TaxTMI 
TaxTMI 
2026 (10) TMI 819
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....hese appeals have been heard together and a consolidated order is being passed for the sake of convenience and brevity. The facts as well as grounds of appeal narrated in IT(SS)A No.1/Ind/2025 for AY 2011-12 has been taken into consideration for deciding these appeals en masse. 3. The concise and summarized ground raised by the Revenue in ITA No.423/Ind/2025 for AY 2016-17 are as follows: "(i) The Ld. CIT(A) erred in deleting the following additions: (a) Rs. 6,00,000/- part of Rs. 13,24,00,000/-, on account of cash found. retraction, which is after thought. (b) Rs. 5,10,00,000/- excess stock found during search, however, stock verification was conducted transparently, which is part of Rs. 13,24,00,000/-. (c) Addition of Rs. 7,73,00,000/- (being Rs. 3,30,00,000/- on account of LPS-1 and Rs. 4,43,00,000/- on the basis of LPS-6, the reconciliation, was provided by the assessee in respect of unaccounted financial transaction, jottings in the loose paper sheet, both part of Rs. 13,24,00,000/-. (d) Addition of Rs. 35,00,000/- (Difference Rs. 65,00,000 - Rs. 30,00,000), difference of surrender amount on account of miscellaneous issues to cov....
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....ck. (This, is ground No.4 in IT(SS)A No.1/Ind/2025 for AY 2011-12, ground No.4 in IT(SS)A No.02/Ind/2025 for AY 2010-11, Ground No.5 in IT(SS)A No.9/Ind/2025 for AY 2012-13, Ground No.7 in IT(SS)A No.10/Ind/2025 for AY 2013-14, Ground No.4 in IT(SS)A No.13/Ind/2025 for AY 2016-17, Ground No.6 in IT(SS)A No.12/Ind/2025 for AY 2015-16, Ground No.4 in IT(SS)A No.11/Ind/2025 for AY 2014-15). (v) The Ld. CIT(A) erred in confirming the addition of Rs. 61,71,090/- by disallowing the deduction under section 35D of the Act, when such addition was not based upon any incriminating material. (This, is ground No.5 in IT(SS)A No.1/Ind/2025 for AY 2011-12, ground No.5 in IT(SS)A No.02/Ind/2025 for AY 2010-11, ground No.6 in IT(SS)A No.9/Ind/2025 for AY 2012-13, Ground No.8 in IT(SS)A No.10/Ind/2025 for AY 2013-14, Ground No.5 in IT(SS)A No.11/Ind/2025 for AY 2014-15). (vi) The Ld. CIT(A) erred in confirming the addition of Rs. 25,00,000/-, merely on presumption of payment by the appellant company towards conversion of its GDRs into shares on irrelevant and extraneous consideration and without properly appreciating the submissions of the appellant. (Thi....
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....hat such statement was subsequently retracted and the appellant had fully justified the reasons for retraction, along with the documentary evidences, before the Ld. assessing officer. (This is Ground No.3 in IT(SS)A No.12/Ind/2025, for AY 2015-16). 5. Facts of the group case. The relevant material facts, as culled out from the material on record, are as follows. The assessee is a domestic company in which public is not substantially interested, incorporated under the provisions of Companies Act, 1956, and inter-alia engaged in manufacturing and trading of HDPE/PP/PVC Pipes. Search and seizure operations u/s. 132 were carried out on the business as well as residential premises of the Texmo Group including the assessee along with other concerns/business associates on 23/09/2015. The case was centralized with this office alongwith other group cases vide order dated 05/04/2016 passed u/s. 127 of Income Tax Act, 1961 (hereinafter referred as the Act) by the Pr. Commissioner of Income Tax-2, Indore. Since, there are common issues involved, this is a common order for assessment year 2010-11 to 2016-17 in the case of the assessee. The orders for assessment years 2010-11 to 2....
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.... the Act, on 13/11/2015. The manner in which the undisclosed income earned was not disclosed during the search proceedings u/s. 132(4) of the Act. Considering the fact that while filing the return of income u/s. 139(1) of the Act, the assessee has concealed the income which was unearthed during search proceedings.Notices u/s. 143(2) for assessment years 2010-11 to 2015-16 were issued on 07/08/2017 and for A.Y. 2016-17 on 22/09/2017. Questionnaire along with notice u/s. 142(1) was issued on 12/09/2017 and duly served upon the assessee. In response to the above notices, Shri Devendra Bansal and Shri Jayant Lodha, both, CA and Authorized Representative of the assessee, attended from time to time and furnished with supporting documents and submissions before the assessing officer. Then, after, assessing officer framed the assessment order for various assessment years, by making various additions, the facts of which will be discussed at the relevant ground of appeal. 6. Aggrieved, by the order of the assessing officer, on account of various additions, the assessee carried the matter in appeal before the learned CIT(A) who has deleted the addition on various issues, for which the reve....
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....ared amount of Rs. 17,74,00,000/-, the assessee had only declared additional income of Rs. 4,50,00,000/- [Rs. 3,50,00,000 (+) Rs. 70,00,000/- (+) Rs. 30,00,000/-] in its return of income filed post search and the balance income of Rs. 13,24,00,000/- was not declared by the assessee in its return of income for A.Y. 2016-17. Accordingly, on the basis of the statement of Shri Sanjay Agrawal, the assessing officer made an addition of Rs. 13,24,00,000/- in the hands of the assessee- company for the assessment year 2016-17. According to the assessing officer, the statement by Shri Sanjay Agrawal was given in his sound state of mind and without any coercion/threat. Further, according to the assessing officer, it is settled law that a disclosure made on oath cannot be retracted unless it has been obtained by undue pressure, threat, coercion etc. Furthermore, according to the assessing officer, it is a settled law that admission made by a person is a good piece of evidence, though not conclusive and the same can be used against a person who makes it. For such proposition, the assessing officer has placed reliance on the Coordinated Benches of the ITAT. Accordingly, on the basis of the state....
