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2013 (12) TMI 712
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....tax (Appeals) had erred in enhancing this addition to Rs.98,82,976/- holding that the entire expenses is not accounted and hence the entire amount is to be added to the income of the appellant. 6.2 The lower authorities have erred in holding that the scribbling in the seized documents were in the nature of expenditure and that these expenses were incurred by the appellant. The appellant never incurred or spent any such amount and therefore the addition, having been made on the wrong premise and being erroneous both on facts and law is to be deleted. 6.3 In any case the enhancement as made by Commissioner of Income-tax (Appeals) being bad in law is to be deleted." 4. In the A.Y. 2005-06, ground nos. 1 to 5 and ground no. 8 was not pressed and therefore the only effective grounds remaining for adjudication reads as under : "6.1 The learned Assessing Officer had erred in adding a sum of Rs.1,69,768/- u/s. 40A(3) of the Act and the learned Commissioner of Income Tax (Appeals) had erred in enhancing this amount of Rs. ....
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....rities have erred in holding that the scribbling in the seized documents were in the nature of expenses and that these expenses were incurred by the appellant. The appellant never incurred or spent any such amount and therefore the addition having been made on the wrong premise and being erroneous both on facts and law is to be deleted. 4.3 In any case the enhancement as made by Commissioner of Income-tax (Appeals) being bad in law is to be deleted. 5.1 The learned Assessing Officer had erred in adding a sum of Rs.1,47,48,900/- being amount withdrawn by several persons from 25 bank accounts in the names of and belonging to different persons and the Commissioner of Income-tax (Appeals) has erred in confirming the same. 5.2 The lower authorities have erred in holding that the appellant had control over the bank accounts. Further the lower authorities have also erred in holding that the expenses claimed by the appellant are bogus to the extent of amounts withdrawn from the bank. This conclusion of the lower authorities being without basis and being only on surmises and conjectures are to be totally ignored and additions as made by Assessin....
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....ted. 6.3 In any case, and without prejudice the addition as confirmed is excessive, it requires to be telescoped. 7.1 The learned Assessing Officer had erred in making an addition of Rs.22,35,21,842/- (20,32,03,707 + 2,03,18,135) as income on account of unexplained investment in purchase of iron ore and profit element on unaccounted sales. The addition as made by Assessing Officer being wholly on suspicion and surmises was wholly erroneous. 7.2 The learned Commissioner of Income-tax (Appeals) has however restricted the above addition to 2.92 Crores only by holding that the appellant had made unaccounted turnover of Rs.29,25,88,980/- on behalf of third person and that on such turnover be made a profit of 10%. 7.3 The conclusions drawn by Commissioner of Income-tax (Appeals) based on various observation in the course of appellate order are absolutely without any basis, the observations are totally unsubstantiated and therefore to be totally ignored. 7.4 The addition on this account as sustained being totally bad on fact and in law, requires to be deleted. 8.1 The learned Assessing Officer has erred in holding a sum of Rs. 1,43,000/- as unexplained investment in plot....
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....0,97,320/- holding that the entire expenses is not accounted and hence the entire amount is liable to be added to the income of the appellant though no addition / enhancement is sustained / made on this count after telescoping. 5.2 The lower authorities have erred in holding that the scribbling in the seized documents were in the nature expenditure and that these expenses were incurred by the appellant. The appellant never incurred or spent any such amount and therefore the addition having been made on the wrong premise and being erroneous both facts and law is to be deleted. 5.3 In any case the enhancement as made by Commissioner of Income-tax (Appeals) being bad in law is to be deleted. 6.1 The learned Assessing Officer has erred in holding that the appellant had excess unaccounted stock and in adding a sum of Rs.4,75,00,000/- to the income of the appellant and the learned Commissioner of Income-tax (Appeals) has erred in confirming the same. 6.2 There was no excess stock at all and there is no evidence therefor. No inventory of such stock was ever found or made by the Income-tax Department. The addition was made on conjecture and hence being without basis and confirm....
