2022 (6) TMI 1105 - AT - Income Tax

Assessment u/s 153A - assessee has not accounted for 2/3 of its sales in its books of account as appearing in the seized documents - unaccounted sales found recorded in the hard disk - As found assessee has incurred expenses outside the books of account and if the same are taken into consideration, the resultant figures in all the three assessment years is net loss - HELD THAT - As once drawn presumption that the contents of the documents of the assessee taken into possession during the search were true, then the same holds good for the entire entries found in those documents which means that the Assessing Officer cannot ignore the unaccounted expenses resulting into net losses in the captioned Assessment Years. Coming to the facts of the case in hand, we find that the additions made by the Assessing Officer are based upon the unaccounted sales found recorded in the hard disk. CIT(A) has restricted the additions to the extent of entries found to be not recorded in the books based upon the decision of Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT - Since the additions sustained by the ld. CIT(A) are based upon the facts found at the time of search, we do not find any error or infirmity in the findings of the ld. CIT(A). Additions on account of undisclosed investment in stock is totally presumptuous and is based upon surmises and presumptions and is not even remotely connected with the facts unearthed at the time of search. We, therefore, do not find any reason to interfere with the findings of the ld. CIT(A). The impugned additions are deleted. - Decided in favour of assessee.

Summary

Issues: Three separate appeals by the Revenue against three separate orders of the Commissioner of Income Tax [Appeals] - 29, New Delhi dated 26.12.2017 pertaining to Assessment Years 2013-14, 2014-15, and 2015-16.

Analysis:
1. Common Issues and Facts: The appeals before the Appellate Tribunal involved identical grievances of the Revenue, leading to a common disposal for convenience. The underlying facts were common across all three appeals, despite variations in the quantum of additions made by the Assessing Officer.

2. Unaccounted Sales and Purchase: The case revolved around a search and seizure operation under section 132 of the Income-tax Act, 1961, in the G.D. Foods group of cases, which also covered the assessee. Data found on a seized hard disk indicated unaccounted sales and purchases by the assessee, prompting the Assessing Officer to estimate significant unaccounted sales amounts for the respective assessment years.

3. Assessing Officer's Additions: The Assessing Officer estimated unaccounted sales and undisclosed stock based on the seized data, resulting in substantial additions to the assessee's income for the relevant years. These additions were challenged before the Commissioner of Income Tax [Appeals] (CIT(A)).

4. CIT(A) Decision: After considering the evidence and submissions, the CIT(A) acknowledged the unaccounted nature of a portion of the assessee's sales but reduced the additions significantly based on the seized documents' contents. Citing the decision in CIT Vs. Kabul Chawla, the CIT(A) restricted the additions related to unaccounted sales and completely deleted the additions concerning undisclosed stock.

5. Tribunal's Analysis: The Appellate Tribunal reviewed the orders of the authorities below and noted that the Assessing Officer's additions were primarily based on unaccounted sales data from the seized hard disk. Upholding the CIT(A)'s decision, the Tribunal found no error in restricting the additions to the unrecorded entries discovered during the search. Additionally, the Tribunal deemed the additions related to undisclosed stock as speculative and unsupported by the search findings, leading to their deletion.

6. Presumption of Seized Documents: The Tribunal emphasized the presumption of truthfulness in the seized documents under section 132(4A) of the Act, highlighting that this presumption extends to all entries in the documents. Therefore, the Assessing Officer was directed not to disregard unaccounted expenses resulting in net losses for the assessment years.

7. Final Decision: Ultimately, the Tribunal dismissed all three appeals by the Revenue, affirming the CIT(A)'s decision to restrict additions on unaccounted sales and delete additions on undisclosed stock. The order was pronounced in the open court on 16.06.2022 in the presence of both parties' representatives.