TaxTMI 
TaxTMI 
2021 (1) TMI 561
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..... Since common issues are involved in all these appeals, hence all these four appeals and CO were heard together by Division Bench and are disposed of by this common order. These four appeals and CO were heard by Division Bench through video conferencing mode through Virtual Court. 2a. The grounds of appeals raised by assesse in ITA No. 632/Alld/2014 for ay : 2007-08 in memo of appeal filed with Income-Tax Appellate Tribunal, Allahabad (hereinafter called " the tribunal") reads as under : ITA No. 632/ALLD/2014 "1. That in any view of the matter the assessment framed vide Order dated 28.12.2011 U/s 143(3) of the Income Tax Act by the assessing officer and his actions as partly maintained by the Commissioner of Income Tax (Appeals) both are unjustified and illegal on facts of the case and also bad in law, therefore the declared income of the assessee in the return should have been accepted in the facts and circumstances of the case. 2. That in any view of the matter observations and findings of the two lower authorities for making and maintaining additions/ disallowances in their orders are incorrect, general, vague and contrary to the actual facts of the case....
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....to be deleted. 9. That in any view of the matter no reasonable opportunity was provided to the assessee before making the additions/disallowances under different heads which is highly unjustified and illegal. 10. That in any view of the matter the penal interest charged under various provisions of the Income Tax Act is highly unjustified and illegal in the facts and circumstances of the case. 11. That in any view of the matter the assessee reserves his right to take any further ground of appeal, before hearing of the appeal." 2b. The grounds of appeals raised by assesse in ITA No. 152/Alld/2013 for ay : 2009-10 in memo of appeal filed with tribunal reads as under : ITA No. 152/ALLD/2013 "1. That in any view of the matter since it is an admitted fact on record that a survey u/s 133A of the income tax act was conducted on 27.08.2009 and not any search and seizure u/s 132(1) therefore the proceedings initiated u/s 153A of the income tax act and the entire assessment made u/s 153A(b) are unjustified and illegal and the two lower authorities failed in considering the issue in appropriate manner. 2. That in any view of the matter assessm....
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....ince the main items for manufacturing is pig iron and coal which are supported by day to day stock registers and likewise for finished goods also stock registers are maintained and recorded in books therefore addition maintained by the Commissioner of Income Tax (Appeals) is unwarranted. 8. That in any view of the matter addition of Rs. 1,02,000.00 as made by the assessing officer as per Para 4 of the assessment order and the same as maintained by the Commissioner of Income Tax (Appeals) as per Para 5.2 of his order without considering and discussing the issue is highly unjustified and unwarranted in the facts and circumstances of the case. 9. That in any view of the matter disallowance of Rs. 9,426.00 and Rs. 6,320.00 under the head 'General expenses' and under the head 'Dispensary expenses' a disallowance at the rate of 10% unwarranted because in the income tax act there is no such provision to disallow the expenses on percentage basis hence liable to be deleted. 10. That in any view of the matter the interest as charged under different section of the income tax act is highly unjustified. 11. That in any view of the matter the appellant reserve....
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....d liable to be deleted and rejection of account is not correct specially when provision of Section 145(3) is not invoked by the assessing officer hence maintained addition is liable to be deleted. 5. That in any view of matter addition of Rs. 1,02,000/- as maintained by C.I.T. (Appeal) as per para 5.2 of his order is not correct as the addition maintained without considering the facts and circumstances of the case. 6. That in any view of matter it not correct to say that the order of C.I.T. (Appeal) being erroneous in law and on facts. 7. That in any view of matter the respondent reserve his right to taken any facts ground of appeal or amend before hearing of appeal. 8. That in any view of matter departmental appeal is bad in law as well as on facts and therefore liable to be dismissed and addition maintained are also liable to be deleted." 2d. The grounds of appeals raised by assessee in ITA No. 633/Alld/2014 for ay : 2010-11 in memo of appeal filed with tribunal reads as under : ITA No. 633/ALLD/2014 "1. That in any view of the matter the assessment framed vide Order dated 28.12.2011 U/s 143(3) of the Income Tax Act by the assess....
