TMI Blog2018 (8) TMI 189X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of business expenses is dismissed. Admittedly similar reasoning has been given by the AO for similar kind of expenses in the assessment year 2010-11 and 2011-12, therefore, our reasoning given above will apply mutatis mutandis for these two years also Bogus purchase made from M/s. Kiran Furniture - during the course of survey made in the case of M/s Nitin Enterprises was found to be engaged in providing bogus bills and one of its partner has given a statement that assessee was also given the bogus bill and has received cheque from the assessee for the said bills in lieu of cash for the same amount returned back to the assessee - Held that:- The assessee has made the payment to the party through banking channels and simply relying upon the statement of one of the partner that cash has been returned in lieu of cheque cannot be accepted without such a person being subjected to cross examination. Even otherwise also such a statement itself loses its credibility and evidentiary value, when the firm itself has taken a legal action for recovery of same dues from the assessee on the purchases made for which it has issued the bills. Not only that, there has been amicable settlement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Events Pvt. Ltd. cannot be disturbed and accordingly the order of CIT(A) affirmed. Additional account of scrap sales and low declaration of income - Held that:- We find it very difficult to appreciate the stand taken by the AO and Ld. CIT (A) to estimate on adhoc basis, the sale of scrap material outside the books of account either by applying 50 % or 20%. More so, when all the invoices and details of services provided and purchases were duly supported by invoice and recorded in the books of accounts; and neither the books nor the trading results including valuation of scrap made has been disturbed. None of the authorities have examined this issue in a proper perspective. Therefore, in the interest of justice we feel that this issue needs to be remanded back to the file of the AO, who shall see; firstly, whether the stocks which are reflected in the books of account are part of stock as on 31st March, 2011 or not and if so, then no addition should be made; secondly, if the stock taken on rent has been returned back then also no addition on account of alleged sale of scrap should be estimated; and lastly, the AO shall examine whether any part of the scrap which has been sold in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has also filed cross appeal. Since common issues are involved in all the appeals arising out of identical set of facts, therefore, the same were heard together and are being disposed of by way of this consolidated order. 2. The disallowances and additions as challenged in the grounds of appeal by the Department in various assessment years on merits as well as by the assessee in the assessment year 2011-12 are summarised as under: - Nature of Addition made by the AO 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Personal expenses 5,23,970 4,77,263 6,16,841 5,43,453 29,52,758 19,93,202 Bogus purchases made from Nitin Enterprises 27,15,435 40,77,004 2,19,48,700 89,49,347 2,52,67,172 2,11,70,553 Unexplained purchases made from Kiran Furniture 1,87,375 8,17,996 14,28,290 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent even though he may not have appealed but can support the order appealed against on any of the grounds decided against him. This inter-alia means that if any issue has been decided against the respondent, then the same can be challenged by the respondent by invoking this rule. 6. On the other hand, Ld. CIT(DR) objecting to the admission of the petition made under rule 27, submitted that the respondent assessee cannot be permitted to raise a ground or an issue which has been decided against him which could have only done by filing of appeal. In support strong reliance was placed in the judgment of Hon'ble P H High Court in the case of Self Knitting Works vs. CIT, reported in (2014) 227 Taxman 253; and ITAT Ahmedabad decision in the case of DCIT vs. Sandeep M Patel, reported in (2012) 137 ITD 104. 7. First of all, we shall decide the admissibility of assessee s petition made under Rule 27 made for the assessment years 2006-07, 2007-08 2008-09, challenging the validity of additions made in the impugned assessment orders on the ground that same are beyond the scope of section 153A. From the perusal of the material placed on record it is seen that assessee before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings can be re-examined by the assessing officer? Whether there can be change of opinion by the assessing officer on the issues already considered without any new evidences coming to his possession? 