2021 (4) TMI 7 - AT - Income Tax

Addition u/s 68 - addition on the basis of receipts in the ledgerised cash sheets as per annexure of seized material found during the course of search - HELD THAT - On perusal of the entire gamut of seized material, we find that there is a master cash book which is marked AA-6 of R-2 which is based on all other documents seized. Based on the said master cash book, surrender was made with regard to all the enclosed set of books which was accepted by the department. In that case we do not find any reason or justification to make separate addition with regard to the same account incorporated in the ledger account and the entries of ledger account arising out of the master cash book. This precise explanation was also given before the AO which has not been adverted to by the Ld. AO. CIT(A) has given a categorical finding as incorporated above after examining each and every entry appearing in the said seized documents which has also been shown to us during the course of hearing from the said seized documents. On independent examination of the documents, we agree with the findings of the CIT (A) that the addition made by the AO has led to double addition and the same nature of transaction have been recorded in the master cash book and ledger account of summary sheet which is nothing but summary of all the transactions recorded in other seized documents. No material has been brought on record to controvert the findings of the Ld. CIT (A) and, therefore, the order of the Ld. CIT(A) deleting the addition has confirmed and the grounds raised by the revenue are dismissed. Since we have already held that exactly same issue is involved in other two years and the same set of facts and findings are permeating therein also apparently our findings will apply in the other two year also.

Summary

Issues Involved:
1. Addition under Section 68 of the Income Tax Act based on receipts in ledgerized cash sheets from seized material during the search.
2. Validity of the addition made by the Assessing Officer (AO) for the assessment years 2010-11, 2011-12, and 2013-14.
3. Examination of whether the same income was recorded multiple times leading to double addition.

Issue-wise Detailed Analysis:

1. Addition under Section 68 of the Income Tax Act:
The revenue challenged the deletion of additions made under Section 68 of the Income Tax Act. These additions were based on ledgerized cash sheets found during a search operation. The AO noted unexplained receipts and added them as undisclosed income. The amounts added were ?1,91,22,400 for 2010-11, ?1,74,77,400 for 2011-12, and ?2,46,85,631 for 2013-14.

2. Validity of the Addition Made by AO:
The AO based the additions on seized documents, specifically Annexure A-5, Party R-2, which showed cash receipts. The AO observed that the assessee received ?3,66,10,131 in cash during the financial year, out of which ?1,19,24,500 was surrendered by the assessee or his elder son. The AO considered the remaining ?2,46,85,631 as unexplained and added it to the income. The CIT(A) reviewed the seized documents and found that the transactions recorded in the cash book and ledger were summarized in Annexure A-5, Party R-2. The CIT(A) concluded that the same income was being recorded multiple times, leading to double addition.

3. Examination of Double Addition:
The CIT(A) examined the seized documents, which included:
- Annexure A-5, Party R-2: Summary of receipts and payments.
- Annexure A-2, Party R-2: Ledger account of different transactions summarized in Annexure A-5.
- Annexure AA-6, Party O-2: Cash book of unrecorded transactions summarized in Annexure A-5.

The CIT(A) noted that the cash book (AA-6) and ledger (A-2) recorded the same transactions, which were summarized in Annexure A-5. The CIT(A) provided instances showing that entries in the cash book and ledger were represented in the summary sheet, indicating no additional income beyond what was already disclosed. The CIT(A) concluded that the addition made by the AO resulted in double counting of the same income.

Conclusion:
The tribunal agreed with the CIT(A) that the additions made by the AO led to double counting of the same transactions recorded in the master cash book and ledger. The tribunal found no justification for separate additions and upheld the CIT(A)'s decision to delete the additions. Consequently, the appeals for the assessment years 2010-11, 2011-12, and 2013-14 were dismissed, confirming that the same set of facts and findings applied to all three years.

Order:
The tribunal dismissed the revenue's appeals and upheld the CIT(A)'s decision to delete the additions made by the AO. The order was pronounced on 22nd March 2021.