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TMI Blog2011 (2) TMI 1470X X X X Extracts X X X X X X X X Extracts X X X X ..... at the time of hearing were not found during the course of search operation. The Ld. Authorised Representative for the assessee stated that the books were lying with the Accountant of the assessee. On being asked to give the name and address of the Accountant the assessee showed his inability. The assessee was further asked to explain the reason why the books were lying with the Accountant to which the Ld. Authorised Representative for the assessee stated that it was the practice of the assessee to keep the books of account at the residence of the Accountant. This is also to be noted that assessee did not have any computer, nor did he ever pay any remuneration for making entries in the computers. The assessee failed to produce sale bills/cash memos of purchase bills stating that he never issued any sale bill or cash memos. Therefore, the entries made in the computerized cash book were definitely made after the search operations. Since the books of account produced at the time of assessment proceedings are not supported by any bills/vouchers/memos they cannot be relied upon and therefore, books were rejected u/s. 145 of the Income Tax Act, 1961. Further, after analysing SK-1 to SK-4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has Constructed S shopping complex consisting of ten shops. On enquiries made by an Income-tax Inspector it was found that the assessee has sold one shop to M/s. Rathi Tyre Services on 12.01.2000 for a consideration of ₹ 71,000/-. The assessee was asked to explain why an addition of ₹ 7,10,000/- (71,000- X 10) should not be made to his total income. In his written submission the assessee stated as under :- It is not the fact that I have sold our all the 10 shops @ 71,000/- per shop. I have sold one shop to Basant Kumar Karwa for ₹ 71,000/- on 13.01.2000, same has been shown in my personal statement of affairs for 2000-01 assessment year as credit in his name filed alongwith my I.T. return for 2001-02 assessment year. I have sold one more shop to Ranjeet Ice (Dutta) for ₹ 50,000/- on 13.10.2000 which also has been shown as credit in the name of Ranjeet Dutta in my personal balance sheet for 2001-02 assessment year. The third shop has been let on rental basis to Sanjiv Ram @ 500/- p.m. w.e.f. July 2002. The land behind the said shop is vacant and that vacant land along with a temporary shed is let out to one Shyam Sarda @ 2,000/- p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the books of account as well as, shown in the Returns duly filed for this period. In view of this fresh finding the action of the A.O. is confirmed. So far as the admitted undisclosed sales for A.Yr. 2000-01 2001-02 (Part), in view of the report submitted by the AO revising the sales for this period, total sales is taken as ₹ 75,93,981/- instead of ₹ 1,52,82,347/- as estimated in the original assessment. Assessment Year Original Revised Sales G. P. Sales G. P. 2000-01 36,08,651 1,44,346 33,35,667 1,33,427 2001-02 1,16,73,696 4,66,947 42,58,314 1,70,333 Total 1,52,82,347 6,11,393 75,93,981 3,03,760 In his report the Ld. AO has submitted that the G.P. rate and N.P. rate as disclosed by the assessee in the assessment years upto A.Y. 1999-2000 ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urse of a survey conducted simultaneously in assessee s own case constitute material for the purpose of computation of undisclosed income for the Block period u/s. 158BB. This information can utilize for the purpose or computation of income. However, I accept the argument of the Ld. A.R. that income cannot be estimated by the AO while computing undisclosed income in a Block assessment order. So, I direct the AO to accept the cost of construction at ₹ 3.00 lakh only in place of ₹ 6.10 lakh. Since the construction work was going on, as admitted by the assessee, it is opened to the AO to make further verification in respect of the investment made over and above ₹ 3.00 lakh as admitted by the assessee in course of regular assessment covering those years. I have gone through the submission of the Ld. AO and also examined the Xerox copy of the bank statement filed. The AO has rightly added this amount as undisclosed income of the assessee. He could have added the other deposits shown in the bank accounts after proper verification. Unfortunately, the same was not done. However, the addition whatever was made is confirmed. I have considered the submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - vide P. B. Page-69 the breakup of which is enclosed and is available at P.B. Page 78 also and that alone could have been added as income for the year and there is absolutely no justification in treating the G. P. as the net income liable to tax, particularly when no return had been filed for the said year. (ii) In respect of the Asst. Yr.2001-2002 the return had not fallen due on the date of the search and Survey and therefore in any case the question of any income for the said year being treated as undisclosed income u/s.158BB does not arise. The income for the Asst. Yr.2001-2002 as shown in the return filed for the said year was ₹ 1,00,062/- only (vide P. B. Page 70) with reference to the sales for the entire year which alone could