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TMI Blog2018 (12) TMI 1702X X X X Extracts X X X X X X X X Extracts X X X X ..... As such, the CIT(A) is justified in deleting such additions made u/s. 68 and confirm the order of the CIT(A). Similar ground was raised in other appeals. This ground of appeals of the Revenue is dismissed for all the assessment years. Addition u/s. 69B - HELD THAT:- Since, the transaction was between M/s. Basanth Impex and Shri Thulasidas, there is no material on record to suggest that the assessee was in any way involved in this business. Therefore, the order of the CIT(A) on this issue is confirmed, deletion of addition is justified. This ground of appeals of the Revenue is dismissed. Addition u/s. 69B towards interest free loans advanced - HELD THAT:- Advances by M/s. Basanth Impex to Shri Thulasidas, a close friend and associate of the assessee, interest free loans of ₹ 2 crores advanced by Ms/. Basanth Impex to Shri Jayakrishnan, a close friend and associate of the assessee and interest free loans of ₹ 4.21 crores advanced by M/s. Basanth Impex to M/s. Thulasi Developers which is promoted by Shri Thulasidas, a close friend and associate of the assessee. The Assessing Officer suspected that these advances were actually made by the present assessee himself, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .43 as on 31/03/2009 was advanced by the assessee to M/s. Sabari Switchgear P. Ltd. Without verifying these facts, the Assessing Officer treated the advance of ₹ 40,23,407/- given by M/s. Sabari Switchgear Pvt. Ltd. to the assessee as deemed dividend u/s. 2(22(e) of the Act which is not correct. Hence, the CIT(A) deleted the addition. In view of this, we do not find any infirmity in the order of the CIT(A) and the same is confirmed. Hence, this ground of appeal of the Revenue Proceedings u/s.153A - HELD THAT:- The date of search has to be reckoned with last warrant executed and there was no dispute about the fact that last warrant was executed in F.Y. 2014-15 and, therefore, the AO had correctly initiated the proceedings u/s. 153A for A.Y. 2009-10 and dismissed this ground of appeal of the assessee. Accordingly, this ground of Cross Objections of the assessee is dismissed. Notice u/s.153A without having jurisdiction as his objection filed on 26.12.2016 was not disposed off u/s.124(3) - HELD THAT:- Since the order was already passed on 08.11.2016, the CIT(A) was of the view that the ACIT, Central Circle had valid jurisdiction and accordingly he issued notice U/s. 153 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O and dismissed this ground of appeal of the assessee. We are in agreement with the finding of the CIT(A) and dismiss this ground of Cross Objections of the assessee. - ITA No./C.O. No. 347 To 360/Coch/2017, 33 To 42/Coch/2017 - - - Dated:- 13-12-2018 - S/Shri Chandra Poojari, AM And George George K., JM Revenue by Shri Shantham Bose, CIT(DR) Assessee by Shri Iype Mathew, FCA ORDER Per BENCH: These appeals filed by the Revenue and the Cross Objections and appeal in ITA No.355/Coch/2017 filed by the assessees are directed against the different orders of the CIT(A) for different assessment years. Since the issues involved in these appeals and Cross Objections are common, they were clubbed together, heard together and are being disposed of by this common consolidated order. 2. The first common ground in ITA Nos. 347 to 352 354/Coch/2017 covering AYs 2009-10 to 2015-16 is with regard to deletion of addition made under section 68 of the I.T. Act. 3. Since the facts are similar in all the appeals, we consider the facts as narrated in ITA No. 347/Coch/2017. The assessee is an individual conducting bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bari Quality Foods) a) Basanth Impex Shree Chao Impex Asst.Year Total Turnover Turnover with SQF Turnover with Sabari Millenium Exports P Ltd Turnover with Sabari Enterprises Ltd Turnover with Sabari Switchgear P Ltd 2009-10 410006631 386596312 8594439 0 14815880 2010-11 244490336 194527698 34520537 0 15442101 2011-12 938148418 175959088 287770321 465465876 8953133 2012-13 256142048 98954776 29957586 116784990 10444696 2013-14 167547824 27370525 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Turnover with Sabari Enterprises Ltd Turnover with Sabari Switchgear P Ltd 2009-10 0 0 0 0 0 2010-11 0 0 0 0 0 2011-12 64841 0 64841 0 0 2012-13 0 0 0 0 0 2013-14 4034750 0 2555749 1479001 0 2014-15 4457276 0 2576166 1881110 0 2015-16 0 0 0 48718355 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 2013-14 5.8 1.1 20 25 2014-15 3.6 6.4 18 52 The Assessing Officer noticed that the businesses of Sabari Group declared a profit of 1.1 to 52% for the Asst Years