9911796707
TMI Blog2025 (2) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 1. On the facts, in the circumstances of the case and in law, assessment proceeding u/s 153A of the Act is bad in law, void-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 Ld. CIT (A) erred in confirming the addition of Rs. 37,01,550/- 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 from assessee and totally based on surmises, conjectures, suspicion, irrelevant material or no material more so when no such stock/excess stock was found as the result of search. 3. On the facts and circumstances of the case, it is contended that even in case unaccounted purchases are found and corresponding excess stock is not found then only prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d taxed the same u/s 115BBE of the Act. The addition was confirmed without appreciating the fact that the addition was made on surmises, conjectures and suspicion. 5. On the facts and in the circumstances of the case, it is contended the provisions of section 115BBE cannot be applied to tax the assessee at higher rate. 6. The appellant prays for leave to Add, to amend, to delete, or modify the all or any grounds of appeal on or before the hearing of appeal. 4. The brief facts of the case are that the assessee is doing business of non - edible oil, soap material and commission agent in the name of M/s S.S. Traders. The books of accounts of the assessee were audited u/s 44AB of Income Tax Act. The assessee filed his original ITR u/s 139(1) for A.Y. 2017-18 and A.Y. 2019-20 on 23/09/2017 and 27/10/2019 declaring total income at Rs. 3,57,980/- and Rs. 1,87,940/- respectively. The Income Tax department carried out search operations over Shubh Laxmi Group, a leading soap manufacturer in Nagaur and this assessee was also covered for the search in the group as related party. During the course of search over the assessee, statements of assessee, Shri Dinesh Singh (employee) and Shri So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 2017-18, the Ld. A.O. made the addition on the basis of his findings in para 9.1.3 to 9.1.5 by holding that:- "9.1.3 Reply of the assessee has been considered but not found tenable. 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 has admitted in his statement that all these transactions were not recorded in books of account. In this regard, it seems that the assessee paid part payment through RTGS and part has made cash payment. However, the details of transactions written on said pages clearly show that the assessee has made various unaccounted cash transactions. The plea of the assessee that he has not made unaccounted transactions is not acceptable. 9.1.4 Considering this fact, it can be said that the assessee has made the said cash payments out of unaccounted sources. Further these transactions appearing on these pages, the assessee was unable to verify with the books of account. He could not produced any documentary evidence, any ledger for supporting his claim. 9.1.5 Section 69C of IT Act,1961 states- 'Where in any financial year an assessee has incurred any expend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the mobile no. 9413342115 pertains to him. During the course of appellate proceedings, the appellant has submitted the copy of bill of mobile no.9413342115 in the name of Shri Dinesh Kumar. It is possible that the connection was taken in the name of Dinesh Kumar, but the same was used by Shrikant Singhania, which is evident from the above discussion. Hence the contention of the appellant is not acceptable as the same is after thought and beyond truth and only to misguide the truth facts of the case. 2. As per the assessment order, the proper opportunities were provided to the appellant to substantiate his claim but he had failed to do so and was failed to verify the entries of the seized material with his regular books of account. 3. Further the appellant has submitted that the assessee maintains proper books of accounts since many years and these accounts are also audited by qualified chartered accountant. 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 admit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the same were not reflecting in the regular books of account maintained by the appellant. In these circumstances, there is no question for invoking the provisions of section 145(3) of the I.T.Act,1961 by the AO. On the basis of above discussion, it is evident that the appellant has made efforts to refute the entries of data seized from his mobile during the search proceedings and failed to justify the entries from his regular books of accounts. The appellate has made a story only to substantiate his claim for undisclosed expenditure, which is beyond truth and cannot be relied upon without any supporting documents. In these circumstances, I uphold the addition of Rs. 37,01,550/- made by the AO considering the unexplained expenditure to the total income of the assessee as per section 69C of the I.T. Act,1961 and application of provisions of section 115BBE of the I.T. Act,1961. In AY 2019-20, the Ld CIT(A) confirmed the addition on the basis of his findings in para 5.2.14 which are almost to his similar findings in AY 2017-18. 