9911796707
TMI Blog2023 (11) TMI 1044X X X X Extracts X X X X X X X X Extracts X X X X ..... tors of Rs. 1,71,95,480/- explains the source of the investment, as the assessee has not furnished the details of creditors, such as names, addresses, PANs, I.T. particulars, confirmation letters of the creditors, mode of receipt of the amounts, creditworthiness of the creditors in respect of the credit of Rs. 1,71,95,480/-, nor the basis for capital balance of Rs. 76,64,320/-. 2.2. The Id. CIT(A) failed to note that the source for the unexplained investment of Rs. 2,09,48,927- has not been explained by the assessee with reference to cash flow statement with appropriate evidence." As is evident, the revenue is aggrieved by deletion of addition made by Ld. AO u/s 69 of the Act. 2. The Registry has noted delay of 17 days in the appeal, the condonation of which has been sought by Ld. CIT-DR. The Ld. AR did not object to the condonation of delay. Considering the period of delay, the delay is condoned and the appeal is admitted for adjudication on merits. 3. The Ld. CIT-DR advance argument and submitted that the impugned addition was made on the basis of seized material found during the course of search action on the assessee. The Ld. CIT-DR submitted that the assessee did not file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n amount of Rs. 19.80 Lacs being cash seized from the assessee and another sum of Rs. 27.26 Lacs as offered by the assessee on account of stock, the balance amount of Rs. 209.48 Lacs was added to the income of the assessee u/s 69 and 69A of the Act. Appellate Proceedings 5.1 The assessee assailed the impugned additions with partial success before Ld. CIT(A). During appellate proceedings, the assessee submitted that the books of accounts were not maintained properly. All the transactions were noted in the form of loose sheets. It was also submitted that the balance sheet was drawn incorporating the closing balances of 11-05-2016 and the income was arrived at Rs. 50.67 Lacs which was admitted in the return of income. The Ld. AO only considered those figures which were favorable to the department. It was further submitted that Balance Sheet as on 11-05-2016 was available in the seized document. On the date of search in the evening, the cash was found for Rs. 19.80 Lacs and stock was computed as Rs. 27.26 Lacs. The reason for differences in balances was that the assessee was carrying on the business activity from the morning onwards till the time of search. Based on seized material a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e loose sheets. Ans. There are paper noting regarding foreign exchange transactions. The left side of the noting indicates what has been received and right side indicates what has been given. The numbers mentioned in the paper notings will sometimes be in Indian currency and sometimes in foreign currency. The back side shows the rate at which the foreign currencies are purchased." The appellant has explained the nature of transaction mentioned in the seized documents. It is settled position of law that there is presumption u/s 132(4A) of the Act and the said presumption cannot be extended beyond its legitimate field. It is relevant to observe that the appellant has to explain the entries found in a document that was recovered during search proceedings and it is the equal responsibility of the AO to establish specific nexus between the narration in the jottings and the accounts. In the instant case, the appellant has stated that he was carrying on trading in forex and that the seized documents represented a kind of balance sheet inasmuch as the jottings represented both the receivables and the liabilities including the capital and the creditors that go to explain the receivables ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee till the date of search. It was noted that Ld. AO did not brought any adverse inference against the same. Further, the seized document was to be considered as a whole and Ld. AO could not resort to cherry picking. The Ld. AO relied on the entries to work out the impugned additions but conveniently chose to ignore the liabilities that go on to explain the sources thereof. When assets side is taken to determine the income of the assessee, it was incumbent for Ld. AO to equally consider the liability side as well since asset in excess of liability alone would represent the income of the assessee. The document as a whole was to be considered and not in a piecemeal fashion as done by Ld. AO. Therefore, the impugned addition was deleted. 5.4 Proceeding further, Ld. CIT(A) noted that the assessee's capital as on 11-05-2016 was Rs. 77.19 Lacs and as on 12-05-2016, it was shown as Rs. 60.42 Lacs and therefore, there was discrepancy to the extent of Rs. 16.76 Lacs. The assessee also did not reflect any income for rest of the period after search which was to be estimated @15000/- per month for 11 months. Accordingly, Ld. CIT(A) made enhancement and directed Ld. AO to add back these two ..... X X X X Extracts X X X X X X X X Extracts X X X X
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