TaxTMI 
TaxTMI 
1999 (10) TMI 117
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....p; 33,76,890 2. Additional income on account of sale of coal ash (Para 2) 5,45,000 3. On account of bogus purchase of steel from Jindal Steels (Para 3) 21,97,374 4. On a/c of bogus purchase of steel from Maheshwari Iron & Steel Ltd. [Para (4) &....
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....p; ------ --------------- Total 1,33,63,217 &nb....
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....; 21,79,020 3. News-print and M.G. Craft 5,42,916 4. Miscellaneous items 2,29,804 -------------------- Total &nbs....
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....bsp; 1,50,000 -------------------- Total 4,57,200  ....
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....as being offered so as to make total disclosure of Rs. 6.75 lakhs. He also drew our attention to the Panchanama appearing at page 34 of paper-book No. I to show that search continued till 31st October, 1995 while the re-conciliation was made on 30th October, 1995. According to him, the issue in this regard was closed and no query was ever raised by the Department till the completion of assessment proceedings. Even in the questionnaire, the Assessing Officer had proposed the addition of Rs. 6.75 lakhs on this account vide letter dated 25th September, 1996. The intention of the Assessing Officer is also clear from the proposed draft order wherein the addition of Rs. 6.75 lakhs was proposed. According to the Ld. counsel for the assessee, the assessee appeared before the CIT for discussion in respect to other additions and no question whatsoever was raised by the Commissioner in respect to this addition. Despite these facts, the assessee was surprised when the assessment order was received involving addition of Rs. 33,76,890 on this account. According to Mr. Pathak, the Assessing Officer had exceeded his jurisdiction by acting in a arbitrary manner without even informing the assessee a....
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....nama dated 31st October, 1995 appearing at page 34 of paper-book No. I. The questionnaire issued by Assessing Officer dated 25th September, 1996, i.e., in the course of assessment proceedings also shows that the offer of Rs. 6.75 lakhs was accepted by the Department as this same addition was proposed in the said letter and no further query was raised thereafter. The last letter of the Assessing Officer dated 22nd October, 1996 appearing at page 28 of paper-book No. I also shows that no addition over and above Rs. 6.75 lakhs was proposed by him in the draft assessment order. In connection with the draft assessment the assessee appeared before the Commissioner of Income-tax on 28th October, 1996, but there was no material on the record to show that any discussion took place between the assessee and CIT on this issue. We have also gone through the CIT folder, but there is nothing on record to suggest any addition over and above Rs. 6.75 lakhs. The order sheet in the CIT Folder dated 28th October, 1996 states as under: Date &nbs....
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....sp; Sushma Trivedi (CIT) Sd/- (Shrikant Kasat) 28th October, 1996 We have also gone through the aforesaid lett....
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....at assessee company was operating an account No. 2747 in Mahesh Sahakari Bank Ltd., Nanapeth Branch, Pune in the name of Jindal Steel (Proprietor Abhay Kumar) and a sum of Rs. 21,97,374 had been deposited in this account out of the funds of the company. The said amount was withdrawn by the company itself through bearer cheque and utilised by the Directors for the personal use. The statement of the Managing Director Shri Shrikant M. Kasat was recorded on the 13th October, 1995 wherein it was admitted by him that no steel was received from Jindal Steels and only the payment by cheque was made. Undated signed cheques were also found with the assessee. It was also admitted that the amount belonged to them and assessee would like to surrender this amount in the hands of five directors equally. It was also declared by him that the so-called purchases would not be included either as capital expenditure or Revenue expenditure of the company and purchases to that extent shall be cancelled. On the basis of these materials, the Assessing Officer recorded a finding that the said Bank A/c was a bogus A/c and the money deposited and subsequently withdrawn were utilised by the Directors for perso....
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....e said that income of Rs. 21,97,374 accrued to the assessee. Accordingly, the same is deleted. Before parting with this issue, we would like to mention that assessee had surrendered the aforesaid amount for the purpose of taxation in the hands of Director and the Ld. D.R. had relied on such disclosure for sustaining the addition. We are unable to accept the such contention of the Ld. D.R, firstly the surrender was in the hands of the directors and not on behalf of assessee company. Secondly, there cannot be estoppel against the legal principles and therefore, if the income does not accrue to the assessee, the same cannot be taxed merely on the ground that it was offered for taxation. The assessee can always retract if the amount offered cannot be taxed under the law. Addition of Rs. 53,68,953 on account of bogus purchases of Steel from Maheshwari Iron & Steel Ltd. 9. This addition has been discussed by the Assessing Officer in para 4 of his order. The assessee had shown purchases of steel for the aforesaid amount from Maheshwari Iron & Steel Ltd. of Madras. According to the assessee, this steel was purchased for construction of its building for its new project. Since in the cour....
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.... by assessee himself and the same had been utilised by the directors. This was a solid material to falsify the entries in the books of account of the assessee. But, in respect of purchase of steel from Maheshwari Iron and Steel Co., no such material is available on record. On the contrary, the Managing Director has stated that steel was purchased from this company. Hence, it cannot be said that facts were similar in both the cases. Therefore, in our considered opinion, the Assessing Officer has wrongly proceeded on the footing that facts of both the cases were similar and consequently, no such addition could be made solely on this basis. 11. It is also well settled position of law that the apparent is the real until the contrary is established and the burden lies on the person who alleges that apparent is not real. The concept of undisclosed income under chapter XIV-B is akin to the concept of concealed income. Therefore, Assessing Officer must bring positive material on the record to prove the falsity of the entries in the books of account. The books of account cannot be rejected in light hearted manner on mere suspicion and surmises howsoever grave. Section 158-BB also provide....
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.... 1995 amounts to 153.5 tonnes which tallies with the estimate of the chartered engineer. Even otherwise, such contention of the Ld. D.R. cannot be entertained since acceptance of the same would amount to confirmation of addition on entirely different ground ie. unexplained investment in construction of the building which was never the case of the Assessing Officer. Therefore, in our opinion, the Assessing Officer was not justified in making this addition on mere suspicion and surmises. The Assessing Officer has failed to establish the falsity of the transactions with the said company. Therefore, the entries in the books of the account of the assessee cannot be rejected. 12. Even presuming for the sake of arguments that transactions of purchases with M/s. Maheshwari Iron & Steel Co. were also not genuine, the addition cannot be made for the reasons given by us while disposing the issue regarding the addition made by Assessing Officer vis-a-vis the purchases of steel from M/s. Jindal Steels. Accordingly, the order of the Assessing Officer on this issue cannot be sustained. Consequently, the addition of Rs. 53,68,953 is hereby deleted. The Addition of Rs. 15.25 Lakhs on account ....
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....sp; 50 Sriram 35 Kasat Family (including ....
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.... ------- 25 Lacs - KPPL will give 40 &....
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....sp; 28 ------- ------------------------------------------------------------------------------------------------------------ The perusal of the above clearly shows that the sum of Rs. 12 lakhs was paid by the assessee in accordance with the arrangement for raising the share capital. The assessee has not been able to explain the source of such payment. The Ld. counsel for the assessee tried to improve the case of the assessee by pointing out the payment of Rs. 10 lakhs to Rajesh Kasat & Co. made from the books of account and submitting that to this extent relief be given. We are unable to accept this explanation inasmuch as this does not tally with the entry appearing at page 332. Further, the assessee himself had admitted in his statement that these payments of Rs. 15.25 lakhs were made outside the books of account. The assessee....