9911796707
TMI Blog2024 (10) TMI 1615X X X X Extracts X X X X X X X X Extracts X X X X ..... t order passed in terms of Section 153A of the Act without assigning proper reasons and justification. 3. The CIT (Appeals) - 20, Chennai failed to appreciate that the search assessment completed by making the disputed addition(s) in the absence of valid incriminating seized material relatable to such addition(s) should be reckoned as nullity in raw and further ought to have appreciated that the judicial trend in this regard was completely over looked and brushed aside in passing the impugned order there by vitiating the related findings. 4. The CIT (Appeals) - 20, Chennai failed to appreciate that the search assessment order under consideration was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law. 5. The CIT (Appeals) - 20, Chennai erred in confirming the addition of Rs. 4,05,91,502/- on the presumption of wages payable claimed in the month of March of the relevant assessment year as bogus without assigning proper reason and justification. 6. The CIT (Appeals) - 20, Chennai failed to appreciate that the wages expenses were actually incurred by the Appellant in the normal course of business and the disallowance of such ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the salary payable was actually incurred by the Appellant in the normal course of business and the disallowance of such expenses as not genuine was wholly unjustified and not sustainable both on facts and in law. 14. The CIT (Appeals) - 20, Chennai failed to appreciate that the Appellant had rectified the return of income filed u/s 153A of the Act in claiming the actual expenses relatable to the assessment year under consideration and further ought to have appreciated that the Assessing Officer having considered the reversal of such provision in the said return of income, the action to deny the claim of actual expenses relatable to the assessment year under consideration would distort the financial results of the Appellant Company. 15. The CIT (Appeals) - 20, Chennai failed to appreciate that the salary expenses were wrongly denied both in the year of claim (as per original return of income) as well as in the actual year of outflow (as per 153A return) would defy the principles of fairness in taxation there by vitiating the related findings in the impugned order. 16. The CIT (Appeals) - 20, Chennai failed to appreciate that having not found any discrepancy in the expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cets was wrong, erroneous, incorrect, invalid and not sustainable both on facts and in law. 23. The CIT (Appeals) -20, Chennai failed to appreciate that the Assessing Officer had not brought on record any evidence establishing the movement of cash / flow of funds nor identified the disputed sum in the form of any asset there by vitiating the sustenance of the addition made by invoking the provisions of Section 69 of the Act. 24. The CIT (Appeals)- 20, Chennai failed to appreciate that the explanation offered by the Appellant were not considered in proper perspective while dealing with the grounds raised and further ought to have appreciated that the factual position was further clarified by the Partner of the Appellant firm during the post search proceedings there by vitiating the related findings in the impugned order. 25. The CIT (Appeals)-20, Chennai failed to appreciate that in any event the assessment of such presumed investment as unexplained in the hands of the Appellant firm there by negating the addition made in this regard and further ought to have appreciated that the sustenance of the disputed sum in the hands of the Appellant was wrong, erroneous, incorrect, inva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 2020-21 31.03.2021 20,40,75,060 NA 36,16,07,280 15,75,32,220 7 2021-22 31.03.2022 67,59,66,220 NA NA NA It is evident that the assessee offered additional income of Rs. 18.58 Lacs in this year. 2. Disallowance of Wages & Salaries Payable 2.1 This addition is based on notings found in Measurement books (M Books) for labor payments and excel sheets. Upon comparison of these documents with regular Tally Data, discrepancies were found and Ld. AO concluded that the assessee booked wages payable in the last month of various financial years to suppress profits. After rejecting assessee's submissions, Ld. AO made addition of Rs. 405.91 Lacs on account of wages payable and another addition on account of salaries payable for Rs. 17.96 Lacs. The Ld. CIT(A) confirmed the same against which the assessee is in further appeal before us. 2.2 We find that identical issue has been decided by us in assessee's appeal for AY 2017-18, ITA No.1021/Chny/2024 as under: - Our findings and adjudication 4. Upon perusal of ledger extracts of wages payable and salaries payable as placed on record at Page Nos. 70 to 112 of the paper-book Volume-II, it could be seen that as on 01- 04-2016, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; -14,84,105 -33,72, 150 Sub Contractor - Reversed 11,85,29,029 1,40, 18,600 Purchase - Reversed 2,35,08,822 5,53,25,652 Additions - Asst.143 (3) 30,05,474 Esha Sales Reversed -68,00,000 -6,00,000 Revised Income as per Return Filed in response to Notice U/s 153A 11,02,35,450 5,72,95,358 19,07,00,923 11,58,49,606 30,79,08,589 36,16,07,280 67,59,66,220 It could be seen that the assessee has reversed provision of wages payable for Rs. 62.75 Lacs in FY 2015-16 and claimed the same on actual payment basis in FY 2016-17. The same is very much clear from the above reconciliation. Since the provision as wrongly claimed in return of income filed u/s 139(1) has now been reversed in return of income filed u/s 153A, the payment made in subsequent year would be allowable as deduction in the subsequent year. If the same is not allowed, the assessee would suffer double disallowance which is wholly unjustified Therefore, considering the fact of the case, the amount of Rs. 62.75 Lacs would be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned from these loans and unaccounted cash generated in the firm. However, post search, no statement