9911796707
TMI Blog2013 (10) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... und, because, even in respect of assessments done pursuant to search, rules of preponderance of probability will apply. What is specifically noted is that these assessments were done under Section 153C read with Section 143(3) of the Act - The Assessing Officer was not constrained by the fetters of evidence found at the time of search alone. Assessment under Section 153C/153A cannot be treated on par with block assessments done under Chapter XIVB of the Act. Contents of the books found at the time of search, has to be considered as true by virtue of Section 132(4A) of the Act, though it is a rebuttable presumption. Admittedly, nothing was seized which would show that opening balance as on 8.11.99 was the income of the assessee for assessment year 2000-01. Considering these aspects, addition made for investment in Sahukhari Byaj business for assessment year 2000-01 was not warranted and rightly deleted by the CIT(Appeals). However, the additions made by the Assessing Officer for interest earned by the assessee in such business for various years were, unjustly deleted by ld. CIT(Appeals). Such additions are reinstated. Order of the CIT(Appeals) to this extent is set aside. In regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 Not available 2002-03 Rs. 93,776 Rs. 6,52,019 2003-04 Rs. 92,897 Not available 2004-05 Rs. 93,887 Not available 2005-06 Rs. 1,10,614 Not available Assessee never returned any income from its money lending business in regular returns. 3. Subsequent to search, notices were issued under Section 153C of the Act requiring the assessee to file returns for impugned assessment years. In the returns filed in pursuant to such notices, additional income declared by the assessee were as under:- Assessment Year Admitted for unexplained investment in loan against PN (Rokas) called as business loans or Sahukhari Byaj (Rs. ) Admitted for unexplained cash credit/ loans (Rs. ) Admitted for inadequacy of drawing (Rs. ) Admitted for additional interest on loan against Rokas or business loan (Rs. ) 2005-06 53,17,500 Nil 1,00,000 5,38,500 2004-05 Nil Nil 1,00,000 1,78,325 2003-04 Nil 50,000 1,00,000 1,97,750 2002-03 7,00,000 Nil 1,00,000 71,890 2001-02 Nil Nil 1,00,000 13,500 2000-01 2,74,000 Nil 1,00,000 13,500 4. Statements were recorded from Shri Madanlal during the course of search on 4.8.2005 and thereafter on 29.9.2005. Assessee subsequent to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled Girivi Byaj business. The debtors and creditors as on 08.11.99 mentioned above pertained to the Sahukhari Byaj business. After netting the debtors and creditors, and a few other miscellaneous credit balances, Assessing Officer determined the unexplained investment in the Sahukhari Byaj business at Rs. 74,45,523/- for assessment year 2000-01. Though the assessee filed fund flow statement and argued that debtors and creditors were netted over a period of time and the actual investment of Rs. 76,42,159/- stood admitted over various years in the returns filed after the search, Assessing Officer was of the opinion that such unexplained investment ought have been disclosed in the return for assessment year 2000-01 itself. According to him, an addition of Rs. 74,25,523/- was required to be made in the said assessment year. A.O. also relied on a statement recorded from the assessee on 29.9.2005 for coming to the conclusion that assessee had investment of Rs. 74,45,523/- during the relevant previous year. Though the assessee argued that the amount represented opening balance and it was involved in this business for three decades, this did not find favour with Assessing Officer. Accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hari Byaj business ( ) For inadequacy in drawing ( ) For undisclosed interest on loan against Rokas or business loan ( ) For undisclosed income from jewellery business ( ) For excess stock in gold Jewellery business ( ) 2005-06 8,12,000 42,282 8,61,500 24,90,595 95,48,810 2004-05 Nil 98,011 19,21,675 25,22,686 Nil 2003-04 Nil 1,00,627 19,02,250 26,48,421 Nil 2002-03 5,25,000 1,16,794 20,28,110 42,18,044 Nil 2001-02 13,659 1,54,436 20,86,500 25,00,000 Nil 2000-01 2,74,000+74,45,523 1,11,134 20,86,500 25,00,000 Nil 10. Assessee moved in appeal before the CIT(Appeals) for all the assessment years, assailing the additions made. Insofar as addition made for investment in Sahukhari Byaj business, argument of the assessee was that what was considered for addition for assessment year 2000-01 was the