2022 (2) TMI 276 - AT - Income Tax

Addition on account of sale of sale of jeera bag - CIT(A) deleted the additions by holding that the assessee only earned commission income in such sale - HELD THAT - AR furnished detail of the party to whom sales were made along with detail of quantity, commission income earned and their reconciliation. It is also not disputed that the assessee is also engaged in the business of selling the goods on commission basis and the assessee has offered the commission income received on sale of 434 bags of jeera. Before us nothing has been brought on record by the ld. DR to conclusively establish that the assessee has sold Jeera on his own account and not on commission basis. No any defect pointed out in the submission and records such as reconciliation sheet made available by the appellant, and in the commission offered to tax by the assessee, as such no any enquiry carried out from the parties to assessee claimed to have sold goods on commission basis. Therefore, in the absence of contrary finding and since the assessee has filed the reconciliation of the entries with that the name of the parties, we inclined to agree with the categorical finding given by the CIT(A). The contention of the ld. DR that instead of commission income the entire sale proceeds is to be added fails on merits and in law. Hence the ground of appeal of the Revenue is dismissed. Unaccounted sale by holding that there was no sale of 506 bags of Isabgu - As per AO assessee has sold 506 bags of Isabgul without recording the sales proceeds of this commodity - HELD THAT - We concur with the finding of the CIT(A) on this aspect and dismiss this ground of appeal of revenue on the basis of the reasoning that before CIT(C) -II the assessee has reconciled the quantity, given the details of the farmer whose goods are lying, the stock is duly reconciled in the paper book filed before us and the balance stock as argued before us are covering the adat commission disclosed in respect of the quantity of goods that alleged to have been sold as sale made on behalf of farms and the quantity of the goods lying with the assessee even on the date of search thus, the fact that the assessee is engaged in the business of adat commission and vachyati sale the sale computed by the assessing officer without any reference to the seized material and therefore, we find no merits in respect of this addition made the ground of appeal of the department dismissed. Unaccounted sale of jeera for 23320 kg as admitted on oath by the accountant of the assessee - HELD THAT - DR has not brought anything on record except what is contended in the assessment order, argued that the addition is based on the statement of an accountant considering the same as unaccounted sale as evidence from the statement of the accountant. The department has not contradicted the fact being already on record from the the affidavit is filed, nothing discussed against about the facts filed in affidavit or in the quantity of the jeera reconciled in the paper book. The same is not found faulty or wrong at this stage too and thus the addition based merely on admission in statement which is not reliable no addition survives and thus we concur the finding given by the CIT(A). Not only that the grievance of the department that this sale is not accounted is also addressed as the appellant has already accepted that they have disclosed the income earned. Not only that the appellant has reconciled the total quantity of 567875 kg of jeera found during the search. Thus, the entries found at Annexure A041 is of the goods on vachyati goods and the commission income has already been disclosed as unaccounted income and therefore, we confirm the views of the CIT(A) so far as this addition is concern, hence ground of appeal of the Revenue is dismissed. Addition being the purchase price of 567875 kg of jeera not entered in the regular books of accounts as unexplained investment in purchase of jeera u/s. 69 - purchase price of 5,67,875 kg of jeera are not entered in the regular books of accounts - HELD THAT - The income being vachayati sales commission on those bags of jeera also covered under discloser of unaccounted income made by the assessee and assessee groups. Before us, the ld. DR has not brought any new evidence or arguments to controvert and the reference to remand report u/s 264 against that no independent enquiry is also conducted during the assessment proceeding and thus, the finding of the CIT(A) is also based on this facts has not been questioned before us by filling any fresh evidence or error of fact in a detailed reconciliation with that of the seized material placed on record. Therefore, considering the reconciliation chart placed before us with the seized records and entries passed in the books and the amount of the commission disclosed in the return of income as undisclosed income. We do not find any force in the arguments of the ld. DR and inclined to accept the views of the CIT(A). We do not find any infirmity with the finding of the CIT(A) while deleting this addition and therefore, the ground of the Revenue appeal is failed and dismissed. Unrecorded purchase and thereby unexplained investment in 2436 bags of Isabgul - HELD THAT -. The absence of the enquiry and reconciliation of statement coupled with the overall disclosure made by the assessee we are of the considered view that the addition deleted by CIT(A) has no error of facts. We have considered the rival submission and in the absence of the department brought any contrary material on record we concurred the view of the CIT(A) and the