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2016 (7) TMI 449 - ITAT KOLKATA

2016 (7) TMI 449 - ITAT KOLKATA - TMI - Application of section 145(3)- Held that:- Consistently the books of accounts have been accepted by the revenue in the earlier years prior to search and in years subsequent to search proceedings. In these circumstances, we find that the Learned CITA had rightly rejected the action of the Learned AO in applying the provisions of section 145(3) of the Act and consequentially resorting to estimation of net profits for all the assessment years and accordingly .....

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duce any evidences to prove the existence of multiple co-owners except making an oral statement in this regard. We find that the Learned AR without discharging his onus to prove the veracity of the claim of deduction had only tried to simply shift the burden to the department by making the Learned AO to verify the facts from the landlord. We find that the primary onus lies on the assessee to prove and substantiate its claim which is not discharged in the instant case. Hence we find no infirmity .....

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ntil otherwise cancelled by the issuing authority. The Learned AR fairly submitted that this document was not furnished by the assessee before the lower authorities. Hence in the interest of justice and fair play, we deem it fit and appropriate, to set aside this issue to the file of the Learned AO, to verify the veracity of the certificate u/s 197(1) of the Act produced by the assessee and if the same is found to be correct, then the Learned AO is directed to allow deduction of rent paid to Kol .....

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terial on record to substantiate or support his conclusion that there was transfer of cash for obtaining the loans. In view of the above, the addition made by the AO is neither sustainable in law nor on facts - Decided in favour of assessee - Addition on unexplained cash deposit - Held that:- We find that the assessee had discharged its primary onus of disowning the document and the presumption as to ownership of the document in the course of search has been duly rebutted by it. Moreover, t .....

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account. We hold that merely by finding a pay in slip of a third party in the premises of the assessee during the search would not automatically lead to framing of an addition in the hands of the assessee when especially no other corroborative evidences were brought on record to establish the nexus and link of the assessee vis a vis the said seized document. In these circumstances, we hold that the Learned CITA is justified in deleting the addition - Decided in favour of assessee - Addition .....

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ding the entries in the cash book on a subsequent date is quite natural. But this fact is very crucial which has not been the subject matter of examination by the revenue and substantiated properly by the assessee. We find in the facts and circumstances, deem it fit and appropriate, to set aside this issue to the file of the Learned AO, to decide this issue afresh, in accordance with law. - Decided in favour of assessee for statistical purposes. - Addition towards payment through credit card .....

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he assessee in its balance sheet and hence there is no case for making any addition. The Learned DR could not controvert the factual findings given by the Learned CITA before us. - Decided in favour of assessee. - Addition made towards Capital Expenditure - Held that:- We find that the Learned CITA had given a categorical finding that the assessee had constructed a new four-storied commercial building on the rented premises for which building plan was also sanctioned from the local authority .....

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for this year. - Decided in favour of assessee. - Addition towards Unexplained Expenditure Seized Document Reference ILRT /12 and ILRT/23 - Held that:- We find that the seized documents contain the place where certain works were carried out / purported to be carried out with figures. It does not contain any date, mode of payment, name of the contractor who was engaged for the work etc. We find that the Learned AO had recorded a finding that a sum of ₹ 5,32,500/- indicated in the sai .....

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O had recorded a finding that these three payments were not recorded in the books of accounts of the assessee. These findings recorded by the Learned AO had not been controverted by the assessee before us. We find both the premises recorded in the seized document has got linkage and nexus with the assessee. We find that the primary onus lies on the assessee to disprove that the documents seized during search does not belong to it which has not been discharged by the assessee in the instant case. .....

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We also find that the statement u/s 132(4) of the Act given by Shri Laxmi Narain Somani had been later retracted by him clearly adducing the reasons for the retraction. Hence no addition could be made in the hands of the assessee based on the statement of a third party which was later retracted.- Decided in favour of assessee. - Addition towards cash and Jewellery - Held that:- We find that no defects were pointed out by the Learned AO in the cash book and the details submitted by the Karta .....

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ddition made towards cash found in the sum of ₹ 3,23,283/-. - Apropos the addition made towards Jewellery in the sum of ₹ 97,70,729/- , we find from the above discussions that the jewellery found at the time of search was much less than the jewellery declared by the family members of the assessee and their HUFs in their wealth tax returns prior to search and wealth tax assessments on the returns so filed were completed u/s 16(3) of the Act accordingly for which evidences were sub .....

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e find that the Learned CITA had rightly granted the benefit of set off of carry forward long term capital loss of Asst Year 2004- 05 to be set off against the long term capital gain in Asst Year 2010-11 by placing reliance on the CBDT Circular supra and section 10 of General Clauses Act. Hence we find no infirmity in the order passed by the Learned CITA in this regard - Decided in favour of assessee. - I.T.A No.1179/Kol/2012, I.T.A Nos.1225 & 1226/Kol/2012, C.O. No. 83/Kol/2012, C.O. No. 99/K .....

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6.2012, 06.07.2012, 13.07.2012 & 18.07.2012 in the case of Inland Road Transport (P) Ltd and Appeal No. 163/CIT(A)C-1/CC- IV/Kol/11-12 dated 09.07.2012 for Asst Year 2010-11 in the case of Shri Rattan Kumar Somani, against the separate orders of assessment framed by the Learned AO u/s 153A/143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). As the issues involved are identical in nature, they are taken up together and disposed off by a common order for the sake of conve .....

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the assessee along with survey operations carried out u/s 133A of the Act in several other premises on 5.11.2009. The books of accounts and documents were seized / impounded in the course of search and survey operations. The income tax status of the assessee for various assessment years are depicted in the following chart:- Sl.No. 1 Particulars Return filed u/s 139(1) 2004-05 Yes 2005-06 Yes 2006-07 Yes 2007-08 Yes 2008-09 Yes 2009-10 Yes 2010-11 Yes 2 Income declared u/s 139(1) 1357390 1879890 .....

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g the return u/s 153A 15.3.11 15.3.11 15.3.11 15.3.11 15.3.11 15.3.11 NA 10 Income assessed u/s 153A 22980430 53572690 59137540 853881630 126225500 98194840 NA 11 Date of Order u/s 153A 30.12.11 30.12.11 30.12.11 30.12.11 30.12.11 30.12.11 NA 2.2. The Ld. AO made the assessment u/s. 153A at total income of ₹ 2,29,80,430/-. The Ld. AO noted in the assessment order that he was not satisfied about the correctness or completeness of the books of account; and then, invoked the provisions of sec .....

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e assessment order that the assessee failed to produce the books of account and other relevant records in course of the assessment proceedings u/s 153A of the Act. It was explained before the Ld. AO that assessee s business premise at P- 223, Strand Bank Road, Kolkata - 700 001 was severely hit by massive fire, which started on 13-02-2010 and continued for many days, in which important records and documents of business, including computers and substantial electronic data, was destroyed. The Ld. .....

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on made by the assessee that the books of account and other relevant records could not be produced as they were destroyed in the fire was not acceptable. (b) In course of the assessment proceedings u/s 153A of the Act, the Ld. AO required the assessee to produce the books of account. The Ld. AO also required production of party-wise and lorry-wise details of lorry hire charges; and, party- wise details of certain expenses e.g. lorry hire charges, computer expenses, legal charges, etc. along with .....

