TaxTMI 
TaxTMI 
2018 (4) TMI 788
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....on 28.09.2010 in pursuance of warrant of authorization dt.27.9.2010. Notices under Section 153A of the Act dt.23.3.2011 were issued to the assessee for Assessment Years 2008-09 to 2011-12 and in response thereto, the assessee filed the returns of income for these years on 2.4.2012. The assessments were concluded under Section 143(3) r.w.s. 153A of the Act vide order dt.14.3.2013. The details of income returned, additions made and income assessed for Assessment Years 2008-09 to 2011-12 are as under : Asst. Year Income declared u/s.153A (Rs.) Total Additions Accrued Income (Rs.) Unaccounted cash receipts (Rs.) Wrong Claim of expenditure (Rs.) 2008-09 1,68,45,707 8,35,91,047 NIL 9,54,36,754 2009-10 15,28,58,320 17,79,43,250 1,85,00,000 34,43,01,569 2010-11 28,64,99,700 8,70,54,416 2,67,71,921 39,03,26,041 2011-12 42,16,56,730 9,58,64,287 NIL 50,75,21,020 2.2 Aggrieved by the orders of assessment for Assessment Years 2008- 09 to 2011-12 containing the above additions made by the Assessing Officer, the assessee filed appeals before the CIT (Appeals) - 11, Bangalore, who dismissed the assessee's appeal vide the impugned common order dt.....
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....thorities below erred in relying on statements recorded from Mr. Bharat S Ghorpade, Mr. Dinesh Kumar Singhi, Mr.Kartikeya M Ghorpade, Mr. K.V. Balan and Mr. Antony Balraj. 17. The authorities below erred in relying on statements supra in Ground No.16 without providing opportunity to cross examine. 18. That the approval granted u/s153D is not as per law. 19. The appellant denies the liabilities of interest u/s 234B & 234C of the Act. Further prays that the interest if any should be levied only on returned income. 20. No opportunity has been given before levy of interest u/s 234B and 234C of the Act. Without prejudice to the appellant's right of seeking waiver before appropriate authority, the appellant begs for consequential relief in the levy of interest u/s 234B and 234C of the Act. 21. For the above and other grounds and reasons which may be submitted during the course of hearing of the appeal, the assessee requests that the appeal be allowed as prayed and justice be rendered." 3.2 Similar / almost identical grounds of appeal have been raised for Assessment Years 2009-10 to 2011-12 as the issues are common. However, in respect of the additions made on the issue of....
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....counted cash sales Receipts (Rs.) Undisclosed income of KMIORE (Rs.) Undisclosed income of AKG (Rs.) 2008-09 16,71,82,094 8,35,91,047 8,35,91,047 2009-10 19,06,35,900 17,79,43,250 1,26,92,650 2010-11 15,27,27,045 8,70,54,416 6,56,72,629 2011-12 12,95,46,334 9,58,64,287 3,36,82,047 Total : 64,00,91,373 44,44,53,000 19,56,38,373 5.2 The Assessing Officer's case, based on an appraisal of the seized documents, is that it has transpired that the assessee along with Smt. Ambika Ghorpade had extracted iron ore both with and without permit and had received substantial sums both in cheque as well as in cash. While the amounts received by cheque have been duly recorded in the books of account, the cash components received have not been reflected in the books of account. The addition in the table above (at para 5.1 of this order) represents the alleged cash received outside the books from M/s. Bharat Mines & Minerals (in short 'BMM') and M/s. BMM Ispat Ltd. (in short 'BMMIL'). On being confronted with the seized material, the assessee had submitted its reply, with which the Assessing Officer was not satisfied, thereby resulting in the additions as extracted above. Wh....
