Shri Hussain Ali Bohra, JAIPUR V. ACIT, UDAIPUR

ITA 516/JODH/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54451 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 1999-2000
• Appeal Filed On: 27-10-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUBHASH CHANDRA
• Assessee Lawyers: SHARWAN GUPTA
• Keywords: Business expenditure; Income from undisclosed sources; Search and seizure; Document seized; Documents seized
• Section: 143(3); 153A; 234B; 145

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NOS. 516 TO 519/JODH/2010 ASSESSMENT YEARS: 1999-2000, 2003-04 TO 2005-06 PAN: AAACR 5290 C SHRI HUSSAIN ALI BOHRA VS. THE ACIT C/O SHRI SHARWANT KUMAR GUPTA, ADVOCATE CENTRAL C IRCLE- 1 & TAX CONSULTANT, 416, SURYA CHAMBER UDAIPUR RADIO MARKET, NEHRU BAZAR, JAIPUR (APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI SHARWAN GUPTA DEPARTMENT BY : SHRI SUBHASH CHANDRA DATE OF HEARING: 16-12-2011 DATE OF PRONOUNCEMENT: 30-12-2011 ORDER PER N.L. KALRA, AM:- THE ASSESSEE HAS FILED APPEALS AGAINST THREE DIFF ERENT ORDERS OF THE LD. CIT(A)- CENTRAL, JAIPUR DATED 16-08-2010 FOR THE ASSESSM ENT YEAR 1999-2000, 2003-04 AND 2004-05. 2.1 DURING THE COURSE OF HEARING BEFORE US, THE LD. AR HAS NOT PRESSED THE GROUND NO. 1 IN ALL THE APPEALS. THEREFORE, THE SAME IS DISMIS SED BEING NOT PRESSED. 3.1 GROUND NO. 2 IN ALL THE APPEALS IS AGAINST TRAD ING ADDITION OF RS. 82,990/-, 42,026 AND 33,758/- AND RS. 1,83,280/- ON ACCOUNT OF COMM ISSION FROM PROPERTY BUSINESS. 3.2 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE DERIVES INCOME FROM PROPERTY DEALING & FINANCING FOR PURCHASES OF LAND IN THE NA ME & STYLE M/S AL-ANWAR ENTERPRISES, DUNGARPUR AND CHARGES COMMISSION ON PURCHASES AND S ALE OF SUCH LAND AND THE ASSESSEE WAS ALSO CARRYING ON THE BUSINESS OF HARDWARE AND S ANITARY WARE. A SEARCH AND SEIZER 2 OPERATION WERE CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 02.12.2004. DURING THE COURSE OF SEARCH SOME DEEDS RELATING TO TRANSAC TION OF PROPERTY AND THEIR CONVERSATION WERE FOUND. THE AO ISSUED NOTICE U/S 153A FOR FILIN G OF THE CORRECT RETURN OF INCOME. IN RESPONSE THERE TO THE APPELLANT FILED RETURN OF INC OME ON 01.08.2006 AS UNDER: THE AO NOTED THAT THE ASSESSEE MOSTLY PURCHASES AGR ICULTURE LAND AFTER CONVERSION OF IT IN TO RESIDENTIAL/COMMERCIAL PLOT, SHOP AND SALE THERE OF. ASSESSEE ACTS AS BROKER AND EARNED COMMISSION ON SALE OR PURCHASES FROM THE PARTIES DE ALING WITH. IN THE COURSE OF SEARCH ACTION, SEVERAL DEEDS RELATING TO TRANSACTION OF PR OPERTIES, THEIR CONVERSION AND SALES AND LEDGER ACCOUNT WERE FOUND AND SEIZED. ANNEXURE B-1, B-2,B-3,B-5 AND B-6 SEIZED FROM THE RESIDENCE OF THE ASSESSEE WHICH MOSTLY RELATES TO DISCLOSED TRANSACTIONS AND ANNEXURE A-1 TO A-8, A-12,A31,A-33,A-34,A-42,A-46 AND A-50 S EIZED FROM THE OFFICE OF THE ASSESSEE CONTAIN MOSTLY UNRECORDED TRANSACTION. AS SESSEE HAS PREPARED AND PRODUCED BOOKS OF ACCOUNTS IN RESPECT OF REGULAR AND IRREGUL AR TRANSACTION BOTH. FURTHER THE ASSESSEE FILED YEAR WISE CASH BOOK, BALANCE SHEET A ND LEDGER FOR UNRECORDED TRANSACTION ON THE BASIS OF SEIZED DOCUMENTS FOR THE PERIOD 01. 