TMI Blog2022 (11) TMI 624X X X X Extracts X X X X X X X X Extracts X X X X ..... tings in the diary impounded during the course of survey proceedings is a relevant material for the formation of the belief by the AO and hence we see no reason to interfere with the order of CIT(A) in so far as the legal issue contended by the assessee is concerned. The grounds raised in this regard is dismissed. Suppressed sale of scrap - Addition made with respect to purported sale of steel based on the noting made - State Bank of Hyderabad had confirmed the outward remittance to SAIT vide letter dated 30.12.2016 addressed to the CIT(A). We further notice that this submission of the assessee regarding factual position has not been considered by the lower authorities as whether the noting in the diary crystallized in the subsequent financial year and the addition is made merely based on the entries in the diary - these transactions relate to import of materials from the vendor SAIT which is an expense in the hands of the assessee and from the records / ledger copies it is noticed this transaction has materialized in the subsequent financial year i.e. 2007-08. We therefore see merit in the argument that noting found in the diary are proposed imports which happened in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case, the reopening of the assessment u/s 147 of the Act by issuing the notice u/s 148 was opposed to law and accordingly the assessment as made is liable to be cancelled. 3. The conditions precedent being absent, the re-opening of the assessment u/s 147 is bad in law. 4. The learned CIT(A) erred in taxing a sun of Rs. 49,04,000/- towards alleged suppressed sale of scarp without appreciating the explanation of the Assessee. 5. Without prejudice the addition is excessive arbitrary and excessive and ought to be reduced substantially. 6. The learned CIT(A) erred in upholding the interest under sec 234A, 234B and 234C of the Act. 7. For these and such other grounds that may be urged at the time of hearing the Assessee prays that the appeal may be allowed. 3. The assessee further raised additional grounds as follows. However the ld AR did not press for these grounds and hence the same is dismissed as not pressed. 1. The mandatory sanction under 151 of the Act is not taken and the assessment proceedings are void ab initio on the facts and circumstances of the case. 2. Without prejudice, the mandatory sanction under section 151 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be treated as return filed in response u/s. 148. The AO based on the details found from the documents impounded in the course of survey made the addition of Rs.55,68,180. Aggrieved, the assessee filed appeal before the CIT(A) who confirmed the order of the AO. Aggrieved, the assessee is in appeal before the Tribunal. 7. Through ground Nos. 2 3, of the main grounds the assessee is contending the legal issue pertaining to the reopening of the assessment u/s. 147. The ld. AR submitted that during the course of survey, a diary which is the daily planner of the Director was impounded and the AO found entries in the daily planner which is not reflected in the books of accounts of the assessee. The reasons recorded by the AO is that the cumulative cash credits of the entries in the diary of the director are not recorded in the books of accounts should be brought to tax and that is the reason for reopening of the assessment. It is the contention of the ld. AR that the satisfaction recorded by the AO is not clear and the reason to suspect cannot replace the reason to believe for reopening of assessment u/s. 147. In this regard, the ld. AR relied on the Chhugamal Rajpal v. S.P. Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily1 amount to disclosure within the meaning of the foregoing proviso. Explanation 2.-For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely :- (a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax ; (b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return ; (c) where an assessment has been made, but- (i) income chargeable to tax has been underassessed ; or (ii) such income has been assessed at too low a rate ; or (iii) such income has been made the subject of excessive relief under this Act ; or (iv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he diary impounded during the course of survey proceedings is a relevant material for the formation of the belief by the AO and hence we see no reason to interfere with the order of CIT(Appeals) in so far as the legal issue contended by the assessee is concerned. The grounds raised in this regard is dismissed. 12. Ground No.4 relates to the addition made with respect to purported sale of steel. The AO found in page No.48 of the impounded diary certain notings as under:- 1. Cash transaction/payments are through Githa. 