9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (4) TMI 754 - AT - Income TaxBogus purchases - Profit estimation - HELD THAT - As under oath on 18.12.2007 before the DGIT that M/s Khushi Enterprises, which he was controlling, was engaged in the issuing bogus bills. Further, he mentioned that M/s Moraj Building Concepts Pvt. Ltd. (the assessee) was one of the beneficiaries of such bogus bills. The notice u/s 133(6) issued by the AO dated 14.12.2010 to M/s Khushi Enterprises was not replied to - the enquiry by the Ward Inspector showed that no purchases were made by the assessee from M/s Khushi Enterprises. In such a factual scenario, the Ld. CIT(A) has rightly followed the decision in Simit P. Sheth 2013 (10) TMI 1028 - GUJARAT HIGH COURT ; Bholanath Polyfab 2013 (10) TMI 933 - GUJARAT HIGH COURT and brought to tax the profit @ 12.5% of the disputed purchases of ₹ 3,62,881/- which comes to ₹ 45,360/-. As the order passed by the Ld. CIT(A) is based on proper appreciation of facts and position of law, we uphold it. TDS u/s 195 - Disallowance on account of Consultancy Charges paid to Modern Line distribution - amount remitted to non-resident - HELD THAT - Submissions made by the assessee that no tax was liable to be deducted at source as per Article 14 of the DTAA with UAE on account of payment to non-resident for services rendered outside India need re-examination by the AO. Therefore, we set aside the order of the Ld. CIT(A) on the above issue and restore the matter to the file of the AO to make an order afresh after giving reasonable opportunity of being heard to the assessee. We direct the assessee to file the relevant documents/evidence before the AO. Thus the 2nd ground of appeal is allowed for statistical purposes. Addition u/s. 69 on account of unexplained expenses - HELD THAT - We find merit in the observation of the Ld. CIT(A) that when on the same set of papers, more than one entry is made and one such entry is recorded in the books of accounts, it was for the assessee to prove that the other entries were not in respect of unexplained expenditure/investment because the entire document as such has to be either taken as true or dumb. Expenditure confirmed by the Ld. CIT(A) need to be re-examined on the basis of evidence of such expenditure to be filed by the assessee. Therefore, we set aside the order of the CIT(A) on the above ground of appeal and restore the matter to the file of the AO to make an order afresh after giving reasonable opportunity of being heard to the assessee. We direct the assessee to file the relevant documents/evidence before the AO. Disallowance on account of payment made to Shri Sai Prerna Charitable Trust - HELD THAT - In the instant case, the assessee has made a donation of ₹ 55,00,000/- to Shree Sai Prerna Charitable Trust. As observed by the Ld. CIT(A), the assessee failed to explain the purpose of making the donation and as to how it was related to assessee s business. Moreover, it failed to explain that the said Trust was having tax exemption certificate based on which deduction could be claimed by the assessee-company. CIT(A) has rightly observed that as the assessee is following project completion method, the said disallowance would result in reduction of WIP to the extent of ₹ 55,00,000/- leading to a higher profit in the year in which the project is completed and offered to tax. Thus we uphold the order of the Ld. CIT(A) on the above ground of appeal. Addition u/s 69 of purchases - HELD THAT - Goods amounting to ₹ 1,27,999/- were returned to Satya Narayan Marble for which no payment was made by the assessee. In fact it was not payable at all. In such a situation, the addition of ₹ 1,27,999/- confirmed by the Ld. CIT(A) cannot be sustained. Therefore, we delete the above addition of ₹ 1,27,999/- and allow the 5th ground of appeal. Addition being alleged discrepancy in cash in hand - HELD THAT - Difference in cash was explained by way of cash lying at sites viz. Plot 448 (H.O.) ₹ 25,517/-, Plot 448 Khare (H.O.) ₹ 1,87,599/- and Plot ₹ 53,709/-. A perusal of the above explanation which was furnished during the course of survey and also before the ADIT (Inv.) and the AO is further corroborated by the books of account. Addition u/s 68 on account of alleged untallied trial balance - HELD THAT - Assessee has maintained regular books of accounts which have been duly audited. In the instant case, the AO has not rejected the books of accounts. There is nothing on record brought out by the AO to prove that the transactions were not accounted and included in the books of accounts. All the more the said excel sheet does not represent any income or expenditure and it was prepared by the accountant to record the results of trial run taken for the purposes of shifting from Foxpro accounting software to Tally. The assessee at the year-end has drawn final accounting on the basis of regular account which included the transactions in the said two rough trial balances.
