TMI Blog2015 (9) TMI 1182X X X X Extracts X X X X X X X X Extracts X X X X ..... dition made was therefore rightly deleted by CIT(A) - Decided in favour of assessee. Disallowance of unexplained expenditure - CIT(A) deleted the addition - Held that:- We find that CIT(A) has rightly deleted the impugned addition by observing that the law is very clear that when the Assessing Officer has not found any evidence of assessee having incurred any expenditure for discounting of cheques, the addition made only on presumption and suspicion cannot be made u/s 69C. The addition is accordingly deleted. Nothing contrary has been brought to our knowledge by the Revenue.- Decided in favour of assessee. Unexplained cash credits u/s 68 - CIT(A) deleted the addition - Held that:- No infirmity in the order of CIT(A), since he has given reasoned finding that the Auditors had obtained all material and confirmations, which explained the genuineness, capacity and creditworthiness of all the creditors and credits appearing in bank account. After verifying and satisfying themselves, the Auditors had finally given their opinion that income earned in the above 10 concerns/persons from mutual funds, share investment and other income. Thus all other bank entries and credits therein sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 27.11.2003 declaring total income of Rs.NIL The case was reopened by issuing notice u/s 148 of the I.T. Act on 23.03.2009 which was duly served on the assessee. In response to the notice u/s 148 the assessee filed its return of income on 25.06.2009 declaring total income of Rs.NIL. The assessing officer discussed the particulars of case as detailed at para 3 of his order as under :- The assessee had filed an application on 22-06-2006 u/s. 245C'before the settlement commission for Assessment Year 2005-06. While doing so the assessee had also requested the commission to re-open proceedings for Assessment Year 2001-02 to 2004-05 u/s, 245E of the Act for the proper disposal of the settlement application. The assessee had disclosed an amount of ₹ 53,00,000/- for the Assessment Year 2002-03. No proceedings were pending on the date of filing of application for the Assessment Year 2002-03. As per the provisions of section 245D(2A), the assessee was required to pay the additional tax on the income disclosed in the application before the settlement commission. As the assessee had failed to pay the full amount of additional tax.and interest on the income disclosed in the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as under: After going through the submission made by the assessee, the bank account of the relevant assessment year, the surrounding facts and circumstances of the case and inter alia the decision of the Hon'ble Supreme Court and the other judicial decisions referred to above the sum of Rs,$B,01,339/- is treated as explained investment and is accordingly added back to the hands of the assessee. Accordingly, he added back the impugned amount as unexplained investment. Being aggrieved, the assessee carried the matter in appeal before the CIT(A). 2.2 The CIT(A) deleted the impugned addition by observing as under :- 4. I have carefully gone through the assessment Order and the basis on which the additions are made. I have carefully perused the submissions made by the appellant. Based on the details filed it transpires that the Assessing Officer has made the addition based on the fact that the assessee had. filed a Petition before Hon'ble Settlement Commission wherein income. generated from 10 different concerns were owned up by the assessee. Ihe TO names include one Rakesh Panchal Others.. .The assessee has owned up income of Rakesh Panchal, Individua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if he had any doubt. However, the Assessing Officer has made the addition as is evident from Para 4.1 of the order that the assessee could not produce the Karta of H.U.F. for cross examination. In my view the assessee has discharged his onus fully by filing the complete details of bank transactions, name and address, :P.A; No above all declaration on oath in shape of Affidavit wherein the said Party Rakesh Panchal HUF has owned up the entire transactions of the Bank account. It is for the Assessing Officer of Rakesh Panchal HUF to verify as to why there is no income generated from several transactions in the bank account or for that matter conduct other inquiries. The assessee having discharged its onus clearly confirming that whatever transactions were outside the books have been owned up before the Settlement Commission and these transactions of Rakesh Panchal HUF are not owned up before the Settlement Commission and before the Assessing Officer the said person himself is owning up all these transaction, there is no question of making addition of ₹ 58,01,339/- as unexplained investment. The addition made is therefore, deleted. The Revenue being aggrieved is in appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clarificatory and embody a rule of evidence which is otherwise quite clear. This is so because even otherwise an addition could be made in respect of the amount of expenditure which the assessee is found to have actually incurred but not satisfactorily explained. Even where there is no such direct evidence, it is possible for the authorities to make a fair and honest estimate. Reliance in this regard is placed upon the following decision. Yadu Hari Dalmia vs. CIT (1980) 126 ITR 48, 57, 58 (Delhi) As held by the Hon ble Supreme Court in the case Durga Prasad More cited supra the totality of surrounding facts and circumstances have to be considered. Payment to Shroff is on undisputed practice of cash discounting. Therefore, a sum of ₹ 1,28,670/- i.e. @ 0.5% of the value of recovery from debtors is added back in to the hands to the company as unexplained expenditure u/s 69C. 3.2 Aggrieved, the assessee carried the matter in appeal before the CIT(A). The assessee made submissions and also relied on the decision of the Tribunal in the case of Shanti Ram Mehta vs. ACIT (2009) 119 ITD 62 (Kol)(TM), wherein it has been observed as under: Assessing Officer made an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Revenue is dismissed. 5. Now we take up ITA No.993/Ahd/2011 for AY 2005-06 where the sole issue is in respect of deletion of disallowance of ₹ 56,61,60,657/- made by the Assessing Officer on account of unexplained cash credits u/s 68 of the Act. 5.1 The facts of the case are that addition of ₹ 56,61,60,657/- was made by the Assessing Officer considering all the entries in all the bank accounts as unexplained cash. This particularly happened because as mentioned in the original submission notice was issued on 8.12.2008 for the first time, the first effective notice was issued as late as on 27th January, 2009 and order u/s 143(3) making such huge addition was passed within three days i.e. on 30th January, 2009. As the assessee was prevented from filing details and explanation before the Assessing Officer, as application under Rule 46A was made. Assessee s application was forwarded to the Assessing Officer and thereafter the Assessing Officer had submitted the Remand Report, a copy of which was forwarded to the assessee. The Assessing Officer had admitted and accepted that the Special Tax Audit had been conducted and Special Auditor had given his report with rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is is particularly so because the income of ₹ 68,55,384/- as suggested by Special Auditor also cannot be added and sustained inasmuch as the assessee has offered ₹ 72,00,000/- as its unexplained income before Settlement Commission. The Assessing Officer himself has accepted this fact and have excluded the income of ₹ 72,00,000/- as per the directions of Hon ble Gujarat High Court, I agree with the appellant that the income of ₹ 72,00,000/- inter alia includes such income of ₹ 68,55,384/- suggested by the Special Auditor and therefore, there is not case and justification to make any separate addition in the income of ₹ 68,55,384/-. In view of this, the entire addition made by the Assessing Officer of ₹ 56,61,60,657/- is deleted. 5.3 Being aggrieved with this order of CIT(A), the Revenue is in appeal before us. 5.4 The ld. DR supported the Assessing Officer s order and submitted that CIT(A) has wrongly deleted the addition, his order may be set aside and that of the Assessing Officer be restored. On the other hand, the ld. counsel for the assessee relied on the order of first appellate authority. 5.5 We have considered the rival s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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