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ntract cum challan wherein all relevant particulars such as lorry number, driver's license number, etc. is mentioned for the purposes of record as well as for internal control. It was further explained that party-wise ledger of expenses was not maintained in the financial records as there was no requirement of law to maintain such records nor the assessee needed such details for the purposes of its business. The expenditure was charged to respective accounts on actual payment basis. As relev .....

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as was practically possible in view of the event of fire and consequent destruction of important records. The assessee also produced records for different branches which were not destroyed in the fire. It was argued that the original assessment for three assessment years 2004-05, 2005-06 and 2006-07 was made u/s. 143(3); and, the books of account and all relevant records were produced during the course of the original assessment proceedings. The then AO had accepted the books of account as no a .....

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viewed in the assessment proceedings u/s 153A of the Act. The Ld. AO noted in the assessment order that the assessee claimed to have furnished electronic data regarding lorry hire charges pertaining to the assessment years 2008-09, 2009-10 and 2010-11 which was factually incorrect. The Ld. AO maintained that the assessee only furnished day-wise or month-wise expenses on lorry hire charges; and, secondly, no detail was submitted for other expenses. The Ld. AO also noted that the assessee did not .....

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the opinion that once search is initiated u/s 132 of the Act, assessment had to be made u/s 153A of the Act in respect of 6 assessment years immediately preceding the assessment year relevant to the previous year in which the search is conducted. For, the AO placed reliance on the decision of the Hon ble ITAT 'D' Bench, Delhi in the case of Shivnath Rai Harnarian (India) Ltd vs DCIT [2009] 117 ITD 74 and that of the Hon ble ITAT 'A' Bench, Chennai in the case of Harvey Heart Hosp .....

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ere issued in the name of Sri N K Sharma. Search u/s 132 was simultaneously conducted in the case of Sri N K Sharma who in his statement u/s 132(4) of the Act denied having any involvement in the business activity of the assessee. Sri N K Sharma also stated that payment @ ₹ 25,000/- per month was made to him by the assessee for lending his name for disbursement of cash to the lorry operators or owners. He also declared that he intended to claim refund on account of tax deducted in his name .....

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only on the advice of his doctor. In course of the assessment proceedings in his own case, Sri N K Sharma contended that he was working for the assessee through duly executed agreement which was also produced before his assessing officer before the date of search. It was also contended before the AO that the statement u/s. 132(4) of the Act was not properly recorded and that its content was misleading. As the majority of payments totalling to ₹ 73,22,73,315/- on account of lorry hire charg .....

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claim of refund. The AO concluded that the assessee company indulges in using unfair means for evading taxes. (d) The AO required the assessee to furnish details of cash payments exceeding ₹ 20,000/- made to the vehicle operators or owners in the financial years corresponding to the assessment years 2004-05 to 2010-11. It was submitted, and subsequently reiterated, before the AO that there was no single cash payment exceeding ₹ 20,000/- within the meaning of section 40A(3). The books .....

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ad made payments in cash, it was all the more important to maintain proper records. But, the assessee failed to substantiate its claim by producing supporting, records and documents on the ground that they were destroyed in fire. (e) The AO has referred to seized diaries marked ILRT/1 and IRLT/2 containing details regarding disbursement of cash (totalling to ₹ 90,44,020 in the assessment year 2008-09 and ₹ 12,29,600/- in the assessment year 2009-10) by the assessee. It was claimed at .....

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nce to account for the said cash disbursement on any particular day. The AO noted that no cash book was produced before him; and consequently, he was unable to verify whether or not the disbursement of cash as contained in the seized diaries was actually recorded in the cash book. (f) The AO has referred to document marked IRT/21 impounded in survey at the office of the assessee. The AO found that page 9 and 10 of the said impounded document reflected the profit & loss account and balance sh .....

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of submission along with tenders; moreover, such rough estimates or projected data is subject to further revision before their actual submission. They were not prepared by the regular accountant from the regular books of account. These facts were duly explained before the survey party by the supervisor of accounts Sri Shankar Sharma in his statement recorded u/s 133A in course of the survey operation. The AO however noted in the assessment order that the assessee had failed to explain the discre .....

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Sri Laxmi Narayan Somani, who was the key managerial person of the assessee group, had voluntarily made disclosure of ₹ 24 crores in his statement u/s 132(4) recorded on 09-11-2009 on account of bogus claim of expenses. The AO further noted that Sri Laxmi Narayan Somani later retracted his statement u/s 132(4) in so far as the bogus claim of expenses was concerned. It was declared at the assessment stage that the statement regarding bogus claim of expenses was incorrect. The AO observed th .....

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% on gross receipts of ₹ 1,23,37,21,009/- thereby resulting in addition of ₹ 2,16,23,041/-. 3. The revenue has raised the following grounds for the Asst Year 2004-05 :- 1. That on the facts and circumstances of the case and in law, Ld. CIT(A) erred in holding that provisions of section 145(3) of I.T. Act, 1961 cannot be invoked in this case and also in overlooking the judicial decisions mentioned by the AO in paragraph 23 of the Assessment Order. 2. That on the facts and circumstance .....

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T(A) erred in holding that assessment proceedings uls. 143(3) is a witness to the facts that the books of accounts and other relevant records along with supporting documents were properly maintained by the assessee. 5. That on the facts and circumstances of the case and in law, Ld. CIT(A) failed to appreciate that even at the time of original assessment u/s. 143(3) of I.T. Act, 1961, the assessee failed to submit evidence In respect of service charges and miscellaneous expenses as is borne out b .....

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followed by the assessee for earlier assessment years. 8. That on the facts and circumstances of the case and in law, Ld. CIT(A) failed to appreciate that in his statement Sri Laxmi Narayan Somani has stated that the expenses were inflated and that on this ground alone, provisions of section 145(3) could be invoked by the AO and also erred in overlooking the judicial decisions mentioned by the A.O. in paragraph 20 of the Assessment Order. 9. That on the facts and circumstances of the case and i .....

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he book results as it was duly explained that the assessee s business premises was severely hit by fire in Feb 2010 in which important records and documents of business, including computers and substantial electronic data were destroyed. He further argued that the books of accounts and records including the computer data were seized and impounded during the course of search and survey operations from various premises and the details called for were very much available with the records of the dep .....

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e scrutiny proceedings. In the said regular assessment proceedings, the books results have always been accepted and the method of record maintenance regularly followed by the assessee has never been questioned or disputed by the Learned AO in the past. But still the Learned AO insisted on production of records (party wise or lorry wise ledger of lorry hire charges of party wise ledger of expenses) that were destroyed in fire. He further contended that no adverse material was found in the course .....

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the statement u/s 132(4) of the Act was not properly recorded and that its content was misleading. 4.2. He further argued that the statement of Sri L N Somani regarding disclosure of ₹ 24 crores had no bearing on the book results already declared by the assessee in its returns which were also accepted by the department and when no adverse materials were found in the search. It was argued that the Learned AO had referred only to the statement recorded by the ADIT (Inv) on 9.11.2009 but has .....

