TaxTMI 
TaxTMI 
TaxTMI 
2017 (12) TMI 199
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....ade by the Assessing Officer on account of unexplained investment in stock being the difference in the stock statement submitted to the bank as compared to the stock statement furnished to the Assessing Officer during the course of assessment proceedings." 3. The brief facts qua the issue raised are that the assessee-company has filed its return of income for assessment year 2007-08 on 25/10/2007 declaring its total taxable income at Rs. 47,85,298/-. Such return of income was subjected to scrutiny and assessment order under section 143(3) was passed vide order dated 31/12/2009 accepting the returned income. Thereafter, assessee's case has been reopened under section 147 by issuance of notice dated 28/3/2011 under section 148. The background and the 'reasons' for reopening the case was that a search and seizure operation under section 132(1) was carried out on 8/11/2008 in the case of Nimitaya Group in which Ashwani Mahajan Group was also covered. The assesseecompany was also subjected to survey under section 133A, wherein it was revealed that the assessee-company has taken huge share application money. Based on this information, assessee's case has been reopened. During the cours....
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....ck statement is meant only for their bankers. There is no misuse of funds of the overdraft or cash credit account, because it was merely to enjoy credit facilities against the closing stock; (iv) fourthly, for the last several years, assessee has been regularly assessed and the trading results and gross profit of the assessee-company have always been accepted. There is no cash sale or cash purchase or any unaccounted sale of purchase found during the year which also supports that there is no difference in the closing stock as on 31/3/2007. 6. The ld. CIT(A), on perusal of the material placed on record and the financial statements, noted down the following reconciliation:- (a) Plants and machinery Rs.3,64,66,010 Schedule VIII of Balance sheet (b) Advances to suppliers Rs.1,45,64,347 Schedule XI of balance sheet Rs.5,10,30,357 7. Ld. CIT(A) further noted that assessee has disclosed to the banking authorities stock of Rs. 10,08,30,357/- comprising of three items; firstly, plant & machinery (Rs.3,64,66,010/-); secondly, advances to suppliers (Rs.1,45,64,347/-); and lastly, stock in hand (Rs.4,98,00,000/-). All these three items are duly accounted fo....
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....amount of Rs. 5,10,30,357/-, which has been added by the Assessing Officer, was firstly, on account of plant & machinery of Rs. 3,64,66,010/- which has been shown in Schedule VIII of the balance sheet; and secondly, advance to the suppliers shown at Rs. 1,45,64,347/- reflected in Schedule XI of the balance sheet. Thus, there is no such difference apparently in the value of closing stock. It is also an admitted fact that there is no difference in the quantum and in the actual value of the closing stock as appearing in the books of account and there is no cash element on such difference because the amount aggregating to Rs. 5,10,30,357/- is on account of payment given to the suppliers for purchase/expenses incurred through account payee cheques from the bank account and such payments have been shown as amount recoverable and no expenses including purchase have been debited to the profit & loss account, therefore, there is no effect on the profit of the assessee-company for assessment year 2007-08 qua this amount. Otherwise also, it is quite standard practice that the stock statement given to the bank is to enjoy higher credit limit and if stock statement does not give quantity and it....
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....nity of hearing in violation of principles of natural justice and the same deserves to be quashed and the same are not sustainable on legal and factual grounds. 6) That having regards to the facts and circumstances of the case, Ld. A.O. has erred in law and facts in charging interest u/s 234A, 234B, 234C and 234D of Income Tax Act, 1961. 12. So far as legal ground, which has been raised in grounds No. 2 and 4, we find that the assessee has not taken these grounds either before the Assessing Officer or before the ld. CIT (A). These are purely legal and jurisdictional grounds challenging the validity of reopening under section 147 and also challenging the power of the authority for sanctioning notices under section 148 in terms of provisions of section 151(1). All these facts as raised in the legal grounds though does not need any investigation of new facts, but definitely it needs verification from records which before are us are not completely available. Therefore, in the interest of justice, we feel that legal issues, which have been raised before us, should be sent back to the file of the Assessing Officer to be adjudicated in accordance to law after giving due opportunity to ....
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.... Therefore, the order of the ld. CIT (A) in confirming the said amount of Rs. 90 lakhs should be confirmed. 16. After considering the rival submissions and on perusal of the relevant material on record, we find from the perusal of the order sheet entry (copy of which was filed during the course of hearing before us), show cause notice have been issued to the assessee at the fag-end of limitation, therefore, apparently it seems that the time given to the assessee to produce the persons from the share applicant companies was less. Though this opportunity was given again by the ld. CIT (A), but it seems that assessee failed to produce the said share applicants. Now before us, the ld. counsel for the assessee submitted that assessee would be in a position to produce these persons and in the interest of justice the matter should be restored back to the file of the Assessing Officer, because assessee has given all the relevant documents to prove all the three limbs of proving the nature and source of credit, i.e., identity; genuineness and creditworthiness. Simply because Directors or the authorized persons from the said company could not be produced, no adverse inference could have bee....
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....stock. " 19. The Assessing Officer held that assessee's contention that difference on account of plant & machinery and advances to the suppliers, which are duly reflected in the books of account, is not supported with any reliable documentary evidence and accordingly he made addition of difference amount of Rs. 4,13,83,468/- as unaccounted investment outside the books of account. Apart from that, Assessing Officer noted that such a difference in the value of stock as per books of account and as submitted to the bank authorities were for sums amounting to Rs. 2,61,20,464/- as on 30/9/2008; and Rs. 2,40,95,422/- as on 31/10/2008 and has added these amounts also, without even considering the fact that difference as on 31/3/2008 at Rs. 4,13,83,468/- was not for this financial year and no addition could have been made in the assessment year 2009-10. 20. Before the ld. CIT (A), assessee gave detailed submissions which have been dealt and incorporated by the ld. CIT (A) from pages 12 to 15 of the appellate order which by and large on the same lines as given before the ld. CIT (A) in the appeal for assessment year 2007-08, which has been dealt by us in the aforesaid appeal for assessmen....
