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2013 (12) TMI 359
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....is own catering business under the name and style 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 Commissi....
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...., telephone, etc., were found to be cheque payments. Hence, it cannot be held that the same expenditure was claimed 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....
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....ure (Rs.) % of dis-allowance Amount (Rs.) Total (Rs.) 2002-03 Direct Indirect 23,70,344 6,99,087 15% 10% 3,55,552 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 the....
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....tive expenditure. The assessee on the other hand submitted that majority of the expenditure was incurred through banking channel. The assessee also submitted that during the course of assessment proceeding, the books of account were produced before the Assessing Officer in support of the genuineness 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 ....
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....r dated December 27, 2011 wherein we have confirmed the disallowance at 5 per cent. of such expenses by holding as follows in paragraph 9 : "We have heard the parties and perused the material on record. The assessee is a subcontractor. The assessee is 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. Con....
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.... it is also not the case of the Assessing Officer that the seized material, if any, suggested inflation of agricultural income. He, therefore, concluded that such type of addition cannot be made in the assessment under section 153A de hors the material found at the time of search and moreover, in the assessment year 2006-07, sale proceeds 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 a....
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....search and seizure operation for making an assessment of the undisclosed income of the assessee. 30. We have heard the arguments of both parties and perused the record. We are of the opinion that the Commissioner of Income-tax (Appeals) was right in treating the income as agricultural income and not as income from other sources as the assessee has filed 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....
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....s and stated that the same may be considered favourably. The remand report was given to the assessee for perusal and his comments. The authorised representative for the assessee pleaded that those credits recommended by the Assessing Officer are to be held as genuine, and the addition made against them under section 68 should be deleted. After considering the remand report 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 establis....
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....ustained to the extent of Rs. 89,10,000 and the balance of Rs. 43,00,000 is directed to be deleted and while recomputing the total income of the assessee, any claim under the head interest on the loans is to be disallowed as the same are not incurred for the purpose of business. 41. Aggrieved, the assessee is in appeal before us. 42. Learned counsel for the assessee submitted that 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 ....