9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (4) TMI 277 - AT - Income TaxAssessment u/s 153A - Addition based on seized documents - addition of net profit @2% of suppressed receipts - A.O treated them as incriminating material and went ahead to make additions for suppressed receipts @10% of the gross receipts disclosed by the assessee in the regular books of accounts - HELD THAT - In these given circumstances it cannot be said that the addition for suppressed receipts made by A.O are not based on any incriminating material. Though the assessee is challenging it to be a dumb document but the addition made by the Ld. A.O have a direct nexus with the incriminating material found during the course of search. Various judgments referred and relied by the Ld. Counsel for the assessee can apply only in those cases where the additions for completed assessments post search are made without any basis of incriminating material found during the course of search. In the case of assessee the facts are different because the additions for Assessment Year 2007-08 to 2011-12 have been made by Ld. A.O on the basis of incriminating material found during the course of search and such incriminating material has no specific mention of the assessment year for which they relates except for few entries, therefore the A.O was within his powers to make the additions for the block of assessments for Assessment Years 2007-08 to 2013-14 taking the basis of incriminating material found during the course of search. Therefore this common Ground No.2 raised by the assessee for Assessment Year 2007-08 to 2011-12 needs to be dismissed. Addition on the suppressed receipts - HELD THAT - alleged seized material referred to by the Ld. A.O contains certain business transaction not explained satisfactorily by the assessee before the lower authorities and also before us which justify the action of the Ld. A.O of rejecting the books of accounts and estimating the suppressed receipts. Though Ld. A.O made the addition for suppressed receipts which in our view was not justified and Ld. CIT(A) was fair enough to apply 2% of net profit rate on the alleged suppressed receipts by taking basis of net profit rate disclosed by the assessee for various assessment years which ranges from 0.59% to 2.05%. In our considered view no interference is called for in the findings of Ld. CIT(A) sustaining the addition to the extent of 2% of the enhanced turnover. Unexplained cash deposit u/s 68 - peak cash credit addition - HELD THAT - If an addition for peak cash credit of ₹ 1,44,579/- is sustained for 2012-13 it will take care of the peak cash credit with the assessee and thus no addition of ₹ 9,52,752/- and ₹ 31,30,750/- is called for. We accordingly order so and sustain the addition for ₹ 1,44,579/- for unexplained cash for Assessment Year 2012-13 and delete the addition for ₹ 31,30,750/- for Assessment Year 2013-14. In the result Ground No.3 for assessee s appeal for Assessment Year 2012- 13 is partly allowed and that for Assessment Year 2013-14 is allowed. Unaccounted cash receipt - HELD THAT - Some employee of the assessee or the group company has written these figures but these documents were found at the assessee s premises and has the reference of assessee but he failed to explain the transactions in these seized documents even when the burden lies heavily on the shoulders of the assessee, which in the instant case seems not to have been properly fulfilled. As the reply/submission made by the assessee/Ld. Counsel for the assessee in our view are unsatisfactory and vague, we find no reason to make any interference in the findings of Ld. CIT(A) confirming the addition for unaccounted cash receipt. Addition regarding Agra project of IBD Group - unaccounted investment/expenditure on the basis of seized paper - HELD THAT - assessee cannot go away without explaining the contents of such seized material which has some bearing/connection with the business projects run by the group concern. Ld. A.O has also not made proper enquiry about IBD project of Agra so as to correlate the seized material showing the entry of ₹ 7,33,000/- with the details if any of IBD group. In our view this issue of addition of ₹ 7,33,000/- needs to be set aside to the file of Ld. A.O for afresh adjudication so as to decide accordingly as per the provisions of law after calling necessary information from the assessee about the Agra project and IBD group and any other details as necessary to examine the facts after providing reasonable opportunity to the assessee to file its submission in this regard. - ground is allowed for statistical purposes
Issues Involved:
1. Addition for non-abated assessment years without incriminating material. 2. Estimation of suppressed receipts. 3. Validity of additions based on seized documents. 4. Application of peak credit theory for unexplained cash deposits. 5. Levy of interest under sections 234A, 234B, and 234C. Detailed Analysis: Issue 1: Addition for Non-Abated Assessment Years Without Incriminating Material The Tribunal addressed whether additions can be made for non-abated assessment years (2007-08 to 2010-11) in the absence of incriminating material. The assessee argued that no incriminating material was found during the search, and thus, additions for these years should be deleted. The Tribunal relied on precedents, including the Delhi High Court's decision in CIT v. Kabul Chawla and the Bombay High Court's decision in Continental Warehousing Corporation, which held that additions for non-abated assessments can only be made if supported by incriminating material found during the search. Consequently, the Tribunal ruled that the additions for these years were not justified and should be deleted. Issue 2: Estimation of Suppressed Receipts The Tribunal examined whether the estimation of suppressed receipts by the Assessing Officer (AO) was justified. The AO had estimated suppressed receipts based on seized documents, applying a 10% rate on gross receipts. The CIT(A) reduced this to a 2% net profit rate, considering the historical profit rates of the assessee. The Tribunal upheld the CIT(A)'s decision, noting that the estimation of suppressed receipts should be reasonable and based on historical profit rates. It confirmed the addition of 2% net profit on suppressed receipts while dismissing the revenue's appeal for a higher rate. Issue 3: Validity of Additions Based on Seized Documents The Tribunal analyzed whether the seized documents were "dumb documents" or had evidentiary value. The AO had made additions based on these documents, which the assessee claimed were rough jottings without any transactional details. The Tribunal found that the documents contained financial transactions related to the assessee's business and could not be dismissed as dumb documents. Thus, the additions based on these documents were upheld. Issue 4: Application of Peak Credit Theory for Unexplained Cash Deposits For unexplained cash deposits, the Tribunal considered the application of the peak credit theory, which allows for the highest balance during the period to be treated as unexplained income. The Tribunal accepted the assessee's opening cash balance and incremental peak credit, confirming additions based on the peak credit theory. This approach was applied to various years, ensuring that the additions did not exceed the incremental peak credit balance. Issue 5: Levy of Interest Under Sections 234A, 234B, and 234C The Tribunal addressed the assessee's challenge to the levy of interest under sections 234A, 234B, and 234C, finding that the levy of interest was lawful and in accordance with the provisions of the Act. Therefore, the interest levied under these sections was upheld. Conclusion: The Tribunal's judgment provided a comprehensive analysis of the issues, upholding the CIT(A)'s decision on the estimation of suppressed receipts, validating additions based on seized documents, and applying the peak credit theory for unexplained cash deposits. The Tribunal also confirmed the levy of interest under sections 234A, 234B, and 234C while deleting additions for non-abated assessment years due to the absence of incriminating material. The detailed approach ensured that the legal principles and precedents were thoroughly considered, providing a balanced and justified outcome.
|
