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TaxTMI 
TaxTMI 
TaxTMI 
2014 (1) TMI 598
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....3. Both the assessees above are related concerns and the issues involved in their appeals are also common and, therefore, all these appeals were heard together and are disposed off by this common and consolidated order. We shall take up the case of Vinsree Infotech for the block period first :- 4. The brief facts of the case are that M/s Vinsree Infotech is a partnership firm set up by one Shri Suresh and his family members as partners with the object of carrying on business in software development, training and consultancy and it is the contention of the assessee that it has been filing its return of income regularly. The Department had conducted a search and seizure operation u/s 132 of the Income-tax Act on the assessee's business premises and also the residential premises of its partners on 31/1/2003. Various incriminating material was found and seized. The Assessing Officer completed the assessment for the block period u/s 158BC(c) r.w.s 144 on 24.6.2008 raising heavy demand of taxes and penal interest thereon. The assessee filed an application u/s 264 before the CIT stating that he was arrested by the police immediately after search and was granted bail only in August 2007 ....
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....d income of the group was arrived at Rs.5,25,55,400/- and demand of tax was raised accordingly. Against the same, the assessee filed an application u/s 264 of the Income-tax Act before the CIT, (Central) detailing the circumstances under which the assesse could not present himself before the AO and, that the assessment should be set aside. The CIT, passed the order u/s 264 setting aside the original assessment with a direction to the AO to redo the assessment after affording an opportunity of hearing to the assessee. During the assessment proceeding u/s 158BC(c) r.w.s 264 of the Income-tax Act, the AO had reconsidered the issue and found that in case of the assessee it was necessary to get its accounts audited in terms of the provisions contained u/s 142(2A) of the Income-tax Act. The assessee was asked to show cause as to why the accounts should not be audited u/s 142(2A) and the assessee filed its objections. The AO rejected the objections of the assessee and after getting approval from the CIT, (Central) on 24/12/2007, the accounts were got audited by M/s Karvy and Co., Chartered Accountants, Hyderabad. M/s Karvy & Co. submitted its audit report stating that no proper books of a....
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....n as claimed by the assessee for the assessment year 1999-2000 to 2002-03 and arrived at the total undisclosed income of Rs.11,19,27,240/-. 6. Aggrieved by the same, the assessee preferred an appeal before the CIT(A), who allowed the same by holding that the records seized by the search parties were regular records maintained by the assessee and also that the receipts taken into account by the AO as income for the block period was in fact the receipts which were disclosed in the books of accounts as well as in the bank account of the assessee, as all the transactions were through banking channels. He further held that the expenditure incurred for the purchase of books was revenue expenditure, as the assessee had to purchase books from which soft copies were to be made and for the speedy execution of the work, different papers in the books were distributed to different sub contractors for conversion, thereby resulting in the books getting dismembered and are of no more use to the assessee thereafter. He, therefore, held that the entire expenditure had to be allowed in full. He, therefore, set aside the addition made by the AO. 7. Aggrieved by the relief given by the CIT(A), the Re....
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....ounts and has not disclosed the correct income. In fact the partners admitted to the same during the course of search in their sworn statements. For invoking the jurisdiction u/s 158BC of the IT Act, there should have been a search conducted u/s 132 or books of account and other documents or assets should have been requisitioned u/s 132A. In such circumstances, AO shall serve a notice u/s 158BC of the Act, on such person requiring him to furnish within the specified time, return setting forth his total income including the undisclosed income for the block period. The term 'undisclosed income' has been defined u/s 158B(b) of the IT Act to include any income which has not been or would not have been disclosed for the purposes of this Act or any expense, deduction or allowance claimed under this Act which is found to be false. Thus, the AO should be satisfied that the assessee has not or would not disclose its correct income but for the search. In the case before us, the assessee has not only not maintained proper books of accounts but has also during the course of search in the sworn statement admitted to not disclosing the proper and correct income. Therefore, in such a scenario, we....
