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TMI Blog2018 (6) TMI 609X X X X Extracts X X X X X X X X Extracts X X X X ..... 222/Nag./2015 - - - Dated:- 11-6-2018 - SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER For The Assessee : Shri Gitesh Kkumar For The Revenue : Shri K. P. Dewani ORDER PER SHAMIM YAHYA, A.M. This appeal by the Revenue is directed against the order of the ld. Commissioner of Income Tax (Appeals)-2, Nagpur dated 09.04.2015 and pertains to assessment year 2006-07. 2. The grounds of appeal read as under: 1. On the facts and circumstances of the case, the ld. CIT(A) erred in deleting the addition of ₹ 53,00,000/- on account of undisclosed investment in the sand ghat. 2. On the facts and circumstances of the case, the Ld. CIT(A) erred in restricting the addition of ₹ 10,00,000/- on account of the income earned from the undisclosed investment to only ₹ 1,91,890/-. 3. Brief facts of the case are as under: The assessment in this case was reopened by issue of notice u/s 148 in view of certain enquiries conducted by the DDIT(Inv.) Unit-II, Nagpur. It is noted by the Assessing Officer that in pursuance to tax evasion petition in the case of Shri Afzal Ansari (then partner of the assessee firm), the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 53 lacs had been offered for tax and that there was no question of taxing the amount which was given from the regular bank account and reflected in the books of accounts. 4) That the appellant never admitted that demand drafts amounting to ₹ 53 lacs were prepared by them and there was admission only in respect of ₹ 53 lacs turnover. That since the appellant never gave demand draft amounting to ₹ 53 lacs, there was no question of it being taxed on the said amount and that whatever demand drafts have been given, the same are duly accounted for in the books of accounts. 5) All books of accounts and bank statements are evidences which were available for verification. 5. The Assessing Officer considered the submission of assessee but did not accept the same. He noted that while the assessee had disclosed an amount of ₹ 63 lacs before the DDIT(Inv.), the assessee had filed its return of income u/s 147 without offering the said amount of ₹ 63 lacs and has filed a return of ₹ 5,04,2507- only (as against original return filed on 30.07.2007 showing income at ₹ 64,249/-). The Assessing Officer further noted that the expenses in this case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication of the said figure of ₹ 53 lacs as nothing has been brought on record by the Ld. AO to substantiate / quantify the said amount. 6.1 It is important to note that the statements of the appellant were recorded by the DDIT (Inv.) on 21.01.2013 and 11.02.2013 and subsequently vide its letter dated Nil filed before the DDIT (Inv.) itself, (subsequent to the recording of statement) it was clarified by the appellant that certain gross reciepts had not been included in the turnover declared and that it had prepared some demand drafts in favour of the Collector, Nagpur which were reflected in its books of accounts and that repayment of the said amount was made by way of sand purchased by the appellant from Shri Umathe. The appellant further clarified before the DDIT(Inv.) that there were certain gross receipts which they failed to include in the return of income and that therefore they were offering the receipts amounting to ₹ 55 lacs which were not included in the return of income for the year under consideration. It was again reiterated that the demand drafts had been prepared towards business transactions and were reflected in the books of accounts and that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drafts amounting to ₹ 33.45 lacs has been produced by the appellant before the Ld. AO by way documents and the bank statements and by no stretch of imagination can same be stated to be unexplained investment. 6.5 Thus the entire assessment is based on the statement of Shri Afzal Ansari who deposed before the DDIT(Inv.) on 11.02.2013. It is important to note that he has rot been a partner in the said firm since the last several years. Complete details were not available with the said ex-partner due to the passage of time. In this context much credibility can not be attributed to his statement to the DDIT(Inv.) that the advance given was to the tune of ₹ 53 lacs when in fact the actual advance given as per the appellant is only ₹ 33.45 lacs. In any case, the Ld. AO has failed to bring on record any independent evidence to establish that the sum advanced was in fact ₹ 53 lacs as per the statement recorded and not ₹ 33.45 lacs as per the bank statement. 6.6 Thus the appellant has consistently maintained that it had made no unexplained investment amounting to ₹ 53 lacs and that there was no credible evidence available to the department to subst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by deleted. 