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....53A Date of filing of return Assessed income 2003-04 31.03.2009 1,30,934 2004-05 2,56,838 31.03.2009 20,82,332 2005-06 27,28,764 31.03.2009 3,35,83,130 2006-07 3,90,38,732 31.03.2009 5,57,13,703 2007-08 7,85,65,715 31.03.2009 49,23,75,811 2008-09 6,54,42,660 17.08.2009 2,02,90,39,645 In making the above assessment, the AO accepted the claim of the Assessee in the return of income with regard to the turnover of iron ore business declared in the return filed as if it were his own turnover/sales and not on behalf of Shri Anil Lad or Anil Lad's group concerns, M/s. VSL Mining etc. However, the disallowances and additions were made as detailed in the assessment orders including the additions made by treating some of the purchases as totally unaccounted shown in the names of persons as detailed in the assessment orders (relevant for A.Ys 2007-08 and 2008-09). Also, with regard to another category of purchases (again relevant for A.Ys 2007-08 and 2008-09) made from certain parties, the Assessing Officer accepted the claim of the appellant since the parties were existing parties but made a disallowance ....
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..... The AO verified and came to the conclusion that the actual cash payment made by the Assessee is Rs.62,15,790/- and not Rs. 98,82,976/-. CIT(A), therefore, in our opinion is not correct in enhancing the disallowance to Rs. 98,82,976/- since the correct amount which represents the cash payment as per seized document A/MJ/56 dt. 1.4.2008 as per AO is Rs. 62,15,790/-. Therefore, the addition should have been enhanced to Rs. 62,15,790/-. In view of this, we reduce the addition from Rs. 98,82,976/- to Rs. 62,15,790/-. To that extent, the order of CIT(A) is confirmed. Thus, the ground taken by the Assessee is partly allowed. A.Y 2005-06 - 10. Ground no. 6 which survives for our adjudication relates to the issue regarding disallowance made by CIT(A) amounting to Rs.81,05,775/-. The brief facts relating to this ground are that as per seized documents marked as A/MJ/7 dt. 1.4.2008, the AO noted that the Assessee had made cash payment amounting to Rs. 81,05,775/-. He worked out 20% thereof to be Rs. 16,21,155/- and gave opportunity to the Assessee to explain why the amount of Rs.16,21,155/- be not disallowed u/s 40A(3). The Assessee after going through the details of the payments, wor....
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.... of Rs.20,000/- are Rs. 8,48,843/-. Since the Assessee has not claimed any deduction in respect of these expenses and these expenses have been incurred outside the books of accounts, therefore, the provisions of Sec. 40A(3) will not be applicable in this case. CIT(A), we noted, enhanced the addition to Rs.81,05,775/- on the basis of what AO has noted at the initial stage while subsequently the Assessee submitted before the AO the expenses relating to this year are not Rs. 81,05,775/- but were only Rs 8,91,043/-. In our opinion, the Assessee once has incurred the expenses or made the payment outside the books of accounts, the onus is on the Assessee to explain the source thereof to the satisfaction of the Income Tax Officer. Since in this case the Assessee failed to explain the source of these expenses/payments, therefore, to that extent CIT(A), in our opinion, has correctly made the addition but the quantum of the addition made by CIT(A) is not correct. According to the details submitted, the total expenses/payment relating to this A.Y are only Rs. 8,91,043/-. We, therefore, reduce the addition to Rs. 8,91,043/-. To that extent, order of CIT(A) is confirmed. Thus, this ground is pa....
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.... AO, therefore, treated the amounts so withdrawn in each of the Assessment Years to be the undisclosed income of the Assessee and added it to his total income. Thus, during the impugned A.Y a sum of Rs. 2,88,25,000/- was added while Rs.1,47,48,900/- and Rs. 4,96,39,000/- were added as the undisclosed income of the Assessee during A.Y 2006-07 and 2007-08 respectively. The Assessee went in appeal before the CIT(A). CIT(A) confirmed the amount so withdrawn by the Assessee in each of the A.Ys. 11.1 The ld. AR before us vehemently contended that the very premise of these additions is absolutely erroneous. The AO has not pointed under which section or under which provision of law the addition has been made. Per se the withdrawal from the bank accounts cannot par-take the character of income. Therefore, the very basis of the addition, being total withdrawal from the bank be it bogus or otherwise, is not correct and the addition on this basis itself be deleted. The AO has incorrectly concluded that the 25 bank accounts are bogus. The allegation that the bank account-holders are all employees of the Assessee is totally baseless. The statement of salary paid by the Assessee clearly shows ....