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tracted, has no evidentiary value. 4.3. He argued that the premises at P-223, Strand Bank Road, Kolkata , which was massively hit by fire was not under ownership or exclusive control of the assessee. It actually belongs to the Kolkata Port Trust in which offices and godowns of various other business concerns were also located. The event of fire is evidenced by the FIR lodged with the police and intimation to the concerned fire authority of the Government, and also by the press reports published .....

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Learned AO was not justified in his observation that there was no detail of the records which were destroyed in the fire. He argued that the Learned AO erred in wondering as to how the electronic data could also be destroyed. In this regard, he argued that the Learned AO failed to appreciate that computers are not fire proof and as the computers were destroyed in fire, substantial electronic data were also lost. With regard to the observation of the Learned AO that the assessee should be followi .....

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with the customers nor did he ever ask the assessee to narrate the problems that it was facing in dealing with the customers. He argued that it is a matter of fact that many customers have filed claims against the assessee for the goods stored in the godowns which were also destroyed in the fire. 4.4. The Ld AR submitted that the Ld. AO required the assessee to produce the books of account; party-wise and lorry-wise ledger of lorry hire charges; and, party-wise ledger of certain expenses along w .....

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ontract-cum-challan wherein all relevant particulars such as lorry number, driver's license number, etc. is mentioned for the purposes of record as well as for internal control. These contract-cum-challans form the primary documents on whose basis further record is compiled and maintained. It was further explained that party-wise ledger of various expenses as called for by the AO was not maintained in the financial records as there was no requirement of law to maintain such records nor the a .....

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ge which cannot be copied or run at other places or computers. The Ld AR contended that the appellant compiled and furnished as much information as was practically possible in view of the event of fire and consequent destruction of important records and electronic data. Secondly, the appellant also produced records for different branches which were not destroyed in the fire. The AO found no defect in the data that was produced before him at the assessment stage. Also, the AO found no defect &quo .....

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inal assessment orders). The book result was always accepted by the AO; and, routine disallowances only were made in the assessment order(s). Also, the method of record maintenance regularly followed by the assessee was never questioned or disputed by the AO. The Ld AR submitted that the AO was insisting on production of records that was destroyed in the fire. Secondly, he insisted on production of detail in such form that was not possible to prepare from the financial record that was maintained .....

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as never been questioned or disputed in the past by the assessing officers. 4.5. The Learned AR further argued that the Ld AR admitted that TDS certificates were issued in the name of Sri N K Sharma for payments made to different vehicle operators totalling to ₹ 73,22,73,315/- on account of lorry hire charges in the financial year 2006-07. The tax was also deducted at source on such payments and TDS certificates were issued in the name of Sri N K Sharma. It was argued that the AO was not j .....

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as also contended before the AO that the statement u/s 132(4) was not properly recorded and that its content was misleading which has been conveniently ignored by the AO. Also, the AO was not justified in observing that the genuineness of the expenses was doubtful. The freight paid vide the said TDS certificates earned corresponding freight receipts at the destination. The necessary supporting evidence for such receipts was duly produced at the assessment stage; but, the AO has failed to mention .....

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nvoking the provisions of section 145(3). Above all, the issue relates to the assessment year 2007-08 which cannot be made the basis for drawing adverse inference in the year under consideration i.e. for the Asst Years 2004-05 to 2006-07. 4.6. We have heard the rival submissions and perused the materials available on record including the paper book filed by the assessee. The Learned DR at the outset doubted the fact of premises of assessee gutted by fire. According to him , only premises at 223 .....

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o estimation of profits of the assessee u/s 145(3) of the Act. In response to this, the Learned AR argued that the search took place on 5.11.2009 and massive fire took place in Feb 2010 in the premises of the assessee which was widely reported in the media and in support of which he referred to the relevant paper cuttings and First Information Report (FIR) of Police in the paper book filed by him. It was argued that the assessee had duly replied to the notice of the Learned AO that the hard copi .....

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e P-223, Strand Bank Road, Kolkata was factually incorrect and misleading. The Learned AR pointed out that survey u/s 133A of the Act was conducted at the premises at P-223, Strand Bank Road, Kolkata . He pointed out that such survey was conducted against M/s Somani Services P Ltd , another entity in the same Inland group. He further stated in course of such survey, various documents were impounded in the name of said Somani Services P ltd, where large number of papers belonged to Inland Road Tr .....

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mitted that important records having been destroyed in fire, could not have been produced before the Learned AO. 4.6.2. The Learned AR further contended that without prejudice to the aforesaid factual position, the search team has seized electronic data and other records as narrated by the Learned AO in the assessment order itself. It is not in dispute that the assessee had submitted the entire documents and records of various branches which were not affected in fire before the Learned AO. It is .....

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hat the corresponding comparable cases cited before the Learned AO should have been considered, in case the book results were not acceptable to the Learned AO. The assessment u/s 144 has to be based on past records of the assessee. We find that the assessee had filed its objections before the Learned AO objecting to the comparables chosen by the Learned AO for estimation of net profits as below:- (i) Associated Road carrier (ARC) has a portfolio of business where we were either not all present d .....

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is a high profit margin business whereas Inland did not venture into that part at all as it was not having sufficient skilled manpower to take the venture. (ii) M/s Ideal Movers (P) Ltd is a company established by the Essar Group particularly to provide the services to the said group. Ideal s biggest client is Essar till date and they have limited exposure to other clients. Whereas Inland has vast variety of clientele and does not have group or associate whose major scale of work is handled by .....

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are high with reasonable high margin. Accordingly the assessee objected to the comparables chosen by the Learned AO. The assessee gave its comparables of various entities which are in line with its activities in terms of turnover, volume of business, nature of services etc. It was further explained that the data furnished by the assessee are indicative of the reasonable rate of net profit earned by different carriers carrying on almost identical business as that of assessee. The names and addre .....

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sessee produced comparable cases of 14 cases to make it comparable with its net profit ratio and proved before the Learned AO that its net profit was higher than the comparables for the Asst Years 2006-07, 2007-08 and 2008-09. These are reproduced in pages 22-24 of assessment order. 4.6.3. We find that there is no finding given by the Learned AO that freight paid or received is not recorded accurately and correctly. Similarly, there is no finding that the various expenses claimed in the accounts .....

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lic carriers ) wherein the data were taken from website of Registrar of Companies and also requested the Learned AO to use his unfettered powers to examine those comparables which was not done by the Learned AO. Under these circumstances, the net profit reflected by the assessee in its books and returns should have to be accepted. We are in complete agreement with the Learned AR that the proceedings u/s 153A of the Act cannot be taken as a measure / platform to review the books of accounts and t .....

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ot resorted to make any additions on that count. Hence consistently the books of accounts have been accepted by the revenue in the earlier years prior to search and in years subsequent to search proceedings. In these circumstances, we find that the Learned CITA had rightly rejected the action of the Learned AO in applying the provisions of section 145(3) of the Act and consequentially resorting to estimation of net profits for all the assessment years and accordingly we find no infirmity in the .....

