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TMI Blog2024 (10) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... ehicle is owned by Mr. Vijay but the documents clearly shows that this is belongs to Hoover Marketing. There is absolutely no link established with the assessee as the owner. This is only a calculation of purchase of vehicle through bank and the relevant payment scheme. This shows the application of mind of the AO. Further the other notings show that certain expenses were written, the same was not correlated with the nature of income earned by the assessee. As per the records submitted before us, there is no regular income was found in the case of the assessee to relate the above said expenses. It is also relevant to note at this stage that this diary or loose paper was found at the possession or at the residence of Mr.Vikas. We know that Mr.Vikas is running the business in his proprietor concern VCS, where the book result and financial results were accepted. Whereas in the case of Mr. Vijay no such regular income was established to have earned. This evidence may have related to the business carried on by Mr. Vikas. There is no correlation to Mr.Vijay and there is no evidence to show that these are incurred by Mr.Vijay. Hence, this is nothing but dumb document found at the premises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5, Raj Nagar-II, Palam Colony, New Delhi 110 073. Both the assessee had filed their return of income on 28.3.2018 declaring income. Notice u/s. 143(2) was issued on 26.09.2018 and was served accordingly. Later on, notice u/s. 142(1) issued on 28.09.2018 and hearing was fixed for 08.10.2018. In compliance to the said notice, assessee did not furnish any submission. Another notice u/s. 142(1) was issued on 27.11.2018 requiring the assessee to furnish information required for completion of assessment. AO noted that during the search proceedings of the assessee, the following were found :- i) bunch of lose papers (numbered page 18, 19, 23, 29 of Annexure A-1); ii) cash amounting to Rs. 1,30,000/- was found at RZ 54/4 Raj Nagar- 2, Palam Colony, New Delhi 110 073 and Rs. 14,31,500/- was found at F.59/3, Punjabi Bazaar, Kotla Mubarakpur, New Delhi; iii) Jewellery of Rs. 28,22,906/- from RZ 54/4, Raj Nagar-2, Palam Colony, New Delhi 110 073; iv) Jewellery of Rs. 22,54,131/- from Bank Locker No. 87, State Bank of India, Palam Colony Branch, New Delhi 110 077; v) Stock of Rs. 14,57,900/- from F-59/3, Punjabi Bazar, Kotla Mubarakpur, New Delhi. 4. AO noted that assessee did not appear or sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 69A of the Act relating to the cash found at the premises of Mr. Vijay Gupta. 7. Aggrieved, the assessee, (Vijay Gupta) is in appeal before us raising following grounds of appeal :- 1. The Ld. CIT(Appeals) has erred in law and on facts in confirming the arbitrary additions made by Assessing Officer on the basis of scribblings in loose/dumb papers, seized marked as Annexure A-l page 1 to 47, which were not found from the appellant alleging it to be belonging to the appellant ignoring the well settled principle of law that addition can only be made in the hands of a person from whom the documents are seized. Therefore, the action of the Ld. CIT(Appeals) in confirming the additions is arbitrary, unjustified, illegal based upon mere conjecture surmises and bad in law. 2. That the Ld. CIT(Appeals) erred in law and on facts in confirming the additions made on the basis of loose/dumb papers not found from the appellant ignoring the denial of the appellant in his statement recorded at the time of search that these papers do not belong to him, which is arbitrary, unjustified and against the provisions of law. 3. Without prejudice to above, The Ld. CIT(Appeals) has erred in law a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to above, the Ld. CIT(Appeals) has erred in law and on facts in not fully considering the submissions made by the appellant from time to time during the course of hearing. 9. The Ld. CIT(Appeals) has erred in law and on facts in ignoring the principles laid down in the judgments of various High-Court(s) /Apex Court denying natural justice to the appellant, which is arbitrary, unjustified, invalid and bad in law. 10. That the above grounds of appeal are without prejudice to one another. 11. That the appellant prays for the liberty to raise such further grounds of appeal arising from the facts of the case, as may enable the appellant to seek justice and to assist Your Honors' in upholding the majesty of law. PRAYER It is prayed that all the additions confirmed by the Ld. Commissioner of Income Tax (Appeals) may kindly be deleted and full relief be allowed to the appellant. 8. Aggrieved, the assessee (Vikas Gupta) also filed an appeal before us raising following grounds of appeal: Reproduce the GOA 1. That, Ld. CIT(Appeals) has erred in law and on facts in upholding the assessment order passed u/s 143(3) of the Income Tax Act by the assessing officer at income of Rs. 18,05,270/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of unexplained cash confirmed by the Ld. Commissioner of Income Tax (Appeals) may kindly be deleted, and full relief be allowed to the appellant. Basically challenged the addition on account of cash found during the search at the premises of his brother of Rs. 14,31,500/- u/s 69A of the Act. 9. At the time of hearing, ld. AR for the assessee made oral submissions as well as filed written submissions, which are reproduced below:- ITA No.248/Del/2023 in the case of Vijay Gupta A. General Background: Assessee, an individual, assisted his brother Vikas Gupta in supplying cigarettes to colony