TMI Blog2013 (12) TMI 1731X X X X Extracts X X X X X X X X Extracts X X X X ..... nt proceedings or in the grounds of appeal filed before the ITAT? (B) Whether on the facts and circumstances of the cases and in law, the ITAT has erred in deleting the addition of Rs. 3,52,44,338/- made by the Assessing Officer under Section 40A(3) of the Act without appreciating the fact that the assessee had effected cash payments in excess of Rs. 20,000/-, in contravention of the provisions of Section 40A(3) of the Act and also failed to discharge the onus cast on him to prove that such transactions are less than Rs. 20,000/- each as claimed by him? (C) Whether on the facts and circumstances of the cases and in law, the ITAT has erred in deleting the addition of Rs. 52,840/- made out of office expenses without appreciating the fact that the assessee failed to prove the genuineness and necessity of the expenses by providing supporting evidences? (D) Whether on the facts and circumstances of the cases and in law, the ITAT has erred in deleting the addition of Rs. 91,000/- made on account of rent expenses without appreciating the fact that the assessee failed to prove the genuineness and necessity of the expenses by providing supporting evidences? (E) Whether o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the cases and in law, the ITAT has erred in deleting the addition of Rs. 3,89,356/- made under Section 40(ia) without appreciating the fact that the assessee failed to furnish the proof in respect of the payment of TDS either with the return or during assessment proceedings? (E) Whether on the facts and law, the ITAT was correct in deciding the case on merits without deciding the specific ground taken on acceptance of fresh evidence by the CIT(A) without an opportunity to the A.O.? 3. For the sake of convenience, the facts of Tax Appeal No. 969/2013 for the Assessment Year 2005-06 are narrated. 3.1 The assessee filed the return of income for the Assessment Year 2005-06 declaring the total income at Rs. 1,51,204/-. The return of income was accompanied by the balance sheet, capital account etc. A survey under Section 133A of the Income-tax Act was conducted on 22/09/2006 (after the return of income was filed by the assessee) at the Mumbai office. The survey was conducted in consequence to the information received from the Economic Offence Wing, Crime Branch, Mumbai where in the course of recording the statement it was revealed that the assessee is doing the business of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) Copy of the statement recorded under Section 133A of the Act during the course of survey proceedings. (c) Copy of statement recorded before Police authority. 3.2 It appears that prior to issuance of the notice dated 24/12/2008 and on the basis of the impounded books of account it was found by the Assessing Officer that a total sum of Rs. 18,22,21,689/- was paid in cash to six different parties and the statement of which is as under: Sr. No Name of the party to whom payments are made. L.F. No. Total amount paid in (Rs.) 1. M/s. Alfa Trading Co. 6/6 4,88,71,069/- 2. M/s. Anant Trading Co. 12/13 1,27,87,314/- 3. M/s. Kamal Trading Co. 30/43 3,78,72,484/- 4. M/s. Mona Trading Co. 36/51 13,00,000/- 5. M/s. Marshal Trading Co. 37/53 6,07,02,214/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing aggrieved and dissatisfied with the judgment and order passed by the ITAT in ITA No. 2636/Ahd./2009 for the Assessment Year 2006-07 confirming the similar deletion by the CIT(A) deleting the addition made by the Assessing Officer under Section 40A(3) of the Income-tax Act, the revenue has preferred Tax Appeal No. 970/2013. 8. Shri Sudhir Mehta, learned Counsel appearing on behalf of the appellant has vehemently submitted that both the CIT(A) as well as the ITAT have erred in deleting the addition made by the Assessing Officer under Section 40A(3) of the Income-tax Act without appreciating the fact that the assessee had effected the cash payment of Rs. 20,000/- in contravention of Section 40A(3) of the Income-tax Act. It is submitted that as such the assessee failed to discharge the onus cast on him to prove that such transactions are less than Rs. 20,000/- each as claimed by him. It is further submitted by Shri Mehta, learned Counsel appearing on behalf of the revenue that both the CIT(A) as well as ITAT have erred in directing the Assessing Officer to compute the income on the basis of 0.25% on the total turnover without appreciating the fact that estimate of the profit wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en effected from the market. This admission is on oath and there is apparently no reason to presume that appellant would have chosen to state lies on oath. Similarly the A.O. should have had no reason to disbelieve what has been stated by the appellant before the Economic Office Wing, Mumbai which in the first place was the reason to reopen the assessment of preceding year. It is therefore clear that the books of account will give only a picture of make believe nature, quantum and profitability of business. But behind the veil the reality as found and admitted was that only bills were issued on commission basis. However, the estimation of real income will have two important components. Firstly, the rate of claimed commission @ 0.25% which has not been disputed by the AO nor retracted by the appellant till now. The other component would be to ascertain the quantum of sale on which this rate needs to be applied. As per audit report the total sale stands at Rs. 1,02,57,52,103/-. It transpires that the assessee has given entries not only in rough and polished diamonds but also in garments, jewellery, copper scrap and colour stones. In my view, when at the beginning itself the AO m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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