TMI Blog2022 (5) TMI 1098X X X X Extracts X X X X X X X X Extracts X X X X ..... material having bearing on the determination of income on account of unaccounted indirect expenditure, peak cash credits, sundry loan creditors added u/s.68 of the Act, bogus purchases and unexplained investment in property. We find that this is a common feature in all the assessees cases and once this is the fact, we noted that the AO has rightly assumed jurisdiction u/s.153A or 153C - Decided against assessee. Addition of indirect expenditure - AO estimated the expenditure and disallowed 25% of the expenditure - CIT(A) restricted the disallowance at 10% - HELD THAT:- As assessee has made a claim before the AO and before CIT(A) that the accounts of the group concern is statutorily audited and the respective business owners i.e., the assessee, his wife and his mother have duly filed Form No.3CB 3CD, as audited by the auditor. It was claimed that the books of account of the assessee is statutorily audited and duly filed by the assessee. The assessee before CIT(A) claimed that the AO never questioned the statutory audit and disallowance made in regard to indirect expenditure on estimate basis. We noted that the CIT(A) simply estimated the disallowance at 10% as against estima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed as addition as sundry loan creditor in assessment year 2007-08 and now this was deleted for giving credit to the extent of Rs.6 lakhs as impugned investment of Rs.7.5 lakhs in M/s. Shree Battery House, as there is source to that extent is available with the assessee. CIT(A) in the absence of same confirmed the balance Rs.1.5 lakhs as unexplained investment from unaccounted income. Hence, we find no infirmity in the order of CIT(A) and hence, this issue of assessee s appeal is dismissed. Addition of unexplained credit u/s.68 of the Act received from Shri Dharmichand Jain - HELD THAT:- We noted that this amount of Rs.6 lakhs from Shri Dharmichand Jain claimed by assessee but no details were filed to prove the identity, creditworthiness and genuineness of transaction. Even now before us the assessee could not discharge his onus to prove the transaction and therefore, we uphold the order of CIT(A) confirming the addition of Rs.6 lakhs. It is to be noted that this Rs.6 lakhs is doubly added by AO and we have already considered this issue in para 8 where this addition was deleted by CIT(A) and this deletion was confirmed but we sustain this addition here only. Hence, this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Penalty u/s.271A for non-maintenance of books of account - AO levied penalty despite the fact that the assessee contended that the assessee have maintained books of accounts and got them audited u/s.44AB - HELD THAT:- We noted that only seized material found during the course of search is a hard disk i.e., document in the form of incomplete tally package inventories as ANN/SR/RJ/hard disc/S dated 22.5.2012 having bearing on the determination of the total income were recovered. This is incomplete tally package of documents i.e., sales, purchase but no books of account are maintained. Even now before us, the ld.counsel admitted that there is no books of account and assessee could not produce any books of account before us despite specific opportunity given. Hence, we are of the view that the lower authorities have rightly levied penalty for non-maintenance of books of account u/s.271A . - ITA Nos. 2357 to 2363/CHNY/2019 And 2389 to 2402/CHNY/2019 And 2587 to 2598/CHNY/2019 And 429 to 446/CHNY/2020 - - - Dated:- 20-5-2022 - Shri Mahavir Singh, Vice President And Dr. M.L. Meena, Accountant Member For the Appellants : Shri D. Anand, Advocate For the Respondent : Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to settle the fee bills. Accordingly, the appeal papers were gathered and due to frequent change of counsels, these appeals were filed belatedly by 138 days as argued by ld.counsel. 2.1 When these facts were confronted to ld. Senior DR, he only opposed the condonation of delay but could not controvert the above fact situation. In this group of appeals, he stated that in all the appeals, there is a delay ranging from 7 days to 138 days and it is not possible that all the appeals were filed with a delay without reasonable cause. In term of that, the ld. Senior DR opposed the condonation of delay. 2.2 We have heard rival contentions and gone through the condonation petition along with affidavit. We have gone through the reasons cited by ld. counsel and noted that the reasons seems sufficient in view of the length of the delay i.e., 7 days to 138 days in all these appeals. As the assessee is able to explain the delay, hence we condone the delay and admit these appeals for adjudication. This decision will apply in all the appeals for condonation of delay. 