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....s maintained by the Commissioner of Income Tax Appeal is highly unjustified and illegal in the facts and circumstances of the case, hence the maintained part of the sum also deserves to be deleted. 8. That in any view of the matter a part sum of Rs. 4,136/- out of the disallowance of Rs. 8,273/- made under the dispensary expenses as maintained by the Commissioner Income Tax (Appeal) is unjustified and incorrect in the facts and circumstances of the case, hence the same is liable to be deleted in interest of justice. 9. That in any view of the matter assessment framed and Assessing Officer's actions as partly confirmed are abinito void, unlawful and bad in law, without appreciation of facts and utter disregard of the submissions tendered by the appellant, the lower authorities based on unwarranted presumptions, surmises, conjectures and imagination only without any evidence, therefore the additions/disallowance under different head so made and maintained are unwarranted hence the same are liable to be deleted. 10. That in any view of the matter no reasonable opportunity was provided to the assessee before making the additions/disallowances under differ....
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.... of authorization issued by Revenue against the assessee and Panchanama's prepared during the course of search operations claimed to be carried out by Revenue u/s 132(1) of the 1961 Act, on 27.08.2009 against the assessee. Pursuant to such directions issued by the Bench, now learned CIT DR has filed copies of warrant of authorization which were issued by Revenue against the assessee in connection with the aforesaid search and seizure operations conducted by Revenue against the assessee u/s 132(1) of the 1961 Act, on 27th August, 2009. The copies of Panchnama's prepared during the course of search operations on 27.08.2009 are also filed by Revenue with the tribunal. The counsel of the assessee was also given copies of Warrant of Authorisation drawn by Revenue against the assessee and also copies of Panchnama prepared during the course of Search operations conducted by Revenue against the assessee on 27.08.2009, u/s 132(1) of the 1961 Act . The aforesaid warrant of authorization and Panchanama are placed on record in file. At the opening of the hearing before the Bench, the learned counsel for the assessee at the outset conceded that he has gone through the documents furnished by ....
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....T(A) to the assessee while adjudicating first appeal. At the outset, learned counsel for the assessee submitted before us that ground no. 1 to 4, and 6 to 11 raised by assessee in memo of appeal filed by assessee with tribunal are not being pressed and prayers are made for dismissal of these grounds as not being pressed. The learned CIT DR raised no objection to dismissal of ground no. 1 to 4 and 6 to 11 raised by assessee in memo of appeal filed with tribunal, as not being pressed. After considering contentions of both the parties, we dismiss ground numbers 1 to 4 and 6 to 11 raised by assessee in memo of its appeal filed with tribunal, as not being pressed. We order accordingly. 6. This leaves us with ground number 5 raised by assessee in memo of appeal filed with tribunal, which is vehemently argued by assessee, and which requires adjudication by us on merits of the issue raised in the appeal filed with the tribunal. During the course of search and seizure operations conducted by Revenue u/s 132(1) of the 1961 Act against the assessee on 27.08.2009, the Revenue seized a document ( numbered as LP-19, page number 41) from the business premises of the assessee . The said seized ....
