TaxTMI 
TaxTMI 
2020 (4) TMI 754
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.... of purchases be treated as representing suppressed profit and any disallowance/addition in which so ever year be deleted and that the value of the work-in-progress be not reduced by any amount whatsoever. 2.1 Briefly stated, the facts of the case are that the Assessing Officer (AO) received information from the Director General of Income Tax (Inv.) [in short 'DGIT'] that one Shri Tushar Ruparel was controlling and handling few concerns including the account of M/s Khushi Enterprises and he had given a statement under oath on 18.12.2007 before the DGIT that M/s Khushi Enterprises was engaged in issuing bogus bills and that it had never done any actual purchase or sale transaction with delivery of goods or materials. It was further stated that the modus operandi was to receive account payee cheques against accommodation sale bills and later to withdraw cash and handover to the party who availed the bogus sale bills after deducting commission @ 0.25%. In his statement, he had specifically mentioned that M/s Moraj Building Concepts Pvt. Ltd. (the assessee herein) is one of the beneficiaries of such bogus bills. Accordingly, the AO required the assessee to furnish the ledger extract....
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....ed under oath on 18.12.2007 before the DGIT that M/s Khushi Enterprises, which he was controlling, was engaged in the issuing bogus bills. Further, he mentioned that M/s Moraj Building Concepts Pvt. Ltd. (the assessee) was one of the beneficiaries of such bogus bills. The notice u/s 133(6) issued by the AO dated 14.12.2010 to M/s Khushi Enterprises was not replied to. Further, the enquiry by the Ward Inspector showed that no purchases were made by the assessee from M/s Khushi Enterprises. In such a factual scenario, the Ld. CIT(A) has rightly followed the decision in Simit P. Sheth (supra) ; Bholanath Polyfab (supra) and brought to tax the profit @ 12.5% of the disputed purchases of Rs. 3,62,881/- which comes to Rs. 45,360/-. As the order passed by the Ld. CIT(A) is based on proper appreciation of facts and position of law, we uphold it. Thus the 1st ground of appeal is dismissed. 3. The 2nd ground of appeal Disallowance of Rs. 7,50,000 on account of Consultancy Charges paid to Modern Line distribution a The Ld. CIT(A) has appreciated the fact that the amount paid during the year and claimed in Return of Income as expenses and carried forward to work in progres....
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....cy charges for business development and claim was made only to that extent and therefore, the AO had misguided herself in making a disallowance which did not exist in the first place. Secondly, as far as the merits of the disallowance is concerned, it was stated that no tax was liable to be deducted at source as per Article 14 of DTAA with UAE on account of payment to non-resident for services rendered outside India and in this regard reliance was placed on the decision in the case of GE India Technology Pvt. Ltd. 327 ITR 456 (SC). Further, it was stated that in any case the amount in question was added to the closing WIP and hence, there would be no addition as such to the income. However, the Ld. CIT(A), after analyzing the factual and legal position held that the claim of Rs. 7,50,000/- made by the assessee in the return of income is to be disallowed and added back to the WIP. 3.3 Before us, the Ld. counsel for the assessee reiterates the submission made before the Ld. CIT(A). On the other hand, the Ld. DR relies on the order passed by the Ld. CIT(A). 3.4 We have heard the rival submission and perused the relevant materials on record. We are of the considered view that ....
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....of papers more than one entry is made and one such entry is recorded in the books of account, it was for the assessee to prove that the other entries were not made in respect of unexplained expenditure/investment because the entire document as such has to be either taken as true or done, (ii) when the assessee had itself admitted that Rs. 3,06,353/- which was recorded at page 90 in the books, it goes without saying that the balance amount was not recorded in the books of account, (iii) a sum of Rs. 1,30,806/- appears to have been doubly taken and, therefore, after giving due weightage to the same, it is held that the assessee has failed to prove the necessary evidence of the expenditure in respect of the balance amount of Rs. 7,63,865/- and hence the addition to that extent is sustained. Sustaining an addition of Rs. 7,63,865/-, the Ld. CIT(A) held that as the assessee is following project completion method which was not negated by the AO, the said disallowance shall lead to reduction of WIP to that extent. 4.2 Before us, the Ld. counsel for the assessee reiterates his submissions before the Ld. CIT(A). On the other hand, the Ld. DR supports the order passed by the Ld. CIT(A)....
