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2018 (12) TMI 458

diaries are not prepared by the assessee but by third party and there is no signature of the assessee to even remotely suggest that the assessee has been paid rent by Shri. Kashinath Khemsa Khode for carrying out liquor business under the Excise Licence of the assessee. - While it is true that admission is an important piece of evidence; unless corroborated, it cannot be said to be conclusive and it is open to the person who has made the admission to show that it is incorrect; which in my considered opinion has been successfully done in the case on hand. Before me, Revenue has failed to controvert the averments made in the Affidavits dated 19.11.2015 filed by the Khodes and the clarifications by the assessee and Shri. Kashinath Khemsa Khode and Shri. Anil Kashinath Khode in statements dated 17.03.2016 and 18.03.2016 respectively. In this factual matrix of the case, as discussed above, the additions made by the AO and upheld by the CIT(A) on account of Rent for Assessment Years 2011-12 to 2013-14 are hereby deleted. - Disallowance of Excise Licence Fees paid - as per assessee assessee’s accounts have been audited u/s 44AB of the Act and the amounts in question have admitted .....

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ssessee were not subject to scrutiny assessment. 2.2 A survey u/s 133A of the Income Tax Act, 1961 (in short the Act ) was conducted on 28.08.2014 in the business premises of one Shri. Kashinatha Khemsa Khode at (i) Mahalaxmi Market, Divatgi Oni, Hubli and (ii) at another business premises at CTS No. 468, Bellary Galli, Hubli. In the course of the survey, it was allegedly found that Shri. Kashinath Khemsa Khode was carrying on the business of purchase and sale of liquor in the name and style of M/s. A. R. Habib & Wines and for this business, was using the Excise Licence standing in the name of the assessee. Therefore, the purchase and sale of liquor business of M/s. A. R. Habib & Wines were made in the name of the assessee. Certain material in the form of loose sheets, note books and diaries were also found and impounded in the survey action. On the basis thereof, a statement of one Shri. Anil Kashinath Khode, son of the aforesaid Shri. Kashinath Khemsa Khode was recorded on the date of survey. In his statement, Shri. Anil Kashinath Khode in Answer to Question No. 3, stated that his father Shri. Kashinath Khemsa Khode was carrying out the purchase and sale of liquor of bran .....

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loss account; holding that the assessee was not able to provide the challan for having paid the Excise licence fee. 2.4 Aggrieved by the orders of assessment; all dated 31.03.2016 for Assessment Years 2011-12 to 2013-14, the assessee filed appeals before the CIT(A), Hubli, raising several grounds contending that the aforesaid 2 additions/disallowances were unwarranted. The CIT(A), after hearing the assessee, dismissed the appeals for these three Assessment Years vide the impugned orders dated 31.08.2017; holding that, in respect of the additions made towards rent received for each of the three years, the notings in the impounded materials are unambiguous; are written in the normal course of business and that Shri. Anil Kashinath Khode who looks after the wine business had clearly deposed that the payments are nothing but payments of rent for the use of the liquor licence exploited by Shri. Kashinath Khemsa Khode. The CIT(A) also held that the statement denying the receipt of rental income by the assessee was an afterthought; that it was a self-saving statement and also that the subsequent statement of Shri. Kashinath Khemsa Khode was not reliable. The other disallowance of ₹ .....

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returned by the appellant from the business of running the liquor shop consistent with his finding that the appellant was merely in receipt of rent from the said liquor shop being run by Sri Kashinatha Khode under the facts and in the circumstances of the appellant's case. 5. Without prejudice to the right to seek waiver with the Hon'ble CCIT/DG, the appellant denies himself liable to be charged to interest u/s. 234-A and 234-6 of the Act, which under the facts and in the circumstances of the appellant's case and the levy deserves to be cancelled. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs. 3.2 I have heard the rival contentions of both parties and perused and carefully considered the material on record. 4. Ground Nos. 1 and 6 (Assessment Year 2011-12) Ground Nos. 1 and 7 (Assessment Years 2012-13 and 2013-14) 4.1 These grounds being general in nature, and not being urged before me, require no adjudication an .....

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by the AO/CIT(A). In support of the proposition that the Affidavits filed by Shri. Kashinath Khemsa Khode and Shri. Anil Kashinath Khode is a valid piece of evidence and cannot be ignored, the learned AR placed reliance on the decision of the Hon ble Apex Court in the case of M/s. Mehta Parikh & Co., (30 ITR 181) (SC). According to the learned AR, the assessee was running the business of the Wine Store and not Shri. Kashinath Khemsa Khode as stated in the earlier statement dated 28.08.2014 of Shri. Anil Kashinath Khode. In this regard, it was further contended that the assessee has filed the returns of income for the aforesaid three Assessment Years declaring income from the business of purchase and sale of liquor in the name and style of M/s. Jayalaxmi Wine Centre and thus making an addition on account of rent on the very same business amounts to double taxation. 6.2 Per contra, the learned DR for Revenue submitted that the statement recorded from Shri. Anil Kashinath Khode in the course of survey on 28.08.2014 clearly states that the assessee was receiving daily rent and cannot be ignored as it is an important piece of evidence. According to the learned DR, the subsequent Aff .....

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idavits dated 19.11.2015, filed in the course of assessment proceedings. I have also perused the statement of the assessee recorded on 17.03.2016 and the statement of Shri. Kashinath Khemsa Khode recorded on 18.03.2016 recorded in the course of assessment proceedings; wherein they have completely denied that the assessee had received any rent from Shri. Kashnath Khemsa Khode for using the Excise Licence for carrying on the liquor business and the said statements corroborate the submissions in the Affidavits filed by Shri. Anil Kashinath Khode and Shri. Kashinath Khemsa Khode; all of which have been merely brushed aside by the authorities below as mere afterthoughts and as being unreliable without controverting the declarations made therein. It is settled position that Affidavit filed have evidentiary value and the same cannot be ignored; as has been held by the Hon ble Apex Court in the case of M/s. Mehta Parikh & Co., Vs. CIT (30 iTR 181) (SC). Therefore, the Affidavits filed by Shri. Anil Kashinath Khode and Shri. Kashinath Khemsa Khode explaining the facts which has not been controverted by authorities below, cannot be disbelieved, ignored and brushed aside as an afterthough .....

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uthorities below. 7.3.1 I have heard the rival contentions and perused the material on record. Copies of the challans for payment of ₹ 4,18,600/- for Excise Licence for Assessment Years 2012-13, paid on 28.06.2011 and for Assessment Year 2013-14, paid on 26.06.2012 are placed on pages 65 and 66 of the paper book filed. Even otherwise, as the assessee s books of accounts have been audited u/s 44AB of the Act; copies of challans for payment of Excise Licence Fees to government are filed to corroborate the assessee s claims for such expenditure and the fact that the assessee admittedly carried on the business of sale of liquor during the impugned Assessment Years 2012-13 and 2013-14, I am of the view that the same is allowable expenditure. In the light of the aforesaid evidence and in this view of the matter, the disallowance of the expenditure on Excise Licence Fee made by the AO and sustained by the CIT(A) is factually unsustainable for Assessment Years 2012-13 and 2013-14 and therefore the same are deleted. Ground No. 5 raised by the assessee for Assessment Years 2012-13 and 2013-14 are allowed. 8. Ground No. 2 8.1 Since the assessee s grievances/grounds raised on the merits .....

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