mentioned above. The Kolkota based businesses declared incomes in their returns as under: Basanth Impex and Shree Chao Impex Asst Year Total Turnover Total Income Returned Gross profit ratio declared 2009-10 1217756546 134990 0.10 2010-11 910675187 207600 0.14 2011-12 1884595022 252810 0.11 2012-13 2013-14 1636835083 1194591232 189540 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gross profit ratio declared 2009-10 2863662066 990900 0.60 2010-11 3031108532 760114 0.34 2011-12 845673545 211683 3.0 2012-13 2184183988 982890 0.42 2013-14 658241184 374514 0.60 2014-15 444409756 525030 1.06 2015-16 220741120 408150 2.92 Shyam International Asst Year Total Turnover Total Income Returned Gross profit ratio declared 2009-10 1432628764 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... death he had taken over the business related work. In answer to question 12 he had explained that books of accounts of M/s Basanth Impex, M/s Shree Chao Impex, M/s Shyam International and M/s Mayur Impex were maintained by Sabari Group and are kept in their possession. He stated that they only put signature on legal documents, P L A/c, Balance Sheet, Cheque books as per direction of Sabari Group. He also went on state under Oath that M/s Basanth Impex, M/s Shree Chao Impex, M/s Shyam International and M/s Mayur Impex are controlled and managed by Sabari Group itself. According to him all the business activities, books of accounts etc. in respect of these proprietorships concerns were performed and maintained by Sabari Group. They were used only for signing authorities by Sabari Group. In lieu of signature they got commission from Sabari Group. He had further stated that the proprietorship concerns were only paper transactions. In reply to notice u/s. 142(1) on 29/11/2016, an affidavit was filed before the Judicial First Class Magistrate, Alipur stating that the statement given before the Income tax Authority was being retracted on the following grounds 1 That he was the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to rectify his declaration before authorities before whom such declaration was made, there was no valid reason for retraction of the same after 2 and months. According to the Assessing Officer it was his father and later on he himself who handled the business. They received a commission every year for their dealing with Sabari Group. His Pan is AFCPK5709F and the bank accounts of these proprietorship were in Kollam branches of various banks as under: i)A/c No 200007114711 with IndusInd Bank, Kollam Branch in the name of Basanth Impex. ii. A/c No 200007114811 with Induslnd Bank, Kollam Branch in the name of Mayur Impex iii.A/c No 200007114803 with Induslnd Bank, Kollam Branch in the name of Shyam International 3.6 It was found that another Kolkota based business having substantial transactions with Sri Sunil Kumar and his companies are M/s Ajay Iron and Steel P Ltd. A survey u/s 133A was conducted at the business premises of the company at Kolkota on 28/4/2016 and during the course of it a statement was recorded from Sri, Ravi Biyala, Chartered Accountant. In the statement, Sri Ravi Biyala stated that M/s Ajay Iron and Steel P Ltd conducts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Director Sri Sunil Kumar by M/s. Sabari Millenium Impex P Ltd which was incorporated in 2003. As the reserves for the financial year 2007-2008 was only ₹ 1,88,051/-, payment received from M/s Sabari Millenium P Ltd was restricted to ₹ 1,88,051/-. According to the Assessing Officer, during the relevant previous year a sum of ₹ 40,23,407 from M/s. Sabari Switchgear was received as loans and advances which was also a payment by M/s Sabari Switchgear P Ltd to its Managing Director and therefore taken as deemed dividend u/s 2(22)(e). The Assessing Officer made addition to total income at ₹ 40,23,407/- as the previous years accumulated profits wass ₹ 57,83,680/-. Under the head Sundry creditors, the balances from the following are: Basanth Impex : 16169669 Shyam International : 78815886 Vani Exporters : 48103927 Therefore these balances were added to the total income as unexplained income and addition on account of this was ₹ 14,30,89,482/-. 