Manoj Kumar Sahoo, Khurda V. ACIT, Central Circle-2, Bhubaneswar

ITSSA 92/CTK/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 3922 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 20-08-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 27-09-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S K AGARWAL
• Keywords: Gift; Business income; Income from undisclosed sources; Opportunity of being heard; Peak credit; Onus to prove; Retraction
• Section: 133(6); 201; 132

Judgement Text

IT(SS)A NO.92/CTK/2017 , , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH , CUTTACK , . . , BEFORE SHRI CHANDRA MOHAN GARG, J M AND SHRI L .P. SAHU, A M ( ) ./ IT(SS)A NO . 92 /CTK/201 7 ( / ASSESSMENT YEAR : 2013 - 2014 ) MANOJ KUMAR SAHOO, PROP: MANOJ SEASON CENTRE, RAILWAY MARKET, JATNI, DIST - KHURDA, PIN - 752050 ODISHA VS. ACIT, CENTRAL CIRCLE - 2, BHUBANESWAR - 751007 ./ PAN NO. : A MYPS 7561 A ( / APPELLANT ) .. ( / RESPONDENT ) /AS SESSEE BY : SHRI S.K.AGARWAL, FCA /REVENUE BY : SHRI S.M.KESHKAMAT, CITDR / DATE OF HEARING : 07 /0 8 /2019 / DATE OF PRONOUNCEMENT : 20 /0 8 /2019 / O R D E R PER L.P.SAHU, A M : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 3 , BHUBANESWAR, DATED 12.06.2017 FOR THE ASSESSMENT YEAR 201 3 - 201 4 , ON THE FOLLOWING GROUNDS OF APPEAL : - 1. THAT, THE LD. FORUMS BELOW ARE WRONG IN MAKING ADDITIONS TO THE INCOME OF THE APPELLANT IN VIEW OF THE FACT THAT NO INCREMENTING MATERIAL WERE FOUND EITHER AT THE TIME OF SEARCH OR ON THE POST SEARCH ENQUIRY, THEREFORE THE TOTAL ADDITIONS ARE ILLE GAL AND LIABLE TO BE DELETED 2. THAT, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN FACTS IN CIRCUMSTANCES IN RESTRICTING THE ADDITIONS OF RS. 2,86,881 IN VIEW OF THE FACT THAT NO INCREMENTING MATERIAL WERE FOUND EITHER AT THE TIME OF SEARCH OR O N THE POST SEARCH ENQUIRY, THEREFORE THE ADDITION IS ILLEGAL AND LIABLE TO BE DELETED. IT(SS)A NO.92/CTK/2017 2 3. THAT, THE ASSESSMENT ORDER PASSED U/S 143(3)/153A OF THE ACT IS WITHOUT JURISDICTION IN VIEW OF THE FACT THAT BEFORE TRANSFERRING OF JURISDICTION FROM ONE ASSESSIN G OFFICER TO ANOTHER ASSESSING OFFICER NO OPPORTUNITY OF BEING HEARD GIVEN TO THE APPELLANT. THEREFORE THE ASSESSMENT ORDER IS LIABLE TO BE QUASHED. 4. THAT, THE APPELLANT CRAVES TO ALTER, AMEND OR ADD ANY OTHER GROUND THAT MAY BE CONSIDERED NECESSARY I N THE COURSE OF APPEAL PROCEEDING. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A WHOLESALE DEALER OF SEASONAL STATIONARY ITEMS OF RAKHI, GREETINGS, FIRE WORKS, HOLI COLOUR ETC. AND FILED HIS RETURN OF INCOME IN THE CAPACITY OF AN INDIVIDUAL. ON 0 7.11.2013 HE WAS TRAVELLING FROM BHUBANESWAR TO DELHI BY INDIGO FLIGHT AND ON REACHING NEW DELHI AIR PORT, HE WAS INTERCEPTED BY AIU TEAM NEW DELHI AT TERMINAL ID, IGI AIRPORT. DURING THE CO URSE OF SEARCH PROCEEDINGS U/S. 132 OF THE ACT , IT WAS FOUND THAT H E WAS CARRYING IN PERSON CASH WORTH RS.20 LAKHS OUT OF WHICH RS.19 LAKHS WAS SEIZED. THE CASE WAS FIRST CENTRALIZED WITH ERSTWHILE CIRCLE - 1(2), BHUBANESWAR AND AGAIN CENTRALIZED WITH CENTRAL CIRCLE - 2, BHUBANESWAR BY THE JURISDICTION ORDER OF THE CIT - 1 & 2, BHUBANESWAR VIDE NO. CIT/BBSR/JURISDICTION/127/03/2014 - 15/364 - 93 DATED 25.11.2014. THEREAFTER THE AO ISSUED NOTICE U/S.153A OF THE ACT DATED 27.11.2013 TO ASSESSEE FOR FILING RETURN OF INCOME, IN RESPONSE TO WHICH THE ASSESSEE FILED THE RETURN OF INCOME O N 26.12.2013 SHOWING TOTAL INCOME OF RS.8,46,617/ - AND NOTICE U/S.143(2) OF THE ACT