TaxTMI 
TaxTMI 
2020 (2) TMI 1226
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....ations U/s. 132 of the Act was conducted in the assessee's Group on 24/7/2008. Subsequently, notice U/s. 153A of the was issued on 17/7/2009 calling for return of income for the AYs 2003-04 to 2008- 09. In response, the assessee company filed its return of income for all the relevant AYs on 13/10/2009. Subsequently, assessments were completed U/s. 143(3) r.w.s 153 of the Act wherein the Ld. AO made additions. On appeal, the ld. CIT (A) granted part relief to the assessee aggrieved by which, both the assessee and the Revenue are now in appeal before us. Appeal No.616/H/2014 (AY: 2003-04): (Assessee's appeal) 3. The assessee has raised several grounds in its appeal however, the cruxes of the issues are that:- (i) The ld. CIT (A) has erred in upholding the addition made by the ld. AO without incriminating materials found at the time of search. (ii) The ld. CIT (A) has erred in upholding the order of the Ld. AO who had disallowed the expenditure incurred towards life tax, registration charges amounting to Rs. 55,025/-. (iii) The ld. CIT (A) has erred in sustaining 50% of the addition amounting to Rs. 37,29,714/- (50% of Rs. 74,59,428) made by the Ld. AO....
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....nting to Rs. 35,87,076/- (50% of Rs. 71,74,152) made by the Ld. AO towards inflated expenditure on Granite processing and dressing charges U/s. 37(1) of the Act. (iv) The Ld. CIT (A) has erred in upholding the order of the ld. AO who had made addition of Rs. 11,41,000 towards payment made to Sri Ramakrishna Reddy as unaccounted expenditure. (v) The Ld. CIT (A) has erred in upholding the order of the ld. AO who had made addition of Rs. 4,52,390/- towards levy of interest U/s. 234A of the Act. (vi) The ld. CIT (A) has erred in directing the Ld. AO to verify the source for acquiring land amounting to Rs. 20 lakhs since all details of payment were submitted. (vii) Ld. CIT (A) has erred in sustaining the addition of Rs. 75,285/- made by the Ld. AO towards difference in sale. Appeal No.958/H/2014 (AY: 2005-06): (Revenue's appeal) 7. The Revenue has raised three grounds in its appeal however, the crux of the issue is that the ld. CIT (A) has erred in upholding the addition made by the ld. AO of Rs. 2,81,87,800/- towards unexplained cash receipts. Appeal No.619/H/2014 (AY: 2006-07): (Assessee's appeal) 8. The assessee has raised several groun....
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....to Rs. 18,66,217/- (50% of Rs. 37,32,434/-) made by the Ld. AO towards inflated expenditure on Granite processing and dressing charges U/s. 37(1) of the Act. (iv) The Ld. CIT (A) has erred in upholding the order of the ld. AO who had made addition of Rs. 24,59,000/- towards payment made to Sri Ramakrishna Reddy as unaccounted expenditure. (v) The Ld. CIT (A) has erred in upholding the order of the ld. AO who had made addition of Rs. 8,21,732/- towards levy of interest U/s. 234A of the Act. Appeal No.621/H/2014 (AY: 2008-09): (Assessee's appeal) 11. The assessee has raised several grounds in its appeal however, the cruxes of the issues are that:- (i) The ld. CIT (A) has erred in upholding the addition made by the ld. AO without incriminating materials found at the time of search. (ii) The ld. CIT (A) has erred in upholding the order of the Ld. AO who had disallowed the expenditure incurred towards life tax, registration charges amounting to Rs. 1,32,595/-. (iii) The Ld. CIT (A) has erred in upholding the order of the ld. AO who had made addition of Rs. 54,96,657/- towards levy of interest U/s. 234A of the Act. (iv) The Ld. ....
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..... Ground No.(i): Addition made by the ld. AO without incriminating materials found at the time of search. 16. Since the assessee has withdrawn this ground, the ground does not survive for adjudication. 17. Ground No.(ii): Disallowance of expenditure incurred towards life tax and registration charges amounting to Rs. 55,025/-. 18. During the course of assessment proceedings pursuant to search it was observed by the Ld. AO from the special audit report that the assessee company had paid Rs. 55,025/- towards Motor Vehicle Tax and Registration Charges with respect to purchase of Ford Ikon car and the same the was claimed as revenue expenditure. However, the Ld. AO was of the view that the expenditure is capital in nature as it goes to increase the cost of the car the utilization of which gives enduring benefit to the assessee. Therefore, the Ld. AO disallowed the entire amount as deduction and added to the income of the assessee. On appeal, the Ld. CIT (A) held that the Life Tax and Registration Charges are one-time payments and certainly add to the value of the asset and such expense shall be treated as capital expenditure which is entitled for claiming depreciation. At the o....
