Patel Ambalal Laxmandas Ni Co., Ahmedabad V. The ACIT, Central CIrcle-2(3), Ahmedabad

ITA 1016/AHD/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 4575 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 13-06-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V.K. SINGH
• Keywords: Reopening of assessment; Unexplained cash credit; Invalid notice; Loose papers; Accommodation entries; Non compliance; Competent authority; Reason to believe; Reassessment proceedings
• Section: 131; 68; 145; 148; 132; 2; 143(3); 142(1); 133A; 274; 143(2); 271B; 44AB; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH Before: Ms. Annapurna Gupta, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member Patel Ambalal Laxmandas Ni Co. 297, Sahjanand Market, 1 st Floor, Pankor Naka, Ratanpole, Ahmedabad- 380001 PAN No: AAHPF1818J (Appellant) Vs The Asst.CIT, Central Circle-2(3), Ahmedabad (Respondent) Appellant by : Shri Suresh Gandhi, A.R. Respondent by : Shri V.K. Singh, Sr.D.R. Date of hearing : 13-06-2022 Date of pronouncement : 22-07-2022 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- These three appeals have been filed by the Assessee against the separate orders dated 05.04.2019, 05.04.2019 & 20.05.2019 passed by the Commissioner of Income Tax (Appeals)-12, Ahmedabad, as against the Reassessment orders passed under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Years (A.Ys) 2009-10, 2010-11 & 2011-12 respectively. ITA Nos. 1014, 1016 & 1018/Ahd/2019 Assessment Years 2009-10 to 2011-12 I.T.A No. 1014, 1016 & 1018/Ahd/2019 A.Y. 2009-10 to 2011-12 Page No Patel Ambalal Laxmandas Ni Co. vs. ACIT 2 2. The brief facts of the case is that the assessee is partnership firm engaged in the business of “Angadia”. (Angadia is a word from Hindi language which means Courier in Hindi. Angadia is a Hindi word that is also used for those designates, who act as Hawaladars, in India. Angadias are the people who act as a parallel banking system, in this country (source : Google). For the Assessment Year 20009-10, the assessee filed its Return of income on 22.06.2009 declaring an income of Rs. 1,47,350/-. On 02.11.2015 information was received from ITO (Inv.) Unit-1, Ahmedabad that a person carrying huge amount of cash and valuables was intercepted by Railway Police. On preliminary enquiry by the RPF team, the person named Shri Nashabhai Laxmanbhai Dabhi could not satisfactorily explain the contents found in three bags. On further enquiry, the RPF team found that the bags contained Indian Currency wroth Rs. 2.50 Crores (approx.). This person had arrived from Delhi by Rajdhani Express , coach no. B-8 at Kalupur Railway Station, Ahmedabad. 2.1. On receiving the above information and facts from the RPF, summons were issued u/s. 131 (1A) of the Act to the above said Shri Nashabhai L. Dabhi. In his statement on oath recorded u/s. 131 dated 02.11.2015 Shri Nashabhai Dabhi stated that he is an employee of partnership firm at Ahmedabad, M/s. Patel Ambalal Laxmandas Ni Co. and the cash of Rs. 2,00,00,000/- was claimed to be belonging to Shri Patel Natvarlal Laxmandas and the part of the cash of Rs. 40,50,000/- was claimed to be belonging to the assessee firm. I.T.A No. 1014, 1016 & 1018/Ahd/2019 A.Y. 2009-10 to 2011-12 Page No Patel Ambalal Laxmandas Ni Co. vs. ACIT 3 2.2. It is thereafter a survey u/s. 133A of the Act was conducted at the business premises of the assessee firm on 02/11/2015. During the survey proceedings, several documents, note books/loose papers files/ booking receipt books etc. were found and impounded as per Annexure A-1 to A-32. In view of the survey and incriminating materials found, the case of the assessee firm were reopened u/s. 147 of the act by issuing Notice u/s. 148 dated 29.03.2016 for the Assessment Years 2009-10 to 2011-12. In response to notice, the assessee firm vide letter dated 28.07.2016 requested the A.O. to treat the original return of income for the Assessment Year 2009-10 filed on 22/06/2009 as return filed in response to the u/s. 148 notice. Thereafter the assessee requested the A.O. to provide the copy of reasons recorded for initiating the reassessment proceedings. Copy of the same was provided to the assessee vide order sheet entry dated 28/07/2016 by the A.O. The assessee firm vide letter dated 17.08.2016 submitted to the A.O. that they have no objection for the re-assessment proceedings. Subsequently, the A.O. issued notice u/s. 143(2) 142(1) requiring the assessee firm to furnish various details and documents. On receiving various replies from the assessee from time to time, the A.O. completed the assessment u/s. 143(2) r.w.s. 147 on 2.12.2016 determining the total income of the assessee at Rs. 38,20,160/- after making the addition of Rs. 36,72,913/- on the basis of the documents/registers impounded as Annexure-5 as against the returned income of Rs. 1,47,250/-. Relevant portion of the Assessment order reads as follows: I.T.A No. 1014, 1016 & 1018/Ahd/2019 A.Y. 2009-10 to 2011-12 Page No Patel Ambalal Laxmandas Ni Co. vs. ACIT 4 3.18.1 In this regard, the assessee in its submission stated that impounded Annexure A/5 was maintained by the office staff for their persona! Information and control purpose. It was also stated that impounded Annexure A/5 is not a complete set of the books of accounts. It is neither the cash book nor the ledger but a rough noting made in the course of business of Angadia containing details of advance given to Staff. But this contention was found incorrect as the impounded Annexure A/5 contained very specific and vital information of collections/receipts of Angadia business month wise for the year under