TMI Blog2020 (7) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... t correctly. The confirmations and the transaction considering the facts in hand in totality and in light of voluminous documentary evidences, we do not find any error or infirmity in the finding of the Ld. CIT(A), hence, we decline to interfere with the finding of the Ld. CIT(A). Accordingly, the ground no. 1 raised by the Revenue is dismissed. Excessive payment of salary to Director covered under section 40(A)(2)(b) - HELD THAT:- The undisputed fact is that the AO has not brought any comparable case to demonstrate that the payments made by the assessee were excessive/ unreasonable. A plain reading of Section 40A(2)(b) show that onus has been cast upon the AO to bring on record comparable cases to demonstrate that the transactions made by the assessee with the related parties are unreasonable and excessive. The AO has failed to bring such comparable case on record. Payees are also assessed to tax at the same rate of tax. The CBDT Circular No. 6-P dated 06.07.1968 states that no disallowance is to be made u/s. 40A(2) in respect of the payments made to the relatives and sister concerns where there is no attempt to evade tax. This Circular has been considered by the Hon ble B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the addresses given, out of which many were not complied with. This has been explained in the table form as under:- Amount as per books of IKEA Amount confirmed / not replied Balance to be added M/s Anisa Carpets Limited 4612608 4612608 APL Delhi 5765282 5765282 APL Mumbai 4402603 4402603 Asian Handlooms 20855076 20855076 Atlantic Fabrics 9375816 NIL Baranwal Carpet Mfg. Co. 3789345 1915116 1874229 Carpet International 62346423 62346423 Continental Home Furnishings 20400551 20400551 Coronet Products Pvt. Ltd. 3619691 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant had failed to furnish the account details and the relevant pay-outs details for verification and no confirmation APL Mumbai 44,02603/- The appellant had failed to furnish the account details and the relevant pay-outs details for verification and no confirmation. Total 1,01,67,885/- Therefore the amount of disallowance being upheld of ₹ 1,01,67,885/- (₹ 57,65,282 + 44,02,603_. The appellants gets relief of ₹ 13,67,57,609/-. 4.1 Aggrieved by the finding of the Ld. CIT(A), both the Assessee and Revenue are in appeals before us. 5. Ld. Counsel for the Assessee reiterated what has been stated before the lower authorities. It is a say of the Counsel that the AO has made the additions on the balance outstanding as on 31st March. It is a say of the Ld. Counsel that the entire outstanding is in relation to purchases made during the year under consideration and no adverse inference has been drawn so as to purchases are concerned. The Ld. Counsel vehemently stated that once the purchases have been accepted as genuine, the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax thereon has been paid under the VDIS. Once the tax is paid on the undisclosed income, it becomes disclosed income and thereafter there is no justification for denying the assessee the facility of bringing the declared income into account. In the cases of the interveners who are all declarants under the VDIS, 1997, this condition has been satisfied and there is no dispute about the same. The immunity given by section 68 of the Finance Act, 1997, is limited to this, that the declared income will not be assessed again as the income of the declarant for any assessment year under the Income-tax Act. Obviously the only provision, which the Assessing Officer can invoke for assessing the amount credited in the books of account, is section 68 of the Income-tax Act, but by virtue of section 68 of the Finance Act, 1997, the applicability of section 68 of the Income-tax Act to the amount declared under the VDIS is ruled out. But the immunity stops there. When the asset representing the declared income or acquired out of the declared income is later sold, the powers of the Assessing Officer to examine the question whether there has been a real sale of the asset is not curtailed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of the declaration made under the VDIS and issue of a certificate by the CIT. But it is certainly open to the income-tax authorities to require the assessee to prove that the gold bars were actually sold. Such proof may include details of the purchaser, his credentials, evidence in the form of bills, etc. It is also open to the income-tax authorities to examine such proof in the manner authorized by law and come to the conclusion whether the sale is genuine or not. While doing so, the Assessing Officer may rely on section 68 of the Income-tax Act. 178. Mr. Ajay Vohra, learned counsel for one of the interveners contested the aforesaid position by submitting that the sale proceeds credited in the books cannot be treated as cash credit simplicitor so as to enable the Assessing Officer to invoke section 68. He says that the sale proceeds have been shown as income in the sense that after deducing the cost of the asset from the sale proceeds, the balance has been declared as capital gains and therefore the sale proceeds cannot be probed under section 68 and the assessee cannot be asked to prove the nature and source of the monies. His further submission is that in the cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ef that the assessee has not furnished evidences in respect of the reimbursement of entire Duty Draw Back to its suppliers. The AO further observed that the assessee has failed to give on record that such Duty Draw Back were actually passed on to its supporting manufacturers which is a primary requirement to justify its claim. The AO accordingly, made the addition of ₹ 20,15,27,543/-. 9. Before the Ld. CIT(A), the assessee strongly contended that the AO never asked for the complete details and the assessee considering the voluminous details filed only sample copies of Duty Draw Back / reimbursement. Before the Ld. CIT(A), assessee furnished the complete details alongwith supporting evidences and demonstrate that the Duty Draw Back has been reimbursed through the account payee cheques to the supporting manufacturers of the equivalent amount as soon as its account was credited by the electronic duty transfer. Ld. CIT(A) considered the evidences alongwith the Remand Report and observed that the AO has sent the notices u/s. 133(6) of the Act to the parties who were not at all in the list of Duty Draw Back. Ld. CIT(A) further observed that out of the list of 21 parties in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 1 raised by the Revenue is dismissed. 12. Ground no. 2 has already been adjudicated by us in Assessee s appeal, as aforesaid, therefore, no need for separate adjudication. 13. Ground no. 3 relates to the deletion of addition of ₹ 56,00,000/- made on account of excessive payment of salary to Director covered under section 40(A)(2)(b) of the I.T. Act. 14. During the course of scrutiny assessment proceedings, the AO asked the assessee to explain the payment of ₹ 10,636,420/- made to 02 persons covered u/s. 40(A)(2)(b) of the Act. The assessee furnished the details of remuneration paid to Director and claimed the same as per Industry Norms and is not in excess of either limits prescribed under the Act or the Industry Norms for the particular class of industry. The AO was of the opinion that the assessee has failed to justify the nature of services rendered by the Directors so as to command such a huge remuneration. The AO accordingly, restricted the remuneration to ₹ 50 lacs and treated the balance of ₹ 56 lacs to the income of the assessee. 15. Assessee strongly agitated the matter before the Ld. CIT(A) and vehemently contended that the AO has no ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
