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TMI Blog2013 (12) TMI 1055X X X X Extracts X X X X X X X X Extracts X X X X ..... Malani - The outcome of all cash transactions between the inter-group concerns was comprised in the cash sheet and the income as per that document having been already considered in the individual assessment of Shri N.K. Malani, who happens to be a partner in both the firms - There is no scope to make any further addition on account of either unaccounted purchases or unrecorded sales, as the entire transactions of the group stand covered under the surrender of cash balance made by the common partner Shri N.K. Malani – Otherwise it would tantamount to a double addition which is not contemplated by the Act – Decided in favour of assessee. - ITA No. 136/JU/2011, ITA No. 127/Jodh/2011 - - - Dated:- 11-3-2013 - Shri Hari Om Maratha And Shri N. K. Saini,JJ. For the Petitioner : Sh. Rajendra Jain, FCA For the Respondent : Dr. Deepak Sehgal-CIT(DR) ORDER Per Bench :- These are cross-appeals pertaining to A.Y. 2008-09 filed against the order of ld. CIT(A) dated 24.01.2011. 2. The assessee is a partnership firm and for A.Y. 2008-09 assessment order was framed on 08/12/2009 u/s 143(3) r.w.ss 153A and 153C of the Income-tax Act, 1961 [hereinafter referred to as 'the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leting the addition of Rs. 11,43,975/- made by the AO on account of undisclosed cash sales despite the facts that the addition made by the AO was on the basis of seized records and the CIT(A) himself has not disputed the finding of the AO and interpretation of the recordings found in the seized records. 3. Allowing set of the trading addition made by the AO of Rs. 4,29,031/- which had been confirmed by him against the addition made by the AO in respect of unaccounted investment in undisclosed purchase of Rs. 18,49,946/- which had been confirmed by him. 4. Allowing set off the trading addition made against the addition made in respect of unaccounted investment in undisclosed purchases despite the fact that the gross profit is ascertainable at the end of the year end and the purchases were made during the entire period." 5. We have heard rival submissions. We have also perused the entire record available or produced before us. The ld. A.R. has raised an additional legal ground although the assessee has already taken similar ground as ground No. 2. In fact this ground No. 2 has been specifically been enlarged by way of additional ground. Since, the assessee has already taken a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end of the year whereas the purchases are made during the entire period so giving such a set off is not justified. Whereas the assessee has challenged even the making of the trading addition only on the basis of a short fall in the g.p. rate which according to him has been duly explained and that no material defect has been pointed out in the books of accounts. It is also contended that the A.O. has made multiple additions on the same income which, action is not warranted under the Act. 8. After hearing both the parties we have noticed that the A.O. has made separate additions on account of unaccounted purchases and undisclosed sales. So, further making estimation of sales on the basis of these very undisclosed sales found at the time of the survey is not at all justified as it would result in conceptual addition which will open a Pandora box. Undisclosed sales/purchases found at a particular period cannot be dragged and cannot be uniformly extended to the entire year. It does not sound justifiable even if it sounds logical to do so. Therefore, we cannot approve the action in estimating the sales and therefore, accept the declared sales. Regarding comparing the application of gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Nand Kishore Malani it is again submitted that the said documents were not found from the business premises of the assessee and suitable explanations are being given in his respective case, however, having regard to your queries the necessary explanations are being submitted herein below with regards to document allegedly belonging to the assessee. The transaction under consideration is related to the period prior to 01.09.2007 and as per the cash sheet of 31.08.2007 found from the possession of Nand Kishore Malani there is an opening cash balance of Rs. 6301819.00 and the surrender with respect to which has already been made in the case of Nand Kishore Malani, already includes the outcome of above inter group transactions in the said opening balance. The said opening cash balance was nothing but the result of all inter group and other transactions of the group and the same has already been surrendered as undisclosed income in the hands of Nand Kishore Malani. Hence, there was rather no need of making a separate surrender in respect of same income as the same income cannot be taxed twice." But, the A.O. after accepting the fact that Sh. N.K. Malani has already surrendere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee on the basis of said documents. With regards to documents found from the residences of partners and family members suitable explanations are being given in their respective cases, however, having regards to your queries the necessary explanations are being submitted herein below with regards to document allegedly belonging to the assessee. In the post search statement recorded during the course of search proceedings on the group Rs. 545985.00 and 627990.00 were got surrendered from Ramesh Chandra Malani and Nand Kishore Malani respective as unrecorded sales of Malani Ramjiwan Jagnnath as on the date of search. In this regards it is submitted that although statement of Shri Ramesh Chandra Malani was recorded in this regard and aforesaid surrender was obtained it is relevant to note that he is neither a partner nor an employee of that firm. It is further submitted that during the course of search proceedings surrender in respect of investment in residential house amounting to Rs. 4667257.00 was obtained the basis of shortage of cash as per page no. 16 to 18 of Exhibit A-2 seized from the possession of Ramesh Chandra Malani. The aforesaid summary of cash balance on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he items of additions are upheld, even then the unaccounted investment in purchase of Rs. 18,49,946/- being more than the unaccounted sales, the net addition has to be of Rs. 18,49,946/-, if the other argument of the appellant of these unaccounted purchase and sales finally gets reflected in the cash sheet found having opening balance of Rs. 63.01 lakhs as on 31.08.2007 and closing balance as on 11.09.2007 as Rs. 56.59 lakhs and Shri Nand Kishore Malani surrendering these cash balances and the cash found at the residence for taxation in his individual hand, is not accepted." 14. Now both parties are aggrieved. After hearing both the sides, we have found that the purchases and sales have been found to have been made outside the books. The cash sheet was also found during search. In this cash sheet opening balance of Rs. 63.01 lakhs as on 31.8.2007 and closing balance as on 11.9.2007 of Rs. 56.59 lakhs have been noted down. Shri Malani has made a surrender of the cash-balance and the cash found at his residence for taxation in his individual hand. The assessee wants that the entire cash purchases and cash sales done outside the books of account stand covered in the opening and cash ..... X X X X Extracts X X X X X X X X Extracts X X X X
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