consideration. The entries mentioned were very specific and were related to the Angadia Business of the assessee. For example, amounts of cash deposits mentioned in page 11 were found deposited in the bank account of the assessee with Bank of India. The entry of deposit of Rs.9,00,000/- with Income Tax Department, Jaipur mentioned at Page 1 and Page 6 of the impounded Annexure A/5 (which was clearly admitted as seized by the Income Tax Department, Jaipur in submission dated 23.11.2016 of the assessee) is not an information to be maintained by the office staff for the personal information and control. It proves that impounded Annexure A/5 was one of the most important books of accounts of the assessee that contained summary of all credited amount in the form of receipts/collection for the whole year. 3.18.2 Further, the assessee had also admitted in Para (iii) of its submission dated 18.11.2016 that entire khep of each month as recorded in impounded Annexure A-5, is not the income of the firm but it is gross collection /receipt. Therefore, the assessee itself admitted it as credit entry in the books of its accounts. 3.18.3 Moreover, the definition of the books is duly elaborated in section 2(12A) of the Income-tax Act which is reproduced below also for the sake of clarity: (12 A) "books or books of account" includes ledgers, day-books, cash books, account-books and other books, whether kept in the written form or as print-outs of data stored in a floppy, disc, tape or any other form of electro-magnetic data storage device; The Hon'ble Supreme Court in the case of CBI vs. V. C. Shukla (1998) 3 SSC 410, 433, 434 has categorically defined "collection of sheets fastened and bound together so as to form material whole as book'. I.T.A No. 1014, 1016 & 1018/Ahd/2019 A.Y. 2009-10 to 2011-12 Page No Patel Ambalal Laxmandas Ni Co. vs. ACIT 5 Further, spiral note books and spiral pads are regarded as books within the meaning of section 34 of the Evidence Act. 3.18.4 In view of the above, the contention of the assessee is found incorrect and impounded annexure A/5 beyond doubt is one of the vital books of accounts for the A. Y. 2009-10 where receipts of Rs 5029702 was found credited. This fact was duly admitted by the assessee in its submission dated 18.11,2016 (Para Hi). Therefore provisions of section 68 of the Act are clearly applicable to the case of the assessee. Hence, suppressed receipts of Rs 36,52,236/-(receipts credited in the impounded books of accounts of accounts (Annexure A/5) of Rs. 5029702 less receipts credited in per Profit & Loss account of Rs. 1377466) is treated as unexplained cash credit i.e. unexplained income u/s 68 of the Act and is to be added to total income of the assessee. The assessee firm is also not eligible for claim of any remuneration to partners on the above additional income of Rs.36,52,236/- u/s 40b (v) of the Act as the assessee had only paid a sum of Rs.1,85,666/- as remuneration to the partners as evident from the computation of total income filed with the return of income. Penalty notice u/s. 274 r.w.s. 271(1) (c) is being issued separately for concealment of income. Penalty notice u/s. 271 A(1) (c) r.w.s. 274 is also being issued separately to Shri Natwarlal Laxmandas Patel, the partner of the firm for non compliance of summons. As evident from the impounded Annexure A/5, the total collection/ receipt of the assessee was Rs.50,29,702/-, the assessee was compulsorily required to get its account audited u/s 44AB of the Act. Since, the assessee did not comply with the provisions of section 44AB despite it's receipts / collection was above the prescribed limit of Rs.40,00,000/-, penalty proceedings u/s. 271B r.w.s. 274 is also initiated separately. 3. Aggrieved against the re-assessment order, the assessee preferred further appeal before the ld. CIT(A)-12, Ahmedabad. Though the assessee raised its Grounds of Appeal only on the addition made by the Assessing Officer of Rs. 36,72,913/-. During the appellate proceedings, the assessee filed Additional Grounds challenging the reopening of assessment is bad in law on the I.T.A No. 1014, 1016 & 1018/Ahd/2019 A.Y. 2009-10 to 2011-12 Page No Patel Ambalal Laxmandas Ni Co. vs. ACIT 6 ground that the satisfaction of the appropriate authority as required u/s. 151 (1) of the Act was not obtained properly. The CIT(A) has merely stated “Yes”, I am satisfied that it is a fit case” and signed the Performa sent by the Assessing Officer for reopening the assessment. Thus, the assessee challenged the PCIT being the sanctioning authority has not applied his mind and expressed his satisfaction for reopening of the assessment. Therefore, the entire re-assessment is bad in law. The Ld. CIT(A) held that the reason for belief that income has escaped assessment has been recorded by the assessing officer in reasonable detail and with reasonable clarity with the materials and evidences in hand and even the extent of income having escaped assessment has been quantified. It was possible because of the survey conducted in the case of the assessee and incriminating materials discovered, therefore the Assessing Officer has recorded reason which is self containing documents with evidences and the amount of the escaped income. The PCIT being the sanction/approval authority be not required to be recorded his satisfaction in detail. It cannot be anybody’s case as to how the satisfaction/approval shall be worded by the competent authority and at the same time, it will be also not tenable that merely because of the volume written by the competent authority will make the satisfaction/approval good in the eyes of law. On merits of the case the ld. CIT(A) held that the Assessing Officer is not correct in allowing estimated expenditure. In order to arrive at the net taxable income, a reasonable percentage needs to be applied on such net unaccounted turnover and it appears reasonable to estimate the net (taxable) income @ I.T.A No. 1014, 1016 & 1018/Ahd/2019 A.Y. 2009-10 to 2011-12 Page No Patel Ambalal Laxmandas Ni Co. vs. ACIT 7 20% which comes to Rs. 7,30,447/- and thereby the addition made by the A.O. of Rs. 36,72,913/- is restricted to Rs. 7,30,447/-. Thus, the ld. CIT(A) granted relief of Rs. 29,42,466/- and thereby partly allowed. As there is no infirmity in the reasons recorded for reopening assessment u/s. 147 and the sanction accorded u/s. 151 of the Act. The additional grounds raised by the assessee was rejected by the ld. CIT(A). 