TaxTMI 
TaxTMI 
TaxTMI 
2017 (9) TMI 1284
X X X X Extracts X X X X
X X X X Extracts X X X X
....-2012 under section 143(3) r.w.s. 153A/C of the Income Tax Act, 1961(hereinafter 'the Act'). First we will deal with ITA No. 790/Mum/2013 assessee's appeal and ITA No. 1144/Mum/2013 Revenue's appeal for A.Y. 2005-06 in the case of M/s M.R. Construction. 2. The first common issue in these cross appeals is as regards to the disallowance made by AO and partly restricted by CIT(A) on account of remuneration under section 40(b) of the Act and also expenses for non deduction of TDS under section 194C of the Act on account of transport charges by invoking the provisions of section 40a(ia) of the Act. For this Revenue has raised following ground Nos. 1 & 2: - "1. That the ld. CIT(A) has erred in law and on facts in deleing the additions of Rs. 10,00,000/- & Rs. 1,00,000/- made under section. 40(a)(ia) on account of non-TDS on payment for labour charges & professional charges respectively without appreciating that the ratio of the decision of the Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverages P. Ltd vs. CIT 293 ITR 226 is only in respect of section 201 & not in respect of section 40(a)(ia). 2. The appellant craves to leave to add, to amend and/ to alter any of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....om the order of the CIT(A) or from the seized material it cannot be gathered whether any seized material relating to these disallowances are available on record. As there is a categorical fact recorded by the AO as well as CIT(A) that these disallowances are made by the Revenue on the basis of the return filed by the assessee originally on 31-10-2005 for the AY 2005-06 and search took place on 16-11-2009. The assessment/processing of return of income got completed on 31-10-2006, as no notices under section 143(2) was issued and assessment was not abated in view of the second proviso to section 153A of the Act. Once, the assessment was completed and has not abated for relevant AY, this issue is squarely covered by the decision of the Hon'ble Bombay High Court in the case of CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015) 374 ITR 645 (Bom). 5. We find that this issue now stands covered in favour of assessee and against the Revenue by the decision of Hon'ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra), wherein considering the judgment of the Special Bench of the Mumbai Tribunal in the case of All Cargo Global Lo....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to assess or reassess the total income of these six years. It is obligatory on the part of the AO to assess or reassess total income of the six years as provided in section 153A(1)(b) and reiterated in the 1st proviso to this section. The second proviso states that the assessment or reassessment pending on the date of initiation of the search or requisition shall abate. We find that there is no divergence of views in so far as the provision contained in section 153A till the 1st proviso. The divergence starts from the second proviso which states that pending assessment or reassessment on the date of initiation of search shall abate. This means that an assessment or reassessment pending on the date of initiation of search shall cease to exist and no further action shall be taken thereon. The assessment shall now be made u/s 153A. The case of Ld. Counsel for the assessee is that necessary corollary to this provision is that completed assessment shall not abate. These assessments become final except in so far and to the extent as undisclosed income is found in the course of search. On the other hand, it has been argued by the Ld. Standing Counsel that abatement of pending assessment ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hough not specifically stated, would be that on annulment of the assessment made u/s 153(1), the AO gets the jurisdiction to assess the total income which was vested in him earlier independent of the search and which came to an end due to initiation of the search. The provision contained in section 132 (1) empowers the officer to issue a warrant of search of the premises of a person where any one or more of conditions mentioned therein is or are satisfied, i.e. - a) summons or notice has been issued to produce books of account or other documents but such books of account or documents have not been produced, b) summons or notice has been or might be issued, he will not produce the books of account or other documents mentioned therein, or c) he is in possession of any money or bullion etc. which represents wholly or partly the income or property which has not been and which would not be disclosed for the purpose of assessment, called as undisclosed income or property. We find that the provision in section 132 (1) does not use the word "incriminating document". Clauses (a) and (b) of section 132(1) employ the words "books of account or other documents". For harmonious interpretatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ought from section 132(1). If any books of account or other documents relevant to the assessment had not been produced in the course of original assessment and found in the course of search in our humble opinion such books of account