TaxTMI 
TaxTMI 
TaxTMI 
2015 (8) TMI 223
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....n its own also. 3. The revenue carried on search and seizure operations in the hands of certain concerns located in Jodhpur. During the course of search operations conducted on 07.09.2003 in the hands of Chopra Group and M/s Jindal Strips Ltd, it came to light that the suppliers of S.S flats are under invoicing sale of S.S. Flats. While the amount received against the invoiced bills were duly accounted for, it was noticed that the difference in sale price was received by way of cash. This fact came into light from the statement recorded from Shri Sandeep Bansal on 17.09.2003, who worked as Branch manager of M/s Jindal Strips Ltd and also from the search conducted in the hands of Chopra group, who had purchased S.S. Flats. It was noticed that a business group named M/s Suncity Alloys group has paid an aggregate amount of Rs. 1,24,04,718/- in cash in connection with the purchase of S.S. Flats from M/s Jindal Strips Ltd during the period from 01.01.2003 to 25.08.2003. It was further noticed that M/s Sandeep Bansal had received cash of Rs. 14.19 crores on account of under billing done during the period from 01-01-2003 to 15-09-2003. 4. Consequent to the receipt of information about t....
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....d to devise a plan for collection of huge outstanding. Accordingly, the assessee contended that these documents do not pertain to it. The assessee also furnished a reconciliation statement with regard to the difference found in the payments made to M/s Haryana Steels. It was further submitted that the statement given by Shri Sandeep Bansal has been retracted by him. The AO was not convinced with the explanations given by the assessee. The AO also observed that the retraction of the statement given by Shri Sandeep Bansal was not acceptable to the department. The AO further observed that the entries found in the seized documents should be considered as correct as per the presumption provided in sec. 132(4) of the Act. He further held that the modus operandi adopted in the trade has been ascertained from the transactions entered by M/s Jindal Strips Ltd and the same should also be followed in the assessee's case. Accordingly, the AO held that the seized documents show that the assessee would have also purchased goods at a higher rate than that disclosed in the invoices and would have paid the difference by way of cash outside the books of accounts. Though the transaction noticed in th....
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....uent receipt of cash by the assessee. However in the initial show cause notice the AO has referred to "under billed purchases" while citing the facts of Sun City Group. (e) Hence the addition made by the AO does not necessarily fall under section 69C of the Act. 9. With regard to the seized documents relied upon the assessing officer, the Ld CIT(A) has observed as under:- (a) The AO did not consider the documents and reconciliation statements filed by the assessee. It is pertinent to note that the assessee had filed confirmation letters from suppliers and customers. (b) The AO did not make any effort to get the reconciliation statement/confirmations cross checked from the concerned parties. (c) The AO has placed reliance on the statements given in the case of Jindal Group. However, the present status of the proceedings in their hand was not ascertained. (d) The AO did not provide to the assessee any opportunity to cross examine the evidences being used by her. (e) Even if some document showed higher cost, the assessee has shown that similar items have been purchased at lower cost. (f) The AO made the addition on account of under invoicing of sale and not for under invoicing....
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....r the price of same 18175 Kgs was shown as Rs. 7,17,913/- in page 73 of the paper book. The Ld D.R submitted that these two documents amply prove that the purchase price has been under invoiced resulting in payment of cash outside the books of accounts. The Ld D.R further submitted that the other documents seized also show that the purchase rate was in the range of Rs. 32.50 to Rs. 42.50 per kg. However, the average rate of purchases shown in the books of account was less than Rs. 30/- per Kg, which clearly substantiate the conclusion reached by the AO. The Ld D.R also placed reliance on the decisions rendered in the case reported in 154 Taxmann 10 (P &H) and 40 SOT 225 (Hyd ITAT) to support his contentions. 12. On the contrary, the Ld A.R submitted that the assessing officer has primarily placed reliance on the evidences found in the case of M/s Jindal Strips Ltd. He submitted that the assessee has not purchased any goods from M/s Jindal Strips ltd and hence the assessing officer was not justified in drawing adverse inferences on the basis of evidences found in the hands of a third party, who is not connected to the assessee at all. He submitted that the additions made by the AO ....
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....shown in the books of account. The AO did not make any enquiry with any of the persons to disprove all of them. Accordingly he submitted that the assessing officer was not justified in making the additions u/s 69C of the Act in all the three years under consideration and hence the Ld CIT(A) was justified in deleting them. 14. In the rejoinder, the ld D.R submitted that the documents placed at pages 72-73 have been taken from the computer of the assessee and hence the AO was justified in placing reliance upon them. 15. We have heard rival contentions and perused the record. The additions under dispute have been made by the assessing officer u/s 69C of the Act. The provisions of sec. 69C read as under:- "Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source or such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year." Provided that, notwithstanding anything contained in any other provisions of ....
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....urther, the Assessing officer, time and again, has stated that the search conducted in the hands of M/s Jindal Strips Ltd has brought to light the modus operandi of the practice followed in the Steel trade. Accordingly, the AO has taken the view that the assessee would have also purchased goods through under invoiced bill and would have paid the difference amount by way of cash outside the books of account. 17. We notice that the assessing officer has entertained such a view solely on the basis of practice alleged to have been followed in the case of M/s Jindal Strips Ltd. However, as observed by Ld CIT(A), the assessing officer has not taken any steps to find out the fate of addition, if any, made in the hands of M/s Jindal Strips Ltd. Even otherwise, in our view, it may be correct to generalize the trade practice solely on the basis of practice followed by a company. Thus, we are of the view that the assessing officer was not correct in presuming that the assessee would have purchased goods through under billing. 18. It is pertinent to note that the assessing officer has given a clear finding that the assessee herein was not found to be selling goods on cash, meaning thereby, t....
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....aryana Steels and found that there are differences. Though the AO observes that the assessee could not reconcile the difference, yet we notice that there was a difference of a meager amount, which the assessee has explained that it could be a rebate difference. We notice that the assessing officer has not examined M/s Haryana Steels in order to disprove the claim of the assessee. Without examining the explanations given by the assessee and without disproving the same, we are of the view that the AO was not justified in drawing adverse inferences against the assessee. 21. During the course of hearing, the Ld D.R pointed out the difference in rates as found in the documents placed in pages 72 and 73 of the paper book. A perusal of the same would show that there is, indeed, a difference in purchase rates. The Ld A.R, in his contentions, has stated that it was not shown that the assessee herein has made the said purchases, wherein the rate difference was found. We have noticed earlier that the AO, in order to invoke the provisions of sec. 69C, should give a categorical finding that the assessee has incurred any expenditure. In the instant case, the assessing officer has not even attem....