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Showing 381 to 400 of 920 Records
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2020 (4) TMI 540
Estimation of income - Bogus purchases - Assessee is one of the beneficiary of accommodation entries of bogus purchase bills issued by Hawala dealers - HELD THAT:- Both the sides have failed to prove the case in their favour with necessary evidences. Although, assessee has filed certain basic evidences, but failed to file further evidences to conclusively prove purchases to the satisfactions of the AO. AO had also failed to take the investigation to a logical conclusion by carrying out necessary enquires, but he solely relied upon information received from investigation wing, which was further supported by information received from Maharashtra Sales Tax Department.
In the case of CIT vs Simith P. Sheth [2013 (10) TMI 1028 - GUJARAT HIGH COURT] had considered a similar issue and held that at the time of estimation of profit from alleged bogus purchases no uniform yardsticks could be adopted, but it depends upon facts of each case.
Although, both authorities have taken different rate of profit for estimation of income from alleged bogus purchase, but no one could support said rate of gross profit with necessary evidences or any comparable cases. Assessee is into the business of trading in Ceramic Tiles and other products - we are of the considered view that the CIT(A) has taken a fair view and estimated 12.50% gross profit on alleged bogus purchases to settle dispute between the parties and hence, we are inclined to uphold order of the ld. CIT(A) and dismiss appeal filed by the Revenue. - Decided against revenue.
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2020 (4) TMI 539
Exemption u/s 11 - denial of registration u/s 12AA - it is not possible to ascertain the nature of objects for which the trust has been created and whether the same are charitable u/s. 2(15) or not and also its genuineness - HELD THAT:- As relying on BABU RAM EDUCATION SOCIETY [2017 (12) TMI 867 - ALLAHABAD HIGH COURT] we are inclined to remit this issue back to the file of CIT(E) to consider the information available on record to conclude whether the trust’s objectives and activities are genuine and falling within the ambit of charitable with the information available on record. CIT(E) has to verify the trust deed and the objects vis-à-vis the genuineness of the activities by enquiring about the facilities, if required verify the financials only to establish whether the activities are genuine. He is not expected to wear the shoes of AO. Therefore, in case of necessity, further relevant information may be called from the assessee and proper opportunity of being heard to the assessee may be granted. Accordingly, grounds raised by the assessee are allowed for statistical purposes.
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2020 (4) TMI 538
Correct head of income - Interest income assessment - under the head “income from other sources” OR "business income" - proof of necessary nexus with assessee's business - HELD THAT:- In the instant case, we find that FDR’s were placed with PNB under its lien for providing necessary margins for the purposes of obtaining the bank guarantees which were required to be placed with the awarder of the contracts to the assessee and issued by the PNB.
There exist a direct nexus between pledging of FDRs with bank and seeking bank guarantee for the purposes of assessee’s business. Some of the FDRs were directly placed with Chief Engineer, PWD, Jaipur by way of security towards performance of contract obligations. Following the ratio laid down in case of M/s Choudhary & Brothers [2018 (10) TMI 1226 - RAJASTHAN HIGH COURT] obtaining and pledging the FDR for the purposes of obtaining bank guarantee for the purposes of its business, the assessee has thus established the necessary nexus with his business and interest earned from such FDRs cannot be treated as income from other sources and would rather be treated an income earned from business. - Decided in favour of assessee.
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2020 (4) TMI 537
Addition on account of estimated net profit - assessee case was selected for scrutiny u/s 143(2) - AO rejected the books of accounts of assessee and estimated net profit @ 0.17% of the turnover - HELD THAT:- Assessee produced paper book no. S-6, which contains the excise returns of the production, details of input-output and work-in-progress. This was sent by speed post and a copy of the speed post receipt dated 13.12.2016 has been produced before ld CIT(A). Hence, these details were submitted before the AO by the assessee - contention of the AO that the information required by him, were not produced during the course of the assessment proceedings, are untenable and not supported by the facts, which are on record. Hence, AO was not correct in rejecting the books of accounts - we decline to interfere with the order of CIT(A) in deleting the aforesaid additions. His order on this issue is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.
