TaxTMI 
TaxTMI 
TaxTMI 
2016 (8) TMI 1192
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....he issues are common, the submissions made by him on such common issues would be applicable to all the appeals and therefore submitted that all the appeals can be heard together. The ld.Sr.DR did not object the aforesaid submissions of the ld.AR. We therefore, for the sake of convenience, proceed to dispose of all the appeal by a consolidated order. 2.1. We first take up the Revenue's appeal in ITA No.1694/Ahd/2012 for AY 2009-10. 2.2. The Revenue has raised the following grounds of appeal:- 1. On the facts and in the circumstances of the case, and in law, the Ld.CIT(A) has erred in restricting the disallowance at 50% of Rs. 12,27,746/- made by the AO on account of unexplained expenditure on URD purchases. 2. On the facts and in the circumstances of the case, and in law, the Ld.CIT(A) has erred in deleting the addition of Rs. 3,98,214/- made by the AO on account of unexplained expenditure on labour payment. 3. At the outset, the ld.AR submitted that the appeal of the Revenue is not maintainable on account of low tax effect and, therefore, be dismissed. The ld. Sr.D.R. fairly admitted that the tax effect on the impugned additions is less than the limit prescribed by the CBDT ....
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....der dated 31/12/2010 and the total income was determined at Rs. 1,82,07,520/-. Aggrieved by the order of the Assessing Officer (AO), assessee carried the matter before the ld.CIT(A), who vide order dated 29/07/2011 (in Appeal No.CIT(A)/VS/261/10-11) granted substantial relief to the assessee. Aggrieved by the order of ld.CIT(A), Revenue is now in appeal before us and has raised the following ground:- 1. On the facts and circumstances of the case and in law, the ld.CIT(A) has erred in Allowing the unexplained cash credits of Rs. 1,24,88,240/- shown in the books. 6.3. The Assessee has raised the following ground in its Cross Objection:- 1. Ld.CIT(A) erred in confirming 20% of disallowance of cash expenses made by AO invoking provisions of section 40A(3) of the Act. Both the lower authorities erred in not appreciating the documentary evidence substantiating the claim that no single payment exceeding amount of Rs. 20,000/- at one time was made by the appellant to attract disallowance of the expenses. Ld.CIT(A) ought to have deleted such disallowance totally that was unjust, uncalled for an unwarranted in light of the submissions on record. 6.4. We first proceed with Revenue's app....
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....t. This is an atrocious approach adopted by the AO for making such huge addition. The AO completely lost the site and contradicted himself in making addition here. For example, the negative cash balance which he added was taken from the uncompleted books whereas he picked up cash payment upto 28.02.2007 from the audited books of a/c submitted by the appellant during the assessment proceeding. He has not given any reasons why he disbelief the reconciliation statement submitted by the appellant or why he did not ask the appellant to reconcile the accounts and furnished the explanation. The action of the AO in this regards calls for severe reprimand. I have perused the statement furnished above by the appellant and found no discrepancy in the cash position. Further, the Id. AR submitted that in the incomplete cash book, the entry of cash received amounting to Rs. 77,50,000/- from the partner, Shri Mohmad Yakub Ahmed Saiyad, which was withdrawn from his proprietary Firm's i.e. Zayba Construction's bank account, was pending to be re-entered by the accountant at the time of survey. The LAO has not considered the Audited cash book, in which the receipts of Rs. 77,50,000/- was ente....
