TaxTMI 
TaxTMI 
2023 (6) TMI 1167
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.... for technical services and as such, TDS should have been deducted under section 195 of the Income tax Act, 1961 ("the Act"). 1.1. That on the facts and circumstances of the case and in law, the CIT(A) did not appreciate that the commission paid to foreign agents was not chargeable to tax in India within the meaning of respective DTAAS. 1.2 That on the facts and circumstances of the case and in law, the CIT(A) in upholding the disallowance has erred in not adjudicating on the additional evidence being the agreements with foreign agents, though the remand report of the Assessing Officer was called for. 2. That on the facts and circumstances of the case and in law, the CIT(A) has erred in sustaining the addition of Rs. 28,78,632/- in respect of the parties from whom the Appellant had purchased material or availed the services, simply for the reason that summon could not be served to the parties. 2.1 That on the facts and circumstances of the case and in law, the CIT(A) in upholding the addition of Rs. 28,78,632/- allegedly on account of undisclosed income from other sources did not appreciate the ground realities of the business of the Appellant." ....
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.... the Tribunal in assessee's own case for assessment year 2009-10 wherein similar disallowance was deleted for the reason that as the assessee had sufficient interest free funds available with it for making advances to sister concerns and other related parties. 8. The ld. DR strongly supported the order of the Assessing Officer. 9. The ld. Counsel for the assessee submits that the present matter is fully covered both on facts and in law by the judgement of Hon'ble Bombay High Court in the case of CIT Vs. Reliance Utilities [313 ITR 340 (Bom)]. The ld. Counsel for the assessee referring to page 329 of the paper book which is the balance sheet as on 31st March, 2011 submits that the assessee had own funds to the extent of Rs. 14,21,00,000/- as at the beginning of the previous year which stood at Rs. 12,91,00,000/- as on 31.03.2011. Therefore, the ld. Counsel submits that once it is clear that the eventuality on own funds at the beginning of the year and at the end of the year far exceeded the loans advanced which facts have not been controverted by the Assessing Officer the ratio of the Hon'ble Bombay High Court in the case of CIT Vs. Reliance Utilities (supra) clearly applies a....
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.... be presumed that the taxes were paid out of the profits of the year and not out of the overdraft account for the running of the business. It noted that to raise the presumption, there was sufficient material and the assessee had urged the contention before the High Court. The principle, therefore, would be that if there are funds available both interest-free and over draft and/or loans taken, then a presumption would arise that investments would be out of the interest-free fund generated or available with the company, if the interest-free funds were sufficient to meet the investments." 11. As could be seen from the above the principle laid down by the Hon'ble Bombay High Court is, if there are funds available both interest free and over-draft and/or loans taken then a presumption would arise that investments would be out of the interest free funds generated or available with the assessee if the interest free funds were sufficient to meet the investments. In the case on hand admittedly the interest free funds available at the beginning of the year i.e. as on 1.04.2010 stood at Rs. 14,25,00,000/- and at the end of the year as at 31.03.2011 the interest free funds stood at Rs. 12,....
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..... 28,78,632/- towards unexplained stock. 14.1 Brief facts are that the assessee is a firm engaged in the business of manufacturing and export of ready-made garments filed its return of income on 30.09.2011 declaring loss of Rs. 83,38,278/-. A survey was carried out at various business premises belonging to the assessee on 6.09.2010 wherein stock of Rs. 11,41,17,922/- was inventorised as against declared stock of Rs. 4,91,06,399/-resulting in unexplained stock of Rs. 6,50,11,523/- which the assessee did not consider the same in the return of income filed. A show cause notice was issued by the Assessing Officer and the assessee submitted that the survey team apart from preparing inventories of stock had taken a print out of profit and loss account available as on 6.09.2010 and in this P & L account the closing stock was depicted at Rs. 4,91,06,399/- which is the value taken by the survey team which was compared with the figure of stock of inventories by them on 6.09.2010 at Rs. 11,41,17,922/-. The assessee submitted that subsequent to survey in the course of audit of accounts undertaken the P & L account for the period 1.04.2010 to 6.09.2010 was prepared after recording all the tr....
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....Similarly it was submitted that expenditure in the unaudited P & L account in respect of dying accessories bills was shown at Rs. 1,00,25,720/- and in the audited P & L account it was shown the actual expenditure at Rs. 1,17,03,688/- and the difference of Rs. 16,77,967/- could not be recorded in the unaudited P & L account and in support the assessee submitted the details of bills for the same. 16. Further the assessee contended that the stock which was inventorized at the premises of SAM Design, A-36, Hans Complex, Noida, which is the proprietary concern of Shri Mukesh Sharma at Rs. 2,57,46,000/- was over-valued and the correct valuation in terms of stock in quantity and value should have been taken at Rs. 1,92,34,153/- and thereby arose excess valuation to the extent of Rs. 65,11,846/-. Therefore, it was explained that if all these are considered the stock as on 6.09.2010 was more than what has actually been inventorized by a small margin of Rs. 5,08,761/- and, therefore, there can be no addition by way of income from undisclosed sources on account of alleged discrepancy in the stock. 17. However, not convinced with the replies, submissions and evidences furnished by the as....