04.1995 TO 31.03.2005. AS PER ACCOUNT PREPARED ON THE BASIS OF AVAILABLE INFORMAT ION SINCE F.Y.1995-96, OPENING UNDISCLOSED CAPITAL AS ON 01.04.1998 WAS RS. 6,50,0 75/-. AFTER LOANS/ADVANCES CURRENT ASSETS IN THE FORM OF DEBTORS WAS RS. 16,12,221/-AN D CLOSING STOCK OF PROPERTY WAS RS. A.Y. INCOME DECLARED U/S 153A CONSIST UNDISCLOSED INCOME 99-2000 86,250/- 11,000/- 03-04 2,43,703/- 55,550/- 04-05 2,62,907/- 60,300/- 05-06 3,52,000/- (U/S 143(3) 3 1,05,000/-. DURING THE ASSESSMENT YEAR 1999-2000, T HE AMOUNT FINANCED IN PURCHASES WAS RS. 9,47,000/-, REGISTRY AND STAMP EXPENSES RS. 55,000/-, CONVERSION CHARGES RS. 4,148/-AND IN DEVELOPMENT RS. 2,28,600/-. THUS THE TOTAL AMOUNT WORKED OUT WAS AT RS. 12,34,748/- AND SALE DURING THE YEAR WAS RS. 9,01,0 00/-.DURING THE ASSESSMENT YEAR 2003-04, THE AMOUNT FINANCED IN PURCHASES WAS RS. 7 ,26,500/-, REGISTRY AND STAMP EXPENSES RS. 1,23,000/-, CONVERSION CHARGES RS. 1,1 9,541/-AND IN DEVELOPMENT RS. 6,05,000/- TOTAL AMOUNT WORKED OUT WAS AT RS. 15,74 ,014/- AND SALE DURING THE YEAR WAS RS. 13,16,500/-.DURING THE ASSESSMENT YEAR 2004-05, THE AMOUNT FINANCED IN PURCHASES WAS RS. 4,73,000/-, REGISTRY AND STAMP EXPENSES. RS . 31,500/- , CONVERSION CHARGES RS. 4,50,107/-AND IN DEVELOPMENT RS. 5,00,000/- TOTAL A MOUNT WORKED OUT WAS AT RS. 14,54,607/- AND SALE DURING THE YEAR WAS RS. 19,53, 551/-. DURING THE ASSESSMENT YEAR 2005-06, THE AMOUNT FINANCE IN PURCHASES WAS RS. 4 ,32,800/-, REGISTRY AND STAMP EXPENSES. RS. NIL , CONVERSION CHARGES RS. 15,000/- AND IN DEVELOPMENT RS. 14,91,792/- TOTAL AMOUNT WORKED OUT AT RS. 19,39,592/- AND SALE DURING THE YEAR WAS RS. 38,17,500/-. 3.3 THE AO ALLEGED THAT THE ASSESSEE HAS DECLARED C OMMISSION ADMITTEDLY @ 5% ON EACH AMOUNT FINANCED FOR PURCHASES AND SALE BUT HAS NOT DECLARED COMMISSION ON CONVERSION AND DEVELOPMENT CHARGES FINANCED BY HIM. HENCE HE WORKED OUT THE COMMISSION INCOME AS UNDER:- A . IN A.Y. 99-2000 COMMISSION OF RS. 61,740/- @ 5% ON AMOUNT FINANCED OF RS. 12,34,748/- ON PROPERTY OWNED BY T HE OTHERS AND COMMISSION OF RS. 45050/- @ 5% ON THE SALE OF RS. 9,01,000/-. THU S TOTAL COMMISSION WORKED OUT BY THE AO AT RS. 106970/- THE APPELLANT DECLARE D RS. 23,800/- IN THE RETURN . HENCE THE AO MADE ADDITION OF RS. 82,990/-. 4 B . IN A.Y. 2003-04 COMMISSION OF RS. 78,701/- @ 5% ON AMOUNT FINANCED OF RS. 15,74,014/- ON PROPERTY OWNED BY T HE OTHERS AND COMMISSION OF RS. 65825/- @ 5% ON THE SALE OF RS. 13,16,500/-. TH US TOTAL COMMISSION WORKED OUT BY THE AO AT RS. 144526/- THE APPELLANT DECLARE D RS. 1,02,500/- IN THE RETURN . HENCE THE AO MADE ADDITION OF RS. 42,026/-. C. IN A.Y. 2004-05 COMMISSION OF RS. 72,730/- @ 5% ON AMOUNT FINANCED OF RS. 14,54,607/- ON PROPERTY OWNED BY T HE OTHERS AND COMMISSION OF RS. 97678/- @ 5% ON THE SALE OF RS. 19,53,551/-. TH US TOTAL COMMISSION WORKED OUT BY THE AO AT RS. 170408/- THE APPELLANT DECLARE D RS. 1,36,650/- IN THE RETURN . HENCE THE AO MADE ADDITION OF RS. 33,758/-. D . IN A.Y. 2005-06 COMMISSION OF RS. 96,980/- @ 5% O N AMOUNT FINANCED OF RS. 19,39,592/- ON PROPERTY OWNED BY T HE OTHERS AND COMMISSION OF RS. 1,90,875/- @ 5% ON THE SALE OF RS. 38,17,500/-. THUS TOTAL COMMISSION WORKED OUT BY THE AO AT RS. 287855/- THE APPELLANT DECLARED RS. 1,04,575/- IN THE RETURN . HENCE THE AO MADE ADDITION OF RS. 1,83,280 /-. 