TaxTMI 
TaxTMI 
2016 (4) TMI 852
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.... ignoring the facts brought on record on the basis of investigation which indicates that the assessee has been indulging in trading activities other than supply of newspaper print on commission." 3. Briefly stated facts are that the assessee carries on business in the name of M/s. Paper & Industries of lifting of newsprints for numerous papers having allotment of newsprints on commission basis from State Trading Corporation (STC). The assessee filed his return of income on 13.06.1987 for the relevant AY 1987-88. Subsequently, a search action u/s. 132 of the act was conducted on the business and residential premises of the assessee on 05.10.1988. During the course of search on the business and residential premises of the assessee books of account, ledger account, cash book etc. were seized and marked as identification no. PTI 1 to 263. The AO during the course of assessment proceedings originally framed assessment u/s. 143(3) of the Act on 27.03.1991 assessing the total income at Rs. 62,92,890/-. Subsequently, this assessment was set aside by CIT(A) to the file of the AO for framing de novo assessment vide his order dated 30.12.1991 and the AO framed assessment u/s. 143(3)/251 of....
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....ence, he invoked the provisions of section 145 of the Act and estimated the turnover of the assessee at Rs. 5 crore and accordingly, taking a margin of 10% of net profit he estimated the income of the assessee from this business at Rs. 50 lacs. Aggrieved, assessee preferred appeal before CIT(A). 4. The CIT(A) deleted the addition for the reason that the AO has not gone into the seized documents, which were evidenced by the bills and vouchers, books of accounts and other documents, which proves that the assessee was only lifting the newsprints for allotting the same to newspapers owners and not selling the newsprints in cash in unauthorized market. According to him, there are ample evidence in the seized documents that newsprints were lifted by assessee for the newspaper owners on the basis of authorization issued to parties by STC and accordingly, payment was also received from them. The assessee produced copies of ledger account of these parties and this ledger accounts were seized during the course of search. According to CIT(A), these parties were supplied newsprints and payment was also received by assessee from them. The assessee collected the newsprints from STC only on th....
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....ollect the paper from STC only on the strength of authorization by the consumers and not otherwise. Both, the assessee as a handling agent as well as the consumer newspapers and periodicals were required to give account of newsprints issued and consumed to the Registrar of Newspapers for India. It is observed that the AO has stated that there was no evidence that newsprint after collecting from the STC by the assessee, was supplied to the respective allottees. That, the assessee had sold the newsprints in unauthorized market earning much higher income than the income declared in the return of income. We do not agree with the view of the AO, specifically, in the absence of any evidence on record that the assessee had sold the newsprints in the unauthorized, market. If the contention of the AO is accepted, it, would mean that on the authorization of allottees of newsprint, the assessee lifted the newsprint from STC and sold it in unauthorized market. If, it is so, from where the allottees newspapers and periodicals would had shown the consumption of newsprints which was allotted to them by the STC for the purpose of printing the newspapers and periodicals? Does it mean that the allot....
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....ssessee, after lifting the newsprints from the STC, was selling the same in the unauthorized market. We find from assessment order, that the AO had made a presumption that generally the citizens are law abiding and hence they would not make payment to the assessee for newsprints otherwise than crossed cheque or bank draft in violation to provisions of Sec. 40A(3) of the Act, whereas, the assessee had shown most of the receipts by way of cash or uncrossed demand drafts. In view of the facts, we are of the view that as far as the assessee is concerned, he had shown receipt of cash and not an expenditure in cash. We find that the assessee had shown receipts in cash from the allottee newspapers and periodicals, it does not mean that the assessee himself was selling the newsprints in cash in unauthorized market. The assessee produced copies of ledger accounts of these parties. The said ledger account was seized during the course of search. On perusal of ledger account of these parties it is observed that the newsprint was supplied to them and payment was also received by the assessee. The said ledger account clearly mentioned the authorization number and date, date of receipt, size of p....
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....es. The A.O. has not doubted the genuineness and correctness of the loan confirmations and hence, I am of the opinion that there is no reason to make the addition aggregating to Rs. 86,000/- on account of the loan taken by the appellant from the above-mentioned four parties. The AO, is directed to delete the addition of Rs. 86,000/-. Similarly, it is observed that from M/s. Mamoni Films, the appellant had taken loan of Rs. 7 lakh by cheque on 20.5.1987. The said loan was returned by him on 12/11/1987. On perusal of Balance-sheet and Profit & Loss a/c of M/s. Mamoni Films for the year ended 14/4/1987, it is observed that the said concern was engaged in the business of production and film distribution etc. M/s. Mamoni Films had also filed loan confirmation giving the address and GIR No. In the course of remand proceedings the AO has not doubted about the correctness of the loan confirmation filed by the said concern. Hence, I am of the opinion that no addition u/s. 68 can be made on account of loan taken from M/s. Mamoni Films. I also find force in the submission of the appellant that the loan of Rs. 7 lakh from M/s. Mamoni Films was taken in the previous year relevant to AY 1988-89 ....