TMI Blog2019 (1) TMI 467X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. CIT (A) on this ground are hereby reversed and findings of AO are restored Unvouched expenses as per findings returned by the AO, addition of ₹ 3,00,000/- made in the assessment u/s 143 (3) was confirmed vide impugned order only remaining addition of ₹ 1,00,000/- was to be explained by the assessee who has not preferred to produce the account books supported with bills and vouchers to explain the genuineness of the expenses. So, we are of the considered view that this issue also requires to be sent back to the AO to decide afresh after providing an opportunity of being heard to the assessee. Disallowance of deduction u/s. 80IC of ₹ 1,55,96,115/- made by the Assessing Officer, we observe from the records that AO while calculating the disallowable profit of eligible units, has computed the claim u/s. 80IC on the basis of turnover of eligible units and non-eligible units. AO has not made any examination in depth as to the veracity of expenditure declared by the assessee to have been incurred on eligible and non-eligible units, particularly when the assessee could not be able to produce the books of accounts as well as bills and vouchers before the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the assessment proceedings by mistake. We, therefore, do not find any mistake in the conclusions reached by the CIT(A) as above. Bogus purchases - rectification application - Held that:- CIT(A) while deleting the addition has considered the rectification order u/s. 154 made by the Assessing Officer and the details of total purchases made by assessee and has rightly considered the actual bogus purchases at ₹ 78,82,615/- during the year. He, therefore, rightly directed the Assessing Officer to allow relief of remaining amount of ₹ 65,83,385/- by restricting the addition on account of bogus purchase of ₹ 78,82,615/- instead of ₹ 1,44,66,000/- considered by the Assessing Officer. Finding no infirmity in the impugned order, we uphold the same - Appeals of the Revenue partly allowed. - ITA Nos. 1530, 1531 And 1532/Del/2012 - - - Dated:- 8-1-2019 - Shri H.S. Sidhu, Judicial Member And Shri L.P. Sahu, Accountant Member For The Appellant : Sh. Banwari Lal, CIT/DR For The Respondent : None ORDER Per L.P. Sahu, A.M.: These three appeals have been filed by the Revenue against separate orders passed by the ld. CIT(A)-III, New ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional income declared by the assessee on account of scrap sale of Dehradun and Haridwar Unit. 6. The order of the CIT(A) is erroneous and is not tenable on facts and in law. Grounds raised in A.Y. 2006-07: 1. On the facts and circumstances of the case, the CIT(A) has erred in law and on facts in deleting the addition of ₹ 1,05,61,660/- 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 ₹ 1,08,75,000/-. 3. On the facts and circumstances of the case, the CIT(A) has erred in law and on facts in deleting the addition of ₹ 7,00,000/- made by the A.O. on account of disallowance unvouched business expenses. 4. On the facts and circumstances of the case, the CIT(A) has erred in law and on facts in deleting the disallowances of ₹ 3,54,86,456/- made by the Assessing Officer u/s. 80IC of the Income tax Act, 1961. 5. On the facts and circumstances of the case, the CIT(A) has erred in law and on facts in deleti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure A2/part-2 and A-2/Part B- 7. From the seized documents, it was noticed that there were other evidences of scrap sales made during the year. In this regard, the assessee was asked to reconcile from the surrendered made with various documents. The assessee filed revised chart of scrap sales and showed unaccounted scrap sales as under : B-2/A-2/page-1 55.61.603/- B-2/A-2/page 10 87,270/- 56,48,873/- The difference of scrap sales disclosed in the return of income filed u/s. 153A and unaccounted scrap sales as per above revised working, the resultant figure of ₹ 15,70,910/- was added to the total income of the assessee. 4. The Assessing Officer further observed from the revised chart submitted that the assessee has admitted that the purchase of ₹ 4,86,408/- from M/s. R.K. Enterprises is bogus. Accordingly, bogus purchase, as above, was added to the total income of the assessee. 