Income Tax Appellate Tribunal - Rajkot
Deputy Commissioner Of Income Tax, ... vs Chetan Nandlal Sangani, Rajkot on 17 September, 2024
IN THE INCOMETAX APPELLATE TRIBUNAL,
RAJKOT BENCH: RAJKOT
BEFORE DR.ARJUN LAL SAINI, ACCOUNTANT MEMBER
And
SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER
आयकर अपील सं./ITA.No.247/RJT/2022
( नधारण वष /Assessment Year: 2020-21)
Chetan Nandlal Sangani, बनाम/ Deputy Commissioner of
309 - Shalin Complex, Vs. Income Tax,
Mandvi Chowk, Soni Bazar, Central-2,
Rajkot-360001 Rajkot
थायीले खासं . /जीआइआरसं . / PAN/ GIR No . : AMVPS578 8E
(अपीलाथ /Appellant) .. ( यथ / Respondent)
आयकर अपील सं./ITA.No.250/RJT/2022
( नधारण वष /Assessment Year: 2020-21)
Deputy Commissioner of बनाम/ Shri Chetan Nandlal
Income Tax, Vs. Sangani,
Central Circle-2, 309, Shalin Complex,
Rajkot Mandavi Chowk, Soni
Rajkot-360001
थायीले खासं . /जीआइआरसं . / PAN/ GIR No . : AMVPS578 8E
(अपीलाथ /Appellant) .. ( यथ / Respondent)
अपीलाथ ओर से/ Appellant by : Shri Vimal Desai, A.R.
यथ क ओर से/Respondent by: Shri Shramdeep Sinha, CIT DR
सुनवाई क तार!ख/ Date of H e ar i ng 19/06/2024
घोषणा क तार!ख /Date of Pr on ounc e me nt 17 /09/2024
आदे श / O R D E R
PER SHRI DINESH MONHAN SINHA, JUDICIAL MEMBER :
Captioned appeals filed by the assessee and Revenue are directed against the orders passed by the Ld. Commissioner of Income Tax (Appeals)-11 (in short 'the CIT(A)') both orders dated 31.08.2022 for assessment year (AY) 2020-21 under section 143(3) of the Income Tax Act, 1961 (in short, 'the Act').
ITA Nos. 247&250/Rjt/2022 A.Ys. 2020-21 -2-
2. Since the issues involved in both the appeals are common and identical amount, therefore, we have clubbed, these appeals are heard together and a consolidated order is being passed for the sake of convenience and brevity.
3. For appreciation of fact, appeal for AY 2020-21 in ITA No.247/RJT/2022 is treated as "lead" case. The assessee has raised following grounds of appeal in ITA No. 247/Rjt/2022:
"1. The assessment order u/s. 143(3) r.w.s. 153A of the Act is bad in law.
2. The learned Assessing Officer has erred in law as well as on facts in making the addition of Rs. 39,20,754/- on account of excess cash found during the course of survey. The ld. CIT(A) has erred in law as well as on facts in confirming the same to the extent of Rs. 36,78,236/-."
4. The Revenue has raised the grounds of appeal in ITA No. 250/Rjt/2022 are as follows:-
"1. On the facts and on the circumstances of the case and in law, Learned Commissioner (Appeals) erred in considering the fats of the case, and ignoring that, the addition of Rs. 1,30,83,542/- were made on the basis of unexplained sales found from EmmEss software maintained by V.K. Group during the course of survey action carried out by the investigation wing.
2. On the fats and on the circumstances of the case and in law, Learned Commissioner (Appeals) erred in Considering margin of profit only 3% of unaccounted/unrecorded sales which was without any base.
3. On the facts and circumstances of the case and in law, learned Commissioner (Appeals) erred in ignoring the facts that during the course of search, digital data were found & seized having a record of whole accounted as well unaccounted transactions i.e. Gold Purchase/sale & in/out of Gold bar in the digital form, on which the AO has relied upon.
