9911796707
TMI Blog1999 (5) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 16,36,468. While completing the assessment, he treated a sum of ₹ 4,00,625 which represented peak of raw material purchased by payment of cash as income derived from other sources. The refusal to treat the revised return as Amnesty return was contested before the CIT(A) in appeal against the assessment order. The learned CIT(A) found his impugned orders that the assessment was made as a sequel to and on the basis of materials seized during the search and seizure operations which took place from 20-5-1986 to 30-5-1986. The surrender of such concealed income so detected in the search proceedings does not come under the umbrella of Amnesty Scheme. For this reason, the leaned CIT(A) justified the action of the Assessing Officer in refusing to treat the revised return as amnesty return. The Assessing Officer treated the sum of ₹ 4,00,625 as income from other sources. His reasons for doing so are mentioned in para 3 of his orders. He states in that para that the company is one of the concerns of M/s. Lupin Laboratories (P.) Ltd. in which there was a search require operation under section 132 on 20-5-1986. In the course of the search, it was found that the company w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue and complete disclosure and on the basis of a peak working, an amount of ₹ 27.80 lakhs has been determined, and considering other relevant facts, it has been agreed that an amount of ₹ 19.33 lakhs may be considered as additional income for taxation. In para 14, it is stated as follows : On the above basis, the total amount of additional income for taxation comes to ₹ 185.00 lakhs (rounded). This addition may be made to the total income and the total taxable income ascertained after such deductions the company may be entitled to on the facts and in law and considering the assessments hitherto made and disclosures made under Voluntary Disclosure Scheme. Para 16 of the said letter is as follows : We may clarify that this letter is being filed in the cases of the taxable entities in respect of whom raids under section 132 proceedings had been carried out by the department. We have not been furnished with copies of any of the statements in respect of the persons whose statement were recorded. They have assured us that the approach in the matter has been one of mutual trust and, therefore, the contents of this letter may be considered in the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11,856 - 8-9-1983 17,70,500 - - 1,66,644 1-10-1983 - 1,78,500 1,78,500 - 2-12-1983 89,250 - 89,250 - 14-12-1983 89,250 - - - 22-12-1983 89,250 - - 89,250 26-12-1983 44,625 - - 44,625 27-12-1983 44,125 - - 44,125 28-12-1983 44,125 - - 44,125 7-2-1984 - 89,250 89,250 - 9-2-1984 - 89,250 1,78,500 - 15-2-1984 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a and M/s. Midway Traders. The learned departmental representative was not able to show to us from the lengthy statements recorded from each of the above persons anything about the cash purchases made from the above two parties. Therefore, in the absence of Revenue establishing any justification for the addition of ₹ 4,00,625 as a result of investigations and detections made prior to search proceedings, i.e., on 29-5-1986 as or subsequently, we are unable to reject the argument of the learned counsel for the company that necessary investigation justifying addition of ₹ 4,00,625 must have been made by the Assessing Officer during the assessment proceedings which culminated in the assessment order dated 30-3-1988, and it is quite unlikely that the Assessing Officer had obtained any information whatsoever about M/s. Supreme Pharma and M/s. Midway Traders from any of the seized material during the course of the search. Therefore, the position boils down to this : whether mere stigma of search and seizure can shut out the company from coming under the Amnesty Scheme and filing the revised return, especially when the materials seized in the search proceedings were not looked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come hitherto can be declared under the Amnesty Scheme if it is seen that such undeclared income has no connection whatsoever with the seized material during the search. Further in order to buttress his argument, the learned counsel for the company Shri S.E. Dastur invited our attention to the judgment of the Calcutta High Court in Anand Kumar Saraf v. CIT (1994) 75 Taxman 320 /(1995) 211 ITR 562. The Head Note of the decision which reflected the ratio in the body of the judgment which is found at page 563 of the reported judgment states as follows : The Amnesty Scheme was administered by Central Board of Direct Taxes though its various Circulars bearing Nos. 423, 432, 439, 440, 441, 450, 451, 453, 456, 472 and 474, Circular No. 451 dated February 17, 1986 issued by the CBDT, clarifying certain points regarding the Amnesty Scheme for assessees, has