TaxTMI 
TaxTMI 
2024 (11) TMI 810
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.... the Act and further erred in confirming the search assessment order passed in terms of Section 153A of the Act without assigning proper reasons and justification. 3. The CIT (Appeals) - 20, Chennai failed to appreciate that the search assessment completed by making the disputed addition(s) in the absence of valid incriminating seized material relatable to such addition(s) should be reckoned as nullity in raw and further ought to have appreciated that the judicial trend in this regard was completely over looked and brushed aside in passing the impugned order there by vitiating the related findings. 4. The CIT (Appeals) - 20, Chennai failed to appreciate that the search assessment order under consideration was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law. 5. The CIT (Appeals) - 20, Chennai erred in confirming the addition of Rs. 4,24,49,502/- on the presumption of wages payable claimed in the month of March of the relevant assessment year as bogus without assigning proper reason and justification. 6. The CIT (Appeals) - 20, Chennai failed to appreciate that the wages expenses were actually i....
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....as bogus without assigning proper reasons and justification. 13. The CIT (Appeals) - 20, Chennai failed to appreciate that the provisions of Section 69 of the Act had no application to the facts of the present case and further ought to have appreciated that the pre-requisite conditions for attracting the provisions in Section 69 of the Act was not satisfied in the present case there by vitiating the disputed addition. 14. The CIT (Appeals) - 20, Chennai failed to appreciate that the seized material relied upon by the Assessing Officer had no evidentiary value and further ought to have appreciated that the addition made solely based on the statement recorded at the time of search and the loose sheet(s) in the absence of corroborative evidence should be reckoned as bad in law. 15. The CIT (Appeals) - 20, Chennai failed to appreciate that the contents of the seized material only relate to the projected figures in relation to TWAD project and further ought to have appreciated that the assessment of projected figures as unexplained investment on various facets was wrong, erroneous, incorrect, invalid and not sustainable both on facts and in law. 16. T....
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.... including the expenses incurred on various projects forming part of the search records and the mechanical addition made by treating the contents of the excel sheet as unaccounted expenses incurred relatable to the projects already captured in the audited financials solely relying on the statement recorded from the accountant in the absence of any corroborative evidence should be reckoned as bad in law. 23. The CIT (Appeals) - 20, Chennai failed to appreciate that the explanation offered by the Appellant was not considered in proper perspective while dealing with the grounds raised and further ought to have appreciated that the factual position was further clarified by the Partner of the Appellant firm during the post search proceedings there by vitiating the related findings in the impugned order. 24. The CIT (Appeals) - 20, Chennai failed to appreciate that in any event the assessment of such presumed unexplained expenditure in the hands of the Appellant firm there by negating the addition made in this regard. 25. The CIT (Appeals) - 20, Chennai failed to appreciate that the entire re computation of the taxable total income on various facets was wrong, ....
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.... 2. Disallowance of Wages Payable 2.1 This addition is based on notings found in Measurement books (M Books) for labor payments and excel sheets. Upon comparison of these documents with regular Tally Data, discrepancies were found and Ld. AO concluded that the assessee booked wages payable in the last month of various financial years to suppress profits. After rejecting assessee's submissions, Ld. AO made addition of Rs. 424.49 Lacs on account of wages payable. The Ld. CIT(A) confirmed the same against which the assessee is in further appeal before us. 2.2 We find that identical issue has been decided by us in assessee's appeal for AY 2017-18, ITA No.1021/Chny/2024 as under: - Our findings and adjudication 4. Upon perusal of ledger extracts of wages payable and salaries payable as placed on record at Page Nos. 70 to 112 of the paper-book Volume-II, it could be seen that as on 01- 04-2016, the wages payable are for Rs. 62.75 Lacs which have fully been paid by the assessee by 30-04-2016. The assessee has made provision of wages payable for AY 2017-18 for Rs. 391.07 Lacs which, as per the statements made during the course of search proceedings, are booked artifici....
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....sed 2,35,08,822 5,53,25,652 Additions - Asst.143 (3) 30,05,474 Esha Sales Reversed -68,00,000 -6,00,000 Revised Income as per Return Filed in response to Notice U/s 153A 11,02,35,450 5,72,95,358 19,07,00,923 11,58,49,606 30,79,08,589 36,16,07,280 67,59,66,220 It could be seen that the assessee has reversed provision of wages payable for Rs. 62.75 Lacs in FY 2015-16 and claimed the same on actual payment basis in FY 2016-17. The same is very much clear from the above reconciliation. Since the provision as wrongly claimed in return of income filed u/s 139(1) has now been reversed in return of income filed u/s 153A, the payment made in subsequent year would be allowable as deduction in the subsequent year. If the same is not allowed, the assessee would suffer double disallowance which is wholly unjustified Therefore, considering the fact of the case, the amount of Rs. 62.75 Lacs would be allowed as deduction to the assessee during AY 2017- 18. We order so. 6. Simila....
