TaxTMI 
TaxTMI 
2018 (10) TMI 66
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....ome-tax (Appeals) for the assessment years 2011-12 and 2012-13. The Revenue has filed appeals for these years against this order as well. Since all the appeals and cross- appeals are based on the same set of facts, these appeals are disposed of through a consolidated order. 2. Before adverting to the grounds taken by the assessee and the Revenue in these appeals, it will be appropriate to encapsulate the related facts. The assessee, Shri Naresh Prasad Agarwal was the proprietor of a business concern called M/s. Shiv Sahai and Sons, trading in gold and silver bullion. Prior to this, he was trading in jewellery. However, in all the previous years relevant to the impugned assessment years, the assessee was doing only bullion business. In September, 2010, the business hitherto before run as proprietorship was taken over by a limited company called M/s. Shiv Sahai and Sons (India) Ltd. The assessee and his son Shri Ganesh Agarwal were directors of the latter company. The main location of the business of the assessee was in Chennai. It had branches in Salem, Coimbatore, Trichy, Madurai, Jaipur, Ahmedabad and Indore. Key personnel conducting the business were the assessee and his son S....
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....e branches. The learned Assessing Officer on verification of the sales bills issued by the assessee, found that bills raised for cash sales were at rates below the rates fixed by Madras Diamond and Jewellery Merchants Association (hereinafter "association"). Quantum of sale of gold and silver bullion, done by the assessee during the relevant previous years were prepared by the learned Assessing Officer. Such data as compiled by the learned Assessing Officer read as under : Amount in crores Shiv Sahai and Sons Shiv Sahai and Sons India Ltd. Description 06-07 07-08 08-09 09-10 10-11 11-12 11-12 12-13 Gold Sales 567 2229 3159 5079 9371 4263 11464 16860 GP amount 1.63 1.87 0.97 (6.38) 11.5 (7.12) 14.79 GP rate 0.29 0.08 0.09 (0.13) 0.12 (0.17) 0.13 Silver Sales 129 191 466 635 750 623 929 1702 GP amount (0.89) 1.16 (0.63) 8.03 0.82 5.73 (19.37) GP rate (0.69) 0.61 (0.14) 1.26 0.11 0.92 (2.08) 5. Bulk of the purchases made b....
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.... was that what were mentioned in the diary were the rates for 0.999 purity gold whereas what were sold by it was 0.995 purity gold. Further, as per the assessee it could quote a lower rate for cash sales, considering the buyers credit received from Metals and Minerals Trading Corporation. The assessee also stated that it was following London bullion market (hereinafter "LMB") for fixing rates and not following association rates. As per the assessee the rates were moving every minute and was never static. According to the assessee, it made its own calculation and adjustment for import duties and other expenses while fixing the rates. 7. However, the learned Assessing Officer did not buy any of the above arguments of the assessee. He rejected the assessee's contention that lower rates for cash sales, were due to buyer credits or due to rate difference on account of disparity in purity. The learned Assessing Officer also did not accept the contention of the assessee that it was guided by London Bullion Market rates. According to the learned Assessing Officer, the categories of billings done by the assessee were as under : "(a) Cash bills sales made by collecting cash w....
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....-cause notice (iii) The assessee has misled the Department regarding high-low selling rates (iv) The assessee has not produced the diary for five years including for 2012 (v) The assessee has furnished limited billing data, in non-analys able format, during the last fortnight of March (vi) The assessee has manipulated the allocation of expenses in the assessment year 2009-10 to prevent probe into gross loss in gold (vii) The assessee has manipulated in preparing the bill-diary matching chart for July 2011 (viii) The assessee is manipulating its sales bills to circumvent the provisions of section 139A (ix) Sales tax authorities have found that his method of raising the tax invoice is defeating the object and reasons of introduction of the Tamil Nadu Value Added tax Act (x) Sales tax authorities have found that his gross profit is less than the normal gross profit in bullion trade (xi) Sales tax authorities have found that his selling rates are below the purchase rates (xii) The accounts manager in Salem has admitted that no bills are issued for cash sales (xiii) For sales in branches, ....
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....sessment year 2009-10. For the assessment year 2011-12, in the case of M/s. Shiv Sahai and Sons (India) Ltd., the learned Assessing Officer chose the third method. There were no addition for suppression of sales in the hands of the assessee Shri Naresh Prasad Agarwal for the assessment years 2010- 11, 2011-12 and 2012-13 or in hands of the assessee M/s. Shiv Sahai and Sons (India) Ltd. for the assessment year 2012-13. The computation of sales suppression as made by the learned Assessing Officer read as under: Asst. Year Average rate of bills in the names of jewellers (per kg) Average rate of cash bills Average rate of others Cash bill amount is lower by Others bills amount is lower by 2006-07 646020 643795 644877 2225 1143 2007-08 920719 915575 917248 5144 3471 2008-09 1028939 946440 930829 82499 98110 2009-10 1227703 1201087 1192193 26616 35510 Computation of suppression in sales A.Y Cash bills Others Total difference amount Difference from jewellery rate Qty. Difference amount Difference from jewellery rate Qty. Difference amount 06-07 2225 ....
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.... from February 4, 2011 to March 5, 2011 and part of it could have also been adjusted within the figure of 68.72 crores (iii) Generally on 31st March the, moneys remaining were adjusted. But on March 31, 2012 (in the hands of company) huge sum of Rs. 17,38,74,036, which was outstanding, was withdrawn. But that day's sales was only Rs. 14,87,77,889. (iv) Some days even negative balance was seen in the account, e.g. on November 11, 2010 it shows a negative balance of 54.93 lakhs and it goes up to 7.42 crores negative balance on March 25, 2010." 11. The learned Assessing Officer put the assessee on notice as to why credits in the bullion margin account for the impugned assessment years, should not be considered for addition under section 68 of the Act. Summary of the peak credits in such bullion margin account prepared by the learned Assessing Officer read as under : Asst. Year Total credits in the year Highest balance Increase over last year Date of highest balance 2006-07 643867143 77969000 NA 18-6-2005 2007-08 2320305797 218876558 140907558 1-1-2007 2008-09 2497679137 310424595 91548037 21-....
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....t he will adjust the amount when the customer comes again after 2 or 3 days and pays the balance. (ii) The cash brought in was not immediately or in the subsequent days adjusted. It remained in the account for very long periods. e.g from January 24, 2011 to January 31, 2011 a sum of Rs. 69.12 crores cash brought in. Out of this, 68.72 crores was adjusted from February 1, 2011 to March 7, 2011. 'F3Lbef.g(e March 7, 2011 further 39.907s cash was brought in from February 4, 2011 to March 5, 2011 and part of it could have also been adjusted within the figure of 68.72 crores. If it is customers' money how they will wait for so long without collecting the gold bars when its price also fluctuates heavily. The assessee has not explained as to how he will be able to adjust the money paid by each and every customer if he comes after one month or more than one month without maintain any record. (iii) Generally on 31st March the moneys remaining were adjusted. But on March 31, 2012 (in the hands of company) huge sum of Rs. 17,38,74,036, which was outstanding, was withdrawn. But that day's sales was only Rs. 14,87,77,889. The assessee did not explain as to how he a....