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....ed all these bank accounts. The AO presumed that all these bank accounts are in the names of the employees of the Assessee but from the details of the bank accounts which are available from pg. 6-8 of the assessment order and the Annexure - A to the assessment order which contains names of the employees of the Assessee, it is apparent that none of these savings bank accounts are in the name of the employees of the Assessee. The Assessee explained that the Assessee has assisted the transporters to open these bank accounts as the transporters are located at faraway places so that the payment can be made to these transporters through cheque and the transporters or his truck driver may withdraw the amount as and when it is needed. It is not denied by the ld. DR that TDS has been deducted out of the transport charges so paid. It is not denied by the revenue that the transport charges so paid by the Assessee have been claimed by the Assessee as deduction. The AO has nowhere held that the transport charges paid by the Assessee are bogus even though the AO presumed that these bank accounts belonged to the Assessee and made the addition in respect of the amount withdrawn from these bank acc....
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....on amounting to Rs.1,21,48,858/- was enhanced. 13.1 The ld. AR before us vehemently contended that the disallowance should have been restricted to Rs. 11,17,400/- as was worked out by the AO. Enhancement made by the CIT(A) is not correct. By referring to the income tax return filed by the Assessee for the impugned assessment year in response to notice u/s 153A, it was submitted that the Assessee has surrendered a sum of Rs. 2,41,00,000/-. Although income is earned on account of VSL Group but the same has been utilized by the Assessee in making payment outside the books of accounts and, to that extent, telescoping should be allowed to the Assessee. 13.2 The ld. DR, on the other hand, relied on the order of CIT(A). 13.3 We have heard the rival submissions and carefully considered the same alongwith the order of the tax authorities below. It is not denied that the sum of Rs. 2,68,97,758/- represents the payment made by the Assessee outside the books of accounts. The details of these payments were not produced to us. In our opinion, if the Assessee has incurred any expenditure outside the books of accounts, the onus is on the Assessee to prove the source of such expenditure. W....
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....to Rs. 9,28,15,521/-. He, therefore, sought explanation of the Assessee why 20% of the expenses amounting to Rs. 1,85,63,104/- be not disallowed. The Assessee submitted that since all these amounts have already been offered as income and the expenditure has not been claimed as deduction under the Income Tax Act, the provisions of Sec. 40A(3) cannot be applied. The AO noted that in the declaration made before the ADIT dt. 20.11.2008, the Assessee tried to reconcile the figures arising out of the seized material A/MJ/29 and agreed to make a declaration of Rs. 16,10,04,519/- being the extent of outflows which also includes cash payments as per annexure A/MJ/29 of Rs. 2,68,67,758/- + Rs.8,50,39,441/- but in the return, the Assessee has offered a sum of Rs. 6,31,00,000/- as declaration for the relevant year. Therefore, he accepted the explanation of the Assessee and no disallowance u/s 40A(3) was made. When the appeal went before CIT(A) for the relevant A.Y. even though no ground of appeal was taken by the Assessee on this issue, the CIT(A) issued a notice of enhancement u/s 251(2) dt. 6.5.2013 and asked the Assessee to explain the source of the sum of Rs. 9,28,15,521/-. CIT(A) did not ....
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....oks of accounts were duly covered by the declaration made by the Assessee and, therefore, no addition should be made in this regard. The cash payments were made out of the cash receipts from the business carried on by the assessee for which the necessary evidences were found during the course of search by way of unaccounted sales as well as unaccounted purchases. In this regard separate addition were made by the A.O. Ultimately, as on the date of the search the assessee got the undisclosed assets to the extent of stock being of eleven crores. Our attention was also drawn towards para 8 of the impugned assessment order. The AO also agreed that the correct figure of the cash payment outside the books of accounts for the A.Y were Rs. 8,50,39,441/-. It was also contended that whatever income is generated by making unaccounted sales and purchase the said income has either been invested, consumed or withdrawal for making personal assets. There had been search in the case of the assessee and ultimately all these payments made outside the books of accounts culminated into an unaccounted asset by way of stock. It was stated that the A.O made separate addition on estimate basis in respect of....
