TaxTMI 
TaxTMI 
TaxTMI 
2017 (12) TMI 469
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....t take up the revenue's appeal for the assessment year 2006-07 and Cross objection filed by the assessee. In the grounds of appeal, the revenue has raised following grounds:- 1. "On the facts and in the circumstances of the case, the CIT (A) has erred on facts and in law in holding that the reopening of assessment on the basis of the report of Assessing Officer of Sh. Kamlesh Gupta was not justified as the name of the assessee was not mentioned anywhere in the documents impounded during the survey despite the facts that in his statement recorded during survey under section. 133A on 22.09.2005, Sh. Kamlesh Gupta had categorically stated that he was working as consignment agent of M/s Rim Jhim Ispat Ltd. on commission basis and had no other source of income. 2. On the facts and in the circumstances of the case, the CIT (A) has erred on facts and in law in holding that the transactions mentioned at page number 3,4,5,9 and 10 of Annexure 2 do not belong to the assessee company despite the fact that Sh. Kamlesh Gupta had admitted during the survey that he had no other source of income from consignment work of M/s Rim Jhim Ispat Ltd. 3. On the facts and in the circumstances of th....
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....f which adverse inference has been sought to be drawn by the AO against the assessee, now cannot be adversely viewed and it was also brought on record that a sworn affidavit on behalf of Shri Kamlesh Gupta owning up the entire transaction in his hand has been filed before his AO at Jhansi in the assessment proceedings in his case i.e., of Shri Kamalesh Gupta; and there was no nexus directly or indirectly of any transaction related to the assessee company. It was submitted that the entire books of accounts alongwith the bills and vouchers were produced during the course of the assessment proceedings which was examined by the AO. However the Ld. AO made the addition after observing and holding as under:- "5. That after examination of explanation and information received on account of survey conducted u/s 133A on 22.9.2005 at Jhansi. There is clear finding that the assessee company transaction pertaining to on the nature of under billing of sale of SS flat were found. Therefore it is a clear case of concealment of income. The replies filed by the assessee from time to time are not able to justify the claim for not treating the same as undisclosed income. The contention of assessee t....
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.... of books sold through concerns of Shri Kamlesh Gupta and TDS has been deducted on total commission paid to him and there is relationship with Shri Kamlesh Gupta was only that he was the agent. The main addition is based on certain pages of annexure 2 which is a pocket diary found from the possession of Shri Sanjay Khandelwal who was the employee of Shri Kamlesh Gupta during the course of survey and in the reassessment proceedings the said employee of Shri Kamlesh Gupta, has filed an affidavit confirming that transactions noted therein and has categorically said that it did not belong to the assessee company and nowhere he has stated that transaction of this diary belong to Rimjim Ispat Limited and he was never cross examined by the AO in the course of reassessment proceedings. The department even has not made inquiry of cross examination to Shri Kamlesh Gupta also. The assessee's detail submission in this regard have been dealt and incorporated by the Ld. CIT (A) in the impugned order from pages 3 to 16 of the appellate order. 5. Ld. CIT (A) after taking note of the entire material facts on record and also the incriminating papers found during the course of survey, first of all h....
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....endent application of mind. True it is, at that stage, it is not necessary to have the established fact of escapement of income but what is necessary is that there is relevant material on which a reasonable person could have formed the requisite belief. To elaborate, the conclusive proof is not germane at this stage but the formation of belie{ must be on the base or foundation or platform of prudence which a reasonable person is required to. Resultantly, the initiation of proceedings under section 147 and issuance of notice under section 148 of the Act are hereby quashed." Applying the above principles as initiated by the Hon'ble Court, it is apparent that there has been no independent application of mind by the AO and had some care been shown in pursuing the pages at 3,4,5, 9 & 10 of Annexure A-2 and an explanation been obtained from the appellant relating to these pages, the AO would have been in a better position to appreciate the facts of the case and take a prima facie considered legal view as to whether there has indeed been escapement of income in appellant's case based on documents found from the possession of an employee ( located at Jodhpur) of the consignment ....
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....-2, GP rate as per assessment order shall be applied by AD instead of commission income worked out at Rs. 81,0001-. The figure of annexure A-2 is also directed to be modified accordingly, thus, appeal is allowed in part. The appellant has inter alia also submitted that Sh. Kamlesh Gupta has never admitted before the survey party that these transactions noted in Annexure belonged to any other party including the principal supplier like Rimjhim Ispat Ltd. That the transactions as per the copy of account of the company were not cross tallied, date wise, amount wise, quantity wise and rate wise found in Annexure A-2 from Sh. Sanjay Khandelwal . That there is no corroborative evidence found from the possession of Sh. Kamlesh Gupta and Sh. Sanjay Khandelwal on which the AO has supported the department's theory of under billing by the appellant. The appellant has also 'relied on the affidavit of Sh. Sanjay Khandelwal regarding the ownership of the seized diary and regarding the contents of the diary. That on a perusal of the Annexure A-2, it no where shows the name of Rimjhim Ispat Ltd. and that the theory of codification is also imaginary. In fact this Annexure is a dumb docum....