3.4 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE CONFIRMED THE TRADING ADDITION AFTER OBSERVING AS UNDER. FOR READ Y REFERENCE, WE ARE REPRODUCING THE FINDINGS OF THE LD. CIT(A) AS GIVEN IN THE APPELLAT E ORDER FOR THE ASSESSMENT YEAR 1999- 2000. 3.3 IT IS ADMITTED FACT THAT IN THE REGULAR BOOKS OF ACCOUNT THE APPELLANT WAS NOT SHOWING THE FULL AND TRUE TRANSACTIONS AND THEREBY FULL AND TRUE INCOME. IN FACT IT WAS AFTER THE SEARCH AND SEIZURE OPERATION THAT THE UNACCOUNT ED TRANSACTIONS/BUSINESS OF THE APPELLANT CAME TO SURF ACE AND IT WAS AFTER THE SEARCH THAT THE APPELLANT PREPARED THE DE TAILS OF HIS UNACCOUNTED TRANSACTIONS SEPARATELY AND PART OF THE UNACCOUNTED /UNDISCLOSED INCOME WAS DECLARED IN THE RETURN FILE D IN RESPONSE TO 5 THE NOTICE U/S 153A. THESE FACTS HAVE BEEN ELABORAT ELY MENTIONED IN THE ASSESSMENT ORDER AT PAGE 2&3. ACCORDINGLY, P LEA TAKEN BY THE A/R OF THE APPELLANT THAT UNLESS SECTION 145 IS INVOKED THE A.O. IS NOT EMPOWERED TO MAKE TRADING ADDITIONS OR DIST URB THE TRADING RESULT, IS WITHOUT ANY BASIS AND LACKS MERIT. IN F ACTS THE A.O. HAS MADE THE CALCULATION OF UNACCOUNTED COMMISSION INCO ME FROM PERUSAL AND SCRUTINY OF THE UNACCOUNTED TRANSACTION WHICH WAS SUMMERIZED BY THE APPELLANT AFTER THE SEARCH AND SE IZURE OPERATION IN THE FORM OF ACCOUNT B. IT IS SETTLED LAW THAT THE PROVISIONS OF S. 145 ARE APPLICABLE TO THE REGULAR BOOKS OF ACCOUNT AND VARIOUS DECISION CITED BY THE A.R. OF THE APPELLANT ARE AL SO IN RELATIONS TO BOOKS OF ACCOUNTS REGULARLY MAINTAINED. THESES DE CISIONS NO WHERE PUT A BAR ON THE DETERMINATION ON UNACCOUNTED INCOME FROM THE UNACCOUNTED TRANSACTIONS UNEARTHED AFTER THE SE ARCH. 3.4 ANOTHER ARGUMENT TAKEN BY THE A.O. IS OF NOT PR OVIDING HIM AN OPPORTUNITY BY WAY OF SHOW CAUSE NOTICE BEFO RE MAKING ADDITION. FROM PERUSAL OF THE ASSESSMENT ORDER, IT IS QUITE CLEAR THAT A.O. HAS DISCUSSED THIS ISSUE WITH THE APPELLANT AN D THE APPELLANT HIMSELF HAS DECLARED /ADMITTED THE COMMISSIONS AT T HE RATE OF 5% ON AMOUNT FINANCED FOR PURCHASE AND ON AMOUNT OF SA LE I.E 9,47,000/- ARE RS. 9,01,000/- RESPECTIVELY. EVEN T HE OTHER ISSUE OF CONSIDERING THE COMMISSION ON FINANCE GIVEN FOR REG ISTRATION, STAMP EXPENSES, CONVERSION CHARGES, AND DEVELOPME NT ETC, IT IS CLEAR FROM THE ASSESSMENT ORDER THAT THE A.O. HAS P OINTED OUT THIS ISSUE ALSO TO THE ASSESSEE DURING THE ASSESSMENT P ROCEEDING FOR WHICH THE ASSESSEE HAS GIVEN ROUND ABOUT REPLY. ACC ORDINGLY, IT IS QUITE CLEAR THAT THE OPPORTUNITY WAS FULLY PROVIDED TO THE ASSESSEE AND MOREOVER MAJOR PART OF THE ADDITION WAS EFFECTI VELY ADMITTED BY THE APPELLANT. THUS THERE IS NO MERIT IN THE ARG UMENT TAKEN IN THE APPELLATE PROCEEDINGS 6 3.5 ANOTHER ARGUMENT OF THE LD. AR OF THE APPELLANT THAT APPELLANT HAS MAINTAINED BOOKS OF ACCOUNT AND NO MA TERIAL WAS FOUND DURING THE COURSE OF SEARCH THAT THE APPELLAN T HAS SUPPRESSED THE BROKERAGE INCOME AND MOREOVER THOUGH TWO SEPARA TE BOOKS OF ACCOUNT WERE MAINTAINED THE FINAL INCOME FROM BOTH THE ACCOUNTS WERE DECLARED BY CONSOLIDATING THE ACCOUNT. ACCORDI NGLY, THE AO HAS NO POWER TO FURTHER ESTIMATE THE INCOME. THE AP PELLANT HAS NOT CHARGED COMMISSION ON THE FINANCE PROVIDED FOR THE PURPOSE OF CONVERSION OR DEVELOPMENT OR REGISTRATION EXPENSES ETC. THIS ARGUMENT OF THE A.R. OF THE