TaxTMI 
TaxTMI 
2024 (5) TMI 24
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....ar mutatis mutandis to other assessment years. Accordingly, we take up the appeal of the assessee and Revenue for assessment year 2013-14 for adjudication. The grounds raised by the assessee in its appeal for assessment year 2013-14 are reproduced as under: "1. On the facts and in the circumstances of the case and law on the subject, the learned Income Tax officer erred in making addition of Rs. 9,90,97,267/- being alleged bogus purchase of fuel/diesel & the learned CIT (Appeal) erred in confirming / upholding the disallowance of Rs. 99,09,726/- being 10 % of purchases of alleged bogus fuel/diesel of Rs. 9,90,97,267/- In view of the facts and circumstances of the case and law on the subject, the same may be deleted. 2. On the facts and in the circumstances of the case and law on the subject, the learned assessing officer erred in making additions of Rs. 29,54,983/- on account of alleged bogus tyre purchase bills & the learned CIT (Appeal) erred in upholding the addition of Rs. 29,54,983/- on account of alleged bogus tyre purchase bills without correct appreciation of facts and law on the subject. In view of the facts and circumstances of the case....
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....ring the survey proceedings, statement of various persons including directors of the assessee company were recorded, wherein they admitted of recording of entry of bogus bills of fuel diesel expenses and other expenses etc in books of accounts. In view of the information of entry of bogus expenses booked by the assessee, received from the Investigation Wing, the Assessing Officer reopened the assessment by way of issue of notice u/s 148 of the Act dated 01.02.2021. In responses to the same, the assessee filed return of income on 20.02.2021 and thereafter statutory notices were issued by the Assessing Officer, which were complied with by the assessee. The Assessing Officer completed the assessment u/s 147 of the Act on 26.07.2021 wherein he made various additions to the returned income. The computation of the assessed income is reproduced as under: "14. Subject to the above discussion, considering the submissions made and information available on record, the total income of the assessee for Assessment year 2013-14 is computed as under.- Particulars Rs. Rs. Total Income from Business and Profession (As per assessment order u/s. 143(3) r.w.s. 147 dated 27.12.2016 ....
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....submitted that the persons whose statement had been recorded by the Investigation Wing were not responsible for or handling diesel purchase of the assessee and therefore, those statements were not to be relied upon. Further, it was submitted that all those persons had filed affidavit retracting the statement which were recorded u/s 133A/131 of the Act during survey proceedings. Further, it was submitted that statement recorded during survey was not having evidentiary value in view of the decision of the Hon'ble Supreme High Court in the case of S. Khader Khan Son (2012) 25 taxmann.com 413 (SC) confirming CIT v. S. Khader Khan Son 300 ITR 157 (Madras). It was contended by the assessee that all the documents including bills, vouchers, bank payment were submitted before the Assessing Officer. The relevant supplier parties also complied the notices issued u/s 133(6) of the Act. Regarding the 'Emist' accounting software, it was submitted that same was implemented on trial basis during that period so certain entries could not be done on that software. During appellate proceedings before the Ld. CIT(A), the assessee filed further additional evidences, which were forwarded to the Assessing....
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....017-18 71,85,943 34,72,036 2.07 According to the AO, it is apparent from Table that the running average of commercial vehicle is ranging from 1.99 to 2.22 kilometer per litre. For F.Y. 2012-13 relevant to A.Y. 2013-14, the appellant has total running of transportation of 76,92,475 km and total purchase of diesel/ fuel of 38,57,021 litres making an average of 1.99 kms/litre. According to the AO the quantity of diesel/fuel, as disallowed in the assessment order is 19,41,595 litres which works out to 50.34% of the total diesel purchases in Mumbai region in F.Y. 2012-13. The AO has also stated that out of 38,57,021 litres of diesel, as much as 50.34% has been purchased from the three parties, i.e. M/s. Shri Ambaji Petroleum, M/s. Uganda Service Station and M/s. K.M. Suchak & Co. In the opinion of the AO, it is unlikely that purchase of 50.34% of diesel purchases are bogus which appears to be impossible for running such a huge fleet of trucks and heavy vehicles. In para 5.2 of the remand report the AO has mentioned that in order to verify the details of such transactions, notices u/s. 133(6) of the I.T. Act were issued to the three parties, entire purchase from which a....
