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TMI Blog2017 (9) TMI 1284X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee himself admitted that profit @10% i.e. net profit on gross contract receipt can be confirmed as estimated by the AO but the consequential telescoping of the available cash balance amount to ₹ 14,48,166/- in this year is to be allowed, giving effect to the balance of pooled cash account and further effecting the negative peak cash credit in current and in subsequent assessment years. We find the plea of the assessee is quite reasonable that the estimated net profit @ 10% is to be upheld and excess is to be allowed to be set off against negative peak cash in current assessment year as well subsequent assessment years. The assessee have filed complete details, the AO can verify and allow the same. We direct the AO accordingly. Addition of negative cash balance - non adjusting the cash balance in the balance of Jawahar B Purohit pooled cash account - Held that:- We find that as regards to the loan brought from various persona and the same are depicted at page 234 of the assessee’s paper book whereby the assessee has issued bearer cheques in their name and cash was withdrawn by the assessee and confirmation is filed at the stage of assessment despite the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) on account of remuneration under section 40(b) of the Act and also expenses for non deduction of TDS under section 194C of the Act on account of transport charges by invoking the provisions of section 40a(ia) of the Act. For this Revenue has raised following ground Nos. 1 2: - 1 . That the ld . CIT ( A ) has erred in law and on facts in deleing the additions of Rs . 10,00,000 /- Rs . 1,00,000 /- made under section . 40 ( a )( ia ) on account of non - TDS on payment for labour charges professional charges respectively without appreciating that the ratio of the decision of the Hon ble Supreme Court in the case of Hindustan Coca Cola Beverages P . Ltd vs . CIT 293 ITR 226 is only in respect of section 201 not in respect of section 40 ( a )( ia ). 2 . The appellant craves to leave to add, to amend and / to alter any of the ground of appeal, if need be . Assessee has also raised following ground No. 1 1 . That the learned Assessing authority ( Assistant Commissioner of Income Tax - Central Circle - 22, Mumbai ) and has grossly erred in making disallowance of Rs . 33,05,310 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of the AO or from the order of the CIT(A) or from the seized material it cannot be gathered whether any seized material relating to these disallowances are available on record. As there is a categorical fact recorded by the AO as well as CIT(A) that these disallowances are made by the Revenue on the basis of the return filed by the assessee originally on 31-10-2005 for the AY 2005-06 and search took place on 16-11-2009. The assessment/processing of return of income got completed on 31-10-2006, as no notices under section 143(2) was issued and assessment was not abated in view of the second proviso to section 153A of the Act. Once, the assessment was completed and has not abated for relevant AY, this issue is squarely covered by the decision of the Hon ble Bombay High Court in the case of CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015) 374 ITR 645 (Bom). 5. We find that this issue now stands covered in favour of assessee and against the Revenue by the decision of Hon ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra), wherein considering the judgment of the Special Bench of the Mumbai Tribunal in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in which search etc . has been initiated . Thereafter he has to assess or reassess the total income of these six years . It is obligatory on the part of the AO to assess or reassess total income of the six years as provided in section 153A ( 1 )( b ) and reiterated in the 1st proviso to this section . The second proviso states that the assessment or reassessment pending on the date of initiation of the search or requisition shall abate . We find that there is no divergence of views in so far as the provision contained in section 153A till the 1st proviso . The divergence starts from the second proviso which states that pending assessment or reassessment on the date of initiation of search shall abate . This means that an assessment or reassessment pending on the date of initiation of search shall cease to exist and no further action shall be taken thereon . The assessment shall now be made u / s 153A . The case of Ld . Counsel for the assessee is that necessary corollary to this provision is that completed assessment shall not abate . These assessments become