Sri Panati Vidyanath Reddy, Bangalore V. Deputy Commissioner of Income Tax, Central Circle-2(4), Bangalore

ITA 1771/BANG/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8109 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 01-09-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: V SRINIVASAN
• Keywords: Business income; Validity of assessment; Documents seized
• Section: 44AD; 11A; 153A; 195; 201; 143(2); 191; 192; 48; 13; 153C; 145; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI A.K GARODIA, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.1771, 1772 & 1773/BANG/2017 ASSESSMENT YEARS : 2013-14 TO 2015-16 SRI PANATI VIDYANATH REDDY, #10, SRI RAMANJANEYA NILAYA, 32 ND MAIN, 5 TH CROSS, DOLLARS COLONY, BTM LAYOUT, BENGALURU-560 068. PAN AFMPR 3580 F VS. THE DY. COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE-2(4), BENGALURU. APPELLANT RESPONDENT ASSESSEE BY : SHRI V SRINIVASAN, ADVOCATE REVENUE BY : SHRI PRADEEP KUMAR, CIT DATE OF HEARING : 11-08-2020 DATE OF PRONOUNCEMENT : 21-08-2020 ORDER PER BEENA PILLAI, JUDICIAL MEMBER PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST CONSOLIDATED ORDER DATED 29/06/2017 PASSED BY LD.CI T(A)- 11, BANGALORE FOR ASSESSMENT YEARS 2013-14 TO 2015- 16 BRIEF IN THE CASE ARE AS UNDER: 2. ASSESSEE IS A SMALL WASTE MANAGEMENT CONTRACTOR, PROVIDING SERVICE IN THE FIELD, WORK SWEEPING COLLE CTION AND PAGE 2 OF 13 ITA NOS.1771, 1772 & 1773/BANG/2017 TRANSPORTATION OF GARBAGE AND IN RUNNING THE BUSINE SS ACTIVITY ALONG WITH HIS BROTHER SH. P.VITTALNATH RE DDY. SEARCH WAS CONDUCTED ON 09/10/2014 IN THE PREMISES OF SH.GOPINATH.P.READY AND OTHERS, AT NO.10 SH. RAMANJ ANEYA NILAYA, 32 ND MAIN, 5 TH CROSS, DOLLARS COLONY, BPM 1 ST STAGE, BANGALORE. 3. IT HAS BEEN SUBMITTED THAT, ASSESSEE STAYS IN RESIDENTIAL PREMISES WITH OTHER FAMILY MEMBERS, AND IS A COMMON RESIDENCE FOR 19 MEMBERS OF THE SAME FAMILY. DURING THE COURSE OF SEARCH, CASH AMOUNTING TO RS.14,80,000/- AND 1970.39GM OF GOLD JEWELLARY WERE SEIZED AS UNACCOUNTED FROM ASSESSEES RESIDENCE. 4. AFTER COMPLETION OF SEARCH THE CASE WAS CENTRALI SED AND LD.AO ISSUED NOTICE UNDER SECTION 153C OF THE ACT O N 05/10/2016 CALLING UPON ASSESSEE TO FILE RETURN OF INCOME FOR ASSESSMENT YEARS UNDER CONSIDERATION. 5. ASSESSEE RAISED OBJECTION ON ISSUANCE OF NOTICE UNDER SECTION 153C OF THE ACT ON THE PREMISE THAT PROVISI ONS OF SECTION 153C ARE APPLICABLE ONLY WHEN THERE IS A SE ARCH IN OF PREMISES AND DURING THE COURSE OF SEARCH CERTAIN PAPERS/DOCUMENTS ARE FOUND THAT BELONG TO OTHER PER SON, AND THAT AO OF SEARCHED PERSON IS SATISFIED THAT SU CH PAPERS ETC., BELONGS TO A PERSON, OTHER THAN SEARCHED PERS