WAS ISSUED ON 04.07.2014 AND OTHER STATUTORY NOTICES WERE ALSO ISSUED TO THE ASSESSEE AND THE ASSESSEE HAS MADE COMPLIANCE TO THE SAME. DURING THE COURSE OF ASSESSMENT PROC EEDINGS, IT WAS NOTICED THAT THE ASSESSEE HAD MAINTAINED TWO BANK ACCOUNTS, DETAILS OF WHICH HAS BEEN INCORPORATED BY THE AO IN ASSESSMENT ORDER AT PARA 3 AS UNDER : - IT(SS)A NO.92/CTK/2017 3 BANK NAME BANK A/C NO. TYPE OF ACCOUNT DEPOSIT DURING 01.04.2007 TO 31.03.2008(IN RS.) P UNJAB NATIONAL BANK, JATNI, MAIN ROAD - 752050 2210008700001612 CASH CREDIT RS.1,48,02,546/ - PUNJAB NATIONAL BANK, JATNI, MAIN ROAD - 752050 2210002100009672 CURRENT RS.29,00,000/ - TOTAL DEPOSIT: RS.1,77,02,546/ - 3. IT WAS NOTICED BY THE AO THAT OUT OF T HE ABOVE TOTAL DEPOSITS, RS. 11,92,530/ - WAS CREATED BY WAY OF TRANSFER/CHEQUE/DRAFT ON DIFFERENT DATES AND THE REST OF THE AMOUNT OF RS.1,65,10,016/ - WAS DEPOSITED IN CASH ON DIFFERENT DATES. IN AUDITED ACCOUNTS THE ASSESSEE HAS DISCLOSED TOTAL SALES AT RS .1,30,40,935/ - AS TURNOVER. THE ASSESSEE WAS ASKED TO EXPLAIN THE DIFFERENT OF RS.46,61,611/ - OUT OF WHICH THE ASSESSEE COULD RECONCILE AN AMOUNT OF RS.14,95,148/ - LEAVING BALANCE OF RS.31,66,463/ - AS UNEXPLAINED AND IT WAS TREATED AS SUPPRESSION OF BOTH S ALES AND PURCHASE BY THE ASSESSEE DURING THE YEAR. ACCORDINGLY, THE AO INFERRED THAT THE ASSESSEE HAS MADE INVESTMENT IN PURCHASE OF STOCK WHICH WERE NOT RECORDED IN HIS BOOKS AND ALSO SOLD THESE STOCKS OUTSIDE HIS BOOKS THEREBY RECEIVING RS.31,66,463/ - WH ICH IS NOTHING BUT A SUMMATION OF UNDISCLOSED INVESTMENT IN THE PURCHASE AS WELL AS THE GROSS PROFIT OF THE ASSESSEE. ACCORDINGLY, THE AO ADDED RS.31,66,463/ - TO THE TOTAL INCOME OF THE ASSESSEE AS UNDISCLOSED INCOME FROM THE BUSINESS. 4. FEELING AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE APPEALED BEFORE THE CIT(A) CHALLENGING THAT THERE WAS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH FOR THE RELEVANT ASSESSMENT YEAR AND HE ALSO CHALLENGED THE JURISDICTIONAL ISSUE. LD. CIT(A) DISMISSED THE L EGAL ISSUE RAISED BEFORE HIM AND HE PARTLY ALLOWED THE APPEAL OF THE ASSESSEE ON THE BASIS OF TELESCOPING IN RESPECT OF PURCHASE AND SALES MADE BY HIM IT(SS)A NO.92/CTK/2017 4 AND CONFIRMED THE GROSS PROFIT @9 .06% ON THE SALES OF RS.31,66,463/ - , WHICH WAS REMAINED UNEXPLAINED BEF ORE THE AO AS SUPPRESSION OF BOTH SALES AND PURCHASE. 5. FURTHER FEELING AGGRIEVED, THE REVENUE IS NOW IN APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL. 6. DURING THE COURSE OF HEARING, LD. AR DID NOT ARGUE ON THE LEGAL GROUNDS RAISED IN GROUND NO.1 & 3. HE ARGUED ONLY ON THE GROUND NO.2 . HE SUBMITTED THAT RS.20 LAKHS CASH WAS SEIZED AT TERMINAL 1D, IGI AIRPORT, WHICH WAS CONFIRMED BY THE TRIBUNAL IN ITA NO.93/CTK/2013, FOR THE ASSESSMENT YEAR 2014 - 2015 VIDE ORDER DATED 26.04.2018 . IN THE SUM OF RS.20 LAK HS ASSESSEES UNACCOUNTED GP OF RS.2,86,881/ - WAS INCLUDED, THEREFORE, DOUBLE TAXATION SHOULD NOT BE MADE ON THE SAME AMOUNT WHICH HAS BEEN TAXED IN THE SUBSEQUENT YEAR. 7. ON THE OTHER HAND, LD. DR RELIED ON THE ORDER OF LOWER AUTHORITIES AND SUBMITTED T HAT TAX SHOULD BE CHARGED IN THE HANDS OF THE ASSESSEE WHICH FALLS IN THE SAME ASSESSMENT YEAR AND ALSO SUBMITTED THAT THE TAX SHOULD BE CHARGED IN THE SAME ASSESSMENT YEAR IN WHICH INCOME HAS BEEN EARNED. THEREFORE, THE CONTENTION OF THE ASSESSEE IS WRONG . HE HAS ALSO NOT RAISED ANY POINT BEFORE THE ITAT IN THE ASSESSMENT YEAR 2014 - 2015 THAT THIS AMOUNT OF RS.2,86,881/ - WAS