TaxTMI 
TaxTMI 
TaxTMI 
2019 (8) TMI 889
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.... On the facts and circumstances of the case and in law, learned Commissioner of Income Tax, appeal-40, Mumbai erred in confirming part addition of Rs. 1,88,04,000/- to the total income of the appellant as unexplained expenditure/investment in capital assets on the grounds that there appears to be no direct correlation of the expenditure vis-à-vis seized records. The addition is bad in law and the same needs to be cancelled. 2. The appellant company craves leave to add, to amend, alter/delete and/or modify the above ground of appeal on or before the final date of hearing." 2. On the other hand the revenue has challenged the order passed by the CIT(A) on the following grounds of appeal: "1. Whether on the facts and circumstances of the case and in law, the CIT(A) was correct in holding that the reliance placed by the assessee on the seized papers was acceptable without appreciating the fact that the assessee was not able to prove the nexus between the capital expenses in cash and cash from bogus bills? 2. Whether on the facts and circumstances of the case and in law, the CIT(A) was correct in applying the three case law of Biren V. Salva vs. ACIT (2006)100 TTJ 1006;....
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.... alia assailed the addition of Rs. 3,88,78,000/- made by the A.O towards unexplained investment/expenditure in acquisition of 'capital assets'. It was observed by the CIT(A), that the investment/expenditure of Rs. 3,88,78,000/- was incurred by the assessee in respect of construction/furnishing of Hotel Courtyard Marriot during the year, as under: Sr. No. Particulars Amount 1. Flooring Rs. 1,26,52,000/- 2. Bathroom fittings & Plumbing Rs. 74,22,000/- 3. Electrical fittings Rs. 79,80,001/- 4. Furniture & fittings Rs. 1,08,24,000/- Total Rs. 3,88,78,000/- The assessee in order to buttress his claim that the cash which was received back by it against payments made towards 'bogus purchases' was used to make investments in the aforesaid assets, relied on the contents of a 'diary' that was seized during the course of the search proceedings from its office premises on 24.05.2011, viz. Annexure A2- Page 13. On a perusal of the aforesaid seized 'diary', it was observed by the CIT(A), that the same revealed the details of cash received back by the assessee against the payments made towards 'bogus bills' and the expenditure incurred out of the said amount, ....
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....ly, the CIT(A) upheld the addition to the extent of Rs. 1,88,04,000/-. 4. That both the assessee and the revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Authorized Representative (for short 'A.R') for the assessee took us through Page 13 of Annexure A2 i.e the extract of the 'diary' that was seized during the course of the search proceedings from the office premises of the assessee on 24.05.2011. Also, a typed copy of the said seized 'diary' was placed on our record by the assessee. It was submitted by the ld. A.R, that the assessee during the course of the search proceedings had declared an undisclosed income of Rs. 4,41,26,298/- in respect of 'bogus purchases' which were debited in its 'books of accounts', and accordingly had reduced the said amount from the cost of the building. It was submitted by the ld. A.R, that the cash received back by the assessee against payments made towards 'bogus purchases' was spent on the construction/furnishing of Hotel Courtyard Marriot. In order to fortify his aforesaid contention, it was submitted by the ld. A.R that the 'source' of the investment/expenditure made by the assessee towards....
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....ck by the assessee against the payments made towards 'bogus bills', had thus erred in sustaining the addition to the said extent. Accordingly, it was submitted by the ld. A.R, that now when the 'source' of the investment made by the assessee towards construction/furnishing of the Hotel Courtyard Marriot was clearly explained to have been made out of the declared undisclosed income of Rs. 4,41,26,298/- pertaining to 'bogus bills' which were booked by the assessee in its 'books of accounts', therefore, there was no justification for the A.O to have made any further addition in respect of the same. 5. Per contra, the ld. Departmental Representative (for short 'D.R') relied on the orders of the lower authorities. It was submitted by the ld. D.R that as the assessee had failed to substantiate the 'source' of the investment made towards construction/furnishing of the Hotel Courtyard Marriot, therefore, the A.O had rightly made an addition of Rs. 3,88,78,000/- in its hands. It was submitted by the ld. D.R that the assessee had failed to establish an inextricable nexus between the investment made towards the construction/furnishing of the Hotel Courtyard Marriot and the undisclosed incom....
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.... Admittedly, a perusal of Page 13 of the said seized document viz. Annexure A2, reveals as under: Particulars Rs. (in lacs) Balance with you as on 01.04.2009 against' Various purchase bills 1,242,39 Add: Received up to 30.09.2009 purchase bills 700.12 1,942.51 Less: Capex Meriott Flooring Bathroom Fittings & Plumbing 126.52 74.22 200.74 Paid for new atrium office Civil Flooring Plumbing 26.47 24.63 8.86 59.96 260.70 Bal with U1681.81 Add: Received up to 31.03.2010 against various Purchase bills 642.79 Less: Capex Marriot Electrical Fittings Furniture & Interiors 79.80 108.24 2,324.60 188.04 Capex new Attrium office furnishing Civil Flooring Plumbing Aluminium Fittings Electrical Fittings 45.29 62.72 27.84 48.24 52.22 236.31 Balance with you &n....
