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TMI Blog2022 (5) TMI 771X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the purpose of advance, name of broker, name of person paying and the date and amount paid is clearly written. Whether this receipt of advance is income of the assessee or not? - Since, the possession of the land and transfer is not took place this advance receipt is not chargeable to tax under the Act. Now, we have to see that the law permits to receive the money in advance or not? The receipt of money in cash w.e.f. 01.06.2015 considered as specified sum under the provision of section 269SS of the act and since, the money has been received before this date this receipt of advance is also in accordance with the law. Thus, the money so received and noted on this page is not prohibited receipt in the hand of the assessee and considering the nature of the receipt the same is also not chargeable to tax. Merely, the assessee looking to the facts and circumstance expressed his inability to submit the circumstantial evidence the basic nature of transaction in absence of this information does not change its nature of receipt. When the details connected with the transaction are outside the purview of the provision of section 68 as all the circumstantial evidence found in the course of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... econciled the valuables with the Wealth tax return and holding of the various family member reconciling the version of the family at the time of search. The submission of the assessee made before the Ld. CIT(A) is duly recorded on the page from 9 to 24, which is very detailed and exhaustive and was relied upon by assessee in addition to the brief submitted before us. No incriminating documents were found to proof that the assessee has made purchase out of books of the jewellery. Looking the detailed finding of ld. CIT(A) and since, the ld. DR has not placed any tangible argument that how and why the finding of the ld. CIT(A) is not correct on fact and on law, in the absence of such argument we find no reason to interfere in the finding of the Ld. CIT(A) and this ground no. 2 raised by the department in this appeal stands dismissed. Unaccounted sale of mustard seed / oil - profit estimated on account of the unexplained sales the separate disallowance u/s. 40A(3) made - HELD THAT:- We confirm the action of the ld. CIT(A) that whole sale consideration cannot be added as income only the related profit can be added in the income of the assessee. As regards the estimation of profit the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... br>Dr. S. Seethalakshmi, JM And Shri Rathod Kamlesh Jayantbhai, AM For the Assessee : Sh. P. C. Parwal, CA For the Revenue : S. Naiyer Ali Najmi, CIT ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM These bunch of four appeals are cross appeal of the assessee as well as of the department and are arising out of the order of the learned Commissioner of Income Tax, Appeals-4, Jaipur [ Here in after referred as Ld. CIT(A) ] for the assessment year 2015-16 & assessment year 2016-17 dated 19.08.2019. As this is related to same assessee for two separate assessments year where in the facts are largely similar and issues involved are identical and thus disposed of by a common order. 2. The hearing of these appeals was concluded through audio-visual medium on account of Government guidelines on account of prevalent situation of Covid- 19 Pandemic, both the parties have placed their written as well as oral arguments during this online hearing process. 3. The lead matter is taken for the assessment year 2015-16 and therefore, the facts are drawn from the said records for the purpose of adjudication. 4. The department has challenged the order of the Ld. CIT(A) for assessment year 2015-16 on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2016 requiring him to file a true and correct return of income as prescribed under Rule 12 of the Income Tax Rules, 1962 within 15 days of the service of the said notice. The assessee filed its return u/s 139 on 30/03/2017 vide acknowledgement no. 12567361029316 declaring total income of Rs. 13,06,680/- and agricultural income of Rs. 12,46,718/-. In response to notice u/s 153A of the Act, the assessee has e-filed its return of income on 08/02/2017 vide acknowledgement no. 615333541080217/- declaring income of Rs. 13,06,680/-. During the course of search cash of Rs. 4,31,265 was found, further various documents were seized from the residence of the assessee. 7. Notice u/s 142(1) dated 04-09-2017 was issued to the assessee and information and details pertaining to the case of the Assessee relevant to assessment of its income were called for u/s 142(1) of the Act by means of a questionnaire. Further, notices u/s 142(1) was issued from time to time. 8. During the course of search, various incriminating documents were found & seized from assessee's residential premises situated at Bank Colony, Alwar on vacation of prohibition order. The assessee, during the course of assessment proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvances of Rs. 2.75 Crore during AY 2015-16 and advances of Rs. 1.68 Crore during AY 2016-17 against sale of agricultural land. The summary of receipt of such advances is also mentioned on the page no. 71A of Exhibit No. AS-1, which is evident from bare perusal of the seized paper itself. The various payments in the nature of expenditures, investments etc. found to have been made by the assessee as per the seized papers, have been made out the funds available with the assessee from the source of such advances aggregating to Rs. 4.43 Crore (Rs. 2.75 Crore+1.68 Crore-4.43 Crore) received by the assessee. Thus, as explained above, there is no cash loans given by the Assessee. Accordingly, proposed addition of Rs. 2,75,00,000/- on account of alleged unaccounted cash loans is not justified, which is against the facts and accordingly no interest thereon is called for. The reply of the assessee was considered and the same was examined in the light of reply given on that particular seized papers annexed as page no. 71A (back side of page 71) exhibit-1. The assessee has replied entry wise transaction mentioned on that seized page as annexure-4 which is reproduced here under:- The Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. (f) Sh. Ronak Kumar. (iv) Furnish the cash flow statement or cash book from 01/04/2014 to 31.03.2015 for the year under consideration. In absence on any of fulfillment of any of the requirement you are asked to show cause as to why the addition of Rs. 2.75 Crore may not be made to the total income of the year under consideration. You are also requested to please furnish the statement of affairs for the year under consideration as required vide this office letter no. 1717 dated 16.11.2017 which is still pending." In response, the assessee vide reply dated 21/12/2017 submitted as under: "With reference to the notice mentioned hereinabove, at the outset, it is submitted that your good-self has alleged in the impugned notice that no corroborating document in support of the claim of advances against sale of interest in agriculture land and expenditures