TMI Blog2012 (12) TMI 1216X X X X Extracts X X X X X X X X Extracts X X X X ..... erred, both on facts and in law in rejecting the contention of the assessee that the order passed by the learned AO under Section 153A is bad and liable to be quashed as the same has been framed consequent to a search which itself was unlawful and invalid in the eyes of law. 4. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law in rejecting the contention of the assessee that the proceedings initiated under Section 153A are liable to be quashed in the absence of a valid search. 5. On the facts and circumstances of the case, the learned CIT(A) ahs erred, both on facts and in law in rejecting the contention of the assessee that the proceedings initiated under Section 153A against the appellant and the assessment framed under Section 153A/143(3) are in violation of the statutory conditions of the Act and the procedure prescribed under the law and as such the same is bad in the eye of law and liable to be quashed. 6. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law in rejecting the contention of the assessee that the proceedings initiated under Section 153 A are bad in law in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned CIT(A) has erred in confirming the order passed by the learned AO rejecting the contention of the assessee that it amounts to reviewing the assessment proceedings for the year under consideration without there being any adverse material on record. (ii) That the above said additions are otherwise untenable since reassessment under Section 153 A consequent to search is to be confined only to the incriminating material belonging to the assessee found during the course of the search. 13. On the facts and circumstances of the case the learned CIT(A) has erred both on facts and in law in ignoring the fact that the assessment for the year under consideration have been scrutinized under Section 143(3) and as such the learned AO was not justified in reviewing its own order. 3 During the course of hearing out of above grounds, only ground No. 11 was pressed before us and all other grounds were not pressed, therefore, grounds No. 1 to 10, 12 13 are dismissed as not pressed. 4 Ground No. 11 After hearing both the parties we find that a search was conducted in the premise of the assessee and assessment has been completed u/s 153A r.w.s 143(3) of I.T. Act. During this year t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as not pressed before us. 11 In ground No. 11 disallowance of 1/5t h of vehicle maintenance expenditure has been made by the Assessing Officer. 12 In this case also the facts are identical as in the case for Assessment year 2004-05 in ITA No. 1313/Chd/2012 which we have discussed above. In this case also the Assessing Officer has disallowed a sum of ₹ 1,69,280/- being 1/5th of vehicle expenses on account of personal usage. Once the addition has been made in the assessment order u/s 143(3) then there is no justification for addition in the assessment made u/s 153A, therefore, following our order in ITA No. 1313/Chd/2012 in para No. 8, we delete this addition. 13 in the result, ITA No. 1314/Chd/2012 is partly allowed. ITA No. 1315/Chd/2012 Assessee s appeal 14 In this appeal also the assessee has raised various grounds but only issue is regarding disallowance of vehicle maintenance expenses of ₹ 2,79,630/- was pressed before us. 15 In this case however, no addition was made originally. The ld. counsel of the assessee submitted that no addition was made because the assessee had paid FBT on account of car expenses. 16 On the other hand, the ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eavy goods vehicle . heavy passenger motor vehicle; light motor vehicle. Medium goods vehicle and medium passenger motor vehicle but does not include maxi cab , motor cab , tractor and road-roller . The expression heavy goods vehicle heavy passenger motor vehicle light motor vehicle , medium goods vehicle , medium passenger motor vehicle , maxi cab , motor-cab , tractor and road roller shall the meanings respectively assigned to them in section 2 of the Motor Vehicles Act, 1988(59 of 1988) On going through the above your honour will notice that the commercial vehicle include not only heavy goods vehicle but also include light motor vehicles. The definition is quite comprehensive. Wherever exclusion is required it has been stated so. Further in the note it has been specifically stated that the light motor vehicle shall have the meaning assigned to it in section 2 of the motor vehicles act, 1988. As per section 2(21) of the motor vehicles act, 1988 the light motor vehicle has been defined- 2(21) light Motor Vehicle means a transport vehicle or Omni bus the gross vehicle weight either of which or a motor car or tractor or road roller the unladed weight of any o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partly allowed. ITA No. 1317/Chd/2012 Assessee s appeal 28 In this appeal the assessee has raised following grounds: 1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] under Section 143(3) is bad both in the eye of law and on facts. 