opening balance as on 8.11.99. According to assessee, he was in this line of business for about three decades and presumption taken by the Assessing Officer that the opening balance in debtors accounts pertained to investment made in assessment year 2000-01, was unfounded. Further, according to assessee, he had already offered in his return for asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in Sahukhari Byaj business, for assessment year 2000-01, was not at all called for. The said amount represented only opening balance. Nothing was found during the course of search to show that it represented the investment of the assessee during the relevant previous year. Further, according to him, the statement recorded on 29.9.2005 and the admissions therein could not be considered for making additions, since these were retracted by the assessee. 15. As for the addition for undisclosed income from jewellery business estimated by the A.O., ld. CIT(Appeals) was of the opinion that this was solely based on the statement recorded from the assessee and not based on any search materials. In this view of the matter, he deleted the addition for income from jewellery business also. 16. Insofar as the addition for interest on Sahukhari Byaj business was concerned, CIT(Appeals) was of the opinion that such additions were also based only on the statement recorded from assessee and not based on any seized documents. These were also deleted by the CIT(Appeals). 17. Insofar as unexplained investment on gold jewellery business was concerned, CIT(Appeals) noted that such excess stock-in-tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not having income from Sahukhari Byaj business. Assessing Officer had estimated the interest income considering these aspects and also considering admission of the assessee. In the statement recorded, assessee had mentioned that he was earning Rs. 20 lakhs to 22 lakhs as interest since very many years except for two years wherein the incomes were Rs. 13 lakhs to 15 lakhs. Assessing Officer had made the addition considering such admission as well as volume of the Sahukhari Byaj business carried on by the assessee. Further, as per learned D.R., there was no evidence for retraction of the statement given by the assessee at the time of search. Even if it was presumed that there was such a retraction, no corroborating evidence was filed by the assessee. Statement recorded from the assessee was more than one and a half months after the date of search. Therefore, he could not say that there was any coercion. Answers given to the queries raised were well thought out and assessee could not get away from the responsibility. Assessee could not turn back and say that he was retracting the statement, without any evidence to show that what was stated by him was not based on facts. Simple retrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per learned A.R., these additions were rightly deleted by the CIT(Appeals). Learned A.R. pointed out that only material found at the time of search pertained to previous year relevant to assessment year 2000-01. Such material had relevance only for assessment year 2000-01. For assessment done pursuant to the search, as per learned A.R., existence of seized material was a sine qua non and for this reliance was placed on the decision of Hon'ble jurisdictional High Court in the case of CIT v. G.K. Senniappan (284 ITR 220). Thus, according to her, CIT(Appeals) was justified in deleting the additions and there was no reason to interfere with the orders of CIT(Appeals). 23. We have perused the orders and heard the rival submissions. In the returns filed prior to search, admittedly, assessee had only shown income from jewellery business. Such income shown by the assessee over various years have been tabulated by us at para 2 above. This varied between Rs. 89,702/- and Rs. 1,10,614/-. Turnover shown by the assessee in the such return for assessment year 2002- 03 was only Rs. 6,52,019/- and for assessment year 2000-01 was only Rs. 4,81,524/-. As against this, the surplus stock found at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47 of seized material in Annexure MPB/B&D/S.15. Go through the same and explain? Ans: I have gone through the page 43 & 47 of seized material of Annexure MPB/B&D/S-15 shown by you and the same is explained as under:- Page No.43 contains the monetary transactions with S.K. and page No.47 contains the monetary transactions with V.J. These are the two major persons from whom I give and take money as and when required. But I cannot divulge