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TMI Blog2011 (8) TMI 1301X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment year 2008-09. 2.4 Before the ld. CIT(A), the assessee has made the same submissions which have been made during the course of appellate proceedings for the assessment year 2008-09. Such submissions have been reproduced in the appellate order for the assessment year 2008-09. The ld. CIT(A) restricted the disallowance to the extent of 15% of the expenses claimed. In assessment year 2008-09 also, the ld. CIT(A) has confirmed the disallowance of 15% of the expenses. 2.5 Before us, the ld. AR has submitted that in case the addition of ₹ 50.00 lacs as made by the AO is considered then gross profit rate will be to the extent of 43.35%. The assessee has shown the profit of 10.68% of the turnover . 2.6 We have heard both the parties. The issue before us is similar to the issue decided as decided in the case of the assessee for the assessment year 2008-09 and 2007-08. Following our finding for the assessment year 2008- 09 and 2007-08, we feel that it will be fair and reasonable to apply the gross profit rate of 12% as against 10.68% disclosed by the assessee. 3.1 The second ground of appeal of the assessee is that the ld. CIT(A) has erred in confirming the disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he explanation of the assessee without pinpointing which incoming (receipts) is bogus or overstated or which outgoing (Payments) are understated. The cash balance can be created either by overstatement of receipts or understatement of outgoings. The cash book is nothing but recording of the entries of receipt and payment in chronological order. The cash payments against the above plots are duly recorded in the cash book produced before the AO, therefore, the investment cannot be treated as unexplained investment. 2) In Rajendra Kumar Kedia V/s. DCIT (JP) report in 22 TW Page 506, the ITAT, Jaipur Bench has held that books of accounts of assessee, which are not properly maintained, can be subsequently prepared and recasted on the basis of bank statements, & other related documents of sale, purchase. After the search the assessee, prepared the books of account on the basis of bank statements, and other documents. The findings of the Ld AO in the assessment would further increase the availability of cash in the hands of the assessee which may be seen as under:- a) Disallowance of construction expenses:- This finding of the AO would result further increase cash balance in the hands ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent so made is held to be unaccounted. Therefore the addition is confirmed. However, the other request/argument of the appellant that the availability of the cash with appellant has already increased on account of various additions by increasing the income or making the disallowance out of expenditure, and accordingly telescoping may be given, will be considered subsequently in the present order.'' 4.5 During the course of proceedings before us, ld. AR has filed the following submissions. ''On careful study of the Ex A-9 (page no. 10 on the basis of which addition had been made) and the chart of the cash payments as drawn by the ld AO himself at page no.5 for the purpose of making disallowance u/s 40 A (3) in respect of various properties it would be noted that that the findings as arrived at by the Authorities Below are not only factually incorrect but self-contradictory as discussed hereunder pointwise: (i) It is incorrect to say that cash payment of ₹ 33 lac was made in respect of these properties over and obove ₹ 30 lac paid by cheque (as per findings of the ld CIT (A) at page no. 10 & 11 of the Appeal Order. In fact ₹ 33 lac were paid in cash in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has made the cash payment for purchase of the plots. It was therefore, submitted that the ld. CIT(A) was justified in confirming the addition of ₹ 33.00 lacs. 4.7 We have heard both the parties. Page 10 of Annexure A-9 shows the payments of ₹ 15.00 lacs through three cheques dated 30-08-05 and it shows the payment of ₹ 13.00 lacs in case the plots mentioned are 118, 119 and 120. At page 8 of the assessment order, the AO has referred to cash payments in respect of plot no. 120, 121 and 122. The total payments in respect of these three plots as per page 10 of Annexure A-9 as per AO order are ₹ 33 lacs in cash and ₹ 30 lacs in cheque dated 19-08-2005. However, the copy of page 10 of Annexure A-9 do not show cash payment of ₹ 33 lacs. Hence, there was no need of making addition of ₹ 33.00 lacs. Thus the addition of ₹ 33.00 lacs is deleted. 