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....gone through the letters of the Assessee dt. 23.4.2008 and 20.11.2008 written to the Asst. Director of Income Tax (Inv.). Copy of these letters were filed before us during the course of the hearing. We noted that vide letter dtd. 23.4.2008 the Assessee agreed to disclose a sum of Rs. 11 crores in the following manner : Value of stock lying at Krishnapatnam port, AP Around 35000-40000, kept for export/sales To exporters Rs. 10,75,00,000/- Additional amount declared to cover for any further Deficiencies in seized material, books of accounts And for other disallowances that may be called for Rs. 25,00,000/- Total Rs. 11,00,00,000/- We further noticed that vide letter dt. 20.11.2008 the Assessee further agreed to make an additional declaration of Rs. 5,10,04,519/- in addition to the sum of Rs. 11 crores as under : 1. Cash payments made as noted in the seized material A/MJ/38 Rs. 7,90,97,320/- Less : Duplication entry at page 4 and 5 Rs. 3,00,00,000/- Undisclosed Income based on the above seized material Rs. 4,90,97,320/- 2. Cash payments as per A/MJ/29 Rs. 2,68,67,....
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....llow telescoping only to the extent of Rs. 6,31,00,000/-. We also noted that the assessee had taken the ground no.7 in respect of the addition made for the estimated profit on the unaccounted sales. The A.O estimated the profit on unaccounted sales of Rs.20,32,03,707/- at Rs.2,03,18,135/-. When the matter went before the CIT(A), the CIT(A) enhanced the addition in respect of the profit estimated at Rs. 2.92 crores, this ground has been dealt by us in the subsequent paragraphs and we have sustained the addition to the extent of Rs.89,40,874/-. We agree with the alternate submission of the learned A.R the addition so sustained by us in respect of the profit on unaccounted sales will also be available with the assessee and therefore we allow the telescoping of the said sum of Rs.89,40,874/- also alongwith the telescoping of Rs.6,31,00,000/- and therefore, we, sustain the balance addition of Rs. 1,29,98,567/-. Thus, this ground is partly allowed. 17. Ground no. 6 relates to the addition of sum of Rs. 4,96,39,000/- sustained by CIT(A), added by AO as amount withdrawn by several persons from 25 bank accounts. Both the parties agreed that the issue is also similar to ground no. 7 taken....
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[email protected]% on unaccounted sales of Rs.39,09,130/- at Rs.3,90,870/-.The Assessee went in appeal before the CIT(A). 18.1 CIT(A) after rejecting the submission of the Assessee that the Assessee was merely providing accommodation entries on commission basis enhanced the quantum of unaccounted sales from Rs. 22,35,21,842/- to Rs. 29,25,88,981/- after making an abstract from the unaccounted purchase and sales made by the Assessee on the basis of the seized material detailed as under : SI. No. Month GRMTC Qty VSL Qty Amount 1 April 2006 19180.840 19180.840 23377609.00 2 May 2006 9750.880 9477.130 10424843.00 3 June 2006 3525.030 3517.030 3868733.00 4 July 2006 16919.060 16899.620 16057098.00 5 Aug 2006 7020.340 7026.550 771978.00 6 Sep 2006 19213.060 19117.110 17063464.00 7 Oct 2006 40616.720 40585.830 37651577.00 8 Nov 2006 54528.950 53737.420 54671594.00 9 Dec 2006 40170.180 39505.420 32062623.00 10 Jan 2007 19378.850 19244.300 2306982.18 11 Feb 2007 56997.570 56417.330 66621779.50 2873....
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....ron-ore was brought to the market as purchases from unregistered dealers in the concern of Sri. Manoj Kumar Jain. The sales proceeds received in cheques on such sales is withdrawn from bank in cash and after deducting his own commission, balance cash was handed over to Mr. Anil Lad and his associates from time to time. The various evidences found during the course of search proceedings in the case of Mr. Manoj Kumar Jain and Mr. Anil H Lad and the sworn statements recorded from Mr. Manoj Kumar Jain clearly proves this modus operandi." Our attention was also drawn towards the copy of the agreement seized, entered into between the Assessee and Shri Anil Lad, a copy of which is placed at pg. 181-182 of the paper book. As per this agreement, Shri Manoj Kumar Jain i.e. the Party of Second Part has to receive for the services rendered by him, profit @ 20% in case the iron ore is FE less than 60% and if FE is greater than 60%, the Assessee is to be paid a fixed amount of Rs. 14/- per ton. This agreement is dt. 7.10.2005 and is available in the seized material A/MJ/29 (pg. 51-56). As per the remand report, the excess of the declared quantity of the fines extracted is 237863 MT. On that ....