INCLUDED IN RS.20 LAKHS WHICH WAS EARNED IN THE LAST YEAR. 8. WE HAVE HEARD BOTH THE SIDES, PERUSED THE ENTIRE MATERIALS AVAILABLE ON RECORD AND THE ORDERS OF AUTHORITIES BELOW . LD. AR SUBMITTED THAT IT WAS INCLUDED IN RS.20 LAKHS SEIZED FROM THE IGAI AIRPORT, TERMINAL 1D, NEW DELHI, WHICH HAS BEEN DISALLOWED BY THE COORDINATE BENCH OF THE IT(SS)A NO.92/CTK/2017 5 TRIBUNAL BUT NOWHERE FOUND THAT THERE IS ANY SUB MISSIONS MADE BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2014 - 2015 IN ITA NO.93/CTK/2017, EVEN THIS ARGUMENT WAS ALSO NOT TAKEN BEFORE THE TRIBUNAL. THE FACTS NOTED AND FINDINGS RECORDED BY THE TRIBUNAL ARE AS UNDER : - 4. AT THE TIME OF SEARCH, TWO STATEMENTS WERE RECORDED. FIRST STATEMENT WAS RECORDED U/S.131(1A) OF THE I.T.ACT, 1961 ON 7.1.2011 AT 1.25 PM. SECOND STATEMENT WAS RECORDED ON THE SAME DATE AT 8.35 PM U/S.132(4) OF THE I.T.ACT, 1961. IN THE FIRST STATEMENT, THE ASSESSEE DEPOSED THAT CASH OF RS.20 LAKHS WAS HIS UNACCOUNTED INCOME EARNED BY HIM DURING THE FINANCIAL YEAR 2013 - 2014. IN THE RETURN OF INCOME FILED, THE ASSESSEE DID NOT DISCLOSE UNACCOUNTED CASH OF RS.20 LAKHS FOUND AT THE TIME OF SEARCH. IN OTHER WORDS, HE RETRACTED HIS ADMISSION MADE D URING THE COURSE OF SEARCH U/S.132(4) OF THE ACT. WHEN SHOW CAUSED BY THE ASSESSING OFFICER, THE ASSESSEE VIDE WRITTEN SUBMISSION ON 8.3.2016 STATED THAT ON THE DATE OF SEARCH, HE WAS IN PANIC AND NOT IN PROPER STATE OF MIND AND HENCE, STATEMENT WAS GIVEN TO ESCAPE. IT WAS STATED THAT HE WAS MAINTAINING BOOKS OF ACCOUNT, BILL, REGISTERS, ETC AND THAT HE HAD NO UNACCOUNTED SALES. HE WAS CARRYING RS.20 LAKHS FROM THE BALANCE OF HIS FIRM MANOJ SEASON CENTRE AND THAT ON 6.11.2013, HE HAS DRAWN RS.20.15 LAKHS F ROM HIS FIRM, WHICH WAS REFLECTED IN THE ASH BOOK DATED 6.11.2013. ON THAT DATE, CASH BOOK SHOWED SUFFICIENT BALANCE TO WITHDRAW THE SUM OF RS.20 LAKHS IN QUESTION. HE ALSO SUBMITTED COPY OF CASH BOOK FOR THE PERIOD 5.11.2013 TO 8.11.2013 IN SUPPORT OF HIS CONTENTION. THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT THE EXPLANATION OF THE ASSESSEE IS THAT HE WAS NOT IN PROPER STATE OF MIND AT THE TIME OF DEPOSITION OF HIS STATEMENT DURING THE COURSE OF SEARCH. THE ASSE SSING OFFICER OBSERVED THAT THE STATEMENTS WERE RECORDED DURING THE COURSE OF SEARCH AT 1.25 PM AND 8.35 PM ON 7.11.2013. HE OBSERVED THAT IT COULD BE UNDERSTANDABLE IF THE ASSESSEE RETRACTED HIS FIRST STATEMENT AT THE TIME OF DEPOSITION OF HIS SECOND STAT EMENT. THERE WAS ALSO SEVEN HOURS GAP BETWEEN THE TWO STATEMENTS. THE ASSESSEE IN HIS ADMISSION TO THE DISCLOSURE OF CASH ALSO STATED ITS SOURCE AS HIS UNACCOUNTED INCOME OF THE PROPRIETORSHIP FIRM M/S. MANOJ SEASON CENTRE WHICH HAS ORIGINATED OUT OF UNACC OUNTED SALES FOR THE FINANCIAL YEAR 2013 - 14. THIS SHOWS THAT WHILE MAKING THE STATEMENT BEFORE THE AUTHORITIES, THE ASSESSEE HAS APPLIED HIS MIND AND NOT ONLY MADE THE DISCLOSURE OF CASH BUT ALSO EXPLAINED ITS SOURCE. THEREFORE, THE EXPLANATION DURING THE PRESENT PROCEEDINGS THAT HE WAS NOT IN PROPER STATE OF MIND DURING THE COURSE OF SEARCH CANNOT BE ACCEPTED AS SUCH. RATHER THE PRESENT EXPLANATION IS AN AFTERTHOUGHT RESORTED BY THE ASSESSEE TO EVADE TAX. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE SEC OND CONTENTION OF THE ASSESSEE IN EXPLAINING THE CASH THAT HE WAS SUFFICIENT AVAILABILITY OF CASH IN HIS CASH BOOK FROM WHICH HE HAD DRAWN RS.20.15LAKHS ON 06.11.2013. IT WAS INTERESTING TO NOTE THAT IT(SS)A NO.92/CTK/2017 6 THE ASSESSEE HAD ABSOLUTELY FORGOT TO INTIMATE THIS VITA L INFORMATION TO SEARCH PARTY ON 07.11.2013 WHICH IS ONLY THE NEXT DAY OF THE ALLEGED DRAWAL OF CASH. AT THE TIME OF GIVING STATEMENT ALSO THE ASSESSEE HAS CATEGORICALLY STATED THAT HE DOES NOT MAINTAIN ANY REGULAR BOOKS OF ACCOUNTS EXCEPT SOME PAPERS RELA TING TO SALE AND PURCHASE. DURING THE COURSE OF PRESENT PROCEEDINGS, THE ASSESSEE PRODUCED PURCHASE, SALE REGISTERS AS WELL AS CASH BOOK FOR THE FINANCIAL YEAR 2013 - 14. THE ASSESSING OFFICER OBSERVED THAT IT IS UNDERSTANDABLE THAT ASSESSEE COULD PREPARE HI S PURCHASE AND SALE REGISTER FROM THE VOUCHERS MAINTAIN BY HIM IN THIS REGARD. HOWEVER, PREPARING CASH BOOK OUT OF SUNDRY PURCHASE AND SALE VOUCHERS IS HIGHLY IMPROBABLE. HE OBSERVED THAT THE UNRELIABILITY OF THE PREPARED CASH BOOK CAN BE GAUGED FROM THE F ACTS THAT FROM THE BANK ACCOUNT NO. 1612 MAINTAINED AT PNB, JATNI, IT IS NOTED THAT ON SEVERAL DATES THE ASSESSEE HAS DEPOSITED CASH IN THE BANK ACCOUNT. THE ASSESSEE PRODUCED THE CASH BOOK TO EXPLAIN THE SOURCE OF THESE DEPOSITS IN BANK. ON PERUSAL OF THE CASH BOOK ALONG WITH THE BANK BOOK REVEALED THAT THERE IS AN APPARENT MISMATCH IN THE AMOUNT OF CASH DRAWN FROM THE CASH BOOK AND DEPOSIT OF THE SAME IN THE BANK BOOK AS UNDER: DATE OF TRANSACTION CASH DEPOSIT AS BANK ACCOUNT CASH WITHDRAWN AS PER CASH B OOK 10.3.2013 4,70,000/ - 47,000/ - 14.03.2013 5,00,000/ - 50,000/ - 22.03.2013 5,00,000/ - 50,000/ - 5. THE ASSESSEE WAS ASKED TO EXPLAIN THIS DISCREPANCY IN HIS CASH BOOK. THE ASSESSEE FURNISHED NO EXPLANATION IN THIS REGARD. THE ASSESSING OFFICER OBSERVE D THAT THIS IS ALSO A CLEAR INDICATION TO THE EFFECT THAT NOT MUCH OF A RELIABILITY CAN BE PLACED ON THE CASH BOOK FURNISHED BY THE ASSESSEE AND IT ALSO GOES TO PROVE THAT THE ASSESSEE HAS UNSUCCESSFULLY TRIED TO EXPLAIN AWAY THE CASH OF RS.20,00,000/ - FOUN D IN HIS POSSESSION ON THE DATE OF SEARCH BY FABRICATING HIS CASH BOOK WHICH IS NOTHING BUT AN AFTERTHOUGHT. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE PROPENSITY OF THE ASSESSEE TO KEEP LARGE AMOUNT OF CASH IN HIS POSSESSION WITHOUT DEPOSITING THE SA ME IN THE BANK UNLIKE ANY OTHER PRUDENT BUSINESSMAN DEFIES LOGIC. FOR EXAMPLE, FROM THE LEDGER COPIES OF 'ADVANCE RECEIVED FROM THE CUSTOMERS' FURNISHED BY THE ASSESSEE, IT IS NOTED THAT FROM 03.04.2013 TO 24.07.2013, ASSESSEE HAS RECEIVED AN AMOUNT OF RS. 33,75,000/ - FROM DIFFERENT CUSTOMERS IN CASH AS ADVANCE. FROM THE CASH CREDIT ACCOUNT MAINTAINED IN THE BANK BY THE ASSESSEE, IT IS FOUND THAT FROM 03.04.2013 TO 24.07.2013, ASSESSEE HAS NOT DEPOSITED ANY CASH IN HIS BANK ACCOUNT. THE PROBABILITY OF THE AS SESSEE UTILIZING THIS CASH TOWARDS MAJOR PURCHASE OF ANY STOCK IN TRADE DURING THIS THREE MONTHS IS RULED OUT AS FROM THE LEDGER ACCOUNT OF THE 10 TOP SUPPLIERS OF THE ASSESSEE, IT IS NOTED THAT MOST OF THE PAYMENTS TOWARDS THE PURCHASE HAS BEEN MADE AFTER JULY - 2013. IN OTHERWORDS THE CASH OF RS.33,75,000/ - WAS LYING WITH THE ASSESSEE DURING THESE THREE IT(SS)A NO.92/CTK/2017 7 MONTHS WITHOUT BEING UTILIZED TOWARDS ANY PURPOSE. FROM 25.07.2013 ASSESSEE STARTED DEPOSITING CASH IN HIS BANK ACCOUNT ON A REGULAR BASIS. FURTHER, THE ASS ESSING OFFICER OBSERVED THAT THE ASSESSEE HE WAS CARRYING CASH FOR PURCHASING THE ITEMS OF CALENDARS, DIARIES, GREETING CARDS ETC. AND OUTSTANDING PAYMENT OF M/S. CALENDAR CORPORATION, SIDDHIPURA, DELHI - 06. DURING THE COURSE OF THE PRESENT PROCEEDINGS, NOT ICE U/S. 133(6) WAS ISSUED TO