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....6 for Rs. 1,00,002/- for supply of chaff cutter machine and spare parts, was raised in favour of Mr. Mukesh Kumar Singh, Purani Gurhati, Chhapra, Bihar, which bill is placed at paper book page no. 51. The copy of ledger account of M/s Mukesh Kumar and Company in the books of the assessee for financial year 2006-07 is also placed in paper book at page number 49. It is submitted that both 'M/s Sudama Singh & Sons' and also 'M/s Mukesh Kumar and Company' ware related parties of the same group and even their addresses are same. It is submitted that invoice of Rs. 1,00,002/- for supply of chaff cutter machine and spare parts, was raised in favour of Mr. Mukesh Kumar Singh, Purani Gurhati, Chhapra, Bihar and cash of Rs. 1,00,000/- was received against the said bill, which is duly accounted for in books of accounts of the assessee. We have observed that in the said letter dated 29.11.2006 written by Mr. Hulas Sharma of M/s Sudama Singh and Sons which was seized by Revenue, there is a mention of 'Mukesh' which was later stuck off by said Mr. Hulash Sharma. In this seized letter, Shri Hulash Sharma has asked for receipt of cash of Rs. 1 Lac. It is also observed that assessee is regularly de....
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.... Sons )was issued on 28.11.2006 for Rs. 1,00,002/- for sale of chaff cutters machine and spare parts which was issued much prior to the date of search carried on by Revenue against assessee u/s 132 of the 1961 Act, on 27.08.2009. The assessee raised bill no. 125 dated 28.11.2006 for Rs. 2,06,204/- in favour of M/s Sudama Singh & Sons and both the parties has same address. Further, the bills raised are printed one with bill number pre-printed on the invoice. Further, in the said invoice even the Lorry/truck number is mentioned in which the goods were transported by assessee viz.MP 17/7917 to said Mr. Mukesh Kumar . No enquiry whatsoever was made by Revenue even at first appellate stage. Further Hulash Sharma is seeking for receipt of Rs. 1 Lac paid by them in cash and name of 'Mukesh' is struck off in the said seized letter dated 29.11.2006, which also strengthen our view that this Rs. 1 Lac received by assessee is against the bill no. 126. There are other dealings of the assessee with the said party M/s Mukesh Kumar and Company during the year under consideration and even payments vide cheque was received ( see ledger account of M/s Mukesh Kumar and Company), hence we accept the....
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....ore, Rajendra Path, Patna, Bihar, vide bill no. 68 dated 24th June, 2009 (challan number 64 dated 24th June 2009), but due to human error entry was made in the stock register of 135 chaff cutter machines on 24th June 2009, which was a bonafide human error and the same was later corrected by the assessee suo moto after the conclusion of search proceedings, on 31st August, 2009. The AO and learned CIT(A) disbelieved the contentions of the assessee and made addition to the income of the assessee to the tune of Rs. 25,750/- on account of allegations of making sales outside books. Before us, similar contentions were made by the learned counsel for the assessee who submitted that there was a human error in posting made in the stock register wherein the sales were made of 125 chaff cutter machines to M/s Raj Machinery Store, Rajendra Path, Patna, Bihar, vide bill no. 68 dated 24th June, 2009 ( challan number 68 dated 24.06.2009), but due to human error entry was made in the stock register (which was seized by Revenue during search operations ) as 135 Chaff Cutter Machines, and this error was a bonafide human error which was later corrected by assessee suo motu on 31st August, 2009, aft....
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....e assessee during the year under consideration was to the tune of Rs. 8.38 Crore and the only discrepancy in the stock register which is found by Revenue for the year under consideration was to the tune of Rs. 25,750/- which is a very small fraction of total sales declared by assessee. Thus, on totality of circumstances and on touchstone of preponderance of probabilities, we hold that this is a genuine and bonafide error made by the assessee while posting stock covered by sales in the stock register and we order deletion of addition of Rs. 25,750/- as was made by the AO which was later confirmed by ld. CIT(A). We order accordingly. 11. Now coming to ground of appeal no. 6 raised by assessee in memo of appeal filed with tribunal, we have observed that several loose papers (marked as Annexure LP-6) were seized by the Revenue from assessee during the course of search operations conducted by Revenue against the assessee u/s 132(1) of the 1961 Act, on 27.08.2009, the details of the seized material have been given in the orders of the authorities below . It is observed that there are cash receipt / payments which are recorded in these seized material, and an amount to the tune of R....
