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DCIT, Central Circle-2, New Delhi and others Versus Delco India Pvt. Ltd. and others

Undisclosed income - addition based on information found on the computer during search - presumption u/s 292C - Apart from the fact that the specific unrelated documents were found it was vehemently argued there is no other evidence with the department to insist that the assessee had transactions with the said concern. - The assessee denied having any transaction with M/s Smridhi Sponge Ltd. and made a claim that it may have belonged to someone who may have visited the assessee’s office. - Held .....

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ive PAN details and also the jurisdiction of the AO where M/s Smridhi Sponge was being assessed.

The record demonstrates that the AO chooses to rely more on postal authorities and makes no effort to cross check the information from the AO of M/s Smridhi Sponge who admittedly had many transactions in cash with some parties. M/s Smridhi Sponge as per record was not a dummy entity but a functional thriving entity. What repeatedly emerges from the above-mentioned facts and evidences is t .....

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ction 292C of the Act only on the rationale that the print outs had been founded from assessee’s premises and thus they necessarily disclosed the assessee’s undisclosed transactions with the said concern. The said conclusion of the tax authorities is completely misplaced on facts.

A perusal of section 292C shows that a statutory presumption can be drawn where any documents is found in possession of a person in the course of a search or survey that it belongs to “such a person”. A pres .....

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ansactions with M/s Smridhi Sponge and has also denied consequently the contents of the seized document as relatable to it; the denial as per the assessment order is also on an affidavit; the particulars available in the public domain procured through the internet searches from the ROC and the official income tax sites as per print outs of the downloads are relied upon. The fact that these were unimpeachable third party evidences that too from the official government sites goes without saying. I .....

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at Jamshedpur whose account number was “1021”; , branch code and factum of the payments made on behalf of the M/s Galaxy Exports as the same “Galaxy” found mentioned at Paper Book page 47 (Seized documents) also dealing in “Iron Ore” were provided; where the names and addresses of the Directors of both the companies; their authorized share capital; details of their balance sheets as per ROC site; Auditor’s, Reporters etc. are all given. The fact that these were relevant unimpeachable evidence h .....

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o dealings with the said concern. In such a background the departmental stand that the level of information available with the assessee proved that the assessee had interactions with the said concern is adding insult to injury.

The silence of inaction speaks much louder than the frenzy of the misdirected actions necessitating a pro-active department to address the fest spreading malaise lest the tools of search and seizure are reduced to a farce. The repeated inactions speak louder t .....

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t batch of 3 appeals are being decided by a common order for the sake of convenience. Whereas ITA No.2925/Del/2013 and ITA No.2453/Del/2013 are cross appeals filed by the Assessee and the Revenue in 2007-08 Assessment Year assailing the correctness of the order dated 22.02.2013 of CIT(A)-III, New Delhi. ITA No.-2926/Del/2013 is also Assessee s appeal assailing the correctness of the separate order dated 22.02.2013 of the CIT(A) stated to be on facts identical to the earlier appeal of the assesse .....

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rred to wherein the grounds raised by the Revenue in ITA No.2453/Del/2013 read as under:- 1. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of ₹ 1,47,78,159/- out of total addition of ₹ 2,68,11,454/- made by the Assessing Officer on account of undisclosed income out of regular books of account of the assessee. 2. The order of the CIT(A) is erroneous and is not tenable on facts and in law. 3. The appellant craves leaves to add, alter o .....

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essment Year. In view of the above only the grounds which are being agitated by the assessee are reproduced hereunder:- 4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in sustaining an addition of ₹ 1,20,33,295/- on account of transaction pertaining to M/s Smridhi Sponge. 5 (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO in making addition on the bas .....

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hereabouts of Smridhi Sponge. 7.(i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in arbitrarily presuming the figures on loose sheets to be the transaction related to purchases by the assessee from Smridhi Sponge. (ii) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the appellant that the addition has been made by AO by indulging into surmises and conjectures, wit .....

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oration and linking any transaction with the business of the assessee. 9(i) Without prejudice to the above and in the alternative, the learned CIT(A) has erred both on facts and in law in confirming addition of ₹ 20,60,108/- as G.P. calculated on the basis of trading account made by AO. 10. Without prejudice to the above and in the alternative the learned CIT(A) has erred both on facts and in law in making an addition of ₹ 99,73,187 on account of minimum capital required to carry on .....

