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2013 (11) TMI 477 - AT - Income TaxRetraction made of the statement through filing affidavit Statement was made u/s 132(4) of the Income Tax Act - accommodation bills Held that - It is for the assessee to tell as to how it has been able to identify some of the bills earlier considered as bogus, as being actually not so - Initial disclosure was voluntary - Assessee does not contend of it being not so, or of having been made under pressure or under physical or mental stress - In the absence of any charge of coercion, mis-representation or fraud, the onus on the assessee to show as to what mistaken belief or incorrect fact/s attends the earlier disclosure, and which it has completely failed to discharge. Exhibition of the mistake or error or incorrect statement, with which the earlier statement is ostensibly imbued with, a matter of fact, is a burden cast by the law on the assessee, and cannot be discharged merely by another voluntary statement. On the contrary, there is nothing sacrosanct about the affidavit, so that it is liable to be necessarily controverted in order to be considered unacceptable. Facts are to be proved on the basis of material and evidences, and not on the basis of affidavits and counter affidavits Decided against the Assessee. Deduction u/s 37 of the Income Tax Act - Rs.8 lakhs, being compensation paid to the local fishermen in connection with the construction of a temporary Jetty at Cuddalore - The assessee claimed to have met the said expenditure out of the cash generated from the accommodation bills procured from M/s. Sachin Crane Service; M/s. Rajesh Hiring; and M/s. Jayesh Crane & Transport Co., for an aggregate of Rs.8.22 lakhs Held that - There is no question of any double deduction in respect of Rs.8 lakhs. The same is being claimed and would stand to be allowed in terms of our foregoing order, u/s.37(1), separate and distinct from the addition qua the accommodation bills for Rs.8.22 lakhs, which have under the facts and circumstances of the case been considered as the source of funding of the said expenditure. Disallowance for the sum being stated to be paid on account of commission for obtaining bogus accommodation bills Held that - The said expenditure is not for generating any income per se, but rather depressing artificially the income already reflected per the assessee s regular books of account - The stated purpose of booking the expenditure in the accounts is an illegal activity. The same is definitely an offence under, and in any case prohibited by, the law, including the Act, so as to be hit by Explanation to section 37(1) - The same does not represent any economic activity, and is deemed to be an income under the Act for the simple reason that it leads to artificially depressing the actual profit/income as reflected by the assessee s books of account. No business purpose as such is served Decided against the Assessee. Levy interest u/s.158BFA(1) of the Act, if the work of the photocopying was incomplete - The assessee was required to file its return u/s.158BC on or before 01.05.2000 - The copies of the assessee s record were made available to it only subsequently, so that it could not have possibly filed the return by 01.05.2000 Held that - Interest being compensatory in nature, any delay which is not attributable to the assessee could not be a subject matter of levy of interest - Interest could be charged to the assessee only for the period after allowing 15 days clear time from the date on which the copy of the relevant records was made available to the assessee Decided in favor of Assessee.
Issues Involved:
1. Deletion of addition of Rs. 18,82,517. 2. Disallowance of Rs. 8 lakhs as compensation paid to local fishermen. 3. Disallowance of Rs. 2,07,182 as commission for obtaining bogus accommodation bills. 4. Disallowance of Rs. 9,20,278 for foreign travel expenses. 5. Deletion of surcharge levied by the AO. 6. Direction to AO regarding interest u/s 158BFA(1). 7. Disallowance of Rs. 5.22 lakhs paid to local fishermen at Dahej. Issue-wise Detailed Analysis: 1. Deletion of Addition of Rs. 18,82,517: The Revenue challenged the deletion of Rs. 18,82,517, which was claimed by the assessee as genuine bills initially considered bogus. The assessee retracted its initial disclosure made during the search, arguing that the disclosure was made without access to records, which were sealed at the time of the search. The CIT(A) accepted the retraction, emphasizing that an admission during a search is not conclusive and can be retracted if shown to be incorrect. However, the Tribunal found the retraction unsubstantiated and unsupported by any material evidence, reversing the CIT(A)'s decision and reinstating the addition. 2. Disallowance of Rs. 8 Lakhs as Compensation to Local Fishermen: The assessee claimed Rs. 8 lakhs paid to local fishermen for constructing a temporary jetty at Cuddalore, sourced from cash generated through bogus bills. The AO disallowed the claim, but the CIT(A) allowed it, stating the payments were for a commercial purpose and not illegal. The Tribunal upheld the CIT(A)'s decision, subject to the assessee demonstrating the expenditure in its regular books of account. 3. Disallowance of Rs. 2,07,182 as Commission for Bogus Bills: The Revenue contested the deletion of disallowance of Rs. 2,07,182 paid as commission for obtaining bogus bills. The Tribunal found no business purpose in such payments, considering them as illegal activities aimed at falsifying accounts. The Tribunal reversed the CIT(A)'s decision, reinstating the disallowance. 4. Disallowance of Rs. 9,20,278 for Foreign Travel Expenses: The AO disallowed 50% of the foreign travel expenses of Smt. Uma Dubash, a director, considering them personal. The CIT(A) deleted the disallowance, noting that no evidence of non-business purpose was found during the search. The Tribunal upheld the CIT(A)'s decision, stating that block assessment proceedings are distinct from regular assessments and should be based on evidence found during the search. 5. Deletion of Surcharge Levied by the AO: The AO levied a surcharge on the tax on undisclosed income, which the CIT(A) deleted. The Tribunal referred to the Supreme Court's decision in CIT vs. Suresh N. Gupta, which clarified that the amendment to section 113 by Finance Act, 2002, is clarificatory and applies to pending assessments. The Tribunal reinstated the surcharge. 6. Direction to AO Regarding Interest u/s 158BFA(1): The CIT(A) directed the AO to verify if the photocopying of records was incomplete as of 01.05.2000 and to adjust the interest accordingly. The Tribunal found no infirmity in this direction, emphasizing that interest should be compensatory and not charged for delays not attributable to the assessee. 7. Disallowance of Rs. 5.22 Lakhs Paid to Local Fishermen at Dahej: The CIT(A) did not accept the assessee's claim for Rs. 5.22 lakhs paid to fishermen at Dahej, stating no corresponding addition was made by the AO. The Tribunal directed that the expenditure should be allowed if the assessee can demonstrate the construction of the temporary jetty for business purposes, similar to the Cuddalore case. Conclusion: The Tribunal partly allowed the Revenue's appeal and partly allowed the assessee's appeal for statistical purposes, directing specific verifications and reinstating certain disallowances and additions based on the evidence and legal principles discussed.
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