TaxTMI 
TaxTMI 
2012 (9) TMI 1093
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....hey are dismisses as such. The surviving grounds No.1, 2 and 3 of the appeal are reproduced herein below for consideration: "1. The Ld. CIT(A) has erred in law and on facts and circumstances of the case in deleting the addition of Rs. 78,55,000/- on account of unaccounted advances. 2. The Ld. CIT(A) has erred in law and on facts and circumstances of the case in deleting the addition of Rs. 32,160/- on account of bad debts u/s. 36(1) (vii) of the I. T. Act. 3. The Ld. CIT(A) has erred in law and on facts and circumstances of the case in deleting the addition of Rs. 9,34,062/- on account of disallowance of payment made to persons specified u/s. 40A (2) (b) of the I. T. Act." 3. The assessee is, engaged in the business of manufacturing and selling of menda, rava, atta, soji, besan, gram dal, rice kanki and by produces etc., filed its return of income on 31-10-2007 in pursuance to notice issued u/s. 153A of the Act, declaring income of Rs. 3,23,98,950/-. A search u/s 132 of the Act was carried out in then case of Navjivan Group and in the case of the assessee on 21-09- 2006. Subsequently proceedings u/s 153A of the Act was initiated. Accordingly, notices u....
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....re us. The learned DR supported the order of the learned AO and prayed that his order may be sustained. On the other hand, the learned AR vehemently argued that it is accepted practice of the department to make addition on the basis of peak credit when advances remained unexplained or found to be bogus. The learned AR further pointed out that the working of peak credit offered by the assessee is completely based on seized documents and, therefore, the same may be accepted. The learned AR relied on the decision in the case of Sterling Tools Ltd. Vs DCIT, 91 TTJ 261 (Del.) and Dr. G.G. Dhir Vs ACIT, 129 TTJ 1 (Agr.). 7. We have heard the rival submissions and carefully considered the material on record. From the facts of the case it is apparent that the learned AO rejected the principles of allowability of peak credit in this given case without bringing out any cogent reasons. However, the learned CIT(A) has deliberated the issue in details and arrived at the following conclusions: (i) The appellant had worked out incremental peak credit after verification and complete satisfaction and had incorporated such working in the submissions presented before the Assessing O....
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....e for bad debts and made addition of Rs. 31,260/- 8.1 The assessee carried the matter before the learned CIT(A). The learned CIT(A) considering the facts of the case, Assessment order of the learned AO and the submissions of the assessee deleted the addition made by the learned AO with the following observation: "...It is seen that the appellant has given details of account of each of the parties for the last 3 to 4 years. In respect of each of the parties having regard to sales made, the amount written off is very small part of the total sales. It is also seen that the appellant has been regularly recovering the amount and the amount written off is only small amount with reference to the amount of sales made to them from year to year. Thus it is in the nature of kasar/vatav which is generally allowed to the debtors in the line of business. It is also appreciated that the appellant has given explanation in respect of each of the account. Apart from this, the appellant has also explained that whenever the amount is recovered subsequently against such amount written off, it is includible in the total income of the year of the recovery and is being shown. The copies of acc....
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.... 2002-03 12% 12% 2003-04 11% 10% 2004-05 10% 09% 2005-06 10% 09% 2006-07 10% 09% 2007-08 10% 6 month 09% 12% 6 month The assessee could not produce any cogent evidence in support of the claim that FDRs were kept for long time by the Directors/members and also failed to explain the legitimate need of payment of interest at 1% of higher rate. Accordingly, the learned AO disallowed the claim of the assessee and made addition of Rs. 9,34,062/- u/s 40A (2) (b) of the Act. 9.1 The assessee carried the matter before the learned CIT(A). The learned CIT(A) considering the submissions of the assessee relying on the decisions of ITAT Ahmedabad in the case of ITO Vs Nilam Cine Enterprises, 59 TTJ 403, Ramesh Kantilal Sheth in ITA No.109Ahd/02-03 for AY 2002-03 dated 05-12-2008, decision of the ITAT Chandigarh Bench in the case of Fakirchand Karva & Sons, 135 Taxman 126 and the decision of the Hon'ble Gujarat High Court in the case of Kaushik Kotak as referred to and relied by the assessee, deleted the addition made by the learned AO. 9.2 The revenue is in appeal against this order of the learned C....