5.1 The fourth ground of appeal of the assessee is that the ld. CIT(A) has erred in confirming the addition of ₹ 16.09 lacs out of ₹ 36.64 lacs made by the AO on account of alleged unaccounted profit on sale of 05 plots at Ganesh Nagar on the basis of paper marked as Annexure A-1 by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ock, which were carried to next year as closing stock. The assessee purchased one plot and shop in Ganesh Nagar which was sold during the year. Therefore, no addition can be made only on the basis of deaf and dumb document. Reliance is placed on following decisions:- (a) Jayantilal Patel Vs. ACIT and others/ Dr Balbir Singh Tomar Vs ACIT & others (Rajasthan High Court) 233 ITR 588. / 244 ITR 500 (Departmental appeal in DB) Hon'ble Rajasthan High Court observed that addition on the basis of noting on a piece of paper cannot be sustained when it is not in assessee's own hand-writing. (b) Hissaria Bros Vs ACIT (ITA No. 179/JDPR/1998) 22 Taxworld 684 ITAT Jaipur It was held that addition cannot be made on the basis of vague figures found noted on seized loose paper without proving that the alleged amount are receipts and income of the assessee. (c) ITO Vs Mannalal Jhalani (ITA No. 250 TO 260/JP/1998) 22 Taxworld 551 ITAT Jaipur. It was held that addition cannot be made simply recovery of some papers found and seized during the course of search without making necessary verification and examination. (d) Ashwani Kumar Bhardwaj Vs DCIT 21 Taxworld 358 ITAT Jaipur. It was held in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 26,61,000/-. Thus there is profit of ₹ 16,09,000/- on sale of Ganesh Nagar Plot. This sale of Ganesh Nagar Plot is different from the sale of Ganesh Nagar Plot and the shop reflected in the books of accounts as in those cases construction work has not been done, whereas this paper reflect the Ganesh Nagar plot sold after construction. Hence, the amount of ₹ 16,09,000/- is held to be unaccounted profit of Ganesh Nagar Plot and the addition so made by the A.O. of ₹ 36,64,000/- is modified as above and restricted to ₹ 16,09,000/-.'' 5.5 The revenue vide ground of appeal no. 2 is aggrieved against the reduction of addition to ₹ 16.09 lacs as against ₹ 33.64 lacs made by the AO. 5.6 Before us, the ld. AR has filed the following submissions. ''In appeal, the findings of the ld. AO were assailed vehemently. On careful study of the said exhibit it would be observed that no where it contained the details of ₹ 36,64,000/- and again there was no mention at all regarding 5 plots of Ganesh Nagar. In the circumstances, it is not under-stood as to how the ld. AO could co-relate Ex.A-1(page no.1) with Ex. A-15 (page no.25). While appreciati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26 to 28 the appellant had informed point blank that these were rough working only relating to plot no.117, Ganesh Nagar which conveyed no meaning at all. Further it was informed that except this plot, he owned no other plot in Ganesh Nagar. The relevant extract from his statement are reproduced here-under for ready reference: In view of above facts, it is an established fact that the appellant did not own so many plots in Ganesh Nagar so the question of receiving cash funds in respect of the alledged 5 plots of Ganesh Nagar did not arise. Thus the findings of the Authorities Below in this regard are factually incorrect and the addition so confirmed on the basis of such incorrect facts deserves to be deleted summarily'' 5.7 On the other hand, the ld. DR has supported the order of the AO. 5.8 We have heard both the parties. Page no. 1 of Annexure A-1 is available at page 28 of the paper book filed by the ld. AR. The ld. CIT(A) has referred to the figures mentioned at page 1 of Annexure A-1. The sum of ₹ 14,94,500/- has been reduced from the figure of ₹ 21.70 lacs and the balance has been mentioned at ₹ 6,75,500/- while the AO added the figure of ₹ 21.70 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied out by the assessee during the year for which detailed P & L A/c was furnished showing therein net loss of ₹ 3,46,339/-. 6.5 We have heard both the parties. We are not having the benefit of the details of the trading account of shares or copy of the D-MAT account. We have not been made available page no. 2 and 3 of Annexure A-1. Subclause (d) of proviso to Section 43(5) has been inserted by Finance Act 2005 w.e.f. 1-04-2006 and according to this the profit or loss on derivative is not to be considered as speculative. Thus the issue of addition of ₹ 1,15,712/- is restored back on the file of the AO. The AO will treat losses in derivates as business loss. Before us, the assessee is aggrieved only against addition and therefore, the loss in respect of derivative to the extent of profit in shares will be allowed to be set off without considering that loss as speculative loss. Thus the issue of addition of ₹ 1,15,712/- is restored back on the file of the AO. 7.1 The sixth ground of appeal of the assessee is that the ld. CIT(A) has erred in confirming the addition of ₹ 59.50 lacs. 7.2 During the year under reference, the assessee