AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2013 (12) TMI 359
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....yle of MBA Catering Services. Search and seizure operations under section 132 of the Act were conducted on December 12, 2007 in the case of Hyderabad House P. Ltd. and at the residential premises of the assessee. During the course of search operation, certain incriminating material were found and seized and statements were recorded from the assessee and his staff. Subsequently, notice under section 153A was issued and the assessee filed returns of income for the assessment years 2002-03 to 2008-09. Based on the evidence found, the Assessing Officer made several additions. The details of year-wise income admitted in the returns and the total income computed by the Assessing Officer are as follows : Assessment year Returned income (Rs.) Assessed income (Rs.) 2002-03 3,21,150 13,23,810 2003-04 4,40,886 28,68,510 2004-05 3,61,721 29,23,266 2005-06 3,41,473 2,04,82,853 2006-07 15,59,508 3,88,66,761 2007-08 30,71,736 2,21,16,055 2008-09 24,74,399 2,74,25,799 3. Aggrieved by the order of the Assessing Officer, the assessee preferred appeals before the Commissioner of Income-tax (Appeals). 4. The first effective ground is directed against the action of the....
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....aimed twice once in the case of Hyderabad House P. Ltd. and for the second time in the case of Mir Mazharuddin, the appellant. The statement of Sri Aftab Pasha extracted in the assessment order is also examined. As seen therefrom, Sri Aftab Pasha had also stated that for large catering orders, the food items are prepared at the site and not at the kitchen at Tolichowki. Raw materials were purchased by the appellant only. Apart from the same, the Assessing Officer could not bring in any material to suggest that the same expenditure was claimed in the case of Hyderabad House P. Ltd. to support his finding of double claim of expenses. It is also a fact that the assessee had filed return of income disclosing the business profits on catering services and claimed various expenses. It is also a fact that no evidence except the statement of the manager was forthcoming on this issue at the time of action under section 132. Considering the totality of the circumstances I am of the opinion that the expenses disallowed by the Assessing Officer are genuinely incurred for the business of MBA Catering Services and as such the finding of 'claim of duplication of expenses' is not properly supported....
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....52 69,909 4,25,461 2003-04 Direct Indirect 20,87,110 6,65,091 15% 10% 3,13,067 66,628 3,79,576 2004-05 Direct Indirect 25,10,855 4,76,500 15% 10% 3,76,628 47,650 4,24,278 2005-06 Direct Indirect 14,72,705 5,74,182 15% 10% 2,20,906 57,418 2,78,324 2006-07 Direct and indirect 33,92,561 15% 5,08,884 5,08,884 2007-08 Direct and indirect 55,26,172 10% 5,52,617 5,52,617 2008-09 Direct and indirect 49,47,348 10% 4,94,735 4,94,735 14. Before the Commissioner of Income-tax (Appeals), the authorised representative for the assessee argued that the assessee is regularly filing income-tax returns and accordingly filed returns of income for all the assessment years under dispute and disclosed the fact of expenses in those returns and there is no material or evidence in respect of these expenses for the Assessing Officer to resort to such disallowance. The authorised representative for the assessee furnished the details of expenses incurred in cash and through cheque payments. He also raised a ground that without any mat....
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....ness of the expenditure claimed and the assessee had also filed a data for the one assessment year 2007-08 segregating the payments made through banking channels and payments made through cash. During the course of the first appellate proceeding, the assessee have filed details segregating the expenses. As per the said details of production expenses, only partial payment is by cash and the balance is by cheques. Similarly, for the employees benefits less director's remuneration partial payments were made by cheque towards provident fund and employees' State insurance contribution and balance paid by way of salaries covered by provident fund and employees' State insurance. As regards administrative expenses less sales tax amounting to a portion includes statutory payments like electricity charges, property tax, food licence, labour licence, trade licence, etc. This apart payment of franchise commission, sales tax appeal etc. were stated to have been made by cheques. The assessee also submitted that on payment of rent, franchise commission and security services, in fact TDS was also deducted. 36. The Assessing Officer himself has observed in the ....
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....engaging labour at site at far flung places. In such circumstances, it is difficult to have documents for such expenditure, to the satisfaction of the Assessing Officer. It is also difficult to verify the identity of the labour, after lapse of many years. The accounts of the assessee have been audited and auditor's certificate under section 44AB has also been furnished. The Assessing Officer has not analysed the expenses compared to the turnover for the earlier years. A search has been made in the premises of the assessee and no incriminating evidence in this regard has been found. Only an ad hoc disallowance of expenditure claimed by the assessee has been made. However, from the observations of the lower authorities it can be inferred that full details of expenditure have not been properly documented. Hence, the possibility of some inflation of such expenses cannot be ruled out. Considering totality of facts and circumstances of the case, we are of the opinion that disallowance of 5 per cent. of labour and site expenses are reasonable.'" 19. Since the issue under consideration is identical to that of Hyderabad House P. Ltd., respectfully following the same, we direct the Assessin....