6.3 Thus, there has to be a clarity regarding nature of the provision of section 153A requiring the assessment or reassessment to be made in the case of search cases. Requirement of section 153A is to open or re-open of the cases for the purposes of making assessment or re-assessment of the total income of proceedings for six assessment years prior to the year of search. It does not contain any provision regarding the concept of making assessment of undisclosed income alone as was the case under block assessment regime under chapter XIVB. It does not contain any provision regarding the nature of addition which can be made under this section. This section has rather provided, for the removal of doubts, by way of insertion of Explanation at the end of the section that 'save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section.' 6.4 Thus, it is clearly implies th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 153A cannot be different. 4. There is no concept of assessment of undisclosed income under section 153A as was the case during block assessment regime under Chapter XIV8. Under block assessment, there was concept of dual assessment - one for undisclosed income detected as a result of search and other for normal assessment as per normal provisions of the Act. Since under section 153A, both the assessment proceedings are merged together, the nature of the additions made cannot be restricted to assess only undisclosed income detected as a result of search. 5. In case of reopening of assessment under section 147/148 specific reasons of income escaping assessment are recorded and, therefore, enquiries are made during assessment proceedings with respect to such issues. However, in case of search case, there are no specific reasons recorded. In the case of search before issuing search warrant, satisfaction may be recorded by the competent authority regarding accumulation of undisclosed income by the person to be searched and the legislature requires such person to be mandatorily assessed for preceding six years with respect to his total income. Therefore, enquiries can be mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ady subjected to assessment under section 143(3) or under section 148 completed prior to the search in respect of six assessment years referred to in section 153A(b) and in the second proviso to section 153A, has also been included in the assessment framed under section 153A. In such circumstances the plea of the assessee cannot be accepted. There is no requirement for an assessment made under section 153A being based on any material seized in the course of search. 6.8 In view of the above, I hold that the action of the Assessing Officer in making the impugned addition was within the scope of jurisdiction u/s 153A of the IT Act, 1961. The appellant has relied on various decisions but these decisions do not support the case of appellant's in view of the above discussion. In fact, the decision of Hon'ble Delhi High Court in the case of Anil Kumar Bhatia, relied upon by the appellant is also not in favour of the appellant. Therefore, the contention of the appellant that the additions made in the assessment completed u/s 153A read with section 143(3) was beyond the scope of jurisdiction u/s 153A is rejected. Hence this ground of appeal dismissed. 8. However, on mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 153A; and in case of such unabated assessments additions can only be made on the basis of any incriminating material found during the course of search qua the assessment years and if no such incriminating material has been found then such an addition cannot be roped in the assessment framed u/s 153A. Before us, the Ld. Counsel for the assessee has given the following facts in this regard which are as under: - Date of search u/s 132: 19.10.2010 Particulars AY 2006-07 AY 2007-08 AY 2008-09 Date of filing of return of income and income returned 1.12.2006 ₹ 1,37,31,204 27.10.2007 ₹ 1,27,56,410 28.09.2009 ₹ 3,68,63,690 Last date of issuance of notice u/s 143(2) --- 30.09.2008 --- Date of passing of assessment order u/s 143(3) 11.11.2008 At an income of ₹ 1,37,31,204 No notice u/s 143(2) was issued, hence the return income attained finality 21.05.2010 At an income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Bom) 2. Decision of Hon'ble Delhi High Court in the case of Commissioner of Income Tax vs. Kabul Chawla dated 28.08.2015 380 ITR 573 (Del) 3. Decision of Rajasthan High Court in the case of Jai Steel (India), Jodhpur vs. ACIT (2013) 259 CTR 281, 219 Taxman 223 (Raj) 4. Decision of Hon'ble Delhi High Court in the case of Principal Commissioner Of Income- Tax V. Kurele Paper Mills P. LTD dated 06.07.2015 [2016] 380 ITR 571 (Del) 5. Decision of Hon'ble Calcutta High Court in the case of Pr. CIT -2 vs Salasar Stock Broking Ltd dated 24.08.2016 (G.A. No. 1929 of 2016/ITAT No. 264 of 2016) 6. Decision of Hon'ble Delhi High Court in the case of Pr CIT Ors vs Meeta