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2024 (1) TMI 50 - ITAT MUMBAIAssessment u/s 153A - additions for suppression of making charges and wastage claim in manufacturing of jewellery and also made addition on account of profit from alleged unrecorded sales and addition u/s 14A - HELD THAT:- We notice that the co-ordinate bench has accepted the contentions of the assessee that the Excel Sheets cannot be considered as parallel books of account and they are merely controlling sheets maintained by employees for computation of jewellery after giving credit or deduction for standard quota of wastage (paragraph 3.11). Since the facts and circumstances relating to both these additions are same in these cases also, following the above said decision of the co-ordinate bench in assessee’s group concern named M/s Saurav Jewellers Pvt Ltd [2022 (11) TMI 124 - ITAT MUMBAI] we modify the orders passed by Ld CIT(A) and direct the assessing officer to delete the additions relating to Making Charges and Wastage claims in all the years under consideration. Addition on account of profit on unrecorded sales - quantity of gold shown in the Excel sheet was found to be lower than the quantity of gold disclosed in the books of accounts of the assessee. The AO treated the shortage in the gold stock as sale outside the books of accounts and accordingly estimated the profit on unrecorded sales @ 2% and added the same - HELD THAT:- In the case of Saurav Jewellers Private Limited (supra), the co-ordinate bench has accepted the contentions of the assessee that the Excel Sheets cannot be considered as parallel books of account and they are merely controlling sheets maintained by employees for computation of jewellery after giving credit or deduction for standard quota of wastage (paragraph 3.11). We notice that the Ld CIT(A) has also noticed many discrepancies in the Excel Sheet. One of the main discrepancies is that the manufacture and sale of medallions and coins were not recorded in the Excel Sheets, which would make huge difference. Besides the above, the search officials did not find any discrepancy between book stock and physical stock. Accordingly, we are of the view that the order passed by ld CIT(A) in deleting this addition is a well reasoned order and the same does not call for any interference. Accordingly, we uphold the order passed by Ld CIT(A) on this issue. Addition u/s 68 - assessee has received share application money from 16 companies - Accommodation entries or not? - HELD THAT:- As noticed that it is not the case of the AO that the assessee did not discharge the initial burden placed upon it with regard to the share capital/share premium money received by it. The assessee has furnished all the details relating to the investors/loan in order to discharge the burden placed upon it u/s 68 of the Act. From details submitted it can be seen that the identities of share subscribers stand proved. Since they have made payments from their bank accounts through account payee cheques, these transactions cannot be treated as bogus. Since the payments have been made from of funds available with them, the credit worthiness would also stand proved. We notice that the AO has observed that these subscribers are either showing loss or meager profits and such meager profits are not commensurate with the investments made by them. However, there is no bar under the law that a person could not make investments out of borrowed funds. In the instant case, it is not the case of the AO that the applicants did not have funds available with them for making investments in the assessee company. In fact, the said investments have been routed through the bank accounts of the assessee as well as the subscribers. Further, these investments are duly reflected in their books of account. We notice that the AO has mainly relied upon the report of investigation wing to come to the conclusion that the assessee has availed only accommodation entries. He has also referred to the non-reply of the notices issued by them and non-furnishing of details called for. But the fact would remain that the assessee has furnished the relevant details before the AO and all those details were earlier filed with either Income tax department or with Registrar of Companies, i.e., with Government authorities. Hence the authenticity of those documents could not be doubted with. When all the relevant details are available with the AO, it is the requirement that the AO should examine those documents and could reject them, only if he finds fault with those documents. We notice that the AO did not find any deficiency or fault with the evidences produced by the assessee. With furnishing of all these documents, in our view, the assessee has discharged initial burden placed upon it under section 68 of the Act by furnishing above said documents. Hence the source as well as the source of source also stands proved by the subscribers. Thus we hold that the additions made by the Assessing Officer under section 68 of the Act in all the years, in the facts and circumstances of the case, were not justified. Disallowance u/s 14A - Hon’ble Madras High Court has held in the case of M/s Marg Limited [2020 (10) TMI 102 - MADRAS HIGH COURT] has held that the disallowance u/s 14A cannot exceed exempt income. We notice the decision rendered by Ld CIT(A) finds support from the above said decision of Hon’ble Madras High Court. Accordingly, we do not find any infirmity in the decision so rendered by Ld CIT(A) on this issue. Assessee appeal allowed.
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