TMI Blog2018 (10) TMI 358X X X X Extracts X X X X X X X X Extracts X X X X ..... 003-04 and ₹ 43,37,000/- @ 0.75% of ₹ 61.83 crores for AY 2004-05 by treating the same to have been paid out of unaccounted income generated from scrap of sale. Since the assessee has failed to explain the availability of funds with him to explain the entries made in the seized material pertaining to the speed money so as to work out as to which of the amount pertains to a particular assessee in group cases on account of speed money, the benefit of telescoping cannot be given to it. So, in these circumstances, ld. CIT (A) has erred in reversing the order of the AO in assessing the speed money at ₹ 30,85,500/- & ₹ 43,37,000/- for AYs 2003-04 & 2004-05 respectively. So, the findings returned by the ld. CIT (A) on this ground are hereby reversed and findings of AO are restored. - Decided in favour of the Revenue. Transformer oil as returned by the customers not taken in the figure of sales in FY 2002-03 as per audit report - Held that:- Assessee has not produced stock register showing returned quantity of transformer oil and the said sale made because of the fact that due to search and seizure operation their record was scattered. Merely because of the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total addition of ₹ 32,71,000/- made by the Assessing Officer on account of unaccounted income from scrap sales. 2. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in holding that the Assessing Officer was not justified in estimating speed money expenses at ₹ 30,85,500/-. 3. On the facts and circumstances of the case, the CIT(A) has erred in law and on facts in deleting the addition of ₹ 42,34,562/- made by the AO on account of value of transformer oil returned by the customers and not shown as closing stock. 4. On the facts and circumstances of the case, the CIT(A) has erred in law and on facts in deleting the addition of ₹ 3,00,000/- made by the A.O. on account of allowance of unvouched business expenses. AY 2003-04 1. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in deleting the addition of ₹ 62,94,000/- made by the Assessing Officer on account of unaccounted income from scrap sales. 2. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in holding that the Assessing Officer was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,00,000/- on failure of the assessee to prove the genuineness of the expenses. 5. Assessee carried the matter by way of appeals before the ld. CIT (A) who has given part relief by partly allowing the appeals. Feeling aggrieved, the Revenue has come up before the Tribunal by way of filing the present appeals. 6. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. GROUND NO.1 OF ITA No.1929/Del/2012 (AY 2003-04) 7. Undisputedly, the assessee company has been making sale of scrap which has not been reflected in the books of account. It is also not in dispute that the assessee company has declared additional undisclosed income of ₹ 40,77,693/-, ₹ 1,99,79,532/- and ₹ 29,36,340/- for AYs 2005-06, 2006-07 2007-08 respectively. It is also not in dispute that the AO has made addition on account of scrap sale on the basis of estimation only by relying upon the statement of Subhash Chand Sharma. It is also not in dispute that assessee has offered an amount of ₹ 15,58,345/- for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04-05 of material consumed as against 1% estimated by the AO. This fact goes to prove that generation of scrap sale in all the years cannot be uniform. 10. In these circumstances, we are of the considered view that in case of assessment u/s 153A/143(3) addition cannot be made merely on the basis of estimation but on the basis of incriminating material only, if any, seized during the search operation, which is undisputedly not there on the file for AY 2004-05. Reliance in this regard is placed on the decision rendered by Hon ble jurisdictional High Court in case of CIT vs. Kabul Chawla - 380 ITR 173 (Del.) . Operative part of which his reproduced below :- 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade to the income already assessed. 11. So, ld. CIT (A) has rightly deleted the addition for AY 2004-05 on account of scrap sale. So, ground no.1 in AY 2004-05 is determined against the Revenue. GROUND NO.2 OF ITA No.1929/Del/2012 (AY 2003-04) ITA No.1930/Del/2012 (AY 2004-05) 12. Undisputedly, there was seized material unearthed during the search showing that assessee has made payment ranging from 0.8% to 2.5% of the project value in cash as speed money/bribe and thereby evidences of speed money of ₹ 10,00,000/- at many instances. In the absence of further detail provided by assessee as to making payment of speed money to various persons shown in the seized material, AO proceeded to estimate speed money paid by the assessee @ 0.75% of ₹ 41.14 crores, the sale figure of the transformers but has not made any separate addition as this amount is treated to have been paid out of unaccounted income generated from sales of scrap. 13. Ld. CIT (A) deleted the addition by providing the benefit of telescoping. However, when Annexure A-4-6 annexed with the assessment order is perused, it contains the details of various expenses and has been categorically menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nos.668 to 676 and 740 to 749 dated 31.03.2002 which was duly accounted for the year ending 31.03.2002 but the same was not accepted by the customer and was received back by the company on 30.09.2002 and were debited against the sale related to FY 31.03.2003. So, the quantity in question was taken in stock and was consumed in regular course of business during the financial year. 17. However, to explain all these facts, the assessee has not produced stock register showing returned quantity of transformer oil and the said sale made because of the fact that due to search and seizure operation their record was scattered. Merely because of the fact that assessment for the year under consideration as completed u/s 153A / 143 (3), particularly when incriminating material was seized on the basis of which different additions were made and the fact that the assessee has itself admitted the sale and then alleged return of the transformer oil in question, the ld. CIT (A) could not have arrived at the decision to delete the addition made by the AO. However, we are of the considered view that this issue is required to be remanded back to the AO to decide afresh on the basis of stock regist ..... X X X X Extracts X X X X X X X X Extracts X X X X
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