TaxTMI 
TaxTMI 
2012 (9) TMI 1158
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....ncome as under against no return of income is filed. (i) Investment in household expenses Rs. 40,400/- (ii) Investment in proprietary business Rs. 2,60,000/- (iii) Investment in purchase of goods. Rs. 18,00,000/- (iv) Estimated profit from business Rs. 7,20,000/- (v) Estimated value of the goods imported Rs. 4,75,500/- (vi) Estimated profit from the value of shortage goods. Rs. 1,26,900/- (4) That the learned Income-tax Officer has not brought any concrete evidence on the record against the appellant, establishing that your appellant is the owner of the M/s. Associated Apparels and accordingly that the Income-tax Officer has not carried out the direction of the Commissioner of Income-tax (Appeals). (5) That the learned Income-tax Officer has erred in law and on facts by stating on Page-2, Para-5 of assessment order that the learned CIT(A) vide his order No.CIT.R/ll/498/87-88 dated 24.3.1992, confirming the addition of Rs. 2,60,000/-. (6) That the learned CIT(Appeals) has erred in law and on facts by confirming assessment order with all the additions. (7) Your appellant prays to quash the I.T.O.'s orde....
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....etitioner. (8) The learned Income-tax Officer has erred in considering the investment for the alleged purchase of goods as investment of your petitioner and treating the same as income amounting to Rs. 18,00,000/-. (9) The learned Income-tax Officer has also erred in estimation and treating an amount of Rs. 7,20,000/- as profit from M/s. Associated Apparel and income of your petitioner. (12) Without prejudice to the above the learned Income-tax Officer has erred in treating the Associated Apparel as the business concern of your petitioner. The appellant white challenging the ITO's action also mentioned in the written submissions filed during the hearing of appeal that he was not the owner of Associated Apparel but was only a Power of Attorney Holder from one Shri Kantilat Ramjibhai Maru who had purchased this business (Page Nos. 5,6, & 7 of letter dated 10-08-1988 addressed to the CIT(A). 2. My predecessor dealt with the question of ownership of Associated Apparel in para 14 which is reproduced as under- Para 14: The next addition are based on the various informations which on the record of the ITO....
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....iled court cases against the Customs authorities. The Addl. Collector, Customs also observes on Page 10 of his order that Shri R.K. Mehta did not have clean hands as far as the case was concerned. (e) In the operative part of the order the Addl. Collector of Customs has levied a penalty of Rs. 20 Lakh on Shri R.P Pandya by treating him as sole proprietor of M/s. Associated Apparels, Kandla Free Trade Zone. 3. From the forgoing it is apparent that the status of Shn R.K. Mehta via-a-via M/s. Associated Apparels is not dear From the observations made in the aforesaid order of the Addl. Collector of Customs, it appears that Shri R.K. Mehta was acting both on behalf of Shri R.P. Pandya, treated as owner of M/s. Associated Apparels and Shri R.P Pandya, treated as owner of M/s. Associated Apparels and Shri K.R. Maru, who according to Shri Mehta had later on bought M/s. Associated Apparels. It is possible that in effect Shri R.K Mehta was the real owner of this business even though in name it was owned by two different persons namely Shri R.P. Pandya and Shri R.K. Mehta. However, the Customs Authorities have taken Shri R.P. Pandya to be the original owner of Associated Ap....
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....dated 27.12.1993 was issued and informed the assessee that he has failed to comply notice and summons dated 26.8.93 and to show-cause as to why the cost of imported goods, profit on sale of goods, investment made in the above business should not be treated as his income. 8. Assessee's advocate Shn M. J. Lava attended on 6.1.1994 and filed Xerox copies of power of attorney given by Shri Kantilal Maru and sale deed of the factory. Further on 13.1.1994 assessee with his advocate attended and produced letter dated 20.1.1993 from the Police Inspector, Gandhidham stating that no enquiry can be made as the case is pending before the Court It is worth noting that Shri Rohitkumar has not proved before the Court that charge is made by Shri Dave. Security Inspector is wrong. Charges were made that Shri Rohitkumar Mehta is signing for R.P. Pandy and Kantilal Maru. Also filed enquiry letter made by the Inspector of Income-tax. On this letter the Inspector of Income-tax has recorded statement from Shri Kantilal Maru wherein Shri Kantilal Maru has stated that he has purchased the factory and he is the owner of the factory. M/s. Associated Apparels. This was purchased from Shri Ramesh....