has been furnished. In this regard, it is submitted that the loose paper [Page No. 71A Exhibit AS-1] pertaining to receipt of advances against sale of share in agricultural land by the Assessee duly forms part of the material/documents seized during the course of search. Also, various loose papers evidencing the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. Query No. 3. In regard to the complete ledger accounts of the persons as mentioned at page no. 71A (back side of the page no. 71) from whom assessee has received the advances against sale of agriculture land, it is submitted that assessee does not maintain any of books of accounts for his personal transaction, therefore ledger account since opening to 31.03.2016 of the mentioned in the query letter are not available. persons Query No. 4. In regard to the submission of cash flow statement or cash book for the desired period, it is submitted that as stated above the assessee does not maintain any of books of accounts, therefore cash flow statement/cash book for the desired period as mentioned in the query letter are not available. However, the assessee has already explained all the entries mentioned in the query letter dated 04.09.2017 through assessee's letter dated 11.12.2017 and annexure attached thereto and a copy of such details and explanations of such entries are again enclosed herewith as annexure-1." The reply of the assessee was considered meticulously. First of all the contention of A/R is not correct that the said receipts are advance against sale of ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished the addresses of neither those persons who advanced the money and nor of the brokers to enable this office for any further inquiry either u/s 133(6) or u/s 131 of I.T. Act, 1961 to be conducted. It is quite strange that assessee is unaware of whereabouts of those persons and of the brokers, from whom he had taken such a huge amount of advances. (iii) On being asked about the present status of land, the A/R simply said that these lands are under dispute and subject to adjudication under Courts and above transaction were made The question arises that on account of disputed land how one can entered into sale agreements with numbers of persons and if so than why those individuals would give him so much of advances without even knowing the title clearance of the land in question which is subject to rights being accrued by the court order only. Further, very interestingly these accounts are still not got settled by them and rolling over time to time. (iv) Further, if we have a close look over the said document seized and which is under consideration, it transpires that the word "r" in which the assessee is putting stress in support of its claim is actually termed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfronted to the assessee. Assessee, after taking into consideration all the transactions recorded in those loose papers and giving a thoughtful consideration to his concealed and unaccounted income, surrendered Rs.2.00 crores on the basis of these loose papers only. However, during course of assessment proceedings, assessee has retracted the said surrender. Out of surrender of Rs. 2.01 crore, only Rs.1,12,92,817/- has been offered as unaccounted income and has contended that, income of Rs. 87,07,183/- was not concealed income at all, and therefore, retracted from taxation. Interestingly, out of total 1,12,92,817/-, Rs. 31,66,065/- only has been admitted as unaccounted taxable income and remaining Rs. 81,26,752/- (Rs. 12,46,718/-has been offered as agriculture income in the year under consideration i.e. AY 2015-16) has been offered in different assessment years as non taxable income in the form of agricultural income. The submission made by assessee in this regard is reproduced as under: "Under the instruction given by the above assessee, we humbly submit that as per the statement recorded u/s. 132(1) of the Act, dated 11.12.2015 of assessee during search and seizure proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when he was much aware that search has already been conducted in his residence on 14.10.2015, Assessee has willfully surrendered Rs. 2.01 crores as unaccounted income after going through all the Seized documents and transactions recorded therein. Further, statement of assessee is reproduced here verbatim: It is evident that assessee has surrendered its unaccounted income for taxation, meaning thereby he knew that at least so much of income certainly taxable income "not the exempt one" but unaccounted at this end and therefore, assessee made surrender of Rs. 2.01 Crore but now, assessee is claiming that out of total 2:01 Crore Rs. 1,12,92,817/- only was unaccounted income and out of this 1,12,92,817/- also Rs. 81,26,752/- (A.Y. 2015-16 Rs. 12,46,718/-) was although unaccounted so offered in return but was agricultural income only so not taxable at all and moreover, rebate of the same has also been claimed for tax rate calculation purpose. The contention of assessee made during course of assessment proceedings in respect of the retraction of surrendered amount, is found completely cooked up story and an afterthought of the following accounts: (i) First of all, on goi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing reasons that: (a) In support of agricultural land holdings in his name, on which he is claiming agricultural income, the assessee furnished all the lands registered in the name of his family members and tried to club the agricultural income of all the family members in his own. First of all the agriculture land pertains to the person who is the land holder and not to anyone else but here assessee without having any rent agreement tried to club all the agricultural income, if any, of all the family members in its own. If it be so, than, it is unbelievable that they also forgot to offer their respective agriculture income in their respective returns. This fact suggests that the claim of assessee that he forgot to offer it agriculture income is nothing but it is a deliberate attempt to justify its unaccounted income which he otherwise surrendered for tax during search. (b) The assessee failed to furnish any land revenue record such as Khasra, Girdavari, in support of its claim whether any agricultural activity was actually performed in the so much of land(s) which he is owner. (c) Furthermore, in support of sale of agriculture produce, the assessee could not furnish any sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is extracted as under:- 5. I have carefully considered the relevant facts and arguments advanced as also the case law cited. The undisputed fact culled out by the assessing officer which is also stated by the appellant is that as per the seized material being paid 71A of annexure A.S. Exhibit 1 is the amount received by the appellant and not paid by the appellant. The dispute is with respect to whether the amount is advance towards sale of agricultural land or is cash loan received by the appellant. Ultimately the addition is made under section 68 of the Act. For the sake of brevity section 68 is extracted herein: 68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year: Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f