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2018 (5) TMI 802
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.....R.) Respondent by Shri K. R. Rastogi, C. A. without appreciating the fact that documents impounded during the course of survey proceedings u/s 133A demonstrate that number of cash loans were received by the assessee company through its Director Shri W.H. Siddiqui. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,21,250/- on account of interest paid on cash loan without appreciating the fact that the assessee company failed to furnish proof that addition was considered in the hands of one of the director of the company Sh. W.H. Siddiqui, in the year 2008-09 and also that the dissatisfaction of the A.O. was derived from the relevant fact and on the basis of proper enquiries of all material before her. 4. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law in deleting the addition of Rs. 30,46,780/- without appreciating the facts and findings of the A.O. and scope of section u/s 40A(3) of the I.T. Act. 5. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the estimation of addition of Rs. 23,77,162/- u/s 69C of the I.T. Act eve....
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.... are reproduced below: (i) Addition u/s 68 of the Act Rs.3,34,000/- (ii) Addition u/s 68 of the Act Rs.18,65,060/- (iii) Addition on account of interest paid on cash loan Rs.1,21,250/- (iv) Addition u/s 40A(3) Rs.30,46,780/- (v) Addition u/s 69C Rs.23,77,162/- (vi) Addition on account of estimated income from projects Rs.7,81,705/- 4.1 As regards the first addition of Rs. 3,34,000/-, the assessee during the assessment and appellate proceedings had submitted that the said amount was received by Shri W. H. Siddiqui, Director of the company in his personal capacity and which fact was supported by affidavit of the Director. The Assessing Officer during the remand proceedings though noted that assessee had stated that the amount was received by Shri W. H. Siddiqui in his personal capacity but he did not agree with the submissions holding that the submission of the assessee was not verifiable from the assessment order. The learned CIT(A) has rightly deleted this addition as if the Assessing Officer was not satisfied with the explanation furnished by the assessee, he could have cross examined Shri W. H. Siddiqui which he ignored to ....
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....t of credits appearing in the ledger account. However, he has ignored the debits appearing in the ledger account on earlier dates. The assessee during the appellate proceedings and before the Assessing Officer had explained that the cash belonging to the group was retained by the Director Shri W. H. Siddiqui who used to keep the amount in safe custody at his home. The debits and credits appearing in the ledger account are nothing but the transfer of cash from office to house and vice versa. Had the Assessing Officer considered debits appearing in the ledger account before the dates of credits, no addition would have been called for. We further find that assessee had explained and reconciled each and every entry in excess of Rs. 50,000/- recorded in the impounded documents. The details of explanation made by the assessee to Assessing Officer is placed at paper book pages 15 to 18 but Assessing Officer instead of accepting the reconciliation, chose to make the addition and which learned CIT(A) has rightly deleted. The findings of learned CIT(A) in this regard are quite relevant which for the sake of convenience are reproduced below: "6(6) I have examined the facts and circum....
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.... & Drosia Construction Balance In Drosia Interiors Total 18.10.07 1,545,417.00 164,405.70 18,597,935.00 2,233,153.00 22,540,910.70 22.10.07 1,523,801.00 150,502.70 18,597,935.00 2,232,653.00 22,504,891.70 08/10/07 1,823,856.00 167,291.70 18,632,340.00 28,157.00 20,651,644.70 25.10.07 1,457,962.00 147,868.70 18,597,935.00 2,181,233.00 22,384,998.70 26.10.07 1,435,847.00 147,676.70 18,597,935.00 2,180,733.00 22,362,191.70 29.10.07 1,255,182.00 147,401.70 18,592,135.00 2,179,633.00 22,174,351.70 02.11.07 1,200,199.00 129,754.70 18,590,635.00 2,170,025.00 22,090,613.70 06.11.07 1,187,249.00 122,951,70^ 38^90,635.00 2,647,285.00 22,548,120.70 05.11.07 1,189,079.00 122,951.70 18,590,635.00 2,142,285.00 22,044,950.70 27.10.07 1,278,847.00 147,676.70 18,596,135.00 2,179,633.00 22,202,291.70 16.11.07 1,177,601.00 112,042.70 18,570,365.00 2,646,735.00 22,506,743.70 24.10.07 1,508,601.00 150,502.70 18,597,935.00 2,215,153.00 22,472,191.70 02.11.07 1,200,199.00 129,7....
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.... 30,886,586.70 20.02.08 850,729.00 177,028.70 25,850,808.00 3,949,399.00 30,827,964.70 23.02.08 809,846.00 160,606.70 25,848,048,00 3,948,839.00 30,767,339.70 27.1)2.08 805,071.00 159,226.70' 25,844,083.00 3,940,339.00 30,748,719.70 03.03.08 773,938.00 142,167.70 15,348,083.00 3,948,1$9.00 20,212,327.70 07.03.08 767,777.00 141,637.70 15,343,793.00 3,870,820.00 20,124,027.70 14.03.08 1,151,001.00 125,169.70 15,320,648.00 3,903,764.00 20,500,582.70 13.04.07 616,032.00 159,718.70 - 19,362.00 795,112.70 25.04.07 643,413.00 154,303.70 - 46,166.00 843,882.70 26.04.07 651,413.00 163,834.70 - 45,091.00 860,338.70 21.11.07 1,179,185,00 110,774.70 18,568,068.00 2,622,342.00 22,480,369.70 6(9) I find from the entries referred by the AO that on the particular dates on which there is entry of cash in the name of W. H. Siddiqui and Smt. Swaleha Naim, both directors of the appellant-company as per impounded Ledger A-52, the position of cash balance as per cash book as above is more than the entry of cash....