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....hat the assessing officer merely on the basis of the surrender made during the course of search, made the addition without properly appreciating the facts and circumstances of the case. The Ld. Counsel of the assessee argued that although admission of income during the search is a good piece of evidence but that by ipso facto, cannot become a basis for addition when the assessee with the documentary evidences explained that the surrender was not correct and was made under a wrong notion. The assessee brought our attention to the breakup of the income surrendered which is placed at page no. 233 & 234 of the Paper Book. The Counsel of the assessee also drew our attention to the relevant pages of the written submission which were filed by it before the ld. CIT(A). The copies of such submissions are placed at page no. 18 to 21 of the Paper Book of the assessee for A.Y. 2016-17. Further, the Counsel of the assessee also invited our attention to the various documents which were seized during the course of the search and based upon which the assessee made the surrender. The copies of such seized documents are placed at page no. 235 to 249 of the Paper Book. 12. Per Contra, Ld. DR for t....
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....e No. 1 to 13, the assessee had surrendered 7,93,00,000/- viz. Rs. 4,00,00,000/- on account of income and Rs. 3,93,00,000/- on account of expenditure noted on same seized documents which were in the form of a cash book. Thus, according to the ld.Counsel the aforesaid amount of Rs. 7,93,00,000/- was comprising of income of Rs. 3,30,00,000/- which was already surrendered by the assessee on the basis of LPS-1, Page No. 18 & 19. 27. We find that the CIT(DR) before us, could not contravert or rebut the arguments made by the Counsel of the assessee as above. We have also gone through the seized documents being page no. 18 & 19 of LPS-1 and Page No. 7 & 8 of LPS-6, as placed at page no. 235,236,242 & 243 of the Paper Book filed by the assessee and upon careful examination of such documents we found substance in the contention of the assessee. Accordingly, in our considered view, the CIT(A) has not committed any error while deleting the addition of Rs. 3,30,00,000/- from the income of the assessee. 14. We find that the second issue concerns surrender of Rs. 7,93,00,000/- on the basis of seized document 'LPS-6, pg no. 1-13', against which the assessee has only declared a sum of Rs. 3,50,....
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.... 2016-17 and in respect whereof, the assessing officer has also granted credit to the assessee while making the addition. Accordingly, in our considered view, no further addition on the count of 'LPS-6, page no. 1 to 13' was warranted and consequently, no infirmity is found by us in the CIT(A)'s Order in deleting the addition to the extent of Rs. 4,43,00,000/-on this count. 15. We find that about the issue, regarding surrender made by Shri Sanjay Agrawal on account of cash of Rs. 6,00,000/- found during the course of search. Before us, the Ld. Counsel for the assessee submitted that Shri Sanjay Agrawal, under a wrong notion, made such surrender of Rs. 6,00,000/-, which was not at all required as on the date of the search, as the assessee- company was showing a much higher cash balance of Rs. 22,39,602/- in its regular books of account. Accordingly, as per the Counsel of the assessee, there was no cash which was in the nature of unexplained and accordingly, no surrender was required to be made by Shri Sanjay Agrawal. In order to prove the availability of cash in the hands of the assessee-company on the date of the search, the Counsel drew our attention to the Cash Book of assesse....
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....y found during the course of search was to the extent of Rs. 54,76,20,174/-, whereas, as per the regular Manufacturing and Trading Account for the period from 1-4-2015 till 23-09-2015 (i.e. date of search), the total closing inventory was to the extent of Rs. 54,62,83,969/-, thereby resulting into minor difference of Rs. 13,36,205/- only in the inventory actually found during the course of search and inventory found recorded in the books of account, which too, is attributable to the variation in rates applied for valuation. We have gone through the contents of the Valuation report submitted by 'M/s. Lalit K. Jain & Co., Chartered Accountants' as placed at page no. 145 to 160 of the assessee's Paper Book for A.Y. 2016-17. As per such Valuation Report, the valuer has made the valuation of the Physical inventory found during the course of search at Rs. 54,76,20,174/-. As against such physical inventory, we find that as per the Manufacturing and Trading Account of the assessee for the period from 1-4-2015 to 23-09-2015, furnished by the assessee in its Paper Book at page no. 261, the value of closing stock as per the regular books of account worked out to be at Rs. 54,62,83,969/-. We f....
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....urrender on miscellaneous aspect. 19. From the above facts and findings of the learned CIT(A), we find that the entire addition of Rs. 13,24,00,000/- got made by the assessing officer was merely on account of the difference between the amount surrendered by Shri Sanjay Agrawal and the amount disclosed by the assessee- company in its return of income without brining on record any other corroborative evidence which could support the making of such addition. We find merit in the submission of the ld. Counsel for the assessee that a statement recorded u/s. 132(4) is a good piece of evidence, but, solely, in the absence of any other corroborative evidence, cannot be used against an assessee. We find that in the instant case, the assessee- company could be able to demonstrate the circumstances under which the surrender was made by Shri Sanjay Agrawal and the reasons for retraction thereof, which have neither been disputed by the assessing officer during the course of the remand proceedings nor by the ld.DR for the Revenue. In such circumstances, we do not find any infirmity in the action of the ld. CIT(A) in deleting the additions of Rs. 13,24,00,000/- merely on account of difference ....