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was argued that the entire addition was made only based on the statement given by Shri N.K.Sharma which was made under stress and signed without understanding its content only with a view to avoid further mental and physical fatigue. We find that Shri N.K.Sharma had during the course of proceedings had contended that the statement u/s 132(4) of the Act was not properly recorded and that its content was misleading. It is not in dispute that the tax has been deducted at source on the said lorry h .....

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find that the Learned CITA had observed that there is no failure on the part of the assessee in deducting and remitting the tax due on the payments made towards lorry hire charges amounting to ₹ 73,22,73,315/-. We find that there is a violation of provisions of section 203 of the Act in as much as the TDS certificates were not issued in the name of the concerned vehicle operators. We find that the Learned AO had made this disallowance on the ground that there was violation of TDS provisio .....

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07-08. 4.6.5. In view of the aforesaid findings, we hold that the Ground Nos. 1 to 10 raised by the revenue for the Asst Years 2004-05 to 2008-09 ; Ground Nos 1 to 9 raised by the revenue for the Asst Year 2009-10 ; Ground Nos. 1 to 6 raised by the revenue for the Asst Year 2010-11 and Ground No. 12 raised by the revenue for the Asst Year 2007-08 are dismissed. 5. Disallowance of rent paid to various co-owners u/s 40(a)(ia) of the Act The brief facts of this issue is that the Learned AO observed .....

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observed from the photo copy of the agreement that the words having equal shares in the property had been added in para 2 of page no. 3 in hand above the typed line without any authentication by the lessors. Accordingly, he entertained a doubt about the genuineness of that part of the agreement and since the original agreement was not submitted by the assessee, he proceeded to disallow the fact of existence of several co-owners and accordingly disallowed the rent of ₹ 7,62,000/- u/s 40(a) .....

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n version in the rent agreement i.e having equal shares in the property . Aggrieved, the assessee has preferred cross objections before us on the following ground No.1:- 1. That in the facts and circumstances of the case, the Ld. CIT(A) erred in confirming disallowance of rent paid to various co-owners totaling ₹ 762000/- for so called non deduction of tax at source under sec. 194-I, where there was no obligation to deduction of tax at source. 5.1. The Learned AR reiterated the submissions .....

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the Learned AR was not able to produce any evidences to prove the existence of multiple co-owners except making an oral statement in this regard. We find that the Learned AR without discharging his onus to prove the veracity of the claim of deduction had only tried to simply shift the burden to the department by making the Learned AO to verify the facts from the landlord. We find that the primary onus lies on the assessee to prove and substantiate its claim which is not discharged in the instan .....

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ource on the said payment and accordingly there was no violation of provisions of section 194I of the Act. The Learned AO not convinced with the reply proceeded to make disallowance u/s 40(a)(ia) of the Act. Before the Learned CITA, it was argued that the payment to the Kolkata Port Trust was made in compliance to the order of the court and hence no tax was required to be deducted. The Learned CITA not being convinced with this argument, upheld the disallowance made by the Learned AO. Aggrieved, .....

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Act in Proceedings No. ACIT/TDS/Cir-58/Certificate u/s 197(1)/2005-06/7 dated 18.5.2005 directing all the payers to deduct 0% TDS on rental payments made to M/s Kolkata Port Trust and the said certificate shall remain in force up to 31.3.2006 until otherwise cancelled by the issuing authority. The Learned AR fairly submitted that this document was not furnished by the assessee before the lower authorities. Hence in the interest of justice and fair play, we deem it fit and appropriate, to set as .....

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ct - ₹ 68,50,000/- 7.1. The brief facts of this issue is that the Ld. AO has mentioned in the assessment order that survey u/s 133A was conducted on 05-11-2009 in the offices of two companies - Respect Vyapaar (P) Ltd and Akashnet Sales (P) Ltd; and, statement of their directors was recorded. It was stated by the director of Respect Vyapaar (P) Ltd that, during the financial year 2006-07, his company had given loan totalling to ₹ 28,00,000/- to the appellant in lieu of cash received .....

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by the assessee through account payee cheque which is duly reflected in the bank account of the loan creditors; and, which has already been verified by the AO. The loan creditors are regularly assessed to income tax, and, their assessment details are available with the AO. The loans given to the assessee are duly reflected in the balance sheet of the loan creditors; and, the interest paid by the assessee on such loans is duly declared in their return. The loan confirmation, and also, the balanc .....

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t of the directors of the said companies recorded at the time of survey, and, held that the loan confirmation of the loan creditors filed by the assessee at the assessment stage was only after-thought. The AO then added the amounts of ₹ 28,00,000/- and ₹ 40,50,000/- under the provisions of section 68. The Ld. AR contended that no incriminating material was found in search which supports the contention of the AO that cash was given to the loan creditors. The AO has examined the bank a .....

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re us on the following ground no.11:- 11. That on the facts and circumstances of the case and in law, Ld. CIT(A) erred in deleting addition of ₹ 68,50,000/- u/s. 68 of I. T. act, 1961. 7.3. We have heard the rival submissions. We find that the Learned CITA had deleted the addition by observing as under:- The only ground on which the addition was made by the AO is that the loans were obtained by the appellant by transferring equal amounts of cash to the loan creditors. The AO has made this .....

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account before, or after, the loan was given to the appellant. The department has made no recovery of cash from the premises of the loan creditors. No incriminating material was found in search nor was any gathered or brought on record by the AO in course of the assessment proceedings which could even remotely suggest that cash was transferred by the appellant to the loan creditors. In this factual background, the contention of the AO that cash was given by the appellant to the loan creditors fo .....

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The assertion made by the AO that receipt of loans involved transfer of cash has no basis. The appellant has produced sufficient evidence to show that the loan transactions are genuine which has not been disproved or even disputed by the AO. On the other hand, the conclusion of the AO is based on mere assumptions and presumptions. The decision of the AO is not based on proper findings. The explanations, and also the documents, submitted by the appellant have been summarily rejected by the AO mor .....

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either sustainable in law nor on facts. The addition of ₹ 68,50,000/- is deleted. The Learned AR vehemently relied on the order of the Learned CITA in this regard. Further he stated that the two parties from whom loans were received by the assessee were also assessed by the same AO. The Learned DR could not controvert any of the findings given by the Learned CITA in his order before us. Hence we deem it fit not to interfere with the order of the Learned CITA in this regard. Accordingly, th .....

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ed to the hank account mentioned in the deposit slips nor with the person Sarat Chandra Patra. It was explained that some of the visitors to the office of the assessee company might have left the deposit slips by mistake; however, the AO could investigate the matter further as the details of the bank account was available with him. The AO found that the cash deposits were made in a branch of the PNB in Durgapur through its branch at BRBB, Kolkata. The AO observed that no person can leave 13 bank .....

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eleting addition of ₹ 2,48,500/- as made by the AO on cash deposit. 8.3. We have heard the rival submissions. The Learned AR vehemently relied on the order of the Learned CITA in this regard. The Learned DR vehemently relied on the order of the Learned AO. We find that the assessee had claimed complete ignorance about the concerned person Sri Sarat Chandra Patra whose pay in slips were found and seized during the course of search. Admittedly the said 13 pay in slips represented cash deposi .....