final except in so far and to the extent as undisclosed income is found in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration of the provision and the submissions, we find that this provision also makes it clear that the abatement of pending proceedings is not of such permanent nature that they cease to exist for all times to come . The interpretation of the Ld . Counsel, though not specifically stated, would be that on annulment of the assessment made u / s 153 ( 1 ) , the AO gets the jurisdiction to assess the total income which was vested in him earlier independent of the search and which came to an end due to initiation of the search . The provision contained in section 132 ( 1 ) empowers the officer to issue a warrant of search of the premises of a person where any one or more of conditions mentioned therein is or are satisfied, i . e . - a ) summons or notice has been issued to produce books of account or other documents but such books of account or documents have not been produced, b ) summons or notice has been or might be issued, he will not produce the books of account or other documents mentioned therein, or c ) he is in possession of any money or bullion etc . which represents wholly or partly the income or property which has not been an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment made under sub - section ( 1 ) is annulled in appeal or other legal proceedings, then the abated assessment or reassessment shall revive . This means that the assessment or reassessment, which had abated, shall be made, for which extension of time has been provided under section 153B . The question now is - what is the scope of assessment or reassessment of total income u / s 153A ( 1 ) ( b ) and the first proviso? We are of the view that for answering this question, guidance will have to be sought from section 132 ( 1 ). If any books of account or other documents relevant to the assessment had not been produced in the course of original assessment and found in the course of search in our humble opinion such books of account or other documents have to be taken into account while making assessment or reassessment of total income under the aforesaid provision . Similar position will obtain in a case where undisclosed income or undisclosed property has been found as a consequence of search . In other words, harmonious interpretation will produce the following results : - a ) In so far as pending assessments are concerned, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 006. It means that the assessment/processing of return of income were completed u/s 143(1) of the Act. No proceedings were pending. Subsequently, the survey under section 133A and search under section 132 of the Act was conducted by the department on the office premises of the assessee firm and residences of the partners on 16-11-2009. The AO during the course of assessment proceedings notice that the assessee has received unsecured loans from Bhawani M. Purohit amounting to ₹ 1,00,000/- and Ravi Purohit of ₹ 1.50 lacs and these are unexplained cash credits. The AO notices from annexure iii to firm No. 6B of the special audit report, which contains details of unsecured loans taken and repaid and according to him these unsecured loans are unexplained cash credits and accordingly he brought to tax u/s 68 of the Act. The CIT(A) also confirmed the action of the AO and confirmed the addition of unexplained cash credit u/s 68 of the Act amounting to ₹ 2.50 lakhs. Aggrieved, assessee preferred the appeal before Tribunal. 9. Before us, the learned Counsel for the assessee stated that addition is not based on any seized material because no incriminating documents were f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ground of appeal . 12. At the outset, the learned Counsel for the assessee stated that in the present case the assessment is made on protective basis and additions made was confirmed by CIT(A) on substantiate the basis in the case of Shri Mahipal P Purohit and accordingly, the AO while giving appeal effect to the order of CIT(A), deleted the addition vide order dated 12-03-2014 by observing as under: - Order giving effect to CIT ( A ) order Consequent to the Order of the CIT(A)-39, Mumbai No. 3ita-39/IT-80/2012-13 dated 08-11-2012, the total income of the assessee is revised as under: - Sl No . Particulars Amount Amount A Total income as per order giving effect of CIT ( A ) dated 28 - 03 - 2013 92,00,295 Less Relief allowed by CIT ( A ) ( i ) Unrecorded advance ( Addition was made on protective basis, the issue is confimrmed in the cas of Shri Mahipal Purohit and this amount is taxable in the 89,50,295 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 40 ( b ) 45,127 2 . Disallowances under section 40A ( 3 ) to the extent of 20 % in case of Expenditure of Rs . 