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/- for the year under consideration. 13. That the appellant craves leave to add, amend or alter any of the grounds of appeal. 3. The relevant facts of the case are that a search and seizure operation u/s 132 of the Income Tax Act, 1961 (hereinafter referred to as Act ) was carried out by the Investigation Wing on 26.02.2009 on Shri Ram Hari Ram Group of cases. It is a matter of record that the case of the present assessee amongst others was also covered u/s 133A of the Act during the course of t .....

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ct vide his order F.No.-CITIV/ Centralization/149/2009-10/2298 dated 30.11.2009. The record shows that referring to the documents found, the AO takes into consideration the Annexure-2 wherein amongst other pages specific pages 11-14 contained details of transactions with M/s Smridhi Sponge. The Assessing Officer considering these documents observed that they pertained to 2007-08 & 2008- 09 assessment year. Accordingly in view thereof the case of the assessee for these two years was re-opened .....

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ilarly for 2008-09 Assessment Year, return identical to what was originally filed was again filed in compliance to the reopening of the proceedings in 2008-09 Assessment Year also. 3.2. Considering the returns; the seized documents and taking note of the fact that the assessee was mainly engaged in the manufacture of metal container the AO required the assessee to explain the documents found and seized in respect of the transactions with M/s Smridhi Sponge for the two years. In response thereto .....

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Directors including the mailing address of M/s Smridhi Sponge. 3.3. Taking note thereof, the AO accordingly issued notice u/s 133(6) of the Act at the given address of M/s Smridhi Sponge requiring the said concern to furnish copy of the ledger account for the business carried out with M/s Delco India Pvt. Ltd. The notice was received back unserved with the remark left . In view of these facts, the AO considering that the entries on the pages which the assessee was required to explain and co-rela .....

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of purchases and payment made to Smridhi Sponge during A.Y. 2007-08 are recorded. The summary compiled are transactions with Smridhi Sponge at page no. 14 and 13 is as under: Page no.14 Payment 16255557 Opening Balance 9000 Total purchases 14197743 Payment received 1027300 Freight 921000 Total 16155043 Balance 100514 16255557 16255557 Opening Balance 100514 Page no.13 Payment 9495789 Purchases 11478441 Service Tax 2433 Freight 543000 Balance 2425138 Total 12021441 Total 12021441 On the basis of .....

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e has not recorded purchase made from M/s Smridhi Sponge in the books of account, the payment made along with estimated G.P. is added to the income of the assessee as undisclosed income in view of the provisions of Sec.68 at ₹ 2,68,11,454/- (2,68,11,454/- (25751355 + 2060108-10,00,000 being amount received from M/s Smridhi Sponge). 4. Aggrieved by this, the assessee came in appeal before the CIT(A) where apart from assailing the additions on merit the re-opening was also challenged. The ch .....

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pheld the gross profit addition of ₹ 20,60,108, however I have my own reservations with the AD's action of adding the entire sale proceeds as income outside the books of accounts of ₹ 2,78,11,454 and giving benefit of just ₹ 10,00,000 on account of purchases. When any person makes both, sales and purchases outside the books of accounts (as is the case now), there is always some money locked up in debtors and he does require some minimum amount with himself, to carry on the .....

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outside the books of accounts. 7.16 To arrive at the capital required to carry business outside the books of accounts, I find from the appellant financial accounts that during the year under consideration the Debtors to Sales Ratio is 35.86% Debtor = ₹ 55.30 lacs Sales = ₹ 154.28 Iacs Debtor to Sales Ratio = 55.30xl00=35.86% 154.28 Thus at any given point of time on an average 35.86% of sales will always be locked up in Debtors, which is the minimum capital requirement to carry on th .....

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Rs.l,69,14,743 (RsA,71,68,832x35.86%). 7.18 Hence from the above discussion, I hold that on the basis of impounded documents which relates to two assessment years i.e. 2007-08 and 2008-09 the following additions deserves to be made: Assessment Year 2007-08: (a) gross profit calculated on the basis of Trading account made by the AO on the basis of notings in the impounded document. Rs. 20,60,108 (b) Minimum capital required to carry on the business outside the books i.e. Capital determined x Sal .....

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documents 1,69,14,743 x 1,93,57,378 ₹ 69,41,555 4,71,68,832 Rs.83,75,435 The appellant thus gets a relief of ₹ 1,47,78,159 (Rs.2,68,11,454 minus ₹ 20,68,108 minus ₹ 99,73,187), out of the total addition of ₹ 2,68,11,454 made in Assessment year 2007-08. 5. Aggrieved by this finding, both the assessee and the Revenue are in appeal before the Tribunal. 6. The Ld. AR addressing his appeal submitted that in his arguments he would not only be addressing the grounds raise .....