4. Ld.CIT(A) erred in ignoring the facts that the assessee has made transaction in cash and AO has rightly invoke the provision of Section 40A(3) by disallowing Cash transaction worth of Rs. 24,29,554/-.
5. Ld. CIT(A) erred in ignoring the facts that the assessee has invested unaccounted money of Rs. 23,13,402/- in investment of Gold, therefore, the AO has rightly made addition u/s 69A of the Act.
6. AO on the facts and in the circumstances of the case and in law, has duly investigated and applied his mind on the report of the DDIT, Investigation wing and after satisfying himself made assessment on the basis of cogent material and relevant evidence on record.
ITA Nos. 247&250/Rjt/2022 A.Ys. 2020-21 -3-
7. On the facts and in the circumstances of the case and in law, learned Commissioner (Appeals) erred in ignoring the facts that during the course of assessment proceedings assessee admitted such an unaccounted sale and request to the estimate the profit on such unaccounted transaction adopting GP/NP ratio of average of last three years.
8. Ld. CIT(A), has misrepresented the facts of the case with V.K. Jewellers, where the relevant data have been accounted, however, the same has not been recorded in the books of the account of the assessee.
9. On the facts and in the circumstances of the case and in law, learned Commissioner (Appeals) erred in ignoring the facts that the excess cash found was due to unrecorded sales transaction and which was remained unexplained during assessment proceedings as well as appellate proceedings and should be taxed u/s 69A r.w.s. 115BBE of the I.T. Act. Instead of regular tax.
10. The appellant prays that the order of the learned Commissioner (Appeals) on the above ground be set aside and the addition made in the Assessment order may kindly be restored."
5. Brief facts of the assessee's case are that the assessee is an individual and engaged in the business of trading in gold and silver bullion under his proprietary concern M/s. Chetan Art Jewellers and filed his return of income on 11.02.2021 declaring total income at Rs. 20,45,020/-. The assessee is doing the business of manufacturing and trading of gold jewellery, trading in gold/silver bullion etc. A survey action under Section 133A of the Act was conducted on 16.01.2018 at the office premises of the assessee at 309, Shalin Complex, Mandavi Chowk, Soni Bazar, Rajkot.
6. Loose papers and cash of Rs. 45,66,920/- was found and out of this cash Rs. 39,20,760/- was found from the cash in hand in the books of account of the assessee. The survey action has been converted into search action u/s. 132 of the Act on 18.01.2020. The assessment proceeding was initiated u/s. 153A of the Act. The case was selected for scrutiny by issuing notice u/s. 143(2) of the Act. The assessment was completed on the basis of facts and details submitted by the assessee. During the course of search proceeding, incriminating material was found in the form of digital data and certain loose papers were also found at the premises of the assessee and seized. After considering the assessee's reply the A.O. made the following additions:
ITA Nos. 247&250/Rjt/2022 A.Ys. 2020-21 -4- Sr. Nature of Addition/Disallowance Amount No.
1. Addition u/s. 69 r.w.s. 115BBE of the Act on account 1,32,31,029/-
of alleged investment in purchases of gold from undisclosed sources.
2. Disallowance u/s. 40A(3) on account of alleged 24,29,554/- unaccounted purchases made in cash.
3. Addition u/s. 69A r.w.s. 115BBE of the Act on 23,13,482/-
account of alleged unaccounted gold bullion receipts.
