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TMI Blog2018 (5) TMI 1824X X X X Extracts X X X X X X X X Extracts X X X X ..... peals), Alwar has erred in law as well as on the facts and circumstances of the case in deleting the addition of Rs. 5,67,936/- made by AO on a/c of estimation of profits u/s 145 of the Act appreciating material facts of the case. 4. That the Commissioner of Income Tax (Appeals), Alwar has erred in law as well as on the facts and circumstances of the case in restricting the addition of Rs. 5,85,323/- to Rs. 1,37,902/- made by AO on a/c of freight receipts without appreciating the findings of AO given on the basis of Annexure A02 page 1-6 of loose papers impounded during the course of survey. 5. That the Commissioner of Income Tax (Appeals), Alwar has erred in law as well as on the facts and circumstances of the case in deleting the disallowance of Rs. 2,53,590/- made by AO on a/c of interest u/s 36(1)(iii) of the I.T. Act, 1961. 6. That the Commissioner of Income Tax (Appeals), Alwar has erred in law as well as on the facts and circumstances of the case in restricting the disallowance of Rs. 50,000/- to Rs. 15,000/- made by AO on a/c of Director's Travelling expenses. That the appellant craves leave to add, amend or alter the grounds of appeal on or before the date the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in fact it goes in favour of the assessee that the amount surrendered was more than the amount appearing in the loose papers. When the surrendered amount was more than the amount spent by the assessee and already taxed then making addition of the differential amount is nothing but double taxation of the same income. 4. We have considered the rival submissions as well as the relevant material on record. Once the assessee has surrendered an income of Rs. 20,00,000/- due to the incriminating material found during the survey then the application of the same income if less than the amount surrendered by the assessee would not lead to the situation that assessee had surrendered less amount than it ought to have surrendered. The AO has made an addition on the ground that the assessee has spent only Rs. 9,21,903/- and, therefore, the balance amount is liable to be taxed as surplus cash. The ld. CIT (A) has deleted this addition by considering the fact that there is no basis of such addition made by the AO. We do concur with the finding of the ld. CIT (A) that the surplus cash, if any, is computed by the AO to the extent of the surrendered amount cannot be considered as an additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale during the year under consideration. 6.1. On the other hand, the ld. A/R has submitted that the assessee has not accepted under billing of scrap sale. However, on the basis of loose papers found during the course of survey and in order to buy peace of mind, the assessee surrendered undisclosed income of Rs. 20,00,000/- which covers the difference as found in the loose papers on account of scrap sale. The AO himself has given the telescopic credit of the addition made in respect of the amount surrendered by the assessee and addition made on account of surplus cash. In the absence of any evidence, the AO is not justified to hold that the assessee has under billed the entire sale of scrap when the transactions in the loose papers were found only in respect of the sale of Rs. 30,02,650/- to four parties. She has further contended that all sales of scrap are controlled by Excise Rules and in the absence of any other material, no such extrapolating can be made by the AO. Further, there are different items of scrap which has different rates by which these scraps sold. Therefore, applying one rate for all kinds of scrap is not justified. 7. We have considered the rival submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... item of scrap sale found recorded in the loose papers impounded during the course of survey and then apply the same rate in respect of the scrap sale of the same item which is shown by the assessee sold at the rate as mentioned in the corresponding bill. Needless to say, the assessee be given an opportunity of hearing before passing a fresh order on this issue. Ground No. 3 is regarding trading addition made by the AO was deleted by the ld. CIT (A). 8. The AO rejected the books of account under section 145(3) of the IT Act. The AO noted that for the assessment year 2004-05 after considering the surrendered amount of Rs. 57,00,000/-, the GP rate comes to 7.46% as against the GP rate for the year under consideration after considering the surrendered amount and addition is 2.44%. Therefore, the AO proposed to apply the GP rate of 7.46% to the total sale/turnover of the assessee. The assessee objected to the rejection of books of account as well as the GP addition proposed by the AO. The AO finally applied the GP rate at 6% including surrendered amount and consequently made an addition of Rs. 5,67,936/- after allowing the telescopic benefit for the addition made on account of scrap s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he surrendered income of the assessee of the preceding year. Therefore, we find that the basis applied by the AO is not proper and appropriate and, therefore, we do not find any error or illegality in the order of ld. CIT (A) in deleting the said addition. Ground No. 4 is regarding an addition made on account of freight receipts of Rs. 5,85,323/- which was restricted by the ld. CIT (A) to Rs. 1,37,902/-. 11. The AO on the analyses of loose papers found that the assessee has received unaccounted cash @ 22.25% which is the difference between the billed amount and actual freight mutually determined with the transporters. By applying this rate to the total expenses on freight declared by the assessee, the AO has made an addition of Rs. 5,85,323/- over and above an amount of Rs. 1,37,902/- declared by the assessee and surrendered during the survey. The ld. CIT (A) deleted the said addition on the ground that the AO has made the addition without bringing any material on record to prove that the assessee has received cash back on the total freight charges. 12. Before us, the ld. D/R has submitted that though the loose papers contains the unaccounted cash receipt found at Rs. 1,37,902/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee paid to Haryana Rajasthan Roadlines. Therefore, to the extent of freight paid to the said transporter, the inflated rate as applied by the assessee is justified but not in respect of the other transporter when there is no material or other record to show such an arrangement between the assessee and other transporter. Accordingly, we set aside this issue to the record of the AO to verify the other freight charges and only to the extent of freight charges to Haryana Rajasthan Roadlines this difference rate can be applied. Ground No. 5 is regarding disallowance of interest under section 36(1)(iii) which was deleted by the ld. CIT (A). 14. The assessee has given loan to M/s. International Engineering & Manufacturing Services Pvt. Ltd. without charging any interest. The AO has disallowed the proportionate interest expenditure amounting to Rs. 2,53,590/-. On appeal, the ld. CIT (A) has deleted the disallowance made by the AO by recording the fact that no fresh loan was given by the assessee during the year under consideration. 15. We have heard the ld. D/R as well as the ld. A/R and considered the relevant material on record. At the outset, we note that the disallowance made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, we do not inclined to entertain the application for condonation of delay. Accordingly, the cross objection filed by the assessee being barred by limitation is dismissed. 19. The ld. A/R of the assessee has pleaded that the assessee is raising the objection against the appeal of the revenue as per Rule 27 of the ITAT Rules, 1963. We have gone through the order of ld. CIT (A) as well as the objections raised by the assessee in the Cross Objection and noted that none of the objections raised by the assessee before ld.CIT (A) which were decided against the assessee shall have the effect of rejecting the appeal of the revenue before us. The scope of raising the objections under rule 27 of the ITAT Rules is only to the extent that if the assessee succeeds in its ground raised before the ld. CIT (A), the appeal filed by the revenue would fail. Thus the effect of objection raised under rule 27 would in any case will sustain the impugned order of ld. CIT (A) and consequent failure of the revenue's appeal but if the grounds which are decided against the assessee are not having direct bearing either on the sustainability of the assessment order or on the grounds raised by the revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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