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2020 (1) TMI 444
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....ing Officer an opportunity to comment on merits after admitting the additional evidence under Rule 46-A despite the fact that in his remand report the Assessing Officer had only objected for admission of additional evidence without foregoing his right to comment on merits once his objection is rejected. 2.2 The Ld. CIT(A) erred in not appreciating the fact that quantity and valuation of stock was duly signed and accepted by the director during the course of survey. No allegation of use of force or coercion has been made by the assessee. 2.3 Ld. CIT(A) erred in not appreciating the fact that the assessee was allowed proper opportunity to explain the stock difference, which it could not do. The correctness of inventory and of revised trading account is not proved or corroborated by independent and material evidence. 2.4 Ld. CIT(A) erred in not appreciating that when statement during the course of survey was made voluntarily and was not alleged to have been obtained under threat or coercion, onus was on the assessee to prove that the said declaration was made under any misconception of facts." 3. In the Cross Objection, following grounds have been raised ....
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.... found at the premises. A balance of Rs. 3,58,397/- was reflected in the cash-book of the assessee company on the date on survey. When questioned about the discrepancy in the cash found at the premises and the cash balance as reflected in the cashbook, the director of assessee company declared unexplained cash amounting to Rs. 13,98,903/- as additional income of the assessee company in the year under consideration. 7. The relevant portion of the statement of Shri Suraj Prakash Aggarwal, Director of the assessee company recorded on 19.03.2003 during the course of survey under section 133A is as under:- "Q 10. Please confirm that all the entries upto date are complete in the books of both the companies. ? Ans. I confirm that all the entries are entered in the books of both the companies. Q 11. Please confirm whether all the purchase bills have been received and entered in the books of both the companies of the goods received till date and all the same bills have been issued for the sales made by both the companies till date ? Ans. I have verified from my records that there is no purchase bill pending to be entered for which goods have been recei....
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.... Q.15 Please State I confirm that the stock belongs to Jagan Automotive Pvt. Ltd. only and not to any other company or entity? Ans. I confirm that the above mentioned stock belongs to Jagan Automotive Pvt. Ltd. only and I want to clarify that the stock of Jagan Lamps Ltd. is kept at Piao Maniyari Road, Kundli, District Sonepat, Haryana. Q.16 In response to question no. 12, you have stated that the excess cash of Rs. 13,98,903/- found at the premises is unaccounted and further in response to question no. 13 & 14, you have stated that the stock of Rs. 2,67,00,018/- is unaccounted and earned from the business activities of the company. So it is dear from the above that the income of Rs. 13,98,903/- and Rs. 2,67,00,018/- has not been reflected in the books of accounts and no tax has been paid on this income. Please state why this income of Rs. 2,80,98,921/- should not be treated as undisclosed income of the company over and above its regular income and the company may not be treated as assessee is default. Ans. I accept that this income of Rs. 2,80,98,921/- is unaccounted income of the company and the company should not be treated as assessee in default as ....
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....the survey u/sec. 133A of the income Tax Act, 1961 on 19.03.2008 at the business premises of M/s. Jagan Automtoives Pvt. Ltd. excess cash of Rs. 13,98,903/- and excess stock or Rs. 2,67,00,018/- as compare to the books of accounts of the company was found. These amounts totaling to Rs. 2,80,98,921/- was offered to tax as additional Income during the current financial year on behalf of the company and three cheques totaling to Rs. 1,00,00,000/- were submitted toward me payment of taxes and interest on the above mentioned additional income. Further, I want to state that I will deposit the due taxes before due date of filing of return. Q.4 Do you want to state any this else. Ans. No The above statement has been given by me without any threat, coercion or inducement and it is true to the best of my knowledge. I have read the above noted statement and it is correctly recorded. Signed (Suraj Prakash Aggarwal) 9. During the course of survey trading account for Jagan Automotive Pvt. Ltd. (NOIDA) from 01.04.2007 to 19.03.2008 was drawn as under: - Trading Account Particulars Amounts Particular Amount Opening stock 1484860.00 Sales ....
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....he value of the stock inventory taken at SDF No. H-11, NSEZ has been calculated as US$ 201857.00 which is in actual is of US$ 107643.00 due to the mistake as explained above. The amount of closing stock as per the inventory taken by your goodself on 19/03/2008 if calculated & comes to Rs. 4261143.75 whereas the same was considered at Rs. 2288587.00 in the trading account furnished to your good self though the stock is carried forward and we had made the correct amount in the dosing stock while computing the income for the year ended as on 31/03/2008. The price per unit of the Stock inventory noted by the team at Punjabi Bagh Office was on ad-hoc basis which are even higher than the prevailing retail price. There was no document found during Survey that we had purchased the goods from local market. The rates has to be calculated at the import Price + Freight + Custom Duty and accordingly declared in the return. It is humbly prayed that the return filed may kindly be accepted and assessment order be passed or further relief to be assesses, as this Hon'ble office may deem fit and proper in the circumstances of the case." 11. During the course of assessmen....
