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TMI Blog2015 (12) TMI 970X X X X Extracts X X X X X X X X Extracts X X X X ..... e of survey belonged to the assessee and its sister concern. The requisite list of workers employed with either of the concerns were filed on record. Merely because the said statement was confronted to one of the partners who had signed the list does not establish that the workers belonged to the firm in which he was a partner i.e. the assessee firm before us. In the absence of any concrete evidence found, we find no merit in the orders of the authorities below and no addition is warranted in the hands of the assessee on the basis of said list prepared by the survey team where the assessee had clearly explained its case that the said total number of workers belonged to two concerns and not to the assessee itself. In any case, the additions in the hands of the assessee for the years under consideration have been made on pure estimation as no evidence of excess workers was found in the years under appeal. - Decided against revenue Addition on account of income of Smt.Meena Garg, Prop. of M/s Punjab Timber Trading Company being treated as income of the assessee on substantive basis - ITAT deleted the addition - Held that:- The Tribunal in the case of Smt.Meena Garg relating to asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation gathered by the Income tax Department during the search proceedings were forwarded to the excise department who in turn visited the premises of the assessee and found no discrepancy in the stock. Thus no merit in the addition made on account of estimated profit of short stock found on the date of search.- Decided against revenue - ITA No. 230 of 2015 - - - Dated:- 28-9-2015 - Ajay Kumar Mittal And Ramendra Jain, JJ. For the Appellant : Mr. Rajesh Sethi, Sr. Standing counsel with Mr. Arun Biriwal, Adv JUDGMENT Ajay Kumar Mittal, J. 1. This order shall dispose of ITA Nos.201 to 203, 230, 284, 285, 286 and 287 of 2015 as according to the learned counsel for the appellantrevenue, the issues involved in all these appeals are identical. However, the facts are being extracted from ITA No.230 of 2015. 2. ITA NO.230 of 2015 has been preferred by the revenue under Section 260A of the Income tax Act, 1961 (in short, the Act ) against the order dated 28.8.2014, Annexure A.3 passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'A' in ITA No.1171/CHD/2013 for the assessment year 2007-08, claiming following substantial questions of law:- i) Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year 2007-08 was completed under scrutiny vide assessment order under section 143(3) of the Act on 30.12.2008, Annexure A.1. Certain additions/disallowances were made which were contested by the assessee before the Commissioner of Income Tax (Appeals) [CIT(A)] and subsequently before the Tribunal. Certain deletions by the CIT(A) were contested by the revenue before the Tribunal. The issues which were decided by the Tribunal in favour of the assessee are as under:- i) Addition o f ₹ 23,63,243/- on account of unexplained expenditure on labour: Prior to search which was conducted on 20.3.2007, a survey was conducted at the business premises of the assessee on 9.9.2004. The document pertaining to number of workers employed by the assessee prepared during the said survey formed the basis of additions on account of suppression of expenditure on labour for production to the extent of ₹ 23,63,243/- for the year under consideration. The books of account were found to be not reliable. The assessee was given opportunity of hearing to show cause as to why difference in wages worked out at ₹ 23,63,243/- may not be treated as expenses incurred out of income from u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition of ₹ 3,35,405/- on this issue. The Tribunal allowed the appeal filed by the assessee on this issue following the decision taken on this issue in the assessment year 2002-03. iii) Addition of ₹ 78,15,026/- on account of unexplained investment in construction of factory building: During the year under consideration, the assessee had made additions to the factory building. The matter was referred to the valuation Officer under Section 142A of the Act. The valuation department reported that the assessee had declared ₹ 13,83,674/- as investment/new construction as shown on layout plan whereas the valuation officer valued the cost of construction as ₹ 1,08,22,000/-. The assessee was asked to show cause as to why the difference of ₹ 94,38,326/- should not be added to the income of the assessee being unexplained investment. The assessee submitted that it had also got its factory valued from a government approved valuer who had estimated the value at ₹ 27,07,000/-. The objections of the assessee were referred to the Valuation Officer. The Assessing Officer after considering the matter allowed 15% of the total value arrived at by the Valuatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given to the assessee. The Tribunal deleted the additions made by the Assessing Officer and upheld by the CIT(A)(C). The findings of the Tribunal on each issue are as under:- On Issue No.(i) The Tribunal for the assessment year 2007-08 had followed the reasoning recorded for the assessment year 2001-02 where similar addition was deleted with the undernoted observations:- 11. We have heard the rival contentions and perused the record. In the facts of the present case before us, survey under section 133A of the Act at the premises of the assessee was first conducted on 9.9.2004. Thereafter search and seizure operations were carried out under section 132 of the Act both at the business and residential premises of the assessee. During the course of survey, the team had prepared the list of workers under which it was reported that the total persons working in the premises of the assessee were 59 on monthly roll and 16 on per piece basis. The assessee had booked the expenditure of ₹ 4,67,424/- in assessment year 2005-06 i.e. the year in which survey was conducted. However, in assessment year 2002-03 the total expenditure booked by the assessee was ₹ 1,82,798/-. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the said addition being made in the hands of the assessee as the explanation of the assessee that the workers of the two concerns were totally considered in the list of workers prepared by the survey team for the assessee firm cannot be ignored. The said list of 59 workers was prepared on 9.9.2004 and the plea of the assessee was that the said 59 workers as on the date of survey belonged to the assessee and its sister concern. The requisite list of workers employed with either of the concerns were filed on record. Merely because the said statement was confronted to one of the partners who had signed the list does not establish that the workers belonged to the firm in which he was a partner i.e. the assessee firm before us. In the absence of any concrete evidence found, we find no merit in the orders of the authorities below and no addition is warranted in the hands of the assessee on the basis of said list prepared by the survey team where the assessee had clearly explained its case that the said total number of workers belonged to two concerns and not to the assessee itself. In any case, the additions in the hands of the assessee for the years under consideration have been ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in valuation of the Valuation Officer was warranted in view of the ratio laid down by the Hon'ble Supreme Court in Sargam Cinema vs. CIT (328 ITR 513 (SC)] 39. The learned DR for the revenue has fairly admitted that the books of account were not rejected. 40. We are of the view that the ratio laid down by the Hon'ble Apex Court in Sargam Cinema (supra) is squarely applicable to the facts of the present case where the books of account were not rejected by the Assessing Officer. On the other hand, the Assessing Officer had referred valuation of the building to the Valuation Officer who had reported the value of the building at ₹ 78,15.026/- as against the cost of the building shown by the assessee at ₹ 70,33,524/-. In view of the ratio laid down by the Hon'ble Supreme Court, no addition on this account can be made in the hands of the assessee where the books of account had not been rejected. Accordingly, we delete the said addition made by the Assessing Officer and reverse the order of the CIT(Appeals) in this regard. The ground of appeal No.4 raised by the assessee is thus allowed. On Issue No.(iv) 57.In the totality of the facts and cir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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