4. Addition u/s. 69A r.w.s. 115BBE of the Act on 39,20,754/- account of alleged excess cash found.
TOTAL 2,18,94,819/-
7. Aggrieved against the order of the Assessing Officer the assessee filed an appeal before the Ld. CIT(A). That the appeal was heard and decided by the Ld. CIT(A), wherein the CIT(A) has partly allowed the appeal of the assessee with the following remark:
Sr. Addition by ld. ITO Addition confirmed Deleted by ld. CIT(A) No. by ld. CIT(A)
1. Rs.1,32,31,029/- Rs.1,47,48,710/- Rs.1,30,83,542/-
2. Rs.24,29,554 Rs.59,271/- Rs.23,70,283/-
3. Rs.23,13,482/- NIL Rs.23,13,482/-
4. Rs.39,20,754/- Rs.36,78,236/- Rs.2,42,518/-
8. Ground No. 1 is general in nature and do not require any specific adjudication.
Ground No. 2 of assessee's appeal are similar to Ground No. 9 of Department's appeal:-
9. During the course of survey proceedings, it was noted
(i) Cash seized Rs. 39,20,754/-
(ii) Stock shortage
(a) 864.706 GM Gold bar
(b) 19.18 kg Silver-bullion.
ITA Nos. 247&250/Rjt/2022
A.Ys. 2020-21
-5-
9.1. The Assessing Officer while making an assessment found that there was a unaccounted sale and Rs. 39,20,754/-, hence an addition of Rs. 39,20,754/- made.
9.2. The Ld. CIT(A)observed that out of Rs. 39,20,754/-
(i) Rs. 1,47.487 is undisclosed sale of Rs. 49,16,239/- on which profit is noted @ 3% has already considered at Page no. 8.
(ii) Rs. 59,271/- 3% net profit on unaccounted sale of Rs.
19,73,703/- has already considered at Page No. 9.
(iii) Rs. 35,580/- NP @ 3% on turnover of Rs. 11,86,000/- has already considered at Page No. 12.
30,20,574-2,42,338= Rs. 36,78,236. Therefore, after considering assessee's submission the Ld. CIT(A) confirmed the addition to the tune of Rs. 36,78,236/-. Therefore the assessee is in appeal before this Tribunal.
10. The A.R. submitted that during the course of search actions at the premises of the appellant, there was excess cash of Rs. 39,20,754/- found. The Ld. CIT(A) deleted Rs. 2,42,330/- and addition of Rs. 36,78,236/- confirmed. Simultaneously, there was shortage of stock of 864.706 grams of gold bullion and 19.018 Kg. of silver bullions found during the course of search and survey. In the statement the assessee explained that there was cash sale of gold and silver on 13.01.2020 and 15.01.2020 to various parties which was yet to be recorded in the books of accounts which resulted into such discrepancies in stock and cash balance. It is an undisputed fact that there was shortage of stock of gold bullion by 864.706 grams and stock of silver bullion by 19.018 kgs found and admitted during the course of search and survey in case of the appellants. This itself corroborates that there were unaccounted sales and impugned excess cash was represented by sale proceeds of such unaccounted sales. Thus, it is submitted that the excess cash of Rs.39,20,754/- found from the premises of the appellant was represented by the proceeds of unaccounted sales and entire amount of such excess cash cannot be presumed as unaccounted income of the appellant. The assessee submitted that it ITA Nos. 247&250/Rjt/2022 A.Ys. 2020-21 -6- is a settle legal position that in case of unaccounted sales, only profit margin embedded therein can be taxed. The Courts and Tribunals have consistently upheld this principle disregarding the contentions raised by the ld. AO in the assessee's case.
11. The Ld. D.R. submitted that CIT(A) was wrong to delete the addition of Rs. 2,42,330/-. The Ld. AO was right in making the addition on the basis of seized and incriminating document. The said excess cash found does not pertain to shortage of stock.
12. We have heard both the parties. We noted that there was an excess stock of Rs. 39,20,754/- and was seized simultaneously there was shortage of stock of 864.706 grm. of gold jewellery and 29018 kg. of silver bar during the course of survey. That the statement of the assessee is that the sale has been made and the stock and entries are yet to be recorded in books from 13 to 15 January amount represent to sale proceed of stock. However, addition was made of Rs. 39,20,754/- which was confirmed only Rs 36,78,236/- by the Ld. CIT(A. It was further noted that the cash sales was different on the ground that no name and address at delivery documents were not provided that during the course of assessment proceedings, the appellant made several submissions before the A.O. and explained that stock of goods sold was stock was found short during the course of survey proceedings by the Income Tax Authorities and the cash so seized to be represented as the sale proceeds.
