TMI Blog2017 (11) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... ghi with Mr. Aditya Vijay For the Respondent : Mr. Sanjay Jhanwar with Ms. Archana JUDGMENT 1. By way of this appeal, the appellant has assailed the judgment and order of the Tribunal whereby Tribunal has dismissed the appeal of the department and cross objection of the assessee was partly allowed for statistical purposes. 2. This court while admitting the appeal on 19.10.2011 framed following substantial question of law:- i. Whether the tribunal was justified in deleting the addition of ₹ 7,59,67,000/- which was made by the Assessing Officer on account of bogus payment shown by the assessee to M/s. Mrigiya Electronics Industries Private Limited for purchasing land of ₹ 4,35,60,000/- for ₹ 11,95,27,000/- without any justification for the same. ii. Whether the tribunal was justified in deleting the addition of ₹ 15,19,340/-being commission paid by it to M/s. Mrigiya Electronics Industries Private Limited for giving accommodation entries, when it was deposed by it s Director that the company was involved in providing accommodation entries after charging commission for the same? 3. The facts of the case are that the appellant is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 141/1 21.35 Smt. Sangeeta Agarwal 6.4.06 7475000 700000 19001500 3 141/2 21.35 Smt. Narmada Modi 7.4.06 7475000 700000 19001500 4 141/3 15.20 Smt. Shobha Modi 7.4.06 5325000 700000 13528000 5 178 8 Smt. Manju Vyas 7.4.06 2000000 500000 7120000 6 178 8.20 Smt. Dhiraj Kanwar 5.4.06 2050000 500000 7298000 7 178 8 Smt. Ashu Chaudhary 6.4.06 2000000 500000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e names of these companies do not appear in the list of persons from whom advance have been received for booking of plot. Rather these companies have introduced share application money/share capital/unsecured lions as per the details filed by the assessee. The claim of this expenditure is therefore disallowed being bogus and without any justification. This works out to ₹ 6,45,000/-. Penalty proceedings u/s 271(1)(c) r.w 274 of the Income-tax Act for concealment and furnishing of inaccurate particulars are initiated separately. (ii) The assessee has also claimed capital expenditure of ₹ 168600/- as a revenue expenditure. The capital expenditure pertains to fees paid to Registrar of Companies for increasing the authorized capital of the company. This fact was brought to the notice of the assessee vide order sheet entry dated 29.12.2009. No satisfactory reply has been filed. It is therefore, disallowed from the revenue expenses claimed by the assessee. Penalty proceedings u/s271(1)(c) r.w 274 of the Income-tax Act for concealment and furnishing of inaccurate particulars are initiated separately. (iii) The assessee was asked to file justification of expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5345 813600 6541745 Total 68379115 Subject to the remarks above, the total income of the assessee is computed is as under: Income shown Nil Unrecorded expenditure as per para 14 1519340 Unrecorded expenditure as per para 15 6100000 Total Income 7619340 4.2 He further contended that CIT(A) while considering the matter has not considered the facts in true spirit and has wrongly partly allowed the appeal of the assessee and the tribunal has committed serious error in dismissing the appeal of the department. 4.3 He has relied upon the decision of Calcutta High Court in CIT vs. Precision Finance Pvt. Ltd. (1994) 208 ITR 465 wherein it has been held as under:- In the course of assessment proceedings for the assessment years 1978-79 and 1979-80, the AO found various cash credits in the books of the assessee. Enquiries were conducted through the inspector on different dates and it was found that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ember, 2006 wherein he has admitted that he was involved in providing accommodation entries in respect of shares. The statement was subsequently retracted by Shri Pramod Sharma, director of M/s Mrigiya Electronics Inds. Pvt. Ltd.. The AO in the case of M/s Mrigiya Electronics Inds. Pvt. Ltd. Has made addition of ₹ 75967000/- as he obtained this information from M/s Mrigiya Electronics Inds. Pvt. Ltd.'s bank account. Thus the payments made by the appellant to M/s Mrigiya Electronics Inds Pvt. Ltd. Through banking channel are supported by bank account. There is no finding of the AO that this amount was withdrawn in cash by M/s Mrigiya Electronics Inds. Pvt. Ltd. And money has come back to the appellant. Copy of bank account of M/s Mrigiya Electronics Inds. Pvt. Ltd. Was filed by the appellant before AO. M/s Mrigiya Electronics Inds. Pvt. Ltd.'s confirmation was filed by the appellant. The addition is not base on any admission given by Shri Pramod sharma regarding transactions with the appellant company and, therefore, a general confession cannot be made basis for making any addition in the case of the assessee. As the transaction between appellant and M/s Mrigiya Electr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so that the Director of M/s Mrigiya Electronics Inds. Pvt. Ltd. Could not be produced before the AO for examination and no books of accounts M/s Mrigiya Electronics Inds. Pvt. Ltd. Were produced. The AO also doubted the genuineness of transactions wherein on investment of ₹ 61 lacs within a month no one can earn profit of ₹ 75967000/-. The AR has tried to explain that AO's observation while doubting this transaction is not correct. M/s Mrigiya Electronics Inds. Pvt. Ltd. Paid advance of ₹ 61 lacs to 12 land owners but the amount was only an advance and the total consideration paid to the land owners was ₹ 43560000/-. The AR by giving a chart has tried to explain that the land owners have earned profit of 100% to 200% within span of 8 months. While selling land at ₹ 43560000/- including payment of Rsm. 75967000/- made to M/s Mrigiya Electronics Inds. Pvt. Ltd., the rate per bigha land comes to ₹ 8,90,000/-. When this is compared with the rate given by M/s Mrigiya Electronics Inds. Pvt. Ltd. To M/s Nikhar Builders for 1.85 bighas of land. (Rs. 16.54 lacs per bigha) the rate given to M/s Mrigiya Electronics Inds. Pvt. Ltd. Does not appear to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is more than DLC rates, registering authority is under obligation to register the deed. In such cases value at which property has been registered may not necessarily be the correct value paid by the purchaser and the real consideration may be more than what is appearing in sale deed. When payment is supported by bank account and other agreements, evidences cannot to ignored simply for the reason that actual consideration cannot be more than what is appearing in the deed. 23. Regarding AO's finding that M/s Mrigiya