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....bmitted that the decision relied upon by the Ld. CIT(A) are factually different from the assessee and therefore, same should be ignored. 6.2 On the contrary, the Ld. DR relied on the finding of the Ld. CIT(A) and submitted that in the statements those parties had clearly stated that against the cheque payment cash was returned back to the employees of the assessee. He submitted that retraction affidavits have been submitted after substantial delay and therefore, no cognizance should be given to those. 6.3 We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The dispute is regarding the genuineness of the bills of fuel/diesel issued by three parties, which the AO disallowed 100 percentile but the ld CIT(A) restricted to 10 percentile on ad-hoc basis, relying on the report of the AO in remand proceedings. During survey, statements of three persons of the assessee company were recorded including Sh Mandik Vishal Yashwant ( person claimed to be engaged in purchase of diesel); Sh Ram Sajjwan Tiwari ( claimed to be cashier of assessee company) and sh mahendra Gangan ( claimed to be engaged in data entry). Those three per....
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....the percentage of disallowance. In said case delivery of material was not established whereas in the instant case the Assessing Officer has neither doubted delivery nor doubted consumption of the diesel and therefore, sustaining ad-hoc disallowance, merely on the basis of the presumption, cannot be upheld and accordingly, we set aside the finding of the Ld. CIT(A) on the issue in dispute and delete the addition sustained by him. The ground No. 1 of the appeal of the assessee is accordingly allowed. 7. The ground No. 2 of the appeal relates to disallowance of Rs. 29,54,983/- on account of alleged bogus tyre purchase bills sustained by the Ld. CIT(A). 7.1 Briefly stated facts qua the issue in dispute are that during the survey proceedings, survey party noticed two set of bills for purchase of tyres from supplier namely M/s Om Shree Siddhivinayak tyres. The Assessing Officer in the impugned assessment order has noted that fictitious bills could be differentiated from the genuine once as they did not contain basic information such as description of tyres, tyre number, size etc. He further recorded that in view of factual observation during the course of survey Shri Satish Mandhan....
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.... in para 9 of the assessment order that although this vendor has submitted a written submission before the AO but did not attend in compliance to summons issued u/s. 131 of the Act. The AO has also stated that the appellant has failed to provide complete set of all the invoices and supporting documents such as delivery challans including description of tyre no. and bills etc. Finally, the AO has come to the conclusion that 10% of the purchases made during the year is certainly non-genuine and accordingly added to the total income of the appellant. 16.1 In reply, the appellant has stated that M/S. Om Shree Siddhivinayak Tyres is a reputed dealer having distributorship of renowned tyre manufacturer M/S Birla Tyre Limited. They are the vendors of the company for last 20 years. According to the appellant various details, i.e. Ledger Confirmations, Bank statements, invoice & delivery challans were submitted to the AO. The notice u/s. 133(6) was also issued to the supplier which has been duly responded to. All the payments were made through proper banking channel. According to the appellant when complete details are filed no disallowance should be made by the AO. 16.2 I....
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....supporting documents, the statements get corroborated that part of the purchases from M/s Om Shree Siddhivinayak tyres are in the nature of bogus. In absence of complete details provided, the Assessing Officer is justified in making estimated disallowance @ 10% of total expenses on tyre purchase. Accordingly, we uphold the finding of the Ld. CIT(A) on the issue in dispute and dismiss the ground No. 2 of the appeal of the assessee. 8. The ground No. 3 of the appeal of the assessee relates to disallowance of Rs. 5,31,951/- sustained by the ld CIT(A), out of disallowance for unsubstantiated expenses of Rs. 53,19,316/- made by the Assessing Officer. The ground No. 2 of the appeal of the Revenue relates to the relief of Rs. 47,87,385/- given to the assessee by the Ld. CIT(A) on this issue. 8.1 The facts qua the issue in dispute are that during the course of assessment proceedings, the Assessing Officer shortlisted expenses claimed in respect of six parties and issued summons for verification and genuineness of expenses. Out of six parties, summons were not complied by two parties namely S.V. Takwale & Sons for expenses of Rs. 44,15,958/- and Shivaji Maruti Jhambulkar for expenses ....