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....ation in this search was also not shown to the assessee or its representatives. It was shown to one Mr. S.Y.Ghorpade to whom the said premises belonged to. The seizure of documents marked A/BSG/01 and A/BSG/02 were made in the hands of S.Y. Ghorpade and Bharath S Ghorpade. The said material did not belong to the assessee. During the course of search at Bangalore premises at Mantri Elite, C-1102, Bannerghatta Road, Bangalore, a statement was recorded from Mr. Karthikeya M Ghorpade in the wee hours of the day. The assessee had lot of apprehensions about the legality and the manner in which statement was recorded and immediately filed a letter before the DDIT (Inv) seeking amendment to the statement recorded (PB page 1 to 3). Inspite of the said request, the DDIT (Inv) refused to give a copy of statement recorded to enable the assessee to confirm the veracity of the statements recorded. The above search was completed vide panchanama drawn on 29.09.2010 at 8.45 am. Thereafter, a notice u/s 153A dt 22.03.2011 was served on the assessee calling for filing return of income. The assessee filed return of income under protest and without prejudice on 02.04.2012 by declaring additional inc....
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....sions. There is neither any asset commensurate to the alleged cash receipts nor is actual cash available with the assessee. In the absence of any such asset or valuable, it would be wholly inconsistent to make the above additions. In this regard, the assessee relies on the decision in Nirmal Fashions (P) Ltd vs DCIT - 123 TTJ 180 - Kolkata ITAT (CLPB page 306/317) wherein the tribunal has held as under: "... As per the presumption of the AO, the assessee is carrying on the business of purchase and sale of saree outside the books on large scale which has resulted in the huge income which is not recorded in the assessee's books of account every year. However, during the course of search of the assessee's premises, no unrecorded stock, cash or other assets were found. The Revenue has searched the business premises of the firm/company as well as the residential premises of the partners/directors. Not a single evidence of purchase or sale outside the books is found. In our opinion, it is impossible to carry on business on a huge scale outside the books unless there is some unrecorded stock, cash, debtors, etc. Moreover, if the assessees had huge unrecorded income of crores of rupees in ....
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....the Revenue getting a second opportunity to reopen the concluded assessment which is not permissible under the law.'' Thus, non adherence to the provisions of section 145(3) of the Act, renders the additions unsustainable. Based solely on the seized material A/BSG/01 & A/BSG/02 the income in the form of alleged cash sales has been calculated at page 53 of the assessment order extracted as under: "Total cash receipts as per seized materials From the above discussion, it is clear that M/s. KMIORE and M/s. AKG have received total cash of Rs. 64,00,91,473/- as evidenced by the seized material. The amount received by M/s. KMIORE and M/s. AKG are purely their profits out of which these concerns might be incurring certain expenses on payment of royalty, administrative expenses etc. All the legal and statutory expenses are met out of accounted cheque receipts. Infact the royalty expenses and other mining expenses are incurred by BMM which is accounted in its books. A.Y Total unaccounted cash sales receipts Undisclosed income of M/s. KMIORE Undisclosed income of M/s. AKG 2008-09 167182094 83591047 83591047 2009-10 190635900 177943250 12692650 2010-11 152727045 ....
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....Secondly the seized material A/BSG/01 & A/BSG/02 seized is mentioned in panchanama issued to SY Ghorpade/Bharat S Ghorpade at PB page 218. The extract of the portion of panchanama is as under : Sl No Description Total pages Written pages 1 Folder containing loose sheets 72 72 2 Folder containing loose sheets 150 150 When the assessee sought copies of the seized material it was provided by the department and the same has been filed before the Hon'ble ITAT. The assesseee immediately took objection of the contents and denied any cash transaction contemporaneously vide letter dt. 26.10.2010 & 22.11.2010 (PB page 1 & 2) and also requested for authentication of the seized material. The department has not authenticated the seized material till date. There are gaping issues on the veracity of the seized material provided as the A/BSG/01 & A/BSG/02 to the assessee. While the number total number of pages and written pages as per panchanama in A/BSG/01 were 72 the written pages provided were far in excess of 72 and numbers 90. Similarly in A/BSG/02 total number of pages and written pages as per panchanama were 150, the written pages provided were far in excess of 150 and nu....
