TMI Blog2016 (7) TMI 373X X X X Extracts X X X X X X X X Extracts X X X X ..... arm land - addition made on substantive basis - Held that:- The investment made in Farm land has already been declared by M/s JPM Farms P. Ltd. and duly accepted by the AO in its block assessment. As find no reason to add the same again in the hands of the appellant. Therefore, the AO was not justified in making the impugned addition .- Decided in favour of assessee Addition made on account of benami investment in Share Capital of different companies - Held that:- The addition has already been made in the case of respective companies on substantive basis, the AO was not justified in making the impugned addition - Decided in favour of assessee Addition on account of bogus job works through MEW Tools Pvt. Ltd - Held that:- Admittedly, the addition including 1/3rd of the amount, as alleged to be received by the appellant has already been added while framing block assessment in the case of MEW Tools P. Ltd. and also in the case of M/s Jay Yushin Ltd. on substantive basis. This fact has also been admitted by the AO in his assessment order. Therefore, no further addition of the same amount can be made in the hands of the appellant, which has already been taxed, on substantive basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shree Vinayak Trading Company P. Ltd. j) M/s Dwarka Electro P. Ltd. k) M/s Brilliant Jewellers P. Ltd. l) M/s S.N. Kohli Company P. Ltd. m) M/s Shirdi Agrofin P. Ltd. n) M/s Modern Engineering Works (Firm) o) M/s Anu Auto Industries (Firm) p) M/s Jay Impex (Firm) q) M/s Moulders Fabricators (Firm) 2.2 M/s Jay Yuhshin Limited was the flagship company of the group, which was established in early 1980s in collaboration with M/s Yuhshin Ltd. of Japan. This company manufactured mainly auto components. 2.3 As per the AO, during the search operation it was revealed that the group was earning huge unaccounted profits by way of unaccounted sales of automobile components in the open market and by debiting bogus bills for job work bogus purchases. The modus operandi as explained by the AO is that the manufactured components were removed from M/s Jay Yuhshin Ltd. and M/s Anu Auto Industries P. Ltd. and sold in the open market through benami concerns like M/s Shri Vinayak Trading Company P. Ltd. and M/s S.N. Kohli Company Pvt. Limited. 2.4 It was allegedly found that most of the bogus job work bills were debited in the books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. Income from Bogus Job Work through M/s MEW Tools (P) Ltd. 1,35,97,741/- ₹ 3,48,85,259/- 3.1 On appeal, the ld. CIT (A) confirmed the addition of ₹ 3,00,000/- on account of unexplained cash. The addition on account of sale of jewellery was deleted. The addition on account of conversion charges on the sale of jewellery was also deleted. The ld. CIT (A) also deleted the addition on account of purchase of farm land. Addition made on account of Benami Share Capital was also deleted. The ld. CIT (A) also deleted addition on account of job work. In addition, the AO had also levied a surcharge @ 17% on the tax due which was challenged by the assessee before the ld. CIT (A) but this ground was dismissed by the ld. First Appellate Authority. Now both, the assessee as well as the Department, have filed appeals before this Tribunal. 4. The grounds of appeal of the assessee read as under: 1. That the ld. CIT (Appeals) has erred both in law as well as in facts of the case in sustaining an addition of ₹ 3.00 lacs made to the undisclosed income of the assessee on the allegation of unexpla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion that the levy of surcharge was not to apply to block assessments pertaining to period prior to 1.6.2002 and that the intention of the legislature was not to give it a retrospective effect. The ld. DR supported the findings of the ld. CIT (Appeals) on this issue. 7. Arguing for the Department s appeal, on ground no. 1, the ld. DR submitted that the ld. CIT(A) had erred in deleting addition of ₹ 30,28,697/- made on account of undisclosed investment in purchase of farm land by M/s. JPM Farms Ltd. on the ground that this addition has been made on substantive basis in the case of M/s.JPM Farms, whereas AO has given a categorical finding that this addition has been made on substantive basis in the case of the assessee, implying thereby that same is being made on protective basis in the case of M/s. JPM Farms (P) Ltd. It was submitted that it was on the basis of information gathered during the course of search and post search enquiries that the AO in the order at page 17 had given a finding that company M/s.JPM Farms (P) Ltd. was not pursuing any business activity except owning a farm land. This company was owned by Sh.J.P. Minda and his two sons along with other family memb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad and also opportunity of cross examine was given to the assessee on at 11:00 A.M. However, the assessee did not avail this opportunity. It was submitted that Page 79 of Paper Book - Page 7/A-18 seized on 3.4.2001 from office of Minda at 204/38 Surya Deep Building is conclusive evidence that transactions are arranged only and not real. Secondly, Large number of blank share certificates of different the Minda group companies seized from the office of Rajinder Agrawal at 103/37-38 Surya deep Building on 30.3.2001. Thirdly, AS-17 to A23 - these share certificates belong to the Minda group of companies like Anu Auto Industry, Sirdi Agrofine (P) Ltd., JPM Automobiles, JPM Farms, Dwarika Electro Investment (P) Ltd., Mew Tools (P) Ltd., JA Builders (P) Ltd. and JPM Auto Industries (P) Ltd. These shares came to Shri Vinod Garg for updating of the record of these companies. Fourthly, Benami Share Capital in the name of Consortium Vyapar Ltd. - This company has got total share capital of ₹ 300,08,300/- out of which an amount of ₹ 2,68,00,000/- has been invested in the Minda Group of Companies. Premises of the company were covered u/s 132 of the I.T.Act on 19.3.2001. It was submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... da or a person of the Minda Group. The Ld. DR stated that Q.No.10 of the statement of Sh.B.B.Mathur clearly shows that Sh.Ashwani Minda used to take cash back from the above named companies in whose name job work charges have been shown. The Ld. DR submitted that in view of these facts and statements on record, the AO s order should be restored while setting aside the Ld. CIT (A) s order. 