an assessee maintained for any previous year". Thus, section 68 comes into play immediately when an entry relating to a sum is found to have been credited in the books kept by the assessee. Meaning thereby, that the condition precedent to apply this section is the existence of books and the recording of a sum, as cash credit therein - ITO v. Rajendra Kumar Taparia [2008] 22 SOT 23 (Jodh.) (URO). Meaning of 'Books' 7. Clause (12A) of section 2 of the Act gives an inclusive definition of 'books'. The said clause (12A) provides that: the term 'books or books of account' includes ledgers, day-books, cash books, account books and other books whether kept in written form or as print-outs of data stored in a floppy disc, tape or any other form of electro-magnetic data storage device. CBDT's Circular No. 14/2001 explains clause (124) of section 2 as under: 'Defining of 'Books of Account' and 'Document' so as to include electronic records, etc. 7.2 With the passing of the Information Technology Act, 2000, the Act has provided definitions of books of account' and 'document' in section 2 of the Income-tax Act, so a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hikkalingaiah [2006] 9 SOT 786 (Bang.) 7.4 Books of account do not mean cash book only. It would mean complete record which a businessman is required to maintain to record his day to day transactions. According to the well settled principles of accountancy, each transaction is required to be treated under two heads - under one head, debit entry is made while under the other head, credit entry is to be made. For example, if money is received from 'K' then cash account is to be debited and account of 'K' is to be credited by the same amount. For the same reason if any sum is introduced in the books by the assessee from his own sources then cash account is debited while assessee's own account has to be credited. Cash book is nothing but the cash account which is debited if money is received and is credited if money is spent or invested by the assessee. In such cases, corresponding credit or debit entries are to be made by assessee in respect of accounts. If such entries are not made, the accounts of assessee would not tally. Therefore, failure on the part of assessee to make credit entry in the respective account would not entitle the assessee to claim that no ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same, it can be defined as regular set of accounts maintained by the assessee in the normal course of his activity to record all the transaction of his income and expenditure as also assets and liabilities. It should also pertain to a specific period which is generally a period of 12 months which coincides with financial year as defined in the act. Any other record of receipts and payment, which if not in the normal course of recording income and expenditure or assets and liabilities but only a summary of such receipt and payment will not amount to books of accounts but only an extract of the receipts and payments. Since the prerequisite for invoking section 68 is that there should be a credit of a sum in the books of an assessee maintained for any previous year, in absence of such books of accounts said section cannot be invoked. There is a well laid down logic behind requirement of books of accounts for purpose of invoking section 68 particularly when said section is read in conjunction with provision of section 69, 69A, 69B, 69C etc. For invoking section 69, 69A, 69B, 69C, the same can be done provided the same is not recorded in the books of accounts if any maintained by hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the applicability s. 69. 69A. 69B or 69C etc. In this regard, on my query to the appellant, ld. Counsel for the appellant submitted that since there is no finding that the appellant has also incurred certain expenses or acquired any assets or money etc. the addition in alternative grounds is also not sustainable. I find force in the arguments. Since there is no finding that for explaining any money, or valuable article etc or any expenditure incurred the said amount received as advance against sale of land was offered as source, the addition under alternative provisions is not attracted. 15. The assessee has filed their submission in relation to the appeal filed by the revenue and relevant submission filed before us is reproduced here in below: At the outset is submitted that the seized paper on the basis of which addition is made is titled "Ramgarh Jamin ke pete" under which the date, name of person, amount received and the narration on account of land interest market rate is noted. Thus, the paper clearly indicates that the amount noted on this paper in relation the amount received against Ramgarh This is further supported from the fact that this noting made overle of page 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that will be presumed that the contents of such books of account and other documents are true, and that the signature and every other part of such books of account and other documents which purport to be in handwriting of any particular person which may reasonably be assumed to have been signed by, or to be in the handwriting of any particular person, are in that person's handwriting, and in the case of a document stamped. executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested. 69.2 A new section 292C has been inserted so as to clarify that presumptions provided in sub section (4A) of section 132 can be made in any proceedings under this Act" It is thus clear from the above that in order to give effect to the legislative intent, while bringing in section 132(4A) of the Act of presumption, the provisions of section 292C of the IT Act, 1961 was brought in the statute vide Finance Act, 2007 with retrospective effect from 01.10.1975. It would thus suffice that section 292C of the Income Tax Act, 1961 lays down a binding deeming fiction that the books of account, other documents, money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h have been fully settled have been scratched If the assessee had not taken these amounts from the lenders there was no reason for him to write these initials of the lenders in these accounts. The fact itself indicates that he had borrowed the money from these various persons It is noted that both these diaries are considered by the Department as true. genuine and correct documents under s 132(4A) and if that be so, the diary No 27 gives, on one hand, the ledger accounts of the borrower and in the same accounts, the amounts taken from the lenders are mentioned When the Department considers the diary as genuine, there is no reason for the Department to doubt these entries in the diaries regarding the lenders. The principle of law is that under s. 132(4A) the document found in search is genuine vis-a-vis the entire contents thereof and the Revenue is not justified in holding a view that only a part of the content, i.e. the name of the borrower, is correct and not the name of the lender. Hence, in this case on the facts the entire diary has to be considered as genuine, true and correct document and if that is