has sold 07 properties at p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sharma 900000.00 Total sale consideration received 26,50,000 (PB page 14 & 18) This shows that only rough estimated figure is mentioned on the impugned seized document. The actual sale consideration of the plot was 26,50,000/- as against so called sale consideration of ₹ 18,00,000/- recorded on this seized paper. d) 123, Bal Vihar alleged sale for ₹ 11,00,000/- as against declared sales at ₹ 5,00,000/- (i) The Ld AO took the figure of declared sale consideration ₹ 5,00,000/- in respect of 123 Bal Vihar whereas the assessee sold ½ plot to Purshottam Ghya and ½ plot to Puspa Devi. The total sale consideration received by the assessee was 5,00,000+ 3,50,000= ₹ 8,50,000/- against which the Ld AO took the declared sales at ₹ 5,00,000/- Further figure 11 denotes the estimated value of the completely finished constructed house. In this case, the assessee sold the plot unfinished house. The work relating to doors & windows and paint was not done by the assessee. Therefore, addition on account of suppressed sale was made on surmises and conjectures. e) 207, Shyampuri alleged sale for ₹ 35,00,000/- as against declared sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ail in A.Y 2005-06 in appeal no. 570/09-10 in order dated 29.12.2010. As already discussed in detail in the appeal order for A.Y 2005-06 in appeal no. 570/09-10 in the case of appellant himself, the subject paper namely page 23 & 25 of Ann.A-25 are not at all mute or ambiguous or rough document. It is not dumb document. The subject papers are loudly speaking about the various plots of the appellant in various colonies. The amount of sale value is also mentioned in coded form. The word "sold" has also been mentioned against many plots, reflecting that those plots have already been sold earlier to the day when these jottings were made on page 23 and page 25 of annexure A-25. It is evident that both these pages have been written at different point of time. It has been held in the appeal order for A.Y 2005-06 that these documents clearly reflect the sale value of the various plots held by the various family members of the appellant group. For the reasons discussed in detail in the appeal order for A.Y 2005-06, it is held that these two documents reflects the actual sale value of the various plots, as against the apparent consideration shown by the appellant in its prepared books of acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agar with pre-fix digit of 64 and suffix digit of 50. Apparently the digits mentioned on the prefix and suffix of the Scheme conveyed no meaning at all. It is not understood as to how the Authorities Below could conclude on the basis of such digits that sales to the extent of Rs.12 lac were suppressed. Again at two more places, 'Ram Nagar' is mentioned which could not be connected with Shri Ram Nagar. Against such schemes there is following mention: 'Ram Nagar- 21x2' and at second place it is 'sold-Ram Nagar- 21x1=15x4. From the above narration, it would noted at first place there is no mention of 'sold' whereas at second place sold word is mentioned. Thus all these digits are ambiguous conveying no meaning at all. In fact this plot was purchased in April, 2004 for ₹ 3,00,000/- and was sold in April. 2005 for ₹ 9,00,000/- after construction. Now it is for consideration as to whether, a plot purchased for ₹ 3,00,000/- about one years back could fetch the price of ₹ 21 lac as taken by the AO. Obviously, the figures as taken by the AO are incorrect and without any basis on the face of such documented evidences (ii) 65, Shri Ram Nagar; ₹ 12,00,000/- On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In fact the said plot was purchased in August, 2004 for ₹ 4,00,000/- and was sub- divided in three parts. One part was Sold for ₹ 8,50,000/- in May, 2005. Second part was sold for ₹ 9,00,000/- in May, 2005 and third part was sold for ₹ 9,00,000/- in June, 2005 after construction of houses. Total sales consideration of this plot was ₹ 26,50,000/- and not ₹ 8,50,000/- as taken by the AO. Further the learned AO had also committed a tactical mistake by taking only one part of the said plot (which was sold for ₹ 8,50,000/-) into account to work-out the suppressed sales of ₹ 9,50,000/- and ignored the sale of second and third part. Thus the amount of suppressed sale as taken by AO is on wrong working. Actually there were no suppressed sales at all as the plot was sold more than the price taken by the AO. On the face of such documentary evidences, the working of the suppressed sales is apparently incorrect and deserves to be deleted summarily. (iv) 123, Bal Vihar; ₹ 6,00,000/- Again there is no specific mention of this property on the said sheets. In absence of specific mention of this property i.e. '123' no adverse inference is ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 