TaxTMI 
TaxTMI 
2024 (8) TMI 106
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....CIT(A) for the assessment years 2011-12 to 2017-18 dated 31.12.2018. Since the issues in these appeals are common, these are clubbed together, heard together and disposed of by this common order for the sake of convenience. 3. The assessee filed common additional ground in ITA Nos. 984, 986/Bang/2023 for assessment years 2013-14 & 2015-16 under Rule 11 of the I.T. Act along with petition as follows: "Ground No. 9A: Without prejudice to the above, there was no transaction with the said contractors during the Previous Year 201213 and hence no addition was called for in this AY and thus the addition made by the AO is liable to be deleted." Similar additional ground in assessment year 2015-16. 3.1 With regard to above additional ground, the contention of the assessee counsel is that in this two assessment years 2013-14 & 2015-16, there was no transaction with the said contractors which is considered as a bogus and there cannot e any disallowance since the main issue has been remitted back to the file of ld. AO to consider the books of accounts of the assessee. This ground is also should go back to the ld. AO if there is no transaction with the said contractors as narr....
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....nal Rules, 1962 INDEX Sl. No Particulars Page No. 1 Application u/r 29 of ITAT Rules, 1962 1-6 2 Annexure-A/1: Letter dated. 24.07.2017 7-7 3 Annexure-A/2: Letter dated 25.10.2018 8-10 4 Annexure-A/3: Letter dated 17.12.2018 11-11 5 Revised Computation of Income 12-19 6 Copy of bills and vouchers for expenditure under the head 'Promotion-Sales schemes and discounts expenses'. 20-312 7 Copy of bills and vouchers for expenditure under the head 'Carriage outward expenses'. 313-1383 (iv) ITA Nos - 985/BANG/2023 A.Y 2014-15 Application under Rule 29 of Income Tax Appellate Tribunal Rules, 1962 INDEX Sl.No Particulars Page No. 1 Application u/r 29 of ITAT Rules, 1962 1-6 2 Annexure-A/1: Letter dated. 24.07.2017 7-7 3 Annexure-A/2: Letter dated 25.10.2018 8-10 4 Annexure-A/3: Letter dated 17.12.2018 11-11 5 Revised Computation of Income 12-18 6 Copy of bills and vouchers for expenditure under the head 'Promotion-Sales schemes and discounts expenses'. 19-876 7 Copy of bills and vouchers for expenditure under the head 'Carriage outwar....
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....lid basis and without affording enough time to properly verify from the concerned persons and records which were voluminous. The persons who were queried by the Team were forced to give admissions when they were under tremendous stress and pressure. 7.2 Later on during the post search proceedings, the Management was made to give entity wise head-wise break of the income declared during search by declaring the same under two heads, namely, (1) Promotion - Sales schemes and discounts expenses and (2) Carriage outward expenses. In the said statement recorded u/s 131(1A) of the Act in the office of the investigation wing of the I T Department, the CMD of the Company had categorically stated that the company has maintained all the bills and vouchers related to Promotion - Sales expenditure as well as Carriage outward expenditure. However he was made to state that to the extent of the amount mentioned therein, the company was then unable to produce the bills / vouchers and hence the same may be disallowed. The said declaration was obtained in in lieu of the declaration obtained from the management on 4th and 7th November 2016. The final declaration so obtained from the MD is as under:....
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....A) has also stated that no retraction statement, no revised computation and no revised return was filed by the appellant without appreciating this fact the assessee has been pleading to examine the books of accounts and all the bills and vouchers and accordingly give credit. 7.5 He submitted that the authorities below have not heeded to the request of the appellant to examine the books of accounts and bills and vouchers in respect of the additional income offered in the ITRs under 'protest' and to exclude the same from total income. Thus, the appellant was not allowed opportunity to substantiate the expenses genuinely incurred for the purpose of business and duly supported by the underlying documents like bills and vouchers. It is submitted that this is a case which is covered by the situations visualized under Rule 29 of the ITAT Rules, 1963. The authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence on the subject disallowances included under protest in the ITR. This is also a case where this Hon'ble Tribunal would require the additional evidence to enable it to pass order. This is also a case where the additional evidences a....
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....rays for permission to submit similar documents for the whole year for verification. 7.9 He prayed that the above documents may kindly be admitted in the interest of justice and fair play. If permitted the Appellant would also submit the balance documents for the entire year for verification. The company follows the system wherein the bills and vouchers of a particular month relating to all kinds of expenditure are bound together in to bound books at the end of the year and stored in godowns. Bills and vouchers etc of a particular head of expenditure cannot be separately taken out without breaking the bound books with a risk of the left margins getting torn. Hence the Appellant has, on sample basis, broken open few volumes of such book for each year for the period as above and producing the same for admission as additional evidence with a prayer to allow production of balance documents of the year on being convinced of the bona fide submission of the Appellant in the interest of justice. 7.10 He submitted that the non-submission of the present additional evidences before the AO or CIT(A) were not willful nor intentional. In this regard the appellant respectfully relies upon t....
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....ht. 9. We have heard both the parties and perused the materials available on record. Admittedly, the assessee vide letter dated 24.07.2017 (filed on 31.7.2017) written to the DCIT Central Circle 1(1), Bangalore submitted that the additional income has been offered and tax has been paid under protest and in case if they are in a position to explain the bona fides of expenses, the benefit should be given to them. For clarity, we reproduce the said letter as follows: 9.1 Further, the assessee on 24.10.2018 (filed on 25.10.2018) written one more letter showing the details of expenditure which is kept on record. The assessee filed one more letter before DCIT Central Circle-1(1), Bangalore on 17.12.2018 filed on (18.12.2018), stating that in the final declaration Shri Paul P. John agreed for certain disallowances under the head trade discounts, repair & maintenance and carriage outwards as they were unable to produce the bills during the time of search and requested extra time which were not provided. Now they are in a position to provide the same and requested the department to check the same and give them necessary credit/refund of taxes paid. On failure to get any relief from ld....
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....nd seizure action u/s. 132 of the Act was conducted in the group of John Distilleries and the Assessee company being the flagship company of the Group, the search operation was carried out even in the Office premises of the Assessee at Bengaluru. During the course of search proceedings at M/s. John Distilleries Pvt. Ltd., Bangalore, certain incriminating documents/materials pertaining to assessee were found and serzed. Statements were recorded under oath from the employees, the key persons and the CMD of the Assessee Company. Notice u/s. 153A was issued on 29.06.2017 for the AYs 2011-12 to 2016-17. In response to the notice u/s. 153A, the assessee filed the return of come for the relevant AYs, the details of which are as under: 10.2 The details of undisclosed income as per the return of income filed by the assessee in response to notice u/s 153A, för the AYs 2011-12 to 2016-17 are as under: 10.3 Pursuant to the issue of notice u/s 153A, the Income assessed in the orders passed by the AO u/s 153A r.w.s. 143(3) r.w.s. 153D, dated 31.12.2018 for the AYs 2011-12 to 2016-17 and u/s 143(3) r.w.s.153D 2017-18 dated 31.12.2018, are as under: 10.4 The additions made ....
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.... expired. Since return filed is even pending to be processed, the return would be treated as pending before the AO. Consequently, AO would have authority/jurisdiction to assessee the entire income, similar to jurisdiction in regular assessment u/s 143(3). 3. Return of Income filed by the assessee - return processed and intimation issued u/s 143(1) - Time limit for issue of notice u/s 143(2) not expired. Since intimation is not akin to assessment and time limit for notice u/s 143(2) hs not expired, even though return has been processed, it will be case where return has not attained finality. Consequently, AO would have authority/jurisdiction to assess the entire income, similar to jurisdiction in regular assessment u/s 143(3). 4. Return of income filed by the assessee. Intimation passed or not u/s 143(1) and time limit for issue of notice u/s 143(2) has expired. Return of income of the assessee shall be treated as having being accepted and attained finality. AO loses jurisdiction to verify the return of income Since, no assessment would be pending there would be no abatement of any proceedings. Accordingly, the scope of assessment u/s 153A would be restric....
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....emes' in their parlance. Various documents pertaining to sales promotion was found and seized. The assessee's director Sri Paul P John was confronted on 27.02.2017 and 06.03.2017 and he admitted that M/S. JDPL has not maintained proper bills and vouchers for the Promotion - Sales schemes and discounts expenses. She drew our attention to the statement recorded from Sri. Paul P John, Chairman of M/S. JDÅL on 06.03.2017 and relevant portion of the statement is reproduced below: 14.1 She submitted that the assessee company has offered a sum of Rs. 2,23,19,384/- in its return of income as admitted during the search. From above it is clear case of concealment of income by the assessee and hence penalty proceedings u/s 271(1)(c) of the Act is initiated separately. 14.2 Regarding bogus carriage outward expenses the ld. D.R. submitted that during the course of the search, it was noticed that JDPL was inflating the carriage outwards to certain extent as the same modus followed under the head of sales promotion expenses. During the course of the search the same has been confronted to Sri Krishnan, Director of JDPL on 3.11.2016 and she drew our attention to the relevant por....
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....s accounted in the books of accounts, the relevant portion of his statement recorded on 6.3.2017 u/s 131 of the Act and she drew our attention to the same which is reproduced below: 14.8 She submitted that during the course of the search the same facts have been confronted to Sri Srinivasan, CFO of M/s. JDPL on M/s. John Distilleries Pvt. Ltd., Bangalore 3.11.2016 and admitted that return income earned out of trucks owned by JDPL has not accounted in the books of accounts. She drew our attention to the relevant portion of the statement which is reproduced below: 14.9 She submitted that like Sri. Srinivasan, CFO of M/S. JDPL Sri. Krishnan, Director of JDPL has been admitted that, income earned from return trip transport income was not properly accounted in the books of accounts. She drew our attention to the relevant portion of Sri Krishnan's statement which is reproduced below: 14.10 She submitted that the director of the company Sri. Paul P John did not accept that income earned out of return trips of trucks was not accounted. However, the facts are different from the statement recorded from Sri. Mohan Duraiswamy, Sri. Mathew, Sri. Srinivasan, Sri. N Krishnan of M/S. ....
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.... there would be no abatement of proceedings. AO loses jurisdiction to review the completed assessment. Accordingly, the scope of assessment u/s 153A would be restricted to incriminating material found during the course of search. 14.13 The ld. AO is directed to examine this issue in the light of above observation and decide accordingly. This ground of appeal in ITA Nos. 982 & 983/Bang/2023 is partly allowed for statistical purposes. 15. Next ground in all these assessee's appeals is with regard to assuming jurisdiction u/s 132(1) of the Act is bad in law as there was no valid satisfaction recorded for conducting search action. In our opinion, this ground cannot be entertained at this stage in view of the insertion of explanation to section 132(1) with retrospective effect from 1.4.1962 by Finance Act, 2017. The said explanation prefers the appellate authorities to go into the reasons recorded by the concerned Income Tax authority for directing the search against the assessee. This view is fortified by Hon'ble Karnataka High Court in the case of Pratibha Jewellery House Vs. CIT 88 taxmann.com 94 (Karn.), wherein held as follows: "That even the law has been amended ....