3. First, let us take the following 8 appeals regarding quantum addition and where the assessees have raised the j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that without prejudice to the above, Commissioner of Income Tax (Appeals) failed to appreciate that additions made under section 153A of the Income Tax Act, 1961 is bad in law as the same were not made on the basis of incriminating material found during the course of search and seizure operation and the case of relevant assessment year has already been assessed u/s.143(1) which could not abate on the date of search. 7. For that the Commissioner of Income Tax (Appeals) erred in considering the hard disk seized by the Revenue as incriminating material, wherein the hard disk contains purchase and sales details recorded through Tally Software. The Commissioner of Income Tax (Appeals) erred in not recognizing the fact that all the information in that hard disk was already available with the Revenue in the form of Audited Financial Statements of the appellant. 3.4 Brief facts are that Shri Shanthilal D Jain is a dealer in various batteries, inverters and UPS of different brands and he is proprietor of M/s. Shri Dharma Battery House and M/s. Shree Battery House (which is one of the group companies under adjudication) and assessee s wife Smt. Sharmila D Jain is also engaged in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .w.s 143(3) of the Act, in regard to unabated assessments which is as under:- S.NO NAME OF ASSESSEE SECTION ITA .NO ASST YEAR STATUS 1. SHANTHILAL D JAIN 153A 2357/2019 2007-08 ROI filed on 19.08.2008-No proceedings pending as on date of search. Hence Unabated 2. SHANTHILAL D JAIN 153A 2358/2019 2008-09 ROI U/s.139(1) filed on 19.08.2008- No proceedings pending as on date of search. Hence Unabated 3. SHANTHILAL D JAIN 153A 2359/2019 2009-10 ROI U/s.139(1) filed on 02.09.2009-No proceedings pending as on date of search. Hence Unabated 4. SHANTHILAL D JAIN 153A 2360/2019 2010-11 ROI U/s.139(1) filed on 08.10.2010-No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessment is untenable as the AO has concluded that books of account were not maintained and thus could not have resorted to assessment u/s 153A of the Act. The AO has referred to the averments made by the appellant to the effect that he had not maintained regular, contemporaneous and completed books of account; that he maintains only purchase and sales account that would be given by the appellant to auditor who would file return of income. The AO has brought adequate material on record that the appellant had not maintained books of account in terms of S 44AA and had not got them audited u/s 44AB and filed with the AO. Nevertheless digital evidence have been recovered during the search which fact has not been maintained and such materials have been factored by the AO while making assessment u/s 153A. The appellant s objections and grounds are thus untenable and are liable to the dismissed. Aggrieved assessee came in appeal before the Tribunal. 3.7 Before us, the ld.counsel for the assessee stated that as per details given in chart, returns of income were filed for the respective assessment years on due dates and search was conducted on the residential and busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have heard rival contentions and gone through the facts and circumstances of the case. We noted that the assessee before AO as well as before CIT(A) could not explain how the transactions recorded in the hard disk which was seized vide Annexure ANN/SR/RJ/Hard Disc/S representing inconsistency in the pattern of expenditure, additions of cash credit, sundry loan creditors u/s.68 of the Act and bogus purchases. The hard disk containing incomplete tally package and recording of the above mentioned entries was recovered during the course of search throws light on the above additions and these are not rebutted by the assessee before either of the authorities and even now before us. We noted that the AO has brought on record adequate material that the assessee has not maintained books of account in term of section 44AA of the Act and has not got them audited u/s.44AB of the Act and filed with the AO. We noted that this is uncontroverted claim that the hard disk contains incriminating material having bearing on the determination of income on account of unaccounted indirect expenditure, peak cash credits, sundry loan creditors added u/s.68 of the Act, bogus purchases and unexplained inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007-08 Indirect expenditure Incentives Peak cash credit Claim for LIC Premium paid Transfer from Personal Books Sundry Loan Creditors Treated as unexplained Cash Credit u/s 68 2008-09 -do- -do- -do- -do- -do- -- Trading in Scrap 2009-10 -do- -do- -do- -do- -- Trading in Scrap Unexplained Inv. In property 2010-11 -do- -do- -do- -do- -- Trading in Scrap 2011-12 -do- -do- -do- -do- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oks of account but assessee was able to produce only incomplete books of account and that also there was inconsistency in the pattern of expenditure claimed and the expenditure is not supported with any bills or vouchers. Accordingly, the AO estimated the expenditure and disallowed 25% of the expenditure in these assessment years as under:- A.Y. 2007-08 Rs.2,12,053/- A.Y. 2008-09 Rs.4,33,951/- A.Y. 2009-10 Rs.34,57,003/- A.Y. 2010-11 Rs.38,819/- A.Y. 2011-12 Rs.2,18,658/- A.Y. 2012-13 Rs.2,38,902/- A.Y. 2013-14 Rs.4,84,180/- Aggrieved assessee preferred appeal before CIT(A). 