or other documents have to be taken into account while making assessment or reassessment of total income under the aforesaid provision. Similar position will obtain in a case where undisclosed income or undisclosed property has been found as a consequence of search. In other words, harmonious interpretation will produce the following results: - a) In so far as pending assessments are concerned, the jurisdiction to make original assessment and assessment u/s 153A merge into one and only one assessment for each assessment year shall be made separately on the basis of the findings of the search and any other material existing or brought on the record of the AO, (b) in respect of non-abated assessments, the assessment will be made on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search, and undisclosed income or undisclosed property discovered in the course of search." 6....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... which contains details of unsecured loans taken and repaid and according to him these unsecured loans are unexplained cash credits and accordingly he brought to tax u/s 68 of the Act. The CIT(A) also confirmed the action of the AO and confirmed the addition of unexplained cash credit u/s 68 of the Act amounting to Rs. 2.50 lakhs. Aggrieved, assessee preferred the appeal before Tribunal. 9. Before us, the learned Counsel for the assessee stated that addition is not based on any seized material because no incriminating documents were found during the course of search and this is mentioned by the special auditors in their report in annexure-III to form No.6B containing the details of unsecured loans from where the AO has made addition. According to the learned Counsel these details were provided by assessee from its accounts which were available before the AO in the original return of income. According to the learned Counsel this issue is also covered by the decision of Hon'ble Bombay High court in the case of continental Warehousing Corporation (Nhava Sheva) Ltd.( Supra). 10. We find from the facts of the case that there is no incriminating material found during the course of sear....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f allowed by CIT(A) (i) Unrecorded advance (Addition was made on protective basis, the issue is confimrmed in the cas of Shri Mahipal Purohit and this amount is taxable in the 89,50,295 his hand vide CIT(A) order No. CIT(A)-39/IT-102/2012-13 dtd. 17- 12-2013) 89,50,295 Gross Total Income 2,50,000 Total Taxable Income 2,50,000 When this was pointed out to the learned CIT DR, he fairly conceded the position as the substantive addition has been confirmed in the hands of Shri Mahipal P Purohit. We find that the AO has rightly deleted the addition while giving the appeal effect to the order of CIT(A) in the case of Sh. Mahipal P Purohit, as the proactive addition has been confirmed. We find that the CIT(A) has wrongly confirmed the addition and AO has rightly deleted the addition while giving appeal effect to the order of CIT(A) in the case of Sh. Mahipal P Purohit. This issue of assessee's appeal is allowed. ITA No. 3709/Mum/2013 of assessee's appeal for AY 2006-07 in the case of M.R. Construction 13. The first issue in this appeal of assessee is against the order of CIT(A) confirming the disallowance of w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d on seized material relating to disallowance of this expense. He admitted that these other disallowances are adhoc disallowances and for non-deduction of TDS under various provisions of section by invoking provisions of section 40a(ia) of the Act. 15. We have heard the rival contentions and gone through the facts and circumstances of the case. We find that the above disallowances are not based on any evidence i.e. the incriminating material found during the course of search. As the original assessment has not been abated, we are of the view that the issue is squarely covered in favour of assessee by the decision of Hon'ble Bombay High Court in the case of continental Warehousing Corporation (Nhava Sheva) Ltd. (supra). We find that the assessee himself conceded that the disallowance of brokerage expenses paid to Mr. Krishnan Iyer amounting to Rs. 6,00,000/- deserves to be confirmed. We direct the AO accordingly. This issue of assessee's appeal is partly allowed. 16. The next issue in this appeal of assessee is against the order of CIT(A) confirming the addition made by AO of unsecured loans as unexplained cash credit under section 68 of the Act. For this assessee has raised follo....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... found during the course of search relating to these cash credits and accordingly, the issue is squarely covered by the decisions of Hon'ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (Supra) as discussed in Para 5 and 6 of this order. Accordingly, this issue of assessee's appeal is allowed. Coming to cross appeals for AY 2007-08 in ITA No. 3710/Mum/2013 in assessee's appeal and ITA No. 3645/Mum/2013 in Revenue's appeal in the case of M.R. Construction 20. At the outset, the learned Counsel for the assessee stated that the assessee and Revenue has raised two common issue regarding disallowance of expense amounting to Rs. 1,03,34,780/- and also addition of unsecured loans as unexplained cash credit under section 68 of the Act amounting to Rs. 4,54,300/- confirmed by CIT(A) out of total cash credit added by the AO at Rs. 19,54,300/-. For balance deletion of Rs. 15,00,000/- Revenue is in appeal. For this assessee has raised following ground Nos.1 and 2: - "1. That the Assistant Commissioner of Income Tax, Central Circle -22, Mumbai has grossly erred in law and on the facts and circumstances of the case in making disallowances and the le....