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.... has given a statement without fear because Shri Rohitkumar K. Mehta was not present at the time of recording the statement It is also very much clear that Shri Kantilal Maru has not complied summons dated 17.1.1994 by which he was to cross examine by the assessee It is doubtless to say that an employee will not speak against his employer and also cannot speak untrue on oath. So far production of Xerox copies of statement recorded by the Inspector of Income-tax, it is fact that statement recorded by the I.T.I, cannot be on oath. Secondly Tea Stall holder, Postman and Pujari of the temple have stated that Shri Rameshchandra P. Pandya was staying at Bhomeshwar Plot, but they have not seen him ever. It is wonderful to note that the Pujari of the temple and tea kittly holder knows about the exact date of purchase of factory. From the above, it reveals that the whole story is cooked up story and arranged to prove that Shri Rohitbhai K. Mehta is not the owner of the factory/business, but Shri Rohitkumar K. Mehta could not succeed in doing so as discussed above." 7. On merits the AO repeated the addition as stated in ground No. 3 as above reproduced in grounds of appeal. 8. In the s....
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....has not purchased any factory with the name of Ms. Associated Apparels at Kandla Free Trade Zone(Kutch) and he does not know any Ramesh P. Pandya. the seller of the factory He has also stated that he is a poor man serving in Mehta Guest House as a Manager on a salary of Rs. 800 - per month. He does not own any movable or immovable property and he is living in rented accommodation. He has also stated that he has not given any power of attorney hut he was simply signing the papers as per the instructions of his boss Seth Shri Rohitkumar K. Mehta. He has further, categorically stated that Shri Rohitkumar K. Mehta has purchased the said property and the payment for purchase of the same has been made by him and if his name appears in the purchase document of the said factory, then it is a false document. With regard to the above, during the cross examination statement given by Shri Kantilal Maru on 31.05.99, he has started as under:- (Page 10 of CIT(A) order) "I have considered the facts of the issue under consideration, the statements recorded and other information available along with the contentions of the appellant in this regard. The statement given before t....
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.... he has not informed this fact to any authority i.e. Customs, Court or Income-tax department. If is only when has came to know about his liability of taxation that he changed his view. In this regard, it could be said that till 25.11.1993 Shri Kantilal R. Maru was under the employment of Shri Rohitkumar K. Mehta and he was blindly signing all papers. correspondence etc. as per the instructions of Shri Rohitkumar K. Mehta. As far as the liability of taxation is concerned, the first Income tax assessment order of Ms. Associated Apparels was framed on 30.03.1987 on Shri Rohitkumar K. Mehta and not on Shri Kantilal R. Maru. Thus, there was no question of any Income-tax liability in the case of Shri Kantilal R. Maru which made him to change his stand in 1993. In fact, if can be said that it was only after he got free from the clutches of Shri Rohitkumar K. Mehta after leaving his service that he could give a statement with a free wind in order to bring out the facts correctly. 7. Other relevant circumstances pertaining to the ownership of Ms. Associated Apparels are as under: (1) The following clause from the general power of attorney given by Shri Kantilal R. Ma....
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....Shri Kantilal R. Maru. Thus, Shri Rohitkumar K. Mehta was going both on behalf of Shri R.P. Pandya treated as owner of M/s. Associated Apparels and Shri Kntilal R. Maru, who is shown to have later got M/s. Associated Apparels. (6) In the cross examination statement of Shri Kantilal R. Maru recorded on 31.05.1999, he has stated that a person named Shri R.P. Pandya is not existing and the factory was purchased by Shri Rohitkumar K. Mehta in bogus name. (8) The above surrounding circumstances are clear pointer to the fact that Shri Rohitkumar K. Mehta is the real owner of Ms. Associated Apparels and Shri Kantilal R. Maru is only his benamidar. If Shri Kantilal R. Maru had been the real owner of Ms. Associated Apparel, the documents pertaining to purchase of the said business would not have been found at the business premises of Sheth Rohitkumar K. Mehta during search. It was not necessary for the real owner to pass on the purchase documents to for the real owner to pass on the purchase documents to the General power of attorney holder. Further, it is not understandable why a low paid employee would give General Power of Attorney in favour of his employer ....