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e seized documents placed at pages 44 -47 of the Paper Book on the basis of which additions have been made in the two years. Drawing attention to Paper Book page No.-48 and 49 it was submitted that these are notices issued by the department requiring the assessee to file a return in compliance to the notice issued u/s 148 and the reply of the assessee received in the AO s office on 05.10.2010 respectively. A detailed questionnaire u/s 143(2) it was submitted was issued on 12.10.2010, copy of whi .....

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mpounded from the premises of the company. The page no. 11 to 14 of Annexure A-2 of the impounded material, are account of M/s Smridhi Sponge and entries of huge amount are recorded for the period ranging between November 2006 to December, 2007, i.e. the period pertains to F.Y. 2006-07 and F.Y. 2007-08. The entries for F.Y. 2006-07, i.e. relevant to A.Y. 2007-08 are as under: Page no. 14 Payment made of ₹ 1,62,55,557/- Page no. 13 Payment made of ₹ 95,96,303/- 6.1. In reply to the sa .....

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e before the AO, attention was invited to the following submissions dated 26.11.2010 before the AO:- That assessee company has never undertaken any transaction with M/s Smridhi Sponge - That assessee company is not aware of where about of M/s Smridhi Sponge. - That details found during survey might be of some one who visited the assessee's office and used the assessee's computer for mail of the account found or might have left the some one unknowingly. 6.2. Attention was further invited .....

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ay be made from the said concern or the Assessing Officer of M/s Smridhi SPonge directly:- The assessee company has undertaken a search through interpet and have collected certain details about M/s Smridhi Sponge Ltd. 1. Office Address 23, Netaji Subhash Road, Kolkata, West Bengal - 700001 2. Company Registration No.:- 067187 3. PAN AADCS 7018l 4. Jurisdiction WBG/W/113/4 5. Directors Particulars Particulars of Directors - Copy Of the extracts taken from internet enclosed. (emphasis provided) 6. .....

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a commodity dealt in by M/s Smridhi Sponge. The address of this concern it was submitted was also given and the search of the assessee demonstrated that M/s Galaxy Export admittedly had business interactions with Smridhi Sponge. Apart from that address the assessee also gave the information of the specific bank account wherefrom the two cheques mentioned at Paper Book page 44 were honoured and again a request was made to enquire from the specific bank of M/s Galaxy Exports and the Directors of t .....

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rther enquiry on internet sites reveals following details regarding one of the name appearing in loose sheet (in the account of M/s. Smridhi Sponge Ltd) viz., GALAXY. It is a private limited company having registered office at P-25 Prince cap street 1st Floor Kolkata, West Bengal. The complete name of the company is M/s. GALAXY EXPORTS PRIVATE LIMITED. The list of directors of M/s. Galaxy Exports (P) Ltd is also enclosed. 2. M/s. Galaxy Exports (P) Ltd is manufacturer of M.S. Ingot and Sponge Ir .....

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of M/s. Smridhi Sponge. (emphasis provided) 6.4. Heavily relying upon these facts, evidences and arguments made before the AO where the assessee was requesting in good faith to the AO to carry out the necessary inquiries and investigations directly with the said concerns, their Directors, their bankers or their Assessing Officer as the assessee never had any transactions with M/s Smridhi Sponge apart from the information made available from the internet searches, it was submitted that apart from .....

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bmitted is at pages 66 to 69 of the Paper Book. Specific attention was invited to the following submissions at page 67 of the Paper Book to highlight the grievance of the assessee:- • Secondly, AO never dispose of the objections raised by the assessee against reasons for opening the assessment u/s 148 of I.Tax Act. It is pertinent to note that while giving reply of questionnaire no. 22 (Regarding reasons for opening of assessment u/s 148 of I.Tax Act) it was categorically replied by assesse .....

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ecords of I.Tax Site. • Particulars of M/s Galaxy Exports (P) Ltd. and name of the Bankers, its address and account no."M/s Galaxy" has issued two cheques of ₹ 25 lacs and ₹ 15 lacs respectly to M/s Simridhi Sponge and its details has been given at page no 11 of Annexure A-1 of seized documents. • Thus assessee on one hand categorically dismissed that it never had any dealing with M/s Simridhi sponge ans also filed affidavit to confirm of having no relationship wi .....

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explaining the transactions found on its computer with M/s Smridhi Sponge. The assessee s answer has all along been on record as no transactions were ever done by the assessee with the said concern who was a stranger to the assessee. It was his submission that the assessee has done what it could have done best in the circumstances where he is called upon to explain the transactions of a stranger. It was submitted that the assessee has never said that the documents were not found from its comput .....