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....of appeal in ITA Nos. 982 to 987/Bang/2023 in assessment years 2011-12 to 2016-17 is dismissed. 18. Ground Nos. 5 to 8 & 10 and 11 in all appeals in ITA Nos. 982 to 987/Bang/2023 and additional ground No. 9A in ITA No. 984 & 986/Bang/2023 in assessment years 2013-14 & 2015-16 are with regard to ignoring the retraction statement and persisting with the income offered under protest in the income tax return in respect of following: (a) Illegal confirmation of additional income offered in return u/s 153A of the Act under protest: (i) Inflated sales and promotion expenses, (ii) Bogus carriage expenses, (b) Addition made in the assessment order: (i) Undisclosed income from transport business, (ii) Undisclosed income from bogus contractors, (iii) Inflated bogus purchase and inflated transport expenses (c) The additional ground is that there is no transaction with the said contractors during the assessment year 2013-14 and 2015-16 and hence no addition called for in these assessment years. 18.1 The ld. A.R. submitted that there was no incriminating material found during the course of search action. The ld. AO exc....
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....T v. B. Nagendra Baliga, (2014) 363 ITR 410 2. A. Shivashankar v. DCIT ITA Nos. 617 to 620/Chny/2017 Dated 31.05.2022 (ITAT, Chennai) 3. Sri Devraj Urs Education Trust for Backward Classes v. ACIT, Bangalore ITA No. 500 to 506/Bang/2020 (TAT, Bangalore) 18.2 Further, he submitted that the assessee has filed various letters before ld. AO seeking opportunity to produce evidence in support of the claim of expenditure, which are not considered by him even the assessee has retracted the statement which was observed by the ld. AO after thought. Further, he relied on the following judgements: 19. The ld. D.R. relied on the order of lower authorities and submitted as follows: 19.1 According to Ld DR, the evidences found are self-speaking, self- explanatory, unambiguous and incriminating against the appellant. explanation offered by the appellant justifies the claim and does not stand in the way of the evidences found and the assessment made in this regard. 19.2 Further, she relied on the following case laws: (i) Judgement of Hon'ble Supreme Court of India in the case of Video Master Vs. JCIT reported in (2015) 378 ITR 374 (SC), wherein held as under: ....
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....ng. The Tribunal lost sight of the fact that all was not well with the books of account maintained by the assessee and it has been keeping away its income from the books. That should have been sufficient for the Tribunal to examine the estimate made by the Assessing Officer, having regard to the principles laid down in the judgment of the Supreme Court (supra). The Tribunal also failed to note the difference between Section 158BB appearing in the Chapter-XIVB and the assessment made by virtue of the provisions of Section 153A of the Act. Secondly, the Tribunal expects the purchasers from the assessee to come forward and declare that they have paid more than what was appearing in the sale bills issued to them and has commented upon the lack of any inquiry from the purchasers on this line. Suffice to say that this throws an impossible burden on the Assessing Officer, having regard to the observations of the Supreme Court that the assessee cannot be permitted to take advantage of his own illegal acts, that it was his duty to place all facts truthfully before the assessing authority, that if he fails to do his duty She cannot be allowed to say that assessing authority failed to establi....
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....ed sales in the pre-search period would continue in the post search period also. This judgment has no application to the present case because the search took place on 13.12.2005 which falls in the year relevant to the assessment year 2006-07. The assessments under Section 153A of the Act have been completed up to and including the assessment year 2006-07. Even if there can be no presumption that after 13.12.2005 there could have been unaccounted sale of Hing or compound Hing, it is hardly material since only a period of 31/2 months were left aft e date of search till the end of the previous year i.e. 31.3.2006." (vi) Further, she relied on the judgement of Madras High Court in the case of CIT Vs. T. Rangroopchand Chordia (241 Taxmann 221) wherein held that loose sheets recovered from the premises of the assessee constitute document within the meaning of explanation under sub-section 4 of section 132 of the Act. 20. We have heard the rival submissions and perused the materials available on record. The lower authorities made the addition by observing as under: As seen from the above, during the course of search action, statement was recorded from Shri Paul P. Joh....
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.... the Act has been amended w.e.f. 1.6.2023. and in such search cases assessment shall be completed as per the provision of section 153A of the Act. The section 153A reads as under: "153A. Assessment in case of search or requisition - (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) Issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139. (b) Assess or reassess the total income of six assessment years immediately preceding the ass....
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....irst time so long as relevant facts are on record in respect of item concerned. From reading of lying alone of judicial proceedings relied by the assessee counsel, it is apparent that authorities under the Income tax are not sacrosanct obligation to act in accordance with law. Tax could be collected as provided under the Act. If an assessee on a mistake, misconception are not being properly instructed is either assessed or over assessed, the authorities under the Act are required to ensure that only legitimate tax dues are collected. This view which flows from enumerable judgements including CIT Vs. Shelly Products 261 ITR 367 (SC), S.R. Kosti Vs. CIT 276 ITR 165 (Guj.), CIT Vs. Prithvi Brokers and Shareholders 349 ITR 336 (Bom) and so on. Therefore, the assessee is within legitimate right to alter wrong position taken earlier in the course of proceedings. In the instant case, assessee wanted to alter its position in the return filed u/s 153A of the Act filed in pursuance to such proceedings, wherein assessee has offered certain additional income in respect of issue raised before us and assessee prayed before us that the assessment in the case of assessee to be completed on the bas....
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....t addition cannot be sustained merely on the basis of the statement. There has to be some material corroborating the content of the statements. 21. In the case of Kailashben Manharlal Chokshi v. CIT1, the Gujarat High Court held that the additions could not be made only on the basis of admissions made by the assessee, in the absence of any corroborative material. The relevant paragraph No. 26 of the said decision has been reproduced hereinbelow: - 26. In view of what has been stated hereinabove we are of the view that this explanation seems to be more convincing, has not been considered by the authorities below and additions were made and/or confirmed merely on the basis of statement recorded under section 132(4) of the Act. Despite the fact that the said statement was later on retracted no evidence has been led by the Revenue authority. We are, therefore, of the view that merely on the basis of admission the assessee could not have been subjected to such additions unless and until, some corroborative evidence is found in support of such admission. We are also of the view that from the statement recorded at such odd hours cannot be considered to be a voluntary sta....
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....s alone, without any other material discovered during the search which would corroborate said statements, do not grant the AO the authority to make an assessment. 24. Coming to the findings of the ITAT with respect to incriminating material in the case of M/s Pavitra Realcon Pvt. Ltd and M/s Delicate Real Estate Pvt. Ltd, it is seen that the ITAT has explicitly held in paragraph No. 18 that no addition has been made on the basis of any incriminating material found during the course of search. Further, the ITAT relied on the decision of the Supreme Court in the case of CIT v. Sinhgad Technical Education Society and held as follows: - "18. Further, while writing the order it has come to our notice that the Hon'ble Apex Court in the case of Sinhgad Technical Education Society has held that section 153C can be invoked only when incriminating materials assessment year-wise are recorded in satisfaction note which is missing here. Therefore, the proceedings drawn u/s 143(3) as against 153C are invalid for want of any incriminating material found for the impugned assessment year. 19. In view of the above, the additional grounds raised by the assessee in the case ....
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....justified to assess income in case no incriminating material is found during the search. The relevant paragraph is reproduced herein below: - "54. In any case, Abhisar Buildwell, in our considered opinion, is a decision which conclusively lays to rest any doubt that could have been possibly harboured. The Supreme Court in unequivocal terms held that absent incriminating material, the AO would not be justified in seeking to assess or reassess completed assessments. Though the aforesaid observations were rendered in the context of completed assessments, the same position would prevail when it comes to assessments which abate pursuant to the issuance of a notice under Section 153C. Here too, the AO would have to firstly identify the AYs' to which the material gathered in the course of the search may relate and consequently it would only be those assessments which would face the spectre of abatement. The additions here too would have to be based on material that may have been unearthed in the course of the search or on the basis of material requisitioned. The statute thus creates a persistent and enduring connect between the material discovered and the assessment that may ....
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....f Sections 158B to 158BI and which embodied the concept of a block assessment. A block assessment in search cases undertaken in terms of the provisions placed in Chapter XIVB was ordained to be undertaken simultaneously and parallelly to a regular assessment. Contrary to the scheme underlying Chapter XIVB, Sections 153A, 153B and 153C contemplate a merger of regular assessments with those that may be triggered by a search. On a search being undertaken in terms of Section 153A, the jurisdictional AO is enabled to initiate an assessment or reassessment, as the case may be, in respect of the six AYs' immediately preceding the AY relevant to the year of search as also in respect of the "relevant assessment year", an expression which stands defined by Explanation 1 to Section 153A. Of equal significance is the introduction of the concept of abatement of all pending assessments as a consequence of which curtains come down on regular assessments. B. Both Sections 153A and 153C embody non-obstante clauses and are in express terms ordained to override Sections 139, 147 to 149, 151 and 153 of the Act. By virtue of the 2017 Amending Act, significant amendments came to be introduc....
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....se of a non-searched person being regulated by the First Proviso of Section 153C(1) is an issue which is no longer res integra and stands authoritatively settled by virtue of the decisions of this Court in SSP Aviation and RRJ Securities as well as the decision of the Supreme Court in Jasjit Singh. The aforesaid legal position also stood reiterated by the Supreme Court in Vikram Sujitkumar Bhatia. The submission of the respondents, therefore, that the block periods would have to be reckoned with reference to the date of search can neither be countenanced nor accepted. E. The reckoning of the six AYs' would require one to firstly identify the FY in which the search was undertaken and which would lead to the ascertainment of the AY relevant to the previous year of search. The block of six AYs' would consequently be those which immediately precede the AY relevant to the year of search. In the case of a search assessment undertaken in terms of Section 153C, the solitary distinction would be that the previous year of search would stand substituted by the date or the year in which the books of accounts or documents and assets seized are handed over to the jurisdictional ....
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.... and repeated requests made by the assessee in this regard. The Hon'ble Supreme Court in the case of M/s Andaman Timber Indusgies vs. CCE reported in 281 CTR 241 has held that not giving opportunity of cross examination makes the entire proceedings invalid and nullity. The Co-ordinate Bench of the Tribunal in the case of Best City Infrastructure Ltd. (supra) has also held that not providing opportunity of cross-examination makes the addition invalid. It has come to our notice that the Hon'ble Delhi High Court recently has upheld the said decision as reported in 397 ITR 82." 31. On this aspect, it is beneficial to refer to the decision of the Supreme Court in the case of Andaman Timber Industries v. CCE, wherein, it was held that not providing the opportunity of cross- examination to the assessee amounts to gross violation of the principles of natural justice and the same will render the order passed null and void. The relevant paragraph of the said decision is extracted herein below: - "6. According to us, not allowing the assessee to cross examine the witnesses by the adjudicating authority though the statements of those witnesses were made the basis of t....