13. The Ld. Counsel for the assessee has relied on the judgment of the Hon'ble Gujarat High Court in the case of CIT vs. President Industries 124 taxman 654 (Guj.), wherein the Hon'ble High Court has held that the Tribunal found that there was no material on the record to suggest that the assessee made any investment outside books of account to make alleged unaccounted sales. The Tribunal also found that the entire sale proceeds could not have been added as income of the assessee but only to the extent the estimated profits embedded in the sales for which the net profit rate was adopted entailing addition of income on the ITA Nos. 247&250/Rjt/2022 A.Ys. 2020-21 -7- suppressed amount of sales. Further, The, Counsel has relied on the case of the Jurisdictional High Court in the case of CIT vs. Gurubacchan Singh J. Juneja 171 taxman 406 (Gujarat), wherein the Hon'ble Court has held that whether in absence of any material on record to show that there was any unexplained investment made by assessee, which was reflected by alleged unaccounted sales, finding of Tribunal that only gross profit on said amount could be brought to tax did not call for any interference. The Counsel for the assessee also relied on the decision of Hon'ble Gujarat High Court in the case of CIT vs. Samir Synthetics Mill 326 ITR 410 (Gujarat), the High Court said that where assessee could not even be able to reconcile production, sales and closing stock although specific opportunity was provided by Assessing Officer, addition was justified on account of suppression of sale consideration but only to the extent of profit.
14. We note that Ld. CIT(A) that On careful consideration of entire facts, it is observed that during the course of search proceeding or assessment proceedings. AO has not brought anything on record to prove that appellant has other means for generating undisclosed income other than business activity carried out by him. It is observed that on the date of search, excess cash of Rs 39,20,754/- is found which means that surplus profit available with appellant is for such amount. On such facts, it is observed that unexplained cash found during the course of search cannot be taxed u/s 115BBE of the Act as AO has not brought anything on record to prove that appellant has generated cash other than from his business activity. However, such available cash balance represent surplus remaining with appellant from his undisclosed turnover hence such income is required to be taxed as per normal provisions of the Act. Thus, aggregate gross profit on unrecorded sales was upheld at Rs 2,42,338/- (Rs 1,47,487+59,271+35,580) and to that extent addition of unexplained cash found during the course of search cannot be made as part of available cash found during the course of search which is from gross profit estimated on unaccounted transactions referred (supra). The remaining amount of Rs 36,78,236/- represents undisclosed net business income of appellant and such income is required to be taxed as per normal provisions of the Act as against stand ITA Nos. 247&250/Rjt/2022 A.Ys. 2020-21 -8- of AO for treating such income u/s. 115BBE of the Act. Considering these facts, we are of the view that remaining addition of Rs.36,78,236/- should not be treated as income of the assessee and only profit element should be taxed. Therefore respectfully following the Judgment of Jurisdictional High Court of Gujarat in the case of President Industries (supra), we direct the AO to treat 30% of Rs. 36,78,236/-, as income of the assessee, which should be taxable under normal provisions of the Act.
15. In the result, Ground No. 2 raised by the assessee in ITA No. 247/RJT/2022 is partly allowed whereas Ground No. 9 raised by the Revenue is dismissed.
Now we shall adjudicate the Department's appeal
16. The Department has raised ten grounds of appeal in which Ground Nos. 1, 2 & 3 are interconnected with Ground Nos. 6, 7 & 8 of the Grounds whcih are deal with together.
