Tax Management India. Com
                            Law and Practice: A Digital eBook ...
TMI - Tax Management India. Com
Case Laws Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Manuals SMS News Articles Highlights
        Home        
 
Extracts
Home List
← Previous Next →

The A.C.I.T., Cent. Circle-1, Baroda Versus M/s. Navjivan Roller Flour & Pulse Mills Pvt., Ltd.,

2012 (9) TMI 1093 - ITAT AHMEDABAD

Addition on account of unaccounted advances - CIT-A allowed the appeal of the assessee by granting benefit of peak credit. From the facts and circumstances of the case, we do not have any reasons to confront the view of the learned CIT(A). Therefore, we are inclined to follow the decision of the learned CIT(A). - Addition on account of bad debts u/s 36(1) (vii) - Held that:- This issue is covered by the decision of the Hon’ble Apex Court in the case of T. R. F. Ltd. Vs CIT [2010 (2) TMI 211 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he records seized from third party and his confirmatory statement 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 ₹ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

; 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 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

is not distributed, then the same ought to have appeared as asset in the balance sheet of the assessee. Thus, whatever may be the position then, the effect in the profit & loss account might have been correctly or incorrectly presented in that year which does not have any bearing on the year under consideration. Further, there is no dispute that the silver coins were purchased during the year 1995 from the declared source of income. - Addition on account of excess physical stock over the sto .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

₹ 8,30,826/- made by the learned AO. Thus, the learned CIT(A) deleted the addition of ₹ 7,30,826/-. We concur with this view of the learned CIT(A) - ITA No.2698 and 2699/Ahd/2009 - Dated:- 7-9-2012 - SHRI G. C. GUPTA, VP AND SHRI A. MOHAN ALANKAMONY, AM Appellant by Shri S. K. Gupta, Sr. DR Respondent by Shri S. N. Soparkar, AR O R D E R PER A. MOHAN ALANKAMONY: These two appeals are filed by the revenue aggrieved by the orders of the learned CIT(A)-IV, Ahmedabad in appeals No. CIT .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s 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 ₹ 3 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

otice issued u/s. 153A of the Act, declaring income of ₹ 3,23,98,950/-. A search u/s 132 of the Act was carried out in then case of Navjivan Group and in the case of the assessee on 21-09- 2006. Subsequently proceedings u/s 153A of the Act was initiated. Accordingly, notices u/s 143(2) and 142(1) of the act were issued along with questionnaire and assessment order was passed on 24- 12-2008 by making various additions and computed the total income of ₹ 3,86,53,040 as against the incom .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he learned AO stated that during the course of search at the business premises of the assessee (annexure A/2 and the documents seized from the resident of Shri G. Sheth it was revealed that the assessee company made unaccounted advances/payments to 21 parties amounting to ₹ 78,55,000/-. The learned AO asked the assessee to explain these payments with supporting evidences in response to which the assessee contended that the assessee company disclosed ₹ 29 lacs as peak credit for the A .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

0/- admitted by the assessee claiming the same by invoking the principles of peak credit. 5. The assessee carried the matter before the learned CIT(A). The learned CIT(A) was of the view that working 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 decisi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 considered the material on record. From the facts of the case it is apparent that the learned AO rejected the princi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e on the basis of seized documents/materials. (ii) The working done by the appellant with regard to incremental peak credit was in accordance with the practice prevalent in the department and in conformity with the various decisions of the higher judiciary viz. Swaroop chand Kojuram Vs CIT, 235 ITR 732. (iii) The logic behind the applicability of the peak credit theory is that if borrowings from certain persons are being treated as non-genuine, then obviously repayment to such persons should als .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he case, we do not have any reasons to confront the view of the learned CIT(A). Therefore, we are inclined to follow the decision of the learned CIT(A). Accordingly, we dismiss this ground of appeal raised by the revenue and thus, the addition of ₹ 49,55,000/- stands deleted. 8. Ground No.2: Deletion of addition of ₹ 32, 160/- on account of bad debts u/s 36(1) (vii) of the Act. The learned AO observed that during the year the assessee had debited ₹ 11,50,027/- in the profit &am .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

