TaxTMI 
TaxTMI 
2018 (4) TMI 870
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....That on the facts and on the circumstances of the case and the provision of law the Ld. CIT(A) has erred in sustaining an addition of Rs. 1901224/- as unexplained investment for acquisition of shares of Empire Casting Pvt. Ltd. 4. That the Appellant craves the right to amend, append, delete any or all grounds of appeal. 2. At the outset, Ld. Counsel for the assessee submitted that he has been instructed by the assessee not to press ground no. 1 raised in the memo of appeal. Therefore, we are dismissing the same as not pressed. 3. The second issue raised by the assessee in ground no. 2 and 3 are inter-connected, therefore, these are being taken up together for the purpose of adjudication for the sake of brevity. 4. The issue raised is that Ld. CIT(A) erred in confirming the order of AO by sustaining the addition of Rs. 1901224/- as unexplained investment. 5. Briefly stated facts are that the assessee in the present case is an individual and filed his return of income declaring income from other sources. A search & seizure operation was carried out at Wings Pharmaceuticals Pvt. Ltd. group of case dated 14.02.2008 u/s 132 of the Act. The assessee being part of the....
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....on account such assets. As such the total value of the plant and machinery was shown at Rs. 2,96,048/- and the total value of current assets is of Rs. 2,45,923/- only. 3. There was no asset shown by ECPL under the head knowhow in its balance sheet. Therefore, there is no question of making any payment for the acquisition of know-how as per the claim made by the assessee. 4. The statement taken of Sh. Pawan Sharma ex-owner of ECPL reveals that the erstwhile company has already sold the plant and machinery within 2 years after the installation plant and machinery i.e. 2001-02, such plant and machinery was sold for Rs. Between 40 to 50 thousand only as scrapped. 5. Moreover the affidavit furnished by Shri Pawan Sharma stating that the shares were sold at Rs. 38,11,000.00 cannot rescue the assessee because it is one of the interested parties in the deal. If he accepts the higher amount of consideration received for the transfer of shares will lead to higher payment of taxes on his part. 6. During the financial year ending 31.03.2005, the benefit of exemption u/s 80IC of the Act were extended to the units located in such area, as a result, the value o....
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....h respect to the issue of unexplained investment for acquisition of shares of Empire Casting P. Ltd. i. It is a matter of record that pages 4 to 8 of Annexure A-4 of party WB-1 have been found from the possession and control of the appellant. In view thereof the presumption under law u/s 132(4A) & 292C of the IT Act as regards the belongingness and truthfulness of the contents of the document applies against the appellant. The issue therefore to be examined is whether the assessee has been able to successfully rebut the said presumption with cogent and credible evidence. ii. It is noted from the assessment order that during the assessment proceedings the assessee has admitted to the fact that the sale consideration for purposes of complete transfer of share holding of M/s Empire Casting P Ltd in name of the assessee and his three brothers was fixed for Rs. 1.15 crores as recorded on page 5 of Annexure A-4. But however subsequently as the existing directors of the company took away all the plant and machinery, stock, debtors and other current assets and also did not agree to provide the usage of their technical knowhow therefore only a total payment for Rs. 38,11,0....
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....er there are nil sundry debtors as on 31.03.04. The total value of closing stock as on 31.03.04 is for Rs. 1,10,323/-. All these figures have been certified by the Chartered Accountant of the company and also bears the signatures of the two erstwhile Directors namely Sh. Pawan Kumar Sharma and Ms. Meena Sharma. Further,in context of the fact that the above factory premises at 35, HPIDC, Baddi, was being purchased by the appellant company for the purposes of his manufacturing activities in "pharmaceuticals manufacturing business" there can absolutely be no requirement for purchase of technical knowhow by the assessee from M/s Empire Castings P. Ltd., which is engaged in casting business. Further as there was no machinery worth the value in the balance sheet of M/s Empire Casting P. Ltd. which was also not having any manufacturing activity, it can be safely concluded that even otherwise " no technical knowhow" worth the name was available in the said company, which had such valuation as is being argued. Resultantly, this whole story of purchase of technical know how does not fit into the scheme of things and is unbelievable as the above premises were purchased by the appellant and hi....
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....s. The appellant has placed lot of emphasis on the word "withheld" noted on page 5 of Annexure A -4. In this connection it is seen that similar notings have been made on page no. 6 of A-4 and here also the word "withheld" has been recorded from which a further a deduction of already paid amount of Rs. 1 lacs (which is also noted on page 5 of Annexure A- 4 is mentioned) is deducted. This fact goes on to show that the word "withheld" cannot be given much credence and is in the nature of internal arrangement between the parties. It has been argued by the appellant that there is no recording on these pages of the fact of Rs. 76,89,000/- being made in cash. In this connection reliance has also been placed by the appellant on the affidavit of Sh. Pawan Kumar Sharma in which he has stated that no cash amount has been received by him. Regarding both these issues it is observed that Sh. Pawan Kumar Sharma is an interested party and direct beneficiary of the cash receipt and therefore it can never be expected of him to admit receipt of cash. So far as no evidence found of payment of balance cash is concerned from the seized documents, it is observed that the fact that the agreed con....
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....ce could be given to- their statements. " Reliance is also placed on the ratio of decision in Surendra M. Kandhar vs. ACIT 321 ITR 254(Bombay High Court), wherein it is held that ''once the document was seized in the premises under control of the appellant, the presumption under section 292C followed as also S. 132(4A) and it was for the appellant to rebut that presumption." It is also settled law that while deciding matters, Income-tax authorities can take into account the surrounding circumstances and also apply the test of human probability and preponderance of probability. In the case of CIT v. Durga Prasad More [1971] 82 ITR 540, the Hon'ble Supreme Court has held that though an apparent statement must be considered real until it was shown that there were reasons to believe that the apparent was not the real, in a case where a party relied on self serving recitals in documents, it was for that party to establish the truth of those recitals. The taxing authorities were entitled to look into the surrounding circumstances to find out the reality of such recitals. In view of the entirety of the above discussion as the appellant has in my considered v....
