9911796707
TMI Blog2017 (7) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... notice u/s 148 in absence of any material indicating any escapement of income for the year under consideration 2. The Learned CIT(A) erred in law and on facts in confirming the addition on account of estimation of commission earned when no material was found during the course of search action carried out u/s 132 for the year under consideration. 3. The learned CIT(A) erred in law and on facts in confirming addition of Rs. 9,83,550/- on account of estimation of commission at an average profit worked out by the learned AO at Rs. 7023/- which is not as per the seized dairy found during the search and failed to appreciate that the actual average profit as per seized diary is less than that estimated by learned AO. 4. The learned CIT(A) erred in law and on facts in allowing Rs. 2809/- towards expenses under the head 'First Category per rickshaw' as against Rs. 3900/- which is as per the seized diary while working out commission per rickshaw. 5. The learned CIT(A) erred in law and on facts in confirming disallowance of bad-debts or loss of Rs NIL incurred by the appellant as guarantor or surety. 4. The grounds of appeal No.1 and 2 raised by the assessee against reo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived in the returns of income. iii) The market forces like demand and supply and overall economic climate have great influence on the commission received. In F.Y. 2000- 2001, the auto market was not in full swing and hence, estimate of total commission on the basis of documents seized during the course of search would not be fair and justified." 6. The Assessing Officer further took note of the statement recorded during the course of search on 05.07.2007, wherein the assessee mentioned that for the Auto he had to incur expenses on purchase of Auto, RTO, Insurance and meter. However, during post search enquiries, the assessee submitted that he incurred certain additional expenses as under:- i) Meter passing and petrol-Rs.450 ii) Hood fitting, navar patti, side plywood-Rs.650 iii) A/R fitting, bar cutting, side bar, frame, glass fitting-Rs.750 iv) Yellow color, radium patti-Rs.550 v) Assignment charges/commission-Rs.1500 to Rs.3500 7. The assessee was asked to produce documentary evidence and also produce the person to whom he claimed to have paid these expenses. However, the assessee could not produce the same. Since the assessee was not maintaining regular boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee had urged before him that the Assessing Officer had applied the average profit, calculated on the basis of 15 loan proposals, to the total number of vehicles in respect of which services were rendered by the assessee. According to the assessee, the estimated profit / commission from the services was not correctly calculated. The relevant portion of submissions of assessee is reproduced at pages 3 to 6 of the appellate order. The CIT(A) noted that the Assessing Officer had examined the seized documents and other material on record and had found that the assessee was not maintaining regular books of account. On the detailed examination of seized documents and other material, he had come to the conclusion that the assessee was suppressing commission from the business of Auto commission agent. The CIT(A) vide para 3.3 summarized the submissions of assessee and observed that the said submissions made during the course of appellate proceedings were substantially identical with those made during the course of assessment proceedings. The main objection taken by the assessee was in respect of estimation of commission and its extrapolation. The assessee relied on certain case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estimated the turnover for the entire year based on the undisclosed sales for the period of 19 days. The Hon'ble Supreme Court upheld the estimation of income by the Assessing Officer. Further, reliance was placed on another decision of Mumbai Bench of Tribunal in the case of Overseas Chinese Cuisine. Therefore, the CIT(A) held that Thus, the basis for estimating the commission by the A.O. in respect of other vehicles has nexus with facts discovered in case of commission of some other vehicles. Therefore, by no stretch of imagination it can be said that the estimate in case of the appellant is arbitrary or without basis and cannot be made. The next contention of assessee that if commission to the extent recorded in the seized documents was received, then the evidence of receipt of substantial cash or other undisclosed investment should have been found during the course of search operation, since no such assets or other evidences were found and hence, there was no basis for the aforesaid addition. This argument was also rejected by the CIT(A) observing that in the absence of evidence found during the course of search, it could not be said that the assessee had not received higher co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Where the Assessing Officer had accepted the existence of documentary evidence of these expenses in respect of some of Rikshaws in the period relevant to assessment year 2006-07 in the assessment order and where documentary evidence relating to other Rikshaws were available as part of the documents seized at serial No.1 of Annexure-A of Panchanama dated 05.07.2007, the CIT(A) noted that the documents clearly indicate the fact that the assessee had incurred expenses of Rs. 3,900/- per vehicle i.e. Rikshaw in the relevant period. The assessee had further furnished certain documents in respect of the said expenses for the period relevant to assessment years 2004-05 to 2005-06 also. However, the assessee could not give reference of the Panchanama through which the said documents were seized. Under the circumstances, the CIT(A) held that the assessee could not get much support from the said documents. The CIT(A) in view of the said evidence found observed that the Assessing Officer was not justified in rejecting the claim of assessee in respect of other expenses of first category merely on the ground that the evidences were not found relating to said expenses in respect of other Riksha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nonallowance of deduction on account of other expenses for various assessment years. 