9911796707
TMI Blog2012 (11) TMI 412X X X X Extracts X X X X X X X X Extracts X X X X ..... petty lapses in the recording of the turnover in the sales register could not be ruled out, thus ends of justice shall be met if the addition on account of profit earned by the assessee not accounted is restricted to Rs.8 lakhs out of the addition of Rs.67.22 lakhs confirmed by the CIT(A) - partly in favour of assessee. On money receipt on sale of timber - Held that:- CIT(A) has dismissed the ground of the appeal of the assessee in a summary manner. The Revenue could not justify with evidence to prove its case regarding receipt of “on money” in respect of sale of premium timber - in favour of assessee. Difference in stock - search - Held that:- As assessee could not establish the nexus between the shortfall in stock found at the time of search and addition made by the AO on account of profit earned from undisclosed trading of timber. Accordingly, the GP element at the rate of 14% on shortfall of timber of Rs.1.14 lakhs which comes to Rs.16,000/- be sustained as addition out of the addition of Rs.1.14 lakhs sustained by the CIT(A) and the balance addition is deleted - partly in favour of assessee. Unexplained expenditure - Held that:- CIT(A) has sustained the addition by o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ND ANIL CHATURVEDI, JJ. Assessee by: Shri J.P. Shah Revenue by: Shri Kartar Singh O R D E R PER G.C. GUPTA, VICE-PRESIDENT: These four appeals, two appeals by the assessee and two appeals by the Revenue for the block period are directed against the order of the CIT(A). These are being disposed of with this consolidated order for the sake of convenience. IT(SS)A.No.336/Ahd/2002 (Assessee s appeal) 2. The assessee has raised the following additional grounds of the appeal with a request for admission thereof. 1. In respect of additions made on basis of material seized from M/s.Mahavir Timber Agency P. Ltd., the necessary satisfaction of the AO as laid down by the Supreme Court in Manish Maheshari Vs. CIT, 289 ITR 3412 is not there and therefore additions of Rs1,14,20,704/- by AO (reduced to Rs.67,22,526/- by CIT(Appeals), Rs.1,62,010/- by AO., Rs.64,59,436/- made by AO and Rs.2,12,138/- made by AO and CIT(A) are all bad. 2. In fact all the additions are bad because they are made without abiding by rules of natural justice and/or proper show cause notice and/or by wrongly recording the factum of admission by assessee, when none was made by assessee. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the CIT(A) and submitted that the AO has given a finding that the sale figure as per the seized material were not recorded by the assessee in its books of accounts. He relied on the order of the AO. 7. We have considered rival submissions and have perused the orders of the AO and the CIT(A) and also the contents of the written submissions filed by the assessee before the CIT(A). We find that the CIT(A) has rejected the grounds of the appeal in a summary manner and has sustained an addition of Rs.67.22 lakhs by merely observing that the appellant s contention that the annexures are recorded in the books of account cannot be accepted since the AO has given such finding after examination of the books of account and seized document which are in the custody of the I.T. department. We find that this approach of the CIT(A) is not sustainable in law. The assessee in its written submission at page no.2 to 25 filed before the CIT(A) has elaborately cited the figure of the turnover as per the seized material, recorded in its sale register and page number of the sale register along with date, amount and full narration has been detailed therein. The CIT(A) has not even rejected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imber. In view of these facts, we delete the addition and the ground no.2 of the assessee s appeal is allowed. 11. The ground no.3 of the assessee s appeal is as under: 3. The ld.CIT(A) erred in law and on facts in confirming the addition to the tune of Rs.1,14,000/- on account of alleged discrepancy in stock on the date of search. 12. The learned counsel for the assessee submitted that the shortfall of stock of Rs.1.14 lakhs on the date of search is covered by the addition made on account of profit from undisclosed trading of timber in ground no.1 of the assessee in the present appeal before the Tribunal. The learned DR has relied on the orders of the AO and the CIT(A). 