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....wer of attorney holder. 11. We have heard the ld. D.R. and assessee. We gone through the written submissions filed by assessee. We also go through paper book filed by the assessee. The brief facts of the case are that the original assessment was framed on the basis of the order of Customs Department and search u/s. 132 of the Act. The assessment order dated 30-03-1987. In the first round of litigation the assessee filed appeal before CIT(A) which has been decided vide CIT(A)'s order dated 02-09-1988. The CIT(A) confirmed the order of AO except deleting two additions Rs. 39,970/- and Rs. 1500/- pertaining to income of wife and mother of the assessee. The assessee filed second appeal before ITAT. The ITAT send back matter to the file of CIT(A) vide its order ITA No.2729/Ahd/1988 dated 07-12-1992. The assessee filed Miscellaneous Application against the said order of ITAT dated 07-12-1992 which was dismissed vide MA No.15/Ahd/92 dated 03-03-1993. In compliance to diction of ITAT, the CIT(A) decided the matter vide his order dated 24-03-1992. The CIT(A) send back matter to the file of AO with direction to determine whether Shri Rohit K. Mehta was the owner of M/s. Associated App....
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....aru of the goods and machinery kept in the said factory which said Rohitkumar Mehta with mala fide intention to escape from paying the debit amount of customs department and by wrongly identifying himself as Rameshkumar Pranlal Pandya and though his true name Rohitkumar Krushnalal by hiding his true identity by having prepared false documents with false signatures to get illegal benefits had prepared the copies of the said documents and though Kantibhai Rajmjibhai Maru know that the person who had done the document in his name is not Rameshkumar Pranlal Pandya but is Rohitkumar Mehta, had helped him and in this way in the said illegal act Kantibhai Ramjibhai Maru is also responsible." 11.3 It has also been noted from a copy of sale agreement of running business of M/s. Associated Apparels between Mr. Maru and Pandya dated 27-06-1983 was also filed before the Court. The Court took this document as Exhibit 275-agreement of dated 27-06-1983 11.4 The accepted facts noted by the Court in para-20 of the judgment are as under:- "(20) For the presentation of the above mentioned statements this below defined acceptable facts must be better to mention. The Accuseds in....
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....e act to cheat will be used had prepared such questioned documents. In this way when the element to be tempted is not proven from the evidences lying, on seeing that the present Accused had done the offence of cheating cannot be believed as proved. Shri Special A.P.P. Dholakiya states that the Accused by identifying himself as R.P Pandya will use it for temptation to K.F.T.Z. and then will cheat and had prepared the document with such intention cannot be proved. Instead of it the evidence of the complainant side itself proves that the deeds done in favour of K.F.T.Z.. R.P. Pandya had signed as the Accused Not only that the witness of the complainant side Ashokkumar Chaturvedi accepts in his evidence that the Accused and the person signing in the deed is R.P. Pandya the same person and no one else. The Lying evidence also states that the present Accused and R.P. Pandya both are the same person and not others. Above it, the witness of the complainant side Liladhar Valji in his evidences accepts that the present Accused Rohitkumar Krushnalal Mehta is known by two names with R.P. Pandya also. In short on seeing the proof of the complainant side, it is clearly accepted that the Accused ....
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.... illegible Bhuj-Kuthchh P.V. Maru. Chief Judicial Magistrate Bhuj - Kutchchh (Emphasis Supplied)" 11.6 Apart from above facts some important facts noted by AO and CIT(A) are that during the course of search at the business premises of Mehta Hotel and residential premises of assessee, some papers indicating the business done by the assessee in the name of M/s. Associated Apparels, Kandla Free Trade Zone were found. Shri Kantiial Maru in his statement stated on oath record on 25-11-1993 stated that real owner of the factory is Rohitkumar K. Mehta and he did not know any Rameshchandra P. Pandya. Mr. Maru was employee of Mr. Mehta at salary of Rs. 800/- p.m. and he did not have capacity for investment and to run such business. The CIT(A) provided opportunity to the assessee for examination of Mr. Maru, which was examined on 31-05-1999. Question and answer No.7 and 8 are reproduced below.:- "Q. No. 7. Is the purchase deed dt.27.6 1983 signed by you ? Is it your signature ? Ans. 7. This matter is false. I did not purchase the same. R.P. Pandya and Rohit Mehta is one person A person named R.P. Pandya is not existing. The factory....