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count holder and the cash deposits found credited in that bank account. We hold that had the Learned AO made corresponding verification with the concerned bank account of Shri Sarat Chandra Patra, that would have eventually led to the concerned party and the said party could have been asked to explain the sources of cash deposits in his bank account. We hold that merely by finding a pay in slip of a third party in the premises of the assessee during the search would not automatically lead to fra .....

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ument Reference ILRT /1 9.1. During the course of assessment proceedings, the Learned AO observed from the seized material in the form of a pocket diary marked ILRT/1 which contains record of cash payments made to different persons during the period from 21.11.2007 to 30.10.2009, that the following cash payments were made in the various years under consideration as below:- Asst Year 2008-09 - ₹ 42,88,000/- Asst Year 2009-10- ₹ 31,87,300/- Asst Year 2010-11 - ₹ 15,68,720/- 9.2. .....

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ading. The office of the C0mpany closes by 6 p.m. The funds required at such booking points are estimated by staff of the company at such booking point and approximate required amounts are to be kept ready. The person handing over the cash at office keeps record of the amounts paid and the name of the person to whom the amounts are paid. Generally, even the acknowledgements of the receiving persons are obtained and the same are visible in the copies of the seized papers. The details of ultimate .....

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d on receipts of such details, the same are recorded in the regular cash book. Considering the nature of business, different persons are assigned to handle the cash required at loading centres in the night after loading of the vehicles. One of such persons is made accountable and therefore signatures are obtained at the time of handing the cash to him. The AO required the appellant to produce the books of account for verification of the transactions recorded in the seized diary on item-to-item b .....

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ry in day-time; arid consequently, tile loading can begin only after 10 pm for which cash fund is required. However, the office of the assessee company closes by 6 pm; and so, cash fund is handed over to a trusted employee who is made accountable for its utilization as well as for the submission of the supporting documents regarding incurring of the expenses. When the cash fund is handed over to the employee, an entry is made in the diary (on the right-hand side) recording particulars such as da .....

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nts are received, the contra entry is made in the diary (on the left-hand side) recording the date and amount. It is for this reason that the date of receipt of accounts is always at a later date than that when the cash fund was handed over to the employee. The amount is the same as the cash fund given to the employee would tally with the total expenses incurred and the left-over of such cash fund. Copy of seized diary marked ILRT/l was filed in course of the appellate proceedings. The Ld AR exp .....

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sh fund made available to the employee for the purposes of the business on any date is explained as the cash fund is covered by the cash-in-hand available on that date in the Cash Book of the appellant company. For, it was contended that the abstract of the cash available with the appellant company was filed at the assessment stage which clearly shows that there was sufficient cash balance to account for the cash disbursement on any particular day. The AO has thus erred in observing that he was .....

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the same day or after a few days. Without prejudice to the above, the Ld AR has taken an alternative plea that the diary records payments as well as receipts, and so, only the peak amount can be assessed; and, the peak being · less than the normal cash balance in the cash book, no addition can be made. 9.4. The Learned CITA observed as below:- I have considered the submission that was made on behalf of the appellant. I have also perused the assessment order and the material on record, I f .....

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pages e.g. page 7, 15, 19, 23, 41, etc. Secondly, the amount on both the sides is the same, and, the name of the person appearing against them is also the same. Thirdly, the left-hand side entry is made at a later date than the right-hand side entry. Fourthly, the seized diary does not show cumulative payments; instead, it records transactions which were eventually squared-up in a few days or so. The above facts clearly suggest that the right-hand side records 'payments' whereas the lef .....

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able to explain the source of such payments which total to ₹ 21,84,000/-. It was contended before me that these payments were made from the cash-in-hand available in the cash book of the appellant company; and, that the corresponding expenses were also subsequently recorded in the cash book. For, the abstract of the cash available with the appellant company was filed at the assessment stage which clearly shows that there was sufficient cash balance to account for the cash disbursement on a .....

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ecorded in the diary 'were actually made from the cash book. Secondly, there is no material on record to suggest the actual nature of the utilisation of cash. The alternative plea taken by the Ld AR that only the peak amount should be assessed cannot be accepted in view of his earlier contention that cash was paid for the purposes of expenses. Once the cash was utilised for the purposes of expenses, it was not available for plough-back into the cash flow, and consequently, the peak theory is .....

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e had raised the following ground for Asst Year 2008-09:- 11. That on the facts and circumstances of the case and in law, Ld. CIT(A) erred in deleting addition of ₹ 21,04,000/- as made by the AO on cash payments. The assessee has raised the following ground in its cross objection:- 1. That in the facts and circumstances of the case, the ld. CIT(A) erred in confirming part additions to the extent of ₹ 2184000/- being part of the amounts noted in memorandum records described as ILRT/1. .....

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iciently available on each date of funding to other godowns though it is recorded int the cash book on a subsequent date. The assessee had also stated before the Learned AO that it is ready to demonstrate the availability of cash balance for making payments to other godowns and what is maintained in the seized document is only memoranda records and hence the delay in recording the entries in the cash book on a subsequent date is quite natural. But this fact is very crucial which has not been the .....

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t Year 2008-09 & CO No.1 of assessee in Asst Year 2008-09 ; Ground No. 10 of revenue in Asst Year 2009-10 & CO No.1 of assessee in Asst Year 2009-10 and Ground No. 7 of revenue in Asst Year 2010-11 & CO No.1 of assessee in Asst Year 2010-11 are allowed for statistical purposes. 10. Addition towards cash payments - Seized Document Reference ILRT /2 10.1. The addition of ₹ 12,29,600/- was made by the Learned AO on account of seized material marked ILRT/2. This seized document is .....

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to the extent of ₹ 6,27,300/- . 10.2. Aggrieved, both the assessee as well as the revenue are in appeal before us. The revenue had raised the following ground for Asst Year 2010-11:- 8. That on the facts and circumstances of the case and in law, Ld. CIT(A) erred in deleting addition of ₹ 6,02,300/-, as made by the AO on cash payments. The assessee has raised the following ground in its cross objection:- 1. That in the facts and circumstances of the case, the Ld. CIT(A) erred in conf .....

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ad also stated before the Learned AO that it is ready to demonstrate the availability of cash balance for making payments to other godowns and what is maintained in the seized document is only memoranda records and hence the delay in recording the entries in the cash book on a subsequent date is quite natural. But this fact is very crucial which has not been the subject matter of examination by the revenue and substantiated properly by the assessee. We find in the facts and circumstances, deem i .....

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edit card The facts of the case with regard to this issue for the Asst Year 2008-09 are stated herein and considered for adjudication. Similar facts are prevalent in Asst Year 2009-10 except with variance in figures. 11.1. During the course of assessment proceedings, the Learned AO found that the assessee had made payments of ₹ 58,63,375/- to ICICI Bank against credit card bills and ₹ 4,75,903/- to its Director Sri Ratan Kumar Somani. The Learned AO observed that no details of credit .....

