TaxTMI 
TaxTMI 
2016 (7) TMI 449
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....3) of the Income Tax Act, 1961 (hereinafter referred to as the 'Act'). As the issues involved are identical in nature, they are taken up together and disposed off by a common order for the sake of convenience. 2. Rejection of books of accounts of the assessee and resorting to estimation of profits u/s 145(3) of the Act for all the years Since ground is common for all the years, we dispose of this ground by this common order by taking the facts from ITA No. 1179/Kol/2012. 2.1. The brief facts of this issue are that the assessee is engaged in the business of transportation and predominantly deriving freight income. There was a search u/s 132 of the Act in the residential and business premises of the assessee along with survey operations carried out u/s 133A of the Act in several other premises on 5.11.2009. The books of accounts and documents were seized / impounded in the course of search and survey operations. The income tax status of the assessee for various assessment years are depicted in the following chart:- Sl.No. 1 Particulars Return filed u/s 139(1) 2004-05 Yes 2005-06 ....
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....ent order that he was not satisfied about the correctness or completeness of the books of account; and then, invoked the provisions of section 145(3) of the Act. The Ld. AO estimated the net profit at Rs. 2,38,10,815/- as against that of Rs. 21,87,774/- as shown in the return thereby resulting in addition of Rs. 2,16,23,041/-. The Ld. AO has narrated various reasons in the assessment order which constituted the basis for his satisfaction that the books of account of the assessee are not correct or complete within the meaning of section 145(3) of the Act, which may be summarized as under - (a) The Ld. AO has noted in the assessment order that the assessee failed to produce the books of account and other relevant records in course of the assessment proceedings u/s 153A of the Act. It was explained before the Ld. AO that assessee's business premise at P- 223, Strand Bank Road, Kolkata - 700 001 was severely hit by massive fire, which started on 13-02-2010 and continued for many days, in which important records and documents of business, including computers and substantial electronic data, was destroyed. The Ld. AO noted that there was no detail as to which records were actual....
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....ve compiled and furnished information as far as was practically possible in view of the event of fire and consequent destruction of important records. The assessee also produced records for different branches which were not destroyed in the fire. It was argued that the original assessment for three assessment years 2004-05, 2005-06 and 2006-07 was made u/s. 143(3); and, the books of account and all relevant records were produced during the course of the original assessment proceedings. The then AO had accepted the books of account as no adverse finding was recorded by him in the original assessment order(s). The book result was always accepted by the Ld. AO; and, routine disallowances only were made in the assessment order(s). Also, the method of record maintenance regularly followed by the assessee was never questioned or disputed by the Ld. AO. Moreover, no adverse material was found in course of the search or survey operation. It was contended at the assessment stage that, in view of the above, the book result could not be reviewed in the assessment proceedings u/s 153A of the Act. The Ld. AO noted in the assessment order that the assessee claimed to have furnished elec....
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.... refund so received to the assessee. However, Sri N K Sharma later retracted his statement made u/s 132(4) of the Act on the ground that he was sick and under the influence of medicine which was administered by his doctor in the presence of the search* party; that he was exhausted as the search continued till late night; that he signed the statement without understanding its content to avoid further mental and physical fatigue, and, he did so only on the advice of his doctor. In course of the assessment proceedings in his own case, Sri N K Sharma contended that he was working for the assessee through duly executed agreement which was also produced before his assessing officer before the date of search. It was also contended before the AO that the statement u/s. 132(4) of the Act was not properly recorded and that its content was misleading. As the majority of payments totalling to Rs. 73,22,73,315/- on account of lorry hire charges was made in cash, the AO required the assessee to produce the supporting bills and vouchers. However, no compliance was made on the ground that the bills and vouchers as required by the AO were destroyed in the fire. The Ld. AO then concluded that the ge....
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....e to verify whether or not the disbursement of cash as contained in the seized diaries was actually recorded in the cash book. (f) The AO has referred to document marked IRT/21 impounded in survey at the office of the assessee. The AO found that page 9 and 10 of the said impounded document reflected the profit & loss account and balance sheet of the assessee company for the assessment years 2008-09 and 2009-10 which did not tally with those enclosed with the returns filed in compliance to notice u/s 153A. It was submitted before the AO that the impounded material at page 9 and 10 of IRT/21 was actually copy of print out taken by the survey party at the time of the survey. These documents contain rough estimates or projected data prepared by the sales executives for procuring contracts from prospective clients or for the purposes of submission along with tenders; moreover, such rough estimates or projected data is subject to further revision before their actual submission. They were not prepared by the regular accountant from the regular books of account. These facts were duly explained before the survey party by the supervisor of accounts Sri Shankar Sharma in his statemen....
