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TMI Blog2015 (8) TMI 364X X X X Extracts X X X X X X X X Extracts X X X X ..... /print out. The reconciliations of all the purchases and sales are not found fault with by the A.O. When the quantitative details of opening stock, purchases, sales are accepted then the closing stock should b arrived at from the figures only. (7) There is no allegation of fabrication of books. The results derived from the books of accounts should form the basis of assessing total income. (8) Stray and random figures cannot from the basis of determining income when these are proved to be wrong figures. In the case on hand the books of accounts have not been rejected. Under those circumstances substituting the book results with a random figures obtained from the document found i.e. P&L account in the CPU is incorrect. There are a catena of judgements which lay down that when books of accounts are not rejected, the question of estimating income does not arise. Here the figure of profit cannot be replaced without rejecting the books of accounts. Thus we delete the impugned addition of ₹ 3,06,91,356/- made by the AO as confirmed by the First Appellate Authority. - Decided in favour of assessee. - ITA No: 1944/Del/2013 - - - Dated:- 5-8-2015 - SHRI J.SUDHAKAR REDDY AND ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment cannot b annulled for all time to come. 7. Similarly, the second judgment cited by Ld.AR of the assessee being the judgement of Hon ble Delhi High Court rendered in the case of Smart Pvt.Ltd. (supra) is also of no help to the assessee in the present case. In this case also the Tribunal order passed on 6th Dec.1988 was quashed on this basis that the petitioner was not afforded any opportunity of being heard but at the same time, the Tribunal was directed by Hon ble Delhi High Court to decide the application filed by the assessee u/s 254(2) in accordance with law after providing adequate opportunity of being heard to the petitioner. Hence, as per this judgement of Hon ble Delhi High Court also, the assessment order in the present case cannot be quashed but it has to be set aside for a fresh decision after providing adequate opportunity of being heard to the assessee. 8. In view of our above discussion, we set aside the order of Ld.CIT(A) and restore the entire matter back to the file of AO for fresh decision after providing adequate opportunity of being heard to the assessee. We want to make it clear that all the issues shall remain open for both sides and we are not de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luation of closing stock. Only the net profit figure taken from the figures found in the final accounts statements in the hard disk and CPU was added. Aggrieved the assessee carried the matter in appeal. The First Appellate Authority considered the various submissions of the assessee and also called for the remand report. He held as follows: (a) Though the assessee has given detailed submissions, since there is evidence in the form of hard disk which was found during the course of survey proceedings, the Ld.CIT(A) was inclined to go by the stand taken by the AO that, the net profit of the assessee had to be taken as per the figures appearing in the hard disk. (b) In the remand report, the AO has stated that the books of accounts were called for and it is noticed, that all the figures taken from the impounded hard disk and the CPU, tallied with the figures appearing in the books, except the figure of net profit and closing stock and hence the impounded hard disk revealed the correct figures. (c) On a submission that the closing stock of ₹ 3,06,91,356/-, has not been made part of the opening stock of the subsequent A.Y., he held that this means that the stock has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h includes stock in hand month wise, which is at page 88 of the paper book and a stock summary which is at page 89 of the paper book. Referring to the month wise stock statement, he submitted that the stock value suddenly jumped from ₹ 1,07,56,233/- as on 20th Feb.,2001 abnormally to ₹ 3,54,96,490/- as on 31.3.2001, which is abnormal and absurd figure. He submitted that if this profit figure in the rough document in the C.P.U. is taken, the gross profit ratio would be 160% of the sales and submitted that this is an impossibility as the revenue can realise by examining the date of the competition of the assessee. He pointed out that the AO agrees that all the other figures i.e. opening stock, purchases, sales etc. Tally with regular books and accounts and hence correct. It is only the closing stock and profit adjustment which do not tally. Under such circumstances it can be safely concluded that there is an error in the closing stock figure. He further argued that this closing stock figure was not taken or carried forward as opening stock for the next year, and hence the opening stock of 1.4.2011 was to be taken as closing stock as on 31.3.2001. He relied on the judgemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the profit figure found in the computer only reflected the result of such out of books transactions. He submitted that data was obtained from the premises of the assessee and hence the authenticity of the same cannot be denied. He argued that at times, closing stock is valued at market value for the purpose of obtaining bank loans and that this may be one such case and hence the closing stock figure, as found in the computer, was not adopted by the Revenue by giving the benefit to the assessee. He submitted that only the profit figure is adopted. Thereafter the Ld.Sr.D.R. argued that this is a case where the assessee is making profit out of the transactions not recorded in the books of accounts and reintroducing the profits so earned into the company through accommodation entries in the subsequent Assessment Years. When it was pointed out that this is not the issue before the Tribunal in the impugned A.Ys, the Ld.Sr.D.R. submitted that all the figures at page 224 of the paper book, which is part of the annual accounts are cooked up figures and are highly unreliable. The sum and substance of his submissions