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.... DR, on the other hand, relied on the order of CIT(A). On a query from the bench by referring to pg. 38 of the paper book as to from where CIT(A) has taken the quantity of purchase and sales made outside the books of accounts, the ld. DR could not be able to specify the annexure which contains such details. 18.4 We have heard the rival submissions and carefully considered the same along with the order of the tax authorities below as well as the documents referred to and relied on before us during the course of the hearing. We noted that in this case CIT(A) has called for the remand report from the AO. The AO in para 2 of the remand report laid down the modus operandi of the business being carried on by the Assessee in the following manner: "2. Various incriminating documents found during the course of Search and seizure proceedings and post search investigations conducted in this case revealed that Sri. Manoj Kumar Jain was acting as an agent for Anil Lad group of concerns to regularize their unaccounted illegally extracted iron-ore and sale thereof through his own concerns. Such unaccounted and illegally extracted ....
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....to B.R. Yogendra Nath Singh between Shri Anil H. Lad, Shri Manoj Kumar Jain and Shri K. Shamshulhaq Khan. Copy of the agreement was placed before us and is available at pg. 181-182 of the paper book. As per this agreement, we noted that the Assessee is entitled for 20% of the profit for the services rendered by him for taking care of the production and marketing of the iron ore in case the iron ore FE is less than 60% and in case the iron ore FE is greater than 60%, Shri Manoj Kumar Jain is to be paid fixed amount @ Rs. 14/- per ton. Ultimately, after discussing the various evidence found in the remand report, the AO observed that the Assessee has loaded and transported iron ore more than the permitted quantity. This proves that the Assessee was resorting to unaccounted illegal extraction of iron ore from the mines. The remand report further states that excess unaccounted stocks was found during the course of the search in the premises of Shri Anil H. Lad as well as in the premises of the Assessee. The Assessee agreed to declare an additional income of Rs. 10.75 crores in respect of the unaccounted stock. The Assessee explained the source to be the cash withdrawal from the bogus ac....
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....e) to various parties during the F.Y 2006-07 and 2007-08 and the Assessee has used the code CQ for cheque and CC for cash sales. In the statement recorded on 5.4.2008 the Assessee confirmed that CC means unaccounted cash sales. Details of these unaccounted cash sales are the same as reproduced earlier amounting to Rs.22,35,21,842/-. In the remand report, the question answer of the statement recorded on 2.4.2008 has been produced. In the statement recorded on 5.4.2008 the Assessee categorically accepted that the sales against which CC is mentioned represents the cash sales. In the same very statement, in respect of the source of the cash payment, the Assessee categorically stated that the source of the cash payment is cash withdrawn from the 25 bank accounts as well as cash sales appearing in the seized material. Ultimately on 24.6.2008 when the statement was recorded in reply to question no. 4, the Assessee agreed for disclosure of additional income of Rs. 11 crores and stated that the Assessee was operating the mines of Anil H. Lad group concerns and the transactions are routed through the proprietorship concern of the Assessee on which the Assessee was getting Commission @ 2-4%. ....
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....ments recorded u/s 132(4) and 131 during the course of search and seizure proceedings and post search investigations that I was operating the mines of Sri. Anil H Lad group of concerns. While doing their business a part of the transactions are routed through M/s GRMTC for which I got only commission of 2 to 4 % for accommodating part of their business. The transactions mentioned by you in ques no. 2 are also of the similar nature i.e accommodation only and myself nor my staff member got more than 2 to 4% amount in other words we got commission for such arrangement to the tune of 2 to 4%. I have already declared additional undisclosed income of Rs. 11 Crores considering the above discrepancies. To cooperate with the department and to avoid further litigation I have declared more undisclosed income. 1 may mention here, that if you work out the turnover based on the 4% commission such unaccounted turnover would be more than Rs. 275 Crores. However you must have seen from the seized documents that the unaccounted turnover is not to that extent. Thus the declaration made by me is correct as per my calculation. In the case of my employees and other concerns mentioned in ques no. 2 paymen....
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....5,88,981/- and even estimated profit @10%, though accepted the explanation of the Assessee with respect to the cash sales outside the books that these pertained to Shri Anil H. Lad and he has only earned a profit margin of certain percentage of these sales, merely by observing that the Commission of 2-4% claimed by the Assessee is too small. CIT(A), we noted, even increased the quantum of the sales even though no notice for enhancement was issued by CIT(A). The provisions of Sec. 251(2) which are very clear and mandatory stipulates that the CIT(A) shall not enhance the assessment unless the Assessee has been given a reasonable opportunity of showing cause against such enhancement. 18.4.2 The ld. DR even though relied on the order of CIT(A) but could not produce any cogent material or evidence to prove that the CIT(A) has given enhancement notice to the Assessee. Even no material whatsoever was brought to our knowledge which may prove the figures of the sales taken by the CIT(A) are based on the basis of the seized material. Under these facts and circumstances, in our opinion, the finding of the AO are to be confirmed that the unaccounted cash sales were only to the extent of Rs.....