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....he spacious argument of non- submission of evidence due to its destruction in fire without appreciating that day to day business of the assessee was not possible if everything was destroyed in fire. 4. That on the facts and circumstances of the case and in law, Ld . CIT(A) erred in holding that assessment proceedings uls. 143(3) is a witness to the facts that the books of accounts and other relevant records along with supporting documents were properly maintained by the assessee. 5. That on the facts and circumstances of the case and in law, Ld. CIT(A) failed to appreciate that even at the time of original assessment u/s. 143(3) of I.T. Act, 1961, the assessee failed to submit evidence In respect of service charges and miscellaneous expenses as is borne out by the Assessment Order. 6. That on the facts and circumstances of the case and in law, Ld. CIT(A) failed to appreciate that since no basic evidence whatsoever was placed before the AO, there was no option but to reject the book results and estimate the assessee profit u/s. 145(3) of I.T. Act, 1961. 7. That on the facts and circumstances of the case and in law, Ld. CIT(A) failed to appreciate ....
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.... AO insisted on production of records (party wise or lorry wise ledger of lorry hire charges of party wise ledger of expenses) that were destroyed in fire. He further contended that no adverse material was found in the course of search or survey operations which could possibly justify the rejection of books of account. 4.1. He further argued that the Learned AO was not justified in relying solely on the statement of Sri N K Sharma recorded u/s 132(4) of the Act which was made under stress and which was signed without understanding its content only with a view to avoid further mental and physical fatigue. In the course of assessment proceedings in his own case, Shri N K Sharma had clarified before the Learned AO that the statement u/s 132(4) of the Act was not properly recorded and that its content was misleading. 4.2. He further argued that the statement of Sri L N Somani regarding disclosure of Rs. 24 crores had no bearing on the book results already declared by the assessee in its returns which were also accepted by the department and when no adverse materials were found in the search. It was argued that the Learned AO had referred only to the statement recorded by the ADIT....
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....bsence of records, carry out its business with the customers, he argued that the Learned AO had never had the occasion to interact with the customers nor did he ever ask the assessee to narrate the problems that it was facing in dealing with the customers. He argued that it is a matter of fact that many customers have filed claims against the assessee for the goods stored in the godowns which were also destroyed in the fire. 4.4. The Ld AR submitted that the Ld. AO required the assessee to produce the books of account; party-wise and lorry-wise ledger of lorry hire charges; and, party-wise ledger of certain expenses along with supporting vouchers for the assessment years 2004-05 to 2010-11. It was explained before the AO that. party-wise or lorry-wise ledger of lorry hire charges was not maintained by the assessee in its financial records as there was no requirement of law to maintain such records nor the appellant needed such details for the purposes of its business. The expenditure was charged to lorry hire charges account on actual payment basis. However, the assessee being public carrier maintains Lorry hire contract-cum-challan wherein all relevant particulars such as lorry....
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....al record that was maintained by the assessee. It was argued that the AO has no legal authority to advice the manner in which the record is to be maintained. For example, party-wise or lorry- wise ledger of lorry hire charges or party-wise ledger of expenses was not maintained by the assessee in its financial records as there was no requirement of law to maintain such records nor the assessee needed such details for the purposes of its business. Secondly, the method of record maintenance regularly followed by the assessee has never been questioned or disputed in the past by the assessing officers. 4.5. The Learned AR further argued that the Ld AR admitted that TDS certificates were issued in the name of Sri N K Sharma for payments made to different vehicle operators totalling to Rs. 73,22,73,315/- on account of lorry hire charges in the financial year 2006-07. The tax was also deducted at source on such payments and TDS certificates were issued in the name of Sri N K Sharma. It was argued that the AO was not justified in relying solely on the statement of Sri N K Sharma recorded u/s 132(4) which was made under the influence of medicine administered by his doctor in the presence ....