Brought forward loss adjustment ignoring the section 14 - HELD THAT:- CIT(A) directed the AO to allow brought forward losses, as per the provisions of section 72 therefore we do not find any infirmity in the order of ld CIT(A) in directing the AO to allow brought forward losses, in accordance to law. Hence, we confirm the order of ld CIT(A). Appeal of the Revenue is dismissed.
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2020 (4) TMI 536
Grant of stay of outstanding demand - HELD THAT:- Out of total demand of ₹ 3,10,31,970, the assessee has already deposited a sum of ₹ 50,62,022. Considering the facts and circumstances of the case, the assessee is directed to deposit a further sum of ₹ 15,00,000/- on or before 28.02.2020 to which the ld AR has agreed on behalf of the assessee. Subject to the said deposit, the balance demand is stayed for a period of three months or disposal of appeal which is ever and the Department is directed not to take any coercive/recovery steps in this regard.
The matter is directed to be listed for hearing on 16.03.2020 as stay granted matter.
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2020 (4) TMI 535
Exemption u/s 11 withdrawn - Anonymous donation - assessee trust has failed to substantiate the donation so received through any credible and verifiable evidence - HELD THAT:- Assessing Officer has recorded a finding that the assessee could not furnished complete address or identify the persons from whom the donations have been received, the receipt books appears to be fabricated without any address of the persons from whom the donations have been received and number of opportunities have been provided to the assessee-trust to furnish postal address and identification of the persons as well as the purpose of the donation and prima facie the list appears to have been prepared on the basis of voter list or any other records of the census department.
Complete name of the Donors is not mentioned nor the details about their father and the address where they were residing were furnished - AO that all these donations have been received of same amount i.e. ₹ 5,000/- from innumerable people which we find practically improbable that each of the donors have donated equivalent amount not a rupee more nor a rupee less - assessee trust has failed to substantiate the donation so received through any credible and verifiable evidence in terms of complete name and address of the donors and purpose of the donation and therefore, the provisions of Section 13(7) r/w 115BBC have been rightly invoked by the Assessing officer and confirmed by the ld. CIT(A). In the result, we do not find any merit and justification in the grounds of appeal so taken by the assessee-trust. - Appeal of the assessee-trust is dismissed.
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2020 (4) TMI 534
Penalty levied u/s 271AAA - undisclosed income offered by the assessee during the course of assessment proceedings and unexplained cash found during the course of search - HELD THAT:- Undisclosed income was neither offered to tax during the course of search nor it was included in the Income Tax Return filed by the assessee. The addition was made while finalizing the assessment order. Thus assessee has not fulfilled any of the conditions enumerated above in Section 271AAA(2) of the Act.
Addition for unexplained cash which was found during the course of search at the assessee’s residence on 25.11.10, assessee could not give any plausible reply to satisfy the search team as well as the Ld. A.O during the course of assessment proceedings. Assessee has also not challenged this addition before the Tribunal. So as far as unexplained cash is concerned assessee failed to fall in Section 271AAA(2) of the Act.
Assessee is liable to pay penalty u/s 271AAA of the Act @10% on the undisclosed income and unexplained cash .- Decided partly in favour of assessee.
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2020 (4) TMI 533
Undisclosed investments u/s 69 - cash loan given - Addition on the basis of said lose papers seized and statement recorded of the assessee during the course of search - CIT (A) also confirmed the fact that “the three unsigned receipts are incriminating documents found in the search and seizure action u/s 132, which shows actual transactions have been taken place - HELD THAT:- On going through the entire factual position, we are unable to accept with the observation of the ld. CIT (A) who has confirmed the addition and at the same time accepting the fact that the receipts are unsigned and yet treating them as incriminating documents.
Going through the statements of the assessee as well as the counter parties, affidavits, the receipts per se and also the observation of the ld. CIT (A) that the receipts are unsigned, we hereby hold that no addition is called for based on these documents and hence, the addition made by the Assessing Officer on this account is hereby directed to be deleted. - Appeal of the assessee is allowed.