clarified that no immunity given by the circular can be availed of by the assessee, whose premises had been searched by the tax authorities. An assessee could make a disclosure in respect of assets or income which had not been found in the course of the search. As to the meaning of the expression before detection by the Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extended upto 31-3-1987. Vide Circular No. 453 dated 4-4-1986 which is reported in (159 ITR (St.) 9), time for filing Amnesty return was extended upto 30-9-1986. Further, under Circular No. 472 dated 15-10-1986 reported in (162 ITR (St) 17), time for filing Amnesty return was further extended upto 31-3-1987 and, therefore, we hold that the revised return filed by the assessee on 30-9-1986 for the assessment year 1985-86 is an Amnesty return and it should have been treated as such. As can be seen from page No. 6 of the Paper Book, total income disclosed under the Amnesty return was ₹ 11,18,531 on which Income-tax and surcharge payable was ₹ 7,04,675. The whole of it is recorded to have been paid as under : Rs. 15-12-1984 3,38,400 31-7-1985 78,250 3-10-1985 48,260 Deposit with IDBI 16,920 Balance paid 29-9-1986 2,22,845 7,04,675 Thus, the revised return was not only filed, but the whole of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e excluded ₹ 1,00,000 and disallowed ₹ 27,614 under section 37(3A). 6. Before the learned CIT(A), advertisement expenditure of ₹ 16,744 and sales promotion expenses of ₹ 49,496 were not pressed. Regarding the car maintenance expenses, the CIT(A) held that section 37(3A) contained a non obstante provision with respect to certain specific expenses mentioned therein,. The phrase expenditure on running and maintenance of motor car according to him, cannot be construed to refer only to petrol expenses. He rejected the contention of the company who relied upon 4 ITD 221. It was also contended that a sum of ₹ 13,055 disallowed under rule 6D was also included in the said sum of ₹ 1,16,376. The learned CIT(A) directed to exclude the amount of ₹ 13,055 from the computation of disallowance under section 37(3A). 7. In this ground, disallowance of ₹ 27,614 under section 37(3A) was contested. In Assam Carbon Products Ltd. v. CIT (1997) 224 ITR 57, 59, 60-61/ 93 Taxman 729(Gauhati), it is held that expenditure on insurance and current repairs which are covered by section 31 would not fall within the gamut of section 37(3A). In CIT v. Ayurved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o in sub-clauses (i) and (ii) of clause (c) of section 40. It is the aggregate of all these four items which cannot exceed ₹ 72,000. No individual ceiling has been put on any of these items of expenditure for the purposes of allowability as has been done in clause (c) in the case of persons other than those falling under the proviso to clause (a). The limit of expenditure referred to in sub-clause (i) of clause (a) is ₹ 60,000 and the limit in respect of expenditure referred to in sub-clause (ii) is ₹ 1000 per month. But in the case of the employee director and such other persons who are covered by the proviso to clause (a), an aggregate ceiling of ₹ 72,000 has been fixed not only in respect of the expenditure referred to it in the aforesaid two sub-clauses but also those referred to in sub-clauses (i) and (ii) of clause (c) of section 40. From this, it is evident that the legislative intention is to treat the employee directors and other persons mentioned in the proviso differently from other employees in the matter of allowability of expenditure incurred on them. Therefore, the ceiling limit is fixed at ₹ 72,000 in the case of employee directors and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted six items, the counsel for the company before us did not press his claim in respect of the first three items and he confined his claim only to items No. 4 to 6. The learned CIT(A) had given the following reasoning as to why he was not convinced about the contention that ₹ 4,00,625 should be treated as business income of the company. His reasoning is contained in para 6 which is as below : The second limb of this ground of appeal is that without prejudice to the above, the IAC erred in not considering the said income as business income of the appellant. Since the cash remained outside the books in terms of the provisions of section 69A and section 69C the concealment so detected could only be described as income from other sources. The appellant s submissions are, therefore, rejected. In view of these facts which are not controverted by the company, it is to be held that ₹ 4,00,625 was not, in our considered opinion, correctly considered as not forming part of profits of an industrial undertaking situated in a backward area. The learned CIT(A) also held that ₹ 1,69,791 is an outstanding liability towards sales-tax and since the liability does not add ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
