9911796707
TMI Blog2025 (5) TMI 341X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of Kohli Tent Group of cases to which assessee belonged. Thereafter, notice u/s 153A of the Act was issued on 24.09.2020. In response to which assessee has filed the return of income on 27.10.2022 declaring the same income as was declared in the return filed u/s 139(1) of the Act. During the course of search, certain documents including pen drives etc. were found and seized from the possession of the assessee company and its Directors and other trusted person. Based on which, it was concluded by the Assessing Officer that assessee was having undisclosed receipts as well as unaccounted expenditure, and after considering the submissions made by the assessee, made additions and assessed the income of assessee at Rs. 8,58,51,255/-. In first appeal, Ld. CIT(A) has partly allowed the appeal of the assessee by observing that the Assessing Officer has made addition towards the undisclosed receipts found noted in the documents found and seized during the course of search and also expenditure on account of unexplained expenditure. The Ld. CIT(A) by following the decisions of Hon'ble Supreme Court and also of Hon'ble Gujrat High Court has held that entire receipts cannot be taxed and rest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found containing details of un-recorded expenditure made by the assessee during this period which include expenses on the construction towards improvement of Banquet Halls and other routine expenses. Since part of the receipts as recorded in the said pend drive were recorded in the books of account, the AO made a reconciliation of the same and found that total receipts of Rs. 6,61,61,600/- as found recorded in the said sheet-1 for the period from 01.10.2017 to 31.03.2018 are undisclosed receipts. As per Ld. CIT-DR, the AO though has held the expenses as found recorded in the seized documents as allowable however, since majority of these expenses are in violation to provisions of section 40(A)(3), 40a(ia), etc. Therefore, he allowed expenditure to the tune of Rs. 28,09,045/- only and balance expenditures of Rs. 6,35,39,625/- is added to the total income of the assessee. 6. As per Ld. CIT-DR these receipts are not disclosed in the books of account and assessee has violated various provisions of the Act for claiming the expenditure as allowable expenditure, the action of AO in making additions of the residuary amount of income is as per the provisions of the Act, and therefore, he p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee that has to be assessed on the basis of incriminating material found during the course of search. For this proposition reliance is placed on the case of PCIT Vs. Abhisar Buildwell Pvt. Ltd. 454 ITR 212 (SC), wherein Hon'ble Supreme Court in Para 14(iii) has held that: " ....... (ii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the Assessing Officer would assume the jurisdiction to assess or reassess the "total income" taking into consideration the incriminating material unearthed during the search and the other material available with the Assessing Officer including the income declared in the returns; and ..." (Page 28 of RPB) 2. For the proposition that what is chargeable to tax is not gross receipts but income reliance is placed on the judgement of Hon'ble Supreme Court in the case of CIT Vs. Willamson Financial Service and others 297 ITR 17 wherein it has been held as under: "38. ... The word "income" has been defined in section 2(24) of the said Act to include profits and gains. The term "total income" is defined in section 2(45) of the said Act. The definition of the term "total inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e word "total income" is not there in Rule 8. 51. The word "income" is an expression of elastic ambit. It is not exhaustive. That is why Section 2(24) defines "income" as including a particular category of receipts. Mere gross receipt cannot be taxed as income." (Page 51 of RPB) 3. Reliance is also placed on the judgement of Hon'ble Gujrat High Court in the case of CIT Vs. President Industries [2002] 258 ITR 654 (Guj) and judgement of Hon'ble Madhya Pradesh High Court in the case of Man Mohan Sadani Vs. CIT [2008] 304 ITR 52 (MP). 4. In the line of the business of the assessee there are unrecorded expenses against the unrecorded receipts which is quite evident from the seized material found during the course of search and seizure operation (Sheet-1). A reference in this context maybe made to the following observation by the id. AO in the order of Fourstar Hospitalities LLP at page 7 reproduced as under: "In the wake of admission by Abhishek Jain and Sh. Sunit Goel, it is clear that the payment for expenses and receipts found recorded in sheet in excel file "Pendrive_000641" were made in cash which remained unaccounted. It has also been stated in your reply that "t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - and Rs. 27,35,536/ out of unaccounted receipts amounting to Rs. 2,73,55,360/- of Kohli Tent House (Page 35 of CIT(A) order). 6. It is submitted that a reference may kindly be made to the P&L and balance sheet mentioned at page 7 of the assessment order showing profit of Rs. 8,47,424/- on an unaccounted turnover of Rs. 5,55,25,400/- (Pages 148 to 149 of RPB) drawn on the basis of seized material which come to about 1.52% whereas the Id. CIT(A) has estimated the net profit at the rate of 10% on the turnover determined by him at Rs. 6,82,11,710/-amounting to Rs. 68,21,171/-." 8. in the last ld. AR, prayed for the confirmation of the order of the Ld. CIT(A). 9. After having considered the arguments put forth by both the parties, we find that in the instant case, the AO has made the additions on account of undisclosed receipts after reducing amount of expenditure which are allowable expenditure under the Income Tax Act, meaning thereby, the AO has disallowed those expenses which are in violation to section 40A(3), 40(a)(ia) and under other provisions of the Act. Admittedly, the undisclosed receipts as well as undisclosed expenditures were found noted in the loose papers and excel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant, the total business receipts were computed as per 'Sheet 1' in pendrive-000641 pertaining to period from 01.10.2017 till 31.03.2018. However, the appellant had taken the premises on rent from 11.11.2017, thus, the transaction prior to 11.11.2017 should be excluded from the business receipt of the appellant which is Rs. 80,54,530/~. Considering the agreement with the M/s APPL for running the banquet hall by the appellant from 11.11.2017 the total unrecorded business receipt for the period between 11.11.2017 to 31.03.2018 has been considered as Rs. 5,81,07,070/- and Rs. 1,87,070/- as other unaccounted receipts as per 'Sheet 1'. Further, the AO has made separate addition of Rs. 99,17,570/- (Rs. 1,60,000/- + Rs. 97,57,570/-) on account of unrecorded business receipts on the basis of Annexure A-13 and images from iPhone of Sh. Sunit Goel. Considering the same the total unrecorded business receipt has been computed at Rs. 6,82,11,710/- Accordingly, the net profit for the year under review shall be Rs. 68,21,171/- (i.e. 10% of 6,82,11,710/-. Therefore, the addition made by the assessing officer is restricted to Rs. 68,21,171/-. Accordingly, this ground of appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant LLP has been already estimated separate addition on this account is not sustainable. the addition on account of estimation of profit at the rate of 10% of the total such unaccounted business receipts has been already made separate disallowance on account of further expenses is not desirable. 8.2 In view of the above, since the profit of the appellant has been computed @10% after considering out of books receipts and expenditure, and rent is also an expense, in my opinion, further addition on account of rent expenses is not sustainable. Therefore, the addition made on account of rent paid in cash by the AO is deleted. In view of this, these grounds of appeal filed by the appellant are allowed." 11. Before us, the Ld. CIT-DR failed to controvert the findings given by Ld. CIT(A) made while deleting the additions by applying profit rate of 10% as against the addition of entire undisclosed receipts. Further, Ld. CIT(A) has deleted the amount of unaccounted expenditure recorded in the same pages by holding the same are not required since net profit rate on undisclosed receipts was applied and addition of Rs. 68,21,171/- is sustained as profit on such undisclosed receipts. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
