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2015 (12) TMI 970 - PUNJAB & HARYANA HIGH COURT

2015 (12) TMI 970 - PUNJAB & HARYANA HIGH COURT - TMI - Unexplained expenditure under head "wages" - ITAT deleted the addition - conclusion of the authorities below was that the assessee had not booked the complete expenditure on wages in its books of account as the number of the workers found during the course of survey were more than the list of workers available in the books of account - Held that:- First of all the said survey was conducted at the premises of the assessee on 9.9.2004 when th .....

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59 workers was prepared on 9.9.2004 and the plea of the assessee was that the said 59 workers as on the date of survey belonged to the assessee and its sister concern. The requisite list of workers employed with either of the concerns were filed on record. Merely because the said statement was confronted to one of the partners who had signed the list does not establish that the workers belonged to the firm in which he was a partner i.e. the assessee firm before us. In the absence of any concret .....

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the years under appeal. - Decided against revenue

Addition on account of income of Smt.Meena Garg, Prop. of M/s Punjab Timber Trading Company being treated as income of the assessee on substantive basis - ITAT deleted the addition - Held that:- The Tribunal in the case of Smt.Meena Garg relating to assessment years 2002-03 to 2007-08 have held that the income arising from M/s Punjab Timber Trading Company was the sole proprietary concern of Smt. Meena Garg, consequent to which the in .....

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e the addition - Decided against revenue

Addition on account of difference in valuation of building - basis of report of the valuation officer - ITAT deleted the addition - Held that:- The ratio laid down by the Hon'ble Apex Court in Sargam Cinema (2009 (10) TMI 569 - Supreme Court of India ) is squarely applicable to the facts of the present case where the books of account were not rejected by the Assessing Officer. On the other hand, the Assessing Officer had referred valuation of t .....

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at:- During the year under consideration, the assessee had shown fall in GP rate and the explanation of the assessee was that due to huge increase in the turnover there was marginal fall in GP rate, which undoubtedly has been accepted by the Assessing Officer in toto. In view of the totality of the facts and circumstances where we have already upheld the addition on account of sale depicted in the seized documents being outside the books of account and on account of the explanation given by the .....

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t of short stock found on the date of search.- Decided against revenue - ITA No. 230 of 2015 - Dated:- 28-9-2015 - Ajay Kumar Mittal And Ramendra Jain, JJ. For the Appellant : Mr. Rajesh Sethi, Sr. Standing counsel with Mr. Arun Biriwal, Adv JUDGMENT Ajay Kumar Mittal, J. 1. This order shall dispose of ITA Nos.201 to 203, 230, 284, 285, 286 and 287 of 2015 as according to the learned counsel for the appellantrevenue, the issues involved in all these appeals are identical. However, the facts are .....

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T is justified in deleting addition of ₹ 23,63,243/- on account of unexplained expenditure under head "wages" without appreciating the fact that the assessee failed to furnish any documentary evidence that the list of workers prepared during the search contained the names of the workers working in the sister concern of assessee i.e. M/s Aggarwal Wood Industries? ii) Whether as per law and in the facts and circumstances of the case, the Hon'ble ITAT is justified in deleting ad .....

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t of difference in valuation of building on the basis of report of the valuation officer without appreciating the fact that the assessee failed to substantiate the source of the said income from which unexplained expenditure was made by the assessee? iv) Whether as per law and in the facts and circumstances of the case, the Hon'ble ITAT is justified in deleting addition of ₹ 10,98,211/- on account of estimated profit on short stock found on the date of search without appreciating the f .....

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ufacturing and treading of core veneer which is consumed by the plyboard industry as also ply and ply board. A search and seizure operation under Section 132(1) of the Act was conducted on Punjab Plywood Group of cases on 20.3.2007. Pursuant to search and seizure operation, case of the assessee for the assessment year 2007-08 was completed under scrutiny vide assessment order under section 143(3) of the Act on 30.12.2008, Annexure A.1. Certain additions/disallowances were made which were contest .....

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document pertaining to number of workers employed by the assessee prepared during the said survey formed the basis of additions on account of suppression of expenditure on labour for production to the extent of ₹ 23,63,243/- for the year under consideration. The books of account were found to be not reliable. The assessee was given opportunity of hearing to show cause as to why difference in wages worked out at ₹ 23,63,243/- may not be treated as expenses incurred out of income from .....

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k to the total income of the assessee vide assessment order dated 30.12.2008, Annexure A.1. The assessee went in appeal before the CIT(A)(C). Vide order dated 24.10.2013, Annexure A.2, the CIT(A)(C) dismissed the appeal. The assessee approached the Tribunal. The Tribunal allowed the appeal holding that the facts and circumstances of the present issue were identical to the facts and circumstances in the issue raised in the assessment year 2001-02 in the case of the assessee and allowed the claim .....

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ot being done by her but only her name was being used for tax avoidance purpose. Accordingly, income of ₹ 3,35,405/- from her proprietary concern was substantively taxed in the hands of the assessee firm. The assessee was given opportunity of hearing. It was submitted by the assessee that the concern of Smt.Meena Garg was actually doing business and investments by her were well established. The Assessing Officer did not accept the submissions of the assessee on the ground that the issue of .....