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rial found during the course of search. The AO has identified seven (7) cash creditors and adding a sum of Rs. 19,54,300/- out of which CIT(A) deleted the addition of unexplained cash credit at Rs. 15,00,000/- and sustain the balance addition of Rs. 4,54,300/- in the following names: - Dinesh Kumar Jain Rs. 1,00,000/- Vilas jadav Rs. 1,00,000/- Norangrai Bajaj Rs. 2,54,300/- 23. At the outset, the learned Counsel for the assessee stated on both the grounds addition is based on the accounts of the assessee and assessee has filed its return of income for AY 2007-08 on 15-11-2007 and no notice under section 143(2) was issued to the assessee on or up to 30-11-2008. It means that the return was processed under section 143(1) and no proceedings, whatsoever, was pending as on the date of search i.e. 16-11-2009. According to the learned Counsel, it means that the issue is squarely covered by the decision of Hon'ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (Supra). 24. We have gone through the facts and circumstances of the case. We find that the admitted facts for the relevant AY 2007-08 are that the assessee has filed its return of in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0,309 Nil Section 194C - Transport 52,136 52,136 Nil Section 194J - Professional Charges 1,17,125 Nil 1,17,125 Interest on Loan -Asahi Infrastructure & Projects Ltd. 10,686 Nil 10,686 Disallowance under section 40(a)(ia) - Late Payment of TDS Section 194A - Interest on loans 4,12,416 Nil 10,686 Section 194C Contractor 78,06,579 Nil 78,06,579 Section 194J - Supervision Charges 2,55,100 Nil 2,55,100 Section 194H - Brokerage Expenses/ commission 2,50,000 Nil 2,50,000 Section 194J - professional charges 50,000 Nil 50,000 4. Adhoc Disallowance for direct Expenses @20% of Rs. 462,000 as 92,400 92,400 Nil 92,400 5. Adhoc Disallowance for Indirect Expenses @20% of Rs. 1,479,147 2,95,829 1,47,915 1,47,915 6. Advertising Expenses disallowed under section 37(2B) 36,000 Nil 36,000 7. Adhoc Disallowance for expenses - Kashish Constructorn for an amount of Rs. 15,55,400 to the extent of 20% 3,11,080 3,11,080 Nil Reduction from WIP 1,19,96,220 16,61,440 1,03,34,780 27. At the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....material and hence, these are confirmed. We direct the AO accordingly. This issue of assessee's appeal is partly allowed. 29. The next issue in this appeal of assessee is against the order of CIT(A) confirming the addition made by AO of unsecured loans as unexplained cash credit under section 68 of the Act. For this assessee has raised following ground No.2: - "2. That the Assistant Commissioner of Income Tax, central circle-22, Mumbai has grossly erred in law and on the facts and circumstances of the case in making addition and the learned Commissioner of Income Tax (Appeals)-39, Mumbai has grossly erred in law and on the facts and circumstances of the case in confirming addition of Rs. 1,03,650/- on account of alleged unsecured loans under section 68 of the Income Tax Act 1961." 30. The facts are admitted and agreed by both the parties. The facts are that the return of income was filed by the assessee for the AY 2008-09 on 08-12-2008 and the return was processed u/s 143(1) of the Act and no proceedings were pending. Subsequently, the survey under section 133A and search under section 132 of the Act was conducted by the department on the office premises of the assessee firm a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... assessee from M/s. Park View Developers under a tripartite agreement dated 25.10.2009 for selling development rights on the ground that the assessee had not made the performance as required under AS-9 on Revenue Recognition to recognize the consideration received of Rs.20 crores without appreciating that AS-9 had no application to the case of the assessee and that the sum of Rs.20 crores had been received by the assessee on sale of development right and not towards performance of any contract or meeting any obligation and liabilities under any contract whereas the balance sum of Rs.20 cores had been paid to the Joint Venture between the assessee and M/s.Green Bell, named as G.M. Construction for termination of the Joint Venture which alone had the liability to meet the obligations under the tripartite agreement dtd.25.10.2009." 2. That on the facts and circumstances of the case, the Learned CIT(A) erred in deleting addition of Rs.20 crores as above relying on a joint affidavit obtained from MIs. Green Bell & the assessee, as members of the Joint Venture, M/s. G.M. Construction, without confronting it to the Assessing Officer for the proposition that under the Joint Venture only....
