TaxTMI 
TaxTMI 
2022 (5) TMI 1627
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.... of CIT(A) dated 27.2.2020 in the case of that assessee. 2. Further, there are 5 appeals by assessee against the order of CIT(A) dated 21.3.2018 for the assessment years 2008-09 to 201112. Since certain issues in all these appeals are common in nature and also relating to same assessee, these are clubbed together, heard together and disposed of by this common order for the sake of convenience. 3. First we take up the appeals in ITA Nos. 1658 to 1661/Bang/2018 for the A.Ys 2008-09 to 2011-12. Since issues in all these appeals are common in nature these are heard together and disposed of by this common order for the sake of convenience. ITA Nos. 1658 to 1661/Bang/2018 for the AYs 2008-09 to 201112: 4. The brief facts of the case are that the assessee company is a manufacturer of alcoholic beverages. The Search and seizure operation u/s 132 of the Income-tax Act, 1961 ['the Act' for short] was conducted in the premises of the assessee on 08.12.2011 and 16.12.2011. During the course of search certain incriminating documents were seized and the statement of the Finance Manager and the Executive Director of the Company were recorded. 5. The proceedings u/s 153A of ....
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....have actually not taken place since FY 2007-08 and the amounts debited on their account are for meeting several cash expenses that have to be incurred for business purposes. The cash that is returned back by these persons are used for labour payments made in cash and other miscellaneous payments. Q. 4 Several papers have been found which refer to "M.M. Payments". Please explain the same. Ans. These are Miscellaneous payments incurred in the course of business promotion and are according to the instructions of the management. Q.5 I am showing you ledger copies where the payments made to the concerns are as per list below: As per the replies submitted above, the payments made to the extent of Rs. 27,49,31,189/- for the various years listed against parties in whose name the same have been booked are bogus. Do you agree? Ans. I Agree. 6. The detailed statement of Sri. Suresh Gowda has been quoted in the Assessment Order. On analysis of such statement, Sri. Suresh Gowda was asked to produce Sri. Manjunath before the Assessing Officer for confirmation of the transactions. This was not done. However in response, Sri. Thimme Gowda filed a rep....
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....to maintain the books of accounts of these business entities in his personal capacity and solely for the sake of his convenience had maintained the accounts and documents and records pertaining to these business concerns at the premises of the assessee. This has been admitted by Sri. Suresh Gowda, Director of the Company in his sworn statement which has been extracted in page 12 of the impugned order (Q. No. 10). As stated earlier, the management of the Company were largely unaware of this act of Sri. V Janardhan and the stationery belonging to the assessee company was found to have been used for the book keeping tasks of these business entities. 10. The assessee submitted that the AO has also relied on such other factors like the withdrawal of cash by the business entities on the same day of receipt of funds from the assessee company, the presence of signatures of the Proprietors of these business entities on both sides of cheques evidencing cash withdrawal, presence of self-made cash vouchers belonging to these business entities, etc., to hold that the payments made to these entities were bogus. It is most respectfully submitted that all these factors had no bearing on the ass....
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....owing additional grounds in all the appeals:- 1. The order of the Learned Assessing Officer ('LAO') and Hon'ble Commissioner of Income tax (Appeals) ('Ld. CIT(A)') is opposed to law and general principles of natural justice as applicable to quasi judicial proceedings. 2. The order of the LAO and Ld. CIT(A) is bad in law and against the provisions of section 153A, since amongst others, the additions are not based on any incriminating material found during the course of search. 3. Without prejudice to above grounds, the order passed by the LAO is bad in law since the LAO has not provided an opportunity to the Appellant to cross examine certain personnel whose statements have been recorded on oath during the course of search. 4. For the above and other grounds that may be urged at the time of hearing of the appeal the appeal may be allowed and justice rendered. 14. The assessee filed petition for admission of additional ground explaining the reason for raising the additional ground and also placed reliance on the judgement of Hon'ble Supreme Court in the case of NTPC Vs. CIT 229 ITR 383 and also judgement of Hon'ble Karnataka High Court in the ca....