4. Aggrieved against the same, the assessee is before us raising the following grounds: For A.Y. 2009-10: Learned CIT(A) has erred in law and on facts while upholding that the Notice issued u/s. 148 of the Act as valid and legal. In view of the fact that the impugned notice issued u/s. 148 of the Act is without proper satisfaction of the appropriate authority as required u/s. 151(1) of the Act, the notice is illegal and invalid and the re-assessment framed pursuant to such illegal and invalid notice is also bad in law and thus requires to be quashed. Learned CIT(A) has erred in law and on facts while estimating the net taxable income of Rs. 7,30,447/- being 20% of the unaccounted turnover. In view of the facts of the case and legal position, the addition sustained by the Ld. CIT(A) required to be deleted For A.Y. 2010-11: Learned CIT(A) has erred in law and on facts while upholding that the Notice issued u/s. 148 of the Act as valid and legal. In view of the fact that the impugned notice issued u/s. 148 of the Act is without proper satisfaction of the appropriate authority as required u/s. 151(1) of the Act, the notice is illegal and invalid and the re-assessment framed pursuant to such illegal and invalid notice is also bad in law and thus requires to be quashed. I.T.A No. 1014, 1016 & 1018/Ahd/2019 A.Y. 2009-10 to 2011-12 Page No Patel Ambalal Laxmandas Ni Co. vs. ACIT 8 Learned CIT(A) has erred in law and on facts while estimating the net taxable income of Rs. 9,87,,921/- being 20% of the unaccounted turnover. In view of the facts of the case and legal position, the addition sustained by the Ld. CIT(A) required to be deleted For A.Y. 2011-12: Learned CIT(A) has erred in law and on facts while upholding that the Notice issued u/s. 148 of the Act as valid and legal. In view of the fact that the impugned notice issued u/s. 148 of the Act is without proper satisfaction of the appropriate authority as required u/s. 151(1) of the Act, the notice is illegal and invalid and the re-assessment framed pursuant to such illegal and invalid notice is also bad in law and thus requires to be quashed. Learned CIT(A) has erred in law and on facts while estimating the net taxable income of Rs. 10,51,353/- being 20% of the unaccounted turnover. In view of the facts of the case and legal position, the addition sustained by the Ld. CIT(A) required to be deleted 5. The ld. Counsel Shri Suresh Gandhi appearing for the assessee reiterated the same arguments made before the ld. CIT(A). The ld. Counsel taken us to pages 126 to 128 of the Paper Book, wherein Form for recording the reasons for initiating proceedings u/s. 148 and for obtaining prior approval by the PCIT was there. He draw our attentions Clause 10 & 11 of the Performa which reads as follows: Clause:-10. Reasons for the belief that income has given below escaped assessment 1. In this connection, on 02.11.2015 information was received to ITO (Inv.) Unit-l, Ahmedabad that a person carrying huge amount of cash and valuables was intercepted by railway police. On preliminary enquiry by the RPF team, the person named Shri Nashabhai Laxmanbhai Dabhi could not satisfactorily explain the contents found in three bags. On further enquiry, the team found that the bags contained Indian Currency worth Rs.2.50 Crores (approx.). This person had arrived from Delhi by Rajdhani Express, coach no. B-8. 2. After receiving the information and facts from the R.P.F., summons were issued u/s 131 (1A) of the I.T. Act, 1961 to Shri Nashabhai L. Dabhi. In his statement on oath u/s 131 dated 02.11.2015, Shri Nashabhai Laxmanbhai Dabhi stated that he is an employee of firm M/s Patel Ambalal I.T.A No. 1014, 1016 & 1018/Ahd/2019 A.Y. 2009-10 to 2011-12 Page No Patel Ambalal Laxmandas Ni Co. vs. ACIT 9 Laxmandas (Juna Anagadia), 297, Sahjanand .Market, 1st Floor, Pankore Naka, Ratanpole, Ahmedabad. 3. for verifying the facts, a survey u/s 133A of the Aot was conducted at the premises of M/s Patel Ambalal Laxmandas & Co. (Juna Angadia), 297, 1st Floor, Sahjanand Complex, Ratanpole, Ahmedabad on 02.11.2015. During the survey proceedings, large amount of documents were impounded as per Annexure A/1 to A/32, which includes large number of incrementing papers related to F.Y. 2008-09''relevant to A.Y. 2009-10 mainly in Annexure A/5. 4. During further enquiry, the assessee had given his written explanation on impounded material on 15.02.2015. As per the assessee's submission, Annexure A/5 is containing the details of salary and advances given to staff and recovery thereof related to F.Y. 2008-09. Looking into the contents of these pages, the reply of the assessee was not found satisfactory. 