2,489,573 /- 4,97,915 3 Disallowances under section 40 ( a )( ia ) Section 194C - Transport 1,79,965 Section 194C Labour Charges 1,72,270 Section 194C Contractor 59,067 Section 194H - Brokerage Expenses / Commission 3,60,000 Section 194J Professional Charges 3,00,000 Section 194J Supervision Charges 11,55,500 4 . Adhoc Disallowance for direct Expenses @ 20 % of Rs . 2,734,243 as discussed above 5,46,850 /- 5 . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd circumstances of the case in making addition and the learned Commissioner of Income Tax ( Appeals ) - 39, Mumbai has grossly erred in law and on the facts and circumstances of the case in confirming addition of Rs . 2,20,000 /- on account alleged unsecured loans under section 68 of the Income Tax Act, 1961 . 17. The facts are admitted and agreed by both the parties. The facts are that the return of income was filed by the assessee for the AY 2006-07 on 31-10-2006 and original assessment was completed u/s 143(3) of the Act vide order dated 29-12-2008. No proceedings were pending. Subsequently, the survey under section 133A and search under section 132 of the Act was conducted by the department on the office premises of the assessee firm and residences of the partners on 16-11-2009. The AO during the course of assessment proceedings notice that the assessee has received unsecured loans from Deepak amounting to ₹ 25,000/- and Pawan M. Purohit of ₹ 1.95 lacs and these are unexplained cash credits. The AO notices from annexure III to firm No. 6B of the Special Audit Report, which contains details of unsecured loans taken and repaid and according to him t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowances and the learned Commissioner of Income Tax ( Appeals ) 39, Mumbai has grossly erred in law and on the facts and circumstances of the case in confirming disallowance of Rs . 1,03,34,780 /- ( including Rs . 87,74,095 /- for which relief is provide in next assessment year ) reducing the value of Work in progress . 2 . That the Assistant Commissioner of Income Tax, Central Circle 22, Mumbai has grossly erred in law and on the facts and circumstances of the case in making addition and the learned Commissioner of Income Tax ( Appeals ) - 39, Mumbai has grossly erred in law and on the facts and circumstances of the case in confirming addition of Rs . 4,54,300 /- on account alleged unsecured loans under section 68 of the Income Tax Act 1961 . Revenue has raised following ground No . 1 On the facts and in the circumstances of the case and in law, the ld . CIT ( A ) erred in directing the AO to exclude the amount of Rs . 15 lakhs from the total addition of Rs . 19,54,300 /- made under section 68 of the IT Act, without bringing any evidence on record . 21. The learned Counsel for the assessee drew o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered by the decision of Hon ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (Supra). 24. We have gone through the facts and circumstances of the case. We find that the admitted facts for the relevant AY 2007-08 are that the assessee has filed its return of income on 15-11-2007 and no notice under section 143(2) was issued up to 30-11-2008 and accordingly, the return was processed under section 143(1) of the Act and no proceedings were pending at the relevant time of search. It means that assessment has not abated for the relevant AY 2007-08 and addition on both the count i.e. disallowance of expenses at ₹ 1,03,34,780/- and addition of unexplained cash credits confirmed by CIT(A) at ₹ 4,54,300/- is based on the return of income filed by the assessee and its accounts and not based on any incriminating material found during the course of search. Once this is the position, we are of the view that the issue is squarely covered in favour of assessee and against Revenue by the decision of Hon ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (Supra). The appeal of Revenue is dismissed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges 1,17,125 Nil 1,17,125 Interest on Loan Asahi Infrastructure Projects Ltd . 