X X X X Extracts X X X X
X X X X Extracts X X X X
....m of Rs. 20,00,00,000/- being consideration to the assesse firm is income of the impugned year in which tripartite agreement was entered into. The AO held that the amount of Rs. 20,00,00,000/- is taxable in the impugned year. The reason as per the AO is that as per the JV agreement with Green bell Housing, all the responsibility for completion of the project is on the JV and not of the assesse and therefore no responsibility rests on the assessee. As no responsibility rests on the assesse firm, therefore whole of the amount is immediately taxable in the hands of the assesse firm. The assessee before AO claimed that the case of the JV, G M Construction was centralised in the same charge and assessment has been completed in its case considering the consideration received by it. Copy of the assessment order is enclosed in the assessee's paper book. Aggrieved, assessee preferred appeal before CIT(A). 36. The CIT(A) held that JV was terminated and therefore no responsibility rests on the JV and it is the assessee as a developer who has to fulfil the responsibility as developer under the LOI. It has further been held that the tripartite agreement clearly records liability of the assesse....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... an incentive for rehabilitating slums. For rehabilitation of slums, no separate consideration or cost is given to developer. To ensure that a developer does not enjoy incentive FSI before completion of rehabilitation, many checks and balances are provided under the scheme including the condition that developer under LOI cannot be changed and the liability of the developer as per LOI remains till the rehabilitation work is complete. Further, it is only on completion of rehabilitation work the property card for the plot of land is freshly issued by government giving separate card for land on which rehabilitation building is standing and separate card for land on which free sale building is standing. Also final occupation certificate for free sale building is issued only after all the conditions of LOT are fulfilled. The applicant has enclosed a flow chart available on web site of SRA authority where all the stages have been listed in details. 39. In view of the above facts, we find that the assessee under the tripartite agreement has sold right to develop and sell incentive FSI under the LOI. Separate consideration has been provided to the JV towards giving up its rights in the pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Purohit. 40. The two common & inter connected issues in theses appeals of assessee is against the order of CIT(A) confirming the action of the AO in issuing the net profit by applying 10% of the gross receipts and further not allowing telescoping effect of net profit addition against addition of negative peak giving effect to the balance of pulled cash account made by AO. For this assessee has raised following ground No. 1 & 3 : - "1. That the learned Assistant Commissioner of Income Tax, Central Circle 22, Mumbai and the learned Commissioner of Income Tax (Appeals) -. 39, Mumbai have grossly erred in law and on the facts and circumstances of the case in making addition and sustaining the addition, respectively, to the income by Rs. 14,48,166/- by applying higher percentage of Net Profit to the gross receipts. 3. That the learned Assistant Commissioner of Income Tax, Central Circle 22, Mumbai and the learned Commissioner of Income Tax (Appeals) - 39, Mumbai have grossly erred in law and on the facts and circumstances of the case in not giving the affect of addition and sustaining the not giving affect of addition, respectively, in business income by increasing the Cash Bala....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that in case the net profit at the rate of 10% is upheld, the excess of the same can be given effect to telescope against other additions made on account of negative peak as raised by assessee in ground No. 3. 