APPELLANT HAS BEEN CONS IDERED BY ME. IT IS QUITE EVIDENT THAT THE DETAILS ETC OF THE UNA CCOUNTED TRANSACTIONS WERE NOTICED DURING THE COURSE OF SEAR CH AND THEREAFTER THE APPELLANT PREPARED ANOTHER SETS OF B OOKS OF ACCOUNTS. AS THE APPELLANT HAS NOT SHOWN THE COMPLETE UNACCOU NTED INCOME IN THE RETURN U/S 153A, THE AO IS FULLY EMPOWERED TO COMPUTE SUCH UNACCOUNTED INCOME OF COMMISSION. MOREOVER THE APPELLANT, DURING THE COURSE OF SEARCH AND THEREAFTER, HAS EFF ECTIVELY ADMITTED EARNING 5% COMMISSION ON SALE OF PLOTS. THESE TWO I SSUES ARE NOT AT ALL IN DISPUTE AND COMMISSION INCOME SO ARRIVED AT BY THE A.O FROM THE SCRUTINY OF SUMMARY OF UNACCOUNTED TRANSAC TIONS PREPARED AFTER THE SEARCH (LOOSELY CALLED AS ACCOUN T-B BY THE ASSESSEE) IS CERTAINLY NOT AT DISPUTE. IT WAS ONLY THE ISSUE OF COMMISSION ON FINANCE GIVEN FOR CONVERSION EXPENSE S, REGISTRATION EXPENSES OR DEVELOPMENT OF LAND SEEMS TO BE IN DISP UTE. HOWEVER, IT IS VERY MUCH CLEAR THAT WHEN THE APPELLANT IS CH ARGING COMMISSION ON FINANCE GIVEN FOR PURCHASE OF PLOT T HEN NATURALLY THE COMMISSION WILL ALSO BE CHARGED BY HIM ON FINAN CE GIVEN FOR OTHER ACTIVITIES LIKE REGISTRATION EXPENSES, DEVELO PMENT EXPENSES INTRINSICALLY LINKED WITH THE PURCHASE OF LAND. THE DECISION SO CITED BY THE A.R. OF THE APPELLANT ARE DISTINGUISHABLE FR OM THE FACTS OF THE CASE. THE ARGUMENT OF THE APPELLANT IS TOTALLY INCORRECT THAT THE 7 BROKERAGE INCOME HAS BEEN RECORDED IN THE REGULAR BOOKS OF ACCOUNT IN THE NORMAL COURSE AND THIS HAS NOT BEEN SUPPRESSED. IN FACTS, IT IS QUITE EVIDENT THAT MOST OF THE BROKERA GE INCOME HAS NOT BEEN RECORDED IN THE REGULAR BOOKS OF ACCOUNT AND I T WAS UNEARTHED DURING THE COURSE OF SEARCH AND WAS ALSO ADMITTED B Y THE APPELLANT AND THEREAFTER HE PREPARED THE DETAILS OF UNACCOUNT ED TRANSACTIONS AND UNACCOUNTED BROKERAGE INCOME BY WAY OF ANOTHER SETS OF ACCOUNTS (LOOSELY CALLED AS ACCOUNTS-B). 3.6 IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND LEGAL POSITION ON THE ISSUE THE ACTION OF THE A.O. IN DET ERMINING THE COMMISSION INCOME ON UNACCOUNTED FINANCE AS WELL A S SALES MADE THROUGH APPELLANT AND NOT RECORDED IN THE BOOKS IS UPHELD AND AS THE A.O. HAS ALREADY GIVEN THE BENEFIT OF THE COMMI SSION INCOME DECLARED IN THE RETURN U/S 153A, THE BALANCE AMOUNT OF RS. 82,990/- SO ADDED BY THE AO. IN A.Y. 1999-2000 IS HEREBY CON FIRMED. 3.5 BEFORE US, THE LD. AR HAS FILED THE WRITTEN SUB MISSIONS. THE LEGAL OBJECTIONS RAISED AGAINST THE CONFIRMATIONS OF ADDITION BY THE LD. CIT(A) ARE THE SAME AS RAISED BEFORE THE LD. CIT(A) AND THESE ARE AS UNDER:- 1. NO TRADING ADDITION CAN BE MADE UNLESS SECTION 1 45 IS INVOKED AND MENTIONED IN THE ASSESSMENT ORDER. 2. NOW SHOW CAUSE WAS GIVEN BEFORE APPLYING RATE OF 5%. 3.6 ON MERIT, THE LD. AR HAS MADE THE FOLLOWING SUB MISSIONS. 