5.2 The CIT(A) restricted the disallowance at 10% by considering the various facts vide para 10.3 10.4 as under:- 10.3 I have gone through the facts of the case and analysed the records. The Act provides that any revenue expenditure (not being personal in nature) and that is wholly and ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of law, defence advanced by the appellant, the prevalent trade practice and the nature of trade, the disallowance of 25% of expenditure claimed cannot be considered as reasonable and is not found to be justified, especially when no concrete adverse material to justify disallowance of this magnitude has been brought on record by the AO. 10.4 On appraisal of the facts of the case, materials on record and the basis of the observations made supra on the impugned addition, I am of the view that the restriction of disallowance to 10% towards indirect expenses debited/claimed for the respective AYs under consideration would meet the ends of justice. Thus, the AO is directed to restrict the disallowance accordingly. Therefore, the appellant gets partial relief and the appellant s grounds on this issue are partly allowed. Aggrieved, assessee came in appeal before the Tribunal. 5.3 Before us, the ld.counsel for the assessee has not all argued the issue on merits and he simply stated that the addition is made just on estimate basis and there is no incriminating material and he stated that the issue is covered by the decision of Hon ble Bombay High Court in the case of Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery House engaged in the trade of batteries and inverters. The assessee was purchasing batteries from M/s. Exide Industries but assessee was not maintaining any books of accounts. Accordingly, the AO called for the ledger account of the assessee in the books of M/s. Exide Industries. After verification of ledger account of the assessee in the books of M/s. Exide Industries, the AO noted that the assessee has received incentives apart from cash discounts on purchases made from M/s. Exide Industries. According to AO, the assessee has not accounted for the same in his books of accounts and hence, the AO disallowed the following incentives and made addition:- A.Y. 2007-08 Rs.28,545/- A.Y. 2008-09 Rs.1,25,397/- A.Y. 2009-10 Rs.13,98,093/- A.Y. 2010-11 Rs.53,886/- Aggrieved assessee preferred appeal before CIT(A). The CIT(A) confirmed the addition by observing in para 11.3 as under:- 11.3 I have given careful consideration to the issue on hand. The assessee was engaged in the trade of batteries and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to addition made by the AO and confirmed by CIT(A) to peak cash credit of bank statement as unexplained cash credits for assessment years 2007-08 to 2012-13 in ITA Nos.2357 to 2362/Chny/2019. The facts and circumstances in all these appeals are exactly identical and the grounds raised are identical and hence, we will adjudicate this issue in ITA No.2357/Chny/2019 for the assessment year 2007-08 in the case of Shri Shanthilal D. Jain. For this assessee has raised following Ground Nos.13 14:- 13. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the Assessing Officer ought not to have added Rs.19,76,020/- being peak cash credit of bank statement as unexplained cash credit. 14. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the deposits made in the bank account represent the amounts received in the course of appellant s business and there was no unaccounted deposit in the bank account. 7.1 Brief facts are that the AO on perusal of bank statements noted that the assessee made cash deposit in South Indian Bank during financial years 2006-07 to 2011-12 relevant to assessment years 2007-08 to 2012-13. The assessee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion on this point has not been repudiated even before the undersigned. In the light of his failure, that the sales turnover is more than the impugned deposits does not hold water. The appellant is under an obligation to explain the credits- regardless of cash and cheque transactions. The onus is on the appellant and is more stringent when the impugned credits are by way of cash. 12.3.1. The appellant's shelter that bank statement cannot be treated as books of accounts does not absolve him of the responsibility to discharge his onus as he has stated to have maintained purchase and sales accounts; and if the appellant's argument that the impugned deposits are part of turnover were to be true, it is all the more incumbent on him to explain the entries to the satisfaction of the AO. The appellant has failed to do so even during the course of appeal proceedings. 12.3.2. The issue is to be decided is whether the addition under Section 68 had rightly been made or not. As per section 68, when a cash credit entry appears in the appellant's accounts, the appellant is under legal obligation to explain the same that too to the satisfaction of the A.O. In case the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d hence, this decision will apply in all those appeals. 