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....relevant finding given in the impugned order as well as the material referred to before us. Ld. CIT (DR) has mainly relied upon the information as has been incorporated in the assessment order which was received from ITO Jhansi and submitted that during the course of survey, it revealed that the assessee company was indulged in under billing of sales and simply because the addition has been confirmed in the hands of Shri Kamlesh Gupta that does not absolve the assessee company to explain its state of affairs and how the under billing has not been done. On the other hand contention of the Ld. Counsel for the assessee was that, firstly, the assessee right from the stage of the AO has denied such transactions and proved that the transactions which have been noted in annexure A-2 does not pertain to the assessee; secondly, in the case of Shri Kamlesh Gupta the addition on the same transaction has been confirmed which has attained finality; and lastly, he informed that no appeal has been filed by Shri Kamlesh Gupta before the Tribunal. Thus, no addition can be made in the hands of the assessee company at all. 8. First of all, we find that the Ld. CIT (A) has quashed the entire proceedi....
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.... 1000 willresult into the figure 5,14,88,000/-. This is the exact amount which has been added by the AO in the impugned order. Now in the case of Shri Kamlesh Gupta from the assessment stage to first appellate stage it has been found that these transactions relate to Shri Kamlesh Gupta only and the amount of Rs. 5,14,88,000/ is only Rs. 1,19,68,500/- and the entire amount has been added in the case of Shri Kamlesh Gupta as noted above. Apart from that, there is also a finding of fact that Shri Kamlesh Gupta never admitted either before the survey party or before the AO during the course of his assessment proceedings that the transaction noted in the annexure A- 2 belong to any other party including the assessee. There was no corroborative evidence qua the assessee that assessee has been resorting to any kind of under billing. After appreciation of the facts and material on record the addition has been deleted by the Ld. CIT(A) in the hands of the assessee and therefore, we do not find any infirmity in such an order of the Ld. CIT(A) and accordingly, same is affirmed and consequently the revenue's appeal is dismissed. 9. In the cross objection it has been submitted that it has been....
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....e deciding the case of Sh. Kamlash Gupta for A.Y. 06-07 cited supra has given categorical finding that the Annexure A2 & other annexure belongs to Sh. Kamlesh Gupta & has estimated Income in his hands. The Department has not filed any appeal against the order of CIT(A)-II Agra. Therefore, the finding of CIT (A)-II, Agra has become final. Following the decision of CIT (A)-II Agra, CIT(A)-III, New Delhi in appellant's own case for A.Y. 06-07 has held that these papers belong to Sh. Kamlesh Gupta proprietor of M/s Rahul Ispat & deleted the addition on merits. I have perused the appellate order passed by CIT(A)-II, Agra in the case of Sh. Kamlesh Gupta For A.Y. 06-07., relevant portion of CIT(A)'s order is reproduced as under:- "I have considered the submission of the AR, assessment order, remand report & position of law, in my opinion, the appellant deserves to succeed partly. The contention of the appellant in connection with transaction as per Annexure A-2 appearing at page no. 1, 2, 3, 4, 5 & 9 as well as 6,7 & 8 are not acceptable because of the following grounds:- A. The papers containing the transaction on the basis of commission income has been alleged to be ea....
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.... which are on higher side and not allowable. It can be allowed only in the hands of assessee after ascertaining the gross profit of undisclosed turnover. Since this was a case of enhancement of income, the assessee was given a show cause notice to explain as to why the content of transaction of A-2 and another annexures of the same type of transactions shall not be treated as exclusively belonging to him instead of M/s Rimjhim Ispat Ltd and also why gross profit rate shall not be applied as per trading results as per assessee's own business results. The assessee has filed a reply dated 21-07- 2009 and has relied upon only explanation as per written submission filed earlier and, has not challenged of rebutted my above show cause. In absence of clear evidence that the transaction as per A-2 and other similar annexures belongs to M/s Rimjhim Ispat Ltd and not to the assessee. I hold that transaction as-per annexure A-2 mentioned at SI. No. 1, 2, 3, 4, 5, 6, 7, 8, 9 & 10 and other annexures belongs to assessee himself. This shall be considered assessee's own business transaction and, hence, not recorded in his regular books of account. The sales as per the annexure shall be con....