4. On appeal the CIT(A) dele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh Khetan retracted the above statement by way of an affidavit after 2 and months from the date of recording his statement u/s. 133A by the Income tax authorities. The Ld. AR submitted that the retraction is valid and his submission that the original statement recorded was under coercion was to be accepted. It was submitted that there was no evidence for payment of any commission form Sabari Group to the Calcutta based companies and the Bank accounts of these concerns were maintained by them in Kollam branches in order to save the bank charges on account of transfer of funds and for speedy transfer of funds. It was submitted that Shri Ravi Biyala was only a partner of the C.A. firm, who had audited the accounts of M/s. Ajay Iron Steel Pvt. Ltd. and he had issued an audit report in Form No. 3CA and its annexure in From No. 3CD. It was submitted that Shri Ravi Biyala also retracted his statement by way of an affidavit dated 20/12/2016, by which he admitted that he had only little knowledge about the affairs of the Company. The Ld. AR submitted that the Assessing Officer had doubted that the credits appearing in the assessee s books were his own funds and round tripping of funds o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. The Ld. AR relied on the following judgments of the High Courts in support of the above contention: 1) CIT vs. Sahibganj Electric Cables Pvt. Ltd. (115 ITR 408) (Cal.) 2) ACIT vs. Hanuman Agarwal (151 ITR 150) (Patna) 3) Mod Creations Pvt. Ltd. vs. ITO (354 ITR 282) (Delhi) 4) CIt vs. Anirudh Narayan Agarwal (84 CCH 24)(All.) 5) DCIT vs. Rohini Builders (265 ITR 360) (Guj.) 7. We have heard the rival submissions and perused the record. The seized material marked as SKP/KLM/DA 1 to 23 clearly showed a lot of trade activities between the assessee and these companies namely, M/s.Sabari Enterprises P Ltd, M/s. Sabari Millenium Exports P Ltd, M/s. Sabari Switchgear P Ltd , and Basanth Impex, Shyam International, Sree Chao Impex, Ajay Iron and Steel P Ltd, Vani Exports and Mayur Impex. The narrated facts in earlier pages of this order in the tabular form proved the trade activities carried on by the assessee with the alleged parties. The Assessing Officer has not denied these business transactions with the alleged parties. The assessee is a trader of DEPB import licences. The assessee purchases these licenses from exporter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le with the Assessing Officer. As seen from the facts of the case, the Assessing Officer has not found any mistake in the books of account maintained by the assessee and he has not rejected the assessee s books of account. The addition made by the AO was mainly based on the statement recorded from Shri Manish Khetan who later retracted his statement and therefore, much credence cannot be given to the statement recorded from these persons as we do not know whether the statement is correct as they have not brought on record any corroborative evidence. Further, the Assessing Officer has not given opportunity of cross examination of these persons to the assessee. The books of accounts of these concerns were duly audited and they have filed the returns of income. The Department having accepted their returns of income, it is not possible to reject certain entries without bringing in any contra evidence against those entries. The main reason for making the addition in the hands of the assessee is that the other concerns were doing business with very low margin of profit. The Assessing Officer suspected extending such huge advances to the assessee. In our opinion, suspicion cannot be reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because of which the assesses were adversely affected. More so, the circumstances surrounding the case are not strong enough to justify rejection of the assessee s plea of providing opportunity of cross examination. In the present case, the entire evidence has to be appreciated in a wholesome manner and even when there is a documentary evidence, the same can be overlooked if there are surrounding circumstances to show that the claim of the assessee is opposed to the normal course of human thinking and conduct or human probabilities. There is difficulty in rejecting the assessee s plea as opposed to the normal course of human conduct. The evidence collected by the lower authorities was not enough to establish their stand that the main transactions carried out by the assessee with the above parties were only paper transactions and only accommodation entries. As discussed earlier, there is no evidence which was brought on record to directly show that these transactions are accommodation entries. Therefore, no addition could be made on account of these alleged transactions in the hands of the assessee by treating them as unexplained credits u/s. 68 of the Act. In our opinion, transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lose nexus between M/s. Basanth Impex and the assessee. The Ld. DR submitted that the proprietor of M/s. Basanth Impex, Shri Manish Khetan admitted on oath that this was only a paper business doing the bidding of the assessee. Therefore, it was prayed that the addition made u/s. 69B of the Act may be restored. 