ON. LD.AO REJECTED THE CONTENTIONS OF ASSESSEES AND PASSED ASSESSMENT ORDER BY HOLDING THAT JURISDICTION UNDER SECTION 153C OF THE ACT HAS BEEN RESUMED CORRECTLY. LD.AO P ASSED ASSESSMENT ORDER ON 13/11/2016 IN RESPECT OF ALL ASSESSMENT YEARS UNDER CONSIDERATION BY ESTIMATING PAGE 3 OF 13 ITA NOS.1771, 1772 & 1773/BANG/2017 BUSINESS INCOME AT RATE OF 12% OF GROSS RECEIPTS AS PER 26 AS. 6. FOR ASSESSMENT YEAR 2015-16, THERE WERE 2 MORE ADDITIONS MADE BY LD.AO IN RESPECT OF 1/3 RD CASH SEIZED FROM THE PREMISES, AMOUNTING TO RS.4,93,000/- AND A DDITION OF RS.16,42,900/- IN RESPECT OF 1/3 RD GOLD SEIZED AT THE TIME OF SEARCH. 7. AGGRIEVED BY ADDITIONS MADE BY LD.AO, IN ALL THE ASSESSMENT YEARS UNDER CONSIDERATION APPEAL WAS FIL ED BEFORE LD.CIT(A) WHEREIN ASSESSEE CHALLENGED ASSUMP TION OF JURISDICTION BY LD.AO UNDER SECTION 153C OF THE ACT , ALONG WITH ADDITIONS MADE IN RESPECTIVE YEARS. LD.CIT(A) AFTER PERUSAL SUBMISSIONS ADVANCED AND DOCUMENT PLACED ON RECORD, CALLED FOR RECORDS OF SEARCHED PERSON SH.P. GOPINATH REDDY. LD.CIT(A) FOUND THAT, LD.AO OF SH.P.GOPINATH REDDY RECORDED SATISFACTION THAT THERE WAS SEIZED CASH AN D JEWELLERY BELONGING TO ASSESSEE BEFORE US THAT WAS FOUND AND SEIZED AT THE TIME OF SEARCH WHICH HAS BEEN HANDED OVER TO ASSESSING OFFICER OF ASSESSEE SUBSEQUENTLY. LD.CIT( A) OBSERVED IN PARA 5.2 OF HIS ORDER THAT, ASSESSING O FFICER OF ASSESSEE RECORDED SATISFACTION FOR INITIATING PROCE EDINGS UNDER SECTION 153C OF THE ACT, AND ASSESSMENT RECOR DS AND THUS LD.AO IN THE PRESENT CASE HAS FOLLOWED THE PRO CEDURE FOR INITIATING PROCEEDINGS UNDER SECTION 153C OF TH E ACT, AND THAT THERE HAS BEEN MATERIAL FOUND AND SEIZED THAT BELONG TO ASSESSEE IN THE COURSE OF SEARCH CONDUCTED. LD.CIT( A) UPHELD ADDITIONS MADE BY LD.AO FOR ALL ASSESSMENT Y EARS UNDER CONSIDERATION. PAGE 4 OF 13 ITA NOS.1771, 1772 & 1773/BANG/2017 8. AGGRIEVED BY ORDER PASSED BY LD.CIT (A) ASSESSEE IS IN APPEAL BEFORE US NOW. VALIDITY OF ASSESSMENT U/S.153C: 9. LD. A.R. SUBMITTED THAT THIS ISSUE IS COMMON FOR ASSESSMENT YEAR 2013-14 AND 2014-15 ONLY. 10. GROUND 2A,2B FOR ASSESSMENT YEAR 2013-14 AND 2014-15 ARE RAISED, CHALLENGING VALIDITY OF ASSESSMENT ORD ER PASSED UNDER SECTION 153C OF THE ACT. 11. AT THE OUTSET, LD.AR SUBMITTED THAT, THIS TRIBUNAL IN CASE OF SH.P.VITHALNATH REDDY, IN ITA NO.1768- 1770/BANG/2017, FOR ASSESSMENT YEARS 2013-14 TO 201 5- 16, VIDE ORDER DATE 26/02/2020 CONSIDERED SIMILAR A DDITIONS AND ISSUES RAISED BY ASSESSEE THEREIN. 