TMI Blog2018 (1) TMI 1039X X X X Extracts X X X X X X X X Extracts X X X X ..... been paid towards regular Bank Charges, Interest, Overdue Interest on PEC LC, Bank LC charges etc., and it appears that none of these charges relates to any interest on borrowals. In such circumstances there should not have been any disallowance by the Assessing Officer. Therefore, we are of the view that the Assessing Officer shall examine this issue with reference to the submissions made by the Ld. Counsel for the assessee and therefore we set-aside this issue to the file of the Assessing Officer for adjudicating this issue in accordance with the law after providing adequate opportunity of being heard to the assessee. This ground is allowed for statistical purpose. Investment made in land as unexplained investment u/s. 69 - Held that:- In the case on hand the Assessing Officer without examining the Books of Accounts properly and without giving a finding that the transactions occurred outside the Books of Accounts invoked provisions of section 69C of the Act. We also find that the transaction happened in the Financial Year 2007-2008 relevant to the Assessment Year 2008-09 as the sale agreement entered into is in the Financial Year 2007-08 and in such circumstances, whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee before us vehemently submits that assessee is maintaining Books of Accounts in Tally software, the auditor has audited the accounts in the computer itself, there was no physical ledger or register of any account maintained by the assessee separately. The Ld. Assessing Officer has not asked the assessee to produce the copies of the bills, invoices for the whole year. The assessee maintained stock register in the computer itself. Therefore, it was not possible to produce stock register signed by the stock/godown in-charge. Learned Counsel for the assessee submits that all the purchases were routed through PEC. Therefore, the addition on account of rejection of Books of Accounts and estimation of Gross Profit is not justified. Learned Counsel for the assessee further submits that due to various market conditions during this Assessment Year assessee incurred loss as against the profit shown in the immediately preceding Assessment Year. Therefore, there is no justification in estimating the Gross Profit on the basis of the profit shown in the immediately preceding Assessment Year. 5. Ld.DR vehemently supported the orders of the authorities below. 6. We have heard the ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejected especially when the books were audited and the assessee is a limited company. Therefore, taking the totality of facts and circumstances into consideration, we are of the considered view that this issue is to be restored to the file of the Assessing Officer and the assessee should be given one more opportunity to produce the Books of Accounts before the Assessing Officer to substantiate its claim for the loss incurred during the current Assessment Year. Thus we set-aside this issue to the file of the Assessing Officer who shall examine afresh in accordance with the law after providing adequate opportunity of being heard to the assessee. This ground is allowed for statistical purpose. 9. The Next ground of appeal is in respect of confirming the action of the Assessing Officer in disallowing finance expenses of ₹.36,94,584/-. 10. The Assessing Officer while completing the assessment noticed that assessee had made investment in share application money in various group companies and related parties and had incurred finance expenses for its business activities. Assessee was asked to justify as to why the finance expenses should be allowed as the funds were invested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d land worth of ₹.5,04,99,110/- from various persons and assessee was required vide order sheet entry dated 09.11.2011 to justify the sources of funds for purchase of agricultural land with confirmation of copies, copy of sources of funds. On 14.11.2011 assessee has submitted that one of the Directors Shri Suresh Babu entered into agreement in November, 2007 with the vendors for purchase of land. However, subsequently it came to know that one of the Director Shri Prasanth Boorugu personally came to know that the vendors owe some money to his Father-in-law Shri G. Eswara Rao and Shri Prasanth Boorugh suggested that the lands be transferred to the assessee company and accordingly agreement was entered into by the company and the total dues payable to the vendors were adjusted out of the money receivable by Shri G. Eswara Rao from the vendors. However, the submissions were not accepted by the Assessing Officer. 16. Assessing Officer also issued notice u/s. 133(6) of the Act to various parties and got confirmations who has stated that consideration is received in the form of shares in the company by name M/s. Sarita Sugars Pvt. Ltd. from Shri G. Eswara Rao. However, the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e agreement to assessee company. It was contended that all these documents had already been submitted to the Assessing Officer on 09.11.2011 by the assessee company vide letter dated 08.01.2011, therefore, Learned Counsel for the assessee submits that the sources for acquisition of the land has been explained properly by the assessee company and therefore the provisions of section 69 cannot be invoked. 19. Ld. DR vehemently supported the orders of the authorities below. 20. We have heard the rival submissions, perused the orders of the authorities below and the case law relied on. It is the preliminary contention of the assessee that section 69 of the Act applies only to the cases where the assessee has made investments which are not recorded in the Books of Accounts, if any, maintained by him for any source of income. The contention of the assessee is that the purchase of land was fully and properly recorded in the Books of Accounts therefore section 69C of the Act could not have been applied in the first instance. This submission of the assessee is supported by the decision of the Hon'ble Orissa High Court in the case of Aurobindo Sanitary Stores v. CIT (supra) whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellant for the assessment year 1989-90. In the facts and circumstances of the case, therefore, the addition of ₹ 2,70,421/- by applying section 69 of the Act is not legal and justified. The second question of law is accordingly answered in favour of the appellant-assessee. 21. The Hon'ble High Court also held that an investment made in a particular Financial Year, the same, cannot be treated as unexplained investment in the subsequent Financial Year. In other words, it should be treated as investment in the year in which it is recorded in the Books of Accounts relevant to that particular Financial Year. As could be seen form the above the Hon'ble High Court held that for applying section 69 of the Act the Assessing Officer must first come to a finding that the assessee has made investments which are not recorded in the Books of Accounts and thereafter call for an explanation from the assessee about the nature and source of investments. In the case on hand the Assessing Officer without examining the Books of Accounts properly and without giving a finding that the transactions occurred outside the Books of Accounts invoked provisions of section 69C of th ..... 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