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TMI Blog2023 (11) TMI 337X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence. 3. The learned CIT(A)-2, Panaji has ought to have appreciated the fact that, an addition cannot be made on the basis of suspicion and guesswork and without bringing corroborative material on record. 4. The learned CIT(A)-2, Panaji, has failed to appreciate that, the Assessing Officer on has failed to cross verify the books of account of the firm for investment made by the appellant. 5. The leaned CIT(A)-2, Panaji has failed to note that, the above additions made by the Assessing Officer is purely on assumptions and presumptions based on the loose sheet found at the time of search and also on the oath statements made under section 132(4), which was later retracted by the Appellant. 5. The leaned CIT(A)-2, Panaji has erred in relying on various case laws, which are not at all applicable to the Appellant's case. 6. The Appellant craves leave to add, amend or alter any of the forgoing grounds. 7. For these and any other grounds that may be urged before the Hon'ble ITAT, it is prayed that the Hon'ble ITAT may allow the appeal with cost." 3. The brief facts of the case are that the assessee filed return of income on 17.10.2016 declaring income of Rs. 55 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lected in the books of Accounts of M/s.Niyaz Sea Food Exports. From the said loan account I have not included three Bank transactions aggregating to Rs. 60,80,000/ - which has been explained at the time of hearing. In the capital account bank transactions have not been considered and only cash entries found have been offered to tax. I am voluntarily offering the same to tax and filing this revised income computation statement. 5.4. As can be seen from the reply of the assessee, in the revised computation filed during the course of assessment proceedings the assessee has offered to tax income of Rs. 4,42,89,894 as additional income under the head "Income from other sources". 5.5. Accordingly taking into consideration the incriminating material impounded, submission of the assessee and the details verified during assessment proceedings the additional income of Rs. 4,42,89,894 offered as income in the revised computation is added to the income of the assessee and assessed to tax under the head "Income from other sources". (Addition: Rs. 4,42,89,894)" 5. On appeal, the CIT(Appeals) after discussing in detail and relying on various case laws, dismissed the appeal of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the cash on hand stood explained and consequently the advances made in the firm, was out of funds which were from explained sources and no amount was to be considered as being unexplained. f. The appellant on erroneous advise has also agreed to offer the said amounts as income, without appreciating that the amounts advanced were already out of known sources and cash withdrawals from bank accounts. Thus, the addition of Rs. 4,42,89,894/- is not justified for the above and following reasons; 1. Addition is based on loose sheets: a. The appellant submits that the addition of Rs. 4,42,89,894/- is solely based on loose sheets and on the statement of the appellant, consenting to offer the said total as income in his hands, without any corroborative evidence, that the investment was indeed out of unexplained sources. b. The appellant submits that such sum is neither recorded in the books of appellant or the partnership firm, as having been transacted and that it is settled principle of law that additions made solely relying upon the statement of the assessee and without any corroborative evidence is impermissible. Reliance is placed on the decision of the Jurisdictional Bangalor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income, without there being a valid return of income, for the purpose of making additions to income. 4. Telescoping of income offered by the firm: a. The appellant during the course of arguments before this Hon'ble Tribunal, has produced the assessment order for the AY 2017-18, in the case of M/s Niyaz Sea foods, wherein the appellant in the capacity of partner has offered an amount of 7.5 crores as income on account of cessation of liabilities of sundry creditors. b. The appellant submits that the goods purchased in the AY 2016-17 were reflected as sundry creditors in the books of the firm, which was funded by the appellant, who thereafter received back the funds out of cash withdrawn. c. The goods from whom the purchases were made was recorded in the books of the firm as a creditor and the same has been carried forward to the next financial year, i.e. AY 2017-18, as an opening balance and remained as a closing balance for the AY 2017-18, with a marginal difference, in a few instances. d. The appellant submits that during the assessment year 2017-18, the firm has offered a sum of Rs. 7.5 crores as cessation of liability under section 41(1) of the Act. (Page 2, Para 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of voluntary income offered by the assessee on the basis of impounded material found during the course of survey in respect of transactions made in the capital account of the assessee and it was confronted to the assessee during the course of assessment proceedings. The assessee objected to the addition before the CIT(Appeals) after a lapse of more time much after the survey/completion of assessment which is not permissible as per the various judicial precedents relied by the CIT(Appeals). 