TaxTMI 
TaxTMI 
2016 (5) TMI 400
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....ture from undisclosed sources under Section 69C, without appreciating that this reimbursement was not debited to the profit and loss account ? (iii) Whether on the facts and in the circumstances of the case, and in law, the Tribunal was justified in confirming the addition law in rejecting the additional evidence contained in pages 1 to 21 and 28 to 228 of the paper book submitted without assigning any reason ? (iv) On the facts and in the circumstances of the case and in law, whether the Income Tax Appellate Tribunal was right in law in confirming the addition to the extent of Rs. 4,77,58,412/- as unexplained expenditure being the value of 3,400 gold coins although the cost of these 3,400 gold coins purchased by the appellant on behalf of Sagem Sa France are reimbursed expenditure ? (v) On the facts and in the circumstances of the case and in law whether there was any material before the tribunal to confirm the addition of Rs. 4,77,58,412/- as unexplained expenditure without fully and properly discussing the various arguments made and affidavit submitted ?" Although the above questions have been raised the basic issue which arises for our consideratio....
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....ment from - Palmone Asia Pacific Ltd. Rs. 2,05,001 Rs. 7,71,04,074 5. In view of the additional evidence produced by the appellant a remand report was called for from the Assessing Officer by the Commissioner of Income-Tax (Appeals). During the proceeding the appellant was asked to explain as to how this expenditure of Rs. 4.77 crores on account of gold coins is to be treated as expenditure incurred for purposes of business. The appellant in response to the same pointed out that the gold coins were purchased from one M/s. Opal Industries a sole proprietary concern of Mr. Subhash Gujar with motive of increasing sales of mobile handset as these gold coins were inserted in mobile handset on random basis so as to motivate the purchase of the same. In support the bills which were produced did not inspire confidence resulting in the Commissioner of Income Tax (Appeals) directing the Pune Commissioner (Directorate) to verify the details of M/s. Opal Industries. In consequences of the same, the Pune Commissioner (Directorate) on investigation reported on 25th March, 2011 as under : "(i) M/s. Opal Industries has no connection with the business of dealing in Gold ....
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....new the Director of M/s. Riddhi Siddhi Bullion Ltd. both from the same native place. * M/s Riddhi Siddhi Bullion Ltd. sold gold bars to Opal and Opal Industries sold the same in form of gold coins to Cenzer. Opal Industries did not have expertise in coversion of gold bars to gold coins. * Opal Industries sold gold coins to Cenzer on 14.06.2005 even though it received the gold bar two days later. The transaction seems bogus since there was no opening stock of gold. * The last delivery of gold bars (30kg) taken on 31.01.2006 at Mumbai and on the same date gold coins were delivered by Opal to Cenzer at Bhiwandi. * No stock register maintained by assessee for gold. * Bank statement of Opal Industries from the Addl DIT (Inv) Pune does not indicate any debit for conversion charges of gold. * On the three transactions of gold, Opal Industries has earned a profit of .011% on the sale proceeds which do not even include gold conversion charges. No prudent businessman would opt for such a low profit margin for a one time transaction. * None of the invoices are signed by the person who has taken hand delivery of gold. * Du....
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....er had originally disallowed an expenditure of Rs. 8.77 crores in the course of remand proceedings on the basis of evidence placed on record, it was noticed that the advertisement expenses were in fact incurred by the appellant by calling in celebrities and expenditure to that extent was allowed. However it found there was not a single advertisement on record which would indicate that the gold coins were being inserted into the mobiles being sold by it except photocopies of advertisement placed on record of "Jeeto India" offer without mentioning size and/or quantity of the gold coins. Further the Tribunal holds that if the appellant wanted to launch a gold coin scheme as proposed it would propagate the same by advertisement, press report etc to make it known so as to ensure its success. Nothing was placed on record except photocopy of the brochure. Thus the genuineness of such an expense was not established. Further it records that insertion of the gold coins in the handsets was also not supported by any evidence. It also observes that opening of a handset and a coin being inserted therein is itself doubtful as 10 handsets come in one packet and these packets are distributed as suc....
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....ave been given to the appellant was personal hearing. Thus this not having been done renders the orders not sustainable. We find that in the present case the appellant had not sought cross examination before the Commissioner of Income Tax (Appeals). In any case a fresh affidavit of Shri Subhash Gujar, proprietor of M/s.Opal Industries was filed before the tribunal. This affidavit does not seek to explain or point out circumstances under which the statement made earlier on oath by the deponent of the affidavit Shri Subhash Gujar was incorrect. The Tribunal has been independently applied its mind to the affidavit filed by the appellant and on examination of the same found it to be unbelievable for the reasons set out in the order as extracted above. Therefore, the aforesaid decision in our view would have no application in this case. It is undisputed that where affidavit evidence is relied upon by a party and the same is challenged by other side, then an opportunity to cross examine the deponent of the affidavit is a necessary ingredient of principle of natural justice, before any reliance can be placed upon it. The appellant in the present case had before the tribunal filed a fresh ....