TaxTMI 
TaxTMI 
2012 (9) TMI 97
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....r with regard to deletion of the sum originally disallowed by the AO on account of remuneration expenses and (iv) correctness of the impugned order deleting the disallowance of amounts paid towards commission by the assessee. 2. The brief facts necessary to decide the case are that search and seizure operation was carried out under Section-132 on 20.08.1998 in the premises of the assessee and the punchnama was drawn in the name of its Director Shri Naveen Gera. Block assessment was completed in respect of Shri Naveen Gera under Section-158 BC. The Revenue alleged that during the course of assessment proceedings in the case of Shri Naveen Gera, certain documents pertaining to the assessee were found. The assessee company was incorporated on 28.02.1997. Its business was to charter and operate flights for transportation of goods. Aircrafts were generally chartered from various foreign airlines and the assessee operated them on the Delhi-Moscow sector. The appellant used to consolidate cargo for transportation from Delhi to various foreign destination for which payment was made by Indian exporter either at Delhi or at the destination. After the completion of block assessment in r....
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.... no evidence had been found during the search to indicate that the whole amount was not spent for the purpose of the business, but the fact that the during the F.Y.1998-99 an amount of Rs.46,35,660/- was spent on Green Boxes against the receipt of only Rs.10,68,100/- will show that the appellant must have spent certain amount under this head for the services which were either not provided or for certain services the payments were not received till the date of search. In such types of services, where work is to done outside the country, no one will do anything unless the payments are received in advance. Therefore, it cannot be said that the expenditure of Rs.46,35,660/- was solely for the purpose of receipts accounted for in the Block Assessment. During the FY 1997-1998 the expenditure under the head Green Boxes was less than 70% of the total receipts. Thus for the FY 1998-1999 an expenditure of Rs.7,47,670/- (70% of Rs.10,68,100/-) can be treated for the purposes of the business, the balance amount of Rs.38,87,990/- may be disallowed. The Assessing Officer is directed to restrict the disallowance under the head Green Bos expenses to Rs.38,87,990/- for assessment year 1999-2000. Th....
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....iture in assessment year 1999-2000 was deleted only in part because it is noted by Ld. CIT (A) that in that year i.e. 1999-2000 the expenses claimed is Rs.46,35,660/- as against receipt of Rs.10,68,100/-. He has allowed expenses in this year also to the extent of 70% of receipts i.e. Rs.7,47,670/- and confirmed this disallowance of the balance amount of Rs.3,88,99990/-. Before us and before Ld CIT (A) also, it was submitted that the expenditure of later year i.e.1999-2000 is a partly on account of work done in the earlier year i.e. assessment year 1998-1999 and hence composite percentage should be seen. It has been explained that against total receipt of Rs.2,92,50,205/-, total expenditure of green boxes is of Rs.2,40,12,123/- and this gives gross profit percentage of 17.91% which is very reasonable particularly in view of this fact that transportation business in Russia was being controlled in India without any office in Russia. Considering the facts of the case, we are inclined to accept this contention of the assessee that green boxes expenses is reasonable expenses for earning the impugned income. We are also in agreement with LD AR of the assessee that expenses in financial ye....
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....imed by the assessee in the hands of the company M/s. Indeo Airways Pvt. Ltd." 5. It is urged on behalf of the Revenue by the learned counsel that the impugned order is ex facie erroneous inasmuch as it upheld the disallowance of the "green box, commission and R expenses". It was submitted that with the inclusion of Explanation to Section 37 (1), only legally tenable or legitimate expenditure which does not relate to any activity that amounts to an offence can be deductible. Counsel urged that the scanty nature of evidence with regard to "green box" and absence of any material to sustain that as well as the purpose for other payments meant that such amounts could not be deducted as business expenses. 6. Learned counsel for the Revenue urged that in every search related assessment, the Revenue was entitled to draw a presumption under Section 132 (4A) and thereafter call for the materials to satisfy whether the assessee‟s claim or that of the person searched is reasonable and permissible within the law. Counsel submitted that the mention of certain heads of expenditure ipso facto did not oblige the Revenue authorities to take them at face value particularly after insertio....
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..... The assesse contended, inter alia, that if that were correct, the other amounts shown as expenditure should be allowed as business expenses. This was not upheld by the AO, who disallowed the entire amount. The CIT (A) accepted the assessee‟s contentions, and directed deletion of a major portion of the disallowance. The revenue‟s appeal was rejected by the Tribunal, which, by the impugned order, accepted the assessee‟s cross objection. The threshold point which this court has to decide is whether the assessee is right in contending that since the revenue has suffered concurrent findings on questions of fact, no substantive question of law arises for consideration by the court. There is authority for this proposition, in the form of this Court‟s judgment in Commissioner of Income Tax v. S.J. Knitting and Finishing Mills P. Ltd., [2004] 266 ITR 0582, that in such circumstances, the findings of the lower authorities are to be treated as pure findings of fact, and the reference consequently has to be answered against the revenue. 10. This court does not wish to rest its decision on the narrow ground of the appeals involving pure issues of fact, especially si....
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....the income, to urge that these constituted expenses entitled to deduction. The AO held these expenses to be excessive. The assessee argues that once the revenue seeks to draw a presumption, by relying on Section 132 (4A) of the Act that presumption has to be given full effect. In other words, if the correctness of the contents of books and other materials is to be presumed, such a deemed state of affairs would have to be assumed in respect of all entries in the books, and not merely the entries of income (or receipts). 15. Section 132 (4A) reads as follows: "(4A) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed- (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed....
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....ssible to do so. The object of introduction of Section 132 is to prevent the evasion of tax, i.e., to unearth the hidden or undisclosed income or property and bring it to assessment. It is not merely an information of undisclosed income but also to seize money, bullion etc. representing the undisclosed income and to retain them for the purposes of realization of taxes, penalties etc. Search and seizure is a serious invasion in the privacy of the person. Section 132 which is a complete code by itself provides that the money, bullion or the books of account etc. should not be retained unnecessarily and that the provisional assessment made under Section 132 for the purpose of retention of the books is passed within a specified time in accordance with law. It provides that the books of account, money and bullion which are not required are not retained unnecessarily thereby causing harassment to the person concerned. In order to see that the assessment order is framed within the time frame provided under Section 132, legislature provided for a rebuttable presumption to be raised against the person from whose possession and control the books of account, money, bullions etc. are seized so....