8.4 On the other hand, the Ld. AR submitted that the addition was not made on the basis of any documentary evidence but purely on suspicion, presumption and surmises and therefore, it cannot be assessed as unexplained investment of the assessee /s. 69B of the I.T. Act. 8.5 We have heard the rival submissions and perused the record. Since, the transaction was between M/s. Basanth Impex and Shri Thulasidas, there is no material on record to suggest that the assessee was in any way involved in this business. Therefore, the order of the CIT(A) on this issue is confirmed, deletion of addition is justified. This ground of appeals of the Revenue is dismissed. 8.6 Similarly, for the assessment year 2012-13, the Assessing Officer made the addition u/s. 69B towards interest free loans of ₹ 80 lakhs advanced by M/s. Basanth Impex to Shri Thulasidas, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and circumstances of the case, the CIT(A) held that the only on the basis of suspicion and in the absence of any evidence, the Assessing Officer was not justified in making the addition of ₹ 61 lakhs u/s. 69 of the Act and deleted the same. 9.3 Against this, the Revenue is in appeal before us. The Ld. CIT(DR) submitted that the CIT(A) overlooked the fact that M/s. Basanth Impex did not have the sources to make such a large investment and that preponderance of probability suggested that the investment was made on the behalf of the assessee. 9.4 On the other hand, the Ld. AR submitted that the assessee had duly reflected this investment in his books of accounts. If the Assessing Officer had doubt about the sources of investment by M/s. Basanth Impex, the Ld. AR submitted that inquiry should have been conducted in the case of M/s. Basanth Impex and addition should have been made in that case. 9.5 We have heard the rival submissions and perused the record. The total investment was made at ₹ 1.61 crores. Out of this, the assessee paid ₹ 1 crore and the balance amount of ₹ 61 lakhs was paid by M/s. Basanth Impex towards subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per, notings without any cogent supporting corroborative evidence cannot be sustained. Accordingly, he deleted the addition. 10.3 Against this, the Revenue is in appeal before us. The Ld. CIT(DR) submitted that the CIT(A) overlooked that as per section 132(4A), the contents of seized documents are presumed to be true. It was submitted that the CIT(A) erred in holding that sufficient enquiries had not been done by the Assessing Officer and the CIT(A) could have got the same investigated by the Assessing Officer rather than summarily deleting the addition. 10.4 The Ld. AR submitted that the Assessing Officer himself admitted that the advance paid as per books was ₹ 6,07,00,000/- which was evident from the first sentence of para 13, page 10 of his assessment order. So what was not recorded even according to the Assessing Officer should have been 13253500/- i.e., ₹ 73953500/- minus ₹ 6,07,00,000/- in place of which he made an addition of ₹ 3,08,19,727/- which figure cannot be derived from the other figures mentioned in his assessment order. Therefore, with respect to this addition also, no explanation was sought from the assessee and the quan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do not find any infirmity in the order of the CIT(A) and confirm the same. This ground of appeal of the Revenue is dismissed. 11. The next ground in ITA Nos. 347/Coch/2017 is with regard to deletion of addition made u/s. 2(22)(e) of the I.T. Act. 11.1 The facts of the case are that the assessee received ₹ 1,70,62,169/- from M/s. Sabari Milineium Impex P. Ltd. as loans and advances which was paid to Director, Shri Sunil Kumar, the assessee. As the reserves for the F.Y. 2007-08 was only ₹ 1,88,051/-, the payment received from M/s. Sabari Milineium Impex P. Ltd. was restricted to ₹ 1,88,051/-. During the relevant previous year, a sum of ₹ 40,23,407/- from M/s. Sabari Switchgear P. Ltd. as loans and advances was paid to its Managing Director and therefore, taken as deemed dividend u/s. 2(22)(e) of the Act. The Assessing Officer made addition to total income of ₹ 40,23,407/- as the previous years accumulated profits at ₹ 57,83,680/-. 