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2016 (6) TMI 684 - ITAT JAIPUR

2016 (6) TMI 684 - ITAT JAIPUR - TMI - Unaccounted investment in house property - Addition on the basis of statement recorded U/s 132(4) - rejection of books of account U/s 145(3) - Held that:- Additional income of ₹ 1.00 crore, which includes disclosure of ₹ 75 lacs on account of unaccounted investment in house property constructed at 4-5, Shubham Enclave, C-Scheme, Jaipur. The addition made by the Assessing Officer on the basis of statement recorded U/s 132(4) are not on the basis .....

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o considered not maintaining stock register and commission payment not verifiable but no specific bills vouchers have been referred by the Assessing Officer that the expenses claimed and commission paid is bogus on the basis of seized material. Whatever addition made by the Assessing Officer on the basis of statement recorded during the course of search U/s 132(4) which have evidentiary value but it is rebuttable. The CBDT also issued instruction on forced disclosure during the survey and search .....

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S.L. Poddar (Adv) ORDER Per T. R. Meena, A. M. This is an appeal filed by the revenue against the order dated 04/01/2013 of the learned C.I.T.(A) (Central), Jaipur for A.Y. 2009-10. The effective grounds of appeal are reproduced as under:- 1. On the facts and in the circumstances of the case, the ld CIT(A), Central, Jaipur, despite confirming the rejection of books of account U/s 145(3) of the IT Act, has erred in reducing the disallowance of ₹ 2 Cr made by the AO to ₹ 10,57,940/-the .....

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arious factors considered by the AO before making the addition, including the fact of disclosure made by the assessee, its failure to adduce evidence to substantiate expenses of much higher amount and specific facts in respect of certain concerns, payments to whom were admittedly used by the assessee to inflate expenses. 3. On the facts and in the circumstances of the case the Id. CIT(A) has erred in appreciating the fact that the disallowances made u/s 37(1) of the I.T. Act was proper and in ac .....

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rn of income also. 2. The assessee filed return on 29/09/2009 declaring total income of ₹ 1,68,38,070/-. The ld Assessing Officer observed that a search/seizure was conducted on 06/8/2008 in the case of Shakun Group of Jaipur to which the assessee belongs. Various assets/books of account and documents were found and seized as per annexure prepared during the course of search. Accordingly, notice U/s 153A of the Income Tax Act, 1961 (in short the Act) was issued by the Assessing Officer on .....

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nue are against disallowance made by the Assessing Officer at ₹ 2.00 crores and deleted by the ld CIT(A). The ld. Assessing Officer observed that the assessee had declared advertisement purchases of ₹ 43,80,83,444/- against advertisement sales of ₹ 45,27,70,370/-. In addition to this administrative expenses of ₹ 1,13,99,630/- which includes consultancy charges, sales promotion and travelling expenses. These expenses were incurred on purchase of advertisement sites, making .....

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e government departments and from autonomous bodies, news papers/news channels and claimed purchase of material for fabrication of the display board items. The assessee was asked to furnish the bifurcation of expenses to get them verified with the help of bills and vouchers and other records maintained by the assessee. The ld Assessing Officer noticed that the assessee had not maintained stock register itemwise and site-wise. It is not ascertainable that expenses claimed were with reference to r .....

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and belief were necessary for the purpose of our audit. 2.1 On this basis/defects pointed out by the Assessing Officer, he proposed to rejection of books of account U/s 145(3) of the act. He further held that statement of Shri Ballabh Das Maheshwari recorded during the search U/s 132(4) of the Act on 07/8/2008. In reply to question Nos. 13 and 14, he had admitted that expenses had been inflated in their concerns namely Shakun Advertising Pvt. Ltd., N.S. Publicity Agencies, SGM Communication and .....