2(i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law, in confirming the addition of an amount of ₹ 3,34,965/- made by the AO as income earned by the assessee on undisclosed sale of ₹ 17,21,300/- (ii) That the above addition has been confirmed despite the same being made arbitrary rejecting the explanation given by the assessee. (iii) That the above addition is untenable in the absence of any supporting material or evidence to prove the allegation that the assessee has made unaccounted sales. 3(i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law, in confirming the addition of an amount of ₹ 4,58,106/- as profit earned on undisclosed sale of ₹ 23,54,094/- (ii) That the above addition has been confirmed despite the same being made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer after considering the submissions observed that description of the documents clearly point out that the sales have been made by the assessee and these documents cannot be construed merely as estimates. It was further observed that there was no difference in the noting for sale vouchers and the notings in the said documents. Handwriting was confirmed by the assessee. However, during the assessment proceedings some sale bills were provided. Some sale bills in respect of sale bill for ₹ 6,45,000/- and ₹ 18,000/- recorded at page 178 179 of the documents were furnished before the Assessing Officer, therefore, after reducing these amounts the Assessing Officer concluded that balance amount of ₹ 17,21,300/- sales were made outside the books. He applied GP Rate of 19.46% on these sales and added a sum of ₹ 3,34,965/- to the income of the assessee. 32 Before the ld. CIT(A) the submissions made before the Assessing Officer were reiterated. It was further contended that the Assessing Officer was not justified in making independent addition on this account because the profit, if any, on such undisclosed sales, would ultimately form part of stock w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... break-up of the income surrendered by the assessee u/s 132(4), it is seen that ₹ 5,75,07,859/- was surrendered on account of excess stock of gold and diamond jewelry while ₹ 16,82,509/- was on account of excess cash found form the business as well as residential premises. The balance of ₹ 8,27,572/- was income surrendered by Shri Anil Talwar which had been withdrawn from the firm. No doubt assessee has surrendered additional income on account of unrecorded business transactions, in fact against the excess gold / diamonds found. Thus I would think that the unrecorded sale transactions of ₹ 3,34,965/- by no stretch of imagination can be said to be covered in the additional income surrendered, unless the assessee is able to correlate to a reasonable extent the excess gold jewelry with the sales as per the slips , or that the sale proceeds have been utilized for purchasing such particular items of the stock. It is also pertinent to note here that the assessee did not reply to the specific show cause issued by the Ld. AO. These unrecorded sale cannot be therefore covered under the surrendered amount in the absence of clear explanation by the assessee. Conse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. There is no room for presumption under the Income tax Act. Even for argument sake and without prejudice to our above submissions, if it is presumed that the assessee have been making sales outside the books of account, the gross profit earned by the assessees from such sales should exceed the amount of disclosure of unaccounted income made by the assessee. The gross profit earned by the assessee must be reflected by certain assets found from the possession of the assessee. In the present case, the assessee has disclosed substantial amount of income invested in excess stock found from, the premises of the assessee. Adverse inference against the assessee can only be taken if the gross profit earned by him including investment made in such transaction exceed the income surrendered by the assessee u/s 132(4). No cognizance of the income earned by the assessee and disclosed u/s 132(4) can be taken twice, once by way of income earned by him by doing business outside the books of account and secondly when this income is invested for accumulation of unaccounted stocks. It is only the undisclosed income which is taxable in the hands of the assessee. The Assessing Officer did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issue raised in ground No. 11 in Assessment year 2009-10 in ITA No. 1316/Chd/2012. The facts as well as the contentions of both the parties are identical and therefore, following that order we confirm the order of the ld. CIT(A) in respect of this issue regarding restriction of car depreciation to 15%. 