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....of natural justice are not a constant: they are not absolute and rigid rules having universal application. It was pointed out by this Court in Suresh Koshy George v. University of Kerala [AIR 1969 SC 198 : (1969) 1 SCR 317 : (1969) 1 SCJ 543] that "the rules of natural justice are not embodied rules" and in the same case this Court approved the following observations from the judgment of Tucker, L.J. in Russel v. Duke of Norfolk [(1949) 1 All ER 109] :"There are, in my view, no words which are of universal application to every kind of inquiry and every kind of domestic tribunal. The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter that is being dealt with, and so forth. Accordingly, I do not derive much assistance from the definitions of natural justice which have been from time to time used, but, whatever standard is adopted, one essential is that the person concerned should have a reasonable opportunity of presenting his case." [Emphasis supplied] 33. Further, the argument of learned counsel for the Revenue that this mistake is curable under S....
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....erved that the entries in the loose papers/sheets are not "books of accounts" and has no evidentiary value u/s 34 of the Indian Evidence Act. The Hon'ble Supreme Court dismissing the writ petition filed by Common Cause, a registered society, refused to give nod to investigate against the Sahara and Birla Groups in the alleged payoff scandal. The factual setting of the case are that, a search was conducted by the CBI in the premises of Birla Groups, as a result of which, certain incriminating materials and an amount of Rs. 25 crores were recovered. CBI referred the matter to Income Tax Department. In another search, the IT department recovered certain incriminating materials and unaccounted money of Rs. 135 crores from Sahara Group of Companies. Allegedly the department recovered certain print out of excel sheets showing that Rs. 115 crores were paid to several public figures. The settlement commission granted immunity to the Sahara Group of Companies on ground that the scrutiny of entries on loose papers, computer prints, hard disk, pen drives, etc. have revealed that the transactions noted on documents were not genuine and have no evidentiary value and that details in these loose ....
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....ratna Estates during registration of properties. A search u/s 132 was conducted in the case of Shri Lanka Anil Kumar as well as the assessee and the survey u/s 133A was conducted in the case of M/s Navaratna Estates. No evidence was found by the department either in the premises of the assessee or in the premises of M/s Navaratna Estates, having given loan to Sri Anil Kumar to the extent of Rs. 1,05,00,000/-. In the search proceedings in the residence of Shri Anil Kumar also, no evidence with regard to unaccounted investment or expenditure representing the loan supposed to be taken from the assessee was found. Merely on the basis of the statement given by Shri Lanka Anil Kumar, which was subsequently retracted, the AO made the addition on the presumption that the assessee had advanced the sums to Shri Lanka Anil Kumar without bringing any evidence on record. The AO has neither given opportunity to the assessee to cross examine the third party nor disproved the explanation given by the assessee. As found from the order of the AO Sri Lanka Anil Kumar is an employee of M/s Navaratna Estates and drawing the salary of Rs. 25000/- per month. He explained that the sums mentioned in the wh....
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....K. V. Lakshmi Savjtri Devi Vs ACIT ITTA 563 of 2017 (AP)(HC) * Jawahar Bhai Atmaram Hathiwala Vs ITO 128 ITJ 36 (Ahd) * DCIT Vs B. Vijaya Kumar ITA No. 930 & 931 of 2009 (Hyd). * CIT Vs R. Nalini Devi ITTA 232 of 2013 (A. P) * CIT Vs P. V Kalyana Sundaran (2007) 294 ITR 49 * Venkata Rama Sai Developers Vs DCIT ITA 453/Vizag/2012. * P. Venkateshwar Rao Vs DCIT ITA 25/825/Vizag/2012. The ratio laid down is that solely on the basis evidences such as notings in loose sheets found with third parties and the statement of third parties, additions cannot be made without corroborative evidences and independent enquiries. Applying the above ratio to the facts of the case, it is held that the addition made is not warranted, the same is deleted." 6.1. No evidence was found by the department to establish that assessee has given loans to Shri Lanka Anil Kumar during the course of search and no evidence was found regarding utilization of purported advances by Shri Lanka Anil Kumar. Shri Anil Kumar also subsequently retracted from the statement and clarified that he has not received any cash loans from the assessee. Addition w....
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....he remarks as mentioned above. (para 7) If the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show-Cause Notice. (para 8)" 20.18 The Delhi Tribunal in the case of Veena Gupta v. ACIT in ITA No. 5662/Del/2018 dated 27.11.2018 relying on the above judgment of Hon'ble Supreme Court in the case of Andaman Timber Industries (supra) quashed the assessment order on the reason of not providing cross-examination of witnesses whose statements were recorded. 20.19 The Hon'ble Supreme Court in the case of Mehta Parikh & Co. v. CIT, 30 ITR 181 held as under:- "In the instant case a mere calculation of the nature indulged in by the ITO or the AAC was not enough, without any further scrutiny, to dislodge the position taken up by the assessee, supported as it was, by the entries in the cash book and the affidavits put in by the assessee before the AAC. The Tribunal also fell into the same error. It could not negative the possibility of the assessee being in possession of a substantial number....
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....r in the case of the assessee, he disowned the sales specifically made to the assessee. This statement can at the worst show that Shri Sukla is not a trustworthy witness and little value can be attached to what he stated either in his affidavits or in his examination by the Assessing Officer. His conduct neutralises his value as a witness. A man indulging in double-speaking cannot be said by any means a truthful man at any stage and no court can decide on which occasion he was truthful. If Shri Sukla is neutralised as a witness what remains is the accounts, vouchers, challans, bank accounts, etc. But, we would observe here that which way lies the truth in Shri Sukla's depositions, could have been revealed only if he was subjected to a cross-examination by the assessee. As a matter of fact, the right to cross-examine a witness adverse to the assessee is an indispensable right and the opportunity of such cross-examination is one of the corner-stones of natural justice. Here Shri Sukla is the witness of the Department. Therefore, the Department cannot cut short the process of taking oral evidence by merely having the examination-in-chief. It is the necessary requirement of the pro....
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....m. This necessarily also postulates that he should crossexamine the witness hostile to him. 10. In any case, we have nothing to rely upon to come to a decision this way or the other. The first thing is that which of the statements of Shri Sukla is correct, is anybody's guess. Therefore, it is necessary to delve out the truth from him and for that matter a cross-examination is necessary. Secondly, if the statement of Shri Sukla as a witness against the adverse party, the assessee, is relied upon as truthful, still remains the question of estimation of the profit. The assessee no doubt has given a comparative instance of gross profit rate but it is also necessary for the Department to come to a finding as to the norm of the gross profit on the basis of comparative cases. Therefore, it is the duty of the Assessing Officer to counter the comparative statement cited by the assessee before he can have the option to estimate the gross profit. Again, it is the comparative instance that alone can be the foundation of such estimate in case the accounts are really found to be unreliable and requiring to be rejected. Therefore, in the interest of justice for both the parties, the ....
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....mons referred to in the letter dated March 9, 1957, and what statement he had made." 20.23 For this purpose we place reliance on the judgement in the case of ICT Vs. Abhinitha Foundation Pvt. Ltd. (2017) (396 ITR 251), wherein held as under: "8. We have heard the learned counsel for the parties and perused the record. 9. According to us, what clearly emerges upon perusal of the record and, in particular, the impugned judgment and order of the Tribunal, is as follows: i. That, in the original return as filed by the assessee company, no claim for deduction under Section 80 IB (10) of the Act had been made. ii. That the assessee company, as observed in paragraph 3 of the impugned judgment and order of the Tribunal, had made a claim for deduction under Section 80 IB (10) of the Act at the stage, when, the assessment proceedings were on. At that point in time, details with regard to the project, qua which, claim was made, were filed along with requisite information, in the prescribed format, i.e., Form 10CCB. iii. The CIT (A), even while recognizing the fact that the claim made by the assessee company for deduction under Section 80 IB (10)....
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....udgment in the case of Goetze, had noticed its own judgment in National Thermal Co. Ltd. vs. CIT, (1998) 229 ITR 383 (SC). In the said case, the Supreme Court was called upon to adjudicate as to whether a claim made by way of a letter before the Tribunal for the first time could have been entertained by the Tribunal. Briefly, the facts which obtained in the said case are as follows: 12. 1. The assessee, in that case, had available with it surplus funds, which it chose to deposit with banks on a short term basis. Qua the said short term deposits, the assessee earned interest during the relevant previous year amounting to Rs. 22,84,994/-. The said interest was offered for levy tax by the assessee, based on which, assessment proceedings were completed. The assessee, however, challenged the assessment order before the CIT (A) qua grounds other than the inclusion of the interest earned on short term deposits in the total income. Consequently, this aspect of the matter was not considered by the CIT (A). The assessee, however, carried the matter in appeal to the Tribunal. The appeal, as originally filed with the Tribunal, did not object to the inclusion of interest in the sum of ....
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....y curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income-tax Officer. This court further observed that there may be several factors justifying the raising of a new plea in an appeal and each case has to be considered on its own facts. The Appellate Assistant Commissioner must be satisfied that the ground raised was bona fide and that the same could not have been raised earlier for good reasons. The Appellate Assistant Commissioner should exercise his discretion in permitting or not permitting the assessee to raise an additional ground in accordance with law and reason. The same observations would apply to appeals before the Tribunal also. The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner of Income-tax (Appeals) takes too narrow a view of the powers of the Appellate Tribunal (vide, e.g., CIT v. Anand Prasad (1981) 128 ITR 388 (Delhi), CIT v. Karamchand Premchand P. Ltd. (1969) 74 ITR 254 (Guj) and CIT v. Cellulose Products of India Ltd. (1985) 151 ITR 499 (Guj) (FB). Undoubtedly, t....
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....imited v. Commissioner of Income Tax, 1991 Supp (2) SCC 744 = (1991) 187 ITR 688. The second submission is based on a judgment of the Supreme Court in Goetze (India) Limited v. Commissioner of Income Tax, (2006) 157 Taxman 1. (A). In Jute Corporation of India Limited v. CIT, for the assessment year 1974-75 the appellant did not claim any deduction of its liability towards purchase tax under the provisions of the Bengal Raw Jute Taxation Act, 1941, as it entertained a belief that it was not liable to pay purchase tax under that Act. Subsequently, the appellant was assessed to purchase tax and the order of assessment was received by it on 23rd November, 1973. The appellant challenged the same and obtained a stay order. The appellant also filed an appeal from the assessment order under the Income Tax Act. It was only during the hearing of the appeal that the assessee claimed an additional deduction in respect of its liability to purchase tax. The Appellate Assistant Commissioner (AAC) permitted it to raise the claim and allowed the deduction. The Tribunal held that the AAC had no jurisdiction to entertain the additional ground or to grant relief on a ground which had not been....