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.... 16. However, the learned Assessing Officer was of the opinion that he could not be saddled with an onus to reconcile the difference between books of the assessee and that of M/s. Metals and Minerals Trading Corporation. He rejected all the objections of the assessee, and made additions for credit notes not accounted by the assessees. Such additions in the case of the assessee Shri Naresh Prasad Agarwal were as under : Assessment year Amount 2007-08 16,64,45,906 2008-09 49,78,94,044 2009-10 34,92,26,800 2010-11 72,74,17,770 In the hands of the assessee M/s. Shiv Sahai and Sons (India) Ltd, the addition came to Rs. 19,64,38,107 for the assessment year 2011-12 and Rs. 35,79,23,486 for the assessment year 2012-13. Latter amount was termed by the learned Assessing Officer as interest due from M/s. Metals and Minerals Trading Corporation to the assessee, not accounted by it. 17. Apart from the above, there were additions for exchange rate fluctuation of Rs. 7,53,46,987 for the assessment year 2008-09 which was an expenditure claimed by the assessee, allegedly based on oral instruction from M/s. Metals and Minerals Trading Corporation. The....
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.... 1. Claim of loss disallowed - - - - - - - 19,35,05,195 - 2. Peak credit in bullion margin money account-increase from preceding year 7,79,69,000 14,09,07,558 9,15,48,037 5,22,45,916 33,42,20,437 - - 77,07,76,868 - 3. MMTC credit notes not accounted by the assessee - 16,64,45,906 49,78,94,044 34,92,26,800 72,74,17,770 - - 19,64,38,107 38,79,23,486 4. Pro-rata interest on diversion of interest bearing funds 3,72,452 38,90,061 16,49,846 59,71,343 59,54,533 5,69,97,153 29,48,676 5,88,000 5,88,000 5. Sundry debtors with negative balance - without confirmation - - - - - - - 4,31,50,000 - 6. Donations 2,51,000 5,001 - - - - - 10,000 - 7. Section 43B disallowance - - - 44,51,445 - - - 4,11,563 - 8. Closing stock valuation difference - - - - 4,93,69,063 - - 19,00,874 - 9. Legal expense, vehicle expenses, interest commission u/s. 40(a)(ia) 5,38,516 6,37,593 ....
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....d have subjected the books for special audit. This has not been done. Instead, the Assessing Officer has picked some holes in the books and has arbitrarily accepted the book results for some years rejecting the book results for other years. The Assessing Officer has accepted profits and rejected losses. This selective pick and choose approach is not proper. Moreover, the assessee has submitted the orders of sales tax authorities accepting the book results declared by the assessee. 15. The assessee runs a large business with high value transactions. The turnover figures run into several thousand crores year on year. It would not be possible for the assessee also to run a business without proper maintenance of books at least for his own purpose. Without this internal control mechanism, the whole edifice of the assessee's business would collapse under its own weight. If the books main tained for Income-tax purposes are not the authentic ones, then the assessee should have been found maintaining any other set of 'parallel' set of books of account. This is precisely the purpose for which a search action under section 132 is conducted. After two searches in the premi....
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....cash advances for cash/credit sales made. The advances/part-sale-considerations are accepted on day 1 whereas the sales/delivery was made on day 3 or day 4. Based on the advances received, the assessee would further place orders from his suppliers, procure the same on day 3 or day 4 and handover the gold bullions to the purchaser while collecting the balance consideration. How ever, the assessee did not want to part with the names and addresses of the buyers. This leaves a crucial link in accounting exposed. The assessee ought to have maintained names and addresses of all the persons to whom cash sales are made. The assessee has the responsibility of providing the names and addresses of persons from whom margin monies have been accepted and pending to be squared up. The Assessing Officer has specifically called for the same and has been refused by the assessee. The assessee has also made an attempt to circumvent providing names and addresses of margin money advance payees on the last day of the financial year also. The asses see has achieved this by booking the margin money outstanding against corresponding sales made on the last day of the financial year. To this extent, the asses....
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.... then it should be adopted in full. The Assessing Officer cannot blow hot and cold at the same time. The assessee is following a mercantile system of accounting and as such the incomes arising on account of net of credit and debit notes should be offered to tax year on year on the basis of receipt of credit/debit notes. The receivables arising to the assessee on account of credit notes are set off against the liabilities arising on account of debit notes received. The credit notes as well as debit notes are very much on record and have been documents submitted before arbitrator as well as the High Court of Madras in the dispute between the assessee and M/s. Metals and Minerals Trading Corporation. The Assessing Officer is directed to give relief to the liabilities arising to the assessee on account of debit notes and set off the same against the incomes receivable as per the credit notes raised by M/s. Metals and Minerals Trading Corporation. The Assessing Officer shall compute the net of credit notes over and above the debit notes and bring only the net amount for taxation. The assessee gets partial relief on this account." 24. Vis-a-vis, addition made for exchange fluctuation ....
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....tained for the assessment year 2010-11. 26. On the addition made for diversion of interest bearing funds, to provide interest free loans, the learned Commissioner of Income-tax (Appeals) held that the assessee had substantial capital built over various years and was also having substantial interest-free advances available with it. As per the learned Commissioner of Income-tax (Appeals) there was nothing on record to show that any interest bearing funds were diverted for giving any interest free loans or for making any investments. The observations of the learned Commissioner of Income-tax (Appeals) on this issue were as under: "32. This merits of the issue are examined. During the course of assessment, the assessee has explained in as many details that the loans given were business advances and that the assessee has had very substantial own capital as well as interest-free advances received. The details of advances given without interest as well as advances received without interest are given by the Assessing Officer as under : Asst. Year Total of investments and interest free advances given Total of interest free advances received 2006-07 1,19,68,0....
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...., the assessee was unable to demonstrate any exceptional reason for incurring expenditure in cash in excess of the limits laid down under the said section. 31. Vis-a-vis the addition made for unexplained loan creditors, which is relevant for the assessment years 2008-09 and 2010-11, the learned Commissioner of Income-tax (Appeals) was of the opinion that the assessee could not produce any confirmation. He specifically noted the failure of the assessee, in the following word, while confirming the order of the learned Assessing Officer. "Though called for vide notice under section 142(1) served on February 4, 2014 you have not yet furnished the confirmation letters from the following new loan creditors. (i) Mecotronics P. Ltd. (2 crores) (ii) Rama L. Makwani (250042). The loan amounts are proposed to be added for want of confirmation letters. 2. Though called for vide notice under section 142(1) served on January 29, 2014 you have not yet furnished the confirmation letters from trade debtors from whom advances were claimed to have been received and outstanding on . . . . March. (i) Subramani (21085736) (ii) Sarangapani....
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....ns : "41. The Assessing Officer has also disallowed loss on sale of shares of Rs. 4,54,814 for the assessment year 2010-11 and Rs. 19,44,450 for the assessment year 2012-13 and has not allowed carry forward of loss. The assessee has not produced any evidence to the contrary in the appeal proceedings. Considering the same, the disallowance of loss claimed is sustained." 37. The order of the learned Commissioner of Income-tax (Appeals) in the appeal of M/s. Shiv Sahai and Sons (India) Ltd., also went on similar lines as in the case of Shri Naresh Prasad Agarwal. The learned Commissioner of Income-tax (Appeals) deleted the rejection of loss of Rs. 2,58,88,090 claimed by the assessee for the assessment year 2011-12 while upholding the addition of Rs. 77,07,76,868 under section 68 of the Act for unexplained credits in bullion margin money account. He allowed the claim of the assessee for telescoping the latter addition with its sales. Manner in which the learned Commissioner of Income-tax (Appeals) dealt with other additions/disallowances made in the hands of M/s. Shiv Sahai and Sons (India) Ltd. are explained in the succeeding paragraphs. 38. On the addition made for rec....
