TaxTMI 
TaxTMI 
2024 (10) TMI 1615
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....e 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. 4,05,91,502/- 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 incu....
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....payable as bogus without assigning proper reasons and justification. 13. The CIT (Appeals)- 20, Chennai failed to appreciate that the salary payable was actually incurred by the Appellant in the normal course of business and the disallowance of such expenses as not genuine was wholly unjustified and not sustainable both on facts and in law. 14. The CIT (Appeals) - 20, Chennai failed to appreciate that the Appellant had rectified the return of income filed u/s 153A of the Act in claiming the actual expenses relatable to the assessment year under consideration and further ought to have appreciated that the Assessing Officer having considered the reversal of such provision in the said return of income, the action to deny the claim of actual expenses relatable to the assessment year under consideration would distort the financial results of the Appellant Company. 15. The CIT (Appeals) - 20, Chennai failed to appreciate that the salary expenses were wrongly denied both in the year of claim (as per original return of income) as well as in the actual year of outflow (as per 153A return) would defy the principles of fairness in taxation there by vitiating the rel....
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....eized 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. 23. The CIT (Appeals) -20, Chennai failed to appreciate that the Assessing Officer had not brought on record any evidence establishing the movement of cash / flow of funds nor identified the disputed sum in the form of any asset there by vitiating the sustenance of the addition made by invoking the provisions of Section 69 of the Act. 24. The CIT (Appeals)- 20, Chennai failed to appreciate that the explanation offered by the Appellant were 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. 25. The CIT (Appeals)-20, Chennai failed to appreciate that in any event the assessment of such presumed investment as unexplained in the hands....
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....2,97,210 2 2016-17 10.02.2017 5,52,28,000 NA 5,72,95,360 20,67,360 3 2017-18 23.01.2018 15,78,68,530 NA 19,07,00,920 3,28,32,390 4 2018-19 15.12.2018 11,39,91,610 NA 11,58,49,610 18,58,000 5 2019-20 30.01.2020 14,40,23,110 NA 30,74,07,590 16,33,84,480 6 2020-21 31.03.2021 20,40,75,060 NA 36,16,07,280 15,75,32,220 7 2021-22 31.03.2022 67,59,66,220 NA NA NA It is evident that the assessee offered additional income of Rs. 18.58 Lacs in this year. 2. Disallowance of Wages & Salaries 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. 405.91 Lacs on account of wages payable and another addition on account of salaries payable for Rs. 17.96 Lacs. The Ld. CIT(A) confirmed the same against which the assessee is in fur....
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.... 15,78,68,526 11,39,91,605 14,45,24,107 29,07,17,231 67,59,66,220 Wages Payable - Reversed 50,91,741 62,74,999 3,91,07,396 4,24,49,502 6,04,23,983 Actual Wages Paid Claimed -50,91,741 -62,74,999 -3,91,07,396 -4,24,49,502 Salary Payable - Reversed 14,84, 105 33,72,150 49,18,047 Actual Salary Paid Claimed -14,84,105 -33,72, 150 Sub Contractor - Reversed 11,85,29,029 1,40, 18,600 Purchase - Reversed 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 w....
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....t seized material was explained by Shri P. Vinoth (Q No.14-I) (an employee of the firm) during search proceedings. He deposed that these amounts were loans taken by the individuals and utilized for non-business purposes. When put forth before, Shri S. Anandavadivel, (Q No.28), said that part of the amount spent was accounted in the books and admitted Rs. 8.80 Crores unaccounted cash utilized for the civil contract projects. Post search proceeding when the same question was posed to Shri S. Anandavadivel, he stated that these were unaccounted loans refunded by the parties and interest earned from these loans and unaccounted cash generated in the firm. However, post search, no statement was recorded from Shri Vinoth who had said that the source was loan borrowed by the individual which has not been confirmed by the partner of the firm in his sworn statement recorded during search proceedings. Post-search proceedings, in statement recorded from Shri Anandavadivel (Q.No.3), he stated that the source was from refund of unaccounted loans with interest to the family member whereas neither the officer has questioned the utilization nor it has been answered. Pertinently, Sh. Vinoth was not ....