12. FOR SAKE OF CONVENIENCE LD.AR FILED SYNOPSIS OF ISSUES INVOLVED AND FINDINGS OF THIS TRIBUNAL IN CASE OF SH.P.VITTALNATH REDDY (SUPRA) WHICH IS AS UNDER: ISSUE GROUND NO. FINDINGS OF ILON'BLC ITAT IN THE CASE OF RELATED ASSE SSEE OF THE GROUP AY 2013-14 AY 2014-15 AY 2015-16 VALIDITY OF ASSESSMENT U/S 153C: NO INCRIMINATING MATERIAL FOUND BELONGING TO APPELLANT & NO SATISFACTION NOTE RECORDED AND FURNISHED TO THE APPELLANT 2A, 2B 2A, 2B N.A HON'BLE ITAT IN THE CASE OF ANOTHER ASSESSEE OF THE GROUP IE. SHRI PANATI VITTALNATH REDDY IN ITA NO. 1768 TO 1770/BANG/2017 DATED 26/02/2020 FOR AY 2013-14 TO A Y 2015-16 [PLACED AT PAGES 170 TO 204 OF PAPER BOOK H AS UPHELD THE VALIDITY OF PROCEEDINGS U/S I53C OF THE ACT. RELEVANT DISCUSSION VIDE PARA 11 AT PAGE 182 OF THE PAPER BOOK. PAGE 5 OF 13 ITA NOS.1771, 1772 & 1773/BANG/2017 ESTIMATION OF BUSINESS INCOME BY THE CIT (A) AT 8.5% OF GROSS RECEIPTS (BEING REDUCED FROM 12',, ORIGINALLY ESTIMATED BY THE LEARNED A.O) 3A, 3B, 3C 3A, 3C 2A, 2B FOR AY 2013-14, HONBLE ITAT HELD IN THE AFORESAID CASE THAT THE ASSESSMENT HAS NOT ABATED SINCE TIME LEVIED FOR ISSUE OF NOTICE U/S 143(2) EXPIRED BEFORE DATE OF SEARCH VID E PARA APPELLANT HAD FILED HIS RETURN FOR AY 2013-.14 ON 2 9/09/2013 [PAGE 48 OF PAPER BOOK] AND TIME LIMIT FOR ISSUE OF NOTICE EXPIRES ON 30/09/2014 WHEREAS DATE OF SEARCH IS 09/ 10/2014 [PAGE 14 OF PAPER BOOK.] FOR THE ASSESSMENT YEAR 2014-15 & 2015-16 THE HON'BLE 11A I HAS PARTLY ALLOWED (116E GROUNDS BY LIMITING THE ESTIMATION OF INCOME TO 80 OF GROSS RECEIPTS VIDE PARA 30 & 3 9 AT PAGE 191 192 & PAGE 195 OF THE PAPER BOOK RESPECTIVELY ADDITION OF RS. 4,93,000/- IN RESPECT OF I/3RD OF CASH SEIZED AT THE TIME OF SEARCH N.A N.A N.A N.A 3 IN THE CASE OF THE OTHER ASSESSEE WHERE SIMILAR ADD ITION OF I/ 3RD OF THE CASH FOUND VAS MADE. 1-LON'BLE [TAT DELE TED THE ADDITION VIDE PARA 45 AT PAGE 197 OF THE PAYER BOOK OBSERVING THAT THERE WERE CASH WITHDRAWALS JUST BEFORE THE SE ARCH AND SUFFICIENT BUSINESS INCOME WAS BEING DECLARED BY TH E ASSESSEE AND CONSIDERING THE NATURE OF BUSINESS. TH E REQUIREMENT OF HOLDING CASH IN HAND WAS TO HE ACCEP TED IN THE CASE OF THE PRESENT APPELLANT, THERE WAS A C ASH WITHDRAWAL OF RS. 9.00.000/- ON 70/09/2014 BEFORE T HE SEARCH AND THE SUBMISSIONS OF THE APPELLANT ON THIS SCORE ARE AT PAGE 166 OF THE PAPER BOOK. ADDITION OF RS. 16,42,900/- IN RESPECT OF LI3RD OR GOLD SEIZED AT THE TIME OF SEARCH 4 ON THIS GROUND. THE H ON'BLE ITAT HAS HELD THAT IF AN) ADDITION VAS TO BE MADE IT HAD TO BE EQUALLY DIVIDED AMONG 1 9 FAMILY MEMBERS. FURTHER. THE APPELLANT HAD CHINNED THAT JE WELLERY OF 261 GRAMS BELONGED TO HIM HAD BEEN REFLECTED IN THE 13/S AS ON 31-03-2011 AND THUS NO ADDITION COULD HE MADE IN THE HANDS OF THE ASSESSEE. HENCE THE ADDITION VAS DELET ED VIDE PARA 51 AT PAGE 199 & 200 OF THE PAPER BOOK. IN THE CASE OF THE PRESENT APPELLANT. HE HAS SHOWN 381.83 GRAMS OF JEWELLERY PURCHASED IN FY 2010-11 AND 157 GRAMS WERE RECEIVED DURING MARRIAGE AND TOTAL HOLDING IS 538.83 GRAMS [REFER PAGE 136 OF PAPER BOOKL. 