8. The next issue i.e., addition on account of transfer from personal books amounting to Rs.1,50,000/- from M/s. Shantilal D. Jain HUF and loan of Rs.6,00,000/- from Late Shri Dharmichand Jain invested in M/s. Shree Battery House for assessment year 2007-08 in ITA Nos. 2357/Chny/2019 and the relevant ground raised reads as under:- 11. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the source of investment in M/s. Shree Battery House to the extent of Rs.1,50,000/- is the borrowing made by the appellant from M/s. Shantilal D Jain HUF. The Commissioner of Income Tax (Appeals) erred in confirming the order of the Assessing Officer in treating the said sum as unaccounted income. 8.1 Brief facts are that the assessee has transferred a sum of Rs.7.50 lakhs and invested in M/s. Shree Battery House, a firm of the assessee and explained the source that Rs.1,50,000/- is loan from M/s.Shanthilal D Jain HUF and Rs.6,00,000/- from his late father Shri Dharmichand Jain. As the assessee could not explain before AO, he made addition. Aggrieved, assessee preferred appeal before CIT(A). The CIT(A) conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has borrowed a sum of Rs.6 lakhs from Shri Dharmichand Jain but could not produce the details and could not explain the source, creditworthiness and identity of the party and therefore, made addition. Even the CIT(A) confirmed the action of AO by observing in para 16.3 as under:- 16.3 I have perused the materials and noticed that the appellant has not discharged his onus as to the cumulative satisfaction of identity, creditworthiness and genuineness of the impugned credit. Even in the records of Dharmichand, details as to the identity of the debtors are not available. In view of the appellant s failure to discharge initial burden of proof, the AO s action is upheld. The appellant s ground is dismissed. 9.2 We noted that this amount of Rs.6 lakhs from Shri Dharmichand Jain claimed by assessee but no details were filed to prove the identity, creditworthiness and genuineness of transaction. Even now before us the assessee could not discharge his onus to prove the transaction and therefore, we uphold the order of CIT(A) confirming the addition of Rs.6 lakhs. It is to be noted that this Rs.6 lakhs is doubly added by AO and we have already considered this issue in para 8 wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has raised following Ground Nos. 11 12 in assessment year 2008-09 in ITA No.2358/Chny/2019. 11. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the profit margin on sale of old batteries were always in the range of 0.5% to 1%. 12. For that the Commissioner of Income Tax (Appeals) erred in holding that the appellant earned 10% profit on sale of old batteries, that too on an arbitrary basis. 11.1 Brief facts are that the AO noted from the hard disk seized during the course of search that there are unverifiable purchases of scrap of batteries by the assessee and accordingly, the AO worked out the profit margin @ 30% in assessment year 2008-09, 37% in assessment year 2009-10 and 27 % in assessment year 2010-11 and made addition of trading in scrap as under:- A.Y. 2008-09 Rs.1.59,923/- A.Y. 2009-10 Rs.3,95,885/- A.Y. 2010-11 Rs.18,47,211/- The assessee before AO contended that the profit margin on sale of old batteries is in the range of 0.5% to 1% and accordingly the estimate should have been made. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to appreciate that the Assessing Officer ought not to have considered the gifts received by the appellant from his relatives as unexplained investment / unexplained credit. 14. For that the Commissioner of Income Tax (Appeals) failed to appreciate that gifts received from relatives is exempt from taxation. The Commissioner of Income Tax (Appeals) erred in disregarding the gift deeds produced by the appellant. 12.1 Brief facts are that the assessee purchased two properties for a total consideration of Rs.11.35 lakhs. The AO noted that the investment made in these properties is out of alleged gift receipt of Rs.8.50 lakhs from Shri Nemichand Jain and Rs.2.85 lakhs from Smt. Kanta Devi being the relatives of the assessee. The AO required the assessee to explain the sources of persons who gifted the amount and also evidences to prove the creditworthiness of the donor, genuineness of transaction and the identity of the donors. The assessee failed to explain and hence, the AO treated the entire unexplained investment or gift received from relatives as unexplained credit and added to the returned income of the assessee. Aggrieved, assessee preferred appeal before CIT(A). The CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue. The ground raised by assessee reads as under:- 10. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the Assessing Officer ought not to have added Rs.15,78,600/- as unexplained cash credit u/s.68. The provisions of section 68 cannot be invoked in the facts and circumstances of the case. 13.1 The AO in assessment year 2007-08 added a sum of Rs.6,00,000/-, in 2011-12 added a sum of Rs.15,78,600/-, in assessment year 2012-13 added Rs.13,50,000/- and in assessment year 2013-14 added Rs.37,00,000/- as unexplained cash credit. The assessee explained before the AO that the assessee claimed to have borrowed total amount of Rs.25.50 lakhs from Shri Dharmichand and others and the AO has accepted the loan from Shri Dharmichand amounting to Rs.10.50 lakhs and balance Rs.15,50 lakhs was added in the absence of any evidence in regard to identity of the party, creditworthiness and genuineness of transaction in term of section 68 of the Act. Aggrieved, assessee preferred appeal before CIT(A). The CIT(A) restricted the addition at Rs.13 lakhs by observing in para 16.6 as under:- 16.6. I have gone through the facts of the case. It is settled positi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asic ingredients have been proved then only the onus would have been treated as discharged whereas in the present case, the cumulative satisfaction of all three limbs has not established. The AO is right in bringing Rs.37,00,000/- to tax. 16.12.1. Similarly, in the case of credit purported to have been received during the year from Shantilal (HUF) amounting to Rs. 12,00,000/-, the appellant has not produced any evidence as to the genuineness and creditworthiness of the impugned transaction. Hence, The AO's action is tenable and is hence upheld. 16.12.2. In view of this finding, it is only corollary that the interest on such credits that have been upheld as -non-genuine is to be disallowed and added to the total income, which the AO has done. 16.12.3. In view of the foregoing discussion, the appellant's ground is dismissed. Aggrieved in all the three years, assessee came in appeal before the Tribunal. 13.3 We have heard rival contentions and gone through facts and circumstances of the case. Before us, ld.counsel for the assessee has not argued anything on merits. We noted that the ld.CIT(A) has very reasonably allowed set off of the carry forward add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appreciate that the Assessing Officer ought to have accepted the indirect expenditure claimed by the appellant. 8. For that the Commissioner of Income Tax (Appeals) erred in disallowing 50% of the disallowance made by the Assessing Officer towards indirect expenditure, that too on an arbitrary basis, disregarding the fact that the accounts of the appellant are duly audited u/s.44AB of the Income Tax Act, 1961 15.1 At the outset, it is noticed that this issue also arose in the 7 appeals of Shri Shanthilal D Jain and the same was dealt by the Bench and the order of CIT(A) restricting the disallowance at 50% of the amount disallowed by AO. The AO made disallowance at 25% of expenditure in all the assessment years and the CIT(A) restricted further 50% of the amount disallowed by the AO by observing in para 10.4 as under:- 10.4 On appraisal of the facts of the case, materials on record and the basis of the observations made supra on the impugned addition, I am of the view that the restriction of disallowance to 50% of the amount disallowed by the AO for the respective AYs under consideration would meet the ends of justice. Thus, the AO is directed to restrict the disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erters. Since the assessee was not maintaining any books of accounts, the AO called for the ledger account of the assessee entered in the books of M/s Exide Industries. On verification of the ledger account of the assessee in the books of M/s Exide Industries, it was noticed that, the appellant has received incentives apart from the cash discount while purchasing the batteries from M/s Exide Industries. But these incentives were not accounted for in his books. Instead, M/s Exide Industries adjusted these incentives against the scrap sold by the appellant. Further, the Exide Industries have received payments from the assessee only after adjusting the incentives and scrap values. Therefore, as the assessee did not account these incentives as his income, the same was calculated from the ledger account submitted by M/s Exide Industries and brought to tax. Therefore, in the absence of books of accounts, the AO did not find any alternate except to add the incentives. The appellant could not demonstrate that he had offered the incentives correctly to tax by adducing evidence even before the undersigned. In view of the appellant s failure, I hold that the AO s action on this issue is in or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... caveat that his estimate should be a reasonable one and should not be arbitrary. In this case, the AO has adopted the profit on studying business model that has not been elaborated or brought on record by the AO. The AO has adopted different profit ratio for three different AYs. The working has not been given. The rate adopted is high and is not reasonable. It is imperative to keep in view the business model of the appellant and that majority of its sale of old batteries [treated as scrap] is to M/s Exide. Yet, the profit element could not be brushed aside. After considering the totality of the