5. Analyzing the pages of Annexure A/5 & return of income filled by the assessee, it was found that the collection for F.Y. 2008-09 relevant to A.Y. 2009-10 has shown in return of income of Rs. 13,77,4667- whereas the receipt/collection as per pages of Annexure A/5 comes to Rs. 50,29,702/-(details tabulated- below). By this way, the assessee had shown less receipt of Rs. 36,52,236A in his RO! for the F.Y. 2008-09 relevant to A.Y. 2009-10. Thus the amount of Rs.36,52,236/- has escaped assessment. 6. Further, vide letter No. ITO(lnv.)/Unit-l/Angadiya/2015-16 dated 13.01.2016, the assessee was asked for clarification. But, no clarification was provided by the assessee in response to letter dated 13.01.2016. The details of receipts / sales as per Annexure A/5 are as under: Month Page Mo. of A’bad Collin Delhi Jaipur Total Total April, 08 3&7 362093 81873 65025 508991 508991 May, 08 3&7 335660 147250 45903 528813 528813 June, 08 4&7 280369 65939 54351 400659 400659 July, 08 4&7 215889 37157 115079 368125 368125 Aug, 08 4&7 148889 40004 45334 234227 234227 Sept, 08 5&8 241742 121740 64478 427960 427960 Oct. 08 5&8 484062 132362 27642 644066 644066 Nov. 08 9&13 119077 75738 42620 237435 237435 Dec, 08 9&13 275123 156585 88765 520473 520473 Jan, 09 9&13 255671 100643 60627 416941 416941 Feb, 09 9 0 357658 March, 09 9&14 156284 197123 30947 384354 384354 Total 5029702 I.T.A No. 1014, 1016 & 1018/Ahd/2019 A.Y. 2009-10 to 2011-12 Page No Patel Ambalal Laxmandas Ni Co. vs. ACIT 10 7. Further, unexplained entry is appearing on page no. 6 of Annexure A/5 of Rs. 4,06,000/- against which date 25.10.2008 is appearing. On going through the page no. 7 & 8 of Annexure A/5', it appears that this is cumulative figures of various months; the details of page 7 & 8 are as under: Amt. Remarks/Particulars 50,00,000 Balance credited in Mahalaxmi 4,60,813 January, 2008 5,96,825 February, 2008 2,42,809 March, 2008 63,00,447 Credited in Mahalaxmi 5,08,991 April, 2008 5,28,813 May, 2008 4,00,659 June, 2008 77,39,910 Credited in Mahalaxmi 3,68,125 July, 2008 2,34,227 August, 2008 83,41,262 Credited in Mahalaxmi 4,27,960 September, 2008 6,44,066 October,2008 9413288 -7,288 FORAH CROSSING KHEP BILL 94,06,000 Total Khep 8. Thus the amount of Rs. 94,06,000/- has escaped assessment within the meaning of proviso to explanation 2 (c) to section 147 of the Income-tax Act, 1961. 9. In view of the above, I have reason to believe that income of the assesses to extent of Rs. 1,30,58,236/- (3652236 + 9406000) has escaped assessment for the AY 2009-10 within the meaning of section, 147 of the Act. Hence, for reassessing the escaped income, approval u/s 147 of the Act rws 151 is solicited. Dt: 28.03.2016 (B.P. SRIVASTAVA) DCIT, CC-2(2), Ahd. Clause 11: Whether the Pr.CIT is satisfied on the reason recorded by the A.O. that it is a fit case for the issue of a notice u/s. 148. Dated: 29.03.2016 Yes, I am satisfied that it is a fait case. (M.K. DUBEY) PR. COMMISSIONER OF INCOME-TAX (CENTRAL), AHMEDABAD I.T.A No. 1014, 1016 & 1018/Ahd/2019 A.Y. 2009-10 to 2011-12 Page No Patel Ambalal Laxmandas Ni Co. vs. ACIT 11 5.1. At serial no. 10 of the above form is the reasons recorded by the assessing officer which is running to two pages, where as serial no. 11 is the satisfaction of the PCIT namely whether the Pr.CIT is satisfied on the reason recorded by the A.O. that it is a fit case for the issue of a notice u/s. 148. In reply thereto, the PCIT has made his remarks in Hand writing “Yes, I am satisfied that it is a fit case” and signed it on 29.03.2016. 5.2. Ld. Counsel further submitted that the Co-ordinate Bench decision in ITA No. 2677 2871/Ahd/2013 in the case of Shri Jaysukhbhai Nanubhai Dudhat & Ors., wherein the sanctioning authority namely Additional Commissioner has neither written “Yes” nor “No”, while granting sanctioning to the assessing officer to reopen the assessment. Therefore the Co-ordinate Bench following the jurisdictional High Curt in the case of Adani Ports and Special Economic Zone Ltd. vs. DCIT, 35 taxmann.com 338 (Guj.) and Hon’ble Madhya Pradesh High Court in the case of CIT vs. Goyanka Lime & Chemical Ltd., 56 taxmann.com 390 quashed the reassessment proceedings as not sustainable. The ld. Counsel also relied upon the Hon’ble Delhi High Court Judgment in ITA No. 335 of 2015 in the case of Pr.CIT vs. N.C. Cables Ltd. and Delhi Bench Tribunal decision in ITA Nos. 2165/Del/2017 in the case of M/s. Radhu Developers (P.) Ltd. vs. ITO following the above rulings. The ld. Counsel thus submitted sanctioning given by the PCIT by simply recording “Yes, I am satisfied that it is a fit case” is not a proper sanctioning and without application of mind and therefore liable to be quashed. On merits of the case, the ld. A.R. also I.T.A No. 1014, 1016 & 1018/Ahd/2019 A.Y. 2009-10 to 2011-12 Page No Patel Ambalal Laxmandas Ni Co. vs. ACIT 12 submitted the ld. CIT(A) erred in estimating 20% of the net taxable income of the unaccounted turnover, wherein the assessee has shown net profit as per the books of account of 10% for the assessment year 2009-10 and 3 to 4% in the Assessment year 2010-11 and 2011-12. Thus the estimation of 20% made by the ld. CIT(A) is bad in law. 6. Per contra, the ld. D.R. Shri V. K. Singh appearing for the Revenue submitted the basis for reopening of assessments, is the assessee is employee Shri Nashabhai Laxmanbhai Dabhi who was caught by Railway Police Force on 2.11.2015 while carrying in bags Indian Currency worth Rs. 2.50 crores in Kalupur Railway Station, Ahmedabad. On enquiry with this assessee’s employee, it came to know about the Angadia (Hawala) business carried on by the assessee’s firm. Therefore a survey action u/s. 133A of the Act was conducted at the business premises on 02.11.2015. During the survey proceedings, large amount of documents