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2020 (4) TMI 532
Stay of demand - total tax alongwith interest u/s. 220 is about 1100 crores therefore, the assessee should be directed to pay at least 50% of the outstanding demand - assessee submitted that stay should be granted to the assessee subject to the adjustment of the refund - HELD THAT:- Assessee has prima facie case for grant of stay subject to certain conditions. We, therefore, without commenting upon the merits of the case, stay the outstanding demand for a period of 6 months or disposal of the appeal whichever may expire earlier subject to payment of ₹ 200 cores by the assessee to the revenue within 30 days and direct the AO to adjust the refund of ₹ 193.34 crores arising to the assessee for A. Y. 2010-11 against outstanding demand for A.Y.2014-15.
The request of the assessee for out of turn hearing is also accepted and the appeal is fixed for hearing on 16.04.2020 which was announced in the open court. The assessee is hereby directed to file the paper book in advance and not to seek any adjournment under any pretext failing which the stay granted to the assessee shall stand vacated automatically.
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2020 (4) TMI 531
Scope of limited scrutiny - Addition u/s 43CA - selection of the case for limited scrutiny under CASS were “Real Estate business with high closing stock (verify whether assessee has adopted percentage completion method) - HELD THAT:- Assessing Officer can widen the scope of scrutiny even the case is selected for limited scrutiny under CASS, however, the condition precedent for such widening of the scope is that the Assessing Officer has to seek prior approval of the authorities mentioned. Such prior approval and the permission of the PCIT is lacking in the instant case. There was no satisfaction about the merits of the issue which necessitated complete scrutiny in the instant case. Hence, the assessment framed by the assessee on the issues which are not inconsonance of the instruction of CBDT are liable to be quashed. The addition u/s 43CA, since beyond the scope of the limited scrutiny is hereby ordered to be deleted. - Decided in favour of assessee.
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2020 (4) TMI 530
Reopening of assessment u/s 147 - assessee’s objection to the reopening is not being disposed of by the Assessing Officer by a speaking order - HELD THAT:- When objections to the reopening are not disposed of by the Assessing Officer by a speaking order the same is fatal to the reassessment and it cannot be treated as procedural mistake which can be cured by remitting the matter to the AO to dispose of the objections. In the present case learned CIT(A) erred in asking the Assessing Officer in remand to dispose of the objection and accordingly has treated the same to be sufficient compliance of Hon'ble Apex Court decision GKN Driveshafts India Ltd. [2002 (11) TMI 7 - SUPREME COURT].
AO has passed assessment order without disposing of the objection of the assessee to reopening by a speaking order, the reassessment is bad in law. We hold that the assessment order passed is not legally sustainable. Accordingly, this issue is decided in favour of the assessee.
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2020 (4) TMI 529
Expenditure allowable u/s 37 (1) - disallowance ‘Scholarship Expenses’ treating the same as not incurred wholly and exclusively for the purpose of the profession of the appellant - assessee is an advocate by profession and is a designated Senior Advocate of the Hon'ble Supreme Court of India and is deriving income from business or profession, income from house property, income from capital gain and income from other sources - HELD THAT:- It is an undisputed fact that the appellant is a well known Supreme Court Lawyer. The agreement with Exeter College, the University of Oxford, exhibited hereinabove, is self-explanatory. We find that on identical circumstances, the co-ordinate bench in assessee’s own case for Assessment Year 2011-12 [2019 (8) TMI 731 - ITAT DELHI] had the occasion to consider a similar disallowance and came to the conclusion that such disallowance cannot be sustained and directed the Assessing Officer to delete the same. - Decided in favour of assessee.