1 13. BOTH SIDES SUBMITTED THAT THE ISSUES MAY BE SEN T BACK TO LD.AO TO VERIFY ISSUES RAISED IN PRESENT APPEALS IN LIGHT OF OBSERVATIONS OF THIS TRIBUNAL IN CASE OF SH.P.VITTALNATH REDDY (SUPRA) . 14. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SI DES IN LIGHT OF RECORDS PLACED BEFORE US. 15. WE NOTE THAT GROUND NO. 2A, 2B RAISED FOR ASSES SMENT YEAR 2013-14 AND ASSESSMENT YEAR 2014-15 IS IN RESP ECT OF PAGE 6 OF 13 ITA NOS.1771, 1772 & 1773/BANG/2017 VALIDITY OF ASSESSMENT UNDER SECTION 153C OF THE AC T, ALLEGING THAT NO INCRIMINATING MATERIAL HAS BEEN FO UND BELONGING TO ASSESSEE AND NO SATISFACTION NOTE HAS BEEN RECORDED AND FURNISHED TO ASSESSEE. 16. THIS ISSUE HAS BEEN DECIDED BY THIS TRIBUNAL IN CASE OF SH.P. VITTALNATH READY (SUPRA) UPHOLDING THE VALIDITY OF PROCEEDINGS UNDER SECTION 153C OF THE ACT BY OBSERV ING AS UNDER: 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE RELEVANT MATERIAL ON RECORD. THE SECTION 153C OF TH E ACT READS AS UNDER:- '153C [(1)] NOTWITHSTANDING ANYTHING CONTAINED IN S ECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153. WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY M ONEY, BULLION, JEWEL/CRY OR OTHER VALUABLE ARTICLE OR THING OR BOO KS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIO NED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDI CTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCE ED AGAINST EACH SUCH OTHER PERSON AND ISSUE NOTICE AND ASSESS OR RE ASSESS THE INCOME OF THE OTHER PERSON IN ACCORDANCE WITH THE P ROVISIONS OF SECTION 153A, IF, THAT ASSESSING OFFICER IS SATISFI ED THAT THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISI TIONED HAVE A BEARING ON THE DETERMINATION OF THE TOTAL INCOME OF SUCH OTHER PERSON FOR THE RELEVANT ASSESSMENT YEAR OR YEARS RE FERRED TO IN SUB-SECTION (1) OF SECTION 153A. PROVIDED THAT IN C ASE OF SUCH OTHER PERSON, THE REFERENCE TO THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A IN THE SECOND PROVISO TO 5 [SUBSECTION (1) OF SECTION 153A SHALL BE CONSTRUED AS REFERENCE TO THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED BY T HE ASSESSING - OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON ' II. CONSIDERING THE ABOVE PROVISION OF THE ACT AND FINDINGS OF C I TI (A) WHO HAS HELD ONCE THE SOME MATERIAL FOUND BELON GING TO THE APPELLANT HAVING BEARING ON THE ASSESSMENT OF INCOM E, THE AO HAS NO CHOICE BUT DUTY BOUND TO ISSUE NOTICE UNDER SECT ION 153C OF THE