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....lected in wealth tax returns. (d) Whether the actual flow of cash has happened directly from the persons concerned or not. By not furnishing the confirmation letters and withholding the identity of these four persons, the assessee is preventing the Department from getting its due taxes (Income-tax and wealth-tax) from them if the money really belongs to them. Therefore the additions may be upheld." The learned Commissioner of Income-tax (Appeals) after examining the remand report held that the assessee failed to give the whereabouts of the four persons in whose name the negative balances were appearing. The learned Commissioner of Income-tax (Appeals) thus upheld the addition. 40. Vis-a-vis, claim of donation, the learned Commissioner of Income-tax (Appeals) noted that the assessee was unable to produce any certificate as required under section 80G of the Act from the recipient. He confirmed such disallowance. 41. Vis-a-vis, disallowance made for VAT shown as payable, the learned Commissioner of Income-tax (Appeals) held that the assessee could not furnish any evidence for remittance of such VAT payable as on March 31, 2011. He confirmed the disallo....
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....icer deleted such disallowance. On disallowance of legal expense of Rs. 8,24,000 made for the same reason, the learned Commissioner of Income-tax (Appeals) again based on a remand report of the learned Assessing Officer restricted the disallowance to Rs. 8,01,500. 44. On the addition of Rs. 30,00,000, considered as an unsubstantiated loan from one Shri Pista Bai, the learned Commissioner of Income-tax (Appeals) sought a remand report from the learned Assessing Officer. Said remand report stated as under : "An addition of Rs. 30,00,000 was resorted to since the assessee did not file a confirmation letter from this loan credit as the amount was shown as outstanding as on March 31, 2012. The assessee has furnished a letter along with ledger extract explaining that originally M/s. Shiv Sahai and Sons had advanced an amount of Rs. 30,00,000 to Pista Bai on April 1, 2009. Subsequently, Pista Bai is shown to have repaid this amount in two instalments on June 3, 2011 and June 14, 2012 during the financial year 2011-12 to M/s. Shiv Sahai and Sons (I) Ltd. The assessee submits that since Pista Bai who was a debtor to M/s. Shiv Sahai and Sons had subsequently bec....
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....oney was accounted as sales. The learned Commissioner of Income-tax (Appeals) though provided relief from double taxation but failed to understand the fact that names, address, and other KYC norms was not applicable for sales below Rs. 2 lakhs and hence the appellant did not maintain the same, hence confirming the addition on account of unexplained credits is bad in law. For these and other grounds that may be adduced during the course of hearing, it is hereby prayed that the arbitrary additions and disallowances may kindly be deleted and thus render justice. 46. Ground No. 1 among the above grounds, is general needing no specific adjudication. 47. The learned counsel for the assessee submitted that grounds 2 to 4 were not relevant for the assessment year 2006-07 since there were no addition made for difference in credit notes in that year. Accordingly, these grounds are dismissed as ill conceived. 48. Adverting to ground No. 5, the learned counsel for the assessee submitted that ad hoc drawings for personal expenditure fixed by the learned Assessing Officer was without considering the facts and circumstances of the case. According to him, there were only four mem....
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.... per the learned authorised representative, when customers paid such margin money a small chit noting the amount, was issued. In the evening of the day or the day after, when delivery of bullion was made, the slips were returned by the customer and the balance cash due on the sale, was received from the customer. As per the learned authorised representative, taxing the peak credit in bullion margin would be equivalent to taxing the gross sales. According to him, on the closing date of every financial year, the amounts standing under bullion margin money account was transferred to the sales account. This entry by itself, as per the learned authorised representative, proved the nature of the transaction. According to him, section 68 of the Act had no applicability when money was received on sale of goods. The contention of the learned authorised representative was that KYC norms being not applicable for the cash sales, since the value of the related transaction did not transgress the limits under the said norms, as long as cash receipts were duly accounted as sales, an addition under section 68 of the Act would result in double addition. 52. Per contra, the learned Departmental re....
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....g Officer has been reproduced by us at paragraph 11, supra. The learned Assessing Officer found negative balance in the bullion margin account at least on two days viz. November 11, 2010 and November 25, 2010 to the tune of Rs. 54.93 lakhs and Rs. 7.42 crores. As per the learned Assessing Officer, these were not properly explained by the assessee. The assessee had all along stated that it was not indulging in any credit sales but doing only cash sales. There is no dispute that money standing in credit in the bullion margin account was consistently transferred to sales. Commissioner of Income-tax (Appeals) has recognised this when he allowed set off of peak credit bullion margin account with the accounted sales of the assessee, though the Department is aggrieved on such set off. There is also no dispute that there was no balance in the bullion margin money account at the end of any financial year, since all credits in such account stood transferred to sales. The books of account of the assessee relied on by the Assessing Officer, for making the assessments under section 153A of the Act, were the same as produced by the assessee during original assessment proceedings. It was not a se....
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....e to give the identity of its customers, who gave advance in cash, and purchased in cash, such addition has to be restricted to the extent it is not reflected in sales. Taxing the credits in bullion margin money account and sales, would be equivalent to taxing the same amount two times. Hence, section 68 of the Act, in our opinion can be invoked only for those amounts which are not reflected in sales. Thus, while holding that the learned Commissioner of Income-tax (Appeals) was justified in confirming the addition for credits in the bullion margin money account, we direct the learned Assessing Officer to rework such addition by exclud ing margin money credits, to the extent accounted in sales, in the same financial years. In the result, ground No. 6 of the assessee is partly allowed. 55. Now, we take up appeal of the Revenue for the assessment year 2006- 07. 56. Grounds taken by the Revenue are reproduced hereunder : "1. The order of the learned Commissioner of Income-tax (Appeals) is erroneous on facts of the case and in law. 2. The learned Commissioner of Income-tax (Appeals) erred in deleting the addition of Rs. 1,06,84.527 made towards suppression of sal....
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....and as admitted by the assessee under section 131 that 'in bullion trade there is no credit sales in the normal meaning' (with higher margin when compared to cash sales). 2.6 The learned Commissioner of Income-tax (Appeals) ought to have appreciated the various circumstantial evidences and facts gathered by the Assessing Officer in the form of obtaining the rates from various registered professional jewellers associations, the sales tax authorities as well as from the sworn statements of the assessee's staff to prove the fact of deliberate suppression of sales by the assessee through such non-genuine business transactions and ought to have confirmed the addition made in the assessment for the assessment year 2006-07 in this case. 3. The learned Commissioner of Income-tax (Appeals) erred in directing the Assessing Officer to reduce the "sales accounted towards margin money in the corresponding years" while confirming the addition of Rs. 7,79,69,000 made by the Assessing Officer under section 68 of the Income-tax Act, towards peak credit on account of margin money received by the assessee in the assessment for the assessment year 2006-07 in the assessee&....