5. The Assessing Officer further noticed that the main business of the assessee is manufacture and supply of transformers. From the seized documents, it was notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total income of ₹ 3,14,70,845/-. The assessee had eligible and non-eligible units. He had two units which are eligible for deduction u/s. 80IC. One is situated at plot No. 2, Sector 8A Ranipur District Daridwar and claimed deduction of ₹ 37,833/- on total sales of undertaking of ₹ 1.39 crores, which was newly established and submitted the audit report in form No. 10CCB separately. Other unit is suited at 1394/2M, Langha Road, Dehradun and has shown to have claimed net profit of ₹ 2,65,06,145/- u/s. 80IC on a turnover of ₹ 37.37 crores. The assessee submitted separate P L account, balance sheet and audit report in Form No. 10CCB. The details of income and expenditure submitted by the assessee in respect of eligible and non-eligible units are as under : Name of the head 80IC Unit Other Units Total Income Sales other income 37,44,46,850/- 63,61,34,335/- 101,05,81,185/- Expenditure Personnel Expenses 20,95,5161- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arged disproportionate expenses to the eligible and non-eligible units. He has accepted the submissions of the assessee only analyzing the data produced by the assessee without verifying the same from the books of account and supporting evidence. Unvouched expenses of ₹ 6 lacs have been allowed without verifying the same. Reliance placed on the judgment in Dhakeshwari Cotton Mills, 26 ITR 775 is misconceived. Accordingly, the ld. DR prayed to restore the order of the Assessing Officer. 11. None is present on behalf of the assessee. 12. After hearing both the sides and perusing the entire materials available on record, we observe in respect of issue No. 1 that the similar issue was involved in ITA No. 1929 1930/Del/2012 for the assessment years 2003-04 and 2004-05 respectively in the cases of assessee itself, which has been decided by the Tribunal in favour of the assessee observing as under : 14. When it is not in dispute that the assessee has been making payment on account of speed money varying from 0.8% to 2.58% of the project value/contract value, the AO has rightly assessed the amount of ₹ 30,85,500/- @ 0.75% of ₹ 41.14 crores for AY 2003-04 and &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt books supported with bills and vouchers to explain the genuineness of the expenses. So, we are of the considered view that this issue also requires to be sent back to the AO to decide afresh after providing an opportunity of being heard to the assessee. So, ground no.4 in AYs 2003-04 20044-05 is determined in favour of the Revenue for statistical purposes. 15. In view of aforesaid decision in the case of the assessee itself, ground No. 2 for assessment year 2005-06 and grounds Nos. 3 in assessment year 2006-07 and 2007-08 are allowed for statistical purposes and the matter is sent back to the file of Assessing Officer to decide it afresh in view of the directions given by the Tribunal in the case of assessee for A.Yrs. 2003-04 and 2004-05. The assessee shall be given reasonable opportunity of being heard. 16. As regards the issue relating to disallowance of deduction u/s. 80IC of ₹ 1,55,96,115/- made by the Assessing Officer, we observe from the records that the Assessing Officer while calculating the disallowable profit of eligible units, has computed the claim u/s. 80IC on the basis of turnover of eligible units and non-eligible units. The Assessing Officer, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 408/- in respect of bogus purchases admitted by the assessee itself. It is an admitted fact that the aforesaid amounts relate to bogus purchases and bogus sales, meaning thereby no actual purchase or sale took place or the assessee had no evidence to support these sales and purchases. However, the amounts relating to these bogus purchase and sales were stated to have been spent on bribery/speed money given to various persons, which is not allowable under the IT Act. These amounts of bogus purchases and bogus sales were admittedly not shown by the assessee in its profit and loss accounts or in any of its books nor did he claim any deduction on such bogus purchases and sales u/s. 80IC in original return. These two amounts of bogus purchases and sales also do not find place in Form No. 10CCB which was issued by an Accountant. Therefore, in our considered opinion, the assessee would not be entitled to the deduction u/s 80IC of the Act on the aforesaid additions made on account bogus purchases and bogus sales. The assessee is maintaining both eligible and non-eligible units. Had the above said purchases and sales been proved to be made for his eligible