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cern. Nothing has been placed on record to rebut the repeated denial of the assessee on record including the denial on affidavit. With the vast resources at the command of the department it was argued these assertions on affidavit remain unrebutted. Addressing the facts, it was submitted the nature of business of the assessee it was submitted is entirely different. The assessee it was submitted is a manufacturer of containers; the group i.e Sri Ram Hari Ram Group is a jewelers group and the seiz .....

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facts in reality are to the contrary. It was his submissions that judicial precedent is clear and well-settled in assessee s favour as when it can be demonstrated that the findings and conclusions are based on wrong facts then the conclusion becomes vitiated. However, the assessee, it was his submission would not want to rely on judicial precedent and proposition of law only as on facts itself the assessee has a very strong case. Thus although on demonstrating that a finding on incorrect facts .....

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ve instead viewed the efforts of the assessee with suspicion and forget about lauding the assessee have instead caste aspersions on the efforts of the assessee who out of the compulsions and necessities of needing to save itself from the consequences of the additions on unrelated facts has all along given relevant facts searched diligently on the official government sites and made available to the department. It was his submission that it is presumed that the search and seizure efforts of the de .....

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, particulars of two of them are available with the Revenue instead of acting on them the efforts have been viewed by the Revenue with suspicion and the assessee is criticized for coming out with new facts. It was his submission that when a person is put in such a situation to defend himself on the basis of some document unconnected with it then will not that person make an all out effort and endeavour seeking the help of friends, relatives, agents, technology etc. to save himself and explain th .....

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the transacted amounts it was submitted tallied with the details of withdrawal from the specific account where the branch code, the city and the address of the concerned banks of M/s Galaxy Exports were all given and tallied. Similarly even for M/s Smridhi Sponge the PAN and the tax jurisdiction of the said concern including the names and particulars of the Directors of M/s Smridhi Sponge their shareholders and shareholding pattern, their long lasting interaction demonstrated from the Balance sh .....

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also provide latest particulars of M/s. Simridhi Sponge. • Copies of latest particulars of 'M/s. Galaxy' viz; M/s. Galaxy Export (P) Ltd as per the records of ROC. • Address of main bankrs of M/s. Simridhi Sponge with Account No. 6.6. Referring to the said page, it was further emphasized that the assessee s representative visited M/s Smridhi Sponge Ltd. at Jamshedpur office and made efforts to obtain confirmation from M/s Smridhi Sponge s however referring to Paper Book page 69 .....

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ce before the CIT(A) was moved, copy of the same it was stated is at page Nos.-70-75 of the Paper Book filed. The assessee assailed the repeated adamancy of the AO before the CIT(A) for not carrying out the due and necessary enquiries in the manner which he was supposed to make. The following submission before the CIT(A) extracted from page 70 of the Paper Book relied upon are extracted hereunder for readyreference:- That AO issued notice u/s 133(6) at the given address of M/s Smridhi Sponge at .....

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viz; name residential address, year of appointment. Assessing officer made no efforts whatsoever to enquire from Assessing Officer of M/s Smridhi Sponge about any transaction with assessee company. AO can trace the assessing officer of M/s Smridhi Sponge by making suitable enquiry at appropriate level. (emphasis provided) 6.8. Heavy reliance was placed on record, efforts made in good faith to trace M/s Smridhi Sponge Ltd. during the assessment proceedings, these submissions are found addressed i .....

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Road, Kolkata However, on 25.10.12 following address of M/s Smridhi Sponge Ltd. is available at ROC site. Room No. 3AB, 3rd Floor, Bishnu Residency 193, Netaji Subhash Road Kolkata, West Bengal-700040 It is quite possible that alleged company changed the address during the period from 13.09.2010 to before the date of service of notice u/s 133(6) of I.T. Act. (emphasis provided) 6.9. Attention was also invited to the following bonafide efforts of the assessee to assist the department in its ques .....

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India, SSI, Jamshedpur Branch. The assessee has collected the address Branch which is as under:- Union Bank of India Jamshedpur-SSI Finance Branch Opp. Ram Mandir, Bistupur Jamshedpur, Jharkhand Phone No. 06572435129 That it has been noted from seized documents (Annexure A-1 Page No. 11 to 14) that M/s Smridhi Sponge has transactions with M/s Galaxy . It has also been noted from list of sundry debtors as on 31.3.2008 (Ref Page No.26) down loaded from ROC site and enclosed with application under .....

