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TMI Blog2020 (12) TMI 823X X X X Extracts X X X X X X X X Extracts X X X X ..... ER] we do not find any reason to quash the reopening of the assessment in the matter merely because the Departmental appeal was pending before the Tribunal when reasons for reopening of the assessment were recorded. If the A.O. would not have recorded reasons for reopening of the assessment on 28.03.2013, then, the period of limitation in favour of the Revenue would have expired to initiate re-assessment proceedings. Thus, the A.O. was justified in reopening of the assessment in the matter. Unrecorded sales from business of sale of gold jewellery - gross profit rate determination - unrecorded sales by applying the gross profit rate of 18% - HELD THAT:- Since the assessee from the beginning have denied the contents of the seized Diary that he did not deal in trading of gold jewellery, therefore, onus was upon the A.O. to prove that assessee actually deal in gold jewellery. The assessee has shown the business income and income from other sources which have not been doubted by the authorities below. Since this similar seized document have been considered in earlier A.Y. 2005-2006 and similar addition have been deleted, therefore, the issue is covered in favour of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared in the return of income and other income available to the assessee on account of accumulation of income - we set aside the Orders of the authorities below and restrict the addition to ₹ 1,58,859/- only. - ITA.No.2338/Del./2017 - - - Dated:- 21-12-2020 - Shri Bhavnesh Saini, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Assessee : Shri Ved Jain, Advocate And Shri Ashish Goel, Advocate For the Revenue : Shri H.K. Choudhary, CIT-DR ORDER PER BHAVNESH SAINI, J.M. This appeal by assessee has been directed against the order of Ld. CIT(A)-19, New Delhi, Dated 15.03.2017, for the A.Y. 2006-2007. 2. We have heard the Learned Representatives of both the parties through video conferencing and perused the material available on record. 3. Briefly the facts of the case are that original return of income was filed on 15.06.2006 declaring income of ₹ 1,30,641/- by the assessee wherein the assessee has shown business income and income from other sources. Subsequently, search operation was carried-out at the residence of the assessee at J-83, Extension, Gali No.4, Guru Ram Dass Nagar, Laxmi Nagar, Delhi-110 092 on 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and allowed the appeal of assessee partly. 5. The assessee in the present appeal has raised the following grounds : (1) On Ground Nos.1 to 9, the assessee challenged the initiation of re-assessment proceedings under section 147/148 of the Income Tax Act, 1961. (2) On Ground No.10, the assessee challenged the addition of ₹ 61,16,740/- on the alleged unrecorded sales. (3) On Ground No.11, the assessee challenged the Order of Ld. CIT(A) in applying profit rate of 18% which is too high for computing business income. (4) On Ground No.12, assessee challenged the addition of ₹ 20,000/- on the basis of the loose paper. (5) On Ground No.13, assessee challenged the addition of ₹ 2,89,500/- towards Bank Deposits. 5.1. Now we deal with all these Grounds as under 6. On Ground Nos.1 to 9, the assessee has challenged the reopening of assessment under section 147/148 of the Income Tax Act 1961. Learned Counsel for the Assessee submitted that earlier assessment order under section 143(3) was passed by the A.O. Dated 28.12.2007 on the basis of the seized material found during the course of same search, copy of which is filed at Page-74 of the paper book in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that there was no justification to initiate the reassessment proceedings merely on the basis of same material found during the course of search. 7. On the other hand, the Ld. D.R. relied upon the orders of the authorities below and submitted that during the course of search, incriminating material was found against the assessee, on the basis of which, assessment under section 143(3)was framed, but, it was quashed on technical reason that notice under section 143(2) have not been served upon the assessee, but material found during the course of search clearly disclose escapement of income, therefore, A.O. rightly recorded reasons within the period of limitation, otherwise A.O. would not have been in a position to tax the escaped income merely because the appeal of the Department was pending before the Tribunal. He has submitted that decision of the Hon ble Bombay High Court does not apply to the facts of the assessee and the Hon ble Gujarat High Court in its later decision Dated 25.07.2017 in the case of Krishna Developers Company vs., DCIT, Circle-7(2) reported in [2018] 400 ITR 260 (Guj.) on identical facts held as under : Merely because reasons recorded by Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra), which was confirmed by the Hon ble Supreme Court. Following the above decisions in the case of Krishna Developers Co., (supra), we do not find any reason to quash the reopening of the assessment in the matter merely because the Departmental appeal was pending before the Tribunal when reasons for reopening of the assessment were recorded. If the A.O. would not have recorded reasons for reopening of the assessment on 28.03.2013, then, the period of limitation in favour of the Revenue would have expired to initiate re-assessment proceedings. Thus, the A.O. was justified in reopening of the assessment in the matter. The decision of the Hon ble Bombay High Court in the case of Metro Auto Corporation (supra) and the decision of Hon ble Punjab Haryana High Court in the case of Smt. Anchi Devi (supra), thus, cannot be relied upon in favour of the assessee. In view of the above, Ground Nos.1 to 9 of the appeal of assessee are dismissed. 