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....disallowance of expenses incurred towards running and maintenance of cars appears unwarranted. 5.1 The learned Commissioner of Income-tax (Appeals) ought to have appreciated that the assessee himself had admitted to using the cars for personal benefit in his sworn statement under section 131 of Income-tax Act recorded on March 12, 2014 and therefore ought to have upheld the disallowances made towards this account. 6. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the order of the learned Commissioner of Income-tax (Appeals) may be set aside and that of the Assessing Officer be restored." 57. Grounds Nos. 1 and 6 are general needing no specific adjudication. 58. Adverting to ground No. 2, the learned counsel for the Revenue submitted that the assessee had effected cash sale of bullion at a rate below the association rates for the impugned assessment years. As per the learned Departmental representative, there was deliberate under invoicing of cash sales and there was no justification for selling at a rate lower than the rate at which sales were made to jewellers. As per the....
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....learned Commissioner of Income-tax (Appeals) submitted that books relied on by the learned Assessing Officer for making the additions were the very same which were produced by the assessee before the learned Assessing Officer during the course of original assessment proceedings. According to him, there were no incriminating materials found at the time of search. As per the learned authorised representative, recomputation of profit was made by the learned Assessing Officer purely on surmises. The learned authorised representative submitted that the assessee was not following association rate for selling bullion but was following London bullion market with adjustments for exchange rate difference, import duty etc. According to him, sales made to jewellers based on cheques received from them, required a couple of days at least for collection, whereas across the counter cash sales brought in immediate realisation of money. This as per the learned authorised representative, always encouraged the assessee to offer slightly lower rates for cash sales. 60. Adverting to the difference between rates mentioned in the diary and rate charged for cash sales, the learned authorised representat....
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....don Bullion Market rates. We find there were a number of instances where the assessee had charged lesser on its jewellery customers than for cash sales. Invoice No. 8861, dated July 26, 2010 placed at paper book 30 and invoice number 941, dated July 26, 2010, placed at paper book 31 are example. Former is a cash bill and rate per kg of gold is shown as Rs. 18,81,188.12, whereas latter is a credit bill and rate per kg is shown as Rs. 18,21,782.18. Similar invoices with lower rate for cheque sale is available for August 12, 2010 also (paper book pages 45 and 46). The assessee as well as the Assessing Officer are one in that the assessee had no credit sale and what was termed as credit sales were sale to jewellery for which payments were received by cheque or through bank. That apart realisation of money on cheque sales do have a time lag which can stretch to a couple or more days and there is nothing which stopped the assessee from incentivising cash sales since such sales brought in immediate cash. There is also nothing on record to show that the assessee's claim of following London Bullion Market rates were incorrect. It is the choice of the seller whether to follow association....
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....Srinivasan are in cash section. They receive the cash from the customers. Shri Ashok Kumar Gupta is in charge for strong room where gold bars are stored. There are no separate persons for delivery of gold. It will be handed over either by Shri Ashok Kumar Gupta himself or by cash section officials. Q. 4 What are the working hours for you and for Smt. Sumithra. A. 4 For billing section the working hours are 11-30 a.m, to 9 p.m for accounts Q 5. When will the directors (or earlier the proprietor) come and leave? A 5 Shri Ganesh Sir or Shri Naresh sir will normally come at 9 a.m. and leave at 4 pm Q 5 What are the working hours during which a customer can come any gold bars A The customers can come and buy gold bar when Shri Ganesh Sir is available in office. Q. 6 Please tell me the step by step procedure when a customer comes to buy gold bar A. 6 .The customers will meet Shri Ganesh Agarwal, director. They will get a slip from the director as to the amount of cash to be paid. They will go to the cash counter and pay the cash. The cashier will count the cash in front of the customer using the cash counting machine....
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....e. What do you then do with the bill. A.11 When Shri Ganesh Sir asks me to prepare the bill I will prepare the bill. I will collect the signature of the manager and will hand over the bill if the customer comes and asks for bill. But all customers do not ask for bill. Q.12 What do you do with the bills which customers do not ask for? A12 From the year 2013, I am not taking two copies of cash bill. Only for credit bill two copies are taken. Only when the customers asks I will take a print out. I will take out print a daily statement of bills. Q. 12 Before 2013 what were you doing with the customer's copy which were not collected by them. A 12 Both copies will be filed together Q.13 I am showing you a statement given by Shri M. Jayaprakash, accounts manager in your Salem branch on January 6, 2012. Please sign in page 3 in token of having read the statement. In his reply to Q. 2, he has stated, in page 3, that for cash purchase no bills are issued by our company. What do you say ? A 13 I was preparing cash bills for the Salem branch. I was also sending them by mail. Probably he would not have taken printout of the bill....
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....d No. 3, the grievance of the Department is that the learned Commissioner of Income-tax (Appeals) fell in error in directing the learned Assessing Officer to reduce the peak credit in the bullion margin money account with the sales accounted by the assessee. 63. We have at paragraph 61 above upheld the order of the learned Commissioner of Income-tax (Appeals) deleting the addition for suppression in cash sales. Since the credits in bullion margin money account were transferred as sales, the learned Commissioner of Income-tax (Appeals) directed the Assessing Officer to reduce the peak credit considered for addition under section 68 of the Act from sales accounted by the assessee. As mentioned by us at paragraphs 53 and 54 above, it is an undisputed position that credits in bullion margin money account were generally transferred to sales account. Addition of credit in bullion margin money account has been sustained by us, only to the extent not transferred/ accounted in the sales. Otherwise, it will result in double addition of the same amount. In such circumstances, we are of the opinion that the learned Commissioner of Income-tax (Appeals) was justified in giving direction to se....
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....of the case and the principles of natural justice. 2. The learned Commissioner of Income-tax (Appeals) erred in adopting the accounts as provided by M/s. Metals and Minerals Trading Corporation. 3. The learned Commissioner of Income-tax (Appeals) failed to understand the fact that there were huge errors in the statement of accounts as provided by M/s. Metals and Minerals Trading Corporation and the erroneous accounts as provided by M/s. Metals and Minerals Trading Corporation cannot be considered as the basis for finalisation of the appellant's accounts. 4. The learned Commissioner of Income-tax (Appeals) failed to appreciate the fact that both the appellant and M/s. Metals and Minerals Trading Corporation were disputing each other and that the matter was pending before the hon'ble Madras High Court. 5. The learned Commissioner of Income-tax (Appeals) erred in upholding the ad hoc drawings fixed by the learned Assessing Officer. 6. State Trading Corporation : The learned Commissioner of Income-tax (Appeals) failed to appreciate the fact that appellant had duly recorded the credit notes from State Trading Corporation on receipt of....
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....ce. As per the learned authorised representative, the difference in the balances as shown in the accounts of the M/s. Metals and Minerals Trading Corporation and in the books of the assessee, was due to the credit notes and debit notes issued by M/s. Metals and Minerals Trading Corporation without any basis. 71. Continuing his submissions the learned authorised representative pointed out that Metals and Minerals Trading Corporation officials were under investigation by the Central Bureau of Investigation for fraudulent maintenance of their accounts. As per the learned authorised representative, the Central Bureau of Investigation had arraigned the assessee Shri Naresh Prasad Agarwal also as an accused for frauds perpetuated by the officials of M/s. Metals and Minerals Trading Corporation but the hon'ble jurisdictional High Court through its judgment dated April 17, 2017 in Criminal Original Petition No. 21438 of 2014 and Criminal Revision Petition No. 1991 of 2015 had discharged him from the proceedings, finding no evidence against Shri Naresh Prasad Agarwal. As per the learned authorised representative, this judgment also confirmed falsification of accounts by Metals and Mi....