Gutgutia, Prop. Ferns 'N' Petals Ors (2017) 395 ITR 526, (2017) 82 taxmann.com 287 (Delhi) 7. Decision of Hon'ble Bombay High Court in CIT v. Gurinder Singh Bawa (2016) 386 ITR 483 (Bom) 8. Decision of Hon'ble Supreme Court in the case of CIT vs. Sinhgad Technical Education Society (2017) 397 ITR 344 (SC) 9. Decision of Hon'ble Delhi High Court in the case of Principal CIT, Delhi 2 Vs. Best Infrastructure (India) Pvt. Ltd. Others in ITA N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Delhi High Court held that jurisdiction of AO under 153A is to assess total income for the year and not restricted to seized material. Post search reassessment in respect of all 6 years can be made even if original returns are already processed u/s 143(1)(a) - Assessing Officer has power u/s 153A to make assessment for all six years and compute total income of assessee, including undisclosed income, notwithstanding that returns for these years have already been processed u/s 143(1)(a). Even if assessment order had already been passed in respect of all or any of those six assessment years, either under section 143(1)(a) or section 143(3) prior to initiation of search/requisition, still Assessing Officer is empowered to reopen those proceedings under section 153A without any fetters and reassess total income taking note of undisclosed income, if any, unearthed during search. Filalex India Ltd Vs CIT (49 taxmann.com 465); where Hon'ble Delhi High Court held that during assessment under section 153A, additions need not be restricted or limited to incriminating material, found during course of search. 14. We have heard the rival submissions and also perused the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously, an assessment has to be made under this Section only on the basis of seized material. v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed following expenses to its profit and loss account: - Sl. No. Particulars Amount (Rs.) 1. Business Promotion Expenses 13,41,288/- 2. Staff labour and Welfare expenses 3,12,213/- 3. Printing Stationary 7,80,974/- 4. Miscellaneous Expenses 2,82,788/- Total 27,17,263/- AO observed that most of these expenses have been incurred in cash or payment has been made through credit card of the Directors. The cash vouchers furnished by the assessee have been held by him to be not genuine as they do not prove the genuineness of the expenses claimed. He held that the element of personal expenses cannot be ruled and accordingly, he has disallowed these expenses which come to ₹ 5,43,453/-. 19. Ld. CIT(A) held that AO did not point out any specific instance as to which are the expenses have been incurred for non-business purposes and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Enterprises and the statement of one of its partners, Shri Nitin Bansal was also recorded. During the course of survey, it was found that this firm was engaged in the practice of issuing bogus bills to various parties and AO observed that modus operandi adopted by this party was that the bogus bills were raised by M/s. Nitin Enterprises to a particular party and the payment on the basis of these bogus bills were returned to other parties out of the cash sales. In the statement also, the partner accepted that bogus bills were also issued to the assessee company and invoices raised by him to the assessee company for the goods were actually not supplied. He further stated that the amount received in cheque from the assessee company was returned to it in the form of cash. Relevant question No. 23 and 24 of the statement of Shri Nitin Bansal has been incorporated in the impugned assessment order at pages 3 and 4. Based on this survey and the statement of partner, the Ld. AO has made the addition on account of purchases shown by the assessee from this party to be bogus and disallowed the same while computing taxable income for the assessment year 2009-10, 2010-11 and 2011-12. 22. Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axmi Glass Works Pvt Ltd., (supra), the issue related to closing stock valuation of adjustment of unutilized Modvat credit. The Tribunal allowed the adjustment. Hon'ble High Court confirmed the order of the Tribunal. Therefore, the issue is covered in favour of the assessee by the decision of Hon'ble High Court. Hence, if the closing stock is to be increased on account of un utilized Modvat credit, the corresponding opening stock of that year should also be increased. Besides above submissions various decisions were also referred on the issue that if the statement given by third party is relied upon, without any opportunity to cross examine by the assessee then same cannot be relied upon. One most important submission made on the basis of material facts to prove that assessee has made actual purchases was that, this party has also filed a suit against the assessee for recovery of balance amount due to them on account of purchase made by the assessee company. This fact alone goes to show that the purchases made by the assessee cannot be held to be bogus. 