TMI Blog2017 (2) TMI 851X X X X Extracts X X X X X X X X Extracts X X X X ..... orded by Revenue is a good starting point for making further investigation but it is not conclusive. The Revenue should have made further investigation and take it to logical conclusion but the AO left the job at the initial point itself, which is clear from the assessment order. Even the CIT(A) has not carried this matter further. We are of the view that suspicion however high, cannot take place of evidence. In such circumstances we allowed to these interconnected issues in assessee’s appeal directing the AO to allowed capitalization on both the counts. - Decided in favour of assessee - ITA No.3153/Mum/2013 - - - Dated:- 17-2-2017 - SRI MAHAVIR SINGH, JM AND SRI RAJESH KUMAR, AM For The Assessee : Dr.P.Daniel, AR For The Revenue : Shri N.P.Singh, CIT DR ORDER PER MAHAVIR SINGH, JM: This appeal by assessee is arising out of the order of CIT(A)-39, Mumbai, in ITA No. CIT(A)-39/IT-479/2008-09 vide his order dated 05-03-2013. The assessment was framed by the ACIT Central Circle-18 19 for the assessment year 2008-09 vide his order dated 30-12-2009 u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. The two interconnected iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd 6,31,176 cheque No. 853783 dated 13.06.07 -do- 6. Toshali Cement Pvt. Ltd. 78,032 cheque no. 853779 dated 13.06.07 -do- 7. Taurus Pvt. Ltd. 36,90,000 Cheque No. 853777 dated 13.06.07 -do- 8. Electrotherm India Ltd. 60,30,000 Cheque No. 853777 dated 13.06.07 -do- 9. Dynatech Furnaces(Bombay) P. Ltd 1,44,00,000 Cheque No. 853771 dated 28.05.07 -do- Total Amount 3,13,07,498/- The assessee also filed the similar details. Assessing Officer noted that the statement of one Shri Soumil M. Parik Proprietor of M/s. C.K. Enterprises was recorded wherein he admitted on 28/11/2007 that he has collected all the 9 cheques and encashed them that for discounting purposes and an equivalent cash was returned back to the party after deducting commission. On the basis of this s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e time of assessment proceedings inspite of having been given sufficient and reasonable time to prove the genuineness of the transaction. The statement of Shri Nitin M. Shah at the time of search makes it very clear that the amount of ₹ 3,13,38,798/- (Rs.3,13,07,498/- + 31,300/-) from the Capital expenses incurred for the construction of the plant by the company and the Fixed assets of the plant will be reduced by a sum of ₹ 3,15,00,000/- as admitted by Shri Nitin M. Shah in his sworn statement dated 19.10.2007. As this amount is encased by Shri Nitin M. Shah, who is Managing Director of the Company, this amount will be assessing his hands as unaccounted income for this assessment year (A.Y. 2008-09). Similarly the commission of ₹ 100/- per 1.00 lac paid amounting to ₹ 31,300/- is also disallowed in the hands of the Nitin M. Shah and added to his total income for A.Y. 2008-09. 5. As regards, to the addition of bogus expenditure capitalized for purchase of steel material, the assessee filed the details of the parties as under: S.No Name Purchases 1 M/s M.R. Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lary/batta paid to them. The evidence produced by the appellant are ledger extract copies, copies of invoices with the stamp of SEZ and details of payments made and realized by the parties. It can be observed that though evidence has been produced to show the delivery of steel at the SEZ premises, there is no independent evidence to show the actual and physical delivery of steel from Mumbai to Vizag through road. Further, none of the parties have either physically appeared or responded to the enquiry letter, summons issued by the Department. It follows that appellant was not able to prove the factum of purchase from the said five parties. The enquiry made by the Inspector did not yield any result for the reason that no such premises or party as mentioned by the appellant company could be found at the given address. Hence I have to hold that the appellant has not been able to establish beyond doubt the genuineness of the purchase from the said five parties. In this context it is pertinent to examine the declaration of income made by the Managing Director Shri Nitin M. Shah. It has already been mentioned in pre-paragraphs that in statement under oath Shri Nitin M. Shah has conceded t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fixed assets in the case of M/s. Nitin Cylinders Ltd. and also to take care of other issues. So far the contention of the department that the assessee had stated the same as unaccounted income in relation to commodity transactions in grey market is concerned, it may be observed that neither any evidence in this regard was found during the course of search action nor in the investigations during assessment proceedings. The AO had made no enquiries in this respect. He has just relied upon the statement of the assessee made during search action, that in these type of transactions, no evidence generally is available. When there was no evidence found or detected nor there is any contention of the revenue that any evidence in this respect has been concealed by the assessee, then under such circumstances, it has not been explained by the Department as to what prompted the assessee to make such a declaration in respect of income from commodity transactions. It has also not been explained as to even why the AO had not made any enquiries in this respect during the assessment proceedings. The facts on the file clearly reveal that the declaration was made by the assessee in relation to discre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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