9. The Ld. AR of the assessee filed separate written submissions and paper book for each of the year and disputed the findings of Ld. CIT(A). The ld A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ming images in whatsapp chat. The Ld. AO has quantified the unexplained purchases on the basis of assumption. Further, these chats in whatsapp are received chats neither prepared by the assessee or his employee and were also not snapped by the assessee or his family members or by his employees. Ld. AR draw our attention towards seized page 19 of annexure AS 1 (paper book page 85) which is not properly visible and readable. Further, name of the assessee is not appearing against the payment. Seized page 20 of annexure AS 1 (paper book page 86) name of Pappuji Jaipur is appearing against payment of Rs. 1,00,000/- shown in the print out of the image. Seized page 22 (paper book page 88) shows some calculation; not the payment of Rs. 28,000/-. Seized page 23 (paper book page 89) is not properly visible and readable and shows some calculations. Seized page 3 (paper book page 69) shows some calculation and balance Rs. 3,26,124/- and no name of the assessee is appearing. Seized page 4 (paper book page 70) shows RTGS in name of Shivnath and cash in name of Chetan, Rajesh, Kota is appearing. Seized page 5(paper book page 71) also does not show any payment made by the assessee, rather names of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Private Limited ITA No. 446/JP/2016 order dated 28.02.2017, (iv) Deputy Commissioner of Income-Tax. Versus Pahar Ganj Grih Nirman Sahkari Samiti Limited and Others. 005 (10) TMI 237 - ITAT JAIPUR Other Citation: TTJ 099, 549, order Dated: - October 21, 2005 (v) Commissioner of Income-tax v. President Industries [2002] 1 24 TAXMAN654 (GUJ.) (vi) D.K. Enterprises v. Income Tax Appellate Tribunal, Mumbai[2018]99taxmann.com151 (vii) Jyotichand Bhaichand Saraf & Sons (P.) Ltd. v. Deputy Commissioner of Income-tax, Circle 11 (1) [2012] 26 taxmann.com 239 (Pune) (viii) Commissioner of Income- tax v. Gurubachhan Singh J. Juneja [2008] 171 Taxman 406 (Gujarat) (ix) Shri Nawal Kishore SoniVs. The ACIT Central Circle - 3 Jaipur, ITANo. 1256, 1257, & 1258/JP/2019, dated 15.09.2020. (x) Man Mohan Sadani v. Commissioner of Income-tax [2008] 304 ITR 52 (Madhya Pradesh). (xi) Shri Lakshmanan v. ITO, Ward - 1(3), Chennai, [2021] 127 taxmann.com 391 (Chennai-Trib.). (xii) NishikantT.Patnev.ACIT,Circle-3, [2013] 36 taxmann.com 540 (Pune-Trib.). (xiii) G. Raja Gopala Rao v. DCIT, Circle-4 (1), Visakhapatnam, [2017] 78 taxmann. Com 61 (Visakhapatnam-Trib.) (xiv) CIT Vs Samir Synth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only be taxed as business income of the assessee. The bench noted that recently the jurisdictional Hon'ble Rajasthan High court while dealing the estimation of gross profit on account of bogus purchase while dealing with the case of COMMISSIONER OF INCOME TAX (CENTRAL), JAIPUR vs. M/S CLARITYGOLD (P) LTD. [100 CCH 0396 Raj HC ] held as under: 4. Facts of the case are that the assessee company derives its income from business of manufacturing of jewellery and in trading of gems stones. The background of search action on the Clarity Group was survey under Section-133A conducted in FY2007-08 by the BCTT Wing of the Investigation Directorate of Jaipur which revealed that Clarity Gold Pvt Ltd. And its sister concerns M/s Marine Minerals and Herbal Remedies Pvt. Ltd. Jaipur had obtained bogus purchase bills amounting to Rs. 13.59 crores from various entry providers, who provided bogus sale bills without supplying the goods mentioned in the bills. After search (20.05.2009) the case of the assessee was centralized with ACIT, Central Circle-1, Jaipur, who issued notice under Section-153A to the assessee company on 23.09.2009. In response the return was filed on 28.04.2011, declaring inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ench in the case of M/s Asian Construction Co. Vs ITO 34 Taxworld 89 has held that the past history of assesses case is the best reflector of the true trade results. The fact remains that the Ld. CIT (A) estimated the profit on short stock by applying profit rate of 6.97% and the weighted average rate of GP is 7.96% for A.Y. 2014-15, 2015-16, 2016-17 and 2017-18. Therefore, keeping in mind the doctrine of equity, justice and good conscious business income should be estimated @ 8% on the unexplained purchases of Rs. 37,01,550/- and Rs. 27,53,711/- for A.Y. 2017-18 and A.Y. 2019- 20 respectively. Thus, the addition of Rs. 2,96,124/- and Rs. 2,20,297/- is sustained as business income for AY 2017-18 and AY 2019-20 respectively as against addition of Rs. 37,01,550/- and Rs. 27,53,711/- made by AO u/s 69C for AY 2017- 18 and AY 2019-20 respectively. The ground no. 2 to 4 in ITA No. 1221/JPR/2024 AY 2017-18 and ground no. 3(a), 3(b) and 5 in ITA No. 1222/JPR/2024 AY 2019- 20 are partly allowed. 12. Ground no. 2 in AY 2019-20 is in respect addition of Rs. 50,270/- on account of unaccounted sales. The Ld. AO made the addition of Rs. 50,270/- treating the same as cash sales out of the books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded in the order of Ld. AO and that of the Ld. CIT(A). 15. We have heard the rival contentions and perused the material placed on record. We noted that the department neither provided the copy of seized page no. 1 to 3 of Annexure 6 found from the control and possession of Shubh Laxmi Group nor it was reproduced in the assessment order as mentioned in para 9.1.3. Further, the Ld. 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. We further noted that the AO has not reproduced the relevant part of the statement in the assessment order although he mentioned in para 9.1.4 of assessment order that he is reproducing the relevant part of statement. Further, the 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, the Ld. AO has not justified in making the addition of Rs. 50,270/- on account of unaccounted sales. We therefore, set aside the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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