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kata. 6.10. Inviting attention to the Index of the Paper Book filed, it was submitted that the assessee in the form of additional evidence has placed the following details and evidence before the ACIT:- 11. Copy of Application of Additional Evidence filed before ACIT dated 29.10.2012 Page 70-76 - Form 23AC of Samridhi Sponge Ltd. Page-77-82 - Copy of Balance Sheet of Samridhi Sponge Ltd. for the year ended 31st March 2007 Page 83-102 - Copy of Form 23ACA of Samridhi Sponge Ltd. 103-106 - Copy of .....

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t Jamshedpur which as per record came back with the comment left and addressee left respectively. It was his argument that these comments do not mean that the said concern was not in existence and it merely suggests that the postman did not then find the said concern there thus it was argued nothing turns on the said comments. It was also his argument that what stopped the AO to carry out the necessary verification from the AO of M/s Smridhi Sponge Ltd. the details were available with him and th .....

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ails of Directors of Samridhi Sponge Ltd. Page-137 6.12. Taking us through the documents filed and co-related with the seized documents it was his submission that where on facts the assessee repeatedly states that it had no interactions with M/s Smridhi Sponge and the repeated statement is supported by an affidavit, the nature of work of the two concerns being entirely different has been addressed where the seized documents demonstrate that M/s Smridhi Sponge had interactions with M/s Galaxy Exp .....

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rily conducted on the Sri Ram Hari Ram Group of cases and one of the Directors of the assessee is related to the said Group. 6.13. Inviting attention to the judgements relied upon by the CIT(A), it was his submission that they have been wrongly applied on facts. In support of the arguments made, the Ld. AR had filed his written submission and the arguments were advanced on the basis of the same, accordingly for the sake of brevity the reliance placed in Ld. AR s own words is reproduced hereunder .....

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ponse to the details filed by the assessee in respect of those seized documents and issued order on 26/12/2011. -AO never informed to the assessee that notices u/s 133(6) was issued to M/s Smridhi Sponge and received unserved. Even Assessment order is silent about these facts. At the time of Appellate Proceedings before CIT Submission dated 29.10.2012) PB pg. 70-76 -Assessee has provided new address of Smridhi Sponge Dated 25.10.2012 by downloading from ROC Website. -A Representative of assessee .....

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20- 09-2012 to one of the director and also sent his representative to the factory in Jharkhand however, no response was received. However, through a Iron & Steel Broker, assessee has received letter dtd. 11.10.2012 signed by the director in which it was confirmed that they have no transaction with the assessee company. -It was also informed to the department that assessee is making effort to pursue Smridhi Sponge to send those documents directly to department in the form of reply to notice .....

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ssee has never said that this reply had been received on 11.10.2012. (i) CIT vs Babu Mohan lal AryaSmarak Educational Trust (High Court of Allahabad) ITA No.-303 of 2013; (ii) ACIT vs Vatika Greenfiled (P.) Ltd. ITAT Delhi [2009] 121 TTJ 208 Delhi; (iii) ACIT vs Dr. Kamla Prasad Singh 3 ITR 533 [2010] ITAT Patna Bench; (iv) CIT Panchkula vs M/s Khosla Ice & General Mills, Punjab & Haryana High Court 2013 (1) TMI 451; (v) ACIT vs Buldana Urban Co-op Creidt Society Ltd. 23 ITR (Trib) 411; .....

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no desire or effort to bring those concerns within the tax net and not bothering with the fact that as a result of this repeated inaction they have caused heavy losses to the Revenue in collecting the just and due taxes from them which ideally should have been their primary concern the Assessing Officer and the CIT(A) have satisfied themselves by picking a soft target wrongly on facts. It was his submission that the assessee is ready to co-operate in any further investigation of the AO however, .....

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uld address the departmental appeal as well as the assessee s appeal. In the eventuality the assessee it was submitted does not succeed on merits in its appeal than on quantification and the manner in which the computation has been done by the AO and CIT(A) were also strongly assailed. However the arguments thereon are not being addressed at this stage and would be referred to by us only if the assessee fails on the man plank of its arguments. 7. The Ld. CIT DR relying upon the findings recorded .....

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ion about the M/s Smridhi Sponge Ltd. repeatedly giving different addresses, it demonstrates the falsity of the pleadings of the assessee in stating that is has no interaction with the said concern. In the face of the various details of these concerns given by the assessee, both the authorities it was submitted have rightly rejected the false claim of the assessee and held that the assessee on facts had interactions with M/s Smridhi Sponge Ltd. which are not recorded in its books of accounts. Th .....