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....gs, the assessee company further submitted as under: - "in continuation to our letter dated 20.11.2010 regarding the assessment proceedings in the case. We further submit as under:- STOCKS AT DELHI: In support of the rates adopted gor the valuation of stocks held as on 19.03.2008, we are enclosing herewith the quotations obtained by the assesses from its customers. The rates have been adopted as prevalent as on that date indicated by the customers. STOCK AT NOIDA: The reasons for stock difference as on the date of survey has already been explained as per letter dated 26th March, 2008 and 29th September, 2008. The operations inside the special Economic Zone (NEPZ) are fully maintained by the customs authorities. Materials coming in and going out are fully checked and monitored at the gate of custom offices. Intact, register of receipt and dispatch of materials at the unit are authenticated by the customs. We are enclosing herewith the material receipt register, materials dispatch register and stock register in support thereof. It can be observed that the items listed at Items no.1 to 60 are correct and fully reconciled with fie stock register maintained. I....
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....ISCC 508, 509 (SC) wherein petitioner retracted his confession given to the customs officials, yet it was held to be binding. The Indian law on confession can be understood from the following passage in a decision under criminal law in State of UP. V. Boota Singh, AIR 1978 SC 1770. It was held that "As, however, the confession was a retracted one it could be acted upon only if substantially corroborated by independent circumstances. It is not necessary that a retracted confession should be corroborated in each material particular; it is sufficient that there is a general corroboration of the important incidents mentioned in the confession." 17. The Hon'ble Kerala High Court in Mahesh B Shah Vs ACIT (1999) 238 ITR 130 and the Hon'ble Gauhati High Court in Greenview Restaurant Vs ACIT (2003) 263 ITR 169, examining the similar issue has observed as under: "The petitioner has agreed to treat the expenditure as a capital expenditure both before the Assistant Commissioner of Income-tax as well as before the revisional authority. No evidence of material is furnished to show that the petitioner was coerced to make a statement. Nothing prevented the petitioner to re....
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....ssessing Officer relied on the judgment in the case of CIT Vs M Ganapati Mudaliar (1964) 53 ITR 623, Hon'ble Supreme Court had held in no uncertain terms that "Once it is found that a receipt by the assessee was income of the assessee, it is not necessary for the revenue to locate its exact source". 22. Pursuant to the above discussion, an amount of Rs. 2,67,00,018/- is treated as unexplained investment in stock u/s 69 and an amount of Rs. 13,98,903/- is treated as unexplained cash u/s 69A and treated as income from undisclosed sources and assessed under the head Income from undisclosed sources by the revenue. 23. The ld. CIT (A) deleted the addition on the grounds that the stock was valued at higher rates instead of market value and the stock shown at Noida is a hypothetical figure. It was also held that the GP rate adopted for working the excess stock was erroneously taken at 2% instead of 9%. He also relied on the judgment of jurisdictional High Court in the case of Dhingra Metal Works 328 ITR 384 wherein it was held that additions made based on the statement recorded during the survey is not a conclusive proof and the assessee's explanation regarding the discrepanc....
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....htak Road, Punjabi Bagh. The value of the Noida stock was estimated at Rs. 80,74,007/- and the value at Delhi was Rs. 2,09,14,598/-. The assessee has offered to tax an amount of Rs. 13,98,903/- the excess cash found during the survey and also an amount of Rs. 71,47,249/- as the value of the excess stock found during the survey at Punjabi Bagh instead of Rs. 2,67,00,018/-.The main dispute of the issue: 29. The assessee has retracted the statement vide letter dated 26.03.2008. With regard to the letter of retraction, we find that this letter has not been referred anywhere during the proceeding either before the Assessing Officer or the ld. CIT (A). The very veracity of the filing of the letter has been strongly contended by the ld. DR. We have gone through the material on record and find that there is no iota of the mention of this letter either during the proceedings before the Assessing Officer or during the proceedings before the ld. CIT (A). It do finds mention at page no. 8 of the assessment order wherein the letter was mentioned while reconciling the stock position. The survey was conducted on 19.03.2008 and after completion of the survey, the statement of the Director, Sh. ....
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....0 5 H3 24V 70 W 60000 21 1260000.00 6 H4 12V 60/55 W 5000 28 140000.00 7 H4 24V 75/70 W 2000 42 84000.00 8 12V 60/50 W 20000 9 180000.00 20914598.00 32. The inventory filed by the assessee during the assessment proceedings is as under:(page 76 of the paper book) S. No. ITEM OTY RATE IN US$ RATE IN DNR FREIGHT CUSTOM CLEARANCE CUSTOM DUTY LANDED COST AMOUNT (Automobile Bulb) 4.50% 0.25% 34.13% 1 H4 12V 100/90 W 200000 0.22 8.756 0.39 0.023 3.13 12.304 2460720.83 2 H4 12V 100/90 CP 289159 0.18 7.164 0.32 0.019 2.56 10.067 2910843.71 3 H4 24V 100/90 W 30000 0.24 9.552 0.43 0.025 3.42 13.422 402663.41 4 H3 12V 55W 80000 0.14 5.572 0.25 0.015 1.99 7.83 626365.30 5 H3 24V 70W 60000 0.15 5.970 0.27 0.016 2.13 8.389 503329.26 6 H4 12V 60/55 W 5000 0.18 7.164 0.32 0.019 2.56 10.077 50383.61 7 H4 24V 75/7....
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....sessing Officer has simply rejected the explanation of the assessee merely n the ground that valuation was accepted by the assessee before the survey party and difference was offered from taxation. In my opinion, if the assessee can demonstrate that valuation adopted by the survey party was wrong with reference to the materials on record, then addition cannot be justified merely on the ground that it was offered for taxation. Though, the admission of the assessee is piece of evidence but the assessee can demonstrate that admission was wrong. In the present case, the assessee has been able to demonstrate that it is a case of overvaluation. In this context, reliance is placed on the decision of the jurisdictional High Court in CIT Vs Dhingra Metal Works (2010) 328 ITR 384 (Del.)." 34. Since, the material facts remain same, in the absence of any other new material brought to our notice, we hereby decline to interfere with the order of the ld. CIT (A). 35. Ground No. 2.1 relates to admission of additional evidences under Rules 46A. The ld. CIT (A) has rightly called for the report of the Assessing Officer for the comments. We find that the Assessing Officer submitted in the reman....
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....the previous year in which the [undertaking began to manufacture or produce such articles or things or computer software] in such free trade zone or export processing zone : [Provided also that for the assessment year beginning on the 1st day of April, 2003, the deduction under this sub-section shall be ninety per cent of the profits and gains derived by an undertaking from the export of such articles or things or computer software :] Provided also that no deduction under this section shall be allowed to any undertaking for the assessment year beginning on the 1st day of April, [2012] and subsequent years. [(1A) Notwithstanding anything contained in sub-section (1), the deduction, in computing the total income of an undertaking, which begins to manufacture or produce articles or things or computer software during the previous year relevant to any assessment year commencing on or after the 1st day of April, 2003, in any special economic zone, shall be,- (i) hundred per cent of profits and gains derived from the export of such articles or things or computer software for a period of five consecutive assessment years beginning with the assessment yea....
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....e amount not so utilised, shall be deemed to be the profits,- (i) in a case referred to in clause (a), in the year in which the amount was so utilised; or (ii) in a case referred to in clause (b), in the year immediately following the period of three years specified in sub-clause (i) of clause (a) of sub-section (1B), and shall be charged to tax accordingly.] (2) This section applies to any undertaking which fulfils all the following conditions, namely :- (i) it has begun or begins to manufacture or produce articles or things or computer software during the previous year relevant to the assessment year- (a) commencing on or after the 1st day of April, 1981, in any free trade zone; or (b) commencing on or after the 1st day of April, 1994, in any electronic hardware technology park, or, as the case may be, software technology park; (c) commencing on or after the 1st day of April, 2001 in any special economic zone; (ii) it is not formed by the splitting up, or the reconstruction, of a business already in existence : Provided that this condition shall not apply in respect of any undertaking which is formed....
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....anything contained in any other provision of this Act, in computing the total income of the assessee of the previous year relevant to the assessment year immediately succeeding the last of the relevant assessment years, or of any previous year, relevant to any subsequent assessment year,- (i) section 32, section 32A, section 33, section 35 and clause (ix) of sub-section (1) of section 36 shall apply as if every allowance or deduction referred to therein and relating to or allowable for any of the relevant assessment years [ending before the 1st day of April, 2001], in relation to any building, machinery, plant or furniture used for the purposes of the business of the undertaking in the previous year relevant to such assessment year or any expenditure incurred for the purposes of such business in such previous year had been given full effect to for that assessment year itself and accordingly sub-section (2) of section 32, clause (ii) of subsection (3) of section 32A, clause (ii) of sub-section (2) of section 33, sub-section (4) of section 35 or the second proviso to clause (ix) of sub-section (1) of section 36, as the case may be, shall not apply in relation to any such all....
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....ection (1) of section 139, furnishes to the Assessing Officer a declaration in writing that the provisions of this section may not be made applicable to him, the provisions of this section shall not apply to him for any of the relevant assessment years. (9) [Omitted by the Finance Act, 2003, w.e.f.1-4-2004.] (9A) [Omitted by the Finance Act, 2003, w.e.f. 1-4-2004.] Explanation 1.- [Omitted by the Finance Act, 2003, w.e.f.1-4- 2004.] Explanation 2.-For the purposes of this section,- (i) "computer software" means- (a) any computer programme recorded on any disc, tape, perforated media or other information storage device; or (b) any customized electronic data or any product or service of similar nature, as may be notified by the Board, which is transmitted or exported from India to any place outside India by any means; (ii) "convertible foreign exchange" means foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of [the Foreign Exchange Management Act, 1999 (42 of 1999)], and any rules made thereunder or any other corresponding law for t....