units and accounted for in its pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l position was explained to the A.O. and it was stated that disallowance should be made on the basis of such actual and correct position. For the year under consideration the assessing officer computed the total excess purchases at ₹ 2,08,93,524/- and after reducing already declared income of ₹ 52,43,035/-, he added the balance amount of ₹ 1,56,50,479/-. In the figure of ₹ 2,08,93,524/- the A.O. committed mistake in relation to two parties namely Mohit Industries and G.R. Gupta Bros. In respect of these two parties the A.O. took the purchases figure at ₹ 20,60,550/- and ₹ 12,40,465/- respectively, (totaling to ₹ 33,01,015/-). However, the fact of the matter was that the assessee did not make any purchases from the foresaid two parties during the year and further that the figure of ₹ 20,60,550/- in relation to Mohit Industries was actually figure of sales to them and not purchases from them. After considering the submissions of the assessee, the ld. CIT(A) has decided the issue as under : It is noted from the assessment order that the assessing officer made addition of ₹ 1,56,50,479/- on account of bogus purchases. Out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving gone through the aforesaid findings of the ld. CIT(A), we find that the conclusions reached by the ld. CIT(A) are based on factual position available on record and has reduced the amount of ₹ 1,23,49,264/- declared by the assessee as income under the head others . There being no contrary material on record to discard the above conclusion reached by the ld. CIT(A), we find no substance in ground No. 2 raised by the Revenue in appeal for the assessment year 2006-07. Accordingly, this ground of appeal deserves to be dismissed. 21. The additional issued by the Revenue in ground No. 1 for the assessment year 2007-08 is with respect to deletion of addition of ₹ 1,05,51,660/- made by the Assessing Officer on account of sale of scrap. On the basis of seized material, the assessee declared total sale of scrap at ₹ 29,36,340/- against total consumption of raw materials worth ₹ 134.98 crores. The Assessing Officer noticed that in earlier years, the scrap declared by the assessee ranges from 12.21% to 17.93% of the manufacturing of transformers. On this analogy, the Assessing Officer estimated the sales of scrap at ₹ 1,34,98,000/- representing to 1% of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the appellant and the order passed u/s 154 by the assessing officer in this regard has also been gone through. It is seen that original return of Income was filed by the appellant on 13.09.2007 declaring income of ₹ 1,96,92,770/- calculated as under :- Net Profit as per P L A/c 7,34,82,430 Add: Depreciation as per book 7 0,49,721 Less : Depreciation as per Income Tax Act 57,31,679 Gross Total Income 7,48,00,472 Less : Deduction u/s 80IC 5,51,07,706 Total Income 1,96,92,770 Thereafter, revised return was filed on 01.09.2008 declaring income of ₹ 3,71,92,770/- detailed as under : Net Profit as per P L A/c 7,34,82,430 Add: Depreciation as per book 70,49,721 Less : Depreciation as per Income Tax Act 57,31,679 Gross Total Income as per Original return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ignorance of the assessee s understanding of legal provisions. The assessing officer is accordingly directed to exclude the amount of ₹ 1,75,00,000/- from the income of the appellant which has been included twice in the income of the appellant. This ground of appeal is allowed. 24. For want of any contrary material from the side of Revenue, we do not find any justification to interfere with these findings of the ld. ACIT(A) as no litigant can be taxed twice on the same amount. On perusal of the financial statements and notes on accounts, we find that the amount of ₹ 1.75 crores had already been considered as income in the original return of income. However, the said amount was again included in the revised computation given during the assessment proceedings by mistake. We, therefore, do not find any mistake in the conclusions reached by the ld. CIT(A) as above. Accordingly, ground No. 5 deserves to be dismissed. 25. The further additional issue raised by Revenue in ground No. 7 of appeal for A.Y. 2007-08 relates to deletion of addition of ₹ 65,83,385/- out of addition of ₹ 1,44,66,000/- made by the Assessing Officer on account of bogus purchases. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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