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TMI Blog2022 (6) TMI 549X X X X Extracts X X X X X X X X Extracts X X X X ..... ch work has been carried out by the assessee. There is no confirmation from Club Link, client of the assessee. It may not be the concern of the assessee that who has done the work but the documents seized clearly shows that it is merely a quotation. Based on the quotation, it cannot be said that assessee has executed this work and has received the consideration, which has not been accounted for in the books of assessee, without any corroborative evidence. Further, there is a letter dated 21/2/2003, which clearly says that the above assessee firm has been dissolved due to some personal reasons and now a new entity, Orion Enterprise will carry out the work if allotted. The assessee also requested for a new purchase order in the name of new entity. In the same letter, it was also stated that sketch is also sent for approval. Therefore, it is apparent that the work has not been done by the assessee. There is no inquiry whether any such new quotation was given to new entity or not. Both these letter and quotation were also seized during the course of search. When both the documents are seized during the course of search they could not be interpreted in the divergent manner, that assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following grounds of appeal:- 1. The learned CIT (A) has erred in law and on the facts of the case in confirming the action of Assessing Officer in making addition of ₹3,34,403/- and ₹10,742/- under section 37(1) of the Income Tax Act. The action is unjustified and unwarranted. 2. The Ld CIT (A) has erred in law and on the facts of the case in confirming the action of assessing officer in making addition of Rs. 17,50,131/- as unexplained sales. The action is unjustified and unwarranted. 3. The Ld CIT (A) has erred in law and on the facts of the case in confirming the action of assessing officer in making addition of Rs. 17,30,406/- as difference in profit. The action is unjustified and unwarranted. 4. You Petitioner crave leave to add, amend, alter and /or withdraw any or all the aforesaid ground of appeal. 02. Straightjacket Facts of the case show that the assessee is a partnership firm, which had business transaction and taxable income during the year and carrying on the business of interiors and paintings. 03. A search u/s 132 of the act was carried out by The Deputy Director Of Income Tax (Investigation) in case of Nagi group on 30/05/200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly and expressively for the purposes of the business of the firm. It was stated that as the firm is engaged in the business of interior designing, decoration of office and residential premises and for that purpose one has to meet new clients every day, and the expenses incurred are on coffee or car running expenses for going to the office. It was also stated that these expenses are not at all unreasonable and unusual and the AO has blindly concluded that all the expenses incurred by the partners to credit card is nothing but personal expenditure. It was further stated that the learned assessing officer has merely looked at the debit side of the expenditure where a sum of ₹ 334,403/was paid to the partners for expenses however only ₹ 187,042 has been claimed as expenses in the accounts and the balance has been debited to the partners capital account. It was further stated that even total expenditure of ₹ 187,042/ cannot be fully disallowed as personal expenditure 011. The learned departmental representative vehemently supported the orders of the lower authorities. 012. We have carefully considered the rival contention and perused the orders of the lower auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. The learned authorised representative vehemently supported the submissions given before the lower authorities and referred the seized documents. He submitted that letter dated 7/8/2002 of the assessee to Mr. Jayesh shah the total amount of contract is ₹ 1,062,623/ , however same is merely a quotation and ultimately the contract was executed for ₹ 50,000 on which tax at sources was deducted. The sum has already been offered for taxation. He further stated that the other letter dated 27/2/2003 address to managing director of club link; it was informed that the balance work would be executed by Orion enterprise and not by the assessee. He submitted that whatever is the receipt received by the assessee has already been disclosed in the profit and loss account and therefore the addition is purely made based on the quotations. 015. The learned departmental representative vehemently supported the orders of the lower authorities and specifically referred to paragraph number 7 of the order of the learned CIT A wherein it has been specifically stated that the balance work done by another concern was never shown before the learned assessing officer. He therefore stated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Accordingly, ground number 2 of the appeal is partly allowed. 018. Ground number 3 is with respect to the addition of ₹ 1,730,460/- based on one document seized being the profit and loss account of the assessee for the relevant year. The learned assessing officer observed that as per one documents seized which is the profit and loss account of the assessee for the relevant year, actual profit of the assessee is ₹ 1,953,998/ as against the income declared in the return of income of only ₹ 223,592/ and therefore the addition of ₹ 1,730,460 was made. The matter reached before the learned CIT A who after obtaining the remand report and rejoinder of the assessee noted that there are irreconcilable differences between the partners of the assessee, which ultimately resulted into the dissolution of the firm. Further, the assessee firm was dissolved in the relevant year , itself there remains little doubt that the said profit and loss account as per the seized document is genuine and so is the profit shown in it. He also rejected the contentions of the assessee that when the alternative addition has already made of ₹ 1,750,131/ on account of unrecor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the above shows that major items of the difference are increase in purchases of ₹ 923,699/ , salary and wages of ₹ 110,000, rent payment of ₹ 130,495. The audited profit and loss account also shows write off sundry debtors amounting to ₹ 536,992, which was not there in the seized profit and loss account. The books of accounts of the assessee were scrutinized by the assessing officer during the course of assessment proceedings. The learned assessing officer has not tinkered with any of the expenditure for making any addition/disallowance. Further, there is higher amount of expenditure in the audited profit and loss account compared to the expenditure in the seized profit and loss account. There are no instances that in the seized profit and loss account higher expenditure are shown whereas in the audited profit and loss account no expenditure is disclosed except society charges. The clear-cut difference of ₹ 536,992/ of debtors write off would not have been as such added to the total income of the assessee on this count. Further, the total punches expenditure of ₹ 1,765,102/ has been accepted by the AO. The society charges debited in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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