Electronics Inds. Pvt. Ltd. Was not a genuine entity, statements of the director of M/s Mrigiya Electronics Inds. Pvt. Ltd. Were recorded in December, 2006 wherein he has admitted that he was involved in providing accommodation entries in respect of shares. The statements were subsequently retracted by Shri Pramod Sharma, director of M/s Mrigiya Electronics Inds. Pvt. Ltd has made addition of ₹ 75967000/- as he obtained this information form M/s Mrigiya Electronics Inds. Pvt. Ltd.'s bank account. Thus the payments made by the assessee to M/s Mrigiya Electronics Inds. Pvt. Ltd. Through banking channel are supported by bank account. There is no finding of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ld. CIT(A) neither could be controverted nor any material was brought on record to hold otherwise. The ld. CIT(A) has taken each and every objection of the AO and then concluded that explanation of the assessee was acceptable. The contention of the AO that by merely investing ₹ 61,00,000/- no one can earn such a huge profit of ₹ 7 crores or so has been considered by the ld. CIT(A) and found that the investment of ₹ 61,00,000/- was given as advance and not the full consideration. Therefore, on investment of ₹ 61,00,000/-, earning of ₹ 7 crores or so is not correct. In fact the real amount was invested in land was ₹ 4,35,60,000/- and purchaser M/s MEIPL was going to develop th land relating to 12 partners. Therefore, the land in pieces was brought by assessee company. It is not a case of the department that in lieu of cheques any cash was withdrawn from the bank and the same has been returned to the assessee. The general statement recorded of the Director that he is dealing in accommodation entry on account of shares cannot make a company in-genuine or bogus. Thereafter the statement given was retracted also. Even otherwise this is a land transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as construction of a statute or document of title, the decision of the Tribunal is open to reference to the court under section 66(1). (2) When the point for determination is a mixed question of law and fact, while the finding of the Tribunal on the facts found is final in decision as to the legal effect of that finding is a question of law which can be reviewed by the court. (3) A finding on a question of fact is open to attack under section 66(1) as erroneous in law when there is no evidence to support or if it is perverse. (4) When the finding is one of fact, the fact that it is itself an inference from other basic facts will not alter its character as one of facts. 16. We have considered all the contentions urged on behalf of the appellant at some length. We would like to make it clear that we are not sitting here as a court of appeal on facts. We have examined the record only with a view to see whether there is any misdirection or non-direction, such as is likely to have affected the result, and we have come to the conclusion that there is none, and that the finding of the Tribunal is not therefore open to attack. 6.3 He has also relied upon the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them at a late stage were found to have been freshly written up. When Durgaprasad Mandalia, the manager of the appellant, was asked as to what securities he held as cover in respect of the huge transactions he entered into with men of such means, he answered that they were men of character. Sagarmal Dingliwala, the manager of J. R. Pillani, Gwalior, at the relevant period, was asked the same question, and he replied that this business was of Jiyajeerao Cotton Mills, Ltd. The appellant had, in fact, genuine transactions with Cotton Agents Ltd., Gwalior, on a large scale, and when Durgaprasad Mandalia was asked why he did not put these transaction through them, he had to answer to give. And he was likewise unable to explain why he did not directly deal with J. R. Pillani, Gwalior. It was suggested by the learned Solicitor-General that if the object of the appellant in setting up contracts in Gwalior was to throw a veil over its contracts with Jwaladutt Kishanprasad, that could not effectively be achieved by putting them in the name of J. R. Pillani, Gwalior, which was a branch of the firm, as the veil would have been too thin to concern the true face of the contracts, and that is w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. Mr. Kolah also contended that the evidence of Birlas would have been material in deciding whether they settled the contracts at Bombay as contended for by the Department and that though the order of remand stated that their evidence should be taken, that had not been done and that was a serious irregularity. The portion of the order of remand relevant for the present purpose is as follows : The managing director of the assessee company or rather the person responsible for ordering these transactions on behalf of the assessee company should also be similarly examined. 15. Now, the obvious intention behind this order, read as a whole, was that persons connected with the several links in the chain of contracts and series of payments concerned in these transaction should be examined with a view to elucidate the true position, and the managing director was mentioned as the person who was likely to have entered into these transactions. Durgaprasad Mandalia was the manager of the appellant company, and he gave evidence that he put the present transactions through the brokers, and that has been considered. If Birlas wanted themselves to give evidence, there was nothing to prev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment during the concluded assessment proceedings, any part of his income, profits or gains chargeable to income-tax has escaped assessment. He may start reassessment proceedings either because some fresh facts had come to light which were not previously disclosed or some information with regard to the facts previously disclosed comes into his possession which tends to expose the untruthfulness of those facts. In such situations, it is not a case of mere change of opinion or the drawing of a different inference from the same facts as were earlier available but acting on fresh information. Since the belief is that of the Income-tax Officer, the sufficiency of reasons for forming the belief is not for the court to judge but it is open to an assessed to establish that there in fact existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and non-specific information. To that limited extend, the court may look into the conclusion arrived at by the Income-tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by the Income- tax Officer and further whether that material ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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