11.2 On appeal, the CIT(A) deleted the addition by observing that the addition was made in a routine mechanical manner without verifying the facts of the case. During the year under considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced the fact that the assessee had advanced a sum of ₹ 8,48,01,579/- to M/s. Sabari Switchgear Pvt. Ltd. Thus, net amount of ₹ 8,07,78,171.43 as on 31/03/2009 was advanced by the assessee to M/s. Sabari Switchgear P. Ltd. Without verifying these facts, the Assessing Officer treated the advance of ₹ 40,23,407/- given by M/s. Sabari Switchgear Pvt. Ltd. to the assessee as deemed dividend u/s. 2(22(e) of the Act which is not correct. Hence, the CIT(A) deleted the addition. In view of this, we do not find any infirmity in the order of the CIT(A) and the same is confirmed. Hence, this ground of appeal of the Revenue in ITA No. 347/Coch/2017 is dismissed. 11.6 The only ground in assessee s appeal in ITA No. 355/Coch/2017 is with regard to deletion of addition of ₹ 62,78,256/- made u/s. 2(22)(e) of the I.T. Act as deemed dividend. 11.7 We have heard both the parties. In this assessment year, the assessee being the Managing Director and beneficiary owner of shares of M/s. Sabari Switchgear Pvt. Ltd., received loan of ₹ 4,94,78,237/-. The cumulative profit in the hands of M/s. Sabari Switchgear Pvt. Ltd. was at ₹ 62,78,256/-. To that e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iry. In our opinion, the argument of the CIT(DR) is misconceived. The assessments were framed u/s. 153A of the I.T. Act and it is the duty of the investigating authorities as well as the Assessing Officer to make necessary enquiry before framing the assessment. The failure on the part of the Assessing Officer to carry out necessary enquiry for bringing evidence on record, cannot be attributed to the assessee and at this stage, we are not in a position to extend time so as to cause further enquiries to facilitate evidence on record to sustain the additions. There cannot be any further enquiry or examination of facts, if the basic facts necessary for the disposal of the matter are already on record. In our opinion, factually, further enquiry can be done in rare cases by the CIT(A) only when it is not possible for the CIT(A) to make just order. There cannot be any further enquiry or calling for remand report by the CIT(A) for patching up the weak part of the case and fill up the omission of the authorities by giving another innings. The CIT(A) should decide the matter one way or the other rather than causing further enquiry, when all the facts required for adjudication were already av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO correctly issued Notice on 29.11.2016. The CIT(A) was of the view that the assessee filed his objection on 26.12.2016, which can only be treated as an afterthought and needed to be ignored, as by then assessment proceedings were in advance stage and the appellant was aware that substantial additions are likely to be made. In view of the sequences of events discussed above, the CIT(A) held that this ground of appeal was of no relevance and the same was dismissed. 15.2 We have heard the rival submissions and perused the record. Considering the above facts, we do not find any infirmity in the order of the CIT(A) and uphold the same. Thus, this ground of Cross Objections of the assessee is dismissed. 16. The next common ground of the assessee is that the assessment was getting barred by limitation of time on 31.12.2017 and not on 31.12.2016. 16.1 The Ld. AR contended that the last Panchanama was drawn on 17.04.2015 and, therefore, the time barring date for completion of assessment was 31.12.2017. Since the AO took time barring date as 31.12.2016, there was paucity of time and he was not given cross-examination of persons, whose statements were used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of Cross Objections of the assessee. 19. The next common ground is that the original assessment was completed u/s, 143(3) and no incriminating material was found in the search. 19.1 The Ld. AR submitted that the seized document SKP/KLM/DS 1 to 23 were accounted for in the books of accounts of the assessee and, therefore, it was not an incriminating seized material. The Ld. AR contended that in absence of incriminating found in the search, assessment u/s.153A was not sustainable under the law. According to the CIT(A), there was no doubt about the fact that documents evidencing financial transactions of the assessee were found and seized during the course of search at assessee's premises. The CIT(A) held that whether these transactions were recorded in the books of the assessee and whether the income emanating from these transactions were offered to tax by the assessee or not could only be ascertained in assessment proceedings u/s.153A r.w.s. 143(3). According to the CIT(A), it is not necessary that all the documents found and seized in the search should result in addition to total income. The CIT(A) took the view that the very purpose of assessment is to ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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