TMI Blog2012 (9) TMI 1093X X X X Extracts X X X X X X X X Extracts X X X X ..... may raise suspicion but cannot prove that it is assessee’s income”, which seems to be squarely applicable to the facts of this case. Further, the question raised by the learned AR remains to be unanswered that there was no interpretation made by the learned AO for the balance amount of ₹ 2,15,60,000/- advanced out of the total amount of ₹ 2,78,60,000/- decoded as amount advanced, whereas the learned AO treated ₹ 63,00,000/- pertaining to the assessee. Additions deleted Addition on account of interest income on unaccounted loans - Held that:- CIT(A) deleted the addition as he held that there was no reason for making the addition of ₹ 63,00,000/- in the hands of the assessee for the alleged advances made through Shri Mihir Shah. Since, we have also concurred with this view of the learned CIT(A) (supra) and this addition of ₹ 1,34,940/- being consequential for the addition made for ₹ 63,00,000/-, we delete the same. Addition on account of unaccounted payments/advances - Held that:- This issue pertains to the granting of benefit of peak credit to the assessee for the advances made and advances returned. Both the parties submitted that the this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(3) of the Act and for assessment year 2007-08, passed u/s 143 (3) read with section 250 of the IT Act respectively. Both the appeals of the assessee were heard together and the same are being disposed of by this common order for the sake of convenience. ITA No.2698/Ahd/2009 (Assessee s appeal for AY: 2006-07) 2. The revenue has raised five grounds in his appeal wherein grounds No.4 and 5 are general in nature and do not survive for adjudication and they are dismisses as such. The surviving grounds No.1, 2 and 3 of the appeal are reproduced herein below for consideration: 1. The Ld. CIT(A) has erred in law and on facts and circumstances of the case in deleting the addition of ₹ 78,55,000/- on account of unaccounted advances. 2. The Ld. CIT(A) has erred in law and on facts and circumstances of the case in deleting the addition of ₹ 32,160/- on account of bad debts u/s. 36(1) (vii) of the I. T. Act. 3. The Ld. CIT(A) has erred in law and on facts and circumstances of the case in deleting the addition of ₹ 9,34,062/- on account of disallowance of payment made to persons specified u/s. 40A (2) (b) of the I. T. Act. 3. The assessee is, eng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of the peak credit submitted before the learned AO was in order as the same was based on the seized documents. Accordingly, the learned CIT(A) relying on the decision of the Hon ble Jurisdictional Gujarat High Court in the case of Pipush Kumar O. Desai Vs CIT reported in 247 ITR 568 and other decisions of the Hon ble Rajasthan High Court and the Hon ble Supreme Court directed the learned AO to allow the claim of peak credit after verification of the seized documents. 6. The revenue is now in appeal before us. The learned DR supported the order of the learned AO and prayed that his order may be sustained. On the other hand, the learned AR vehemently argued that it is accepted practice of the department to make addition on the basis of peak credit when advances remained unexplained or found to be bogus. The learned AR further pointed out that the working of peak credit offered by the assessee is completely based on seized documents and, therefore, the same may be accepted. The learned AR relied on the decision in the case of Sterling Tools Ltd. Vs DCIT, 91 TTJ 261 (Del.) and Dr. G.G. Dhir Vs ACIT, 129 TTJ 1 (Agr.). 7. We have heard the rival submissions and carefully consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry by the learned AO, the assessee submitted that the assessee had issued legal notice and filed civil and criminal cases against 13 debtors for total amount of ₹ 8,28,537/-. But, no action for recovery of the debts from Shakti Bekry, Dahod for an amount of ₹ 31,260/- was taken by the assessee. The learned AO relying on the decision of the Hon ble Gujarat High Court in the case of Dhall Enterprises Engineers Pvt. Ltd. Vs CIT reported in 207 CTR 729 (Guj) rejected the claim of the assessee for bad debts and made addition of ₹ 31,260/- 8.1 The assessee carried the matter before the learned CIT(A). The learned CIT(A) considering the facts of the case, Assessment order of the learned AO and the submissions of the assessee deleted the addition made by the learned AO with the following observation: It is seen that the appellant has given details of account of each of the parties for the last 3 to 4 years. In respect of each of the parties having regard to sales made, the amount written off is very small part of the total sales. It is also seen that the appellant has been regularly recovering the amount and the amount written off is only small amount with refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with form No.3CD, the auditors have specified that the assessee made payments to specified persons covered u/s 40A (2) (b) of the Act under the head interest. On being asked to furnish the nature and amount of payment by the learned AO, the assessee submitted that the relatives of the directors and the directors of the assessee company were paid interest at the following rates: Assessment year Directors Members Others Rate of interest Rate of Interest 2001-02 12% 12% 2002-03 12% 12% 2003-04 11% 10% 2004-05 10% 09% 2005-06 10% 09% 2006-07 10% 09% 2007-08 10% 6 month 09% 12% 6 month The assessee could not produce any cogent evidence in support of the claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case in deleting the addition of ₹ 63,00,000/- on account of unexplained advances/loans. 