43. We have heared the rival contentions and gone through the facts and circumstances of the case. We find that this issue is dealt by CIT(A) in para 8 of his appellate order, wherein he has confirmed the action of the AO by rejecting the books of accounts and subsequently, upheld the estimation at the rate of 10% of the gross contract receipts in Para 8.1 and 8.1.1 as under: - "8.1. Having rejected the books, the A.O. has proceeded to estimate the income at 10% of the gross contract receipts. The appellant had shown net profit at the rate of 3.79%, which was considered low taking into account in view of the incompleteness and incorrectness of the accounts. The appellant contents that the net profit adopted at 10% is exorbitant. It is pointed out that in the return filed under s. 139(1), the net profit rate declared was 2.89% of the turnover; in the re-drafted books, after consolidation the declared business income is 3.79% of the turnover, which is 0.90% higher than that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fit declared Peak offered in ROI Peak accepted during assessment Total peak offered profit considering peak offer % of net profit Addition made by AO and confirmed by CIT(A) adopting NP rate of 10% 2004-05 2,32,59,516 8,77,786 3.79% 0 0 0 8,77,786 3.79% 14,48,166 2005-06 4,86,74,017 18,50,018 3.80% 0 0 0 18,50,018 3.80% 30,17,384 2006-07 3,02,89,790 11,60,339 3.83% 0 0 0 11,60,339 3.83% 18,68,640 2007-08 4,63,02,636 17,26,319 3.73% 25,07,535 0 25,07,535 42,33,854 9.14% 27,20,029 2008-09 10,48,76,738 39,58,773 3.77% 42,47,059 53,67,292 96,14,351 1,35,73,124 12.94% 65,28,901 2009-10 8,59,70,431 32,72,115 3.81% 0 43,07,103 43,07,103 75,79,218 8.82% 53,24,928 2010-11 1,19,43,168 4,70,717 3.94% 0 38,46,992 38,46,992 43,17,709 36.15% 7,36,030 Total 35,13,16,296 1,33,16,067 3.79% 67,54,594 1,35,21,387 2,02,75,981 3,35,92,048 9056% 2,16,44,078 45. We also find from the findings of CIT(A) as regards to telescoping to net profit addition against addition on account of negative peak was admitted by CIT(A) in Para 11.1 at page 10 of his appellate order, which reads as under: - "11.1 As can be ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and the learned Commissioner of Income Tax (Appeals) - 39, Mumbai have grossly erred in law and on the facts and circumstances of the case in net decreasing and sustaining the net decrease, respectively, by adjusting the Cash Balance by Rs. 6,89,004/- thereby affecting the balance of "Jawahar B. Purohit - Pooled Cash Account and further affecting the Peak Negative Cash in current and forthcoming assessment years." 49. Brief facts relating to the issue are that the assessee filed working of negative peak cash showing a sum of Rs. 6,89,004/- shown as receivable from M/s Shyona Corporation but the AO reduced this cash balance as on 31-03-2004 from the peak working. According to the AO, no documentary evidences were furnished. The CIT(A) also confirmed the action of the AO vide Para 10.1 of his appellate order which reads as under: - "10.1 It is observed from paragraph 15 of the order of assessment that the A.O has reduced the cash balance of the appellant by a sum of Rs.6,89,004/-. The cash balance has been reduced based on the finding in the report of the Special Auditor that a sum of Rs. 6,89,004/- is shown as having been received from MIs Shayona Corporation in the re-drafted b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssment Order Page No. of CIT(A) Date Amount of Adjustment Remarks 1 Sundry Debtors Page No. 12,Para 15 point iii) Page No. 9 ara 10.1 31-032004 6,89,004 This amount is on account of amount receivable from debtor shayona Corporation. Since the amount was received in cash, no evidence of receipt of money is available. This amount is on account of amount receivable from debtor shayona Corporation. Since the amount was received in cash, no evidence of receipt of money is available. The learned Counsel for the assessee only requested that this amount is to be taken as received cash and should be considered for the adjustment made in working of negative peak. We find that the plea of the assessee's Counsel is quite reasonable and accordingly, we direct the AO to consider this amount while making adjustment in the working of negative peak. We direct the AO accordingly. 51. The next issues in ITA No. 7209/Mum/2013 of assessee's appeal for AY 2005-06 are in regard to remuneration of partnership, addition of interest on IT refund and disallowances made in MR construction raised by way of ground No 2, 4 and 7 are not pressed by the learned Counsel for the assessee at the tim....