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TMI Blog2018 (12) TMI 1212X X X X Extracts X X X X X X X X Extracts X X X X ..... s paid on the fund used for investment, the same cannot be allowed against the business income. The assessee has expressed his inability to segregate the details, therefore, in the facts and circumstances of the case, we do not find any reason to interfere with the order of the CIT(A), hence, this ground of assessee’s appeal is dismissed. Addition in dairy business - N.P. determination - AO excluded the closing stock from the net profit declared by the assessee - Held that:- Once the assessee has declared net profit which is to be taken for the purpose of income tax then the exclusion of closing stock from the net profit is not permissible. Even otherwise while computing the net profit as per the principle of accounting standards, the opening and closing stock are very much part of the P 1,475/- then no addition is called for. Therefore, the net profit declared by the assessee excluding the interest income is 8.44% then even applying the deeming provisions of presumptive income U/s 44AD of the Act, no addition is called for as the net profit declared by the assessee is more than 8% as provided U/s 44AD of the Act. Accordingly we delete the addition made by the Assessing Officer. Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Mundra and her Balance Sheet as at 31.03.2012; (ii) Copy of Jwellery purchase bill dated 30.01.2013 and 12.11.2012 for ₹ 105000/- and ₹ 134750/- by Sarla Mundra and her Balance Sheet as at 31.03.2013; (iii) Copy of Jwellery purchase bill dated 30.01.2013 for ₹ 420000/- by Rukmani Mundra and her Balance Sheet as at 31.03.2013; (iv) Copy of Jwellery purchase bill dated 07.04.2008 for ₹ 117700/- by Seema Mundra and her Revised Computation of Total Income by Seema Mundra wherein income of ₹ 117700/- is shown by her and she has paid tax ₹ 59100/-; and (v) Copy of Jewellery purchase bill dated 10.02.2012 for ₹ 450000/- by Sarla Mundra and her Revised Computation of Total Income wherein she has income of ₹ 450000/- and have paid tax of ₹ 173690/-. 5. That the appellant craves leave to add, alter, amend, modify and/or otherwise substitute any of the foregoing ground: as and when required." 2. Ground No. 1 of the appeal is regarding the validity of assessment framed U/s 143(3) read with Section 153B(1)(b) of the Income Tax Act, 1961 (in short the Act). There was a search U/s 132 of the Act on 13/8/2013 in Mundra Group, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but the assessment has been framed U/s 143(3) after complying the procedural conditions of issuing notice U/s 143(2) of the Act. Since the assessee did not file the return of income U/s 139(1) of the Act, therefore, the Assessing Officer issued notice U/s 142 of the Act and consequently after the return of income filed by the assessee, the Assessing Officer has proceeded to frame the scrutiny assessment by issuing notice U/s 143(2) of the Act. He has relied upon the order of the ld. CIT(A). 5. We have considered the rival submissions as well as the relevant material on record. The assessee has raised the legal issue of validity of assessment framed by the Assessing Officer on the ground that the assessment year under consideration pertains to the previous year in which search was conducted on 13/8/2013 and therefore, the provisions of Section 153A of the Act are not applicable for assessment of the year under consideration. There is no quarrel on the point that the provisions of Section 153A of the Act are applicable for making the six assessment years immediately preceding the assessment year relevant to the previous year in which search was conducted or requisition was made. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnish in writing and verified in the prescribed manner information in such form and on such points or matters (including a statement of all assets and liabilities of the assessee, whether included in the accounts or not) as the 75[Assessing] Officer may require : Provided that- (a) the previous approval of the 76[Joint Commissioner] shall be obtained before requiring the assessee to furnish a statement of all assets and liabilities not included in the accounts; (b) the 77[Assessing] Officer shall not require the production of any accounts relating to a period more than three years prior to the previous year. Once the assessee has undisputedly not filed the return of income U/s 139(1) of the Act then the Assessing Officer was well within his powers and jurisdiction to issue a notice U/s 142(1) requiring the assessee to furnish return of income in the prescribed form and verified in prescribed manner and set forth such other particulars as may be prescribed. Therefore, the notice issued U/s 142(1) of the Act on 12/12/2014 is well within the framework of procedure for assessment provided under Chapter (xiv) of the Act. It is not the case where the assessee had already fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly M/s. Preet Stone Industries, interest income and also declared agricultural income. Appellant c-filed her original return of income on 29-11-2014 for the A.Y. 2014-15 declaring total income at ₹ 2,81,210/- and also declared agricultural income of ₹ 1,72,000/-. Appellant belongs to Mundra Group, Kota on whose premises, a search u/s 132 of the Act was carried out on 13- 08-2013. Various assets/books of accounts and documents were found, inventorized and seized as per annexure prepared during the course of search. Pursuant to this, AO issued a notice u/s 142(2) r.w.s. T53A of the Act to the appellant, in compliance of which, appellant filed her return of income on 19-01-2015 for the A.Y. 2014-15 declaring total income at ₹ 2,81,210/-and also declared agricultural income of ₹ 1,72,000/-. Finally, AO completed assessment u/s 143(3) r.w.s. 153B(1)(b) of the Act vide order dated 29- 01-2016 at a total income of ₹ 10,15,250/-. 4….. 