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2020 (4) TMI 528
Reopening of assessment u/s 147 - no notice u/s. 143(2) of the Act was issued by the AO - addition u/s 68 for unexplained cash credit - HELD THAT:- Requirement of service of notice u/s. 143(2) of the Act in the present case was necessary and the admitted factual position is that no such notice was issued after the filing of return of income by the assessee in response to notice u/s. 148 - we are of the view that that the ratio laid down by the Hon’ble Supreme Court in the case of Hotel Bluemoon [2010 (2) TMI 1 - SUPREME COURT]) and Laxmandas Khandelwal [2019 (8) TMI 660 - SUPREME COURT] will apply to the present case. The consequene of non-issue of notice u/s. 143(2) of the Act is fatal to the validity of the order passed u/s. 148 of the Act. Since the aforesaid legal infirmity renders the order of assessment null and void, we are of the view that the order of assessment has to be annulled. - Decided in favour of assessee.
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2020 (4) TMI 527
Reopening of assessment - absence of any reason to believe that income had escaped assessment - no sufficient opportunity to the assessee for representing his case - HELD THAT:- A.O. has not given sufficient opportunity to the assessee for representing his case. There is a lack of enquiry by the A.O. Even in the remand report, the A.O. has not made any enquiry from the subscriber companies. Assessee has brought to our notice that there are two assessment orders of the same date. No satisfactory reply is furnished by the A.O.
There is no substantial difference between the assessment orders. One of the assessment order is having office note. Therefore, action of the A.O. regarding not making enquiries on the material and also not providing sufficient opportunity to the assessee, we set aside the assessment order and restore the assessment to the file of the A.O to dispose of the objections made against the reasons for reopening by way of a separate speaking order. - Decided in favour of assessee for statistical purposes.
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2020 (4) TMI 526
Interest on borrowed fund were given as advance to sister companies - assessee reiterates that advances made to sister companies were for business purposes and not necessarily out of any specific borrowings - charging notional interest as indirect interest debited by on the assessee on these business advances - HELD THAT:- Advances to Gokaldas Images Infrastructure P. Ltd., (GIIPL) Loans are given out of borrowed funds and not own funds, which could not be controvert by Ld. AR even in the present year. Accordingly, we are not inclined to interfere with the findings of CIT(A)on the issue.
Advances to Hinduja Realtors Pvt. Ltd. issue requires a fresh consideration by the Assessing Officer and therefore the Order of the CIT (A) is set aside. The assessee is directed to file the required documents to substantiate its case before the Assessing Officer. The Assessing Officer is directed to consider the same and decide the issue in accordance with law after affording the assessee an opportunity of being heard.
Deduction under Section 10B of the Act without setting off of the loss, depreciation / Business pertaining to non-10B Units - HELD THAT:- We found that the CIT (Appeals) has relied on the jurisdictional High Court decision in YOKOGAWA INDIA LTD. [2011 (8) TMI 845 - KARNATAKA HIGH COURT] which was confirmed by the Hon'ble Supreme Court [2016 (12) TMI 881 - SUPREME COURT]. The learned Departmental Representative could not controvert the observations of the CIT (Appeals) with cogent evidence. Accordingly, we are not inclined to interfere with the order of CIT (A) on this disputed issue
No TP adjustment is called for in this case.
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2020 (4) TMI 525
Penalty u/s 271(1)(c) - estimated income only due to proceeding u/s 132 - assessee has disclosed the commission income earned from accommodation entries provided by him which varies from transaction to transaction between @ 0.02% to 0.05% and assessee came forward voluntarily offered 0.02% as commission income - HELD THAT:- Assessee has completely gave the information which is agreeable to the AO and cooperated to complete the assessment with real income. Accordingly, AO made reasonable estimation on the profit. Penalty cannot be imposed when the income of the assessee is estimated.
Defective notice u/s 274 - as per assessee notice issued by the AO is defective since AO has not brought of record the reason for levy of penalty - HELD THAT:- We notice that in the assessment order, AO has made it clear that penalty proceedings are initiated separately for furnishing inaccurate particulars of income, therefore the AO has already indicated that why the penalty proceedings are initiated. Therefore, we reject the contention of the assessee that notice is defective.