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....person, Rohitkumar Krishnalal Menta. This finding further supported by the facts that during the course of search, some papers were found related to that firm M/s. Associated Apparels and its business. Some other adverse facts noted by revenue authorities after examining the issue in detail taking statements of concerned person. We therefore find that for the purpose of provisions of Income-tax Act, the CIT(A) after detailed discussions some them reproduced in above Para No. 8.8.1 and 8.2 of this order, has rightly confirm action of the AO in treating Shri Rohitkumar K. Mehta as the owner of the business in the name of M/s. Associated Apparels. On perusal of paper book, we noticed that the assessee filed appeal before the High Court challenging the order of Chief Judicial Magistrate, Bhuj on 04-02-2003. But the assessee failed to point further progress on that case, neither any stay or the order has been set-aside by High Court nor bring to our notice. Thus ground number 4 is decided against assessee. 11.9 Now we are coming to the merit of the case. The relevant ground of the appeal is ground number 3 reproduced above. The two additions of Rs. 18 lakh and Rs. 7.20 lakh made by t....
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....he profit applying 40% net profit rate without finding out the final outcome of those goods. The investment in purchases of goods for Rs. 18 lakh is supported by evidence/material but in respect of profit of 40% on that goods such material is not on record. Under the circumstances of the case, we find that the addition of Rs. 18 lakh also cover if deficiencies on this addition We therefore, deleted the addition of Rs. 7,20,000/-. 11.13 Next two addition of Rs. 4,75,500/- and Rs. 1,26,900/- on account of goods imported and profit thereon. The AO on the basis of verification of assessee's business premises on 08-08-1983 by Customs Authority, Kandla noted that the assessee purchased imported zip fasterns of Rs. 4,75,499/-. At the time of physical verification, the Custom Authority found shortage in goods valued at Rs. 3,17,243/-. The AO drew conclusion that the assessee disposed off the goods in open market. The AO applied 40% profit rate on Rs. 3,17,243/- and calculated profit of Rs. 1,26,897/-. The AO accordingly made addition of Rs. 4,75,500/- value of goods purchased and Rs. 1,26,900/- profit on goods sold. After considering fact of the case that on account of shortage in g....
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....recalled vide order dated 08-05-2008. Thereafter, this case was fixed for hearing several times but adjourned on one pretext or the other. On the last date of hearing i.e. 21-12-2011, the assessee Shri R.K. Mehta himself appeared and filed written submission wherein it was contended that in his case, the entire original assessment was framed on the basis of search action u/s.132 at residential premises of the assessee and he was considered as proprietary of M/s. Associated Apparels. But in fact, he is holder of power of attorney of Shri Kantilal Maru. Reliance was also placed on written submission already placed on record which was submitted by Shri M. J. Lava. 3. In the proposed order, the learned brother has confirmed the addition of Rs. 18,00,000/- being investment in purchase of goods for the details reasons given in para-11.9 on page-19 of the impugned order. In para-11.8 of the proposed order, the learned brother has held that assessee accepted this stand of the revenue that Shri Rohitkumar K. Mehta is the owner of M/s. Associated Apparels and decided the ground No.4 against the assessee. Once it is held that assessee is the owner of M/s. Associated Apparels who made inves....
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....e Income - tax Act after administering oath of Shri Maru and the said statement has also stood the test of cross examination by the Authorised Representative of the appellant on 31.05.1999. It is also to be noted that Shri Kantiial R. Maru left the service of Sheth Rohitkumar K. Mehta on 25.11.1993 i.e. the date on which his statement was recorded by the I.T.O. This goes to show that this statement was given in a free manner and not under pressure or duress. The facts mentioned in the said statement cannot be ignored and have to be relied upon. The next contention of the appellant is that from 1984 to 1993 he has complied with all correspondence with the Court and Customs as the owner of M/s. Associated Apparels and before 25.11.93, he has not informed this fact to any authority i.e. Customs, Court or Income - tax department. It is only when has came to know about his liability of taxation that he changed his view. In this regard, it could be said that till 25.11.1993 Shri Kantilal R. Maru was under the employment of Shri Rohitkumar K. Mehta and he was blindly signing all papers, correspondence etc., as per the instructions of Shri Rohitkumar K Mehta. As far as the liability of tax....