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sh H. Purohit 22,425 Rancchhodpurohit 22,425 Rohan & Associates 3,83,312 Shankar Shetty 20,700 Sharddha Construction co. 33,052 Varshasupeda 23,000 Total 11,02,652 The learned Counsel for the assessee explained from the above that this amount of Rs. 11,02,652/- in the name of various persons were borrowed and reflected in the books of accounts. The assessee had issued bearer cheques during the relevant previous year and cash was withdrawn and retained by him but in the books of accounts bear cheques were reflected as loans repaid. Subsequently in the re-casted books of accounts prepared before search action, on the basis of which assessment has been made, the assessee reflected the correct state of affairs. The learned Counsel for the assessee further stated that cash withdrawn by the assessee was shown in cash account and loans are shown as outstanding. The assessee filed confirmation letters from the lenders to the AO, but the AO did not accept the plea of the assessee and the CIT(A) also confirmed the action of the AO vide Para 9.3 of his order as under: - "9.3 I have very carefully considered the matter. With regard to the finding of the A.O as regards the do....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce? Please state the reason why these blank letter heads and blank bills are lying in your office premise Ans. Yes, I confirm that the above mentioned blank letter heads and blank bills have been founded at my office premises. These entities are not my clients. The blank letter heads are used on behalf of various clients to register with BMC. The blank bills are used to show purchase from various parties. Q.14 Vide answer to question No.13 you have mentioned that blank bills are used to show purchases from various parties Do you mean to say that the bills are merely raised in your office but the goods have not been actually procured? Please provide details that the goods have been actually delivered by showing details of transport date of delivery and bill of laden etc. Ans. No details as mentioned above are available in my office at this time. This original bills have been taken away by the client. However, the above bills are bogus and no actual transaction has taken place. Q.15 I am showing you photo copies bills impounded vide page number 95 to 125 at annexure 'A' which have been found from your office premise in the following entities: - 1. Shree Sundha 2. H.M.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pite the fact that in the books of accounts the amount are still outstanding, the cash received by the assessee from these debtors is available with the assessee and qua this amount, the assessee's pooled cash account should be increased and peak benefit should be allowed. 57. The next issue in ITA No. 6847/Mum/2013 of Revenue's appeal for AY 2005-06 is as regards to the order of CIT(A) deleting the addition made by the AO on account of agricultural income, not accepted and treated the same as income from other sources. For this Revenue has raised following two grounds: - "1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting addition of Rs.24,06,006/- made on account of income from other sources declared by the assessee as agricultural income when the assessee had not produced any proof of land holdings. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the proceedings are not open when the provisions of Sec.153A clearly empowers the Assessing Officer to issue notice and make assessment and to assessee the total income of the assessee which includes disclosed as well as undisclos....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n favour of assess and against Revenue by following the decision of Hon'ble Bombay High Court the case of continental Warehousing Corporation (Nhava Sheva) Ltd. (Supra). 62. We find from the facts of the case that search was carried out on 16.11.2009 and there is no incriminating material were found during the course of search relating to agricultural income. As per law what abates are only the pending assessments or reassessment proceedings and not the completed assessment and accordingly, by following the decisions of Hon'ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (Supra). Accordingly, we confirm the deletion and appeal of Revenue is dismissed. 63. The next common issues in ITA No. 7210/Mum/2013 of assessee's appeal for AY 2006-07 are regarding confirmation of addition by CIT(A) of negative peak of Rs. 3,47,924/-, adjustment disallowed in working of negative peak of Rs. 1,85,000/- and disallowance made in M.R. Construction giving consequential effect in working of negative peak are not pressed by the learned Counsel for the assessee under the instructions of the assessee. Hence, the same are dismissed as not pressed. 64. The nex....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ash should be given effect while computing negative cash in the pooled cash account. We direct the AO accordingly. 