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....he ld. DR submits that since the assessee has not given any proper explanation for the differences in stock the same was rightly treated as unaccounted stock by the Assessing Officer. The ld. DR placed reliance on the following decisions in support of his contentions :- (i) Raj Hans Towers (P.) Ltd. Vs. CIT [(2015) 373 ITR 09 (Del)]; (ii) Pr. CIT Vs. Avinash Kumar Setia [(2017) 395 ITR 235 (Del)]; (iii) M/s. Pebble Investment & Finance Ltd. Vs. ITO [(2017) TIOL 188 (Bom)] [(SLP dismissed by the Hon'ble Supreme Court vide order dated 5.07.2017 in SLP (Civil) No. 11784/2]. 20.1 The ld. Senior Advocate, Shri C. S. Aggarwal, appearing for the assessee submits that on 06.09.2010 a survey u/s 133A of the Income Tax Act had been conducted at the business premises of the assessee firm. The survey team had prepared stock inventories of the stocks found at the various business premises as is tabulated below:- SI. No. Premises Value Type of stock Activity carried out 1. A -36, Hosiery Complex, Noida 2,57,46,000.00 Unprocessed Fabric (Meters) Dyeing and printing of fabric 2. Stock at Customs 2,36,22,278.00 Finished Goods (....
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....and also explained that there was no discrepancy in the value of stocks found and inventorised on the date of survey. Thus by implication, it had retracted the statement made by Shri V. P. Sachdeva which had been given by him on complete misconception of facts and was based on the facts projected to him by the survey team. That, during the course of assessment proceedings the assessee had made following written submissions before the learned Assessing Officer and in the aforesaid submissions, it had been submitted that there was no discrepancy in the value of stocks found and the entire stocks found at the time of survey is fully accounted for. The aforesaid submissions made by the appellant had been supported by the documentary evidences filed at the time of the assessment. It had been submitted that on the date i.e. on 06.09.2010 when the Profit & Loss Account had been prepared from the computerised accounts, certain transactions had remained to be entered in the books of accounts. The various reasons which had lead to non-recording of the transactions had also been explained as is evident from Para 7.1 (Pg. 91 of the PB). It had further been submitted that even the stocks lying ....
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....6 8,31,29,067 3,09,88,855 Add: Cost of stock exported up to 06.09.2010 and not entered till the date of survey. 1,76,08,784 1,76,08,784 Less: Value of Stock in hand as per books of account on the date of survey. 4,85,97,639 4,91,06,399 Difference in Reconciliation of stock on the date of survey as per accounts at the time of survey after entered in the books of accounts. 5,08,760 Note: In the reframed accounts on the date of survey, the stock in hand after adjustments exceeds by Rs. 5,08,760/-which is on account of merely valuation difference. As such, it had been prayed that the declared results, be accepted. 22.1 That in spite of the above submissions made by the assessee from time to time (and duly supported by the necessary documentary evidences), the learned AO, framed an assessment after including in the income, a sum of Rs. 4,29.63,309/- instead of Rs. 6,50,11,523/-, as had erroneously and on misconception of facts been offered in the statement of Shri V. P. Sachdeva. In other words, the learned AO had allowed only a deduction of Rs. 2,20,51,214/-, the value of the sales recorded by the ass....
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....ransactions in the ledger account, the value of stocks (which had been adopted) held on the date of survey as per the books of account was erroneous. 22.4 The ld. Counsel submits that it is also necessary to note that after the assessee had furnished return of income after due audit, the learned AO has accepted not only the results as reflected in the Profit & Loss account but has also made no adverse comments or rejected the books of accounts maintained by it in the normal course of business. Thus in brief, it is submitted that the claim of the assessee that it had purchased fabrics, incurred fabrication expenses, purchased accessories and certain dying expenses had not been entered, had completely been side tracked and overlooked by the learned Assessing Officer. 22.5 The ld. Counsel submitted that the assessee had also stated that there is a difference in the value of fabric stock as inventorised by the survey tem; whereas actual stock was lying at M/S. SAMTEX DESINZ. In fact, it had also been contended that the value of stocks inventorised at A-36, Hosiery Complex, Noida at Rs. 2,57,46,000/- was not based on physical verification. The detailed submissions in respect there....
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.... submitted by the assessee at page 56 of Volume 4 of the paper book. The assessee has further submitted a copy of his Fabrication ledger account for the period 15.06.2010 to 06.09.2010 at pages 57 to 74 of Volume 4 of the paper book wherein the bills have been accounted for post the date of the survey though the goods relating to the said bills had been received by the assessee from its vendors before the date of the survey. The assessee has further submitted a summary of Fabrication Charges/Expenses at pages 75 to 76 of Volume 4 of the paper book to show a party wise detail of Fabrication Charges reconciliation between the physical stock reported by the survey team and the one noted by them form the Profit & Loss Account taken before commencement of the survey. In order to verify the claim of the assessee, we proceeded to issue notices u/s 133(6) of the Income Tax Act to the parties whose fabrication bills were reported by the assessee in its reconciliation statement and the aggregate value of whose bills as mentioned by the assessee was in excess of Rs1.00 lakh. The names and addresses of the said parties are as under: Sl. No. Name of the Party. Address. Valu....