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.... and that the said issue cannot be determined in the absence of Shri Pandya from whom Shri Maru claims to have derived title. On this question to the title of Shri Maru to the firm there appear to have been proceedings in Civil Courts initiated either by Shri Maru or his power of attorney agent but that the said proceedings were terminated by withdrawal thereof before any actual decision." (5) From the order dated 03.07.1985 of the Additional Collector of Customs, Kandla Free Trade Zone, it is seen, Shri Rohitkumar K Mehta was earlier appearing before the Customs authorities on behalf of Shri Ramesh P. Pandya. Only at the later stage of hearing Shri Rohitkumar K. Mehta, started appearing as Power of attorney holder of Shri Kantilal R. Maru. Thus, Shri Rohitkumar K. Mehta was going both on behalf of Shri R.P. Pandya treated as owner of M/s. Associated Apparels and Shri Kntilal R. Maru, who is shown to have later got M/s. Associated Apparels. (6) In the cross examination statement of Shri Kantilal R. Maru recorded on 31.05.1999, he has stated that a person named Shri R.P. Pandya is not existing and the factory was purchased by Shri Rohitkumar K. Mehta in....
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....the assessment under appeal can be considered for making addition in the assessment year under appeal. Therefore, the decision of learned CIT(A) on this issue is set aside and matter is remanded to the file of AO with the direction that he will ascertain the actual investment made in machinery/shed in the name of M/s. Associated Apparels and make necessary addition in accordance with law. Since now it is clear that Shri R.P Pandya is none-else than assessee, therefore, in the interest of justice, he should cooperate with the department and tell the actual investment made in machinery/shed etc. to start factory in KFTZ in the name of M/s. Associated Apparels. Investment in household expenses Rs. 40.400/-: 6. In the written submission filed before us, in respect of this addition, the following submissions are made:- "(i) Investment in household expenses Rs. 40,400/.00 Assessing Officer has made this addition as the same has been in the original assessment order. However, the Hon'ble I.T.A.T has restored back this addition to the CIT(A) vide M.A. No. 15/92. (PAPER BOOK PAGE N0.15) Accordingly now the CIT(A) has passed this issue vide....
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....bviously, such a meagre withdrawal was not adequate for house-hold expenses itself so the question of considering the acquisition of these imported items is obviously unbelievable. At present, before me, a stand is taken that several people like Shri Umakant Parekh etc., entrusted liaison work to the appellant has met these expenses. In this behalf also no proof is produced and Shri Umakant Parekh's address is not even given. Besides, it is pointed out that the appellant was having 30 acres of land and these expenses could have been met out of agricultural income. Unfortunately, in both these cases no evidence is produced and it is clear that the appellant is only whistling in the dark. Under these circumstances, I am of the opinion that the explanation which is ever changing cannot be accepted and the action of the ITO in adding an amount of Rs. 40,400/- in this behalf deserves to be confirmed." Through I.T.A.T., Ahmedabad Bench 'C' order in M.A. No. 15 (Ahd)/1992 dated 3-3-1993, the entire appeal including the addition of Rs. 40,400/- has been restored to the C.I.T.(A) for decision. Accordingly, the appellant was asked to make submissions against the various ....
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....ear and facts of each year could be different. In this year the appellant has visited Dubai and has incurred expenditure on the said visit and on import of SONY T.V. etc. for which no withdrawals have been made by him. The appellant's wife has made withdrawals of Rs. 9,600/-for household expenses for which credit has been given. Further, the appellant has not been able to show how the estimate of Rs. 50,000/- is excessive in his case. I agree with the C.I.T. (A)-l, Rajkot (order No. CIT.R/498/87-88 dated 24.3.92) that the estimate on the facts and circumstances of the case is justified. The addition made is required to be sustained, particularly because the appellant has not been able to refute any the facts/data on the basis of which addition is made in spite of Specific opportunity allowed. The addition of Rs. 40,400/- made in the hands of the appellant is, therefore, confirmed.' 8. From the perusal of submission made by assessee (supra) and reasoning given by the ld. CIT(A) in impugned order in para-10 which is reproduced by me (supra), it is clear that even if it is presumed that visit to Dubai was for the purpose of business of the assessee viz., M/s. Associated App....