were impounded as per annexure A-1 to A-32 which includes large number of incrementing papers related to three Assessment Years i.e. 2009-10 to 2011-12. After detailed enquiry by the Assessing Officer, the reassessment have been completed. In fact, the assessee himself vide letter dated 17.08.2016 stated that they have no objection for the reassessment proceedings, which recorded by the Assessing Officer at page no. 4 of the assessment order. It is thereafter the A.O. issued notices u/s. 143(2) and 142(1) to proceed with the reassessment. The assessee has given his written letter dated 17.08.2016 that they have no objection for the reassessment I.T.A No. 1014, 1016 & 1018/Ahd/2019 A.Y. 2009-10 to 2011-12 Page No Patel Ambalal Laxmandas Ni Co. vs. ACIT 13 proceeding. However during the appellate proceedings, it is not proper in raising Additional Grounds on this count, the satisfaction recorded by the PCIT u/s. 151 is not proper. In fact the Form for obtaining the Sanction from PCIT, wherein the assessing officer has given a detailed reasons recorded for reopening the assessment. 6.1. Ongoing through the details reasons with evidences and amount of escaped income mentioned by the assessing officer, the PCIT is satisfied with the detailed reasons. Therefore he has written in hand writing “Yes I am satisfied, that it is a fit case” and approved the reopening of assessment on 29.03.2016. Thus, there is no infirmity in the sanction granted by the PCIT for reopening of the assessment, after going through the facts of the present case and detailed reasons recorded by the Assessing Officer. The case laws relied by the assessee are not clearly distinguishable to the facts of the present case and therefore the findings of the ld. CIT(A) does not require any interference. 6.2. The ld. D.R. further submitted that as far as merits of the case is concerned, the ld. CIT(A) has given a clear cut reasoning for disallowance of estimated expenditure is not correct method, whereas a reasonable percentage to be disallowed and comparing with the net profits as per the books of account. The Ld. (CIT(A) justify in estimating 20% disallowance is proper in law. In support of the same, he relied upon by the jurisdictional High Court in the case of CIT vs. CIT vs. Samay Tiles Ltd. reported in [2014] 50 taxmann.com 332 (Guj.) and in the case of CIT vs. President I.T.A No. 1014, 1016 & 1018/Ahd/2019 A.Y. 2009-10 to 2011-12 Page No Patel Ambalal Laxmandas Ni Co. vs. ACIT 14 Industries Ltd. reported in 258 ITR 654. Thus, the addition made by the A.O. is restricted to 20% and balance relief was granted to the assessee. This finding of the ld. CIT(A) does not require any interference and therefore pleaded that the appeal field by the assessee are liable to be dismissed. 7. We have heard both sides and perused the materials available on record including the Paper Books filed by the assessee. The root cause of reopening of assessment is the assessee employee who was caught by Railway Police Force on 2.11.2015 while carrying in 3 bags Indian Currency worth Rs. 2.50 crores and not explained satisfactorily above the source of the cash seized. Pursuant to this, a survey action u/s. 133A of the Act was carried out in the business premises of the assessee wherein large amount of documents were impounded by the department by annexure A/1 to A/32. After detailed reasoning and seized material and amount of escaped income, the assessing officer recorded the reasons for reopening the assessment and obtained sanctioning u/s. 151 from the PCIT which is reproduced in Para 5 hereinabove. A perusal of the same, makes it is very clear the PCIT sanctioning namely “Yes, I am satisfied, that it is a fit case” cannot be construed as non- application of mind by the PCIT while according sanctioning u/s. 151 of the Act. At serial no. 10 of the Form, clearly gives the detailed reasons recorded by the assessing officer with documentary evidences seized during the course of survey, the amount of income escaped for assessment u/s. 147 read with Explanation 2(c) of the Act. Moreover, in this Approval Form, I.T.A No. 1014, 1016 & 1018/Ahd/2019 A.Y. 2009-10 to 2011-12 Page No Patel Ambalal Laxmandas Ni Co. vs. ACIT 15 personal hand writing by the PCIT “Yes, I am satisfied, that it is a fit case” and signed it on 29.03.2016. Thus the PCIT being the Senior Officer of the Department cannot be expected while granting sanctioning of reopening of assessment, when he found that the A.O. has recorded detailed reasons with evidences and amount of income escaped from taxation. In such situation, it cannot be accepted the PCIT while sanctioning the reopening of Assessment to make more notings on recordings. Thus, the plea of the ld. Counsel that the PCIT has not applied his mind is not correct. More particularly, in the facts and circumstances of the case. We do not find any infirmity in the sanctioning accorded by the PCIT. 7.1. The case law relied upon by the Co-ordinate Bench in the case of Shri Jaysukhbhai Nanubhai Dudhat & Ors. Cited (supra) is clearly distinguishable with the facts of the present case, wherein the Additional Commissioner of Income Tax being the sanctioning authority in that case has not recorded his reasons either ‘Yes’ or ‘No’ while approving the reopening. Therefore, the ratio of laid down in that decision will not be applicable. Furthermore in the present case, the assessee has filed his original return of income, admited an income of Rs. 1,47,250/- only. In response to the u/s. 148 notice, the assessee stated to treat the original return in compliance to u/s. 148 notice and no additional income is being offered in response to the 148 notice. The A.O. brought on record the seized material wherein to the extent of Rs. 50,29,702/- and 94,06,000/- in all totaling Rs. 1,30,50,236/- is the escaped assessment for the relevant Assessment Year 2009-10. I.T.A No. 1014, 1016 & 1018/Ahd/2019 A.Y. 2009-10 to 2011-12 Page No Patel Ambalal Laxmandas Ni Co. vs. ACIT 16 Considering the reasons recorded by the Assessing Officer, the PCIT was satisfied with the detailed reasons recorded and therefore given his approval as “Yes, I am satisfied, that it is a fit case”, we do not find any infirmity and the sanctioning granted u/s. 151(1) of the Act, to bring to tax the escaped income. 