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t disclosing the true facts in para 7.5. Heavy reliance was placed on these findings in para 7.5. For ready-reference, these are reproduced hereunder:- 7.5 The computer print outs of documents found and impounded during the survey from the appellant's premises and the entries recorded therein clearly show that the appellant is not disclosing the true state of its affairs and dealing with Smridhi Sponge and is not coming out with clean breast. The initial onus as per section 292C of the Incom .....

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arged by the assessee. The addition on facts it was submitted has been rightly made in his hands. Qua the relief granted by the CIT(A), reliance was placed upon the assessment order. It was his submission that the assessee has sent the department on a wild goose chase all over the country. Acting on the information provided the AO as per record it was submitted has sent notice u/s 133(6) which returned unserved. The fact that this was not confronted to the assessee as per the arguments before th .....

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that the addition is not warranted on facts it was submitted is not correct. The burden placed on the assessee u/s 292(C), it was submitted has not been discharged and the income has rightly been added in the hands of the assessee. 8. In reply the Ld. AR reiterated the submissions advanced emphasis was laid on the fact that the bonafide efforts of the assessee in addressing the seized documents are duly and diligently made available to the AO repeatedly informing the said authority that the ass .....

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ddressing the reply filed by the assessee at page 128 onwards it was stated that the information provided was as per the ROC records and there is no change in any particular of the M/s Smridhi Sponge Ltd. in the public domain demonstrated by the downloaded print outs from the ROC site. The addresses of Kolkata and Jamshedpur Main office and factory office respectively continued to remain the same on the site. Addressing the information provided as confirmation of the assessee s version by the Di .....

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Sh. Om Prakash resident of 20, Tube Rose Lane, Ashiana Garden Sorari Jamshedpur. Assessee also sent its representative to factory located at Mohitpur, Sini Distt, Seraikela KHARSWA JHARKHAND. However, no initial response was received regarding traction if any M/s Smridhi Sponge Limited had with the assessee during F.Y. 2006- 07 and F.Y. 2007-08. Recently through a Iron & Steel Broker assessee has received letter dt. 11.10.2012 signed by director of SSL Sh. Om Praksh. Copy enclosed. The conte .....

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ompany during F.Y. 2006-07 and F.Y. 2007-08. Yours faithfully, For Smridhi Sponge Ltd. Sd/- Director The assessee is making all efforts to pursue M/s Smridhi Sponge Ltd to sent the above letter directly to the department with the copy endorsed to the assessee. However, it appears that unless any communication is made by department address to SSL even in the form of a copy of earlier s letter sent by AO u/s 133(6) of the I.T. Act with endorsement to the assessee, SSL is reluctant to respond to th .....

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documents was dealing in iron ore . The seized documents it was submitted pertained to dealings in iron ore in the name of M/s Smridhi Sponge who had interactions with Galaxy who as the record shows was dealing in M.S.Ingot and its raw material was iron ore the bank transactions show the interconnection between these two concerns. Nothing relatable to the assessee has been brought on record till date. Accordingly in the facts of the present case, it was his submission that the addition has wrong .....

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placed on Hiren Vasantlal Shah v. Assistant Commissioner of Income Tax [2012] 19 taxmann.com.241 (Guj.) and Commissioner of Income-tax v. Sonal Constructions 28 taxmann.com 127 (Delhi) for the proposition that the seized documents constitute undisclosed income of the assessee in terms of section 292C of the Act so as to justify the addition made. 9.2. Further relying upon the principle laid down by the Apex Court in the case of Dhakeshawari Cotton Mills vs CIT 26 ITR 775 (SC) and Homi J Gheesta .....

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e was placed upon section 106 & 144 of the Indian Evidence Act. The relevant extract filed in the written submission is reproduced hereunder for ready-reference:- According to the Indian Evidence Act, presumptions can be made regard to certain facts by the Court unless rebutted by the assessee. In this case, facts regarding possession of the document showing trading transactions sale and purchase with Smridhi Sponge in the computers of the assessee has not been rebutted. 106. Burden of provi .....

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produced, be unfavourable to the person who withholds it. 10. We have heard the rival submissions and perused the material available on record. On a careful consideration of the same including the facts and evidence and the judicial precedent pleaded by the parties in support of their respective claims, we deem it appropriate to first refer to the material available on record. A perusal of the assessment order shows that the assessee was covered u/s 133A in the search and seizure operation u/s .....

