TaxTMI 
TaxTMI 
2025 (11) TMI 1898
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....s. 45,03,39,610/- made by the assessing officer on account of alleged undisclosed income are beyond the scope and jurisdiction of provisions of Chapter XIV-B of Income Tax Act, 1961 and therefore, the additions made by the assessing officer are liable to be deleted. 3. On the facts and circumstances of the case and in law, the assessing officer erred in treating / assessing the amounts of Rs. 45,03,39,610/- as undisclosed income. 4. On the facts and circumstances of the case and in law, the assessment order passed by the assessing officer is contrary to the provisions of section 158BG of the Income Tax Act, 1961 and CIT(A) erred in not holding so." The grounds of cross objection of the Assessee are as under: "1. On the facts and circumstances of the case and in law, the assessment order passed by the assessing officer is bad-in-law, without jurisdiction and barred by limitation and Ld. CIT(A) erred in not holding so. 2. On the facts and circumstances of the case and in law, the additions of Rs. 45,03,39,610/- made by the Assessing Officer on account of alleged undisclosed income are beyond the scope and jurisdiction of provisions of Chapter XI....
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....ssion in further proceedings. Against the re-initiation of proceedings by the settlement commission, the Assesseecompany filed a writ petition before the Hon'ble Delhi High Court. The Hon'ble High Court passed an order dated 08.12.2016 accepting the contention of the Assessee and directed for further proceedings/fresh assessment by the A.O. After the above mentioned order dated 08.12.2016 of Hon'ble Delhi High Court, the assessing officer took up the assessment proceedings. The assessing officer issued notice u/s 142(1) dated 20.01.2017 asking the assessee to furnish certain information/details. The information/replies/details were duly submitted by the Assessee to the assessing officer. The assessing officer did not point out any discrepancies in the details / information / replies submitted by the Assessee. The assessing officer also did not raise any further queries. Assessing officer passed the assessment order dated 03.02.2017 determining undisclosed income of Rs 45,03,39,610/-. 4. Aggrieved by the assessment order dated 03.02.2017, the Assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 10/12/2024, deleted the addition of Rs. 45,....
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....ing undisclosed income of Rs. NIL. After approaching the Settlement Commission and the Hon'ble High Court, finally an assessment order came to be passed on 03.02.2017 determining undisclosed income of the Assessee at Rs. 45,03,39,610/-. The assessing officer completed the assessment by disallowing losses on sale of shares in various years. The gist of the reasons for disallowance of losses assigned by the A.O. are as under:- a). The losses claimed were not genuine b). The company was following different accounting years for Income tax purposes and companies Act. c). The transactions of sale purchase were done through group companies. d). The transactions were done off market. e). The transactions were not supported by proper bills. 8. During the first appellate proceedings before the Ld. CIT(A), it is the specific case of the Assessee that the Ld. A.O has erred in making in aggregate additions of Rs. 45,03,39,610/- in the Block Period for alleged bogus losses, the additions are based on suspicion, conjectures, surmises and erroneous views ignoring and/or not appreciating the facts and law involved. The additions are illegal, arbit....
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.... 143(3)/250 26.03.2001/24.03.2003 1997-98 30.11.97 143(3) 15.03.2000 9. Losses have been disallowed as bogus by relying upon and making comparisons with rough and incomplete papers without pointing out any instance of any transaction which may have been found in the seized material but not found recorded in the books of accounts. The transactions which are recorded in the books of accounts can be considered in the regular assessments and not in the Block assessment under section 158BC of the Act. It is a matter of record that the books of accounts were produced not only in the original block assessment proceedings, but were also furnished in the regular assessment proceedings as is evident from various assessment orders relating to regular assessment proceedings. As a matter of fact, the AO has himself attached the chart showing complete details of opening stock, purchases, sales and closing stock with the assessment orders which are as per books of accounts and audited financial statements and all the transactions in respect of which losses have been disallowed by the AO are forming part of the chart prepared by the AO. The observations of the A.O. that the....