so, the fact that the initials of the lenders are mentioned in the account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enuine with respect to all the entries recorded therein. The Revenue is not justified in taking a view that only a part of the contents, i.e., the names of the borrowers is correct and not the names of lenders Entire documents should read as a whole and contents of entire documents should be treated as correct or rejected as a whole Navjivan Oil Mills vs. CIT (2001) 170 CTR (Guj) 224: (2001) 252 TTR 417 (Guj), Kantilal Bros vs. Asstt. CIT (2995) 51 MI (Pune) 513: (1995)52 TD 412 (Pune), Glass Lines Equipment Co. Lid vs CIT (2001) 170 CTR (G) 170 (2002) 253 ITR 454 (Gnj), Mehta Parikh & Co vs CIT (1956) 30 TR 181 (SC) and Chander Mohan Mehta vs. Asstt. CIT (lm) (1999) 65 TTJ (Pune) 327 (1999) 71 TD 245 (Pune) applied. First thing the AO has to prove is that it is the investment of the assessec. In other words, the ownership of the investment must be proved to be that of the assessee the one is on the Department to prove it before actually deeming the income, relevant to the investment, as that of the assessee. Further the words used in 69 are "may presume" It casts discretion with the AO to treat the alleged investment as unexplained or explained. It goes without saying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the third parties. After this, the burden again shifts to the Revenue to prove, with some additional material that even though outgoings recorded in A-2 and A-4 belonged to third parties but outgoings recorded in 1-3 and A-5 belonged to the assessee. No such material has been brought on record or no cogent reasons have been advanced. There cannot be two standards of presumption, one for set A-2 and A-4 and other for A-3 and 4-5.- CIT vs SMS Investment Corporation (P) Ltd (1994) 207 FTR 364 (Raj) and I1O vs T. Abdul Majeed (1987) 64 CTR (Ker) 266: (1988) 169 ITR 440 (Ker) relied on. Since all the entries in A-3/A-5 contain the names of the lenders, therefore, what the assessee means in the statement is that money was advanced through him and it does not, therefore, lead to the inference that money so advanced belonged to the assessee. Thus, not much weight can be given to the question and answers recorded on 3rd Jan. 1995 particularly when legal implication of the words used in the statement are not clear to the deponent and when he is under lot of stress due to search operation and fear of life, due to disclosure of the names of the lenders. Further, the statement cannot be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paper is advance received against sale of rural agricultural land from various persons and on various dates through brokers with the stipulation that interest would be paid. This fact was also stated in course of assessment proceedings vide reply filed on 21.12.2017 (PB 14-15). The AO at Pg 8 of the assessment order in Para (v) has also observed that it might be possible that any land deal could be done through any mediator/ broker but it is unbelievable that advance against such kind of deal would also be received through broker only. This is only the assumption of AO but at the same time he admitted that land deal could be through broker. No material is brought on record by the AO that the amount noted on this paper is not an advance received against sale of Ramgarh land. Therefore, the content of this paper has to be read as such in view of section 292C of the Act and therefore, addition made by the AO by treating these amounts as unexplained cash loan is unwarranted and unjustified. 3 Without prejudice to above, AO has made the addition of the amounts noted on this paper u/s 68 of the Act. Section 68 of the Act reads as under: Where any sum is found credited in the books o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has further made an addition of Rs. 52.40.137/- on account of debtors exceeding the creditors. We have found that the peak determined by the AO is not correct, otherwise also, when once peak amount has been added then no separate addition is required. It seems that the AO has not properly prepared the list of debtors and creditors based on any logic. The Ld. CIT(A) has confirmed the addition of Rs. 52,40,137/- under the Provisions of Section 69B of the Act. This section relates to investment made by the assessee in the acquisition of bullion jewellery or other valuable articles but it does not speak about any investment in debtors. Moreover, Section 69B also stipulates the position where the investment exceeds the amount shown in the books of account. Since the assessee does not maintain any books of account where in the debtors and creditors are reflected, therefore, this addition has also been wrongly made and upheld u/s 69B of the Act Hence, in our considered opinion, only commission income has to be determined in this case and nothing more. Accordingly, we reverse the findings of the Ld. CIT(A) and order to delete the entire addition so made. Thus Ground Nos. 3 and 4 of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oks and other books. The term other books does not mean to include some dumb documents like diary, notebook or deleted entries of computer CPU. The term other books refers to any other books which are relevant and in consonance with ledgers, daybooks, cash books, account books, etc. Therefore, in order to include any other books of accounts maintained by the assessee within the ambit of term 'other books', those books must be relevant in the business of the assessee to keep track of transactions. Hence, other books refers to in the ordinary course of any business of the assessee are stock books maintained in the ordinary course of business to record movement of stocks, books of accounts maintained for recording salary and wages as required under the Wages Act and other statutory books prescribed under any other law. But, it does not include diary, notebook and some other dumb documents maintained by any person for any reason. Therefore, in our considered view books refer to under section 68 means, regular books of accounts maintained by an assessee in the ordinary course of business to record its business affairs and also to prepare financial statements for the relevant yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings u/s 271D has been initiated whereas according to assessee it is a receipt of cash advance against property. Therefore, in either of situation no addition u/s 68 can be made. In view of above, order of Ld. CIT(A) be upheld by dismissing the ground of department. 