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....iliamson Financial Services Limited versus CIT, Guwahati 2024 (9) TMI 1571 (GuHC). The ld. Counsel for the assessee, in support of his assertion that in absence of any exempt income earned or received during the year under consideration, the provisions of section 14A cannot be invoked and also to support his assertion that the Explanation to section 14A has no retrospective application, drew our attention of the judgment of the jurisdictional High Court of Madhya Pradesh in the case of PCIT(Central), Bhopal vs. M/s. Keti Construction Ltd. 2024 (5) TMI 168 (MPHC), a copy whereof has been placed at page no. 288 to 296 of the assessee's Paper Book. On the other hand, the ld DR of the Revenue also vehemently argued that the assessee has made huge investments in exempt income yielding assets and accordingly, the disallowance so made by the assessing officer u/s. 14A r.w.r 8D of the Income Tax Rules, 1962 deserves to be upheld. 25. We have carefully gone through the facts of the case. Undisputedly, during the year under consideration i.e. for A.Y. 2016-17, the assessee has not claimed to earn any exempt income. Such fact has duly been verified by us from the Computation of the total i....
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....No.1 in IT(SS)A No.10/Ind/2025 for AY 2013-14, Ground No.1 in IT(SS)A No.13/Ind/2025 for AY 2016-17, Ground No.1 in IT(SS)A No.12/Ind/2025 for AY 2015-16, Ground No.1 in IT(SS)A No.11/Ind/2025 for AY 2014-15)". The above summarised and concise ground No.1 of assessee, in various appeals are, general in nature, hence, do not require adjudication. 30. The summarised and concise ground No.(ii) raised by the assessee, is reproduced below: "The Ld. CIT(A) erred in confirming the addition aggregating to a sum of Rs. 68,53,673/-, without considering the material facts that on the date of initiation of the search under section 132, no assessment proceedings was pending in respect of the assessment year under consideration". (This is ground No.2 in IT(SS)A No.1/Ind/2025 for AY 2011-12, Ground No.1 & 2 in IT(SS)A No.2/Ind/2025 for AY 2010-11, Ground No.2 in IT(SS)A No.9/Ind/2025 for AY 2012-13, Ground No.2 in IT(SS)A No.10/Ind/2025 for AY 2013-14). 31. We have heard, both the parties and carefully gone through the submission put forth on behalf of the assessee as well as the Revenue along with the documents furnished and the case laws relied upon, and perused the f....
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.... the assessing officer in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the assessing officer in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved." In our considered view, the case of the assessee falls under clause (iii) of the aforesaid Order of the Hon'ble Supreme Court inasmuch, undisputedly, in the case of the assessee during the course of the search some incriminating documents were found and seized. In such circumstances, as per the ratio laid down by the Hon'ble Supreme Court, even in respect of the completed assessment years, the assessing officer has rightly assumed the jurisdiction to assess or reassess the total income of the assessee by taking into consideration incriminating material and as also, any other material available with him at the time of framing the assessment u/s. 153A of the Act. 32. In the result, summarised and concise ground No.(ii) raised by the assessee, is dis....
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....rd, both the parties. Upon the insistence of the Bench during the course of the hearing, the assessee, vide its counsel's submission dated 17/06/2026, has also furnished copies of all the statements of Shri Sanjay Agrawal recorded by the Search Party either during the course of search u/s. 132(4) or during the course of post search investigation u/s. 131(1A) of the Act. We find that the ld. CIT(A) vide para (3.3.2) of his Order for A.Y. 2010-11 has confirmed the addition made by the assessing officer. According to the CIT(A) once the documentary evidences are unearth during the search action from the premises of the assessee's group and once, the same has been admitted by the CMD (Shri Agrawal) then it was very clear that such evidences gives proof of showing a higher amount of salary by the assessee-company. 37. We have carefully perused and gone through the seized documents as referred to by the assessing officer in the body of the assessment order. On a perusal of the LPS-19 and LPS-22 we find that such papers are handwritten with the caption 'Salary Calculation'. We find that at such papers at the left hand side some figures, which appear to be salary recorded in books of ac....
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....he salary by Shri Vijay Prasad Pappu to the cashier of the assessee- company could have only been regarded as a matter of internal financial transaction between two personnel of the assessee- company and merely on the basis that Shri Vijay Prasad Pappu has refunded certain amount of his salary to the cashier of the assessee -company could not, ipso facto, be regarded as the excess claim of salary by the assessee -company to Shri Vijay Prasad Pappu. During the course of hearing before us, the assessee has also furnished one copy of letter of confirmation duly given by Shri Vijay Prasad Pappu affirming the fact that out of the receipt of salary, every month he used to deposit a certain sum with the cashier of the assessee company for the purpose of saving. In confirmation, Shri Vijay Prasad Pappu confirmed that the saving was made by him for the construction of a residential house for him and in the subsequent years, he had made investment for such purpose. 39. Further, the ld. counsel of the assessee also submitted that Shri Vijay Prasad Pappu was holding a key position in the assessee- company and the payment of salary of Rs. 1,00,000/- per month claimed to have been made is qui....
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....er and copy of letter of confirmation duly given by Shri Vijay Prasad Pappu, we find that such refund of salary was made by Shri Vijay Prasad Pappu in his personal capacity to the cashier of the assessee- company. Further, from the copies of the bank statements of Shri Vijay Prasad Pappu placed at page no. 154 to 214 of Paper Book for A.Y. 2010-11, copy of Form No. 16 issued to Shri Vijay Prasad Pappu, copy of TDS certificate issued to Shri Vijay Prasad Pappu, copy of Form No. 3A filed by the assessee company with the PF Authorities, copy of the income tax return and assessment order relating to Shri Vijay Prasad Pappu, it can safely be concluded that the assessee- company has made the entire payment of salary to Shri Vijay Prasad Pappu as claimed in its books of account from year to year. Further, from the copy of the assessment order passed in the case of Shri Vijay Prasad Pappu, for A.Y. 2010-11 to A.Y. 2016-17, by the same assessing officer who passed the assessment orders in the case of the assessee, as placed at page no. 230 to 247 of the Paper Book, we find that the assessing officer although disputing the payment of salary in the hands of the assessee has accepted the entir....