9. As regards the addition of ₹ 10 lacs, the ld. Commissioner of Income Tax (Appeals) granted part relief by holding as under: 7. The Ld. AO has further added an amount of ₹ 10 lacs in view of the appellants statement before the DDIT(Inv.) being income earned on account of advance/cost of purchase of ₹ 53 lacs being not offered in the return of income. As stated above, the Ld. AO subsequently clarified the issue to the DDIT(Inv.) and has subsequently mentioned before the Ld. AO that only income arising out of the said turnover had not been reflected in its books of accounts and had consequently offered ₹ 4,40,OOO/- additional net profit on the additional turnover of ₹ 59 lacs. During the 'course of appellate proceedings it has been further explained that the said figure of additional turnover is an estimate and the appellant has no exact details of the same and the additional income has been offered @ 7.4% of the turnover which is reasonable as compared to 9.6% as shown in the original return of income. It is further submitted that the above estimate should be accepted in the given set of facts. 7.1 I have considered the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d investment. It was submitted that advance was given about ₹ 25 lacs and not ₹ 55 lacs. (P- 20 21) C) Investigation Wing or record of A.O. has no evidence that assessee has made investment of ₹ 53 lacs and same remains unexplained. Entire assessment/addition is based on statement which is retracted being contrary to evidence on record. D) The assessee firm is engaged in the business of trading of sand. In case of assessee regular return of income was filed on 30/07/2007 declaring income at ₹ 64,250/-. Assessee had submitted return in response to notice u/s 148 declaring income at ₹ 5,04,250/- . The additional income of ₹ 4,40,000/- was declared in return in response to notice u/s 148 on estimated turnover of ₹ 59.20 lacs. E) Shri Afzal Ansari was partner of firm during the Asstt. Year 2006-07 and he retired from partnership ) from 11/06/2008 as is evident from the partnership deed dated 11/06/2008 . (P- 45 - 49) [Vol.-l] F) In the month of January 2013 Shri Afza! Ansari was examined by Deputy Director of Investigation, Nagpur when he was not the partner of firm. In the statement obtained from him it has been stated that the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9-50)(49)[Vol.-ll] K) A.O. has accepted income as shown in return in response to notice u/s 148. A.O. has accepted the income declared on estimated basis at ₹ 4,40,000/-on estimated turnover of ₹ 59.40 lacs without inviting any adverse observation. On the basis of aforesaid factual position further addition of ₹ 53 lacs on account of investment in the absence of any evidence on record and ₹ 10 lacs as estimated profit is unjustified and unsustainable. L) The addition made by A.O. is not represented by any unexplained investment/expenditure brought on record. Addition made by A.O. is thus unjustified and unsustainable. M) The income determined in past Asstt. Year has been considered by Hon'ble CIT(A) to adopt the average net profit on estimated turnover to sustain addition at ₹ 1.92 lacs at the hands of assessee. Approach of CIT(A) is fair and reasonable and does not call for any interference. N) The only basis for making addition by A.O. is the statement obtained by Investigation Wing of the Department from Shri Afzal Ansari in the year 2013 when he was not partner in the assessee firm. The statement was obtained almost 6 years after th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) has relied upon the CBDT Circular No. 286/2003/IT dated 10.03.2003 which states that efforts should be made by revenue official to obtain credible evidence and obtaining admission de hors evidence should be avoided. In our considered opinion, the reliance by the ld. Commissioner of Income Tax (Appeals) on this CBDT Circular is germane and supports the deletion of addition of ₹ 53 lacs. 14. As regards the addition of ₹ 10 lacs, we find that this was also found on admission by the ex-partner. The assessee has subsequently offered ₹ 4,40,000/- being additional net profit on the additional turnover of ₹ 59 lacs. The ld. Commissioner of Income Tax (Appeals) has applied the profit rate of assessment year 2006-07 and held that the profit accordingly comes to ₹ 6,31,890/-, as against ₹ 4,40,000/- shown by the assessee. Hence, he restricted the addition to the extent of ₹ 1,91,890/- and granted relief to the assessee to the extent of ₹ 8,08,110/-. We find that this addition is also solely based upon the admission by the ex-partner de hors any credible evidence. Accordingly, on the same basis, as applied by us in deleing the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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