17. The ld. A.O. made the addition of Rs.1,32,31,029/- u/s. 69 r.w.s. 115BBE of the Act on account of alleged investment in purchase of gold from undisclosed sources. On appeal by assessee, the Ld. CIT(A) restricted the addition of Rs.1,44,487/- observing as follows:
"The appellant has declared the GP ratio @ 0.12% and he is a wholesaler in bullion. However, it is the well accepted position under the law that the GP ratio in unaccounted transactions is usually higher than the GP ratio as per the transactions recorded in the books of accounts. Accordingly, it will be fair and justified in my view that if the margin from unaccounted receipts is estimated @3%.in respect of unrecorded sales of Rs.49,16,239/- as determined hereinbefore. Resultantly, the addition to be confirmed comes to Rs.1,47,487/-. Therefore, I hereby confirm the addition to the tune of Rs.1,47,487/- out of the total addition of Rs.1,32,31,029/- and delete the remaining addition of Rs.1,30,83,542/- (1,32,31,029 1,47,487). Thus, ground of appeal no. 3 is partly allowed."
18. We have heard both the parties. We note that Ld. CIT(A) observed that:
"7.9.1 The appellant has also submitted with reference to the Hon'ble Jurisdiction High Court of Gujarat's judgment in case of President Industries (Supra) that in the absence of ITA Nos. 247&250/Rjt/2022 A.Ys. 2020-21 -9- any corroborative material or finding, there cannot be any addition on account of investment for unrecorded sales. Therefore, keeping in view of the judicial pronouncement of the Hon'ble Jurisdictional High Court of Gujarat (supra), the claim of the appellant is found to be acceptable because the entire sales do not constitute the income of the assessee but only a reasonable profit margin embedded therein can be taxed. This is a settled position as per accounting as well as taxation. I therefore hold that the AO was not justified in making addition of entire amount of sales. The appellant has declared the GP ratio @ 0.12% and he is a wholesaler in bullion. However, it is the well accepted position under the law that the GP ratio in unaccounted transactions is usually higher than the GP ratio as per the transactions recorded in the books of accounts. Accordingly, it will be fair and justified in my view that if the margin from unaccounted receipts is estimated @ 3%.in respect of unrecorded sales of Rs.49,16,239/- as determined hereinbefore. Resultantly, the addition to be confirmed comes to Rs. 1,47,487/-. Therefore, I hereby confirm the addition to the tune of Rs.1,47,487/- out of the total addition of Rs. 1,32,31,029/- and delete the remaining addition of Rs.1,30,83,542/- (1,32,31,029 1,47,487) Thus, ground of appeal no. 3 is partly allowed."
19. We have gone through the above findings of the Ld. CIT(A) and noted that Ld.CIT(A) has passed a detailed order considering assessee's submission and facts narrated by the Assessing Officer. The conclusion reached by the Ld. CIT(A), therefore does not require any interference by us. Therefore, we dismiss Ground Nos. 1, 2, 3 and 6 to 8 raised by the Revenue.
20. In the result, Ground Nos. 1, 2, 3 and 6 to 8 raised by the Revenue are dismissed.
21. Ground No. 4 Disallowance u/s. 40A(3) on account of alleged unaccounted purchases made in cash - Rs.24,29,554/-..
22. Brief facts qua the issue are that during the assessment proceedings, the Assessing Officer observe that there was unaccounted purchases to the tune of Rs.24,29,554/-. During the assessment proceedings, the assessee has made submissions before the Assessing Officer that it is not an unaccounted purchase, it is merely was added by the Assessing Officer based on the dumbed documents seized during the course of survey. However considering the submissions of the ITA Nos. 247&250/Rjt/2022 A.Ys. 2020-21
- 10 -
assessee, the assessing officer rejected the contention of the assessee and made an addition of Rs. 24,29,554/-.