M/S. CALENDAR CORPORATION AT THE ADDRESS GIVEN BY THE ASSESSEE IN HIS STATEMENT. THE SAID NOTICE WAS RETURNED BY THE POSTAL AUTHORITY WITH A COMMENT 'INCOMPLETE ADDRESS'. WHEN CONFRONTED WITH THIS, THE ASSESSEE VIDE WRITTEN SU BMISSIONS STATED THAT FROM THE MARKET HE HAD HEARD THE NAME OF M/S. CALENDAR CORPORATION, NEW DELHI AND WAS PLANNING TO MAKE A VISIT TO IT FOR PURCHASE OF STOCKS. HE HAD NO TRANSACTION WITH THIS CONCERN DURING THE YEAR 2014 - 15. HE WAS CARRYING THE CASH FOR PURCHASE AND PAYMENT FROM AND TO M/S. CALENDAR CORPORATION. UNFORTUNATELY, ON HIS REACHING DELHI AIRPORT HE WAS INTERCEPTED BY THE I.T. DEPARTMENT AND HIS CASH WAS SEIZED. THE ASSESSING OFFICER OBSERVED THAT THE EXPLANATION OF THE ASSESSEE IN THIS REGARD IS BASED ON HEARSAY AND CONJECTURE AND HENCE NOT ACCEPTABLE. A PRUDENT BUSINESS MAN IN ORDINARY CIRCUMSTANCES WOULD NOT CARRY SUCH A LARGE SUM OF AMOUNT IN CASH WITHOUT MAKING ANY PRIOR APPOINTMENT WITH THE PERSON/SUPPLIER FROM WHOM HE INTENDS TO MAKE PURC HASE. THEREFORE, HE ADDED RS.20 LAKHS TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED MONEY FOR THE ASSESSMENT YEAR 2014 - 15. 6. ON APPEAL, THE CIT(A) OBSERVED THAT THE ASSESSEE HAS NOT MAINTAINED PROPER BOOKS OF ACCOUNT FOR ANY OF THE YEARS WHERE NOTICE U/S 1 53A OF THE ACT WAS ISSUED. HE OBSERVED THAT THE DISCREPANCIES IN THE BOOKS OF ACCOUNT ARE SERIOUS AND THE ASSESSEE HAS TRIED TO MAKE COLOURABLE DEVICES TO CAMOUFLAGE HIS OWN MONEY, CUSTOMER ADVANCES, GIFTS ETC., BUT COULD NOT EXPLAIN THE UNACCOUNTED CASH SALES WITH PROPER EVIDENCE. THE CIT(A) RELIED ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF PULLANGODE RUBBER PRODUCE CO. VRS STATE OF KER A LA 1972 CTR (SC) 253,WHERE, IT WAS HELD THAT AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE THOUGH I T IS NOT CONCLUSIVE. THEREFORE, A STATEMENT MADE VOLUNTARILY BY THE ASSESSEE COULD FORM THE BASIS OF ASSESSMENT. THE MERE FACT THAT THE ASSESSEE RETRACTED THE STATEMENT COULD NOT MAKE THE STATEMENT UNACCEPTABLE. THE BURDEN LIES ON THE ASSESSEE TO ESTABLI SH THAT THE ADMISSION MADE IN THE STATEMENT AT THE TIME OF SEARCH IS WRONG AND IN FACT, THERE WAS NO ADDITIONAL INCOME. THE CIT(A) OBSERVED THAT IN ASSESSEES CASE, HE RETRACTED FROM THE BUT HE HAS GROSSLY FAILED TO PRODUCE PROPER BOOKS OF ACCOUNT, BIL LS AND VOUCHERS OF EXPENSES, INVOICES / CASH MEMOS OF PURCHASES AND SALES NOT ONLY FOR THE YEAR UNDER CONSIDERATION BUT ALSO FOR THE EARLIER YEARS BEGINNING FROM PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2008 - 09. HENCE, THE ASSESSEE HAS FAILED TO DISCH ARGE THE BURDEN TO PROVE THAT THE CASH SEIZED BY THE AIU TEAM, NEW DELHI WAS THE ACCOUNTED CASH WITHDRAWN FROM THE CASH BOOK OF THE ASSESSEE AND THEREFORE, THE RETRACTION FROM THE STATEMENT ADMITTING CASH SEIZED AS UNACCOUNTED CASH IS NOT JUSTIFIED. THE CI T(A) THEREFORE, CONFIRMED IT(SS)A NO.92/CTK/2017 8 THE ACTION OF THE ASSESSING OFFICER. 7. BEFORE US, LD A.R. ARGUED THAT NO ADDITION CAN BE MADE MERELY ON THE BASIS OF ADMISSION OF UNDISCLOSED INCOME BY THE ASSESSEE IN A STATEMENT MADE U/S.132(4) OF THE ACT UNLESS THE SAME IS CO RROBORATED WITH MATERIALS FOUND DURING THE COURSE OF SEARCH. FOR THIS, RELIED ON THE DECISION OF AMRITSAR BENCH OF THE TRIBUNAL IN THE CASE OF ACTI VS. JANAK RAJ CHAUHAN (2006) 102 TTJ 316, WHERE, IT WAS HELD THAT ADMISSION MADE AT THE TIME OF SEARCH ACTI ON IS AN IMPORTANT PIECE OF EVIDENCE BUT THE SAME IS NOT CONCLUSIVE. IT IS OPEN TO THE ASSESSEE WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT AND THE SAME WAS MADE UNDER A MISTAKEN BELIEF OF LAW OR FACTS. FURTHER, THE JODHPUR BENCH OF THE TRIBUNAL I N MAHESHWARI INDUSTRIES V. ASSTT . CIT [2005] 148 TAXMAN 74 (JODH) (MAG.) HAS HELD THAT ADDITIONS SHOULD BE CONSIDERED ON MERITS RATHER THAN ON THE BASIS OF THE FACT THAT THE AMOUNT WAS SURRENDERED BY THE ASSESSEE. IT WAS HIS ARGUMENT THAT THE ASSESSEE BEFO RE THE ASSESSING OFFICER FILED THE CASH BOOK AND DEMONSTRATED THAT THE ASSESSEE HAD SUFFICIENT CASH BALANCE IN HIS FIRM M/S. MANOJ SEASON CENTRE ON 6.11.2013 AND THE AMOUNT OF RS.20 LAKHS WAS WITHDRAWN, WHICH WAS REFLECTED THEREIN. HENCE, THE ASSESSING OFF ICER WAS NOT JUSTIFIED IN NOT ACCEPTING THE PLAUSIBLE EXPLANATION OF THE ASSESSEE AND MAKING ADDITION OF RS.20 LAKHS TO THE INCOME OF THE ASSESSEE AS UNDISCLOSED MONEY. 8. LD D.R. RELIED ON THE ORDERS OF LOWER AUTHORITIES. 9. WE HAVE HEARD THE RIVAL SUB MISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE CASH OF RS.20 LAKHS WAS FOUND IN THE POSSESSION OF THE ASSESSEE ON 7.11.2013 OUT OF WHICH RS.19 LAKHS WAS ALSO SEIZED BY THE DEPARTMENT. AT THE TIME OF SEIZURE IN THE STATEMENT RECORDED U/S.132(4) OF THE ACT, THE ASSESSEE ADMITTED THAT HE WAS NOT MAINTAINING BOOKS OF ACCOUNT IN RESPECT OF HIS BUSINESS INCOME AND CASH OF RS.20 LAKHS WAS OUT OF HIS UNACCOUNTED SALES. 10. HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE PRODUCED CASH BOOKS IN RESPECT OF HIS BUSINESS AND SUBMITTED THAT CASH OF RS.20 LAKHS WAS AVAILABLE IN THE SAID CASH BOOK ON 6.11.2013. 11. THE ASSESSING OFFICER FOUND THAT CASH BOOK PRODUCED WAS UNRELIABLE AND, THEREFORE, NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND ADDED RS.20 LAKHS TO THE INCOME OF THE ASSESSEE. 12. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER AND OBSERVED THAT EXCEPT FEW PURCHASES AND SALES INVOICES, THE CASH BOOK PRODUCED BY THE ASSESSEE IS NOT SUPPORTED BY BILLS, VOUCHERS, CASH MEMO OR INVOICES. 13. BEFORE US, LD A.R. SUBMITTED THAT THE STATEMENT GIVEN AT THE TIME OF THE SEARCH IS NOT CONCLUSIVE AND THE ASSESSEE CAN ALWAYS SHOW THAT THE STATEMENT W AS GIVEN UNDER A MISTAKEN BELIEF OR LAW OR FACT. IN SUPPORT OF HIS ARGUMENTS, HE RELIED UPON THE DECISION OF IT(SS)A NO.92/CTK/2017 9 AMRITSAR BENCH OF THE TRIBUNAL IN THE CASE OF JANAK RAJ GHAUHAN (SUPRA). HE CONTENDED THAT IN THE INSTANT CASE, THE STATEMENT MADE BY THE ASSESSEE AT THE TIME OF THE SEIZURE WAS INCORRECT AND SAME WAS MADE IN PANIC. HE FURTHER CONTENDED THAT AS CASH OF RS.20 LAKH WAS AVAILABLE IN THE CASH BOOK BEFORE THE DATE OF SEIZURE AND, THEREFORE, THE ADDITION WAS NOT WARRANTED. 14. WE FIND THAT THE ASSESSEE HA S NOT DISPUTED THE FINDINGS OF THE LOWER AUTHORITIES THAT THE CASH BOOK WAS NOT SUPPORTED BY PROPER PURCHASE AND SALES VOUCHERS AND EXPENSE VOUCHERS. IN THE CIRCUMSTANCES, WE DO NOT FIND ANY ERROR IN THE CONCLUSION OF THE LOWER AUTHORITIES TO THE EFFECT TH AT THE CASH BOOK PRODUCED BY THE ASSESSEE IS UNRELIABLE. IN ABSENCE OF ANY RELIABLE MATERIALS PRODUCED BY THE ASSESSEE TO SHOW THE SOURCE OF CASH OF RS.20 LAKHS FOUND IN THE POSSESSION OF THE ASSESSEE ON 7.11.2013, WE DO NOT FIND ANY GOOD REASON TO INTERFE RE WITH THE ORDERS OF LOWER AUTHORITIES AND DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. 