10. On Ground Nos.10 and 11, the assessee challenged the addition of ₹ 61,16,740/- on unrecorded sales by applying the gross profit rate of 18%. In the alternate contention, it is claimed that application of 18% gross profit rate is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that at the time of search or in post-search enquiries, the incriminating documents i.e., Annexure-A Diary was never confronted to the assessee. The A.O. admitted in the remand report that statement of assessee was not recorded at the time of search or thereafter. It is the first time after the search on 09.12.2005, assessee was asked to appear personally on 25.03.2014 i.e., after a considerable period of 09 years and statement of assessee was recorded at the reassessment proceedings by confronting the documents which is the basis for computing the undisclosed sales, but, assessee denied the same. No attempt is also made to tally the handwriting of the assessee with the seized Diary so as to put liability upon him. Therefore, there is no material available on record to suggest that the Annexure-A Diary pertain to the assessee. Similar issue was considered by the ITAT, Delhi Bench in the case of same assessee for preceding A.Y. 2005-2006 and addition made by the A.O. on the basis of the same seized material have been deleted by the Tribunal. The findings of the Tribunal in paras 8 to 13 of the Order Dated 12.05.2017 (supra) are reproduced as under : 8. We have considered the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record namely that M/s Smridhi Sponge, assessed to tax in a specific jurisdiction in Kolkata manufacturing M.S. Ingot and Sponge Iron, having specific address as per ROC site receiving payments in cash and cheque as per the seized documents qua which presumption u/s 292C operates towards their correctness; wherein two specific cheques were honoured by Punjab National Bank at Jamshedpur whose account number was 1021 ;, branch code and factum of the payments made on behalf of the M/s Galaxy Exports as the same Galaxy found mentioned at Paper Book page 47 (Seized documents) also dealing in Iron Ore were provided; where the names and addresses of the Directors of both the companies; their authorized share capital; details of their balance sheets as per ROC site; Auditor's, Reporters etc. are all given. The fact that these were relevant unimpeachable evidence has not been doubted. In these facts the reluctance of the tax authorities to address this issue and to carry the enquiries to the logical conclusion is a glaring fact of deliberate inaction. The repeated inactions speak louder then the half hearted actions undertaken. The evidences remains unrebutted on record. No eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are essentially factual. Further, we find no infirmity with the findings returned by the ITAT and in any event the same cannot be held to be perverse by any stretch. 18. In the circumstances, no substantial question of law arises and the appeals are, accordingly, dismissed. 11. Similarly, the ITAT Mumbai Bench in the case of Sh. Pandoo P. Naig Vs ACIT and ACIT, CC-32, Mumbai Vs Prakash B. Bandarkar, Parvin B. Bandarkar, Room in ITA Nos. 7089 7364/Mum/2011 and ITA No. 6671 6672/Mum/2012 (supra) vide order dated 24.06.2016 held as under : 14. We find that the wording of the section 292C which supposes the presumption to be taken is qualified with the words 'may be', hence, it may or may not be presumed that such documents belong to the person searched. Firstly, the section uses the word 'may presume' and not 'shall presume', hence the presumption of facts under section 292C is not a mandatory or compulsory presumption, but, a discretionary presumption; secondly, such a presumption' is not a conclusive presumption but is a rebuttable presumption because it is a presumption of fact not a presumption of law. Under the circumstances, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO by presuming that the assessee had made payments to the certain parties but in those documents which had been relied by the AO nowhere it is mentioned that the assessee purchased the gold and even the nature of the transaction is not clear because against certain payments, some quantity of gold has been written and against the others nothing is mentioned. Therefore, the addition made by the AO is only on the basis of surmises and conjecture without bringing any cogent material on record to substantiate that the assessee was engaged in the business of gold and jewellery and the AO had not brought any material on record to substantiate that the denial of the assessee was false. 13. In the present case, the contention of the assessee that there was a family function two months prior to the search and somebody has forgotten the documents found during the course of search has not been rebutted. It is also noticed that the Id. CIT(A) also at page no. 13 of the impugned order mentioned as under: In regard to the seized documents Annexure A-4 page 31, 32 and 33, the AO had not found any corroborative evidence during the course of search and assessment proceedings. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- on 08.10.2005 on the birthday party function of his grand-son at Soubhagya Banquet, Preet Vihar, New Delhi. The assessee in response to the show cause notice given by the A.O. submitted that expenditure might have been met by his son. The A.O, however, made the addition of ₹ 20,000/- in the hands of assessee which is confirmed by the Ld. CIT(A). 15. Learned Counsel for the Assessee referred to PB-11 and 12 which is the seized document indicating holding of function on account of birthday of his grand-son Mr. Ayush. He has submitted that name of the assessee did not appear in the seized document and that name of Mr. Ashu Agarwal, son of the assessee, who has held the party have been mentioned. Since assessee denied to have incurred any expenditure, therefore, entire addition is unjustified. 16. On the other hand, Ld. D.R. relied upon the Orders of the authorities below. 17. After considering the rival submissions, we are of the view that addition is not warranted in the hands of the assessee. The seized paper do not indicate the name of the assessee if he has incurred any expenditure. The assessee is grand father of Mr. Ayush, therefore, presumption would be that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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