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....stated that the additional evidence filed by the appellant may not be admitted at the appellate stage. In the rejoinder the appellant has stated that merely because parties are not responding to notice adverse view should not be taken against the assessee when it has produced other supporting documents such as GST No., certificate from banks. On careful consideration full relief with respect to disallowance of Rs. 53,19,316/- cannot be given as existence of these parties have not been fully established. However, at the same time, the genuineness of the transaction has not been denied. There are sufficient documentary evidences produced by the appellant to establish that payments have been made with respect to rent paid for RMC plant and labour supplied at Pune site. Once AO has not doubted that rent has been paid for RMC plant or labour has been supplied at the Pune project, 100% disallowance is not feasible. No lacuna or defect has been found in the documentary evidences filed during assessment proceedings. Considering the totality of the facts and circumstances and keeping a consistent stand, 10% of the expenses, ie. Rs. 5,31,931/-is confirmed while the balance amount of Rs. 47,8....
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....ssue in dispute is accordingly set aside. The ground No. 3 of the appeal of the assessee is accordingly allowed and the ground No. 2 of the appeal of the Revenue is dismissed. 9. The ground No. 4 of the appeal of the assessee relates to disallowance of Rs. 36,79,111/- u/s 40(a)(ia) of the Act made by the AO, out of which amount of Rs. 5,69,535/- has been sustained by the Ld. CIT(A). This ground of appeal was not pressed before us and therefore, same dismissed as infructuous. 10. Now we take up the ground No. 1 of the appeal of the Revenue, wherein the Revenue has challenged the deletion of the addition for the share application money amounting to Rs. 11,85,74,000/- u/s 68 of the Act. The facts in brief qua the issue in dispute are that during the year under consideration the assessee had received share application money of Rs. 11,85,74,000/- from M/s Dhanteras Agency Pvt. Ltd. The Assessing Officer rejected the contention of the assessee in support of onus u/s 68 of the Act and made addition in the hand of the assessee treating money received from M/s Dhanteras Agency Pvt. Ltd. as not genuine. In the course of appellate proceedings before the Ld. CIT(A) the assessee filed cer....
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....turned the share application money in subsequent year due to dispute. All these transactions have taken place through banking channel. It is also stated that the total reserve and surplus of M/s. Dhanteras Agency Pvt. Ltd. far exceeded the share application money given to the appellant. Hence merely because no reply is received from the company, which is strike off, the assessee cannot be held liable for the same. 32.6 On careful consideration I find that no adverse comment has been given by the AO in the remand report with respect to evidences produced at the time of remand proceedings. It is a fact that share application money received in F.Y. 2012-13 was repaid back in F.Y .2013-14. All these transactions reflect in the bank statement furnished during the remand proceedings as well as before the undersigned. The AO in the remand proceedings has also examined the financial statement of M/s. Dhanteras Agency Pvt. Ltd. and found that total reserve and surplus of Rs. 13,59,22,291/- was much higher than the share application money given to the appellant i.e. Rs. 11,85,74,000/- The AO has also highlighted that since M/s. Dhanteras Agency Pvt. Ltd. was strike off by ROC no rep....
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....o. 7 is allowed." 10.1 It is evident that in the remand proceedings no adverse comment has been given by the Assessing Officer in respect of additional evidence produced. The Assessing Officer himself has noted the creditworthiness of the share subscriber and commented that total reserve and surplus of Rs. 1,35,92,291/- was much higher than share application money given to the assessee Rs. 11,85,74,000/-. The basis for the Assessing Officer in the original assessment proceedings for making addition was firstly, that M/s M/s Dhanteras Agency Pvt. Ltd. did not respond to the notices issued u/s 133(6) of the Act. For which the assessee has submitted during the appellate proceedings that said company has been stricken off by the Registrar of Companies (ROC) ,therefore, no reply was received. The Ld. CIT(A) is justified in accepting this explanation of the assessee and therefore, no adverse view could be taken on this account. Secondly, the Ld. CIT(A) has further rejected the argument of the Assessing Officer in the original assessment order that director of the assessee was a non-filer. In our opinion the status of the director of company as non-filer is not relevant while deciding ....
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.... and circumstances of the case and law on the subject, the same may be deleted." 11.1 The grounds raised by the Revenue are reproduced as under: 1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) is justified in deleting the disallowance of share application money without appreciating the facts that the identity, creditworthiness and genuineness was not established by the assessee with regard to the alleged parties? 2. ii. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) is justified in deleting the disallowance of unsubstantiated, expenses without appreciating the facts that the identity, creditworthiness and genuineness was not established by the assessee with regard to the alleged parties?" 3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) is justified in deleting the disallowance of depreciation on unaccounted sales of old vehicles without appreciating the facts that the genuineness of the purchaser of old vehicles was not established by the assessee? 12. The ground Nos. 1 to 3 of the appeal of the assessee and ground No. 2 of the a....