was recorded from Shri Vinoth who had said that the source was loan borrowed by the individual which has not been confirmed by the partner of the firm in his sworn statement recorded during search proceedings. Post-search proceedings, in statement recorded from Shri Anandavadivel (Q.No.3), he stated that the source was from refund of unaccounted loans with interest to the family member whereas neither the officer has questioned the utilization nor it has been answered. Pertinently, Sh. Vinoth was not questioned during post search operations especially when Sh. Anandavadivel has given a different version of source and application with that of his original statement during search proceedings. It was, therefore, submitted that the addition based on single excel sheet as maintained by Sh. Vinoth had no evidentiary value and no corroborative documents were seized for the source or application as stated in the sworn statements of both Sh. Vinoth and Sh. Anandavadivel. Neither the excel sheet nor the sworn statement would indicate any investment either by the firm or by the partners of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t make any attempt to cross-examine any of the party in this regard. The Ld. AO failed to consider that the details in the loose sheet had no relevance to income or investment either by the firm or by the partners. All the details in the loose sheets were nothing but estimated project cost and expenditure for a particular forthcoming project from TWAD. The sheet was merely a dumb document having no evidentiary value and could not be taken as a sole basis for making the addition. Reliance was placed on various judicial decisions to support the submissions. The assessee referred to the decision of Hon'ble High Court of Madras in the case of CIT vs. J. Dinesh Mehta (TCA No.84/2020). Reliance was also placed on the decision of Hon'ble Delhi High Court in CIT vs. Praveen Juneja (ITA No.56/2017 dated 14.07.2017). The other decisions include the decisions of Mumbai Tribunal in ITO Vs Kranti lmpex Pvt. Ltd. (ITA NO.1229/Mumbai/2013) and the decision of Delhi Tribunal in Shri Neeraj Goel Vs ACIT (ITA NO.5951/Del/2017). 3.5 The Ld. CIT(A), considering the factual matrix, noted that Sh. Anandavadivel, in sworn statement recorded on 30-04-2021, stated that source for amount in hands of partne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure was already recorded in the books of accounts. In sworn statement recorded on 30-04-2021, he still agreed that amounts mentioned in seized sheet represents actual cash (investment / capital) introduced by partners and family member. He, in fact, explained source for investment in hands of partners and family member as unaccounted cash generated by the assessee firm from business and unaccounted loans of assessee firm refunded and unaccounted interest received by firm etc. However, only during assessment proceedings, it was argued that the transactions were nothing but projected figures for TWAD project and these were not actual transactions. The aforesaid claim was merely an after-thought which could not be considered. There was no retraction of statement by any of the persons. Accordingly, the impugned addition was confirmed against which the assessee is in further appeal before us. Our Adjudication on this issue 4. We find that the impugned issue emanates from certain loose sheets which have been kept on Page Nos. 113 to 118 of Paper book Volume II wherein tabulation with certain details specified as capital and investment is mentioned. The Accountant, Shri Vinoth a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrary to each other. Also, the statement made by managing partner is without any corroborative evidence. This statement also does not support confirmation of impugned addition in the hands of the assessee-firm. 6. Post search proceedings, the Managing Partner stated that the cash was introduced by the individual partners out of their unaccounted loans and unaccounted cash generated from the assessee-firm. No statement was recorded from Shri Vinoth. Even going by this statement, no inference of unaccounted income could be made against the assessee. The assessee was subjected to search proceedings and after considering every incriminating material as found therein, the assessee already admitted additional income and Ld. AO made further additions in earlier years. Therefore, whatever unaccounted income has been earned by the assessee-firm in earlier years, the same has already been brought to tax and therefore, no further addition could be made in the hands of the assessee at the time of expansion thereof. This statement also does not support the case of Ld. AO in making impugned additions. 7. We also find that during the course of the assessment as well as appellate proceedings, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the parties and interest earned from these loans and unaccounted cash generated in the firm. Thus, there is clear contradiction in these statements and no addition could be made merely by relying upon the same unless the same is supported by any corroborative evidence on record. 10. Upon perusal of loose excel sheet as extracted in the assessment order, it could be seen that these sheets lacks sufficient details to form an opinion of actual cash introduction by the partners of the firm. The same merely contain certain computation of interest only without suggesting anything more. The complete details of the transactions could not be deciphered from the same. The same do not have any details as to source of alleged capital introduction by the partners. Under these circumstances, not much credence could be given to this document to make impugned additions in the hands of the assessee in the absence of corroboration of entries as contained therein. 11. The Hon'ble Karnataka High Court in its recent decision titled as CIT vs. Sunil Kumar Sharma (159 Taxmann.com 179; 22.01.2024), rendered in the context of Sec.153C, held that a sheet of paper containing typed entries and in loose fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