13. We have considered rival submissions and perused the orders of the AO and the CIT(A). We find that the assessee could not establish the nexus between the shortfall in stock found at the time of search and addition made by the AO on account of profit earned from undisclosed trading of timber. Accordingly, we hold that the GP element at the rate of 14% on shortfall of timber of Rs.1.14 lakhs which comes to Rs.16,000/- (in round figure) be sustained as addition out of the addition of Rs.1.14 lakhs sustai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as per the seized paper is sustained, as the issue pertains to very old block period for which necessary evidences could not be available with assessee for each item of the petty expenditure. We find that the CIT(A) has sustained the addition by observing that the AO appears to have verified the material, and accordingly worked out the amount of expenditure. These observations of the CIT(A) is not sustainable. In view of the submissions of the learned counsel for the assessee and to cover up the possible petty lapses and expenditure which could not have been accounted for by the assessee, we hold that the ends of justice shall be met if the addition of Rs.7 lakhs is confirmed out of addition of Rs.64.59 lakhs sustained by the CIT(A) and the balance addition is deleted and the ground no.4 of the assessee is partly allowed. 17. The ground no.5 of the assessee s appeal is as under: 5. The ld.CIT(A) erred in law and on facts in confirming the addition of Rs.1,81,694/- made on account of profit earned from alleged undisclosed trading turnover. 18. The learned counsel for the assessee at the outset fairly submitted that this ground does not arise out of the appellate order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A). 26. We have considered rival submissions and perused the orders of the AO and the CIT(A). We find that the CIT(A) has observed that further addition equal to 15% of the seized items contained in Annexure BS-43 is made, which works out to Rs.1,81,694/- with the remarks that the same will be set off against the above income on account of unaccounted turnover. We find that separate addition on account of undisclosed turnover was made by the Revenue, and therefore the CIT(A) was wholly justified in allowing the set off of this amount of Rs.1,81,694/- against the income from undisclosed turnover of the assessee. There being no mistake in the order of the CIT(A) on this issue, the same is confirmed and the ground no.3 of the Revenue is dismissed. 27. The Ground No.4 of the Revenue s appeal is as under: IV. The learned CIT(A) has erred in law and on facts in deleting the addition made of Rs.1,62,010/- on account of unaccounted initial investment. 28. The learned DR has relied on the order of the AO. The learned counsel for the assessee has relied on the order of the CIT(A). 27. We have considered rival submissions and perused the orders of the AO and the CIT(A). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue authorities recorded while disposing of this issue against the assessee. The explanation of the assessee is clearly an after thought. In these facts of the case, we confirm the addition of Rs.1,17,000/- made in the hands of the assessee and the ground no.1 of the appeal of the assessee is dismissed. 33. The ground no.2 of the assessee s appeal is as under: 2. The ld.CIT(A) erred law and on facts in confirming the addition of Rs.65,917/- on account of alleged discrepancy in stock on date of search. 34. We have heard the parties. We find that the AO has made addition of Rs.4.39 lakhs on account of shortage of stock. The CIT(A) has restricted the addition to Rs.65,917/- only by applying a GP rate of 15% against the stock of Rs.4,39,452/- and the balance addition was deleted by the CIT(A). Therefore, we find no mistake in the order of the CIT(A), the same is confirmed and the ground no.2 of the assessee s appeal is dismissed. 35. The ground no.3 of the assessee s appeal is as under: 3. The ld.CIT(A) erred in law and on facts in confirming the addition of Rs.15,23,347/- on account of unaccounted profit alleged to have been earned from alleged undisclosed tradin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... surcharge on tax and the same may please be deleted. 43. The learned counsel for the assessee has not pressed these grounds of the appeal of the assessee, which are accordingly dismissed. 44. The additional ground no.1 of the assessee s appeal is as under: 1. Rs.1,17,000/- cannot be separately added as it will stand telescoped by the addition of Rs.15,83,247/- upheld by CIT(A) or out of Rs.20,31,130/- made by the AO as unaccounted profit. 45. We have heard the parties. The additional ground no.1 of the appeal as reproduced above is admitted. Unexplained cash of Rs.1,17,000/- is covered with the addition sustained while disposing of Ground no.3 of this appeal, and accordingly, the assessee is entitled to telescopic benefit, and the issue is decided in favour of the assessee and the AO is directed to allow telescopic benefit to the extent of Rs.1.17 lakhs and accordingly the additional ground no.1 of the assessee s appeal is allowed. 46. The additional ground no.2 and 3 are as under: 2. The assessment order is bad because section 158BC notice was vague and therefore, bad. 3. All the additions made by AO are bad because they are made without abiding the rules of n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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