9911796707
TMI Blog2013 (11) TMI 1486X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) erred in sustaining the following additions as undisclosed income: Assessment Year Amount (Rs) 1989-90 55,750.00 1994-95 1,21,205.00 1995-96 1,21,205.00 (b) Learned CIT(A) failed in not appreciating that the additions made by the AO and sustained by him was without evidence of record justifying such additions. He ought to have appreciated that the AO had not brought anything on record to show that the appellant earned such income. He ought to have further appreciated that what was taxable under law as real income and not any figure worked out on surmises, suspicions and estimates based on them. 4. The learned CIT(A) erred in sustaining addition of Rs.75000 made by the AO on estimates of travel expenses despite bringing on record as a matter of fact that her husband was NRI and was in Dubai to sponsor her travel expenses and living expenses. While he appreciated that the living could have been provided by husband, he wrongly held that the ticketing part should be held to have been spent by the appellant herself and therefore tax such estimated amount as undisclosed income. He erred in partly accepting and partly denying the claim of the appellant. 5. The learned CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical trade and dealing in chemicals. There was a search and seizure operation u/s 132 in Thakkar Group of cases on 21.1.1999. The search operation covered both, the business premises as well as residential premises of the members of Thakkar family. The Thakkar family is engaged in the business of manufacturing as well as trading in various chemicals. During the relevant years the assessee was associated with following business concerns of Thakkar Group: Name of the firm/concerns Nature of business Designation 1.Jalaram Petrochem Trader in Petrochemicals Partner 2.Usha Exports Export of Fish Partner 3.Sunil Chemical Industries Trader in Protrochemicals Proprietor 7. It is relevant to state that Sunil Chemical Industry carried out trading business in petrochemicals under the proprietorship of assessee only for four months i.e. till 31.3.1998 and from 1.4.1998 this concern was converted into a partnership firm with assessee and her husband as partners. 8. Pursuant to search at the premises of the assessee, notice u/s 158BC (a) was issued on 13.11.1999, vide which the assessee was asked to file block return covering the period from 1.4.1988 to 21.1.1999. The assessee file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of the appellant, such burden of proof has not been discharged at all. The appellant's attitude in this regard has been of total recalcitrance. If the appellant feel that the income estimated by the assessing officer is not correct then she was free to put correct facts and figures before the assessing officer regarding her income earned by her during these previous years. She could have done this even at the stage of first appeal. However, nothing such has been done. It is a settled law that in the appropriate circumstances, the assessing officer is well within his rights to estimate undisclosed income of an assessee. In my opinion, facts and circumstances of the case of the appellant so warrant. Further, even as per scheme of section 158BB, it is clear that if an assessee fails to file return of income of any of the years falling in the block period, within the prescribed time limit, then, the assessing officer is free to estimate undisclosed income in respect of such year/ years. It is also relevant to appreciate that the appellant assessee has not, on the basis of adequate evidence, submitted that the income estimated by the assessing officer is excessive. The appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment years viz 1989-90, 1994-95 and 1995-96. He submitted that as per section 158BB(3), the burden is on the assessee to prove that any undisclosed income had already been disclosed in any return of income filed by assessee before commencement of search. Since assessee has not placed any document on record, the AO has rightly adopted the formula of estimating the income considering other assessment years of the assessee particularly when the AO has stated that the source of income of the assessee were constant. He submitted that the order of ld. CIT(A) be confirmed. 12. We have carefully considered the submissions of ld. Representatives of the parties and the order of Hon'ble jurisdictional High Court (supra) relied upon by ld. AR in the light of orders of authorities below. It is a fact that the assessee has failed to prove by any documentary evidence that the income of assessee in the assessment years viz 1989-90, 1994-95 and 1995-96 were below taxable limit. The assessee has also not disputed the fact, which have been stated by AO that the source of income of the assessee in the above assessment years viz 1993-94 or 1996-97 were constant. We also observe that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee had spent out of her undisclosed income on her visits to Dubai and her husband did not spend for her living thereat. It was also contended that the husband of the assessee had declared Rs.70,00,000/- as undisclosed income for the block period and paid taxes thereon. Therefore, estimation of undisclosed income on the travel of assessee to Dubai is uncalled for. Her passport does not contain any such evidence that she had taken any exchange with her. 16. Ld. CIT(A) after considering the submissions of the assessee has held vide para 5.3 that no incriminating evidence were found during the course of search regarding undisclosed income attributable to foreign traveling is concerned. Ld. CIT(A) has accepted the fact that expenses of boarding, lodging, local travelling and entertainment expenditure etc, were born by her husband. However, he has considered that expenditure on account of foreign travelling can be estimated at Rs.75,000/- i.e. at the rate of Rs.25,000/- per trip as undisclosed income of the assessee. Therefore, ld. CIT(A) has deleted a sum of Rs.2,75,000/- out of the addition of Rs.3,50,000/- made by AO and sustained the addition to the extent of Rs.75,000/-. Hence, ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earch