TaxTMI 
TaxTMI 
2020 (6) TMI 635
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....he additions under various heads made by the Assessing Officer to the income of the assessee. The revenue challenged the deletion made by the CIT (A) in respect of five heads before the Tribunal. The Tribunal by its order dated 05th July 2016 upheld the order passed by CIT (A). 3. The brief facts relevant for the purpose of deciding the present appeal are as follows : 3.1. On the basis of information received from the Investigation Wing of the Income Tax Department in the case of M/s. Galaxy Plasto O-Chen Industry Ltd., it was revealed that the said company belonged to one Vora family comprising of three brothers, viz Naresh B. Vora, Sudhir B. Vora and Nitin B. Vora. Under the provisions of Section 133A of the Act, a survey was conducted at the business premises of the above company on 04th September 1998, pursuant to which books of accounts and other documents were seized and impounded on 25th September 1998. 3.2. The statements of Mr. Nitin B. Vora and Mr. Sudhir B. Vora were recorded on 25th September 1998, 15th November 1998 and 16th November 1998. Mr. Nitin B. Vora stated that he was in the Hawala business and he admitted to concealment of Rs. 1.35 Crores and admitted....
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....T. Act 1961, which established that the assessee sold in open market the Naphtha products at hefty cash premium and part of which unaccounted sale consideration routed back in the books through accommodation entries and the component of cash premium never reflected in the books of accounts ? (B) Whether on the facts and in the circumstances of the case and in law, the Hon. ITAT was right in deleting the addition made on account of sale of delivery orders purchased from M/s Reliance Industries Ltd. ignoring the seized material, on the ground that it is not primary, which established that the assessee earned unaccounted premium out of sale of goods ? (C) Whether on the facts and in the circumstances of the case and in law, the Hon. ITAT was right in deleting the addition made on protective basis ignoring the statement of Shri Naresh Vora who had categorically alleged that some of the parties on whose behalf bogus invoices were raised by Thakkar brothers ? (D) Whether on the facts and in the circumstances of the case and in law, the Hon. ITAT was right in deleting the addition made on account of foreign tour expenses ignoring the fact that the assessee has f....
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....ote book which shows :- Sunil Carrier 13/9/97 Rama 1,01,640x5= 5,08,200/- Bank Commission =500/ Commission =21,000/- Atlas 1,20,200 x 5 = 6,00,000/- Bank Commission =1,200/- Commission =21,000/- ----------------------------------- 3,74,960/- Above mentioned entries are related to accommodation entries taken by Shri Sunil Thakkar for which the name 'Sunil Carrier' appears at the top. The figures against Rama (M/s. RRPL) are nothing but calculation of value of one invoice multiplied by number of 5 invoices amount comes to Rs. 5,08,200/and Rs. 500/-, Bank commission for 5 pay orders issued for 5 invoices referred earlier. Rs. 21,000/- is my commission on the total amount i.e. 5,08,200/-. Similar is the calculation shown against Atlas (Atlas Petrochemicals). As a matter of fact all the transaction appearing in this note book against 'Rama' and 'Atlas' are transaction related to accommodation entries taken by Sunil Thakkar on behalf of M/s. RRPL & Atlas Petrochemicals Ltd." 5.2. Mr. Walve submitted that the assessee was referred to in the books of the Vora group by several names su....
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....ized accommodation entries from the concerns of Vora group; (iii) that these concerns procured petro chemicals either directly from pubic sector undertakings like; BPCL, HPCL, IOCL, GAIL etc, or through intermediaries providing accommodation entries and that the amounts involved were large. 9. The Assessing Officer duly scrutinized the statements made by the Vora and Thakkar family members and on the basis of facts, circumstances, evidence and transactions appearing in the seized books confronted the assessee (Mr. Sunil M. Thakkar) by notice under Section 131 of the Act, inter-alia, providing the assessee an opportunity to examine Mr. Naresh B. Vora. Since the assessee did not avail of the opportunity at the first instance the assessee was provided a further opportunity on 20th February 2001 on which date the assessee examined Mr. Naresh B. Vora. During cross examination of Mr. Naresh B. Vora it was revealed that the assessee had been regularly depositing cash to avail accommodation entries for sale of "Naphtha" on behalf of M/s. Ram Remedies Pvt. Ltd. On the basis of corroborative evidence obtained from the seized books, documents, loose papers etc, the Assessing Offic....
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....respect of accommodation entries; (v) The Assessing Officer added a sum of Rs. 1,54,197.00 as income from the business of hiring of tankers to the income of the assessee; (vi) The Assessing Officer added a sum of Rs. 2,00,000,00 spent by the assessee on a foreign trip to the income of the assessee as also Rs. 21,83,010.00 towards household expenses of the assessee. 11. Being aggrieved by the above order, the assessee preferred appeal before the first appellate authority i.e. the CIT (A), Mumbai. The CIT (A) after considering the entire gamut of evidence placed before the Assessing Officer dealt with each and every addition made by the Assessing Officer and vide its order dated 14th March, 2006 returned its findings as under :- 11.1. In respect of addition of Rs. 2,92,90,123.00 as undisclosed exempted income disclosed by the assessee, the assessee had claimed exempted income of Rs. 1,96,50,420.00 for remittances on the basis of his residential status being a non resident Indian. For the year 1992 - 1993 and 1993 - 1994, the status of the appellant was non resident Indian and from assessment year 1994 - 1995 onwards for the next eight years, the status was "no....