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....O had considered the negative cash balance from the uncompleted books, whereas on the other hand he had picked up the cash payment upto 20/02/2007 from the audited books of account submitted by the assessee during the assessment proceedings, which he had himself rejected as being incomplete. He has further given a finding that the additions made by the AO was without any basis. Before us, Revenue has not placed any material on record to controvert the findings of the ld.CIT(A). In view of these facts, we see no reason to interfere with the findings of the ld.CIT(A) and thus the ground of Revenue is dismissed. 8. In the result, Revenue's appeal in ITA No.2656/Ahd/2011 for AY 2007-08 is dismissed. 9. Now we shall take up Assessee's Cross Objection No.22/Ahd/2012 for AY 2007-08. 9.1. The solitary issue in this CO is with respect to disallowance u/s.40A(3) of the Act. 9.2. On the basis of impounded books of accounts, AO noticed that the assessee had made cash payments of Rs. 8 lacs to Shri H.Y. Khatri on 31/08/2006 and Rs. 29,50,000/- to Shri Balabhai Bachubhai Prajapati on 31/03/2007. Assessee was asked to explain the same to which assessee inter-alia submitted that the impounded ....
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....e completed in the computer. The appellant explained to the AO that the a/c. has already been completed and the R/I was filed as early as 31.10.2007. Due to the loss of data in the system, the data were re-entered in commensuration with the hard copy available with the appellant. But the AO firmly ignored those explanation by the appellant. As seen above, the AO had accepted the book result on 25.06.2009 at the time of passing rectification order much after the survey, there is no justification in rejection the audited a/c in a casual manner with giving any reasons for doing so. Therefore, the rejection of the book result by the AO is not justified. Secondly, the assessment was re-opened and completed u/s.143(3) r.w.s.147 of the Act. In the assessment order, the AO has not recorded reasons for such reopening of assessment. The survey was on 19.03.2008 and the discrepancy found during the year was relevant to A.Y.2008-09. There is nothing in the assessment order that can be attributable to discrepancy detected pertaining to A.Y. 2007-08. In this circumstances, the additions made by the AO were discussed on merit and accepting the book results shown by the appellant. 5.3.1. In th....
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....of appeal is partly allowed." 9.3. Aggrieved by the order of ld.CIT(A) assessee is in cross-objection before us. 9.4. Before us, ld.AR reiterated the submissions made before AO and ld.CIT(A) and further submitted that none of the cash-payments made to Shri H.Y.Khatri or Shri Balabhai Bachubhai Prajapati exceeded Rs. 20,000/- in a day and in support of which he pointed to the copy of the ledger accounts of those persons which are placed in the paper-book. He therefore submitted that the addition be deleted. As an alternate, he submitted that the matter may be remitted back to the file of AO for verification and if the cash payments are found to be in excess of Rs. 20,000/-, the same be disallowed. The ld.Sr.DR, on the other hand, supported the orders of AO and ld.CIT(A). 10. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The issue in the present case is with respect to disallowance of u/s.40A(3) of the Act. Before us, it is ld.AR's submission that there are no instances of cash payment exceeding Rs. 20,000/- in a day to Shri HY Khatri or Shri Balabhai Bachubhai Prajapati and in support of which h....
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....ought not to have made such adhoc addition. 13. The ld.counsel for the assessee submitted that he does not wish to press the Cross Objection (for AY 2008-09) filed by the assessee. 13.1. In view of the aforesaid submissions of ld.AR the Assessee's cross-objection are dismissed as not pressed. 14. Revenue's appeal for AY 2008-09 14.1. First ground is with respect to addition on account of suppressed sales. 14.2. During the course of assessment proceedings, AO noticed that as per impounded books, the profit upto 08/08/2008 was shown at Rs. 1,56,76,680/- whereas as per audited accounts, the profits was Rs. 22,82,387/-. He also noticed that as per the audited accounts, cash on hand was shown at Rs. 1,28,048/-, whereas as per the cash book which was prepared upto 08/08/2008 and which was impounded, the cash available was shown at Rs. 1,03,53,333/-. He also noticed that the sales figure as per the audited accounts and as per the impounded books was shown at Rs. 3.55 crores. The assessee was asked to clarify the difference in cash balances and profits as per the audited accounts and impounded books, to which it was inter-alia submitted that the impounded books were the incomplete boo....