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plained that the assessee company had taken 51 smart fleet cards in the name of its executives from the ICICI Bank which can be used only for the purposes of fuel and lubricants. The smart fleet card is accepted only at authorized HPCL Petrol Pumps, and so, they cannot be used for any other purposes. The assessee company has fleet of vehicles owned by it as well as hired by it as public carrier. The drivers of selected vehicles were provided with the smart fleet cards to meet the en-route expens .....

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ation of one cheque of Rs.l,33,010/- and possible allowance of minor rebates. Copy of lubricant account was filed in course of .the appellate proceedings. The Ld AR further explained that the assessee company had made payment of ₹ 4,75,903/- against the expenses incurred on tour by its director Sri Ratan Kumar Somani through his credit card. The expenses mainly relate to travelling and hotel charges on tours undertaken by him for the purposes of the business of the assessee company, and, a .....

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as ever raised in the series of notices that the AO had issued u/s 142(1). This fact is also evident from the assessment order which is completely silent about it. But, even otherwise, the AO had no legal sanction or authority to draw adverse inference only on the basis of conjectures and surmises. The Ld AR contended that the entire payment on account of credit cards is made from the bank account of the assessee company which is duly disclosed in its books of account. The payment or its source .....

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ny could possibly afford to burden itself with the personal expenses of its directors or employees to the extent of an astronomical figure of ₹ 63,39,278/-. The Ld AR finally concluded that the action of the AO was not based on any material fact or evidence found in course of the search or collected during the proceedings of assessment. 11.3. The Learned CITA observed that on perusal of the assessment records, it was found that no details were called for by the Learned AO regarding the cre .....

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granted relief for a sum of ₹ 58,63,375/-. However, with regard to the payment to its Director Sri Ratan Kumar Somani, the assessee was not able to produce any details regarding the nature of payment and the business nexus of the same before the Learned CITA and accordingly he confirmed the addition made in the sum of ₹ 4,75,903/-. Aggrieved, the assessee as well as the revenue are in appeal before us. The revenue had raised the following ground in Asst Year 2008-09 :- 13. That on t .....

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dice, it is submitted in the facts and circumstances of the case, that the additions for the business expenses through the credit card of Sri Ratan Kumar Somani is highly excessive. Similar grounds are raised by the assessee (in its CO) for Asst Year 2009-10 except with variance in figures. Hence the decision rendered for Asst Year 2008-09 would apply with equal force for the Asst Year 2009-10 also in this regard. 11.4. We have heard the rival submissions and perused the materials available on r .....

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e. The Learned DR could not controvert the findings of the Learned CITA before us in this regard. 11.5. With regard to the credit card payments of Sri Ratan Kumar Somani (Director), the Learned AR stated that the assessee company availed the facility of credit cards issued in the names of the Directors including Sri Ratan Kumar Somani. Such usage was done mainly for meeting the travelling expenses and charges for hotels. Payments were made by the assessee directly to the service providers. He pl .....

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ssee company. The Learned AR stated that the tax auditor and the statutory auditor had reported that no personal expenditure has been debited to profit and loss account. We hold that the assessee company being a non-natural person cannot have any personal element thereon and all the expenditure incurred thereon had to be construed only for official purposes . In this regard, we place reliance on the decision of the Hon ble Gujarat High Court in the case of Sayaji Iron and Engineering Co vs CIT r .....

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ITR 414 Madura Knitting Co vs CIT (1956) 30 ITR 764 (Mad) 11.5.1 In view of the aforesaid facts and circumstances and respectfully following the judicial precedents thereon, we have no hesitation in deleting the addition made in the sum of ₹ 4,75,903/- for the Asst Year 2008-09. Similar relief is also granted for the Asst Year 2009-10. 11.6. Accordingly, the Ground No. 13 of revenue for Asst Year 2008-09 is dismissed ; Ground No. 2 of Cross Objection of the assessee for the Asst Years 2008 .....

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duly reflected in its books of account. The AO noted that no document explaining the investment was filed before him. The AO held that in absence of supporting evidence, the investment in the property is treated as undisclosed income of the assessee company. The AO thus made addition of ₹ 1,67,07,000/-. 12.1. The Learned CITA observed that - The Ld AR explained that the assessee company had made investment for purchase of office space in Gurgaon. The impounded document that the AO has refe .....

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unt. The investment is duly reflected in the balance sheet for the assessment year 2007-08 and the subsequent years which the AO has not cared to verify. The investment was financed to the extent of ₹ 1.15 crores by the ICICI Bank which was duly explained at the assessment stage. The AO is not justified in his observation that there is no supporting evidence to explain the investment when the same is duly reflected in the balance sheet of the company filed from year to year. The amount of .....

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for the relevant years was also filed. I have perused the material on record. I find merit in the submissions of the assessee. The assessee has made payment towards the purchase of the said property in the financial year 2006-07, and also, in the subsequent years. The payment was made through the banking channel. The investment was also financed by bank loan. Above all, the investment is duly reflected in the balance sheet for the relevant years. For, it is duly shown on the asset-side the bala .....

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ade by the AO on investment in immovable property. 12.3. The Learned DR vehemently relied on the order of the Learned AO. On the contrary, the Learned AR relied on the order of the Learned CITA. 12.4. We have heard the rival submissions and perused the materials available on record. We find that the Learned CITA had given a categorical finding for deleting this addition by stating that the monies paid for purchase of immovable property at Gurgoan had been duly disclosed by the assessee in its ba .....

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red an expenditure of ₹ 4,45,66,268/-. In the books the assessee chose to capitalize the same. But in the return, the same was claimed as deduction which was disallowed by the Learned AO treating the same as capital expenditure. The Learned AO did not grant depreciation on the said capital expenditure. The Learned CITA upheld the action of the Learned AO. Aggrieved, the assessee has preferred cross objections before us for Asst Year 2010-11 as below:- 3. That in the facts and circumstances .....

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rpose of business of the assessee. Hence the renovation expenditure incurred on the rented premises is to be allowed as revenue expenditure. Without prejudice to this argument, he argued that the assessee should at least be granted the benefit of depreciation on the said capital expenditure. In response to this, the Learned DR fairly agreed for grant of depreciation on the expenditure incurred. 13.2. We have heard the rival submissions and perused the materials available on record. We find that .....

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ure and admittedly the same is used for the purpose of business of the assessee and hence the assessee is entitled for depreciation thereon. The Learned AO is directed to grant depreciation on the same accordingly for this year. Needless to mention that the Learned AO has to correspondingly rework the written down value of the block for the consequential impact and benefit of depreciation in subsequent years. Accordingly, the Ground No. 3 of Cross Objection of the assessee for Asst Year 2010-11 .....

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in details of expenses of ₹ 5,32,500/- incurred on civil construction work at the residence of Alipore and those of ₹ 1,50,000/- at the office at Strand Bank Road. Similarly the Learned AO observed that the seized material ILRT/23 contain details of expenses of ₹ 11,24,093/- incurred on civil construction work at the residence of Alipore. The argument of the assessee that the contents mentioned in the seized document were only estimates and not actual expenditure incurred, did .....