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....143(2) of the Act had lapsed and no such notice was issued. In this regard, reliance is placed on the following judgments:- i. PCIT vs Meeta Gutgutia (405 ITR 28) (SC); ii. Yunus Zia v. DCIT (ITA No. 126 to 130/Bang/2013 (Bang. Trib); iii. Chintels India Ltd v. DCIT (397 ITR 416) (Delhi HC); iv. CIT v. Continental Warehousing Corporation Ltd (374 ITR 645) (Bom HC); v. DCIT v. Saravana Stores (61 ITR ( Chennai Trib) 20) b. The assessment u/s 153A of the Act ought to be quashed since it is not based on any incriminating material but is based on: i. Books of account of the assessee - it is the purchase ledger copies of the Appellant that was shown to Sri Janardhan and no fresh material that was incriminating; and ii. Sworn statement / admission of Sri Janardhan where Sri Janardhan has stated that the expenditure on purchase of grapes and bottles from three vendors (Vinayaka Fruit Mandi, Srinivasa Bottle Traders and Venkateshwara Bottle Traders) is bogus. In this regard, reliance is placed on the following judgments :- (i) CIT v. IBC Knowledge Park (P) Ltd (69 taxmann.com 108) (Kar HC); (....
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....nternal auditor and Finance Manager of the company. Shri Suresh Gowda, Executive Director of the Company after acknowledging the incriminating material admitted an additional income of Rs. 15 crores for Asst. Year 2009-10 to 2012-13. The AO has elaborated the modus operandi and the statement of Shri Suresh Gowda in para 9 to 13 of Assessment order. Relevant portion of statement recorded from Shri Suresh Gowda is also made part of Assessment order. 20. The ld.DR submitted that Shri Suresh Gowda, Executive Director of company was specifically asked to produce Shri A. Manjunath, Prop of M/s. Vinayaka Fruit Mandi and M/s. Venkateshwara Bottle Traders for examination. However, there was no response from Shri Suresh Gowda, Executive Director of the company. 21. A final show cause notice was issued in the month of January 2014 as the case was getting time barred by 31st March 2014. This was issued after analysing the incriminating documents seized during the course of search and on the basis of enquiries conducted thereafter. In compliance to the Show cause notice, Shri Thimmegowda, Director of company filed a reply contradicting the statement of Shri V. Janardhan, Internal Auditor ....
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.... 0794201003601 Canara Bank, Seshadripuram Branch 3 M/s. Srinivasa Bottle Traders 0794201003505 Canara Bank, Seshadripuram Branch 24. Examination of bank account statements of the above concerns obtained from the bank showed the following:- (a) The money has been transferred by way of cheque from the bank account of M/s. SPR Group Holdings Pvt. Ltd., only. The amounts have been withdrawn on the same day or the immediate next day by way of self cheque. (b) It was also found in the seized material that the cheque leaves have been signed by Sri. A Manjunath on both the sides so that somebody can withdraw on his behalf. (c) The banks were requested to furnish instruments such as deposit slips and withdrawal slips used in depositing the cheque and withdrawing cash from the above mentioned accounts. (d) For all the transactions the deposit and withdrawal slips were not signed by Sri A Manjunath. (e) However in one case while mentioning it in the deposit slip it was mentioned as M/s SPR Group Holdings only. 25. According to the department, the other incriminating material found in the searched premises were as follows:- ....
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....ottle Traders, M/s. Venkateshwara Bottle Traders, and M/s. Vinayaka Fruit Mandi. The AO came to the conclusion that the company SPR Group Holdings Pvt. Ltd. has created the above three entities for the purpose of inflation of expenses in the name of purchase of bottles and grapes. But in reality, there is no any such purchase. The company has transferred the amounts by cheque to the bank accounts of the above concerns and the same has been withdrawn through self-cheque which has been utilized for the payment of certain expenses which are not allowable u/s. 37(1) of the Act. The AO caused enquiry with regard to location of these concerns and deputed the ITI, who furnished his report as follows:- "Enquiry Report As per direction by the DCIT-CC 1(3) open enquiry is made in the following addresses 1. Sri.A.Manjunath #.58/2,8th cross, 12th main, Nanjappa Layout, Adugodi, B'lore-30. 2. #.65, 2nd cross, 3rd main, Rajajinagar, B'lore-10 3. #.3866, 10th cross, 1st main, gayatheri nagar, B'lore. 4. #.214/5B,Nayandahalli,Kengri, Hobli, B'lore. 5. #.55/160,5th Main Rd, 8th Cross, Malleswaram, B'lore. ....