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....ponse to this, the Learned AR argued that the search took place on 5.11.2009 and massive fire took place in Feb 2010 in the premises of the assessee which was widely reported in the media and in support of which he referred to the relevant paper cuttings and First Information Report (FIR) of Police in the paper book filed by him. It was argued that the assessee had duly replied to the notice of the Learned AO that the hard copies of various documents desired by the Learned AO prior to Feb 2010 could not be produced due to massive fire in the premises of the assessee in Feb 2010. 4.6.1. The Learned AR vehemently opposed to the allegation by the Learned DR about non-production of books of accounts willingly. He pointed out that the Learned AO was asking the assessee to do an impossible task. He further argued that the Learned DR's assertion that the assessee had no connection with the address at which fire took place i.e P-223, Strand Bank Road, Kolkata was factually incorrect and misleading. The Learned AR pointed out that survey u/s 133A of the Act was conducted at the premises at P-223, Strand Bank Road, Kolkata . He pointed out that such survey was conducted against M/s Somani....
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....e case of tender business for the corporate world - in this case we were marginally present only and ARC was having large chunk of it. In addition to the above, top line from that sector, the other sector was specialized transportation of heavy merchandise where we were not present till 2010. ARC again was involved in the express division which is a high profit margin business whereas Inland did not venture into that part at all as it was not having sufficient skilled manpower to take the venture. (ii) M/s Ideal Movers (P) Ltd is a company established by the Essar Group particularly to provide the services to the said group. Ideal's biggest client is Essar till date and they have limited exposure to other clients. Whereas Inland has vast variety of clientele and does not have group or associate whose major scale of work is handled by it. (iii) V. Trans (India) Ltd is in the mode of express transportation as well as warehousing sector. Their exposure to hard core transportation is Nil, whereas our company is into hardcore transportation and has not presence in the specialized sector of express handling as well as warehousing. Our company does not provide that natur....
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....stances, the net profit reflected by the assessee in its books and returns should have to be accepted. We are in complete agreement with the Learned AR that the proceedings u/s 153A of the Act cannot be taken as a measure / platform to review the books of accounts and the trading results of the assessee especially when no incriminating materials were found during the course of search regarding the same in respect of the concluded assessments. We also find from the assessment orders filed before us for the Asst Years 2011-12 and 2012-13 which were admittedly completed u/s 143(3) of the Act and part of the paper book filed by the assessee, the Learned AO had accepted the trading results of the assessee based on the books of accounts produced before him and had not resorted to make any additions on that count. Hence consistently the books of accounts have been accepted by the revenue in the earlier years prior to search and in years subsequent to search proceedings. In these circumstances, we find that the Learned CITA had rightly rejected the action of the Learned AO in applying the provisions of section 145(3) of the Act and consequentially resorting to estimation of net profits for....
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.... that there is no need to disallow the expenditure. Hence no addition could be made in the instant case in the sum of Rs. 73,22,73,315/- for the Asst Year 2007-08. 4.6.5. In view of the aforesaid findings, we hold that the Ground Nos. 1 to 10 raised by the revenue for the Asst Years 2004-05 to 2008-09 ; Ground Nos 1 to 9 raised by the revenue for the Asst Year 2009-10 ; Ground Nos. 1 to 6 raised by the revenue for the Asst Year 2010-11 and Ground No. 12 raised by the revenue for the Asst Year 2007-08 are dismissed. 5. Disallowance of rent paid to various co-owners u/s 40(a)(ia) of the Act The brief facts of this issue is that the Learned AO observed that the assessee had paid rent to the tune of Rs. 7,62,000/- to Mr Y U Parthasarathy from its Bangalore Branch without deduction of tax at source. The assessee explained that the payment in question had been made to 13 individual co-owners and individual payment of each co0owner is less than the amount liable to TDS. It also stated that the separate ownership of the landlords in respect of the tenanted premises was also confirmed vide letter dated 24.7.2004 of the landlords. The Learned AO observed from the photo copy of the a....
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....e to prove and substantiate its claim which is not discharged in the instant case. Hence we find no infirmity in the order of the Learned CITA in this regard. Accordingly, the Ground No. 1 raised by the assessee in CO 83/Kol/2012 is dismissed. 6. Disallowance of rent paid to Kolkata Port Trust u/s 40 (a)(ia) of the Act The brief facts of this issue is that the Learned AO observed that the assessee had paid rent to the tune of Rs. 76,15,435/- to Kolkata Port Trust without deduction of tax at source. The assessee replied that there was no liability to deduct tax at source on the said payment and accordingly there was no violation of provisions of section 194I of the Act. The Learned AO not convinced with the reply proceeded to make disallowance u/s 40(a)(ia) of the Act. Before the Learned CITA, it was argued that the payment to the Kolkata Port Trust was made in compliance to the order of the court and hence no tax was required to be deducted. The Learned CITA not being convinced with this argument, upheld the disallowance made by the Learned AO. Aggrieved, the assessee is in appeal before us on the following ground no.2:- "2. That in the facts and circumstances of the....
