TaxTMI 
TaxTMI 
2025 (2) TMI 1666
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....ntrary to law, facts and opposed to the principles of natural justice and fair procedure. 2. The ld. PCIT has failed to appreciate the fact that as per Explanation 2 (a) to Section 263, "...an order passed by the A0 shall be deemed to be erroneous, if the order is passed without making inquiries or verification which should have been made". In the instant case, a thorough scrutiny has been carried out by the Ld.AO, being a search assessment, after giving enough opportunities to the appellant to appear and explain the case during the assessment proceedings. Hence, invoking Section 263 is not justified. 3. The Ld. PCIT has erred in passing the order without considering the detailed submissions filed by the appellant in response to notice u/s 142(1) dated 09/07/2021. 4. Where AO has carried out adequate enquiries in original assessment proceedings after considering the seized materials unearthed from the premises of M/s.Pechis Castle LLP and accepted the contentions of the assessee by accepting the additional income, and passed a well-reasoned order, revision proceedings u/s.263 merely based on audit objection on similar subject, could not be invoked. ....
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....hed u/s.132 of the Act, on 06.08.2019 in connection with the search in the case SNJ Distillery Pvt Ltd group of cases. During the course of search, from the evidence found seized, it was seen that they were supplying empty old bottles mainly to Kals Distilleries Pvt. Ltd. group of cases which was also searched u/s.132 of the Act on 09.08.2019 and resorting to issue of inflated purchase invoices and thereby earning commission income which was unaccounted. During the course of search in the residential premises of Shri S.Nadesan, JMD of M/s.Kals group, an Apple Mac Laptop seized vide ANN/MS/SM/ED/S, Excel sheets - titled, spent new.xlxs, spent new-2.xlsx etc. were found containing details of cash sales of spent malt to various vendors out of which cash sales of spent malt made to M/s.NTN Agro Products, one of the concerns run by Shri.V.Muthukumar, who is the brother in law of Shri V.S.Natarajan of M/s.Devi Group during the F.Ys. from 2016- 17 to 2017-18 were found. 4. Consequent to search, notice u/s.153C was issued on 14.02.2021 in case of assessee. In response to the same the assessee has filed Return of Income on 15.07.2021 declaring a total income of Rs. 57,47,685/-. During th....
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....ii) Interest disallowed in the computation of business income Rs. 28,77,640 Assessed income Rs. 2,51,05,494/- Aggrieved by the order of the AO u/s.153C r.w.s. 143(3) dated 29.09.2021, the assessee preferred an appeal before the ld.CIT(A), Chennai - 20. 6. The Assessee filed a detailed submission before the ld.CIT(A) and prayed for deleting the impugned additions. However, the ld.CIT(A) after considering the written submissions of the assessee was not convinced and pleased to confirm the additions made by the AO by passing an order dated 29.06.2024 by holding as under: "7.2.3 During the course of assessment proceedings, the AO asked appellant to furnish details of parties from whom he has arranged loans to Kals Group and collected interest on their behalf. Since appellant failed to furnish any details, the AO has added interest income pertaining to the year grouped under the head 'Madras Interest' of Rs. 72,25,000/- in the hands of appellant. 7.2.4 During appeal proceedings, Submissions made appellant by against above addition can be summarized as under. 1. The AO made addition based on incorrect interpretation of statement given by ....
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....ose sheet 22 (Madras Interest). It can be concluded that loose sheet 23 represents interest paid to Sri Natarajan at Tanjore on loans taken from him and loose sheet 22 represents interest paid to Sri Natarajan at Chennai on loans taken from him through banking channel. 7.2.8 Sr Nadesan stated that loose sheet 22 (Madras Interest) also contains details of interest paid on account of outstanding dues. He stated that such interest payments are usually made through Sri Natarajan. The Fact that appellant makes payments to third parties (Customers/suppliers of Kais group) on instructions of Sri Nadesan out of cash returnable to Kals Group is not denied (Modus operandi of Devi Bottles Group i.e. over invoicing of sales of bottles to Kals Group, Returning of Cash attributable to over invoiced sale price out of bank payments received from Kais Group towards purchase of bottles has been accepted by appellant). But loose sheet 22 (Madras Interest') contains details of persons who handed over interest amount at Madras. If loose sheet contains details of interest paid through Sri Natarajan, his name would have been mentioned. Relevant loose sheet is reproduced as under: 7.....
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....of 189 pages for the A.Ys 2014-15, 2015-16 and 2016-17 detailed below: Sl. No. Particulars Page reference 1 Notice u/s 153C dated 14.02.2021 for AY 2014-15 1 1 2 Acknowledgement for Return of Income filed u/s 153C dated 15.07.2021 for AY 2014-15 2 2 3 Computation of Statement of Total Income for the AY 2014-15 3 3 4 Submission to 142(1) dated 09.09.2021 4 12 5 Assessment order u/s 143(3) r.w.s 153C of the Act dated 29.09.2021 13 18 6 Form 35 filed along with Grounds of appeal and statement of facts 19 30 7 Common written submission dated 18.06.2024 for AYs 2014-15 / 2015-16 and 2016-17 filed before CIT(A) -20. 31 47 8 Relevant extracts of Q.No.13 and answer of the sworn statement recorded u/s 132(4) from S. Nadesan on 21.09.2019 along with relevant copy of Seized material 48 51 9 Relevant extracts of Q.No.12 and answer of the sworn statement recorded us 131 of the Act from V S Natarajan on 25.01.2020 52 52 10 Extract of submission made before the DDIT(Inv), Unit 2(2), Chennai dated 31.01.2020 53 53 11 Order u/s 250 of the Income Tax Act, 1961 dated ....