16. In addition to the written submission filed the Ld. AR has made further arguments before us stating that the assessee, his wife and sons owns approximate 230 vigha of land at village Ramgadh. This fact is not disputed by the department and the seized records consists of the proof of land holding. The seized documents it self is an evidence that on the same very paper which is seized the date, amount and name of person along with the purpose is very well written. The assessee being individual partner in various firms not required to be maintain regular books of accounts. Looking to the nature of transaction being under dispute done with the help of the broker the advance against land is not income not required to be considered as income of the assessee u/s. 68 as the seized paper itself proves the nature of transaction wherein date, amount, name of person paying and the broker itself is evidently written. Merely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther drawn our attention to the finding of the Ld. CIT(A) that even if the receipt is considered as income or a loan then in that case since the transfer is not made the income cannot be considered as chargeable tax under the head capital gain in the year under consideration and if considered as loan even then the same is capital receipt and is not chargeable to tax in the year under receipt. Thus, he has submitted that the findings of CIT(A) is clear finding on all aspects of law and thus, there is no error in the said order of the Ld. CIT(A) on facts as well as in law the same should sustain. 18. On the other hand, the Ld. DR argued that looking to the nature of amount recorded on the reverse side of seized page 71 and in the absence of the relevant supporting documents the version of the assessee cannot be considered as true and thus, he has vehemently argued to confirm the action of the assessing officer. He has also contended that assessee failed to submit any details about the sale document or agreement to sale and in the absence of these important document one cannot believe that the sum received by the assessee is in relation to their agricultural land. He further cogently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealt with all the four questions of the assessing officer, which is reproduced in the assessment order and the gist of the same is that (i) sale deed could not be made on account of dispute between the brothers pending in court and the holding of the land is also forms part of the seized records and law does not restrict to take advance on the disputed land to (ii) The broker has arranged the land deal and the broker was not in touch therefore, these advance being related to the capital receipt has no bearing on the income of the assessee for the year under consideration (iii) As assessee is not required to maintain the books so ledger not available but in fact the details written on the seized paper will serve the purpose of the information called for (iv) since no regular books are written cash flow is not available. 21. On perusal of the reply of the assessee on the points raised by the AO we find no breach of provision of law once the transaction recorded on the seized paper evidently make it clear that the money so received is on account of the proposed sale of agricultural land of the assessee. The argument of the AO that the advance is subject to interest but it has no be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the facts are different as to what has been written has to prove with an evidence that the content written on the seized paper are not correct. Thus, at this stage it is also noted after taking into consideration the receipt the subsequent page seized source is considered as money received as advance. 23. All these seized documents confronted to the assessee during the course of search in the statement recorded, he has offered a sum of Rs. 2.Cr. based on the loose papers found during the course of search although the income consists partly of as undisclosed income and partly as agricultural income. 24. Alternatively, once it is accepted to be a loan or advance it is a capital receipt and not a revenue receipt. Hence, on this analogy also the amount cannot be added to income as also held by 1d. CIT(A), as we find no contrary argument before us or any material brought before us by the Revenue to convince us to take a different view of the matter then the view so taken by the Ld CIT(A). Thus, we do not find any merit in this ground of appeal raised by the revenue and thus, appeal of the revenue on this ground is dismissed. In the result the appeal of the department bearing No. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om A-115, Bank Colony, Alwar during the course of search 31,66,065 Total Additional Income 1,12,92,817 Thus, a sum of Rupees 1,12,92,817/- may kindly be considered as income surrendered w/s. 132(4) of the Income Tax Act, 1961 in place of Rs. 2,01,00,000/ and accordingly stated u/s. 132(4) of the Act stands retracted/modified/amended. The assessee has earned the aforesaid additional income from activity of agriculture, business & other miscellaneous activities. 27. The AO, however, held that assessee is claiming agricultural income in respect of land holdings of all his family members as his agricultural income which is nothing but a deliberate attempt to justify his unaccounted income surrendered in search. The assessee has also failed to furnish Khasra Girdawari and sale vouchers evidencing the sale of agricultural produce and therefore, he considered the agricultural income of 12,46,718/- in the return as bogus agricultural income and made addition for the same. 28. The Ld. CIT(A) held that there is no denial of earning of income but the assessee failed to prove that the same was in nature of agricultural income and therefore, addition made by the AO was confirmed. The r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sil Ramgarh (PB 5-10). From Khasra Girdawari of such land at PB 16-95 it is evident that safeda trees are grown on part of this land and agricultural crop is cultivated on part of the land. The assessee in his statement dt. 11.12.2015 u/s 132(4) in reply to Q.No.2 has also stated that apart from salary and remuneration he earns agricultural income. 2. In course of appellate proceedings, assessee in support of the agricultural income filed Khasra Girdawari (PB 16-95), P&L A/c of agricultural activity (PB 96), sale statement supported by invoices (PB 97-164), sale agreement with Sohrab of safeda trees (PB 165-168) and the affidavit of family members as to the belonginess of the agricultural income to the assessee (PB 169-174). However, the Ld. CIT(A) has ignored all these evidences before holding that assessee failed to prove the agricultural income. 3. It may be noted that in AY 2010-11 to 2014-15 also assessee has declared the agricultural income in the return filed u/s 153A which was assessed by AO as income from other sources. However, in these AYs the Ld. CIT(A) vide order dt. 19.08.2019 has deleted the addition made by the AO by holding that additions made by the AO are wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the net agricultural income supported by an evidence to the extent of Rs. 12,46,718/- cannot be considered as not proved or not genuine and thus ground of the assessee is allowed. Thus, the two grounds raised by the assessee for agricultural income in ITA No. 1222/JPR/2019 is allowed. 34. Now we take up ITA No. 1232/JPR/2019 being the appeal filed by the revenue against the order of the ld. CIT(A) for assessment year 2016-17. In this appeal revenue has taken following grounds of appeal 1. "On the facts and circumstances of the case and in law the Ld.CIT(A) has erred in deleting the addition of Rs.6,02,275/ made on account of unexplained cash without appreciating the fact that the assessee has not maintained any books of accounts in respect of agricultural income and did not furnish details of his assets and liabilities." 