lac taking the part sale of the plot as sale of the full plot measuring 350 sq. yards. Thus working of the figures of the suppressed sale is factually incorrect. On the face of such documentary evidences, the working of the suppressed sales is apparently incorrect and deserves to be deleted summarily. (vii) 121, Bal Vihar: ₹ 3,00,000/-: Again there is no specific mention of this property on the said sheets. In absence of specific mention of this property i.e. '121' no adverse inference is called for. There is mention of the word "Bal Vihar Colony ' at one place on sheet of 2006 with the following narration 11x4.which conveyed no meaning at all as the appellant did never own 4 plots in the said Nagar.. The AO had related this jotting to plot no. 122 to work out the suppression of sales without any basis and reason. In fact plot No. 121 in the said Colony was subdivided in two parts. One part measuring 155.55 sq yards out of total area of 350 sq. yards was sold by the appellant for ₹ 8,00,000/- during the year and the remaining part of 194.45 sq. yards is lying in the closing stocks. However, the ld. AO had over-looked the fact of sub-division and made addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adopted the sale consideration at ₹ 18.00 lacs as against consideration of ₹ 8.50 lacs. It means that there has been no suppressed sale in respect of the plot. Hence, the addition of ₹ 9.50 lacs is deleted. 7.10 The assessee has sold the property at 123 Bal Vihar. The AO has adopted the sale consideration at ₹ 11.00 lacs as against ₹ 5.00 lacs shown in the sale consideration. There is no mention of this property at pages 23 and 25 of Annexure A-25. The assessee in his explanation has contended that plot was subdivided in two equal parts. The sale consideration for both the plots is ₹ 8.50 lacs and not ₹ 5.00 lacs. Since this property is not mentioned in pages 23 and 25 of Annexure A-25, therefore, it was not a case of making addition. Hence the addition of ₹ 6.00 is deleted. 7.11 The assessee has sold the property at 207. Shyampuri and the AO has adopted the sale consideration at ₹ 35.00 lacs as against ₹ 25.00 lacs shown in the sale deed. It is true that following noting is available at page 25 of Annexure A-25. ''sold Shyampuri 207 = 35'' The noting is not a conclusive evidence to hold that the consideration receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case are similar to the facts as considered by us while deciding the appeal in the case of the assessee for the assessment year 2008-08. Following our finding, we hold that the ld. CIT(A) was not justified in confirming the addition of ₹ 4,27,400/-. 9.1 In Ground No. 6, the revenue is aggrieved against admission of additional evidence. 9.2 We had already held while deciding the appeals of the assessee for the assessment year2008-09 and 2008-07 that the ld. CIT(A) was justified in accepting the additional evidence. Hence, Ground Nos. 4 and 6 of the revenue are dismissed while Ground No. 7 of the assessee is allowed. 10.1 The 8th ground of appeal of the assessee is that the ld. CIT(A) has erred in confirming the disallowance of ₹ 20,000/- out of addition of ₹ 58,100/- made by the AO on account of profit on sale of electronic items. 10.2 The revenue in Ground No. 5 is aggrieved in reducing the addition to ₹ 20,000/- as against ₹ 58,100/- made by the AO. 10.3 The AO in his order has mentioned that the assessee has shown income from sale of electronic items. No details have been filed. Therefore, the income was assessed at ₹ 58,100/-. 10.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the revenue while disallowance of expenses is partly allowed by estimating the income from taxi at ₹ 1.00 lac. 13.1 The Ground No. 11 of the assessee is in respect of allowing telescoping of addition made on account of suppressed sales as against expenses of the amount paid over and above the consideration. 13.2 We have heard both the parties. We find that no specific issue is raised before us in respect of telescoping. Hence, Ground No. 11 of the assessee is dismissed. 14.1 Ground No. 12 of the assessee is that the AO has passed the order u/s 153A read with Section 144 of the Act and the ld. CIT(A) has erred in not annulling the assessment order. 14.2 We have heard both the parties. The powers of the ld. CIT(A) are coterminous with the powers of the AO and the assessee has been provided adequate opportunity before the ld. CIT(A). Hence, the ld. CIT(A) was justified in not annulling the assessment order. Thus Ground No. 12 of the assessee is dismissed. 15.1 The Ground No. 7th of the revenue is that the ld. CIT(A) has erred in directing the AO to give set off for the unaccounted/ suppressed sale consideration as such suppressed sale consideration is available for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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