2014 (1) TMI 1800 - AT - Income Tax

Assessment u/s 153A - Held that - The premises authorized in the warrant for search u/s 132 includes Mr. Jaswinder Singh Bajaj; Mr. Swaranjit Sijit Singh Bajaj and Punjab Sindh Dairy Products Pvt Ltd (the assessee here). Therefore, it is not correct to sate that Warrant of Authorization is not fault and faultily executed. It is an admitted position that mere failure of the Department to get the signature of the Directors on the warrant does not vitiate proceedings and make the search invalid and therefore, additions made in the assessment. Warrant is properly executed too. Considering the fact the warrant is properly authorized and the activities are done in accordance with the process of law, we find no mistake in the findings of the CIT (A) Invoking provisions of 145(3) - Held that - Admittedly, this is the case where the books pertaining to the production, issuance, consumption are not maintained by the assessee. Therefore, the finding of the CIT (A) on this issue is fair and does not call for any interference. Addition on sale of milk - G.P. addition - Held that - No sale of milk as evidenced by way of filing bills. The AO / CIT (A) have categorically stated that the assessee failed to submit the details in support of the sale of milk to the tune of 12,15,244/-. Thus, the said assessee‟s failure clubbed with the statements of the employees given on oath became relevant. The arguments relating to the retraction of the said statements by the employees are not sustainable considering the fact that the retraction was done in undated letters without giving sustainable reasons for such retraction. Therefore, in principle, the allegation of the Revenue on utilization of milk for making of the milk products by the assessee is sustainable. Accordingly, the sustenance of addition by the CIT (A) does not call for any interference. The allegation that the additions are made without any help of incriminating material is not sustainable considering the fact that there are multiple statements of the employees together with circumstantial evidences of no supporting registers showing the consumption details of milk constitutes incriminating information pertaining to the business affairs of the assessee in general and milk and dairy products in particular. Deduction u/s 80G denied - Held that - Onus is on the assessee to submit the details and evidence before the AO before claiming any deduction. The appellant has failed to submit the receipt before the AO, therefore, the AO has rightly disallowed the claim Assessee appeal dismissed.

Issues Involved:
1. Validity of invoking provisions of section 153A without proper Warrant of Authorization.
2. Nature of assessment under section 153A and scope of additions.
3. Rejection of books of accounts under section 145(3).
4. Confirmation of addition as estimated undisclosed income.
5. Disallowance of deduction under section 80G.
6. Validity of interest charges under sections 234A, 234B, and 234C.

Detailed Analysis:

1. Validity of invoking provisions of section 153A without proper Warrant of Authorization:
The assessee contended that the Assessing Officer (AO) erred in invoking the provisions of section 153A without issuing a proper Warrant of Authorization. The Tribunal found that the Warrant of Authorization included the names of the assessee's premises and was properly executed. It was concluded that the failure to get the signatures of the directors on the warrant did not invalidate the proceedings. Thus, the Tribunal upheld the validity of the assessment under section 153A, dismissing the related grounds.

2. Nature of assessment under section 153A and scope of additions:
The assessee argued that the assessment under section 153A should be restricted to undisclosed income unearthed during the search. The Tribunal found that the search and survey action was conducted simultaneously, and the warrant bore the name of the assessee's premises, justifying the assessment under section 153A. The Tribunal dismissed the grounds related to the nature of the assessment and scope of additions.

3. Rejection of books of accounts under section 145(3):
The AO rejected the books of accounts under section 145(3) due to the absence of production registers. The Tribunal agreed with the CIT (A) that the absence of relevant material to substantiate the sale of milk justified the rejection of the books of accounts. The Tribunal upheld the rejection of the books of accounts, dismissing the related grounds.

4. Confirmation of addition as estimated undisclosed income:
The AO made an addition of Rs. 14,13,628 as estimated undisclosed income, which the CIT (A) reduced to Rs. 12,15,244. The Tribunal found that the assessee failed to submit details supporting the sale of milk and that the statements of employees, although retracted, were relevant. The Tribunal upheld the addition of Rs. 12,15,244, dismissing the related grounds.

5. Disallowance of deduction under section 80G:
The AO disallowed the deduction of Rs. 28,500 under section 80G due to the assessee's failure to substantiate the claim with receipts and eligibility certificates. The CIT (A) upheld the disallowance, stating that the onus was on the assessee to provide the necessary evidence. The Tribunal agreed with the CIT (A) and dismissed the related grounds.

6. Validity of interest charges under sections 234A, 234B, and 234C:
The Tribunal noted that the interest charges under sections 234A, 234B, and 234C were consequential to the other grounds. Since the other grounds were dismissed, the Tribunal also dismissed the ground related to the interest charges.

Conclusion:
The Tribunal dismissed both appeals filed by the assessee for the assessment years 2006-07 and 2007-08, upholding the findings of the CIT (A) on all issues.

← Previous Next →