2. "Or the facts and circumstances of the case and in law the Ld.CIT(A) has erred in deleting the addition made on unexplained jewelry of Rs.25,34,587/- ignoring the fact that the assessee has not submitted any concrete evidence in support of jewelry found during search proceedings." 3. "On the facts and circumstances of the case and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interfere in the finding of the Ld. CIT(A), as the fact of the case in this year and in A. Y. 2015-16 being similar the agricultural income is required to be considered as genuine based on the set of facts placed by the assessee. The ld. DR on the other hand relied on the order of the AO and has not placed any contrary evidence that the assessee has submitted in his submission. Based on this findings, ground no. 1 taken by the department in this appeal is dismissed. 37. The second ground that has been raised by the department in this appeal is in relation to the action of the ld. CIT(A) in deleting the addition made on unexplained jewelry of Rs. 25,34,587/- ignoring the fact that the assessee has not submitted any concrete evidence in support of jewelry found during the search proceedings. 38. The facts in this regard is that during the course of search at the premises of the assessee and in the bank locker, jewellery in the form of gold and silver were found which is tabulated by the AO in page. 8 of the impugned order. According to which, gold jewellery was of 3319.93 gms. Plus 945 gms of precious stones which was valued at Rs. 95,30,784 and silver ware of 5955.6 gms was value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entiary value to some extent and the same cannot be held as an afterthought but at the same time he further observed that such sheet does not put evidential value to a document itself until and unless it is supported with documentary evidences. He further held that jewellery found from residence and bank locker at Alwar alone is to be considered in the hands of assessee in view of the alleged contradictions in the statement of various persons recorded in search as narrated in the assessment order and thus out of 3319.93 gms of gold jewellery and 5955.60 gms of silver items found, gold jewellery of 2437.67 gms and silver of 4406 gms is explained. Accordingly, unexplained gold jewellery was worked out at 882.93 gms valued at Rs.23,66,252/- along with value of other precious stones of Rs.1,11,000/- and unexplained silver articles was worked out at 1549.6 gms valued at Rs.57,335/- and thus, addition of Rs.25,34,587/- was made by AO. 3. The Ld. CIT(A) held that all the members and all the premises were covered by search. No addition in respect of jewellery is made in the hands of any other member of family which give credence to the contention of assessee that all the family members a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the assessee, there is no reason not to consider part of the jewellery found at Alwar as belonging to his daughter-in-laws. Thus, the jewellery found needs to be considered in totality and on that basis no excess jewellery was found particularly when in search no evidence was found that assessee has purchased any jewellery/ silver articles which is not disclosed. 5. Otherwise also alleged unexplained gold jewellery of 882.93 gms and silver article of 1.550 kg found from family members of assessee comprising of 3 male members, 3 ladies and 4 children can't be presumed to be excessive/ unreasonable considering the status of assessee. In this connection reliance is placed on the decision of Hon'ble Delhi High Court in case of Ashok Chaddha Vs. ITO 69 DTR 82 where gold jewellery weighing 906 gms found in search was held to be not substantial as being 'Stri Dhan' of the assessee's wife and accordingly addition u/s 69A was deleted. Again the Hon'ble ITAT Delhi Bench in case of Vibhu Aggarwal Vs. DCIT (2018) 170 ITD 580 where jewellery of 2531.50 gms was found at the assessee's residential premises, considered the same as reasonable by holding that in vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circular and considering the likely jewelry held by them, it can be said that the excess considered by the Ld. AO is much less than the permissible limit. The excess gold jewelry worked out by the Ld. AO is only to the extent of 882.93 gms which could be validly possessed by the married sons and daughter-in-law of the appellant. Though the circular is with reference to the non-seizure of the jewelry during search to the extent mentioned therein, various courts in the judgments relied upon by the appellant, it was held that the same applies also to consider the same as explained for purpose of s. 69 of the act also and to be considered as explained. Accordingly, addition in respect of gold jewelry and precious stones studded therein is to be deleted. 41. On the contrary, the ld. DR has relied upon on the order of the assessing officer and has also not controverted the submission and contention raised by the assessee and has merely supported the order of the assessing officer. 42. Having heard the rival submission and gone through the relevant material on record, the ld. AR of the assessee explained and reconciled the valuables with the Wealth tax return and holding of the various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eized material consisting various entries recorded therein and based on the working of debit and credit entries in such seized material, the AO at p. 42-49 of his order firstly calculated total debit entries to be of Rs. 4.05 crores and that of credit entry to be of Rs. 4.21 crores. He also computed peak of these credit entries to be Rs. 4.43 crores pertaining to A.Y. 2015-16 as well as A.Y. 2016-17. Accordingly for year under appeal he treated Rs. 1.68 crores to be unexplained and added u/s 68 of the Act. The said addition has been deleted by us as per earlier para of this order. On the same very seized pages and on very same entry, the AO carved out certain entries to be of purchase and sale of mustard seeds/ oil. The total of credit entries was worked out to be Rs. 1,34,76,825 and that of debit entries to be Rs. 1.95,06,818. The credit amount has been treated as sale out of books and accordingly added as such. The debit amount is considered as purchase of mustard seeds and since the same is in a sum exceeding Rs. 20000/- the same was disallowed and added u/s 40A(3) of the Act for an amount of Rs. 1,95,06,618/-. 