43 Ground No. 5 This issue is identical to ground no. 11 for Assessment year 2006-07 in ITA No. 1315/Chd/2012. The facts and contentions of both the parties are identical which was made in respect of that order and therefore, following that order, we set aside the order of the Ld. CIT(A) and direct the AO to make disallowance of 1/10t h of vehicle maintenance. 44 In the result, ITA No. 1317/Chd/2012 is partly allowed. ITA No. 81/Chd/2013 Revenue s appeal 45 In this appeal the revenue has raised the following grounds: 1 Whether on the facts and in the circumstances of the case the ld. CIT(A) has erred in law as well as facts by deleting the addition of ₹ 2,08,35,789/- on account of unexplained investment u/s 69B in stock (Gold) when the same was not objected to by the assessee in the course of search. 2 Whether on the facts and in the circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9410.05 Purchases Diamond 11140830.00 Closing Stocks Diamond 43938361.95 Gross profit 20% 4259882.00 Total 65237772.00 Total 65237772.00 There was some more adjustment required to be made in diamond stock which has been extracted by the Assessing Officer as under: Calculation of s tock of Diamonds as on 23.7.09 Amount (Rs) Value of stock as per trading account prepared at the time of search 43938362 Less: Value of stones included in above 248874 (Opening balance as on 1.4.2009) 43689488 Add: Value of diamonds studded in Platinum jewellery 2910703 (Based on trading account prepared upto the date of search Value of Diamond stock as on 23.7.2009 as per books ₹ 46600191 It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e trading results and as inventorised by the Departmental Valauer in the presence of assessee and the same was accepted by the assessee. Therefore, the excess stock was determined at ₹ 7,83,43,708/- and after reducing the amount of surrender on account of excess stock amounting to ₹ 5,75,07,919/-. The excess undisclosed stock was determined at ₹ 2,08,35,789/- and the same was added to the income of the assessee. 49 On appeal before the ld. CIT(A) it was mainly submitted that the assessee was following the method of valuation of closing stock as cost or market value whichever is lower, therefore, when the figure of undisclosed stock was determined on the basis of GP Rate, naturally the stock as per provisional trading account would be at cost price. It was pointed out that during search stock was valued at market price. This becomes further clear from the fact that if physical quantities are compared no difference is there. The ld. CIT(A) found force in the submissions and deleted the addition. 50 Before us, the ld. counsel of the assessee reiterated the submissions made before the ld. CIT(A). He referred to page 79 of the paper book which is a copy of questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the closing stock followed was stated to be cost or market whichever is lower. So it was submitted that the excess be firstly determined to which the value adopted by the Valuer could be applied. 1 find that the assessment order is silent on the method of the valuation of the stock. The alternate plea of the assessee is that at the year end, the excess stock value will get set off in any case. Be that as it may, I am inclined to accept the arguments of the assessee, that as the value of the stock for the purpose of trading account has been worked out by taking the inventory at cost value, not the market value, so for making a comparison the value should be arrived at by the same method. In other words, the book value of the stock is valued at cost whereas the physical stock is valued at market value. No doubt the details for drawing up the trading account as on the date of search was provided by the assessee and the GP rate is also not in dispute. It is therefore only fair that when the quantitative details are not in dispute, the difference should be necessarily worked out following identical scale. The fact also remains that the method of accounting regularly followed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellery 53353.200 53298 gms 7,36,27,416 10,10,49,782 2. Gold bullion 22 carat 10250.000 353 gms 1,41,45,000 3. 18 carat gold jewellery 34024.096 34027 Gms 4,08,28,915 4. Labour charges 22 carat gold 21,35,000 5. Labour charges 18 carat gold 51,00,000 6. Stones 5,00,000 7. Diamonds 7715.66 cents 9,03,56,350 4,66,00,191 TOTAL 22,66,93,681 14,76,49,973 If the above details are compared with reply given by the assessee on 20.11.2011 where the following working has been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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