TaxTMI 
TaxTMI 
2014 (3) TMI 103
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....quantum appeals can be heard together. We therefore proceed with the facts of A.Y. 03-04 in ITA No. 133/AHD/2009. 3. The relevant facts as culled out from the material on record are as under. 4. Assessee is a firm engaged in the business of building construction. Assessee filed its return of income for AY 2002-03 on 23.7.2003 declaring total income of Rs 37,080/-. A survey operation u/s 133A of the Act was carried at the business premises of Assessee on 23.9.2003 and thereafter Assessee filed revised return of income on 20.10.2003 declaring revised total income of Rs.7,40,620/- The case was selected for scrutiny and thereafter the assessment was framed u/s 143(3) rws 145(3) of the Act vide order dated 28.2.2006 and the total income was assessed at Rs 33,33,120/-. Aggrieved by the order of Assessing Officer, Assessee carried the matter before CIT(A). CIT(A) vide order dated 31.12.2008 partly allowed the appeal of the assessee. Aggrieved by the order of CIT(A), Assessee is in now in appeal before us. The ground raised which were later revised, by the Assessee reads as under:- 1. That the learned CIT(A) has erred in both in law and on the facts of the case in confirming an ad....
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....mitted that in the statement recorded the partner had declared the gross receipts and not the total income. The submissions of the assessee was not found acceptable to the AO. He thereafter for the reasons recorded in the order rejected, the books of accounts of the assessee u/s 145(3) and considered the income recorded at the time of survey amounting to Rs 16,86,813/- u/s 69 of the Act. Aggrieved by the order of AO, Assessee carried the matter before CIT(A). CIT(A) rejected the ground of Assessee and upheld the order of AO by holding as under:- 2.2 I have considered the submissions. During survey action at appellant's premises on 23.9.2003, blue diary inventorised at item No.9 of Annexure-K was found. During the statement recorded on oath U/S.133A on 23.9.2003, Shri Kameshbhai J. Patel, partner in answer to Q.No.16 submitted that diary-K-9 contained details of J. K. Landmark Scheme, i.e. names and addresses of the buyers, number of the shops sold and date wise receipts. The authorized officer in Q.No.17 showed page No.24 of the diary to Shri Kamleshbhai, which contained record of receipts, both by cash and cheque on various dates in respect of shop Nos. B.I, B.2 and B.3 sol....
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..../- and Rs.85,000/-, being recorded in the regular cash books, despite providing due opportunity, no date wise or party wise reconciliation could be made by the appellant as discussed in para 18 of the assessment order. Thus, it is held that the Assessing Officer was justified in not allowing credit for Rs.9,29,001/- and Rs.85,000/- and in holding that the unrecorded receipts for J. K. Landmark Scheme were Rs.16,86,813/- and Rs.26,41,593/- for F.Yrs.2002-03 and 2003-04 respectively as per Annexure-A to assessment order. Whether it was justified to treat these unaccounted receipts to be net income is adjudicated in para 2.2.2. 2.2.1. Before proceeding further, appellant's related ground of appeal (No.3) that the authorised officer had no jurisdiction or power to obtain declaration of income during survey U/S.133A is disposed of. In appellant's case, the unaccounted receipts are evidenced from the diary found during the survey, which recorded names of persons making the payments, dates, amounts received by cheque as well as cash. Statement recorded during survey only corroborated diary entries. The authorised officers did not obtain any confession of undisclosed income but ....
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....ission made during such statement cannot be the basis of addition. In the alternate he submitted that addition may be made @8% u/s 44AD of the Act and for which he placed reliance on the decision in the case of V.R.Textiles vs JCIT (2011) 11 ITR (Trib) 476 (Ahd), Kesharbhai Ghamarbhai Chaudhary Vs ITO (2012) 44 (II) ITCL 439 (Ahd) (ITA No 1402/Ahd/2009 order dated 28th Jan 2011 for the proposition that where the legislature has provided some formula for estimation of income, the income should be estimated accordingly and even if the AO has rejected the books of accounts. He also relied on various other decisions. 8. The Ld.D.R on the other hand took us through the findings of AO and CIT(A). He submitted that during the course of survey, statement of Shri Kamleshbhai Patel, the partner of the firm, was recorded u/s 133A on 23.9.2003 wherein he admitted the cash entries to be the unrecorded income of the firm. He pointed to the relevant answers given to Q No 14 to 18 (the translated copies of which are placed at page 34 to 36 of the paper book) in his support. He further submitted that subsequently, statement of another partner, Shri Shaileshbhai Patel was recorded u/s 131(1) of t....
