ACIT Vs Ganpati Developers (ITAT Jaipur)
Facts: The assessee filed the cross objection late by 6 days for which an application for condonation of delay was filed.
Conclusion: As regards the sufficiency of cause for filing the appeals belatedly, it is settled principles of law that the Courts have to take liberal approach while interpreting the expression ‘sufficient cause’ for condonation of delay. In case of Collector, Land Acquisition Vs. Mst. Katiji (1987) 167 ITR 471, the Hon’ble Supreme Court has laid down the principle that the power to condone the delay provided under the statute is to enable the Courts to do substantial justice to the parties by disposing of the matter on merits, therefore, while considering the matters for condonation of delay, the law must be applied in a meaningful manner which subserves ends of justice and technical considerations should not come on the way of cause of substantial justice.
If the party who is seeking condonation of delay has not acted in malafide manner and reasons explained are factually correct then the Court should be liberal in construing the sufficient cause and lean in favour of such party.
No addition merely based on Loose paper found during search not supported by corroborative evidence
In this case AO has just made a one sided assessment based only on the loose sheet without bringing on record the other corroborative evidences. The addition made by the Assessing Officer based on the loose paper, which is not conclusive evidence and, therefore, the same is not sufficient to make the addition.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
The appeal filed by the revenue and the cross objection filed by the assessee arise against the order of the ld. CIT(A), Kota dated 07/09/2018 for the A.Y. 2015-16. The grounds taken in the revenue’s appeal and assessee’s C.O. are as under:
“Grounds of Revenue’s appeal:
1. On the facts and in the circumstances of the case, the ld. CIT(A) has erred in restricting addition made by A.O. of Rs. 1,85,30,430/-on account of undisclosed income to Rs. 75,630/- without appreciating the facts discussed by the A.O. in the assessment order.
2. The appellant craves liberty to raise additional ground and to modify/amend the ground of appeal at the time of hearing.”
“Grounds of assessee’s C.O.:
1. That the Hon’ble Commissioner of Income Tax (Appeals) Kota grossly erred in not quashing the assessment order and deleting entire additions of Rs. 18530430/- ignoring that the learned AO has grossly erred in converting the limited scrutiny into complete scrutiny without entire facts before him and thereby making addition of Rs.18530430/-.
2. That under the facts and circumstances of the case the Hon’ble Commissioner of Income Tax (Appeals) Kota also failed to appreciate that as the learned ACIT had gross erred in moving for conversion from limited scrutiny to complete scrutiny without possession of full facts before him and therefore as Hon’ble Principal CIT, Kota has accorded mechanical approval without considering that sanction sought by learned AO was ignoring CBDT instructions dated 29.12.2015 and 14.07.2016 and therefore it suggests for annulment of order.
3. That the appellant therefore prays for annulment of order.
4. That the appellant craves leave to add, alter, amend, modify and / or otherwise substitute any of the foregoing grounds as and when required.”
2. The hearing of the appeal and C.O. were concluded through video conference in view of the prevailing situation of Covid-19 Pandemic.
3. The brief facts of the case are that the assesse is a partnership firm and engaged in the business of building and constructions works. The assessee filed its return of income on 28/09/2015 declaring total income of Rs. 41,41,130/-. The case of the assessee was selected for limited scrutiny through CASS and notices were issued. The A.O. completed the assessment on 28/12/2017 and assessing total income of assessee at Rs. 2,26,71,560/- by making addition of Rs. 1,85,30,430/- on account of undisclosed income.
4. Being aggrieved by the order of the A.O., the assessee carried the matter before the ld. CIT(A), who after considering the submissions of both the parties as well as material placed before him, restricted the addition to the tune of Rs. 75,630/-. Against the impugned order passed by the ld. CIT(A), both i.e. the revenue is in appeal and the assessee is in cross objection before the ITAT.
5. The ld. D.R. appearing on behalf of the Revenue has relied on the order of the A.O. and also relied on the brief facts submitted before the Bench and the same is reproduced below:
“Assessment in the case was completed u/s 143(3) on 28.12.2017 at an income of Rs.2,26,71,560/- as against income of Rs.41,41,130/-declared by the assessee after making addition of Rs. 1,85,30,430/-on account of undisclosed income as per disallowance on account of provisions. The assessee is a partnership firm & engaged in the business of building & construction works.
At the time of assessment preceding the AO found that as per information received from the Central Circle, Kota, it is found that a search was conducted in the case of Mundra Group, Kota on 13/08/2013. During the course of search proceedings some bunch of incriminating documents were found/seized from searched place. The seized documents of this bunch pertain to the assessee, M/s Shree Ganpati Developers wherein difference was found in sale price of different flats sold by the assessee as per seized books and sale price as per books the total of this difference amount of Rs. 1,85,30,430/-.
Therefore, the assessee was issued a show cause as to why the difference in value calculated above amounting to Rs. 1,85,30,430/-may not be treated income of the assessee and added to the income of the assessee.
In response the assessee submitted his reply. The reply of the assessee has been considered and the same is found to be not acceptable.
At the time of assessment proceeding , considering the submission of assessee and facts available on records AO found that there is a difference of Rs. 1,85,30,430/- between the actual sale consideration recorded as impounded annexure (per page No. 9) and sale price shown is books. Therefore the same is added to the total income of the assessee.
Against the order of the AO assessee moved to the CIT(A) Kota. The CIT(A) allow the appeal of the assessee partly deleted for Rs. 18454800/- out of addition made Rs. 1,85,30,430/-and confirm the addition for Rs. 75,630/- relying on decision of the various appellate Authority and further stating that :
A. O’s examination of Annexure AS-2 was very casual and not based either on the possible further enquiries or workings or on the appreciation of statements and change in the status of several flats & onwards. He has just made a one sided assessment based only on the loose sheet without bringing on record the other corroborative evidences to the fore for establishing his finding. The addition made by the Assessing Officer based on the loose paper, which is not conclusive evidence and, therefore, the same is not sufficient to make the addition. In my opinion, no addition can be made on the basis of dumb documents/note book/loose slips in the absence of any other material to show that the assessee has earned undisclosed income.
The CIT(A) further stating that :
“I am not inclined to agree with the addition made by the A.0 totaling to Rs. 1,85,30,430/- & restrict it to Rs. 75,630/-
The decision of the CIT(A) is not acceptable as the CIT (A) has not appreciated the facts mentioned by the AO in the assessment order :
During the time of assessment proceeding in compliance of show cause the assessee has stated that :
“we just a planning, estimate and subsequently what actually happened, has been considered in the books of accounts and no contrary material has been found that the amount of sale, mentioned in the books o accounts, is wrong. No circumstantial or other evidence has been shown to us that when books of accounts are not treated proper and the sales of flats, mentioned therein, has not been accepted as per the books of accounts. As such, we request you to consider the sales as per the books of accounts. We also inform you that this is a partnership firm and estimates and planning was made by a partner for future sale on rough paper, which was found at the time of search of their premises, cannot be taken a incriminating document for the sale of the firm….”
The reply of the assessee has been considered and the same is found to be not acceptable. It was further noticed that as per statement of Sh.Anil Mundra recorded u/s 131 of the IT Act on 17/10/2013 in the reply to the question No. 57 has stated as under:
Further perusal of seized paper page 9 of Annexure AS-2 and books of account the sale price of following flats are same:
