TMI Blog2023 (11) TMI 1044X X X X Extracts X X X X X X X X Extracts X X X X ..... ed day wise considering the transaction of the each of the day. Therefore, the most relevant Balance Sheet, in our considered opinion, would be the Balance Sheet as available on latest date i.e., on 11-05-2016. CIT-DR has argued that there is not substantial difference in the Balance Sheet. Even if the said argument is accepted, we find that AO is only accepting a part of the Balance Sheet and putting onus on assessee to substantiate the other part of the Balance Sheet. The liability side of the Balance Sheet contains the capital account of the assessee and details of sundry creditors which constitute source of sundry debtors, stock and cash in hand. A presumption would arise that the documents belong to the assessee and the entries made therein are correct and true. Therefore, the assessee could not be obligated to substantiate only one part of the Balance Sheet while accepting the other part of the Balance Sheet which is favorable to the department. The approach of Ld. AO, in this regard, is clearly erroneous and the same could not be held to be justified. We concur with the aforesaid adjudication of Ld. CIT(A) in the impugned order. Considering the Balance Sheet as a whole ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the requisite details of sundry creditors. To support the same, our attention has been drawn to the material found during the course of search action and conclusions drawn by Ld. AO on the basis of the same. The Ld. AR, on the other hand, submitted that the document had to be accepted in full and there was no justification on the part of Ld. AO to accept the same partially. Having heard rival submissions and upon perusal of case records, our adjudication would be as under. Assessment Proceedings 4.1 The assessee being resident individual is stated to be engaged in purchase and sale of foreign currency. The assessee was subjected to search action on 12-05-2016 which resulted into impugned assessment in the hands of the assessee. During the cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered 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 and considering the transaction that took place between the close of 11-052016 till the time of search on 12-05-2016 evening, the assessee computed the Balance Sheet which was submitted to Ld. AO. However, the same was rejected without any valid reasons. Accordingly, the assessee assailed the impugned additions. 5.2 After considering assessee s submissions, Ld. CIT(A) deleted the impugned addition by observing as under: - 8. The appellant had contended that he had based on the jottings seized by the department and as per the documents and details available prepared account and had produced his accounts before the AO during the assessment proceedings: Balance Sheet as on 11.05.2016 Particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itten items of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Balance Sheet prepared by the assessee 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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