the full details. Q.80: I am showing you page No. 145 to 182 of seized material in Annexure/MPB/B&D/S-15. Go through the same and explain? Ans: I have gone through the pages 145 to 182 of seized material in Annexure/MPB/B&D/S-15 and the same is explained as under:- These are details of Potli transactions pertaining to the period 1999 to 2002 and the balance outstanding as on 31.3.2002 is Rs. 25,04,500/-." Thus, in our opinion, it has been clearly established that assessee was having Sahukhari Byaj business and was also earning substantial interest therefrom. Admission of the assessee regarding such interest income could, therefore, be extrapolated to various years other than the years for which the books were found, because, even in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h book was found at the time of search and seized as per Annexure MPB/B&D/S-24. Assessee was required to explain such cash book and in answer to question No.51 in the statement recorded from assessee on 29.9.2005, it was mentioned by the assessee as under:- "Q.51: I am showing you the Cash Book found during the course of search on 3.8.2005 in your residence at No.12, Moulana Abdul Kalam Azad Street, Red Hills, Chennai-52 and seized as per Annexure MPB/B&D/S-24 dated 3.8.2005. Please go through the same and explain? Ans: This books is the Cash book for the period 1.4.2000 to 31.3.2001 maintained by me in respect of purchase and sale of gold jewellery, silver articles, pawn broking business and Potli loans. These cash transactions are in respect of my jewellery business (M/s Amrath Jewellers, Proprietor Madanlal HUF) and the pawn broking business being carried out in my wife Smt. Leela Bai's name (M.L. Jain Pawn Brokers, Proprietor Smt. Leela Bai). This also includes the Potli business being carried out by me." The above cash book called "Mall Khata Jama" which pertained to financial year 2000-01 was further explained by the assessee in answer to questions 63 to 65. It was mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the minimum gross profit at 10% of sales turnover was ranging between Rs. 18 lakhs to 22.5 lakhs in the last six years. Q.70: It means that the maximum gross profit at 20% was also possible? Ans: The gross profit margin normally varies between 10% to 15%. Q.71: If the minimum gross profit per year of Rs. 18 lakhs to 22.5 lakhs is taken for the last six years your profit from jewellery business alone works to Rs. 108 lakhs 135 lakhs for the last last six financial years from 1999-2000 to 2004-2005. Is it not? Ans: Yes I do agree with the computation that by adopting a minimum of 10% of gross profit also my total income from jewellery business for the financial years 1999-2000 to 2004- 2005 alone works out to Rs. 1.35 crores." In answer to question No.73, assessee mentioned as under:- "Q.73: I am showing you Page No.35 of seized material in reference Annexure/MPB/B&D/S-15 seized on 3.8.2005. Go through the same and explain? Ans: I have gone through the page No.35 of seized material in reference Annexure/MPB/B&D/S-15 seized from my residential premises at No.12, Moulana Abdul Kalam Azad Street, Red Hills, Chennai-52 on 3.8.2005. This page contains the monthwise turnover o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y for assessment year 2005-06, there is no doubt that such excess stock was found at the time of search. The date of search fell in previous year 2005-06 relevant to assessment year 2006-07. Assessee had admitted value of such stock in his return for assessment year 2006-07. Assessing Officer had made the addition for assessment year 2005-06, but nevertheless, deleted such amount admitted by the assessee in his return for assessment year 2006-07. We are of the opinion that CIT(Appeals) was justified in taking the view that the excess stock found at the time of search could have been considered for assessment only in the previous year in which the search was conducted. Hence, it was assessable only for assessment year 2006-07 and admittedly, assessee had returned such income in the said assessment year. The addition was rightly deleted by the CIT(Appeals). Nevertheless, A.O. is directed to ensure that the amount is included in the income of the assessee for assessment year 2006-07. 27. In the result, we confirm the orders of CIT(Appeals) insofar as it relate to deletion of additions made for investment in Sahukhari Byaj business and excess stock in gold and jewellery business. Howe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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