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.....Y 1991-92 the net profit earned by the company in shares trading was Rs. 41,82,380/-. There were transactions wherein the appellant earned profit earned by the company in shares trading was Rs. 41,82,380/-. There were transactions wherein the appellant earned profit of Rs. 1,25,91,619/- and there were similar transactions in which the appellant incurred loss of Rs. 84,09.295/-. The AO has accepted all the transactions resulted into profit and has disallowed loss of Rs. 83,95,000/- i.e. almost all the transaction resulting into loss. The transactions of profit/loss are with the same parties and are supported by similar documentary evidences. All the transactions are duly recorded in the books of accounts and disclosed in the books of accounts as well as regular income tax returns filed. The appellant has furnished before the AO as well as before me detailed analysis and documentary evidence of each and every transaction of loss. Thus, the action of the AO in disallowing the losses cannot be held to be justified. F.Y. 1992-93 For FY 1992-93, the AO has made addition of Rs. 80,68,217/- on amount of suppressed profit. As per Chart B-2 Annexed with the assessment orde....
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....disallowed loss of Rs. 4,58,85,303/- i.e. almost all the transaction resulting into loss. The transactions of profit/loss are with the same parties and are supported by similar documentary evidences. All the transactions are duly recorded in the books of accounts and disclosed in the books of accounts as well as regular income tax returns filed. The appellant has furnished before the AO as well as before me detailed analysis and documentary evidence of each and every transaction of loss. Thus, the action of the AO in disallowing the losses cannot be held to be justified. F.Y. 1994-95 For the F.Y. 1994-1995 the net profit earned by the company in shares trading was Rs. 2,08,84,198/-. There were transactions wherein the appellant earned profit of Rs. 15,84,92,489/- and there were similar transactions in which the appellant incurred loss of Rs. 13,76,08,291/-. The AO has accepted all the transactions resulting into profit and has disallowed loss of Rs. 13,76,08,290/- i.e. almost all the transaction resulting into loss. The transactions of profit/loss are with the same parties and are supported by similar documentary evidences. All the transactions are duly recorded i....
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.... 13. It is also pertinent to note that the cases of many of the companies (including M/s. Cornflower Investments Ltd.) with whom transactions have taken place and wherein losses have been incurred (which have been disallowed by AO) have been completed by A.O. u/s 158 BD and the transactions have been duly accepted and admitted as genuine in their cases. Therefore, there remains no basis for the AO to treat the transactions as non-genuine in the appellant's case." 10. It is also observed that, the Ld. CIT(A) while deleting the addition, relied on the order of the Tribunal in the case of H. B. Stock Holding Ltd (supra), wherein similar disallowances were made in the case of Group Companies i.e. H. B. Stock Holding Ltd. and the nature of additions and the basis/reasoning of additions in the said case were same as in the case of the Assessee herein. The Co-ordinate Bench of the Tribunal is while deleting the addition in IT(SS) Appeal No. 83 (Del)/2002 (Block Period 01/04/1987 to 07/08/1997, held as under:- "6. We have heard the rival submissions and considered them carefully. We have also perused the material on which our attentions were drawn. We have also considered the ....
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.... seized and if any addition can be made, that can be made only on the basis of that material and not on the basis of any expenditure or income disclosed while filing the regular returns. We have seen the assessment order as well as order of the CIT(A) and found that they have mentioned at so many places in their orders that assessee has booked the ingenuine transactions in the books for claiming a higher loss. Almost each para of the AO says that assessee has booked ingenuine loss in its book of accounts, which clearly shows that all the transactions were entered by assessee in the regular books of accounts maintained in regular course of business. In some paragraph the AO stated that some of the entries made in Annex. A-53, are not in consonance with the entries entered in the regular books of accounts. In reply, the learned counsel has stated that, of course, there may be some difference in the items as per Annex. A-53, but if the journal is taken into consideration, then it will be found that all the transactions made by assessee have already been entered in the journal. It was also submitted that the assessee-company is a share broker and has entered into so many transactions w....