m 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 s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sales made to them from year to year. Thus it is in the nature of kasar/vatav which is generally allowed to the debtors in the line of business. It is also appreciated that the appellant has given explanation in respect of each of the account. Apart from this, the appellant has also explained that whenever the amount is recovered subsequently against such amount written off, it is includible in the total income of the year of the recovery and is being shown. The copies of account of parties wer .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and also considering the sales made to each of the parties in the past i.e. the business relationship. This ground of appeal is, therefore, allowed. 8.2 The revenue is now in appeal before us against the order of the learned CIT(A). The learned DR supported the order of the learned AO and prayed that his order may be upheld. On the other hand, the learned AR supported the order of the learned CIT(A) and submitted that the claim of bad debts may be allowed. 8.3 We have heard the rival submissions .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of ₹ 32,160/- made by the learned AO on account of rejection of bad debt claimed. This ground of appeal of the revenue is dismissed. 9. Ground No.3: Deleting addition of ₹ 9,34,062/- on account of payment made to persons specified u/s 40A (2) (b) of the Act. The learned AO noticed that in the original return filed u/s 139(1) by the assessee accompanied with form No.3CD, the auditors have specified that the assessee made payments to specified persons covered u/s 40A (2) (b) of the Ac .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ent evidence in support of the claim that FDRs were kept for long time by the Directors/members and also failed to explain the legitimate need of payment of interest at 1% of higher rate. Accordingly, the learned AO disallowed the claim of the assessee and made addition of ₹ 9,34,062/- u/s 40A (2) (b) of the Act. 9.1 The assessee carried the matter before the learned CIT(A). The learned CIT(A) considering the submissions of the assessee relying on the decisions of ITAT Ahmedabad in the cas .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the learned AO and prayed that the same may be sustained. On the other hand, the learned AR reiterated his submissions made before the authorities below and supported the order of the learned CIT(A). The learned AR further submitted that the same issue has been decided by ITAT Ahmedabad C Bench in assessee s own case for AY 2003-04, 2004-05 and 2005-06 in ITA Nos. 2695, 2696 and 2697/Ahd/2009 vide order dated 20-05-2011 in favour of the assessee and against the revenue and prayed that learned CI .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

also dismissed. 10. In the result, the appeal of the revenue is dismissed. ITA No.2699/Ahd/2009 (Revenue s appeal for AY: 2007-08) 11. In this appeal the revenue has raised 9 grounds wherein grounds No.8 and 9 are general in nature and require no adjudication. The surviving ground Nos. 1, 2, 3, 4, 5, 6 and 7 are reproduced herein below for reference: 1. The Ld. CIT(A) has erred in law and on facts and circumstances of the case in deleting the addition of ₹ 63,00,000/- on account of unexpl .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oins 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lated to Shri Mihir H. Shah as admitted by him in the statement recorded by the learned AO and page 54 of annexure A/1 was relating to loan of ₹ 8 lacs to Shri R. G. Patel. From the seized papers it was found that the assessee had advanced loan for a total sum of ₹ 63,00,000/- which was not accounted for in its books of accounts. The learned AO, accordingly added the sum of ₹ 63,00,000/- on account of unexplained loans given by the assessee. The learned CIT(A) on perusal of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

aid loose papers it was clearly explained by him that Shri Mihir Shah used to enquire about any funds available with the assessee to make advances and that all the advances through him were by cheques and recorded in the books. He also stated that no advances were made in cash. The question raised before Shri Shereyas Sheth and its reply clearly shows that loose paper was found from possession of Shri Mihir Shah and not from any of the persons connected with the appellant group. The Assessing Of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d 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 appe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he 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 along with the materials on record. From the facts of the case, it appears that the entire addition is based on the three pages found in the possession of Shri Mihir Shah who happened to be standing outside the gate of the residence of Shri I. G. Sheth, director of the assessee Company. Further, the learned AO or the search .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

matory statement 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. Consideri .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l for ₹ 8 lakhs for one month and interest of ₹ 6,400/- was charged and after deducting brokerage of ₹ 150/- the balance was assessee s interest income. Based on this working for the other transactions, the learned AO worked out the brokerage and interest on ₹ 63 lacs advances and made addition of ₹ 1,34,940/- to the interest income of the assessee. The learned CIT(A) deleted the addition as he held that there was no reason for making the addition of ₹ 63,00,0 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ccount 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 th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

iness premises of the assessee. In the statement recorded by the learned AO, Shri Shirish G. Sheth, director of the assessee company admitted that the silver coins were purchased in the year 1995 for distributing the same as gift on the occasion of golden anniversary of the assessee company. Since, the assessee did not show the coins in its closing stock, the learned AO made addition of ₹ 6,36,650/- to the income of the assessee. The learned CIT(A) considering the submissions of the learne .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

es below. He further pleaded that the silver coins are not part of stock in trade and hence could never form part of stock and prayed that the order of the learned CIT(A) may be sustained. 15.2 We have heard both the sides, carefully perused the orders of the authorities below and considered the materials produced before us along with paper book submitted by the assessee. There is no dispute with respect to the year in which the silver coins were procured i.e. during the year 1995. If these coin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ng on the year under consideration. Further, there is no dispute that the silver coins were purchased during the year 1995 from the declared source of income. 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 t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 learned AO noted that as held by the Hon ble Kerala High Court in the case of V. Kunhikannan & Sons Vs CIT, 219 ITR 235 (Ker) these two witnesses .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

inst shortage of stock of ₹ 20,03,436/-. The learned CIT(A) considering the facts that there was shortage of stock and well as excess of stock estimated ₹ 1,00,00/- as against total addition of ₹ 8,30,826/- made by the learned AO and accordingly deleted the addition of ₹ 7,30,826/-. 17.1 The revenue is in appeal before us against the order of the learned CIT(A). The learned DR supported the order of the learned AO and prayed that his order may be sustained. The learned AR .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Discussion Forum
what is new what is new
 


|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.