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....ly if supported wth materials. He also placed reliance on the decision in the case of Bachittar Singh Vs CIT & Anr (2010) 328 ITR 400 (P&H) for the proposition that even if statement u/s 133A was not at par with the statement u/ 132(4) and did not have that evidentiary value but such statement cannot be held to be irrelevant material so as to be ruled out of consideration in totality of facts. He also placed reliance on the decision in the case of CIT vs Sonal Construction 359 ITR 532 (Del). He thus strongly supported the order of AO and CIT(A). 9. We have heard the rival submissions and perused the material on record. It is an undisputed fact that during the course of survey on 23.9.2003 a diary was found which contained the details of cash receipts. The statement of Shri Kamleshbhai, a partner, was also recorded wherein he admitted that the cash entries recorded in the diary to be unrecorded income of the firm. It is also an undisputed fact that subsequently another partner, Shri Shaileshbhai Patel, in the statement recorded u/s 131 of the Act on 26.9.2003 confirmed the statement of his partner Shri Kamleshbhai. It is also a fact that on 12.10.2003 i.e. subsequent to the surve....
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....d therefore while working out Rs 7,03,558/- no expenses were deductible by Assessee. The aforesaid findings of CIT(A) could not be controverted by Ld A.R nor any material was furnished by A.R. to controvert the same. 10. Thus in the present case, we agree with the findings of CIT(A) that the addition has not been made merely on the basis of statement recorded during the course of survey but on the contrary it has been made on the basis of corroborative evidence found at the time of survey and which was further corroborated with the statements of the partners and other person recorded u/s 131 and 133A of the Act. Before us, ld. A.R. has not brought any material on record to demonstrate that the statement of the partner was obtained by coercion or under pressure. In view of the aforesaid facts, we are therefore of the view that for which the case law relied upon by the Ld. AR cannot be applied to the facts of the present case, we also find support to our view by the following decisions. In the case of CIT vs Sonal Construction (2013) 359 ITR 532 (Del) Hon'ble Delhi High Court has held that when documents which are not meant for the eyes of the Revenue are unearthed after un....
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....00/- to be unexplained income of the Assessee. Aggrieved by the order of AO, Assessee carried the matter before CIT(A). CIT(A) granted partial relief by holding as under:- 5.2. I have considered the submissions. In respect of receipts issued to Prashant Khare and Jyotikaben Parmar, appellant has contradicted itself. During the assessment proceedings, these sums were claimed to be unaccounted receipts forming part of work-in-progress of Rs.7,03,558/- whereas during appellate proceedings, these amounts were claimed to be Kachha receipts which were later adjusted against payments recorded in the books. As rightly held by Assessing Officer, due to the names of Prashant Khare and Jyotika Parmar not appearing in diary K-9, there was no question of allowing set off for these receipts against unaccounted receipts in diary K-9 or the WIP. As far as claim regarding these two receipts being Kachha receipts, later adjusted against total payment is concerned, the same is not backed by any evidence and is not accepted. Addition of Rs.20,000/- in respect of first two receipts is therefore, in order. Regarding the third receipt, the reasons assigned by the AO for not accepting confirmation from....
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....ssment order are not to any agent of the appellant. Provisions of Rule 6DD(k) are therefore, not applicable. Disallowance of Rs.28,613/- u/s.40A(3) is confirmed. 17. Aggrieved by the order of CIT(A), Assessee is now in appeal before us. 18. Before us, Ld A.R. reiterated the submissions made before lower authorities and also relied on the decision in the case of CIT vs Banwarilal Banshidhar (1998) 229 ITR 230 and CIT vs Purshottamlal Tamrakar Uchehra (2004) 270 ITR 314. On the other hand Ld D R relied on the order of AO and CIT(A). 19. We have heard the rival submissions and perused the material on record. We find that CIT(A) has given a finding that the payments were not made to any agents so as to cover under the shelter of Rule 6DD(k) and therefore it was rightly disallowed by AO. Before us, ld.AR could not controvert the findings of CIT(A). The ratio of decisions relied by Ld A.R. are distinguishable on facts and have no application to the present facts. We therefore find no reason to interfere with the order of CIT(A). Thus this ground of Assessee is dismissed. 20. In the result the appeal of the Assessee is dismissed. ITA No 134 (AY 2004-05) Ground No 1 & 2 a....