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....fore us to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income Tax Officer.[emphasis supplied]'' (B) It is clear, therefore, that an assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional claims before them. The appellate authorities have the discretion whether or not to permit such additional claims to be raised. It cannot, however, be said that they have no jurisdiction to consider the same. They have the jurisdiction to entertain the new claim. That they may choose not to exercise their jurisdiction in a given case is another matter. The exercise of discretion is entirely different from the existence of jurisdiction. 16. At page 694, after referring to certain observations of the Supreme Court in Additional Commissioner of Income-tax v. Gurjargravures P. Ltd., (1978) 111 ITR 1, the Supreme Court observed at Page 694 as under :- The above observations do not rule out a case for raising an additional ground before th....
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....not were not in existence. Grounds which were not in existence when the return was filed or when the assessment order was made fall within the second category viz. where the ground became available on account of change of circumstances or law. (Emphasis is ours) 12.5. A reading of the aforesaid observations would clearly establish that the arguments advanced by Mr.Ravi that the assessee company could only raise an additional ground and not make a new claim or additional claim is not sustainable. As indicated by us hereinabove, this power of entertaining the claim vests with the appellate authorities based on the facts and circumstances of the case. The power of the appellate authorities to consider claims made based on material already on record is co-terminus with the power of the Assessing Officer. The failure to advert to the claim in the original return or the revised return cannot denude the appellate authorities of their power to consider the claim, if, the relevant material is available on record and is otherwise tenable in law. Any other view, in our opinion, will set at naught the plenary powers of appellate authorities. 13. The judgment of the Divisio....
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....the case of ACIT vs. Gurjargravures P. Ltd. In this case as well, it was noticed that neither was any claim made before the ITO nor was any supporting material placed on record. It is in this background that no relief was granted. The Supreme Court, in this case, disagreed with the High Court, inasmuch as it sustained the direction of the Tribunal issued to the ITO to grant appropriate relief qua claim made under Section 84 of the Act. 18. In sum, what emerges from a perusal of the ratio of the judgments cited above, in particular, the judgments rendered by the Supreme Court in GOETZE's case and National Thermal Power Co. Ltd.'s case, and those, rendered by the Division Bench of this Court in Ramco Cements Ltd. and CIT vs Malind Laboratories P. Ltd., as also the judgments of the Delhi High Court in Sam Global Securities Ltd.'s case and Jai Parabolic Springs Ltd.'s case, that, even if, the claim made by the assessee company does not form part of the original return or even the revised return, it could still be considered, if, the relevant material was available on record, either by the appellate authorities, (which includes both the CIT (A) and the Tribunal)....
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....sing authorities are bound to compute the correct income, and merely for a procedural lapse on technicalities, the assessee should not be compelled to pay more taxes than what is due from him. 4. It is further noted by us that in A.Y 2008-09 an identical claim was made by the assessee during the course of the assessment proceeding with respect to additional claim on account of bad debts. The AO in that year had had rejected the claim in an identical manner by relying upon the judgement of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. v. CIT (supra) as has been done in this year. The said claim was allowed by the ld. CIT(A) and Department carried the matter in appeal before the Tribunal. 5. The Tribunal in A.Y 2008-09 considered the entire gamut of facts and the position of law on this issue and decided the appeal in favour of the assessee by upholding the order of the ld. CIT(A) in allowing the revised claim made by the assessee during the course of the assessment proceedings. Relevant findings of the order of the Tribunal are reproduced hereunder for the sake of ready reference: "3. Ld. CIT(A) has stated that the assessee has filed the....
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.... appeal over an assessment were plenary and conterminous with those of the AO and that he can do what the ITO can do and also direct him to do what he has failed to do. In the light of the law laid down in this judgment by the Supreme Court, it was open to the CIT(A) to consider the assessee's claim on merits by virtue of his coextensive power over the assessment proceedings and also by virtue of s. 250(5). That apart, the judgment of the Supreme Court in Goetze (supra) is distinguishable on facts because in that case the claim was made for the first time in the letter filed by the assessee in the course of the assessment proceedings whereas in the present case the claim of depreciation on the trucks @ 20 per cent was already made in the return of income and it was merely enlarged to 40 per cent on the footing that the assessee was running the trucks on hire. It cannot be said to be an entirely new claim made for the first time in the letter filed by the assessee in the course of the assessment proceedings. The CIT(A) therefore committed no error in dealing with the assessee's appeal on merits. Moreover, the AO himself has examined the claim on merits though he earlier held....
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.... assessee is entitled for a deduction, as per law and facts, same should not have been denied to itr merely because the claim was not made in the return of income. That would, in our considered opinion, amount to collecting taxes without authority of law. It is further noted by us that it is well settled position of law that assessee can resile from its return of income during the course of assessment proceedings if he is able to show that the return filed was not in accordance with the law or if some income was wrongly offered to tax, which was as per law, not liable to tax, or if the assessee finds that there was omission to make a claim in the return of income. The only 7 M/s. CMS Securitas Ltd. precaution to be taken here would be that fresh claim of the assessee should be strictly within the four corners of law. If it is so, the claim made even for the first time during the assessment proceedings should not be rejected. 7. In our view, there are no estoppels on legal issues under the income tax law. Even if, assessee agrees or consents for something contrary to law, the A.O. is obliged under the law, to discharge his duty of making fair assessment of income and to com....
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....a statute, it cannot be taken away by the adjudicatory authority on mere technicalities. It is settled proposition of law that no tax can be levied or recovered without authority of law. Article 265 of the Constitution of India and section 114 of the State (J&K) Constitution imposes an embargo on imposition and collection of tax if the same is without authority of law." 10. Lastly, we find it useful to refer to judgment of Hon'ble Bombay High Court in the case of Central Provinces Manganese Ore 112 ITR 734, holding that, the mere fact that a deduction was not claimed before the Income-tax Officer, was not of much importance, since if the liability arises then a claim can be made in a bonafide manner at any stage before the higher authority, who is competent to grant relief. 11. As far as the judgment of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. v. CIT (supra) is concerned, it is respectfully stated that it has been observed in the said judgment by the Hon'ble Supreme Court that this embargo is not applicable on the appellate authorities. In this regard, the Hon'ble Delhi High Court in the case of CIT v. Jai Parabolic Springs Ltd., 30....
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....bordinate authority may have in the matter. There is no good reason to justify curtailment of the power of the AAC in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the ITO. This Court further observed that there may be several factors justifying the raising of a new plea in an appeal and each case has to be considered on its own facts. The AAC must be satisfied that the ground raised was bona fide and that the same could not have been raised earlier for good reasons. The AAC should exercise his discretion in permitting or not permitting the assessee to raise an additional ground in accordance with law and reason. The same observations would apply to appeals before the Tribunal also." 17. In Goetze (India) Ltd. vs. CIT (2006) 204 CTR (SC) 182 : (2006) 284 ITR 323 (SC), wherein deduction claimed by way of a letter before AO, was disallowed on the ground that there was no provision under the Act to make amendment in the return without filing a revised return. Appeal to the Supreme Court, as the decision was upheld by the Tribunal and the High Court, was dismissed making clear that the decision was limited....
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....ney won in the lottery of the Sikkim Government, that would not take away her right to contend that the prize money was not chargeable to tax under Income tax Act, 1961. In this case also, having conditionally offered the income for tax, the assessee raised the issue before the learned CIT(A) that such income is not legally includible in his total income. The learned CIT(A) rejected this plea on the ground that having already voluntarily disclosed the income, the assessee cannot raise such ground. This finding of the learned CIT(A) is not in consonance with the Hon'ble Bombay High Court decision referred above. Another basis on which the learned CIT(A) did not entertain the ground of appeal raised by the assessee is the provisions contained in proviso (b) of Section 240. The relevant section has already been reproduced above. A plain reading of the provision shows that Clause (b) of proviso applies only to a case where the assessment is annulled. In the present case, admittedly, the assessment is not annulled. The assessments have been partly confirmed by the learned CIT(A). Therefore, it cannot be said that in the present case, relevant assessments have been annulled. This is ....
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....s per the provisions of Section 199 of the Act, credit for TDS shall be allowed for assessment year for which the relevant income is brought to the charge of the tax. When the income itself, was not shown by the assessee, in the original return of income, the claim for TDS was patently wrong. However, that should not be reason for bringing to the charge of tax such income, which is not chargeable to tax at all in the hands of the assessee as per the provisions of law. The assessing officer is within his right to deny credit for the TDS but he cannot bring to the charge of tax the income, which is not assessable in the hands of the assessee. 21. In view of the above discussion, we hold that the relevant interest income is not chargeable in the hands of the assessee and we direct the assessing officer to exclude such income from the assessee's total income for all the assessment years under appeal. The assessing officer is also directed to withdraw the credit in respect of TDS allowed to the assessee for all the assessment years. 22. The last ground raised by the assessee pertains to partial disallowance sustained by the learned CIT(A) from out of disallowance m....
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....3(2) of the Act within the stipulated period. The amendments made in Sections 143 to 147 of the Act with effect from April 1, 1989, do not in any manner negate this proposition of law as enunciated by the Hon'ble Supreme Court in the case of CIT v. Sun Engineering Works P. ltd. 198 ITR 297. 24. The learned Counsel pointed out that the Hon'ble Punjab & Haryana High Court also considered decision of Hon'ble Supreme Court in the case of V. Jagan Mohan Rao v. CIT 75 ITR 373 (SC). The learned Counsel argued that once the proceedings Under Section 147 are validly initiated, the jurisdiction of the assessing officer is confined to only income, which has escaped assessment and the entire assessment cannot be made denovo after making enquiries. The learned DR relied on the provisions of Section 147. 25. We have considered the rival submissions in the light of the legal position as emerging from the provisions of law and the eases cited before us. Section 147 is applicable with effect from 01.04.1989 reads as under: Income escaping assessment. 147 If the [Assessing] Officer /has reason to believe/ that any income chargeable to tax has escaped a....
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....xcessive relief under this Act; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed.] 26. From the above, it may be seen that once re-assessment proceedings have been validly initiated Under Section 147, the assessing officer is authorized to assess or reassess such escaped income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of assessment proceedings Under Section 147, it is clear that the jurisdiction of the assessing officer Under Section 147 is not merely confined to bringing to charge of tax the income referred to in the reasons recorded for issue of notice Under Section 148, but it also extends to bringing to charge of tax any other income which has escaped assessment and which comes to his notice during the reassessment proceedings. The Hon'ble Punjab & Haryana High Court, in the case of Vipan Khanna (supra) held that it is only such income which has escaped assessment which can be brought to the charge of tax in the re-assessment framed Under Section 147. If during the course of re-assessment proceedings, the assessing officer....