23. On appeal, the Ld. CIT(A) restricted the addition by observing as follows:
"8.2.1 I have duly considered the above. It is pertinent to note that the appellant has not denied the connection of the above loose papers with his business and therefore, in my view, such documents cannot be treated as dumb documents Further, the appellant has stated that the silver forming part of the above documents was recorded in his books of accounts. However, except this statement, the appellant has not furnished any evidence or material to support this contention. The onus was on the appellant to substantiate his explanation by reconciliation of above weighing slips with his books of accounts but the appellant has failed in doing so. On the other hand, the AO has assumed the unaccounted purchases without understanding the nature of the appellant's business. The appellant is a wholesaler in Silver bullion and therefore, he does not require cutting of Silver in small quantity in respect of his purchases. He requires such cutting of Silver in respect of his sales to his customers who need small quantities than a bar of fixed weight. Further, without proving any kind of cash payment, the AO invoked the provision of section 40A(3) which is also not logical. When the above weighing slips were considered alongwith the nature of the appellant's business and his explanation, it logically leads to the conclusion that the weighing slips can be co-related with the sales of the appellant and not the purchases. Hence, in the absence of any reconciliation by the appellant, the inference to be drawn is that the quantity in the weighing slip represents unaccounted sales of Silver by the appellant. Accordingly, I hold that the amount of Rs.19,75,703/- is required to be treated as unaccounted sales of the appellant.
8.3 Further, the second is a loose paper found during the search from the premises of the appellant. The same was inventorized as Page No. 14 of Annexure A-5.
In this regard, the appellant submitted that the above loose paper only contained scribbling and that it was a dumb document without any particulars or identification. The AO did not accept this explanation and he treated the figure of Rs 59.951/- as unaccounted purchase and with reference to section 40A(3) made addition thereof. During the appeal, the appellant reiterated this stand that the above loose paper is just a dumb document without any specific particulars and the contents thereof were just scribbling.
8.3.1 I have duly considered the above. Apparently, the seized loose paper does not contain any specific particulars or date or identification. It merely contains 2 figures and the AO picked-up the higher figure of Rs.59,951/- and made addition thereof without saying anything on the other figure of Rs.29.953/- Prima facie, the ITA Nos. 247&250/Rjt/2022 A.Ys. 2020-21
- 11 -
assumption of the AO of unaccounted purchase does not find any support whatsoever from the seized loose page as no particulars whatsoever are mentioned on such seized loose paper. Further, without proving any kind of cash payment, the AO invoked the provision of section 40A(3) which is also not logical. On careful consideration, I am inclined to agree with the appellant that the above seized loose paper is only a dumb document since neither the content thereof states anything nor the corroboration thereof is possible in any manner. The Hon'ble Court and tribunals in the decisions relied upon by the appellant have clearly taken a view that no addition should be made on the basis of a dumb document which does not contain any explicit or c-relatable particulars. Respectfully following the same, the AO is directed to delete the addition of Rs.59,951/-.
8.4 Further, the third is a page extracted from the mobile of the appellant. The same was inventorized as Page No. 5 of the digital data of the appellant's mobile In this regard, the appellant initially submitted that the above is only a loose paper containing some rough scribbling by the parties who visited his premises for price verification The AO did not accept this explanation and he made addition of Rs.3.94,000/- as undisclosed sale and Rs. 3,93,900/- as unaccounted purchases. During the appeal, the appellant reiterated his stand that the above loose paper is a scribbling. The appellant further submitted that when the AO already taxed the total amount of Rs 3,94,000/- as unrecorded sales, he ought not to have taxed Rs.3,93,900/- as unaccounted purchases separately 8.4.1 I have duly considered the above. The above page extracted from the mobile of the appellant has already been considered by me while deciding ground no. 3 of the appellant hereinbefore. I have rejected the argument of the appellant that the above paper contain only scribbling and I have already upheld the AO's action of treating the amount of Rs.3,94,000/- as undisclosed sales of the appellant in the earlier paragraph of this appellate order. However, when the unrecorded sales has been taken into account for making the addition, there cannot be separate addition of unaccounted purchases corresponding to such sales as it amounts to double addition. Since the amount of Rs.3,94,000/- is already taken into account as unrecorded sales of the appellant, no separate addition of Rs.3,93,900/- can be made as unaccounted purchase of the appellant. Accordingly, the AO is directed to delete the addition of Rs.3,93,900/-.