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....It was also noted from the Account statements submitted by the above named parties that they were regularly receiving payments from the assessee during the Financial Year 2010-11. 23.5 Further a sum of Rs. 52,63,222/- has been claimed by the assessee as in-house tailors payment in its aggregate sum of Rs. 1,53,48,825/- towards bills/expenses not accounted for while preparing the reconciliation of physical stock value and the one noted by the survey team. The said amount was kept out of the preview of notices u/s 133(6) of the Act since this sum does not represent sums invoiced by the assessee's vendors but is spent by the assessee on its own for payments to its in-house labour force. Apart from the above, notices for value Rs. 7.10.969/- were not issued to various parties whose aggregate billing as detailed by the assessee in its appeal papers was less than Rs. 1.00 lakhs due to the sheer voluminous nature of the transactions involved albeit of very small value." 24.1 From the aforesaid report it is submitted it would be evident that the learned Assessing Officer was satisfied that there was no discrepancy of the value of stocks found at the time of survey. In fact, the d....
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....onally stated that the claim of the assessee does not deserves to be accepted. The assessee for the sake of brevity is not extracting the objections of the learned Assessing Officer which are at Pg. 1497-1502 of PB - 5. Further as the proceedings were not closed, the appellant had made following additional submissions after the second remand report was sent by the learned Assessing Officer. Sl. No. Date Pages. 1. 06.08.2018 1944-1951 2. 01.03.2020 1952-1969 3. 17.03.2020 1970-1991 26. Thus in respect of fabrication expenses incurred and claimed during the Financial Year 2010-11 the written submissions made before the learned Assessing Officer and the learned CIT (Appeals) are as under: Before the learned Assessing Officer Sl. No. Date Pages. 1. 30.01.2014 99. Before the learned CIT (Appeals) Sl. No. Date Pages. 1. 04.12.2015 439-442 2. 21.11.2017 1672 3. 27.11.2017 1942-1943 4. 06.08.2018 1947 5. 01.03.202 1954-1559 6. 17.03.2020 1984-1986 27. The learned CIT (Appeals) thus after analysing the assessee's submissions and the report of the l....
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....aid expenditure incurred the assessee had entered in the books of accounts till the date of survey i.e. 06.09.2010, an aggregate expenditure of Rs. 3,53,31,230.68 (Pg. 109 of PB) and remaining sum of expenditure of Rs. 1,53,48,829/- though had been incurred but had yet to be entered. A complete list of such details as had been furnished both before the learned Assessing Officer and learned CIT (Appeals) itself establishes that such an expenditure incurred is supported by necessary documentary evidence. A copy of the table as furnished is also annexed as Annexure 'A'. 29. It is submitted the aforesaid sum of expenditure of Rs. 1,53,48,829/- had been a sum paid for fabrication of the garments exported. The aforesaid sum had been paid to 57 of the fabricators. Such fabricators have been fabricating the garments for the assessee in the preceding years also. In fact, during the instant year, prior to survey and even after survey, such fabricators had been providing their services. It is well known fact that such fabricators are belong to an un-organised sector and also small time tailors. The assessee had led necessary evidences to support that the expenditure incurred and de....
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....n our books at Page No- 577 Paper Book-3 Form 16A-Page No 579 2 ARYAN ENTERPRISES Gadi Gali Village Mamura Sector-66, Near Ambedkar ITI Institute Opp. Sector-64, Noida. 1,23,170.00 152 & 155/ 10.07.2010 & 10.08.2010 01.10.2010 & 02.10.2010 Cheque 1. Respective Bill 2. Copy of Account in our books at Page No- 604 Paper Book-3 Form 16A-Page No605. 3 BABLI FABRICATOR, Chitra Colony, Bhangel, Ph. - II, Noida. 1,59,905.00 25 to 35/ 15.06.2010 30.06.2010 15.07.2010 30.07.2010 14.08.2010 30.08.2010 06.09.2010 26.10.2010 25.11.2010 27.12.2010 21.01.2011 Cheque 1. Respective Bill 2. Copy of Account in our books at Page No- 614 TO 617 Paper Book-3, Form 16A-Page No-625 to 626. 4 CHAUHAN ENTERPRISES Inside Gate, Sharma Market Salarpur Bhangel, Noida. 1,37,257.00 1160 & 1182/ 28.07.2010 & 30.07.2010 26.10.2010 & 25.11.2010 Cheque 1. Respective Bill 2. Copy of Account in our books at Page No- 641 Paper Book-3, Form 16A-Page No644. 5 DEEPAK KAJ HOUSE B-165, New Ashok Nagar, Delhi. 1,27,835.00 1024, 1018, 1025/ 30.06.2010 15.07.2010 31.07.2010 06.09.2010 26.10.2010 25.11.2010 Cheque 1. Respective Bill 2. Copy of A....