1. FIRSTLY WE HAVE TO SUBMIT THAT THE AO HAS FAILED TO KNOW THE SYSTEM OF BUSINESS CONDUCTED BY THE ASSESSEE AND THE SYSTEM O F RECORDING OF TRANSACTION RELATED TO SUCH BUSINESS AND ALSO FAILED TO APPREC IATE THE SYSTEM OF RECEIPT ON ACCOUNT OF COMMISSION AGAINST TRANSACTION OF PURCHA SES AND SALE OF IMMOVABLE PROPERTY ONLY. THE COMMISSION INCOME OF THE ASSESSE E IS REGULAR SOURCE OF 8 INCOME OF THE ASSESSEE . THE ASSESSEE HAD NEVER CHA RGED COMMISSION AT THE TIME OF FINANCE FOR THE PURPOSE OF DEPOSIT OF AMOUNT AGA INST CONVERSION OR DEVELOPMENT OF THE LAND AS WRONGLY ALLEGED BY THE A O. 2. THE ASSESSEE HAS DECLARED CORRECT INCOME IN THE RE TURN FILED IN RESPONSE TO NOTICE U/S 153A. TWO SETS OF ACCOUNTS WERE MAINT AINED BUT THE INCOME OF THE YEAR AND INCOME FOR BOTH THE ACCOUNTS WERE DECLARED BY CONSOLIDATING THE ACCOUNTS. THE SEPARATE ACCOUNT FOR UNDISCLOSED TRAN SACTION WAS PREPARED FOR VERIFICATION OF SEIZED MATERIAL AND DOCUMENT FOUND AT THE TIME OF SEARCH. THE TRANSACTION OF BOTH THE ACCOUNTS WERE DULY VERIFI ED BY THE AO AT THE TIME OF ASSESSMENT AND HE HAS NOT BROUGHT A SINGLE EVIDENCE ON RECORD CONTRARY TO THE ACCOUNTS BY THE AO. THE SYSTEM OF EARNING COMMISSIO N HAS BEEN EXPLAINED IN DETAILS IN ASSESSMENT PROCEEDING, WHEREIN COMPLETE CHARTS ALONGWITH THE CASH BOOK AND LEDGER OF THE RELATED YEAR HAS BEEN FURNIS HED TO THE AO. THE BROKERAGE INCOME HAS BEEN RECORDED IN THE BOOKS OF ACCOUNTS I N NORMAL COURSE, THESE BOOKS HAS NOT BEEN REJECTED. THERE WAS NO MATERIAL FOUND DURING THE COURSE OF SEARCH FROM WHICH IT CAN BE INFERRED THAT THE ASSESSEE HAS CHARGED COMMISSION AT THE TIME OF FINANCE FOR CONVERSION OR DEVELOPMENT OF T HE LAND. THE ADDITION HAS BEEN MADE BY THE AO JUST ON ASSUMPTION, PRESUMPTION AND SUSPICION WITHOUT BRINGING ANY MATERIAL EVIDENCE ON RECORD IN SUPPORT OF HIS C ONTENTION. THE PRINCIPLE THAT ASSESSMENT CAN NOT BE MADE ON PR ESUMPTION AND CONJECTURES OR SURMISES HAS BEEN WELL SETTLED IN VA RIOUS DECISIONS OF THE SUPREME COURT AND HIGH COURT REFER DHAKEHSWARI COTTON MILLS LTD. V CIT (261 ITR 775(SC), DHIRAJLAL GIRDHARILAL V CIT (26 ITR 736 (S C), OMAR SALARY MOHANMED SAIT V CIT (37 ITR 151) (SC), LEKCHABND BHAGAT AMBI CA RAM V CIT (37 ITR 285) (SC), CIT V NANDINI C. (1989) 230 ITR 679, 689 (CAL). THERE IS NO BASIS FOR SUCH ESTIMATION. IN SEARCH AL SO NO MATERIAL WAS FOUND TO SUGGEST THAT BROKERAGE INCOME DECLARED BY THE AS SESSEE IS SUPPRESSED. THE BROKERAGE INCOME HAS BEEN RECORDED IN THE BOOKS OF ACCOUNTS IN NORMAL COURSE, THESE BOOKS HAS NOT BEEN REJECTED, NO OTHER EVIDENC E OF SUPPRESSION OF INCOME IS FOUND. HENCE THERE WAS NO QUESTION OF ESTIMATING T HE INCOME ON HIGHER SIDE WITHOUT PROVING THE INVESTMENT FROM SUCH ADDITIONAL INCOME BY THE ASSESSEE WITH 9 COGENT AND SUFFICIENT EVIDENCE FOUND AT THE TIME OF SEARCH. THE AO IS NOT EMPOWERED FOR ESTIMATION OF INCOME IN THE ASSESSMEN T UNDER CHAPTER XIVB. REFER :- CIT V/S BALAJI WIRES (P) LTD 304 ITR 393 (DEL). CIT V/S BANSAL HIGH CARBONS (P) LTD 223 CR 179 (DE L). CIT V/S RAJENDRAPRASAD GUPTA 248 ITR 350(RAJ.) IN ACIT V/S SMT. RADHA RANI 101 TTJ 1017(JP ) IT HAS BEEN HELD THAT UNDISCLOSED INCOME CAN BE ASSESSED UNDER CHAPTER XI V-B ONLY ON THE BASIS OF EVIDENCE FOUND AS RESULT OF SEARCH . THE AO CAN NOT APPLY A RULE OF THUMB WHILE MAKING SUCH ASSESSMENT.ALSO REFER SHREE CHAND SONI V/S DCIT 101 TTJ 1028 (JD) ACIT V/S AMBICA FOOD INDUSTRIES LTD 110 TTJ 680 (HY D) DCIT V/S ROYAL MARWAR TOBACCO PRODUCT (P) LTD 120 T TJ 387(AHD). JAGDISH DUGGAL V/S ACIT 24 DTR 174(CHD.)