10,686 Nil 10,686 Disallowance under section 40 ( a )( ia ) Late Payment of TDS Section 194A Interest on loans 4,12,416 Nil 10,686 Section 194C Contractor 78,06,579 Nil 78,06,579 Section 194J Supervision Charges 2,55,100 Nil 2,55,100 Section 194H Brokerage Expenses / commission 2,50,000 Nil 2,50,000 Section 194J professional charges 50,000 Nil 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstruction are emanating from seized material. He admitted that these other disallowances are adhoc disallowances and for non-deduction of TDS under various provisions of section by invoking provisions of section 40a(ia) of the Act or 40(b) or 40A(3) of the Act. 28. We have heard the rival contentions and gone through the facts and circumstances of the case. We find that the above disallowances are not based on any evidence i.e. the incriminating material found during the course of search. As the original assessment has not been abated, we are of the view that the issue is squarely covered in favour of assessee by the decision of Hon ble Bombay High Court in the case of continental Warehousing Corporation (Nhava Sheva) Ltd. (supra). We find that the assessee himself conceded that the disallowance of the amounts of ₹ 4,58,858/-, ₹ 9,00,000/- being disallowance of miscellaneous expenses being repayment of advance, ₹ 14,77,884/- being adhoc disallowance of expenses incurred on Kashish Construction are emanating out of seized material and hence, these are confirmed. We direct the AO accordingly. This issue of assessee s appeal is partly allowed. 29. The next is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the learned Counsel this issue is also covered by the decision of Hon ble Bombay High court in the case of continental Warehousing Corporation (Nhava Sheva) Ltd.( Supra). 32. We find from the facts of the case that there is no incriminating material found during the course of search relating to these cash credits and accordingly, the issue is squarely covered by the decisions of Hon ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (Supra) as discussed in Para 5 and 6 of this order. Accordingly, this issue of assessee s appeal is allowed. In ITA No . 3646 / Mum / 2013 for AY 2010 - 11 in the case of M . R . Construction 33. The only issue in this appeal of Revenue is against the order of CIT(A) deleing the addition of ₹ 20 crores made by the AO on account of receipt of this amount under tripartite agreement dated 25-10-2009 for selling development rights. For this Revenue has raised following two grounds : - 1 . That on the facts and circumstances of the case, the Learned CIT ( A ) erred in deleting addition of Rs . 20 crores out of Rs . 40 cores received by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... V named GM Construction and a third party M/s Park View Developers whereby it was agreed as follows (copy of tripartite agreement is enclosed at pages 266-355 of paper book filed by the assessee): a) At page 269-270 the three parties to the agreement have been listed and the assessee firm is called as Developer, b) Whole of the right to develop and sell units in free sale component building under the LOI is granted to the Co-developer being Park view Developers. C) At page 273 in clause 3, consideration payable to the assessee is noted and at page 274-6 in clause 7, obligations of the assessee firm as Developer have been noted. It is clearly provided that at cost of the assessee firm Rehab building No. 4 has to be completed and also that all conditions of LOI have to be fulfilled by the assessee firm. The assessee firm is provided a consideration of ₹ 20,00,00,000/- for selling right to develop free sale building and towards completing responsibility as developer under LOI, d) On page 273-4 in clause 4 it has been noted that JV i.e. GM Construction is dissolved, it gives up all its rights in the SRA project and it has removed itself from the site and in considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided, cost, a predefined area of unit for his rehabilitation. In addition, other structures in the slum like Temples, place of worship, etc. have also to be constructed and provided. Common amenities including roads, sewage, etc have to be planned and provided. Also various charges have to be paid to SRA authority office for welfare of slum dwellers have to be provided. Various charges have to be paid to SRA authority including development charges and corpus has to be provided to society of rehabilitation buildings for its future maintenance. 38. Against such outgoings, the scheme provides for incentive FSI which can be developed by the Developer and sold in open market and retain the sale proceeds thereof. The assessee before us claimed that grant of LOI by the SRA authority is the starting point for a developer. It is the scheme that though the SRA authority permits and grants proportionate FSI for free sale component in proportion to rehabilitation buildings completed but final separation of plot for rehabilitation building and free sale building with separate property card and occupation certificate for Free sale buildings is granted only after all the conditions of LOI are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of property card for Free sale building and occupation certificate is only on completion