TMI Blog2014 (3) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... :- CIT(A) held that the provisions of s. 44AD are applicable when the turnover of the Assessee does not exceed Rs 40 lacs but in the case of Assessee after including the "on money" to the turnover declared by the Assessee, the turnover exceeds Rs 40 lacs and therefore the provisions of presumptive tax does not apply - Assessee could not controvert the findings of CIT(A) Decided against Assessee. Addition on account of unaccounted receipts Held that:- CIT(A) while granting partial relief has noted that the claim of Assessee that the two receipts of Rs. 20,000/- were Kachha receipts which were later adjusted against total payment was not backed by any evidence assessee could not bring any material to controvert the findings of CIT(A) thus, there is no infirmity in the order of the CIT(A) Decided against Assessee. Disallowance u/s 40A(3) of the Act Held that:- CIT(A) has given a finding that the payments were not made to any agents so as to cover under the shelter of Rule 6DD(k) and therefore it was rightly disallowed by AO Assessee could not controvert the findings of CIT(A) thus, there is no reason to interfere with the order of CIT(A) Decided against Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C. Gupta And Shri Anil Chaturvedi, A.M.,JJ. For the Appellant : Shri N. C. Amin. A. R. For the Respondent : Shri K. C. Mathews, Sr. D.R. ORDER Per Shri Anil Chaturvedi,A. M. 1. These 5 appeals filed by the Assessee are against the order of CIT(A)-IV, Baroda dated 31.12.2008 18.07.2012 for A.Ys. 2003-04 2004-05 respectively. Out of the 5 appeals, 2 appeals are against the quantum additions, 2 appeals are against order u/s. 154 and 1 appeal is against penalty order. 2. Before us at the outset, the ld. A.R. submitted though the quantum appeals before us pertain to different assessment years i.e. A.Y. 03-04 04-05 but the issue involved in both the appeals are similar as they arise out of same survey action and the facts and circumstances of the case are similar and therefore the submissions made in the case of one year would be equally applicable to other and therefore both the quantum appeals can be heard together. We therefore proceed with the facts of A.Y. 03-04 in ITA No. 133/AHD/2009. 3. The relevant facts as culled out from the material on record are as under. 4. Assessee is a firm engaged in the business of building construction. Assessee f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant to Ay 2003-04 (Rs 22,82,559/-) and AY 2004-05 (Rs 20,45,848/-) Statement of Shri Kamleshbhai Patel, a partner, was also recorded at the time of survey u/s. 133A wherein he admitted the cash entries to be the unrecorded income of the firm. Later vide letter dated 12.10.2003, Assessee reconciled the unrecorded income and corrected the breakup of the income for the two years at Rs 16,32,559/- for AY 2003-04 and Rs 26,95,848/- for AY 2004-05. Subsequently Assessee filed revised return of income where it credited only Rs 7,03,558/- in the Profit and loss account under the head Work in progress instead of the reconciled figure of Rs 16,32,559/- which was admitted in the statement recorded at the time of survey. The Assessee was asked to show cause the change in stand to which Assessee interalia, apart from submitting that the statement recorded u/s. 133A of the Act did not carry evidentiary value, also submitted that in the statement recorded the partner had declared the gross receipts and not the total income. The submissions of the assessee was not found acceptable to the AO. He thereafter for the reasons recorded in the order rejected, the books of accounts of the assessee u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts. Both the partners thus accepted the entries in diary K-9 to be 'on money' payments not recorded in the books of accounts and also declared them to be net unaccounted income. In view of the documentary evidence gathered during the survey U/S.133A and the statement of the partners on oath, there is no doubt that the cash entries in the diary were of receipts in respect of J. K. Landmark Scheme and as per partners' own admission, receipts at least to the extent of Rs.13,53,558/- for F.Y.2002-03 and Rs.19,60,848/- for F.Y.2003-04 were net undisclosed income. Later, through letter dated 12.10.2003, it was pointed out by the appellant that one entry of Rs.6.5 Lakh included in F.Y.2002-03 actually pertained to F.Y.2003-04, due to which the cash receipts for the two years as per the diary worked out to Rs.16,32,559/-for F.Y.2002-03 and Rs.26,95,848/- for F.Y.2003-04. Regarding claim of Rs.9,29,001/- and Rs.85,000/-, being recorded in the regular cash books, despite providing due opportunity, no date wise or party wise reconciliation could be made by the appellant as discussed in para 18 of the assessment order. Thus, it is held that the Assessing Officer was justified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be recorded in regular cash book for F.Y.2002-03 from total cash receipts of Rs.16,32,559/- in diary K-9 for F.Y.2002-03. Thus, while working out Rs.7,03,558/-, no expenses were deducted by appellant. 