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....o the AO by the Ld. CIT(A), the AO vide his remand report stated that the assessee had accepted having made the donation which was corroborated by letters issued by payee on its letter head thanking the assessee for contribution made to the Trust ; however, the assessee could not explain the purpose of making the donation and as to how it was related to the assessee's business. Moreover, it was not stated that the Trust was having tax exemption certificate based on which the deduction to be claimed by the assessee-company. During the course of appellate proceedings before the Ld. CIT(A), the assessee stated that the said amount was not claimed as an expense but was added to the cost of WIP and at best disallowance would result in reduction of WIP. The Ld. CIT(A) after examining the remand report and submission of the assessee observed that merely because no deduction as such has been claimed, the very fact that a sum of Rs. 55,00,000/- was added to the WIP in itself amounts to claim of deduction which would lead to reduction of payment of tax in the year in which the project is completed and offered for taxation. Further stating that when the assessee has itself accepted that....
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....as not for return of defective goods but was a sum paid u/s 69C in cash which cannot be allowed. c The appellant submits that the goods of amount of Rs. 1,27,999 was returned to Satyanarayan Marble for which no payment was made and was not payable at all. d The appellant appreciates that CIT(A) has accepted the fact that said disallowance would result in reduction in WIP leading to the higher profit in the year of completion of project. e The appellant pleads that the addition made to the year of completion of project of Rs. 1,27,999 be deleted. 6.1 During the course of assessment proceeding, the assessee had stated before the AO that an amount of Rs. 1,75,827/- was payable to Shri Satya Narayan Marbles Pvt. Ltd. against materials purchased for Panvel Site and out of this, after return of defective material, a sum of Rs. 47,828/- became payable and hence, balance of Rs. 1,27,999/- was cancelled. It was therefore stated that there was no cash payment of Rs. 12,79,990/- but only a reversal of Rs. 1,27,999/-. During the course of appellate proceedings, the assessee submitted before the Ld. CIT(A) that the AO had mistakenly taken an amount of Rs. 12,79,....
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....g 45,33,916 45,33,916 Being cost of 285 sq. ft. allotted now 5,33,916 40,00,000 24.9.07 5,00,000" The Ld. CIT(A) confirmed the addition of Rs. 5,00,000/- with the following reasons : "2.4.79 Having perused the jottings at page no. 90 of Annexure A-4 and after going through the affidavit and statement of Shri Satyavan Jagdale, the author of the said jottings, it is an uncontroverted fact that a sum of Rs. 40 lac was receivable from Shri R.A. Chug. Further, the very fact that a particular date has been stated against sum of Rs. 5 lac viz. 24.09.2007, the said noting did not remain dumb any more as it is very clear from the said noting that out of the receivable of Rs. 40 lac, the appellant had received a sum of Rs. 5 lac on 24.09.2007. The appellant has also not negated the notings at the said page as being completely unrelated to its business and in fact all the notings at the said page have been accepted as true other than receipt of Rs. 5 lac. Looking into the sequence of notings at said page, it could not be said that the said amount was receivable from Shri R.A. Chug on 24.09.2007. While coming to the above conclusion....
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....dinary course of business and such loss was allowable u/s 28 in computing the Business Income for the year under consideration. d The appellant pleads that the addition Rs. 2,66,393 be deleted and in the alternative the said amount be allowed as a business loss in the hands of the appellant. 8.1 The above ground relates to the addition of Rs. 2,66,393/- on account of alleged discrepancy in cash on hand noticed during the course of survey operation. As per the AO, the amount of cash on hand should have been Rs. 8,49,133/- vis-à-vis the physical cash found at the premises during the course of survey which was Rs. 5,82,740/-. The assessee submitted before the AO that some of the cash was lying with the site supervisors and that the list of companies with cash balance as on the date of survey was being supplied. However, the AO was not convinced with the above explanation of the assessee and made an addition of Rs. 2,66,393/-. During the remand proceedings, the assessee had explained that cash book was being maintained at sites and that the books of accounts at year end were properly audited. However, the AO was not convinced with the explanation of the assesse....
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.... expenditure and as explained in facts, it was prepared by the accountant to record the results of trial run taken for the purposes of shifting from Foxpro accounting software to Tally. The company had maintained regular books of accounts that were duly audited and no defects have been found therein. e The Ld. CIT(A) mentions that as the appellant follows Project Completion Method, the sum ofRs. 16,77,178 would result in reduction in WIP leading to the higher profit in the year of completion of project. f The appellant pleads that the addition made to the year of completion of project of Rs. 16,77,178 be deleted. 9.1 The above ground relates to addition of Rs. 16,77,178/- as unexplained cash credit on the basis of untallied trial balance during the course of survey. The AO made the addition on the reason that the assessee did not give satisfactory explanation during the course of assessment proceedings. In appeal, the Ld. CIT(A) observed that (i) the assessee had failed to explain the nature of discrepancy and merely stating that the said difference in trial balance arose on account of shifting of one account software to another would not be of much assis....