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2020 (4) TMI 524
Penalty levied u/s 271(1)(c) - addition made on account of profit margin on sale of Mixer Grinder - penalty leviable on addition made on estimation of income - HELD THAT:- AO estimated the profit @ ₹ 300/- per piece on sale of 1500 Mixer Grinder. Assessing Officer estimated the profit of ₹ 4,50,000/-. On appeal before the ld. CIT(A), the addition was upheld. However, on further appeal before the Tribunal, the addition was restricted to ₹ 3,37,500/- in [2016 (2) TMI 1274 - ITAT MUMBAI] - We have further noted that in reply to the show cause, the assessee stated that no penalty is leviable on addition made on estimation of income and relied upon the decision of Jodhpur Tribunal in ITO vs. Gurunanak Oil Agency [2013 (3) TMI 718 - ITAT JODHPUR]. The contention of assessee was not accepted by Assessing Officer. The Assessing Officer levied the penalty @ 100% of the tax sought to be evaded.
The ld. CIT(A) affirmed the action of Assessing Officer. There is no dispute that addition on which penalty was initiated was based on estimation basis.
The addition was further reduced by Tribunal by allowing administrative and other expenses and estimated the profit @ ₹ 225/- per piece/per Mixer Grinder. It is settled position that no penalty is leviable on adhoc/estimated addition. Hence, we direct the assessing officer to delete the entire penalty levied under section 271(1)(c) - Decided in favour of assessee.
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2020 (4) TMI 523
Penalty levied u/s 271(1)(c) - Defective notice - non specification of charge in notice - not intimated the specific charge of "Concealment of income" or "Furnishing inaccurate particulars of income" - addition @ 1% of commission on accommodation entries - HELD THAT:- AO found that there was total transaction during the year of ₹ 5.38 crore. AO made addition of 1% commission on the entire transaction. No further appeal was filed by assessee against the said addition in the quantum assessment. Penalty proceeding are separate and independent.
Penalty under section 271(1)(c) is not automatic on the basis of additions made or part of the additions sustained in the appeal. In the assessment, the addition can be on the basis of presumption for making estimated addition.
AO estimated the addition on account of commission income, on the basis of entire transaction during the year. The Assessing Officer levied the penalty @ 300% without specifying special reason for levying maximum penalty. CIT(A) restricted the penalty @ 100% of the tax sought to be evaded.
In Gurunanak Oil Agency [2013 (3) TMI 718 - ITAT JODHPUR] held that when the addition are based on estimated basis, the penalty under section 271(1)(c) could not be imposed. Also in CIT vs. Dhillon Rice Mills [2000 (9) TMI 10 - PUNJAB AND HARYANA HIGH COURT] held that addition made on estimation basis would not automatically lead to conclusion that there was failure to return the correct income by mean of fraud or gross wilful neglect.
No justification in levying the penalty under section 271(1)(c). - Decided in favour of assessee.
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2020 (4) TMI 522
MAT Computation - surplus on sale of shares received as gift to the book profit for taxation under section 115JB - HELD THAT:- As decided in own case [2016 (4) TMI 348 - ITAT AHMEDABAD] Ld.AO has rightly added the long term capital gain from sale of shares to the book profits u/s 115JB of the Act, and accordingly this grounds of appeal is decided against the assessee.
TP Adjustment - upward adjustment of interest on loan to the AE to the income of the appellant company on account of determining the Arm’s Length Price of International Transactions - HELD THAT:- Transactions under consideration is in the nature of quasi capital. Hence, there was no requirement charge an arm's length price. Keeping in mind all these factors, as also entirety of the case, we deem it fit and proper to delete the arms length price adjustment in respect of interest on loan to AE, which, according to the revenue authorities, should have charged on the loan granted to the AE’s to bring back preferential shares capital in India.
Upward adjustment of guarantee fee charges - determining the arm’s length price of the international transactions - HELD THAT:- Corporate guarantee has been given for obtaining a loan from a bank which is used for redeeming assessee preference shares in the AE. BHPL has brought back moneys invested as preference shares + guarantee charges paid to the Bank. Hence, the ALP of that transaction equivalent to the guarantee commission expenses paid is not justified. BHPL not claimed guarantee charges paid as deduction against any taxable income. Chapter X –Section 92 and 92Cconstitute anti-avoidance provisions which result in determination of ALP and adding back the ALP and the price recorded in the books of accounts to the total income to levy tax.