7.2. In this connection, the Jurisdictional High Court in the case of Cart Processor Ltd. vs. DCIT reported in [2018] 94 taxmann.com 429 wherein it was held that where A.O. on basis of information supplied by Investigation Wing of department, initiated re- assessment proceedings on ground that a company provided accommodation entries to assessee in the form of share capital and premium, there being a prima facie case to believe that income chargeable to tax has escaped assessment, validity of the reassessment proceedings was to be upheld. 7.3. Further the ld. CIT(A) in his impugned order at page No. 23 held as follows: 5.1 .......... 5.2 From rom the critical perusal of the recording of the reason for initiating proceedings u/s 148 and for obtaining prior approval of the Commissioner of Income Tax as provided by the AO, I find that the reason for belief that income has escaped assessment has been recorded by the AO in reasonable detail and with reasonable clarity with the materials and evidences in hand and even the extent of income having escaped assessment has been quantified. It was possible because of the survey conducted in the case of the appellant and incriminating materials discovered. In view of all these, it is sufficient that the Pr.CIT (Central) has gone through the facts of and the evidences in the case and the basis and the quality of the formation for reason to believe by the AO. If the AO's reasoning and basis thereof are good, why the sanctioning authority should record the I.T.A No. 1014, 1016 & 1018/Ahd/2019 A.Y. 2009-10 to 2011-12 Page No Patel Ambalal Laxmandas Ni Co. vs. ACIT 17 satisfaction in detail. It cannot be anybody's case as to how the satisfaction/approval shall be worded by the competent authority and at the same time it will be also not tenable that merely because of the volume written by the competent authority will make the satisfaction/approval good in the eyes of law. 5.3 I find no infirmity in the reason recorded for the purpose of notice u/s 148 and re-opening for assessment u/s 147 and in the sanction u/s 15.1. The additional ground challenging the validity of notice u/s 148 and the proceedings u/s 147 is rejected. 7.4. Thus, we have no hesitation in confirming the order of the ld. CIT(A) and upholding that the proper sanction was accorded by the PCIT after considering the detailed reasons recorded by the assessing officer and establishing an escaped income chargeable to tax in the above case. Therefore, ground no. 1 raised by the Assessee is hereby rejected. 7.5. Ground No. 2 namely on merits of the case, CIT(A) held as follows: 7. However, coming to the amount of addition worked out by the AO, it has been challenged during the course of appeal hearing by the appellant that even otherwise the addition made by the AO was not justified. The said contention is examined in the light of observation of the AO in the assessment order and it is seen that on page No. 7 of the assessment order an amount of Rs.50,29,702/- has been considered as total collection/receipts. The AO considered the said amount for the purpose of addition and allowed the payment of salary and remuneration to partners as per Annexure A/5 (Rs.6,88,291/-) and estimated expenses for rent, parcel expenses, office expenses, telephone expenses and other miscellaneous expenses to the extent of Rs.4,50,000/-and allowed the expenses totaling to Rs. 12,09,541/- (which includes Rs.71,250/- as ticket expenses for December 2008 as per Page 8 of Annexure A/5) and determined net income at Rs.38,20,161/-. Out of this, income as per Profit 85 Loss Account and return of income filed of Rs.1,47,248/- has been allowed and the net amount of. I.T.A No. 1014, 1016 & 1018/Ahd/2019 A.Y. 2009-10 to 2011-12 Page No Patel Ambalal Laxmandas Ni Co. vs. ACIT 18 Rs.36,72,913/- is added u/s. 145(3). When the estimated expenses of Rs.4,50,000/- have been allowed as deduction by the AO, it becomes absolutely clear that the said diary does not contain all/entire expenditure required to be incurred in the normal course of the business and therefore, I am inclined to partly accept the contention of the appellant that the diary contains the gross receipt/collection, which is in the nature of turnover. It is seen that for the previous year 2008-09, in the books of account of the appellant, an amount of Rs. 13,77,466/- has been shown as the gross income and therefore, from the total receipt/collection of Rs.50,29,702/-, an amount of Rs.13,77,466/- is required to be allowed to be deducted to arrive at unaccounted turnover/collection of Rs.36,52,336/-. In my considered view, in order to arrive at the net taxable income, a reasonable percentage needs to be applied on such net unaccounted turnover rather than allowing estimated expenditure and giving relief for the income as per the return of income, as done by the AO. It is seen by me that the net profit as per books of account is about 10% and the said net profit was found to be around 3 to 4% in the A.Y. 2010-11 and A.Y. 2011-12 and therefore, in order to meet the ends of justice, it appears reasonable to estimate the net (taxable) income at the rate of 20%, which comes to Rs.7,30,447/-. This approach is based on placing reliance on [2014] 50 taxmann.com 332 (Guj) in the case of CIT vs. Samay Tiles Ltd. and also 258 ITR 654 (Guj) in the case of CIT Vs. President Industries Ltd. Therefore, the addition made by the AO of Rs.36,72,913/- is restricted to Rs.7,30,447/- and the appellant gets the relief of Rs.29,42,466/- (Rs.36,72,913/- (-) Rs.7,30,447/-). 