2. The Ld. CIT(A) has erred in law and on facts and circumstances of the case in deleting the addition of ₹ 1,34,940/- on account of interest on unaccounted loans. 3. The Ld. CIT(A) has erred in law and on facts and circumstances in deleting the addition of ₹ 1.18.92,500/- on account of unaccounted payments/advances. 4. The Ld. CIT(A) has erred in law and on facts and circumstances of the case in deleting the addition of ₹ 6,36,650/- on account of silver coins purchased. 5. The Ld. CIT(A) has erred in law and on facts and circumstances of the case in deleting the addition of ₹ 35,630/- on account of bad debts u/s. 36(1) (vii) of the I. T. Act. 6. The Ld. CIT(A) has erred in law and on facts and circumstances of the case in deleting the addition of ₹ 7,30,826/- on account of excess physical stock over stock book. 7. The Ld. CIT(A) has erred in law and on facts and circumstances of the case in deleting addition of ₹ 10,12,091/- on account of disallowance of payment made to persons specified u/s. 40A(2)(b) of the I.T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer and the search party particularly keeping in view the statement of Shri Sheth recorded at the time of search. In the absence of any such exercise carried on by the Department it is not justified to make the addition in the hands of the appellant based on the loose papers found from Shri Mihir Shah particularly when veracity of statement of Shri Mihir Shah remained unexamined. The decisions referred to by the appellant viz. Prarthana Construction, Prabhat Oil Mills and V. C. Shukla support the appellant s claim that notings made by the third persons in their diary does not represent any unaccounted money of the appellant. The addition is, therefore, totally unjustified and is directed to be deleted. 12.1 Against this order of the learned CIT(A), the revenue is now in appeal before us. The learned DR supported the order of the learned AO and prayed that the same may be sustained. On the other hand, the learned AR reiterating the submissions made before the authorities below and relied on the order of the learned CIT(A) and prayed that his order may be sustained. 12.2 We have heard the rival submissions and carefully perused the orders of the authorities below ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rough Shri Mihir Shah. Since, we have also concurred with this view of the learned CIT(A) (supra) and this addition of ₹ 1,34,940/- being consequential for the addition made for ₹ 63,00,000/-, we delete the same. Thus, the order of the learned CIT(A) stands confirmed on this count also. Accordingly, this ground raised by the revenue is dismissed. 14. Ground No.3: Deleting the addition of ₹ 1,18,92,500/- made on account of unaccounted payments/advances. This issue pertains to the granting of benefit of peak credit to the assessee for the advances made and advances returned. Both the parties submitted that the this issue is the same as considered for the AY 2006-07 wherein the learned AO did not grant the benefit of peak credit considering that there was no rotation of money involved, however, the learned CIT(A) had allowed the appeal in favour of the assessee. It was submitted by both the parties that the decision of the Tribunal for the AY 2006-07 on this issue may be followed for the AY 2007-08 also. Since, we have decided the issue in favour of the assessee in Para No.7, Page 4 and 5 supra; this ground of appeal raised by the revenue is dismissed. 15. Grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, we do not have any hesitation to confirm the order of the learned CIT(A) on this issue. Accordingly, this ground of appeal raised by the revenue is dismissed. 16. Ground No.5: Deleting the addition of ₹ 35,630/- on account of bad debts u/s 36(1) (vii) of the IT Act. The same issue has been decided by us in ground No.2 of the revenue s appeal for AY 2006-07 supra following the decision of the Hon ble Apex Court in the case of T. R. F. Ltd. Vs CIT reported in 323 ITR 397. Accordingly, we dismiss this ground raised by the revenue for the AY 2007-08 also. 17. Ground No.6: Deleting the addition of ₹ 7,30,826/- on account of excess physical stock over the stock book. The learned AO noted that during the survey physical stock of ₹ 11,41,686/- was found against book stock of ₹ 4,31,060/-. The learned AO required the assessee to explain the excess stock of ₹ 7,10,626/-.The assessee submitted that there was no discrepancy in the stock and that the survey party has not taken the stock properly. The assessee also submitted that physical stock was taken by the assessee itself after conclusion of search in presence of two witnesses. However, the le ..... X X X X Extracts X X X X X X X X Extracts X X X X
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