9911796707
TMI Blog2025 (2) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... ion treating the same as cash sales out of the books in the hands of the assessee on the basis of documents found from Shubh Laxmi Group seized - HELD THAT:- AO used the statement of Birendra Taparia against the assessee without providing the copy of the statement to the assessee and without providing opportunity of cross examination which is against the principle of natural justice.
AO has not reproduced the relevant part of the statement in the assessment order although he mentioned in assessment order that he is reproducing the relevant part of statement. AO has made separate addition on account of unaccounted purchases and short stock treating the same as unaccounted sales therefore, the separate addition on account of sales out of the books cannot be made. Therefore AO has not justified in making the addition on account of unaccounted sales. X X X X Extracts X X X X X X X X Extracts X X X X ..... ab-initio, and deserves to be annulled for various reasons. The Assessment order passed by the ld. Assessing Officer is arbitrary, whimsical, capricious, perverse, against the law and principal of natural justice. The Ld. CIT (A) erred in not annulling the assessment proceeding and confirming the action Ld. A.O. as valid. 2. On the facts and in the circumstances of the case, the order CIT (A) erred in confirming the addition of Rs. 50,270/- made to the total income of appellant on account of alleged unaccounted Sales and taxed the same u/s 115BBE of the Act. The addition was confirmed without appreciating the fact that the same was made without having any corroborative evidences found from assessee and totally based on surmises, conjectures, suspicion, irrelevant material or no material. 3(a) On the facts and in the circumstances of the case, the Ld. CIT (A) erred in confirming the addition of Rs. 27,53,711/- made to the total income of appellant u/s 69C of the Act on account of alleged unexplained purchases and taxed the same u/s 115BBE of the Act. The addition was confirmed without appreciating the fact that the same was made without having any corroborative evidences found f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 42155, which was found from the residence of the assessee. A.Y. 2019-20 1. Addition of Rs. 50,270/-was made on account of unaccounted sales of Rs. 50,270/- on the basis of some images found from the mobile. 2. Addition of Rs. 27,53,711/- u/s 69C was made on account of unaccounted cash purchases on the basis of some images found from the mobile bearing no. 9413342155, which was found from the residence of the assessee. 3. Addition of Rs. 36,291/- was made on account of estimating the profit at the rate of 15.31% on stock of Rs. 2,37,042/- found short. 5. Aggrieved from the order of assessing officer the assessee filed appeals before CIT (A) which was decided by CIT(A) vide orders dated 05/08/2024 wherein the all the addition made by A.O. were confirmed except allowing relief in A.Y. 2019-20 in respect of addition of Rs. 36,291/-was made by A.O. on account of short stock by restricting the addition to Rs. 16,522/- by applying profit rate of 6.97% as against 15.31% applied by A.O. on short stock. 6. Aggrieved from the orders of Ld. CIT(A), the assessee preferred present appeals for A.Y. 2017-18 and A.Y. 2019-20 on the various grounds raised in the respective appeal memos fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. Thus, amount of Rs 37,01,550/- is being added as unexplained expenditure to the total income of the assessee for AY 2017-18 as per Section 69C of IT Act.1961 and taxed accordingly." In computation of sheet, the tax was charged at special rate u/s 115BBE. In assessment year 2019-20, the Ld. A.O. made the addition of Rs. 27,53,711/- on the basis of almost similar findings in para 9.2.3 of the order. The Ld. CIT(A) in A.Y. 2017-18 and A.Y. 2019-20 confirmed the addition of Rs. 37,01,550/- and Rs. 27,53,711/- respectively made by the A.O. In A.Y. 2017-18 the findings of Ld. CIT(A) are in para 5.2.10 were as under:- "5.2.10 I have considered the reply of the appellant but I find that the facts mentioned by the appellant are beyond truth. The detailed discussion is as under: 1. During the course of appellate proceedings, the appellant has submitted that the Ld. AO made this addition on the basis of loose sheets recovered from Mobile's Whatsapp massages received of one of his employees (Dinesh Singh) mobile. The contention of the appellant is not acceptable, as during the course of search proceedings, statements of Shrikant Singhania were recorded and in his statements i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, got cleaned assessment order from concerning department which are also adding evidentiary value in credibility of the assessee's Books of Accounts and eliminate any suspicious possibility of unaccounted purchase transaction or incomplete records. The contention of the appellant is not acceptable, the AO has clearly mentioned in the assessment order that on verification these entries from books of accounts it was found that same were not recorded in the declared books of accounts. Further, the assessee had admitted in his statement that all these transactions were not recorded in books of account. Further during the course of appellate proceedings, the appellate has failed to substantiate his claim with documentary evidences." 5. Further, the additions made by the AO were based on the entries found in the seized material during the search proceedings and the appellant has failed to verify the same from regular books of account. These undisclosed entries have no relevance with no excess stock or no excess cash found during the search proceedings. 