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....m the assessee company by way of contract and the contract receipt was included in the computation of income and tax was paid U/s. 44AD of the Act. However, the Ld. AO opined that since the assessee was not obliged to maintain books of account as per section 44AD of the Act and accordingly she has not maintained her books of account, there was no documentary evidence to prove that she has undertaken and carried out the contract work of processing the granites. Thereafter, the Ld. AO opined the transaction made by the assessee is bogus and it was a novel method adopted by the assessee to reduce its income by inflating bogus expenditure and thereby invoked the provisions of section 40A(2)(b) of the Act and disallowed the expenditure of Rs. 37,04,860/-. In the instance when the amount was paid to M/s. Sai Rock Enterprises proprietrix Smt. V. Prameela Rani, she could not respond to the summons issued U/s. 131 of the Act as she was out of the country. However, the Ld. AO treated the same also as bogus expenditure and disallowed the expenditure of Rs. 37,54,568/- invoking the provisions of section 40A(2)(b) of the Act. Thus, the Ld. AO made an aggregate disallowance of Rs. 74,59,428/-....
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....tion sustained by the Ld. CIT (A) may be deleted. Ld. DR on the other hand vehemently supported the order of the Ld. CIT (A). 23. We have heard the rival submissions and carefully perused the materials on record. From the facts of the case it is apparent that both the Revenue Authorities has not looked into the scope, volume and nature of work carried out by the proprietorship firm. Further, it is evident that the Ld. CIT (A) has accepted that certain work was carried out for processing the granites otherwise the granite slabs could not be exported. From this, it is evident that the entire disallowance made by the Ld. AO and partly sustained by the Ld. CIT (A) is based on surmises and conjectures and without examining the quantum of work performed by the proprietorship firms. Moreover, when the proprietorship concerns were no required to maintain books of accounts as per Section 44AD of the Act, Revenue cannot take any adverse inference for those proprietorship concerns in not maintaining the books of accounts. It is a settled legal position that additions made on the basis of presumption is not sustainable in law. Therefore, we do not find any merit in the disallowance made by ....
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....payment made by the assessee cannot be verified and the same cannot be brushed aside by stating that the cheque payment cannot be reconciled. In this situation, we do not find any merit in the order of the ld. AO for making addition of Rs. 29,21,000 in the hands of the assessee. However, in the interest of justice, we remit the matter back to the file of the Ld. AO in order to verify whether the payment of Rs. 8 lakh is made by cheque, the expenditures incurred aggregating to Rs. 4,20,845 are entered in the books of account of the assessee and the amount of Rs. 17 lakh is treated as unexplained investment in the hands of M/s. Reliance Granite Pvt ltd., for the AY 2003-04 and if found so, delete the addition and if found otherwise, decide the matter in accordance with law and merits by passing a speaking order. It is ordered accordingly. 27. Ground No.(v): Addition of Rs. 1,24,940/- towards levy of interest U/s. 234A of the Act. 28. At the outset, the Ld. AR submitted that the due date of filing of the income tax return for the AY 2003-04 was extended up to 30.11.2003 as per section 119 of the Act and the assessee had filed the return of income within such due date on 27/11/20....
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....limited which is assessed as unexplained investment in its hands Rs. 15 lakh. 37. Ground No.(v): Addition of Rs. Rs. 4,08,155/- towards levy of interest U/s. 234A of the Act. 38. At the outset, the Ld. AR submitted that the due date of filing of the income tax return for the AY 2004-05 was extended up to 01.11.2004 as per section 119 of the Act and the assessee had filed the return of income within such due date on 01/11/2004. However, the Ld. AO had levied interest U/s. 234A of the Act for default in furnishing the return of income. Since these facts are not verified by the Ld. AO as well as not addressed by the ld. CIT (A), we remit back the matter to the file of the Ld. AO for fresh consideration. Needless to mention that if there is no default in furnishing the return of income by the assessee then, interest cannot be levied U/s. 234A of the Act. Appeal No.957/H/2014 (AY: 2004-05): (Revenue's appeal) 39. Deletion of the addition made by the ld. AO of Rs. 1,82,90,500/- towards unexplained cash receipts. 40. During the course of search proceedings certain documents were seized from the residence of Sri N. Tirupati Rao, former Director of assessee-company (Midwest G....
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....sessed the same amounts in the hands of the assessee company as the representative of SAGMPL, which mean the AO who has assessed the assessee company u/s. 153A, has arrived at the conclusion that the information was related to SAGMPL, for initiating the proceedings U/s. 153C. Further, the assessment of the assessee company was not made on protective basis. Judicial decision endorse this view on the said issue of double taxation. Under the circumstances, I am of the considered opinion that same income which was assessed in the hands of one assessee cannot be assessed in the hands of another assessee and such assessment amounts to double taxation of the same amounts. Hence, I am of the considered opinion that the income assessed in the hands of SAGMPL u/s. 153C r.w.s 1449(c) of the Act is not assessable in the hands of the assessee u/s. 143(3) r.w.s 153A. On this ground, the assessee succeeds and the addition stands deleted. The ground of appeal is treated as allowed." 41. From the above it is apparent that the finding of the Ld. CIT (A) is that the same income was assessed in the hands of another assessee and therefore, it cannot be taxed one again in the hands ....