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....uipment's. The assessee is not selling coal, Kiwad, Iron etc. which is found mentioned in the seized document, rather the assessee is buying these items. Thus, explanation of the assessee cast serious doubts and is against the normal conduct of the business of the assessee. This amount of total material value of Rs. 87,523.75 is not reflected in books of accounts by sale / purchase invoice on 22.06.2009. The amount of Rs. 70,000/- shown to have been received in cash by assessee on 22.06.2009 is not demonstrated to be reflected in cash book. We are of the considered view that the assessee is not able to justify and/or connect these receipts / payments as are found mentioned in loose documents seized by Revenue, with the transactions sought to be explained by assessee as are recorded in its books of accounts, and the explanation which is made by the assessee are merely an after thoughts to wriggle out of tax ambit. Thus, we reject the contention of the assessee on this issue and uphold /sustain the addition as was made by AO and which was later sustained / upheld by learned CIT(A). We order accordingly. b) There is a loose document in seized Annexure LP-6, where the....
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....speaks that there was a total transaction of Rs. 35,658/- on 23.07.2009 and an advance was already paid of Rs. 25,000/-. This transaction of Rs. 35,658/- of supplies is not demonstrated to have been recorded in books of accounts. Further addition of Rs. 9250/- on account of transaction of Rs. 9250/- for material supplies on 25.08.2009, the corresponding invoice is not shown to have been reflected in books of accounts for both the above supplies of material. Further, no connection/nexus between 'Santosh' as mentioned in seized document and M/s Badri Prasad Amar Nath is brought on record. We are of the considered view that the assessee is not able to justify and/or connect these receipts / payments as are found mentioned in loose documents seized by Revenue, with the transactions sought to be explained by assessee as are recorded in its books of accounts, and the explanation which is made by the assessee are merely an after thoughts to wriggle out of tax ambit. Thus, we reject the contention of the assessee on this issue and uphold /sustain the additions as was made by AO and which was later sustained / upheld by learned CIT(A). We order accordingly. d) Payment of Rs. 13130/....
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.... 4 to 7 in assessee's appeal and ground of appeal number 1 and 2 in Revenue's appeal, are with respect to the additions being made on account of purchases being made by the asessee. The learned CIT(A) has granted part relief to the assessee while adjudicating first appeal filed by assessee, and against the part relief so granted by learned CIT(A), the Revenue has come in appeal before the tribunal, while the assessee being aggrieved by additions sustained by learned CIT(A) has come in appeal before the tribunal for the additions sustained by learned CIT(A). The Cross Objections are filed by assessee in support of learned CIT(A) appellate order granting relief to the assessee, against which Revenue is in appeal before the tribunal. 15. So now coming to the merits of the issue. There was a search and seizure operations conducted by Revenue against the assessee u/s 132(1) of the 1961 Act, on 27.08.2009. There was also an simultaneous survey operations carried on by Revenue u/s 133A of the 1961 Act against the assessee's Chartered Accountant namely M/s. Gupta Sanjay & Associates on 27.08.2009 wherein some documents were impounded by Revenue during the course of survey operations fro....
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....d of purchases, closing stock and consumption(see chart above) are tallying in document impounded from CA during survey operations and the audit report, but the values are varying. The assessee was asked by the AO to explain the difference in the figures of purchase, consumption and stock of raw material and finished goods between the document impounded during survey operations conducted by Revenue u/s 133A on CA M/s Gupta Sanjay and Associates and the figures certified in the audit report by the CA. The assessee explained that said document impounded from the premises of M/s Gupta Sanjay & Associates was with respect to raw material namely Pig Iron and Coal, as is mentioned in the impounded document, but there are several other materials, consumables etc. which were purchased by the assessee and which are used in manufacturing activities carried on by assessee, which are not included in the aforesaid impounded document, while the same are duly accounted for in the books of accounts and consequently in the audit report . The assessee also explained that it is mentioned in the document itself that this document concerns itself with Pig Iron and Coal, and it was explained by assessee....
