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TMI Blog2019 (9) TMI 655X X X X Extracts X X X X X X X X Extracts X X X X ..... No.92/CTK/2017 - - - Dated:- 20-8-2019 - BEFORE SHRI CHANDRA MOHAN GARG, JM AND SHRI L.P. SAHU, AM Assessee by: Shri S.K. Agarwal, FCA Revenue by: Shri S.M. Keshkamat, CIT DR ORDER Per L.P. Sahu, AM: This is an appeal filed by the assessee against the order of CIT(A)-3, Bhubaneswar, dated 12.06.2017 for the assessment year 2013-2014, on the following grounds of appeal :- 1. That, the Ld. Forums Below are wrong in making additions to the income of the appellant in view of the fact that no incrementing material were found either at the time of search or on the post search enquiry, therefore the total additions are illegal and liable to be deleted 2. That, the Ld. Commissioner of Income Tax (Appeals) erred in facts in circumstances in restricting the additions of ₹ 2,86,881 in view of the fact that no incrementing material were found either at the time of search or on the post search enquiry, therefore the addition is illegal and liable to be deleted. 3. That, the assessment order passed u/s 143(3)/153A of the Act is without jurisdiction in view of the fact that before transferring of jurisdiction from one assessing officer to another ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l deposits, ₹ 11,92,530/- was created by way of transfer/cheque/draft on different dates and the rest of the amount of ₹ 1,65,10,016/- was deposited in cash on different dates. In audited accounts the assessee has disclosed total sales at ₹ 1,30,40,935/- as turnover. The assessee was asked to explain the different of ₹ 46,61,611/- out of which the assessee could reconcile an amount of ₹ 14,95,148/- leaving balance of ₹ 31,66,463/- as unexplained and it was treated as suppression of both sales and purchase by the assessee during the year. Accordingly, the AO inferred that the assessee has made investment in purchase of stock which were not recorded in his books and also sold these stocks outside his books thereby receiving ₹ 31,66,463/- which is nothing but a summation of undisclosed investment in the purchase as well as the gross profit of the assessee. Accordingly, the AO added ₹ 31,66,463/- to the total income of the assessee as undisclosed income from the business. 4. Feeling aggrieved by the order of AO, the assessee appealed before the CIT(A) challenging that there was no incriminating material found during the course of searc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the first statement, the assessee deposed that cash of ₹ 20 lakhs was his unaccounted income earned by him during the financial year 2013-2014. In the return of income filed, the assessee did not disclose unaccounted cash of ₹ 20 lakhs found at the time of search. In other words, he retracted his admission made during the course of search u/s.132(4) of the Act. When show caused by the Assessing Officer, the assessee vide written submission on 8.3.2016 stated that on the date of search, he was in panic and not in proper state of mind and hence, statement was given to escape. It was stated that he was maintaining books of account, bill, registers, etc and that he had no unaccounted sales. He was carrying ₹ 20 lakhs from the balance of his firm Manoj Season Centre and that on 6.11.2013, he has drawn ₹ 20.15 lakhs from his firm, which was reflected in the ash book dated 6.11.2013. On that date, cash book showed sufficient balance to withdraw the sum of ₹ 20 lakhs in question. He also submitted copy of cash book for the period 5.11.2013 to 8.11.2013 in support of his contention. The Assessing Officer did not accept the contention of the assessee on the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash book to explain the source of these deposits in bank. On perusal of the cash book along with the bank book revealed that there is an apparent mismatch in the amount of cash drawn from the cash book and deposit of the same in the bank book as under: Date of transaction Cash deposit as bank account Cash withdrawn as per cash book 10.3.2013 4,70,000/- 47,000/- 14.03.2013 5,00,000/- 50,000/- 22.03.2013 5,00,000/- 50,000/- 5. The assessee was asked to explain this discrepancy in his cash book. The assessee furnished no explanation in this regard. The Assessing Officer observed that this is also a clear indication to the effect that not much of a reliability can be placed on the cash book furnished by the assessee and it also goes to prove that the assessee has unsuccessfully tried to explain away the cash of ₹ 20,00,000/-found in his possession on the date of search by fabricating his cash book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash without making any prior appointment with the person/supplier from whom he intends to make purchase. Therefore, he added ₹ 20 lakhs to the income of the assessee as unexplained money for the assessment year 2014-15. 