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ey pertained to M/s Smridhi Sponge Ltd. The assessee accordingly was required by the AO to explain the entries made therein as a presumption was drawn that the seized documents pertained to the assessee. The copy of the detailed notice issued u/s 143(2) is appearing at pages 57 to 62. The relevant query raised has been reproduced in the earlier part of this order. The assessee as per record is found to have stated vide reply dated 26.11.2010 that these documents do not pertain to the assessee. T .....

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record. These facts are also evidenced from para 6 of the assessment order and reproduced hereunder:- 6. During the course of survey, loose papers were found and impounded from the business premises of the assessee company as Annexure A-2. At page no.11 to 14 of Annexure A-1, these pages are in respect of transactions with M/s Smridhi Sponge. The assessee was asked to furnish the details of these entries on each of the pages and correlate with the books of accounts. In response, the assessee sub .....

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On these facts, the addition made was challenged. It is seen that the CIT(A) accepting the arguments of the assessee that the notice u/s 133(6) returned unserved was not confronted to the assessee permitted the assessee to produce additional evidence. The fresh evidence it is seen consisted of Form 23AC of M/s Smridhi Sponge Ltd. which is the Form in which the balance sheet is filed before the ROC for the said concern of the year ended 31.03.2007. On the basis of the same, it was claimed that M .....

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rs s Report; Copy of form 23ACA of M/s Smridhi Sponge Ltd.; copy of Form 20B along with annual return filed before the ROC disclosing its authorized share capital etc. were also filed; details of registered office and the details of authorized share capital of M/s Smridhi Sponge Ltd. and M/s Galaxy Exports (P). Ltd. as per record at pages 70 to 123 were also filed. The record shows that the CIT(A) confronted the said evidence to the AO who as per record issued notice u/s 133(6) to the changed ad .....

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ith the specific supporting Annexures as print outs of downloaded from the ROC and income tax site and a confirmation etc. at pages 133 to 137 of the Paper Book were relied upon. A perusal of the same shows that according to the search from the ROC records as on 17.01.2013, the address disclosed was the same. The assessee supported its claim by copy of its letter dated 28.09.2012 to M/s Smridhi Sponge Ltd. and copy of letter of M/s Smridhi Sponge Ltd. dated 11.10.2012 stated to be received along .....

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ssee in tracing the said concern show that the very same results qua its address and that of the directors are shown in the public domain by the said concern. Accordingly it is seen that a request to cross-check the information again including the confirmation dated 11.10.2012 from the Director of M/s Smridhi Sponge Ltd. were relied upon. These facts are reproduced in the earlier part of this order affirming the assessee s stand stating that M/s Smridhi Sponge Ltd. never had any transactions wit .....

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and through one iron and steel broker they have procured a letter dated 11.10.2012 from Smridhi Sponge, in which the director of Smridhi Sponge have stated that Smridhi Sponge has no dealing with the appellant company." The above submission of the appellant cannot be relied upon and it appears that the appellant wants to delay and unnecessary drag the issue. If the appellant had received a letter dated 11.10.2012 from the director why the same was informed now on 13.01.2013, and was not at .....

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ion on 29.10.2012 and even on any of the subsequent dates of hearings viz. 12.12.2012, 14.01.203, 28.01.2013 and 12.01.2013, clearly shows that all is not well the appellant state of affairs, as on the one hand he states that they had no dealing with Smridhi Sponge and on the other hand they had the new addresses as well as able to contact the Director of Smridhi Sponge. (emphasis provided) 10.3. In the above-mentioned peculiar facts, we find that considering the fact that the information was av .....

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re found from the assessee s business premises necessarily the presumption that they relate to transactions with M/s Smridhi Sponge outside the assessee s books of accounts. However on the quantum of the additions partial relief was given which is challenged by the Revenue. The said finding has been challenged by the assessee. 10.4. In the context of the above facts on record, we find that where we have called upon to consider the provisions of section 292C of the Act, it is appropriate to first .....

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ents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by w .....

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he possession or control of that person in the course of a search under section 132. 10.5. In the facts of the present case, the evidence on record is that the impounded documents by way of a computer print out were found from the premises of assessee s business. The record shows that the assessee confronted with the seized material by the AO has filed a reply dated 15.11.2010, copy of which is placed at pages 57 -62 denying the same. Apart from that the following details as per page 56 were pro .....