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....in its hands Rs. 5.50 lakh. 50. Ground No.(v): Addition of Rs. Rs. 4,52,390/- towards levy of interest U/s. 234A of the Act. 51. At the outset, the Ld. AR submitted that the assessee had filed its return of income within the due date i.e., 30.10.2005 and the return was processed U/s. 143(1) on 20/07/2006. Thereafter, assessment was made U/s. 143(3) on 24/12/2007. It was therefore pleaded that there was no default in furnishing the return of income by the assessee hence interest levied by the Ld. AO U/s. 234A of the Act for Rs. 4,52,390/- is not justifiable. The ld. DR could not controvert to the submission of the ld. AR. After hearing both sides, we find it appropriate to remit the matter to the file of the Ld. AO for fresh consideration as the issue is neither verified by the Ld. AO nor addressed by the Ld. CIT (A). Needless to mention that if there is no default in furnishing the return of income by the assessee then, interest cannot be levied U/s. 234A of the Act. 52. Ground No.(vi): The ld. CIT (A) has erred in directing the Ld. AO to verify the source for acquiring land amounting to Rs. 20 lakhs though all details of payment were submitted before the Ld. AO. 53. Du....
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.... Paper book page no.172 contains the following information: Annexure for Point No.5 (Note on purchase of quarry land at Bangalore) Name of the Pattadar Extent of land (in Acres) Amount of advance given Payment at the time of registration Total amount Remarks (Details for advances made no further payments done) Sivarudramma 4.02 11.65 0 11.65 Madappa 2.18 1.40 5.03 6.43 Jadia 2.56 1.75 7.25 9.00 Rs. 1,50,000 vide DD Taken from Midwest Zuffikhan 9.51 3.00 6.00 9.00 Rs. 1,50,000 DD taken from Midwest Rs. 50,000 DD taken from Nova and debited to Midwest Jamandh 11.00 5.00 5.00 10.00 Rs. 5,00,000 DD taken from Nova and debited to Midwest. Anwar Pasha 6.60 2.50 5.00 7.50 Rs. 3,50,000 DD taken from Nova and debited to Midwest Munithqeem 4.70 2.50 5.000 7.50 Rs. 2,50,000 DD taken from Nova and debited to Midwest Ubedulla 2.00 2.00 5.00 7.00 Rs. 1,00,000 DD taken from Nova and debited to Midwest Sardar Pasha 2.12 3.00 3.00 6.00 Rs. 50,000 DD taken from Nova and debited to Midwest A....
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....ales and brought to tax. Before the ld. CIT (A), the assessee reconciled the deference to the extent of Rs. 22,00,012/-. Therefore, the ld. CIT (A) granted relief to that extent and sustained the balanced amount of Rs. 75,285/-. Since the assessee could not reconcile the difference amount of Rs. 75,285/- before the Ld. Revenue Authorities and before us, at this stage, we do not have any other option but to sustain the addition of Rs. 75,285/-. Accordingly, we do not find it necessary to interfere with the order of the Ld. CIT (A) on this issue. Appeal No.958/H/2014 (AY: 2005-06): (Revenue's appeal) 59. Deletion of the addition made by the ld. AO of Rs. 2,81,87,800/- towards unexplained cash receipts. 60. Since the facts and issue are identical to that of the Revenue's appeal for the AY 2004-05, the same decision holds good. Accordingly, the appeal of the Revenue is devoid of merits. Appeal No.619/H/2014 (AY: 2006-07): (Assessee's appeal) 61. Ground No.(i):- Addition made by the ld. AO without incriminating materials found at the time of search. 62. Since the assessee has withdrawn this ground, the ground does not survive for adjudication. 63. Ground No.(ii):....
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....the assessee, interest levied by the Ld. AO U/s. 234A of the Act for Rs. 29,81,843/- is not justifiable. The ld. DR could not successfully controvert to the submission of the ld. AR. After hearing both sides, we find it appropriate to remit the matter to the file of the Ld. AO for fresh consideration as the issue is neither verified by the Ld. AO nor addressed by the Ld. CIT (A). Needless to mention that if there is no default in furnishing the return of income by the assessee then, interest cannot be levied U/s. 234A of the Act. 71. Ground No.(vi): The Ld. CIT (A) has erred in upholding the addition made by the Ld. AO of Rs. 39,328/- towards penalty paid to Central Excise Department. 72. At the outset, the Ld. AR submitted before us that the amount paid to Central Excise Department for Rs. 39,328/- is compensatory in nature and it is not barred by section 37 of the Act. Ld. DR relied on the orders of the Ld. Revenue Authorities. 73. We find merit in the submission of the ld. AR. Explanation-1 to section 37 prohibits any expenditure incurred by the assessee which is related to an offence or any expense prohibited by law. In the case of the assessee it appears that the e....