ground of the department that the assessee has unaccounted purchases of 2436 bags out of the book fails on facts in absence of any evidence and the against the finding and the same is dismissed. Excess stock of 6 bags of Isabgul found which has been deleted by the CIT(A) - HELD THAT - Since, we have considered the detailed reconciliation of the stock of the commodity Isabgul and relied upon the finding of CIT(C)-II recorded at para 9 and at point no. 14 and 15 above we do not find any force in the argument of the department. Before us there is no contrary facts presented by the department and even the CIT(A) has given a detailed finding about the quantity of this commodity and considering the reconciliation of stock statement and other evidence placed on record by the assessee before us we do not find any merits in the grounds of appeal filed by the revenue and the same is dismissed. Excess stock of Tarbuj required to be taxed under section 69 - HELD THAT - This ground of appeal that the tarbuj seeds stock is excess stock of the assessee, raised before us is fails on merits and the department has already accepted the fact that the assessee is engaged in the sale of goods on commission, we hold the decision of the CIT(A) is on finding of facts and we do not wish to consider the grounds of the department in absence of any contrary evidence and DR has merely relied upon finding given in the assessment order. In the light of the stated facts this ground of appeal of the department fails on merit and thus the same is dismissed. Suspended and protective addition made on account of the unexplained and hidden stock of jeera of the assessee, where in the police investigation is yet to be finalized - HELD THAT - Even the stock found in search were duly reconciled and the commission on the sale of Vachyati Goods is already offered and that amount is accepted by the department making any adjustment that figure too and there is no contrary finding placed on record in the assessment order and thus based on our finding on the various additions made on account of item jeera we find no force that the assessee is still having unexplained and hidden stock of jeera to the extent of ₹ 1,41,90,841/-, therefore, we find force in the finding of the CIT(A) on this point and looking to the arguments and evidence we also confirm the views of the CIT(A) on this issue and dismiss the ground raised by the department failing on merits. Suspended and protective addition made on account of the unexplained and hidden stock of jeera of 3,20,814 kg found during the search - HELD THAT - As regards the FIR made, we have not been updated the current status of that investigation but looking to the finding of the fact that the forensic report clearly establishes that the there is no tempering of the seal and the statement made by the assessee and their relative and staff with that of the quantity mentioned is not exactly matching. In fact, the quantity found in the questioned godown much more than mentioned the quantity mentioned in the statement. Had it been the case of the department than the quantity given in the statement may be matching exactly or in shortage whereas, the quantity found is much more than what is mentioned in the statement. Thus, looking to these two aspects and as quantity of the item jeera is already reconciled and for the reasoned mentioned the same is dealt with the other grounds in this appeal and thus, we do not find merit in the grounds placed before us that the CIT(A) has erred in deleting the suspended and protective addition made on account of unexplained stock of jeera of 3,20,814 kg found during the search fails and the same is dismissed. Suspended and protective addition - additions made under section 68 and 69C and assessed in the assessment order u/s 158BB - CIT-A deleted addition - HELD THAT - We considered the findings of the CIT(A) is the finding of the facts and in law and DR has not pointed out any single defects in the findings of the CIT(A). Considering the arguments of both the side we find force in the arguments placed by the AR of the assessee and finding of the CIT(A) and thus looking to the overall arguments of the both the sides we inclined to accept the findings of the CIT(A) and dismissed both the grounds of appeal of the department on facts and in law. Thus, Grounds No. 10 11 both are dismissed on the reasons stated here in above Substantial addition be apportioned equally between the three assessee s irrespective of the fact that the purchases had been effected in the case of the assessee only - HELD THAT - The departmental representative has simply relied upon the finding in the assessment order and the office note where in the AO has considered that the assessee is key person and hence the addition of the unexplained sales and purchase is made in his case only. There is no other finding of the facts or any further evidence has been placed before us. Therefore, we find there is no force in respect of these two grounds raised that the same is be treated as assessee s income alone we feel that the finding of the CIT(A) that the addition be apportioned in respect of all the three assessee is after taking into account the over all aspect of facts explained, reconciliation of the commodities and its stock were considered to of all the three concerns together and accepted by AO, reconciliation of stock found and recorded in books were considered of all the concerns, we do not find any error of facts in the finding of the CIT(A) and thus, the ground of the department fails on facts and in law and the same is dismissed.