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....count payee cheque which is duly reflected in the bank account of the loan creditors; and, which has already been verified by the AO. The loan creditors are regularly assessed to income tax, and, their assessment details are available with the AO. The loans given to the assessee are duly reflected in the balance sheet of the loan creditors; and, the interest paid by the assessee on such loans is duly declared in their return. The loan confirmation, and also, the balance sheet of the loan creditors were filed before the AO. The assessee also deducted tax on payment of interest. It was contended that the assessee had discharged its onus of establishing the identity and creditworthiness of the loan creditors and also the genuineness of the loan transactions. It was also contended that no cash was ever given to the loan creditors. There was no material found in search or otherwise suggesting that cash was given to the loan creditors. The AO relied on the statement of the directors of the said companies recorded at the time of survey, and, held that the loan confirmation of the loan creditors filed by the assessee at the assessment stage was only after-thought. The AO then added the ....
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....directors of the lending companies, But then, those statements also were later retracted by giving loan confirmations which could not be disputed or disproved by the AO. The statement recorded u/s 133A, when the same was later retracted by giving loan confirmation, and, when no corroborative material was found in search or surveyor was otherwise gathered by the AO, has no evidentiary value. The assertion made by the AO that receipt of loans involved transfer of cash has no basis. The appellant has produced sufficient evidence to show that the loan transactions are genuine which has not been disproved or even disputed by the AO. On the other hand, the conclusion of the AO is based on mere assumptions and presumptions. The decision of the AO is not based on proper findings. The explanations, and also the documents, submitted by the appellant have been summarily rejected by the AO more on presumptions than on factual ground. An assessment has to be made on the basis of the material available on record. But, in the present case, presumptions have led the AO to a state of affairs where salient evidences were overlooked and the material on record was ignored. On the other hand, the AO ha....
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....Learned DR vehemently relied on the order of the Learned AO. We find that the assessee had claimed complete ignorance about the concerned person Sri Sarat Chandra Patra whose pay in slips were found and seized during the course of search. Admittedly the said 13 pay in slips represented cash deposits made in a bank account to the tune of Rs. 2,48,500/- were in the name of Sri Sarat Chandra Patra who is not at all related to assessee. We find that the assessee had discharged its primary onus of disowning the document and the presumption as to ownership of the document in the course of search has been duly rebutted by it. Moreover, there was no other corroborative evidences found in the course of search or thereafter to prove the linkage or relation of the assessee with the concerned account holder and the cash deposits found credited in that bank account. We hold that had the Learned AO made corresponding verification with the concerned bank account of Shri Sarat Chandra Patra, that would have eventually led to the concerned party and the said party could have been asked to explain the sources of cash deposits in his bank account. We hold that merely by finding a pay in slip of a thi....
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....hecked and cleared within a day or two, entries for the same at the time of handling over the funds are not considered necessary by the company, as the full account is duly cleared within reasonable time and on receipts of such details, the same are recorded in the regular cash book. Considering the nature of business, different persons are assigned to handle the cash required at loading centres in the night after loading of the vehicles. One of such persons is made accountable and therefore signatures are obtained at the time of handing the cash to him. The AO required the appellant to produce the books of account for verification of the transactions recorded in the seized diary on item-to-item basis. However, as the appellant could not get the transactions verified from the cash book, the AO treated the amount of Rs. 42,88,000/- as undisclosed income of the assessee and added the same to its total income. 9.3. Before the Learned CITA , it was submitted that the Ld AR submitted that the AO has not appreciated the nature of the entries made in the seized diary with reference to the practical compulsions of the transport business, It was explained that the trucks are not permi....
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.... to account for the cash disbursement on any particular day. The AO has thus erred in observing that he was unable to verify whether or not the disbursement of cash as contained in the seized diary was actually recorded in the cash book without analysing the nature of entry made in the seized diary. It was argued that the AO has blindly added the amounts appearing on both the sides when one side records payments whereas the other side records receipt of accounts. The seized diary also shows that there is no cumulative payment - rather it contains record of certain transactions which is squared- up on the same day or after a few days. Without prejudice to the above, the Ld AR has taken an alternative plea that the diary records payments as well as receipts, and so, only the peak amount can be assessed; and, the peak being * less than the normal cash balance in the cash book, no addition can be made. 9.4. The Learned CITA observed as below:- "I have considered the submission that was made on behalf of the appellant. I have also perused the assessment order and the material on record, I find substance in the argument that the addition of all the amounts appearing on both s....