8.5 In view of the above discussion, addition of Rs 19,75,703 unrecorded sales of the appellant and the additions of Rs 59,951 are deleted is confirmed as & Rs.3.93,900/-
8.6 The next question is what is the amount to be taxed? In this regard, the appellant has submitted that he is a trader in bullion and he has maintained complete quantitative details of transactions recorded in the books of accounts.
ITA Nos. 247&250/Rjt/2022 A.Ys. 2020-21
- 12 -
Hence, in such a situation, the entire sales cannot be taxed but only profit margin embedded in such sales can be taxed. In support of his claim, the appellant relied upon the following judicial pronouncement of the Hon'ble Jurisdictional Gujarat High Court-
i. CIT vs. President Industries-258 ITR 654 ii. CIT vs Gurubachhan Singh J. Juneja - 302 ITR 63 iii. CIT vs. Samir Synthetics Mill-326 ITR 410 iv. CIT vs Leo Formulations (P.) Ltd - 363 ITR 322 8.6.1 The appellant has also submitted with reference to the Hon ble Jurisdiction High Court of Gujarat's judgment in case of President Industries (Supra) that in the absence of any corroborative material or finding, there cannot be any addition on account of investment for unrecorded sales. Therefore, keeping in view of the judicial pronouncement of the Hon'ble Jurisdictional High Court of Gujarat (supra), the claim of the appellant is found to be acceptable because the entire sales do not constitute the income of the assessee but only a reasonable profit margin embedded therein can be taxed. This is a settled position as per accounting as well as taxation. I therefore hold that the unrecorded sales of Rs. 19,75,703/-
cannot be treated as income of the appellant but only margin embedded therein can be taxed. The appellant has declared the GP ratio @ 0.12% and he is a wholesaler in bullion. However, it is the well accepted position under the law that the GP ratio in unaccounted transactions is usually higher than the GP ratio as per the transactions recorded in the books of accounts. Accordingly, it will be fair and justified in my view that if the margin from unaccounted receipts is estimated @ 3% in respect of unrecorded sales of Rs. 19,75,703/- as determined hereinbefore. Resultantly, the addition to be confirmed comes to Rs.59,271/ Therefore, I hereby confirm the addition to the tune of Rs.59,271/- out of the total addition of Rs.24,29,554/-and delete the remaining addition of Rs. 23,70,283/- (24,29,554-59,271). Thus, ground of appeal no. 4 is partly allowed."
24. Aggrieved by the order of Ld. CIT(A), the Revenue is in further appeal before us.
25. The Ld. D.R. for the Revenue submitted that Ld. CIT(A) has deleted the addition to the tune of Rs.3,93,900/- and partly other additions made by the Assessing Officer, therefore, the Ld. CIT(A) sustained the addition merely to the tune of Rs.59,271/- out of the total addition made by the Assessing Officer to the tune of Rs.24,29,554/-. Therefore Ld. D.R. contended that Ld. CIT(A) was not ITA Nos. 247&250/Rjt/2022 A.Ys. 2020-21
- 13 -
justified in deleting the huge addition and hence addition made by the Assessing Officer may be confirmed.
26. On the other hand, Ld. Counsel for the assessee defended the order passed by the Ld. CIT(A). The Ld. Counsel entirely believed on the conclusion reached by the Ld. CIT(A).
27. We have heard both the parties. We have gone through details findings by the Ld. CIT(A) in Para 8.2.1 to Para 8.6.1 and noted that Ld. CIT(A) after considering the submissions of the assessee passed a reasoned order. Therefore, we confirm the findings of the Ld. CIT(A) and dismissed the Ground No. 4 raised by the Revenue.