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.... and the entries therein belonged to Shri W. H. Siddiqui, director of the appellantcompany. The AO did not accept the contention of the assessee and made the aforesaid addition of Rs. 1,21,250/- under section 68 of the Act. 7(6) I find that the assessee explained that the entries appearing in the impounded ledger A-52 at page 59 referred to interest payments on personal loans taken by Shri W. H. Siddiqui, director of the appellant-company. Shri W. H. Siddiqui, director of the appellant-company also filed an affidavit dated 16/02/2016 during remand proceedings before the AO. In the affidavit so filed, Shri W. H. Siddiqui, director of the appellantcompany, accepted that the loans were taken by him in personal capacity from Shri Nasreen Jafri, Shri Ashfaq and Shri Rahan /Nima. The AO did not consider it necessary to call Shri W. H. Siddiqui in order to cross- examine him with reference to the statements made by him in his affidavits. Under these circumstances it is not open to the Revenue to challenge the correctness of the statements made in the affidavit. Nevertheless, once Shri W. H. Siddiqui, director of the appellant-company has filed an affidavit accepting that the inte....
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.... the Act. 8(6)(i) Page 1 of annexure A-52 shows the following entries- 16.06.2007 Asad Gittiwala Rs.55,000/- 09.12.2007 Asad Gittiwala Rs.71,000/- 11.12.2007 Asad Gittiwala Rs.42,800/- Rs.1,68,800/- The appellant has explained that these entries were not claimed as expenses in the books of accounts as these were personal expenses of Shri W. H. Siddiqui, director of the company and were considered his personal withdrawals. Shri W. H. Siddiqui, director of the appellant-company also filed an affidavit dated 16.02.2015 during remand proceedings before the AO. In the affidavit so filed, Shri W. H. Siddiqui, director of the appellantcompany, accepted that these expenses were his personal expenses. I therefore find that addition under section 40A(3) of the Act made by the AO is not justified as the appellant has not claimed these expenses in the books of accounts and these were personal expenses of Shri W. H. Siddiqui, Director of the appellant company. The addition of Rs. 1,68,800/- made by the AO under section 40A(3) of the Act is deleted giving corresponding relief to the appellant. 8(6)(ii) Page 103 of annex....
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....gh the employees whose name is mentioned in the entries. The source of cash has been explained as under- Date Withdrawal from Account of Cheque No. Amount 18/05/2007 BOB A/c No. 0069 IEDC (JV) 543109 10,00,000 11/06/2007 BOB A/c No. 0069 IEDC (JV) 543116 15,00,000 14/06/2007 BOB A/c No. 0069 IEDC (JV) 543121 10,00,000 09/06/2007 Cash in hand - 7,87,317 18/06/2007 BOB A/c No. 0069 IEDC (JV) 543131 15,00,000 It appears therefore that these entries do not relate to any claim of expenditure in the books of accounts. The AO has without examining the nature of the entries come to the conclusion that the entries were related to claim of expenditure and has made the impugned disallowance under section 40A(3) of the Act. The entries are not even related to of a joint venture, a sister concern. I therefore find that the addition made under section 40A(3) of the Act is unjustified as the entries do not relate to any claim of expenditure. The addition of Rs. 23,50,000/- made by the Assessing Officer under section 40A(3) of the Act is deleted giving corresponding relief to the a....
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....ngs of learned CIT(A) clearly state that the amounts referred by the Assessing Officer as expenditure were not expenditure and were not claimed by the assessee in the profit & loss account. The learned CIT(A) has further held that some of entries were not even related to the appellant company as withdrawals have been made from the account of a group concern. We further find that a major portion of disallowance u/s 40A(3) relates to details in the ledger account marked as A-52. These debits have already been held to be transfer of cash from office to house of Director. The Assessing Officer made the additions on account of debits in the ledger account u/s 40A(3) of the Act whereas the credits in the ledger account have been added as additions u/s 68 of the Act. The learned CIT(A) has rightly appreciated the facts and has rightly allowed the relief. In view of the above, we do not find any infirmity in the order of learned CIT(A) therefore, ground is No. 4 is dismissed. 4.5 As regards ground No. 5 regarding addition made by the Assessing Officer u/s 69C of the Act, we find that learned CIT(A) has made a finding of fact that the amounts treated to be investments u/s 69C were in fac....
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.... Rs.21,26,031/- The expenses amounting to Rs. 21,26,031/- are therefore duly accounted for in the books of accounts and therefore addition made under section 69C of the Act by the AO is unjustified. The addition amounting to Rs. 21,26,031/- is deleted giving relief to the appellant. 9(8) Again, interest @12,500/- per month has been paid periodically to Shri Ashok Sur for 7 months and the total expenses of Rs. 87,500/- have been paid by cheque drawn on HDFC Bank after deduction of TDS. The repayment of loan of Rs. 25,00,000/- has been made on 29.10.2007 through cheque drawn on HDFC Bank. Further, TDS of Rs. 37,655/- has been deducted from interest on 31.03.2007. In view thereof, the expenses amounting to Rs. 87,500/- are therefore duly accounted for in the books of accounts and therefore addition made under section 69C of the Act by the AO is unjustified. The addition amounting to Rs. 87,500/- is deleted giving relief to the appellant. 9(9) I find that Section 69C of the Act clearly stipulates that where, in any financial year, the assessee has incurred an expenditure and he offers no explanation about the source of such expenditure or part thereof, or ....