23. Ld. CIT (A), after considering the entire facts and submissions placed on record, first of all held that, AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is and payments of some invoices were pending. Such copies of the invoices where the payments were pending was submitted by M/s Nitin Enterprises before the Hon'ble High Court of Delhi and the same were also furnished. before the Assessing Officer in the course of the assessment proceedings vide its letter dated 27.05.2013. M/s Nitin Enterprises also submitted before the Hon'ble High Court of Delhi, a copy of the ledger account of the appellant company i.e. M/s Meroform India Pvt. Ltd. in its books of accounts which evidenced that the material was delivered to the appellant. Subsequently, both the parties i.e. M/s Nitin Enterprises and the appellant concluded the matter by entering into an out of court settlement agreement, according to which M/s Nitin Enterprises agreed to receive the balance payment without the interest amounting to ₹ 55.58 lacs and filed a combined application on May 31st 2012 before the Hon'ble High Court for disposal of the writ filed by M/s Nitin Enterprises. Vide order dated 01.06.2012, the Hon'ble Delhi High Court dismissed the writ filed by M/s. Nitin Enterprises and concluded the matter as extracted below: 1. Plaintiff has file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses was contrary to the statement given by its partner in the course of survey proceedings on 1.04.2011. On the other hand, such a petition for recovery before Hon'ble High Court substantiates the genuineness of purchases. No prudent person would expend money on legal matters which is not only time consuming but also long drawn in procedures on an issue which never existed or found to be bogus. Again, in the course of search u/s 132 there was no excessive cash found that substantiated that the appellant received cash in lieu of cheque from M/s Nitin Enterprises or any incriminating material where certain cash transactions were found recorded on loose sheets I papers to support cash receipt. In the course of appeal proceedings, as well as assessment proceedings the appellant filed complete details pertaining to the legal battle between them, which the Assessing Officer did not consider nor he has brought any material contrary to what was stated by the appellant. It is also a point to bring on record that there was no bar on the Assessing Officer to conduct further independent enquiry pertaining to these transactions. The Assessing Officer was unable to bring on record the number ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cross examine. Apart from that, during the course of search operation nothing incriminating in respect of bogus purchase has been found and there is an inherent contradiction in the conduct of the said party, because on one hand the partner Shri Nitin Bansal stated that it has given accommodation entry but at the same time the firm has issued legal notice to the assessee company for recovery of outstanding dues on account of bill raised against them for the purchases made by the assessee company and also filed a suit before the Hon ble Delhi High Court; and thereafter deed of settlement has been executed between the said party and the assessee wherein the quantification of liability of unpaid purchases has been settled and Hon ble High Court which has been accepted by the parties in the settlement ratified vide order dated 1.6.2012. Consequent to settlement the writ petition filed by M/s. Nitin Enterprises has been dismissed. Thus, under the facts and circumstances of the case, the purchases made by the assessee from M/s. Nitin cannot be held to be bogus. 26. After hearing the rival contentions and on perusal of the material referred to before us, we find that the main ground f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this issue as incorporated above is not only based on correct appreciation of facts but also in law, therefore, the said finding is affirmed and the addition made by the AO on account of bogus purchase is deleted. In the result issue of bogus purchases in all the assessment years from the said party stands decided in favour of the assessee and the grounds raised by the revenue are dismissed. 