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....a amounting to Rs. 36,38,000.00 the CIT (A) once again came to the conclusion that, since there were no details / material available with respect to the vehicles owned by the assessee that were allegedly used for the transactions the finding of the Assessing Officer was not sustainable in the absence of direct involvement of the assessee, thereby deleting the above addition made by the Assessing Officer. 11.4. In respect of addition of cash amount of Rs. 23,11,000.00 found during search in the assessee's premises, which was claimed by Mr. Atul Thakkar (assessee's brother) admitting that the said cash belonged to him, the CIT (A) after considering the evidence on record came to the conclusion that since this amount was declared as undisclosed income in the block return by Mr. Atul Thakkar, it could not be made attributable to and foisted on the assessee. The CIT (A) therefore deleted this addition made by the Assessing Officer after considering the fact that Mr. Atul Thakkar had paid taxes on the said cash amount as it belonged to him and that there was no evidence on record to link the cash to the assessee. 11.5. In respect of unaccounted initial capital amounting to Rs. ....
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....d in one Gandhi diary during the search of premises of Sunil Chemicals reflecting entries of monthly cash withdrawals had added the same to the income of the assessee. The CIT (A) held that, since no incriminating document or evidence was found which proved that the withdrawal was made by the family members of the assessee, it could not be held that the assessee had earned this undisclosed income. The assessee pleaded that there was no documentary evidence about concealing his household expenditure and that his household expenditure was much more than the expenditure appearing in the said books of accounts. It weighed with the CIT (A) that the Assessing Officer did not consider the total withdrawals by all the family members of the assessee's family. The CIT (A) held that in fact the Assessing Officer had added Rs. 62,00,000.00 approximately to the income of all the members of the family of the assessee for the same period, and therefore considering these facts, the addition made by the Assessing Officer on account of withdrawal towards household expenses came to be deleted. 12. The revenue being aggrieved by the order passed by the CIT (A) approached the Income Tax Appellat....
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....etion of addition on account of sale on premium of Naphtha amounting to Rs. 12,48,61,834.00 and concurred with the findings of the CIT (A) that this addition was merely based upon the statement of Naresh B. Vora. Tribunal held that not a single word had been written specifically relating to or pointing to the evidence by the Assessing Officer. Tribunal held that during the entire proceedings under Section 132 (search proceedings) no incriminating material was found or seized which could show or prove that the assessee was a quota holder of Naphtha or that he owned a factory manufacturing petrochemicals. Tribunal held that the assessee was not confronted with the alleged material and the statement of Naresh B. Vora which was used against him and no investigation was carried out by the Assessing Officer with respect to the nexus of the assessee with the alleged Ahmedabad and Baroda parties. Tribunal held that the CIT (A) specifically referred to the statement of Naresh B. Vora dated 15th October 1998 and in particular to question Nos.3,4 and 5 and their answers and the observation made by the Assessing Officer relating to collection of evidence during the the course of search and fur....
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....in Atlas Petrochemicals, Ankini Petrochemicals and / or Avani Petrochemicals. Therefore, the above addition which was made merely on the basis of the statement of Naresh B. Vora could not be sustained. Tribunal considered that there was no document to arrive at such a conclusion. Tribunal also considered the fact that in the entire statement of Naresh B. Vora, there was no allegation that the assessee was working on behalf of Atlas Petrochemicals, Ankini Petrochemicals and Avani Petrochemicals and therefore the Tribunal agreed with the findings given by the CIT (A) in deleting the addition of Rs. 4,99,36,298.00 made on protective basis and thus this ground of challenge raised by the revenue also came to be dismissed by the Tribunal. 15.4. Tribunal considered the fourth challenge with respect to deletion of addition of Rs. 2,00,000.00 on account of foreign tour expenses on the basis of evidence which was gathered. It was observed by the Tribunal that during the search and seizure proceedings no incriminating documents were found which could be linked with the foreign trips made by the assessee. Further the assessment order was silent about the evidence which could prove that the ....
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....sed income of the block period shall be the aggregate of the total income of the previous years falling within the block period computed, in accordance with the provisions of the Act, on the basis of evidence found as a result of search or requisition of books of account or other documents and such other materials or information as are available with the Assessing Officer and relatable to such evidence, as reduced by the aggregate of the total income, or as the case may be, as increased by the aggregate of the losses of such previous years. Therefore, while determining / computing the undisclosed income of the block period, the Assessing Officer shall compute the income on the basis of evidence found as a result of search or on requisition of books of accounts. This is so because the correctness or otherwise of the return filed in pursuance of notice under Section 158BC (a) has to be examined with reference to the materials in possession of the Assessing Officer having nexus to the assessment of undisclosed income. Hence block assessment has to be framed in the light of material coming in to the possession of the assessing authority pursuant to the search, which is the foundation o....