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TMI Blog2021 (12) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... his illegality and forgery as a defense of the assessee while giving him the relief. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the additions of Rs. 2,58,59,522/- made on the ground of unexplained investment in stock and GROSS PROFIT thereon respectively and that the Ld. CIT(A) erred in terming the seized papers as dumb documents in the light of the fact that the assessee has himself confessed that the insurance of stock was indeed made, and the very figure of the insured stock is appearing in the seized papers. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in restricting the disallowance of travelling expenses @ 10% instead of @ 25% by observing that the disallowance was on higher side without appreciating the fact that the assessee had carried out various pleasure trips and personal trips to foreign destination with his family members, and has also made various not fully explained purchases on personal count; which are apparent from the documents seized from the assessee's premises. 2. Facts, in brief, with regard to ground nos.1 & 2 on the issue of deletion of the addition of Rs. 2,58,59,522/- made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of the ld. CIT(A) is justified. 5. We have considered the rival submissions of both the parties and gone through the material available on the file. We find that the assessee is deriving income from business of retail trading of jewellery and is the proprietor of M/s. Interstar. A search and seizure action u/s 132 was carried out at the business as well as residential premises of the Interstar Jewellers group including the assessee on 15.12.2016. Accordingly, notice u/s 153A was issued and in response, the assessee filed return of income and for the assessment year 2014-15 under consideration, the Assessing Officer made addition of Rs. 2,58,59,522/- on account of unexplained investment in stock u/s 69 of the Income Tax Act as narrated above. We find that for promoting the sales, the assessee is in practice of taking part in various trade shows, exhibitions and fairs in different cities and during search and seizure proceedings, certain loose papers in the form of Consignment memos, issued for the exhibition purpose which was in turn for the purpose of insurance, were seized by the Revenue. The AO had compared these consignment memos with value of stock as per books and the dif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adverse observation in relation to stock keeping made by the auditor. During the assessment proceedings, the books of accounts along with bills and vouchers were also produced for verification before the AO in which no defects of any kind was found . The comparison between the Consignment Memo and books of accounts is itself erroneous as memo issued was for the purpose of Insurance and cannot represent the actual stock on that particular date. The goods were sent for exhibition to different cities is not in dispute. The factum of insurance cover is also a matter of fact and based on business The goods were sent for exhibition to different cities is not in dispute. The factum of insurance cover is also a matter of fact and based on business requirement. It is also well known that in theft cases, Insurance companies do not pay the entire insured amount on some technical pretext or the other. In the unexpected event of theft, the payment by Insurance companies could be as low as 50% of the insured money. On the date of search no significant stock discrepancy was found except for a shortage of stock of Rs. 9,35,088/- for the A.Y 2017- 18 on which 25% profit has been duly offered in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst the appellant. The burden of showing that the appellant had undisclosed income is on the Revenue. That burden cannot be said to be discharged by merely referring to the statement given by the appellant to a third party in connection with a transaction which was not directly related to the assessment and making that the sole foundation for a finding that the appellant had deliberately suppressed his income. That the burden is on the Revenue to prove that the income sought to be taxed is within the taxing provisions and there was in fact income, are propositions which are well settled by the Supreme Court in the case of Parimisetti Seetharamamma v. CIT [1965) 57 lTR 532 which reiterates these propositions. HIGH COURT OF RAJASTHAN , JODHPUR BENCH in case of Commissioner of Income-tax v. Relaxo Footwear [2002] 123 TAXMAN 322 (RAJ.) Head Note - Section J 43 of the Income-tax Act, 1961 - Assessment _ Addition to income - Assessment year 1992-93 .. Tribunal on. examination of books of account found that true position of stock was rightly reflected in books of account of appellant and stock statement submitted to bank was deliberately inflated only to get higher limit of credit f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a loose paper found during search standalone could not be used as a basis for making impugned addition without the company of any other supportive material and evidence more so when contents of main three parts of the notings were not interlinked and the Assessing Officer had deleted decimal from noting of the figure of Rs. 4,47,000.00 for reading and accepting the same as Rs. 4,47,00,000 which was not permissible in absence of other supportive evidence. The addition was, therefore, deleted Hon'ble ITAT Indore in the case of ACIT vs M/s. Fairdeal Marwar Garage Ltd. (2019) 34 ITJ 521 (Trib. - Indore) HELD The assessing officer failed to corroborate the material find during the course of survey with the transactions carried out by the appellant. In the given facts and circumstances of the case) we find no infirmity in the finding of fact given by Ld. CIT(A) and thus dismiss Grounds No. 1 to 15 of the Revenue's appeal. In CIT vs Lalit Bhasin [2007] 290 ITR 245 (Delhi) it was held that "the assessing officer arrived at a conclusion, primarily on imaginative basis and conjecture rather than on the basis of any record or books of account. The Tribunal had found that here was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n A.Y. 2015- 16 are Deleted. Therefore, the appeal on these grounds is Allowed." From the perusal of the above, we find that the ld. CIT(A), having made discussion on facts and relevant judicial pronouncements thereof, noted that the addition made is not based on any tangible evidence and is totally based on loose paper seized by the Revenue in the form of consignment memo for Exhibition Purpose. Further, there are no corroborative evidences in the hands of Revenue to substantiate the allegations of unaccounted purchase. During search proceedings there were no evidences found in the form of unaccounted purchase bills or unaccounted sales or list of suppliers from whom unaccounted purchases made or payments made for such alleged unaccounted purchase etc. In the absence of such corroborative evidence, the loose paper seized (Consignment Memo) is nothing but a dumb document and do not possess any evidentiary value in the eyes of Law. If the assessee would be doing transactions of such high magnitude of unaccounted purchase/sales, the same would have been easily corroborated through aforesaid tangible evidences. But the Revenue couldn't bring such evidences even on account of exte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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