TMI Blog2023 (4) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... Mehak Enterprises which is corroborated by the affidavit of Shri Sanjeev Angra, the same cannot be held against the assessee and thus, the addition cannot be made in the hands of the assessee. In the result, the ground of appeal is allowed. Addition made on estimate basis for enhancing the N.P. rate - Admittedly, the facts and circumstances of the case are identical to A.Y 2009-10 as can be seen from the order of the lower authorities, therefore, the order and the findings of the Coordinate Bench in assessee s own case for A.Y 2009-10 [ 2016 (12) TMI 747 - ITAT CHANDIGARH] the addition so made by estimating a higher NP rate is directed to be deleted. The ground of appeal is thus allowed in favour of the assessee. Addition u/s 68 - addition on the basis of seized documents - HELD THAT:- On perusal of records, we find that the payment of Rs 9,30,000/- relates to sale of flats which have been sold by the assessee to Goyal brothers. The sale deeds in respect of these flats were registered on 24/08/2007 and all the payments totaling to 59,30,000/- including the payment of 9,30,000/- was received prior to registration of the sale deed. Therefore, we agree with the contention o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d acceptable to the AO. As per the AO, the assessee has failed to reconcile the expenses recorded on page no. 20 of the siezed documents with his regular books of account. It has been further held by the AO that the assessee has not brought any material fact on record to prove that the expenses incurred for installation of kitchen accessories on the said documents did not related to this project. Hence the expenses of Rs. 7,40,704/- as recorded in the said document was treated as unexplained expenditure under section 69C of the Act. 5. Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A) who confirmed the said addition. Against the said findings the assessee is in appeal before us. 6. During the course of hearing, the Ld. AR referred to the explanation submitted to the AO vide letter dt. 25/11/2011 and 07/12/2011. It was submitted that the details on the seized papers is apparently a rough estimate for extra work in few kitchens of Power House project which was undertaken by the owner of the flats themselves through one Sanjeev Angra Parnter of Mehak Enterprises who directly did this work for owners and no connection with the assessee. 6.1 It wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the documents are neither written by the assessee nor its employees and neither was it related to any project carried out by the assessee and its members. However, the AO observed that on the top of the document Power House has been mentioned which clearly implies that the said document was related to the Power House project of Sh. Pawan Sahni, carried out by him in individual capacity. Consequently as the assessee to reconcile the entries recorded on the said document with regular books of accounts, the amount of Rs. 7,40,704/- was treated as unexplained expenditure u/s 69C and added back in the hands of the assessee. In appeal, the assessee reiterated that the document did not belong to him, stating that the affidavit of Shri Angra filed during the assessment proceedings, deposing that the document belonged to him was ignored by the AO. Be that as it may, I find that the affidavit referred to states that Shri Angra is a partner of M/s Mehak Enterprises of near DC Office, Solan. On the other hand the written submission of the assessee dated 07.12.2011, the supplier who carried out the kitchen accessories work is stated to be M/s Koncept Kitchens and Decorators, Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regular kitchen work was done by the assessee through Koncept Kitchen and Decorators, and the specific kitchen work was got done by the respective customers through M/s Mehak Enterprises which the assessee might have facilitated. The affidavit of Shri Sanjeev Angra, the partner of M/s Mehak Enterprises is on record at page 15 of the paperbook where he admits this fact and also the contents of the paper which has been found and impounded and the fact that the payments have been made directly by the Customers. Nothing has been brought on record to rebut the same. Though the paper has been found from the premises of the assessee, where the assessee has given an explanation that the work has been got done by the customers through M/s Mehak Enterprises which is corroborated by the affidavit of Shri Sanjeev Angra, the same cannot be held against the assessee and thus, the addition cannot be made in the hands of the assessee. In the result, the ground of appeal is allowed. 8. In Ground No. 2, the assessee has challenging the sustenance of addition of Rs. 4,48,754/-. 9. In this regard, it was submitted that this addition has been made by the AO purely on estimate basis for enhancing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial year 2008-09 and 2009-10. In the absence of depreciation in financial year 2008-09 and 2009-10, the net profit ratio would have been 2.78% and 4.85% respectively which is almost same as in earlier years. 25(i) It was further submitted that later on projects of the assessee were at partial completion stage and sales have been booked and the fixed expenses such as staff salary, electricity expenses etc. cannot be avoided as they occur through out the year. Therefore, net profit shown by the assessee is correct. The Assessing Officer, however, did not accept explanation of the assessee and noted that NP rate remained high in earlier year is not acceptable and by rejecting the Profit Loss Account, recasted the profit and by applying average net profit rate of two years, made above addition of Rs. 18,77,319/-. 26. The ld. CIT(Appeals) also confirmed the addition and dismissed this ground of appeal of the assessee. 