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ills Co. Ltd. Vs CIT (1967) 63 ITR 57 (SC). (iii) Assam Pesticide and Agro Chemicals Vs. CIT 227 ITR 846 (Gau). He further observed that Shri Ballabh Das Maheshwari during the search in reply to question No. 9, surrender of ₹ 2.97 crores on account of inflated expenses outstanding in the books, out of which a surrender of ₹ 1.00 cores was alone made. Further it was mentioned that persons owing M/s Sixth Sense Communication and Kritika Advertisement, Mumbai were dummy concerns in the .....

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ogus expenses booked in the name of above mentioned concerns. Besides this, there are number of companies whose names, liability had been shown by the assessee, which has been tabulated on page 7 of the assessment order. The total such parties were identified 12 in numbers. It is further held that this list of bogus persons was only an illustration not exhaustive. Required confirmation had not been submitted during the assessment proceedings before the Assessing Officer. These expenses recoded i .....

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was offered to tax during the year under consideration on account of unaccounted investment in house property constructed at 4-5, Shubham Enclave, C-Scheme, Jaipur. The income offered to tax of ₹ 1.00 crore to take care of the unaccounted investment in said house property. Since the assessee had claimed that surplus fund generated on account of booking bogus expenses were applied for investment in construction of house property. Thus, he made addition of ₹ 2.00 cores in the income of .....

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as substantiated by any material gathered during the course of search. The appellant even confronted that statement of one Director was recorded by the search team by stating wrong fact of alleged statement of one Shri Ravi Chapperwal of M/s Sixth Sense Communications recorded during survey at their premises at Mumbai inasmuch as Shri Chapperwal clearly admitted that his concern was provided services to the appellant company but in a particular question, answer was recorded in a manner as Shri C .....

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r of the director in respect of inflation of expense and surrender of income of ₹ 2.97 crore was recorded in the background wrong facts of statement of Shri Chapperwal. However, there is no doubt for dispute on the issue that in respect of A.Y. 2009-10 as regards the specific surrender of ₹ 2.97 crores on account of inflation of expenses there was no specific surrender of ₹ 2.97 crores on account of inflation of expenses and there was no specific sized record for any other rele .....

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) CIT Vs. Ashok Kumar Soni 291 ITR 172 (Raj)(HC). (iv) Sh. Dhanraj Soni Vs ACIT, Bikaner, Jaipur Bench ITA No. 1722/JP/1994 dated 22/07/1996. (v) M/s Maheshwari Industries Jodhpur Vs ACIT, ITA No. 845/JP/95 dated 06/10/2003. (vi) Jindal Stainless Ltd. Vs ACIT (2009) 120 ITD 301. He further referred CBDT Instruction No. 286/2003-IT(Inv) dated 10/3/2003 wherein it has been clarified that while recording the statement during the course of search operation, no attempt should be made to obtain the co .....

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re us. The ld DR has vehemently supported the order of the Assessing Officer and argued that the statement recorded U/s 132(4) has evidentiary value under the Income Tax Act. This group has surrendered additional income on account of inflated expenses, therefore, this year also, the assessee should honour the disclosure made by the Director of the company during the course of search. Number of incriminating documents were found during the course of search, on which this disclosure was made but l .....

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ent never stated that he had not provided any services to M/s Shakun Advertising P. Ltd. and that wrong facts were stated before the Director of the company Shri Ballabh Das Maheshwari for obtaining forced surrender of income. As soon as these facts came to notice of Sh. Chapperwal, he immediately filed an affidavit and retraction letter before the ADIT, Jaipur. The affidavit filed by Sh. Chapperwal has not been controverted by the ld. Assessing Officer. The copy of retraction letter and affidav .....

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t ₹ 2.97 crores on the basis of loose papers and documents found at the business premises at Delhi, Mumbai and Ahmadabad as he was not able to get verification from the regular books of account from the family members and business concerns. However, in return, he has admitted additional income of ₹ 1.00 crore, which includes disclosure of ₹ 75 lacs on account of unaccounted investment in house property constructed at 4-5, Shubham Enclave, C-Scheme, Jaipur. The addition made by .....

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