of all conditions of LOI. The rights itself are yet to accrue to the assesse fully and finally and assesse cannot transfer what it does not own fully. It is only when conditions of LOI are fulfilled that the assesse can give away title to the free sale building. In the circumstance till the conditions of LOI are fulfilled transfer is not complete and income does not accrue to the assesse. We find from the facts of the case that lot of work in accordance with LOI was pending as on the date of tripartite agreement. This can be verified from the assessee s paper book pages 413-430, paper book no 2. Accordingly, we are of the view that principal amongst the conditions pending completion is construction of rehabilitation building no 4 and many temples and places of worship and the CIT(A) has rightly held that income under the tripartite agreement has not accrued to the assesse and no amount is taxable in the hands of the assesse in A Y 2010-2011. Accordingly, we confirm the order of CIT(A) and this issue of Revenue s appeal is dismissed. Coming to ITA Nos . 7208, 7209, 7210, 7211, 7212, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n search proceedings, assessee prepared fresh state of affairs book of accounts including turnover and transactions of such concerns. Similarly, the assessee also prepared pool account of cash in the name of jawahar B Purohit , in which all the expenses and outgoings detected during the search were accounted for. The shortfall in the said account was offered in the returns of income filed for the six assessment years in response to notice under section 153A of the Act. The AO referred to re-casted books of accounts for Special Audit Report and assessments were completed considering the audit report furnished by the Special Auditor. During the assessment proceedings the AO made adjustment to the said pooled cash account after making other various additions against which assessee has preferred the appeal before CIT(A), which were partly allowed. These inter-connected common issues against the addition made by AO by estimating net profit at the rate of 10% of the gross receipts and the same is confirmed by CIT(A) which is challenged by assessee for AYs 2005-06, 2006-07, 2007-08, 2008-09, 2009-10,2010-11 and also claimed telescoping effect of net profit additions against additions on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or estimating income from contract receipts . The A . O . has fixed the net profit rate a little over 8 % , i . e . at 10 % of the gross contract receipts . 8 . 1 . 1 Considering the fact that books were not reliable, that business was also being carried on in the names of family members, relatives, not all of whom were filing returns, considering that the financial statements of all such family entities have not been made available for examination either before the Special Auditor or the Assessing Officer, it cannot be stated that the estimation by the A . O . is arbitrary and without taking into account the history of the appellant . Hence, I am in inclined to uphold the action of the A . O . in estimating the net profit at 10 %. It is held that the estimation is not arbitrary but based on peculiar facts of the case . It has been held by the Hon ble Supreme Court in the case of Commissioner of Sales Tax vs . H . M . Esufali H . M . Abdulali ( 1993 ) 90 ITR 271 ( SC ) that if the estimate made by the assessing authority is a bonafide estimate and is based on a rational basis, the fact that there is no go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2010-11 1,19,43,168 4,70,717 3.94% 0 38,46,992 38,46,992 43,17,709 36.15% 7,36,030 Total 35,13,16,296 1,33,16,067 3 .79 % 67,54,594 1,35,21,387 2,02,75,981 3,35,92,048 9056 % 2,16,44,078 45. We also find from the findings of CIT(A) as regards to telescoping to net profit addition against addition on account of negative peak was admitted by CIT(A) in Para 11.1 at page 10 of his appellate order, which reads as under: - 11 . 1 As can be seen, the ground itself is vague and is saddled with infirmity . No specific instance of double addition / taxation has been pointed out . Even otherwise, the addition / disallowances are the subject matter of appeal and yet to attain finality . A submission was made that since the A . O . increased the profit under best judgement assessment, he ought to have given the effect of incre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cash Account and further affecting the Peak Negative Cash in current and forthcoming assessment years . 