6. Further, appellate has submitted that the AO had made huge addition without following the due procedure of law and AO did not fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee submitted purchase bill of mobile at paper book page 295-296. The assessee also submitted sworn affidavit of Shri Dinesh Singh at paper book page 300-301 wherein Shri Dinesh Singh affirmed that this mobile pertains to him and impugned images recovered from this mobile have no connection with the business of assessee. Besides this, the assessee filed his affidavit at paper book page 297-299 wherein he submitted that the mobile does not belong to him and the impugned images found therein do not connected with the assessee. The Ld. AR submitted that the Ld. CIT (A) has wrongly held that the assessee has not retracted from the statement recorded during the search while the fact remains that the assessee has retracted from the statement by filing the affidavit before the AO. The Ld. AR submitted that Ld. AO has not controverted the contents of the affidavit and the contents of the affidavit were not proved as vague, therefore, the affidavit should be accepted as correct. He relied upon following decisions:- (i) Mehta Parikh & Co v CIT [1958] 30 ITR 181 (SC) (ii) Daulat Ram Rawatmull v. CIT (1973) 87 ITR 349 (SC). (iii) Shri Nirmal Kumar Kedia V/s DCIT (Vice-Versa) 2019 (6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yam [IT Appeal 87 (Viz) of 2020, dated 23-9-2020] (iv) A. John kumar v. DCIT CC 1(4) [IT Appeal 3028 (Chny) of 2019, dated 13-5-2022 (v) Atul Tantia v. Dy. CIT [IT Appeal 492 (Kol.) of 2021, dated 28-3-2023] (vi) Designers Points v. ACIT [IT Appeal 2517 (Delhi) of 2022] In alternative submission, the Ld. AR submitted that even if the impugned images are accepted as evidence then also entire purchases cannot be treated as income of the assessee. These impugned purchases are related to business of the assessee. The department has carried out search and survey operations on the premises of the assessee and no excess stock was found and therefore, if the assessee made the purchases then it was sold out by the assessee and from the sale proceeds the payment of purchases was made. It is apparent from the seized record that the purchases are credit purchases and payments were not made on the single day. In such a case plausible presumption which can be drawn is that the assessee sold such goods and out of sale proceeds the payment of purchases consideration was made. Thus, in such a case due profit embedded in the transaction can only be taxed as income of the assessee. Without est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipur in ITA No. 50/Jodh/2021 dated 23/11/2021. 10. Per contra, Ld. DR representing revenue heavily relied upon the findings recorded in the order of Ld. AO and that of the Ld. CIT(A). 11. We have heard the rival contentions and perused the material placed on record. It is an undisputed fact that the impugned mobile no. 941342115 was found from the possession and control of the assessee and certain images were recovered from this mobile. In search statement the assessee was confronted with the images recovered from this mobile which were seized vide Annexure AF Exhibit 1 page 1 to 32 vide question no. 26 and he stated that payments were noted on seized page 3 to 5 in respect to material like acid oil, coconut oil used in manufacturing of soap. Therefore, the contention of Ld. AR that these images cannot be used as acceptable evidence, cannot be accepted. However, these images show payments against soap material on various dates and the fact remains that no excess stock was found and in view of these facts and circumstances, the plausible presumption which can be drawn is that the assessee sold such goods out of books and out of the sale proceeds the payment of purchase considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own of the identical industry whose case is also heard together. The GP rate of previous years reads as under:- A.Y. 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2009-10 unaudited 2010-11 Sales 198490 1426903 5466428 68749794 97777586 10306287 1072033 1540384 Stock diff. 144657 5147868 0 71450573 6769267 83951400 83334242 5750095 Total 2129557 1941690 5466428 75894851 1054510 11145801 11553681 2115394 Purchases 181023 1698878 4962283 68670235 9376682 96584379 99103051 1574824 Direct Cost 0 6118276 9962436 1409772 1312092 8607118 10319346 8163403 Total 181023 1760061 5061907 70080007 9507891 97445091 10013498 1956458 Grow 3193228 1816292 4045206 5514844 9466185 14012920 15401828 1589358 G.P.Rate 16.08% 12.72% 7.40% 8.45% 9.68% 13.59% 14.36% 10.31% Taking into account the average GP rate which will be applied in the present case will be 12 per cent. It is made clear that where ever the profit is more than12 per cent, the same will not be refunded to the assessee but where it is less than 12 per cent, the income will be assessed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of AS 1 which shows payment of Rs. 3,27,500/- for the period 28/04/17 to 15/06/17. This shows that the assessee has received payment of Rs. 50,270/- during this year on account of sales out of the books. The CIT(A) confirmed the findings of AO on the basis of reasons mentioned in para 5.2.14. 13. Ld. AR submitted that no any corroborative entry was found from the documents seized from the possession of the assessee to support the addition of Rs. 50,270/- made by the ld AO. Further, the copy of seized paper page 1 to 3 of Annexure 6 from the possession of Shubh Laxmi Group was not provided. Further, at page 6 of assessment order at the bottom of para 9.1.3. he mentioned that he is reproducing the image but it was not reproduced/found in the assessment order also. Further, the AO mentioned that Shri Birendra Taparia proprietor of M/s Shubh Laxmi Soap Industries has confirmed in his statement dated 24/04/2019 that out of the said 3 pages of Annexure 6, page 1 and 3 are same and belongs to payments of purchases made from the assessee. The Ld. AO neither provided to the assessee copy of the statement of Shri Birendra Taparia nor he reproduced the same in the assessment order although ..... X X X X Extracts X X X X X X X X Extracts X X X X
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