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.... 'were actually made from the cash book. Secondly, there is no material on record to suggest the actual nature of the utilisation of cash. The alternative plea taken by the Ld AR that only the peak amount should be assessed cannot be accepted in view of his earlier contention that cash was paid for the purposes of expenses. Once the cash was utilised for the purposes of expenses, it was not available for plough-back into the cash flow, and consequently, the peak theory is not applicable. In view of the above, it is to be held that the appellant has failed to discharge' its onus in establishing that the cash payments totalling to Rs. 21,84,000/- as recorded in the seized diary marked ILRT/1 actually came- from the regular cash book. The addition on this account is therefore sustained to the extent of Rs. 21,84,000/-. The appellant gets relief of Rs. 21,04,000/-." Aggrieved, both the assessee as well as the revenue is in appeal before us. The revenue had raised the following ground for Asst Year 2008-09:- "11. That on the facts and circumstances of the case and in law, Ld. CIT(A) erred in deleting addition of Rs. 21,04,000/- as made by the AO on cash payments." ....
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....Asst Year 2010-11. The Learned CITA held that the seized diary ILRT/2 is similar to ILRT /1 and accordingly held that the cash payments totaling to Rs. 6,27,300/- as recorded in the seized diary could not be explained by the assessee from the regular cash book. Accordingly he granted relief to the extent of Rs. 6,02,300/- and sustained the addition made by the Learned AO to the extent of Rs. 6,27,300/- . 10.2. Aggrieved, both the assessee as well as the revenue are in appeal before us. The revenue had raised the following ground for Asst Year 2010-11:- "8. That on the facts and circumstances of the case and in law, Ld. CIT(A) erred in deleting addition of Rs. 6,02,300/-, as made by the AO on cash payments." The assessee has raised the following ground in its cross objection:- "1. That in the facts and circumstances of the case, the Ld. CIT(A) erred in confirming part additions to the extent of Rs. 875560/- being part of the amounts noted in memorandum records described as ILRT/1." 10.3. We have heard the rival submissions and perused the materials available on record including the copy of the seized material enclosed in the paper book filed by the assesse....
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....d is accepted only at authorized HPCL Petrol Pumps, and so, they cannot be used for any other purposes. The assessee company has fleet of vehicles owned by it as well as hired by it as public carrier. The drivers of selected vehicles were provided with the smart fleet cards to meet the en-route expenses towards fuel and lubricants. On receipt of the accounts on expenses along with relevant bills from the driver and its subsequent confirmation with the statement of the smart fleet card, the appellant company would make payment to the ICICI Bank which is debited in its books under the head "Lubricants". For the year under consideration, such expenses on fuel and lubricant totals to Rs. 57,38,337/-. However, this figure differs slightly from that of the AO primarily due to cancellation of one cheque of Rs.l,33,010/- and possible allowance of minor rebates. Copy of lubricant account was filed in course of .the appellate proceedings. The Ld AR further explained that the assessee company had made payment of Rs. 4,75,903/- against the expenses incurred on tour by its director Sri Ratan Kumar Somani through his credit card. The expenses mainly relate to travelling and hotel charges on tour....
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....essee and the Learned AO's observation that the expenses were personal in nature has got no basis without bringing any material on record to that effect. Accordingly, he granted relief for a sum of Rs. 58,63,375/-. However, with regard to the payment to its Director Sri Ratan Kumar Somani, the assessee was not able to produce any details regarding the nature of payment and the business nexus of the same before the Learned CITA and accordingly he confirmed the addition made in the sum of Rs. 4,75,903/-. Aggrieved, the assessee as well as the revenue are in appeal before us. The revenue had raised the following ground in Asst Year 2008-09 :- "13. That on the facts and circumstances of the case and in law, Ld. CIT(A) erred in deleting addition of Rs. 58,63,375/- as made by the AO on payment through credit card." The assessee had raised the following cross objection in Asst Year 2008-09:- "2. That in the facts and circumstances of the case, the Ld. CIT(A) erred in confirming addition of Rs. 4,75,903/- being the business expenses incurred by the assessee through credit card of one of its director namely Sri Ratan Kumar Somani. 3. Without prejudice, it is su....
