TaxTMI 
TaxTMI 
2012 (11) TMI 745
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....ade by the A.O. rejecting the books of account and applying G.P. rate on estimated sales. (c) On the facts and in the circumstances of the case, as the defects in the books had been pointed out, the ld.CIT(A) ought to issued appropriate directions in estimating G.P. and sales, instead of deleting the addition, in view of the provisions of section 292C and fully accepting the assessee's version. 2. Since the facts and the issues involved are almost common in all the appeals, therefore, these appeals can be disposed of by this consolidated order for the sake of brevity. The first ground raised by the revenue pertains to deleting the addition of Rs.12,34,489/- on account of unrecorded advances received from the customers. The learned counsel for the assessee contended that necessary details for receiving the advances were duly furnished before the Assessing Officer. The learned CIT DR supported the assessment order whereas the learned counsel for the assessee supported the impugned order. 3. We have considered the rival submissions and perused the material available on file. For better appreciation of the facts, the details are summarised as under :- S.No. Particular ....
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....rtains to deleting the impugned addition by rejecting the books of account and application of gross profit rate on estimated sales. Brief facts of the case are that a search and seizure operation u/s 132(1) of the Act was carried out at Sanghvi/Gupta group of cases on 8.10.2003. Notice u/s 153A of the Act was served upon the assessee on 3.6.2004 in response to which the assessee declared loss of Rs. 4,16,100/-. However, the assessment was completed at an income of Rs.22,29,824/- and the additions were made on various accounts. The Assessing Officer rejected the books of account by applying section 145(3) and the book results were not accepted. The total sales were estimated at Rs.3,75,00,000/- and the gross profit was estimated at 16.5% which resulted into gross profit of Rs.61,87,500/- against the total sales shown by the assessee to the tune of Rs.3,72,34,558/- @ 13% gross profit (Rs.48,27,636/-), thus, the gross profit was worked out at Rs.13,59,864/- (Rs.61,87,500/- (-) Rs. 48,27,636/-) thus impugned addition was made. On appeal before learned Commissioner of Income Tax (Appeals) the assessee challenged the rejection of books of account by applying the provisions of section 143....
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....e sales at Rs.3,15,00,000/- and G.P. @ 16.5% as against sales of Rs. 3,00,81,719/- and G.P. @ 17.51% declared by the appellant. The A.O. neither specified the entries made in the seized documents nor basis of estimating the sales and G.P. as against declared by the appellant. It is a search case and no evidence has been brought on record in estimating the sales at Rs. 3,15,00,000/- as against Rs. 3,54,81,719/- declared and applying the G.P. @ 16.51% as against @ 17.51% declared by the appellant. In view of these facts, the action of the A.O. cannot be sustained and hence addition made on this account is deleted. This ground of appeal is allowed." 7. If the totality of facts is analysed, the undisputed fact remains that the whole suspicion arose due to the wrong entries deliberately entered by the ex-accountant to harass the assessee firm along with its directors and ultimately the documents no. LPS1/21, on the basis of which the books were rejected, and addition was made, were found to be dump documents as police complaint was filed in this respect. Copies of these complaints were duly filed before the Assessing Officer. This factum was not controverted by the revenue. Even o....
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....e. For fair appraisal of the issue, we have reproduced the table at page 4 (para 3) of this order where the learned Commissioner of Income Tax (Appeals) has made the disallowances. So far as the issue of share application money is concerned in respect of STL Extrusion (P) Limited, the same has been disposed of by the coordinate Bench, wherein one of us, is signatory to the order and decided the issue in favour of the assessee. The relevant portion of the same is reproduced hereunder :- " Both these appeals are by the assessees for different assessment years against the common order of the learned CIT(A) dated 18.9.2008 wherein following common grounds have been raised :- 1. That impugned order passed by the learned Commissioner of Income Tax (A) is bad in law as well as on the facts. It is based on incorrect interpretation of law and the facts have also been incorrectly construed. 2. That on the facts and in the circumstances of the case the ld. CIT(A) erred in upholding the A.O.'s action for making addition of Rs.1,59,000/- and Rs. 15,31,200/- respectively being amount of share application money received during the year by alleging that the same is bogus without appreciat....
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.....2000. A search u/s 132 was carried out at the premises of the assessee company on 8.10.2003. Consequent to search, a notice u/s 153C read with section 153A was served upon the assessee on 3.6.2004 to which the assessee again filed the return of loss i.e. Rs.22,91,022/- as originally filed. During assessment proceedings the assessee was asked about the details of increase in share capital of the assessee to which the assessee filed a list containing nine share holders from whom the share capital of Rs.1,59,300/- and Rs. 15,31,200/- was received. The assessee also filed confirmation from the subscribers through duly notarized affidavit containing the details like name, address, age, source of income, annual income, date of purchase of application of share tendered, number of shares purchased along with the amount given by subscribers. On receipt of these confirmations, neither anything was asked from the assessee nor any inquiry was made. The addition of Rs.1,59,300/- was made by the Assessing Officer by observing as under : "On perusal of submission made by the assessee in respect of share application money received by the assessee during the year. It is seen that in respect of ....
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....done in the present appeals. Therefore, in view of a decision of the Hon'ble Apex Court in the case of Mehta Parikh & Company v. CIT (supra), these affidavits become unchallengeable. The ratio laid down by the Hon'ble Delhi High Court in the case of CIT v. Shiv Prasad Agrawal (306 ITR 324) (relevant page 326) further fortifies our view. As far as the reliance of the revenue upon the decision from Hon'ble jurisdictional High Court in the case of CIT v. Rathi Finlease Limited (supra) to the extent that the assessee has to establish the genuineness of the credits, we are in full agreement with the argument but in the present appeal the assessee has duly established the identity, source of the credits. Even it is not the case that the shares have been issued to non-existing persons. Broadly we are of the view that once the identity and source of the subscribers is established for making share application, no addition can be made u/s 68 of the Act because even the Hon'ble Apex Court in the case of CIT v. Lovely Exports Private Limited; 216 CTR (SC) 195 even stepped ahead by concluding as under :- "If the share application money is received by the assessee company from alleged bogu....
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....st is consequential in nature, meaning thereby that it is not leviable/chargeable. 5. In view of these facts and judicial pronouncements both these appeals of the assessee are allowed. Finally, the appeals of the assessee are allowed. Order pronounced in open Court on 10th May, 2010." 10.2 In the aforesaid order the Tribunal has discussed various decisions including of the Hon'ble jurisdictional High Court in the case of CIT v. Rathi Finlease Limited; 215 CTR 429(MP), decisions from various High Courts and Hon'ble Apex Court such as Mehta Parikh & Company vs. CIT; 30 ITR 181 (SC), CIT vs. Lovely Exports; 216 CTR 195 (SC), CIT v. Divine Leasing & Finance Limited; 299 ITR 268 (Del), G.P. International Limited; 229 CTR (P&H) 86, Steller Investment Limited; 192 ITR 287 (Del) and Sophia Finance; 205 ITR 98 (Del). The share applicants in the case of the present appeal are the same which were also share applicants in the case of STL Extrusion (P) Ltd., who were found to be genuine by the Tribunal as their identity was not in doubt, therefore, the same applicant cannot be said to be bogus in the present appeal. However, the learned Assessing Officer added the amount of R....