pan shops and roadside pan kiosks through latter's proprietary concern M/s Virender Cigarette Store (VCS). Being a person of modest means, assessee his family lived on first floor while his brother and his family on ground floor of the same house situated in rural area of Delhi. Consequent to search in Vinod K. Patel Group of cases, a search operation was carried out at his residential premises by issuing search warrant in his name but since his brother along with his family lived on the ground floor of the same house, he was also subjected to the search operations. During the course of sea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .5 page 39. Finding on other additions on the basis of loose papers in paras 8.9 on page 40. F. Written Submissions made: Ld. CIT (A) invoked presumption of Section 292 C on the basis of following wrong and incorrect facts : i) The factum of separate residences of assessee and that of his brother Vikas Gupta is proved by maintenance of separate establishments including kitchens on ground floor and First floor of the house (finding of Ld. CIT (A) in para 4.6 on page 28 of PB in the case of Kavita Gupta, wife of assessee) .( Para 2 of WS) ii) Similarly, the valuation reports of jewellery prepared separately during the course of search (Page 30 31 of Paper Book) clearly show that jewellery was being separately maintained by families of assessee and his brother (Para 5 of WS) iii) The finding of business cash of proprietary firm VCS from assessee was just incidental to proactive participation in business of VCS by assessee as due to ill health Vikas Gupta was leaving the shop early as stated in para 5 of WS. The fact of non-recovery of loose papers from the assessee remaining undisputed, the invocation of presumption of section 292C on the basis of incorrect premises was wrong on the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Audit Report iii) Details of Month wise sales purchases made during the year iv) Details of GP NP rates for the year v) Details of unsecured loan taken from Induslnd Bank vi) Details of addition to Furniture Fixture vii) Details of Trade Creditors outstanding on 31.03.2017 viii) Details of Loans Advances given ix) Copies of bank statements x) Details of expenses incurred The details of month wise cash sales, VAT payment of Rs. 29.03 Lakh against VAT Liability of Rs. 28.89 Lakh and reasons for keeping cash due to no locker at shop were furnished along with production of books of accounts including cash book in replies dated 16.12.2018 18.12.2018. The assessee in answer to question no 6 his statement recorded during the course of search has clearly stated that all purchase and sale bills etc. were lying with CA Shri Bhardwaj (Page 19 20 of PB) and the purpose can only be for writing of books. Therefore, the treatment of amount recorded as cash sales in books as unexplained money is against all principles of law and leads to double taxation also. The decisions of ACIT Vs Hirapanna Jewelers ( para 9 on page 73 of Paper Book) ITO v. Rajeshkumar Chhanalal Patel ( Last Para on Page 81 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elongs to the assessee and he failed to substantiate the same during the assessment as well as appellate proceedings. She submitted that the Ld CIT(A) has elaborately discussed this issue in his order and she relies on the same. 13. Considered the rival submissions and material placed on record. We observed that the search was conducted at the residence of Mr. Vijay Gupta and Vikas Gupta, where it was found certain cash, stock, jewellery and loose papers relating to certain transactions. With regard to jewellery and stock, the Ld CIT(A) has deleted the additions. The issues raised before us by Mr. Vijay Gupta relates to loose papers found at the premises of Mr. Vikas Gupta and additions were sustained in the hands of Mr. Vijay Gupta. All the notings recorded in the loose sheet of diary referred as A1 should have some connection with the activities carried by the assessee. We observe that no activities or source of income was found as carried out by Mr.Vijay. All the notings which are found has to have some credibility with the presumptions applied by the AO. From the first page ie., page 18 of A1 relating to noting of Duster Vehicle, which was presumed that this vehicle is owned by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the loose paper found at the residence of Mr.Vikas, therefore this is also relating to his business only and the addition made in the hands of Mr.Vijay is not proper. Hence, this addition also deleted in the hands of Mr. Vijay. 16. In the result, appeal filed by Mr. Vijay is allowed. 17. Coming to the appeal filed by Mr. Vikas, we observed that the cash was found at the first floor where the assessee lives and the same was added to the income of the assessee u/s 69A of the Act. We observed from the record and the submissions made before us that the assessee has a regular proprietary business where the assessee earned income by way of cash transactions/sales only. The financial results were also declared and accepted by the revenue. Once the business income is accepted which generates income only by way of cash transactions, the possession of cash at the residence of the assessee establishes that this is out of business income. The financial results also shows substantial cash transactions ie., cash sales of Rs. 2.13 crores and cash purchase of Rs. 2.14 crores therefore there is sufficient funds in the rotation/circulation. It cannot be ruled out that the cash found at the residen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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