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....t M/s. SPR Group Holding Pvt. Ltd., Wilson Garden, Bangalore. Please go through the same and explain the contents therein. Ans.: The page Nos 1 to 105 of the seized material marked as A/SPRGHPL/2 consisting of cash vouchers of the company SPR Group Holdings Pvt.Ltd. The payments varies from Rs. 50,000/- to Rs. 10,00,000/- in cash towards certain expenses. Q. No. 4.: I am showing you page Nos. 1 to 76 of the seized material marked as A/SPRGHPL/3 seized during the course of search u/s.132 of the I T Act at M/s. SPR Group Holding Pvt.Ltd., Wilson Garden, Bangalore. Please go through the same and explain the contents therein. Ans.: The page Nos 1 to 76 of the seized material marked as A/SPRGHPL/3 consists of cash vouchers and ledger extracts of cash payments of the company SPR Group Holdings Pvt.Ltd., The same folder at page No. 54 to 64 also consists of cash vouchers debited to M/s. Srinivasa Bottle Traders. Q. No. 5.: I am showing you page Nos. 1 to 42 of the seized material marked as A/SPRGHPL/4 seized during the course of search u/s.132 of the I T Act at M/s. SPR Group Holding Pvt. Ltd., Wilson Garden, Bangalore. Please go through the same and ex....
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....been withdrawn on the same day or the immediate next day by way of self cheque. The statement also shows that the proprietor of M/s. Vinayaka Fruit Mandi is Shri. A. Manjunath, who is the joint account holder. Please explain the transaction. Ans.: Shri. Manjunath was looking after the business of procuring grapes from various sources for the use of our production. The payments to Shri. Manjunath - M/s. Vinayaka Fruit Mandi were being made by way of crossed cheques from our company. He had to apparently draw the money to make the various payments against the purchases effected by him and also to meet such other expenses. This could be the reason for the cash being drawn out immediately on transfer of cheque payments from us to his bank account. Q. No. 10 Please explain why the bank statement of M/s. Vinayaka Fruit Mandi is found in the business premises of M/s. SPR Group Holdings Pvt. Ltd? Ans.: Shri. Janardhan, our accountant was also looking after the accounts of both the concerns viz., M/s. Srinivasa Bottle Traders and M/s. Vinayaka Fruit Mandi. I am told by Shri. Janardhan that he had collected all the details from the said Shri. Manjunath to update th....
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.... of the seized material marked as A/SPRGHPL/23 seized during the course of search u/s.132 of the I T Act at M/s. SPR Group Holding Pvt. Ltd., Wilson Garden, Bangalore. Please go through the same and explain the contents therein. Ans.: The page Nos 1 to 28 of the seized material marked as A/SPRGHPL/23 consists of self-made cash vouchers in the name of M/s. Vinayaka Fruit Mandi. Q. No. 17.: I am showing you the 21 pages of the seized material marked as A/SPRGHPL/26 seized during the course of search u/s.132 of the I T Act at M/s. SPR Group Holding Pvt. Ltd., Wilson Garden, Bangalore. Please go through the same and explain the contents therein. Ans.: The 21 pages of the seized material marked as A/SPRGHPU26 consists of signed cheque book of M/s. Vinayaka Fruit Mandi bearing current account No. 0794201003601 maintained at Canara Bank, Seshadripuram Branch. The cheque leaves have been signed by Shri. A. Manjunath, Prop: M/s. Vinayaka Fruit Mandi. Q. No. 18 The details of the cheques already issued as per the counter-foil in the cheque book shows that all the cheques have been used as self cheque for withdrawal of cash. Please explain the reason for wi....
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....ores (including Rs. 13.56 admitted on 08/12/2011) as un-disclosed income on account of inflation of expenditures with regard to payment to M/s. Venkateshwara Bottle Traders, M/s. Srinivasa Bottle Traders and M/s. Vinayaka Fruit Mandi. You may offer your comments so as to why the entire amount of Rs. 27,49,31,189/- claimed as expenses should not be disallowed. Ans.: As stated earlier, the supplies made by M/s. Srinivasa Bottle Traders, M/s. Vinayaka Fruit Mandi and also M/s. Venkateshwara Bottle Traders are genuine suppliers of bottles and grapes. The payments made for procuring these goods have to be taken into consideration for determining the income. The amount of Rs. 15.00 crores offered as income represents such of those expenses which are not allowable as per the provisions of income tax Act, more specifically u/s.37(1). This is the reason as to why the entire amount of Rs. 27.49 crores cannot be considered as income. The genuineness of procurement and supply of these goods can be verified from the seized materials w.r.t. goods receipt note maintained by our company. Q. No. 23: I am now showing you some of the payment vouchers seized during the course of sear....