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....eeds of the agricultural land were disclosed and offered to capital gains which clearly suggested the existence of agricultural land in the hands of the assessee during the relevant years under reference. The Commissioner of Income-tax (Appeals) accordingly directed the Assessing Officer to delete the additions made on this ground for the assessment years 200203, 2003-04, 2004-05 and 2005-06. 24. Aggrieved, the Revenue is in appeal before us. 25. Before us, learned counsel for the assessee pointed out that in the regular assessment agricultural income has been accepted. However, in the assessment year 2006-07, the agricultural land was sold and was offered to capital gains, which proved that the assessee was holding agricultural land till the date of sale. 26. After hearing the learned Departmental representative and perusing the record, and after examining the details of agricultural land holding and document numbers and relevant records, we find that the assessee is the owner of the agricultural lands. In these circumstances, we confirm the order of the Commissioner of Income-tax (Appeals) and dismiss the ground raised by the Revenue in this regard. 27. The Revenue raised com....
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....ed a letter dated November 24, 2009 explaining that the ownership of the agricultural land purchased in the year 1986 and 87 vide 1005 of 96 and 745 of 96. Therefore, the assessee has substantiated the fact of holding agricultural land by way of proper evidence and the requirement of material found during the course of search operation or other than what was available during the course of search operation is not of any relevance. The Commissioner of Income-tax (Appeals) held that it is not the case of the Assessing Officer that the seized material, if any, suggested inflation of agricultural income. Hence, we confirm the order of the Commissioner of Income-tax (Appeals) on this issue. Accordingly, the ground Nos. 5 and 6 raised in the assessment years 2002-03 to 2005-06 are dismissed. 31. Now, we take up the grounds raised in the assessee's appeals (I. T. A. No. 1183 to 1188/Hyd/2012) : 32. Ground No. 1 that the Commissioner of Income-tax (Appeals) is not justified in sustaining the disallowance of expenses at 8 per cent. raised in all the appeals under consideration has been decided in the Revenue appeals vide paragraph 19 (supra). Since this ground of appeal raised by the asses....
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....eport and submissions of the assessee, the Commissioner of Income-tax (Appeals) held as follows : "8.3 I have examined the issue, the remand report and the submissions of the appellant thereon. As reported by the Assessing Officer, details of which are mentioned in the preceding paragraph for the assessment years 2003-04 and 2004-05 the assessee could not file any confirmation and supporting evidences to the genuineness of the loans obtained, the additions so made of Rs. 14,60,000 for the assessment year 2003-04 and Rs. 5,82,870 for the assessment year 2004-05 for the cash credits appearing in the books of the assessee cannot be accepted as genuine. Some of the credits are obtained from non-residents staying abroad. Therefore, their identity also has not been established. Therefore, the additions so made for the assessment year 2003-04 of Rs. 14,60,000 and Rs. 5,82,870 for the assessment year 2004-05 is confirmed." 37. For the assessment year 2005-06, the Assessing Officer had made two additions under unexplained cash credits of Rs. 32,32,000 and Rs.1,42,79,929 as unexplained credits appearing under Excellence Estates. The total ad....
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....hat once the income is estimated there cannot be any addition whatsoever. For this purpose, he relied on the judgment of Indwell Constructions v. CIT [1998] 232 ITR 776 (AP) wherein it was held that where the books of account are rejected by the Revenue, the Revenue cannot rely on the same books for addition of exact item in the profit and loss account. 43. On the other hand, the learned Departmental representative relied upon the order of the Commissioner of Income-tax (Appeals). 44. We have heard the arguments of both parties and perused the record. The main contention of learned counsel for the assessee on the issue of addition under section 68 is that no addition must be made as income is estimated. We find from the assessment record that income of the assessee is not estimated. The income is determined after considering the returned income and making further disallowance for discrepancies in voucher/bills produced by the assessee. Even otherwise, when income is estimated by the Assessing Officer, addition under section 68 is permissible. For this purpose, reliance is placed on the decision of the jurisdictional High Court in the case of CIT v. Maduri Rajaiahgari Kistaiah [19....