ROOP FASHION GUJJAR MAL ROAD, LUDHIANA,PUNJAB V. .AJAY KUMAR THE ACIT CENTRAL CIRCLE-1, LUDHIANA, PUNJAB

ITA 578/CHANDI/2024

AI Insights

The case involves Roop Fashion appealing against various additions made by the Assessing Officer and confirmed by the CIT(A) for the Assessment Year 2018-19. The primary issues revolved around the additions made for unexplained cash, unaccounted sales, and the rejection of books of accounts. The Tribunal found merit in the assessee's arguments regarding the unexplained cash and certain unaccounted sales, leading to the deletion of those additions. However, the Tribunal upheld the CIT(A)'s decision on other grounds, including the estimation of gross profit on unaccounted sales and the rejection of the books of accounts under section 145(3).

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 28842 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2018-2019
• Appeal Filed On: 15-05-2024
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANJEET KAUR
• Assessee Lawyers: SUDHIR SEHGAL
• Keywords: Unexplained investment; Document seized; Documents seized
• Section: 145(3)

Judgement Text

" आयकर अपीलȣय अͬधकरण,चÖडीगढ़ Ûयायपीठ,चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL ‘SMC’ BENCH, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER आयकरअपीलसं./I.T.A. No. 578/CHD/2024 Ǔनधा[रणवष[ / Assessment Year : 2018-19 Roop Fashion, Gujjar Mal Road, Ludhiana 141001, Punjab बनाम Ajay Kumar The ACIT Central Circle-1, Ludhiana, Punjab èथायीलेखासं./PAN NO: AALFR 5035M अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent (PHYSICAL HEARING) Ǔनधा[ǐरतीकȧओरसे/Assessee by : Shri. Sudhir Sehgal, Adv. राजèवकȧओरसे/ Revenue by : Dr. Ranjeet Kaur, Sr. D.R. सुनवाईकȧतारȣख/Date of Hearing : 13.11.2024 उदघोषणाकȧतारȣख/Date of Pronouncement : 09.12.2024 आदेश/Order The present appeal has been preferred by the assessee against the order passed by the ld. Commissioner of Income Tax (Appeal)- 5, Ludhiana (hereinafter referred to as the “Ld. CIT(A)”) dated 19.03.2024 for the Assessment Year: 2018-19. 2. The assessee in this appeal has raised the following grounds of appeal: “1. That the Ld.CIT(A) has erred in confirming the addition of Rs. 2,26,065/- on account of unexplained cash in hand as on the date ITA No. 578/CHD/2024 Roop Fashion v. Ajay Kumar the ACIT 2 of search against the addition of Rs. 5,71,015/- as made by the Assessing Officer. 2. That the Ld.CIT(A) has erred in confirming the addition on account shortage in stock by applying the gross profit rate and confirming the addition of Rs. 6,32,967/ out of addition of Rs. 8,12,581/- as made by the Assessing Officer. 3. That the Ld. CIT (A) has erred in confirming the action of the Assessing Officer in rejecting the books of accounts u/s 145(3) on the basis of certain irrelevant facts. 4. That the Ld. CIT (A) has erred in confirming the addition of Rs, 1,02,756/- on accounted sale as per books of accounts. 5. That the Ld. CIT(A) has erred in making the addition of alleged unaccounted investment of the disclosed sale to the tune of Rs. 4,03,296/- and applying the provisions of section 115BBE of the Income Tax Act, which is against the facts and circumstances of the case. 6. That the Ld. Assessing Officer has erred in confirming the addition of Rs. 6,50,000/- on account of alleged unaccounted cash received from customers as per seized documents. 7. Notwithstanding the above said grounds of appeal, the Ld.CIT (A) has erred in not allowing the telescoping effect in respect various addition. 3. Ground no. 1: The assessee vide this ground has contested the confirmation of addition of Rs.2,26,065/- on account of unexplained cash in hand as found on the date of search at the house of the assessee. 4. At the outset, the ld. counsel for the assessee has invited my attention to page No. 33 of the impugned order of the ld. CIT(A) to show that the ld. CIT(A) after going through the facts of the case noted that as per the Assessing Officer, there was unexplained cash ITA No. 578/CHD/2024 Roop Fashion v. Ajay Kumar the ACIT 3 in hand of the assessee as Rs.11,26,065/-. The Ld. CIT(A), however, accepted the explanation of the assessee regarding cash of Rs. 9 lacs. The Ld. CIT(A), however, did not agree with the contention of the assessee, that the remaining amount of Rs.2,26,065/- was out of the past savings of the family. Considering the smallness of the amount, which obviously can be assumed to be out of the past savings, I do not find any justification on the part of the Ld. CIT(A) in confirming the impugned addition, especially, when the assessee has explained the source of the entire cash in hand to the satisfaction of the lower authorities. This ground is allowed and accordingly, the impugned addition is ordered to be deleted. 5. Ground nos. 2 & 3: The assessee has agitated against the confirmation of the addition by the Ld. CIT(A) of Rs.6,32,967/- by estimating the gross profit rate on the unaccounted sales made by the assessee. The ld. counsel has not pressed these grounds of appeal, the same are accordingly dismissed. 6. Ground nos. 4, 5 & 6: The ld. counsel has contended that the Assessing Officer has erred in confirming the addition made by the Assessing Officer on account of some documents/slips found during the course of search and thereby observing that the assessee had ITA No. 578/CHD/2024 Roop Fashion v. Ajay Kumar the ACIT 4 received some unaccounted cash. The ld. counsel for the assessee has submitted that it is the case of the department that the assessee has made unaccounted cash sales of about Rs.50 lacs. He has submitted that the small amounts covered vide ground nos. 4, 5 & 6 i.e., Rs.1,02,756, Rs.4,03,296/- and Rs.6,50,000/- are lower than the alleged receipts of unaccounted sales, income relating to which has already been added and the same has not been contested as noted in relation to Grounds no. 2 and 3 above. The amounts in question, therefore, are covered by the aforesaid unaccounted sales, profit element to which has already been added to the income of the assessee. In view of this, the addition made by the lower authorities in respect of ground nos. 4, 5 & 6 is not sustainable, the same is ordered to be deleted and the ground nos. 4 5 & 6 are accordingly allowed. 7. Ground no. 7 is general in nature. 8. In the result, the appeal of the assessee stands partly allowed. Order pronounced on 09.12.2024. Sd/- (SANJAY GARG) Judicial Member Dated : 09.12.2024 “GP/Sr.PS.” ITA No. 578/CHD/2024 Roop Fashion v. Ajay Kumar the ACIT 5 आदेशकȧĤǓतͧलͪपअĒेͪषत/ Copy of the order forwarded to : 1. अपीलाथȸ/ The Appellant 2. Ĥ×यथȸ/ The Respondent 3. आयकरआयुÈत/ CIT 4. ͪवभागीयĤǓतǓनͬध, आयकरअपीलȣयआͬधकरण, चÖडीगढ़/ DR, ITAT, CHANDIGARH 5. गाड[फाईल/ Guard File आदेशानुसार/ By order, सहायकपंजीकार/ Assistant Registrar "