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....accountant, it was recalled that this excel sheet was prepared for a project for TWAD board and for which the requirement for the project cost and the estimated interest was worked for the discussion purposes only. Since there was no financial transaction involved either by the assessee or by the partners, there was no question of tangible investment by the firm or by its partners and no iota of evidence was available during search proceedings for investment as per the seized material. The Ld. AO, while alleging unexplained investment, has not even identified a single loan party and did not make any attempt to cross-examine any of the party in this regard. The Ld. AO failed to consider that the details in the loose sheet had no relevance to income or investment either by the firm or by the partners. All the details in the loose sheets were nothing but estimated project cost and expenditure for a particular forthcoming project from TWAD. The sheet was merely a dumb document having no evidentiary value and could not be taken as a sole basis for making the addition. Reliance was placed on various judicial decisions to support the submissions. The assessee referred to the decision of H....
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.... The heads of expenditure towards which investment was utilized was also mentioned in seized sheet. He clarified that above payments were unaccounted non-business expenditure. Therefore, investment by partners and family was for unaccounted payments. 3.7 Shri Anandavadivel, in sworn statement dated 31-10-2020, agreed that the amounts as mentioned in seized sheet represents cash (investment / capital) introduced by partners and family member. Regarding utilization of cash introduced, he stated that only Rs. 8.8 Crores mentioned under the head 'Mini' was unaccounted whereas rest of the expenditure was already recorded in the books of accounts. In sworn statement recorded on 30-04-2021, he still agreed that amounts mentioned in seized sheet represents actual cash (investment / capital) introduced by partners and family member. He, in fact, explained source for investment in hands of partners and family member as unaccounted cash generated by the assessee firm from business and unaccounted loans of assessee firm refunded and unaccounted interest received by firm etc. However, only during assessment proceedings, it was argued that the transactions were nothing but projected f....
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....trary to the statement of Shri Vinoth. The partner stated that partial amount was accounted whereas partial amount was unaccounted. In such a case, no addition to the extent of accounted portion could have been made in the hands of the assessee. Nevertheless, no exercise has been carried out by Ld. AO to verify the statement of the partner and bring on record evidences to fortify the same. Further, nothing has been said by the partner on the source of investment and there is no admission with respect to the same. In any case, the statement of Shri Vinoth as well as the statement of the partner runs contrary to each other. Also, the statement made by managing partner is without any corroborative evidence. This statement also does not support confirmation of impugned addition in the hands of the assessee-firm. 6. Post search proceedings, the Managing Partner stated that the cash was introduced by the individual partners out of their unaccounted loans and unaccounted cash generated from the assessee-firm. No statement was recorded from Shri Vinoth. Even going by this statement, no inference of unaccounted income could be made against the assessee. The assessee was subjected to sear....
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....tions for monetizing the funding of the project and there could not be any presumption of unaccounted loans / cash being introduced unless details thereof have been brought on record. There is no evidence for actual borrowing of money by the partners. 9. Similarly, the statement of Managing Partner has contradictions. During search, he has stated that part of the amount spent was accounted for in the books of accounts. There is no such evidence brought on record by any of the lower authorities. Post search proceedings, the partner stated that the source of cash introduction was unaccounted loans refunded by the parties and interest earned from these loans and unaccounted cash generated in the firm. Thus, there is clear contradiction in these statements and no addition could be made merely by relying upon the same unless the same is supported by any corroborative evidence on record. 10. Upon perusal of loose excel sheet as extracted in the assessment order, it could be seen that these sheets lacks sufficient details to form an opinion of actual cash introduction by the partners of the firm. The same merely contain certain computation of interest only without suggesting anythin....