facts and circumstances of the case, I am of the view that restriction of profit margin to the extent of 50% of the addition effected by the AO for the respective impugned years would meet the ends of justice. The appellant's ground is partly allowed. We noted that the Tribunal has estimated the profit rate for all the years at 10% in the case of Shri Shanthilal D Jain at para 10.1 10.2 supra, and hence taking a consistent view, we restrict the profit rate @ 10% for all the years and direct the AO accordingly. Hence, this common issue in these 4 appeals of assessee is partly allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The appellant has not demonstrated that the cash deposits have been included in the sale receipts by reconciling the entries in the bank account. The appellant has not brought any explanation with reference to the accounts which in any case he had not maintained completely except saying that he has included the cash deposits in his accounts. 12.4. In view of the failure on the part of the appellant and keeping in view the facts narrated above and hi absence of any supporting corroborative evidences, the A.O. was justified in making addition of peak cash credit of. Rs.7,34,400/-, Rs.3,73,800/-, Rs.10,00,000/- and Rs.39,43,450/- for AYs. 2010 to 2013-14. Accordingly, the order of the A.O. is confirmed on this ground. The appellant's ground is dismissed. 18.2 Even now before us, the assessee could not make any submission or could not produce any evidence to explain that these cash deposit in South Indian Bank during these 4 years is out of sale proceeds of battery. The addition made in each of the year is as under:- A.Y.2010-11 Rs.7,34,400 A.Y.2011-12 Rs.3,73,800 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based on only one seized document i.e., one hard disk containing tally details of indirect expenditure, incentives, peak cash credit, trading in scrap, unexplained investment, sundry loan creditors added u/s.68 of the Act, bogus purchases and bad debts. The ld.counsel for the assessee stated that the facts can be taken from the case of Smt. Sharmila S. Jain for the assessment year 2008-09 in ITA No.429/Chny/2020 and issue can be decided. 20. The first common issue in all these appeals of assessee in ITA Nos.429 to 434/CHNY/2020 for assessment year 2008-09 to 2013- 14 is as regards to the order of CIT(A) confirming the action of AO in making addition of indirect expenditure. For this, assessee has raised following Ground No.3:- 3. The Learned CIT erred in disallowing 50% of the indirect expenditure claimed, without any valid reasoning or evidence to the contrary and only on estimate basis without concrete material, while failing to realize the fact that the Appellant had only filed her return after her books were duly audited. 20.1 At the outset, it is noticed that this issue also arose in the 7 appeals of Shri Shanthilal D Jain and the same was dealt by the Bench a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... But these incentives were not accounted for in its books of account. Further, it was noted that M/s. Exide Industries adjusted these incentives against the scrap sold by the assessee and Exide Industries have received payments from the assessee only after adjusting the incentives and scrap values. The assessee before AO or before CIT(A) could not produce any evidence to contradict the findings of AO that the ledger account provided by M/s. Exide Industries is not correct or could not controvert the same. Hence, the CIT(A) confirmed the action of AO in making addition of incentive by observing in para 11.3 as under:- 11.3 I have given careful consideration to the issue on hand. The assessee was engaged in the trade of batteries and Inverters. Since the assessee was not maintaining any books of accounts, the AO called for the ledger account of the assessee entered in the books of M/s Exide Industries. On verification of the ledger account of the assessee in the books of M/s Exide Industries, it was noticed that, the appellant has received incentives apart from the cash discount while purchasing the batteries from M/s Exide Industries. But these incentives were not accounted for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o assessment years 2008-09, 2009-10, 2011-12 2013-14 is out of sale proceeds accounted for, but the assessee neither before AO nor before CIT(A) has not filed any evidence or produced the books of accounts. In the absence of books of accounts, the AO made addition and CIT(A) confirmed the addition vide para 12.3.2 to 12.4 as under:- 12.3.2. The issue is to be decided is whether the addition under Section 68 had rightly been made or not. As per section 68, when a cash credit entry appears in the appellant's accounts, the appellant is under legal obligation to explain the same that too to the satisfaction of the A.O. In case the appellant did not offer any explanation or fails to tender evidence or burkes an enquiry then the A.O. can hold that income as income from undisclosed sources. It is thus, imperative for the appellant to prove prima facie the transactions, which resulted in