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TMI Blog2017 (12) TMI 1633X X X X Extracts X X X X X X X X Extracts X X X X ..... based on the cash amounting to Rs. 68,00,000/- found during the course of search at office premise and the locker of the assessee maintained with M/s. Gold Sukh Safety Vaults Ltd., which was admitted being his undisclosed commission income on hawala transaction for the period 1.4.2012 till the date of search (9.11.2012) of the assessee?" 2. "On the facts and circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeal) erred in ignoring the principal of extrapolation of income as laid down by the Hon'ble Supreme Court in the case of Eusafali 90 ITR 271?" 3. Briefly the facts relating to the issue in disputeare,theassessee an individual, is the Managing Director of M/s. Indrapuri Express Courier Pvt. Ltd. A search and seizure operation under section.132 of the Income Tax Act,1961was carried out in case of M/s. Gold Sukh Safety Vaults Ltd.,Vithalvadi, Mumbai, during which it was found that the said company was providing lockers on rent without verification of 'Know Your Customer' (KYC) details. Since, it was found that the assessee has taken on rent a locker from M/s. Gold Sukh Safety Vaults Ltd., asearch and seizure operation under section.132 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from frequent operation of locker in the relevant period. Relying upon the statement of assessee's employee and the entries made in the seized document, the Assessing Officer concluded that when the assessee had admitted of earning undisclosed income of Rs. 82,22,200/- till the date of search on 08/11/2012, he must have earned similar amount for the remaining five months of the Assessment Year and accordingly, proceeded to compute the income for the A.Y.2013-14 on pro-rata basis which was quantified at Rs. 1,40,95,000/-. Since,the assessee had already offered income of Rs. 82,22,200/-,he made addition of Rs. 58,72,800/-.Further, assuming that assessee's business must have grown @20% per year,the Assessing Officer computed income adopting similar methodology forAssessment Year 2007-08 to 2012-13. Theaddition made by the Assessing Officer in different Assessment years are as under:- A.Y. Undisclosed income computed Commission Income offered in return Addition made 2013-14 1,40,95,000/- 82,22,200/- 58,72,800/- 2012-13 1,17,46,000/- 0 1,17,46,000/- 2011-12 97,88,000/- 0 97,88,000/- 2010-11 81,50,000/- 0 81,50,000/- 2009-10 67,90,000/- 0 67,90,000/- 2008-09 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s totaling to Rs. 40,00,000/- on which the assessee would have earned commission @0.15% per Rs. 1,00,000/- and fortransaction value of Rs. 40,00,000/- it will amount to Rs. 6,000/- per day. The First Appellate Authority also noted that in course of hearing, the authorised representative of the assessee also submitted a working as per which the assessee would have earned commission income of around Rs. 6,00,000/- based on 100 days working which might have escaped assessment.Therefore, he accepted addition of Rs. 6,00,000/- as additional income as found from the seized document. Thus, on the basis of the aforesaid submissions of the assessee, learned Commissioner (Appeals) concluded that out of the addition made of Rs. 58,72,600/- by the Assessing Officer for A.Y.2013-14, the income which could have escaped assessment for the post search period of Assessment Year 2013-14 can be estimated at Rs. 6,00,000/-. As far as the income determined for the preceding assessment years i.e., A.Y.2007-08 to 2012-13, learned Commissioner (Appeals) observed, the Assessing Officer has not brought any material or documentary evidence on record to establish that the assessee had earned similar undisclos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by considering the volume of transaction noted in the seized document. The learned Departmental Representative submitted, such estimation having been made by the Assessing Officer to the best of his judgment and on a reasonable basis, cannot be disturbed by the First Appellate Authority. In support of such contention, she relied upon the decision of the Hon'ble Supreme Court in case of Eusafali90 ITR 271. She also relied upon the following decisions. 1.Income Tax Appeal no.498 of 2013 and others dated 16/03/2015 in case of Prakash K Kankaria v/s. CIT. 2.Institute of Chartered Accounts of India v/s. Vivek Kapoor and others Civil Reference no. 5 of 2012(O & M) Judgment dated 18/03/2016. 10. We have heard learned Departmental Representative and perused the materials on record. We have also applied our mind to the decisions relied upon. As far as the factual aspect of the issue is concerned, it is evident from record that on 08/11/2012, a search and seizure operation under section.132 of the Actwas carried out on the assessee.In course of search and seizure operation, cash amounting to Rs. 14,22,200/- was found in the office premises of M/s. indrapuri express courier Pvt. Ltd., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th hawala transaction or earning of any undisclosed income.Though, it may be a fact that the assessee has frequently operated the locker but certainly it will not lead to the conclusion that the assessee was using the locker for keeping cash used in hawala transaction, as there is no evidence on record to demonstrate such fact. In any case of the matter, even the locker no. 575 was opened only on 15/12/2010. Therefore, the addition on estimate basis on mere presumption and surmises, that too, in a search assessment cannot be upheld. As correctly observed by the learned First Appellate Authority, neither during the search and seizure operation any incriminating material was found to indicate that the assessee was involved in hawala transaction to justify addition in these assessment years nor the Assessing Officer has brought any material or documentary evidence even during the post search proceedings to justify such estimation. Therefore, the addition made for A.Y.2007-08 to A.Y.2012-13 on estimate basis by extrapolating the entrie/ figures found in the seized material pertaining to A.Y.2013-14 is legally unsustainable. As far as A.Y.2013-14 is concerned, we find from the material ..... X X X X Extracts X X X X X X X X Extracts X X X X
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