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....IT(A) accepted the contentions of the assessee so far as purchases made by assessee from M/s Benaras Steel Traders, Motiakhan, Mandy, Gobindgarh, Punjab to the tune of Rs. 1,03,27,195/- and additions stood deleted to that effect by learned CIT(A) by holding that purchases made by assessee from M/s Benaras Steel Traders are genuine and duly supported by purchase invoices, transport bills, confirmation of account from M/s Benaras Steel Traders, payments being made by cheque/draft which are sufficient evidences to hold that purchases from this party M/s Benaras Steel Traders are genuine. The learned CIT(A) confirmed the additions with respect to purchases to the tune of Rs. 3,08,98,592/- on the grounds that the assessee failed to brought on record evidences for purchases such as purchase invoices, vouchers, details of payment, confirmation from relevant parties and evidences in support of transportation of material and stock records, vide appellate order dated 10.01.2013 passed by learned CIT(A). 18. Now, Both assessee and Revenue being aggrieved by the appellate order passed by learned CIT(A) have filed cross appeals before the tribunal. Similar contentions were made by learned....
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....d. It was submitted by ld. Counsel for the assessee that the assessee is carrying on same business for last several years and no such addition has been made by Revenue in any of the earlier years. It was submitted that stock has been accepted in earlier years and only for this year the addition has been made . The learned CITDR has submitted that the assessee has inflated its purchase in books of accounts and unexplained purchases were added rightly by AO. The learned CIT-DR relied upon the appellate order passed by learned CIT(A) so far as additions were sustained by learned CIT(A) and on assessment order of the AO on the issue on which learned CIT(A) has given relief to the assessee. 19. We have heard rival contentions and perused the material on record. We have observed that the assessee is engaged in the business of manufacturing of agricultural equipment's such as chaff-cutter machine, Osai-fan, cane-crusher and thresher etc., and sale of these agricultural equipment's. there was a search and seizure operations conducted against the assessee by Revenue on 27.08.2009, u/s 132(1) of the 1961 Act and simultaneously there was a survey operations conducted by Revenue against the....
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.... The authorities below had observed that weight of items in quantity as are mentioned of purchases, closing stock and consumption(see chart above) are tallying in document impounded from CA during survey operations and the audit report, but the values are varying. The assessee on its part had explained that said document impounded from the premises of M/s Gupta Sanjay & Associates was with respect to raw material namely Pig Iron and Coal, as is mentioned in the impounded document, but there are several other materials, consumables etc. which were purchased by the assessee and which are used in manufacturing activities carried on by assessee, which are not included in the aforesaid impounded document, while the same are duly accounted for in the books of accounts and consequently in the audit report . The assessee had also explained that it is mentioned in the document itself that this document concerns itself with Pig Iron and Coal, and it was explained by assessee that there are other raw material and consumables which are used for manufacturing activities carried on by assessee of agricultural equipment's such as chaff cutters machine, Osai fan, cane crusher and thresher etc. .....
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....ls in taxaudit report is also concerning Pig Iron and Coal but there is no mention of the same in tax-audit report. The counsel for the assessee has stated that if these additions are sustained, then the GP ratio will go upto 180%. It is also claimed by ld. Counsel for the assessee that same business was carried on by assessee as was conducted in earlier years and no such addition was made by Revenue in preceding years and it is for only this year, the additions have been made. The assessment order dated 19.12.2011 (pb/page 352) passed under VAT is also placed on record. There is a prima-facie merit in the contentions of the assessee, but the grievance of the Revenue is that the assessee has not such as purchase invoices, vouchers, details of payment, confirmation from relevant parties and evidences in support of transportation of material and stock records before the authorities below, which fact is emerging from appellate order passed by learned CIT(A). These details require verification as to whether the expenses were incurred for business of the assessee or not. The assessee is claiming deduction from income towards purchases of raw material and consumables and the onu....