2016 (7) TMI 168 - AT - Income Tax

Tribunal upholds revision order, reinstates revenue's appeal partially

The Assistant Commissioner of Income-tax, Circle-1 (1), Ernakulam Versus M/s. Bhageeratha Engineering Ltd. and Vica-Versa and The Deputy Commissioner of Income-tax, Circle-1 (1), Ernakulam Versus M/s. Bhageeratha Engineering Ltd.

The Tribunal upheld the revision order passed by the Administrative Commissioner, allowing for the examination of issues omitted in the original ... Addition relating to the cash seized by the department - Held that:- AO has taken statement from the carrier Shri Ashok Kumar Singh also, who has also confirmed that the amount that was handed over to Shri Anup Kumar Shah, was received by him from shri S.K.Jain. The statements taken from the three persons clearly show that the amount of ₹ 15.00 lakhs belonged to the assessee-company herein. The statement of Shri S.K.Jain, who was holding the responsible position of “Vice President” has not been rebutted by the assessee company. In view of the above, there was no necessity for the AO to invoke the presumption provided u/s 132(4A) of the Act in the hands of Shri Anup Kumar Shah. Further there is no compulsion under the Act that the AO should necessarily invoke the provisions of sec.132(4A) of the Act, as the words used in that section are “may be presumed”. In view of the above, we are unable to agree with the view expressed by the Ld CIT(A) on this issue. We also notice that the assessee has failed to furnish any credible explanation with regard to the unaccounted cash referred above. In view of the above, we set aside the order of ld CIT(A) on this issue and restore the addition made by the AO. - Decided against assessee Addition pertaining to the unaccounted payments claimed to have been paid to the officials of NHAI - addition was deleted by the Ld CIT(A) on the ground that the AO did not confront the NHAI officials and the assessee company’s officials - Held that:- AO presumed that the amount mentioned above represent “amount in lakhs of rupees”. Accordingly, the AO has taken “1.00” as “One lakh rupees”. Considering the quantum of work undertaken by the company and the position of the officials mentioned above, in our view, it would be reasonable to presume that the amounts noted in the seized materials represent “amounts in lakhs”. The assessee, having failed to rebut the presumption, in our view, the AO was justified in making the addition of ₹ 30,25,850/-. Accordingly, we set aside the order of Ld CIT(A) on this issue and restore the addition made by AO.- Decided against assessee Addition on non finding the vouchers - Held that:- In the relevant vouchers, it was mentioned that the sum of ₹ 12.50 lakhs was paid to Shri S.K.Jain. Before Ld CIT(A), the assessee filed bank statements. On verification of the same, the Ld CIT(A) has given a clear finding that the transactions pertaining to ₹ 12.50 lakhs could not be identified in the bank statements. Ld CIT(A) has also given a finding that the amount of ₹ 12.50 lakhs was not accounted in the books of account of Joint venture concern. Before us, though the assessee reiterated its claim that the transactions pertaining to ₹ 12.50 lakhs belong to the Joint Venture concern, yet no material was produced to contradict the findings given by Ld CIT(A). Accordingly, we do not find any reason to interfere with the decision reached by Ld CIT(A) on this issue.- Decided against assessee Issues Involved:1. Validity of the revision order passed by the Administrative Commissioner.2. Jurisdiction of the CIT(A) in admitting and adjudicating the appeal filed by the assessee.3. Addition of Rs. 14,78,500/- relating to the cash seized by the department.4. Addition pertaining to the unaccounted payments claimed to have been paid to the officials of NHAI.5. Addition of Rs. 57.50 lakhs as illegal payments made to the officials of NHAI.6. Addition of Rs. 12.50 lakhs for payments not accounted in the books.Issue-wise Detailed Analysis:1. Validity of the Revision Order Passed by the Administrative Commissioner:The appeal numbered IT(SS)A 28/Coch/07 challenged the validity of the revision order under section 263 of the Income-tax Act. The Administrative Commissioner directed the AO to examine issues omitted in the original block assessment. The Tribunal upheld the revision order, citing the Supreme Court's interpretation of section 263 in Malabar Industrial Co. Ltd. v. CIT, which allows for revision if the order is erroneous and prejudicial to the interests of the Revenue. The AO's failure to examine search materials rendered the assessment order erroneous and prejudicial to Revenue interests.2. Jurisdiction of the CIT(A) in Admitting and Adjudicating the Appeal Filed by the Assessee:The revenue's appeal in IT(SS)A 01/C/2009 contested the jurisdiction of the CIT(A) in admitting the appeal against the assessment order passed under section 143(3) r.w.s. 263. The Tribunal dismissed the revenue's contention, stating that the CIT(A) has jurisdiction to hear appeals on issues not decided by the revisional or appellate authorities. The Tribunal referenced the Bombay High Court's decision in Hardilla Chemicals Ltd Vs. CIT, affirming that the CIT(A) can adjudicate issues not attaining finality in earlier proceedings.3. Addition of Rs. 14,78,500/- Relating to the Cash Seized by the Department:In the appeal IT(SS)A 210/Coch/2005, the revenue contested the deletion of Rs. 14,78,500/- by the CIT(A). The Tribunal reinstated the addition, noting that the cash seized from Shri Anup Kumar Shah was traced back to the assessee-company through statements from Shri S.K.Jain and Shri Ashok Kumar Singh. The Tribunal held that the presumption under section 132(4A) was rebutted by the clear evidence linking the cash to the assessee.4. Addition Pertaining to the Unaccounted Payments Claimed to Have Been Paid to the Officials of NHAI:The Tribunal also addressed the deletion of Rs. 30,25,850/- related to unaccounted payments to NHAI officials. The CIT(A) had deleted the addition due to lack of confrontation with the officials. However, the Tribunal reinstated the addition, emphasizing the presumption under section 132(4A) and the assessee's failure to rebut it. The amounts noted in the seized materials were reasonably presumed to be in lakhs, considering the context and the assessee's business operations.5. Addition of Rs. 57.50 Lakhs as Illegal Payments Made to the Officials of NHAI:In the assessee's appeal IT(SS)A 57/C/2008, the Tribunal upheld the addition of Rs. 57.50 lakhs for illegal payments to NHAI officials. The Tribunal referenced its earlier discussion on similar issues, affirming that the addition was justified based on seized materials and the presumption under section 132(4A).6. Addition of Rs. 12.50 Lakhs for Payments Not Accounted in the Books:The Tribunal also upheld the addition of Rs. 12.50 lakhs. The AO found that the vouchers for Rs. 40.50 lakhs were not accounted for, and Rs. 12.50 lakhs were not reflected in the Joint Venture's books. The CIT(A) confirmed this after verifying bank statements and records. The Tribunal found no reason to interfere with the CIT(A)'s decision, as the assessee failed to provide contradictory evidence.Conclusion:The Tribunal allowed the revenue's appeal in IT(SS)A 210/C/2005, reinstating the additions of Rs. 14,78,500/- and Rs. 30,25,850/-. The revenue's appeal in IT(SS)A 01/C/2009 was dismissed, affirming the CIT(A)'s jurisdiction. Both appeals of the assessee were dismissed, upholding the additions of Rs. 57.50 lakhs and Rs. 12.50 lakhs. The judgment was pronounced on 08-06-2012.