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the extent of ₹ 5,32,500/- and in any case the same were noting of memorandum record only for/by others. 6. That in the facts and circumstances of the case, the Ld. CIT(A) erred in confirming addition of ₹ 1,50,000 on the basis of seized document marked as ILRT/12, which was noting of some estimate only. 7. That in the facts and circumstances of the case, the Ld. CIT(a) erred in confirming addition of ₹ 11,24,093 on the basis of seized document marked as IRTL/23 whereas the sai .....

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does not contain any date, mode of payment, name of the contractor who was engaged for the work etc. We find that the Learned AO had recorded a finding that a sum of ₹ 5,32,500/- indicated in the said seized document was towards the civil works carried out at the residence of Somani family at Alipore, Kolkata. Similarly for ₹ 1,50,000/- , the Learned AO had recorded a finding that the said seized document was towards the civil works carried out for Strand Bank Road office. Similarly .....

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the assessee. We find that the primary onus lies on the assessee to disprove that the documents seized during search does not belong to it which has not been discharged by the assessee in the instant case. Hence we find no infirmity in the order of the Learned CITA in this regard. Accordingly, the Ground Nos. 5, 6 & 7 of Cross Objection of the assessee for Asst Year 2010-11 are dismissed Rattan Kumar Somani - ITA No. 1479/Kol/2012 - Revenue Appeal - Asst Year 2010-11 15. Addition of ₹ .....

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on behalf of the assessee herein for the Asst Year 2010-11. Thereafter, the assessee filed his return of income declaring taxable income of ₹ 6,36,590/- without including the sum of ₹ 9 crores. Laxmi Narayan Somani was asked by the Learned AO vide questionnaire dated 28.02.2011 to explain the reason for not declaring income for AY 2010-11 as per disclosure because he had made disclosure on behalf of Ratan Kumar Somani himself. He stated vide his letter dated 24.03.2011 (para No. 9) .....

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contended that the AO has erred in law in relying solely on the statement made by third party for drawing adverse inference in the case of the assessee; and, that too, when such third party had also retracted the declaration contained in his statement and there was no corroborative material on record to support the declaration. Sri Laxmi Narain Somani had, vide his letter dated 24-03- 2011, duly explained before the AO that the said statement u/s 132(4) was not made by him with the consent or a .....

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s and circumstances of the case and in law, Ld. CIT(A) erred in deleting addition of ₹ 9,00,00,000/-, made by the AO as undisclosed income. 15.3. We have heard the rival submissions and perused the materials available on record. The facts stated hereinabove remain undisputed are not reiterated for the sake of brevity. Both the Learned AR and Learned DR reiterated their respective submissions from the orders of the lower authorities. We find that the entire addition of ₹ 9 crores has .....

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e seized documents and without the consent / advice of the assessee. For the sake of convenience, the letter dated 24.3.2011 by Shri Laxmi Narain Somani is reproduced hereunder:- On the fateful date of search, I was not present at any of the spots. At the insistence of the Id DDIT [Investigation] in the control of search against me, I had to rush to Kolkata from interior village in Maharashtra and immediately on attending his office, I was asked to make statement regarding undisclosed income. I .....

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case the return of income of any person is not filed for any asst year before .the date of search, the same is considered as undisclosed income for the purpose of search. With this belief, I made the statement which contained statement regarding undisclosed income. I again wish to reiterate that there was no material, at the time of making the statement, indicating any undisclosed income. In para 12 of the submissions made by me as per annexure to your notice/letter- the basis for giving the br .....

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y said Sri Ratan Kurnar Somani. I was not aware about the activities of said Sri Ratan Kumar Somani resulting in any undisclosed - the said statement was never made by me with his consent/his authority/his advice. The said statement was not based on any documents seized in course of search. In the particular facts of the case, the submissions in relation to Sri Ratan Kurnar Somani may kindly be treated as unwarranted/irrelevant and contrary to the facts and should not be relied/acted upon." .....

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he return 'of income under sec 153A for asst year 2009-10/regular return for asst. year 2010-11. This is to submit that I never earned any income, which may tantamount to undisclosed income in the previous years relevant to the above assessment years. Such income was not revealed by any of the documents seized from my custody in course of search. Therefore there did not arise any question of offering any income in the aforesaid returns as undisclosed income. Needless to mention, I never offe .....

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spute that no incriminating documents or assets representing such undisclosed income of ₹ 9 Crores belonging to assessee were found in the search and seizure operations. We also find that the statement u/s 132(4) of the Act given by Shri Laxmi Narain Somani had been later retracted by him clearly adducing the reasons for the retraction. Hence no addition could be made in the hands of the assessee based on the statement of a third party which was later retracted. Reliance in this regard is .....

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reasons given in the orders passed by the CIT(A). 7. It is not in dispute that during the course of search, the assessee first submitted that he has nothing to disclose and therefore first stand of the assessee was that he had no undisclosed income and then the assessee alleged to had stated that he had also undisclosed income of ₹ 7 lakhs. However, the Assessing Officer himself found that out of said amount of ₹ 7 lakhs, the amount which the assessee stated has been deposited in the .....

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ct by the Assessing Officer himself. Therefore, the admission made by the assessee before the Assessing Officer during the course of search contained three facts-(i) that he had no undisclosed income, (ii) the assessee had undisclosed income of ₹ 7 lakhs, and (iii) that he had invested ₹ 4 lakhs in stock of M/s. Moolchand Jain and Sons in support of which there was no evidence collected by the Assessing Officer and then deposit of ₹ 3 lakhs in the Bank Account which could not h .....

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of the assessee. These reasons had been considered by the CIT(A) as well as by the ITAT and therefore, their findings about the taxable income of the assessee has been given in the facts of the case. (iii) Kailashben Manoharlal Chokshi vs CIT (2010) 328 ITR 411 (Guj) Held, that the statement of the assessee was recorded under section 132(4) of the Act at midnight. In normal circumstances, it was too much to give any credit to the statement recorded at such odd hours. The person would not be in .....

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e ground floor was constructed. He had been living there and during 1986 to 1988 he had constructed the first floor and had incurred expenses of ₹ 2,03,185.65 and this amount had been withdrawn from the account of the firm which he was a partner. The Departmental Valuer had accepted the cost of construction and there was no reason to make addition of ₹ 4 lakhs on the basis of the disclosure made by the assessee. The Revenue had not brought any evidence to establish that the assessee .....

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he first floor a detailed source of investment of furniture purchased with due confirmation from the party concerned had been filed by the assessee before the Assessing Officer. Since no payment for this additional furniture was made by the assessee till the date of search, no addition could be made on this count. The explanation of the assessee was convincing but not been considered by the authorities below. Merely on the basis of the admission of the assessee the additions could not be made un .....

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Narayanan & Bros vs ACIT reported in (2011) 339 ITR 192 (Mad) CIT vs S Khader Khan Sons reported in (2008) 300 ITR 157 (Mad) which was later approved by Hon ble Supreme Court Bachittar Singh vs CIT reported in (2010) 328 ITR 400 (P&H) 15.3.2. In view of the aforesaid facts and findings and respectfully following the judicial precedents stated hereinabove , we do not find any reason to interfere with the order of the Learned CITA in this regard. Accordingly, the Ground No.1 raised by the .....