27. After considering rival submissions, we are of the view addition is wholly unjustified. The ld. counsel for the assessee contended that Assessing Officer has not rejected the books of account and no specific defects in maintenance of the books of accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We have heard the rival contentions and purused the material available on record. Admittedly, the facts and circumstances of the case are identical to A.Y 2009-10 as can be seen from the order of the lower authorities, therefore, the order and the findings of the Coordinate Bench in assessee s own case for A.Y 2009-10, the addition so made by estimating a higher NP rate is directed to be deleted. The ground of appeal is thus allowed in favour of the assessee. 13. In Ground No. 3, the assessee has challenged the sustenance of addition of Rs. 9,30,000/- under section 68 of the Act. 14. In this regard, it was submitted by the ld R during the course of hearing that the AO has made an addition of Rs. 72,86,000/- on the basis of seized documents referred as Annexure A-2 page 58 59 out of which 63,56,000/- has been deleted by the Ld. CIT(A) and the remaining amount of Rs. 9,30,000/- has been sustained by the Ld. CIT(A) against which the assessee is in appeal before the Tribunal. It was submitted that the seized paper shows that the working of sale of five flats by the assessee to Shri Pankaj Goel and Shri Neeraj Goel for which the payments were received as under: Rs. 50,00, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts totaling to 59,30,000/- including the payment of 9,30,000/- was received prior to registration of the sale deed. Therefore, we agree with the contention of the ld AR that the payment of Rs. 9,30,000/- can only be considered in A.Y 2008-09 and not in the impugned assessment year 2010-11. The addition so made in the impugned assessment year is therefore directed to be deleted. 19. In the result, the appeal of the assessee is allowed. ITA No. 1402/Chd/2016 20. This appeal is against the levy of penalty under section 271AAA for A.Y. 2010-11 wherein the assessee has taken the following grounds of appeal: 1. That under the facts and circumstances, penalty levied u/s. 271 AAA / 271 (1) (c) is unsustainable in law as well as on merits 2. That the show cause notice issued is fatally defective thereby making the whole order illegal and un- sustainable. 3. That under the facts and circumstances, penalty levied on amount of Rs. 25 lacs surrendered as WIP (work - in - progress) u/s. 132 (4) of the I.T. Act is un - sustainable in law as well as on merits, more so the same was declared in the return, assessed also and all conditions of Sec. 271 AAA (2) stands sati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein the Ld. CIT(A) deleted the same vide his order dt. 09/06/2017 and which stands accepted by the Department. It was submitted that the facts and circumstances of the case are exactly identical and therefore the findings of the Ld. CIT(A) are equally applicable in the instant case and following the same, the penalty levied for the impugned assessment year should be directed to be deleted. 23. It was further submitted that in the whole penalty order upto Para-34, the A.O. has copied the assessment order and has mentioned for initiation of penalty proceedings only. The findings of levy of penalty are in few lines in Para-35 (last Pg.) only. These findings are in extremely generalized manner. He has simply stated the law that the onus was on the assessee to prove the manner of deriving additional undisclosed income and to be corroborated with documentary evidence. However the A.O. has not mentioned as to how he has not discharge his onus. It was submitted that the assessee, duly disclosed the manner i.e. on account of variation of work in progress , which duly stood accepted by the A.O. on being self declared in the ITR. The assessee duly satisfied all the conditions of Sec.271A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition cannot be made under section 68 of the Act. Consequently no penalty can be levied on the addition made under section 68 of the Act. Thirdly, it was submitted that the figures of Rs. 9,30,000/- does not relate to A.Y. 2010-11 but A.Y. 2008-09 and therefore it cannot be subjected to penalty under section 271AAA of the Act in A.Y. 2010-11. It was further submitted that this amount does not represent any undisclosed income as per the Explanation A to Section 271AAA and therefore cannot be subjected to levy of penalty under section 271AAA of the Act. 28. Per contra, the Ld. DR relied on the order of the lower authorities and our reference was drawn to the findings of the AO and the same reads as under: 35. In view of the above, it is not found acceptable and sufficient to hold the assessee as not fit for levying of penalty u/s 271AAA. The onus was on the assessee to prove and specify the manner in which he had; derived the additional undisclosed income. The submission had to be corroborated with documentary evidence. Further, the books of accounts of the assessee were not complete at the time of search. Mere passing of entries in books of accounts is not sufficient to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any undisclosed income of the specified previous year has been found during the course of search in case of the assessee and the term Undisclosed income has been defined under explanation to section 271AAA of the Act and any undisclosed so found thus has to satisfy the parameters laid down therein. Further, under sub-section (2), it has been provided that no penalty under sub-section (1) shall be levied provided the assessee satisfies the conditions specified therein. In the instant case, we find that the AO has passed a very creptic and non-speaking order as so the satisfaction of the conditions for levy of penalty u/s 271AAA of the Act. Secondly, there is no finding that the conditions under sub-section (2) of section 271AAA are satisfied or not satisfied in the instant case. Similarly, we donot see any clear finding recorded by the ld CIT(A). The ld AR has raised various contentions as we have noted above and have also referred to the order of the ld CIT(A) for the immediately preceding year 2009-10. However, we are of the considered view that the matter needs to be examined by the AO afresh and he is directed to pass a speaking out in this regard taking into considerations v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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