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.... 2(ii) in IT(SS)A No.13/Ind/2025 for AY 2016-17, (f) Ground No.2(i) and 2(ii) in IT(SS)A No.12/Ind/2025 for AY 2015-16, (g) Ground No.2(i) and 2(ii) in IT(SS)A No.11/Ind/2025 for AY 2014-15. 43. The summarised and concise ground No.(iv) raised by the assessee, is reproduced below for ready reference: "The Ld. CIT(A) erred in confirming the addition of Rs. 6,82,583/- in respect of depreciation on truck. (This, is ground No.4 in IT(SS)A No.1/Ind/2025 for AY 2011-12, ground No.4 in IT(SS)A No.02/Ind/2025 for AY 2010-11, Ground No.5 in IT(SS)A No.9/Ind/2025 for AY 2012-13, Ground No.7 in IT(SS)A No.10/Ind/2025 for AY 2013-14, Ground No.4 in IT(SS)A No.13/Ind/2025 for AY 2016-17, Ground No.6 in IT(SS)A No.12/Ind/2025 for AY 2015-16, Ground No.4 in IT(SS)A No.11/Ind/2025 for AY 2014-15). 44. Brief facts qua the above issue are that the ground relate to disallowance of depreciation on trucks claimed by the assessee in its returns of income from A.Y. 2010-11 to A.Y. 2016-17. The assessing officer has dealt with such issue from para (14.1) to para (14.5) of his common assessment order. The assessing officer instead of computing the W.D.V. from year ....
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....und No.4 in IT(SS)A No.1/Ind/2025 for AY 2011-12, (b) Ground No.4 in IT(SS)A No.02/Ind/2025 for AY 2010-11, (c) Ground No.5 in IT(SS)A No.9/Ind/2025 for AY 2012-13, (d) Ground No.7 in IT(SS)A No.10/Ind/2025 for AY 2013-14, (e) Ground No.4 in IT(SS)A No.13/Ind/2025 for AY 2016-17, (f) Ground No.6 in IT(SS)A No.12/Ind/2025 for AY 2015-16, (g) Ground No.4 in IT(SS)A No.11/Ind/2025 for AY 2014-15. 47. The summarised and concise ground No.(v) raised by the assessee, is reproduced below for ready reference: "(v) The Ld. CIT(A) erred in confirming the addition of Rs. 61,71,090/- by disallowing the deduction under section 35D of the Act, when such addition was not based upon any incriminating material. (This, is ground No.5 in IT(SS)A No.1/Ind/2025 for AY 2011-12, ground No.5 in IT(SS)A No.02/Ind/2025 for AY 2010-11, ground No.6 in IT(SS)A No.9/Ind/2025 for AY 2012-13, Ground No.8 in IT(SS)A No.10/Ind/2025 for AY 2013-14, Ground No.5 in IT(SS)A No.11/Ind/2025 for AY 2014-15)". 48. Brief facts qua the issue are that the above summarised ground relates to disallowance of claim of deduction u/s. 35D of the Act made ....
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....ed in the case of the assessee- company for A.Y. 2010-11 u/s. 143(3) of the Act and the copy of the assessment order dated 11-03-2014 for A.Y. 2011-12 u/s. 143(3) of the Act have been filed by the assessee in his Paper Book compilation at page no. 76 to 98 for A.Y. 2010-11 and page no. 89 to 108 for A.Y. 2011-12. Further, on the direction of the Bench, the assessee vide his counsel's letter dated 17/06/2026 has also filed other relevant documents such as copies of the Orders passed by the then CIT(A), Orders passed by the Hon'ble ITAT, copies of the appeals filed by the assessee before the Hon'ble High Court of Madhya Pradesh u/s. 260A and copies of the Orders passed by the Hon'ble High Court of Madhya Pradesh. 51. We have noted the facts of the case relating to the disallowance u/s. 35D of the Act from the copy of the original assessment order passed u/s. 143(3) in the case of the assessee for A.Y. 2010-11 as placed at page no. 76 to 98 of the assessee's Paper Book for A.Y. 2010-11. We find that during the course of the original assessment proceedings, the then assessing officer noted that for the purpose of public issue of shares, during the relevant previous year, the assesse....
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....aining amount of claim under section 35D at Rs. 54,21,090/-. We find that against the disallowance so made by the assessing officer, the assessee preferred appeals before the then CIT (Appeals), but could not find any favour. The assessee also could not get any favour from the ITAT or the Hon'ble High court of Madhya Pradesh. The Order of the Hon'ble High Court of Madhya Pradesh is placed at page no. 166 of the supplementary submission dated 17-06-2026 filed by the assessee during the course of the hearing before us. On a perusal of the order of the Hon'ble High Court of Madhya Pradesh, we found that the Hon'ble High Court for dismissing the appeal of the assessee has placed reliance upon the decision of the Hon'ble Supreme Court in the case of M/s. Berger Paints India Limited vs. CIT, Delhi-V 2017 SSC Online SC 285, wherein the Hon'ble Supreme Court has held that share premium amount received by an assessee is not capital employed in the business of a company and therefore, an assessee is not entitled to claim any deduction under section 35D in relation to the premium received by it from the shareholders. 52. However, from the audited balance sheet of the assessee for F.Y. 2009....