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.... Managing Director of KMIORE) was recorded on oath questioning him on certain pages of the seized material marked as A/BSG/01 & A/BSG/02 (page 408PB). The statement u/s 132(4) was also recorded of Ambika Ghorpade at the same time during the search proceedings questioning her on certain pages of the seized material marked as A/BSG/02 (page 420 PB). In view of the above factual position, it is incorrect to say that the seized material shown to Kartikeya M Ghorpade/Ambika Ghorpade while recording statement is the same seized material which was seized in the case of Bharat S Ghorpade at his father SY Ghorpade residence as the said seized material was still in Hospet on 29.09.2010 till 7.45am. Since the statements were taken from Kartikeya M Ghorpade and Ambika Ghorpade in the wee hours of the day and there being no clarity on the basis on which the statements were recorded, the assessee represented by its Directors (Kartikeya M Ghorpade and Ambika Ghorpade) wrote to the Investigation wing seeking copies of seized material based on which their statements were recorded (page 1 & 2 PB). Till date the said copies have not been made available to the assessee neither an opportunity to ....
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....No.7: I am showing you pages 71,72,109,115,118,125,129,135 and 147 of the seized material marked as A/BSG/02 seized from the residence of Mr. Bharat Ghorpade at Gandhi Colony, Hospet during the course of search u/s 132(1) on 28/9/2010. Please go through the pages and explain the contents of the same. Also please state who has written these pages. Q.No.13: I am showing you page No.34 of the seized material marked as A/BSG/01 seized from the residence of Mr. Bharat Ghorpade at Gandhi Colony, Hospet during the course of search u/s 132(1) on 28/9/2010. Please go through the page and explain the contents of the same. Also please state who has written these page.'' and statement of Ambika Ghorpade in question no.3 (PB page 421) extracted hereunder: "Q.No.3: I am showing you pages 71,72,109,115,118,125,129,135 and 147 of the seized material marked as A/BSG/02 seized from the residence of Mr. Bharat Ghorpade at Gandhi Colony, Hospet during the course of search u/s 132(1) on 28/9/2010. Please go through the pages and explain the contents of the same. Also please state who has written these pages.'' seems to show that the same material which was at Hospet at the impugned time was....
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.... with semi legible scribblings is not a regular books of accounts and not even kaccha books of accounts. It has lot of overlapping information and not continuous. It does not even mention the individual transactions but mentions certain aggregate of transactions in somewhat non descriptive code words. Several conflicting interpretations are possible and no uniform conclusion can be drawn. It is in this context that the Hon'ble Supreme Court has held in Common Cause (A Registered Society) & Others vs. Union of India & Others - 98 CCH 28 (CLPB page 279, para 17 pg 284, para 20 &21 page 285, para 24 page 286) that no liability can be fastened on the basis of loose sheets as per section 34 of the Evidence Act. The supreme court also refers to the view of the Income Tax Settlement Commission and upholds the same that loose sheets are not evidence because it is neither books of accounts nor it is maintained regularly. In the absence of non adherence to the twin requirements of section 34 of the Evidence Act, the supreme court has held that no liability under law can be brought about based on the loose sheets. Similarly Hon'ble ITAT in Nishant Construction Pvt Ltd vs ACIT - ITA 1502/Ahd/2....
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....Co Ltd vs. State of Kerala & Anr - 91 ITR 18 - Supreme Court (CLPB page 189/190) CIT vs. S.Khader Khan Son - 352 ITR 480 - SC (CLPB page 336) CBDT Instruction No.F.No.286/2/2003/IT(Inv) - confession of additional income during the course of search & seizure and survey operation (CLPB page 167) On the issue that loose sheets have no evidentiary value/no corroborative material: Common Cause (A Registered Society) & Others vs. Union of India & Others - 98 CCH 28 - SC CIT vs. Shri Praveen Juneja - ITA 57/2017 - Delhi HC Nishant Construction Pvt Ltd vs ACIT - ITA 1502/Ahd/2015 - AHD ITA Nirmal Fashions (P) Ltd vs DCIT - 123 TTJ 180 - Kolkata ITAT. On the issue that statement taken in the wee hours cannot be relied: Sahil Study Circle Pvt Ltd vs DCIT - 179 TTJ 1 - Delhi ITAT On the issue of approval granted u/s 153D, it is the contention of the assessee that the approval has been granted without application of mind and in a mechanical manner. In support of its contention, the following caselaws are relied on: 1) Chhugamal Rajpal vs. S.P.Chaliha & Ors - 79 ITR 603 - SC. 2) CIT vs. Akil Gulamali Somji - 84 CCH 53 - Mum HC- CLPB page 358 3) Smt.Shreelekha....