46. At the outset, the ld. AR appearing on behalf of the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment order relate to sale and purchase/ trading of mustard seeds and oil. Thus, once all these transactions are considered as relatable to sale & purchase, the sale amount as such cannot be added to income. What can be added is only the profit margin in such sales as held in the following cases: CIT Vs. Balchand Ajit Kumar 263 ITR 610 (MP) (HC) The facts of this case were that in a search conducted at the business and residential premises of the assessee, it was found that there were credit sales which were not reflected in the books of account. On scrutiny of the books of account of the assessee, the Assessing Officer added a sum of Rs.8,19,255/- towards the sales profit of the assessee. The Commissioner (Appeals) came to the conclusion that the entire credit sales could not have been included in the total income of the assessee and accordingly followed the method of adding net profit rate of five per cent, on these sales and accordingly Rs.40,960/- was included on that score. The Tribunal held that the Commissioner (Appeals) had recourse to a reasonable method by adopting the net profit rate of five per cent in as much as the entire sale could not have been regarded as the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be taxed as income. 2. The Ld. CIT(A) after holding that sales as such cannot be added to income has applied g.p. rate of 10% on such sale to confirm addition of Rs.13,47,683/-. The g.p. rate of 10% applied by Ld. CIT(A) is on a higher side. The average g.p. rate in this trade is not more than 5% as evident from the g.p. rate declared by the following concerns: Name of concern Turnover (in Rs.) Gross profit (in Rs.) G. P. Rate (in %) AY15-16 A.Y.16-17 AY15-16 A.Y.16-17 AY15-16 A.Y.16-17 Saurabh Agrotech P. Ltd. 2570631687 1679784674 116058401 76607325 4.51 4.56 Ritika Vegetable Oil P. Ltd 1285202945 3618084989 41799397 152312140 3.25 4.21 Therefore, g.p. rate of 10% applied by Ld. CIT(A) is on a very higher side and the same be reduced to 5% and to that extent the addition confirmed by Ld. CIT(A) be deleted. 3. The Ld. AO has presumed that assessee has made purchases of Rs.1,95,06,818/- and the payment made is in contravention of section 40A(3) and therefore, the same was disallowed. It is submitted that out of the total amount of Rs.1,95,06,818/-, an amount of Rs.1,45,00,000/- has been given to Padam Trading Co. as security advance out of which Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. CIT(A) and as regards, the disallowance u/s. 40A(3) being the cash payment made for purchases he relied on the order of the learned assessing officer and submitted his version of both the ground and heavily supported the order of the assessing officer. 48. The finding of the ld. CIT(A) on both these ground is extracted here in below for the sake of brevity of issue on hand: I have considered the issues raised, the assessment order and the submissions made. The issue to be considered is as to whether the transactions reflect unaccounted sales and purchases or not. At the first, it is to be held that whenever any evidence is found during course of search, it is for the assessee to explain the same with cogent evidence. Simply denying the transaction without any supporting evidence will not absolve the appellant from being taxed based on the entries mentioned in seized material. The appellant cannot wash off his hands and offer no explanation in relation to such entries. The description mentioned by the AO against each such entries is not challenged by the appellant. The appellant has tried to explain the source out of which such advance is given. The AO has not added such ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e I have estimated an amount of 10% as income, no further disallowance is attracted. The estimation of income takes care of each and every allowance/disallowance. This view is supported by the decision of Allahabad high court in the case of CIT V. Banwari Lal Bansidhar (229 ITR 229) wherein identical question came before the court. The court held thus: "The question for consideration is when no deduction was sought and allowed under section 40A(3), was there any need to go into section 40A(3) and rule 6DD(j). We see force in the view taken by the Appellate Tribunal that when the income of the assessee was computed applying the gross profit rate and when no deduction was allowed in regard to the purchases of the assessee, there was no need to look into the provisions of section 40A(3) and rule 6DD(j). No disallowance could have been made in view of the provisions of section 40A(3) read with rule 6DD(j) as no deduction was allowed to and claimed by the assessee in respect of the purchases. When the gross profit rate is applied, that would take care of everything and there was no need for the Assessing Officer to make scrutiny of the amount incurred on the purchases by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the sales and has also not filed any tangible material that why the estimation made by the ld. CIT(A) @ 10 % being the profit estimated should sustain. On the contrary ld. AR of the assessee has relied upon the various judgments in his submission and submitted that value of sales cannot be added as income only the income earned can be added. He has relied the various decision. One of the such decision in the case we have followed in the case of ITO VS. Gurubachan Singh J. Juneja 216 ITR 99 (AT) (Ahd.) (Trib.) (TM) in this case it was held that value of the cash sales can't be added to the total income as there was no material on record that assessee made investment to make unaccounted sales. Gross profit rate should be applied to the unaccounted sales. This decision is approved by Hon'ble Gujarat High Court reported in 302 ITR 63 where at Para 6 it was held as under: "6. Hence, in the absence of any material on record to show that there was any unexplained investment made by the assessee which was reflected by the alleged unaccounted sales the finding of the Tribunal that only the gross profit on the said amount can be brought to tax does not call for any interfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y calculated total debit entries to be of Rs. 4,05,05,446/- and that of credit entry to be of Rs. 4,21,40,484/-. He also computed peak of these credit entries to be Rs. 4.43 crores pertaining to A.Y. 2015-16 as well as A.Y. 2016-17. Thus, out of total credit entry of 4.21 crores, he made addition of 1.68 crores as unexplained cash credit u/s 68 of the Act. Further sum of Rs. 1.34 crores was added as unaccounted sale and added as such. For the balance sum of Rs. 1,18,63,659 (4,21,10,484-1,68,00,000 1,34,76,825) he noted that the said sum is unexplained cash credit. He accordingly asked the appellant to explain them. The appellant vide his letter dated 21/12/2017 explained the same as temporary advances given out of funds available with him as per advance received for sale of agricultural land. The said advances have been received back without any interest being charged thereon. The Ld. AO was not satisfied with explanation offered. He held that since the appellant failed to prove the identity, creditworthiness and genuineness of the transaction, the same is to be added as unexplained cash credit u/s 68 of the Act. 53. In respect of this addition the assessee has filed a detailed su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment order) and is in fact renewal of amount received on 24.02.2015 (refer Pg 42 of the assessment order). Again entry at S. No.8 of Rs.10 lacs in the name of Sh. Brahm Dutt Modi is contra entry of same date (refer Pg 45 of the assessment order) and shows only