TMI Blog2022 (4) TMI 1481X X X X Extracts X X X X X X X X Extracts X X X X ..... ffered by him is found not satisfactory, the sum credited may be charged to income tax as the income of the assessee of that previous year. In this case, the director of the assessee company made disclosure on the basis of documents found and impounded during the course of survey, which is admitted the AO in the assessment order itself. The Director further stated that the income was earning from the project named Florence Fiona. The income from that project has been assessed as business income. Therefore, the additional income credited by the assessee is from the business activities. The assessee has offered explanation and AO had not given any reason for finding it non-satisfactory. When the disclosure was based on documents found during the course of survey, additional income is disclosed on the basis of such documents and on such additional income was stated as earned from specific project, the assessee's explanation cannot be held as non-satisfactory. Therefore, ld CIT(A) observed that the findings of the AO considering the same u/s. 68 r.w.s 115BBE of the Act is not found justified. Set off of carried forward of losses on account of unabsorbed depreciation - as con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) from the A.O. 3. It is, therefore, prayed that the order the Ld. CIT(A)-4, Surat may be set aside and that of the AO may be restored to the above extent. 4. The assessee craves leave to add, alter, amend and/or withdraw any ground(s) of appeal either before or during the course of hearing of the appeal. 4. Brief facts as discernable from the orders of lower authorities are that a search action u/s 132 of the Income Tax Act was carried out in the case of Param Group at its office. Further, a survey u/s 133A was also carried out at business premises of the assessee company on 03.09.2015 by the investigation wing. The company is engaged in the business of different segments like real estate, export, manufacturing and generation of power. The company has also income from letting out of the properties i.e. Rent. The separate accounts were maintained for different divisions by the assessee. During the course of search action u/s 132 of the Act carried out in the case of M/s Param Properties of Surat, on 04.09.2015, seizure of various incriminating evidences possessed by it, corresponding to facilitation of unaccounted cash transactions of its clients, financiers, other brok ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny entries in the seized cash book by third parties attended in response to summons and admittance that the entries in the cash book of M/s Param Properties do correspond to the transactions made by them and (v) nothing has been put forth by the partners of Param Properties at any time, even in the form of an argument, till date, implying that there are incorrect entries in the said cash book. In respect of Annexure BS-50 Page No. 16, it was stated by Shri Agam V. Vadecha in his statement recorded on oath on 16.10.2015 that the same is the copies of original diary of Flat No. H-801 of the project Florence project. Thus, assessing officer noted that sanctity and correctness of the documents seized from the premises of the assessee firm during the search action crystal clearly stands established. 6. In view of the above, the assesse vide notice u/s 142(1) dated 04.09.2017 and vide show cause notice dated 04.12.2017, was asked to furnish the explanation in respect of seized material and was show caused as to why, in absence of proper satisfactory explanation, transactions reflecting in seized material should not be treated as unexplained cash transactions (receipts and payments) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer, the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition. Aggrieved, the Revenue is in appeal before us. 10. Shri H. P. Meena, Learned CIT(DR) for the Revenue vehemently argued that in respect of Annexure BS-50 Page No. 16, it was stated by Shri Agam V. Vadecha in his statement recorded on oath on 16.10.2015 that the same is the copies of original diary of Flat No. H-801 of the project Florence project. Thus, sanctity and correctness of the documents seized from the premises of the assessee firm during the search action crystal clearly stands established. Further, during the course of post search enquiry, summons u/s 131 of the Act was issued to Shri Naresh Nemichand Shah, key person and Director of M/s Enn Enn Corporation Ltd and his statement was recorded on oath on 23.10.15 wherein he admitted that these pages pertain to flat N. A-702 of Florence project. He also admitted the amount recorded in this diary is not recorded in his books of account. He further stated that he had already disclosed the on money received in said project for A.Y. 2012-13 and 2016-17 during the course of survey proceedings carried out in his premises in A.Y. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04.09.2015, incriminating documents were found and seized. In the said documents, details of flat no. A-702 of Florence Project undertaken by the assessee Company, was written. Statement of Shri Aagam Vadecha, was record on the documents found during the course of search. As per these documents, customer paid on money in cash for purchase of flat from the assessee. Statement of Shri Naresh N. Shah, Director of the assessee company was recorded on 23.10.2015 and during the statement he admitted the document found as related to flat no. A-702, Florence project undertaken by the assessee company. Shri Naresh N. Shah further filed a letter confirming that he is disclosing additional profit of Rs.l4.85 Crores in the hands of the assessee for A.Y. 2016-17 for Florence Fiona Project. He made disclosure of additional income of Rs.6.15 Crore in his individual hands from the same project. Further, 4 Crore was disclosed as income on sale of plots. With these facts, the AO held that the assessee had received cash of Rs.1,94,75,000/-for Florence Project for A.Y. 2014-15 and Rs.38 Lakh for A.Y. 2011-12, during the years under consideration and the same has not been shown in regular returns fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I.T. Act as business income without appreciating the fact that the assessee failed to explain the source of such cash credits and more particularly the assessee could not provide even the identity of the persons from whom the above amount of Rs.14,85,00,000/- was received. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in allowing the carried forward unabsorbed depreciation against the income of the current year by relying on the judgment of the Hon'ble High Court of Gujarat in the case of CIT-II V/s. Shipla Dyeing Printing Mills (P) Ltd. (2013) 35.Taxmann.com.3(Guj.) without appreciating the fact that the said judgment of the Hon'ble High Court of Gujarat deals with the set-off current year business loss with the income declared during the survey and not that of the carried forward unabsorbed depreciation. 3. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in allowing the carried forward unabsorbed depreciation against the income assessed u/s 68 r.w.s. 115BBE of the I.T. Act without appreciating the fact that depreciation allowance (whether current or carried forward) is not allowabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on the basis of documents found and impounded during the course of survey, which is admitted the AO in the assessment order itself. The Director further stated that the income was earning from the project named Florence Fiona. The income from that project has been assessed as business income. Therefore, the additional income credited by the assessee is from the business activities. The assessee has offered explanation and AO had not given any reason for finding it non-satisfactory. When the disclosure was based on documents found during the course of survey, additional income is disclosed on the basis of such documents and on such additional income was stated as earned from specific project, the assessee's explanation cannot be held as non-satisfactory. Therefore, ld CIT(A) observed that the findings of the AO considering the same u/s. 68 r.w.s 115BBE of the Act is not found justified. 17. Next issue relates to not allowing set off of carried forward of losses on account of unabsorbed depreciation. The ld Counsel contended that it has carried forward unabsorbed depreciation of previous years, which was claimed in the return of income as per provisions of the Act but the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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