TMI Blog2015 (9) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... - Decided in favour of revenue for statistical purposes only. - ITA No. 568/JP/2011 - - - Dated:- 11-8-2015 - SHRI R.P. TOLANI AND SHRI T.R. MEENA, JJ. For The Revenue : Shri Raj Mehra (JCIT) For The Assessee : None (Adj. application rejected) ORDER PER: T.R. MEENA, A.M. This is an appeal filed by the Revenue against the order dated 22/03/2011 passed by the Ld. CIT(A)-III, Jaipur for A.Y. 2002-03. The sole ground of appeal is against deleting the disallowance and other expenses amounting to (Rs. 13962535/- (-) ₹ 1396253) to ₹ 12566282/-. 2. This case was fixed by this office from 09/06/2011 and 17 opportunities had been provided. The appeal was admitted in the year 2011 by the revenue or this was th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the group company. As per schedule-R to the P L account, the payment made to Konega International Pvt. Ltd. (in short KIPL) on account of purchase and job work at ₹ 12,60,36,553/-, which was found by the Assessing Officer as device to evade the tax. The entire purchase of the fabric was made from KIPL for which the assessee had credited its account the stitching expenses. Even clearing export expenses are paid by it on behalf of the assessee. Account of KIPL stands credited by ₹ 1,18,981/- on account of telephone expenses. Thus in substance, the fabric is purchased from KIPM, stitching work is done by KIPL, readymade garments are exported from KIPL and freight is paid by KIPL. Even telephone bill is paid by KIPL. The involvement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer. Income U/s 28 iiia, iiib and iiic had been assessed separately. The assessee claimed loss in share business at ₹ 30,44,764/-, which was ₹ 1,69,08,522/- in preceding year. The ld Assessing Officer has reproduced the trading account of share business on pages 7 to 9 of the assessment order. After considering the expenses debited in the P L account, the Assessing Officer concluded that this loss is almost ₹ 80 lacs during the year under consideration. The assessee had purchased shares amounting to ₹ 81.08 crores from Mewar International Pvt. Ltd., which is an associated group company of Assessee Company, further purchased shares amounting to ₹ 9.2 crores from another sister concern Plaza Securit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of tax by resorting to dubious methods. It is the obligation of every citizen to pay taxes honestly without resorting to subterfuges. The main purpose of making transaction with the sister concern of reducing tax liability. He further relied on the decision of Hon'ble Supreme Court in the case of Juggilal Kamalapat Vs. CIT (1969) 73 ITR 702 (SC) wherein it was held that income tax authorities are entitled to pierce the veil of corporate entity and look at the reality of the transaction. The court has power to disregard the corporate entity if it is issued for tax evasion or to circumvent tax obligation. Accordingly he invoked the provisions of Section 145(3) of the Act. The ld Assessing Officer assessed the net profit from the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es are not sustainable and thus, the same are directed to be deleted. Consequently, these grounds of appeal are treated as allowed. For Section 14A 4.2 On the other hand, Ld. AR submitted that the Assessing Officer was himself not sure as to why he was disallowing the expenses debited in the P L account and it was contended that the entire expenditure incurred and debited to the Profit and Loss account could not be related to the dividend income. It was pointed out that the assessee company had shown substantial business of trading in shares, as well as, of manufacturing and export of garments and as per the provisions of section 14A, only that expenditure, which was relatable to the dividend income could have been disallowed. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is a tactics of the assessee to delay the legal proceedings. He further relied on the order of the Assessing Officer and argued that each and every item has been discussed by the Assessing Officer in his assessment order and assessee company is on loss also not genuine, therefore, he prayed to reverse the order of the ld CIT(A). 6. We have heard the rival contention of both the parties and perused the material on record. The assessee s attitude was not cooperative with this Bench, therefore, we have not allowed further adjournment and on perusal of the assessment order that the ld Assessing Officer made specific observation on various points as mentioned in the preceding paras of this order. However, the ld CIT(A) s order is not spe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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