AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (12) TMI 1702
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....ing business of trading of import duty scrips. A search was conducted at the residential and business premises of the assessee on 03/02/2015. The assessee has filed his return of income u/s. 139(1) on 30/09/2009, declaring a total income of Rs. 3,21,05,740/-. Consequent to search, notice u/s. 153A was issued for the assessment years 2009-10 to 2014-15 on 29/11/2016 in response to which the assessee filed return of income on 06/12/2016, declaring a total income of Rs. 3,21,05,740/-. 3.1 The assessee is primarily a trader in export incentives received under Vishesh Krishi Gram Udyog Yojna, Duty Entilement Pass Book etc. The export incentives received by the cashew exporters, marine exporters who are mainly based in Kollam are purchased by the assessee and sold to importers based outside the State. The assessee conducts same kind of business through the following Companies as Managing Director: i) M/s. Sabari Quality Foods ii) M/s. Sabari Enterprises P. Ltd. iii)M/s. Sabari Milllenium Exporters P. Ltd. iv)M/s. Sabari Switchgear P. Ltd. Among the major purchasers of export incentives as per the books of accounts of Sabari Quality foods, Sabari Millennium Exporters p. Ltd....
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....over with Sabari Enterprises Ltd Turnover with Sabari Switchgear P Ltd 2009-10 0 0 0 0 0 2010-11 0 0 0 0 0 2011-12 64841 0 64841 0 0 2012-13 0 0 0 0 0 2013-14 4034750 0 2555749 1479001 0 2014-15 4457276 0 2576166 1881110 0 2015-16 0 0 0 48718355 0 Total 0 0 5196756 52078466 0 d) Vani Exporters Asst.Year Total Turnover Turnover with SQF Turnover with Sabari Millenium Exports P Ltd Turnover with Sabari Enterprises Ltd Turnover with Sabari Switchgear P Ltd 2009-10 120407959 15500035 58934156 0 45973768 2010-11 125761421 118503685 87124 0 7170612 Total 0 134003720 59021280 0 53144380 3.3 The Assessing Officer noticed from the aforementioned tables that Kolkota based businesses were having substantial transaction with the businesses of Shri Sunil Kumar, M/s Sabari Millenium Exports P. Ltd., Sabari Enterprises P. Ltd. and Sabari Switchgear P Ltd. On an examination of the books of accounts of Sabari Quality Foods, Sabari Enterprises P Ltd, and Sabari Switchgear P Ltd, they have declared a profit as a percentage of their sales as under: Asst Year Gross profit ratio declared by Sabari Quality Foods Gross pr....
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....s were also viewed in the background of a statement recorded from Sri Mahesh Khetan S/o Late Gouri Shankar Khetan by the Deputy Director of Income tax (Inv)Unit 2(1), Kolkota on 7.4.2016. The substantive part of the statement is the answer to question no.10 which states: " Apart from the above companies these are the concerns in which my family members and I are/were associated with: SI No Name of the Concerns Name of proprietor Nature of business 1 M/s Basanth Impex Late Gouri Shankar Khetan Deals in import licence 2 Shree Chao Impex -do- -do- 3 Shyam International Mrs. Seema Khetan -do- 4 Mayor Impex Shri Manish Khetan -do- All these proprietorships concerns run from 9 Old China Bazar Street, Kolkotta01" . Further he stated that his late father Shri Gouri Shankar Khetan managed and controlled all the above proprietorships and after his death he had taken over the business related work. In answer to question 12 he had explained that books of accounts of M/s Basanth Impex, M/s Shree Chao Impex, M/s Shyam International and M/s Mayur Impex were maintained by Sabari Group and are kept in their possession. He stated that they only put signature....
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....f the Supreme Court in the case of CIT vs. Durga Prasad More (82 ITR 540) (SC) where in a case party relied on self serving recitals in documents it was for the party to establish the truth of these recitals. According to the Assessing Officer, for a retraction to be valid, threat or coercion has to be proved. He relied on the decision of the ITAT, Ahmedabad Bench in the case of Manoharlal Kasturchand Chokshi vs. ACIT (61 ITD 55). Reliance was also placed on the decision of the ITAT, Bangalore Bench in the case of Carpenters Classics (Exim) (P) Ltd. vs. DCIT (108 ITD 142) wherein it was held that when a statement was made voluntary and was not alleged to have been obtained under threat or coercion onus was on assessee to prove that declaration was made under any misconception of facts, since assessee has not taken any steps to rectify his declaration before authorities before whom such declaration was made, there was no valid reason for retraction of the same after 2 and ½ months. According to the Assessing Officer it was his father and later on he himself who handled the business. They received a commission every year for their dealing with Sabari Group. His Pan is AFCPK570....