10. In response the ld. AR submitted that Ground No. 1 relates to addition of ₹ 30,28,697/- on a/c of undisclosed investment in purchase of farm land by M/s JPM Farms (P) Ltd. He submitted that this farm was purchased by M/s JPM Farms (P) Ltd. at ₹ 23,39,500/- shown in the books and the amount paid over and above the registered price i.e. ₹ 85,19,875/- and ₹ 4,66,216/- being development fee (aggregating to ₹ 90,86,091) was offered to tax by M/s JPM Farms (P) Ltd. and which has been so assessed in their hands as noted in the block assessment order of JPM Farms P. Ltd. (Paper Book pages 20-29) wherein is the relevant discussion is respect of the impugned land according to which ₹ 90,86,091/- was added as undisclosed income of that company. Thus there is no ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the evidences for the impugned addition and as to whether the assessee was ever confronted with these evidences. He further submitted that the Ld. CIT (A) has held that there was no evidence found as a result of the search or brought on record by the AO and this finding has not been displaced with evidence. In fact, addition was made on account of share capital in the hands of various companies which was deleted by the Tribunal. In the case of JPM Automobiles, the Tribunal has held that there was no material, share capital stood disclosed and in any case addition could not be made in the hands of the company. 11. The Ld. AR further submitted that ground no. 3 relates to addition of ₹ 1,35,97,741/- on account of alleged bogus job work through M/s. Mew Tools (P) Ltd. He submitted that the AO has held in this case that bogus job work was done by M/s Mew Tools P Ltd. and disallowance of ₹ 4,07,93,224/- was made in the assessment of M/s Mew Tools P Ltd., one third of which comes to ₹ 13597741/-(i.e. equally between Mr. J.P. Minda and his two sons).He submitted that Job charges paid by M/s Jay Ushin to M/s Mew Tools Pvt. Ltd. was ₹ 8,75,55,623/- regarding whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pter XIV-B comprehensively takes care of all the aspects relating to the block assessment relating to undisclosed income. Not only does Chapter XIV-B define what undisclosed income is, it also lays down the block period for which undisclosed income can be taxed and the procedure for taxing that income. Specific provision in the form of section 158BA (2) is inserted making it the charging section and the rate at which such income is to be taxed is mentioned in section 113 of the Act. It remains static at 60 per cent of the undisclosed income which is the categorical stipulation in section 113 of the Act. The rates of tax chargeable in the case of a block assessment are not provided in the Finance Act. The character and nature of undisclosed income referred to in Chapter XIV B are quite distinct from total income referred to in section 5. When a separate charging section is introduced specifically, to assess the undisclosed income, notwithstanding a provision in the nature of section 4 already on the statute book, the reason could only be that for assessing undisclosed income, the charging provision is section 158BA(2) alone. The Hon ble Apex Court further held that there cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amendments in section 158BE, would be prospective, i.e., take effect from June 1, 2002. The Finance Act, 2003, by addition of a further proviso, again makes the position clear that surcharge in respect of block assessment of undisclosed income was made prospective where a block assessment was made for the period April 1, 1989, to February 10, 2000, pursuant to search and seizure operations conducted u/s 132 of the Act in the premises of the assessee; Held accordingly, that surcharge levied by the AO for the block assessment pertaining to the period prior to June 1, 2002, was liable to be deleted. (Emphasis supplied). The Apex Court also held that an amendment made to a taxing statute can be said to be intended to remove hardships only of the assessee, not of the Department. Imposing a retrospective levy on the asesee would have caused undue hardship and for that reason Parliament specifically chose to make the proviso effective from June 1, 2002. Where a benefit is conferred by a legislation, the rule against a retrospective construction is different. If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y M/s JPM Farms P. Ltd. where the appellant is not a director. The said company has separately offered undisclosed income on account of investment in purchase of land while filing its block return in response to notice u/s 158BC and such return stands accepted by the AO. It is well settled principle of law that some income/investment cannot be taxed twice. As decided by Rajasthan Court in 130 Taxman 585 which is to the effect that once income shown in the name of the appellant firm was finally assessed and taxed in hands of one of its partners, there was no question of taxing the same income or making an addition in the hands of the firm. 14.4 Keeping in view the fact that the investment made in Farm land has already been declared by M/s JPM Farms P. Ltd. and duly accepted by the AO in its block assessment. I find no reason to add the same again in the hands of the appellant. Therefore, the AO was not justified in making the impugned addition of ₹ 30,28,697/-. Accordingly, the same is deleted. 16. The findings of the ld. CIT (A) could not be disputed by the ld. DR before us also and, therefore, we find no reason to interfere with the findings of the ld. CIT (A) on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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