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....he spent about Rs. 2,60,000/- for the purchase of the said business. No proof as regards to the source of payment is forthcoming. I would therefore, include Rs. 2,60,000/- as unexplained investment by the assessee for the purchase of the said business. It is seen from the papers found during the search as mentioned above that the assessee had imported following items: Sr.No. Description. Cost. Value in Rs. 1. 45 Wooden cases for containing 450000 pieces of Polyster Zipper from Japan. NR Y 69,20,550 5,76,711 2. 274 Cartons containing 65% Polyster & 35% Viscos Suitings 48415.5 Yds. US $ 65,360 5,88,240 3. 20 cases of snap fastner Y 30,75,800 2,56,310 The said goods were insured for a sum of 71897 US Dollar The value of goods comes to US$ 65,360 as per invoice No.DE/211/83-84 dated 11th August, 1983. The goods in question was purchased from Hong Kong as far as Polyster yarn are concerned. Details as regards other two items from Japan, it is seen from the seized materials that assessee had imported YKK Zip Fastners from Japan. The value of goods imported comes to 6920550. The said goods appears to have been importe....
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....t of total imported by the assessee valued at Rs. 4,75,499/- there was shortage of goods valued at Rs. 3,17,243/-. It is clear that the assessee disposed off the goods in question, which was imported for the purpose of using in Free Trade Zone, in the open market. Considering the cost of goods, and the prevailing market rate at the relevant time, I would estimate the profit of the assessee at 40% of the total amount i.e. of Rs. 3,17,243/-. The same would also to be added to the total income of the assessee. This comes to Rs. 1,26,897/-." 10. After considering the submission of the assessee and after appreciating the evidences available in this regard and keeping in view the conspicuous facts of the case, the id. CIT(A) in the impugned order confirmed all the three additions for the detailed reason given in paras-11 to 14. 11. It is pertinent to note that at no stage of proceeding either before both the departmental authorities or before us, the assessee has refuted any of the aforesaid facts or the documentary evidence. His only stand was that he is simply power of attorney holder and not owner of M/s. Associated Apparels. It is pertinent to note that the contention of the as....
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....ppers valued Rs. 3,17,243/- and put Government into loss of Rs. 6,23,977.31 towards customs duty on the same. On this complaint, Criminal Case No. 2188/1993 was registered and decided on 31-01-2003 by Chief Judicial Magistrate at Bhuj-Kutchchh. From the perusal of this judgment, it can be seen that Shri R.P. Pandy and accused Rohitkumar Mehta are same person. This judgment was not available when ld. CIT(A) passed the impugned order. The unit of M/s. Associated Apparels for manufacturing readymade garments from out of imported goods, machinery etc. and to export the said manufactured goods was started by assessee who is also known as R.P. Pandya as per FTZ/Plan A.O.83/7527 dt.5-1-1983 of the Development Commissioner of Kandla Free Trade Zone, Gandhidham. Admittedly, the alleged goods manufactured from imported material/machinery were never exported. Prima facie, it appears that whole exerciser is being done to evade customs duty which appears to be more than 100%. In these circumstances, it cannot be said that profit estimated by AO @ 40% is excessive or unreasonable. The addition of Rs. 18,00,000/- was made on the basis of documents found during the course of search u/s. 132 of IT.....
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....accordance with law. 14. In the result, for statistical purpose, the appeal of the assessee is treated as partly allowed. ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961 As there is a difference of opinion between the Members of the Bench we state the following point of difference and refer the same to the Hon'ble President, Income-tax Appellate Tribunal for further necessary action as envisaged u/s.255(4) of the Income-tax Act:- (1) Whether on the facts and in the circumstances of the case and material on record the addition of Rs. 40,400/- made by AO on account of investment in household expenses should be deleted or restricted to Rs. 30,000/-. (2) Whether on the facts and in the circumstances of the case the addition of Rs. 2,60,000/- in proprietary business namely; M/s. Associated Apparels which was set-up by assessee by representing himself before concerned authority as R.P. Pandya should be deleted or set aside to the file of AO for ascertaining the actual amount of investment in shed and machinery etc. (3) Whether on the facts and in the circumstances of the case, the addition made by AO on account of estimation of profit from b....