In the instant case BHPL itself has not claimed it as a deduction from any income and guarantee charges accordingly has been offered to taxation. The amount paid as guarantee charges has already suffered disallowance while filling return of income itself. Hence, again addition the same to total income results in double taxation. TP Study report rejected without a speaking order. BHPL has filed Transfer Pricing Documentation and has undertaken T P Study on the basis of Interest Saver (IS) approach. In view of the foregoing, the upward adjustments on account of bank guarantee are therefore, deleted.
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2020 (4) TMI 521
Unexplained investment u/s 69 - unaccounted investment in rough diamonds by the assessee on the date of survey - HELD THAT:- There was no excess stock of rough diamonds found during survey. CIT (DR) has also not controverted these facts and findings as recorded by the CIT(A) and simply supported the AO`s observations. In alternate, where no physical stock was found at the time of survey, and there is shortage, then in such situation, at the most the profit can be estimated by the AO on account of unaccounted sales, if it is proved that there were unrecorded sales, which are also covered by declaration made by the assessee and shown in that returned income.
The movement of rough diamonds might have been more because of the unrecorded sales declared by the assessee. The assessee has declared ₹ 5 crores and therefore, considering the Gross Profit @6.27%, the unaccounted turnover comes to ₹ 79,74,48,166/- of which profit is far less than declaration as made by the assessee. This view is also fortified by decision in the case of CIT v. President Industries [1999 (4) TMI 8 - GUJARAT HIGH COURT] wherein it was held that only percentage of profit could be considered for addition where shortage of stock. Therefore, considering the all the facts on record, circumstances of the case and the facts that the CIT(A) has carried out detailed verification and working as filed before him, we therefore, do not find any infirmity in the order of ld.CIT(A), accordingly, same is upheld. This grounds of appeal of revenue is therefore, dismissed.
Unaccounted income from sale of polished diamonds on suppression of yield even though it was categorically analyzed in the body of assessment order that the assessee had suppressed its yield - HELD THAT:- We find that as per impounded Annexure B-47 Page No. 90 to 99 & 10 to 104, the yield till Ghat process comes to 69.86% and yield after Ghat process comes to 52.30% and therefore, the overall yield of rough diamonds polished diamonds was 36.24% as per notings of Page nos. of Annexure B S -47. AO has also stated that the yield till Ghat process is 69%. There is always, further loss of 50% after Ghat process and even the seized material shows such as loss at 49.45%, therefore, the yield shown by the assessee is about 35% which was very much reasonable. Hence, the addition made by the AO was rightly deleted by the Ld. CIT (A). Therefore, we do not find any infirmity in the order of CIT (A). In view of these facts and circumstances, this ground of appeal is therefore, dismissed.
Unaccounted manufacturing expenses - As submitted that the disclosure of ₹ 5 crores was made by the assessee after considering the unaccounted expenses - HELD THAT:- The disclosure of ₹ 5 crores was net income offered by the assessee after considering all the expenses by the assessee and therefore, no addition is required to be made for unaccounted expenditure, when the unaccounted expenditure is less than ₹ 5 crores. The assessee has declared ₹ 5 crores and therefore, considering GP of 6.27%, the unrecorded turnover comes to ₹ 79, 74, 48, 166 and, therefore, manufacturing expenses are clearly deductible under section 37. In view of above facts and circumstances, we dismissed the appeal of the Revenue and allow the appeal of the assessee.
Unaccounted income from unaccounted manufacturing of finished diamonds from rough diamond and sold outside Books - HELD THAT:- Whole sales cannot be added and only % of the profit can be added in view in the case of CIT v. President Industries [1999 (4) TMI 8 - GUJARAT HIGH COURT] and CIT Samir Synthetics [2008 (1) TMI 591 - GUJARAT HIGH COURT] unless there is no concrete evidence that the assessee has made investment outside the books before receipts of the sale consideration. The assessee has proved on the basis of seized paper only that to the AO wrongly made the addition that the assessee was having more stock then the rough diamonds stock issued to the lesser Department and so Ld.CIT(A) has rightly deleted by giving detailed findings - there was no excess stock of rough diamonds was found at the time of survey. Thus, no physical stock was found at the time of survey, hence, at the most the profit can be estimated by the AO for unaccounted sales which is covered by the declaration made by the assessee. The assessee has declared peak investment found of polished diamonds at the time of survey. No infirmity in the order of CIT (A), accordingly, same is upheld.