6. Aggrieved by the order of CIT(A), Assessee is now in appeal before us. 7. Before us, Ld.A.R. reiterated the submissions made before AO particularly that the statement was recorded during the course of survey u/s 133A when the Assessee was fully exhausted and further the Assessee had stated in the statement was gross receipts and not the income. He therefore submitted that after reconciling the Assessee had rightly submitted that Rs 7,03,558/- was the income in the revised return. He further placed reliance on the decision of Apex Court in the case of CIT vs S. Khader Khan Son (2013) 352 ITR 480 (SC) for the proposition that statement recorded u/s 133A of the Act has no evidentiary value and any admission made during such statement cannot be the basis of addition. In the alternate he submitted that addition may be made @8% u/s 44AD of the Act and for which he placed reliance on the decision in the case of V.R.Textiles vs JCIT (2011) 11 ITR (Trib) 476 (Ahd), Kesharbhai Ghama ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of statement but on the contrary the addition was made on the basis of the corroborative material found and on the basis of statements and therefore the decision of Apex Court relied upon by the ld. A.R. was not applicable to the facts of the case. He further submitted that AO has noted at page 23 of the order that during the course of assessment proceedings, Assessee had neither contended or claimed having any unaccounted expenditure as incurred nor produced any evidence which can prove that any expenditure other than what was accounted had been incurred and therefore whatever income which was collected in cash and found in the diary was net income only. He further placed reliance on the decisions in the case of CIT vs Hotel Samrat (2010) 323 ITR 353 (Ker), CIT vs P.Balasubramanian (2013) 354 ITR 116 (Mad) for the proposition that any statement recorded u/s 133A would have evidentiary value only if supported wth materials. He also placed reliance on the decision in the case of Bachittar Singh Vs CIT Anr (2010) 328 ITR 400 (P H) for the proposition that even if statement u/s 133A was not at par with the statement u/ 132(4) and did not have that evidentiary value but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Sailesh Patel during appellate proceedings. With respect to closing stock/work in progress, we find that that during the course of survey proceedings, a question (Q No. 14) was asked to Shri Kamleshbhai Patel as to whether Assessee was showing closing stock or work in progress in J.K. Promotors Scheme to which it was replied we are not showing closing stock or work in progress. From practical point of view it is not possible to show the same (Relevant Question and Answer is on page 34 of Paper Book). CIT(A) has further given a finding that in the revised return the Assessee had increased its income by Rs 7,03,558/- by terming the same as WIP which was not shown in the original return. It however exactly matched with the figure of total cash receipts of Rs 16,32,559/- found in the diary less the cash receipts of Rs 9,29,001/- which was claimed to have been recorded in regular cash book for FY 2002-03 and therefore while working out Rs 7,03,558/- no expenses were deductible by Assessee. The aforesaid findings of CIT(A) could not be controverted by Ld A.R nor any material was furnished by A.R. to controvert the same. 10. Thus in the present case, we agree with the findings of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of AO and CIT(A) and thus no interference is called for in their order. Thus these grounds of Assessee are dismissed. Gr. No 3 is with respect to addition of Rs 20,000/- on account of unaccounted receipts confirmed by CIT(A). 13. On verification of Annexure K-10 (Receipt Book - Temp) AO noticed cash receipts aggregating to Rs 41,000/- in respect of booking of flats/shops were not reflected in the regular cash book (details of which are on page 25 of the AO order). The submission of the Assessee was that the amount of Rs 20,000/- was covered by the work in progress of Rs 7,03,558/-. With respect to Rs 21,000 it was submitted that it was with respect to shop No B-9 in the basement which was booked by Bhavesh Chavda and on account of cancellation of booking, the same was returned. The submission of the Assessee was not found acceptable to AO and he therefore considered the aggregate amount of Rs 41,000/- to be unexplained income of the Assessee. Aggrieved by the order of AO, Assessee carried the matter before CIT(A). CIT(A) granted partial relief by holding as under:- 5.2. I have considered the submissions. In respect of receipts issued to Prashant Khare and Jyotikaben Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder). AO noted that no satisfactory reason was given by Assessee to explain as to how the same were covered under Rule 6DD(J) so that the same can be allowed as an expenditure. He accordingly disallowed 20% of the cash payments applying the provisions of Section. 40A(3) of the Act. Aggrieved by the order of AO, Assessee carried the matter before CIT(A). CIT(A) confirmed the action of AO by holding as under:- 6.2. I have considered the submissions. Before AO, initially, exclusion was sought under Rule 6DD(j) but later on being asked to substantiate, appellant switched its defence to Rule 6DD(k). In the Form No.35 also, shelter under Rule 6DD(k) has been taken. Under clause (k) of Rule 6DD, payments to agent who is required to make payments in cash for goods or services on behalf of assessee only are excluded from the purview of section 40A(3). The payments of Rs.1,43,065/- recorded on page.26 of the assessment order are not to any agent of the appellant. Provisions of Rule 6DD(k) are therefore, not applicable. Disallowance of Rs.28,613/- u/s.40A(3) is confirmed. 17. Aggrieved by the order of CIT(A), Assessee is now in appeal before us. 18. Before us, Ld A.R. reiterated the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Torrent Financiers Pvt. Ltd. of ITAT Ahmedabad. 6.2 I have considered the submissions. Appellant's reliance on the decision in the case of Torrent financiers is completely misplaced. Partners' capital is not interest free fund in appellant's hands. In the profit and loss account for F.Y. 2003-04, interest of Rs. 3,13,021/- has been debited towards 'partners' interest expenditure'. Disallowance of Rs. 25,800/- is upheld. 