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TMI Blog2017 (8) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... .Y. 2004-05 because the year mentioned is 2004 while distributing the profit as per the capital account seized. Anyhow, the assessee has earned the total profit of 30,25,282/- in a benami firm M/s Nimbeshwar Creation and admittedly, the assessee’s share to the extent of 67% and the profit accordingly workout is 20,26,938/-. The assessee admitted and offered a sum of 15,26,938/- in the relevant A.Y. 2004-05 and remaining sum of 5,00,000/- in A.Y.2005-06. As the facts gathered from seized material, we are of the view that a reasonable view is to be adopted and reasonable view seems that the profit of 15,26,939/- declared by assessee is to be assessed in 2004-05 and this is to be telescoped against the investment in renovation/ acquisition of house property of 15,00,000/- i.e. House No. 601, 6th Floor, A-Wing, Suparshava Apts., opp. Orbit Towers, Raamchandra Sudkoji Sawant Chowk, Elphistone Road, Mumbai. Accordingly, we direct the AO to re-compute the income and assessee the income as declared by the assessee being profit earned from M/s Nimbeshwar Creation amounting to 15,26,939/- and give telescoping effect to the same against the investment in purchase / renovation of House. This i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the action of the AO for the reason that assessee failed to discharge his onus in this regard and could not produce any evidence. Aggrieved, now assessee is in second appeal before the Tribunal. 4. Before us the learned Counsel for the assessee Shri. Girish Dave argued that this gift was disclosed in the return of income filed for the A.Y. 2004-05 filed on 25-11-2004 by the assessee and in balance sheet this gift of ₹ 1,00,000/- from Sanjay Jethava was clearly reflected. The learned Counsel for the assessee took us through pages 1 to 3 of assessee's paper book, wherein complete documents relating to this gift were filed. The learned Counsel for the assessee also took us through declaration of gift by donor Shri. Sanjay Jethava, which are enclosed at pages 12 to 18 of the assessee's paper book which includes the copy of return of income of Shri Sanjay Jethava including computation of income to prove the identity, capacity and genuineness of the transaction. The learned Counsel for the assessee stated that this gift was received amounting to ₹ 1,00,000 by cheque No.287211 dated 30-04-2003 drawing on Cosmos Bank, Dadar West, Mumbai. The learned Counsel for the assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order u/s. 153A/143(3) of the Act could not disturb the assessment order which has attained finality unless the material gathered in the course of search u/s. 132/153A of the Act established that the finality attained in the assessment were contrary to the facts unearthed during the course of search. The relevant portion of the judgment reads as under: - "31. We, therefore, hold that the Special Bench's understanding of the legal provision is not perverse nor does it suffer from any error of law apparent on the face of the record. The Special Bench in that regard held as under:- "The provision under section 153A is applicable where a search or requisition is initiated after 31.5.2003. In such a case the AO is obliged to issue notice u/s 153A in respect of 6 preceding years, preceding the year in which search etc. has been initiated. Thereafter he has to assess or reassess the total income of these six years. It is obligatory on the part of the AO to assess or reassess total income of the six years as provided in section 153A(1)(b) and reiterated in the 1st proviso to this section. The second proviso states that the assessment or reassessment pending on the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... now examine the provision contained in sub-section (2) of section 153, which has been dealt with by Ld. Counsel. It provides that if any assessment made under subsection (1) is annulled in appeal etc., then the abated assessment revives. However, if such annulment is further nullified, the assessment again abates. The case of the Ld. Counsel is that this provision further shows that completed assessments stand on a different footing from the pending assessments because appeals etc. proceedings continue to remain in force in case of completed assessments and their fate depends upon subsequent orders in appeal. On consideration of the provision and the submissions, we find that this provision also makes it clear that the abatement of pending proceedings is not of such permanent nature that they cease to exist for all times to come. The interpretation of the Ld. Counsel, though not specifically stated, would be that on annulment of the assessment made u/s 153(1), the AO gets the jurisdiction to assess the total income which was vested in him earlier independent of the search and which came to an end due to initiation of the search. The provision contained in section 132 (1) empower ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is pending on the date of initiation of the search, it shall abate. In other words pending proceedings will not be proceeded with thereafter. The assessment has now to be made u/s 153A (1)(b) and the first proviso. It also means that only one assessment will be made under the aforesaid provisions as the two proceedings i.e. assessment or reassessment proceedings and proceedings under this provision merge into one. If assessment made under sub-section (1) is annulled in appeal or other legal proceedings, then the abated assessment or reassessment shall revive. This means that the assessment or reassessment, which had abated, shall be made, for which extension of time has been provided under section 153B. The question now is - what is the scope of assessment or reassessment of total income u/s 153A (1) (b) and the first proviso? We are of the view that for answering this question, guidance will have to be sought from section 132(1). If any books of account or other documents relevant to the assessment had not been produced in the course of original assessment and found in the course of search in our humble opinion such books of account or other documents have to be taken into acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s raised following ground No.2 and 3: - "2. The learned CIT(A) has erred in law and on facts and in the circumstances, in upholding the order of the AO in ignoring the source of investment from M/s Nimbeshwar cration of Rs. 15,26,938/- towards purchase of property. 3. The learned CIT(A) has erred in law and on facts in the circumstances in confirming addition of Rs. 15,00,000/- made by AO." 8. Briefly stated facts are that the assessee group deals in readymade garments, which include shirts, kids wear, Sherwani, etc. During the course of search and seizure operation at the residence of the assessee certain loose papers as per Annexure-A9 consisting of pages 1-123 containing the transactions with regard to the purchase of the above stated House No.601 and another loose paper Annexure-A3 containing transactions in the name of benami firm of M/s Nimbeshwar Creation was found and seized. According to the AO the total unexplained investment/expenditure appearing at page No.123 of Annexure-A9 found and seized is totaling of ₹ 15,00,000/- being the amount invested in renovation/purchase of above stated House No.601. To this point the learned Counsel for the assessee accepted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that the almost profit to the extent of ₹ 14,00,000/- is earned in A.Y. 2004-05 because the year mentioned is 2004 while distributing the profit as per the capital account seized. Anyhow, the assessee has earned the total profit of ₹ 30,25,282/- in a benami firm M/s Nimbeshwar Creation and admittedly, the assessee's share to the extent of 67% and the profit accordingly workout is ₹ 20,26,938/-. The assessee admitted and offered a sum of ₹ 15,26,938/- in the relevant A.Y. 2004-05 and remaining sum of ₹ 5,00,000/- in A.Y.2005-06. As the facts gathered from seized material, we are of the view that a reasonable view is to be adopted and reasonable view seems that the profit of ₹ 15,26,939/- declared by assessee is to be assessed in 2004-05 and this is to be telescoped against the investment in renovation/ acquisition of house property of ₹ 15,00,000/- i.e. House No. 601, 6th Floor, A-Wing, Suparshava Apts., opp. Orbit Towers, Raamchandra Sudkoji Sawant Chowk, Elphistone Road, Mumbai. Accordingly, we direct the AO to re-compute the income and assessee the income as declared by the assessee being profit earned from M/s Nimbeshwar Creation amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and CIT(A) has not examined this issue while adjudicating the issue of application of profit rate. The learned Counsel for the assessee sated that this is a limited issue and this can be remitted back to the file of the AO for verification whether there are direct or indirect expenses available in the seized records and if direct or indirect expenses are available this should be allowed. On query for the Bench, the learned Sr. DR has not objected to remanding the matter back to the file of the AO for verification of expense. 14. After considering the submissions of the assessee's counsel, we are of the view that if the details regarding direct and indirect expenses are available in the seized records of the department, this benefit should have been given to the assessee. Hence, we remand this matter back to the file of the AO for verification of the same and assessee should also be confronted to the same before deciding the issue. This appeal is remitted back to the file of the AO. 15. The next issue in ITA No.5779/Mum/2015 for the A.Y. 2007-08 is as regards to the order of the CIT(A) confirming the addition of ₹ 50,000/- on account of undisclosed jewelry found from the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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