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....hat this offer of income to be considered as undisclosed income and immunity may be granted under the law for this declaration of additional income. Thus, Ld. D.R. submitted that framing of assessment for all these assessment years u/s 153A of the Act is valid. 31. We have heard the rival submissions and perused the materials available on record. In this case there was search at the premises of SPR Group Holdings Pvt. Ltd. (erstwhile company presently known as SPR Spirits Pvt. Ltd.) on 8.12.2011. During the course of search action various seized material found and seized. There was no dispute regarding the search action us/ 132 of the Act at the premises of the assessee and also seizure of various documents at their premises and recording of statement u/s132(4) of the Act from Shri Janardhan V., Internal auditor and financial manager of assessee company. There was also recording of statement u/s 132(4) from Shri Suresh Gowda, Executive Director of assessee company on the basis of this, notice u/s 153A of the Act was issued to the assessee on 23.11.2012. Now the contention of the Ld. A.R. is that there is no seized material so as to frame the assessment u/s 153A of the Act. In ou....
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....y preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and for the relevant assessment year or years : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years and for the relevant assessment year or years : Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years and for the relevant assessment year or years referred to in this sub-section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate: Provided also that............ Provided also that.......... 10. In Canara Housing Development Company, supra, the coordinate Bench of this Court while considering proceedings under Section 263 of the Act vis-à-vis proceedings under Section 153A of the Act, has observed thus: "10. Section 153A of the Act starts with a non obstante clause. The fetters imposed upon the Assessing Officer by the strict procedure to assume jurisdiction to reopen the asses....
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....sment years in question in separate assessment orders. The Assessing Officer is empowered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, if any, unearthed during the search. He has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Section 153A, by even making reassessments without any fetters. This means that there can be only one assessment order in respect of each of the six assessment years, in which both the disclosed and the undisclosed income would be brought to tax. When once the proceedings are initiated under Section 153A of the Act, the legal effect is even in case where the assessment order is passed it stands reopened. In the eye of law there is no order of assessment. Re-opened means to deal with or begin with again. It means the Assessing Officer shall assess or reassess the total income of six assessment years. Once the assessment is reopened, the assessing authority can take note of the income disclosed in the earlier return, any undisclosed income found during search or and also any other income which is not disclosed in the earlier return or which is not unear....
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....ncluded assessment can be reopened. The very same accounts which were submitted by the assesseee, on the basis of which assessment had been concluded, cannot be reappreciated by the Assessing Officer merely because a search had been conducted in the premises of the assessee." 12. In Commissioner of Income Tax V/s. IBC Knowledge Park (P) Ltd., [(2016) 385 ITR 346 (Kar.), the coordinate Bench of this Court has referred to the decisions of M/s Lancy Constructions supra as well as Canara Housing Development Company supra along with other judgments cited at the Bar and has observed that the relevant sections as well as judicial precedents would enunciate that, Section 158BD of the Act deals with undisclosed income of a third party. However, insofar as the incriminating material of the searched person or other person detected during the course of search is concerned, the same can be considered during the course of assessment. Further, such incriminating material must relate to undisclosed income which would empower the assessing officer to upset or disturb a concluded assessment. Otherwise, a concluded assessment would be disturbed without there being any basis for doing so whic....
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.... the provisions contemplate search and requisition where the assessee is not likely to disclose his income. It appears that the object of both the provisions is to unearth the income which the assessee has not or is not likely to disclose. 15. On a plain reading of Sectioin153A of the Act, it is evident that the trigger point for exercise of powers thereunder is a search under Section 132 or a requisition under Section 132A of the Act. Once a search or requisition is made, a mandate is cast upon the assessing officer to issue notice under Section 153A of the Act to the person, requiring him to furnish the return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and assess or reassess the same. Since the assessment under Section 153A of the Act is linked with search and requisition under Sections 132 and 132A of the Act, it is evident that the object of the section is to bring to tax the undisclosed income which is found during the course of or pursuant to the search or requisition. However, instead of the earlier re....