Addition of undervaluation of closing stock - HELD THAT:- The assessee had disclosed ₹ 5 Crore as unaccounted income including excess stock of ₹ 98,82,364/- and set-off of excess finished stoke of ₹ 98,82,364/- has already been granted against the proposed addition of ₹ 98,41,832/-. CIT(A) has further granted set-off of ₹ 98,41,832/- on account of undervaluation of polished diamond by deleting the addition of undervaluation of polished diamond. The AO has also of the view that set off should be allowed. In view of this matter, this ground of appeal is therefore, dismissed.
Undervaluation of closing stock - HELD THAT:- We find that the assessee has included the excess stock of polished diamonds in the disclosure of ₹ 5 crores and not shown separately in the Profit & Loss Account but has shown the same in balance sheet at ₹ 12,26,39,769/- inclusive of excess stock of polished diamonds. Therefore, the findings recorded before the CIT(A) are appears to be correct. Hence, no interference is called for. Accordingly, this ground of appeal is therefore, dismissed.
Stock register prepared by the assessee although the assessee was maintaining Lot Wise Registers which were impounded during survey for each of the manufacturing process - HELD THAT:- We find that there is no discrepancy between lot wise register impounded during the course of survey and stock register produced by the assessee as Ld. CIT (A) has deleted the addition based on the lot wise register. Accordingly, this ground is dismissed.
Rejection of books of accounts u/s 145 - HELD THAT:- As during the course of survey, there was impounding of registers, the papers related to diamond manufacturing business, discrepancies in stock, and Appellant firm admitted additional income of ₹ 5 crores. The AO cited decision of Hon`ble Delhi High Court in the case of Action Electrical v. DCIT [2002 (7) TMI 64 - DELHI HIGH COURT] held that books of accounts cannot be relied to be complete and liable to be rejection, as the same does not give correctness and completeness to the accounts. In view of this matter, we do not find any infirmity in the order of CIT (A), accordingly, same is upheld. This ground of appeal is therefore, dismissed.
Unaccounted manufacturing expenditure incurred u/s 69C - HELD THAT:- We find that this grounds of appeal is covered by Ground No. 3 of appeal of revenue, wherein we have held that the manufacturing expenditure is allowable as deduction in the light of judgements of Hon’ble Gujarat High Court in the case of CIT v. Shilpa Dyeing and Printing Mills Pvt. Ltd. [2015 (7) TMI 691 - GUJARAT HIGH COURT]. Therefore, this grounds of appeal is allowed in the favour of the assessee.
Addition made under section 69 - unexplained investment made in finished diamonds - HELD THAT:- When rough diamonds are found to be short, it did not mean that the polished diamonds were manufactured afterwards, but in fact, it means that either the polished diamonds have already been manufactured out of the shortage of rough diamonds or rough diamonds were sold which is available for investment in excess stock.
Assessee is entitled to set off the addition against the balance declaration of ₹ 4,01,17,636/-. It is to be noted that the AO has given the set off ₹ 5 crores against all the additions, which has been withdrawn by the CIT(A) without giving notice of enhancement. No enhancement can be made without giving showcause notice as held by various court’s , hence, on that count also this addition is required to be deleted - assessee is entitled to set off against declaration as allowed by the AO in assessment himself in assessment order - Shortage of rough diamonds means either same were sold outside India of which are available for investment or it has been used in manufacturing of polished diamonds. Therefore, same are covered either by disclosure hence, telescoping of the same is allowable against excess polished diamonds sales of ₹ 4.01 crores. Therefore, in any circumstances, no separate addition is sustainable in law.
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9911796707
