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TMI Blog2015 (3) TMI 645X X X X Extracts X X X X X X X X Extracts X X X X ..... ear relevant to the assessment year 2007-2008 and the ratio of .25% was not applicable. 2. On the facts and in the circumstances of the case and in Law, the Ld.CIT(A) erred in deleting the disallowance of depreciation in respect of portion of value shown in the books which represented over invoicing of assets as detected during the course of survey and in respect of which the Ld.CIT(A) confirmed the addition on commission paid for such bogus bills." 2. At the outset, the learned Counsel submitted that the issue raised by the department in ground nos.1 and 2 are covered in favour of the assessee by the earlier order of the CIT(A) as well as the Tribunal. 3. Brief facts of the case are that a search and seizure action u/s 132 was conducted in the case of the assessee-company and its group concerns on 18.02.2009. During the course of search proceedings, it was detected that the assessee-company had entered into transaction with a concern managed by one, Shri Praveen Jain and other concern managed by Shri Krishna Kumar Gupta. During the year, the Assessing Officer (AO) noted that the assessee had made purchases of Rs. 66,62,95,692 and has made sale of Rs. 69,66,58,158, which were ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Department) which are indicators that these are genuine transactions. Ld AR also relied on payments for purchases and receipts from saIes that are on bill to bill basis and acceptance of the turnover as reflected in the annual accounts of the appellant by the Sales Tax Department as per the VAT returns which include transactions with the aforesaid parties and on which the appellant has also paid sales tax as per the VAT return. The Id. AR also relied on the affidavit executed by 7 parties on 04.04.2008 confirming that the transactions were genuine and carried out with basic prudent principles of business. The Id. AR further relied on the income shown out of these transactions. 2.6.3 After carefully considering the facts and circumstances of the case as elaborated herein above, it is not disputed that Shri Praveen Jain confirmed that the transactions never resulted into any delivery of goods and also no transaction expenses were debited in the books. It is apparent that the appellant had entered into transaction with the said Shri Praveen Jain and said Shri Praveen Jain confessed that these concerns have neither taken any physical delivery of goods in case of the purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commodation entries for which he must have charged commission. 2.6.6 After accepting the conclusion of the Id. AO about the accommodation entries I now proceed to determine the quantum of commission that must have been charged by Shri Praveen Jain. 2.6.7 The Ld. AO on pages 11-12, para 6.6 held that commission paid for accommodation entries is held as unexplained expenditure and hence he disallowed 2% of Rs. 69,66,58,158/- amounting to Rs. 1,39,33,163/- as unexplained expenditure under section 69C. It is seen that while disallowing @ 2%, the Ld. AO has not pointed out the basis to adopt 2%. He has not shown that Shri Praveen Jam has confirmed charging 2% for the accommodation entries. At the same time as held in the earlier para, Shri Praveen Jain had issued accommodation entries for which he must have charged commission from the appellant. It was seen in the earlier years that Shri K.K. Gupta who had provided accommodation entries had confessed to charging commission (r) 0.25%." 4. Before us, the learned Counsel submitted that, against the said order of the CIT(A), department has not filed any appeal before the Tribunal. In fact the assessee had preferred an appeal before the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to cross examination was reserved. However, during the course of assessment, the assessee has asked for the cross examination which was denied by the A.O. on the ground that the same is untenable and unacceptable. 12. In Kishinchand Chellaram v. CIT (1980) 125 ITR 713 (SC), the Hon'ble Supreme Court inter alia held that (Headnote - page 714 & 715): "............But before the income-tax authorities could rely upon it, they were bound to produce it before the assessee so that the assessee could controvert the statements contained in it by asking for an opportunity to cross-examine the manager of the bank with reference to the statements made by him..........." 13. In absence of any contrary material placed on record by the Revenue to show that the cross examination of Mr. K.K. Gupta was provided to the assessee, we respectfully following the ratio of the above decision and keeping in view that the assessee in his submissions dtd. 19-12-2008 stated that he is showing profit ranging between 40 to 45% on the purchases has not been uncontroverted by the Revenue even at this stage and also keeping in view the books of accounts have not been rejected, we are of the view that the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nticated location, testing report and installation report filed before your kind self and already on record as relating to the said machinery. (c) Some of the said machinery is also part of the demerger arrangement under the order of the Honourable Mumbai High Court, and hence is part of the High Court records. This fact has more value than mere general statements made by the said Mr. Gupta. (d) The above is in addition to and without prejudice to the submissions already made and on record. (e) The Annexure hereto relating to the claim of depreciation reinforces what is already on record and explained before you kind self. The increase in output on account of the purchases would not have been possible without the additional machinery. The said Annexure is self explanatory." It was further stated that necessary documents related to the purchase of assets are already filed before the A.O. It was further stated that the above assets have not been installed in the assessee's centre and the details of its inspection report and verification report was already filed. It was, therefore, submitted that the above assets are being used for business purposes, therefore, the depreciation be all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt as well as the demerged company M/s. Intelnet BPO Services Limited made all necessary and relevant disclosure including that of the latest financial position and complied with the requirement stipulated in law in Company Petition No. 405 of 2006 connected with Company Application No.542 of 2006. The appellant had also given necessary undertakings before the Honorable Bombay High Court. The Regional Director has filed affidavit and relied upon the report of the Registrar of Companies after examining the scheme and relying upon the report, the Regional Director has certified that the demerger scheme was not prejudicial to the interest of the shareholders, creditors and public interest. The Official Liquidator filed a report before the Honorable Bombay High Court and relied upon the evidence of the C.A.s duly pointed out for scrutiny of the records and books of accounts. The books of accounts of the appellant for five years were duly scrutinized and the C.As. has observed that the affairs of the appellant company were not carried out in a manner prejudicial to the interest of the members and creditors, was also the public interest. Honorable Bombay High Court made the captioned Com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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