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....e Assessee that the Assessee was earning Commission on this unaccounted sales from 2-4%. The revenue cannot be permitted to blow hot and cold whenever they like. The estimation of the profit cannot be at the whims of the A.O that he may apply any rate of profit. The estimation of the profit must be based on the material evidence found during the course of search or as may be gathered by the A.O to support that the estimate made by the A.O is not arbitrary and is bonafide. This is a settled law that part of the statement cannot be accepted as true and the other part of the statement as false. Once on the basis of the statement of the assessee revenue has agreed that the assessee was engaged in unaccounted sales to accommodate the illegal mining carried out by Shri Anil Lad, in our opinion the revenue is bound to accept the other part of the statement that the assessee has earned the profit on such unaccounted business @2-4%. No cogent material or evidence was brought to our knowledge that the assessee has earned the profit @ more than 4%. Under these facts and circumstances, it will be proper and reasonable, in our opinion, the addition be made by estimating the profit on such unacc....
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.... the Balance sheet it is apparent that this Balance sheet is subject to Audit and was not signed by any of the responsible persons. It does not contain the Profit & Loss Account. Only on the Liabilities side of the Balance Sheet, Profit & Loss for the current year is mentioned. It is a normal practice that the print out of the Balance Sheet subject to passing of the final entries is taken out and the Balance Sheet is finalised only after passing the closing entries. The Balance Sheet so found and seized, in our opinion, does not have any conclusive evidence on the basis of which the income can be determined. The Assessee is maintaining the regular books of accounts. The accounts are duly audited by the Auditor and the Auditor has duly certified the Profit & Loss A/c and Balance sheet which were furnished along with the returns. The Audited Profit & Loss and Balance Sheet depicts the correct and fair Profit & Loss Account. The unaudited rough print out of the Balance sheet cannot substitute the audited Profit & Loss and Balance sheet. In view of this fact, we set aside the order of CIT(A) and delete the addition of Rs. 86,97,774/-. 20. The next ground relates to addition of Rs. 1....
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.... 491,400.00 02 Raghavendra Agencies 15,500,00.00 813,750.00 03 Sairam Associates 12,409,800,00 651,515.00 04 Venkateshwara Minerals 31,637,450.00 1,660,966.00 Purchases made from the followinq parties treated as bogus for A.Y. 2008-09 SI. No. Name of the Party Amount Profit thereon 01 Prime Zak Mines & Minerals 42,633,200.00 22,43,572.00 02 Gulab Shah Traders 42,557,580.00 22,34,272.00 03 Raghavendra Agencies 32,110,000.00 16,85,775.00/ 37,81,037.00 04 APN Enterprises 166,447,840.00 87,38,512.00 05 Shakambari Trading Co., 78,916,831.00 41,43,133.00 06 S R Trading Co., 29,642,500.00 15,56,231.00 07 M/s Harihant Enterprises 29,622,500.00 15,55,181.00 08 M/s Hemant Trading Co., 29,635,000.00 15,55,838.00 09 Sai Minerals 220,834,577.00 1,12,62,563.00 10 Bhavani Enterprises 166,447,840.00 87,36,547.00 11 Pooja Mine....
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....cided to be given at the rate of 0.25% i.e., Rs. 1,25,000 on the purchase of Rs.5 crores. ü VAT and Income Tax will be paid by GRMTC. Capital will be retained by GRMTC. ü Employee will be given either benefit of loading or benefit URD which will be decided on quarterly basis and the benefit amount will be kept in FD for 3 years compulsorily. ü Monthly expenses from Rs.13,000 to Rs.20,000 will be given to employees which includes salary, rent, office expenses, petrol, mobile and stationery. ü Per file sales tax will be given at Rs.1500. ü Per file Income Tax of Rs.5,000 will be given. ü VAT cheque statement to be given for transferring of funds and issuing cheques. ü All the required vouchers will be maintained and handed over within 30 days of every month. Some of the employee's names are also written on these pages. They are none other than so called proprietors of various bogus entities from which the assessee has shown as he has made unregistered purchases. Name written on the seized material Name of the Proprietary concern shown in the books Ashok Ashok Chajjer Jain ....