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....rises Ltd., Sabari Millenium Impex P Ltd and Sabari Switchgear P. Ltd. and received share premium from financial years 2009-10 onwards. According to the Assessing Officer, even though as per the accounts of M/s Basanth Impex P. Ltd., Shri Sunil Kumar, his companies and his friends are grouped in sundry creditors, the payment to Thulsidhas and Tulsi Developers P Ltd during the FY 2012-13 was a loan as Tulsi Developers P Ltd is not in the business of trading of duty scrips. These transaction makes it abundantly clear that payments were made to businesses of the assessee and his close relatives in the guise of trading on behalf of the assessee. 3.7 The AO found that the assessee had received Rs. 1,70,62,169/- from M/s. Sabari Millneium Impex P Ltd as loans and advances. This was loan paid to Director Sri Sunil Kumar by M/s. Sabari Millenium Impex P Ltd which was incorporated in 2003. As the reserves for the financial year 2007-2008 was only Rs. 1,88,051/-, payment received from M/s Sabari Millenium P Ltd was restricted to Rs. 1,88,051/-. According to the Assessing Officer, during the relevant previous year a sum of Rs. 40,23,407 from M/s. Sabari Switchgear was received as loans and ....
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....sis for addition. The Ld. AR relied on the judgment of the Jurisdictional High Court in the case of Paul Mathew & Sons vs. CIT (263 ITR 101) and the judgment of the Madras High Court in the case of CIT vs. Kader Khan & Sons (300 ITR 157). The Ld. AR submitted that this view was supported by the CBDT Circular dated 10/03/2003. 6.1 The Ld. AR submitted that Shri Manish Khetan had no knowledge about the business of the Calcutta based companies since his father, Shri Gauri Shankar Khetan was looking after the business till his death in July, 2015. It was submitted that Shri Manish Khetan retracted the above statement by way of an affidavit after 2 and ½ months from the date of recording his statement u/s. 133A by the Income tax authorities. The Ld. AR submitted that the retraction is valid and his submission that the original statement recorded was under coercion was to be accepted. It was submitted that there was no evidence for payment of any commission form Sabari Group to the Calcutta based companies and the Bank accounts of these concerns were maintained by them in Kollam branches in order to save the bank charges on account of transfer of funds and for speedy transfer of....
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....edom 'to make an enquiry "Not only into the Source(s) of the Creditor, but also of his (Creditor's) Sub-Creditors and prove, as result, of such an enquiry that money received by the Assessee, in form of Loan from Creditor though routed through SubCreditors, actually belonged to, or was of, Assessee himself. It was not burden of Assessee to prove genuineness of transactions between his Creditor and Sub Creditors nor was it burden of Assessee to prove that Sub Creditor had credit worthiness to advance cash credit to Creditor from whom cash credit has been, eventually, received by Assessee." The Ld. AR relied on the following judgments of the High Courts in support of the above contention: 1) CIT vs. Sahibganj Electric Cables Pvt. Ltd. (115 ITR 408) (Cal.) 2) ACIT vs. Hanuman Agarwal (151 ITR 150) (Patna) 3) Mod Creations Pvt. Ltd. vs. ITO (354 ITR 282) (Delhi) 4) CIt vs. Anirudh Narayan Agarwal (84 CCH 24)(All.) 5) DCIT vs. Rohini Builders (265 ITR 360) (Guj.) 7. We have heard the rival submissions and perused the record. The seized material marked as SKP/KLM/DA 1 to 23 clearly showed a lot of trade activities between the assessee and these companies namely, M/s.Saba....
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....oup of cases were not found within the contents of original statement of Shri Mahesh Khetan recorded by DDIT, Kolkota are not true and cannot be relied upon. Similarly, statement of Chartered Accountant, Shri Ravi Biyala was recorded, who also retracted subsequently. During the course of assessment proceedings, since the Assessing Officer was using these statements against the assessee, the assessee requested cross-examiantion of Shri Khetan and Shri Biyala, which was not given by the Assessing Officer as there was no sufficient time available with the Assessing Officer. As seen from the facts of the case, the Assessing Officer has not found any mistake in the books of account maintained by the assessee and he has not rejected the assessee's books of account. The addition made by the AO was mainly based on the statement recorded from Shri Manish Khetan who later retracted his statement and therefore, much credence cannot be given to the statement recorded from these persons as we do not know whether the statement is correct as they have not brought on record any corroborative evidence. Further, the Assessing Officer has not given opportunity of cross examination of these persons to....