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....ing that Assessee was paying interest on partner's capital account and therefore it was not interest free and therefore it cannot be said that amount was advanced out of interest free funds. Before us, Ld A.R could not place any material on record to controvert the findings of CIT(A) He also could not substantiate his submission that the interest was on account of car loan. . We therefore find no reason to interfere with the order of CIT(A) . Thus this ground of Assessee is dismissed. 26. Thus this appeal of Assessee is dismissed. ITA No 1945/Ahd/2012 for AY 2004-05 27. This appeal of Assessee is against the penalty of Rs 9,75,000/- levied u/s 271(l)(c) by the AO vide order dated 24.3.2010 and which was confirmed by CIT(A. 28. The relevant facts as culled out from the material on record are as under:- 29. Assessee filed return of income for A.Y. 2004-05 declaring total income of Rs 3,93,093/-. A survey u/s 133A was carried out at the business premises of Assessee on 23.9.2003 and thereafter order u/s 143(3) rws 145(3) was passed on 29.12.2006 determining total income of Rs 34,95,130/- after making aggregate addition of Rs 32,16,848 on account of unrecorded unacco....
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....e diary were considered as income by the AO which was also partly confirmed by CIT(A). During the course of assessment proceedings and appellate proceedings the submissions have been given by assessee but the same have not been proved to be false or untrue by the Revenue. A case for levy of penalty for concealment of income has to be evaluated in terms of provisions of Explanation. 1 to Section. 271(1)(c), as per which if in relation to any addition in the assessment, the assessee offers no explanation or offers explanation which is found to be false or is not able to substitute the explanation and is also not able to prove that the explanation is bonafide, the addition made would amount to concealment of particulars of income. It is a settled legal position that penalty proceedings are different from assessment proceedings and the findings given in the assessment though it may constitute good evidence but same is not conclusive in the penalty proceedings Further, merely because additions have been confirmed in appeal it cannot be the sole ground for coming to the conclusion that the assessee had concealed any income. We are of the view that in the absence of complete and convincin....
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....worked out at Rs. 17,92,4877- inclusive of additions on account of alleged difference of Rs.10,59,633/-. As per the AR, while giving appeal effect, the AO has not given deduction admissible as per the provisions of section 40(b) of the IT Act. The AR has further submitted that on perusal of the assessment for the year under consideration it is proved beyond doubt that the AO has assessed this income under the head business income and the Id CIT(A) had also in Para 2.2.2 has held this amount as business income which included gross receipts and also given finding after making this addition to the declared income it exceeds Rs.40 lakhs and therefore, provisions of section 44AD of the IT Act is not applicable which proves beyond doubt that finding given by DCIT, Anand Circle, Anand in her order u/s 154 of the IT Act is against the factual data and finding given by the AO and the CIT(A) who are the originators of the proceedings in the case of the appellant. Thus the AR had stated that the appellant was entitled to salary/remuneration from disclosed and undisclosed income. The AR has relied upon the decisions of various Hon'ble Courts. 2.3. The order u/s 154 of the IT Act of the ....
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....ct 1961. 3. That the learned CIT(A) has failed to appreciate the facts that the manner of fixing the remuneration was specified in Partnership Deed and without considering it, the application of the appellant U/s 154 rejected by learned A.O. and confirmed by CIT(A) is against the provisions of the Act. 4. On facts and circumstances of the case of the appellant the remuneration claimed by appellant in application U/s 154 be allowed. 5. Having regard to the mandatory provisions of the Act, the appellant is entitled to deduction of partners remuneration while computation of book profit U/s 40(b)(v) of the I.T. Act 1961 be allowed. 6. That the appellant has filed application U/s 154 top the learned A.O. as well as learned Cit(A), however, both the authorities have rejected the same on irrelevant facts and without considering the decisions cited by the appellant be allowed. 7. That the mistakes pointed out by appellant are patent, apparent and glaring which requires to be rectified U/s 154 of the I.T. Act 1961 be directed. 8. It is respectfully prayed to the Hon'ble Tribunal that most of the Tribunals has granted deduction of interest at applicable rates and remune....