Issues Involved:
1. Addition/Disallowance of ?38,319/- for suppressed profit element in purchases. 2. Disallowance of ?7,50,000/- on account of consultancy charges paid to Modern Line Distribution. 3. Addition of ?7,63,865/- on account of unexplained expenses. 4. Disallowance of ?55,00,000/- on account of payment made to Shri Sai Prerna Charitable Trust. 5. Addition of ?1,27,999/- for purchases from Satya Narayan Marble. 6. Addition of ?5,00,000/- u/s 68 on account of tentative buy price of a flat to R.A. Chug. 7. Addition of ?2,66,393/- for alleged discrepancy in cash in hand. 8. Addition of ?16,77,178/- on account of alleged untallied trial balance. Detailed Analysis: 1. Addition/Disallowance of ?38,319/- for Suppressed Profit Element in Purchases: The assessee challenged the addition of ?38,319/- (12.5% of ?3,06,555) made by the AO based on the information that M/s Khushi Enterprises issued bogus bills. The CIT(A) upheld this addition citing the decision in CIT v. Simit P. Sheth and Bholanath Polyfab Pvt. Ltd., estimating suppressed profit at 12.5%. The tribunal found that the CIT(A)'s order was based on proper appreciation of facts and law, and thus dismissed the appeal. 2. Disallowance of ?7,50,000/- on Account of Consultancy Charges Paid to Modern Line Distribution: The AO disallowed ?15,00,000/- paid to Modern Line Distribution for non-deduction of TDS. The CIT(A) noted that only ?7,50,000/- was paid and upheld the disallowance, adding it back to WIP. The tribunal directed the AO to re-examine the applicability of Article 14 of the DTAA with UAE and the necessity of TDS, thus allowing the appeal for statistical purposes. 3. Addition of ?7,63,865/- on Account of Unexplained Expenses: The AO added ?7,63,865/- based on entries in impounded books related to purchases. The CIT(A) upheld this addition, noting the assessee's failure to prove the expenditure. The tribunal directed the AO to re-examine the evidence and allowed the appeal for statistical purposes. 4. Disallowance of ?55,00,000/- on Account of Payment Made to Shri Sai Prerna Charitable Trust: The AO disallowed ?55,00,000/- added to WIP as donation to Shri Sai Prerna Charitable Trust. The CIT(A) upheld the disallowance, noting the lack of business connection and tax exemption certificate. The tribunal agreed with the CIT(A), confirming the reduction of WIP and higher profit in the completion year. 5. Addition of ?1,27,999/- for Purchases from Satya Narayan Marble: The AO disallowed ?1,27,999/- as cash payment for defective goods return. The CIT(A) upheld this addition. The tribunal found that the goods were returned and no payment was made, thus deleting the addition and allowing the appeal. 6. Addition of ?5,00,000/- u/s 68 on Account of Tentative Buy Price of a Flat to R.A. Chug: The AO added ?5,00,000/- based on entries in impounded documents. The CIT(A) upheld this addition. The tribunal found no evidence of actual payment and deleted the addition, allowing the appeal. 7. Addition of ?2,66,393/- for Alleged Discrepancy in Cash in Hand: The AO added ?2,66,393/- for cash discrepancy during the survey. The CIT(A) upheld this addition, questioning the post-survey explanation. The tribunal found the explanation valid and deleted the addition, allowing the appeal. 8. Addition of ?16,77,178/- on Account of Alleged Untallied Trial Balance: The AO added ?16,77,178/- for untallied trial balance. The CIT(A) upheld this, noting the lack of explanation. The tribunal found the discrepancy due to software transition and deleted the addition, allowing the appeal. Conclusion: The tribunal upheld some additions and disallowances while directing re-examination or deletion of others, thus partly allowing the appeal. The order was pronounced on 19/02/2020.
|