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....oint of difference, as reproduced above, relates to the issue of addition of Rs. 40,400/- made by the AO which was deleted by the learned AM and restricted to Rs. 30,000/- by the learned JM. 5. The case of the assessee was that the addition of Rs. 40,400/- towards household expenses were made on mere presumption basis, which could not be sustained. The learned AM has proposed the deletion of the addition by observing that the addition was on estimation and presumption, and therefore, such addition cannot be sustained. I find that the learned JM has given part relief to the assessee on this issue and has restricted the addition to Rs. 30,000/- out of the addition of Rs. 40,400/-made on account of low household expenses and has recorded in his proposed order that this addition is restricted to Rs. 30,000/-, as suggested by the assessee in the written submissions. 6. I have gone through the relevant portions of the written submissions filed by the assessee wherein in the concluding last line of the submissions, the assessee has submitted in writing that "accordingly, the AO should have estimated the expenses not more than Rs. 30,000/-." In these facts, I am of the considered opi....
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....ssessee. The difference between the learned Members arose due to the fact that the learned AM has deleted the addition of Rs. 2,60,000/- in the proposed order observing that once the sale agreement itself has not been accepted, the same could not be used again for making the addition. The learned JM has held that once it is held that the assessee is the owner of the "AA", who made investment of Rs. 18 lakhs in purchase of goods, the investment made in proprietary business viz. "AA" amounting to Rs. 2,60,000/- could not be deleted. I find that the Revenue could not produce enough material on record to justify separate addition of Rs. 2,60,000/- for investment in proprietary business viz. "AA" apart from the addition of Rs. 18 lakhs made on account of investment in purchase of goods of "AA", and particularly in view of the fact that the addition of Rs. 18 lakhs has been sustained by both the learned AM and the learned JM separately. Merely because M/s. "AA" has been found to be the proprietary concern of the assessee and the investment made in purchase of goods of Rs. 18 lakhs having been found as unexplained, for which the addition has been made and confirmed by both the learned Mem....
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....stimate of profit in the hands of the assessee. The customs duty in this case is not less than 100% and which have not been paid, the estimate of profit @ 40% thereof in these types of transaction does not seems to be excessive. In these facts of the case, I agree with the decision of the learned JM on this issue of addition of Rs. 7,20,000/- and direct accordingly. 10. Other addition of Rs. 4,75,500/- being the estimated value of goods imported and Rs. 1,26,900/- estimated profit from the value of shortage of goods, I find that the learned AM has deleted the additions in his proposed order whereas the learned JM has confirmed the additions in his proposed order. The learned AM has deleted the addition by observing that the goods purchased by the assessee related to some incentive for export and government has filed a criminal case against the assessee and the final outcome of fate of those goods was not on record and has allowed telescopic benefit to the assessee to put an end to the litigation. The learned AM observed that the purchase of goods of Rs. 4,75,500/- and profit addition of Rs. 1,26,900/- is circulation of money of that addition of Rs. 18 lakhs sustained separately ....
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....cord the addition of Rs. 40,400/- made by the AO on account of investment in household expense should be deleted or restricted to Rs. 30,000/- 2. Whether on the facts and in the circumstances of the case the addition of Rs. 2,60,000/- in proprietary business namely; M/s Associated Apparels which was set up by the assessee by representing himself before concerned authority as R.P. Pandya should be deleted or set aside to the file of AO for ascertaining actual amount of investment in-shed and machinery etc. 3. Whether on the facts and in the circumstances of the case the addition made by the AO on account of estimation of profit from business Rs. 7,20,000/- estimation value of goods imported Rs. 4,75,500/- and estimated profit from the value of shortage of goods of Rs. 1,26,900/- be deleted or confirm subject to remanding it to the file of the AO for examining and allowing the benefit of telescoping in accordance with law." 2. The Hon'ble Zonal Vice-President sitting as Third Member, vide his order dated 5.9.2012 expressed his opinion on the aforesaid questions as under: (i) In respect of question No. 1, the ld. Third Member agreed with ld. JM that t....