that the assessee had incurred the expenditure on her visits to Dubai and not her husband. We observe that ld. CIT(A) has stated that no incriminating evidence was found during the course of search regarding undisclosed income attributable to foreign travelling of the assessee. Considering the said facts, we are of the considered view that the ld. CIT(A) is justified in deleting the addition of Rs.2,75,000/- which has been estimated on account of boarding, lodging, local travelling and entertainment etc. Further, we are of the considered view that ld. CIT(A) is not justified to estimate a sum of Rs.25,000/- per trip aggregating to Rs.75,000/- as undisclosed income of the assessee on account of foreign traveling particularly when no evidence is placed on record and the said estimation is made arbitrarily and not on any cogent material on record. Hence, we delete the said addition of Rs.75,000/- as sustained by ld. CIT(A), besides confirming the order of ld. CIT(A) in giving relief of Rs.2,75,000/- out of total addition of Rs.3,50,000/- made by AO. Accordingly, ground No.4 of the appeal taken by assessee is allowed. Consequently, Ground No.2 and 3 of the appeal taken by departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36,000/- approximately. The total of the above sales proceeds of Rs.39,680/-is treated as undisclosed income pertaining to the period relevant to A.Y. 1999-2000. 3.6 Last item of undisclosed income is Rs.91,960/-. It is based on pg.no173 of Annexure A- I cited supra. It pertains to cash sales of MTO to various parties without raising bills. Contents of page no.173 are as under: "15/6/98 Sunrise Paint 2000 26/6/98 R.S. Paint 400 28/6/98 Laxmi Paint 1400 6/7/98 Sunrise Paints 2200 14/7/98 R.S.Ind. 1000 27/7/98 Standard Drug & Bar 600/7600" 3.6.1 During the course of block assessment proceedings, as per the. assessing officer, the appellant assessee did not address the issue. It was simply stated that these were part of regular books of account. The assessing officer on the other hand has held that. "the computerized floppies were seized during the search and printouts have been taken in the presence of assessee's representative, does not support the assessee's contention. In fact, the pencil notings appearing on page 175 is month-wise summary of recorded and unrecorded sale of MTO during F.Y.1998-99. Perusal of this page clearly shows that the assessee had sold 7600 ltr of MT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellant has mainly challenged the rate of Rs.12.10 per ltr applied by the assessing officer. Here also the appellant has failed to furnish any evidence to prove that rate adopted by the assessing officer is excessive. Considering these aspects, the addition of Rs.91,960/- made by the assessing office is confirmed. 5.5.2 On the basis of discussion made above, addition to the extent of Rs.1,27,960/- is confirmed and relief allowed is of Rs.3,680/-". Hence, this appeal before the Tribunal. 22. At the time of hearing, ld. AR submitted that there is a mistake in calculation in the orders of authorities below. He submitted that, the AO himself has mentioned that on the basis of seized documents i.e. page 172 of Annexure-A-I, the bills were prepared for less quantity and the actual delivery was higher and the total difference comes to only 300 ltrs. He submitted that the AO himself has applied the rate of Rs.12.1 per ltr and thereby applying that rate sales for the said excess quantity of 300 ltrs at the rate of 12.1 per ltr comes to Rs.3,630/- but the addition as such made by AO is Rs.36,000/- which has also been confirmed by ld. CIT(A) of the same amount which is factually is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of 4 items of jewelleries did not tally (Page 7 of the AO). It was explained that there was no difference in the total weight and value of item. The difference in specifications were due to making and remaking of those jewellery items. It could be possible that at the time of VDIS exact specifications were not written. It could be an inadvertence also. Against the value of Rs.7,58,507/- items valued Rs.21,731/- did not tally) accounting to 2.86% variation in specification and not value or weight. Firstly, overall weight and value tallying, the AO should have accepted that there was no non disclosure in that respect. Secondly, looking to the smallness of the value specifications not being ruled out, he should have accepted that there was no non disclosure of income on this account. This cannot be termed a reasonable assessment." Hence, department is in appeal before the Tribunal. 27. At the time of hearing, ld. DR submitted that AO has rightly made the addition as the said four items of jewellery did not tally with the specifications given in the returns of Wealth tax and declarations filed under VDIS. However, he did not dispute the fact that there was no difference in the to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned that this interest is claimed here on proportionate basis i.e. for four months period. Considering all these force, the claim of interest on overdraft is restricted to 15% of the balance appearing in the overdraft balance sheet. Such interest expense is worked out at Rs.79,576/-. The excess of Rs.40,416/- is disallowed and treated as undisclosed income of the appellant." 30. The assessee filed appeal before the First Appellate Authority and contended that existence of proprietary concerns was for the period from 1/4/1998 to 31.7.1998. It was contended that the firm Sunil Chemical Industries dealt with petrochemical products having higher margin and whereas the new firm in which the assessee was a partner only for four months were dealing in Petroproducts. AO compared unlike products and compared GP of the assessee firms of 0.81% as against GP of the earlier firm which was 2.9%. The assessee has also stated that the GP of the assessee's firm is of 2.9% of the total turnover if the trading and profit and loss account filed by the assessee are considered and the discount given by supplier be also taken note of. The ld. CIT(A) after considering the submissions of assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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