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.... The assessee filed reply on 6/2/2013 (page 21 to 24 of assessment order). vi. All the issues on point wise were considered and finding was recorded by the Assessing Officer as under: - a. with respect to objection stating statement does not indicate any payment of cash or activity outside books. Assessee attention was invited to statement dated 19/7/2010 to Q.No.8 of Mr Dinesh Kumar Singhi accepting payment of Rs. 1.40 crores in cash and the remaining amount of Rs. 27,03,33,112/- in cheque. b. Assessee's objection regarding not indulged in sale outside the books of accounts and no supply has been made to JSW and KFIL, attention of the assessee was invited to the seized material found and seized from the premises of Mr Bharat S Ghorpade and confirmed by Mr Dinesh Kumar Singhi, Mr Kartikeya Ghorpade and also Mrs Ambika Ghorpade. c. Assessee objection with respect to statements of Mr Dinesh Singhi, Mr Bharat S Ghorpade and Mr Karthik Ghorpade, the statements relied on have been provided to the assessee and acknowledged by the assessee. The material relied on (seized material) has been provided to the assessee and the same is acknowledged. The assessee has not objected to ....
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....easuring 52442.780 MT. The remaining sale consideration of Rs. 2,87,99,803/- is written as cash for the month of August and September 2009 out of which a sum of Rs. 37,99,803/- is written to have been received and the balance of Rs. 2,50,00,000/- yet to be received. A sum of Rs. 1,50,00,000/- being cash component for the month of August 2009 has been considered in the about table. The remaining amount of Rs. 1,37,99,803/- needs to be taxed as unaccounted and undisclosed income in the hands of the assessee and Mrs Ambika Ghorpade proportionately. f. Similarly the cash receipts for period of April 2008 to March 2009, cash payments are tabulated at page 39 of the assessment order. Total amount received in cash is Rs. 19,06,35,900/- for the above period and the same has been admitted by Mr Bharat S Ghorpade from Mr Dinesh Kumar Singhi of M/s. Bharat Mines and Minerals. Relevant portion of statement is extracted for ready reference at page 40 and 41 of the assessment order. The contents of the said page was also confronted to Mr Karthikeya M Ghorpade during course of search at his residence and he has admitted the receipt of cash from Mr Dinesh Kumar Singhi of Bharat Mines and Minera....
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....period on confrontation of the seized material, and the same has been admitted to be undisclosed income. (Relevant Statement of Mr Kartikeya Ghorpade extracted at page 49 to 50 of assessment order). j. The cheque component received on sale of iron ore by the assessee and Shri Ambika K Ghorpade mentioned in the seized material tallied with the books of accounts with minor differences which would have crept in due to rounding off of the rates or due to carry forward of the previous month sales to the following months or addition of arrears of royalty etc and fits to the modus of accounting and billing as discussed above. The month wise sale as found in the seized material is tabulated at page 51 to 52 of the assessment order. From the tabulation it is clear that Bill prepared at the end of month for the cheque portion of the consideration received, consideration received by cheque is apportioned to the permitted quantity of the iron ore sold. At the time of invoicing, the total sale consideration is increased by Rs. 100/- per MT of permitted quantity of iron ore sold. k. The month wise sale of iron ore for which consideration is received by cheque tallies with the books of acco....
