9911796707
TMI Blog2015 (9) TMI 441X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was also covered under the warrant of authorization executed on 16-11-2006. In response to notice u/s.153A dated 30-11-2007, the assessee furnished the return of income on 28-12-2007 declaring total income of Rs. 99,25,712/-. The return was accompanied with the statement showing computation of income, trading, profit and loss account, capital account, tax audit report and other annexures. 4. The AO noted that during the course of search action cash amounting to Rs. 45,92,723/- was found whereas the cash recorded as per the books of accounts as noted by the search party was Rs. 88,944/-. Thus, there was difference of Rs. 45,03,779/-. The assessee in answer to Question Nos. 25 and 29 has accepted the total undisclosed cash amounting to Rs. 45,00,484/-. The assessee reconciled the same with difference of Rs. 5,295/-. The AO accordingly made addition of Rs. 45,05,779/- to the total income as undisclosed income of the assessee. 5. The AO similarly noted that during the course of survey conducted u/s.133A of the I.T. Act in the case of M/s. Sairam Trading Company stock inventories were prepared. A tentative trading account was also prepared according to which excess stock of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the search as peak investment in the unaccounted business, although he has included the amount of Rs. 18,11,873/- in the taxable amount (i.e.Rs.8,03,732/- + Rs. 10,08,151/-). The AO, therefore, asked the assessee to explain as to why the amount of Rs. 28 lakhs should not be added to his total income which was declared by him as peak investment in the unaccounted transactions. The assessee in his reply submitted as under : "Peak Credit we draw your kind attention to answer to Q. No. 26, wherein it is clearly slated that circulating capital was Rs. 25 to 30 Lakhs and loosely termed as peak credit and also offered for taxation. It may please he noted that, this does not constitute the undeclared income because cash on hand on the date of search offered for taxation was more than peak credit. In other words, the same cash was rotated or circulated continuously in the business. Once the cash on hand if offered for taxation, question of peak credit to be taxed does not arise. Because, cash on hand was quite more than the estimated peak credit. In case had it been done, it is nothing but taxation of a single item twice, which is not permitted. As per the principals of taxation, und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er effect which goes on changing its nature from time to time. Having been brought in cash it is converted into stock and subsequently into credit sales, sundry debtors etc. What the assessee has disclosed was the circulating capital of Rs. 28 lakhs which was loosely termed as peak credit investment. Under these circumstances, either the initial amount at the time of introduction, i.e. Rs. 28 lakhs or unaccounted stock/debtors/cash on the date of search is taxable but not both. Relying on a number of decisions it was argued that the addition of Rs. 28 lakhs made by the AO should be deleted. 11. However, the CIT(A) was not satisfied with the arguments advanced by the assessee. He observed that the addition was made by the AO based on the assessee's own statement duly substantiated by seized documents. Relying on various decisions he noted that the statement recorded u/s.132(4) has great evidentiary value. He noted that admission by a person is a good piece of evidence because the person making a statement stops the opposite party from making further investigation. A statement recorded u/s.132(4) of the I.T. Act stands on an even stronger footing. The truth of the statements can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - and sundry debtors of Rs. 10,08,141/-, therefore, further addition of Rs. 28 lakhs will amount to double addition of the same amount and therefore the same should be deleted. He also relied on the decision of the Mumbai Bench of the Tribunal in the case of Shri Arvind M. Kariya Vs. ACIT vide ITA No.7024/Mum/2010 order dated 30-01-2013. 14. The Ld. Departmental Representative on the other hand heavily relied on the order of the CIT(A). He submitted that the assessee during the course of his statement recorded u/s.132(4) had categorically offered additional income of Rs. 28 lakhs being the peak investment in unaccounted purchases and sales. Thus, by offering the additional income of Rs. 28 lakhs, the assessee prevented the department from making further enquiry. There was no formal retraction by the assessee immediately after the search and only in the return of income, the assessee did not add the same. Therefore, there is also no valid retraction after offering the additional income of Rs. 28 lakhs on account of peak investment in the unaccounted transactions. He accordingly submitted that the order of the CIT(A) be confirmed and the ground raised by the assessee be dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found during the course of search amounting to Rs. 45,05,779/-. The assessee by making a statement during the course of search and by not retracting the same immediately thereafter has prevented the department from making further enquiries. Therefore, the argument of the Ld. Counsel for the assessee that an amount of Rs. 28 lakhs is already included in the cash found during the course of search at Rs. 45,05,779/- and the unaccounted debtors at Rs. 19,76,176/- cannot be accepted. However, we find some force in the submission of the Ld. Counsel for the assessee that the entire amount of Rs. 28 lakhs cannot be added to the total income of the assessee. We find the assessee during the course of search has admitted unrecorded credit sales made by Shri Satnarayanan and Shri Raja Koli amounting to Rs. 10,08,141/- and Rs. 8,03,732/- respectively both totaling to Rs. 18,11,873/-. The above amount of Rs. 18,11,873/- relates to the unrecorded credit sales made by the two salesman of the assessee, i.e. Shri Satnarayanan and Shri Raja Koli. We find the AO at Para 4.8 of the order has analysed and has mentioned that the above amount includes debtors to the extent of Rs. 10,76,176/- relating to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gaged in share transactions alleged to be penny stock companies where fraudulent transactions have taken place in connivance with some brokers. However, here the issue is addition of peak investment in unaccounted transactions which is based on the admission by the assessee during the course of search. We accordingly hold that the case decision relied on by the Ld. Counsel for the assessee is not applicable to the facts of the present case. In view of our above discussion, the assessee gets relief of Rs. 10,76,176/- only and balance amount of Rs. 17,23,824/- is sustained. The ground raised by the assessee is accordingly partly allowed. 18. Ground of appeal No.2 by the assessee reads as under : "On the facts and circumstances of case the Ld.CIT(A) has erred in sustaining the adhoc addition ofRs.1,00,000/only relying upon the admission made by the appellant." 19. After hearing both the sides we find the AO made addition of Rs. 1 lakh on adhoc basis out of various expenses on the ground that the same were not fully verifiable with supporting vouchers for which the assessee himself has agreed for addition of Rs. 1 lakh. In appeal the Ld.CIT(A) sustained the addition by observing as ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