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....9;ble Supreme Court in the case of ITO v. Sun Engineering works Pvt. Ltd. 198 ITR 297 (SC). We deem it proper to reproduce below the relevant part of the decision as under from pages 319 to 321 of the report: The principle laid down by this court in V. Jaganmohan Rao's case, therefore, is only to the extent that once an assessment is validly reopened by issuance of a notice under Section 22(2) of the 1922 Act (corresponding to Section 148 of the Act), the previous underassessment is set aside and the Income-tax Officer has the jurisdiction and duty to levy lax on the entire income that had escaped assessment during the previous year. What is set aside is, thus, only the previous underassessment and not the original assessment proceedings. An order made in relation to the escaped turnover does not affect the operative force of the original assessment, particularly if it has acquired finality, and the original order retains both its character and identity. It is only in case of "underassessment" based on Clauses (a) to (d) of Explanation 1 to Section 147, that the assessment of tax due has to be recomputed on the entire taxable income. The judgment in V. Jaganmohan Rao&#....
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.... is not proper to regard a word, a clause or a sentence occurring in a judgment of the Supreme Court, divorced from its context, as containing a full exposition of the law on a question when the question did not even all to be answered in that judgment. Although Section 147 is a part of a taxing statute, it imposes no charge on the subject but deals merely with the machinery of assessment and in interpreting a provision of that kind, the rule is that construction should be preferred under Section 147 of the Act are for the benefit of the Revenue and not an assessee and are aimed at garnering the "escaped income" of an assessee, the same cannot be allowed to be converted as "revisional" or " review" proceedings at the instance of the assessee, thereby making the machinery unworkable. As a result of the aforesaid discussion, we find that, in proceedings under Section 147 of the Act, the Income tax Officer may bring to charge items of income, which had escaped assessment other than or in addition to that item or items, which have led to the issuance of the notice under Section 148 and where reassessment is made under Section 147 in respect of income, which has escape....
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....sessment proceedings, unless relatable to "escaped income", and re-agitate the concluded matters. 29. The legal position which emerges from the decisions of Hon'ble Punjab & Haryana High Court and Hon'ble Supreme Court referred to above may summarised as follows: Once the re-assessment proceedings are validly initiated, it is a statutory duty of the assessing officer to bring to the charge of tax, the entire income, which has escaped assessment. His jurisdiction is not confined to the matters on the basis of which re-assessment proceedings were initiated. Section 147 is primarily for the benefit of the revenue and during the course of the reassessment proceedings, the assessee cannot claim any deduction or any benefit with regard to the matters which have already reached finality at the time of original assessment. The assessee cannot be permitted to convert the re-assessment proceedings as his appeal or revision in disguise and seek relief in respect of items earlier rejected or claim relief in respect items not claimed in the original assessment proceedings. The assessing officer can bring to the charge of tax any income which has escaped assessment and ....
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....or the assessment year 95 96 when for all the assessment years there is a consistency finding by the learned CIT(A) that this expenditure was entirely for professional purpose Therefore, for the assessment year 95-96, we modify the order of the learned CIT(A) to the extent that the disallowance from out of the printing and stationery expenses is directed to be deleted With regard to the disallowances from out of other expenses as mentioned above, orders of the learned CIT(A) are upheld." 20.26 In the case of M/s. Maruti Enterprise, Amreli Vs. The ADIT (CPC), Bangalore (2023) ITA No. 10/Rjt/2023 dated 20.3.2024, the Rajkot Bench of this Tribunal held as under: "8. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that the basis of making the disallowance is that such deduction was not claimed in the tax audit report. To our understanding, the tax audit report is a significant piece of evidence/ document but based on that the genuine claim of the assessee cannot be denied especially in the circumstances when other details are available on records. As such the assessee has claimed d....
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....ed should be allowed while determining the taxable income. In view of the above and after considering the facts in totality, we are of the view that the claim of the assessee cannot be denied as it was not reported in the tax audit report especially in the circumstances where other evidence is available on record suggesting the deduction in pursuance to the provisions of section 43B on payment basis is available. Accordingly, we set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is allowed." 20.27 Sharp Tools (421 ITR 90), Hon'ble Madras High Court held as under: 8. Heard both sides and perused the materials placed before this Court. 9. The petitioner is an Assessee under the respondent-Department. For the assessment year 2013-2014, the petitioner filed their return on 30.09.2013. While filling up the columns therein, the petitioner, in Column No. 14, under the head "Debits to Profit and Loss Account", "Compensation to Employees" and "Total Compensation to Employees", has entered the figure of Rs. 1,38,59,509/, which according to the petitioner is incorrect figure and on t....
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....account of the wrong entry being Rs. 49,22,735/- the amount that was reckoned as the income of the Assessee for the assessment year in question. 10. It would be of significance to mention that the Assessee had in the certified copy of P&L account uploaded along with the return of income, placed on records and perused by me, has booked the expenditures on account of labour charges at Rs. 56,12,426/-, wages at Rs. 75,14,652/- and Salary & bonus at Rs. 56,55,166/-. 11. From the aforesaid it would be clear that the Assessee had committed an error, though inadvertent, for which he would be fully responsible, in its return of income which had resulted in the adoption of income by CPC at Rs. 49,22,738/- and the consequent raising of demand of tax." 11. Perusal of the above findings of the respondent would show that he in fact, found that the error committed by the Assessee was inadvertent and that the expenditure shown under the head "Compensation to Employees" are genuine, since such expenditures are supported by the certified copy of the Profit and Loss Account uploaded along with the return of income. However, after finding so, the respondent, though advised ....
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....ase of an appeal to the 4[Principal Commissioner or Commissioner] (Appeals) or to the Appellate Tribunal, the assessee has not waived his right of appeal; or (b) where the order is pending on an appeal before the Deputy Commissioner (Appeals); or (c) where the order has been made the subject of an appeal to the 4[Principal Commissioner or Commissioner] (Appeals) or to the Appellate Tribunal. (5) Every application by an assessee for revision under this section shall be accompanied by 1[a fee of five hundred rupees]. [(6) On every application by an assessee for revision under this sub-section, made on or after the 1st day of October, 1998, an order shall be passed within one year from the end of the financial year in which such application is made by the assessee for revision. Explanation: In computing the period of limitation for the purposes of this sub-section, the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded.] [(7) Notwithstanding anything contain....
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....aid amount is permissible for the assessment year 2008-09. As held by a Division Bench in Parekh Brothers (supra), there is no limit to exercise the jurisdiction under Section 264 of the IT Act. That was also a case in which the claim was not made by the assessee in the return or at the time of arguments when the assessment was made. In such an instance, the Division Bench held that, even assuming that the assessment order was correct, still it is open for the assessee to seek the revisional jurisdiction in respect of an item which was not made by way of a mistake. Therefore, the jurisdiction of the Commissioner to pass orders even if a revised return is not filed, is very much available. 15. In [2017] 394 ITR 247 (Mad), Sri Selvamuthukumar Vs. CIT, the Division Bench of this Court has observed at Paragraph Nos. 9 & 13 as follows: Mr. Swaminathan would refer to the judgment of the Division Bench of the Andhra Pradesh High Court in M.S. Raju Vs. Deputy Commissioner of Income Tax (MANU/AP/0956/2007 : 298 ITR 373) which has expressed a view to the effect that the import of the word 'record' as set out in the Circular (supra) would be restricted to the power u....
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....ower and intended to prevent miscarriage of justice. It is also observed therein that the powers under Section 264 of the IT Act, is to enable the Commissioner to provide relief to an Assessee, where the law permits the same. 17. In [2016] 386 ITR 643 (Del.), Vijay Gupta Vs. CIT, the Division Bench of the Delhi High Court, after referring to the Circular No. 14/1955 dated 11.04.1955 has observed at Paragraph Nos. 22, 35, 36 & 39 as follows: Circular No. 14(XL-35) : MANU/DTCR/0004/1955 of 1955, dated 11.4.1955, issued by the Central Board of Direct Taxes and relied upon by the Petitioner reads as under: "Officers of the department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a tax payer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the officers should take the initiative in guiding a tax payer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the department, for it would inspire confidence in him that he may be sure of getting a square d....
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....r instead of merely examining whether the intimation was correct based on the material then available should have examined the material in the light of the Circular No. 14(XL-35) : MANU/DTCR/0004/1955 of 1955, dated 11.4.1955 and Article 265 of the Constitution of India. The commissioner has erred in not doing so and in failing to exercise the jurisdiction vested in him on mere technical grounds. 18. Perusal of the above decisions would show that the powers conferred on the Commissioner under Section 264 of the IT Act, is not only wider in its scope and also intended for the purpose of preventing miscarriage of justice and for providing relief to an Assessee, which he is otherwise entitled to, but for the order under challenge in revision. 19. No doubt Section 139(5) provides for filing a revised return within one year for correcting any mistake. It is true that the petitioner has not exercised such option within such time. However, the petitioner filed a rectification return after receipt of intimation under Section 143(1). It is true that there is a delay in filing such return. But the said rectification return was rejected on 24.10.2017 and immediately, within ....
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.... for doing real and substantial justice to the parties. The relevant observation made at Paragraph 49, is extracted hereunder: "When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred and the Courts may in the larger interests of administration of justice may excuse or overlook a mere irregularity or a trivial breach of law for doing real and substantial justice to the parties and pass orders which will serve the interest of justice best." 21. Likewise, the Apex Court in [2013] 4 SCC 186, Union of India and others Vs. Ex-Gnr Ajeet Singh, has observed at Paragraph Nos. 24 & 26 as follows: 24. The expression "failure of justice" would appear, sometimes, as an etymological chameleon. The Court has to examine whether there is really a failure of justice or whether it is only a camouflage. Justice is a virtue which transcends all barriers. Neither the rules of procedure, nor technicalities of law can stand in its way. Even the law bends before justice. The order of the court should not be prejudicial to anyone. Justice means justice between both the parties. 26. Jus....
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....s no embargo on the Commissioner to exercise his power and grant the relief under Section 264 of the IT Act. In other words, for granting the relief to an Assessee, which the Commissioner finds that the Assessee is entitled to otherwise, no time restriction is provided under Section 264 of the IT Act, if such revisional jurisdiction is invoked by the Assessee by making an application under Section 264 of the IT Act. However, the Commissioner is not entitled to revise any order under Section 264 on his own motion, if the order has been made more than an year previously. Thus, it is manifest that only suo-motu power of the Commissioner under Section 264 of the IT Act, is restricted against an order passed within one year, whereas no such restriction is imposed on the Commissioner to exercise his power in respect of an order, which has been passed more than on year, if such revisional power is sought to be invoked at the instance of the Assessee by making an application under Section 264 of the IT Act. 26. Considering the above stated facts and circumstances, this Court is of the firm view that the order of the respondent impugned in this writ petition cannot be sustained. Ac....