ACT. THE CASE LAWS RELIED BY THE COUNSEL ARE DISTIN GUISHABLE ON FACTS AS IN THE CASE OF THE ASSESSEE THERE WAS NO S EIZURE OF ASSETS IN THE FORM OF VALUABLES CASH AND JEWELLERY WAS FOU ND. THEREFORE, SAME IS UPHELD. PAGE 7 OF 13 ITA NOS.1771, 1772 & 1773/BANG/2017 17. AS FACTS AND CIRCUMSTANCES IN BOTH THESE CASES ARE IDENTICAL ARISING OUT OF THE SAME SEARCH CONDUCTED ON THE GROUP, WE DO NOT FIND ANY REASON TO DEVIATE FROM TH E ABOVE FINDINGS. WE ALSO NOTE THAT LD.CIT(A) HELD THAT MAT ERIALS FOUND BELONGING TO ASSESSEE WAS FOUND DURING COURSE OF SEARCH, FROM SEARCHED PREMISES, AND THEREFORE, NOTI CE ISSUED UNDER SECTION 153C OF THE ACT IS VALID. ACCORDINGLY THESE GROUNDS RAISED IN ASSESSMENT YEAR 2013-14 AND 2014-15 STANDS DISMISSED. ADDITION OF ESTIMATION OF BUSINESS INCOME: 18. GROUND 3A, 3B, 3C FOR ASSESSMENT YEAR 2013-14; GROUND 3A, 3C FOR ASSESSMENT YEAR 2014-15 AND GROUN D 2A, 2B FOR ASSESSMENT YEAR 2015-16 ARE IN RESPECT OF ESTIMATION OF BUSINESS INCOME BY LD.CIT(A) AT 8.5%. 19. A.Y:2013-14: WE NOTE THAT THIS ISSUE HAS BEEN DEALT WITH BY THIS TRIBUNAL WHILE DECIDING THIS ISSUE OBSERVED THAT FOR ASSESSMENT YEAR 2013-14, TIME PERIOD FOR ISSUIN G NOTICE UNDER SECTION 143 (2) EXPIRED BEFORE THE DATE OF SE ARCH AND THAT THE ASSESSMENT HAD NOT ABATED. 20. THE SAID OBSERVATION HAS BEEN RECORDED AS UNDER : 18. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE RETURN OF INCO ME WAS FILED ON 30.09.2013 AND NOTICE UNDER SECTION 143(2) COULD BE ISSUED UP TO 30.09.2014 FOR MAKING SCRUTINY ASSESSMENT IN THIS C ASE. HOWEVER, THE SEARCH WAS CONDUCTED ON 09.10.2014 HENCE, ON TH E DATE OF SEARCH NO PROCEEDING WERE PENDING FOR ASSESSMENT YE AR 2013-14, HENCE, THE ASSESSMENT IS NOT ABATED ON THE DATE OF SEARCH. THEREFORE, NO ADDITION UNDER SECTION 153C COULD BE MADE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, WHERE NO INCRI MINATING MATERIAL WAS FOUND IN SEARCH RELATING TO THAT ASSES SMENT YEAR. ACCORDINGLY, ADDITION IN BUSINESS INCOME SUSTAINED ON ACCOUNT OF ESTIMATION @ 8.5% OF GROSS RECEIPTS IS THEREFORE, D ELETED. ACCORDINGLY, GROUND NO. 3A, 3B AND 3C OF APPEAL IS ALLOWED. PAGE 8 OF 13 ITA NOS.1771, 1772 & 1773/BANG/2017 21. IN PRESENT FACTS OF THE CASE LD.AR SUBMITTED TH AT ISSUE IS IDENTICAL. IT IS ALSO BEEN ALLEGED BY LD. AR THA T NO INCRIMINATING MATERIAL WAS FOUND DURING SEARCH RELA TING TO ASSESSMENT YEAR 2013-14. 