AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2017 (12) TMI 1344
X X X X Extracts X X X X
X X X X Extracts X X X X
....isregard of the facts and documentary evidences. 2. Ld CIT(A) -XXXII, New Delhi has erred by confirming the addition of Rs. 4078000/- in assessment year 1994-95 on the basis of a rough noting on page no. 2 of Annexure A-2, added by Assessing Officer on account of undisclosed ICDs which is arbitrary, unjust and against the facts of the case. 3. CIT(A) -XXXII, New Delhi has erred by confirming the addition of Rs. 133,22590/- in assessment year 1996-97 on the basis of Annexure A-40, added by Assessing Officer on account of unexplained source of repayment of Loan which is arbitrary, unjust and against the facts of the case. 4. CIT(A) -XXXII, New Delhi has erred by confirming the addition of Rs. 3750000/- (in assessment year 1996-97 Rs. 1500000/- and in 1997-98 Rs. 2250000/-) on the basis of a notional calculation of interest on the basis that the loan amount was utilized for illegal purposes which is arbitrary, unjust and against the facts of the case. 5. The appellant craves leave to add, delete, modify any ground of appeal with the permission of Hon'ble Bench. 2. The grounds of appeal of the Revenue are reproduced as under: 1. Wheth....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eated as return filed under section 158BC of the Act. Subsequently, statuary notices were issued and complied with. The assessment was completed on 30/12/2011 determining total undisclosed income for the block period from 1989-90 to 1999-2000 at Rs. 4,41,35,732/-. Aggrieved, the assessee filed appeal before the Ld. CIT-(A) and filed certain additional evidences. The Ld. CIT-(A) forwarded those additional evidences to the Assessing Officer. The Assessing Officer did not object for admitting the additional evidences and accordingly, after taking into account the additional evidences and submission of the assessee, the Ld. CIT-(A) allowed part relief to the assessee. Aggrieved, both the assessee and the Revenue are in appeal raising their respective grounds in their appeal. IT(SS)A No.22/Del/2013. 4. First we take up the appeal of the assessee in IT(SS)A No. 22/Del/2013. 5. The Ground No.1 relates to addition of Rs. 25,43,192/- as unexplained expenditure based on seized document marked as page No. 6 to 8 of Annexure A-1. The Assessing Officer observed that the amount of Rs. 25,43,192/- consisted of amount of Rs. 22,67,896/- shown as outstanding as on 05/12/1998 and amount of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g debtors of M/s Rashiwa International Ltd. as on 05/12/1998, whereas according to the lower authorities, the assessee failed to explain with evidences that the amount in question is outstanding debtors of M/s Rashiva International Ltd. Before the Ld. CIT-(A), the assessee produced trial balance of M/s Rasiwa International Ltd. as on 05/12/1998 and general Ledgers of the parties appearing in the books of accounts of M/s Rashiwa International Ltd, however, the Ld. CIT-(A) observed that the claim of the assessee could not be reconciled with the documents submitted by the assessee. In our opinion, the trial balance dated 05/12/1998 and Ledger of parties, which were not audited by any Chartered Accountant, cannot be reconciled in isolation. The assessee was required to produce complete books of accounts and vouchers of M/s Rashiwa International Ltd., so that the Revenue Authorities could reconcile the name of the parties and amount appearing in page No. 6 of Annexure A-1 with the amount outstanding from the relevant parties as on 05/12/1998 in the books of accounts of M/s. Rashiwa International Ltd. Since this exercise of reconciling the amounts appearing in seized documents with the b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at the assessee failed to furnish any evidence to support the explanation that the transaction did not belong to it, accordingly he made addition of the amount of Rs. 40.78 Lacs to the income of the assessee. Before the Ld. CIT-(A), the assessee repeated the same submission that it was a rough document and did not belong to the assessee. The Ld. CIT(A) observed that the Ld. AR merely repeated the earlier contention that the transaction did not belong to it. According to him, such contention of the assessee without any substantiation, was having no meaning in view of the provision of section 132(4A) of the Act and accordingly upheld the addition. 6.1 Before us, the learned counsel referred to page -25 of the paper book, which is a copy of page No. 2 of Annexure -A of seized documents. The learned counsel took twofold arguments challenging the additions. Firstly, the date against the figure of 52.60 was appearing as 30/06/94, whereas the assessee company was incorporated on 18/05/1994 as per master data from Ministry of company affairs appearing at page No. 26 of the paper book. According to the Ld. counsel it was not possible for a company to have ICDs outstanding of Rs. 40.78 La....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ulars as inter-corporate deposits (ICDs). Name of the parties are also mentioned in coded form. The judgments relied upon by the Ld. counsel are also of no assistance to the assessee. In the case of S.M. Aggarwal (supra), the assessee stated that accounts belongs to his daughter, though she denied in her statement. The assessee was not allowed the opportunity to cross-examining his daughter and therefore the Tribunal held that if the evidence collected against the person has not been confronted, it could not be utilized against him. In view of the facts, the Hon'ble High Court held that no substantial question of law arises in the said case. In the said case figures too were totally unexplained and thus the Hon'ble High Court held that the document was a dumb document. In the instant case, the assessee has not stated as to whom the paper belongs and also the amount, date particulars etc. are clearly mentioned in the document, thus the document cannot be treated as dumb document. In the case of Girish Chaudhary (supra), the Assessing Officer alleged that the conclusion that the figure "48" is to be read as 'Rs.48 lakhs', which the Hon'ble High Court has held to be a dumb document. B....