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....otice is triggered following the search, the assessment proceedings can be concluded in any manner known to law including under Section 143(3) of the Act or even144 of the Act, if need be. Assessment proceedings can be concluded even without any incriminating material being available against the assessee in the search under Section 132 of the Act on the basis of which the notice was issued under Section 153A (1)(a) of the Act. 17. The Hon'ble High Court of Allahabad in the case of Commissioner of Income Tax, Central, Kanpur .v. Raj Kumar Arora [(2014) 52 Taxmann.com 172 (Allahabad)], has held thus: "8. Section 153A of the Act along with Section 153B and 153C replaced the "Post Search Block Assessment Scheme" in respect of any search under Section 132A or requisition under Section 132A made after 31.05.2003. CBDT explained these provisions through circular dated 5.9.2003, which is reported in (2003) 263 ITR (St) 62. The said circular is as under: ............. 10. Under the block assessment proceeding under Chapter XIV-B only the undisclosed income found during the search and seizure operation were required to be assessed and the regular assessment proceedings were preserve....
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....only dismissed the appeal on this legal issue and had not considered the matter on merits." 18. In Commissioner of Income Tax V/s. Kabul Chawla [(2016) 380 ITR 573 (Delhi)], Hon'ble Delhi High Court considering the decision in CIT V/s. Anil Kumar Bhatia [(2013) 352 ITR 493 (Del)], has held thus: "21. Therefore it is clear that the decision in CIT V/s. Anil Kumar Bhatia (supra) does not deal with a situation where, as in the present case, no incriminating material was found during the search conducted under Section 132 of the Act." 19. It is significant to note that the Co-ordinate Bench of this Court in Canara Housing Development Company supra relied upon by the Revenue has also been considered in Kabul Chawla supra and has held thus: "26. In the High Court the question was whether the CIT could invoke the power under Section 263 of the Act once the proceedings under Section 153A was initiated. The High Court in Canara Housing (supra) answered the question in the negative. It referred to the decision of this Court in CIT v. Anil Kumar Bhatia (supra) and came to the conclusion that once proceedings are initiated under Section 153A of the Act the legal effect was th....
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....at the Tribunal was justified in holding that invoking of Section 153A by the Revenue for the assessment years concerned therein was without any legal basis as there was no incriminating material qua each of those assessment years. In the judgment of Kabul Chawla supra, the Hon'ble High Court of Delhi has referred to the decision of the Rajasthan High Court in Jai Steel (India), Jodhpur V/s. ACIT [(2013) 36 Taxman 523 (Raj)] and also took note of the decision of the Bombay High Court in Commissioner of Income Tax V/s. Continental Warehousing Corporation (Nhava Sheva) Ltd. [(2015) 58 taxmann.com 78 (Bom)] which accepted the plea that if no incriminating material was found during the course of search in respect of an issue, then no additions in respect of any issue can be made to the assessment Section 153A and 153C of the Act. The legal position has been summarized in Kabul Chawla supra as under: "37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) w....
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....Hon'ble Apex Court by the Revenue and Special Leave Petition has been dismissed condoning the delay. Thus, the judgment of the Hon'ble High Court of Delhi in Meeta Gutgutia has reached finality. 22. The Hon'ble High Court of Judicature at Bombay, Nagpur Bench in the case of Commissioner of Income Tax V/s. Murli Agro Products Ltd., [ITA No. 36/2009, D.D. 29.10.2010] has held thus: "9. What Section 153A contemplates is that, notwithstanding the regular provisions for assessment/reassessment contained in the IT Act, where search is conducted under Section 132 or requisition is made under Section 132A on or after 31/5/2003 in the case of any person, the Assessing Officer shall issue notice to such person requiring him to furnish return of income within the time stipulated therein, in respect of six assessment years immediately preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made and thereafter assess or reassess the total income for those assessment years. The second proviso to Section 153A provides for abatement of assessment/reassessment proceedings which are pending on the date of search/requisition. Section 153....
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....h Section 143(3) of the IT. Act could not have disturbed the assessment/ reassessment order which has attained finality, unless the materials gathered in the course of the proceedings under Section 153A of the Income-tax Act establish that the reliefs granted under the finalised assessment/reassessment were contrary to the facts unearthed during the course of 153A proceedings." 25. Similarly, the Hon'ble High Court of Gujarat in the case of Ramesh Bhai Jivraj Desai supra, in paragraph 6 has held as under: "6. Thus, having regard to the materials on record, the Tribunal is right in holding that once it is held that the assessment has attained finality, then, the Assessing Officer, while passing independent assessment order under Section 153A read with Section 143(3) of the Act cannot disturb the assessment/reassessment, which has attained finality unless the materials gathered in the course of the proceedings under Section 153A of the Act establish that the reliefs granted in the final assessment/reassessment were contrary to the facts coming during the course of Section 153A proceedings. 26. In the light of these judgments, we have analyzed Section 153A of the Act....