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.... decision of the Hon'ble Gujarat High Court in the case of Sayaji Iron and Engineering Co vs CIT reported in 253 ITR 749 (Guj) which directly supports the case of the assessee. We find that the Learned AO had made the entire addition based on surmises and conjectures without bringing any material on record. It is well founded proposition that what is apparent is real and the allegation to prove the contrary is on the person making such allegation. The following decisions support our view in this regard:- CIT vs Daulat Ram Rawatmull (1973) 87 ITR 349 (SC) Sukhdayal Rambilas vs CIT (1982) 136 ITR 414 Madura Knitting Co vs CIT (1956) 30 ITR 764 (Mad) 11.5.1 In view of the aforesaid facts and circumstances and respectfully following the judicial precedents thereon, we have no hesitation in deleting the addition made in the sum of Rs. 4,75,903/- for the Asst Year 2008-09. Similar relief is also granted for the Asst Year 2009-10. 11.6. Accordingly, the Ground No. 13 of revenue for Asst Year 2008-09 is dismissed ; Ground No. 2 of Cross Objection of the assessee for the Asst Years 2008-09 & 2009-10 are allowed and Ground No. 3 of Cross Objection of the asse....
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....ant years was also filed. I have perused the material on record. I find merit in the submissions of the assessee. The assessee has made payment towards the purchase of the said property in the financial year 2006-07, and also, in the subsequent years. The payment was made through the banking channel. The investment was also financed by bank loan. Above all, the investment is duly reflected in the balance sheet for the relevant years. For, it is duly shown on the asset-side the balance sheet under the head "LOANS & ADVANCES". The AO was thus not justified in his observation that there is no supporting evidence to explain the investment when the same is duly reflected in the balance sheet of the company. The addition of Rs. 1,67,07,000/- is deleted." 12.2. Aggrieved, the revenue is in appeal before us on the following ground :- "9. That on the facts and circumstances of the case and in law, Ld. CIT(A) erred in deleting addition of Rs. 1,67,07,000/-, as made by the AO on investment in immovable property." 12.3. The Learned DR vehemently relied on the order of the Learned AO. On the contrary, the Learned AR relied on the order of the Learned CITA. 12.4. We have heard ....
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....ed commercial building on the rented premises for which building plan was also sanctioned from the local authority. We find that the case laws relied upon by the Learned AR were prior to the amendment brought in section 30 by the Finance Act 2003 with effect from 1.4.2004 and hence therefore not applicable for the Asst Year under appeal. Hence we hold that the expenditure incurred is capital in nature and admittedly the same is used for the purpose of business of the assessee and hence the assessee is entitled for depreciation thereon. The Learned AO is directed to grant depreciation on the same accordingly for this year. Needless to mention that the Learned AO has to correspondingly rework the written down value of the block for the consequential impact and benefit of depreciation in subsequent years. Accordingly, the Ground No. 3 of Cross Objection of the assessee for Asst Year 2010-11 is dismissed and Ground No. 4 of Cross Objection of the assessee for Asst Year 2010- 11 is allowed. 14. Addition towards Unexplained Expenditure - Seized Document Reference ILRT /12 - Rs. 6,82,500/- and Seized Document Reference ILRT/23 - Rs. 11,24,093/- The Learned AO treated a sum of Rs. 6,....
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.... seized document was towards the civil works carried out at the residence of Somani family at Alipore, Kolkata. Similarly for Rs. 1,50,000/- , the Learned AO had recorded a finding that the said seized document was towards the civil works carried out for Strand Bank Road office. Similarly he had recorded a finding tha a sum of Rs. 11,24,093/- indicated in the said seized document was towards the civil works carried out at the residence of Somani family at Alipore, Kolkata. The Learned AO had recorded a finding that these three payments were not recorded in the books of accounts of the assessee. These findings recorded by the Learned AO had not been controverted by the assessee before us. We find both the premises recorded in the seized document has got linkage and nexus with the assessee. We find that the primary onus lies on the assessee to disprove that the documents seized during search does not belong to it which has not been discharged by the assessee in the instant case. Hence we find no infirmity in the order of the Learned CITA in this regard. Accordingly, the Ground Nos. 5, 6 & 7 of Cross Objection of the assessee for Asst Year 2010-11 are dismissed Rattan Kumar Somani ....
