TMI Blog2019 (1) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... Chandra, DR ORDER Per Sandeep Gosain, Judicial Member: The present Appeal filed by the assessee is against the order of Ld. CIT (Appeal) 48, Mumbai dated 25.11.16 for AY 20013-14 on the grounds mentioned herein below:- 1. On the facts and circumstances of the appellant's case and in law the Ld. Commissioner of Income Tax (Appeals) erred in rejecting books of accounts u/s 145(3) of the Income Tax Act 1961 as per the grounds stated in the order or otherwise. 2. On the facts and circumstances of the appellant's case and in law the Ld. Commissioner of Income Tax erred in confirming the action of Ld. AO in making an addition of ₹ 1,28,56,000/- on account of gold bullions found during the course of search proceedings as per the grounds stated in the order or otherwise. 3. On the facts and circumstances of the appellant's case and in law the Ld. Commissioner of Income Tax erred in confirming the action of Ld. AO in making an addition of ₹ 1,50,50,011/- on account of cash found during the course of search proceedings as per the grounds stated in the order or otherwise. 4. On the facts and circumstances of the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. We have heard the counsels for both the parties at length and we have also perused the material placed on record, judgment cited by both the parties as well as the orders passed by revenue authorities. As per the facts of the present case, a search in the case of M/s Gold Sukh Safety Ltd was conducted on 08.11.12 who were engaged in the business of providing private lockers and had provided lockers to hawala operators. One of the lockers provided by M/s. Gold Sukh Safety Ltd. was registered in the name of one Rashesh Shah bearing locker no. 418. As per the KYC of the locker no. 418, there were additional operator of the locker which included the assessee and the said locker was opened on 05.05.2011 and it was last operated on 06.11.2012 by assessee. In the absence of assessee, a prohibitory order was placed on locker no. 418 on 09.11,2012. 5. It was submitted by Ld. AR that on 16.11.2012, the assessee appeared before the investigation wing and admitted that the locker no. 418, belonged to him and in this respect, a statement u/s 131 was also recorded. As per records, the prohibitory order was revoked and in the said locker, gold bullion valuing ₹ 1,28,56,000/- and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereby estimating income at ₹ 29,10,560/-. 9. On appeal Ld. C1T(A) upheld the finding of the A.O. by holding that no books were presented at the time of search proceedings. The Ld. CIT(A) rejected the books of accounts u/s 145(3) of the Act and held that books were fabricated to accommodate the unaccounted stock and cash. It was also held that there were extraordinary cash sales during the relevant period prior to search which reflects that the contention of assessee regarding stoppage of cash sales after search action was an afterthought. 10. Apart from above, it was also observed by Ld.CIT(A) that it was impractical for the assessee to keep the most of the stock at the locker, leaving little stock at his shop and thus closing stock at the time of search of ₹ 1.33 Crores was not normal. 11. Ld. AR submitted that the assessee had appeared before the Investigation wing on 16.11.2012 in response to notice u/s 131 and clearly explained that the contents of the locker were duly accounted on 16.11.2012. It was submitted that assessee was acquainted with only Hindi. Therefore, it was assured by the revenue officers that although the statement is in English and the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee-AO rejected assessee's claim merely on the basis of the statements of the assessee and his son-Not justified-Neither the statement of the assessee nor the statement of his son support the findings of the AO that goods did not belong to third parties-CIT(A) justified in deleting the addition. 16. On the other hand, Ld. DR relied upon the orders passed by the revenue authorities. 17. After having heard the counsels for both the parties and perusal of the records, we find that the entire basis of addition in the present case are upon the statement made by the assessee. However, from the records we notice that assessee had sent the entire books of accounts alongwith invoices to prove that the stock in cash is accounted and the said details were accompanied with a detailed affidavit. It is pertinent to mention here that all the documents and the books of accounts were sent within 4 days of the original statement. The assessee in the present case has categorically mentioned in the affidavit that he does not know English and only understands Hindi and in this respect, he had filed sworn affidavit which has not been countered by the revenue. As far as the questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntire stock register, purchase and sale bills before lower authorities. However, not a single discrepancy had been pointed out. Hence in the absence of any discrepancy, terming the books of account as fabricated and without affording opportunity of being heard is grossly bad in law. While reaching to the said conclusion, we draw strength from the judgment of UDHMI RAM vs. The Income Tax Officer reported in [1996] 88 TAXMAN 191 (ASR.) (MAG.) wherein it has been held that the so called discrepancy pointed out by the Assessing Officer could lead to investigation, but without specific material to show that there was under-statement in value of sales or inflation of expenses, the book results could not be rejected. 21. Ld. CIT(A) had impressed upon the fact that there was an extraordinary delay in payment of creditors out of which cash sales were made. In our view, this cannot be a reason for disbelieving books of accounts. In any case, the payment terms would depend upon understanding between buyer and saler. 22. We noticed that in para 5.11, Ld. CIT(A) had mentioned that the payment to M/s. Mahesh Gold Jewellery were made in cash. However, this finding of the Ld. CIT(A) is factu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ₹ 1,50,50,011/- which clearly shows that the notings found with Shri Gajmanal had nothing to do with the assessee and therefore, cannot be considered as the transaction of the assessee. On the identical facts, Chandigarh Bench of Tribunal in the case of Cosmos Infra Engineering (India) Ltd. vs DCIT reported in [2017] 88 taxmann.com 761 has held as under:- ....Under such circumstances when even the third party from whose premises the alleged documents were found, has not confirmed that the said entry belong to the assessee, there was no question of any assumption or belief that the entry belonged to the assessee. Moreover, any entry found on loose papers in the premises of the third party without any corroborative evidence, cannot be made basis for addition in the case of the assessee. During the course of search at the premises of the assessee, no incriminating material relating to the above stated entry had been found. We, therefore, do not find any justification on the part of the lower authorities to make addition ii: the case of the assessee on the basis of an entry found in the bahi of third party from which neither it can be definitely said that the name writt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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