Issues Involved:
1. Deletion of addition on account of unaccounted sale of jeera bags.
2. Deletion of addition on account of unaccounted sale of Isabgul.
3. Deletion of addition based on retracted statement of the accountant.
4. Deletion of addition on account of unexplained investment in purchase of jeera.
5. Deletion of addition on account of unrecorded purchase of Isabgul.
6. Deletion of addition on account of excess stock of Isabgul.
7. Deletion of addition on account of excess stock of Tarbuj seeds.
8. Deletion of suspended and protective addition on account of unexplained and hidden stock of jeera.
9. Deletion of suspended and protective addition on account of unexplained stock of jeera found during the search.
10. Deletion of suspended and protective addition based on spiral diary entries.
11. Deletion of addition based on sworn statements and affidavits.
12. Apportionment of substantial addition among three assessees.
13. Direction to apportion undisclosed income among three assessees.

Issue-Wise Detailed Analysis:

1. Deletion of addition on account of unaccounted sale of jeera bags:
The AO added ?20,42,331/- based on seized bills indicating unaccounted sales of 434 bags of jeera. The CIT(A) deleted this addition, accepting the assessee's explanation that these were commission transactions, not sales. The Tribunal upheld this deletion, noting that the Revenue failed to conclusively prove that the assessee sold jeera on his own account and not on a commission basis.

2. Deletion of addition on account of unaccounted sale of Isabgul:
The AO added ?9,10,800/- for unaccounted sales of 506 bags of Isabgul. The CIT(A) deleted this addition, noting that the stock reconciliation provided by the assessee was ignored by the AO. The Tribunal upheld this decision, stating that the Revenue did not provide specific evidence of unaccounted sales from the seized material.

3. Deletion of addition based on retracted statement of the accountant:
The AO added ?20,98,800/- based on the accountant's statement, which was later retracted. The CIT(A) deleted this addition, accepting the assessee's reconciliation of jeera sales and commission income. The Tribunal upheld this deletion, noting that the statement was retracted and the assessee had reconciled the total quantity of jeera.

4. Deletion of addition on account of unexplained investment in purchase of jeera:
The AO added ?3,61,77,994/- for unaccounted purchases of 567,875 kg of jeera. The CIT(A) deleted this addition, accepting the assessee's reconciliation and noting that the purchases were recorded in the books. The Tribunal upheld this deletion, agreeing with the detailed reconciliation provided by the assessee and noting no contrary evidence from the Revenue.

5. Deletion of addition on account of unrecorded purchase of Isabgul:
The AO added ?29,66,094/- for unrecorded purchases of 2,436 bags of Isabgul. The CIT(A) deleted this addition, noting that the stock reconciliation was accepted in earlier proceedings. The Tribunal upheld this deletion, agreeing with the CIT(A)'s detailed analysis and noting no contrary evidence from the Revenue.

6. Deletion of addition on account of excess stock of Isabgul:
The AO added ?9,549/- for excess stock of 6 bags of Isabgul. The CIT(A) deleted this addition, accepting the assessee's reconciliation. The Tribunal upheld this deletion, noting that the Revenue did not present any contrary evidence.

7. Deletion of addition on account of excess stock of Tarbuj seeds:
The AO added ?1,45,260/- for excess stock of Tarbuj seeds. The CIT(A) deleted this addition, accepting the assessee's explanation that the stock belonged to farmers. The Tribunal upheld this deletion, noting no contrary evidence from the Revenue.

8. Deletion of suspended and protective addition on account of unexplained and hidden stock of jeera:
The AO added ?1,41,90,841/- for unexplained and hidden stock of jeera, based on an alleged removal of stock from a sealed godown. The CIT(A) deleted this addition, noting lack of evidence for the alleged removal. The Tribunal upheld this deletion, agreeing with the CIT(A)'s finding that no stock was removed as alleged.

9. Deletion of suspended and protective addition on account of unexplained stock of jeera found during the search:
The AO added ?2,27,77,749/- for unexplained stock of 3,20,814 kg of jeera. The CIT(A) deleted this addition, accepting the assessee's reconciliation. The Tribunal upheld this deletion, noting that the forensic report and reconciliation supported the assessee's claim.

10. Deletion of suspended and protective addition based on spiral diary entries:
The AO added ?1,20,06,368/- based on entries in a spiral diary. The CIT(A) deleted this addition, noting that there was no evidence linking the entries to cash credits or interest. The Tribunal upheld this deletion, agreeing with the CIT(A)'s finding that the entries did not represent cash credits.

11. Deletion of addition based on sworn statements and affidavits:
The AO made additions based on sworn statements, which were later retracted by affidavits. The CIT(A) deleted these additions, accepting the affidavits. The Tribunal upheld this deletion, noting that the Revenue did not provide any evidence to contradict the affidavits.

12. Apportionment of substantial addition among three assessees:
The AO made an addition of ?19,87,756/- in the hands of one assessee. The CIT(A) directed that this addition be apportioned among three assessees. The Tribunal upheld this direction, noting that the stock reconciliation considered all three concerns.

13. Direction to apportion undisclosed income among three assessees:
The AO made additions in the hands of one assessee. The CIT(A) directed that the undisclosed income be apportioned among three assessees. The Tribunal upheld this direction, agreeing with the CIT(A)'s finding that the stock reconciliation considered all three concerns.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s deletions and directions regarding the various additions made by the AO. The Tribunal found that the Revenue failed to provide sufficient evidence to support the additions, and accepted the detailed reconciliations and explanations provided by the assessee.

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