(TRB) HENCE IN VIEW OF THE ABOVE SUBMISSION AND CASES IT IS SETTLED THAT NO ADDITION CAN BE MADE UNDER CHAPTER XIV-B IN ABSENCE OF MATERIAL/EVIDENCE IN A RESULT OF SEARCH. THE AO NO WHERE STATED THAT HE FO UND SUCH TYPE OF MATERIAL/EVIDENCE WHICH CAN BE USED FOR MAKING THE SUCH ADDITION. THE ASSESSEE BEING BOHRA AND EARNING OF INTEREST IS BEING AGAINST THE SOCIAL PHENOMENA IN HIS CAST AND COMMUNITY SO KEEPI NG FUNDS IN BANKS IS AVOIDED BY THEM. HE HAD ACCEPTED THE PRACTICE TO EARN COMMI SSION INSTEAD OF INTEREST FOR THIS REASON. THE METHOD OF EARNING AS WELL AS SYSTE M OF BUSINESS OF HIS CHOICE IS TO BE ADOPTED IS A CONSTITUTIONAL RIGHT OF EVERY CI TIZEN AND NO ONE ELSE CAN GUIDE HIM IN THIS RESPECT. 4. FURTHER WE HAVE TO SUBMIT THAT (A) IN A.Y. 1999-2000 THE AO HAS ESTIMATED THE COMMISS ION INCOME OF RS. 1,06,970/- ON THE TOTAL SALE ,PURCHAS E AND OTHER EXP. AND MADE ADDITION OF RS. 82,990/- AFTER STATING THAT T HE ASSESSEE HAS ALREADY DECLARED RS. 23,800/-, HOWEVER WE FAILED TO UNDERST AND THAT FROM WHERE HE TOOK THE FIGURE OF RS. 23,800/- THE ASSESSEE HAS DE CLARED THE COMMISSION INCOME OF RS. 47,300/- AND THE ASSESSEE HAS ALSO SH OWN THE PROFIT ON THE 10 SALE OF PROPERTY WHICH IS THE PART OF TRADING ACTIV ITY, THAN THERE SHOULD BE NO QUESTION TO ESTIMATE FURTHER COMMISSION INCOME O N SUCH SALE VIDE OUR COMPUTATION OF TOTAL INCOME(PB2) AND P&L A/C (PB3&5 ). (B) IN A.Y. 2003-04 THE AO HAS ESTIMATED THE COMMISSIO N INCOME OF RS. 1,44,526/- ON THE TOTAL SALE ,PURCHASE AND O THER EXP. AND MADE ADDITION OF RS. 42,026/- AFTER STATING THAT THE AS SESSEE HAS ALREADY DECLARED RS. 1,02,500/-, HOWEVER WE FAILED TO UNDERSTAND THA T FROM WHERE HE TOOK THE FIGURE OF RS. 1,02,500/- THE ASSESSEE HAS DECLA RED THE COMMISSION INCOME OF RS. 4,30,750/- AND THE ASSESSEE HAS ALSO SHOWN THE PROFIT ON THE SALE OF PROPERTY WHICH IS THE PART OF TRADING ACTIV ITY, THAN THERE SHOULD BE NO QUESTION TO ESTIMATE FURTHER COMMISSION INCOME O N SUCH VIDE OUR COMPUTATION OF TOTAL INCOME AND P&L A/C (PB7-9). (C) IN A.Y. 2004-05 THE AO HAS ESTIMATED THE COMMISSIO N INCOME OF RS. 1,70,408/- ON THE TOTAL SALE ,PURCHASE AND O THER EXP. AND MADE ADDITION OF RS. 33,758/- AFTER STATING THAT THE AS SESSEE HAS ALREADY DECLARED RS.1,36,650/-, HOWEVER WE FAILED TO UNDERSTAND THAT FROM WHERE HE TOOK THE FIGURE OF RS. 1,36,650/- THE ASSESSEE HAS DECLA RED THE COMMISSION INCOME OF RS. 2,65,000/- AND THE ASSESSEE HAS ALSO SHOWN THE PROFIT ON THE SALE OF PROPERTY WHICH IS THE PART OF TRADING ACTIV ITY, THAN THERE SHOULD BE NO QUESTION TO ESTIMATE FURTHER COMMISSION INCOME O N SUCH SALE VIDE OUR COMPUTATION OF TOTAL INCOME AND P&L A/C (PB11-13). (D) IN A.Y. 2005-06 THE AO HAS ESTIMATED THE COMMISSIO N INCOME OF RS. 2,87,855/- ON THE TOTAL SALE ,PURCHASE AND O THER EXP. AND MADE ADDITION OF RS. 1,82,280/- AFTER STATING THAT THE ASSESSEE HAS ALREADY DECLARED RS.1,04,575/-, HOWEVER WE FAILED TO UNDERS TAND THAT FROM WHERE HE TOOK THE FIGURE OF RS. 1,04,575/-THE ASSESSEE HA S DECLARED THE COMMISSION INCOME OF RS. 2,48,350/- AND THE ASSESSE E HAS ALSO SHOWN THE PROFIT ON THE SALE OF PROPERTY WHICH IS THE PART OF TRADING ACTIVITY, THAN THERE SHOULD BE NO QUESTION TO ESTIMATE FURTHER COM MISSION INCOME ON SUCH SALE VIDE OUR COMPUTATION OF TOTAL INCOME AND P&L A/C (PB15-18). 