7.6. We find the jurisdictional High Court in the case of CIT vs. Samay Tiles Ltd. reported in [2014] 50 taxmann.com 332 (Guj.) held as follows. Section 145 of the Income-tax Act, 1961 - Method of accounting - Estimation of income (GP rate) - Assessment years 2005-06 and 2006-07 - Whether, where assessee had suppressed sales and had also suppressed expenses and Assessing Officer, had rejected books of account of assessee, estimation of gross profits for both years at 20 per cent by Tribunal as against 40 per cent made by Assessing Officer on unaccounted sales was justified as there was no perversity pointed out in approach adopted by Tribunal - Held, yes [Para 9] [In favour of assessee] I.T.A No. 1014, 1016 & 1018/Ahd/2019 A.Y. 2009-10 to 2011-12 Page No Patel Ambalal Laxmandas Ni Co. vs. ACIT 19 7.7. Thus, this finding of the ld. CIT(A) does not require any interference since against the net profit of 10% as per books of accounts admitted by the assessee. In the absence of proper records and rejection of books of accounts, the ld. CIT(A) has estimated 20% which does not require any interference. Therefore the order of the ld. CIT(A) on this count is also confirmed by us. Thus the ground raised by the assessee is rejected. 7.7. In the result, appeal filed by the Assessee is hereby dismissed. (In ITA No. 1016/AHD/2019 for Assessment Year 2010-11) 8. The reasons recorded by the Assessing Officer for Assessment Year 2010-11 which reads as follows: 1. On 02.11.2015 at about 11 AM, information was received from railway police protection force that they had intercepted a person named Shri Nashabhai Laxmanbhai Dabhi, carrying huge amount of cash and valuables at Platform no. 1. This person had arrived from Delhi by Rajdhani Express coach no. B-8. It was also informed that on preliminary enquiry by RPF team, Shri Nashabhai Laxmanbhai Dabhi could not satisfactorily explain the contents of these three bags which contained Indian Currency worth Rs.2.50 Crores (approx.). Two persons who came to receive Shri Nashabhai Laxmanbhai Dabhi namely Shri Arvindbhai Kantibhai Patel and Shri Alpeshkumar Navinchandra Patel were also quizzed by the RPF team. 2. Accordingly, search u/s 132 of the Act was conducted on-person on Shri Nashabhai Laxmanbhai Dabhi on 02.11.2015 and from his possession cash worth Rs.2,60,67,600/- and Jewellery worth Rs. 15,97,236/- was found out of which cash worth Rs.2,60,50,000/- and Jewellery worth Rs. 15,97,236/- was seized. During the statement, Shri Nashabhai Laxmanbhai Dabhi admitted that he is working as an employee of the firm name M/s Patel Ambaial Laxmandas ni Co. and cash was given to him by Shri Rakeshbhai of Delhi Branch and the cash belongs to the firm. It was also stated that jewellery was also given to him by Shri I.T.A No. 1014, 1016 & 1018/Ahd/2019 A.Y. 2009-10 to 2011-12 Page No Patel Ambalal Laxmandas Ni Co. vs. ACIT 20 Rakeshbhai of Delhi Branch to hand over the same to Shri Natwarlal Laxmandas Patel, the partner of the firm at Ahmedabad office of M/s Patel Ambaial Laxmandas ni Co. During 'the statement, Shri Nashabhai Laxmanbhai Dabhi failed to prove the ownership of cash and jewellery with him and stated that he was totally unaware of about how and where such things were accounted for. Some loose papers were also found from his possession which were seized as Annexure A-1 & A-2: 3. To ascertain the ownership of cash, Jewellery and loose documents found from the Shri Nashabhai L. Dabhi, a survey u/s 133A of the Act was conducted in the case of M/s Patel Ambalal Laxmandas ni Co. on 02.11.2015. During the course of survey proceedings, no partner was available at the premises of the firm and no evidence of ownership of cash, jewellery and loose documents were found by the survey team. The cash book found was also not found updated. Consequently, statement of Shri Nitinbhai Babubhai Patel an employee of the firm was recorded u/s 133A of the Act on 02.11.2015 during the survey proceedings and various papers, diaries etc were impounded as per Annexure A/1 to A/32. 4. During post survey proceedings, the managing partner of the firm M/s Patel Ambalal Laxmandas ni Co., Shri Natvarlal Laxmandas Patel was confronted on the contents of the various Annexure specially Annexure A/2, A/5, A/30 & A/31 which were impounded. In response, the partner of the firm filed only a general explanation that the transactions are recorded but did not submit any regular books of accounts to prove that contents of the various annexure were accounted for by the assessee firm. Despite been afforded multiple opportunities, the assessee firm did not submit any books of accounts except cash book of F.Y 2015- 16. Finally, thorough analysis of impounded materials year-wise was made with the return of income and it is found that as per annexure A/5, the assessee firm had a receipt of Rs S754765/- during the year whereas receipt of Rs 1497996/- was only disclosed in the return of income. Thus, the assessee firm has made concealment of income of Rs 5256769A- for the A.Y.2010-11' Thus, income of Rs. 52567G9/- has escaped assessment for the A.Y.2010-11. 