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TMI Blog2021 (10) TMI 1207X X X X Extracts X X X X X X X X Extracts X X X X ..... on any excess cash of serious amount, nor could unearth any unaccounted assets or investment to corroborate the unaccounted gross receipts in question. Besides, the deposition made in statement u/s 132(4) suggests that the amount generated by way of gross receipts have been ploughed back in the business of the assessee. Question No.13 of the statement under Section 132(4) clearly vouches this significant aspect. In this factual backdrop, the case made out on behalf of the assessee that only the profit element embedded in the gross receipt is susceptible to tax cannot be brushed aside. We find merit in the plea of the assessee that the Assessing Officer was not justified in bringing to tax the whole amount of unrecorded receipts. In the light of judicial precedents cited above and many more, entire gross receipts cannot be brought to tax. The action of the assessee to restrict the inclusion of unaccounted income in ROI to the extent of profit embedded in such unaccounted receipts cannot be faulted in the facts and circumstances of the case. - Decided in favour of assessee. - I.T.A. Nos. 93 to 99/RPR/2019 - - - Dated:- 26-10-2021 - Shri Pradip Kumar Kedia, Accountant Member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn Of Income (ROI) for AYs 2011-12 to 217-18 wherein the aggregate additional income of ₹ 1,05,90,100/- only was offered for taxation out of such surrender. On being questioned on the mismatch, it was explained by the assessee to the Assessing Officer that the aggregate unrecorded amounts, as reflected in the seized documents, represented the on-money received from different customers as a part of consideration on which only net profit element is chargeable to tax; and, accordingly the net profit element by applying the net profit rate for the respective financial year was worked out to ₹ 1,05,90,100/- and has been correctly offered as additional income in the return filed in response to notice under Section 153A of the Act. 3.1 The year-wise surrender of amount by the assessee and corresponding income disclosed in the Return Of Income (ROI) as tabulated in paragraph No.6.1 of the assessment order is reproduced hereunder for ready reference:- S. No. AY Amount surrendered during the course of search Net Profit Ratio as per Audited Balance Sheet Income Voluntarily disclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of any misconception of facts or law. The Assessing Officer consequently rejected the explanation of the assessee towards its offer on additional income and concluded that the amounts surrendered in the statement under Section 132(4) is liable for taxation without any adjustment. As a sequel to such observations, the Assessing Officer replaced the additional income offered by the assessee with that of amount surrendered in the statement under Section 132(4) in the respective assessment years. Consequently, the Assessing Officer made an addition of ₹ 11,11,10,800/-, in aggregate, in different assessment years which amount represented the difference between amounts surrendered during the search and amounts offered in the return of income under Section 153A in different assessment years. 3.3 Aggrieved by the additions towards difference between amount surrendered under Section 132(4) and additional income offered in the respective return of income (on the basis of estimation of the net profit element embedded in such surrender as per assessee), the assessee preferred appeal before the CIT(A). The CIT(A), however, did not find merit in the plea of the assessee for restr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e averments made in the statement under Section 132(4) are rebuttable in nature and, therefore, the assessee is entitled to explain the real state of affairs by direct or circumstantial evidence at any stage. The learned Counsel relied upon the decisions in the case of Pullangode Rubber Produce Co. Ltd. Vs. State of Kerala (1973) 91 ITR 18 (SC) and many other judicial precedents for the proposition that the addition cannot be made solely on the basis of averments made in the statements which are not final or conclusive. The statement so made can be deviated from by showing grounds for doing so. It was contended that if the whole gross receipts is taken as unaccounted income, the revised net profit ratio would be totally rendered un- comparable with the industry standards or with the net profits declared by the assessee and duly assessed prior to search under Section 143(3) of the Act. It was next submitted that the whole ground for conclusion drawn against the assessee is the absence of any formal retraction of the statement made at the time of search. In this regard, it was contended that the assessee has actually honoured the declaration made under Section 132(4) of the Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment order as well as the first appellate order. We have also gone through the statement recorded in the course of search and other material referred to and relied upon in the course of hearing in terms of Rule 18(6) of the IT(AT) Rules, 1963. At the outset, we take note of the undisputed fact that certain seized materials were found in the course of search showing unrecorded receipts of ₹ 12,17,00,900/- and consequently, a disclosure of this amount was made in aggregate in various assessment years by way of statement recorded under Section 132(4) of the Act at the time of search. The assessee, however, has offered the net profit elements whereas the Revenue has attempted to tax the gross amount in tune with deposition made in the statement on behalf of the assessee- company at the time of search. The only dispute thus is whether the whole amount of on-money received can be subjected to taxation or only the income embedded therein can be brought to tax in the facts of the case. 6.1 We notice a few vital facts to begin with. In the course of search, certain loose-papers were found showing unaccounted receipts. The assessee readily surrendered the aforesaid receipts as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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