9911796707
TMI Blog2025 (5) TMI 279X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Commissioner of Income Tax (Appeals) is bad in law as well as on the facts and in the circumstances of the case. 2. That the learned Commissioner of Income Tax (Appeals), in para 5 of the order, has erred in facts and law in holding that 'it is evident from the facts of the case and submissions made by the applicant that several incriminating documents in physical as well as electronic form were found and seized from the different premises during the course of search wherein out of books cash receipts were found to be recorded. These seized/impounded materials which are incriminating in nature have direct bearing on the total income of the appellant and proper satisfaction was recorded before initiating proceedings u/s 153C of the Act' and accordingly rejecting ground nos. 1 to 4 raised before him. 3. That the learned Commissioner of Income Tax (Appeals), in para 6 of the order, has erred in facts and law in holding that 'the appellant was provided sufficient opportunity by way of issuing various notices on different dates starting from 26.02.2021 to 31.08.2021 and a show cause notice dated 28.08.2021 was also served to the assessee' and accordingly rejecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular income tax assessee and had filed an original return of income u/s 139 of the Income-tax Act, 1961 [the Act, for short] on 04.11.2016 at a total income of Rs. 5,06,360/-.A search and seizure operation was carried out at the residence of the partners and the business premises of other concerns in the group on 03.05.2018. The assessee was not covered in the search u/s 132 of the Act whereas certain recordings/details were found inventorised from various premises. Notice u/s 153C of the Act was issued to the assessee on 10.02.2021, in response to which the assessee filed a return of income on 17.02.2021 declaring total income of Rs. 5,06,360/-. 6. During the course of search, an excel file named "Booking Amount Detail_35890.xlsx" was retrieved from Laptop impounded as Annexure A-5 from the Pandal - Velvet, Rajouri Garden, New Delhi which contained a sheet named "Jan to July" giving the details of total cash receipts including receipts by cheque from functions involving cash component held at the banquets run by the assessee. 7. The assessee received a notice dated 25.02.2021 mentioning Query no. 30 wherein a list of such functions noted in Annexure A-5 was provided in two categ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs 63,18,760/- as income of the assessee. 13. Now the assessee is in appeal before us. At the outset, the assessee stated that he is only contesting ground no 4 and 5 of the appeal and would not press the ground no 1 to 3 with regard to veracity of Notice u/s 153C, legality of order u/s 153C and violation of principles of natural justice. The ld AR fairly stated that he will only contest the case on merits. 14. Having said so, the ld AR stated that the seized material on the basis of which suppression factor has been determined is Annexure A-5 for the period January 2016 to July 2016 and accepted that for this period, evidence has been found to show that the assessee is receiving cash over and above the cheque payments which is its unaccounted turnover. The ld AR stated that the details of Annexure A-5 are reproduced in the assessment order at page 65 of appeal memo which is in respect of 24 functions. The ld AR stated that the reference to pages 94 to 96 of APB for AY 2016-17 and pages 86 to 89 of APB for AY 2017-18 would show that during the period relevant to the period mentioned in Annexure A-5 i.e., January 2016 to July 2016, the functions held by the assessee are 38 for AY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on unaccounted turnover as computed by the AO at Rs. 6,31,87,608/- and has sustained the addition to the tune of Rs. 63,18,760/- as against addition of Rs. 6,31,87,606/- made by the Assessing Officer in the assessment order.10% of net profit on correctly computed/estimated unaccounted turnover of Rs. 2,66,47,512/- would be Rs. 26,64,751/- and thus the assessee claims a further relief of Rs. 36,54,009/- (Rs. 63,18,760/- minus Rs. 26,64,751) which may kindly be allowed. 19. Per contra, the ld. DR strongly supported the order of the AO.The ld DR submitted that the addition and extrapolation made by the AO with regard to the unaccounted receipts from the business activities of the assessee is based on the seized materials and evidences found in the course of search and is very much permissible in law. The ld DR further pointed out that the assessee has not contested the veracity, relevance of the seized documents and has completely accepted the description available in the seized documents. The ld DR forcefully stated that the assessee has further accepted the legality of assumption of jurisdiction and order passed u/s 153C. The ld DR further pointed out that the assessee has accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditions made, are not under dispute. The dispute lies only on the quantum of additions made. 23. We find that in the course of search, materials were seized such as laptop as Annexure A-5 from Velvet, Rajori Garden (Document set-7) which showed that the assessee had received Rs 1,84,39,110/- as cash which were not accounted for in the books of the assessee. Further, from the images extracted from mobile phone of Sanjeev Kohli and Sunit Kohli (Documents set-21), we find that unaccounted receipts found is Rs 13,50,560/-. On the basis of these data, the assessing officer calculated the suppression factor as 2.9217 as follows: Document set Accounted Sales Unaccounted Sales Document Set 7 63,23,725 1,84,39,110 Document Set 21 4,49,440 13,50,560 67,73,165 1,97,89,670 Ratio 2.9217 24. The assessing officer, on the said basis of suppression factor of 2.9217, has made addition of Rs. 5,00,36,946/- on account of suppressed business receipts as follows: AY Sales as per Books Unaccounted Sales already considered Estimated Unaccounted sales (B*2.9217) Estimated suppressed sales (D-C) A B C D E 2016-17 2,16,27,000 1,31,50,660 6,31,87,606 5,00,36,946 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s part of suppressed turnover and applied a rate of 10% on it to compute unaccounted income of the assessee. 