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....ken into consideration the amount of share capital and the gross amount of the share premium as getting reflected in the audited balance sheet of the company at Rs. 11,27,00,000/- and Rs. 42,16,00,000/-. After further adding the amount of borrowing at Rs. 5,78,08,959/-, the Tax Auditors computed the amount of capital employed at Rs. 59,21,08,959/- and on the basis of amount of capital employed at Rs. 59,21,08,959/- so worked out, the Tax Auditors determined the maximum allowable expenditure under section 35D of the Act at Rs. 2,96,05,448/-, i.e. 5% of Rs. 59,21,08,959/-. 53. We are of the considered view that the amount of deduction under section 35D so claimed by the assessee- company in its return of income at Rs. 59,21,090/- by taking into consideration the amount of share premium at Rs. 42,16,00,000/- as the part of the capital employed is not legally sustainable, more in view of the decision of the Hon'ble Supreme Court in the case of Berger Paints Limited (supra). However, during the course of the assessment proceedings, the counsel for the assessee, as an alternate plea, argued that for the purpose of computing the amount of capital employed, even if the amount of share p....
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....ention of the ld. counsel for the assessee that the long-term borrowings include any borrowing made by a company from the Government or the industrial financial corporation or specified financial institutions or any banking institutions and such definition does not prescribe the term of the borrowing and therefore, as per the specific definition of the long-term borrowings given in the Act, as aforesaid, all the borrowings, whether shown as short term borrowings or long-term borrowings, as on the last day of the financial year, in the audited financial statements of a company, is required to be taken into consideration for the purpose of computing the capital employed. For such proposition, the assessee placed reliance upon the decision of the Hon'ble High Court of Gujarat in case of DCIT vs Core Healthcare Limited [2009] 308 ITR 263 (Gujarat). 56. We note that the assessee company in its audited balance sheet as on 31.03.2010, has shown share capital as well as borrowings. Accordingly, in our considered view, the claim of the assessee made before us that for the purpose of computing the deduction allowable to it under section 35D of the Act, and in turn for computing the amount....
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.... (e) Ground No.5 in IT(SS)A No.11/Ind/2025 for AY 2014-15 59. The summarised and concise ground No.(vi) raised by the assessee, is reproduced below for ready reference: The Ld. CIT(A) erred in confirming the addition of Rs. 25,00,000/-, merely on presumption of payment by the appellant company towards conversion of its GDRs into shares on irrelevant and extraneous consideration and without properly appreciating the submissions of the appellant. (This, is ground No.4 in IT(SS)A No.9/Ind/2025 for AY 2012-13, Ground No.4 in IT(SS)A No.10/Ind/2025 for AY 2013-14). 60. Brief facts qua the issue are that the addition amounting to Rs. 25,00,000/-and Rs. 2,72,85,000/- respectively for A.Y. 2012-13 and A.Y. 2013-14, aggregating to a sum of Rs. 2,97,85,000/- has been made by the assessing officer on the allegation of undisclosed payments made by the assessee towards conversion of Global Depository Receipts(GDRs) . The assessing officer has given his detailed finding on this issue from para (10.1) to para (10.18) of the common assessment order for A.Y. 2010-11 to A.Y. 2016-17. The assessing officer has given his findings running into 20 pages from page no. 11 to 30 (....
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....made the addition for remaining amount of Rs. 2,72,85,000/-. 62. Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before Ld. CIT(A), for both assessment years, against the additions made by the assessing officer, however, the appeals of the assessee for both the years were dismissed by the Ld. CIT(Appeals) vide his findings given at paras (3.4) to (3.4.6) in the orders for both the assessment years. 63. We have heard, both the parties and carefully gone through the oral as well as written submission put forth on behalf of the assessee as well as the Revenue along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld. CIT(A) and other materials brought on record. 64. Learned Counsel for the assessee, argued that assessing officer in his body of assessment order has alleged that the entire issue of GDR is merely a sham transaction. However, while finally framing the assessment order, the assessing officer has not formed any adverse view as regard to the claim of the assessee as regard to receipt of GDR proceeds which were recorded in its regular books of accounts....
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....ne excel sheet seized and inventorized as page no. 11 of LPS-15, which has been scanned by the assessing officer at page no. 15 of the common assessment Order. From the caption given to the excel sheet, one can note that it is in the nature of some transaction statement of some Muk in the books of some NC and it nowhere contains the name of the assessee -company. The none of the directors of the assessee- company have the abbreviation of 'Muk' or 'NC'. The assessing officer could not bring on record that either such sheet was prepared by the assessee- company or by anyone else on the instructions of the assessee -company. During the course of the assessment proceedings, the assessee had shown its disassociation with such excel sheet. The assessing officer based upon column no. (4) of such excel sheet i.e. page no. (11) of LPS-15, at para (10.14) of the assessment order, noted that the total of the transactions value of payments works out to be at Rs. 2,45,35,000/-. Therefore, learned Counsel for the assessee, contended that addition made by the assessing officer is based on guess work, and conjuncture, which should be deleted in the interest of justice. 66. On the other hand, ld....
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....t seized and inventorized as 'Page no. 18 of LPS-15'. A copy of such excel sheet has also been scanned by the assessing officer at page no. 17 of the order. On a perusal of such excel sheet, we could gather that all the entries made at the upper part of the excel sheet seized and inventorized as 'Page no. 11 of LPS-15' as scanned by the assessing officer at page no.15 of the order, are also getting reflected in the excel sheet seized and inventorized as Page No. 18 of LPS-15 as scanned by the assessing officer at page no. 17 of the order. 68. In our view, from a perusal of the excel sheet inventorized as 'Page No. 18 of LPS-15', it has been gathered that in such excel sheet nowhere the name of the assessee- company or any of its directors or its functionaries is getting reflected. Further, even from such excel sheet, it cannot be inferred that the assessee- company had given any cash to any person. On the contrary, from the said excel sheet, one can infer that some person residing out of India had given some fund to some person in India. We are of the considered view that merely on the basis of some excel sheets found during the course of the search, with....