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....d that the same has been used against the assessee. There was no reason for Mr. Pawan Sharma to admit the fact that he has received consideration in cash being an interested party. 22. Ld. D/R vehemently supported the order of the authorities below. 23. We have heard the rival contentions, perused the material available on record. The issue in the present case relates to the cash payment made by the assessee along with his three brothers for Rs. 78,89,000/-. As per the AO, the assessee has acquired the company ECPL at Rs. 1.15 crores but it has paid only a sum of Rs. 38,11,000/- from the disclosed source and the balance amount has been paid by assessee in cash which was available with him in unaccounted form. The view taken by the AO was subsequently confirmed by the Ld. CIT(A). 24. At this juncture, we find him to reproduce the seized documents on the basis of which the addition was made by the lower authorities. The contents of the seized document are reproduced as under:- " Seized Documentary Evidence. As discussed above, M/s Empire Castings Pvt. Ltd., the company was taken over by the assessee and his brothers on 23.04.2004. As per page 4 to 8 of Anne....
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....search, it ought to have relied on other materials. Having once drawn the presumption that the contents of the documents (of the assessee) taken into possession during the search were true, the revenue could not have, consistently with that presumption, proceeded to require the assessee to produce materials in support of the expenditure entries. Such an inconsistent approach in respect of the contents of the same book appears to have been founded only on suspicion that they were not genuine. However, suspicion cannot replace proof. Moreover, the full effect of the presumption should be given effect to, whenever the statute directs a particular non-existent state of affairs to be assumed. (Ref State of Bombay v. Pandurang Vinayak Chaphalkar AIR 1953 SC 244; Karnataka State Road Transport v B.A. Jayaram AIR 1984 SC 790). In these circumstances, the effect of the presumption (which bade the revenue, when it chose to invoke it, to presume that the "contents of such books of account and other documents are true..". Therefore, in the absence of any materials, in the form of documents, the revenue could not have denied the benefit of any expenses which would otherwise have inured to the a....
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.... of law the Ld. CIT(A) has erred in sustaining the penalty of Rs. 5,96,319/- u/s 271(1)(c) of the Act. 5. That the Appellant craves the right to amend, append, delete any or all grounds of appeal." 30. At the outset, we observed that we have already decided the quantum appeal of the assessee in his favor. Therefore, the penalty imposed by the AO stands deleted. 30.1 Thus, the appeal filed by the assessee is allowed. ITA 1441/Del/2012 31. The assessee has raised the following grounds of appeal:- 1. That on the facts and circumstances of the case and the provision of law the Ld. CIT(A) has failed to appreciate that the assessment order passed by the Ld. AO u/s 143(3)/153A is illegal, bad in law and wrong on facts. 2. That the Ld. CIT(A) has failed to appreciate that impugned assessment order passed by the Ld. Assessing Officer is against that principles of natural justice and has been passed without affording reasonable opportunity of being heard. 3. That on the facts and on the circumstances of the case and the provision of law the Ld. CIT(A) has erred in sustaining an addition of Rs. 2018060/- as unexplained investment for acquisition....
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....law and wrong on facts. 2. That the Ld. CIT(A) has failed to appreciate that impugned assessment order passed by the Ld. Assessing Officer is against that principles of natural justice and has been passed without affording reasonable opportunity of being heard. 3. That on the facts and on the circumstances of the case and the provision of law the Ld. CIT(A) has erred in sustaining an addition of Rs. 1989735/- as unexplained investment for acquisition of shares of Empire Casting Pvt. Ltd. 4. That the Appellant craves the right to amend, append, delete any or all grounds of appeal. 33.1 The issues raised by the assessee are exactly identical to the issue raised in ITA No. 1439/Del/2012, both the Ld. AR and D/R before us agreed whatever view would be taken in ITA No. 1439/Del/2012 would be applied in the instant case. As we have already decided the issue in favour of the assessee in ITA No. 1439/Del/2012. Therefore, respectfully following the same, we decide the issue raised by the assessee in his favour. 33.2 Thus, the appeal filed by the assessee is allowed ITA No. 1440/Del/2012 34. The assessee has raised the following grounds of appeal:- ....
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....he right to amend, append, delete any or all grounds of appeal." 35.1 At the outset, we observed that we have already decided the quantum appeal of the assessee in his favour. Therefore, the penalty imposed by the AO stands deleted. 35.2 Thus, the appeal filed by the assessee is allowed ITA No. 2567/Del/2014 36. The assessee has raised the following grounds of appeal. 1. That on the facts and circumstances of the case and the provision of law the Ld. CIT(A) has failed to appreciate that the initiation of proceedings u/s 271(1)(c) is illegal and bad in law. 2. That on the facts and circumstances of the case and the provision of law the Ld. CIT(A) has failed to appreciate that the impugned penalty order passed by Ld. AO u/s 271(1)(c) is illegal, bad in law, time barred, without jurisdiction and wrong on facts. 3. That on the facts and circumstances of the case and the provision of law the Ld. CIT(A) has failed to appreciate that impugned penalty order passed by the Ld. assessing officer is against the principles of natural justice and has been passed without affording reasonable opportunity of being heard. 4. That on the facts and on th....