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....e No- 873 to 877 Paper Book-3, Form 16A-Page No-888 to 889. 14 SIDDIQUL EXPORT Rz- 524/24, Tughlakabad Extn., New Delhi 110 019. 4,02,768.00 100, 101, 109, 110, 108, 112, 114, 120, 113, 116, 115/ 15.06.2010 30.07.2010 14.08.2010 30.08.2010 17.08.2010 06.09.2010 26.10.2011 25.11.2011 Cheque 1. Respective Bill 2. Copy of Account in our books at Page No- 767 to 769 Paper Book-3, Form 16A-Page No-771. TOTAL : 2594300.00 30.2 It is submitted that from the aforesaid table it would be seen that despite the evidences furnished which is of similar nature, yet the learned CIT (Appeals) has upheld the disallowance. It is most humbly submitted that the mere fact the summons could not be delivered by the learned Assessing Officer by itself could be no ground to have upheld the disallowance. Needless to reiterate that such of the fabricators had been undertaking fabrication activities in the prior period and even in the later period of the same financial year, as is tabulated as Annexure 'B'. 31. Ld. Counsel submitted that at Pg. 49, the learned CIT (Appeals) has referred to figure of Rs. 28,33,607 (which ....
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....8 Paper Book-4. 2 HITKARI ACCESSORIES G-7, Shreejee Complex, Sharma Market, Harola, Noida. 1,27,143.00 3354, 3598 3348, 3602 3421, 3619 3423, 3611 3469, 3600 3450, 3605 3494, 3638 3491, 3662 3507, 3660 3508, 3641 3530, 3670 3531, 3672 3535, 3726 3562, 3700 3576, 3752 3577, 3751 3765/ 14.08.2010 18.08.2010 19.08.2010 20.08.2010 21.08.2010 23.08.2010 25.08.2010 26.08.2010 27.08.2010 28.08.2010 30.08.2010 31.08.2010 01.09.2010 16.09.2010 Cheque 1. Respective Bill 2. Copy of Account in our books at Page No- 1110 to 1181 Paper Book-4. 34.2 For the sake of convenience, the assessee is furnishing a chart as Annexure - 'C' which provides the details of such suppliers of accessories who had also been supplying accessories in the prior period and even in the later period of the same financial year. 35. Therefore, the ld. Sr. Counsel for the assessee submits that since the CIT (Appeals) analyzed both the remand reports of the Assessing Officer and since the assessee has furnished all the evidences and explanations in support of the claim that there is no difference in stocks the ld. CIT (Appeals) has rightly deleted the addition of Rs. 28,78,632/-. The ld. Sr. Couns....
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.... Rs. 4,91,06,399/- resulting in unexplained stock of Rs. 6,50,11,523/- which the assessee did not consider the same in the return of income filed. A show cause notice was issued by the Assessing Officer and the assessee submitted that the survey team apart from preparing inventories of stock had taken a print out of profit and loss account available as on 6.09.2010 and in this P & L account the closing stock was depicted at Rs. 4,91,06,399/- which is the value taken by the survey team which was compared with the figure of stock of inventories by them on 6.09.2010 at Rs. 11,41,17,922/-. The assessee submitted that subsequent to survey in the course of audit of accounts undertaken the P & L account for the period 1.04.2010 to 6.09.2010 was prepared after recording all the transactions for this period and in the P & L account the assessee has shown the correct stock on 6.09.2010 at Rs. 6,10,63,622/- and, therefore, there is no discrepancy in the matter of stock inventorised by the survey team on 6.09.2010 and the correct figure of stock has been shown by the assessee on 6.09.2010 in the audited books of account. 37.1 We observed that the assessee contended that goods worth Rs. 33,8....
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....r the assessee contended that the stock which was inventorised at the premises of SAM Design, A-36, Hans Complex, Noida, which is the proprietary concern of Shri Mukesh Sharma at Rs. 2,57,46,000/- was over-valued and the correct valuation in terms of stock in quantity and value should have been taken at Rs. 1,92,34,153/- and thereby arose excess valuation to the extent of Rs. 65,11,846/-. Therefore, it was explained that if all these are considered the stock as on 6.09.2010 was more than what has actually been inventorized by a small margin of Rs. 5,08,761/- and, therefore, there can be no addition by way of income from undisclosed sources on account of alleged discrepancy in the stock. 39. However, not convinced with the replies and submissions and the evidences furnished by the assessee the Assessing Officer made addition of Rs. 4,29,63,309/- as unexplained stock after giving credit of Rs. 2,20,51,214/- which stock was lying with customs warehouse awaiting for shipment. The Assessing Officer treated the balance of Rs. 15,71,064/- as part of stock as on 6.09.2010 i.e. the date of survey. 40. The assessee preferred appeal before the ld. CIT (Appeals) and furnished various sub....