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....the assessee, but the same was received by assessee from A. Nitin Co. Confirmation of A. Nitin Co. was filed, whereby it was confirmed that they have made a payment of Rs. 6.25 crore to the assessee. On the contrary, the AO has observed in his order that assessee has made the payment of Rs. 6.25 crore to A. Nitin Co., which in fact, is incorrect. Therefore, in our considered view, doubting the transaction, was not justified at the end of the AO. Again we find that the CIT(A) also confirmed the action of the AO by merely saying that assessee has booked the ingenuine loss for lowering its profitability. But not a single instance has been brought on record that how the profits were converted into losses, neither any material was found which shows that any money paid by assessee through cheques has been received by assessee underhand; nor any transaction was found which was not genuine or was not entered in the regular books of accounts. The AO was placing reliance on Annexs. A-53 & A-35, but he has not considered the reconciliation along with reply dt.23rd Aug., 1999, filed by the assessee. If the reconciliation could have been considered, then in that case no difference would have be....
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.... books of accounts have been filed, then on that basis no income or loss can be added or disallowed while making the assessment under Chapter XIV-B of the IT Act. 13. In the case of Parakh Foods Ltd. vs. Dy. CIT (1998) 64 ITD 396 (Pune), the Pune Bench of the Tribunal has discussed the issue at great length, wherein it has been discussed in detail that what is undisclosed income and what can be added while assessing the income under s. 158BC. They have distinguished both the Chapter XIV-B and Chapter XIV. Chapter XIV is in regard to regular assessments completed under s. 143(3) or s. 148 and Chapter XIV-B is in regard to undisclosed income of block period which contains 10 years. Under Chapter XIV-B the charging of tax is computed under the provisions of s. 113 of the IT Act, which is 60 per cent of the total undisclosed income and under Chapter XIV, the tax is charged at normal rate, ranging between various categories of income. Further, it has been observed by the Pune Bench that "if the assessee has disclosed the particulars of income before the date of search and the AO draws an adverse inference and intends to assess the same as income, then such income cannot be trea....
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....as to the existence of undisclosed income. A presumption is an inference of fact drawn from other known or proved facts. It is rule of law under which Courts are authorised to draw a particular inference from a particular fact, until and unless the truth of such inference is disproved by other evidence. The scheme of Chapter XIV-B does not give power to the Revenue to draw the presumption in regard to the undisclosed income. The AO could proceed on the basis of material detected at the time of search and the evidence gathered. Under s. 132(4), the authorised officer may, during the course of search or seizure, examine on oath any person who is found to be in possession or control of any books of accounts, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Act." 15. The Hon'ble Gujarat High Court has also held that both the proceedings are separate, i.e., under Chapter XIV and Chapter XIV-B and both the proceedings can be initiated separately. However, it has been clarified that no addition can be made on the basis of regular retu....
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....aken under s. 132(1)(c). 20. Here in the instant case there may be that some of the entries have not been made by assessee in regular books of accounts, but those entries can be held that they may not partake the character of taxable income. And the meaning of undisclosed income was given with reference to s. 132(1)(c), therefore, we are of the view that same can be applied with reference to Chapter XIV-B. Accordingly we are of the view that the view of ours find fortified by the aforesaid decision of the Hon'ble Delhi High Court, because the assessee has submitted in his reply before the AO that some of the entries are not made because a consolidated entry has been made after adjusting both of the entries i.e., purchase of shares and sale of shares, but that do not have the charter of any taxable income. 21. Further as we have already discussed in detail that neither the AO, nor CIT(A) has brought any material on record that which part of the income was not disclosed by assessee while filing the return of income or which portion of loss claimed by the assessee in the regular returns, was not genuine. Merely ITBA/APL/S/250/2024-25/1071042822(1) presuming that asse....
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....and every transaction where the assessing officer has made the disallowance. The CIT(A) has taken note of the fact that the assessing officer has disallowed almost all the losses and accepted all the profit transactions. Although the transaction of profit as well as loss were based on the similar documentation and were carried out with same parties. The CIT(A) has also taken note of the fact that return of income up to A. Y. 1995-96 were filed well before the date of search and all the transactions of profit as well as loss were duly recorded in the books of accounts and disclosed in the income tax returns. Similarly, the return of income filed for A.G. 1996-97 & H.G. 1997-98 (due date of filing of return of income was after the date of search), all the transactions of profit & loss were duly disclosed in the return of income filed. The assessing officer has not pointed out any single transaction which was undisclosed or not recorded in the books of account. The observation of the assessing officer that assessee was having different accounting year for the purpose of Companies Act and for the purpose of Income Tax Act is out of context and not relevant as the assessing officer has ....