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.... the books of a/c. be rejected. In the instant case, a survey was conducted on 19.03.2008 in the business premises and certain books/documents were impounded. During the survey it was noticed that certain a/c for the F.Y.2007-08 were yet to be completed in the computer. The appellant explained to the AO that the a/c has already been completed and the R/I was filed as early as 30.09.2008. The appellant also contended that the R/I was filed on the basis of audited account. The AO had not found any deficiency in the audited account. But the AO firmly ignored those explanations offered by the appellant and relied on the account as on the date of survey. There is no justification in rejection the audited a/c in a casual manner with giving any reasons for doing so. Therefore, the rejection of the book result by the AO is not justified. Having considered the facts and circumstances under which the AO rejected the book result, it is necessary to examine the context of the addition made by the AO in this case. The AO found profits as on the day of survey (19.03.2008) was Rs. 1,56,76,680/- but as per the audited a/c. the profit shown at the end of the financial year was Rs. 22,88,387/-. The ....
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....he sales bills were not issued after the month of December, 2007, but the material cost and direct expenses were to be incurred, it is clear that as and when the part of the project was completed and the completion certificate was received from the architect, the bill was issued to party. The LAO not considered the same as the said expenses were genuine and supported by third party evidences i.e. bills/vouchers. In addition to residential construction project (Green Park Enterprise), the appellant firm also constructs the factory shed of Alok Industries Ltd. 5.3.1 I have carefully considered the submissions made by the Id. Id. AR and the explanations offered by the appellant is not convincing. The appellant putting hard to justify the anticipated bills as expenditure incurred. It is appropriate to hold that the expenses referred above of Rs. 16,66,855/- do not justify the context herein. In other words the .expenses shown above appears to be suspect because the appellant could not produce sufficient evidences. In view of this, I am of the opinion that those expenses deserved to be disallowed. Accordingly the AO is directed to disallow Rs. 16,66,815/- and add to the profit (Rs.22,....
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....dditions because the appellant has nothing to do with that payment. I am ceased with the appeal of ZCC for the said period and the facts and circumstances as applicable will be dealt therein. Accordingly, this ground of appeal is allowed". It is very clear from the finding thereon was that the amount of Rs. 65.00 lakhs paid by Zyaba Construction Co (ZCC) to Shri. Surendrabhai Jiwrajkar as per the documents and not refuted. Therefore, the said amount to be assessed in the hand of ZCC. The matter was discussed in details with the Id. AR. The ld.AR also concurred that the documents concerning the said transaction relates to the ZCC and agreed that the income of 13% of 65.00 lakhs may if at all be taxed in the hands of ZCC. Accordingly, the amount to be taxed in the appellant's hand is Rs. 8.45 lakhs being 13% of 65.00 lakh. The AO is directed to make further addition of Rs. 8.45 lakhs in the hands of the appellant. Thus, this ground of appeal is partly allowed." 14.3. Aggrieved by the order of ld.CIT(A), Revenue is in appeal before us. 14.4. Before us, ld.Sr.DR supported the order of AO. Ld.AR, on the other hand, reiterated the submissions made before AO and ld.CIT(A) and further ....
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....e arguments. During the appellate proceeding the ld.AR produced ledger a/c. Examination of the ledger a/c supported the contention of the appellant. In view of the above, the AO is directed to delete the addition made in this ground of appeal. Thus, this ground is allowed." 16.2. Aggrieved by the order of ld.CIT(A), Revenue is in appeal before us. 16.3. Before us, ld.Sr.DR supported the order of AO. Ld.AR, on the other hand, reiterated the submissions made before AO and ld.CIT(A) and supported the order of the ld.CIT(A). 17. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that ld.CIT(A) while deleting the addition has noted that assessee had produced ledger account during the appellate proceedings and the examination of the ledger account revealed that there was no payment in cash. Before us, the Revenue has not controverted the findings of the ld.CIT(A) nor has pointed any fallacy in the finding of ld.CIT(A). We therefore find no reason to interfere with the order of ld.CIT(A). Thus, this ground of Revenue is dismissed. 18. In the result, Revenue's appeal in ITA No.2663/Ahd/2011 is dism....