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....e notes were vague. As per the learned authorised representative, narration in many of the debit notes were "claim recoverable pending reconciliation" and in many of the credit notes "reserve for bad and doubtful debts" the submission of the learned authorised representative was that nothing could be made out from these debit and credit notes, and the assessee could not be put in peril, for difficulties in reconciling the accounts of the assessee in the books of M/s. Metals and Minerals Trading Corporation with that of M/s. Metals and Minerals Trading Corporation in the books of the assessee. The learned authorised representative placing reliance on a letter dated March 28, 2014 from the assessee addressed to the learned Assessing Officer, submitted that all these facts were brought to the notice of the learned Assessing Officer, but still the learned Assessing Officer took the aggregate value of credit notes and subjected it to an addition. As per the learned authorised representative, the learned Commissioner of Income-tax (Appeals) fell in error in confirming the addition for credit notes without appreciating the facts. 72. Per contra, the learned Departmental representative ....
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....ng Corporation, if it was legitimately done, would result in a difference in the balances as per M/s. Metals and Minerals Trading Corporation account and as per the assessee's account. The claim of the assessee all along was that a number of credit notes were not received by it and if the aggregate of credit notes were considered, than huge amounts would have been due from M/s. Metals and Minerals Trading Corporation to the assessee whereas it was vice versa. What we find is that the arbitration proceedings were initiated by the assessee against M/s. Metals and Minerals Trading Corporation, in which allegations are there on various counts like difference on amounts received as buyer's credit, on quantity of gold delivered, on excess payment made by the assessee, on legitimacy of various debit and credit notes issued by M/s. Metals and Minerals Trading Corporation etc. The relevant paragraphs of this petition is reproduced here under : "11.The claimants state that the respondent has indulged in the following among other malpractices/deficiencies, to the determent of the claimants : 'a. During the period 2009-10, the claimants received delivery notes for....
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....ly.'. . . 16. The respondent by its mail dated December 28, 2011, sent one further debit note and two credit notes towards interest on loan against deposits for the financial years 2008-09, 2009-10 and 2010-11. The debit note No. AR09/001110/DN-11 dated December 28, 2011 was for Rs. 5,76,47,862 ; the credit note No. AR09/000265/CN-11 dated December 28, 2011 was for Rs. 1,24,72,384 ; and the credit note No. AR09/000266/CN-11 dated December 28, 2011 was for Rs. 61,59,901. The respondent demanded the claimants to pay an amount of Rs. 33,90,15,577 (rupees thirty-three crores ninety lakh fifteen thousand five hundred seventy-seven only) under the debit note after adjusting the amounts payable to the claimants under the credit notes (i.e. Rs. 35,76,47,862 minus Rs. 1,24,72,384 minus Rs. 61,59,901) along with 18 per cent. interest per annum. As per the note, given at the bottom of the said debit note, it is alleged that it is related to interest on loan against fixed deposits purportedly paid to the banks and purportedly not debited and recovered from the claimants during the year 2008-09. Obviously the debit note is baseless, untenable, high- handed, illegal and barred by li....
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....egation of fraud against the third respondent, with some splattering of allegations against the first two defendants/respondents, would not result in the case being made unfit for adjudication before the agreed mode of the Arbitral Tribunal. In fact, even the appellant understood it in the same way, till suddenly the 'U' turn arose, as noticed by us aforesaid." 74. M/s. Metals and Minerals Trading Corporation did not stop here but preferred to move the hon'ble apex court against the judgment of the hon'ble jurisdictional High Court. Their Lordships in this appeal numbers as Civil Appeal No. 11148 of 2017 held as under : "The parties agree that the plaint in the suit be treated as claim of the appellants and the claim petition filed by the respondents before the arbitrator be treated as counter claim. The said documents will be furnished by the appellant to the learned arbitrator within a period of two weeks from today. The venue of the arbitration can be at place convenient to the arbitrator. However, the seat of the arbitrator will be taken to be at Chennai. The arbitrator will be at liberty to take any expert assistance." 75. We also find that the a....
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.... reading of the averments of page No. 6 of the charge-sheet which runs over the next page would go to show that out of 132 bullion consignments eight buyer's credit resulted in gain but, major number of consignments during the relevant period resulted in loss. 216. It could be seen from document No. 51 which is a tour report, that there was an acute man power shortage and the report suggested to engage sufficient man power to complete the task and to reconcile all the imports of bullion. The report of M/s. Purushothaman and Company, Auditors for the year ending March 31, 2009 would also go to show that the internal mechanism needs to be strengthened and proper utilisation of the BTS software to account the bullion trading to be done effectively. 217. As rightly argued by Mr. Muralikumaran, the learned counsel for the petitioner, the prosecution did not produce even a single scrap of paper to show that Mr. V. Gurumoorthi was either authorised person or the only person authorised to make deposits and to take loans from foreign banks. 218. It is therefore clear that it is the duty of the prosecution to put forth some documents such as the board's res....
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....As discussed in the beginning paragraphs of this order, there is no legality or genuineness in the complaint. 224. As contemplated under section 233A of the Companies Act, the special audit can be appointed only by the Central Government. This, so called special audit was not appointed by the Central Government nor by the Comptroller and Auditor General of India In so far as the case on hand is concerned, as could be seen from the reply given for the RTI, by the Comptroller and Auditor General of India, the so called special audit report was not placed before the Comptroller and Auditor General of India for his comments and observations. 225. It could be seen from the report of the Comptroller and Audi tor General of India, that the matter was reported to the Ministry in March 2013 and it is stated that the reply is awaited. The report of the Comptroller and Auditor General of India will be a very crucial issue as to how, the Ministry wanted the matter to be dealt with because under section 619A read with section 233A sub-clause 6 of the Companies Act, the Central Government is empowered to take action on such reports. 226. The special audit report says t....
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....nance and Accounts), Metals and Minerals Trading Corporation Ltd., Chennai Regional Office, Chennai and unknown officials of Metals and Minerals Trading Corporation Ltd., Regional Office, Chennai had entered into a criminal conspiracy with Mr. N. P. Agarwal, (A3 as per FIR) proprietor M/s. Shiv Sahai and Sons and with unknown officials of Union Bank of India Main Branch, Chennai to cheat the Metals and Minerals Trading Corporation Ltd., in the matter of bullion trading through buyers credit scheme. 231. 'Conspiracy' in terms of section 120B of the Code is an independent offence. The ingredients of criminal conspiracy as laid down by the apex court in R. Venkatakrishnan v. CBI [2009] 11 SCC 737 ; AIR 2010 SC 1812 ; [2009] 11 Scale 102 ; [2009] 13 SCR 762 are : (i) an agreement between two or more persons ; (ii) the agreement must relate to doing or causing to be done either (a) an illegal act ; (b) an act which is not illegal in itself but is done by illegal means. In Lennart Schussler v. Director of Enforcement, New Delhi [1971] 1 SCJ 199 ; [1971] 1 33 Mad LJ SC 33, the apex court has held that : 'The gist o....