cash credit in his account. Such proof includes proof of identity, capacity of creditors to advance and genuineness of the transaction. In case these three basic ingredients have been proved then only the onus would have been treated as discharged whereas in the present case the cumulative satis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee as well as ld. CIT-DR agreed that this issue of trading in scrap i.e., profit margin on sale of old batteries is a recurring issue in all 3 assessees cases and the issue has been dealt with in the case of Shri Shanthilal D Jain at para 10.1 10.2, wherein the order of CIT(A) estimating profit rate at the 10% is confirmed. In the present case, the AO has worked out the profit rate @ 30% for all the 4 assessment years 2010-11 to 2013-14 but the CIT(A) restricted the profit rate @ 50% of the estimate made by the AO by observing in para 14.3 as under:- 14.3. I have perused the findings of the AO and the submissions made before me by the appellant. The appellant has not discharged his onus of demonstrating that he had earned certain profits from sale of scrap by maintaining proper, regular and complete books of account and he further needs to substantiate such claims/ results by advancing necessary primary documents. In this case the appellant has clearly failed to substantiate the outcome of scrap sales and as to the quantum of profit/loss. In the circumstances, the AO is permissible to make estimate profits as held in a catena of judicial decisions of course subject to a ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to M/s. Shree Batteries, the assessee asked the assessee to explain the sources. Since, the assessee did not produce any explanation or evidence for the source of this amount of Rs.10 lakhs, he treated the same as unexplained cash credit u/s.68 of the Act. Aggrieved assessee preferred appeal before CIT(A). The CIT(A) also confirmed the action of AO vide para 19.3 as under:- 19.3 I have gone through the facts of the case and material available on record. The appellant did not produce any explanation supported by documentary evidence relating to the source for the impugned transfer during the course of assessment proceedings. It is relevant to mention that the appellant could not and did not produce any evidence on the subject matter even before the undersigned. In view of the appellant s failure, I am of the view that the addition deserves to be upheld. The appellant s ground is dismissed. Aggrieved, now assessee is in appeal before the Tribunal. 24.2 We have heard rival contentions and gone through the facts and circumstances of the case. The assessee before CIT(A) and even now before us contended that there was no transfer as such, as stated by the AO but this Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated as infructuous. 25. The next common issue in these two appeals of assessee in ITA Nos. 429 430/Chny/2019 for assessment years 2008-09 2009- 10 is as regards to the order of CIT(A) confirming the action of AO in making addition of sundry loan creditors of Rs.45,52,182/- in assessment year 2008-09 and Rs.49,40,850/- in assessment year 2009-10. For this, assessee has raised following Ground No.6 in AY 2008-09, similarly the assessee has raised following Ground No.4 in AY 2009-10:- AY 2008-09: 6. Without prejudice to the above the Learned Assessing Officer and the Learned CIT erred in treating the peak credit as unexplained cash credits while having already treated the sum of Rs.45,52,182/- of the loan and interest as unexplained credit which would have been part of the peak credit hence tantamounting to double addition of the sum of money. AY 2009-10 4. The Learned CIT erred in treating the loan of Rs.48,00,000/- and it s interest quotient of Rs.1,40,850/- as unexplained credit in the hands of the Appellant. 25.1 Brief facts are that the AO noted from the seized material that there is a sundry loan credit of Rs.40 lakhs for assessment year 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id not produce any evidence either in regard to sundry creditor loan of Rs.40 lakhs in assessment year 2008-09 or fresh credit of Rs.8 lakhs in assessment year 2009-10, the interest of Rs.5,52,182/- for assessment year 2008-09 and Rs.1,40,850/- in assessment year 2009-10 which is consequential. In the absence of any details, we have no alternative except to confirm the order of CIT(A). This common issue of assessee s appeals in both the years is dismissed. 26. The next issue in ITA No.431/Chny/2020 for assessment year 2010-11 is as regards to the order of CIT(A) confirming the action of AO in regard to extra debit to purchase of Rs.27,72,435/-. For this assessee has raised following Ground No.7:- 7. The Learned Assessing Officer and the Learned CIT erred in disallowing the sum of Rs.27,72,435/- under the head inflation of expenditure. 26.1 Brief facts are that the AO on verification of profit and loss account as per seized material noted that the assessee has debited a sum of Rs.27,72,435/- as purchase of scrap over and above the purchase of Rs.21,23,984/- which includes in the total purchases of Rs.1,78,03,291/-. The assessee before AO explained that the purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. 