TaxTMI 
TaxTMI 
2011 (5) TMI 263
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the order dated 4-12-2009 passed by the Income-tax Appellate Tribunal, Delhi Bench "D", New Delhi (hereinafter referred to as "the Tribunal") in ITA No. 3804/Delhi/2009, for the assessment year 2007-08, claiming the following substantial questions of law :- "Whether, on the facts and circumstances of the case, the Hon'ble ITAT was right in law in deleting the addition of Rs. 14,33,132 made by the Assessing Officer on account of the salary paid by the assessee to his employees and thereafter having received the said salary back from them?" 3. Briefly stated, the facts necessary for adjudication as narrated in the appeal are that a search and seizure operation was carried out on 24-8-2006 at the premises of the assessee and during the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rate discussion had concluded that the Assessing Officer was not right in holding that the assessee had inflated the expenses under the head "salary to staff". The relevant findings recorded by the Tribunal in paras 13 and 14 of its order are as under :- "13. We have heard the rival submissions and have gone through the material available on record. We find that the ld. CIT(A) has decided this issue after discussing all the facts in proper perspective and hence we reproduce below the finding of ld. CIT(A) from page Nos. 13 to 15 of his order :- I have carefully considered the contention of the ld. counsel for the appellant and perused the relevant record. The Assessing Officer has made this addition mainly on the basis of statements o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d to be justified in rejecting the evidence as above on this ground. Whereas he has based his entire assessment order on the basis of statement of one such employee, he has ignored the statement of other 11 similar employees. If the statements of all these 11 persons are considered, the adverse inference drawn by the Assessing Officer against the appellant is not sustainable. In addition to the above evidence, the Assessing Officer has himself mentioned that he was making addition on the basis of certain circumstantial evidence. Circumstantial evidence may be important for deciding an issue in the assessment proceedings in a normal case. However, in my opinion, when an assessee is subjected to search and all the important premises are co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....basis of statement of Shri Surinder Miglani recorded during the course of search, adverse inference could be drawn against the appellant, as far as payment of salary to him alone is concerned, keeping in view the entirely of the facts and circumstances i.e., statement of 11 other employees recorded during the course of search and the subsequent affidavit of Shri Miglani which has been rejected by the Assessing Officer not for some good and valid reasons, it would not be appropriate even to sustain addition even in respect of salary paid to Shri Miglani. In view of the above, addition of Rs.14,33,132 made by the Assessing Officer is, therefore, deleted. 14. From the above, we find that ld. CIT(A) has decided this issue in proper perspecti....