2. L/C through sait - Ist lot / 250 mtrs. Rs.6,40,800/- - 60/- 3204000 Rs.22,40,000/- - 240/- 2883600 Rs.28,88,800/- - 300 USD 13. The assessee submitted before the AO that these are calculations regarding material that are going to be imported by sister concern M/s. Ajay Constructions. The AO did not accept the submissions of the assessee and held that this noting of similar nature made in diaries pertaining to AY 2005-06 where the assessee company was engaged in high sea sale of steel scrap and lot of cash transactions were made. The AO further held that the assessee company has not furnished any evidence of above transactions in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AR submitted that the assessee in the course of planning his cash flow for managing various business interests, has projected that Rs. 17,00,000/- could be raised out of refund of loans from M/s Ajay Constructions, Pune, arising out of sale of goods at Pune, in the regular course of their business, which was in the knowledge of the director of the assessee. The said funds were intended to meet business requirements out of the loans earlier advanced to M/s Ajay Constructions, which is available in the financials of the assessee. The said monies totaling Rs. 20,00,000/- was also received back (page 150-151, 20/07/2007) in AY 2008-09 and the same is reflected in the bank accounts and also in the ledger accounts of the respective parties. The said entry in the planner of the director was a mere noting for future cash flows and there was no sale of scrap by the assessee. The documents filed by the assessee and the creditor are ample proof that the fund flow was anticipated to meet the requirement of the assessee's financial requirement, which was entirely explained and accounted in the books of both the parties. In view of the above, the entire addition of Rs. 17,00,000/- as a sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore us that the assessee does not sell any scraps and the noting is an expected receipt from the sister concern M/s.Ajay Constructions that has sold the steel scrap. The ld AR drew our attention to the ledger copy of assessee s account in the books of M/s.Ajay Constructions and the bank statement of M/s.Ajay Constructions where in an amount of Rs.20,00,000 is paid to the assessee on 20.07.2007. The ld AR submitted that this is the proposed receipt noted by the MD of the assessee which is received in the subsequent financial year. We notice that the AO while making this addition has stated that the amount noted as receivable should have been received on that day or any future date and that the assessee company has not furnished any evidence to show that such receipt was accounted in any future date either in the hands of the assessee or in the hands of any other sister concern. We find that this conclusion is arrived at not based on perusal of any materials produced before the AO. We also notice that the CIT(A) has upheld the addition merely on the basis that the during AY 2006-07 also similar issue is noticed and the unaccounted income arising out of the business transaction needs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ai payment to be received in our sister concern M/s Ajay Constructions. 6 27-02-07 VBM shipping 36000 No comments offered. 7 19-03-07 Chamarajnagar 27000 Being out of pocket expenses at Chamarajanagar, Sister Concern (REPL) recorded. 8 19-03-07 Hoskote 25000 Cash planned to be sent to Hoskote factory. TOTAL 664180 22. The AO treated the above amount as unexplained expenditure u/s. 69C on the basis that the expenditure were not entered in the books of accounts of the assessee and that the explanation provided by the assessee that these expenses pertained to sister concerns was not acceptable. On further appeal, the assessee filed details pertaining to these expenses before the CIT(A). The CIT(A) did not admit the additional evidence filed by the assessee and confirmed the addition. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT(A) rejected these documents by stating that the assessee has not submitted the same before the AO inspite of having sufficient opportunity and did not provide sufficient cause for his failure to furnish these documents before the AO. On this ground the CIT(A) upheld the addition. The ld AR during the course of hearing submitted that the major amount of Rs.4,99,000 does not belong to the assessee and belongs to some other entity. The ld AR in this regard drew our attention to pg 168 of paper book where the relevant document to substantiate the said claim and submitted that the same was furnished before the lower authorities. Since the CIT(A) did not admit the documents to arrive at the decision to uphold the addition and that the assessee s contention that the amounts are either personal in nature or does not belong to the assessee need to be factually examined. Since the AO has stated that the assessee has not furnished any details before him to support the claim in the interest of justice, we remit the issue back to the AO. The AO is directed to consider the evidences and documents and decide the issue afresh after examination in accordance with law. Needless to say that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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