TMI Blog2019 (6) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... of the facts and the fact that seized records itself shows availability of the cash with the assessee in the books of account clearly shows that Ld. CIT(A) on proper appreciation of facts and material on record, correctly deleted the addition - Decided against revenue Addition on account of under reporting of profit - CIT-A deleted the addition - HELD THAT:- There was no reason to compare the profit of earlier year with the profit declared in assessment year under appeal. Low project by itself is no ground to make addition. In the absence of any material on record, particularly that books of account have not been rejected by the A.O. and that the surrendered amount is treated as income from other sources by CIT(A), there was no justification for the A.O. to make this addition. CIT(A), on proper appreciation of facts, rightly found that in assessment year under appeal, the costs of the assessee have increased substantially as against the cost incurred in preceding assessment years. This fact has not been rebutted by the Revenue Authorities through any evidence or material on record. - Decided against revenue - ITA.No.1296/Del./2013, ITA.No.1907/Del./2013 - - - Dated:- 3-6-2019 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese facts, the Revenue challenged the Order of the Ld. CIT(A) in deleting the addition. 4. Ground No.1 is general an need no adjudication. 5. On Ground No.2, Revenue challenged the Order of the Ld. CIT(A) in restricting the addition to ₹ 9,20,245/- made by the A.O. on account of undisclosed cash. The A.O. noted that during the course of survey u/s 133A of the Income Tax Act, 1961 by the Investigation Wing of the Income Tax Department at the business premises of Assessee-Company at Karol Bagh, New Delhi, excess cash of ₹ 60,00,000/- was found which could not be explained properly by the persons who were controlling the business affairs at the business premises. During the course of survey at the business premises/showroom of Assessee- Company at Karol Bagh,cash of ₹ 61,25,000/- was physically found whereas the cash as per books of account was only ₹ 1,25,000/-. The statement of Sh. Amit Verma an employee of the group, who was working as Cashier, was recorded on oath under section 133A by the officers of the Investigation wing of the Department. The discrepancy in cash was confronted to him. In his statement he stated that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , while a further amount of Rs.l1,87,139/- was reflected in the accounts of a group company called M/s Diamond Hut India Pvt. Ltd. Relevant cash books belonging to the assessee were seized by the Department during the search itself Therefore, the addition is unjustified. 7. The Ld. CIT(A) noted that it is well-known that trade in bullion and jewellery generates large cash sales. It is also not disputed that the cash available as per the records seized, by the Department itself, was ₹ 53.48.755/-. Therefore, it is not appropriate to treat the entire cash as unaccounted simply for the reason that there was no entry regarding cash transfer from one branch of the assessee to another. The Ld. CIT(A), however, found that evidence of further amount of Rs.l1,87,139/- reflected in the accounts of M/s Diamond Hut India Pvt. Ltd. was neither found during the course of survey/search and it was never claimed during those proceedings that the cash belonged in part to this company also. The Ld. CIT(A) noted that cash on the date of search and seizure was found of ₹ 62,69,000/- and admittedly the cash available with the assessee was of ₹ 53,48,755/-. The explanat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee during the course of search operation i.e., ₹ 3,18,62,953/- is reduced from the profit reported by the assessee for the year under consideration, net profit left is only ₹ 24,17,834/- (₹ 3,42,80,787 - ₹ 3,18,62,953). Hence, the net profit ratio for assessment year under appeal excluding the surrender amount is just 0.09%. The A.O. noted that in preceding assessment year 2009-2010 the net profit ratio is 0.99%. In assessment year 2008-09 it was 2.5%, which indicates that after disclosing the unaccounted income the assessee has claimed expenses by inflating them so as to reduce the tax liability. The A.O, therefore, applied net profit ratio of 0.99% of the last year and made the addition of ₹ 2,40,49,700/- . 12. The assessee challenged the addition before the Ld. CIT(A). It was submitted that A.O. made the addition without any adverse material by merely applying net profit rate of earlier year. There was no basis to make the addition. Books of account of the assessee are audited in which sales, purchases have been properly recorded. No single purchase or sale was found outside the books of account. No di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the submissions of the Ld. D.R. in the light of findings of fact recorded by the Ld. CIT(A), we do not find any merit in these grounds of appeals of the Revenue. The assessee has surrendered ₹ 3.18 crores over and above the normal income during the course of search and survey. The assessee also paid the taxes thereon. The Ld. CIT(A) directed it to be considered as income from other sources. The A.O. without pointing-out any specific defects in the maintenance of the books of account of assessee, noted that if the surrendered amount is reduced from the income declared by assessee, there will be a low net profit as compared to net profit declared in the preceding year. Since the Ld. CIT(A) considered the surrendered amount under different Head of Income i.e., Income from other sources , therefore, there was no justification for A.O. to reduce the same from business income of the assessee declared as per the books of account. No sales and purchases were found to have made by assessee outside the books of account. No details of expenses or creditor and debtor have been noted to show that any unaccounted expenses claimed by assessee. The A.O. did not reject the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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