11 HOWEVER BOTH THE LOWER AUTHORITY HAS IGNORED THESE VITAL FACTS DESPITE AVAILABLE ON RESCORED. THEY HAVE NOT DENIED THAT THE BOOKS OF THE ACCOUNTS PREPARED BY THE ASSESSEE EITHER REGULAR OR IRREGULAR AND ALL THE TRANSACTION FOUND IN THE COURSE OF SEARCH ARE INCOR PORATED IN THOSE ACCOUNTS. FURTHER THE LD. AO ESTIMATED THE COMMIS SION INCOME BUT HE HAS NOT ALLOWED THE EXPENSES WHICH REQUIRES TO MEET OUT THE BUSINESS EXPENSES. HENCE THE ESTIMATION OR ADDITION MADE BY THE AO AND CONFIRMED BY THE CIT(A) IS DESERVE TO BE DELETED IN FULL. 3.7 THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORIT IES BELOW. 3.8 WE HAVE HEARD BOTH THE PARTIES. FOR THE ASSESSM ENT YEAR 1999-2000, THE ASSESSEE FILED THE ORIGINAL RETURN DECLARING INCOME OF RS. 7 5,250/- ON 25-02-2000. IN RESPONSE TO NOTICE U/S 153A, THE ASSESSEE FILED THE RETURN VIDE WHICH AN INCOME OF RS. 86,250/- WAS FILED ON 1-08-2006. THUS THE UNDISCLOSED INCOME OF RS. 11,000/- WAS SHOWN FOR THE ASSESSMENT YEAR 1999-2000. THE ORIGINAL RETURN FOR THE ASSESSMENT YEAR 2003-04 WAS FILED ON 24 TH DEC. 2003 AND INCOME OF 1,88,513/- WAS SHOWN. IN R ESPONSE TO NOTICE U/S 153A, THE ASSESSEE FILED THE RETURN DECLARING INCOM E OF RS. 2,43,703/- WHICH COMPRISES OF UNDISCLOSED INCOME OF RS. 55,550/-. FOR THE ASSESSM ENT YEAR 2004-05, THE ASSESSEE FILED THE ORIGINAL RETURN ON 30-07-2004 VIDE WHICH INCOME OF RS. 2,62,907/- WAS DISCLOSED. THE ASSESSEE WHILE FILING RETURN IN RESPONSE TO NOT ICE U/S 153A DISCLOSED INCOME OF RS. 2,62,907/- WHICH MEANS THAT AN UNDISCLOSED INCOME O F RS. 60,300/- HAS BEEN SHOWN. THE SEARCH PROCEEDING WERE CARRIED OUT ON 2 ND DEC. 2004 AND THEREFORE, THE RETURN FOR THE ASSESSMENT YEAR 2005-06 HAS BEEN FILED AFTER THE SE ARCH OPERATION. IN THE RETURN FILED IN RESPONSE TO NOTICE U/S 153A, THE ASSESSEE HAS SHOWN ADDITIONAL INCOME UNDER THE HEAD COMMISSION AND MISCELLANEOUS INCOME . THE AO IN HIS ORDER HAS MENTIONED THAT SEVERAL DEEDS RELATING TO TRANSACTION OF PROPERTIES WERE FOUND AND SEIZED. SUCH SEIZED 12 DOCUMENTS ARE MOSTLY IN RESPECT OF UNRECORDED DEAL OF PROPERTY TRANSACTION. THE ASSESSEE HAS DECLARED THE COMMISSION AT 5% ON EACH AMOUNT FI NANCED FOR PURCHASE AND SALES BUT THE ASSESSEE HAS NOT DECLARED COMMISSION ON CONVERS ION AND DEVELOPMENT CHARGES FINANCED BY HIM. THIS ISSUE WAS DISCUSSED BY THE AO WITH THE ASSESSEE AND THE ASSESSEE CONTENDED THAT THERE IS NO SUCH UNIFORM PRACTICE OF CHARGING COMMISSION ON CONVERSION AND DEVELOPMENT CHARGES. IT WAS STATED THAT SOMETIM ES, THE COMMISSION IS LESS THAN 5% AND SOMETIMES IT IS MORE THAN 5%. 3.9 THE LD. CIT(A) HAS OBSERVED THAT THE ASSESSEE W AS NOT DISCLOSING CERTAIN TRANSACTIONS IN THE REGULAR BOOKS OF ACCOUNT. THE A MOUNT OF INCOME FROM SUCH TRANSACTIONS IS BEING ESTIMATED. HENCE, THERE WAS A CASE OF APPLICATION OF PROVISIONS OF SECTION 145. NORMALLY, THE BROKERS ARE CHARGING COM MISSION@ 2% IF THE CONSIDERATION IS LESS THAN A CRORE. SINCE THE ASSESSEE HAS STATED TH AT HE IS CHARGING COMMISSION OF 5%. IT MEANS THAT HE IS NOT SEPARATELY CHARGING COMMISSION ON CONVERSION AND DEVELOPMENT CHARGES FINANCED BY HIM. THE AO IN HIS ORDER HAS ME NTIONED THAT THE ASSESSEE HAS FILED THE CHART GIVING THE AMOUNT OF LOAN GIVEN FOR PURCH ASE OF PROPERTY AND ADDITIONAL LOAN/EXPENSE FOR CONVERSION AND DEVELOPMENT AND HAS ALSO GIVEN THE DETAILS OF COMMISSION CHARGES. IN THE ABSENCE OF CHART NOT FIL ED BEFORE US, WE ARE