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.... strung together on a piece of twine which is intended to be untied at will, would not, in ordinary English, be called a book I think the term "book" in Section 34 aforesaid may properly' be taken to signify, ordinarily, a collection of sheets of paper bound together with the intention that such binding shall be permanent and the papers used collectively in one volume. It is easier however to say what is not a book for the purposes of Section 34, and I have no hesitation in holding that unbound sheets of paper in whatever quantity, though filled up with one continuous account, are not a book of account within the purview of Section 34." We must observe that the aforesaid approach is in accord with good reasoning and we are in full agreement with it. Applying the above tests it must be held that the two spiral note books (MR 68/91 and 71/91) and the two spiral pads (MR 69/91 and MR 70/91) are "books" within the meaning of Section 34, but not the loose sheets of papers contained in the two files (MR 72/91 and MR 73/91). 24. It cannot be gainsaid that the words 'account', 'books of account', 'business' and 'regularly kept' appearin....
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..... 27. Coming now to the word 'business', we need not search for its meaning in Black's Law Dictionary, or words and Phrases for this Court has dealt with the word in a number of cases. InNarain Swadesh Weaving Mills v. The Commissioner of Excess Profits Tax, (1955) 1 SCR 952, a five judge bench of this Court held that the word 'business' connotes some real, substantial and systematic or organised course of activity or conduct with a set purpose' and the above interpretation was quoted with approval in Mazagaon Dock Ltd. v. The Commissioner of Income Tax and Excess Profits Tax, (1959) SCR 848. Again in Barendra Prasad Ray v. ITO, (1981) 92 SCC 693 this court observed that the word 'business' is one of wide import ad it means an activity carried on continuously and systematically by a person by the application of his labour or skill with a view to earning an income. The activities of the Jain brothers, as sought to be projected by the prosecution now on the basis of the materials collected during investigation (detailed earlier) would, therefore, be 'business' for they were being carried on continuously in an organized manner, with a s....
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.... correct and authentic entries in books of account cannot without independent evidence of their trustworthiness, fix a liability upon a person. Keeping in view the above principles, even if we proceed on the assumption that the entries made in MR 71/91 are correct and the entries in the other books and loose sheets which we have already found to be not admissible in evidence under Section 34 are admissible under Section 9 of the Act to support an inference about the formers correctness still those entries would not be sufficient to charge Shri Advani and Shri Shukla with the accusations levelled against them for there is not an iota of independent evidence in support thereof. In that view of the matter we need not discuss, deleve into or decide upon the contention raised by Mr. Altaf Ahmed in this regard. Suffice it to say that the statements of the for witnesses, who have admitted receipts of the payments as shown against them in MR 71/91, can at best be proof of reliability of the entries so far they are concerned and not others. In other words, the statements of the above witnesses cannot be independent evidence under Section 34 as against the above two respondents. So far as Sh....
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....dly, the alleged diaries in the present case are not records of the entries arising out of a contract. They do not contain the debits and credits. They can at the most be described as a memorandum kept by a person for his own benefit which will enable him to look into the same whenever the need arises to do so for his future purpose. Admittedly the said diaries were not being maintained on day-to-day basis in the course of business. There is no mention of the dates on which the alleged payments were made. In fact, the entries there in are on monthly basis. Even the names of the persons whom the alleged payments were made do not find a mention in full. They have been shown in abbreviated form. Only certain 'letters' have been written against their names which are within the knowledge of only the scribe of the said diaries as to what they stand for and whom they refer to." x xxxxxxxxxxxxxx 17. From a plain reading of the Section it is manifest that to make an entry relevant thereunder it must be shown that it has been made in a book, that book is a book of account and that book of account has been regularly kept in the course of business. From the a....
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.... 71/91) and the two spiral pads (MR 69/91 and MR 70/91) are "books" within the meaning of Section 34, but not the loose sheets of papers contained in the two files (MRs 72/91 and 73/91). 20. Mr. Sibal, the learned counsel for the Jains, did not dispute that the spiral note books and the small pads are "books" within the meaning of Section 34. He, however, strongly disputed the admissibility of those books in evidence under the aforesaid section on the ground that they were neither books of account nor they were regularly kept in the course of business he submitted that at best it could be said that those books were memoranda kept by a person for his own benefit. According to Mr. Sibal, in business parlance "account" means a formal statement of money transactions between parties arising out of contractual or fiduciary relationship. Since the books in question did not reflect any such relationship and, on the contrary, only contained entries of monies received from one set of persons and payment thereof to another set of persons it could not be said, by any stretch of imagination that they were books of account, argued MrSibal. He next contended that even if it was assumed f....
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....no evidentiary value. The entire prosecution based upon such entries which led to the investigation was quashed by this Court. 21. We are constrained to observe that the Court has to be on guard while ordering investigation against any important constitutional functionary, officers or any person in the absence of some cogent legally cognizable material. When the material on the basis of which investigation is sought is itself irrelevant to constitute evidence and not admissible in evidence, we have apprehension whether it would be safe to even initiate investigation. In case we do so, the investigation can be ordered as against any person whosoever high in integrity on the basis of irrelevant or inadmissible entry falsely made, by any unscrupulous person or business house that too not kept in regular books of accounts but on random papers at any given point of time. There has to be some relevant and admissible evidence and some cogent reason, which is prima facie reliable and that too, supported by some other circumstances pointing out that the particular third person against whom the allegations have been levelled was in fact involved in the matter or he has done some act....
