TMI Blog2023 (3) TMI 851X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee has been found. The assessee cannot substantiate more than that that no such party in the name of XYZ Private Limited exist in the registrar of companies. Allegation of the revenue, that non-existence of XYZ Private Limited in the ROC does not support the case of the assessee, are rejected. In the preceding assessment year the turnover of the assessee was of Rs.4.43 crore, and in the year under consideration turnover was only of ₹2.5 Crores, therefore any such attempt for increasing the turnover for the purpose of availing bank loan by an accountant or other person cannot be ruled out, though it is an illegal act and Bank Authorities should take note of this. Thus it is the AO, who was required to establish whether those were the cash sales as claimed by him and not the fictitious sales as claimed by the assessee. In absence of any such evidence of the cash sales, the addition confirmed by the Ld. CIT(A) is not justified and accordingly, we set aside the finding of the Ld. CIT(A) on the issue in dispute. Appeal of the assessee is allowed. - ITA No. 4295/MUM/2016 - - - Dated:- 13-2-2023 - Shri Om Prakash Kant (Accountant Member) And Shri Sandeep Singh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee filed return of income on 24/09/2010 declaring total income of ₹34,80,500/-for the year under consideration. The return of income filed by the assessee was selected for scrutiny and statutory notices under the Income-tax Act, 1961 (in short the Act ), were issued and complied with. 4.1 During assessment proceedings, the Assessing Officer noticed that a survey action under section 133A of the Act was conducted in the case of the assessee on 04/03/2010. The survey team mainly observed two discrepancies. Firstly, cash balance in the books of accounts maintained in the computer was of ₹5,77,411/-, whereas actual cash of ₹80,500/- was found and therefore there was difference of cash of rupees 4,96,911/-Secondly, net profit of ₹1,57,05,468/-was shown in the profit and loss account generated at the time of the survey, but when being questioned as why the advance tax was not paid on the said profit earned , the director Sh Sahir Siraj Hamid in his statement dated 04/03/2010 stated that actual profit must had been less due to certain expenses like depreciation, interest etc. not debited to the profit loss account, but agreed to pay an amount of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, the Director of the Company was not able to explain and had shifted his responsibility upon the Accountant on the ground that his Accountant had gone to his native place and all the necessary evidences would be given after his return. When initial explanatior. was that this much profit could not be there the business receipts was considerably less during the year and further it was clarified that such profit of Rs. 1,57,05,468/- would be reduced after claiming depreciation and other expenditure which were yet to be entered. However, during the course of survey proceedings, the Director of the Company has admitted as under :- ...to buy peace of mind and in order to avoid inconvenience, I am prepared to pay an amount of Rs.25 lacs towards the tax liability 3.4. Subsequently on 15.03.2010, the Director has stated that he had discussed the matter that his Accountant who has stated that profit was on higher side due to sale entry made in the name of M/s. XYZ at the end of every month from April, 2009 to January, 2010. Mis. XYZ is not an existing party as there is a difference in Si.Nos. of Sales Bills of regular customers and Sale Bills shown in the name of Ms.XYZ. The con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in profit loss account as on 05.03.2010 expenditure like depreciation, provision entry, interest and other expenditure was to be claimed. It means profit shown was correct and only routine expenditure was to be claimed which Appellant had claimed. Subsequently. therefore, the profit unearthed to the extent of Rs.1,57,05,468/- cannot be substituted. As regard various arguments, it is pertinent to mention that none of the arguments is tenable. In written submission, the Appellant has shown name of alleged party as XYZ Pvt. Ltd. whereas throughout the proceedings and in his statement the Director has referred to only MIs. XYZ and not MIs. XYZ Put.Ltd. . Therefore, there is a twisting of fact. 3.7. It is meaningless to argue that name of this party was not appearing in the register of ROC. Further, I find no merit in the argument that the Assessing Officer has not considered the explanation of the Appellant. It is not necessary for the Assessing Officer to accept the explanation which is not acceptable at all. The Ld. Assessing Officer has rightly rejected the cooked-up story claimed to be explanation. Further, it is important to point out that the addition has not bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the lower authorities submitted that during the course of the survey, the assessee did not submit the fact of fictitious bills but only after 11 days of the survey, the assessee for the first time came out with this explanation which is an afterthought only. He submitted that filing copy of bills impounded during survey by the Ld. counsel of the assessee is of no assistance and the difference amount has been correctly assessed by the learned AO as undisclosed income of the assessee. 9. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. On the issue in dispute, the assessee has contended that sales of ₹81,07,050/which was recorded in the books maintained on computer as sales to XYZ, was a fictitious entry for the purpose of availing bank loan and there being no real sale, the addition made by the Assessing Officer for the same is not justified. On the contrary, the Assessing Officer is of the view that same are actually sales made in cash by the assessee, whereas recorded in the name of XYZ only ,therefore the claim of the assessee for removing the amount of ₹81,07,050/from the sales cannot be ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e series of bills recorded in respect of the XYZ is different from the series in respect of the undisputed sales, which also indicate that those are not part of regular sales. Thirdly, when the assessee himself is submitting that those sales are fictitious sales, then onus is on the Assessing Officer to establish whether those are cash sales. The income tax authorities have carried out survey at the premises of the assessee and no evidence suggesting cash sales by the assessee has been found. The assessee cannot substantiate more than that that no such party in the name of XYZ Private Limited exist in the registrar of companies. As far as the contention of the Assessing Officer that during statement recorded on 15/03/2010, the director stated only XYZ whereas in submission during assessment proceeding, the party s name was mentioned as XYZ Private Limited, we are of the opinion that name of the said fictitious party was entered in the books of account of the assessee, and the income tax authorities must have impounded soft copy of the same. The Ld. DR was asked to produce sales ledger of ₹81,07,050/- appearing in the books of accounts found during the course of the survey, bu ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