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.... incriminating material found during the course of search as held by Hon'ble Supreme Court in the case of PCIT Vs. Abhisara Buildwell Pvt. Ltd. in ITA No. 454 ITR 212 wherein it was held that no addition can be made in respect of assessment framed u/s 153A of the Act without any seized material supporting such additions. 20.32 Accordingly, we direct the ld. AO to determine the income of the assessee in these assessment years only on the basis of seized material/incriminating material in the assessment year 2011-12 to 2016-17 and not solely on the basis of statement recorded u/s 132(4) of the Act. More so, assessee has been continuously before the ld. AO as well as ld. CIT(A) requesting to do the assessments on the basis of books of accounts and evidence found during the course of search since the declaration made by assessee during the course of search was lumpsum basis as there was no enough time to verify the correctness of the records which were voluminous. Before us, assessee filed additional evidence, those are admitted as discussed in the earlier para of this order and it is required to be examined by the authorities as they have vital impact on the computation of income o....
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....SCC Online (Allahabad) 1294 of Hon'ble Allahabad High Court and in the case of CIT Vs. Anju Bansal (2022) SCC Online (Delhi) 4159 of Delhi Bench of Tribunal. However, the assessee was not able to demonstrate how there was no subjective satisfaction recorded for granting approval u/s 153D of the Act by competent authority. Hence, this ground of appeals is dismissed. 22. In the result, all the appeals of the assessee in ITA Nos. 982 to 987/Bang/2023 for the AYs 2011-12 to 2016-17 are partly allowed for statistical purposes. ITA Nos. 961, 962 & 1012/Bang/2023 (AYs 2015-16, 2016-17 & 2014-15) (M/s. John Distilleries Pvt. Ltd.) (Revenue's appeals): 23. The grounds raised by the revenue in all these appeals are common, which reads as follows: i. Whether the CIT(A) was correct on law and facts in holding that no specific evidence existed for the AYs 2014-15, 2015-16 & 2016-17 in respect of the inflated purchases and inflated transportation expenses and consequently deleted the additions. ii. Whether the CIT(A) was correct on law and facts in not considering the sworn statements of Shri Mathew Joseph and other employees recorded u/s 132(4) of the IT Act, 1961 in ....
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....d 'Repairs and maintenance'. 296-430 8 Copy of bills and vouchers for expenditure under the head 'Commission Expenses'. 431-467 ITA Nos - 839/BANG/2023 M/s. Paul Resorts and Hotels Pvt Ltd. vs DCIT,CC(1)(1), Bengaluru A.Y 2012-13 Application under Rule 29 of Income Tax Appellate Tribunal Rules, 1962 INDEX Sl. No Particulars Page No. 1 Application u/r 29 of ITAT Rules, 1962 1-6 2 Annexure-A/1: Letter dated. 30.10.2018 7-15 3 Annexure-A/2: Letter in dated 30.10.2018 in reply to notice u/s 142(1) of the Act. 16-18 4 Annexure-A/3: Letter dated 17.12.2018 19-20 5 Revised Computation of Income 21-25 6 Copy of bills and vouchers for expenditure under the head 'Travelling Expenditure'. 26-119 7 Copy of bills and vouchers for expenditure under the head 'Repairs and maintenance'. 120-512 8 Copy of bills and vouchers for expenditure under the head 'Commission Expenses'. 513-593 ITA Nos - 840/BANG/2023 M/s. Paul Resorts and Hotels Pvt Ltd. vs DCIT, CC(1)(1), Bengaluru A.Y 2013-14 Application under Rule 29 of Income Tax Appellate Tribunal Rules, 1962 ....
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.... ITA Nos - 843/BANG/2023 M/s. Paul Resorts and Hotels Pvt Ltd. vs DCIT,CC(1)(1), Bengaluru A.Y 2016-17 Application under Rule 29 of Income Tax Appellate Tribunal Rules, 1962 INDEX Sl. No Particulars Page No. 1 Applicattion u/r 29 of ITAT Rules, 1962 1-6 2 Annexure-A/1: Letter dated. 30.10.2018 7-15 3 Annexure-A/2: Letter in dated 30.10.2018 in reply to notice u/s 142(1) of the Act. 16-18 4 Annexure-A/3: Letter dated 17.12.2018 19-20 5 Revised Computation of Income 21-27 6 Copy of bills and vouchers for expenditure under the head 'Travelling Expenditure'. 28-104 7 Copy of bills and vouchers for expenditure under the head 'Repairs and maintenance'. 105-207 8 Copy of bills and vouchers for expenditure under the head 'Commission Expenses'. 208-693 27. With regard to admission of additional evidences, the contention of the ld. A.R. is that the present application is filed under Rule 29 r/w Rule 18(4) of the Income Tax Appellate Tribunal Rules, 1962 seeking admission of additional evidences in the above matter vide applications dated 6.5.2024. 27.1 The ld. A.R. submitted that a su....
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....TRs were filed the additional income was included in the ITR and taxes were paid the it was conveyed in the covering letter for AY 2011-12 that the same was done under protest. A letter dated 30.10.2018 accompanied the Physical ITR filed u/s 153C of the Act for AY 2011-12. The same was reiterated in the Reply to notice u/s 142(1) of the Act vide letter dated 30.10.2018 for all the AYs involved. Thereafter during the assessment proceedings, it followed it up with a request - both oral as well as written to consider the books of accounts, bills and vouchers etc maintained in respect of all the three subject heads of expenditure and to exclude the additional income included in the ITRs. Kind reference is invited to the letter dated 17.12.2018 wherein after giving background of the declaration obtained during search and survey action, it was submitted that the Assessee was in a position to furnish all the bills and vouchers in respect of all the three heads of expenditure and the AO was requested to check the same and give credit to the expenses incurred and refund the taxes paid under protest. 27.4 However he submitted that the Ld. AO did not consider the Assessee's request and pas....
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....ences are required to do substantial justice to the case as the 'cause of justice' has taken a big hit in the whole process culminating into the impugned order. 27.7 Pertinently, the income that can be assessed to tax under section 153C of the Act is only that income which is based on the incriminating material found during the search u/s 132 of the Act as held by the Apex Court in CIT v. Abhisar Buildwell (P) Ltd., 2023 SCC OnLine SC 481. However, the income that has been assessed by the AO is not based on incriminating material but is based merely on the declaration obtained under pressure without the corresponding incriminating material. As stated earlier, the declaration by way agreeing to disallowance of the expenditure was made with an understanding and assurance that the same would be allowed and deleted when the company substantiates it during the assessment proceedings. Both the authorities below did no appreciate the spirit behind and the bona fide actions of the Assessee in adhering to the declaration, though given under pressure. The CIT(A) even went on to the extent of holding that the same was an after-thought which, it is humbly submitted, is contrary to the facts....
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....llful nor intentional. In this regard the assessee respectfully relies upon the ratio of the decision of the Hon'ble High Court of Delhi in the case CIT v. Text Hundred India Pvt. Ltd., (2013) 351 ITR 57 wherein at Para-13 of the Judgment, it was held that Rule 29 enables the Tribunal to admit any additional evidence which would be necessary to do substantial justice in the matter. Their Lordships further observed that the various procedures, including that relating to filing of additional evidence, is a handmade of justice and justice should not be allowed to be choked only because of some inadvertent error or omission on the part of one of the parties to lead evidence. 27.13 Without prejudice to the above, the Assessee submitted that ITAT is the last fact finding authority under the Act and hence empowered to look into the question of fact also, even if not raised earlier in order to determine the correct tax liability of the Assessee. In this regard the Assessee respectfully relies upon the ratio of the decision of the Hon'ble Apex Court in Commissioner Of Income-Tax, Madras vs Mahalakshmi Textile Mills 1968 AIR 101 wherein it has been held that 'all questions whether of law ....
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....addition in the assessment year framed u/s 153C r.w.s. 153A & 143(3) of the Act. In our opinion, we find force in the argument of ld. A.R. These are the searched assessments framed u/s 153A/153C of the Act and which was based on the seized material in case of concluded assessments. Being so, in our opinion, it is appropriate to admit these additional evidences as discussed in the case of M/s. John Distilleries Pvt. Ltd. for the assessment years 2011-12 to 2016-17 in ITA Nos. 982 to 987/Bang/2023. Ordered accordingly. 30. The assessee has raised very lengthy grounds, however at the time of hearing, filed a concise ground in the form of chart making the same as many as 12 grounds. Accordingly, we confined to our adjudication to the grounds mentioned in the chart only. 31. First ground in these appeals is general in nature, which do not require any adjudication. 32. Next ground for our consideration is that no assessment could be made in the case of unabated assessment without any incriminating material found during the course of search action. This is common ground in all these appeals. The assessee raised this ground in ITA No. 838 to 843/Bang/2023 for the assessment years ....
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....ese were cross checked with the assessee's books of accounts, discrepancies were found and on being confronted with the same with Shri Shelly Thayil, C.O.O. of the assessee company has admitted that company is making some bogus expenses and the same has been utilized for making inadmissible business payments. Thus, she submitted that this is the reason for initiating the proceedings u/s 153C of the Act. She further submitted produced a copy of satisfaction note recorded u/s 153C of the Act in this case, where it has mentioned the document at sl.no.5 clearly show that the assessee M/s. Paul Hotels and Resorts Pvt. Ltd. has bogus commission payments to travel agents, inflated repairs and maintenance expenses, inadmissible business expenses for AY 2011-12 to 2017-18. Hence, notice u/s 153C of the Act was issued. Further, she submitted that the following seized material relating to the present assessee found during the course of search action in the case of M/s. John Distilleries Pvt. Ltd. and examining the same notice u/s 153C of the Act has been issued. 1. A1/TPB-01- Commission payment page No. 17 2. A1/TPB-01-Cash payment page No. 1 to 54 3. A/PRH/06-Commi....
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.... the order of the ITAT reveals that the ITAT had scanned through the Satisfaction Note and the material which was disclosed therein was culled out and it showed that the same belongs to Assessment Year 2004-05 or thereafter. After taking note of the material in para 9 of the order, the position that emerges therefrom is discussed in para 10. It was specifically recorded that the counsel for the Department could not point out to the contrary. It is for this reason the High Court has also given its imprimatur to the aforesaid approach of the Tribunal. That apart, learned senior counsel appearing for the respondent, argued that notice in respect of Assessment Years 2000-01 and 2001-02 was even time barred. 19. We, thus, find that the ITAT rightly permitted this additional ground to be raised and correctly dealt with the same ground on merits as well. Order of the High Court affirming this view of the Tribunal is, therefore, without any blemish. Before us, it was argued by the respondent that notice in respect of the Assessment Years 2000-01 and 2001-02 was time barred. However, in view of our aforementioned findings, it is not necessary to enter into this controversy. ....