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....finding given by the CIT(Appeals) at para (3.4.6) of his order, we find that the orders passed by the SEBI have already got set-aside/cancelled. We find that the order dated 28/02/2023 passed by the Chief General Manager of SEBI in the case of the assessee- company and its directors has got set-aside/cancelled by the Securities Appellate Tribunal, at Mumbai vide its Order dated 24/10/2024, which is placed at page no. 223 & 224 of the assessee's Paper Book for A.Y. 2012-13. For a ready reference, the copy of the Order of the SEBI Appellate Tribunal dated 24/10/2024 is reproduced below: 72. We also note from findings given by the assessing officer at para (10.12), we find that the assessing officer himself has averred that one entry in the excel sheet inventorized as 'Page No. 18 of LPS-15' relating to TT (Telegraphic transfer) of 40,000 USD, represents the TT transfer in the name of the assessee- company and the same was duly verified by the assessing officer and as per such verification, such TT was transferred from the bank account of some 'Tapti Pipes and Products, FZE,' a wholly owned foreign subsidiary of the assessee -company, to the bank account of the assessee- co....
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....ould not reject the corresponding expenditure reflected in the same material merely because formal third-party particulars were not furnished. A similar view was taken by the Hon'ble ITAT Ahmedabad in the case of Assistant Commissioner of Income Tax, Central Circle-1 (3), Ahmedabad Versus Rakeshkumar Mahendrakumar Shah And (Vice-Versa) 2025 (12) TMI 1222 - ITAT Ahmdabad. 74. In our considered view, the ld. CIT(A), at para (3.4.6) of his order, has rightly observed that the earlier order passed by the Chief General Manager of SEBI dated 28/02/2023 got set aside by the Appellate Authority of the SEBI only on the ground that the assessee wanted to file some additional submission and documents before the adjudicating authority. We find that the SEBI Appellate Tribunal has set aside the Orders of SEBI Authority way back in the year 2024 and the present status of the SEBI Order has not been brought on record either by the assessee or by the Revenue. 75. Therefore, in our considered view, merely from the excel sheets scanned by the assessing officer in the body of the assessment order, it cannot be inferred that the assessee had made any unaccounted cash payments for conversion of G....
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....nd/2025 for AY 2012-13, (b) Ground No.4 in IT(SS)A No.10/Ind/2025 for AY 2013-14. 78. The summarised and concise ground No.(vii) raised by the assessee, is reproduced below for ready reference: "The Ld. CIT(A) erred in confirming the addition of Rs. 26,301/- by making disallowance of interest expenses on belated payment of TDS. This is Ground No.7 in IT(SS)A No.9/Ind/2025, for AY 2012-13" 79. Brief facts qua the issue are that during the course of the assessment proceedings, the assessing officer noticed that the assessee has claimed a sum of Rs. 26,301/- on account of interest on belated payment of TDS, which was disallowed by him. On appeal, the learned CIT (A) confirmed the action of the assessing officer, therefore, assessee in appeal before Tribunal. 80. Before us, the counsel for the assessee has submitted that the TDS amount on which the interest expenses had been incurred by the appellant did not represent the tax of the assessee- company, but, it was the tax of the party, on whose behalf the TDS was deducted and paid to the Government Exchequer. Thus, according to the assessee, any delay in the payment of TDS by the assessee-company cann....
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....d was not pressed by the assessee, therefore, we dismiss the above ground, as not pressed. 85. The summarised and concise ground No.(ix) raised by the assessee, is reproduced below for ready reference: "(ix) The Ld. CIT(A) erred in making addition of Rs. 4,68,000/- on the basis of some rough jotting found made in a diary, BS-1, pertaining to one of the directors of the appellant company seized during the course of search, merely on guesswork, conjectures and surmises without properly considering and appreciating the submission of the appellant. (This is Ground No.6 in IT(SS)A No.10/Ind/2025, for AY 2013-14, Ground No.4 in IT(SS)A No.12/Ind/2025, for AY 2015-16, Ground No.3 in IT(SS)A No.11/Ind/2025, for AY 2014-15 ( videBS-1, BS-2, BS-3). 86. Brief facts qua the issue are that the assessing officer vide para (12) of his common assessment order has made addition amounting to Rs. 4,68,000/- Rs. 2,50,000/- and Rs. 15,00,000/- respectively for A.Y. 2013-14, A.Y. 2014-15 and A.Y. 2015-16. The additions are based upon certain documents found and seized during the course of the search u/s. 132 of the Act carried out in the premises of the assessee- company and its ....
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....ssessing officer, during the course of the assessment proceedings, the assessee made evasive reply that the seized document was not connected to Shri Sanjay Agrawal. 92. We find that the ld. CIT(A) has dealt with this issue at para (3.4.2) of his Order for A.Y. 2015-16. According to the ld. CIT(A), since, the assessee failed to give his explanation on the contents of the loose paper through its books of account, then, the addition deserved to be rightly made, as per ld.CIT(A). 93. We have gone through the findings of the assessing officer, CIT(A), oral and written submissions made by both the parties and documents placed on record, and arguments made by the learned DR for the revenue. We find that the assessee in its Paper Book filed for A.Y. 2015-16 has filed the relevant abstract of the statement of Shri Sanjay Agrawal in which the relevant entry as referred to by the assessing officer has been scanned. Such relevant abstract of statement of Shri Sanjay Agrawal is placed at page no. 244. We find that during the course of recording of statement of Shri Sanjay Agrawal, CMD of the assessee- company, through question no. (59), he was required to explain the jottings made at poi....