22. WE THEREFORE DIRECT LD.AO TO VERIFY THE SAME AN D CONSIDER THE CLAIM OF ASSESSEE. IN THE EVENT IT IS FOUND THAT TIME PERIOD FOR ISSUANCE OF NOTICE UNDER SECTION 14 3 (2) STOOD EXPIRED, AND THAT NO INCRIMINATING MATERIALS WERE FOUND, NO ADDITION COULD BE MADE UNDER SECTION 153C . ACCORDINGLY, THIS GROUND FOR ASSESSMENT YEAR 2013-1 4 STANDS ALLOWED FOR STATISTICAL PURPOSES. AY:2014-15 & 2015-16 23. IN RESPECT OF ASSESSMENT YEAR 2014-15 AND 2015- 16, LD.AR SUBMITTED THAT, THIS TRIBUNAL PARTLY ALLOWED BY LIMITING THE ESTIMATION TO 8% OF GROSS RECEIPTS, BY OBSERVING AS UNDER: 30. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE COULD NOT PRODUCE BOOKS OF ACCOUNTS AND SUPPORTING VOUCHERS OF EXPEN SES AND THERE WAS HUGE EXPENSES DEBITED IN PROFIT & LOSS ACCOUNT. HENCE, WE ARE OF THE CONSIDERED OPINION THAT THE AO HAS RIGHT LY REJECTED BOOK RESULT UNDER THE PROVISIONS OF SECTION 145 OF THE A CT. HENCE, SAME IS UPHELD. HOWEVER, SO FAR THE ESTIMATION OF PERCEN TAGE AT 8.5% IS CONCERNED, WE FIND THAT THE RATE OF GROSS PROFIT IS DISCLOSED AT 8.94% IN A.Y. 2011-12, 8.98% IN A.Y. 2012-13 , 7.43 % IN A.Y. 2013-14, 7.12% IN A.Y. 2014-15 AND 7.12% IN A.Y. 20 15-16 OF WHICH AVERAGE COMES TO 7.918%. HENCE, THE CIT(A) WA S NOT JUSTIFIED ADOPTING RATE AT 8.5% OF GROSS RECEIPTS B Y UPHOLDING THE ADDITION ON THIS ACCOUNT. SINCE, THE AVERAGE GIVES A RATE OF 7.918%, WHICH IS ALMOST EQUAL PRESUMPTIVE RATE OF 8% UNDER SECTION 44AD IN THE CASE OF NON-MAINTENANCE OF BOOKS OF ACCOUNTS . THEREFORE, ON CAREFUL CONSIDERATION OF FACTS AND TAKING A REASONA BLE APPROACH, IT WOULD BE MET END OF JUSTICE, IF THE PROFIT RATE WER E APPLIED TO 8% BEING EQUAL TO PRESUMPTIVE RATE UNDER SECTION 44AD OF GROSS PAGE 9 OF 13 ITA NOS.1771, 1772 & 1773/BANG/2017 RECEIPTS AS AGAINST ESTIMATION @ 8.5% BY LD. CIT (A ). THE AG IS, THEREFORE, DIRECTED TO RECALCULATE THE ADDITION OF BUSINESS INCOME BY ADOPTING 8% OF GROSS RECEIPTS. THIS GROUND OF AP PEAL IS THEREFORE, PARTLY ALLOWED. 24. WE NOTE THAT, ABOVE OBSERVATION HAS BEEN APPLIED MUTATIS MUTANDIS FOR ASSESSMENT YEAR 2015- 16 IN PARA 39 AT PAGE 195 OF PAPER BOOK. 25. BOTH SIDES HAS ADMITTEDLY SUBMITTED THAT FACTS AND CIRCUMSTANCES BASED UPON WHICH PETITIONS HAVE BEEN MADE IN CASE OF PRESENT ASSESSEE ARE SIMILAR TO THE FACT S IN CASE OF SH. P VITTALNATH REDDY, (SUPRA) CONSIDERED BY THIS TRIBUNAL, VIDE ORDER DATED 26/02/2020. ACCORDINGLY THESE GROUNDS RAISED BY ASSESSEE STANDS PARTLY ALLOWED FOR ASSESSMENT YEARS 2014-15 AND 201 5- 16. 26. LD.AR SUBMITTED THAT, ADDITION IN RESPECT OF 1/ 3 RD CASH SEIZED AND 1/3 RD GOLD CEASED AT THE TIME OF SEARCH IS RAISED FOR ASSESSMENT YEAR 2015-16. 27. GROUND 3 FOR ASSESSMENT YEAR 2015-16 PERTAINS TO ADDITION OF RS.4,93,000/-, BEING 1/3 RD OF CASH SEIZED AT THE TIME OF SEARCH. 