TaxTMI 
TaxTMI 
2024 (5) TMI 1615
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....ssee under section 132 of the Act and thereafter the case of the assessee was selected for complete scrutiny and accordingly statutory notices have been issued to the assessee, in response to which the assessee e-filed the details as called for through ITBA. 2.1 On perusing the details filed by the assessee it was observed by the Assessing Officer (AO) that the assessee is engaged in the business of mining of Manganese Ore located in Nagpur which is still at the initial stage of prospecting and exploration stage. During the course of search and seizure action under section 132 of the Act at the office premises of M/s. GNP Consultancy & Solutions Pvt. Ltd. at office No. 704, 705, 706 & 708, 7th Floor, Embassy Centre, Nariman Point, Mumbai, a red color pen drive of 8GB Cruzer blade with the tag "Soniya PD 1" was found, in which an excel sheet with the name "Sunny-Mining Accounting" was found containing data related to mining activities of the assessee, according to which and findings of the search proceedings, it was gathered by the AO that the assessee has received Rs. 2,74,90,000/- unaccounted cash. Though during the course of assessment proceedings, the GNP group acce....
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....iness income and accordingly taxed under section 28 of the Act. 2.5 The AO also considering the fact "that the Assessee has also claimed expenses of Rs. 1,343/- on account of interest paid on late payment of TDS which has been claimed under section 37 of the Act" disallowed the said amount of Rs. 1,343/- as per the provisions of section 37(1) of the Act. 3. The assessee being aggrieved with the aforesaid additions preferred first appeal before the Ld. Commissioner. With regard to the addition of Rs. 2.75 crores the assessee before the Ld. Commissioner submitted as under: "M/s GNP Realty LLP was incorporated on 21.12.2017 under The Limited Liability Partnership Act, 2008 with the main object of acquiring, exploring. prospecting, developing and operating into business of Mining activities. To attain the main object M/s. GNP Realty LLP, the assessee proposed to acquire the lease mining rights in Manganese Ore from an entity M/s. Veet Rag Exploration and Minerals Private Limited. Assessee had applied for grant of license in their name and same was finally approved by the State Government only on 28.04.2022 i.e. much after the date of search. As stated abov....
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....ncy & Solutions Private Limited had already offered 70% of receipts of Rs 2,75,00,000/- i.e. a sum of Rs 1,92,50,000/- to tax during Assessment Year 2021-22 by them in the return of income filed. The date of filing of return of M/s. GNP Consultancy & Solutions Private Limited was 15.03.2022 which was after the date of search. The returned income was Rs 12,15,92,714/- which included the additional income of Rs 1,92,50,000/- (net of expenses @30% on 2,75,00,000/-) relating to the said assessee from mining consultancy fees. The assessee group vide its letter dated 03.03.2022 submitted on 30.03.2022 before DDIT (Inv) (page no 199 of APB) had specifically mentioned that an income of Rs. 2.75 Crs belonged to consultancy business & duly offered to tax u/s 132(4) in the hands of the group company M/s GNP Consultancy & Solutions Private Limited. However, according to the assessee, without considering the explanation and submission given by the assessee, the AO has wrongly stated that during the course of search, no such claim was made. Assessee submitted that the said income has already been offered on substantive basis in the hands of M/s GNP Consultancy and....
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...., GNP Consultancy & Solution Pvt Ltd had claimed 30% deduction for expenditure. Thus, GNP Consultancy & Solutions Pvt Ltd has offered net mining income of Rs 1,92,50,000/- (i.e. 70% of gross receipts of Rs 2.75 Crores). I have noticed that, during the post search proceedings, GNP group had written a letter dated 03.03.2022 to the DDIT (Inv.) stating that such income of Rs 2.75 Crores was offered to tax by GNP Consultancy & Solution Pvt Ltd. Even during the assessment proceedings, this fact was also communicated to the AO. 9.9 On verification of the records, I find that the contention of the assessee is correct. The assessee has produced copy of acknowledgment of return of income, computation of total income and Assessment Order of GNP Consultancy & Solutions Pvt Ltd for Assessment Year 2021-22 The additional income offered pursuant to search was Rs 7,15,77,000/ (gross) which included Rs 2,75,00,000/- pertaining to the assessee LLP. After claiming 30% deduction for estimated expenses, GNP Consultancy & Solutions Pvt Ltd has offered additional income of Rs. 5,01,03,900/- for Assessment Year 2021-22. Thus, the assessee has proved that such income of Rs. 2.75 Crores ....
