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TMI Blog2016 (5) TMI 1360X X X X Extracts X X X X X X X X Extracts X X X X ..... 2003-04 11.11.2003 8,48,960/- 2004-05 09.10.200 4 9,45,249/- 2.1. A search and seizure operation u/s 132 of the Act was conducted on 23.12.2005, on the residential and business premises of the assessee. During the course of search in respect of assessee's premises at Vasant Vihar, Annexure A 5(bunch of loose papers) were seized pertaining to assessment year 200405. As per pages 14 to 39 of this annexure A-5, closing/opening stock of the assessee as on 31.03.2004 and 01.04.2004 has been worked out at Rs. 3,41,491/- as against Rs. 99,950/-, declared by the assessee. 2.2. In response to the notice u/s 153A of the Act dated 12.12.2006, the assessee filed her return of income on 09.01.2007 declaring the same income as declared in the original return filed for all the years under consideration. In response to notices issued u/s 143(2) and 142(1) along with questionnaire dated 03.10.2000 the assessee filed various documents and explanation as required by the ld. Assessing Officer. The ld. AO completed assessment on 28.12.2007 after making various additions in the returned income. 2.2. Aggrieved by the order of ld. AO the assessee preferred appeals in respect of all the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall-- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this subsection pending on the date of initiation of the search under section 132 or making of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or- reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings {i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. " 4.4 Further in the case of DCIT Vs Lata Jain vide order dated 29.04.2016, the Hon'ble Jurisdictional High Court held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the figures shown in the books only. He admitted additional evidence and called for remand report from the Assessing Officer and found that the claim is genuine and supported by evidence. Aggrieved by the order of the Ld.CIT(A), the revenue has preferred an appeal before us now. 6.4 From the findings recorded by the Ld.CIT(A), it is found that during the appellate proceedings the assessee had filed certain additional evidence relating to the franchisee agreements entered into between her and various parties. These additional evidences were sent to the Ld. AO for verification, and report was called for in respect of the same. The Ld.AO in the report observed that the payment of commission paid by the assessee does not tally with the terms and condition mentioned in the agreement. He therefore justified the addition made by her as correct. 6.5 These additional evidence are in the form of, copy of confirmation of franchisee commission, rent received from various parties etc. The genuineness of these agreements are not doubted by the Ld. AO in the remand report. It is an admitted position that the assessee has made the payment of commission by way of check on the basis of which TDS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. The assessee has submitted the name and addresses of all the parties that are Franchise outlets, wedding franchises and retail outlets of hers, year-wise and Assessing Officer verified the same and has not made any adverse comments. 6.6 Ld. CIT(A) after considering all the evidence on record, held as under: "6.3 On the basis of appreciation of the views of the AO in the assessment order and the remand report, the contention of the appellant and the verification of the original franchisee agreements by the AO and the undersigned, the following facts emerge: (a) That during October -December 2007, the AO asked the appellant to give details of various controlled outlets/franchisees outlets of the appellant's business without asking for any yearwise bifurcation of the same. The same question. 'Please give the details which complete names and address of 46 outlets, 65 strategic alliance and 156 vendor partners outside India as mentioned in your group profile' was included by the AO in all questionnaires issued for various assessment years from 7.001-02 to 2006-2007 on basis of information collected from the appellant's website. (b) That the appellant gave a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isee outlets of the appellant during various assessment years Involved as mentioned by the appellant in her affidavit dated 18/03/2010. From the details which are part of the affidavit, it is seen that for the A Y 2004-05, there were only four owned outlets and there were twenty-one franchisee outlets. No evidence to dispute the affirmations in the affidavit have been brought on record by the AO in the remand proceedings 6.3.1 In view of the above factual position, it is seen that the estimated addition made by the AO to the tune of Rs. 88,00,000/- is based' on misconception of the factual position with regard to the number of outlets in existence during the relevant previous year as well as on the suspicion that the appellant must have earned undisclosed income during the year under appeal also since she had made a disclosure during the period relevant to A.Y. 2006-07. It is pertinent to note here that in the appellant's case a search & seizure operation was conducted but no incriminating material relating to the A.Y. 2004-05 has been brought on record which could support such presumption as made by the AO in her case. The presumption of the AO is based on mere suspicion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould not be allowed to submit additional evidence, no adverse comments on the genuineness of the additional evidence produced have been made. I, therefore, in the interest of justice. allow the additional evidence u/s 46A and proceed to decided the issue. "7.3.1 In his remand report, it appears that the AO has copied wrong figures of refundable and non-refundable security deposits received by the appellant during the year. However, the AO has given a clear finding that the appellant's submission as to non-taxability of refundable deposits is acceptable. At the same time, he has emphasized that the non-refundable security deposit being one time nonrefundable revenue receipt is to be treated as the appellant's income. This issue has also been decided by the undersigned on the above principle while deciding the appeals in the appellant's own case for A.Y.2003-04. Therefore, it is held that out of the total addition of Rs. 17,32,511/- the addition of Rs. 3,28,336/- (Rs. 4,48,168/- received as non refundable security deposit minus Rs. 1, 19,832/- credited as income on deferred basis) is justified and correct. The appellant gets a partial relief of Rs. 14,04,175/- only." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is less, therefore, there is bound to be difference between the cost and tag price valuation of stock. It is worth mentioning here that both the valuations of closing stock i.e. as per return of income for the year under consideration and as evident from the seized papers referred to above have been done by the assessee herself. If the argument of the assessee that there is bound to be difference in the cost and tag price of valuation of stock then the GP of the assessee is bound to go up to 200% as against the GP of hardly 20% to 25% shown by the assessee as the valuation of stock as per the seized documents is more than three times the value of stock declared by the assessee, a situation the assessee herself would not like. Accordingly, there is no force in the various arguments put forth by the assessee in support of her claim and the same are accordingly, rejected. It is to be noted that this valuation of stock is only in respect of one of the six outlets; she is running as per the list of outlets submitted by her during the course of assessment proceedings. Tote! undisclosed closings stock for all the six outlets controlled by the assessee is worked out at Rs. 14,49,246/- ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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