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2015 (3) TMI 50 - AT - Income TaxAddition to income u/s 69A - documents recovered from the premises of M/s Gian Chand Ramji Das during the course of search conducted - FAA uphold the addition of ₹ 318602/- out of the total addition of ₹ 368602/- and his given the relief of ₹ 50,000/-. - Held that - In the search 56 papers were seized from the premises of M/s Gian Chand Ramji Das and 33 papers are linked to the general copy house sent to the AO of the assessee. On explanation by the assessee on the seized document the assessee stated that they were not aware of the companies M/s AAA Exports & M/s ABC Exports etc. The assessee has also filed a letter from Mr. Chandra Prakash partner of M/s Gian Chand Ramji Das in which he has stated that he has made these entries for his learning and also told that these entries are for his convenience sake and has no concerned with assessee s books of accounts. The assessee has also stated before the Revenue Authority that Sh. Chandra Prakash is handling their export of their paper and board business and is also their attorney with Union Bank of India, Sadar Branch. The assessee has categorically denied that they have not received even a single piece from him. As assessee has explained about all 33 papers allegedly related to the assessee and established that assessee has not received any payment mentioned in the seized papers but the ld. First Appellate Authority has not appreciated the explanation given by the assessee which is supported by evidences also and has made the addition of ₹ 3,18,602/- without any basis and contrary to the explanation given by the assessee as well as contrary to the evidence produced by the assessee before the Revenue Authorities. - Decided in favour of assessee.
Issues:
1. Challenge to the order of the ld. CIT(A) dated 09/09/2013. 2. Dispute over addition of undisclosed income based on transactions with M/s Gian Chand Ramji Das. 3. Adequacy of explanation provided by the assessee regarding the transactions. 4. Assessment of the evidence and documents seized during search proceedings. 5. Evaluation of the impugned order by the ld. First Appellate Authority. Analysis: Issue 1 - Challenge to CIT(A) Order: The appellant contested the order of the ld. CIT(A) dated 09/09/2013, claiming it to be illegal and contrary to the law and facts of the case. Allegations were made that the authorities did not provide sufficient opportunity for the assessee to substantiate its claims, prompting the ITAT to direct a reevaluation. However, the appellant argued that the subsequent order by the CIT(A) was passed routinely without proper consideration of the written submissions and evidence filed by the assessee. Issue 2 - Addition of Undisclosed Income: The dispute arose from transactions between the assessee and M/s Gian Chand Ramji Das, where certain cash payments and receipts were not reflected in the regular books of accounts. The AO initiated proceedings under section 158BC of the Income Tax Act, 1961, based on documents seized during search proceedings. The AO concluded that certain receipts were not recorded in the assessee's books of accounts, leading to an addition of undisclosed income. The CIT(A) partly allowed the appeal, upholding an addition of &8377; 3,18,602 out of the total &8377; 3,68,602. Issue 3 - Adequacy of Explanation: The assessee provided explanations regarding the transactions, citing lack of awareness about certain companies mentioned in the seized documents. A letter from a partner of M/s Gian Chand Ramji Das clarified that the entries were for learning purposes and not related to the assessee's accounts. Despite the explanations and evidence presented, the AO deemed the responses insufficient, leading to the addition of undisclosed income. Issue 4 - Assessment of Seized Documents: Upon review of the seized documents and explanations provided by the assessee, the ITAT found that the assessee had adequately explained the nature of the transactions linked to the seized papers. It was noted that the CIT(A) had not properly appreciated the evidence and explanations put forth by the assessee, leading to an erroneous addition of income. Issue 5 - Evaluation of CIT(A) Order: The ITAT, after considering the submissions, documents, and explanations presented by both parties, concluded that the addition of &8377; 3,18,602 made by the CIT(A) lacked a proper basis. The ITAT found that the explanation provided by the assessee, supported by evidence, was sufficient to refute the allegations of undisclosed income. Consequently, the ITAT allowed the appeal, deleting the addition of &8377; 3,18,602 upheld by the CIT(A). In conclusion, the ITAT ruled in favor of the assessee, overturning the addition of undisclosed income and allowing the appeal against the order of the ld. CIT(A) dated 09/09/2013.
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