6. On appeal, the CIT(A) observed that the assessee has not maintained proper books of account for any of the years where notice u/s 153A of the Act was issued. He observed that the discrepancies in the books of account are serious and the assessee has tried to make colourable devices to camouflage his own money, customer advances, gifts etc., but could not explain the unaccounted cash sales with proper evidence. The CIT(A) relied on the decision of Hon ble Apex Court in the case of Pullangode Rubber Produce Co. vrs State of Kerala 1972 CTR (SC) 253,where, it was held that an admission is an extremely important piece of evidence though it is not conclusive. Therefore, a statement made voluntarily by the assessee could form the basis of assessment. The mere fact that the assessee retracted the statement could not make the statement unacceptable. The burden lies on the assessee to establish that the admission made in the statement at the time of search is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 20 lakhs was found in the possession of the assessee on 7.11.2013 out of which ₹ 19 lakhs was also seized by the department. At the time of seizure in the statement recorded u/s.132(4) of the Act, the assessee admitted that he was not maintaining books of account in respect of his business income and cash of ₹ 20 lakhs was out of his unaccounted sales. 10. However, during the course of assessment proceedings, the assessee produced cash books in respect of his business and submitted that cash of ₹ 20 lakhs was available in the said cash book on 6.11.2013. 11. The Assessing Officer found that cash book produced was unreliable and, therefore, not accepted the explanation of the assessee and added ₹ 20 lakhs to the income of the assessee. 12. On appeal, the CIT(A) confirmed the action of the Assessing Officer and observed that except few purchases and sales invoices, the cash book produced by the assessee is not supported by bills, vouchers, cash memo or invoices. 13. Before us, ld A.R. submitted that the statement given at the time of the search is not conclusive and the assessee can always show that the statement was given under a mist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 31,66,463/-which is nothing but a summation of undisclosed investment in purchase as well as the gross profit of the appellant and hence, he added ₹ 31,66,463/- to the total income of the appellant as undisclosed income from the business. In other words, he has accepted both purchases and sales as unaccounted/unrecorded in the books of account and for such conclusion, assessment of the entire unrecorded sales is not justified and only the profit component is the gross profit but not the net profit of that particular year for which such unrecorded sales are unearthed and the reason behind applying the GP rate is that the indirect expenses involved in such unaccounted purchase sales have already been claimed as deductions in P L Account of that year, unless and until the assessee proves with evidence that indirect expenses incurred for such unrecorded purchases and sales are not included in the indirect expenses claimed in the P . L Account. In appellant's case, the GP rate was 9.06% of sales disclosed in P L Account of the previous year relevant to the assessment year 2013-14 and applying the rate of GP to the unaccounted sales of ₹ 31,66,463/-, the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich accrues or arises to him outside India shall not be so included unless it is derived from a business controlled in or a profession set up in India. (2) Subject to the provisions of this Act, the total income of any previous year of a person who is a non-resident includes all income from whatever source derived which- (a) is received or is deemed to be received in India in such year by or on behalf of such person ; or (b) accrues or arises or is deemed to accrue or arise to him in India during such year. Explanation 1.-Income accruing or arising outside India shall not be deemed to be received in India within the meaning of this section by reason only of the fact that it is taken into account in a balance sheet prepared in India. Explanation 2.-For the removal of doubts, it is hereby declared that income which has been included in the total income of a person on the basis that it has accrued or arisen or is deemed to have accrued or arisen to him shall not again be so included on the basis that it is received or deemed to be received by him in India. It is clear from the above provisions that the tax should be charged in the relevant assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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