9. WE ALSO NOTED FROM THE ORDER OF LOWER AUTHORITIES THAT THIS DIFFERENCE OF RS.31,66,463/ - HAS BEEN TREATED AS SUPPRESSION OF SALES BY THE WHICH HAS RIGHTLY BEEN ALLOWED PARTLY BY THE CIT(A) . THE OBSERVATIONS OF THE CIT(A) IN THIS REGARD AT PAGE 14 ARE AS UNDER : - COMING TO THE CLAIM OF THE LD. A.R REGARDING PEAK CREDIT AND TELESCOPING THEORY, THOUGH IT HAS ITS JUDICIAL RECOGNITION IN ANANTHRAM VEERASINGHIAH & CO . VS. CIT (1980) 123 ITR 457 (SC), THE APPELLANT HAS NEVER CAME UP WITH THE PROPOSAL EITHER BEFORE THE A.G IN COURSE OF ASSESSMENT PROCEEDINGS OR IN COURSE OF APPELLATE PROCEEDINGS. IT IS A SUBMISSION OF THE LD. A.R FOR SAKE OF ARGUMENT. REGARDING THE ALTE RNATIVE SUBMISSION OF THE LD. A.R TO APPLY THE NET PROFIT RATES OF THE YEAR ON UNACCOUNTED SALES, IT IS NOTICED THAT THE APPELLANT, FROM THE BEGINNING OF HIS INTERCEPTION BY AIL) TEAM NEW DELHI AT TERMINAL ID, IGI AIRPORT, IS BEING INSISTING THAT THE UNACC OUNTED CASH ARE GENERATED FROM UNACCOUNTED SALES AND DESPITE THE INFIRMITIES OBSERVED IN THE BOOKS OF ACCOUNTS, BILLS & VOUCHERS, INVOICES OF PURCHASES & SALES, THE A.O HAS CONCLUDED THAT APPELLANT HAS MADE INVESTMENT IN PURCHASE OF STOCKS WHICH WERE NOT R ECORDED IN HIS BOOKS AND ALSO SOLD THESE STOCKS OUTSIDE ITS BOOKS THEREBY RECEIVING RS.31,66,463/ - WHICH IS NOTHING BUT A SUMMATION OF UNDISCLOSED INVESTMENT IN PURCHASE AS W ELL AS THE GROSS PROFIT OF THE APPELLANT AND HENCE, HE ADDED RS.31,66,463/ - TO THE TOTAL INCOME OF THE APPELLANT AS UNDISCLOSED INCOME FROM THE BUSINESS. IN OTHER WORDS, HE HAS ACCEPTED BOTH PURCHASES AND SALES AS UNACCOUNTED/UNRECORDED IN THE BOOKS OF ACCOUNT AND FOR SUCH CONCLUSION, ASSESSMENT OF THE ENTIRE UNRECORDED SALES IS NOT JUSTIFIED AND ONLY THE PROFIT COMPONENT IS THE GROSS PROFIT BUT NOT THE NET PROFIT OF THAT PARTICULAR YEAR FOR WHICH SUCH UNRECORDED SALES ARE UNEARTHED AND THE REASON BEHIND APPLYING THE GP RATE IS THAT THE INDIRECT EXPENSES INVOLVED IN SUCH UNACCOUNTED PURCHASE & SALES HAVE ALREADY BEEN CLAIMED AS IT(SS)A NO.92/CTK/2017 10 DEDUCTIONS IN P & L ACCOUNT OF THAT YEAR, UNLESS AND UNTIL THE ASSESSEE PROVES WITH EVIDENCE THAT INDIRECT EXPENSES INCURRED FOR SUCH UNRECORDED PURCHASES AND SALES ARE NOT INCLUDED IN THE INDI RECT EXPENSES CLAIMED IN THE P &. L ACCOUNT. IN APPELLANT'S CASE, THE GP RATE WAS 9.06% OF SALES DISCLOSED IN P & L ACCOUNT OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2013 - 14 AND APPLYING THE RATE OF GP TO THE UNACCOUNTED SALES OF RS. 31,66,463/ - , THE PROFIT COMPONENT COMES TO RS 2,86,881/ - . IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, ADDITION MADE ON THIS SCORE IS RESTRICTED & CONFIRMED AT RS. 2,86,881/ - . THE APPELLANT GETS PARTIAL RELIEF ON THIS GROUND OF APPEAL. 10. IT IS CLEAR FROM THE ABOVE FINDINGS NOTED BY THE LD. CIT( A ) THAT THE DISPUTED AMOUNT OF RS.2,86,881/ - HAS BEEN EARNED DURING THE ASSESSMENT YEAR 2013 - 2014, THEREFORE, IT WOULD BE TAXED IN THE ASSESSMENT YEAR 2013 - 2014. ACCORDINGLY, WE DO NOT FIND ANY SUBSTANCE IN THE SUBMISSI ONS OF THE AR OF THE ASSESSEE THAT THIS AMOUNT IS INCLUDED IN RS.20 LAKHS. THE AMOUNT HAS BEEN EARNED BY THE ASSESSEE DURING THE IMPUGNED ASSES SMENT YEAR, THEREFORE, TAXABILITY ON THE SAME AMOUNT CANNOT BE CARRIED FORWARD ED IN THE SUBSEQUENT YEAR. THE INCOME HAS BEEN DEFINED AS P ER SECTION 2(24) OF THE ACT. FOR THE COMPLETENESS OF OUR ORDER, WE WOULD LIKE TO REPR ODUCE THE PROVISIONS OF SECTION S 4 & 5 OF THE ACT, 1961 : - CHARGE OF INCOME - TAX. 4. (1) WHERE ANY CENTRAL ACT ENACTS THAT INCOME - TA X SHALL BE CHARGED FOR ANY ASSESSMENT YEAR AT ANY RATE OR RATES, INCOME - TAX AT THAT RATE OR THOSE RATES SHALL BE CHARGED FOR THAT YEAR IN