27. The next issue relates to addition on account of unexplained purchases made from M/s. Kiran Furnitures. The facts in brief are that in the course of assessment proceedings, notices u/s 133(6) was sent to various parties from whom the assessee company has made purchases during the year. All the parties have duly complied with the said notices except for one party, namely, M/s Kishore Mahadeo Mistry located in Mumbai. When this fact was confronted to the assessee, it provided the new address and notice was sent on the given address however again no response was received from the said party. Accordingly, AO concluded that the purchases made from the said party is non genuine. Before the Ld. CIT (A) it was submitted that M/s. Kiran Enterprises is engaged in manufacturing of furniture and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Invoices of the services rendered by M/s. Kiran enterprises. (iii) Permanent Account number of Mr. Kishore M. Mestry, Proprietor, M/s. KiranFurniture. (iv) The address of the Kishore M. Mestry, Proprietor, M/s. Kiran Furniture. (v) The mode of payments made. (vi) Nature of services obtained, place where such service obtained and bills of services rendered raised by M/s. Kiran Furniture. (vii) The Income tax returns of M/s. Kiran Furniture, which duly reflected that the job charges received from the appellant were duly accounted for and income earned therefrom has been offered for taxation by the said party. [viii] The TDS records in the form of TDS Certificates, as required by the provisions of Chapter XVII showing the nature of services obtained and TDS as required by law duly deducted and deposited by us to the credit of Central Govt. From the details placed on record it is seen that Sh. Kishore Mahadeo Mistry is the proprietor of Mls Kiran Furniture and is situated in Mumbai and was engaged in the business activity of manufacture of furniture and fixture and also rendered services as a labour contractor . On perusal of the details, it is seen that the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, the Assessing Officer ignored even the fact that M/s Kiran Furniture furnished the ITRs for various years and the Assessing Officer could have easily verified from the jurisdictional Assessing Officer where the said party was assessed to tax regularly. Without an intended undertaking to further conduct necessary enquiries I investigation, to verify the genuineness of the transactions which the Assessing Officer doubted, merely disallowance of purchases only on the ground that the party did not respond to the notices which were rightfully served upon the said party u/s 133(6) is unjustified as the Assessing Officer at the least could have also levied a penalty for non-compliance of such notices served on it. 16.1 The evidence furnished by the appellant was ignored and not taken into account on merit by the Assessing Officer. The payments made which were duly supported, confirmed and vouched cannot be treated as the undisclosed income of the appellant in the name of unexplained purchases simply on the ground that M/s Kiran Furniture did and respond to the notice issued u/s 133(6) and that it represented and unexplained and undisclosed income of the appellant. The instan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retionary manner to choose what suited him. Therefore, the impugned disallowance made by the Assessing Officer was not justified. Accordingly, the addition of ₹ 9,88,687/- made by the Assessing Officer on account of expenses incurred in connection with the services obtained by the appellant from M/s Kiran Furniture is deleted. 29. After hearing both the parties and on perusal of the relevant material placed on record, we find that the assessee has furnished various evidences and documents as enlisted by the Ld. CIT (A) to prove the genuineness of the purchases made and simply because, the notices issued by the AO to the said party has not been replied back, it cannot be held that either the said parity has not rendered any services to the assessee or the invoices raised by the said party is fictitious or the identity of the said party cannot be established. Moreover the payments have been made to the said party through cheques on which TDS has been deducted. All these facts ostensibly leads to conclusion that payment has been made to the assessee to the said party for receiving the services at various projects and such a payment cannot be held to be non genuine. The det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee-company, M/s. G.L. Litmus Events Pvt. Ltd. and other entities. ( b) Copy of confirmation from M/s. G.L. Litmus Events Pvt. Ltd. stating that Mr. Alexander Vidal, Mr. Herve Chu and Mr. Victor Besa (foreign nationals) were working on its project and their US Dollars were kept for safe custody in the searched premises. ( c) Copies of statements of floating advance accounts duly acknowledged by the said foreign nationals for the period 04.10.2010 to 31.10.2010 establishing that they were contracted by M/s. G.L. Litmus Events Pvt. Ltd. for its projects as well as their presence in India at the time of search. ( d) Copy of FIR dated 28.08.2010 (before date of search) lodged by the said foreign nationals on outbreak of fire at their premises on 27.8.2010, establishing that their valuables were kept in the safe custody of M/s. G.L. Litmus Events Pvt. Ltd. at the premises shared by it with the assessee and others. 