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2018 (2) TMI 500

erification. The partners have put their signatures after verifying the correctness of the stock statement. The assessee is simply denying about the availability of excess physical stock at the time of survey. They are harping upon the purchase bills and sales bills and entries made in the stock register. It is pertinent to observe that the surveys and searches are the last resorts with the Revenue to verify the actual position on the spot. - The allegation against the assessee(s) is that they were not accounting total purchases in their books. That is why excess physical stock was available on a particular day when the survey was carried out. These allegations cannot be refuted by merely just saying that the alleged calculation made at the time of survey is wrong. The survey team was not having power to get declaration as well as arrest the assessee. The partners should have not put their signatures on the inventory of stock prepared by the survey team. Now, with the help of simple denial, they cannot say that excess stock was not found.- Decided against assessee - Addition u/s 40(a)(ia) - Held that:- Delhi High Court in the case of CIT Vs. Ansal Land Mark Township (P) Lt .....

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d CIT(A) are being impugned in ITA Nos. 3037 and 3038/Ahd/2015. The learned Assessing Officer has imposed penalty under Section 271(1)(c) of the Act on both these assessees vide order dated 27.03.2014. Penalty of ₹ 8,84,599/- in the case of M/s. H.S. Steel and ₹ 8,41,311/- in the case of M/s. Volga Steel were imposed. On appeal, learned CIT(A) has deleted the penalty in the case of M/s. Volga Steel vide order dated 26.02.2016; however, in the case of M/s. H.S. Steel, penalty was confirmed vide order dated 18.03.2016. This order is being impugned by the assessee in ITA No.1599/Ahd/2016 in Assessment Year 2008-09. 2. First we take up the two quantum appeals, i.e. ITA Nos. 2621 and 2622/Ahd/2012. The grounds of appeal taken by both the assessees are not in consonance with Rule 8 of the ITAT's Rules, they are descriptive and argumentative in nature. In brief, their grievance is that the learned CIT(A) has erred in confirming the addition of ₹ 25,01,025/- and ₹ 25,00,525/- in the case of M/s. H S Steel and M/s. Volga Steel respectively. 3. The brief facts of the case are that both the assessees are engaged in wholesale trading of iron sheets. They have filed .....

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ey has no evidentiary value. He made reference to Section 133A(3)(iii) of the Incometax Act and, in support of his contention, he relied upon the judgment of Hon ble Kerala High Court in the case of Paul Mathews & Sons Vs CIT, reported in (2003) 263 ITR 101 (Ker). He further made reference to the decision of Hon ble Madras High Court in the case of CIT Vs. S. Khader Khan Son, reported in [2008] 300 ITR 157 (Mad). This decision has been upheld by the Hon ble Supreme Court also. On the strength of these decisions, he contended that the statement recorded under Section 133A has no evidentiary value. 6. On the other hand, learned Departmental Representative relied upon the orders of the revenue authorities. He submitted that learned First Appellate Authority has considered the decisions of Hon ble Kerala High Court (supra) as well as of Hon ble Madras High Court (supra) and observed that the additions are not being made on the basis of admission of income by the partners in their statement under Section 133A of the Incometax Act; rather, the additions are based on recovery of excess physical stock admitted by the partners and not retracted. 7. We have duly considered the rival cont .....

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of hearing, it was admitted that charging of interest is consequential in nature. No argument was advanced; hence, it is rejected. 10. In the case of M/s Volga Steel, no other ground was raised against the order of learned CIT(A) dated 12.09.2012; hence, ITA No. 2622/Ahd/2012 is rejected. 11. In the case of M/s H S Steel, one more issue has been agitated, wherein it has been pleaded that learned Assessing Officer has erred in disallowing a sum of ₹ 52,730/-. 12. The brief facts of the case are that the assessee has debited a sum of ₹ 3,22,188/- in the Profit and Loss account towards freight carting and octroi expenses. The assessee has paid freight of ₹ 52,730/- to M/s. Nirala Roadways. According to the Assessing Officer, TDS was not deducted on this freight and, therefore, it was disallowed with the help of Section 40(a)(ia) of the Income-tax Act. The learned Counsel for the assessee, at the very outset, submitted that recipients must have accounted these receipts in their taxable income and as per the latest decision of the Hon ble Delhi High Court in the case of CIT Vs. Ansal Land Mark Township (P) Ltd, if the recipients have paid the taxes on the receipts on w .....

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32,117/- (c) On account of expenses u/s 40(a)(ia) - Rs. 52,730/- 17. According to the Assessing Officer, the assessee has concealed the particulars of his income and he imposed a penalty at the rate of 100% of taxes sought to be evaded. 18. Appeal to the CIT(A) did not bring any relief to the assessee. 19. Learned Counsel for the assessee submitted that in the case of M/s. Volga Steel, learned CIT(A) has deleted the penalty vide order dated 26.02.2016. This order was not challenged by the Department before the ITAT. The facts in the cases of both the assessees are identical. He placed on record copy of the CIT(A) s order. 20. Learned Departmental Representative, on the other hand, relied upon the order of the Assessing Officer. 21. We have considered the rival contentions and gone through the record carefully. 22. Section 271(1)(c) of the Act has a direct bearing on the controversy and, therefore, it is salutary upon us to take note of the relevant provisions of section 271(1)(c) along with Explanation 1 which read as under: 271. Failure to furnish returns, comply with notices, concealment of income, etc. (1). If the Assessing Officer or the Commissioner (Appeals) or the CIT in th .....

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s deeming fiction, by way of Explanation I to section 271(1)(c) postulates two situations; (a) first whether in respect of any facts material to the computation of the total income under the provisions of the Act, the assessee fails to offer an explanation or the explanation offered by the assessee is found to be false by the Assessing Officer or Learned CIT(Appeals); and, (b) where in respect of any fact, material to the computation of total income under the provisions of the Act, the assessee is not able to substantiate the explanation and the assessee fails to prove that such explanation is bona fide and that the assessee had disclosed all the facts relating to the same and material to the computation of the total income. Under first situation, the deeming fiction would come to playa if the assessee failed to give any explanation with respect to any fact material to the computation of total income or by action of the Assessing Officer or the Learned CIT(Appeals) by giving a categorical finding to the effect that explanation given by the assessee is false. In the second situation, the deeming fiction would come to play by the failure of the assessee to substantiate his explanatio .....

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