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TMI Blog2019 (10) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... AV, JUDICIAL MEMBER: Assessee is in appeal before the Tribunal against order of ld.CIT(A), Gandhinagar dated 23.12.2016 passed for the assessment year 2012-13. 2. Grounds of appeal taken by the assessee are not in consonance with the Rule 8 of the Income Tax (Appellate Tribunal) Rules, 1963 - they are descriptive and argumentative in nature. In the first fold of grievance, the assessee has pleaded that the ld.CIT(A) has erred in confirming the addition of ₹ 3,74,90,000/- which was made by the AO with help of outcome of survey carried out at the premises of the assessee. 3. Brief facts of the case are that survey under section 133A of the Act was carried out at the premises of the assessee on 19.10.2011. It has filed its return of income on 30.9.2012 electronically declaring taxable income at ₹ 1,17,21,050/- which was revised on 30.10.2012 declaring total income at ₹ 1,22,22,060/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued and served upon the assessee. The ld.AO found that during the course of survey statement of Shri Nikil Prahladbhai Patel, partner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the statement given at the time of survey and also alleged that this diary was created by the Revenue authorities. The ld.counsel for the assessee took an alternative plea whereby he contended that the AO himself has alleged that amounts reflected in the diary from 84 persons who have booked shops/residential flats which were reflected in the list of unit holders, therefore, at the most it could be construed as acceptance of onmoney in cash. It is to be treated as part of total sale consideration and only the element of profit involved in such receipts ought to be treated as income of the assessee. For buttressing this contention, he relied upon the following decisions: i) DCIT Vs. Panna Corporation, Tax Appeal No.323 of 2000 (Guj) ii) CIT Vs. President Industries, 258 IR 654 (Guj) iii) CIT Vs. Balchand Ajit Kumar, 263 ITR 610 (MP) iv) Man Mohan Sadani Vs. CIT, 304 ITR 52 (MP) 5. In order to demonstrate the amount requires to be added back or quantification of the profit involved in the alleged on-money, he submitted that the assessee-firm has started its business from the Asstt.Year 2011-12 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... haderkan(supra) is not applicable in the present case. As far as restriction of addition to the extent of element of profit is concerned, he submitted that this is the receipt which has not been included in the overall receipts reflected in the book, though expenditure must have been debited in the book. Therefore, total are required to be added. 8. We have duly considered rival submissions, and gone through the record carefully. As far as the argument of the ld.counsel for the assessee is concerned that statement recorded during the course of survey does not carry evidentiary value and on the strength of such evidence no addition can be made is concerned, we are of the view that in the present case, addition has not been solely on the basis of the statement. The addition has been made on the cumulative settings of the disclosure made by a partner during the course of survey coupled with discovery of a diary containing details of on-money received by the assessee from 84 persons. The partner, Shri Nikil Prahladbhai Patel though filed an affidavit deposing therein that this diary was prepared during the course of survey by the survey-team, but it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, hence, how the assessee said these 84 persons as fictitious ? The diary is containing 129 pages, which is not possible to make it in one morning hours. 9. At this stage, we would like to take note of the finding of the Hon ble Gujarat High Court in the case of DCIT Vs. Panna Corporation where similar circumstance arose. The question which was formulated by the Hon ble High Court and relevant part of conclusion made in this case read as under: Whether the Appellate Tribunal is right in law and on facts in deleting the addition made on account of undisclosed income earned by the assessee out of on money receipts from the sale of row houses done during the block period? 5. Learned counsel for the revenue, Shri Sudhir Mehta submitted that the Tribunal committed a serious error in reversing the order of the Assessing Officer. He submitted that the on money collection by the respondent - assessee firm was established. The Tribunal having confirmed such findings, ought not to have rescinded the directions for collection of tax, interest etc. 6. On the other hand, learned senior counsel Shri S. N. Soparkar ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of income on the suppressed amount of sales. Such decision was carried in appeal by the revenue before the High Court. The High Court rejected the appeal, observing that unless there is a finding to the effect that investment by way of incurring the cost in acquiring the goods which have been sold has been made by the assessee and that has also not been disclosed, such addition could not be sustained. It was observed that in absence of such findings of fact, the question whether the entire sum of undisclosed sale proceeds can be treated as income of the relevant assessment year answers by itself in the negative. The High Court rejected the appeal holding that no question of law which requires to be referred arises. 11. In the case of Commissioner of Income Tax v. Gurubachhan Singh J. Juneja, reported in (2008) 302 ITR 63 (Guj.), once again a somewhat similar issue came up before this Court. In the said case, the assessee was engaged in the business of trading of tyres. Search proceedings were carried out at the residential and business premises of the assessee. On the basis of loose sheets which were seized during such search operation, the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012-13 ₹ 5,44,29,724/- Rs.L28.32.868/- 23.58% 2013-14 ₹ 2,20,87,315/- Rs.NIL- - 2014-15 ₹ 80,61,000/- ₹ 38,32,625/- 47.55% 2015-16 ₹ 58,62.000/- ₹ 15,18,753/ - 25.91% 2016-17 ₹ 58,32,000/- ₹ 7,62,877/- 13.08% Total ₹ 11,24,97,200/- ₹ 7,62,877/- 20.25% 11. A perusal of the above would indicate that weighted average of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses incurred by the assessee in relation to the building construction during the assessment proceedings. The major reason for the disallowance was that the labor contractors could not prove the regular payment to the laborers. It was also observed that the assessee has not released entire payment to the labor contractors till the end of the financial year under consideration. Therefore, it was doubted on the payment to the laborers made by the labor contractors. However, we note that all the supporting evidence of the parties such as their PAN No., bank account, bills, income tax return were duly furnished, which is available on record. The AO has not doubted in any of the documents filed by the assessee during the assessment proceedings. We also note that there was a certain defects in the amount of bills furnished by the labor contractors during the assessment proceedings, but that does not lead to the conclusive evidence that the payment to the laborers is bogus. Therefore, we are of the view, that the justice will be served to the assessee if the disallowance made by the CIT(A) is reduced to 2% of the total labor expenses. Accordingly, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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