9. After hearing the rival contentions, we note that the search proceedings was carried out on 08.02.2018 in the residential premises of the assessee and survey was conducted in the partnership firm M/s. Nyas Sea Foods. We note that no addition has been made by the AO on the basis of searched material unearthed during the course of search. The addition is made only on the basis of documents found during the course of survey in the partnership firm in which debit and credit transactions were found in the capital account which is clear from the statement recorded u/s. 131 of the Act dated 10.07.2018. The relevant part of the statement is as under:- "8. I am showing you Blue colour loose shee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing document and it cannot be overruled. In our opinion, reliability of these statements depends upon the facts of each case and particularly surrounding circumstances and in this case, the lower authorities reached to the conclusion on the basis of assumption resulting into fostering liability on the assessee on the basis of in-advocate material coupled with statement recorded during the course of search since there is no corroborative material to support the contention of the AO. In the absence of corroborative evidence, merely on the basis of admission in the statement recorded u/s 132(4)/131 of the Act, no addition could be made by AO. The AO failed to bring on record any materials to support his view to make an addition and there was no reason as to why AO did not proceed further to enquire into the unaccounted income as admitted by assessee in statement recorded u/s 132(4) of the Act. This fact was also not taken care of and also no corresponding assets with reference to unaccounted cash receipt of Rs. 4,93,05,000/- was brought on record. In such circumstances, we are not in a position to sustain this addition. For this proposition, we rely on the following judgement: a) Sr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plea of the appellant that, the Assessing Officer ought to have been taxed only the profit element on Rs. 43,21,251 at gross profit ratio of 2 to 3 percent as prevailing the fishing business. 2.4 The learned CIT(A)-2, Panaji has ought to have appreciated the fact that, an addition cannot be made on the basis of suspicion and guesswork and without bringing corroborative material on record. 3. Seized cash treated as unexplained money: 3.1 The learned CIT(A)-2, Panaji erred in upholding the additions made by the Assessing Officer amounting to Rs. Rs. 66,00,000 as unexplained money as business income of the appellant. 3.2 The learned CIT(A)-2, Panaji has failed erred in law in entertaining the alternative plea of the appellant that, the Assessing Officer ought to have been taxed only the profit element on Rs. 66,00,000 at gross profit ratio of 2 to 3 percent as prevailing the fishing business. 4. The leaned CIT(A)-2, Panaji has failed to note that, the above additions made by the Assessing Officer is purely on assumptions and presumptions based on the loose sheet found at the time of search and also on the oath statements made under section 132(4), which was later retracted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Accordingly, the CIT(Appeals) deiced the appeal on the basis of details available on record and written submissions filed by the assessee and dismissed the appeal of the assessee. Aggrieved, the assessee is in appeal before the Tribunal. 16. The ld. AR reiterated submissions made before the lower authorities and filed written synopsis which is as under:- "1. Addition of Rs. 43,21,251/- towards commission: .......... b. The appellant vide letter dated 06.11.2019 (reply extracted at page 2 of the assessment order) submitted that the said amount was included in the sales of Rs. 22,85,42,710/- (Pg.37 of the common paper book, Sl No.40a) offered as part of turnover for the assessment year 2018-19 and any addition would result in double taxation. c. Without prejudice, the appellant submits before your Honours that only the net profit margin on the sum of Rs. 43,21,251/- could be added and not the entire turnover. The appellant submits that during the relevant assessment year, the net profit margin is 1.51% (Pg.37 of the common paper book, Sl No. 40c) and this rate may be adopted to arrive at the income from commission. d. Without prejudice and not conceding that the values r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... encloses herewith the statement of cash withdrawals made and the bank account statement for your Honours consideration, along with the financials for AY 2017-18, wherein the turnover achieved was Rs. 49 crores odd and the purchases was Rs. 48 crores approximately. Thus the inference is that the cash withdrawal is to the extent of Rs. 35 crores, considering that fact that the closing creditors were Rs. 13 crores. e. The appellant submits that, though the cash withdrawal chart has been prepared for the convenience of demonstrating to the Hon'ble Bench, all the bank statements were already submitted before the assessing officer and explanations were offered, which the AO has not appreciated and additions of Rs. 66 lacs were made, which is bad in law and unjustified and there is no addition in the hands of the firm. (copy of assessment order of the firm for AY 2018-19 is enclosed for ready reference) f. Thus, with a cash withdrawal of Rs. 35 crores, a cash buffer of Rs. 66 lacs was a viable proposition and a distinct possibility, which could not be doubted. g. The appellant submits that it is a settled principle that once there is sufficient proof that the cash in hand balance is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee was not able to prove the source of cash and before the CIT(Appeals) he could not establish, whereas the CIT(Appeals) gave chances for proving the claim of the assessee. 21. Considering the rival submissions, we note that during the course of search, document marked as 12/A/NSF/2017-18 from pages 35 to 39 relating to commission earned under the head "UKB Commission" was impounded and not offered to tax in the return. The assessee has taken dual stand one before the AO that it is included in the turnover of the assessee and the other that he has requested before us that the net profit margin @ 1.51% may be adopted to arrive at the income from commission. If the amount is included in the turnover, taxing the same on net profit margin would amount to double taxation. Before the CIT(Appeals), the assessee did not comply with the notices and present his case. Considering the totality of facts and arguments advanced by both the sides, in the interest of justice, we think it fit to send the matter to the AO for further verification. 22. Further, in respect of cash seized during the course of search, the assessee has taken different stand that cash was withdrawn from the bank throug ..... X X X X Extracts X X X X X X X X Extracts X X X X
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