5. The appellant has taken a legal ground that since notice u/s 153A was issued to him for the instant A. Yr. the entire assessment should be quashed. The appellant has cited Sec 153A to state that for this A. Yr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Hon'ble Chandigarh Bench (supra) does answer doubts raised by Hon'ble CIT(A) also. We therefore submit assessment order be quashed. " 2.3 On the other hand, the Id. DR supported the order of the Id. CIT(A). 2.4 We have heard the rival contentions and perused the materials available on record. It is not imperative to repeat the facts and circumstances of the case as the Id. CIT(A) has elaborately discussed the issue in his order. However, it is noted that on the similar issue the ITAT Chandigarh Bench in the case of Rajeev Kumar vs ACIT (2017) 186 TTJ 522 relying on decision of ITAT Delhi Bench in the case of Upendra Kumar Sharma vs DCIT Circle - 9(1) (ITA No. 3141/Del/09 dated 12-04- 2010) has quashed the assessment order. The relevant observation of ITAT Chandigarh Bench is as under:- ''11.....It is well settled that an assessment is to be framed for the previous year which precedes the assessment year. Therefore, for the previous year 2006-07, the assessment year 2007-08. this assessment year succeeds the period of search and not precedes. From the plain language of the provisions contained in cl. (b) of sub-s( 1) of section 153A of the Act, it is clear th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al, the ld. CIT(A) has confirmed the addition made by the Assessing Officer. 8. Before us, the ld AR of the assessee has submitted that the assessee has shown the loss on account of interest income as part of business profits. Further the department has accepted this claim in the earlier years and assessee has been taking a consistent decision of treating the interest income or loss as part of the business income of the assessee. He has further submitted that in the P&L account, the assessee has debited/credited interest paid or received from different persons together with bank charges wherein there is net loss of ₹ 2,45,431/-. The borrowings and investment are so intermixed that it is not possible to segregate wherein a particular fund is invested and therefore, while computing the taxable income, net loss from this head has been taken by the assessee under the head Profit and Gain of business and profession. For the A.Y. 2013-14, a similar profit and loss account prepared wherein surplus of ₹ 88,62,588/- was credited to P&L account under the head "business" which was not disputed by the Assessing Officer in scrutiny assessment. Following the past year, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count of interest then it is the primary onus of the assessee to prove and establish the allowability of the claim against the business income. To the extent of the interest which was paid on the fund used for investment, the same cannot be allowed against the business income. The assessee has expressed his inability to segregate the details, therefore, in the facts and circumstances of the case, we do not find any reason to interfere with the order of the ld. CIT(A), hence, this ground of assessee's appeal is dismissed. 11. Ground No. 3 of the appeal is regard the addition of ₹ 94,809/- in dairy business. The Assessing Officer noted that the assessee has declared net profit of ₹ 5,86,000/- on total turnover of ₹ 69,29,175/- from dairy business of M/s Mundra Dairy Udhyog. The Assessing Officer further noted that this net profit also includes interest from bank as well as closing stock. The Assessing Officer recomputed the net profit after excluding the bank interest of ₹ 1,475/- and closing stock of ₹ 1,25,000/-. The net profit comes to ₹ 4,59,525/- whereas as per the provisions of Section 44AD of the Act, the Assessing Officer proposed to adopt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of Shri B.D. Mundra. During the course of assessment proceedings, the Assessing Officer asked the assessee to explain the ownership of jewellery and other silver articles as well as source and year of acquisition of the jewellery with documentary evidence. The assessee in reply dated 14/09/2015 referred to the CBDT Instruction No. 1916 dated 11/5/1994 and therefore, sought benefit of jewellery and ornaments to the extent of 500 gms. per married lady, 250 gms. per unmarried lady and 100 gms. per male member of the family. The assessee also submitted that gold jewellery stock was declared in VDIS 1997 by the family members and addition on account of its recycling jewellery purchased and shown in the books. Thus, after claiming the benefit of the Circular of the CBDT as well as the jewellery declared in the VDIS 1997, the assessee contended that the excess jewellery which was as per the documents found during the search has been declared in the revised return of income and paid tax. The Assessing Officer did not accept this explanation of the assessee for want of supporting documentary as source of jewellery, the Assessing Officer has submitted that the excess of jewellery of 500 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lls of ₹ 10,20,750/- made between 16/05/2011 to 30/01/2013. The Assessing Officer has also not considered the jewellery of ₹ 5,67,700/- recorded in the books of account which was purchased on 07/07/2008 and 10/02/2012. The jewellery which was not recorded in the books of account till the date of search was already offered in the revised return of income and paid the tax before initiation of proceedings U/s 153A of the Act. The ld AR has submitted that total jewellery declared in the revised return is ₹ 15,88,450/- on which tax has already been paid and therefore, the addition made of ₹ 15.00 lacs is to be deleted. 19. On the other hand, the ld CIT-DR has submitted that the Assessing Officer has already allowed the benefit of more than ₹ 1,57,21,000/- to the assessee on account of reasonable quantity of jewellery in the hands of the family members of the assessee and only the balance amount of ₹ 15.00 lacs was added out of the total jewellery of ₹ 1,72,21,000/-. He has relied upon the orders of the authorities below. 20. We have considered the rival submissions as well as the relevant material on record. The Assessing Officer has found tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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