49. Brief facts relating to the issue are that the assessee filed working of negative peak cash showing a sum of ₹ 6,89,004/- shown as receivable from M/s Shyona Corporation but the AO reduced this cash balance as on 31-03-2004 from the peak working. According to the AO, no documentary evidences were furnished. The CIT(A) also confirmed the action of the AO vide Para 10.1 of his appellate order which reads as under: - 10 . 1 It is observed from paragraph 15 of the order of assessment that the A . O has reduced the cash balance of the appellant by a sum of Rs . 6,89,004 /-. The cash balance has been reduced based on the finding in the report of the Special Auditor that a sum of Rs . 6,89,004 /- is shown as having been received from MIs Shayona Corporation in the re - drafted books, whereas in the return filed under s . 139 ( 1 ) the said sum was shown as receivable . The appellant contends that the said amount was received in cash during the year . The A . O . has not accepted the said explanation and hence the same has an im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Remarks 1 Sundry Debtors Page No. 12,Para 15 point iii) Page No. 9 ara 10.1 31-032004 6,89,004 This amount is on account of amount receivable from debtor shayona Corporation. Since the amount was received in cash, no evidence of receipt of money is available. This amount is on account of amount receivable from debtor shayona Corporation. Since the amount was received in cash, no evidence of receipt of money is available. The learned Counsel for the assessee only requested that this amount is to be taken as received cash and should be considered for the adjustment made in working of negative peak. We find that the plea of the assessee s Counsel is quite reasonable and accordingly, we direct the AO to consider this amount while making adjustment in the working of negative peak. We direct the AO accordingly. 51. The next issues in ITA No. 7209/Mum/2013 of assessee s appeal for AY 2005-06 are in regard to remuneration of partnership, addition of interest on IT refund and disallowances made in MR construction raised by way of ground No 2, 4 and 7 are n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 37,088 Originally the return of income filed under section 139(1), these loans were show as paid, but the bearer cheques were issued in their names and cash was withdrawan by the appellant. Confirmations were filed at the stage 153A proceedings confirming that the amounts were still outstanding. Akshar Construction co. 1,89,750 Amrut Engineers 3,30,625 Bhanwarlal Purohit 21,275 BhomaramjiGelaji 19,000 Hitesh H. Purohit 22,425 Rancchhodpurohit 22,425 Rohan Associates 3,83,312 Shankar Shetty 20,700 Sharddha Construction co. 33,052 Varshasupeda 23,000 Total 11,02,652 The learned Counsel for the assessee explained from the above that this amount of ₹ 11,02,652/- in the name of various persons were borrowed and ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on-genuine as purchase of machinery and relevant copy of statement is enclosed at page 247 of the assessee s paper book and relevant question No. 13 at page 251 and 252 reads as under: - Q . 13 . I am showing you blank letter heads and blank bills in the name of following entities impounded at page numbers from 83 to 94 of impounded material at Annexure A . Blank Letter Heads 1 . National Institute of Industrial Engineering . 2 . Indian Institute of technology Bombay 3 . R . C . Builders and Developers 4 . Jasmine Enterprises Blank Bills 1 . Metro Engineering works 2 . Moolight Industries Pvt . Ltd . 3 . Kohinoor sales corporation 4 . R . H . Winsler Industries Ltd . 5 . Rakesh Engineering Company 6 . Jackson Engineers 7 . Srikrishna Industries 8 . Patel Co . Please confirm that these have been recovered from your office premise . Are the above mentioned entities your clients to whom you render professional service? Please state the reason why these blank letter heads and blank bills are lying in your office premise Ans . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 point a) of 9.1, 9.2 and 9.3 03.02-2005 5,35,290 This is invoice of R.H. Winsher industries Ltd. Which is seized from Mr. S.R. Desai Office not from our office as we earlier also reply to special auditor and AO also that this invoices not belongs to us and this invoice never seized from us as we have never entered any transaction with the said party but AO think this invoice very much related to us and he reduced the cash balance with this amount which is wrong. Replay to of Mr. S.R. Desai to Q. No. 13 14 in his statement under section 133A on 16-11-2009 may be seen in which he has stated that these bills are bogus and no transaction has taken place. 3. Sundry Debtors Page No. 19,20 Page No. 10, point b) of 9.1 31-03-2005 24,00,000 This amount Is on account of amount receivable from debtor Shayona Corporation. Since the amount was received in cash, no evidence of receipt of money is available. 