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ng Ltd. 1. Office Address 23, Netaji Subhash Road , Kolkata, West Bengal - 700001 2. Company Registration No.:- 067187 3. PAN AADCS 7018l 4. Jurisdiction WBG/W/113/4 5. Directors Particulars Particulars of Directors - Copy Of the extracts taken from internet enclosed. 1. Further enquiry on internet sites reveals following details regarding one of the name appearing in loose sheet (in the account of M/s. Smridhi Sponge Ltd) viz., GALAXY. It is a private limited company having registered office at .....

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s 2894. Following two cheques have been encashed from above account of the M/s.Galaxy Exports (P) Ltd -4/12/07 MR.JUN ch.No.177699 Rs.2500000/- 9/12/07 MR.JUN ch.No.186001 Rs.1500000/- The amount of above cheques are appearing in loose sheet found during search in respect of M/s. Smridhi Sponge. In this respect it is submitted as under:-That assessee company has never undertaken any transaction with M/s Smridhi Sponge. - That assessee company is not aware of where about of Mls Smridhi Spong exce .....

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sis provided) 10.6. A perusal of the same shows that the assessee denied having any transaction with M/s Smridhi Sponge Ltd. and made a claim that it may have belonged to someone who may have visited the assessee s office. The present case is not only a case of simple denial but the denial is on affidavit. The assessee as per record is also found to have made efforts to trace the said concern. The internet search conducted admittedly as per record has made a mention of specific Kolkata s address .....

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transactions in cash with some parties. M/s Smridhi Sponge as per record was not a dummy entity but a functional thriving entity. What repeatedly emerges from the above-mentioned facts and evidences is that the assessee during the assessment proceedings and in the appellate proceedings makes an all out mammoth exercise to give the details of M/s Smridhi Sponge Ltd. and also traces the two specific cheque numbers mentioned in the seized documents which were paid by the bankers of M/s Galaxy foun .....

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tion 292C shows that a statutory presumption can be drawn where any documents is found in possession of a person in the course of a search or survey that it belongs to such a person . A presumption is also drawn that the contents of such a document are true. The presumption having been drawn as per law is required to be confronted and the documents as per record have been confronted. Whether the onus placed upon the assessee in a given set of facts is discharged or not has to be seen from the re .....

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s per print outs of the downloads are relied upon. The fact that these were unimpeachable third party evidences that too from the official government sites goes without saying. In these facts, merely sending notices to the addresses provided on the ROC site cannot be said to be rebutting the evidence on record namely that M/s Smridhi Sponge, assessed to tax in a specific jurisdiction in Kolkata manufacturing M.S.Ingot and Sponge Iron, having specific address as per ROC site receiving payments in .....

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uthorized share capital; details of their balance sheets as per ROC site; Auditor s, Reporters etc. are all given. The fact that these were relevant unimpeachable evidence has not been doubted. In these facts the reluctance of the tax authorities to address this issue and to carry the enquiries to the logical conclusion is a glaring fact of deliberate inaction. The repeated inactions speak louder then the half heated actions undertaken. The evidences remains unrebutted on record. No effort to co .....

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why no efforts whatsoever as per record were made by the AO either in the assessment proceedings or Remand proceedings to obtain relevant information from the Assessing Officer of M/s Smridhi Sponge Ltd. an entity with a thriving business and enquire into the information in its possession to its logical conclusion by tracing possible transactions not disclosed to the tax authorities. The fact which repeatedly emerges is that the information which comes to the knowledge of the AO repeatedly is n .....

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that as far as the assessee is concerned the onus to address the seized documents qua which a statutory presumption has been drawn stands fully discharged. 10.7. In view of the above, detailed reasoning in the peculiar facts on record and our reasoning thereon having considered the statutory provision and the judgement relied upon by the Revenue, we find that the ground nos.4 to 8 raised by the assessee have to be allowed. The onus placed upon the assessee is a rebuttable onus and on facts the .....

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he Bench proceed on facts peculiar to their own as such do not require a detailed mention. Suffice it to say that in the case of Sonal Construction, the document under question was not a computer print out but a handwritten document which was claimed by another partner to be in the handwriting of another partner; the handwritten document was accepted as relatable to the assessee by the other partner who claimed to recognize the handwritten note reflecting undisclosed transaction in specific proj .....

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laced by the ld. CIT DR that burden cast upon the assessee to prove that it was not so; or that the AO cannot be fettered by technical rules of evidence are well-settled legal position and in the facts of the present case do not help the Revenue in any way as the onus on the assessee is a rebuttable onus and having rebutted the onus it shifts on the Revenue. Similarly it is seen that the principle followed in the case of Indeo Airways is entirely distinguishable as it lays down the proposition t .....

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