TaxTMI 
TaxTMI 
2020 (1) TMI 454
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....d to Sri. P.K.Kunjumoideen. 3) The Assessing Officer has not considered the statement of retraction given by Sri. P.K.Kunjumoideen and also not accepted that wheat is sold by the appellant Company. 4) The Assessing Officer has gone wrong in omitting to consider the facts that Sri. P.K.Kunjumoideen is engaged in purchase and sale of wheat and purchases are made by him from Government Agencies through tenders and purchases from others. 5) The Commissioner of Income Tax (Appeals) has gone wrong in sustaining the addition to the extent of 50% after finding that wheat is sold by the appellant company to Sri. P.K.Kunjumoideen. 6) For the above grounds and evidences produced at the time of hearing, the appellant may request the Hon'ble Income Tax Appellate Tribunal to cancel the assessment order. 3. The Revenue has raised the following common grounds of appeals: 1) The order of the CIT(A) is opposed to law, weight of evidence and facts of the case. 2) The CIT(A) erred in restricting the addition made by the Assessing Officer, on the issue of suppressed sales to 50%, without any reasoning, whereas the addition made by the Assessi....
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....e open market. In actuality the wheat shown as sold to M/s. Teekay Rice Mill was milled in the assessee's factory itself and was sold as Wheat flour in its various forms (Atta, Sooji. Maida and Bran). The assessee used to bill the Wheat at 1% markup on its funding cost to M/s. Teekay Rice Mill. In Reality, the assessee used to mill the wheat and sell it at a higher profit in the market. The difference is the additional income to the assessee from this circumrouting activity. 4.2 Shri. P.K. Kunjumoideen was questioned about his business activities on the day of the search to which he has described his Grocery business at Chengamanad as his source of income. This individual was not aware of the trading activities in his name at M/s. Teekay Rice Mill. He said that Shri. Abdul Kareem and Shri. Ameer Ali are his cousin brothers living at Palakkad and are owning the Prince Group of concerns and added that they are running some business in his names, for which he has given various signed forms and cheques to them and he is not aware of exactly what kind of business is run in his name. When questioned about his bank account, he could recall only his bank account at the local bank at....
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....mmodative in nature. The billing was made at 1% markup on the landing cost to PRFM. He also identified materials in CHN/11/J3- 14/EAM/A- 38 as the sales collection made on the milled flour by PRFM from these sales and the said sums were not entered in the Tally accounts and the amounts were given to Shri. Abdul Kareern direct. 4.6 From the above depositions it was evident that the assesses was resorting to methods to understate its true sales revenue and incomes. There cannot be any situation where three of the active participants of a trade will depose on the modus operandi used by them in the same manner. Hence, there were no reasons to disbelieve their depositions. The assessee tried to save on its actual GP on the Wheal Quantity routed through M/s. Teekay Rice Mill and also on the VAT tax components therein. 4.7 Sales of Wheat to M/s Teekay Rice Mill The assesseswas found to have made the following Raw Wheat sales to M/s Teekay Rice Mills: FY Raw wheat sales to M/s. Teekay Rice Mill in Metric Tonnes 2007-08 - 2008-09 162,000 2009-10 7877.000 2010-11 5431.400 2011-12 2995.800 2012-13 3088.000 2013-14 2178.100 As per the....
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.... Profit 25112981 The assessee's unaccounted income from the above trade practice was worked out below: Sale Value of milled Wheat Flours (as in Table 2) Rs. 21,64,672 Less: sale value of Wheat to P.K. Kunjumoideen Rs. 24,15,802 Income undisclosed in the hands of the Assessee Rs. 2,51,130 [1] Savings on VAT on the said Rs.[4-1] = 3% [24,15,802 x 3%] Rs. 64,940/- [2] The assessee when pricing the product in the open market would not differentiate between its VAT levied and non levied items and could have priced it at the same rate. VAT rates were 4% for F.Y. 2008-09. Thus there was an unfair enrichment of Rs. 3,16,070/- (1) +(2) in the hands of the assesses out of this activity. Addition: Rs. 3,16,070/- Penalty proceedings u/s. 271(1)(c) of the Income Tax Act were initiated separately. Accordingly, the assessment was completed as under: Income from Business[as returned] Rs. 30,93,270/- Addition (as per para 5.3] Rs. 3,16,070/- Addition as per order u/s. 143 (3) dt. 13.7.2011 Rs. 1,50,000/- Total Income Assessed Rs. 35,59,340/- Deemed income u/s. 115JB Rs. 28,73,031/- AY 2010-11 Table 1 Sl. No. ....
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....7/- Total Income Assessed Rs. 2,71,33,467/- Deemed income u/s. 115JB Rs. 30,70,160/- AY 2011-12 Table 1 Sl. No. Products Qty. Produced in Production yield % Sale Value Sale Quantity Average Selling Rate per tone 1. Maida 10330.061 58.70 202034147.71 10378.160 19467.24 2. Sooji 1518.089 8.63 30303306.97 1530.759 19796.26 3. Atta 1130.821 6.43 21031695.83 1142.502 18408.45 4. Bran 4379.56 24.88 48661543.20 4441.160 10956.94 98.64% Wheat milled 5431.400 The production yield was derived in Column 4 and the average selling rate on real time basis was worked out in Column 7. On the above basis, the sale value of wheat products that could be produced from the circumvented sale of 5431.400 MT for the A Y was worked out below: Table-2 Sl. No. Products Qty. Produced in Production yield % Average Selling Rate per tonne Sale Value 1. Maida 3187.989 58.70 19467.24 6261351.64 2. Sooji 468.502 8.63 19796.2....
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....erage Selling Rate per tonne Sale Value 1. Maida 1820.523 60.77% 18875.76 34363755.22 2. Sooji 228.166 7,62% 19295,13 4402492.632 3. Atta 158.091 5.28% 18300.89 2893206.001 4. Bran 731.111 24.40 11613.12 8490479.776 50149933.63 Wheat sold to P.K. Kunjumoideen 2995.800 Sale value of wheat to P.K. Kunjumoideen 37373850.04 Profit 12776083.59 The assessee's unaccounted income from the above trade practice was worked out below: Sale: Value of milled Wheat Flours (as in Table 2) Rs. 5,01,49,933 Less:sale value of Wheat to P.K. Kunjumoideen Rs. 3,73,73,850 Income undisclosed in the hands of the Assessee Rs. 1,27,76,083 [1] Savings on VAT on the said Rs. 5,01,49,933/- [4-1] = 3% [5,01,49,933x3%] Rs. 15,04,498/- [2] The assessee when pricing the product in the open market would not differentiate between its VAT levied and non levied items and could have priced it at the same rate. VAT rates were 4% for F.Y. 2011-12. Thus, there was an unfair enrichment of Rs. 1,42,80,581/- (1) + (2) in the hands of the assesses out of t....
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....and non levied items and could have priced it at the same rate. VAT rates were 4% for F.Y. 2011-12. Thus, there was an unfair enrichment of Rs. 1,80,41,977/- (1) + (2) in the hands of the assesses out of this activity. Addition: Rs. 1,80,41,977/- Penalty proceedings u/s. 271(1)(c) of the Income Tax Act were initiated separately. Accordingly, the assessment was completed as under: Income from Business[as returned] Rs. 4812959/- Addition (as per para 5.3] Rs. 18041977/- Total Rs. 22854956/- Less: Chapter VIA Deduction (80G) Rs. 2500/- Total Income Assessed Rs. 22852436/- AY 2014-15 Table 1 Sl. No. Products Qty. Produced in Production yield % Sale Value Sale Quantity Average Selling Rate per tone 1. Maida 13471.78 60.77 343938538 13552.485 25378.26 2. Sooji 1708.666 7.71 44029446.31 1711.706 25722.55 3. Atta 1572.911 7.10 34542429.02 1561.91 22115.51 4. Bran 5069.765 22.87 79387964 5079.05 15630.47 98.44% Wheat milled 22169.120 &n....
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....tioned as to what pressure was exerted on them and what was the portion of statement, which was untrue. On the other hand, the CIT(A) observed that in the assessment order, the AO had nowhere mentioned regarding these retractions. According to the CIT(A), since there was nothing specific in the retractions, there was no need to consider the retractions and clearly, the retractions were the afterthought having no bearing on the facts of this case. 6.1 According to the CIT(A), on the basis of the various statements recorded, the AO reached the conclusion that the assessee did not sell the raw-material to M/s. Teekay Rice Mill and it was used only for the name sake. In fact, finished products like Maida, Sooji etc. was sold and the resultant profit was pocketed by the assessee without routing through the books of the assessee with a purpose to evade taxes. Regarding the first limb, on the facts and circumstances of this case, the CIT(A) was convinced that the transaction which had been entered into between M/s. Teekay Rice Mill and the assessee was only a fictitious transaction, carried on only on paper, and the goods were directly sold by the assessee, through its own channels, in....
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....o the A.Y.'s 2009-10 to 2014-15 the assessee had sold wheat to Shri. P.K. Kunjumoideen, M/s. Teekay Rice Mill, Palakkad. The assessing officer considered what was sold by the assessee company were wheat products such as atta, maida, sooji etc, instead of wheat. After presuming this position the assessing officer estimated the profit of wheat products for the A. Y. as under: A.Y. Alleged Profit Alleged Savings on VAT Total Addition 2009-10 251130.00 64940.00 316070.00 2010-11 20695955.00 3810662.00 24506617.00 2011-12 9140121.00 2777084.00 11917205.00 2012-13 12776083.00 1504498.00 14280581.00 2013-14 18041977.00 0.00 18041977.00 2014-15 10837719.00 0.00 10837719.00 7.1 It was submitted that the assessee had accounted the sale of wheat to P.K.Kunjumoideen, M/s. Teekay Rice Mill and already included profit @ 1% on sales. After reducing this profit the assessing officer has made the following additions in respect to the following assessment years. AY Sale value of wheat to P.K.Kunjumoideen Excluding VAT (Amount in Rs.) Mark up profit @1% included in Col.2 (Amount in Rs.) 2009-10 2....
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....s not wheat but wheat products. A scrutiny of the Income tax/VAT return filed by him would reveal that he had been regularly trading in wheat and steel scrap. The fact that he has supplied substantial quantities of wheat to well established concerns like M/s. Yamuna Roller Flour Mills and also to the assessee was evident from the books of accounts impounded. He submitted that copies of confirmation of supply of wheat to M/s Yamuna Roller Flour Mills was filed before CIT(A). It was submitted that to discredit these concrete evidences, which are part of the records, evidencing the nature of transactions, just on the strength of a statement recorded is not what in expected of while completing the assessment. The assessing authority ought to have compared these evidences with the findings emanating from the sworn statements. 7.3 In the action under Section 133A, in the case of Shri. P.K. Kunjumoideen, it was submitted that no material evidences to the contrary were recovered from his premises or from the premises of Prince Roller Flour Mills (P) Ltd. The entire sale of wheat effected by the assessee to P.K. Kunjumoideen were duly supported by credit invoices issued by the assessee a....
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....he VAT Authorities. The Ld. AR also submitted that copies of Mahasars dated 12.07.2013 and proceedings dated 30.01.2014 issued by the VAT Department to this effect were filed before CIT(A). The Ld. AR submitted that contrary to the proceedings under section 132 where no effort was made by the Department to physically verify and reconcile the stock available at the premises, the VAT Department had elaborately conducted physical verification of the entire stock at their premises and the alleged variation was very miniscule which itself is indicative of the fact that the transaction between P.K.Kunjumoideen and Prince Roller Flour Mills (P) Ltd. as recorded in the various books are genuine. An analysis of these facts goes to clearly prove that what was sold by Prince Roller Flour Mills (P) Ltd. was raw wheat only to P.K. Kunjumoideen 7.5 In the sworn statement taken from Shri Sabarigireesan, Accountant, it was stated that there was no actual sale of Wheat to Sri. P.K. Kunjumoideen but the items sold were wheat products viz. Maida, Sooji, Atta and Bran. This statement was also one which was recorded under tremendous pressure situation. It was submitted that the statement recorded fr....
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....ction could not be entered in the computer. It was submitted that the total amount of Rs. 1,50,985/- out of which Rs. 93,545/- were by way of Cheques and the balance of Rs. 57,440/- was in cash and after the search this transaction was entered in the accounts and the copy of seized document with the copies of ledger in respect of debtors mentioned in the seized documents were produced before the CIT(A) in Paper Book Page Nos. 157 to 198. Thus, it was submitted that the entire search and survey operation that took place at the premises of Prince Roller Flour Mills (P) Ltd. or Shri P.K. Kunjumoideen did not unearth even a single piece of paper which can point out unaccounted dealings like list of Sundry Debtors or collection. It was submitted that in a search assessment, additions can only be made on the strength of material evidences unearthed during the course of such proceeding, which in the present case was absent. It was submitted that there were no evidence or incriminating documents seized at the time of search and no documentary evidence to prove that the sale was effected as wheat products were obtained at the time of search both at the premises of the assesses and in the pr....
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.... submitted by the Ld. AR that there were documentary evidence in support of the contentions of the assessing officer that Wheat products were sold to Shri P.K. Kunjumoideen, Shri Sabarigireesan and Sri P.K. Kunjumoideen had filed retraction statements before the Assessing officer, but the Assessing Officer had not referred the retraction statements in the Assessment order. It was submitted that there were no other seized documents to indicate that wheat products were sold to Shri P.K. Kunjumoideen as claimed by the assessing officer. In the absence of any such evidence the assessment of the additional Income for the various assessment years by way of differential profit are liable to be cancelled. AY 2009-10 2,51,130/- AY 2010-11 2,06,95,955/- AY 2011-12 91,40,121/- AY 2012-13 1,27,76,083/- AY 2013-14 1,80,41,977/- AY 2014-15 1,08,37,719/- Hence, it was submitted by the Ld. AR that as per the reasons stated above, the assessments of the above income in the respective assessment years were found without basis and accordingly, the additions may be cancelled. 8. The Ld. DR submitted that the assessee is engaged in manufacture of wheat products....
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....nly on the basis of seized material. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. 9.1 In these cases, the addition is based on the statements recorded from various persons and seized documents bearing No.CH....
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.... 10. Are you the Managing Partner of Teekay Rice Mill. (A) Since the firm is in my name, the above said persons took PAN in my name and has filed income tax return regularly at Palakkad Income Tax Office. For that purpose I do sign various forms. C.K.Nair & Co, Chartered Accountants firm is filing my return. Sabari and Venkitesh are submitting the accounts to them. 11. Please explain about the Credit in the Bank Statement of A/c No. 746281754 of Indian Bank Chengamanad Branch. (A) The money received at Indian Bank, Chengamanad Branch are sent by T. K Abdul Karim, Ahamed Faizal, Anup Sha, Khadeeja, Aishabi on monthly basis. I guess it may be the profit of business running in my name. 12. Do you include income from the grocery shop at Chengamanad in the IT return filed at Palakkad. (A) No. I do sign papers at C.K.Nair & Co on the directions of Sabarigireesh and Venkatesh. 13. Do you include turnover of your grocery shop at Chengamanad in the VAT return filed at Palakkad. (A) No. VAT Return does not include turnover of shop at Chengamanad 14. Please explain, towards which account the deposits from Palakkad....
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....d.? A. No. 3 I am mainly looking after the administrative side of Prince Roller Flour Mills. All the governmental as well as banking duties (liaison work) connected with the concern are attended by me. In addditlon, I am assisting the MD Shri T. K Abdul Karim in finalizing the payment of cheques to various parties and receipt of cheques. The verification of these cheques are done by me before finalization by MD. The verification of final accounts are also done by me. We are maintaining the books of accounts in the Tally software and monthly verification is done by me. The corrections with regard to the invoices is also look after for each and every bill before making the payment of those cheques is also one of my duty. The unit wise accounts are maintained in the concerned units. However, data synchronization is done every day among the units and the same is available in the server in this unit. Q, No.4. On verification of accounts in the tally software by the Income-tax dept today. It is noticed that, a ledger account of Shri Kunjumoideen, was seen which relates to the sale of raw wheat tohim and also containing the details of Wheat purchased from him. Kindly exp....
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..... Do you have anything else to say? A.No. 8. Nothing." 9.4 Shri M. Premil Deep had retracted the above statement vide affidavit dated 06/09/2013 which reads as follows: "I, Premil Deep. M, aged 53 years residing at H.No. B, Access Revera, Checkdam Road, Yakkara , Palakkad solemnly state as under: I state that I am Manager of M/s. Prince Roller Flour Mills (P) Ltd, 9/75, Anappuramkadu, Kinassery Post, Palakkad 678707. I state that the Income Tax Officials conducted a search u/s 132 of the Income Tax Act in the above company on 05.09.2013 at around 10.30 am and in the course of investigation the officers recorded my statement at the late night on the same day. The officers forced me to sign the statement written and prepared by them which was not according to the facts. I state that the statement recorded on 05.09.2013 is not true and voluntary. I was forced, threatened and compelled to sign and write the declaration in the statement without my consent. I therefore hereby retract the statement signed by me before the Income Tax Officials on 05.09.2013. I state that, I am executing this sworn affidavit so that I may make use of ....
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....ill be a slight variation in yield of wheat, in addition to the above there will be approximately 2% wastage also. 6) While conducting the search by the Income Tax Department in this firm today, the records shows there are sales of raw wheat as well as purchase of raw wheat in huge volume from/to Sri. P. K. Kunjumoideen, when officials asked about these to Sri. Balasubramanian who is the personal accountant of Sri. P. K. Kunjumoideen and the Managing Director of this firm Sri. T. K. Abdul Karim, they have stated that the purchase and sales with Sri. P. K. Kunjumoideen are bogus. Please explain in detail. (A) The Sales and Purchase of wheat with Sri. P. K. Kunjumoideen is recorded in the books of accounts and the supporting sales bills and purchased invoice are maintained. But in reality there is no sales made to Sri. P. K Kunjumoideen. Instead the entire quantity shown as sales are used in the process of wheat and its products like maida, atta, sooji, bran are sold. It is also shown in the records that there are many purchases made from Sri. P.K.Kunjumoideen. The purchases made on 27/08/2012 for Rs. 26,86,600/- are on 09/10/2012 for Rs. 1,58,06,500/- are real. The....
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.... 10) What will be the approximate profit margin earned while transacting these products. (A) It could only be ascertained by calculating rate of purchase and sales and other related details of each year. 11) We are showing the materials marked CHN/11/13-14/EAM/A36, CHN/11/13-14/EAM/A-37, paper bunch seized by Income tax, today while conducting search. Please check and explain. I have checked it. These are computer printout of ledger account of Sri. P. K. Kunjumoideen prepared in Tally software. 12) We are showing the materials marked CHN/ 11/ 13-14/EAM/A38 seized by Income tax, today while conducting search. Please check and explain. I have checked it. From page 1 to 20, the details of arrival of wheat load. Page 21 contains collection details of cheque and cash received on 04/09/2013 from various parties against sales. Cash collections are not shown in the book of accounts, it is usually handed over to the Managing Director. 13) While conducting search today, it is found that the actual cash balance in less than the Cash Book balance. What is your explanation in this regard? The Cashier Sri. Sankarakrishnan only can....
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....he assessee had used Shri. P.K. Kunjumoideen (PAN- AHDPK83Q1E) as a front. Shri. P.K. Kunjumoideen was shown as the proprietor of M/s. Teekay Rice Mill with premises at Pallimukku, Thathamangalam, Palakkad. The property at the said address was owned by Shri. T.K. Abdul Karim himself and many of his other concerns had offices in the same address itself. At the time of the search, Shri. P.K. Kunjumoideen was not available in the business address of his. He was found to be residing at Chengamanad near Aluva running a Grocery shop there. He had been living and seeking a living out of the business for the past 20 years at Chengamanad. The assessee had used the business address of M/s. Teekay Rice Mill, to show that a portion of its wheat procured is sold to the said concern, which in turn has sold the same in the open market. In actuality the wheat shown as sold to M/s. Teekay Rice Mill was milled in the assessee's factory itself and was sold as Wheat flour in its various forms (Atta, Sooji. Maida and Bran). The assessee used to bill the Wheat at 1% markup on its funding cost to M/s. Teekay Rice Mill. In reality, the assessee used to mill the wheat and sell it at a higher profit in ....
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....Mill was milled at M/s Prince Roller Flour Mills itself and is sold in the market as Wheat flour in the form of Atta. Maida, Sooji etc. The Billing to M/s. Teekay Rice Mill is seen done at the instructions of Shri. Abdul Kareem. The sale proceeds of M/s. Teekay Rice Mill was remitted into its bank account by the Roller Flour Mill staff only from moneys given to them by Shri. Abdul Kareem. The amount payable to PRFM is then remitted from its account into PRFM account. 10.4 A similar deposition was given by Shri Sabarigireesan, Accountant of the assesses. He also stated that no Raw wheat was sent to M/s. Teekay Rice Mill. He stated that only two wheal purchases made from Food Corporation of India on 27/8/2012 and 9/10/2012 were actually done by it. Wheat purchases shown to have made from PRFM was only accommodative in nature. The billing was made at 1% markup on the landing cost to PRFM. He also identified materials in CHN/11/J3- 14/EAM/A- 38 as the sales collection made on the milled flour by PRFM from these sales and the said sums were not entered in the Tally accounts and the amounts were given to Shri Abdul Kareern direct. 10.5 Thus, the Assessing Officer was of the opinion....
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....gs etc. He was an assessee under the rolls of the Income Tax Department from very early period which can be cross checked. He purchased wheat not only from M/s. Prince Roller Flour Mills (P) Ltd. but from various parties in North Indian Stales like Uttar Pradesh, Madhya Pradesh, Rajastan etc., through Railway Wagons. He purchased wheat from Food Corporation of India and Kerala State Civil Supplies Corporation Ltd. also through open sales wheat tender. He was supplying wheat purchased from open market to many established companies in and around Malabar even during the eighties. Hence, it was not correct to state that he was not carrying out any trading operations. The assessee filed summary of major purchases effected by Shri P.K. Kunjumoideen over the years which would categorically establish that the transactions were not limited to one or two dealings, but there were continuous transactions, involving substantial quantities. Shri P.K. Kunjumoideen was not entirely associated with the assessee, but was also dealing with other business entities too. 11.2.1 The Registration Numbers of KGST, CST and VAT of M/s. Teekay Rice Mill, Proprietor, Shri P.K. Kunjumoideen are as follows: ....
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....es 62.090 3. Coimbatore Roller Flour Mills 239.230 4. Essem Traders 54.100 5. Harikrishna Agencies 31.480 40,700 148.960 6. Maliakkal Roller Flour Mills 159.690 7. Periyar Agro Products 70.760 8. Premier Agro Products 10.080 506.280 9. Retail Sales 4760.600 625.600 83.500 10. S.R. Traders 93.410 41.600 11. Sreerama Roller Flour Mills 263.90 12. Srinivasa Roller Flour Mills 70.990 11.4 It was the plea of the assessee that the commercial tax authorities had on many occasions inspected their premises and verified the books and records etc. relating to purchase, production, sale etc. periodically. Even on 12.07.2013, a few days before the search under section 132, there was an inspection by the VAT Au....
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....ction. It was only said that since the matter was personally being handled by Mr. Sabarigireesan, he would be a better person to throw light on the facts and this cannot be termed as an admission by itself of unaccounted transaction, by any stretch of imagination. This statement was retracted by him as he had written the same under coercion and threat. Retraction statements by way of Affidavit were prepared on 06.09.2013 without seeing the copies of the statement recorded on the previous date from the respective persons who felt that the statements given were wrong and the same was given under pressure from the Investigating Officers. Subsequently both Shri Sabarigireesan and Shri P.K. Kunjumoideen had applied for the copies of statements on 18.11.2014 and it was received on the same day. Retraction statements of these two persons were placed before us in Paper Book, Page Nos. 57 to 66 & 109 to 140 respectively. The Assessing Officer had not made any reference to the retraction statements filed by these persons in the Assessment Order. 11.7 The sworn statements were taken from Shri T.K. Abdul Karim, Managing Director of the Company on 05.09.2013 and 30.09.2013 and no specific qu....
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.... and no documentary evidence to prove that the sale was effected as wheat products were obtained at the time of search both at the premises of the assesses and in the premises of Shri P.K. Kunjumoideen and hence, the assessments cannot be upheld. 11.8.4 Further, there are no evidences or incriminating documents seized at the time of search. No documentary evidence to prove that the sale was effected as wheat products, are obtained at the time of search both at the place of assessee company and in the place of Shri P.K. Kunjumoideen. In the absence of any such evidence it is wrong to presume that the sales effected as wheat products to enable the differential income in the assessment and in the absence of any evidences to indicate that the Wheat is sold as Wheat Products, the Assessment after assuming the Quantity of Wheat is sold as Wheat Products is improper. 11.8.5 In these cases, the lower authorities assumed that the assessee sold wheat products to Shri P.K.Kunjumoideen of M/s. Teekay Rice Mill without any evidence. The lower authorities have come to the conclusion that wheat products were sold without any evidences seized at the time of search. It is to be noticed that t....
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....18.05.09 23,66,179.00 Shiv Om Trading Co., Shajahanpur 8. 01-015/18.05.09 7,88,727.00 Anilkumar Sanjaykumar, Shajahanpur 9. 0911615/31.12.09 20,38,800.00 Kerala State Civil Supplies Corporation Ltd. 2011-12 10. 043/01.05.10 39,40,700.00 R.L. Enterprises, Shajahanpur 11. 3522/01.05.10 31,91,214.00 Rahul Rice Traders, Delhi 12. 01-41/01.05.10 22,97,403.00 Ambey Edible Food Products (P) Ltd., Shajahanpur 13 027/01.05.10 23,71,950.00 Sudhir Trading Co., Shajahanpur 14 682/-34/01.05.10 26,36,100.00 Food Corporation of India, Palakkad 15 269-18/07.09.12 1,33,46,300.00 Food Corporation of India, Thrissur 2013-14 16 269-43/03.10.12 1,57,05,500.00 Food Corporation of India, Chalakudy 17. 269-49/16.11.12 63,83,200.00 Food Corporation of India, Chalakudy 11.9 Further, there was documentary evidence in support of the contentions of the assessing officer that Wheat products were sold to Shri P.K. Kunjumoideen, Shri Sabarigireesan and Shri P.K. Kunjumoideen had filed retraction statem....
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....h income of the assessee in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition made, the Assessing Officer shall assess or reassess the total income of each assessment year falling within six assessment years immediately preceding the assessment year relating to the previous year in which the search is conducted or requisition made,as the case may be, of bringing on record material to show that there is undisclosed income of the assessee. In other words, there should be material on record to show that income is assessed on the basis of material or documents in the hands of the assessee and the addition cannot be made in vaccum. The guess work is not possible in the case of search assessment framed u/s. 143(3) r.w.s. 153A of the I.T. Act. The Assessing Officer should have basis for holding that Shri P.K. Kunjumoideen is acted on behalf of the present assessee. Even otherwise, uncorroborative statements collected by the Assessing Officer cannot be an evidence for sustenance of addition made by the Assessing Officer. 12.2 At this stage, it is pertinen....
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....inst the officer who recorded the statement, the authority, while acting on the inculpatory statement of the maker, is not completely relieved of his obligation at least subjectively to apply its mind to the subsequent retraction to hold that the inculpatory statement was not extorted. It thus boils down to this that the authority or any Court intending to act upon the inculpatory statement as a voluntary one should apply its mind to the retraction and reject the same in writing. It is only on this principle of law that this Court, in several decisions, has ruled that, even in passing a detention order on the basis of an inculpatory statement of a detenu who has violated the provisions of the Foreign Exchange Regulation Act or the Customs Act, etc., the detaining authority should consider the subsequent retraction and record its opinion before accepting the inculpatory statement lest the order be vitiated. Reference may be made to a decision of the Full Bench of the Madras High Court in Roshan Beevi vs. Jt. Secretary to the Government of Tamil Nadu, Public Deptt. etc. (1983) Mad LW (Crl.) 289 : (1984) 15 ELT 289 : AIR 1984NOC 103, to which one of us (S. Ratnavel Pandian, J.) was a ....
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....y value as contemplated under law; (iii) The expression "such other materials or information as are available with the Assessing Officer" contained in Section 158BB of the Income-tax Act, 1961, would include the materials gathered during the survey operation under Section 133A; (iv) The material or information found in the course of survey proceeding could not be a basis for making any addition in the block assessment; (v) Finally, the word "may" used in Section 133A(3)(iii) of the Act, viz., "record the statement of any person which may be useful for, or relevant to, any proceeding under this Act, as already extracted above, makes it clear that the materials collected and the statement recorded during the survey under Section 133A are not conclusive piece of evidence by itself. A survey was conducted in the premises of the assessee-firm. One of the partners in his sworn statement offered an additional income of Rs. 20 lakhs for the assessment year 2001-02 and Rs. 30 lakhs for the assessment year 2002-03. However, the said statement was retracted by the assessee-firm in its letter dated August 3, 2001, stating that the partner from whom a statement was recorded during the ....
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....it is amply clear that the CBDT has emphasized on its officers to focus on gathering evidences during search/survey operations and strictly directed to avoid obtaining admission of undisclosed income under coercion/under influence. Keeping in view the guidelines issued by the CBDT from time to time regarding statements obtained during search and survey operations, it is undisputedly clear that the lower authorities have not collected any other evidence to prove that the impugned income was earned by the assessee. 12.9.1 In view of the above discussion, the statement of Shri P.K. Kunjumoideen cannot be the basis to hold that he is acted and carried on business of wheat products on behalf of the assessee. On the other hand, the evidence brought on record by the assessee shows that Shri P.K. Kunjumoideen is not carrying on business on behalf of the assessee. 13. Similarly, Shri M. Premil Deep, Manager of M/s. Prince Roller Flour Mill P Ltd, Kinassery, (PRFM) Palakkad had deposed on the day of the search that the accounts for the concern of M/s. Teekay Rice Mill was actually controlled from the business premises of M/s Prince Roller Flour Mill P Ltd, Kinassery, Palakkad and the a....
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....i P.K. Kunjumoideen, Shri Premil Deep and Shri Sabarigireesan. Further, these statements have no evidentiary value in view of retraction made by these persons immediately the next day. Hence, what was left to rely on was the seized document cited supra. The seized document suggest that the assessee was engaged in the sale of wheat products from Tee Kay Rice Mills. The sole basis on which the Assessing Officer presumed that the assessee was selling the wheat products through Shri P.K. Kunjumoideen is collapsed. The estimation of production of wheat products and selling thereof have no basis and it is only a presumption without any basis. The CIT(A), though agreed that estimation made by the Assessing Officer is wrong, he sustained the estimation of profit to 50% of the profit that was estimated by the Assessing Officer. In our opinion, the estimation of profit by both Assessing Officer as well as CIT(A) is not based on cogent material procured through search action or after pre search enquiry which cannot be sustained. Accordingly, we are of the view that Shri P.K. Kunjumoideen cannot be treated as acted and carried on business of wheat products on behalf of the assessee and sold wh....