28. In the result, Ground No. 4 raised by the Revenue is dismissed.
29. Ground No. 5 raised by the Revenue relates to addition of Rs.23,13,482/- on account of alleged unaccounted investment in gold bullion.
30. Brief facts qua the issue are that the Assessing Officer made the impugned addition on the basis of loose papers/chits marked as Page No. 5, 7 & 11 of Annexure-5 found during the course of survey. These loose papers/chits contained jottings of figures. Therefore the Assessing Officer was of the view that these figures represent unaccounted investment of the assessee and therefore made the addition of Rs.23,13,482/-.
31. On appeal, the Ld. CIT(A) deleted the addition by observing as follows:
"9.2.1 I have duly considered the above. Indeed, the aforesaid two loose papers were identical to Page No. 6 of Annexure A-5 which I have dealt with and decided in Ground No. 3 hereinbefore. All three loose papers are in chronology. For Page No. 6. the AO assumed unaccounted sales whereas for Page No. 5 & 7, the AO assumed unaccounted receipts. The reason for such distinction is nowhere mentioned by the AO. While assuming unaccounted receipts, the AO had not specified as to how the content of seized page reflects unaccounted receipts. The said seized page did not have any specific date and except some figures mentioned thereon and there were no further particulars which can corroborate the assumption of any receipts. For taking any particulars view, the content of seized page should reasonably corroborate such view otherwise it will only be a case of ITA Nos. 247&250/Rjt/2022 A.Ys. 2020-21
- 14 -
guess on the basis of which no addition is permissible. The Hon'ble Courts and Tribunals have consistently taken a view that no addition can be made on the basis of a dumb document without having any particulars and which does not corroborate to the rational of the addition to be made The presumption prescribed under section 2920 is a rebuttable one and it does not empower the AO to assume anything which does not find any support or corroboration from the content of seized document. In view of this, I am not in agreement with view taken by the AO of unaccounted receipts as the seized page neither contains nor corroborates to such kind of assumption. The explanation of the appellant in respect of above seized page appears to be reasonable and plausible. Accordingly, the AO is directed to delete the additions of Rs.21,35,540/- and Rs.1,47,940/-."
32. Aggrieved by the order of the Ld. CIT(A), the Revenue is in appeal before us.
33. The Ld. D.R. for the Revenue relied on the findings of the Assessing Officer, whereas Ld. Counsel for the assessee relied on the findings of the Ld.CIT(A).
34. We have heard both the parties. We note that the Assessing Officer while assuming the unaccounted receipts, the Assessing Officer has not specified as to how the contents of the seized page reflects unaccounted receipts. Therefore we are inclined to confirm the findings of the Ld. CIT(A) and therefore dismiss Ground No. 5 raised by the Revenue.
35. In the result, Ground No. 5 raised by the Revenue is dismissed.
36. In the combined result, the appeal filed by the Assessee in ITA No. 247/RJT/2022 is partly allowed, whereas appeal filed by the Revenue in ITA No. 250/RJT/2022 is dismissed.
Order pronounced in the Open Court on 17- 09 - 2024
Sd/- Sd/- SS S/-S
(DR. ARJUN LAL SAINI) (DINESH MOHAN SINHA)
ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER
RAJKOT;
Dated 17 / 09/2024
आदे श क त ल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
ITA Nos. 247&250/Rjt/2022
A.Ys. 2020-21
- 15 -
3. संब(ं धत आयकर आय*
ु त / Concerned CIT
4. आयकर आय*
ु त(अपील) / The CIT(E)-Ahmedabad
5. .वभागीय 1त1न(ध, आयकर अपील!य अ(धकरण,राजोकट/DR,ITAT, Rajkot
6. गाड? फाईल / Guard file.
आदे शानुसार/BY ORDER,
स या.पत 1त //True Copy////
उप/सहायक पंजीकार (Dy./Asstt.Registrar)
आयकर अपील"य अ#धकरण,राजोकट / ITAT, Rajkot