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....of Rs. 7,30,826/- on account of excess physical stock over stock book. 7. The Ld. CIT(A) has erred in law and on facts and circumstances of the case in deleting addition of Rs. 10,12,091/- on account of disallowance of payment made to persons specified u/s. 40A(2)(b) of the I.T. Act." 12. Ground No.1: Deleting the addition of Rs. 63,00,000/- on account of unexplained advances/loans: The learned AO observed that during the search conducted at the residential premises of Shri Indravadan G. Sheth, director of the assessee various incriminating documents containing pages 1 to 66, Annexure A/2 and part of Annexure A/1 containing 1 to 74 pages were seized. Page 1to 3 of annexure A/2 related to Shri Mihir H. Shah as admitted by him in the statement recorded by the learned AO and page 54 of annexure A/1 was relating to loan of Rs. 8 lacs to Shri R. G. Patel. From the seized papers it was found that the assessee had advanced loan for a total sum of Rs. 63,00,000/- which was not accounted for in its books of accounts. The learned AO, accordingly added the sum of Rs. 63,00,000/- on account of unexplained loans given by the assessee. The learned CIT(A) on perusal of the assessment ....
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....er hand, the learned AR reiterating the submissions made before the authorities below and relied on the order of the learned CIT(A) and prayed that his order may be sustained. 12.2 We have heard the rival submissions and carefully perused the orders of the authorities below along with the materials on record. From the facts of the case, it appears that the entire addition is based on the three pages found in the possession of Shri Mihir Shah who happened to be standing outside the gate of the residence of Shri I. G. Sheth, director of the assessee Company. Further, the learned AO or the search party had not cross-examined the respective persons whose names appeared in these loose papers to whom the loan was purported to be extended by the assessee by way of cash. The loose papers were found from Shri Mihir Shah which was written in his own handwriting and his statement remained yet to be un-examined. The appellant placed reliance on the decision of the case Latamangeshkar, 97 ITR Page 676 wherein it was held that "though the entries in the records seized from third party and his confirmatory statement may raise suspicion but cannot prove that it is assessee's income", which s....
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....-07 on this issue may be followed for the AY 2007-08 also. Since, we have decided the issue in favour of the assessee in Para No.7, Page 4 and 5 supra; this ground of appeal raised by the revenue is dismissed. 15. Ground No.4: Deleting the addition of Rs. 6,36,650/- on account of silver coins purchased. During the course of assessment proceedings the learned AO observed that 3.7.44 Kgs of silver coins worth of Rs. 6,36,650/- were found at the business premises of the assessee. In the statement recorded by the learned AO, Shri Shirish G. Sheth, director of the assessee company admitted that the silver coins were purchased in the year 1995 for distributing the same as gift on the occasion of golden anniversary of the assessee company. Since, the assessee did not show the coins in its closing stock, the learned AO made addition of Rs. 6,36,650/- to the income of the assessee. The learned CIT(A) considering the submissions of the learned AR opined that since the silver coins were purchased in the year 1995 i.e. prior to the period covered u/s 153A of the Act deleted the addition made by the learned AO and allowed the ground of appeal of the assessee. 15.1 The revenue is in appeal....
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....y has not taken the stock properly. The assessee also submitted that physical stock was taken by the assessee itself after conclusion of search in presence of two witnesses. However, the learned AO noted that as held by the Hon'ble Kerala High Court in the case of V. Kunhikannan & Sons Vs CIT, 219 ITR 235 (Ker) these two witnesses were not reputed persons and they were related with the business of the assessee and hence, assessee's contention is illogical and vague. Accordingly, the learned AO added a sum of Rs. 7,10,626/- to the income of the assessee. The learned CIT(A) considering the submission and the facts of the case opined that the learned AO was not justified in applying 6% gross profit on shortage of stock amounting to Rs. 20,03,436/- and he ought to have reduced Rs. 7,10,626/- being excess stock against shortage of stock of Rs. 20,03,436/-. The learned CIT(A) considering the facts that there was shortage of stock and well as excess of stock estimated Rs. 1,00,00/- as against total addition of Rs. 8,30,826/- made by the learned AO and accordingly deleted the addition of Rs. 7,30,826/-. 17.1 The revenue is in appeal before us against the order of the learned CIT(A). The....