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....of the assessee for the F.Y 2010-11 wherein the value and the bill numbers of the fabrics purchased and as claimed by the assessee in its reconciliation statement were verified, one by one, in entirety from the copies of bills as submitted by the assessee at pages 22 to 55 of volume 4 of the Paper Book. It was noted from the account statements submitted by the above named parties that they were regularly receiving payments from the assessee during the Financial Year 2010-11 against goods supplied. Purchases from M/S SAM Overseas to study the pattern of deviation: The earlier years as well as 2 subsequent year accounts of M/s. SAM Overseas, a proprietary firm of Sh. Ved Parkash Sachdev a sister concern of the assessee firm were studied to understand the pattern of transactions between the said party and the assessee and it was observed that the assessee firm was routinely procuring fabrics from its sister firm at market value and routinely making payments against the same, in other words treating it as a vendor. We have evaluated the value of debit as well credit transactions represented by the purchases and payments made by the assessee respectively and summarise ....
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....regularly receiving payments from the assessee during the F.Y. 2010-11." The Assessing Officer in his remand report dt. 29.02.2016 summarizes his conclusions as under: i) all the bills for respective expenses as claimed by the assessee in its reconciliation statements in support of its claim of non recording as on the date of survey were found to be correct and valid; ii) the parties with whom the assessee was conducting its business were regularly doing business with it and receiving regular payments from it; iii) all the bills were duly verified from the accounts statements so submitted by the parties to whom notices u/s 133(6) were issued It seems that the Assessing Officer in his remand report dated 29.02.2016 has given very conclusive and explicit findings. In his opinion he conducted all the necessary inquiries entrusted on him and after making all required verifications of the books of accounts, bills etc arrived at these conclusions. 2nd remand report The following are the relevant paras of the AU's remand report dt. 09.05.2017 containing conclusions of the verifications conducted by her: (i) The Assessing O....
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....ed. Therefore, it was easiest possible way available with the assessee to manipulate the stock/purchase records.........." (ix) The AO has in para 14.4 of his remand report has stated "The bills were perused and based on the observations made above bills do not appear as genuine proof of the claims that the assessee has made." 5.2 The AO has even objected in para 14.5 of his remand report to payments being made as "staggered sums. It is a decided law that the Assessee knows his business and how to conduct it and that the Revenue cannot make decide on how the Assessee should be running his business. Comments The Assessing Officer has deduced, in conclusion to her remand report dt. 09.05.2017, that all evidence provided and relied upon by the Assessee to offer a credible explanation to the discrepancy in stock is constructed and manipulated, but she has not brought any substantial evidence to support her conclusion. Prom the perusal of the above findings of it is seen that the Assessing Officer clearly couldn't find any material to establish that the bills are bogus and manipulated and thus has based the remand report on own thinking of the cas....
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....s DCIT 98 ITD 285 of the Hon'ble Delhi High Court to state.....the fall scope of picture which emerges has to be taken cognizance of However in this case the facts are different, as in this case the Revenue found blank sale deed, share certificates, etc. on the premises which wasn't the case in the Assessee's present case. In the instant case the Survey team discovered stock the bills for which were not recorded by the Assessee at the time of conducting of the survey. The Assessee fault was not having updated his books of accounts as the accounts were not finalized at that time and statutory audit not undertaken. The Hon'ble Court in the cited case said that once a judicial consciousness has been stirred, then it must be taken to its logical conclusion, but the AD could not take it to its logical conclusion. The other cited case by the Assessing Officer in her remand report is of The Hon'ble Supreme Court in the case of CIT Vs. Durga Prasad More 82 ITR 540 (SC) is relevant in only as much as is being reproduced. "It is true that an apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real A littl....
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.... We have gone through the Fabric Reconciliation statement submitted by the assessee on page 21 of Volume 4 of the paper book wherein bills not accounted for as on the date of the Survey, though goods received before the said date have been mentioned to show a reconciliation between the physical stock reported by the survey team and the one noted by them from the Profit & Loss Account taken before commencement of the survey. In order to verify the genuineness of claim of the assessee, notices u/s 133(6) of the Income Tax Act were issued to M/S SAM Overseas, assessee's sister concern as well as other parties whose fabric purchase bills were reported by the assessee in its reconciliation statement The names and addresses of the said parties are as under: S.No Name of the Party Address Value of Transaction Verified (Rs) 1. M/s SAM Overseas B-83, Sector 83. Noida- 201305. UP. 3.38,02.315/- 2. M/s. DhanlaxmiExportSyndicate 9, Annamalai, Ground Lay Out, Mettur Road, Opp Bus Stand, Erode-638011. 3,87,888/- 3. M/s. Dhanlaxmi Impex. 9, Annamalai, Ground Lay Out, Mettur Road, Opp Bus Stand, Erode-638011. 1.36,184/- &nb....