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....yments made. Upon perusal of the same, the only conclusion, if any, that could be drawn was that the mentioned sums could have been received in individual capacity from private financiers for TWAD construction project. Further, the sums were expanded for non-business purpose. He also stated that the computations were not actual interest payments but mere computations. Going by this statement, even if presumed to be true, in any eventuality such sums as mentioned in the sheets could not be considered to be the income of the assessee firm since the amounts, at the most, were received in individual capacity and the same were expanded for non-business purposes only. Therefore, this statement would not lend any credence to the case of Ld. AO while making impugned additions in the hands of the assessee-firm. Going by this statement, no case of impugned addition could be made out against the assessee-firm. 5. Proceeding further, Managing Partner, Shri Anandavadivel, at the time of search (Page No. 120 & 121 of Volume I) stated that part of the disputed amount was already accounted for in the books of accounts. However, he admitted that Rs. 8.8 Crores was unaccounted cash utilized....
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.... not actual interest payment then the same would lose its evidentiary value and no concrete conclusion could be drawn on the basis of the same. 8. Also, from the statement of Shri Vinoth, it is clear that he did not have complete knowledge of the transactions. He merely stated the above sum was received by the promoters in their individual capacity from private financiers for the purpose of construction project. He also mentioned that interest calculations made by him were not actual interest payments made. Apparently, that person lack complete knowledge of these transactions. No particulars of financiers as stated by him have been brought on record. This statement is not corroborated with any independent evidences forming part of the search records. Not even single financiers have been identified during proceedings before lower authorities. There is no direct evidence for borrowing money and utilization of the same for the TWAD project which has taken place in subsequent years. No enquiry has been made from Shri Vinoth post search proceedings. Under these circumstances, his statement would not hold much evidentiary value in the absence of any other evidence corroborating ....
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....egular books needs to be independently corroborated and proved when some liability is to be fastened in respect of such transactions. The legal principle as laid down by Hon'ble Supreme Court is that independent corroborative evidence is required in respect of entries in regular books of accounts and the same would apply in the present case. Pertinently, Special Leave Petition (SLP) of revenue against this decision has been dismissed by Hon'ble Supreme Court on 20-08-2024 which is reported as 165 Taxmann.com 846. We are of the opinion that aforesaid principle as laid down by Hon'ble Court would apply to the facts of the present case before us and same strengthens the arguments of Ld. AR. Similarly, Mumbai Tribunal, in the case of ITO vs. Kranti Impex Pvt. Ltd. (ITA No.1229/Mum/2013) held that when the seized papers were undated having no acceptable narration and did not bear the signature of any party, they are in the nature of dumb documents having no evidentiary value and could not be taken to be the sole basis for determination of undisclosed income of the assessee. The onus would be on revenue to collect cogent evidences to corroborate the nothings therein. The ratio of other d....
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.... Therefore, the argument that this was dumb document could not be accepted. The retraction during assessment proceedings was merely an after-thought and no credence could be given to such statement. The case laws being relied upon by the assessee were held to be distinguishable. Finally, the impugned addition was confirmed against which the assessee is in further appeal before us. Our Adjudication on this issue 5. We find that the impugned addition stem from loose sheet found during search which is placed on Page No.252 of Volume II wherein certain amounts have been stated against the projects being carried out by the assessee. The same read as under: - TSS I TGode I 6,30,00,000 M9+ALM2+Sl+C0.5 VSS Vadavalli 3,10,00,000 M9+S1+CO5 GSS Gandhi 1,69,00,000 M8+S1+CO.5 TSS II T.Gode - II 97,00,000 M8+S1+CO.5 SSS Rajan 3,32,00,000 M8+S1+CO.5 JPS Jayakondam 2,53,00,000 M7.5+ALM2+PA0.5+S0.5+C0.25 NNSS Nehru 2,42,00,000 M8+S1+C0.5 TOTAL 20,33,00,000 The whole case of Ld. AO is based on this loose sheet only. Shri Vinoth, at the time of search, stated that the same were unaccounted cas....
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....t any corroborative evidence establishing the same. There is no direct evidence of any cash payment by the assessee. Not even a single concrete evidence has been brought on record to establish that the assessee, in fact, has incurred cash expenditure which was not accounted for in the regular books of accounts. It could be seen that the assessee was subjected to search proceedings and after considering every incriminating material as found therein, the assessee already admitted additional income and Ld. AO made further additions in earlier years. Therefore, even otherwise, each and every unaccounted income whatever has been earned by the assessee-firm in earlier years, the same has already been brought to tax and therefore, no further addition could be made in the hands of the assessee at the time of expansion thereof. All these facts lends credence to the arguments of Ld. AR. 7. The Hon'ble Karnataka High Court in its recent decision titled as CIT vs. Sunil Kumar Sharma (159 Taxmann.com 179; 22.01.2024), rendered in the context of Sec.153C, held that a sheet of paper containing typed entries and in loose form, not shown to form part of the books of accounts regularly maintained....