5 Therefore, I have reason to believe that income of the assessee of Rs 525G769/- has escaped assessment for A.Y. 2010-11 and it is a fit case for the re-opening of the assessment u/s. 147 of the Income Tax Act. Accordingly, notice u/s. 148 of the Income Tax Act is issued. I.T.A No. 1014, 1016 & 1018/Ahd/2019 A.Y. 2009-10 to 2011-12 Page No Patel Ambalal Laxmandas Ni Co. vs. ACIT 21 (In ITA No. 1018/AHD/2019 for Assessment Year 2011-12) 9. The reasons recorded by the Assessing Officer for Assessment Year 2011-12 which reads as follows: 1. On 02.11.2015 at about 11 AM, information was received from railway police protection force that they had intercepted a person named Shri Nashabhai Laxmanbhai Dabhi, carrying huge amount of cash and valuables at Platform no. 1. This person had arrived from Delhi by Rajdhani Express coach no. B-8. It was also informed that on preliminary enquiry by RPF team, Shri Nashabhai Laxmanbhai Da'bhi could not satisfactorily explain the contents of these three bags which contained Indian Currency worth Rs.2.50 Crores (approx.). Two persons who came to receive Shri Nashabhai Laxmanbhai Dabhi namely Shri Arvindbhai Kantibhai Patel and Shri Alpeshkumar Navinchandra Patel were also quizzed by the RPF team. 2. Accordingly, search u/s 132 of the Act was conducted on-person on Shri Nashabhai Laxmanbhai Dabhi on 02.11.2015 and from his possession cash worth Rs.2,60,67,600/r and Jewellery worth Rs. 15,97,2367- was found out of which cash worth Rs.2,60,50,000/- and Jewellery worth Rs. 15,97,2367- was seized. During the statement, Shri Nashabhai Laxmanbhai Dabhi admitted that he is working as an employee of the firm name M/s Patel Ambalal Laxmandas ni Co. and cash was given to hirji by Shri Rakeshbhai of Delhi Branch and the cash belongs to the firm. It was also stated that jewellery was also given to him by Shri Rakeshbhai of Delhi Branch to hand over the same to Shri Natwarlal Laxmandas Patel, the partner of the firm at Ahmedabad office of M/s Patel Ambalal Laxmandas ni Co. During the statement, Shri Nashabhai Laxmanbhai Dabhi failed to prove the ownership of cash and jewellery with him and stated that he was totally unaware of about how and where such things were accounted for. Some loose papers were also found from his possession which were seized as Annexure A-1 & A-2. 3. To ascertain the ownership of cash, Jewellery and loose documents found from the Shri Nashabhai L. Dabhi, a survey u/s 133A of the Act was conducted in the case of M/s Patel Ambalal Laxmandas ni Co. on 02.11.2015. During the course of survey proceedings, no partner was available at the premises of the firm and no evidence of ownership of cash, jewellery and loose documents were found by the survey team. The cash book found was also not found updated. Consequently, I.T.A No. 1014, 1016 & 1018/Ahd/2019 A.Y. 2009-10 to 2011-12 Page No Patel Ambalal Laxmandas Ni Co. vs. ACIT 22 statement of Shri Nitinbhai Babubhai Patel an employee of the firm was recorded u/s 133A of the Act on 02.11.2015 during the survey proceedings and various papers, diaries etc were impounded as per Annexure A/1 to A/32. 4. During post survey proceedings, the managing partner of the firm M/s Patel Ambalal Laxmandas ni Co., Shri Natvarlal Laxmandas Patel was confronted on the contents of the various Annexure specially Annexure A/2, A/5, A/30 & A/31 which were impounded. In response, the partner of the firm filed only a general explanation that the transactions are recorded but did not submit any regular books of accounts to prove that contents of the various annexure were accounted for by the assesses firm. Despite been afforded multiple opportunities, the assessee firm did not submit any books of accounts except cash book of F.Y 2015- 16. Finally, thorough analysis of impounded materials year-wise was made with the return of income and it is found that as per annexure A/5, the assessee firm had a receipt of Rs 6632240/- during the year whereas receipt of Rs 1710635/- was only disclosed in the return of income. Thus, the assessee firm has*made concealment of income of Rs 4921605/- for the A.Y.2011-12. Thus, income of Rs. 4921605/- has escaped assessment for the A.Y.2011-12. 5. Therefore, I have reason to believe that income of the assessee of Rs 4921605/- has escaped assessment for A.Y. 2011-12 and it is a fit case for the re- opening of the assessment u/s. 147 of the Income Tax Act. Accordingly, notice u/s. 148 of the Income Tax Act is issued 9.1. The reasons recorded for the above Assessment Years i.e. 2010-11 & 2011-12 and Sanctioning given by the PCIT u/s. 151 of the Act are identical and the Grounds of Appeal raised by the assessee are also identical. This issue is already decided by us for the Assessment Year 2008-09 in ITA No. 1014/Ahd/2019 by this common order. For the detailed findings given therein, the issue being identical for these two Assessment Years 2010-11 and 2011- 12, we dismiss the appeals filed by the assessee. The next grounds namely estimation net taxable income at 20%, we hereby confirm the order of Ld. CIT(A) on this issue, in the absence of proper I.T.A No. 1014, 1016 & 1018/Ahd/2019 A.Y. 2009-10 to 2011-12 Page No Patel Ambalal Laxmandas Ni Co. vs. ACIT 23 records maintained by the assessee and rejection of books by the A.O. Therefore these grounds are rejected and the appeals are dismissed. 10. In the result, all the appeals filed by the Assessee are hereby dismissed. Order pronounced in the open court on 22 -07-2022 Sd/- Sd/- (ANNAPURNA GUPTA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 22/07/2022 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद