TaxTMI 
TaxTMI 
2020 (1) TMI 476
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....on 145(3) of the Act even though books of account were never produced before the authority and no material defects were pointed out therein; 4. In estimating undisclosed income of sum of Rs. 2,50,859/- and Rs. 3,50,710/- based figure appearing in balance sheet despite the fact that such books of account were never relied upon; 5. In treating a sum of Rs. 10,00,000/- as income without any basis, material and evidence; 6. Error in making assessment without understanding the facts of the case. All the above actions being most arbitrary, erroneous, untenable and unlawful, it is prayed that same must be quashed." Grounds of Appeal for AY 2007-08: While the other grounds are similar to the grounds taken above except the difference in the amounts, the assessee has taken up another ground at no. 5 that the Ld. CIT(A) erred in confirming the addition of Rs. 25 lakhs on account of alleged sales to M/s Reliance India Ltd. on protective basis. 3. At the outset, Ld. AR inviting our attention to the assessment order under consideration submitted that the assessee who is found mentioned at Sl. No.-11 in the list of companies where Konichiva Builders Ltd. is found mentioned in Sl....
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....clave, New Delhi. In the course of the search operation, it was reported by the investigation wing that a large number or companies were being operated and controlled by Shri S. K Gupta from his main office premises at H-108, Connaught Place. The list of these Companies is as under:- 1. Konichiva Builders Ltd. 2. B.T.Technet Ltd. 3. Swen Television Ltd. 4. T & G Quality management consultants Ltd. 5. Hitech Computech Pvt. Ltd. 6. Centenary software pvt. Ltd 7. Trump and Gates 8. T & G Quality Servrces 9. GTM Konichiva Builders 10. Gupta Rakesh Associates 11. Era Advertising and Marketing Coy Pvt Ltd 12. PG Travels Hindustan Com 13. Shark Communication Pvt Ltd 14. Spg Finvest Pvt Ltd. 15. Krishna Informedia 16. Bolni Exim India Ltd 17. Bharti Properties Pvt Ltd 18. Marketing Insurance Brokers Pvt Ltd 19. Cam Soft (lndia) Pvt Ltd 20. Ours Trading Pvt. Ltd 21.Pawar Estates Pvt Ltd 22. Rajdhani Leasing Ltd 23.DMC Vaults Ltd 24. Sigma Farms Ltd 25. North India securities Pvt Ltd 26. Hamara Samay TV News Network Pvt Ltd 27.Cel Cel Technologies Ltd 28. Chip Set Solutions Pvt Ltd 29. Trump & Gates 30. Servel Technology System Pv....
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....of Sh. S.K.Gupta. (vii) The Assessing Officer has given elaborate and adequate opportunities to the appellant company to explain their matter during the assessment proceedings and to counter the findings of the Assessing Officer. (viii) The Assessing Officer himself has repeatedly recorded statements of Shri S.K.Gupta and has confronted him in detail about the findings." 6.2. On the basis of the above facts the AO arrived at the following conclusions. These are extracted from the assessment order:- 4. "Inferences:- i. It is proved beyond doubt on the basis of documentary evidences, confessional statement of Shri. S.K.Gupta, the main person controlling the state of affairs of the assessee. Husband of Smt. Saroj Gupta, director of the assessee company and results of the assessment that assessee is engaged in the accommodation entry business and not doing any genuine sale & purchase as claimed in the final account statements annexed with return of income. ii. Since assessee has failed to produce any regular books of account, sale & purchase and expenses vouchers the book results shown by the assessee are liable to be rejected by taking recourse to provisions or sect....
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....er: With these remarks income of the assessee is computed as under: (i) Total income as per 153 A return Rs. 19,060/- Add:- Income earned from Accommodation entry Business (a) On the Accommodation Sale Bills/Turnover @ 2% of Rs. 23,57,555/- Rs. 47,151/- Rs. 66,211/- 6.3. In appeal before the First Appellate Authority the CIT(A) held as under:- 2.3.5."Taking into consideration the totality of facts and circumstances of the case as discussed hereinabove, it is held that the addition made by the AO on account of net income earned from accommodation entry business to the tune of Rs. 47,151/- is justified and is, therefore, confirmed. Since the AO has given a categorical finding that the appellant had only indulged in accommodation entries business and had not done any genuine business and rejected the books results on that ground, the net profit shown in the return has lost its relevance and should not be given any credence. The AO is, therefore, directed to recomputed the total income accordingly. This disposes off all the grounds of appeal taken by the appellant against the impugned assessment order." 7. Aggrieved by this the assessee in appeal before us h....
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.... entries business and did not do any genuine business. All the sale and purchases etc. booked in these companies were found to be bogus. Proper books of accounts were not found to have been maintained. In these circumstances, the books of accounts of the assessee were rejected and additions were made on estimate basis, the same were affirmed by the Ld. CIT(A) in appeal." 8.1. The issue pertaining to books of accounts etc. was considered by the Coordinate Bench in the following manner:- 6. "The first issue pertains to rejection of books of accounts. Ld. Counsel of the assessee in this regard submitted that he is not vehemently pressing this issue. We find that in the search and on the basis of material recovered and statements obtained it has been duly established that assessee was indulging in bogus accommodation entries. No actual sale and purchase was done by the assessee. Proper books of accounts were not maintained. In these circumstances, we do not find any infirmity in the orders of the authorities below in which the books of accounts have been rejected." 8.2. It is seen that considering the statement recorded of Sh. S.K.Gupta which facts have been summed in the followi....
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....cur the expenditure on account of salary, rent bank charges, conveyers, telephone, water and electricity. However, it is also settled that mere submission that expenditure has been incurred cannot lead to allowance of expenditure. Assessee has to prove with cogent material that the expenditure has been incurred to earn the income. In these circumstances we remit the issue to the file of the AO. The Assessing Officer shall examine the aspect of allowance of expenditure on the basis of cogent materials to be submitted by the assessee. 9. In the afore-mentioned peculiar facts and circumstances addressing the limited plea of the assessee in the light of the arguments advanced by the parties before us wherein Ld. AR has placed reliance upon the order of the Division Bench in the case of Konichiva Builders Ltd. and the Ld. CIT DR though not opposing it has invited our attention to the order of the SMC Bench in the case of Centenary Software Pvt. Ltd. We find on considering the order in Centenary Software Pvt. Ltd. relied upon by the Revenue that the Ld. AR before the SMC Bench had not raised any plea in regard to allowance of expenditure and had instead canvassed before the SMC Bench t....