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....ontention of the assessee is an afterthought and without any basis. b. The contention of the assessee that objection filed has been summarily dismissed without meaningful going through the same is incorrect on the face of it. Each and every objection has been dealt by the Assessing Officer point wise. The Assessing Officer has explained each and every page of the seized material and the relevance of the same with support of the statements of the above referred persons. c. The further contention that the material in the form of A/BSG/01 and A/BSG/02 does not belong to the assessee is an afterthought when the person in charge of the business of the assessee and the Managing Director have admitted the same, the above submission is only for the sake of argument without any substance. d. In view of the assessments being pending under section 153A of the Act, the contention of the assessee that assessment under section 153C of the Act has to be done in respect of the material found and seized from Mr Bharat S Ghorpade is incorrect and the Act does not provide for dual assessments one under section 153A and another under section 153C of the Act. Reliance is placed on the judgemen....
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.... the orders of the authorities below and the others material on record, including references to the relevant seized material in AIBSG/01, AIBSG/02, A/KMIORES (Series), AIDKS-1 and the statements of Bharat S Ghorpade, Kartikeya M Ghorpade,Ambika Ghorpade and Dinesh Kumar Singhi. 6.1.2 The issues that require consideration can be summed up as under :- 1) Whether seized material AIBSG/01 and AIBSG/02 can be relied on for framing the assessments in the hands of the assessee M/s. KMIORE, Ambika Ghorpade, M/s. BMM Ispat Limited and M/s. Bharat Mines and Minerals. 2) Veracity of relying on the statements of Bharat S Ghorpade, Kartikeya M Ghorpade, Ambika Ghorpade and Dinesh Kumar Singhi. 3) The reliability of seized material in A/KMIORES (series) 4) Whether such addition is sustainable in the absence of commensurate undisclosed cash or valuables or assets or unexplained expenditure. 5) Whether there is enough corroboration in support of additions made. 7.1.1 The first objection of the assessee is that the material AIBSG/01 and AIBSG/02 was seized from the residence of Sri S. Y. Ghorpade, father of Bharat S Ghorpade, at Gaurihara, Gandhi Colony, Hospet and the entire proceeding....
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.... HC. 7.2 Per contra, the Ld. Standing Counsel for Revenue objected to the assessee's submissions, as in para 4(c) and 4(d) of the written submissions which are extracted as under :- " 4. (c) The further contention that the material in the form of A/BSG/01 and A/BSG/02 does not belong to the assessee is an afterthought when the person in charge of the business of the assessee and the Managing Director have admitted the same, the above submission is only for the sake of argument without any substance. 4. (d) In view of the assessments being pending under section 153A of the Act, the contention of the assessee that assessment under section 153C of the Act has to be done in respect of the material found and seized from Mr Bharat S Ghorpade is incorrect and the Act does not provide for dual assessments one under section 153A and another under section 153C of the Act. Reliance is placed on the judgement of the High Court in the case of Canara Housing 274 CTR 122 wherein it is held that assessment under section 153A of the Act is not confined only to the seized material but also with reference to the material in possession of the Assessing officer and some other material found i....
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....by affising signature and date, from whose possession the same has been seized. In such a situation, the assessee is not correct in questioning the authenticity of the seized material that too in a situation where majority of the entries tallied with the books of accounts maintained by the assessee." 8.3 The objection of the assessee is that the copies of seized documents are in excess of the number mentioned as seized in the Panchanama. The reply of Revenue is that all the seized material are properly numbered, serialized, are genuine and that the objection put forth by the assessee is hyper technical in nature. If the copies of the seized documents supplied are in excess of the actual documents seized, as seemed to be suggested by the assessee, the assessee could easily point out the documents that don't belong to it. This has not been done. It could be merely a case of wrong mention of numbers in the Panchanama. As long as the assessee has not pointed out any document as not being genuine, this objection is technical and has no bearing on the substantive issues raised in the appeal. We, therefore, dismiss the objections raised in this regard. 9.1.1 The Third Objection of the ....