ACCORDANCE WITH, AND [SUBJECT TO THE PROVISION S (INCLUDING PROVISIONS FOR THE LEVY OF ADDITIONAL INCOME - TAX) OF, THIS ACT] IN RESPECT OF THE TOTAL INCOM E OF THE PREVIOUS YEAR [***] OF EVERY PERSON : PROVIDED THAT WHERE BY VIRTUE OF ANY PROVISION OF THIS ACT INCOME - TAX IS TO BE CHARGED IN RESPECT OF THE INCOME OF A PERIOD OTHER THAN THE PREVIOUS YEAR, INCOME - TAX SHALL BE CHARGED ACCORDINGLY. (2) IN RESPECT OF INCOME CHARGEABLE UNDER SUB - SECTION (1), INCOME - TAX SHALL BE DEDUCTED AT THE SOURCE OR PAID IN ADVANCE, WHERE IT IS SO DEDUCTIBLE OR PAYABLE UNDER ANY PROVISION OF THIS ACT. IT(SS)A NO.92/CTK/2017 11 SCOPE OF TOTAL INCOME. 5. (1) SUBJECT TO THE PROVISIONS OF THIS ACT, THE TOTAL INCOME OF ANY PREVIOUS YEAR OF A PERSON WHO IS A RESIDENT INCLUDES ALL INCOME FROM WHATEVER SOURCE DERIVED WHICH ( A ) IS RECEIVED OR IS DEEMED TO BE RECEIVED IN INDIA IN SUCH YEAR BY OR ON BEHALF OF SUCH PERSON ; OR ( B ) ACCRUES OR ARISES OR IS DEEMED TO ACCRUE OR ARISE TO HIM IN INDIA DURING SUCH YEAR ; OR ( C ) ACCRUES OR ARISES TO HIM OUTSIDE INDIA DURING SUCH YEAR : PROVIDED THAT, IN THE CASE OF A PERSON NOT ORDINARILY RESIDENT IN INDIA WITHIN THE MEANING OF SUB - SECTION (6) OF SECTION 6, THE INCOME WHICH ACCRUES OR ARISES TO HIM OUTSIDE INDIA SHALL NOT BE SO INCLUDED UNLESS IT IS DERIVED FR OM A BUSINESS CONTROLLED IN OR A PROFESSION SET UP IN INDIA. (2) SUBJECT TO THE PROVISIONS OF THIS ACT, THE TOTAL INCOME OF ANY PREVIOUS YEAR OF A PERSON WHO IS A NON - RESIDENT INCLUDES ALL INCOME FROM WHATEVER SOURCE DERIVED WHICH ( A ) IS RECEIVED OR IS DEEMED TO BE RECEIVED IN INDIA IN SUCH YEAR BY OR ON BEHALF OF SUCH PERSON ; OR ( B ) ACCRUES OR ARISES OR IS DEEMED TO ACCRUE OR ARISE TO HIM IN INDIA DURING SUCH YEA R. EXPLANATION 1. INCOME ACCRUING OR ARISING OUTSIDE INDIA SHALL NOT BE DEEMED TO BE RECEIVED IN INDIA WITHIN THE MEANING OF THIS SECTION BY REASON ONLY OF THE FACT THAT IT IS TAKEN INTO ACCOUNT IN A BALANCE SHEET PREPARED IN INDIA. EXPLANATION 2. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT INCOME WHICH HAS BEEN INCLUDED IN THE TOTAL INCO ME OF A PERSON ON THE BASIS THAT IT HAS ACCRUED OR ARISEN OR IS DEEMED TO HAVE ACCRUED OR ARISEN TO HIM SHALL NOT AGAIN BE SO INCLUDED ON THE BASIS THAT IT IS RECEIVED OR DEEMED TO BE RECEIVED BY HIM IN INDIA. IT IS CLEAR FR OM THE ABOVE PROVISIONS THAT THE TAX SHOULD BE CHARGED IN THE RELE VANT ASSESSMENT YEAR IN WHICH IT HAS BEEN RECEIVED OR DEEMED TO BE RECEIVED / ACCRUES OR ARISES OR IS DEEMED TO ACCRUE OR ARISE/ACCRUES OR ARISES TO THE ASSESSEE AT THE RATE IN FORCE IN THAT ASSESSMENT YEAR. LD. A R OF THE ASSESSEE HAS ALSO NOT DISPUTED THAT THIS INCOME HAS BEEN EARNED DURING THE IMPUGNED ASSESSMENT YEAR, THEREFORE, IN VIEW OF THE ABOVE, LD. IT(SS)A NO.92/CTK/2017 12 CIT(A) HAS RIGHTLY DECIDED THE ISSUE. HENCE, WE DO NOT SEE ANY REASON TO INTERFERE IN THE FINDINGS RECORDED BY THE CIT(A) AND THE SAME ARE UPHELD AND THE SOLE GROUND OF APPEAL RAISED BY THE ASSESSEE IS DISMISSED. 1 1 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON 20 /0 8 / 201 9 . SD/ - ( C. M.GARG ) SD/ - (L.P.SAHU) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 20 / 0 8 /201 9 . . / PKM , S R.P.S. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - . MANOJ KUMAR SAHOO, PR OP: MANOJ SEASON CENTRE, RAILWAY MARKET, JATNI, DIST - KHURDA, PIN - 752050 ODISHA 2. / THE RESPONDENT - ACIT, CENTRAL CIRCLE - 2, BHUBANESWAR - 751007 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//