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ssessee) , Shri Shyam Sundar Somani and Shri Radha Kishan Somani. The Learned AO observed that the assessee resides in Kolkata whereas his brothers live in places outside Kolkata and accordingly concluded that the said cash and jewellery found as belonging to the assessee and proceeded to treat the same as income of the assessee. However, no separate addition was made towards the same in the assessment in view of addition made in the sum of ₹ 9 Crores by the Learned AO. 16.1. Before the Le .....

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of income tax return along with the computation of income, profit & loss account and balance sheet pertaining to the assessment year 2010-11. The Karta of the said HUF responded vide its letter dated 03-11-2011 and submitted all documents as required by the AO. The cash book and bank statement as well as copy of income tax return along with the computation of income, profit & loss account and balance sheet pertaining to the assessment year 2010-11 was produced before the AO. The copy of .....

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wings for personal use By Drawings for personal use By cash seized byIT Department 5,00,000 1,00,000 1,00,000 3,00,000 5,26,000 4,26,000 3,26,000 26,000 Based on this cash book, it was contended that no addition need to be made towards the cash found at the time of search as it stands fully explained. The Learned CITA deleted the addition of ₹ 3,23,283/- in the hands of the assessee. 16.2. During the course of search, the total jewellery found in the residential premises of the assessee gr .....

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residential premises in Kolkata, Mumbai and Delhi. This is also evident from the fact that the warrant of authorisation u/s. 132 was issued in the name of the four brothers and the panchanama at the residential premise in Kolkata was also drawn in their joint name. It was submitted before the AO that the jewellery found at the residential premises actually belong to the family members and their HUFs. While the AO has considered the jewellery found in Mumbai in the hands of Sri Laxmi Narayan Soma .....

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g of the AO that the entire jewellery belongs to the assessee is also contrary to the material on record. For, the panchanama containing description of jewellery drawn at the residential premise in Kolkata clearly shows that different items of jewellery was recovered from different bed rooms belonging to the brothers and was also found on different persons. The confirmation given in this regard by different family members was also produced at the assessment stage which has been ignored by the AO .....

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assessment orders, etc. It was submitted that the wealth tax returns of 4 lady members of the family is not filed as there is no wealth tax liability, but then, it is customary that any woman of a Hindu family would have some jewellery. The Ld AR submitted that 17815.910 gms of gold jewellery and 1713.120 cts of diamond is declared by the said 11 persons in their wealth tax returns which was summarized as under - Sr. No. Family members PAN AO Weight of gold (gms) Weight of diamond (cts) Value ( .....

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3 8. Laxmi Devi Sornani AMIPS6052J CC-IV 2156.560 222.320 22,83,625 9. Shanti Devi Somani ALOPS2029Q CC-IV 2957.640 330.000 29,67,100 10. Chandu Somani AXEPS3622D CC-IV 2551.080 219.600 26,38,598 11. Navin Somani AXEP53620B CC-IV 2741.400 141.000 15,93,819 GRAND TOTAL 17815.910 1713.120 2,11,83,915 The Ld AR contended that the jewellery found in search at residential premises of the assessee group was far lower than the total jewellery declared by the family members and their HUFs in the wealth .....

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de for the purposes of the business; but then, all have their headquarters in Kolkata. All the family members are regularly assessed in Kolkata. The panchanama containing description of jewellery drawn at the residential premise in Kolkata clearly shows that different items of jewellery was recovered from different bed-rooms belonging to the brothers and was also found on different persons. The confirmation claiming ownership of jewellery given by different family members was produced at the ass .....

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0 cts of diamond whereas the assessee's family has declared in their wealth tax returns 6763.820 grns of gold jewellery and 637.400 cts of diamond. The Ld AR concluded that, in view of the above, the jewellery found in search is duly explained, and, that there was no basis or justification for the AO to hold that the jewellery found in search has to be added to the income of the assessee. In fact, there is no finding in the assessment order that the jewellery so found represents undisclosed .....

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/- found during the course of search can be made by AO and that the assessee s explanation on this issue is acceptable. 16.4. We have heard the rival submissions and perused the materials available on record including the paper book filed by the assessee. We find that the assessee had explained before the Learned AO that the cash found in search belongs to Shyam Sundar Kamal Kumar Somani (HUF) . We find that the Learned AO had verified this contention of the assessee by cross verification from t .....

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cash found belongs to them deserves to be accepted. No contrary evidence were brought on record by the revenue to disbelieve the same. Accordingly, we hold that the Learned CITA had rightly deleted the addition made towards cash found in the sum of ₹ 3,23,283/-. 16.4.1. Apropos the addition made towards Jewellery in the sum of ₹ 97,70,729/- , we find from the above discussions that the jewellery found at the time of search was much less than the jewellery declared by the family membe .....

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was not able to bring any contrary evidence to this before us. We find that the Co-ordinate Bench decision of this tribunal in the cases of Tulika Kedia vs ACIT in IT(SS) A No. 71/Cal/1997 which in turn placed reliance on its other decision in the case of Manju Devi Kedia vs ACIT in IT(SS) A No. 73/Cal/1997 had held as under:- Respectfully following the Tribunal s order in the case of other family/group member in IT(SS)A No. 73 (Cal) of 1997 by E-Bench, Calcutta dated 23.12.1999, we conclude tha .....

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s long as the jewellery found during the search is less than the jewellery disclosed in the wealth tax returns prior to the search. This is so because the jewellery being a fashion industry had to be remade according to changing fashion and designs. We find that this contention also gets support from the fact that the jewellery other than those under consideration was not found in the search, which means the logical conclusion would be that the same are sent for re-making to be in line with the .....

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o ₹ 97,70,729/- would become the undisclosed income of the assessee. Under these circumstances, we find no infirmity in the order passed by the Learned CITA in this regard. Accordingly, the Ground No. 2 raised by the revenue is dismissed. 17. Non-granting of benefit of set off of Long Term Capital Loss of Asst Year 2004-05 The brief facts of this issue is that the assessee filed the return of income for the Asst Year 2004-05 on 1.11.2004 which according to the Learned AO was beyond the due .....

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e assessee submitted that CBDT vide its order F. No. 220/1/2004-IT(A-II) dated 22-07-2004 had extended the due date for filing of return from 31-07-2004 to 31-10-2004. And, since the 31st October, 2004 happened to be Sunday, the last date for filing the return stood automatically extended to 01-11-2004 in view of section 10 of the General Clauses Act, 1897. The Ld AR submitted that the CBDT had also clarified this issue vide its Circular No. 639 dated 13-11-1992 which is extracted below - Where .....

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contention of the appellant. The AO has not allowed the set-off for the reason that the return for the assessment year 2004-05 was filed on 01-11-2004 which was beyond the due date. However, this finding of the AO is not correct. For, the CBDT had extended the due date for filing of return from 31-07-2004 to 31-10-2004. Since the 31st October, 2004 was Sunday, the appellant could file the return on 01-11-2004 which is to be considered to have been filed within the due date in view of section 10 .....

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