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....nnai and included the name of Mr. Ganesh Agarwal in the category of conspirators. 235. The place and the period where and when the alleged criminal conspiracy took place have not been clearly identified. The prosecution has not come forward with a definite case of conspiracy. This court has thoroughly discussed about this in the earlier paragraph of this order. Having taken into consideration of all the relevant facts and circumstances with reference to the alleged criminal conspiracy, this court is of considered view that no concrete and clinching evidence is available to indict the petitioners to say that they had committed the offence of conspiracy, because the ingredients for making out a case of conspiracy are not available in this case. 236. In the absence of any clinching and unassailable evidence to charge the petitioners with section 120B of the Indian Penal Code this court finds that no prosecution under section 120A of the Indian Penal Code could be launched against the petitioners to punish them under section 120B of the Indian Penal Code. 237. As indicated above, in the first information report, the prosecution says that Mr. S. Gurusamy, form....
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....ng is punishable under section 417 of the Indian Penal Code, but where there is delivery or destruction of any property or alteration or destruction of any valuable property resulting from the act of a person deceiving this section (420 of the Indian Penal Code) comes into operation. For an offence under this section, it must be proved that the complainant parted with his property acting on a representation which was false to the knowledge of the accused and that the accused had a dishonest intention from the outset. (See Mobarik Ali's case [1958] SCR 328 ; AIR 1957 SC 857) The offence under section 420 of the Indian Penal Code has the following essentials : (i) There must be deception i.e. the accused must have deceived some one : (ii) That by the said deception. The accused must induce a person: (a) to deliver any property ; or (b) to make, alter or destroy the whole or part of the valuable security or anything which is signed or sealed and which is capable of being converted into a valuable property ; (iii) That the accused did so dishonestly. 239. For a person to be convicted under section 420 of the Indian Pena....
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....ounts and the offence under section 13(1)(d) of the Prevention of Corruption Act, 1988 is relating to criminal misconduct by a public servant. Section 13(1)(d) of the Prevention of the Corruption Act, 1988 enacts that a public servant, if said to commit the offence of criminal misconduct, (a) to (c) . . . (d) if he, (i) by corrupt or illegal means, obtains for himself or for any other person any valuable thing or pecuniary advantage ; or (ii) by abusing his position as a public servant, obtains for him self or for any other person any valuable thing or pecuniary advantage; or (iii) while holding office as a public servant, obtains for any person any valuable thing or pecuniary advantage without any public interest ; The offence under section 13(1)(d) of the Prevention of Corruption Act, 1988 certainly cannot be connected with the petitioners because Mr. N. P. Agarwal (A2) being the proprietor of M/s. Shiv Sahai and Sons is one of the parties to the memorandum of understanding, dated April 2, 2008. The Metals and Minerals Trading Corporation Ltd., is also one of the parties. However, the third accused Mr. Ganesh Agarwal is not a ....
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....me income arising to the assessee, it will crystallised only in the year in which the arbitration proceedings reach a finality. The Revenue may, if it choose, take cognizance of the arbitral award, in the year in which the arbitration is complete and proceed according to law. We therefore set aside the additions made for credit/debit notes and differences in reconciliation with M/s. Metals and Minerals Trading Corporation for the impugned assessment year. Grounds 2 to 4 of the assessee is allowed. 77. In its ground No. 5, the grievance raised by the assessee is on additions made by the learned Assessing Officer for inadequate drawings, which was confirmed by the learned Commissioner of Income-tax (Appeals). Similar ground has been raised by the assessee in its appeal for the assessment year 2006-07 also as ground No. 5. We have already held at paragraph 50 that such additions were not warranted in the facts and circumstances of the case. Addition for the impugned assessment year also stands deleted. Ground No. 5 of the assessee is allowed. 78. Vide its ground No. 6, the assessee is aggrieved on an addition of Rs. 1,64,05,327 for difference in M/s. State Trading Corporation (M....
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.... on a surmises. The said addition stands deleted. Ground No. 6 of the assessee is allowed. 79. In its ground No. 7, grievance raised by the assessee is on the addition made for bullion margin money account. This issue has been considered by us at paragraph Nos. 53 and 54 above order in relation to ground No. 6 raised by the assessee in its appeal for the assessment year 2006-07. For the very same reasons as mentioned in these paragraphs, we give similar directions here also. Ground No. 7 of the assessee is partly allowed. 80. Now we take up cross-appeal of the Revenue for the assessment year 2007-08. Grounds taken by the Revenue are reproduced hereunder : 1. The order of the learned Commissioner of Income-tax (Appeals) is erroneous on facts of the case and in law. 2. The learned Commissioner of Income-tax (Appeals) erred in deleting the addition of Rs. 10,42,87,764 made towards suppression of sale amounts of gold bullion made by the Assessing Officer, in the assessment order passed under section 143(3) read with section 153A of the Income-tax Act, 1961 for the assessment year 2007-08 in the assessee's case. 2.1 The learned Commissioner of Income....
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....s and facts gathered by the Assessing Officer in the form of obtaining the rates from various registered professional jewellers' associations, the sales tax authorities as well as from the sworn statements of the assessee's staff to prove the fact of deliberate suppression of sales by the assessee through such non-genuine business transactions and ought to have confirmed the addition made in the assessment for the assessment year 2007-08 in this case. 3. The learned Commissioner of Income-tax (Appeals) erred in directing the Assessing Officer to reduce the "sales accounted towards margin money in the corresponding years" while confirming the addition of Rs. 14,09,07,558 made by the Assessing Officer under section 68 of the Income-tax Act, towards peak credit on account of margin money received by the assessee. in the assessment for the assessment year 2007-08 in the assessee's case. 3.1 The learned Commissioner of Income-tax (Appeals) ought to have appreciated that while computing the peak credit (as per detailed working sheets for the assessment years 2006-07 to 2010-11 annexed to the assessment order for the assessment year 2011-12) the adjustments h....
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....e assessment year 2007-08 in the asses see's case. 5. The learned Commissioner of Income-tax (Appeals) erred in deleting the disallowance of proportionate interest of Rs. 38,90,061 on the interest bearing funds diverted for interest-free advances, made by the Assessing Officer, in the assessment order passed under section 143(3) read with section 153A of the Income-tax Act for the assessment year 2007-08 in the assessee's case. 5.1 Having held that the assessee was well within his lending capacity to advance monies without charging interest out of own capital as well as interest-free advance received, the learned Commissioner of Income-tax (Appeals) ought to have appreciated that the assessee has not furnished the details of the availability of interest- free funds as on the date of making the interest-free advance. 6. The learned Commissioner of Income-tax (Appeals) erred in deleting the disallowance of car maintenance expenses of Rs. 1,45,966 made by the Assessing Officer, towards personal nature involved, in the assessment order passed under section 143(3) read with section 153A of the Income-tax Act for the assessment year 2007-08 in the asses....
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....No. 4 of the Revenue is dismissed as infructuous. 84. Ground No. 5 raised by the Revenue for the impugned assessment year is similar to its ground 4 for the assessment year 2006-07, which assails the deletion of disallowance made by the learned Assessing Officer for pro-rata interest on the interest bearing funds diverted for interest given free advances. We have already held at paragraph 65 above, that the disallowance was not warranted. For the very same reasons mentioned thereon, we uphold the order of the Commissioner of Income-tax (Appeals) deleting such disallowance. Ground No. 5 of the Revenue stands dismissed. 85. In its ground No. 6, the Revenue assails the deletion of disallowance of Rs. 1,45,966 for personal use of car. This issue has also been dealt by us in Revenue's appeal for the assessment year 2006-07 against its ground No. 5. We have already held at paragraph 67 above, that such disallowance was rightly made by the learned Assessing Officer based on the admission of the assessee and the learned Commissioner of Income-tax (Appeals) fell in error in deleting it. The addition is reinstated. Accordingly, ground No. 6 of the Revenue is allowed. 86. Now, we....
