TaxTMI 
TaxTMI 
2008 (9) TMI 9
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....only issue raised by the Revenue in the present Appeal is with regard to the deletion by the Tribunal of a sum of Rs.21,61,67,368/- which had been added by the Assessing Officer under Section 40A(3) of the Act on account of purported cash transaction in the sum of Rs.108,08,36,839/-. 3. In order to dispose of the Appeal, the following facts relevant to the issue require to be noted. These are as follows:- 3.1 A search and seizure operation was carried out in the premises of the Assessee i.e, Shri A.S.Khandelwal, on 15.10.1998. Consequently, a notice dated 11.11.99 under Section 158BC of the Act was issued, which was served on the Assessee on 22.11.99. By virtue of this notice the Assessee was required to furnish a return for the block....
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....he case, the Ld CIT(A) has erred in confirming action of the AO in holding that the various loose papers found from the assessee belongs to him. He has further erred in confirming the action of the AO by holding that various transactions/jottings on these papers represent trading of the assessee.? "8. Under the facts and circumstances of the case, the Ld. CIT(A) has erred in confirming action of the AO in invoking the provisions of section 40A(3) in respect of alleged purchases of Rs.1,08,08,36,839/- on the basis of seized papers and thereby confirming the addition of Rs.21,61,67,368/- for Asstt. Year 1999-2000 u/s 40A(3).? 3.5 The Tribunal while dealing with Ground No.2 noted that even while the Assessing Officer made observations on....
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....ssee. The Tribunal noted that after the Assessing Officer had accepted the agency commission it was not permissible for the Assessing Officer to presume that such transactions were from purchase or sale made by the Assessee in his own right. In view of the above, the Tribunal concluded that the appellant herein could not bring on record any material to prove that the transactions referred to in the documents seized represented the purchase and sale of goods in which the Assessee had proprietary rights. 3.6 In these circumstances, the Tribunal allowed Ground No.2 raised in the appeal filed by the Assessee before it. 3.7 With reference to Ground No.8 the Tribunal noted the contention of the Revenue that the transactions reflected ....
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....iod without any adverse comments thereon, there was no factual or legal justification in making disallowance under Section 40A(3) of the Act. The Tribunal categorically stated that it was unable to accept that the seized documents Annexures A-2 to A-8 represented purchases made by the Assessee in cash. 4. Having heard the learned counsel for the Revenue as well as the Assessee and perused the record of the case below, we are of the view that the addition made by the Assessing Officer by taking resort to Section 40A(3) of the Act on the ground that the Assessee had made cash purchases to the tune of Rs. 108,08,36,839/- is untenable. It is quite evident that the said section is set into motion only if an Assessee incurs an 'exp....