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.... of Rs. 44 crores as deposit in the previous year relevant to the assessment year 2008-09 and later on became subject matter of the writ petition before the Delhi High Court. That was challenging the validity of notice under section 153C read with section 153A. In dealing with such situation and the peculiar facts that the Delhi High Court upheld the satisfaction and the Delhi High Court found that the machinery provided under section 153C read with section 153A equally facilitates inquiry regarding existence of undisclosed income in the hands of a person other than searched person. The provisions have been referred to in details in dealing with a challenge to the legality and validity of the seizure and action founded thereon. We do not find anything in this judgment which would enable us to hold that the tribunal's understanding of the said legal provision suffers from any error apparent on the face of the record. The Delhi High Court judgment, therefore, will not carry the case of the revenue any further." We, thus, do not find any merit in these appeals. 22. We now advert to the implication of the fact which has been emphasised in para 15. As pointed out i....
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....f Singhad Technical Education Society cited (supra) and in the case of Abhisara Buildwell Pvt. Ltd. reported in 454 ITR 212 wherein held that only when during the course of search undisclosed income was found on unearthing incriminating material during the search, the ld. AO assumed jurisdiction to assess or reassess the total income even in case of completed or unabated assessments. In other words there should be seized material relating to each assessment year found during the course of search to reopen completed assessment, if there is no valid seized material the concluded assessment cannot be reopened. With this observation, we remit this ground relating to framing assessment of unabated assessments consequent to search action to the file of ld. AO for reconsideration. 36.3 In respect of assessment year 2011-12 & 2012-13, ld. A.R. submitted that notice u/s 153A of the Act was issued on 7.9.2018. The order was passed u/s 153C of the Act on 28.12.2018 as the time limit to issue notice for those assessment years has been already lapsed, as such no notice u/s 153C of the Act to be issued for the assessment years 2011-12 & 2012-13. 36.4 In our opinion section 153C of the Act ....
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.... examined by the lower authorities, therefore, the matter was to be restored to his file for considering the date when the relevant documents were handed over by the Assessing Officer of the person searched to the Assessing Officer of the present assessee and decide this issue accordingly, in the light of our above observations. 37. Next ground in ITA Nos. 838 & 839/Bang/2023 relating to assessment years 2011-12 & 2012-13 is that the assessments are time barred. Since this ground is akin to the earlier ground with regard to framing assessment in case of unabated assessment, this issue is also remitted to the file of ld. AO as discussed in immediate earlier para herein above. 38. Next common ground in all these appeals is with regard to carrying of search action u/s 132 of the Act without according proper satisfaction. 38.1 This common ground in all these appeals of this assessee is dismissed on similar lines as discussed in similar ground in earlier part of this order in the case of M/s. John Distilleries Pvt. Ltd. by placing reliance on the judgement of jurisdictional High Court in the case of Pratibha Jewellery House Vs. CIT 88 taxmann.com 94 (Karn.). This ground of appe....
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....2 Supreme Court cses 433, 149 taxmann.com 399 (SC), Civil appeal No. 6580 of 2021 C. Tribunal has discretion to admit additional evidence in the interest of justice: For this proposition, he relied on the following judgements:- 1) Goetze (India) Ltd. vs. Commissioner of Income-tax (2006) 284 ITR 323 2) Goetz India CIT vs. Text Hundred India Pvt. Ltd. (2013) 351 ITR 57 3) Fibres & Fabrics International (P) Ltd. vs. ACIT, Circle-11(3), Bangalore (2013) 33 taxmann.com 90 (Bangalore Trib) 4) HL Malhotra & Co. (P) Ltd. vs. DCIT, Circle12(1), New Delhi(2021) 125 taxmann.com 70 (Delhi) D. Extrapolation not permitted in S&S assessment: He relied on the following judgements: 1) CIT v. B. Nagendra Baliga, (2014) 363 ITR 410 2) A. Shivashankar v. DCIT ITA Nos. 617 to 620/Chny/2017 Dated 31.05.2022 (ITAT, Chennai) 3) Sri Devraj Urs Education Trust for Backward Classes v. ACIT, Bangalore ITA No. 500 to 506/Bang/2020 (TAT, Bangalore) 41.5 Further, he submitted that the assessee has filed various letters before ld. AO seeking opportunity to produce evidence in support of the claim of expenditure, which are not con....
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....ntion to the relevant part of the order of the AO which is reproduced below: 42.2 She submitted that it is evident from the above paragraphs of the order of the AO, that the assessee admitted: a) to claiming bogus expenses in books of accounts, which were accommodation entries b) that the bills and vouchers for such expenses claimed, were not available and could not be produced. 42.3 She submitted that on account of the evidence unearthed during the search and based on admissions of key employees and the CMD, the Assessee filed return of income in response to notice u/s 153C, declaring the undisclosed income in relation to repairs and maintenance, following the admission made in the statements recorded under oath during the search proceedings. Para 7 of the order for the AYs (2013-14 to 2016-17) pertains to "Undisclosed income under the head Bogus commission expenses". During the course of search, various documents were found and seized and impounded, which shows the assessee has paid major commission expenses. The same was confronted with Sri Siva, Accounts Manager and Sri Fazal Sheikh, CFO. Both have admitted in statement recorded u/s 132(4) that they have....
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....ct. It is also noted that Assessee also did not file any retraction statement at all. This proves the fact that the admission of undisclosed income was correct as it was based on incriminating materials and evidence detected during the search proceedings. Even at the stage of filing of return in response to notice u/s 153C, the Assessee consciously chose to file the return, adhering to the admissions of undisclosed income made in the statements recorded under oath. This again proves the fact that the admission of undisclosed income was based on incriminating material which was declared only due to the search proceedings. 42.11 Further she submitted that even during the assessment proceedings Assessee did not file any documents in support of travel expenses, repairs and maintenance and commission paid before the AO. A revised computation contradicting the disclosure made in the return u/s 153C was not filed and neither did the Assessee file a revised return u/s 153C. Thus in the time period from 3.11.2016, when the search was carried out till 31.12.2018, i.e date of passing of order u/s 143(3) rws 153C, Assessee never contested the admission of undisclosed income. However only du....
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....he AYs 2011-12 to 2016-17, which has been remitted to the file of ld. AO for fresh consideration to decide the same only on the basis of seized/incriminating material found during the course of search action and not on stand-alone basis of statement recorded u/s 132(4)/131(1A) of the Act. Accordingly, in this case of assessee also the impugned issues in all these appeals is remitted to the file of ld. AO on similar direction to decide the same after considering the additional evidence filed by the assessee before us. Hence, the ld. AO has to relook into the additional income offered in the return filed in response to notice u/s 153C of the Act as well as addition made by him in the course of framing assessment u/s 153C of the Act as discussed in ITA Nos. 982 to 987/Bang/2024 in the case of M/s. John Distilleries Pvt. Ltd. Accordingly, these impugned issues remitted to the file of ld. AO for reconsideration in the light of above observation. 44. Next ground No. 9 is with regard to approval granted u/s 153D of the Act as mechanical and without application of mind. The assessee has not placed any material to show that approval u/s 153D of the Act was granted in a mechanical manner.....
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....ls is with regard to addition made without any seized/incriminating material. As discussed in the case of M/s. John Distilleries Pvt. Ltd., in earlier part of this order, we remit this impugned issue in all these appeals on similar lines to the file of ld. AO to confine the addition only to the extent of incriminating material/seized material found during the course of search and not to make any addition, if there is no seized material solely relying on the statement recorded u/s 132(4)/131(1A) of the Act. 51. Next common ground in these appeals is ground No. 3 which is with regard to assessment which is already concluded and no assessment could be made without any seized material. The ld. A.R. submitted that in assessment years 2014-15 & 2015-16, the assessee has filed return u/s 139(1) of the Act on 26.11.2014 and 30.9.2015 for the assessment years 2014-15 & 2015-16. The assessment has been already concluded u/s 143(3) on 24.10.2016 and 20.11.2017. As such, these assessments are not pending as on date of search on 3.11.2016. In our opinion, only for the assessment year 2014-15, the assessment was completed before date of search that was 24.10.2016. Being so, in case of assessm....
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.... the Act, the firm has not considered the amount declared during survey separately and included it in the overall declaration made subsequently during the search. 52.4. After hearing both the parties, we direct the ld. AO to give appropriate deduction towards the income already declared in the survey conducted on 23.9.2016 in accordance with law. Ordered accordingly. 53. Appeals filed by the assessee in ITA Nos. 845 to 847/Bang/2023 are partly allowed for statistical purposes. ITA No. 844/Bang/2023 (AY 2017-18) (M/s. Paul Plathotathil John, Coorg) (Assessee's appeals) 54. The assessee in this appeal is aggrieved against the addition of Rs. 4,10,889/- made towards undisclosed income on account of unaccounted cash transaction. 55. Facts of the case are that during the course of search and seizure action carried out in the entities of the assessee, incriminating documents revealing unaccounted cash transactions were found. These facts have been discussed in para 6.1 to 6.3 of the Assessment order passed. The assessee was confronted with the information's received and his statement on oath was recorded on 06.03.2017. The assessee after going through the documents adm....
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....m not taken into account while making the admission. The claims of the assessee are contradictory, not supported with any corroborative evidences and just an after-thought. The fact remains that the declaration were made on account of unaccounted cash transaction, which is clearly discussed in the assessment order passed. As such, he observed that the claims made by the assessee vide Ground No. 3 to 5 are found to be devoid of any' corroborative evidences and contradictory to the statement given on oath by the assessee himself. The additions made by the A.O towards undisclosed income admitted amounting to Rs. 51,43,887/- are found to be reasoned. Further, the other additions being contested are on account of income declared and admitted by the assessee himself in the return of income filed. These issues raised clearly reveal the contradictory stands being taken by the assessee to suppress the correct income. As such, the ld. CIT(A) concluded that no interference is called for on the above additions made and dismissed the grounds raised by the assessee. Against this assessee is in appeal before us. 56. We have heard the rival submission and perused the materials available on ....
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....011-12 2 2012-13 3 2013-14 Income offered in return u/s 139(1) 4 2014-15 9,73,50,750 11,43,81,080 9,20,95,180 NIL Date 29.09.2011 25.09.2012 29.09.2013 29.11.2014 5 2015-16 NIL 30.09.2015 6 2016-17 16,21,71,610 17.10.2016 7 2017-18 33,97,88,690 06.11.2017 Document 3 Sl No AY Income offered in return u/s 153A for AYs 2011-12 to 2016-17 /139(1) - only for AY 2017-18 Date 123 45 6 7 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 12,15,61,686 15,06,45,614 12.38,05,430 80,58,430 88.09.780 28,85,28,450 33,97,88,690 24.07.2017 24.07.2017 24.07.2017 24.07.2017 31.07.2017 24.07.2017 06.11.2017 Note: AY 2017-18, being the year of search u/s 132, the return of income was filed u/s 139(1) Document 4 gs SI AY No Returned income u/s 139. Details of undisclosed income declared inflated sales and promotion bogus carriage outward expenses. Returned income u/s 153A expenses. 1 2011-12 9,73,50,750 1,33,91,943 1,07,76,926 12,15,19,619 2 2012-13 11,43,81,080 2,23....