32. Ld. CIT(A) after considering the entire facts and material on record has deleted the above after observing and holding as under:- I have gone through the details of this issue and written submissions filed by the appellant. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts projects as well as they were in India at the time of search. ( c) Refer P.B. page No 9D being copy of a FIR dated 28.08.2010 lodged by the foreign national contracted persons of M/s. G.L. Litmus Events Pvt. Ltd. subsequent to outbreak of fire at their premises on 27.08.2010 i.e. just prior to search. Therefore under the circumstances the valuables belonging to contracted foreign nationals were kept in the safe custody at the premises and under possession of M/s. C.L. Litmus Events Pvt. Ltd. 10.1 From the above discussion, it is evident that the appellant company furnished substantial material in support of its contention, but the Assessing Officer failed to bring on record anything adverse contrary to what is submitted and on record. Further, the release of foreign currency by the search party during their search operation u/s 132 itself proved that the same was released after the satisfaction of the search party with a conclusion that the same was neither an unexplained nor an undisclosed income of the appellant nor it belonged to M/s. G.L. Litmus Events Pvt. Ltd. but the same belonged to the foreigners contracted by the company M/s. G.L. Litmus Events PVt. Ltd. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in brief are that, Assessee Company is engaged in the business of erection, commissioning and consultancy of structure design process, decoration and exhibition pavilions etc. The assessee was awarded work for execution of same. Before us Ld. Counsel has explained the entire facts on this issue in the following manner:- The assessee company awarded work for execution of Common Wealth Games, 2010 (CWG).1n relation to this, the appellant had provided to M/s. GL Litmus Events Pvt. Ltd. for the execution of the CWG Games the following: i) Services amounting to ₹ 8.82 crores; and ii) Sales of ₹ 1,25,30,700/-. 2. The Id. AO. however noted that the Services (totalling to ₹ 8.82 crores), included in it rental charges of ₹ 5,80,78,138/- earned on material given on hire to M/s G.L. Litmus Events Pvt. Ltd. as under:- S No. Amount (Rs.) Description 1 25,38,077 Rental charges for Pre- fabricated ceiling 2 48,34,400 Rental charges for providing cassette floor/ramps/c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le document was found suggesting suppression of income, the Appellant, considering the above unforeseen peculiar circumstances owing to the noting on loose sheet recovered from the office desk of the said site manager after his death, with a view to coming out clean to protect its goodwill, to buy peace of mind and to cover up any other shortfall besides the abovementioned income of Rs.l6,78,340/- arising from sale of scrap, offered a sum of ₹ 20 lakhs on account of scrap sale to tax in the Settlement Application filed before the Hon'ble Settlement Commission u/s.245C of the Act to depict the true and full disclosure. However the said application stood un-admitted for the reason that the company, according to Hon. Settlement Commission, could not satisfactorily explain as to why capitalization of income generated from sale of scrap in cash should be restricted to ₹ 16,78,340/-. 2.3. The appellant also furnished a detailed chart, which is also appearing on pages 48 to 50 of the order of Ld. CIT(A), showing/narrating bill-wise contents of items, their utility, scrap value, stock position etc. 2.4. The Ld. A.O., however, alleged that although the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were asked to remove the same and to keep the scrap as payment in lieu of the services provided for dismantling/removing the structures and cleaning the village site. ( d) That in the interest of the business and in view of various cost involved in removing the structures etc. within a short span of time, shortage of godowns for storing those scrap etc., the company gave authority to its site supervisor/in charge to dispose of at the site itself at the maximum bargain price. ( e) That the structures erected in the CWG village have more artistic value than the cost of the material used, which has no residual value after the work is over. ( f) The AO has alleged that the materials/goods were used for 45 days in the CWG village, but he has failed to appreciate that during this period the goods were subjected to such rough use, that by the end of the period the goods had lost their usable life. Further, the goods which were found re-usable, were taken back to the godowns, duly shown as part of the closing stock and valued the same in accordance with the