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....M.P., and has shown the same cash payments as commission expenses. According to the assessing officer, on the basis of these documents, consequential search action was also conducted on General Manager of BSNL, Bhopal and as also, upon a Liasoning Agent. According to the assessing officer, from the loose paper seized and inventorized as page no. 8 of BS-1, and page no. 6 of BS-1, it was evident that for the purpose of receiving the payment against supply from BSNL of a sum of Rs. 28,01,27,809/-, the assessee- company had made a payment of Rs. 52,00,000/- as discernible from page no. 8 of BS-1. The assessing officer has further given a finding that besides making the payment of Rs. 52,00,000/- as aforesaid, the assessee has also made payment under the head Commission of an aggregate sum of Rs. 11,04,542/- as per the details given at para (13.5) of the assessment order. From the narration made at list of commission expenses, the assessing officer assumed that the assessee- company must have made commission at the flat rate of 4% for expediting the billing process and for other miscellaneous works. On such assumption, the assessing officer by applying the rate of 4% on the total amoun....
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.... on the basis that for a part of supply of Rs. 5,37,34,238/-, as mentioned in the list scanned by the assessing officer at para (13.5), the claim was made at the rate of 4%, the assessing officer was not correct in his approach that on the entire payment received by it against the supply of an aggregate sum of Rs. 28,01,27,809/-, the commission at the same rate of 4% was claimed or paid. 99. Per Contra, the Ld. CIT(DR) supported the Orders of the authorities below and argued that the seized documents clearly reveal payment of commission of Rs. 1,12,05,112/- by the assessee in two assessment years and since, against such payments, which are unaccounted in nature, the assessee had surrendered income amounting to Rs. 70,00,000/- only, the assessing officer was correct in his approach in making the remaining addition of Rs. 42,05,112/- in two assessment years. 100. We have gone through the findings of the assessing officer, CIT(A), oral and written submissions made by both the parties and documents placed on record. We find that although the assessing officer himself has given a finding that consequential search action was conducted in the premises of the General Manager, BSNL, B....
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....ated at page no. 8 of BS-1, scanned by the assessing officer at para 13.3. Thus, we are of the considered view that the assessee company must have made unaccounted payments aggregating to a sum of Rs. 66,77,240/- and if the amount of Rs. 11,04,542/-, as per list at para (13.5) of the assessment order, the total unaccounted payment has to be estimated at Rs. 77,81,782/- and since, against such unaccounted payments, the assessee had already disclosed additional income of Rs. 70,00,000/- in its return of income for A.Y. 2016-17, the remaining payment of Rs. 7,81,782/- (77,81,782-70,00,000) is liable to be added in the income of the assessee-company u/s. 69C of the Act for A.Y. 2016-17. Accordingly, we hereby delete the addition of Rs. 5,23,539/- made by the assessing officer for A.Y. 2015-16 and of Rs. 28,99,791/- for A.Y. 2016-17 [being Rs. 36,81,573/- (-) Rs. 7,81,782/-]. Consequently, the Ground No. 5 of the assessee for A.Y. 2015-16 is fully allowed, whereas, Ground No. 3 of the assessee for A.Y. 2016-17 is partly allowed. 101. The summarised and concise ground No.(xi) raised by the assessee, is reproduced below for ready reference: (xi) The Ld. CIT(A) erred in maintai....
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....ingly, the AO made the aforesaid additions for A.Y. 2011-12, A.Y. 2015-16 and A.Y. 2016-17. 103. Being aggrieved with the additions made by the AO, the assessee preferred separate appeals for all the three assessment years before the Ld. CIT(A). The ld. CIT(A), after giving his findings, out of the total additions of Rs. 14,40,29,114/-made by the AO for various assessment years, deleted the additions and only sustained the addition of Rs. 45,76,789/- pertaining to A.Y. 2015-16. The CIT(A), for confirming the addition of Rs. 45,76,789/-, has given his findings at para (3.3.3) of his Order for A.Y. 2015-16. Against the addition deleted by the CIT(A) for A.Y. 2011-12 and A.Y. 2015-16, the Revenue has not preferred any appeal before us. However, against the deletion of addition of Rs. 13,24,00,000/- for A.Y. 2016-17, the Revenue is in appeal which has been dealt in the Order. The ld. CIT(A) vide para (3.3.3) of his Order has given the finding for confirming the addition of Rs. 45,76,789/-. 104. We find that the AO vide item no. 9 of the table drawn by him at para (9.2) of the assessment order has given a finding that for A.Y. 2015-16, the assessee had made a surrender of Rs. 45,7....
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.... it for acquisition of investment in partnership firm titled as Mangal Murti Minerals. Therefore, we are of the view that the documents and evidences narrated above, should be examined in the context of the various statements, by the assessing officer, therefore, we restore this issue back to the file of the assessing officer for fresh adjudication. 105. In the result, ground No.3 in IT(SS)A No.12/Ind/2025, for AY 2015-16 is restored back to the file of the assessing officer, for statistical purposes, in above terms. 106. In the combined result, appeal of the revenue is dismissed, whereas, appeal of the assessee is partly allowed/allowed for statistical purposes, as per the terms indicated above, in the respective grounds of the assessee. Order is pronounced under provision of Rule 34 of ITAT Rules, 1963 on 08/09/2026. ============= Document 1 THIS APPEAL COMING ON FOR HEARING THIS 24/ DAY OF OCTOBER 2024, THIS TRIBUNAL PASSED THE FOLLOWING: ORDER Per : Justice P. S. Dinesh Kumar, Presiding Officer (Oral) After hearing the matter substantially, it was pointed out that the appellant has some more documents to substantiate its contention that the proceeds of GD....