15. The assessee is in appeal against the order of CIT(A). 16. The learned Authorized Representative for the assessee pointed out that diaries were found which related to assessment years 2003-04 to 2008-09. However, the said diaries were not maintained in any methodological manner and no regular cash entries were made in the said diaries. Admittedly, there was no cash book found and the assessee also had not made any declaration under section 132(4) of the Act. During the course of search, cash of Rs. 2 lakhs and jewellery of 900 grams was found. The Assessing Officer made enquiries from the bank from whom loans were taken for financing of Autos and the number of loans sanctioned were worked out by the Assessing Officer. The learned Authorized Representative for the assessee stated that there was no dispute on number of Rikshaws against which loans were sanctioned. She further stated that the original return of income was not on the basis of regular books of account as no books of account were maintained except for assessment year 2008-09. She further stated that the income of assessee was commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve buyers of Auto Rikshaws, wherein the services of assessee included securing loans from the bank against purchase of Rikshaws and also insurance, delivery of said Rikshaws to the individual purchasers after incurring certain items of expenditure. Search and seizure operations under section 132 of the Act were carried out at the premises of Shendge group cases on 04.07.2007. Certain diaries and other documents were found during the course of search and the Assessing Officer on the basis of said evidence estimated the commission income at Rs. 7,023/- per vehicle. The assessee explained that it had incurred two types of expenditure i.e. First Category of expenditure which totaled to Rs. 3,900/-. During the course of assessment proceedings, the assessee claimed that certain additional expenses were also incurred. The assessee admits that number of vehicles worked out by the Assessing Officer on the basis of information supplied by the bank and other documentary evidence was correct. Hence the same is to be applied in order to work out the commission in the hands of assessee. The assessee was not maintaining regular books of account except for maintaining a diary in which certain expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008-09 350 12 13524/- 3900/- 9624/- 23,64,223/- 21. The assessee states that as against the income declared in returns of income of Rs. 32,32,963/- for the captioned assessment years i.e. 2001-02 to 2008-09, the net income after the order of CIT(A) works out to Rs. 1,23,39,160/- which estimation is very high in the hands of assessee. The first objection raised by the assessee is against the estimation of commission income on average profit, as per the Assessing Officer at Rs. 7,023/- for the instant assessment year. The assessee pointed out that the said estimation even on the basis of seized diary found during the course of search was higher since the seized diary itself reveals that the same was less than the estimation made by the Assessing Officer. The second claim made by the assessee was in not allowing Rs. 3,900/- as deduction for earlier years and in restricting the same to Rs. 2,809/- and Rs. 2,864/-. The issue by way of ground of appeal No.5 i.e. disallowance of bad debts or losses incurred by the assessee as guarantor or surety at Nil was not pressed and hence, the claim of assessee of other expenses does not survive. The basis for adopting average profit per veh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of appeal No.1 and 4 raised by the assessee are not pressed. The grounds of appeal No.2 and 3 are against the estimation of commission @ 7,023/- per vehicle and in restricting the First Category of expenses at Rs. 2,809/-. The issue raised in ITA No.933/PN/2012 is identical to the issue in ITA No.932/PN/2012 vide grounds of appeal No.3 and 4 and following the same, the Assessing Officer is directed to re-compute the income. 24. In assessment years 2003-04 and 2004-05, the grounds of appeal No.1 and 2 are identical to the grounds of appeal No.3 and 4 in ITA No.932/PN/2012 and following the same parity of reasoning, the Assessing Officer is directed to recompute the income in the hands of assessee. The ground of appeal No.3 raised by the assessee is not pressed and hence, the same is dismissed as not pressed. The grounds of appeal raised by the assessee are thus, partly allowed. 25. Coming to assessment years 2005-06 and 2006-07, the ground of appeal No.2 raised is not pressed and hence the same are dismissed as not pressed. The ground of appeal No.1 is against the estimation of commission income at Rs. 9,571/- which is identical to the ground of appeal No.3 in ITA No.932/PN/2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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