is that he relies on the order of the First Appellate Authority, as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn in the print out taken from the hard disc/CPU, as mentioned above, be not held as the true figures in respect of closing stock and the net profit. To this effect the assessee has not filed any explanation, therefore, it is clear that the assessee has no explanations to offer about it. Further, the conclusion drawn by the then AO after discussion and scrutiny of books of accounts and other documents etc. By way of hard copies and statements taken from the hard disc/CPU. The income of the assessee company was finally computed as under: Income as originally assessed u/s 143(3) dt. 31.10.2002 ₹ 19,95,187/- Add: (i) Undisclosed profit as discussed ₹ 3,06,91,356/- (ii) Income from undisclosed sources as per accommodation entry taken by the Assessee company ₹ 2,70,82,114/- (iii) Closing stock originally taken ₹ 10,00,800/- ₹ 5,87,74,270/- Total income was assessed. ₹ 6,07,69,457/- (Emphasis supplied). 8.1. A perusal of the above demonstrates that all the figures in the Profit and Loss a/c and the Balance Sheet in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent from the CPU/hard disk and adopted for assessment of total income. Such an approach cannot be approved. 8.2. The Kolkata A Bench of the Tribunal in the case of Bimal Kumar Singhania vs. Dy.CIT(supra) 100 TTJ 0790, has held as follows. 13. We have heard the rival contentions of the parties and perused the orders of the Revenue authorities. We have also carefully considered the various documents placed on record. The crux of the various reasons assigned by the AO for treating the impugned books and trial balance seized in course of search as genuine is that bank transactions noted therein tallies with the account statements received from banks and the corresponding entries in the regular books of account of the respective assessees. The same should not however, have any deterrent effect on the assessee's case. It may be pointed out that the assessee has been consistently maintaining right from the very inception that the impugned books had been prepared for presentation before the bank in order to raise loans. All the bank transactions were duly incorporated therein with the apprehension that the bank may verify the said transactions. As such, the fact that the bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assesses for balance period, i.e., for the month of January, 2002 till the date of search, would have been found in the course of search; which under the circumstances would have been definitely maintained by the assessee so as to enable him to incorporate the same into the alleged Kaccha books. However, admittedly in the present case, although all the bills and vouchers supporting entries in the regular books of account upto the date of search were found and seized, no iota of evidence corroborating the alleged undisclosed transactions for the balance period (supra) was found in the course of search. Furthermore, it is also pertinent to mention that even a trial balance had been drawn up on the basis of entries in such fabricated books as on 31st Dec., 2001. This also fortifies the repeated, contention of the assessee that the fabricated books were prepared only for producing before the bank. If at all the said books had been maintained in normal course of business drawing up of a trial balance in the mid of the financial year could conceivably serve no logical purpose. 13.2 On the above premises, to sum up, the relevant facts reveal that in course of search in the various p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been maintained in the regular course of business. As such, the totality of facts and circumstances of the case highlights the assessee's contention that he had not indulged in any unaccounted transaction and that the said books were fabricated. In view of the above, the assessee has discharged the initial onus of proving that what was apparent from the seized books was not real. It was the duty of the AO to consider the explanation of the assessee vis-a-vis the surrounding circumstances and in the light of assets found in course of search. Since the assessee had discharged the primary onus of proving his stand, it was for the AO to disprove the same by bringing on record some positive material to establish that the impugned books recorded real transactions of the assessee, This was possible only if the AO came across some evidence, in the form of excess physical stocks, unaccounted bills, vouchers etc. supporting the entries in the fabricated books in the course of search. Clearly, in the present case, the AO has failed to discharge the said onus. Under the circumstances, the explanations of the assessee cannot be overlooked without bringing on record some conclusive evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r not. The Hon'ble Supreme Court again in the case of K.P. Varghese v. ITO has clearly stated that it would indeed be most harsh and inequitable to tax an assessee on income which has neither arisen to him nor is received by him, Apart from the unsigned MoU the AQ has not led any cogent and reliable evidence to establish that the assessee earned or received the amounts mentioned in the said unsigned MoU. As held by us earlier the assessee has rebutted the presumption by way of ample evidence which is on record.... We are, therefore, of the view that the CIT(A) was perfectly justified in deleting the addition of ₹ 4,93,000 made by the AO on the basis of unsigned MoU, We, therefore, affirm the finding of the CIT(A) in this regard. 13.4 In the instant case also, as stated above, Sri Jai Prakash Singhania has led ample evidence to rebut the presumption under Section 132(4A) of the Act and to prove that what was apparent from the seized books was not true. Our attention was also drawn to the judgment of the Tribunal, Lucknow Bench in the case of Satnam Singh Chhabra v. Dy. CIT (2002) 74 TTJ (Lucknow) 976 wherein it was held as under [at para 30(6) and (7)] : In any case, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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