27. We further find that with regard to the adoption of the profit rate of 10%, the CIT(A) has considered the evidences found and seized during search in respect of one of the group concern, M/s Fourstar Hospitalities LLP found in the excel workbook titled as 'pendrive- 00641' marked as annexure A-13 in which there is a worksheet named as 'sheet-1' which records the unrecorded transaction of receipts and payment held in respect of M/s APPL (Angel Promoters Private Limited ) for the period from 02-03- 2017 to 10-11-2017 and in respect of M/s. Fourstar Hospitalities for the period from 11.11.2017 to 10.04.2018 and further Annexure A-12 has been found from M/s Fourstar Hospitalities for the period from 11.04.2018 to 2.05.2018. On the basis of the seized data contained in A-13 and A-12, a profit and loss account has been prepared for the period from 11.11.2017 to 31.03.2018 and from 01.04.2018 to 02.05.2018 relating to M/s Fourstar Hospitalities according to which the average net profit comes to about 10% of the receipts outside books. The CIT(A) further found that the AO himse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made other than unaccounted sales as per seized material, the same ought to be only for and in respect of the functions held between April 2015 to December 2015 for the said year. The assessee further proposed that as per the Annexure A-5, the assessee has been found to have received unaccounted cash receipts in respect of only 24 functions. The sales as per books for this period is totaling to Rs. 1,28,32,000/- which is in respect of 46 functions held during the period from April 2015 to December 2015.As is evident from the seized material, the cash receipts are in respect of only 36% (24/66*100) of functions held. Thus 36% of the sales as per books would be Rs. 46,19,520/-(12832000*36%). And by applying the suppression factor of 2.9217 to Rs. 46,19,520/- the unaccounted sales for the said period would be Rs. 1,34,96,852/- instead of Rs. 5,00,36,946/- estimated by the Assessing Officer. There is no requirement for making an estimate of unaccounted sales for the period January 2016 to March 2016 since the same has been found to have been made in the seized material. Thus the assessee proposed the unaccounted sales at Rs 2,66,47,512/- which included Rs 1,34,96,852 as calculated ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ext question that arises for consideration is whether the basis adopted in estimating the turnover has a reasonable nexus with the estimate made. If the basis adopted is held to be a relevant basis even though the courts may think that it is not the most appropriate basis, the estimate made by the assessing authority cannot be disturbed. In the present case, there is no dispute that the assessee's accounts were rightly discarded. We do not agree with the High Court that it is the duty of the assessing authority to adduce proof in support of its estimate. The basis adopted by the Sales-tax Officer was a relevant one whether it was the most appropriate or not. Hence the High Court was not justified in interfering with the same." 31. We are therefore of considered view that the CIT(A) has applied a scientific view gathered from the seized materials found in the course of search for arriving at the suppressed unaccounted turnover/receipts of the assessee. We are also inclined to accept that the net profit of 75% from such business is not a probable proposition from the business of renting space and catering. We are of the considered view that adopting the net profit ratio of 10% o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18] (Revenue appeal)
33. We have passed a separate order in respect of the assessment year 2016-17 hereinabove. As the facts and circumstances of the instant appeal are admittedly mutatis mutandis similar to those of the immediately preceding year, respectfully following the same, we uphold the decision of the CIT (A). The grounds of the appeal of the assessee is dismissed. The Revenue appeal is also dismissed.
ITA No. 2477/DEL/2023 [A.Y. 2018-19] (Assessee appeal)
ITA No. 2449/DEL/2023 [A.Y. 2018-19] (Revenue appeal)
34. We have passed a separate order in respect of the assessment year 2016-17 hereinabove. As the facts and circumstances of the instant appeal are admittedly mutatis mutandis similar to those of the immediately preceding year, respectfully following the same, we uphold the decision of the CIT(A). The grounds of the appeal of the assessee is dismissed. The Revenue appeal is also dismissed.
35. To sum up and conclude, Appeals of the Assessee in ITA Nos. 2475, 2476 and 2477/DEL/2023 are dismissed. The appeals of the Revenue in ITA Nos. 2447, 2448 and 2449/DEL/2023 stand dismissed.
The order is pronounced in the open court on 29.04.2025. X X X X Extracts X X X X X X X X Extracts X X X X
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