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.... Party were available but did not file the confirmation 4. North South Enterprise (P) Ltd. 14,50,000 Party were available but did not file the/ confirmation When this discrepancy was confronted to the assessee, assessee gave the following documents to prove the genuineness:- S. No. Particulars Remarks 1. Jalpa Machinery (P) Ltd. Stated that correct address in A-47, Mayapuri and not A-41, Mayapuri filed the confirmed copy of accounts with PAN details, and photocopy of return of income. 2. Sadashiv Marketing (P) Ltd. Filed the confirmed copy of account, with PAN details and photocopy of return of income. 3. Punita Bharadwaj Filed the confirmed copy of account, with PAN details and photocopy of return of income. 4. North South Enterprise (P) Ltd. Filed the confirmed copy of account, with PAN details. 24. Again when comment was sought from the Assessing Officer by the ld. CIT (A) post assessee's filing of documents, the Assessing Officer said that either party was not available at the address or have refused to have any dealing with the assessee. The ld. CIT (A) held that the person (Punita Bharadwaj) about whom Assessing Officer had said that she refused to have ....
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....40,95,422/- was on account of advances given to the suppliers, he then wanted to verify the transaction from these parties whether the advances given and appearing in the books of account are fictitious, was never subject matter of doubt by the Assessing Officer at the assessment stage. Be it as that may be, we find that the ld. CIT (A) has duly acknowledged the evidences filed by the assessee in support of the advances given to the suppliers and whatever adverse comment which has been given by the Assessing Officer that either party is not available at the address or one person has stated that he has not done any dealing with the assessee, the Ld. CIT(A) has duly considered the entire facts and material on record while giving his finding and also noted that factum of report and enquiry file was not submitted by the AO before the ld. CIT(A), despite his requisition. 29. So far as in the case of Punita Bhardwaj where she has refused having any dealing with the assessee, we feel that the matter should be restored back to the file of the Assessing Officer to confront to the assessee as to what was her statement given in the enquiry when she herself has given confirmation letter that ....
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....ines etc. Although the assessee claims it to be a Trading activity, but this requires various types of processing, repairing, assembling and dismantling of machines which makes it suitable to fetch higher price in market. In fact, such activity cannot be termed as 'Trading'. But to bypass the Custom Duty and Excise Duty levied on such items, he is showing such expenses on processing in the names of other business concerns which are also run by him but there are other persons/employees of Shri Ashwani Kumar who are shown as the shareholders etc. of these concerns. The authorized officer at Party D-1 has informed as per his Survey Report that Shri Ashwani Kumar Mahajan is also proprietor of Gurulal Enterprises and e rectors in the following companies: 1. Sadashiv Marketing Pvt. Ltd. 2. North South Enterprises Pvt. Ltd. The other directors of the above two companies are also director in A One Machinery Components Pvt. Ltd was also functioning from the portion of the premises with the same main entrance. Shri Pradeep Nagdev and Shri Gopal Nagdev are the directors of the company residing at A-3/50, Janak Puri, New Delhi. Shri Pradeep and Shri Gopal Nagdev are also director of N....
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....addition. 34. After hearing both the parties, we find that such a finding of the ld. CIT(A) is based on correct appreciation of facts, because not only this transaction is reflected in the copy of account but is also confirmed by the confirmation letter filed by the said company along with copy of bank statement. The entire transaction stands verified based on various evidences as discussed by Ld. CIT (A) and, therefore, there is no reason to treat the said amount as unexplained credit. Thus, the addition deleted by the ld. CIT (A) is upheld. 35. Now we will deal with assessee's appeal wherein assessee has challenged the addition of Rs. 62 lakhs on account of undisclosed investment in the property on the alleged payment of cash. 36. During the course of search, a document was found marked as Page 6 of Annexure A1 and also certain pages of Annexure A2 showing that assessee had purchased a land measuring 6 Kanal 16 marlas at Village Jakhoda, Haryana. This land was registered for a sale consideration of Rs. 21.25 lakhs and Rs. 1,64,300/- was paid towards stamp duty. However, as per record a figure of "62" was mentioned which was treated as Rs. 62 lakhs by the Department and it was ....
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....s been filed before us. Moreover, assessee had rebutted this document on the ground that it is not in his handwriting and noting if at all belongs to the broker from whom Assessing Officer should have enquired and assessee has categorically submitted that this document does not belong to him or is not in his handwriting. Thus, he prayed that the matter can be restored back to the file of the Assessing Officer so that proper enquiry can be made before making addition as the same has not been done by the Assessing Officer. 38. On the other hand, the ld. Sr. D.R. strongly relied upon the orders of the Assessing Officer and the ld. CIT (A) and submitted that the onus, which was cast upon the assessee, has not been discharged and, therefore, the transaction mentioned in the said document is to be added in the hands of the assessee only. 39. After hearing both the parties and on a perusal of the impugned order, we find that a document was seized from the premises of the assessee which mentioned sale transaction of land which reflected that property was registered for a consideration of Rs. 21.25 lakhs and other expenses like stamp duty of Rs. 1,64,300/-. In the said seized document, th....