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s issue following the decision taken on this issue in the assessment year 2002-03. iii) Addition of ₹ 78,15,026/- on account of unexplained investment in construction of factory building: During the year under consideration, the assessee had made additions to the factory building. The matter was referred to the valuation Officer under Section 142A of the Act. The valuation department reported that the assessee had declared ₹ 13,83,674/- as investment/new construction as shown on layo .....

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er after considering the matter allowed 15% of the total value arrived at by the Valuation Officer in favour of the assessee and thus made an addition of ₹ 78,15,026/- to the income of the assessee as investment from undisclosed sources. On appeal by the assessee, the CIT(A)(C) allowed further benefit of 10% of ₹ 78,15,026/- in view of the fact that some expenditure was admittedly incurred in assessment years 2001-02 and 2003-04 whereas the Assessing Officer added the entire amount i .....

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ourt in Sargam Cinema vs. CIT, (2010) 328 ITR 513. iv) Addition o f ₹ 10,98,211/- on account of difference in stock: During the course of search, it was found that stock as per books was ₹ 2,76,77,856/- whereas as per physical verification by the search team, the stock was found to be worth ₹ 1,94,20,630/-. The assessee was asked to show cause as to why GP on the difference of stock of ₹ 82,576,226/- should not be added to the income of the assessee being GP earned on sal .....

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sessee. On appeal, the CIT(A)(C) upheld the entire addition of ₹ 10,98,211/-. The assessee went in appeal before the Tribunal. The Tribunal allowed the appeal filed by the assessee. Hence the instant appeals by the revenue. 4. We have heard learned counsel for the appellant-revenue. 5. The Assessing Officer made additions on all the issues mentioned above. On appeal by the assessee, the CIT(A)(C) upheld the additions except on issue No.(iii) where partial relief was given to the assessee. .....

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Act at the premises of the assessee was first conducted on 9.9.2004. Thereafter search and seizure operations were carried out under section 132 of the Act both at the business and residential premises of the assessee. During the course of survey, the team had prepared the list of workers under which it was reported that the total persons working in the premises of the assessee were 59 on monthly roll and 16 on per piece basis. The assessee had booked the expenditure of ₹ 4,67,424/- in ass .....

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addition of ₹ 2,67,443/-. Similar addition has been made in assessment years 2002-03 to 2006- 07. 12. The plea of the assessee before us was two folds that first of all the discrepancy,if any, in the number of workers detected under survey at the premises of the assessee on 9.9.2004 could not be utilized for computing unexplained expenditure on account of wages while completing the assessment under section 143(3) read with section 153A of the Act pursuant to search carried out at the prem .....

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of the Act vide order dated 30.12.2008. The said assessment was made pursuant to the search operation carried out at the premises of the assessee on 20.3.2007. During the course of search the team had detected suppression in sale in the hands of the assessee and had computed income of the assessee after the said detection by making various disallowances under various heads of expenditure. One said head of expenditure was on account of unexplained expenditure on labour. The conclusion of the aut .....

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the assessee under section 132 of the Act. Secondly, there was no merit in the said addition being made in the hands of the assessee as the explanation of the assessee that the workers of the two concerns were totally considered in the list of workers prepared by the survey team for the assessee firm cannot be ignored. The said list of 59 workers was prepared on 9.9.2004 and the plea of the assessee was that the said 59 workers as on the date of survey belonged to the assessee and its sister con .....

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red by the survey team where the assessee had clearly explained its case that the said total number of workers belonged to two concerns and not to the assessee itself. In any case, the additions in the hands of the assessee for the years under consideration have been made on pure estimation as no evidence of excess workers was found in the years under appeal. In view thereof, we find no merit in the addition of ₹ 2,67,443/- and direct the Assessing Officer to delete the same. The grounds o .....

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te the addition of ₹ 3,35,405/-. The ground of appeal No.2 raised by the assessee is thus allowed." The Tribunal had followed the reasoning for the assessment year 2002-03 which is as under:- "18. We have heard the rival contentions and perused the record. The Tribunal in ITA Nos.115 to 1170/Chd/2013 in the case of Smt.Meena Garg relating to assessment years 2002-03 to 2007-08, vide order dated 26.2.2014 have held that the income arising from M/s Punjab Timber Trading Company was .....

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style of M/s Punjab Timber Trading Co, there is no merit in making any addition in the hands of the assessee in this regard. Accordingly, we direct the Assessing Officer to delete the addition of ₹ 1,44,210/-. The ground of appeal No.2 raised by the assessee is thus allowed. On issue No.(iii) "37. The issue in ground No.4 raised by the assessee is against the addition made on account of difference in valuation of building on the basis of report of the Valuation Officer. 38. the learn .....

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in Sargam Cinema (supra) is squarely applicable to the facts of the present case where the books of account were not rejected by the Assessing Officer. On the other hand, the Assessing Officer had referred valuation of the building to the Valuation Officer who had reported the value of the building at ₹ 78,15.026/- as against the cost of the building shown by the assessee at ₹ 70,33,524/-. In view of the ratio laid down by the Hon'ble Supreme Court, no addition on this account c .....

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