67. The second adjustment is as regards to not giving effect of cash available in respect to labour job work of Rs. 18,39,158/-. The facts are that one of the entity which was owned up by the assessee during search proceedings was M/s. Harshita Corporation and all the transactions of the said concern has been considered in the re-casted books of accounts. During the relevant assessment year, the said concern had done labour job work and received the amount of Rs. 18,39,158/- by cash. In the re-casted books, both the sales and corresponding cost incurred had been reflected. Before us it was argue that expenses of the said concern were also recorded in re-casted books of accounts and net profit for the said year is only 4%.The AO reduced the said sales from cash receipt in pooled cash account leading to shortfall in cash on hand. Though the AO has reduced the same from turnover for making estimate of 10% NP but expenses of the said sales are still considered in the re-casted books of accounts and thereby are debited in pooled cash account. The assessee claimed that such....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mbai have grossly erred in law and on the facts and circumstances of the case in net decreasing and sustaining the net decrease, respectively, by adjusting the Cash Balance by Rs. 37,88,147/- thereby affecting the Peak Negative cash in current and forthcoming assessment years." 73. By these ground Nos. 2 and 3 the assessee has challenged adjustment made by AO to pooled cash account and consequential addition made to total income on account negative cash in such pooled cash account. The break up and facts of various adjustments made has been summarised in statement enclosed at page 239-241 of paper book no 2, which reads as under: - 74. We find from the facts of the case that the first adjustment to pooled cash account is on account of purchase of machinery on the basis of invoice found and impounded from S R Desai during simultaneous survey carried out at his place. The assessee claimed that facts and contentions relating to the said issue are the same as in ground 3 & 5 of AY 2005-06. The assessee contended that the AO may be directed to ignore the said amount of Rs. 16,52,036/- and not consider the same as outgoing in computation of pooled cash account. The second adjus....
X X X X Extracts X X X X
X X X X Extracts X X X X
....same is dismissed as not pressed. 76. The next issue in ITA No. 7213/Mum/2013 for AY 2009-10 in assessee's appeal is as regards to addition made on account of negative peak amounting to Rs. 44,57,103/- and adjustment made in working of negative peak of Rs. 1.50 lacs. For this assessee has raised following ground No. 2 and 4 :- 2. That the learned Assistant Commissioner of Income Tax, Central Circle 22, Mumbai and the learned Commissioner of Income Tax (Appeals) - 39, Mumbai have grossly erred in law and on the facts and circumstances of the case in making addition and sustaining addition, respectively, on account of Peak Negative Cash Balance by Rs. 44,57,103/- thereby also affecting the cash balance in current and forthcoming assessment years. 4. That the Assistant Commissioner of Income Tax, Central Circle 22, 41 Mumbai and the learned Commissioner of Income Tax (Appeals) - 39, Mumbai have grossly erred in law and on the facts and circumstances of the case in net decreasing and sustaining the net decrease, respectively, by adjusting the cash balance by Rs. 1,50,000/- thereby affecting the balance of "Jawahar B. Purohit - pooled Cash Account" and further affecting the peak N....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessment years." 80. The assessee has challenged by ground Nos. 2 and 3 the adjustments made by AO to pooled cash account and consequential addition made to total income on account negative cash in such pooled cash account. The break up and facts of various adjustments made has been summarised in statement enclosed at page 242 of paper book no 2, which reads as under: - 81. The first adjustment to pooled cash account is towards payment of Rs. 1,82,367/- towards invoice of Shanti Electric and Hardware. The assessee claimed that the said invoice has not been paid and was outstanding. However, the AO treated the said invoice as paid and reduced the same in pooled cash account. The said issue has been discussed by AO at page 14-15 and by the CIT(A) at page 11, para 9.3. The assessee claimed that the AO may be directed to ignore the said amount of Rs. 1,82,367/- and not consider the same as outgoing in computation of pooled cash account. The second adjustment is presumed expenditure of Rs. 44,71,000/- on a day prior to date of search. At the time of search in the preliminary statement the assessee had stated that cash of Rs. 30,00,000/- was lying at his residence and Rs. 40,00,000/- ....