28. LD.AR SUBMITTED THAT IDENTICAL ISSUE HAS BEEN ADDRESSED BY THIS TRIBUNAL IN CASE OF SH. P VITTALNATH REDDY, (SUPRA). HE ALSO SUBMITTED THAT IN THE PRESENT CASE ASSESSE E HAD WITHDRAWN CASH OF RS.9,00,000/- ON 20/09/2014 B EFORE THE DATE OF SEARCH FOR CERTAIN EXPENSES AND THE BAL ANCE WAS AVAILABLE WITH HIM AS ON THE DATE OF SEARCH. PAGE 10 OF 13 ITA NOS.1771, 1772 & 1773/BANG/2017 29. LD. SENIOR DR SUBMITTED THAT THE ISSUE MAY BE S ET ASIDE TO LEARNT AO FOR VERIFICATION. 30. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SI DES IN LIGHT OF RECORDS PLACED BEFORE US. 31. WE NOTE THAT IN CASE OF SH. P VITTALNATH REDDY, (SUPRA) THIS TRIBUNAL CONSIDERED THIS ISSUE BY OBSERVING AS UNDER: 45. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ASSES SEE HAS WITHDRAWN CASH OF RS. 7 LAKH ON O1.10.2014, HENCE, THIS CASH MIGHT BE AVAILABLE WITH THE ASSESSEE ON THE DATE OF SEARCH. AS AGAINST THIS, THE ADDITION MADE BY THE AO IS RS.4.9 3 LAKHS ONLY. WE FURTHER NOTE THAT THE ASSESSEE HAS BEEN SHOWING SUB STANTIAL INCOME OVER THE YEARS AND ATE OF BUSINESS REQUIRES HOLDING CASH IN HAND FOR MAKING WEEKLY PAYMENTS TO POURAKARMIKAS, DIESEL ETC. CONSIDERING THESE FACTS, IT CAN BE ASSUMED THAT CAS H OF RS.4.93 LAKH WAS AVAILABLE OUT OF KNOWN SOURCES, WHICH CAN BE CONSIDERED AS EXPLAINABLE OUT OF CASH WITHDRAWALS MADE PRIOR A WEEK OF SEARCH DATE. THEREFORE, WE ARE OF THE VIEW THE AO W AS NOT JUSTIFIED IN MAKING THIS ADDITION, HENCE, THE ADDITION OF RS. 4.93 LAKH IS DIRECTED TO BE DELETED. THIS GROUND OF APPEAL IS, T HEREFORE, ALLOWED. 32. WE DIRECT LD. AO TO VERIFY THE FACTS IN RESPECT OF WITHDRAWALS FOR YEAR UNDER CONSIDERATION AND TO CON SIDER THE CLAIM IN LIGHT OF OBSERVATIONS OF THIS TRIBUNAL IN CASE OF SH. P VITTALNATH REDDY, (SUPRA) . ACCORDINGLY THIS GROUND RAISED BY ASSESSEE FOR ASSESSMENT YEAR 2015-16 STANDS ALLOWED FOR STATISTI CAL PURPOSES. 33. GROUND NO. 4 FOR ASSESSMENT YEAR 2015-16 IS IN RESPECT OF ADDITION OF RS.16,42,900/- BEING 1/3 RD OF GOLD SEIZED AT THE TIME OF SEARCH. 34. LD.AR SUBMITTED THAT IDENTICAL ISSUE HAS BEEN ADDRESSED BY THIS TRIBUNAL IN CASE OF SH. P VITTALNATH REDDY, (SUPRA). PAGE 11 OF 13 ITA NOS.1771, 1772 & 1773/BANG/2017 35. LD.SR.DR SUBMITTED THAT THE ISSUE MAY BE SET AS IDE TO LEARNT AO FOR VERIFICATION. 36. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SI DES IN LIGHT OF RECORDS PLACED BEFORE US. 37. WE NOTE THAT IN CASE OF SH. P VITTALNATH REDDY, (SUPRA) THIS TRIBUNAL CONSIDERED THIS ISSUE BY OBSERVING AS UNDER: 51. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE RELEVANT MATERIAL ON RECORD. WE FIND THAT IT IS FAC T THAT JEWELLERY OF ALL FAMILY MEMBERS WAS KEPT TOGETHER AT ONE PLACE A ND ASSESSEE WAS JOINTLY RESIDING THEREIN. THE INVENTORY SO MADE DURING SEARCH IS ALSO REFLECTING THIS FACT. THE ASSESSEE HAS FILED A LIST OF 19 PERSON TO WHOM THIS JEWELLERY WAS FOUND DURING SEARCH. THE LI ST OF 19 PERSON TO WHOM JEWELLERY BELONGED WAS SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WHICH IS PLACED AT PAPER BO OK PAGE NO. 262, ACCORDING TO WHICH THE ASSESSEE HAS OWNED JEWE LLERY OF 261 GRAMS, WHICH REFLECTED IN BALANCE SHEET. THEREFORE, THERE WAS NO JUSTIFICATION IN MAKING ADDITION IN THE CASE OF THE ASSESSEE. THEREFORE, WE ARE OF THE CONSIDERED OPINION THE NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE BY TREATING 1/3RD OF SEIZED JEWELLERY IN HIS HAND AS JEWELLERY WAS BELONGING TO ENTIRE FAMILY MEMBERS. THEREFORE, IF AT ALL IF ANY ADDITION TO BE MADE IT IS TO BE EQUALLY DIVIDED AMONG FAMILY MEMBERS. FURTHER, THE ASSESSEE HAS ONLY CLAIMED JEWELLERY OF 261 GRAMS AS BELONGING TO HIM, WHICH HAS BEEN REFLECTED IN BALANCE SHEET AS ON 31.03.2011 HE NCE, NO ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE . FURTHER, CONSIDERING THE CBDT CIRCULAR WHICH PROVIDES JEWELL ERY HOLDING BY FEMALE MEMBER AND MALE MEMBERS AND CHILDREN IN PAR TICULAR QUANTITY AS NOT BE SERVED MEANING THEREBY AS EXPLAI NED, WE ARE OF THE CONSIDERED OPINION THAT NO ADDITION CAN BE SUST AINED ON THIS ACCOUNT. ACCORDINGLY, 1/3RD ADDITION MADE IN THE CA SE OF THE ASSESSEE ON ACCOUNT OF JEWELLERY AT RS.16,42,900/- IS DELETED. THIS GROUND OF APPEAL IS THEREFORE, ALLOWED. 38. WE DIRECT LD.AO TO VERIFY THE FACTS FOR YEAR UN DER CONSIDERATION AND TO CONSIDER THE CLAIM IN LIGHT OF OBSERVATIONS OF THIS TRIBUNAL IN CASE OF SH.P.VITTALNATH REDDY, (SUPRA) . PAGE 12 OF 13 ITA NOS.1771, 1772 & 1773/BANG/2017 ACCORDINGLY, THIS GROUND RAISED BY ASSESSEE FOR ASSESSMENT YEAR 2015-16 STANDS ALLOWED FOR STATISTI CAL PURPOSES. IN THE RESULT, APPEAL IS FILED BY ASSESSEE FOR ASSE SSMENT YEAR 2013-14, 2014-15 AND 2015-16 STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST AUG, 2020. SD/- SD/- (A.K GARODIA) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 21 ST AUG, 2020. /VMS/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL. BANGALORE. PAGE 13 OF 13 ITA NOS.1771, 1772 & 1773/BANG/2017 DATE INITIAL 1. DRAFT DICTATED ON ON DRAGON SR.PS 2. DRAFT PLACED BEFORE AUTHOR -08-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -08-2020 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. -08-2020 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS -08-2020 SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON -08-2020 SR.PS 7. DATE OF UPLOADING THE ORDER ON WEBSITE -08-2020 SR.PS 8. IF NOT UPLOADED, FURNISH THE REASON -- SR.PS 9. FILE SENT TO THE BENCH CLERK -08-2020 SR.PS 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER. 13. DRAFT DICTATION SHEETS ARE ATTACHED NO SR.PS