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....tation of total income, PAN, financial statement, ledger highlighting bank transactions along with share application confirmation of said parties. The appellant has further submitted that Kasturi has been issued the shares against the share application money received on 28.03.2023. To satisfy this, Form No. PAS-3, list of allottees, valuation report, Form PAS-5, master data of the company and copy of resolution for verification of the undersigned are also submitted. Thus, it is claimed that not only the identity of the creditor but creditworthiness and genuineness have been fully established and hence no disallowance is called for. The appellant has also relied on certain judicial decisions. 38.3 On careful consideration of the submission of the appellant as well as various details brought on record, I find that identity of M/s Kasturi is never doubted by the AO. There is no doubt that share application money has been received through banking channels as copy of bank statements have been verified and found in order. Moreover, the shares were also allotted on 28.03.2022. As far as creditworthiness of M/s Kasturi is concerned that is also not doubted by the AO as he himself ....
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....n the issue in dispute but for verification of the fact addition in respect of source of money has been already done in assessment of Kasturi, we restore the matter back to the Assessing Officer. The ground No. 1 of the appeal of the Revenue is accordingly allowed for statistical purpose. 13. The ground No. 3 of the appeal of the Revenue relates to deletion of disallowance of depreciation of Rs. 6,75,000/- by the ld CIT(A) which was made by the AO with respect to old vehicle sold during the year. On the basis of Annexure RM-1 found during the course of survey, the Assessing Officer noted that assessee company had unaccounted sales of vehicles during the assessment year 2018-19. On the basis of such unaccounted sales corresponding to assessment year 2018-19, the Assessing Officer was of the view that in all the probability assessee had received unaccounted sale of old vehicles in other years including the assessment year under consideration. He estimated unaccounted sales of Rs. 1,50,000/- per vehicle and accordingly disallowed the depreciation amounting to Rs. 6,75,000/-. 13.1 On further appeal the Ld. CIT(A) deleted the addition observing as under: 37. In ground of ....
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....eedings, the ld. AR has stated that it has submitted statement containing names of purchaser, PAN, address, sold vehicle registration number along with mode of payment and receipt to the AO for verification. According to the appellant, it has received sale proceeds of vehicles in cheque and bill record of receipts in books of accounts. No lacuna has been found by the AO during the assessment proceedings. 37.2 On careful consideration I find that entire work of the AO for the year under consideration, work and extrapolation of figures related to subsequent years. He has clearly mentioned that "Assessee has sold vehicle and by extrapolating the findings in F.Y. 2017-18 and 2018-19 in these years, the unaccounted sales on vehicle sold in year under consideration has been determined." 37.3 Thus, it is apparent that no evidence of any unaccounted sales of vehicle has been found for F.Y. 2013-14 relevant to A.Y. 2014-15. Moreover, no statement was recorded indicating unaccounted sales during the year. Hence, the disallowance of depreciation of sale of old vehicle is unjustified and deserves to be deleted. Thus, the addition of Rs. 6,75,000/- is deleted. The gro....
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....ance of Rs. 1,22,066/- being 10% of Rs. 12,20,666/- on account of unsubstantiated expenses of without correct appreciation of facts and law on the subject. In view of the facts and circumstances of the case and law on the subject, the same may be deleted. 14.1 The ground Nos. 1 to 3 of the appeal being identical to grounds raised by the assessee in assessment year 2013-14 ,therefore, following our finding in assessment year 2013-14, the ground Nos. 1 to 3 of the appeal of the assessee for the year under consideration are decided mutatis mutandis. ITA No. 3234/Mum/2023 15. Now, we take up the appeal of the assessee for assessment year 2016-17. The grounds raised by the assessee are reproduced as under: 1. On the facts and in the circumstances of the case and law on the subject, the learned Income Tax officer erred in making addition of Rs. 9,75,79,573/- being alleged bogus purchase of fuel / diesel & the learned CIT (Appeal) erred in confirming the disallowance of Rs. 97,57,957/- being 10 % of Rs. 9,75,79,573/-purchases of alleged bogus fuel/ diesel. In view of the facts and circumstances of the case and law on the subject, the same may be deleted....