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....of the assessee and deleted the addition made in the sum of Rs. 9 Crores in the hands of the assessee. Aggrieved, the revenue is in appeal before us on the following ground:- "1. That on the facts and circumstances of the case and in law, Ld. CIT(A) erred in deleting addition of Rs. 9,00,00,000/-, made by the AO as undisclosed income." 15.3. We have heard the rival submissions and perused the materials available on record. The facts stated hereinabove remain undisputed are not reiterated for the sake of brevity. Both the Learned AR and Learned DR reiterated their respective submissions from the orders of the lower authorities. We find that the entire addition of Rs. 9 crores has been made based on the statement u/s 132(4) of the Act made by the key person of the group Shri Laxmi Narain Somani who had made disclosure of Rs. 9 crores in the name of the assessee just to make the total disclosure to Rs. 24 crores. Later, the said person had filed a reply letter dated 24.3.2011 before the Ld. AO retracting the statement wherein it was duly mentioned that the disclosure of Rs. 9 crores made in the hands of the assessee herein was made without verifying the complete seized doc....
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....ed as unwarranted/irrelevant and contrary to the facts and should not be relied/acted upon." The Ld AR further submitted that the assessee also furnished his explanation at the assessment stage. It was submitted before the AO that the assessee never earned any undisclosed income which was also evident from the fact that no document or asset representing his undisclosed income was found in search. For the sake of convenience, the submission of the assessee at the assessment stage is reproduced hereunder:- "Kindly refer to your query regarding non inclusion of sum of Rs. 9 crores in the return 'of income under sec 153A for asst year 2009-10/regular return for asst. year 2010-11. This is to submit that I never earned any income, which may tantamount to undisclosed income in the previous years relevant to the above assessment years. Such income was not revealed by any of the documents seized from my custody in course of search. Therefore there did not arise any question of offering any income in the aforesaid returns as undisclosed income. Needless to mention, I never offered any such income in course of subsequent to search proceedings under sec 132. Further, so called....
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....not correct by the Assessing Officer himself. Therefore, the admission made by the assessee before the Assessing Officer during the course of search contained three facts-(i) that he had no undisclosed income, (ii) the assessee had undisclosed income of Rs. 7 lakhs, and (iii) that he had invested Rs. 4 lakhs in stock of M/s. Moolchand Jain and Sons in support of which there was no evidence collected by the Assessing Officer and then deposit of Rs. 3 lakhs in the Bank Account which could not have been if his statement as given at the relevant time is deemed correct, because the assessee also stated that he lent some of the amounts to some persons. Therefore relying on only one such statement given by the assessee in these circumstances where out of three two facts were found to be not correct, then in these facts and circumstances, it was the duty of the Assessing Officer to collect more evidence in support of the fact that there was undisclosed income of Rs. 7 lakhs in the hands of the assessee. These reasons had been considered by the CIT(A) as well as by the ITAT and therefore, their findings about the taxable income of the assessee has been given in the facts of the case. (ii....
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....uch odd hours could not be considered to be a voluntary statement, if it was subsequently retracted and necessary evidence was led contrary to such admission. The Tribunal was not justified in making addition of Rs. 6 lakhs." (iv) Similar views were expressed by the Hon'ble Courts in the following cases:- CIT vs Chandrakumar Jethmal Kochar reported in (2015) 230 Taxman 78 (Gujarat) M.Narayanan & Bros vs ACIT reported in (2011) 339 ITR 192 (Mad) CIT vs S Khader Khan Sons reported in (2008) 300 ITR 157 (Mad) which was later approved by Hon'ble Supreme Court Bachittar Singh vs CIT reported in (2010) 328 ITR 400 (P&H) 15.3.2. In view of the aforesaid facts and findings and respectfully following the judicial precedents stated hereinabove , we do not find any reason to interfere with the order of the Learned CITA in this regard. Accordingly, the Ground No.1 raised by the revenue is dismissed. 16. Addition towards cash (Rs. 3,23,283/-) and Jewellery (Rs. 97,70,729/-) During the course of search, Cash of Rs. 3,23,283/- and Jewellery worth Rs. 97,70,729/- was found in the residential premises of the assessee at No. 9, New Road, Anugrah Buildi....