prescribed accounting standards. ( g) That during the course of verification of books of accounts, stock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, this was the evidence in the possession of the Assessing Officer with regard to the scrap sale and which was found not recorded in the books of account of the appellant. in the course of the assessment proceedings, the appellant failed to provide the complete details of sale of scrap and admitted that was an unaccounted sale of scrap to the extent of the transactions found recorded on the loose sheet recovered from the desk of the manager site in charge. The fact that the appellant offered ₹ 20 lakhs as income on account of sale of scrap in an application filed before the Hon'ble Settlement Commission itself established beyond doubt that the appellant made sale of scrap out of its books. 22.4. It is also seen that the Assessing Officer made the disallowance on adhoc basis without specifying particular item or bill on an estimate basis as there was no material in his possession except the transactions recorded on the loose sheet pertaining to ₹ 16,78,340/-. The appellant also did not furnish any details pertaining to the sale of scrap except to admit the transactions recorded on the loose sheet, the one which is already in the possession of the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odown for reuse and reflected in stock as at 31.03.2011. 137 Rental charges for providing temporary walls doors at CWG (Rs. 2,61,15,924) Company had stock of these materials for recycle and these items formed part of stock as at 31.03.2011. 138 Rental charges for providing miscellaneous on site material (Rs.41,43,540) Repair/renovation of doping centres toilets etc. - Nothing in the nature to be resold or scrap value. 177 Rental charges for providing signage, design, hoarding services at Delhi Airports. (Rs. 51,40,000) Furniture supplied at the Airport brought back after CWG and part of closing stock valued as per their balance useful life. Signages installed at Airports were not dismantled and hence not taken as stock or scrap. 178 Rental charges for providing Electrical other equipments (Rs.75,20,586) a)Electrical Material supplied from own stock and taken back at stock as at 31.03.2011 - ₹ 33,64,746 b)Air-conditioning done by taking on rent from outside parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned issue of sale of scrap has arisen due to fact that assessee itself has admitted and offered ₹ 20 lacs as income on account of scrap and material placed from CWG project before the settlement commission and the assessee has not provided any documentary evidences. Based on this fact, the AO has treated the entire details of services and material given on hire to M/s. G L Litmus Events P Ltd. and disallowed 50% of their value on the ground assessee has failed to provide details of purchase made for CWG and keeping in view the material and usage. He held that scrap value of these items cannot be less than 50% of the value. Ld. CIT (A) too has made value of scrap sold at 20% of the purchase value. Assessee who has awarded the execution of CWG had assigned M/s G.L. Litmus Events for the execution of CWG for the services and sales the said services also included rental charges of ₹ 5,80,78,138/-. The details of which have been incorporated above. During the course of survey a loose document was found in the office of Site Manager showing an amount of ₹ 16,78,340/- recorded sale of scrap without giving the details of item sold etc. Based on this material assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the stocks which are reflected in the books of account are part of stock as on 31st March, 2011 or not and if so, then no addition should be made; secondly, if the stock taken on rent has been returned back then also no addition on account of alleged sale of scrap should be estimated; and lastly, the AO shall examine whether any part of the scrap which has been sold in the subsequent year has been accounted for or not. With this direction this matter is remanded back to the AO, who shall give proper opportunity of hearing to the assessee to substantiate its contention alongwith the documentary evidences. In the result grounds raised by the assessee as well as by the revenue on this score are treated as partly allowed for statistical purpose. 41. Lastly, in the assessee s appeal the other ground which has been raised relates to addition of ₹ 11,84,424/-. The facts qua the issue are that the assessee was awarded contract with DDA to provided installation of signage at different sites for Common Wealth Games. In its books of accounts for the impugned assessment year, (i.e., A. Y. 2011-12) the assessee company has booked an amount of ₹ 78,39,230/- as revenue from DDA, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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