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.... the case and law on the subject, the same may be deleted. 3. On the facts and in the circumstances of the case and law on the subject, the learned assessing officer erred in making disallowance of Rs. 4,84,000/- on account of unsubstantiated expenses & the learned CIT (Appeal) erred in confirming disallowance of Rs. 48,400/-being 10% of Rs. 4,84,000/-on account of unsubstantiated expenses of without correct appreciation of facts and law on the subject. In view of the facts and circumstances of the case and law on the subject, the same may be deleted." 16.1 The ground Nos. 1 to 3 of the appeal being identical to grounds raised by the assessee in assessment year 2013-14 ,therefore, following our finding in assessment year 2013-14, the ground Nos. 1 to 3 of the appeal of the assessee for the year under consideration are decided mutatis mutandis. ITA No. 3232/Mum/2023 and ITA No. 3028/Mum/2023 17. Now we take up the appeal of the assessee and Revenue for assessment year 2018-19. The grounds of appeal of the assessee are reproduced as under: 1. On the facts and in the circumstances of the case and law on the subject, the learned Income Tax officer er....
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....these credits were loans in nature of accommodation entries because both those companies were controlled and operated by entry provider sh Prakash Jajodia, therefore, he asked the assessee to discharge burden u/s 68 of the Act in respect of those credits under reference. In response the assessee submitted that those two parties were the distributors of the assessee since 2010 and the amount received was as a security deposit under distribution agreement. The assessee also filed copy of the distribution agreements. It was explained by the assessee that the source of the funds in hands of the distributors was by way of receipt from sale debtors. The copies of the sales registers and bank statement of assessee also submitted along with other documentary evidence to establish identity & creditworthiness of those two concerns and genuineness of the transactions. However, the Assessing Officer was not satisfied with the contention of the assessee. According to him the shareholders of those two concerns were found to be dummy directors controlled by accommodation entry provider Sh Prakash Jajodia. The Assessing Officer referred to the statement of Shri Prakash Jadodia recorded u/s 131 of ....
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....e addition in the appellant's hand was deleted. Same situation exists for this year too. At the same time, I find that loan/deposit taken from M/s Trump Trexim Pvt. Ltd. is also on the same footing and the situation, nature of evidences, findings of the A.O. are also same as that of M/s Metropolitan. Considering totality of facts and circumstances of the issue involved, it is held that addition of unsecured loans/ deposits and interest paid of Rs. 3,00,82,390/- is uncalled for and hence it is deleted. However, the AO may explore the possibility of reopening of the assessments of M/s Metropolitan Distributors Pvt. Ltd. and M/s Triumph Trexim Pvt. Ltd. for the relevant A. Yrs as the A.O. has expressed his doubt about the genuineness of such shareholders. Thus, the ground of appeal no. 6 is Allowed." 18.3 Before us, the Ld. Departmental Representative (DR) submitted that assessee has failed in discharging its onus u/s 68 of the Act and therefore, the Ld. Assessing Officer is justified in making additions u/s 68 of the Act in view of the statements of the director of the said concerns. 18.4 On the other hand, the Ld. Counsel for the assessee submitted that in respect of both ....
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....by the director of the respective parties the Ld. CIT(A) has recommended for taking action of reassessment in their hand. In our opinion there is no infirmity in the finding of the Ld. CIT(A) on the issue in dispute and accordingly, we uphold the same. The ground No. 1 of the appeal of the Revenue is accordingly dismissed. 18.6 The ground No. 2 of the appeal of the Revenue relates to disallowance of depreciation on unaccounted sales of old vehicles in this regard the relevant finding of the Ld. CIT(A) is reproduced as under: "59. In this ground, disallowance of depreciation on sale of vehicle during the year under consideration, i.e., Rs. 29,30,168/- has been challenged. During the course of survey proceedings statement of oath of Shri Ravishankar M Patel was recorded. He stated that it relates to sale of old vehicles where cash was received to the extent of Rs. 43,10,002/- This amount was not accounted for during the year under consideration. This statement was further confirmed by Shri Satish Mandhania, Director of the company. It is further stated by the AO in para 8.9 that the assessee company had given details of only 24 vehicles which were sold during the year. He....