TMI Blog2013 (7) TMI 1082X X X X Extracts X X X X X X X X Extracts X X X X ..... s were found for A.Y. 2007-08 to 2009-10 that the cash component collected by the assessee is in respect of the broiler birds only and not in respect of layer birds. The seized papers indicated that the assessee had received cash on account of cull sales and this fact was accepted by the assessee in the course of search. In response to query in this regard, the assessee admitted unaccounted income received on account of Cull sales and offered the same to tax in the returns filed for A.Y. 2007-08 to 2009-10. But at the same time, it was submitted on behalf of the assessee that no evidence was found of any unaccounted income generated on Cull sales for A.Y. 2003-04 to 2006-07. This fact could also not be disputed by Revenue. Hence in the absence of any evidence of any unaccounted income generated on cull sales, the assessee company did not offer any income to tax for A.Y. 2003-04 to 2006- 07. 2.1. The Assessing Officer has not accepted the stand of the assessee. According to him, the assessee must have carried out similar practice in the earlier years as well and hence, on the basis of the evidences gathered for A.Y. 2007-08 to 2009-10, the Assessing Officer extrapolated the Cull ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) which is applicable to the facts of the case. On the other hand, the learned Authorised Representative supported the order of the CIT(A). 2.4. After going through the rival submissions and perusing the material on record, we find that the addition has been made on presumptions and surmises that the assessee might have received any amount over and above the amount noted in the books for A.Y.2003-04 to 2006-07. Accordingly in the absence of any evidence for these four years, the addition is not justified. It was also submitted that no income can be estimated for the above years on the basis of evidence found for one particular year especially when no incriminating evidence was found for the years under consideration. The Pune Bench of the Tribunal in the case of M/s. Ramdeo Oil Industries (supra) has dealt with similar issue. In the said case, a diary was seized wherein certain dispatches of goods have been recorded relating to the period of 1-5-2004 to 22-9-2004. On verification, it was found that only part of the transactions of dispatches was recorded in the books of the assessee. The Assessing Officer calculated the average monthly unaccounted turnover and compared it with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid years was found. In absence of any material being found during the search relevant to the aforesaid assessment years, CIT(A) was justified in deleting the addition made for these years only on the basis of assumption and surmises. 2.4.2. We find that Jaipur Bench of the Tribunal in the case of ACIT Vs. M.M. Sales Agencies (2005) 97 TTJ (Jaipur) 575 held that the sales are to be estimated only for the year for which information or document has been found or seized for a part of the accounting period and not for the period for which no information is available on the basis of seized record. 2.4.3. We also find that Hyderabad Bench of the Tribunal in the case of ACIT Vs. Ambica Food Industries Ltd (2007) 110 TTJ (Hyd) 680 held that the addition of notional income could not be made in the block assessment on the assumption that since there was suppression of turnover in a specific period there was suppression of turnover/income in the earlier years and subsequent years/period also. Once there was no suppression of turnover or unaccounted business in earlier years, there was no question of making any addition on account of investment for running unaccounted business in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer can estimate the undisclosed income of the assessee by placing reliance on the evidence found in the course of search. The facts of the case referred by the Assessing Officer are distinguishable. In the case of Khopade Kisanrao Manikrao (supra), the evidence was found that the assessee had taken on money on sale of plots. The evidence was found for all the years falling within the block period. Thus the issue arose that on the basis of evidence found for sale of certain plots, can the Assessing Officer estimate the income in respect of other plots for which no evidence was found. The Third Member held that the evidence was found that the assessee was taking the on money for sale of plots for the various years of the block period and hence, the Assessing Officer could estimate the on money in respect of sale of other plots even though the evidence was not found. Hence against the distinguishing factor, the evidence was found for all the years and not some of the years and therefore, the Assessing Officer was not justified in estimating the unaccounted income for the other years in this case. In the case of Khopade Kisanrao Manikrao (supra), the issue was whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsence of any evidence for the years under consideration, no additions are justified. Same has been upheld by us. Following the same reasonings, the addition on account of party expenses in absence of evidence for the year under consideration was not justified and the CIT(A) has rightly deleted the same. This reasoned finding of the CIT(A) needs no interference from our side. We uphold the same. This takes care of the issue raised by way of revenue s appeal captioned above. 4. Now, we shall deal with assessee s appeals In ITA No. 753/PN/2012 to 755/PN/2012 for A.Y. 2003-04 to 2005-06 raising common grounds. For the sake of brevity, the grounds of appeal for A.Y. 2003-04 are reproduced hereunder: 1. The learned CIT(A) erred in confirming the addition to the extent of ₹ 63,50,000/- being 5% of ₹ 1277.65 lakhs being expenditure incurred on entertainment, sales promotion, conveyance, travelling, car running and repairs/depreciation, telephone, aircraft expenses and gifts as personal/nonbusiness expenditure. 2. The learned CIT(A) failed to appreciate that the expenditure of ₹ 1277.65 lakhs incurred on entertainment, sales promotion, conveyance, travelling, ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance @10% of the said expenses which are in the subsequent years subjected to FBT. However, the AO has not brought on record any specific instance of these expenses being incurred not for the purposes of business. The appellant had submitted that, scrutiny orders u/s 143(3) was passed in the appellant company's case for this yeah-and no such disallowance was made by the A. O. in the original assessment proceedings. It was claimed that, the A. O. cannot make additions on issues which are already settled and taken into account while completing the original assessment u/s 143(3) in the absence of any incriminating material found as a result of search. I find considerable force in this argument of the appellant. It was claimed that the various loose papers found during the course of search contained notings regarding expenditure on account of conveyance, hotels, vehicles, travel and entertainment etc. which are duly recorded in the books of accounts. The AO has also accepted this fact in the assessment order. It was claimed that Statutory Auditors and the Tax Auditors, in their CARO Report and Tax Audit Report, had reported that no personal expenses have been charged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a relief of ₹ 62, 50,000/- and ₹ 60, 50,000/- in A.Y.2004-05 and 2005-06 respectively. 4.3 Aggrieved with such order of the Ld. CIT(A), the assessee is in appeal before us. 4.4 The Ld. Counsel for the assessee submitted that the disallowance made is not justified since in the case of a company no such disallowance on account of expenditure incurred for personal purposes can be made. For this proposition he relied on the decision of the Pune Bench of the Tribunal in the case of Nasik Breeding and Research Farm Ltd. Vs. DCIT reported in 77 ITD 581 and the decision of Hon ble Gujarat High Court in the case of Sayaji Iron and Engineering Co. Vs. ITO reported in 253 ITR 749. Without prejudice to the above he submitted that since the disallowance made is very high the same may kindly be reduced since in the scrutiny orders passed u/s.143(3) earlier for this year no such disallowance is made by the Assessing Officer in the original assessment proceedings. 4.5 The Ld. Departmental Representative on the other hand heavily relied on the order of the CIT(A). He submitted that as against the disallowance of 10% the Ld.CIT(A) has already reduced the same to 15% of the to ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
