9911796707
TMI Blog2015 (7) TMI 290X X X X Extracts X X X X X X X X Extracts X X X X ..... s been concealed by the assessee, then under such circumstances, it has not been explained by the Department as to what prompted the assessee to make such a declaration in respect of income from commodity transactions. It has also not been explained as to even why the AO had not made any enquiries in this respect during the assessment proceedings. The facts on the file clearly reveal that the declaration was made by the assessee in relation to discrepancies found during the search action in the case of Nitin Cylinders Ltd. The naming the disclosure as from commodity trading in the grey market was made as was then advised to the assessee. It is evident on the file that disclosure of ₹ 5.36 crores as per the return of income was to cover ₹ 3.51 crores capitalized in M/s Nitin Cylinders considered as bogus purchase and further the sum of ₹ 1.82 Crores for covering various issues as explained by the assessee in his letter dated 22.12.2009. The assessee has also claimed that the disclosure be also considered for difference in purchase of steel in M/s Nitin Cylinders Ltd. The Ld. CIT(A) though has held that the sum totally accounted for was at ₹ 4,97,00,000/-, how ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (hereinafter referred to as the AO) into the returned income of ₹ 6,25,65,246/- of the assessee. 4. The brief facts of the case under consideration are that the assessee is the Managing Director of the company M/s Nitin Fire Protection Industries Ltd. which is engaged in manufacturing of Fire Fighting Equipments etc.. The said company and the other group companies are controlled by the assessee, his family members and associates. A search operation was carried on 6.9.2007 under section 132 of the income tax Act in the case of Group Companies known as Nitin Group . The A.O. issued notice u/s. 153A of the I.T. Act, 1961 on 31.07.2008 on the assessee Shri Nitin M. Shah for A.Y. 2002-2003 to 2007-08. In response to notice, the assessee filed returns of income on 22.09.2009, wherein certain additional income for some of the above noted assessment years was admitted/returned by the assessee. For the year under consideration i.e. A.Y. 2008-09 , the assessee in his original return of income filed on 30.09.2008 declared total income at ₹ 6,24,50,245/- The AO however vide order of assessment dated 30.12.09 passed u/s 143(3) of the Act, made the following additions/disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired the assessee to explain as to why above stated amount of ₹ 3.15 crores should not be taxed in the hands of the assessee. The assessee in his response vide letter dated 22.12.09 submitted that the amount of ₹ 3.15 Crore capitalized in Nitin Cylinders Ltd., no depreciation had been claimed. Further the said amount had already been offered to tax by the assessee in his individual capacity as the assessee had voluntarily disclosed the sum of ₹ 6.85 crores and due taxes thereon had been paid. This disclosure was reflected in Return of Income of respective years. The assessee had never entered or indulged in any transactions relating to the commodity trading in grey market or on commodity exchange. That during the investigation and/or assessment proceedings, no record, material or evidence of any type of commodity trading in grey market or otherwise was found. Further, that during the statements recorded, to buy the peace and to cover the discrepancies in Nitin Cylinders Ltd. in purchase of materials/ commodities capitalized in Nitin Cylinders Ltd, the naming of the disclosure was given as commodity trading in grey market as was advised then. He, therefore, state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder I. T. Act on this sum of ₹ 3.13 Crore capitalized in Nitin Cylinders Ltd. He further contended that this fact of owning up of the amount was stated in the assessment order of Nitin Cylinders Ltd. and that none of the said facts was refuted or controverted by the AO.It was therefore contended that the said sum of ₹ 3,13,38,798/ - was wrongfully added in the hands of the assessee. That this was a case of double addition of the same income. Further that it was very clearly stated by the assessee in his statement that ₹ 5.00 Crorcs were declared to cover up all such discrepancies or deficiencies which could arise during the assessment of group companies. Without prejudice, the assessee submitted that even vide submissions dated 22-12-2009 before the A.O. in the case of Nitin Cylinder Ltd., the clarification/ retraction with regard to voluntary declaration of ₹ 5 Crore was made to the effect that in case of ₹ 3.15 Crore capitalized in Nitin Cylinders Ltd , no depreciation under Income Tax Act 1961 was claimed and the said amount had already been offered for tax in individual capacity of Mr. Nitin Shah. That Mr. Nitn M. Shah had voluntarily disclosed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the various issues, such as 25% of ₹ 1.19 lacs amounts spent in Alert Fire Protection Ind. Ltd. (group company) towards party on IPO success of Nitin Fire Protection Ind. Ltd. and same is coincidence with the birth date of Mr. Nitin M. Shah and the 25% of ₹ 3.29 lacs being hotel bill of ITC partly for business promotion with the foreigners on the occasion Marriage of Mr. Kunal Shah and all and/or any and/or sundry discrepancies which may arise during investigation/assessment in different companies/concerns /individuals/huf assessee of Nitin Fire Groups. This disclosure, may also cover any purchase of steel differences in M/s. Nitin Cylinders Ltd. c. It is humbly submitted that voluntary disclosure of income is much higher than the discrepancies and the same is made as a gesture of co-operation with I.T. Department. 9. The assessee further relied upon the submission filed vide letter dated 30-12-2009 before the A.O. about which the Ld. CIT(A) observed that the same had clearly controverted the contents of the remand report dated 02-06- 2011. The relevant part of the said submissions has been reproduced in the impugned order as under: Dear Sir, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken into consideration the assessment framed under s.143(3) in the case M/s. Nitin Cylinders Ltd., for the same year i.e. 2008-09. In the assessment of M/s. Nitin Cylinders Ltd. for the A.Y 2008-09, based on the findings in the course of the search conducted on the group and also based on the post search enquiries conducted, an aggregate sum of ₹ 5,81,03,042/- (Rs.3,15,00,000/- + 2,66,03,042/-) had been held as bogus capital expenditure and hence it was held that the same is to be reduced from the fixed assets and depreciation on the same to be disallowed. In this context it is to be pointed out that in the course of search on the appellant, the appellant had declared a sum of ₹ 5 crores for the A.Y 2008-09. The said disclosure was to account for the various discrepancies/ deficiencies noticed in relation to claim of additions to the fixed assets in the case of M/s. Nitin Cylinders Ltd. and also to take care of other issues as is evident from the record. It can be seen from the statement recorded from Shri Nitin M. Shah, read alongwith his letter dated 22.12.2009 (reproduced in page 11 of the assessment order) that the disclosure is given as commodity trading in gre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted income in relation to commodity transactions in grey market is concerned, it may be observed that neither any evidence in this regard was found during the course of search action nor in the investigations during assessment proceedings. The AO had made no enquiries in this respect. He has just relied upon the statement of the assessee made during search action, that in these type of transactions, no evidence generally is available. When there was no evidence found or detected nor there is any contention of the revenue that any evidence in this respect has been concealed by the assessee, then under such circumstances, it has not been explained by the Department as to what prompted the assessee to make such a declaration in respect of income from commodity transactions. It has also not been explained as to even why the AO had not made any enquiries in this respect during the assessment proceedings. The facts on the file clearly reveal that the declaration was made by the assessee in relation to discrepancies found during the search action in the case of Nitin Cylinders Ltd. The naming the disclosure as from commodity trading in the grey market was made as was then advised to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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