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TaxTMI 
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TaxTMI 
2016 (12) TMI 1146
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....by the department u/s 132 of the Act at the business and residential premises of the assessee on 05/01/2006. In the statement recorded during the course of search, the assessee had admitted that he was earning net profit @10% on the gross receipts. The gross receipts of the assessee from his proprietary business were Rs. 11,93,19,338/-. The net profit @10% on it works to Rs. 1,19,31,933/-. The assessee had disclosed net profit of Rs. 1,13,73,561/-. The Assessing Officer(AO) made an addition on the difference of Rs. 5,58,372/- to the assessee's income. 3.1 The assessee had disclosed Long Term Capital Gains(LTCG) of Rs. 52,92,328/- on transaction of purchase and sale of shares. In response to the query raised by the AO, the assessee could not produce during the assessment proceedings, the share certificates, STT challans, demat account. The AO recorded the statement of Shri Raj Masalia, Principal Officer of M/s DPS Shares & Securities Pvt. Ltd through whom the assessee had shown transactions of purchase and sale of shares. In his statement, Shri Masalia admitted that, in fact, no purchase or sale of shares of M/s Pranett Industries had been undertaken by him on behalf of the assesse....
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....le of equity shares of a listed company i.e. M/s Prranet Industries Ltd. It is also stated that due to diverse reason, the assessee could not produce the relevant details called for by the AO in the course of assessment proceedings. The assessee also harboured doubts about obtaining the relevant information from the broker who was not cooperating. To overcome this defect, the assessee voluntarily filed a revised return of income on 20/12/2007 wherein income of Rs. 17,95,551/- was additionally offered to tax and cash balance to the extent of Rs. 35,00,000/- was reduced. Thus the credit in the accounts on account of exempt LTCG was nullified through the revised return/revised accounts. It is submitted that the transaction of purchase and sale of shares be taken as genuine as the sale of shares had taken place in demat form. He brought to our notice p. 36 to 38 of the paper book filed by him. The AO in the original assessment proceedings had recorded the statement of the broker through whom the concerned shares were acquired. It is stated that the said broker appears to have denied that any shares were purchased through him. It is specifically stated that no reliance should be placed ....
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....3% i.e. 10% figure stated by the assessee in the 132(4) statement. The addition made by the AO is solely based on the statement of the assessee recorded u/s 132(4) of the Act and no defect or deficiency has been pointed out by him in support of the addition. Therefore, the penalty u/s 271(1)(c) would not be attracted on the addition of Rs. 5,58,372/-. The order of the ld. CIT(A) on the penalty in respect of Rs. 5,58,372/- is set aside and the AO is directed to delete the same. 6.1 Now we turn to the appeal filed against the levy of penalty u/s 271(1)(c) of the Act on addition of Rs. 53,86,564/- made u/s 68 as unexplained cash credit on account of consideration received on sale of equity shares. Let us begin with the cases relied on by the ld. Counsel of the assessee. The first case is Andaman Timber Industries (supra). In this case the assessee had filed its declaration u/s 173C of the Central Excise Rules showing the price of the goods at which they were sold ex-factory and delivery basis. Statements of two buyers were recorded and show-cause notice was served on the assessee stating as to why the price at which goods were sold to these customers from the depots may not be the b....
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....and advertisement activities. The amount of Rs. 1.15 crores paid to them was treated as expenditure to arrive at its profit while filing its return of income. This was accepted by the AO u/s 143(1) of the Act. Thereafter, the AO issued a notice u/s 148 seeking to reopen the above assessment on the ground that the expenditure claim of Rs. 1.15 crores was bogus as evidenced by the statement of representative of "Inorbit" "Nupur". During the course of assessment proceedings, the assessee called upon the AO to make available to him the statement recorded of the representatives of "Inorbit" "Nupur" which were allegedly adverse to him. Thereafter, the assessee sought cross-examination of the deponents of the statements made on behalf of "Inorbit" "Nupur". Inspite of the above request, the AO passed an assessment order disallowing the expenditure of Rs. 1.15 crores. In appeal the CIT(A) and ITAT upheld the order of the lower authorities. In further appeal by the assessee, the Hon'ble High Court held: "There has been a breach of principles of natural justice in as much as the Assessing Officer has in his order placed reliance upon the statements of representatives of Inorbit and Nupur to ....
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....ee has not demanded right to cross-examination before the AO during the course of assessment u/s 153A r.w.s 143(3) dt. 31/12/2007. Also the assessee has not filed appeal before the ITAT against the order of the ld. CIT(A)-1, Thane dated 31/07/2008 which arises out of the above order of the ACIT, Central Circle-2 ,Thane. Thus, the above order passed by the ld. CIT(A)-1, Thane has attained finality. In view of the above, the case of the assessee is distinguishable from the above decision. The third case relied on by the ld. Counsel of the assessee is Gem Granites (supra) . In this case, the assessment in respect of the assesse for the A.Y. 1996-97 was completed u/s 143(3) on 30/03/1999 on a total income of Rs. 26,12,140/-. There was search conducted u/s 132 in which it was revealed that in a real estate dealings, there were 'on money' transactions and cash of Rs. 27,00,000/- was seized. The assessee offered to admit the 'on money', but claimed that they will do so on completion of the projects under the 'completed contract method' and therefore, no income was offered by the assessee in the said year, namely, 1996-97. The assessee took a stand that the cash found at the time of searc....
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....e of the present assessee is distinguishable from the above decision . The assessee, in the instant case, has also filed a paper book wherein the written submission dated 08.05.2014 filed before ld. CIT(A) has been mentioned. Therein, the assessee has relied on some decisions. The copies of the said decisions were not filed before us. Inspite of it, we shall try to examine them. The first decision is M/s Karla Glue Factory vs. STT & Ors (1987) 167 ITR 498 (SC) . The assessee submits that where the statement of a person is recorded behind the back of the assessee but not tested by cross examination, such a statement cannot be allowed to be used to the prejudice of the assessee. The second decision relied on by the assessee before the ld. CIT(A) is Mukesh R. Marolia vs. Addl. CIT, 6 SOT 247(Mum.)(2006). The assessee submits that the Tribunal in this case has upheld the contentions of the assessee with relation to purchase and sale of shares through off market transactions. The third decision relied on by the assessee is CIT v. Anupam Kapoor (2008) 299 ITR 179(P&H). In this case, it has been held that there was no material before the AO which could have led to a conclusion that tra....
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.... of the proceedings which closely follow the assessment proceedings. Findings given in assessment proceedings are certainly relevant and have probative value, in the instant case as the ld. AR submits that due to diverse reason, the assessee could not produce the relevant details called for by the AO in the course of assessment proceedings. 6.3 Let us delineate the law relating to onus of proving the source of any money received by the assessee. It is well established by a set of decisions of the Hon'ble Supreme Court, namely Kale Khan Mohammad Hanif v. CIT(1963) 50 ITR 1(SC), Govindarajulu Mudaliar(A) v. CIT(1958) 34 ITR 807(SC), CIT v. Devi Prasad Vishwanath Prasad (1969) 72 ITR 194(SC), that the onus of proving the source of any money received by the assessee is upon him. In Sreelekha Banerjee v. CIT(1963) 49 ITR 112(SC), the Hon'ble Supreme Court has held that if there is an entry in the account books of the assessee which shows the receipt of a sum, it is necessary for the assessee to establish, if asked what the source of that money is and to prove that it does not bear the nature of income. In the instant case, the assessee could not produce before the AO, during the course....