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.... present case, the assessee is having grievance of not being provided an opportunity of cross examination of the parties whose statements were relied on by the Assessing Officer while framing the assessment, though the said parties retracted the statements. According to us, not allowing the assessee to cross examine the parties whose statements were relied upon to make addition in the impugned assessment order is a serious flaw which makes the order null and void in as much as it amounted to violation of principles of natural justice because of which the assesses were adversely affected. More so, the circumstances surrounding the case are not strong enough to justify rejection of the assessee's plea of providing opportunity of cross examination. In the present case, the entire evidence has to be appreciated in a wholesome manner and even when there is a documentary evidence, the same can be overlooked if there are surrounding circumstances to show that the claim of the assessee is opposed to the normal course of human thinking and conduct or human probabilities. There is difficulty in rejecting the assessee's plea as opposed to the normal course of human conduct. The evidence colle....
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....ly recorded by them in their books. Under these facts and circumstances of the case, the CIT(A) held that the addition made by the Assessing Officer cannot be sustained and thereby, deleted the addition of Rs. 1,00,00,000/- u/s. 69B of the Act. 8.3 Against this, the Revenue is in appeal before us. The Ld. CIT(DR) submitted that since M/s. Basanth Impex did not have the wherewithal to advance loan, the funds came from the assessee only. It was submitted that the CIT(A) overlooked the close nexus between M/s. Basanth Impex and the assessee. The Ld. DR submitted that the proprietor of M/s. Basanth Impex, Shri Manish Khetan admitted on oath that this was only a paper business doing the bidding of the assessee. Therefore, it was prayed that the addition made u/s. 69B of the Act may be restored. 8.4 On the other hand, the Ld. AR submitted that the addition was not made on the basis of any documentary evidence but purely on suspicion, presumption and surmises and therefore, it cannot be assessed as unexplained investment of the assessee /s. 69B of the I.T. Act. 8.5 We have heard the rival submissions and perused the record. Since, the transaction was between M/s. Basanth Impex and S....
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....hares of M/s. Penver Products Pvt. Ltd. and recorded the same in his books of account. Similarly, M/s. Basanth Impex had paid an amount of Rs. 61 lakhs for subscribing 7367 shares of M/s. Penver Products Pvt. Ltd. and recorded the same in its books of account. The CIT(A) observed that there is no evidence showing that the assessee funded Rs, 61 lakhs to M/s. Basanth Impex out of books. Under the facts and circumstances of the case, the CIT(A) held that the only on the basis of suspicion and in the absence of any evidence, the Assessing Officer was not justified in making the addition of Rs. 61 lakhs u/s. 69 of the Act and deleted the same. 9.3 Against this, the Revenue is in appeal before us. The Ld. CIT(DR) submitted that the CIT(A) overlooked the fact that M/s. Basanth Impex did not have the sources to make such a large investment and that preponderance of probability suggested that the investment was made on the behalf of the assessee. 9.4 On the other hand, the Ld. AR submitted that the assessee had duly reflected this investment in his books of accounts. If the Assessing Officer had doubt about the sources of investment by M/s. Basanth Impex, the Ld. AR submitted that inqu....
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....o enquire about the transaction reflected in the seized piece of paper. The CIT(A) was of the opinion that the piece of paper found and seized during the course of search was good enough to start investigation but not good at all to reach a conclusion. According to the CIT(A) addition made on the basis of loose paper, notings without any cogent supporting corroborative evidence cannot be sustained. Accordingly, he deleted the addition. 10.3 Against this, the Revenue is in appeal before us. The Ld. CIT(DR) submitted that the CIT(A) overlooked that as per section 132(4A), the contents of seized documents are presumed to be true. It was submitted that the CIT(A) erred in holding that sufficient enquiries had not been done by the Assessing Officer and the CIT(A) could have got the same investigated by the Assessing Officer rather than summarily deleting the addition. 10.4 The Ld. AR submitted that the Assessing Officer himself admitted that the advance paid as per books was Rs. 6,07,00,000/- which was evident from the first sentence of para 13, page 10 of his assessment order. So what was not recorded even according to the Assessing Officer should have been 13253500/- i.e., Rs. 739....
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....price of the land and there was no admission made by the assessee during the course of search regarding this transaction. Under these facts and circumstances, the CIT(A) deleted the addition as no corroborative material was found to sustain the addition. Accordingly, we do not find any infirmity in the order of the CIT(A) and confirm the same. This ground of appeal of the Revenue is dismissed. 11. The next ground in ITA Nos. 347/Coch/2017 is with regard to deletion of addition made u/s. 2(22)(e) of the I.T. Act. 11.1 The facts of the case are that the assessee received Rs. 1,70,62,169/- from M/s. Sabari Milineium Impex P. Ltd. as loans and advances which was paid to Director, Shri Sunil Kumar, the assessee. As the reserves for the F.Y. 2007-08 was only Rs. 1,88,051/-, the payment received from M/s. Sabari Milineium Impex P. Ltd. was restricted to Rs. 1,88,051/-. During the relevant previous year, a sum of Rs. 40,23,407/- from M/s. Sabari Switchgear P. Ltd. as loans and advances was paid to its Managing Director and therefore, taken as deemed dividend u/s. 2(22)(e) of the Act. The Assessing Officer made addition to total income of Rs. 40,23,407/- as the previous years accumulate....
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....680/-. Hence, the Assessing Officer treated the amount of Rs. 40,23,407/- as deemed dividend u/s. 2(22)(e) of the I.T. Act. However, the Assessing Officer has not noticed the fact that the assessee had advanced a sum of Rs. 8,48,01,579/- to M/s. Sabari Switchgear Pvt. Ltd. Thus, net amount of Rs. 8,07,78,171.43 as on 31/03/2009 was advanced by the assessee to M/s. Sabari Switchgear P. Ltd. Without verifying these facts, the Assessing Officer treated the advance of Rs. 40,23,407/- given by M/s. Sabari Switchgear Pvt. Ltd. to the assessee as deemed dividend u/s. 2(22(e) of the Act which is not correct. Hence, the CIT(A) deleted the addition. In view of this, we do not find any infirmity in the order of the CIT(A) and the same is confirmed. Hence, this ground of appeal of the Revenue in ITA No. 347/Coch/2017 is dismissed. 11.6 The only ground in assessee's appeal in ITA No. 355/Coch/2017 is with regard to deletion of addition of Rs. 62,78,256/- made u/s. 2(22)(e) of the I.T. Act as deemed dividend. 11.7 We have heard both the parties. In this assessment year, the assessee being the Managing Director and beneficiary owner of shares of M/s. Sabari Switchgear Pvt. Ltd., received loan....
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....set aside the issue to the file of the Assessing Officer for fresh enquiry. In our opinion, the argument of the CIT(DR) is misconceived. The assessments were framed u/s. 153A of the I.T. Act and it is the duty of the investigating authorities as well as the Assessing Officer to make necessary enquiry before framing the assessment. The failure on the part of the Assessing Officer to carry out necessary enquiry for bringing evidence on record, cannot be attributed to the assessee and at this stage, we are not in a position to extend time so as to cause further enquiries to facilitate evidence on record to sustain the additions. There cannot be any further enquiry or examination of facts, if the basic facts necessary for the disposal of the matter are already on record. In our opinion, factually, further enquiry can be done in rare cases by the CIT(A) only when it is not possible for the CIT(A) to make just order. There cannot be any further enquiry or calling for remand report by the CIT(A) for patching up the weak part of the case and fill up the omission of the authorities by giving another innings. The CIT(A) should decide the matter one way or the other rather than causing furthe....
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....ssee by that date and the AO correctly issued Notice on 29.11.2016. The CIT(A) was of the view that the assessee filed his objection on 26.12.2016, which can only be treated as an afterthought and needed to be ignored, as by then assessment proceedings were in advance stage and the appellant was aware that substantial additions are likely to be made. In view of the sequences of events discussed above, the CIT(A) held that this ground of appeal was of no relevance and the same was dismissed. 15.2 We have heard the rival submissions and perused the record. Considering the above facts, we do not find any infirmity in the order of the CIT(A) and uphold the same. Thus, this ground of Cross Objections of the assessee is dismissed. 16. The next common ground of the assessee is that the assessment was getting barred by limitation of time on 31.12.2017 and not on 31.12.2016. 16.1 The Ld. AR contended that the last Panchanama was drawn on 17.04.2015 and, therefore, the time barring date for completion of assessment was 31.12.2017. Since the AO took time barring date as 31.12.2016, there was paucity of time and he was not given cross-examination of persons, whose statements were used ag....