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....spect is the file - Accounting which Sunny Mining MENT is at Annexure 14 to the statement of Sh. Ginsh Pawar. This This fife gives the party wise breakup of Rs 2.75 Crores showing unaccounted mining consultancy income. The same is mentioned in Question 164 of statement of Sh. Girish Pawar. In the said Annexure 14, the name of the assessee LLP is not found mentioned. A list of parties is mentioned, nature of work is mentioned and amount received is also mentioned. The file contains total project receivables, amount received till date which was Rs 2.75 Crore and balance receivable. The nature of work relates to the allotment of mines, compliance & extension of time of mining tenure, extension of time limit for compliance during allotment. No notings of any mining activity carried out by assessee as explained above is found mentioned. In fact the assessee had not commenced its mining activity when the search took place and in the absence of any evidence found relating to mining activity as part of the said seized document, it cannot be concluded that the said document is pertaining to the assessee LLP. 9.14 At Question 12 of the statement of Sh. Girish Pawar, has given the de....
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....2] 258 ITR 654 (Gujarat) 9.18 Thus, the additional income offered @ 70% income offered by group entity GNP Consultancy & Solutions Pvt Ltd of Rs 1,92,50,000/- (i.e. 70% of gross receipts of Rs 2.75 Crores) is reasonable and in line with the above judicial precedents. 9.19 Moreover, it is seen that the AO has simply brushed aside the arguments of the assessee. He has not dealt with the argument that a group company has already offered such income for taxation. In fact, while completing the assessment in the case of GNP Consultancy & Solutions Pvt Ltd, the AO has upheld the addition of these receipts in the hands of GNP Consultancy & Solutions Pvt Ltd only. The AO has very much relied upon the statement of Sh. Girish Pawar while completing the assessment in the case of GNP Consultancy & Solutions Pvt. Ltd. I am of the view that such statement cannot be viewed adversely as far as the assessee is concerned as in no part of the statement has Sh. Girish Pawar admitted that the mining consultancy income relates to the assessee firm GNP Realty LLP. Moreover, the AO while doing the assessment for AY 2021-22 in the case of GNP Consultancy & Solutions Pvt Ltd has very much a....
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....der of M/s. GNP Consultancy & Solutions Pvt. Ltd. for the A.Y. 2021-22 wherein the additional income offered pursuant to the search was Rs. 7,15,77,000/- (gross) which included Rs. 2,75,00,000/- qua the assessee. M/s. GNP Consultancy & Solutions Pvt. Ltd. after claiming deduction @ 30% for estimated expenses, has offered additional income of Rs. 5,01,03,900/- for the A.Y. 2021-22 which goes to show that such income of Rs. 2.75 crores pertaining to the search has already been taxed in the hands of its group entity i.e. M/s. GNP Consultancy & Solutions Pvt. Ltd. for the same year. The Ld. Commissioner also considered the peculiar facts/aspect of the instant case vis-à-vis that in fact the assessee has not commenced its mining activities when the search took place and in the absence of any evidence found qua mining activity as part of the seized documents it cannot be concluded that documents seized during the search proceedings under section 132 of the Act in fact pertains to the assessee. The Ld. Commissioner also considered another aspect that M/s. GNP Consultancy & Solutions Pvt. Ltd., after claiming a deduction of 30% as explained, offered 70% of mining....
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....as claimed the said amount of expenses on account of interest paid on late payment of TDS, as allowable expense as per the provisions of the Act. However, the AO disallowed the same as per the provision of section 37(1) of the Act. 10.1 The Ld. Commissioner on appeal reversed the findings of the AO and consequently allowed the aforesaid expense by holding the same as allowable deduction by following the judgment of the coordinate Bench of the Tribunal in the case of Resolve Solvage and Fire India Pvt. Ltd. vs. DCIT (2022) 139 Taxman.com 196 (Mum.) wherein the co-ordinate Bench has followed the decision of another co-ordinate Bench of the Tribunal in the case of Stup Consultants (P.) Ltd. vs. Addl. CIT 5827 (Mum.) of 2012. Conclusion drawn by the ld. Commissioner is as under: "10.1. During the assessment proceedings, the assessee was asked to justify its claim of interest on delayed payment of TDS of Rs 1,343/- as the same is not an allowable expense under the Act. The assessee submitted that the same was a deductible expense. The AO did not accept this submission and disallowed a sum of Rs. 1,343/-. 10.2. During the appellate proceedings, the assessee subm....