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....nal use By Drawings for personal use By cash seized byIT Department 5,00,000 1,00,000 1,00,000 3,00,000 5,26,000 4,26,000 3,26,000 26,000 Based on this cash book, it was contended that no addition need to be made towards the cash found at the time of search as it stands fully explained. The Learned CITA deleted the addition of Rs. 3,23,283/- in the hands of the assessee. 16.2. During the course of search, the total jewellery found in the residential premises of the assessee group in Kolkata, Mumbai and Delhi comprises 4458.760 grams of Gold Jewellery and 258.320 carats of Diamond which are summarized as below:- Sr. No. Premise Weight of gold (gms) Weight of diamond (cts.) Value (Rs.) 1 Kolkata Total 3706.900 223.490 97,70,729 2 Delhi 284.090 8,050 12,84,954 3 Mumbai 467.770 26.780 10,621,865 4458.760 258.320 1,21,18,548 It was explained before the AO that the appellant were a joint family and jewellery belonging to....
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....id 11 persons in their wealth tax returns which was summarized as under - Sr. No. Family members PAN AO Weight of gold (gms) Weight of diamond (cts) Value (Rs.) 1. Puspa Devi Somani AJWPS3190G CC-IV 1947.180 171.700 31,36,389 2. Ratan K Arun K Sornani HUF AADHR1573C CC-IV 1187.260 94.250 6,35,787 3. Arun Sornani HUF AAHHA2882D CC-IV 464.900 65.000 11,89,173 4. Raj* Kumar Somani HUF AAJHR5626L CC-IV 930.780 92.800 20,75,163 5. Sanyukta Sornani AGAPM4363Q CC-IV 1120.980 79.250 13,67,725 6. Sweta Somani AVUPS8671A CC-IV 1112.720 134.400 17,51,953 Total 6763.820 637.400 1.01.56,190 7. Mohini Devi Sornani AJWPS3193F CC-IV 645.410 ....
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....ax returns 6763.820 grns of gold jewellery and 637.400 cts of diamond. The Ld AR concluded that, in view of the above, the jewellery found in search is duly explained, and, that there was no basis or justification for the AO to hold that the jewellery found in search has to be added to the income of the assessee. In fact, there is no finding in the assessment order that the jewellery so found represents undisclosed income of the assessee. 16.3. The Learned CITA appreciated the contentions of the assessee and deleted the addition made in the sum of Rs. 3,23,823/- towards cash found and Rs. 97,70,729/- towards Jewellery in the hands of the assessee. Aggrieved, the revenue is in appeal before us on the following ground:- "2. That on the facts and circumstances of the case and in law, Ld. CIT(A) erred in holding that no addition in respect of cash of Rs. 3,23,283/- and jewellery of Rs. 97,70,729/- found during the course of search can be made by AO and that the assessee's explanation on this issue is acceptable." 16.4. We have heard the rival submissions and perused the materials available on record including the paper book filed by the assessee. We find that the assesse....
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.... smaller figure, there is no case for making any addition on account of finding of jewellery during the course of search and seizure operation." We hold that even if the individual items of jewellery did not match with the wealth tax returns already filed prior to the search, no addition could be made towards jewellery as long as the jewellery found during the search is less than the jewellery disclosed in the wealth tax returns prior to the search. This is so because the jewellery being a fashion industry had to be remade according to changing fashion and designs. We find that this contention also gets support from the fact that the jewellery other than those under consideration was not found in the search, which means the logical conclusion would be that the same are sent for re-making to be in line with the changing fashion and designs. We find that the confirmation filed by the different family members of the assessee claiming ownership of their respective jewellery together with the respective list of items were neither disputed nor disproved by the Learned AO. Hence we hold that the entire jewellery found at the time of search valued at Rs. 97,70,729/- stands duly explaine....
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....nded the due date for filing of return from 31-07-2004 to 31-10-2004. Since the 31st October, 2004 was Sunday, the appellant could file the return on 01-11-2004 which is to be considered to have been filed within the due date in view of section 10 of the General Clauses Act, 1897 and CBDT Circular No. 639 dated 13-11-1992. In view of the above, the AO was not correct in holding that the return for the assessment year 2004-05 was filed beyond the due date. The AO is accordingly directed to allow the set off as per the provisions of law." Aggrieved, the revenue is in appeal before us on the following ground:- "3. That on the facts and circumstances of the case and in law, Ld. CIT(A) erred in deleting addition of Rs. 4,31,806/- as made by the AO on LTCG." 17.2. We have heard the rival submissions. We find that the Learned CITA had rightly granted the benefit of set off of carry forward long term capital loss of Asst Year 2004- 05 to be set off against the long term capital gain in Asst Year 2010-11 by placing reliance on the CBDT Circular supra and section 10 of General Clauses Act. Hence we find no infirmity in the order passed by the Learned CITA in this regard. Accor....