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....(2009) 179 Taxman 253 (Del) 2. CIT V s. Premnath reported in (2008) 214 CTR 51 (Del) 15. We find that the Hon'ble Delhi High Court in the case of JMD International (cited Supra) was considering the case of the assessee who was found to have recorded the cash deposits in its books of account regularly maintained and the returns prepared on the basis of said books of account for the assessment years 1999-2000 to 2001-02 and were filed much prior to the search and in such circumstances, it was held that the cash deposits could not be treated as undisclosed income. In the case before us, the assessee has claimed to have maintained regular books of accounts and filed returns regularly reflecting the income but the AO has not examined this claim of the assessee. If the receipts were reflected in the regular returns of the relevant assessment years falling in the block period, then they cannot be considered as undisclosed income of the assessee for the block period. But even before us, the assessee has failed to file any documents in support of its claim of filing returns regularly for the relevant assessment years. Therefore, AO had no other alternative but to proceed to compute the un....
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.... including the interest u/s 234A and 234B of the Income- tax Act. 23. Aggrieved, the assessee preferred an appeal before the CIT(A) explaining that during the relevant previous year, the assessee had obtained the data entry work from certain agents of the foreign companies in India and for providing the work, the assessee had to compensate the intermediaries in the form of consultancy fee. It was submitted that the assessee had entered into agreements with the intermediaries which were also found and seized by the department during the course of search and, therefore, payments made towards consultancy fee through account payee cheques/DD's are reflected in the assessee's current account maintained with Allahabad Bank and that it represents its expenditure and should be allowed as such. The CIT(A) had considered the contentions of the assessee which are reproduced in CIT(A)'s order at paragraph 4.2.1 and held that the books of accounts of the assessee were under the custody of the AO when he determined the income of the assessee for the assessment year 2003-04, but the AO never bothered to compute the income as per the books of accounts but computed it by treating the receipts as i....
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....s settled position of law that when the assessee makes a claim of expenditure, the burden is on the assessee to prove its claim with necessary evidence. We find that it is not in dispute that the agreements of the assessee with the principles as well as the sub-contractors were seized during the course of search. The stand of the assessee has been that these documents were the evidence in proof of necessity to make the payments made by the assessee and were in the custody of the Assessing Officer. Therefore, the assessee's contention that it was rightly prevented from furnishing necessary evidence before the AO in proof of the expenditure claimed by it is correct. In such circumstances what is the procedure to be adopted by the AO. If there is no material in his custody and the assessee does not produce any evidence, then the AO may proceed to complete the assessment according to his best judgment u/s 144 of the Income-tax Act. It is also settled position of law that the AO has to compute the income of the assessee in accordance with law. If the assessee fails to prove its claim, the AO has to make the assessment on the basis of the material available with him. However, we do not a....
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....that the assessee was not maintaining proper books of account. Therefore, the Assessing Officer initiated proceedings u/s 158BC and made huge additions. The assessee thereafter filed an application u/s 264 detailing the reasons for non-appearance of the assessee before the AO and after being satisfied with the reasons furnished by the assessee, the CIT directed the AO to redo the assessment after giving the assessee another opportunity. During the proceedings u/s 158BC r.w.s 264 and 144 of the Income-tax Act, the AO observed that the assessee has shown receipts to the tune of Rs.10,15,025/-, during the relevant period. Since the assessee did not maintain any books of account, special audit u/s 142(2A) of the Income-tax Act was directed after considering the assessee's objections and the audit was done by the M/s Karvy and Co., Chartered Accountants Hyderabad. The Assessing Officer after considering the findings in the audit report, observed that the assessee maintained current account bearing No.CA/3311 with Allahabad Bank, S.D Road Branch and as per the information obtained from the assessee, the assessee had received a sum of Rs.12,48,81,281/- and as against this has claimed a lo....
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....o the period of search had not ended and the assessee's income is recorded in the documents maintained with the bank. Therefore, in our opinion, the provision of sub sec. (3) of sec. 158BA is very much applicable. The reliance of the assessee on the deicison of the Hon'ble Delhi High Court in the case CIT Vs. Maha Singh Rana reported in (2008) 172 Taxman 144 (Del) is in support of this contention. The Hon'ble High Court has held in the said case that an income would be treated as undisclosed income if but for the search, it would not have been disclosed in the books of account or other documents and that in the case therein, even before the search took place, the cash receipt/income was disclosed in the other document, i.e in the bank account of the assessee and, therefore, the provision of sec. 158BA(3) are applicable and the Revenue should have assessed the income of the assessee u/s 143(3) and not under Chapter XIV B of the Income- tax Act. We find that the facts of the present case are similar to the facts of the case before the Hon'ble Delhi High Court. Though the assessee has raised these grounds before the CIT(A,) the CIT(A) has not adjudicated on this issue but has granted ....