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....cuments or any assets are requisitioned under Section 132A, after May 31st 2003. In such cases, the assessing officer shall issue notice to such person requiring him to furnish within such period as may be specified in the notice, return of income in respect of six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted under Section 132 or requisition was made under Section 132A. Thus, it is clarified that the appeal, revision or rectification proceedings pending on the date of initiation of search under Section 132 shall not abate. 28. Section 153B provides for the time limit for completion of search assessments. 29. Section 153C provides that where an Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account documents seized or requisitioned belong or belongs to a person other than the person referred to in Section 153A, then the books of account, or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against such....
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....sessment is initiated, the second, at the stage during the course of reassessment and third, at a stage where the reassessment is altered by a different assessment in respect of searched person or in respect of third party. In this regard, reference may be made to the decision of Apex Court in case of M/s. Calcutta Knitwear (supra) and based on the said decision, the CBDT has also issued circular dated 31.12.2015 vide No. 24/2015. The relevant extract of the circular for ready reference can be extracted as under: '.................... '" As regards the pending assessments are concerned only one assessment shall be made separately for each assessment year on the basis of the income unearthed during search and any other material existing or brought on the record of the Assessing Officer. Even in the absence of any incriminating material abated assessment or reassessment could be done. The returns filed under Section 139 of the Act gets replaced by the returns filed under Section 153A[1] of the Act. Pending proceedings in appeal, revision/application shall not abate subsequent to initiation of Section 153A proceedings. Further, recording of satisfaction under Section 153A may not be n....
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.... record. In this case, a search was taken place on 8.12.2011 at the assessee's premises. The assessment was framed on 25.3.2014 by issuing a notice u/s 153A of the Act on 23.11.2012. Notice u/s 143(2) of the Act was issued on 14.5.2013. Notice u/s 142(1) of the Act was issued on 28.11.2013 and 17.2.2014. The assessee's counsel Shri Ranganath, FCA appeared before the AO and given various information and filed details before AO. At that time the assessee not sought any cross examination of the parties concerned. During the course of search, statements were recorded through Janardhan V., Internal auditor and Finance Manager of the assessee company and Suresh Gowda, Executive Director of the assessee company. The incriminating material found during the course of search were confronted to the assessee's employee Janardhan V. and also to the Executive Director Suresh Gowda. His statement was also recorded. Suresh Gowda has admitted to the fact that the entities namely Vinayaka Fruit Mandi and Venkateswara Bottle Traders were created for the purpose of inflation of expenses of the assessee company and thereby generation of cash. He also stated that the entire payment is not bogus. He furt....
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....h Gowda. Instead, another Director, in response Sri Thimmegowda has replied as under:- "You have referred to seized materials marked as A/SPRGHPU2, 3, 5, 7 & 15. Apparent these documents were seized at our marketing office at Wilson Garden on 08.12.2011. The documents contained in seized materials are payments made to various persons, apparently on the vouchers under the heading of our Company. In reality, they _are payments, not relating to our company or activities. We have two major suppliers M/s. Vinayaka Fruit Mundy, Prop., concern of Mr. Manjunath and M/s. Srinivasa Bottle Traders, Prop., concern of Mrs. Sushilamma, supplying grapes and bottles respectively. Grapes are used for fermenting and producing spirit. Bottles are used for packing the produce. During the assessment years under consideration, the purchases made from these two concerns are as follows: Asst. Year Vinayaka Fruit Mandy (Rs.) Srinivas Bottle Traders (Rs.) 2007-08 - 1,04,06,142 2008-09 - 15,41,29,110 2009-10 42,14,810 3,42,92,609 2010-11 4,22,50,000 - 2011-12 2,17,78,750 - 37. However, the AO did not accept the contentions of Sri Thim....