interest payment of Rs.80,000/- and is in fact renewal of amount received on 12.02.2015 (refer Pg 42 of the assessment order). Therefore, the amount of Rs.1,18,63,659/- is either the realisation of advance given or is agricultural income or considered in the return filed u/s 153A and therefore, the Ld. CIT(A) has rightly deleted the addition made by the AO. 54. The relevant finding of the ld. CIT(A) in respect of the deletion of the said addition in his order is recorded at page 20 of his order and the same is extracted here in below; I have considered the relevant part of the assessment order, the submissions made during assessment as also filed before me. The issue arises for consideration is whether the entries narrated in p. 58 and 59 are cash credit at all. The narration mentions the same as given to Mr. Ashok Gupta and Mr. Pooran Chand Gupta. Thus, it is the amount advanced and not received and hence the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icultural income during assessment years 2016-17. In support of the same, we are furnishing Profit and Loss statement of and sales statement for AY 2016-17 (Annexure 23) wherein the amounts have been explicitly stated for the purpose of calculation of agricultural income of the appellant. Further, it is pertinent to note here that the Ld. AO has also considered such agricultural income of the appellant as bogus and accordingly has made addition for it. Since, the amount has been already added in total income of the appellant as bogus agricultural income, thus, inclusion of same over here too will lead to double taxation. Thus, it is our humble request to delete the same. 6.3.3 Entry no. 15 In relation to this, it is submitted that the appellant is engaged in agricultural activities for which he provides fund for expenses to farmers working on his agricultural fields. This entire amount is paid back to the appellant by the same farmer after sale of crops. Entry no. 15 amounting to Rs. 75000.00 is receipt of such amount only. In support of our explanation, we would like to furnish page no. 21 of AS 4 (Annexure 24) on which such entry is stated. By plain reading of this paper, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties. Kindly, refer below tables: From above tables, it is evident that the appellant has first provided above amount as temporary advance to these parties and then received them back after a short period of time. But in case of Mr. Ashok Gupta, there stands a credit balance; this is because the Ld. AO has considered incomplete details for addition due to which credit balance is standing. Thus, addition based on perception of Ld. AO is unjustified as she has only obtained partial understanding of the facts Further, it is pertinent to note that the Ld. AO herself has accepted the fact that the amount was given to these parties. She has explicitly stated the same on page no. 58 of assessment order. Her exact words are as under: To Quote "On perusal of documents seized from P.O operation of your residential premise situated at Bank Colony, Alwar annexed as Exhibit- 1 of AS, AS-3 & AS-4 has been observed that you have given cash advances as follows:-" To Unquote This implies that the Ld. AO has accepted the fact that the amount was given by the Appellant but she has rejected to believe that the said amounts only were received back by the Appellant from the conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with different approach of presentation. Thus, it is our humble request to delete addition of Rupees. 1000000.00, since, it has been returned on the same date and has no effect. From above explanation, it can be concluded that the appellant has adequately elucidated nature and source of credits, thus, it is infirmity to consider the same as unexplained and make addition in pursue of section 68 of Income Tax Act, 1961. 6.4 In conjunction to above, it is reiterated that if some documents are found during the course of search, the burden is on the assessee to provide details of the seized paper and explain the transactions as noted down on the seized paper. However, once such explanation is furnished by the Assessee then, the burden shifts upon the Revenue to prove as to how the explanation offered by the Assessee is false. In the case under consideration, no evidence or material has been brought by the revenue on record to distinguish the explanation offered by the appellant and also, no corroborative evidence has been placed to establish the allegation of the Ld. AO. 56. On the other hand on this issue ld. DR argued that in the absence of regular books of account why the transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant has given advances of Rs. 1,18,63,659/- as noted in earlier paras, the appellant must have earned interest thereon. He accordingly added a sum of Rs. 14,23,639/- being the interest earned at 12% there on and added the as income. 60. Before us the ld. AR of the assessee vehemently argued that there is no proof in the seized material that this money that was advanced was on interest and when the assessee has not received any interest no notional interest income is required to be added. Before the ld. CIT(A) the AR of the assessee filed a detailed submission and based on that submission the ld. AR vehemently argued before us that so far as addition of interest on the above amount is concerned the seized paper nowhere indicate that any interest has been received, therefore, addition of notional interest calculated by the AO on surmises & conjectures on the said amount is rightly deleted by the Ld. CIT(A). The ld. CIT(A) has given his finding on this issue at para 23 the same is reproduced here in below : "23. Having considered the impugned order and submission made before me, I am inclined to delete the addition made. First of all there is no logic in charging interest f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e out of her presumption and surmises, and the ld. CIT (A)-Iv, Jaipur has erred in sustaining the same. 3. That the ld assessing offer has erred in law as well on the facts and circumstances of the case in making addition of Rupees. 341513.00 in respect of agricultural income claimed exempt by the assessee while treating the same to be unaccounted taxable income and the ld. CIT (A)-IV, Jaipur has erred in sustaining the same. 64. In respect of ground no. 1, we have given our detailed finding on this issue of estimation of profit and unaccounted sale made by the assessee. As we have already given a detailed finding on this issue in ITA NO. 1232/JPR/2019 while dealing with the ground no. 4 of the department appeal and we have partly considered the grievance of the assessee and the finding given in that appeal of the department we have dealt it with in detail and thus the finding given in ITA no. 1232/JPR/2019 shall apply mutatis mutandis in this ground also and thus, this ground No.1 of appeal is partly allowed. 65. As regards the ground no. 2 & 3 we have given our detailed finding while dealing with the assessee's appeal in ITA No. 1222/JPR2019 for Assessment year 2015-16 since ..... X X X X Extracts X X X X X X X X Extracts X X X X
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