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.... and discounts expenses claimed to the extent as tabulated below. Hence the same can be disallowed Promotion - Sales schemes and discounts expenses as per books (Rs.) Sl No Financial Year 1 2010-2011 1,33,91,943 2 2011-2012 2,23,19,384 3 2012-2013 2,02,79,561 4 2013-2014 2,06,68,805 5 2014-2015 3,39,72,356 6 2015-2016 4,03,73,597 Total 15,10,05,646 Document 9 5) Please state whether all the receipts are accounted in your books of accounts. a) Sir, I admit that the company is generating cash out of the books. These cash are not accounted in the books. 6) I am showing you the sworn statement of Shri. Hugo K Raj, Shri. Johnson, Shri. Mathew Joseph, Shri. Hari babu, Shri. Prakash recorded on 03.11.2016 and 04.11.2016 during the course of Search proceedings at your business premises at M/s John Distilleries Pvt Ltd, NO.110, Panthrapalya, Mysore Road, Bangalore - 560039 u/s 132 of The Income Tax Act, 1961. Please go through all these statements and comment. a) Yes Sir, I have gone through all the statements in detail. I agree with whatever they have stated in their respective statem....
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....s of cash from the transportation of goods through our lorries when they return from government depots after unloading the alcohol cases. This amount of approximately Rs. 8 Lakhs every month of unaccounted income that is generated. The second source is Document 12 Please explain the nature of the payments that are made for the transportation of cases of alcohol in your own vehicles. a. Alcohol is transported by our own vehicles which are about 80-100 in number. These vehicles pick up the stock in our warehouses in Bangalore and transport them at various government depots in Karnataka. Once these cases are unloaded, the trucks have to return empty. Once in a while, instead of returning empty, they carry loads for various parties across Karnataka. Towards this, money is earned by the company. However, the entire amount is not received by me. All the amount that is received by me is accounted by me in the books. However, the amount not received by me does not appear in the books of accounts of the company. The amount of this transportation income that does not reach me might be in the order of Rs. 4-5 Lakhs per month. However, only the tr....
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....on. 21) You have stated that after the delivery of the finished goods by the trucks, these trucks regularly carry some agricultural products and delivers in the destinations. This amounts to another business activity. However, in Answer to Q.No.7, you have stated that the company does not run any other businesses. Please comment. a) Sir, I agree that it is another business activity as the trucks regularly undertake the activities of carrying agricultural products and delivers in the destination. This is being done in order to utilize the opportunity of trucks coming back empty. Also, it gives us opportunity to generate unaccounted cash for our business purpose. MA & CO Document 15 5) Please state whether all the receipts are accounted in your books of accounts. a) Sir, I admit that the company is generating cash out of the books. These cash are not accounted in the books. 6) I am showing you the sworn statement of Shri. Hugo K Raj, Shri. Johnson, Shri. Mathew Joseph, Shri. Hari babu, Shri. Prakash recorded on 03.11.2016 and 04.11.2016 during the course of Search proceedings at your business premises at M/s John Distilleries Pvt Ltd, NO....
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....inancial Year 1 2010-2011 2 2011-2012 2012-2013 3456 2013-2014 2014-2015 2015-2016 Total Carriage outward expenses disallowed (Rs.) 1,07,76,926 1,39,45,150 1,13,95,187 1,27,25,738 1,67,41,590 1,87,42,956 8,43,27,548 45,50,00,000* 2016-2017 * As on the date of search John Distilleries Private Limited dint pay any advance tax and post search it has paid the advance tax. Document 19 5. In the earlier statement that was recorded from you on 03.11.2016, you had clearly explained the details of unaccounted cash payments made by the company. Please explain the sources of this cash payment a. There are mainly three to four sources of cash generation. Firstly, through unaccounted receipts of cash from the transportation of goods through our lorries when they return from government depots after unloading the alcohol cases. This amount of approximately Rs. 8 Lakhs every month of unaccounted income that is generated. The second source is Document 20 9. Please explain the nature of the payments that are made for the transportation of cases of alcohol in your own vehicles. a. Alcohol is t....
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....usiness activities. If so, please provide the details. a) Sir, I state that in this company M/s John Distalleries Pvt Ltd, we do generate unaccounted cash due to nature of our business. When the truck delivers the finished goods that is Liquor products and returns to factory, they regularly carry some agricultural products and they deliver it in the en route destinations. For this activity, the payments are received in cash and only small portion of this cash is accounted. Remaining cash receipt is not accounted in the books. In Chittali Unit at Maharashtra some transport invoices booked to generate cash. These are bogus invoices in order to get accommodation entry for cash generation. These are the avenues of unaccounted cash generation. 21) You have stated that after the delivery of the finished goods by the trucks, these trucks regularly carry some agricultural products and delivers in the destinations. This amounts to another business activity. However, in Answer to Q.No.7, you have stated that the company does not run any other businesses. Please comment. a) Sir, I agree that it is another business activity as the trucks regularly u....
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.... 88,09,780 28,85,28,450 4,16,71,471 31.12.2018 32,22,19,440 31.12.2018 2017-18 33,97,88,690 36,75,25,025 31.12.2018 Document 26 AY Transport business Undisclosed Income from Undisclosed income from Bogus contractors Inflated Bogus Purchases and Inflated Transport expenses in Chitali Unit Commission paid to SLV Enterprises 2011-12 15,517 2012-13 42,91,168 2013-14 47,27,391 2014-15 49,69,915 64,38,533 63,99,550 1,80,00,000 2015-16 37,10,060 1,10,65,726 1,80,00,000 2016-17 2017-18 40,21,518 1,12,08,242 1,80,00,000 85905 4,61,230 1,80,00,000 9136335 Document 27 To BY SPEED FO ON WEBSITE OF THE DEPARTMENT F.No. 286/98/2013-IT (Inv.II) Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes Room No. 265 A, North Block New Delhi, the 18th December, 2014 1. All Principal Chief Commissioners of Income Tax 2. All Chief Commissioners of Income Tax 3. All Directors General of Income Tax (Inv.) 4. Director General of Income Tax (I & CI), New Delhi Subject: Admissions of Undisclosed....
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....nce: 6.1 income under the head Bogus Repairs and During the course of search, some vouchers/ bills relating to repairs and maintenance were found. When these were cross checked in their books of account, discrepancies were found and on being confronted with Sri Shelly Thayil, COO of M/s Paul Resorts and Hotels Pvt. Ltd, admitted that they are making some bogus expenses in the books of accounts and the same has been utilized for making the inadmissible business payments. 6.2 The company was inflating the expenses by booking common name of billing payments for the easy reference. Sri Nisar Mohammed Ali, was asked to produce complete bills/ vouchers for the travelling expenses and in his statement dated 06.03.2017 has stated that he was unable to produce the bills. Q.23. Please furnish the supporting bills/vouchers for the following expenditure claimed ( as per the financial) towards Commission, Travelling expenses, repair and maintenance for the financial years from 2010-11 to 2016-17. S.No Financial years 1 2010-11 2 2011-12 3 2012-13 4 2013-14 5 2014-15 6 2015-16 7 2016-17....
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.....2016 from Sri Fazal Sheikh, CFO of M/s Paul Resorts and Hotels PVT.. Ltd and during the course of statement he was confronted with these documents and in his statement he had admitted that they have not maintained any details of the commission paid. 4. Please see the Papers inveidorised as exihibit No. APRIUI. Explain the same as also the statement recorded from Sri Vijay Kismar, Accounts Assistant Manager and Sri Siva, Manager Accounts recorded on 03-11.2016. Please go through the some and give your comments, ns. These are Direct Payment Advices, Invoice and bills will be bookedin Kerala. Only le Commission payments are processed in Bangalore. I agree to the statement given by both may subordinates that the address, telephone no. of the persons to whom the Document 31 5. commissions have been paid is not available and there payments have been made by them on my directions. The persons to whom commission have been paid have brought business to the company. To safeguard their confidentiality I have directed the accounts staft at Kumarkom to book the expenses on account of commission paid in the month of March....
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.... the assessee and penalty proceedings u/s 271(1)(c) of the IT Act are initiated separately. Document 32 7) I am showing you the sworn statement of Mr. Mohammed Ali, Director of M/s Paul Resorts and Hotels Pvt Ltd recorded on 04.11.2016 during the course of Search proceedings in your case. Please go through the statement and comment. a) Yes Sir, I have gone through all these statements in detail. I agree with whatever he has stated in his statement and I confirm the same. I understand that for various years, evidence with respect to inflation with respect to expenditure and generation of cash through various s means was found and accordingly, year wise break up of the undisclosed income in the hands of the company, ie, Paul Resorts and Hotels Pvt Ltd was arrived at Lagree to this break up. The total undisclosed income is as shown below, S. No. AY of Amount undisclosed Income (Rs) 1 2011-12 57 39 Lakhs 2 2012-13 58.67 Lakhs 3 2013-14 4 2014-15 S 2015 16 47.15 Lakhs 35.56 Lakhs 332.50 Lakhs 6 2016-17 591.20 Lakhs 7 8 2017-18 Total 1101.00 Lakhs 2223.47 ....
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....ct to inflation with respect to expenditure and generation of cash through various means was found and accordingly, year wise breakup of the undisclosed income in the hands of the company, ie, Paul Resorts and Hotels Pvt Ltd was arrived at. I agree to this break up. The total undisclosed income is as shown below, TR Pg. 2 Document 35 S. No. AY 1 2011-12 2 2012-13 3 2013-14 4 2014-15 5 2015-16 6 2016-17 7 2017-18 8 Total Amount undisclosed income (Rs) of 57.39 Lakhs 58.67 Lakhs 47.15 Lakhs 35.56 Lakhs 332.50 Lakhs 591.20 Lakhs 1101.00 Lakhs* 2223.47 Lakhs In the case of AY 2017-18, as on date, no Advance Tax has been paid by the Company. We disclose an amount of Rs. 4,01,00,000 as undisclosed income for the period 01.04.2016 to 02.11.2016. I also wish to state that we shall be offering income amounting to Rs. 7,00,00,000/- as income for the period 03.11.2016 to 31.03.2017 . 1 wish to state that I agree to the aforementioned break up of undisclosed income and I shall be paying the taxes within time. The modus of generation of this income ha....