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....ade additions as follows:- S.No. Asst. Year Undisclosed income (Rs.) 1. 2008-09 16,74,23,150 2. 2009-10 3,92,55,717 3. 2010-11 4,22,50,000 4. 2011-12 2,60,02,322 41. The Ld. A.R. submitted that these additions are opposed on the basis of seized material and also the statement recorded u/s 132(4) of the Act from Janardhan V. and Suresh Gowda. Now the contention of Ld. A.R. is that CIT(A) erred in treating the purchases as bogus for the following reasons: a. The fact of actual purchases made is evident from the purchases made by the Appellant, the bills, goods received notes which form part of the seized material. That the goods have been consumed for production (which has finally yielded sales and taxable income) has not been questioned by the AO or the CIT(A). b. The LAO and CIT(A) have not disputed the quantity details of goods purchased; the inward receipt of the purchases is also not questioned. c. Appellant has made payments to the three vendors by way of crossed cheques. The factum of payment by crossed cheques is in accordance with the provisions of the Act and warrants no disallowance. d. The....
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....rdance with law within six months from the date of receipt of this order as this is very old matter relating to AY 200809 to 2011-12. 44. In the result, the appeals filed by the assessee in ITA Nos.1658 to 1661/Bang/2018 for the AYs 2008-09 to 2011-12 are partly allowed for statistical purposes. Appeal No. 127/Bang/2020, Revenue's appeal No. 575 /Bang /2020 & CO No. 12/Bang/2020 for the AY 2007-08:- 45. ITA No. 127/Bang/2020 is the appeal filed by the assessee against the substantive addition made by AO confirmed by CIT(A) vide order dated 23.10.2019. ITA No. 575/Bang/2020 is the appeal by revenue directed against protective assessment order vacated by the CIT(A) vide order dated 27.2.2020 and the CO No. 12/Bang/2020 is filed by the assessee in support of the CIT(A) order dated 27.2.2020. 46. First, we will take up the substantive assessment in the case of SPR Spirits Ltd. In ITA No. 127/Bang/2020. The assessee has raised following grounds of appeal:- 1. The order of the Hon'ble -Commissioner of Income Tax (Appeals),Bengaluru11 is opposed to law and facts of the case. 2. The Hon'ble Commissioner of Income Tax (Appeals)-11 erred in upholding the....
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.... Act along with annexure dated 14/05/2013, 28/11/2013 & 17/02/2014 were issued and served on the assessee. During the course of search action conducted in the group cases, it came to light that M/s SPR Developers Pvt. Ltd., had entered into sale agreement dated 23/11/2005 and MOUs dated 06/10/2005 and 28/07/2007 with M/s Vijay Bank Employees Housing Cooperative Society to form residential sites and transfer the same to members of the society at the rate of Rs. 276/- per sq. ft of saleable area for the first 80 acres of land and subsequently it was increased to Rs. 360/- per Sq. ft. of saleable area for the rest 100 acres of land situated on Mysore-Bangalore Road. These lands were transferred from Shri M. Thimme Gowda and his family members to the society during FY 2005-06 and 2006-07. As the assessee being a company cannot acquire agricultural land for the purpose of formation of residential sites and cannot sell the same to the employees of M/s Vijay Bank Employees Housing Co-operative Society, purchase and selling was done through Shri T. Nadakrishna. Therefore, the business income of Rs. 7,30,77,776/- was assessed substantively in the hands of the assessee company. Aggrieved, th....
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....58 to 1661/Bang/2018 from para Nos.14 to 39 and the same decision is applicable herein also. Accordingly, all the additional grounds raised by the assessee herein are dismissed. 50. The constructive main grounds for our consideration in ground Nos.2 to 4 in ITA No. 127/Bang/2020 are as follows:- 2. "The Hon'ble Commissioner of Income Tax (Appeals)-11 erred in upholding the addition in a sum of Rs. 7,30,77,776/-under the head business income. 3. The Hon'ble Commissioner of Income Tax (Appeals) failed to appreciate that entire surplus arising out of the transaction not being exigible to tax in the hands of the appellant. 4. The Hon'ble Commissioner of Income Tax (Appeals) committed an error in upholding the additions, without even looking at the transaction which was a subject matter of arbitration and later was cancelled." 51. We have heard the rival submissions and perused the materials available on record. In this case, order of the Ld. CIT(A) is very cryptic with regard to the issue that how there was income generated in the hands of the assessee on giving Rs. 1.85 crores advance to T. Nanda Krishna who has bought the property and late....