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.... claim of appellant on account of margin money but failed to consider these parties thus resulting in double addition. 9. Margin money addition : The learned Commissioner of Income- tax (Appeals) failed to appreciate the fact that the amounts collected in margin account represented part sale consideration these were received from prospective buyers and on receipt of these margin money was accounted as sales. The learned Commissioner of Income-tax (Appeals) though provided relief from double taxation but failed to understand the fact that names, address, and other KYC norms was not applicable for sales below Rs. 2 lakhs and hence the apt did not maintain the same, hence confirming the addition on account of unexplained credits is bad in law. 88. Out of the nine grounds, ground No. 1 is general, requiring no specific adjudication. 89. Grounds 2 to 4 are similar to grounds Nos. 2 to 4 raised by the assessee in its appeal for the assessment year 2007-08. It assails the order of the learned Commissioner of Income-tax (Appeals) confirming the addition made for credit notes issued by M/s. Metals and Minerals Trading Corporation not accounted by the assessee. We hav....
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....ribunal. As mentioned above at paragraphs 73 to 76 above, in relation to the assessee's appeal for the assessment year 2007-08, there were a number of debit/credit notes, which did not give any meaningful narration. If M/s. Metals and Minerals Trading Corporation had charged on the assessee, exchange fluctuation loss of Rs. 7,53,46,987, it would definitely appear in the account of the assessee with M/s. Metals and Minerals Trading Corporation. We have already held that the learned Assessing Officer can take a wholesome view considering the reconciliation differences, if any, between the assessee and the M/s. Metals and Minerals Trading Corporation, once the Arbitral Tribunal reaches its conclusion, in the year which such proceedings are complete. The assessee in our opinion could not have claimed such amount in the impugned assessment year when all along its argument was that credit/debit notes issued by M/s. Metals and Minerals Trading Corporation were fraudulent. The lower authorities were in our opinion, justified in disallowing the claim. Ground No. 6 of the assessee is dismissed. 95. Ground No. 7 of the assessee for the impugned assessment year which assails the additio....
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....t the facts of the case and the principles of natural justice. 2. The learned Commissioner of Income-tax (Appeals) erred in adopting the accounts as provided by M/s. Metals and Minerals Trad ing Corporation. 3. The learned Commissioner of Income-tax (Appeals) failed to understand the fact that there were huge errors in the statement of accounts as provided by M/s. Metals and Minerals Trading Corporation and the erroneous accounts as provided by M/s. Metals and Minerals Trading Corporation cannot be considered as the basis for finalisation of the appellant's accounts. 4. The learned Commissioner of Income-tax (Appeals) failed to appreciate the fact that both the appellant and M/s. Metals and Minerals Trading Corporation were disputing each other and that the matter was pending before the hon'ble Madras High Court. 5. The learned Commissioner of Income-tax (Appeals) erred in upholding the ad hoc drawings fixed by the learned Assessing Officer. 6. State Trading Corporation : The learned Commissioner of Income-tax (Appeals) failed to appreciate the fact that appellant had duly recorded the credit notes from State Trading Corporation ....
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.... by the Revenue is reproduced hereunder : 1. The order of the learned Commissioner of Income-tax (Appeals) is erroneous on facts of the case and in law. 2. The learned Commissioner of Income-tax (Appeals) erred in deleting the addition of Rs. 77,57,23,138 made towards suppression of sale amounts of gold bullion made by the Assessing Officer, in the assessment order passed under section 143(3) read with section 153A of the Income-tax Act, 1961, for the assessment year 2009-10 in the assessee's case. 2.1 The learned Commissioner of Income-tax (Appeals) ought to have appreciated the fact that the assessee has deliberately under invoiced its cash sales made to buyers without bills as compared with sales made to jewellers with bills resulting in huge difference between the two when both the sales were made in cash. 2.2. The learned Commissioner of Income-tax (Appeals) erred in allowing relief on the ground that the Assessing Officer has not subjected the books of account to special audit, overlooking the modus operandi of the assessee, discussed in detail in the assessment order, and also the reasons recorded by the Assessing Officer for non- reje....
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.... margin money in the corresponding years" while confirming the addition of Rs. 5,22,45,916 made by the Assessing Officer under section 68 of the Income-tax Act, towards peak credit on account of margin money received by the assessee. in the assessment for the assessment year 2009-10 in the assessee's case. 3.1 The learned Commissioner of Income-tax (Appeals) ought to have appreciated that while computing the peak credit (as per detailed working sheets for the assessment years 2006-07 to 2010-11 annexed to the assessment order for the assessment year 2011-12) the adjustments have already been taken into account by the Assessing Officer and there is no double addition as claimed by the assessee. 3.2. The learned Commissioner of Income-tax (Appeals) has erred in directing to allow relief from the sales without appreciating that the peak credit addition made is towards unexplained credits introduced i.e for the reasons that no details from whom received etc. were furnished by the assessee with respect to such buyers from whom the amounts were stated to have been received. 3.3. The learned Commissioner of Income-tax (Appeals) ought to have appreciated that....
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....unt of the assessee, the addition was made in the assessment for the assessment year 2009-10 in the asses see's case. 5. The learned Commissioner of Income-tax (Appeals) erred in deleting the disallowance of proportionate interest of Rs. 59,71,343 on the interest bearing funds diverted for interest-free advances made by the Assessing Officer, in the assessment order passed under section 143(3) read with section 153A of the Income-tax Act for the assessment year 2009-10 in the assessee's case. 5.1 Having held that the assessee was well within his lending capacity to advance monies without charging interest out of own capital as well as interest-free advance received, the learned Commissioner of Income-tax (Appeals) ought to have appreciated that the assessee has not furnished the details of the availability of interest- free funds as on the date of making the interest-free advance. 6. The learned Commissioner of Income-tax (Appeals) erred in deleting the disallowance of car maintenance expenses of Rs. 1,89,007 made by the Assessing Officer, towards personal nature involved, in the assessment order passed under section 143(3) read with section 153A ....
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....clause 11 of the agreement entered on April 2, 2008 with M/s. Metals and Minerals Trading Corporation, filed before the Arbitral Tribunal, placed at page 14 of the paper book. According to him, the question whether there was any shortage of gold in closing stock was intrinsically connected to reconciliation with M/s. Metals and Minerals Trading Corporation. As per the learned authorised representative, it was therefore premature to make an addition for shortage of gold. 114. Per contra, the learned Departmental representative supported the order of lower authorities. 115. We have considered the rival submissions. What was stated by the learned Assessing Officer in the assessment order with regard to shortage of gold is reproduced hereunder : "Difference in closing stock (assessment year 2010-11) : In your letter dated March 5, 2012 to the Additional Director of Income-tax (Investigation), you have admitted, in paragraph 4, that as against 50,438 kg gold for which Metals and Minerals Trading Corporation issued bills, the quantity received was only 50,405 kg and that 30 kg, gold was still to be received as on March 31, 2010. Vide questionnaire under section 14....