23. Aggrieved by the order of CIT(A), Assessee is now in appeal before us. 24. Before us, Ld.AR reiterated the submissions made before CIT(A) and further submitted that interest was only on account of car loan. He therefore submitted that the addition be deleted. Ld D.R. on the other hand supported the order of CIT(A). 25. We have heard the rival submissions and perused the material on record. CIT(A) while upholding the addition has given a finding that Assessee was paying interest on partner's capital account and therefore it was not interest free and therefore it cannot be said that amount was advanced out of interest free funds. Before us, Ld A.R could not place any material on record to controvert the findings o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the penalty levied by the AO be deleted. 31. Ld D.R. on the other hand took us through the findings of AO and CIT(A) and submitted that that the income was detected during the course of survey and had there been no survey the income would have remained undetected and untaxed. He further placed reliance on the decision of Apex Court in the case of Mak Data (P) Ltd vs CIT (2013) 38 taxmann.com 448 (SC). He therefore submitted that AO has rightly levied the penalty in the present case and the order of the AO be upheld. 32. We have heard the rival submissions and perused the material on record. It is an undisputed fact that during the course of survey u/s 133A at the premises of Assessee diary was found which contained details of cash entries. The cash entries was accepted as income by one of the partner in the statement that was recorded at the time of survey. The cash entries found in the diary were considered as income by the AO which was also partly confirmed by CIT(A). During the course of assessment proceedings and appellate proceedings the submissions have been given by assessee but the same have not been proved to be false or untrue by the Revenue. A case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same was correctly allowed. Aggrieved by the order of AO, Assessee carried the matter before CIT(A). CIT(A) vide order dated 18.7.2012 dismissed the appeal of the Assessee by holding as under:- 2.2. As stated above, during the course of appellate proceedings, Shri N.C Amin, Advocate attended and filed submission dated 24/05/2012. The AR of the appellant in his submission dated 24/05/2012 has stated that the assessment order u/s 143(3) of the IT Act in the case of the appellant was passed on 27/12/2006 by the ITO, Ward-1, Anand determining total income of Rs.34,95,130/- by making various additions amounting to Rs.32,16,848/- which included alleged unrecorded and unaccounted income amounting to Rs.26,95,848/-. As per the AR, against this said assessment order, the appellant has filed appeal before the CIT(A) and the Id. CIT(A) has allowed substantial deductions and revised total income after appeal effect worked out at Rs. 17,92,4877- inclusive of additions on account of alleged difference of Rs.10,59,633/-. As per the AR, while giving appeal effect, the AO has not given deduction admissible as per the provisions of section 40(b) of the IT Act. The AR has further submitted that on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction which is not subject matter of such order of CIT(A). The appellant was required to file rectification application before the AO only against the assessment order or it could have raised such issue before the CIT(A). Considering these facts, I reject the above ground of appellant as filed against the order u/s 154 of the IT Act dated 26/02/2010 of the DCIT, Anand Circle, Anand. In the result, the appeal of the appellant is dismissed. 36. Aggrieved by the order of CIT(A), Assessee is now in appeal before us and has raised the following grounds:- 1. That the learned CIT(A) IV, Baroda has erred both in law and on the facts of the case in confirming order passed U/s 154 by the learned A.O. 2. That the learned CIT(A) ought to have granted mandatory deductions of remuneration allowable U/s 40(b) of the book profit as per the terms and conditions of Partnership Deed and the provisions of the l.T. Act 1961. 3. That the learned CIT(A) has failed to appreciate the facts that the manner of fixing the remuneration was specified in Partnership Deed and without considering it, the application of the appellant U/s 154 rejected by learned A.O. and confirmed by CIT(A) is against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was matter of appeal before CIT(A) who granted certain relief to the Assessee and accordingly the addition made by the AO was reduced. On the aforesaid additions which were confirmed by CIT(A), Assessee seeks further deduction u/s 40(b) in respect of salary paid to partners. We find that CIT(A) while upholding the order of AO has given a finding that Assessee had not claimed the deduction of Rs 8,14,232 u/s 40(b) in respect of addition income declared during the survey, before the AO during assessment proceedings, nor assessee had filed any revised return of income. He has further noted that no claim of deduction u/s 40(b) was made even before CIT(A) in appellate proceedings or any application u/s 154 was moved before CIT(A). He has further held that the AO has only passed order giving effect to the order of CIT(A) and AO cannot consider the deduction of any amount u/s 40(b) while giving such appeal effect order. Before us, the ld. A R. has not demonstrated as to how the deduction can be given in rectification proceedings when there was no such claim before AO or CIT(A). In view of the aforesaid facts, we find no infirmity in the order of CIT(A) and therefore no interference to h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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