2016 (4) TMI 852 - AT - Income Tax

Receipts in cash from the allottee newspapers and periodicals - Estimation of income - rejection of books of accounts - Held that - We find that the assessee had shown receipts in cash from the allottee newspapers and periodicals, it does not mean that the assessee himself was selling the newsprints in cash in unauthorized market. The assessee produced copies of ledger accounts of these parties. The said ledger account was seized during the course of search. On perusal of ledger account of these parties it is observed that the newsprint was supplied to them and payment was also received by the assessee. The said ledger account clearly mentioned the authorization number and date, date of receipt, size of paper, number of reels, weight, number and date of memo of delivery and amount etc. Hence, we are of the view that it cannot be said that either these parties did not make the payment to the assessee or did not lift the newsprints. Therefore, on the basis of 3-4 parties out of about 200 allottees, the adverse inference cannot be drawn in the hands of assessee. In the case of assessee, he had maintained proper books of account and there is no material on record to show that the he had made sale of newsprints in unauthorized market. Hence, the books of account of the appellant cannot be rejected by invoking section 145(2) and the turnover/profit cannot be estimated. In view of above, in the absence of any evidence of selling the newsprints in unauthorized market by the assessee, the CIT(A) had rightly held that the AO was not justified in rejecting the books of account and estimating either the turnover or the profit of the assessee for the year under appeal. Accordingly, we confirm the order of CIT(A) - Decided in favour of assessee Unexplained cash credit - Held that - CIT(A) after taking loan confirmations and other documents deleted the addition respect to loan creditors to the extent of ₹ 86,000/- in the names of Shri Balsinger Singh, Shri A. K. Mullick, Shri S. K. Mullick and Shri Biman Behari Saha. In respect to loan creditor M/s. Mamoni Films of ₹ 7,00,000/- there is a categorical finding recorded by CIT(A) that the loan pertains to AY 1988-89 and not to the relevant AY 1987-88. Once this is the position, the same was confronted to Ld. Sr. DR whether he has some material to controvert the same, he could not reply. In such circumstances, we are of the view that CIT(A) has rightly deleted the addition in respect to cash credits and we confirm the same - Decided in favour of assessee Addition u/s 68 - Held that - We have heard rival submissions and gone through facts and circumstances of the case. We find that the entire addition is based on a provisional order passed u/s/. 132(5) of the Act estimated the income of the assessee and by virtue of which holding that M/s. Industrial Papers was benami of the assessee instead of Shri Ram Balak Singh. No doubt certain books and documents of Shri Ram Balak Singh were found from the premises of the assessee but it does not prove that this business belongs to assessee or assessee is benamider of the same. The onus is on revenue to prove that the assessee is benamidar of the Industrial Papers. In view of the above, we are of the view that the CIT(A) has rightly deleted the addition and we confirm the same - Decided in favour of assessee

Summary

Issues Involved:
1. Deletion of addition made by AO on estimated profit on estimated turnover of sale of newspaper prints.
2. Deletion of unexplained cash credit of Rs. 7.86 lacs.
3. Deletion of unexplained cash credit of Rs. 2 lacs.

Issue-wise Detailed Analysis:

1. Deletion of Addition on Estimated Profit on Estimated Turnover of Sale of Newspaper Prints:
The primary issue revolves around whether the CIT(A) was justified in deleting the addition of Rs. 50,00,000/- made by the AO on the grounds of estimated profit on the estimated turnover of newspaper prints. The AO had invoked section 145 of the Income Tax Act, 1961, estimating the turnover at Rs. 5 crore with a 10% profit margin, resulting in an estimated income of Rs. 50 lacs. This was based on the assertion that the assessee could not produce evidence of dispatching newsprints to over 200 newspapers and lacked records of expenses. However, the CIT(A) found that the AO had not examined the seized documents, which included bills, vouchers, and books of accounts proving that the assessee was only lifting newsprints for newspapers on authorization from STC, not selling them in the unauthorized market. The Tribunal upheld the CIT(A)'s order, noting that the AO failed to provide evidence that the newsprints were sold in the unauthorized market and had not properly examined the confirmations and ledger accounts provided by the assessee.

2. Deletion of Unexplained Cash Credit of Rs. 7.86 lacs:
The second issue pertains to whether the CIT(A) was justified in deleting the addition of Rs. 7.86 lacs as unexplained cash credit. The AO had added this amount, asserting that the assessee failed to produce supporting evidence. The CIT(A), however, deleted the addition after reviewing loan confirmations and other documents, noting that the loans from individuals like Shri Balsinger Singh, Shri A. K. Mullick, Shri S. K. Mullick, and Shri Biman Behari Saha were received through cheques and confirmed by the creditors, who also provided their GIR numbers and addresses. Similarly, a loan of Rs. 7 lakh from M/s. Mamoni Films was confirmed as received and returned by cheque, with supporting documents from the creditor. The Tribunal agreed with the CIT(A), emphasizing that the AO had not doubted the correctness of these confirmations and that the loan from M/s. Mamoni Films pertained to the subsequent assessment year.

3. Deletion of Unexplained Cash Credit of Rs. 2 lacs:
The third issue involves the deletion of an addition of Rs. 2 lacs as unexplained cash credit, which the AO attributed to the assessee based on documents found at the assessee's premises suggesting that M/s. Industrial Papers, owned by Shri Ram Balak Singh, was a benami entity of the assessee. The CIT(A) deleted the addition, stating that the AO's conclusion was based on presumption without concrete evidence. The Tribunal upheld this decision, noting that mere possession of documents related to Shri Ram Balak Singh's business at the assessee's premises did not conclusively prove that the business was benami. The onus was on the revenue to substantiate this claim, which it failed to do.

Conclusion:
The Tribunal dismissed the revenue's appeal, confirming the CIT(A)'s deletions of the additions made by the AO on all counts. The Tribunal emphasized the lack of evidence and proper examination by the AO in all three issues, thereby upholding the CIT(A)'s detailed and reasoned findings.