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.... G. No. 1, H. No. 43, Rahul Vihar, Near Y R School, Behind Green Hotel, Ghaziabad. 3,04,317/- 12. M/s. M. K. Garments Finishers. A-113, Sec. 20, Noida. 4,39,982/- 13. M/s. Malik Enterprises. Village Chigarsi, Sector 63. Noida. 2.71.875/- 14. M/s. Mohan Fab. A-39/40, Durgavihar, Lakarpur, Faridabad, Haryana. 2.69,202/- 15. M/s. N. K. Finishing. 23, VDS Market, Sec. 93, Noida. 1.41,320/- 16. M/s. PraveshKaj House. B-165, New Ashok Nagar, Delhi. 1.80.681/- 17. M/s. Rajni Kaj Centre. B-165, New Ashok Nagar, Delhi. 1,94,284/- 18. M/s. Reliance Enterprises. 38/7, Sharma Market, Harola, Sec. 5, Noida. 1.63,029/- 19. M/s. S.A.M. Overseas. B-76, Sector 83, Noida. 49.94,922/- 20. M/s. Shyamji Computer Embroidery. 341/A/8, St. No. 1, Near Balaji Tent House, Kanti Nagar, Delhi-51. 5.02.585/- 21. M/s. Siddiqui Export. RZ-802/20, Near Jain Mandir, New Delhi. 4,02,770/- TOTAL : 93,74,634/- (iii) Details of Accessories Purchased Local & Central) not recorded by the assessee on the date of the survey : Rs. 16,77,967/- We have gone ....
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....ies are as under: S.No Name of the Party Address Value of Transaction Verified. 1. M/s. Samtex Desinz. A-36, Hosiery Complex, Noida. 16.41,764/ - TOTAL : 16.41,764/ - Therefore the notices issued by the Assessing Officer u/s 133(6) for conducting inquiries to verify the genuineness of claim of expenses and response to such notices are being summarised under: S. No. Particulars Notice u/s 133(6) Issued to Response to notice u/s 133(6) (i) In Fabric Purchase Expenses 3,43,26,387.00 3 Parties 3,43,26,387.001 All 3 Parties 3,43,26,387.00 (ii) In Fabrication Expenses 1,53,48,829.00 21 Parties (93,74,631.00) All 21 Parties (93,74,631.00) (iii) In Accessories Purchase 16,77,967.00 6 Parties (10,63,562.00) All 6 Parties (10,63,562.00) (iv) In Dyeing Expenses. (16,41,764.00) 1 Party (16,41,764.00) 1 Party (16,41,764.00) 24 remand report In case of 2nd remand proceedings the appellate authority directed the Assessing Officer to issue summons to all the parties who filed their respective confirmations u/s 13316) during the 1st remand proceedings. The ....
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.... 4. M/s. Shyamji Computer Embroidery. 341/A/8, St. No. 1, Near Balaji Tent House, Kanti Nagar, Delhi-51. 5.02,585- Summons delivered & party appeared with books of accounts 5. M/s. Anamika Enterprises. C-1, Old Maujpur, (Near Subzi Mandi Punchayat Ghar) New Delhi-53. 1.37,929/- Summons delivered but party did not appear. 6. M/s. Deepak Kaj House. B-700, 1st Floor, New Ashok Nagar, Delhi-96. 1,27,835/- Summons not delivered. 7. M/s. M. F. Fashion. G. No. 1, H. No. 43, Rahul Vihar, Near Y R School, Behind Green Hotel, Ghaziabad. 3,04,317/- Summons delivered but party did not appear. 8. M/s. M. K. Garments Finishers. A-113, Sec. 20, Noida. 4,39,982/- Summons delivered & party did not appear with books of accounts but submissions received by post. 9. M/s. Pravesh Kaj House. B-700, 4th Floor, New Ashok Nagar, Delhi-96. 1.80.681/- Summons not delivered. 10. M/s. Malik Enterprises. B-206, Gali No. 6, Hardev Puri, Shahdara, Delhi-93. 2.71.875/- Summons not delivered. 11. M/s. Rajni Kaj Centre. B-615, 1st Floor, New Ashok Nagar, Delhi-96. 1.94.284/- Summons not delivered. ....
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....st the assessee." Accessories unrecorded bills Rs. 16.77.9671: S.No Name of Party Address Transaction Value Summons Delivery Status 1. M/s. Digamber Trim Point. G-5, Shree Ji Complex, Sharma Market, Harola, Noida. 2.18,031/- Summons delivered & party appeared with books of accounts 2. M/s. Paras Tapes Co. (Regd.) 3797, Gali Barna, Sadar Bazar, Delhi. 2,21.951/- Summons delivered & party submitted for adjournment. 3. M/s. KannuJiMathu Mal & Sons. 2721, Chowk Raiji, Nai Sarak, Roshanpur, Chandni Chowk, Delhi-6 1,81,550/- Summons delivered & party appeared with books of accounts 4. M/s. Sethi Pooja Buttons. Shop No. 6, Street No. 9, 1043, Akashdeep Complex, Govindpuri, Kalkaji, Delhi. 1,57,704/- Summons delivered but party did not appear. 5. M/s. Avery Dennison. Plot No. 6B, 1^st Main Road, Kiadb, Ph.I, Bangalore. 1.57,183/- Summons not delivered. 6. M/s. Hitkari Accessories. G-7, Shree Ji Complex, Sharma Market, Harola, Noida. 1,27,143/- Summons not delivered. TOTAL : 10,63,562/- Out of the unrecorded sums of Rs16,77,967/-summo....