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....ng no clarity on the basis on which the statements were recorded, the assessee represented by its Directors (Kartikeya M Ghorpade and Ambika Ghorpade) wrote to the Investigation wing seeking copies of seized material based on which their statements were recorded (page 1 & 2 PB). Till date the said copies have not been made available to the assessee neither an opportunity to rectify the statements has been given. Assessee's submissions regarding the same before the AO are found in page 90 to 92 relevant page 92 ;pages 115 to 122 PB, relevant page 117 PB." 9.1.2 The essential contention of the assessee in this objection is that the additions have been made in the assessee's hands based on certain statements recorded from Kartikeya M Ghorpade and Ambika Ghorpade, wherein these two persons have reportedly admitted to earning of undisclosed income, after they were confronted with the documents in question. It is the assessee's contention that these documents were found in the premises of Bharat S Ghorpade, which was in another town far away and hence the claim of Revenue that these documents were shown to these persons were wrong and further the copies of these statements were....
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....explain or rebut or correct the statements is inappropriate. On an appraisal of the record before us, in our view, the Assessing Officer has faultered in not following the rule of law and the procedures prescribed in this regard by judicial pronouncements. In this context, the reliance placed on the follwoing is appropriate :- (i) Pullangode Rubber Produce Co. Ltd. Vs. State of Kerala & Another (91 ITR 18) (SC) (Paper Book pages 189 & 190) wherein the Hon'ble Court observed that - " An admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the person who made the admission to show that it is incorrect." (ii) CBDT Instruction No.F.No.286/2/2003/IT(Inv) dt.10.3.2003 (Page 167) - on confessions of additional income during the course of search and seizure and survey operations. (iii) Sahil Study Circle Pvt. Ltd. Vs. DCIT (179 TTJ 1) (Delhi ITAT) (Paper Book pages 337 & 338) wherein it was observed and held as under :- " .........CIT (A) erred in upholding the conclusion of the AO based only on the admission during survey made by Shri Suri at the wee hours (i.e. between 3.00 AM - 4.00 AM) to fasten the liability whe....
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....n ITA Nos.833 to 835/Bang/2015 since the issues and facts are similar. Both parties have basically relied on the submissions made in Assessment Year 2008-09, for these Assessment Years 2009-10 to 2011- 12, which have been heard and considered at length by us. 10.3.2 We have considered the rival submissions and perused and carefully considered the material on record and the judicial pronouncements cited. We find that the facts and issues before us, in the case on hand for Assessment Years 2009-10 to 2011-12 are similar to those in the appeal for Assessment Year 2008-09. Since we have decided the issue in the assessee's appeal in ITA No.832/Bang/2015 for Assessment Year 2008-09 in favour of the assessee, the impugned issues in the appeals in ITA Nos.833 to 835/Bang/2015 for Assessment Year 2009-10 to 2011-12 are also held and allowed in favour of the assessee and therefore the additions of Rs. 17,79,43,250 for Assessment Year 2009-10; Rs. 87,50,54,416 for Assessment Year 2010-11 and Rs. 9,58,64,287 for Assessment Year 2011-12 being part of alleged cash receipts of Rs. 64,00,91,973 are unsustainable and are accordingly deleted. 11. Bogus Expenses (Applicable for A.Ys 2009-10 & 2....
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.... (a) Bogus expenses:-The entire operations of the mines owned by the assessee are being carried out by Bharat Mines and Minerals as such the assessee has no expenses to be incurred except administrative in miscellaneous expenses. In the course of search at residence of Mr Bharat Ghorpade and office premises of the assessee setting bills pertaining to the contract works were found and seized and the same is placed at page 55 of the assessment order reflecting adjustment bills in the name of the employees of the company. (b) Similar entries were found for the Assessment Year 2010-11 in the notebook maintained by the assessee and same is scanned at page 57 of the assessment order reflecting generation of bills in the names of spouses of the employees by the assessee. The statement of employees (accountant) is extracted at page 59 and 60 admitting the contractors are either the employees of the company or the spouses or relatives. Further admitted generation of bills in the office of the assessee (relevant portion of statement at page 61 and 62 of the assessment order). An analysis it is found the contract work is only accommodation entries to avoid payment of tax." 11.4.1 We have ....