be assessed as the regular income for that year and not as undisclosed income under Chapter XIVB. In the course of the Remand proceedings the ITO had verified the sales found in the inventorised / impounded papers relatable to the said year as recorded in the regular accounts, but still he did not take any cognizance of it by opening in his Remand Report that the assessee at the assessment stage did not explain / clarify his position re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -7) and therefore net profit with reference to such sales, even if taken at the average rate of 1.5% on the sales of ₹ 75,93.981/- for the two years will work out to Rs.l,13,910/- only and not ₹ 3,03,760/- as sustained by the Ld. CIT(A). This submission is being made without prejudice to the contention that the sales which were found recorded in the regular books of accounts and were verified by the A.O. in the course of assessment proceedings could not be treated as undisclosed sales merely because the regular books were not available to the Survey Party at the time of survey and the entire addition of ₹ 3,03,760/- is liable to be deleted. 5. Gr. No.2 - Addition of ₹ 3,00,000/- purportedly sustained by the CIT(A) out addition of ₹ 6,1O,000/- : An addition of ₹ 6,10,000/- was made by the A.O. as estimated investment of the assessee in construction of shops on the Vest land at Darjeeling More. In the course of the search a noting was found on a loose papers marked SK-4 Page-39 (P. B. Page-79) that the assessee had paid a sum of ₹ 7,02,250/- in respect of the land and bricks etc. of the value of ₹ 7,82,700/- and the balance of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect. Gr. No.3 - Addition of ₹ 7,82,700/- for purchase of vest land at Darjeeling More, Siliguri - This addition was made by the A.O. with reference to the seized paper marked SK-4 Page-39 (P.B.Page79) which shows purchase of some land and expenditure thereon for ₹ 7,82.700/- out of which ₹ 7,02,250/- only had been paid as stated above and ₹ 80,450/- was due. That this paper neither contained any date or particulars of the land and was not written by the assessee and was in the nature of a dumb paper and had no evidency any value as such, but in the course of the statement given by the assessee during Survey, he voluntarised to state that he had invested a sum of ₹ 700 000/- approx. for purchasing a land of 16 Kathas at Darjeeling More. The said sum of ₹ 7,00,000/- tallies with the slip of paper also. but in spite of this the A.O. added the total sum of ₹ 7,82,700/- for no ostensible reason. In the course of the assessment proceedings the assessee produced the books of accounts and had also shown that the said sum of ₹ 7.00,000/- paid for the land as also the sum of ₹ 2.90,000/- spent on construction of shops thereon was sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is wholly unjustified both on facts as well as in law. While giving the decision quoted above the Ld. CIT(A) has also not given any direction in respect of the addition of ₹ 60,000/- separately made by the A.O. on the basis of the amount noted overleaf of Page-37 of SK-4 which he has quoted at Page-10 of his order. In fact, there is no locus-standi for the separate addition of ₹ 60,000/- as it formed part of the Cost of construction as explained by the assessee in the last Para of his lett er dtd. 24.12.2002 vide P.B. Page 49. It is therefore necessary that clear finding is given in respect of the said addition. On facts, the consideration of the said Expenditure of ₹ 60,000/- separately from the expenditure of ₹ 2,90,000/- already recorded in books does not arise. If ₹ 2.90,000/- is found explained - the question of making the addition of ₹ 60,000/- cannot arise. Gr. No.4 - Addition of ₹ 75,4301- in respect of peak credit in the account with Centurian Bank : - The peak credit of. ₹ 75,430/- was explained by the appellant to include the sum of ₹ 71,000/- received on sale of one shop which is recorded in the books of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.09.2002. The regular cash book and ledger of Quality Hardware Stores Esskey Enterprises were also impounded on 11.12.2002 in the course of hearing but were later released on 20.12.2002. It is further observed that assessee is regularly filing return of income upto 1999- 2000 i.e. for 1997-98 on 15.03.99, 1999-2000 on 09.03.2000, 1999-2000 on 30.03.2000 and 2001-02 on 11.12.2002. The assessee has not filed any returns for subsequent years. After the search the assessee has filed block returns for 1991-1992 to 2000-2002 on 18.06.2002 and the return for 2001-02 on 11.12.2002 which is apparent from the paper book filed by the assessee. For assessment year 2000-01 no return has been filed by the assessee. From the balance sheet as on 31.03.1999, the capital account shown by the assessee as on 3.03.1999 is ₹ 99,890/- whereas the opening balance in the current account as on 31.03.2003 ₹ 1,01,224/-. The assessee has shown the investment in land and building for the year ending 31.03.2001. In the balance sheet filed alongwith the return of income on 11.12.2002 i.e. subsequent to the block return. On careful perusal of computerized cash book filed, it is evident that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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