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....) 2 parties. (3,79,655) 2 parties. (2,84,326) (iv) Dyeing Expenses (total 16,41,764) Summon u/s 131 issued to 1 party (16,41,764) 1 party M/s. Samtex Desinz (16,41,764/-) NIL NIL TOTAL : 28.78,632/- Total such cases where summons u/s 131 could not be served and which can be said that the assessee did not discharge its onus is Rs. 28,78,632/-. From the details of the parties and their compliance to notices u/s 133(6) and summons u/s 131 it seen that out of the total amount to be verified us unexplained stock was Rs. 4,29,63,309/-2 business entities belonging to the Assessee's business group alone accounted for 94.12% and in both of these cases, not only compliance u/s 131(1) of the Act was carried out by both these parties, their books of accounts for AY 2010-11 were produced along with other documents, but also the statements of the authorised person recorded by the Assessing Officer. S.No Name of the Party Transaction Nature Amount (Rs. ) 1. M/s. S.A.M. Overseas, Prop of Mr. Ved Prakash Sachdev Fabric Expenses. 3,38,02,315.00 2. M/s. S.A.M. Overseas, Prop of Mr. Ved Prakash....
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....h the learned Solicitor-General when he says that the Income tax Officer is not fettered by technical rules of evidence and pleadings and that he is entitled to act on material which may not be accepted as evidence in a court of law but there the agreement ends; because it is equally clear that in making the assessment under sub-section 3) of Section 23 of the Act, the Income-tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment under Section 23(3). In view of the above discussions and respectfully followings the decisions of Hon'ble Supreme Court in case of Orissa Corporation Pvt. Ltd. 159 ITR 78 (SC) and in the case of Dhakeshwari Cotton Mills Ltd. vs. CIT 26 ITR 775 (SC, I am of the opinion that only to the extent to such cases where summons u/s 131 could not be served and for which it can be said that the assessee did not discharge its onus, can be taken as expenses non verifiable. Therefore the addition in respect of unexplained stock is restricted to Rs. 28,78,632/- and the ground no. 2 is partly allowed. ....
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....ntained by the assessee, an offer of additional income for the respective assessment years was made by the parnter of the firm. But, such statement, in view of the scope and ambit of the materials collected during the course of survey action under Section 133A shall not have any evidentiary value, as rightly held by the Commissioner and the Tribunal, since such statement was not attached to the provisions of Section 133A of the Act. It could not be said solely on the basis of the statement given by one of the partner of the assessee-firm that the disclosed income was assessable as lawful income of the assessee. Since there was no material on record to prove the existence of such disclosed income or earning of such income in the hands of the assessee, it could not be said that the Revenue had lost lawful tax payable by the assessee. 5.1. In the decision in Pullangode Rubber Produce Co. Ltd. v. State of Kerala [(1973) 91 I.T.R. 18], the Apex Court held that an admission is extremely an important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect. 5.2. Where a survey was condu....
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....dminister oath or to take any sworn statement and that a mere admission or an acquiescence cannot be a foundation for an assessment and that any statement given during a survey has no effect as an "admission" nor can it be a statement on oath. According to the assessee, his statement during the survey with reference to any books of account can hardly be the basis for any assessment. It was also contended on behalf of the assessee that any material collected or any statement recorded during the survey under Section 133A cannot be put against the assessee, as the same has no evidentiary value. The Division Bench of the Kerala High Court, appreciating the stand taken by the assessee and after referring to Section 133A of the Act, held as hereunder: ".. we find that the power to examine a person on oath is specifically conferred on the authorised officer only under section 132(4) of the Income-tax Act in the course of any search or seizure. Thus, the Income-tax Act, whenever it thought fit and necessary to confer such power to examine a person on oath, the same has been expressly provided whereas section 133A does not empower any Income-tax Officer to examine any person on oat....
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....zure and survey operations. The said circular dated 10.3.2003 reads as follows: " Instances have come to the notice of the Board wher assessees have claimed that they have been forced to confess the undisclosed income during the course of the search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, on confessions during the course of search & seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income-tax Department. Similarly, while recording statement during the course of search & seizure and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, assessing officers should rely upon the evidences/materials gathered during the course of search/survey operation....
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.... extracted above, for arriving at the conclusion that the materials collected and the statement obtained under Section 133A would not automatically bind upon the assessee, we do not see any reason to interfere with the order of the Tribunal. Accordingly, finding no substantial question of law arises for consideration, the tax case appeal stands dismissed." 44. As could be seen from the above the Hon'ble High Court observed that the ld. CIT (Appeals) and also the Tribunal rightly invited to the Circular of CBDT dated 10.03.2003 wherein it was clarified that the contentions made during search, seizure and survey operations do not serve any useful purpose if such contentions are not based upon credible evidence collected in the course of search and survey operations. This decision of the Hon'ble Madras High Court has also been upheld by the Hon'ble Supreme Court in CIT Vs. S. Khader Khan Son (supra) wherein the Hon'ble apex court dismissed the civil appeal filed by the Revenue. 45.1 Therefore, we hold that addition on account of undisclosed difference in stock discrepancy cannot be made merely on the basis of the statement given by the partner at the time of survey with....