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....d additional depreciation U/s. 32(1)(iia) of the Act on plant and machinery, mining equipment etc. the Ld. AO opined that the activity of the assessee cannot be treated as manufacturing or production of article or thing as envisaged U/s. 32(1)(iia) of the Act and therefore disallowed the claim of additional depreciation of Rs. 12,89,185/-. On appeal, the ld. CIT (A) held that the activity of making the blocks, along with shaping and cutting of granites amounts to manufacturing / production by relying on his own order of the other assessment years while granting the benefit of deduction U/s. 10B of the Act. 81. At the outset, on perusing the orders of the Ld. CIT (A), we find that the Ld. CIT (A) while deciding the issue with respect to deduction U/s. 10B of the Act in the case of the assessee for the assessment year 2008-09 relied on the Circular No.729 dated 1/11/1995 issued by the CBDT the crux of which is as follows:- "When rough granite is cut to dimensional blocks of uniform colour and size, it not only undergoes mechanical process of cutting but also certain amount of dressing and polishing is involved to removed various natural flaws such as colour variations, gr....
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....ee in the appeal for the AY 2003-04 hereinabove. Hence, the same decision shall hold good as the facts are identical for the relevant assessment year. Further from the order of the ld. AO it is not clear as to what extent to the aggregate amount of Rs. 24,59,000/- was towards payment made through cheque to Mr. K.V. Ramakrishna Reddy or towards expenditure incurred on behalf of Sri K.V. Ramakrishna Reddy, purchase of granites etc. However, it was clarified by the assessee that the payment was duly accounted in the books of accounts of the assessee company and we failed to understand as to what prevented the Revenue to verify the same. 91. Ground No.(v): Addition of Rs. Rs. 8,21,732/- towards levy of interest U/s. 234A of the Act. 92. At the outset, the Ld. AR submitted that the assessee had filed its return of income within the due date i.e., on 30/11/2007. It was further submitted that for the relevant AY the due date of filing the return of income was extended up to 29/02/2008 as per order U/s. 119 of the Act. It was therefore pleaded that since there was no default in furnishing the return of income by the assessee, interest levied by the Ld. AO U/s. 234A of the Act for Rs.....
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....novo consideration. On this issue we are of the view that when the Ld. AO makes an ad-hoc addition without proper explanation, then the addition is not sustainable. Therefore, we hereby direct the Ld. AO to deletion the addition made for Rs. 49,360/-. 101. Ground No.(v): The Ld. CIT (A) has erred in upholding the addition made by the Ld. AO of Rs. 9,212/- towards interest paid for delayed remittance of tax deducted at source. 102. On this issue the Ld. AR submitted that the assessee has requested that the matter may be remitted back to the file of the Ld. AO for re-computation of the interest and the ld. DR did not seriously objected to the submission of the Ld. AR. Therefore, in the interest of justice we remit the matter back to the file of the ld. AO for de novo consideration. Appeal No.961/H/2014 (AY: 2008-09): (Revenue's appeal) 103. Ground No.(i) Deduction under section 10B of the Act for Rs. 11,48,84,461/-. 104. During the course of scrutiny assessment proceedings it was observed by the Ld. AO that the assessee has claimed deduction U/s. 10B of the Act. On perusing the issue the Ld. AO opined that the assessee is not entitled for the benefit of deduction U/s. ....
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....e licence from another entity alone may will not constitute reconstruction or reconstitution of the company. Therefore, we do not find it necessary to interference with the order the ld. CIT (A) on this issue. Hence, the appeal of the Revenue on this issue is devoid of merits. 107. Ground No. (ii): Disallowance of additional depreciation of Rs. 12,89,185/-. 108. Since the issue is already adjudicated on the identical facts in the Revenue's appeal for the AY 2006-07 hereinabove, the same decision holds good. Accordingly, the appeal of the Revenue is devoid of merits on the issue. Appeal No.622/H/2014 (AY: 2009-10):(Assessee's appeal) 109. Ground No.(i):- Addition made by the ld. AO without incriminating materials found at the time of search. 110. Since the assessee has withdrawn this ground, the ground does not survive for adjudication. 111. Ground No.(ii): Disallowance of expenditure incurred towards life tax and registration charges amounting to Rs. 2,62,520/-. 112. This ground is identical to the ground no.(ii) raised by the assessee in the appeal for the AY 2003-04 hereinabove. Hence, the same decision shall hold good as the facts are identical for the relev....