438/CHNY/2020 2011-12 12. 439/CHNY/2020 2012-13 13. 440/CHNY/2020 2013-14 14. 2591/CHNY/2019 2010-11 SHREE BATTERY HOUSE 15. 2592/CHNY/2019 2011-12 16. 2593/CHNY/2019 2012-13 17. 2594/CHNY/2019 2013-14 27.1 The only issue in the above mentioned 17 appeals is as regards to the order of CIT(A) confirming the action of AO in levying penalty u/s.271A of the Act for non-maintenance of books of account. The facts and circumstances are identical in all the appeals and the AO in all the appeals for all assessment years in appeals levied penalty u/s.271A of the Act of Rs.25,000/- in each of the years. The AO levied penalty despite the fact that the assessees contended that the assessees have maintained books of accounts and got them aud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant except by resorting to disallowance on the basis of certain heuristics with reference to the expenditure booked and claimed to have incurred in respect of indirect expenditure and by resorting to estimation of profit on scrap sales. Similar is the case with certain other claims that he appellant could not substantiate his claims in the assessment proceedings. It becomes an admitted case that books of account were not maintained and even in present proceedings where the issue was with respect to maintaining of the books of account by the assessee. 7.3. The appellant's contention that the AO had not properly appreciated the averments given by the appellant is misconceived as it has been categorically deposed that no books of account were maintained except purchase and sales ledgers. No accounts to substantiate the indirect expenditure have been maintained. The AO could not keep track of the correctness of the expenditures said to have been incurred by the appellant as the accounts were incorrect and incomplete as recorded by the AO in the assessment order as well as in the penalty order. The appellant's defence that he did not personally maintain the books and that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is fortified by the decision of the Hon ble High Court of Jharkhand in the case of A One Batteries (P) Ltd Vs Deputy Commissioner of Income-tax, Special Range, Ranchi [2011] 11 taxmann.com 90 (Jharkhand). The appellant s grounds are accordingly dismissed. 27.2 Now before us, the ld.counsel for the assessee contended that the assessee has not maintained any books of account and hence, he agreed that penalty levied u/s.271A of the Act by the AO can be confirmed. The ld.Senior DR relied on the order of AO and that of the CIT(A). 27.3 After hearing rival contentions and going through the case records, we noted that only seized material found during the course of search is a hard disk i.e., document in the form of incomplete tally package inventories as ANN/SR/RJ/hard disc/S dated 22.5.2012 having bearing on the determination of the total income were recovered. This is incomplete tally package of documents i.e., sales, purchase but no books of account are maintained. Even now before us, the ld.counsel admitted that there is no books of account and assessee could not produce any books of account before us despite specific opportunity given. Hence, we are of the view that the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28.2 Before us, ld.counsel for the assessee made only one statement that the Hon ble Allahabad High Court in the case of CIT vs. S.K. Gupta Co., (2010) 322 ITR 86, Hon ble Madhya Pradesh High Court in the case of Bharat Construction Co. vs. ITO, (1999) 153 CTR 414 and Hon ble Gauhati High Court in the case of Surajmal Parsuram Todi vs. CIT, (1996) 222 ITR 691 has categorically held that once books of account are not maintained and consequently penalty u/s.271A of the Act is levied and confirmed, no penalty u/s.271B of the Act for failure to get the accounts audited u/s.44AB of the Act be levied. The Hon ble Gauhati High Court in the case of Surajmal Parsuram Todi, supra, held as under:- We have gone through the provisions of ss. 44AA, 44AB, 271A and 271B of the Act. Maintenance of accounts is envisaged under s. 44AA and on failure to do so the assessee shall be guilty and liable to be penalised under s. 271A. Even after maintenance of books of account the obligation of the assessee does not come to an end. He is required to do something more, i.e., by getting the books of account audited by an accountant. But when a person commits an offence by not maintaining the book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2363/CHNY/2019 2013-14 Dismissed 2389/CHNY/2019 2007-08 Dismissed 2390/CHNY/2019 2008-09 Dismissed 2391/CHNY/2019 2009-10 Dismissed 2392/CHNY/2019 2010-11 Dismissed 2393/CHNY/2019 2011-12 Dismissed 2394/CHNY/2019 2012-13 Dismissed 2395/CHNY/2019 2013-14 Dismissed 2396/CHNY/2019 2007-08 Allowed 2397/CHNY/2019 2008-09 Allowed 2398/CHNY/2019 2009-10 Allowed 2399/CHNY/2019 2010-11 Allowed 2400/CHNY/2019 2011-12 Allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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