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....s the introducer only in respect of 3 concerns, viz. Shakambari Trading Co., Sai Minerals and Bhavani Enterprises. Letters/summons were duly served by the AO. These parties appeared before the AO. Even their statements were also recorded. Even these parties have filed their income tax returns before issuance of notice u/s 153C. All the sales made to the Assessee are duly shown. The total purchases from the unregistered dealers are much less. Within the group, purchases are to the extent of Rs. 33,75,75,865/- while the total purchases made by the Assessee in both the years is Rs. 89,06,89,046/-. Our attention was also drawn towards the sales tax return filed by these concerns as well as their Trading Account which are appearing from pg. 152-165 of the paper book. On this basis, it was contended that in some cases the employees of the Assessee may be the proprietor but all these concerns are genuine concerns. In respect of the rest of the concerns, our attention was drawn towards the order of the A.O and it was stated that all these concerns are income tax Assessees and are being regularly charged to income tax. Even otherwise, it was contended that the Assessee has submitted the qua....
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....n ore at its own if any iron ore illegally extracted and an income is earned that would belong to the owner of the mine. In this regard reliance was placed on the decision of Hon'ble Supreme Court in Civil Appeals Nos. 4540-4548 of 2000 in the case of Threesiamma Jacob & Ors vs Geologists, Dptt. Of Mining & Geology & Ors in which Hon'ble Supreme Court vide order dated 8th July, 2013 Hon'ble Supreme Court held under para 57 of its order that ownership of sub-soil/mineral wealth should normally follow the ownership of the land, unless the owner of the land is deprived of the same by some valid process. Even in this case the Hon'ble Supreme Court was of the opinion that there is nothing in law which declares that all mineral wealth sub-soil rights vest in the state. Before us copy of the trading account for both the years ended as on 31.3.2007 and 31.3.2008 were filed and it was contended that the gross profit during the year 31.3.2007 as per the books comes to 16.5% while for the year ended 31.3.2008 comes to 6.06%. If the purchases disallowed are confirmed the gross profit for the year ended 31.3.2007 will shoot up to 50.89% while for the year ended 31.3.2008 it will shoot up to 90.....
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....search that the assessee was engaged in the trading of the iron ore. During the course of carrying out the trading in iron ore the assessee has accommodated Shri Anil H. Lad and M/s VSL and Sons for selling iron ore procured by them through illegal mining carried out in their mining. Thus, the purchases made by the assessee from these firms which were without bills were shown by the assessee in his books of accounts as if the assessee has made purchases from various parties so that it may appear that the assessee has made the purchases for these parties. It is also uncontroverted fact that the assessee did not own any mine and was engaged only in trading of iron ore through its proprietorship concern. The sales made by the assessee were duly accepted by the revenue. We have gone through the decision of the Hon'ble Supreme Court in Civil Appeals Nos. 4540-4548 of 2000 in the case of Threesiamma Jacob & Ors vs Geologists, Dptt. of Mining & Geology & Ors in which Hon'ble Supreme Court vide order dated 8th July, 2013 Hon'ble Supreme Court held under para 57 of its order that ownership of sub-soil/mineral wealth should normally follow the ownership of the land, unless the owner of the l....
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....he bills @ 4%. This may make the bills to be bogus but we cannot conclude that the Assessee has not made the purchases. It is not a case where the Assessee has inflated the purchases i.e. the quantity of the purchases are much more than the quantity of the iron ore sold. The AO in his remand report has categorically accepted the fact that the Assessee was working on behalf of Shri Anil H. Lad who want owned the mines and has extracted iron ore illegally much more than permissible. To cover up the quantities of purchase made from Shri Anil H. Lad concern M/s VSL & Sons, the Assessee had to procure the purchase bills. It is not the case of the revenue that the iron ore purchases and sales made by the Assessee are not reconcilable. The Assessee has submitted the quantitative reconciliation statement which has been referred to by the AO in his remand report. The sales accounted for and made by the Assessee have not been disputed by the Revenue. At the most, in our opinion, where the Assessee had saved any tax in procuring the bogus bills, the Assessee could have made more profit but the purchases made by the Assessee cannot be disallowed. There are evidences that these firms were duly ....