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.... summons on the parties. The assessment year involved in this case is 2011-12 and the financial year is 2010-11. The summons were issued in the year 2017 in the course of remand proceedings to the parties whereby there is a considerable gap of time and the parties might have moved out or closed down their business. Therefore, simply because the summons could not be served the fabrication expenses incurred by the assessee cannot be treated as not proved. Thus, allowing ground No. 2 of grounds of appeal of the assessee, we direct the Assessing Officer to delete the addition of Rs. 28,78,632/- sustained by the ld. CIT (Appeals). 47. Coming to assessee's appeal the only ground left for adjudication is in respect of sustaining the disallowance of Rs. 30,76,482/- being the commission paid to foreign agents. In the course of assessment proceedings the Assessing Officer noticed that the assessee has debited an amount of Rs. 30,76,482/- on account of export commission paid. The assessee was required as to why TDS on over-seas commission has not been deducted and why it should not be considered as assessee in default for non-deduction of TDS as per the provisions of section 195 of the Act....
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.... Cooper Engineering Ltd. [68 ITR 457 (Bom.)] (ii) Vijay Ship Breaking Corporation vs. CIT [314 ITR 309 (SC)] (iii) Al Nisr Publishing [239 ITR 879 (AAR)] (iv) British Gas India Pvt. Ltd. in Re. [287 ITR 421], [239 ITR 879 (AAR)] 50.3 It is submitted that the aforesaid 'persons' to whom the commission had been paid are non-residents and does not have a PE in India. In fact it had been contended that the expenditure as had been incurred was for services rendered outside India. 50.4 However, the Assessing Officer in Para 6.6 of his order held that, commission paid to non-resident is an income deemed to accrue or arise in India within the meaning of section 9 of the Act and thus the assessee was liable to have deducted the tax at source on the expenditure incurred as commission paid by it to the non-residents. 51. On appeal the learned CIT (Appeals) has confirmed the findings of the learned Assessing Officer in para 7.7 at Pg. 28 of his order. He has held that after considering the assessee's submission dated 01.03.2020 (Pg. 1952 to 1969 of PB) and 17.03.2020 (Pg. 1970 to 1991 of PB) since the assessee has not produced any agreement enter....
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....Explanation (2) of section 9(1)(vii) of the Act which reads as under: 9. (1) The following incomes shall be deemed to accrue or arise in India:- ....... (vii) income by way of fees for technical services payable by - (a) the Government or (b) a person who is a resident, except where the fees are payable in respect of services utilised in a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India; or (c) a person who is a non-resident where the fees are payable in respect of services utilised in a business or profession carried on by such person in India or for the purposes of making or earning any income from any source in India: Provided that nothing contained in this clause shall apply in relation to any income by way of fees for technical services payable in pursuance of an agreement made before the 1st day of April 1976, and approved by the Central Government] Explanation 1 For the purposes of the foregoing proviso, an agreement made on or after the 1st day of April, 1976 shall be deemed to have been made before that dat....
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.... not taxable in India. iii. Rajinder Kumar Aggarwal (HUF) Vs. Deputy Commissioner of Income-tax [(2021) 131 taxmann.com 252 (Delhi-Trib.)] iv. Deputy Commissioner of Income-tax Vs. JLC Electromet (P.) Ltd. [(2022) 140 taxmann.com 350 (Jaipur-Trib.)] v. Deputy Commissioner of Income-tax Vs. Mc Fills Enterprise (P). Ltd. [(2019) 101 taxmann.com 212 (Ahmedabad-Trib)]. 52.6 While concluding with the aforesaid submissions, the assessee-appellant seeks to rely upon the recent decision of the Income Tax Appellate Tribunal Delhi Bench in the case of Apurva Goswami vs. DDIT, Chandigarh reported in [196 ITD 10] wherein it was held that commission payments made by assessee to non-resident agents/service providers for rendering services like sales promotion, marketing publicity and procuring sales order etc. was not FTS but business profit and in absence of permanent establishment of these service providers in India, such commission payments were not taxable in India. 53. In fact the learned Assessing Officer in his remand report dated 29.02.2016 at Pg. 1440 had admitted that the expenditure incurred is allowable expenditure. The said report reads as under:- ....
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....mmission to the non-resident agents and their income is not chargeable to tax in India. Therefore, the observation of the ld. CIT (Appeals) that the commission paid to foreign agents has to be taxed as FTS is not sustainable. 57. We observe that in the case of D. G. Drive Vs. ACIT (supra) the Delhi Tribunal held that mere rendering of service of procurement of orders by a non-resident company for Indian company does not fall in the category/consultancy services as explained in Explanation (2) to section 9(1)(vii). We also observe that in the case of Pure Software Pvt. Ltd. (supra) the co-ordinate bench of the Delhi Tribunal held that payment made by the assessee to foreign entities for rendering sales procurement abroad could not be regarded as royalty or fees for technical services and thus the said payment was not taxable in India. 58. Further we also observe that the Assessing Officer in his remand report dated 29.02.2016 observed as under:- "(C) Foreign Commission disallowed u/s 40(a)(i): 30,76,4827- Rs. We have examined the additional evidence submitted by the assessee in the form of the copies of the agreements between the overseas agents and the asses....