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....ent year was not justified. Such addition stands deleted. Ground number 6 is allowed. 116. Vide its ground No. 7, the assessee is aggrieved on an addition of Rs. 3,03,35,736 made for want of confirmation on the credit balance in the trade debtors account. 117. We have perused the orders and heard the rival submissions. The credit balance for which the addition was made appeared in the accounts of following trade debtors. (a) Subramani Rs. 2,10,85,736 (b) Sarangapani Rs. 76,50,000 (c) Ravi Rs. 16,00,000 The assessee could not file any confirmation letters either before the Assessing Officer or before the learned Commissioner of Income-tax (Appeals). Even during the remand proceedings the assessee failed to substantiate the credit. The contention of the learned authorised representative before us is that balances in such creditors account was trans ferred to sales and hence addition ought not have been done. We are unable to appreciate this argument. The assessee having introduced credits in the name of these three persons in its accounts, was obliged to provide confirmation and substantiate orders. At no point of time, the assessee claimed i....
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....;s son Shri Ganesh Agarwal had executed on August 11, 2010 four sale deeds bearing Nos. 5745 to 5748 of 2006 in favour of the assessee. The plots transferred were bearing Nos. 292, 299, 335 and 336 and were located at Pudupakkam village, Tiruporur. Payments were made at the rate of Rs. 7,20,000 per plot. The learned Assessing Officer was of the opinion that the cost of one plot came to Rs. 7,84,800, if stamp duty also was considered. In the fixed asset schedule filed along with the return for the impugned assessment year, the assessee had declared value of property at Tiruporur at Rs. 7,89,050 only. This being equivalent to the cost of one plot, the learned Assessing Officer took a view that the balance payments made for acquiring three of the four plots were not explained. The learned Assessing Officer considered a sum of Rs. 23,67,150 as unexplained investments. The appeal of the assessee before the learned Commissioner of Income-tax (Appeals) on this issue, did not meet with any success. 129. Now, before us, the learned authorised representative submitted that the addition was not warranted since the payments were made through bank accounts. According to him, bank account of ....
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....g Officer for the impugned assessment year also. Accordingly, ground No. 3 of the Revenue is allowed. 137. Now, we take up the cross-appeals of the assessee and the Revenue for the assessment year 2012-13, in that order. 138. The assessee in its appeal has taken altogether six grounds of which Ground No. 1 is general in nature, needing no specific adjudication. 139. Grounds Nos. 2 to 4 and 5 of the assessee are similar to grounds Nos. 2 to 4 and 5 in its appeal for the assessment year 2007-08. We have already dealt with grounds 2 to 4 and ground 5 at paragraphs 73 to 76 and 50 above and deleted the addition. Such additions stand deleted here also. Accordingly, these grounds are allowed. 140. This leaves us with ground No. 6, which assails addition made by the Assessing Officer under section 68 of the Act for the bullion margin money account. This ground is similar to ground No. 6 in the assessee's appeal for the assessment year 2006-07. The issue has been considered by us at paragraph Nos. 53 to 54 above. Similar directions are given here also. Accordingly, ground No. 6 of the assessee is partly allowed. 141. Now, we take up the cross-appeal of the Revenue for th....
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.... of Income-tax (Appeals) failed to appreciate the fact that both the appellant and M/s. Metals and Minerals Trading Corporation were disputing each other and that the matter was pending before the hon'ble Madras High Court. 5. The learned Commissioner of Income-tax (Appeals) failed to understand the fact that the parties reflected in sundry debtors having credit balance where part sale consideration. These parties were subsequently transferred to the sales account. The learned Commissioner of Income-tax (Appeals) allowed the claim of the appellant on account of margin money but failed to consider these parties thus resulting in double addition. 6. Margin money addition : The learned Commissioner of Income- tax (Appeals) failed to appreciate the fact that the amounts collected in margin account represented part sale consideration these were received from prospective buyers and on receipt of the balance the margin money was accounted as sales. The learned Commissioner of Income-tax (Appeals) though provided relief from double taxation but failed to understand the fact that names, address, and other KYC norms was not applicable for sales below Rs. 2 lakh....
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....above four parties. However as per the learned Assessing Officer, delivery of goods to these persons were made after an unduly long period of time. According to him, mere furnishing of ledger extracts were not sufficient to justify the credit balance. What we find is that the claim of the assessee that these creditors were purchasers of gold, and supplies were made to them in April, 2012 has not been found to be incorrect or false. The transactions ought not have been disbelieved just for the delay in supplying the goods. The assessee having shown that sales were effected to clear the credit in the debtors account, in our opinion, an addition ought not have been made. Such addition stands deleted. Accordingly, ground No. 5 of the assessee is allowed. 154. Vide its ground No. 6, the assessee assails the addition made under section 68 of the Act for peak credit in the bullion margin money account. Similar ground has been raised by the assessee, Shri Naresh Prasad Agarwal in his appeals for the assessment years 2006-07 to 2012-13 (I. T. A. Nos. 1449 to 1455/CHNY/2017). We have adjudicated this issue at paragraphs 53 to 54 above. Similar directions are given here also. Accordingly, ....
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....credit in bullion money margin account with accounted sales for reasons given by us at paragraph 63 above. We therefore do not find any reason to interfere with the order of the learned Commissioner of Income-tax (Appeals) in this regard. Ground No. 3 of the Revenue stands dismissed. 160. Vide its ground No. 4, the Revenue is aggrieved on the direction of the learned Commissioner of Income-tax (Appeals) to consider debit notes also, while aggregating the credit notes issued by M/s. Metals and Minerals Trading Corporation for addition. 161. We have already held in the appeal of Shri Naresh Prasad Agarwal, where similar additions have been assailed, that such addition for credit notes and reconciliation difference with M/s. Metals and Minerals Trading Corporation was premature and ought not have been done for the impugned assessment years at paragraphs 73 to 76 above. At paragraph 83, we have dealt with the issue of set off of debit notes also. In line with our observation at paragraph 83 above, we hold the ground raised by the Revenue to be infructuous. Ground No. 4 of the Revenue is dismissed. 162. Vide its ground No. 5, the Revenue assails the direction of the learned Com....
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....he learned Commissioner of Income-tax (Appeals) to delete proportionate interest of Rs. 5,88,000 for interest bearing funds diverted for giving interest free advances. This ground is similar to ground No. 5 raised by the Revenue for the assessment year 2011-12. We have already held at paragraph 162 above, that there was no reason to make any disallowance for proportionate interest considering the substantial interest-free fund available with the assessee. Ground No. 3 of the Revenue stands dismissed. 171. Through its ground No. 4, the Revenue assails the deletion of an addition for a credit balance of Rs. 30 lakhs in the account of one Mrs. Pista Bai. 172. We have heard the rival submissions and perused the orders. The findings of the learned Commissioner of Income-tax (Appeals) with regard to the addition made for credit balance in the name of Mrs. Pista Bai appearing at paragraph 42 of his order, has been reproduced by us at paragraph 44 above. The learned Commissioner of Income-tax (Appeals) has noted that the amounts received from Mrs. Pista Bai were repayment of earlier advance of Rs. 30 lakhs given by Mr. Naresh Prasad Agarwal, when the business was run as a proprietors....