TaxTMI 
TaxTMI 
TaxTMI 
2018 (5) TMI 1323
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....ruction Divisions (RCD). They are also partners of the firm M/s Hindustan Tar Products and a Director in the companies M/s Jutefelt (I) Pvt. Ltd. and M/s Allied Bitumen Complex (I) Pvt. Ltd., which are users of bitumen, as its main raw material. Search & Seizure operations were carried on by the Income Tax Department in the premises of the Chharia Group including the residential and office premises of the appellant on 22/04/1998, during the course of which, various documents and assets including cash and jewellery were found and seized. In response to the notice issued by the A.O. U/S 158BC of the Income-Tax Act, 1961, on 05.05.1999, the Block return was filed by the appellant on 13.03:2000 showing undisclosed income of Rs. 1,00,000/- The Block assessment was completed on 31.05.2000 u/s 158BC/ 143(3) of the Act, computing undisclosed income. In the first appeal, the ClT(A), Central-I, Kolkata, gave certain relief and confirmed the rest of the additions. The appellant filed second appeal before the ITAT, Kolkata Bench against the confirmation of certain items of additions by the ld. CIT(A). The Department also filed second appeal against the relief allowed by the CIT(A). Both the a....
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.... of the case the Ld. CIT(A) has erred in deleting Rs. 1,10,953/- on account of unexplained cash receipts being peak negative cash balance in the cash book for the F.Y. 1995-96 and 1996-97. 2. That on the facts and circumstances of the case the Ld . CIT(A) has erred in deleting Rs. 57,36,064/- on account of undisclosed income representing transportation charges. 3. That on the facts and circumstances of the case the Ld. CIT(A) has erred in deleting Rs. 1,27,86,465/ - on account of undisclosed income from sale of Bitumen. 4. That the Ld. CIT(A) has violated Rule 46A of the 1. T. Rules while allowing the claim of the assessee that the non-delivery was on account of problems arising at the delivery point in some cases which was also communicated to the Oil Companies and after taking due instructions from the Oil Companies, the materials were also sold off as directed, on the basis of pages 142 to 145 of paper book, which was never produced before the A.O. and deleted the above mentioned additions of Rs. 57,36,064/- and Rs. 1,27,86,465/-. 5. The department craves the right to add, alter or modify grounds of appeal during the course of appellate proceedings at any stage. " 5. Th....
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....o a partner of the firm M/s. Hindustan tar Products, both of which, have a common office at 98, B.K.Paul Avenue and that they were maintaining a common cash book and that similar is the case of Late Shri Promod Kumar Chharia,. He submitted that a detail cash flow statement of both these organisations, were given to the AO and as it was a common business having common management, the over all position of cash balance have to be considered. He demonstrated that there was no negative cash balance when the overall position is considered. He further submitted that the ld. CIT(A) in his earlier appellate order dated 29.02.2013 accepted this factual position of the assessee and the AO has ignored the factual finding. 8. On ground No.2,3 and 4, he submitted that additions were based on the fact that there was certain finding in the report of (a) CAG Report on the Bitumen Scam, (b) Report of the Engineer-in-Chief, RCD Patna and (c) Report of Oil Co-ordination Committee established by the Ministry of Petroleum, Govt of India. He submitted that neither the report of CAG nor the report of Engineer-in-Chief was provided to the assessee and as far as the report of Oil Coordination C....
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.... issue of additions with regard to sundry creditors, he relied on the order of the ld. CIT(A) as well as the submissions made on account of the additions made on the basis of reports on the bitumen scam. 12. Heard rival contentions. On a careful consideration of the facts and circumstances of the case, papers on record and the orders of the authorities below as well as case law cited, we hold as follows : The first issue that arises for adjudication is addition of negative cash balance. An addition of Rs. 3,47,032/- was made for A.Y.1996-97 and that of Rs. 99,00,667/- for A.Y.1997-98 in the case of Shri Praveen Kumar Chharia. The ld. CIT(A) at para- 15 of his order held as follows :- "15. I have considered the facts and the material on record. It was argued that the two business concerns, namely M/s. Chharia Transport Organisation and M/s. Hindustan Tar Products had common office at 98,B.K.Pal Avenue; and, that the cash belonging to the two concerns was kept in a common pool and no physical segregzation was actually maintained. The expendiutre of either of the business concerns was incurred out of the common cash pool and the same was duly recorded in the books of the relevant ....