LEFT WITH NO ALTERNATIVE BUT TO ESTIMATE THE COMMISSION INCOME. THE AO FOR THE ASSESSMENT YEAR 1999-2000 HAS ESTIMATED THE COMMISSION INCOME OF R S. 1,06,790/-. THE ASSESSEE IN THE ORIGINAL RETURN DECLARED THE INCOME OF RS. 36,300/- AND FURTHER SHOWED A SUM OF RS. 11,000/-. WHILE COMPUTING THE AMOUNT TO BE ADDED, T HE AO HAS TAKEN TOTAL COMMISSION AT RS. 1,06,790/- AND THE RECEIPT AMOUNT WHICH HAS BEE N DECLARED U/S 153A I.E. RS. 23,800/-. THUS THE AO HAS WRONGLY TAKEN THE VALUE DISCLOSED B Y THE ASSESSEE IN THE RETURN U/S 153A 13 AT RS. 23,800/- AS AGAINST RS. 47,300/-. WE FEEL TH AT IT WILL BE FAIR AND REASONABLE TO APPLY THE RATE OF COMMISSION OF 4%. THUS THE TOTAL COMMIS SION WILL COME TO RS. 85,432/-. FOR THE ASSESSMENT YEAR 1999-2000, THE ASSESSEE HIMSELF HAS DISCLOSED COMMISSION OF RS. 47,300/-. THUS THE ADDITION WHICH IS CONFIRMED WILL COME TO RS. 38,132/- AS AGAINST RS. 82,990/- ASSESSMENT YEAR 2003-04 4.1 THE ASSESSEE HAS SHOWN COMMISSION INCOME WHICH IS MORE THAN THE INCOME ESTIMATED BY THE AO AND THERE IS NO CASE OF MAKING ANY ADDITION. THUS ADDITION OF RS. 42,026/-IS DELETED. ASSESSMENT YEAR 2004-05 5.1 THE ASSESSEE HAS SHOWN THE COMMISSION INCOME OF RS. 2.65 LACS. THE AO HAS ESTIMATED THE INCOME AT RS. 1,70,408/-. HOWEVER, TH E AO HAS WRONGLY TAKEN THE FIGURE DECLARED U/S 153A. THUS THERE IS NO CASE OF MAKING ANY ADDITION FOR THE ASSESSMENT YEAR 2004-05. 6.1 SIMILAR IS THE POSITION FOR THE ASSESSMENT YEAR 2005-06. HENCE, THE TRADING ADDITION FOR THE ASSESSMENT YEAR 2003-04 TO 2005-06 ARE DELETED WHILE PART ADDITION FOR THE ASSESSMENT YEAR 1999-2000 IS CONFIRMED. 7.1 THE THIRD GROUND OF THE ASSESSEE IN ALL THE APP EALS IS IN RESPECT OF DISALLOWANCE OF EXPENSES. 7.2 THE AO IN HIS ORDER HAS MENTIONED THE EXPENSES DEBITED UNDER THE HEAD SALARY, TRAVELING, CONVEYANCE AND TELEPHONE AND THESE ARE N OT VERIFIABLE BECAUSE THE ASSESSEE HAS NOT MAINTAINED ANY SUPPORTING VOUCHERS OR DOCUMENT. THE AO DISALLOWED 10% OF THE EXPENSES FROM THE ABOVE HEADS. 14 7.3 WE HAVE HEARD BOTH THE PARTIES. THE DISALLOWANC E FROM SALARY CANNOT BE MADE AS THERE CANNOT BE ANY CASE FOR PERSONAL USE OF THE EM PLOYEES. SINCE THE EXPENSES UNDER OTHER HEADS ARE NOT VERIFIABLE, THEREFORE, BOTH TH E AUTHORITIES WERE JUSTIFIED IN ESTIMATING THE DISALLOWANCES. WE THEREFORE, FEEL THAT IT WILL BE FAIR AND REASONABLE TO ESTIMATE ADHOC DISALLOWANCE AT RS. 7,000/-, RS. 8,000/-, 8,500/- A ND RS. 9,000/- FOR THE ASSESSMENT YEARS 1999-2000 , 2003-04, 2004-05 AND 2005-06 RESPECTIVE LY. THE AO WILL ACCORDINGLY COMPUTE THE INCOME AS PER ABOVE DIRECTIONS. 8.1 THE LAST GRIEVANCE OF THE ASSESSEE IN ALL THE A PPEALS IS AGAINST CHARGING OF INTEREST U/S 234A, 234B AND 234C OF THE ACT. 8.2 THE CHARGING OF INTEREST IS MANDATORY AND CONSE QUENTIAL IN NATURE. THE ASSESSEE WILL GET THE CONSEQUENTIAL RELIEF. 9. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE A RE PARTLY ALLOWED. THE ORDER IS PRONOUNCED ON 30-12-2011. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JODHPUR DATED; 30 /12/2011 *MISHRA COPY FORWARDED TO :- 1. SHRI HUSSAIN ALI BOHRA 2. THE ACIT, CENTRAL CIRCLE- 1, UDAIPUR 3. THE LD. CIT , JODHPUR 4. THE LD. CIT BY ORDER 5. THE LD.DR 6. THE GUARD FILE (ITA NO.516 TO 518/JODH /10) A.R, ITAT, JAIPUR 15 16 17