9911796707
TMI Blog2024 (12) TMI 1332X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 22.02.2024 for AYs 2018-19 and 2019-20 arising out of assessment orders passed u/s. 153A of the Income Tax Act, 1961 (hereinafter referred to as the Act ) by ACIT, Central Circle-4(3), Kolkata dated 30.09.2021 respectively. 2. At the outset, we note that there is a delay in filing the appeals by the revenue of 11 days by the revenue which was stated to be on account of the time taken in obtaining various information/sanctions and also in complying with the formalities in the administrative hierarchy. Considering the facts of the case and the rival contentions of the parties, we are inclined to condone the delay on the ground of reasons for delay being genuine and bona fide. Accordingly, the delay is condoned and the appeals are admitted for adjudication. First, we take up ITA No. 1006/Kol/2024. 3. Ground no. 1 of the revenue is against the deleting the addition of Rs. 4,94,43,275/- in respect of undisclosed sales by the assessee without appreciating the materials brought on record and facts evaluated by the AO in the assessment order. 4. Facts in brief are that the assessee filed his return of income on 28.10.2019 declaring total income of Rs. 1,82,15,400/-. A search action ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(A), who allowed the appeal by observing and holding as under: 5.2.1. I have gone through the assessment order as well as the submissions of the assessee. It is noticed that during the search seizure operation conducted on the assessee u/s 132 of the Act, several incriminating documents with identification number RJ/1, RJ/2, RJ/3 RJ/HD/1 were seized which depict undisclosed sale of Rs. 5,08,35,899/-. It is also observed that during the recording of statement u/s 132(4) of the Act, the assessee had admitted the same undisclosed sale. Later, during the assessment proceedings, in response to the notice u/s 153A of the Act, the assessee had only included Rs. 13,92,624/- as additional income. Further, in response to notices u/s 142(1) of the Act, the assessee explained how he had arrived to his additional income i.e., the net profit on the undisclosed sales of Rs. 5,08,35,899/-. It is observed that during the assessment proceedings the assessee had claimed purchase of RsA,94,43,275/- against the said undisclosed income. Additionally, it is also observed from the assessment record that to substantiate his claim of the said purchase, he submitted all the relevant bills and voucher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... really the equivalent of 'profits'. The profit of a trade or business is the surplus by which the receipts from the trade or business exceed the expenditure necessary for the purpose of earning those receipts. The tax is upon income, profits or gains; it is not a tax on the gross receipts. The expression 'profits' or 'gains' is not limited to business only, but is used in the Act with reference to other sources of income as well. c) In the case of 'ACIT, Central Circle 1(3), Chennai. VIs Shri V. N. Oevadoss, [2013] 32 taxmann.com 133', the Hon'ble ITAT, Chennai had held the following: Where an assessee has filed his return of income as prescribed by law, even if as a consequence of search carried out under section 132 and in consequence of notice issued under section 153A, the assessee is obviously entitled for claiming corresponding deductions provided in law. The deduction claimed in a return filed under section 153A cannot be denied on the ground that the claim was not made earlier in a return filed under section 139(1). In the present case, the returns were filed because of section 132, section 153A and consequently because of section 139. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred that only forms part of the profit included in the consideration of sales. Therefore, unless there is a finding to the effect that investment by way of incurring cost in acquiring goods which have been sold have been made by the assessee and that has also not been disclosed. In the absence of such finding of fact the question whether entire sum of undisclosed sale proceeds can be treated income of the relevant assessment year answers by itself in negative. g) In the case of in case of 'Manmohan Sadani Vs. CIT 304 ITR 52 (MP)', the Hon'ble Madhya Pradesh High Court had held the following: this Court in the said judgement his not held that the entire sale proceeds have to be should be regarded as profit or treated as undisclosed income of the assessee. On the contrary, this Court has categorically held that it is the net profit rate which has to be adopted in such cases. 5.2.4. In view of the aforesaid judicial pronouncements as well as the discussion held above, it can be inferred that total receipt of unaccounted sale proceeds cannot be considered as unaccounted income of the assessee. Relevant purchases and other expenses related to the said unaccounted sale shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the Ld. CIT(A) noted that even if the unrecorded sales were detected during the course of search, the entire amount cannot be added and only the profit element has to be estimated and added to the income of the assessee. According to Ld. CIT(A), the assessee has incurred purchases/expenses to the tune of Rs. 4,94,43,275/- against such unrecorded sales. The bills and vouchers along with details were also provided during the assessment as well as appellate proceedings and finally after following a series of decisions as noted above, noted that the unaccounted sales cannot be treated as unaccounted income and allowance has to be made for the purchases and other expenses incurred by the assessee for arriving at the unrecorded income. Accordingly, the Ld. CIT(A) directed the AO to delete the addition of Rs. 4,94,43,275/- as the AO himself accepted the profit of Rs. 13,92,624/- as income against the said unrecorded sales. The AR of the assessee cited before us the following decisions which squarely covers the assessee s case: i. CIT vs. President Industries (124 taxmann.com 654) [Gujrat HC] ii. PCIT vs. Anumpam Organiser (Appeal No. 168 of 2020) [Gujrat HC] iii. CIT vs. Ajay Kapoor ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Bench confirmed the view of the Tribunal and did not accept the contention of the revenue that as no accounts had been maintained to substantiate the expenditure incurred by the assessee, the entire amount received by the respondent should be treated as income. The Court concluded that the Tribunal was justified in considering that the respondent- assessee ought C/TAXAP/168/2020 ORDER to have spent reasonable amount for the purpose of receiving such gross receipt. 15. It can, thus, be seen that consistently, this Court and some other Courts have been following the principle that even upon detection of on money receipt or unaccounted cash receipt, what can be brought to tax is the profit embedded in such receipts and not the entire receipts themselves. If that be the legal position, what should be estimated as a reasonable profit out of such receipts, must bear an element of estimation. 16. In view of the legal position that not the entire receipts, but the profit element embedded in such receipts can be brought to tax, in our view, no interference is called for in the decision of the Tribunal accepting such element of profit at Rs. 26 lakhs out of total undisclosed receipt of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestment in the books was sufficient, has to be made good with material and proof by the assessee. The assessee had to explain that purchases recorded in the books were sufficient after adjustment of the recorded sales. In cases of unaccounted sales and purchases, all documents may not be available and certain amount of guess work is lalways required as noticed earlier, but a realistic and common sense approach is required. [Para 11] The finding recorded by the Tribunal that proof of unaccounted purchases did not prima facie indicate or show that unaccounted investment was made, as there was other apparent evidence to the contrary is also not acceptable. Onus, in such cases, is on the assessee to show that unaccounted investment was made out of accounted stock. There cannot be any assumption or presumption that unaccounted sales must be from accounted purchases. Unaccounted sales may result and can contribute towards the investment, but there has to be initial investment. Profits and income earned are also used for personal needs and are taken out of business. [Para 11] The Tribunal did not deal with the second issue in right perspective by placing the onus on the revenue to explai ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