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....As observed by us hereinabove, Sec.292C clearly envisages a presumption that where any books of account or other documents are found in the possession or control of any person in the course of a search conducted under Sec.132 of the Act, it may, in any proceeding under this Act, be presumed, that the contents of such books of account and other documents are true. Admittedly, the presumption envisaged under the aforesaid statutory provision is a rebuttable one, but in the absence of any material proving to the contrary the contents thereof have to be accepted as such. We find that though the A.O on the basis of the contents of the aforesaid seized document viz. Annexure A2 - Page 13 had gathered the details as regards the unexplained investment aggregating to Rs. 3,88,78,000/- made by the assessee towards construction/furnishing of Hotel Courtyard Marriot during the year under consideration, viz. (i) flooring: Rs. 1,26,52,000/-; (ii) bathroom fittings& plumbing: Rs. 74,22,000/-; (iii) electrical fittings: Rs. 79,80,001/-; and (iv) furniture and fitting: Rs. 1,08,24,000/-, however, he had most arbitrarily declined to take cognizance of the fact, that the said investment, as was disce....
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....oom Fittings & Plumbing : Rs. 74,22,000/- Electrical fittings : Rs. 79,80,001/- Furniture & Fittings : Rs. 1,08,24,000/- Rs. 3,88,78,000/- 9. The appellant in this regard brought my attention to Page 13 of Annexure-2 seized during the course of search from its office premises on 24/5/2011. This paper apparently shows the details of cash generated on account of bogus purchases and expenditure incurred out of such cash. These details are reproduced once again as under: - "Himanshu Bhai Lacs Bal with You-1/4/09 Against various purchase bills + Received till 30/09/09 purchase bills 1242.39 700.12 1942.51 Less: Paid capex - meriott Flooring Bathroom fitting and plumbing Paid New Atrium Office - CMI Plastering Plumbing 8.86 126.52 74.22 26.47 24.63 59.96 260.70 Bal with U 1681.81" 10. From the above details available in the seized records, it is clear that an amount of Rs. 1 26,52,000/- had been incurred in respect of flooring of Hotel Marriot. Further, an amount of Rs. 74,22,000/- has be....
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....eason why the expenditure stated therein should be disbelieved merely because there is no written agreement and that payments were not made through cheques or demand drafts. Even when unaccounted income is determined from business carried on clandestinely or not, the statute does not authorize assessment of anything other than 'undisclosed income' which has to be arrived at after allowing expenditure incurred by the assessee whether it be accounted in the regular books or not." 13. Further, in the case of Biren V. Savia vs. ACIT (2006) 100 TTJ (Mumbai) 1006, it has been held that - "The principle is that a document found in search should be treated as genuine with respect to all the entries recorded therein. The Revenue is not justified in taking a view that only a part of the contents, i.e., the names of the borrowers is correct and not the names of lenders. Entire documents should read as a whole and contents of entire documents should be treated as correct or rejected as a whole" - Navjivan Oil Mills vs. CIT (2001)170 CTR (GuI) 224: (2001) 252 ITR 417 (Guj), Kantilal Bros. vs. Asstt. CIT (1995) 51 TTJ (Pune) 513 : (1995) 52 ITD 412 (Pune), Glass Lines Equipment Co. Ltd. vs....
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....tion advanced by the Ld. A.R and find substantial force in the same. A perusal of the seized annexure viz. Annexure A2 - Page 13 (copy placed on record) clearly reveals that the 'source' of the balance investment of Rs. 1,88,04,000/- made by the assessee towards construction/furnishing of the Hotel Courtyard Marriot, was from the cash that was received back by the assessee against the payments made towards 'bogus purchases'. In fact, we are in agreement with the contention advanced by the ld. A.R, that inadvertently the remaining part of the seized document viz. Annexure A2 - Page 13 had remained omitted to be considered by the CIT(A). As observed by us hereinabove, a perusal of the seized document, to the extent, the same is relevant in context of the investment of Rs. 1,88,04,000/- made by the assessee towards construction/furnishing of Hotel Courtyard Marriot, reads as under: "Balance with you 1,681.81 Add: Received up to 31.03.2010 against various Purchase bills 642.79 2,324.60 Less: Capex Marriot Electrical Fittings Furniture & Interiors 79.80 108.24 &nb....