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....ng the search in the case of M/s.Kals Group of Companies, certain excel sheets containing details of Interest paid on loans captured under the head "TNJ Mr Nadarajan Interest" and "Madras Interest" and "Pooja expenses" etc., were found and seized. (Pg. No. 49 and 50 of paper book). Deposition of Shri S.Nadessan, JMD of Kals group in the statement recorded u/s.132(4) on 21.09.2019 about the contents of the excel sheets found as above in their premises: "Q.13. I am showing you the loose sheet numbers 18-23 seized vide ANN/SRN/SR/S/LS/S dated 09.08.2019 from your office which is situated in a front room at the residence of Shri S Rajasekaran at Old No.16, New No.21, Annavasal Salai, Nedungadu, Karaikal district during the course of search proceedings. Please go through the loose sheets and explain the following contents. a) Oduthurai place registration amount of Rs. 12,77,650/- mentioned as 'cash' & oduthurai place registration of Rs. 3,50,000/- under the head registration expenses mentioned in page no. 19 b) 'Madras Interest' mentioned in page number 22 c) Contents under the head 'TNJ Mr.Natarajan Interest' in page 23. Ans:....
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.... books of accounts? Ans: Sir, I have gone through the loose sheets and extracts of the electronic devices shown to me. Sir, I state that we have given loans to persons of Kals group through banking channel which are also reflected in our books of accounts. The interest income received through banking channel has already been offered in respective ITRs. We have also received portion of interest in cash which we will verify and offer to income. The interest paid and written as 'Madras Interest' in the seized materials shown to me does not belong to me." 7.4 Subsequently, the assessee made a detailed submission dated 31.01.2020 by quantifying additional income based on the various findings of the search before the office of DDIT(Inv), Unit 2(2), in which he had agreed to offer additional interest income received on account of "TNJ Interest" (Pg. No. 53 of Paper Book). 7.5 The assessee as per deposition on 25.01.2020, submission made on 31.01.2020, admitted additional interest income of Rs. 38,50,000/-; Rs. 34,75,000/- and Rs. 23,00,000/- on account of TNJ Interest" in the Return of income filed for the A.Y.s 2014-15, 2015-16 and 2016-17 respectively. (Pg. No.3, 81, 131 ....
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....ng the same by dismissing the appeal of the assessee. 9. We have heard the rival contentions and gone through the orders of the lower authorities and perused the materials available on record. It is admitted fact that the assessee group during the search has accepted the fact that they had involved in invoicing the old and new bottles with agreed additional rates to M/s. Kals Group of Companies. After receipt of sale consideration through banking channel from them, the assessee group paid cash to M/s.Kals group for the additional rates by withdrawing cash from bank and after adjusting its commission. Accordingly, the assessee admitted the unaccounted commission income earned and declared in the Return of income filed u/s.153C of the Act, without any deviation from the quantification and deposition at time of search. 9.1 We note that during the search in the case of M/s.Kals Group of Companies, certain excel sheets containing details of Interest paid on loans captured under the head "TNJ Mr Nadarajan Interest" and "Madras Interest" and "Pooja expenses" etc., were found and seized. (Pg. No. 49 and 50 of paper book). At the time of deposition of Shri S.Nadessan, JMD of Kals grou....
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.... district vide ANN/SRN/SR/LS/S dated 10.08.2019 and the electronic devices seized vide ANN/DSG/VSN/ED/S dated 22.09.2019 600004 in the case of M/s.Kals Distilleries Pvt Ltd, M/s.Kals Breweries Pvt Ltd, M/s.Kals Beverages Pvt Ltd, Shri S.Nadesan and Shri S.Vasudevan, which contains interest payments made in cash to you. When confronted Shri S.Nadessan in his sworn statement u/s.132(4) of the Incometax Act, 1961 dated 21.09.2019 stated that a portion of interest was paid to Natarajan in cash and the part was paid through 'RTGS' for the loans taken from you through banking channels. The cash portion of interest paid in the name of "TNJ Interest' amounting to Rs. 1,21,25,000/- for FYs 2013-14 to 2017-18 and in the name of 'Madras Interest' amounting to Rs. 1,50,00,000/- for the FYs 2013-14 to 2015-16. Please go through the relevant loose sheets and extracts of the electronic devices and please explain whether you have admitted the interest payments received in cash from the directors of M/s.Kals group for the loans given by you in your books of accounts? Ans: Sir, I have gone through the loose sheets and extracts of the electronic devices shown to me. Sir, I state that we have....