9911796707
TMI Blog2012 (9) TMI 958X X X X Extracts X X X X X X X X Extracts X X X X ..... urvey and hence it is arbitrary and unjustified. 2. That the Ld. Commissioner of Income Tax (Appeals) has further erred in upholding the rejection of the trading account and thereby upholding the addition of ₹ 1,07,278/- which is arbitrary unjustified. 3. That the Ld. Commissioner of Income Tax (Appeals) has further erred in not telescoping the two additions of ₹ 1,07,278/- and ₹ 4,00,000/- lacs surrendered at the time of survey which is arbitrary unjustified. 4. That the Ld. Commissioner of Income Tax (Appeals) has further erred in upholding the disallowance of interest amounting to ₹ 19,630/- out of the interest paid to the relatives holding that interest @ 12% could be reasonable in place of interest paid at 15%. 5. That the Ld. Commissioner of Income Tax (Appeals) wrongly relied upon the judgment of the Abhishek Industries which is also arbitrary unjustified. 6. That the order of the Ld. Commissioner of Income Tax (Appeals) is erroneous, arbitrary, opposed law and facts of the case and is, thus, untenable. 3. In the course of present appellate proceedings, ld. 'AR' gave brief fact-situation of the case and stated that sea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfactorily explained, then, the value of such investments and money or value of articles nor recorded in the books of account or the unexplained expenditure may be deemed to be the income of such assessee. It follows that the moment a satisfactory explanation is given about such nature and source by the assessee, then the source would stand disclosed and will, therefore, be known and the income would be treated under the appropriate head of income for assessment as per the provisions of the Act. When the income cannot be so classified under any one of the heads of income under section 14, it follows that the question of giving any deductions under the provisions which correspond to such heads of income will not arise. The provisions of sections 69, 69A. 695 and 69C, treat unexplained investments, unexplained money, bullion, etc., and unexplained expenditure as deemed income where the nature and source of investment, acquisition or expenditure, as the case may be, have not been explained or satisfactorily explained. Therefore, in these cases, the source not being known, such deemed income will not fall even under the head Income from other sources . Therefore, the correspondin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and correspondingly debited to the capital account meaning thereby that neither the stock nor the cash in hand have been enhanced. It has been further stated that the A.O. has wrongly placed reliance upon the decision of Hon'ble Gujrat High Court (supra) as the facts of the two cases are entirely different. It has been further stated that the surrender made during the course of survey operation on the business premises consequent to detection of discrepancies is a normal feature of such survey operations and the surrender was accepted on account of these discrepancies. 4.2. I have carefully considered the submission made by the appellant. The appellant has challenged the AO's action of treating the additional income as deemed income mainly stating that the facts of the case in the case of Fakir Mohd. Hazi Hassan (supra) relied upon by the A.O. are different from the facts of the case under appeal. It has been further stated that the surrender made during the survey was due to the difference found in the cash, stock and other discrepancies and therefore has to be treated as the business income of the appellant. The AO on the other hand categorically mentioned that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come under which such income falls will automatically be attracted. The opening words of section 14 save as otherwise provided by this Act clearly leave scope for deemed income of the nature covered under the scheme of sections 69, 69A, 69B and 69C being treated separately, because deemed income is not income from salary, house property, profits and gains of business or profession, or capital gains, nor is it income from other sources because the provisions of sections 69, 69A, 69B and 69C treat unexplained investments, unexplained money, bullion, etc., and unexplained expenditure as deemed income where the nature and source of investment, acquisition or expenditure, as the case may be, have not been explained or satisfactorily explained. Therefore, in these cases, the source not being known, such deemed income will not fall even under the head Income from other sources . Therefore, the corresponding deductions which are applicable to the incomes under any of these various heads, will not be attracted in the case of deemed incomes which are covered under the provisions of sections 69, 69A, 69B and 69C of the Act in view of the scheme of those provisions. In the absenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endered additional income of ₹ 10,00,000/- relating to the assessment year 2005-06 and ₹ 5,00,000/- for the assessment year 2006-07. The Assessing Officer vide order dated 26.12.2008 made additions on account of certain disallowances and the total loss declared by the assessee at ₹ 5,37,300/- was reduced to ₹ 2,22,765/-. The said loss was assessed as 'income from business' and the surrendered income was assessed as an income under Section 69A of the Act. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [in short the CIT(A) ] who vide order dated 16.12.2009 dismissed the appeal. On further appeal by the assessee, the Tribunal vide order dated 30.4.2010 upheld the order of the CIT(A) and dismissed the appeal which gave rise to the assessee to approach \this Court by way of the instant appeal. 3. We have heard learned counsel for the assessee. 4. Learned counsel for the assessee submitted that the amount surrendered by the assessee was business income and assessable as such. He relied upon a decision of the Karnataka High Court in Commissioner of Income-Tax and another v. S.K. Srigiri and Bros. [2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lained at all, or not satisfactorily explained, then, the value of such investments and money or the value of articles not recorded in the books of account or the unexplained expenditure may be deemed to be the income of such assessee. It follows that the moment a satisfactory explanation is given about such nature and source by the assessee, then the source would stand disclosed and will, therefore, be known and the income would be treated under the appropriate head of income for assessment as per the provisions of the Act. However, when these provisions apply because no sources is disclosed at all on the basis of which the income can be classified under one of the heads of income under section 14 of the Act, it would not be possible to classify such deemed income under any of these heads including income from other sources which have to be sources known or explained. When the income cannot be so classified under any one of the heads of income under section 14, it follows that the question of giving any deductions under the provisions which correspond to such heads of income will not arise. If it is possible to peg the income under any one of those heads by virtue of a satisfact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition made by the AO, on account of low GP. However, a perusal of the comparable chart in Annexure-I at page 26 of the Paper Book, filed by the assessee reveals that there is a decline both in GP rate and NP rate, in assessee's case. The relevant comparative chart of the GP is reproduced hereunder : COMPARATIVE CHART Asstt .Yr . Sales Gross Profit G.P . Rate Net P rofit % 2005-06 57,60,455/- 4,11,873/- 07.15% 3,82,178/- 4.70 2006-07 64,17,921/- 4,80,702/ - 07.48% 3,15,113/- 4.90 2007-08 81,27,187/- 5,01,094/- 06.16% 2,76,329/- 4.79 11. Ld. 'AR', further pointed out that books of account were wrongly rejected and no addition is called for in the matter. However, ld. 'DR' placed reliance on the order passed by the lower authorities. The AO, rejected books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of survey. 5.5 The appellant's reliance on the two decisions mentioned in the preceding para is misplaced as the facts of the cases relied upon by the appellant are different from the facts of the case in hand. As per the assessment order certain documents reflecting sales of batteries outside the books of account amounting to ₹ 3 8,0647- were found during the course of survey for which a separate addition has been made by the A.O. Therefore, this argument of the appellant is also rejected. In view of the aforesaid discussion, this ground of appeal is dismissed. 12. In view of the above, grounds of appeal No. 2 3 are dismissed. 13. In Ground No.4, appellant contended that CI T(A) erred in upholding disallowance of interest amounting to ₹ 19,630/- out of interest paid to relatives, holding that interest @ 12% could be reasonable in place of 15%. Ld. 'AR' referred to page 22 and 27 of the Paper Book. Page 22 of the Paper Book is submission made by the assessee before the CIT(A) and page 27 of the Paper Book is a chart of interest paid by the assessee. The assessee has paid interest in the case of Shri Atin Jain and Shri Ankur Jain at 12%, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