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....ed in a common room, in our view, the ld. CIT(A) was rightly justified in deleting the addition by taking an overall view on this issue. 14. Similarly in the case of Shri Praveen Kumar Chharia, the proprietory concern M/s. Ankit Carriers and the partnership concern M/s. Hindustan Tar Products are also located in the same premises. For the above reasons given by us the factual finding of the ld. CIT(A) on this issue on the same ground in the case of Shri Ankit Chharia is also upheld and the ground of the revenue is dismissed. 15. The additions made by the AO relating to the bitumen scam which are ground no.2, 3 and 4 in the appeal of Shri Praveen Kumar Chharia as well as ground no.2, 3 and 4 in the case of Shri Ankit Chharia are now considered by us. The ld. CIT(A) has dealt with this issue at para-19 of his order which is extracted for ready reference :- "19. I have perused the assessment order and the material placed in the paper book. I have also considered the submissions made on behalf of the appellant. I find from the assessment order that the AO has made the additions on the premise that the appellant was involved in the bitumen scam and for the same he has mainly relied ....
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....e, a claim has been raised by them stating that the billing for this distance, which was not covered by the assessee, was required to be refunded to the oil companies. In this respect, the appellant submitted copies of the arbitration proceedings going on with the Oil Companies (paper book page 117 to 149) and laid emphasis on the award passed in favour of the appellant in the arbitration proceedings between the appellant and Bharat Petroleum Corporation Ltd (page 117 to 127 of the paper - book). On the basis of the award specifically, the appellant stated that the allegation of the AO was clearly not correct. The appellant by relying on the award and the arbitration proceedings has clearly demonstrated that the charge against him in one case has been proven to be incorrect and in the other cases is disputed. Further more, it is clear that the claim of the Oil Companies is not that the appellant has not undertaken the trips or has not supplied the materials consigned, but only in respect of the distance travelled. Secondly, the claims made by Oil Companies total to Rs. 33,40,314/- as compared to the disallowance of 55% of the expenses made by the AO. Even the Oil Companies having n....
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....ms have been raised against the appellant, which in one case has been decided against the Oil Company (page 125 & 126 of the paper book) and in other cases is under arbitration and have not been proven. It is also the presumption of the AO that 55% of bitumen was misappropriated by the appellant and sold in the open market. The AO appears to be carried away by the general allegation in the CAG report that 55% of bitumen was misappropriated by the transporters involved in the bitumen scam. As already discussed above, the presumption of the AO that the appellant was engaged in the bitumen scam appears to be factually incorrect. But, even otherwise, I am of the considered opinion that no addition can be made in the case of an assessee merely on the basis of a general allegation contained in the CAG report unless specific evidence is brought on record to show that a particular assessee was involved in misappropriation of bitumen or sale thereof. In this factual background, it appears that the entire addition made by the AO is based on wrong appreciation of facts and on mere assumptions. An assessment order is to be made on the basis of the material available on record. Assumption or su....
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....bmissions of the assessee. Hence we uphold the order of the ld. First Appellate Authority and dismissed ground no.2,3 and 4 in the case of Shri Praveen Kumar Chharia and ground no.2,3 and 4 of Shri Ankit Chharia. The allegation of violation of Rule 46A of the I.T.Rules by the ld. CIT(A) is also factually incorrect. 16. Ground No.5 is on the issue of undisclosed income from purchase of bitumen from Shri K.K.Kedia. The ld. CIT(A) has dealt this issue at pages 28 (last three lines) to 29. "As regards the addition on account of bogus creditors, it is clear that no evidence was found in course of the search which could show that the creditors were bogus. The allegation of the AO is based on the enquiry conducted by him during the course of assessment. It is a matter of record that the creditors stood duly recorded in the books of account at the time of the search. All the transactions with the said creditors also stood duly recorded. Therefore, the said creditors cannot be termed to fall within the definition of undisclosed income under this Chapter. Under the Income Tax Act, Block Assessment proceedings u/s 158BC are separate from regular assessment proceedings, as held by the Hon'b....