X X X X Extracts X X X X
X X X X Extracts X X X X
....-materialization of the deal, all the original post dated cheques as well as promissory note were found and seized from the premises of the Director of the company. The Assessing Officer held that the assessee failed to furnish third-party confirmation, documentary evidence to establish that the loan transaction did not materialize and documentary evidence to establish the source of repayment to the parties and accordingly, he made addition of Rs. 1,33,22,590/- to the income of the assessee. Before the Ld. CIT-(A) also, the assessee repeated same arguments and submitted that the Assessing Officer did not make any inquiry from the respective parties in whose name post dated cheques were found during the search proceedings. The Ld. CIT- (A) rejected the arguments of the assessee and sustained the addition. The relevant finding of the learned CIT-(A) is reproduced as under: "7.3 I have considered the findings recorded by the Id. AO as per the assessment order, the submissions made by the Id. AR and the facts of the case on record. The AO made an addition of Rs. 1,33,22,590/- on the basis of cancelled cheques seized during the search operation from the premises of the appellan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....credit found to corroborate the receipt of loans and also no evidence found to corroborate the repayment. He also submitted that no direct enquiry was made from the parties whose name and address mentioned on those papers. 7.3 The Ld. CIT(DR), on the other hand, submitted that original assessment proceeding, the assessee did not comply various notices issued and the assessment was completed ex parte. She submitted that assessment was set aside in terms of section 264 of the Act by the Commissioner of income tax after a period of almost 10 years and thus it was the onus of the assessee to produce those parties for confirming the facts appearing in seized documents. She further submitted that in those documents only names of the parties are appearing and address are not mentioned and therefore it was not possible for the Assessing Officer to carry out further enquiries for confirmation of repayment of loans. She accordingly submitted that the Assessing Officer was justified in making addition on this account. 7.4 We have heard the rival submission and perused the relevant material on record. From the sample copy of documents containing post dated cheque, loan agreement, receipt....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Bank i.e. Mr. Keshav Banger. The seized document is a copy of letter written by the director of the assessee company to crime and vigilance, New Delhi. The Assessing Officer was of the view that this deposit advanced out of the packing credit limit availed was for illegal purposes and therefore, the interest corresponding to the intercorporate deposit of Rs. 1.5 crores was disallowed by the Assessing Officer in various years as under: F.Y. 1996-97 Rs. 15,00,000 F.Y.1997-98 Rs. 22,50,000 F.Y.1998-99 Rs. 22,50,000 F.Y.1999-2000 upto 2.7.99 Rs. 5,62,500 8.2 The Ld. CIT-(A) upheld the disallowance of Rs. 37,50,000/-for financial year 1996-97 and 1997-98, holding the amount of Rs. 1.5 crores diverted for non-business purposes. The finding of Ld. CIT-(A) are reproduced as under: "8.4 I have considered the findings recorded by the learned AO as per the assessment order, the submissions made by the ld. AR and the facts of the case on record. As per the assessment order, the ld. AO has recorded a finding that an amount of Rs. 1.5 crores was advanced by the appellant for illegal/non-business purposes. Accordingly, he made a disallowance of Rs.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orate deposit was for any business purpose. According to her, in view of the fact the disallowance sustained by the Ld. CIT-(A) was justified. 8.5 We have heard the rival submission and perused the relevant material on record. The relevant part of the letter of the Director of the assessee company seized during the course of search at page 27 to 28 of the Annexure A-2 is reproduced as under: "Ours is an export trading house established in 1995. To execute orders, we have been granted Packing Credit Limit facilities by the Bank of Rajasthan Ltd., Kamla Nagar Branch, Delhi - 110007 of Rs. 3.0 crores on 08.11.95 and the first order was executed in December, 1995. This packing Credit Limit was granted to us against mortgage of our property at D-3/10, Vasant Vihar, New Delhi -1110057, measuring 600 sq. yards situated in South Delhi. Subsequently, we were granted Rs. 1.50 crores on 4.2.96 and Rs. 0.50 crores on 26.7.96 as Packing Credit Limit facilities for executing large orders. Thereafter, we have approached the bank for additional Packing Credit Limit facilities of Rs. 2.5 crores for executing large orders and the same was granted to us. However, this li....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al consideration of Rs. 1,81,19,450/- was due to the assessee from M/s Tartans Infomark Ltd. 12. The assessee explained that it exported goods to Singapore through M/s Tartan Infomark Ltd., who was an export agent and due to non-realization of the sale proceeds, the assessee tried to taking control of the property owned by M/s Tartan Infomark Ltd. but had been unsuccessful. The Assessing Officer was not convinced with the submission and he made the addition for the amount of Rs. 1,76,29,450/- (1,81,19,450- 4,90,000). 13. Before the Ld. CIT-(A), the assessee submitted detail of the transactions. The assessee also submitted that property in question was in control of the assessee under general power of attorney and not sold to the assessee. The learned CIT-(A) directed the Assessing Officer to confirm the fact of the sale of the property from concerned Sub-registrar for sale of properties. The Ld. CIT-(A) after taking into account the remand report of the Assessing Officer and rejoinder of the assessee deleted the addition with following findings: "6.6 I have considered the findings recorded by the Id. AO as per the assessment order, the submissions made by the Id. AR,....