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....ofits. Before concluding our finding on this issue we may mention that the assessing officer had disallowed the expenses incurred by the assessee for the purchases u/s 37(1)of the Income Tax Act. We, therefore, in view of our aforesaid discussion delete the addition made on account of bogus purchases. The purchase cost in the case of a trader in our opinion is allowed as deduction u/s 28 itself as u/s 28 is only the profit and gains of any business or profession which are chargeable to Inc. The consideration received by the assessee on the sales cannot be regarded to be the profit and gains of the profession. Section 28(1) does not make total revenue receipt to be chargeable to Income Tax Act. On this basis also the order of the CIT(A) cannot be sustained in our opinion on this issue. In view of our aforesaid discussion we delete the addition made on account of bogus purchases made by A.O and sustained by the CIT(A). In both the assessment years thus the ground no. 9 in assessment year 2007-08 and ground no. 8 in assessment year 2008-09 are allowed. Assessment Year 2008-09: 22. Ground No.5 relates to the addition of Rs.7,90,97,320/- enhanced from Rs. 1,58,19,464/-. The facts ....
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....; Balance being disclosed now Rs. 5,10,04,519/- Thus, it was contended that the payment made in cash outside the books of accounts was duly covered by the declaration made by the Assessee and, therefore, no addition should be made in this regard. The cash payments were made out of the cash receipt from the business carried on by the assessee for which the necessary evidence were found during the course of search by way of unaccounted sales as well as unaccounted purchases. In this regard separate addition were made by the A.O. Ultimately, as on the date of the search the assessee got the undisclosed assets to the extent of stock being of eleven crores. Our attention was also drawn towards para 8 of the impugned assessment order. The AO also agreed that the correct figure of the cash payment outside the books of accounts for the A.Y were Rs.4,90,97,320/-. It was also contended that whatever income is generated by making unaccounted sales and purchase the said income has either be invested, consumed or withdrawal for making personal assets. There had been search in the case of the assessee and ultimately all these payments made outside the books of accounts culminated into a....
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....the rival submissions and carefully considered the same alongwith the order of the tax authorities below. We have gone through the letters of the Assessee dt. 23.4.2008 and 20.11.2008, written to the Asst. Director of Income Tax (Inv.). Copies of these letters were filed before us during the course of the hearing. We noted that vide letter dtd. 23.4.2008 the Assessee agreed to disclose a sum of Rs. 11 crores in the following manner : Value of stock lying at Krishnapatnam port, AP Around 35000-40000, kept for export/sales To exporters Rs. 10,75,00,000/- Additional amount declared to cover for any further Deficiencies in seized material, books of accounts And for other disallowances that may be called for Rs. 25,00,000/- Total Rs. 11,00,00,000/- We further noticed that vide letter dt. 20.11.2008 the Assessee further agreed to make an additional declaration of Rs. 5,10,04,519/- in addition to the sum of Rs. 11 crores as under : 1. Cash payments made as noted in the seized material A/MJ/38 Rs. 7,90,97,320/- Less : Duplication entry at page 4 and 5 Rs. 3,00,00,000/- U....
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....nce of Rs. 4,75,00,000/- made by the A.O on account of cascading effect for assessment year 2006-07 while declaring the stock in the impugned assessment year amounting to Rs.10,75,00,000/-. The brief facts relating to this addition are that the assessing officer noted that as per the books of accounts closing stock as on 31.3.2008 was Rs. 7,72,83,689/- in M/s JRMTC found during the course of search. In the survey conducted in his stock yard at Sankalanpur village bellary road, hospet stock of Rs. 5,41,20,000/- was found. Quantity of stock lying at stock yard was Rs. 51,00,000/- M.T and value of the same is Rs. 7,51,00,000/- thus there was shortage of Rs. 2,31,00,000/- stock. The assessee in the statement recorded u/s 132(4) dated 23.4.2008 stated that unaccounted stock of iron ore of M/s JRMTC amounting to Rs.10.75 crores was lying at Krishnapatnam, Nellore, District Andhra Pradesh. The assessee claimed that this stock is accumulated out of the cash withdrawn and cash generated out of the unaccounted sales. The assessee submitted when questioned by the A.O that the assessee duly considered the stock declared by him in the return. The A.O noted that the assessee declared during the ....