56. We have heard the rival contentions and gone the facts and circumstances of the case. We find that as regards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Hon ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (Supra). Accordingly, we confirm the deletion and the appeal of Revenue is dismissed. 60. The only issue in ITA No. 6848/Mum/2013 for AY 2006-07 in Revenue s appeal is as regards to the order of CIT(A) deleting the addition of ₹ 38,30,805/- made by the AO on account of agricultural income, not accepted and treated the same as income from other sources. For this Revenue has raised following two grounds:- 1 . On the facts and circumstances of the case and in law, the Ld . CIT ( A ) has erred in deleting addition of Rs . 38,30,805 /- made on account of income from other sources declared by the assessee as agricultural income when the assessee had not produced any proof of land holdings . 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in holding that the proceedings are not open when the provisions of Sec.153A clearly empowers the Assessing Officer to issue notice and make assessment and to assess the total income of the assessee which includes disclosed as well as undisclosed income. 61. At the outset, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x, Central Circle 22, 41 Mumbai and the learned Commissioner of Income Tax ( Appeals ) - 39, Mumbai have grossly erred in law and on the facts and circumstances of the case in net decreasing and sustaining the net decrease, respectively, by adjusting the Cash Balance by Rs . 51,41,818 /- thereby affecting the balance of Jawahar B . Purohit - Pooled Cash Account and further affecting the Peak Negative Cash in current and forthcoming assessment years . At the outset, the learned counsel for the assessee stated that the assessee has challenged the adjustment made by the AO to pooled cash account and consequential addition made to total income on account of negative cash in such pooled cash account. 65. The first adjustment made by AO to pooled cash account is on account of purchase of machinery on the basis of invoice found and impounded from S R Desai during simultaneous survey and search carried out at his place. The assessee contended that the AO may be directed to ignore the said amount of ₹ 10,18,660/- and not consider the same as outgoing in preparation of pooled cash account. The learned counsel for the assessee stated that this amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s appeal is as regards to allowance of deduction of school fee under chapter VI A of the Act amounting to ₹ 25,000/-. 70. A the outset, the learned Counsel for the assessee stated that this issue requires reconsideration at the level of the AO as the assessee will file the evidence of payment of fee and the AO can decide accordingly. The DR has not objected. Accordingly, we restore this issue back to the file of the AO. This issue of assessee s appeal is partly allowed. 71. The next issue in ITA No. 7211/Mum/2013 for AY 2007-08 of assessee s appeal is as regards to disallowance made in M. R. construction by giving consequential effect in working of negative peak. The learned Counsel for the assessee has not pressed this issue under the instructions of the assessee and hence, the same is dismissed as not pressed. 72. The next two interconnected issues in ITA No. 7212/Mum/2013 for AY 2008-09 of assessee s appeal are making addition to the negative peak account amounting to ₹ 1,75,56,162/- and adjustment made in working of negative peak to ₹ 37,88,147. For this assessee has raised following ground No. 2 and 3: - 2. That the learned Assistant Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT(A) has dealt with the issue on page 16 in para 9.3.The assessee contended that the AO may be directed to consider cash withdrawn against bearer cheques of ₹ 15,56,011/- as available with him in computation of pooled cash account. The third adjustment made by AO is on account of loans borrowed from various persons aggregating to ₹ 4,85,000/- and reflected in books of accounts prepared before search action. The assessee claimed that he had issued bearer cheques during the relevant previous year and cash was withdrawn and retained by him. However, in books of accounts, the bearer cheques were reflected as loan repaid. In re-casted books of accounts prepared post search action on the basis of which assessment has been made, the assessee has reflected correct state of affairs. Cash withdrawn by the assessee has been shown in cash account and loans are shown as outstanding. Also, confirmation letters of the lenders were also furnished. The AO has dealt with the issue on page 17-18 and the CIT(A) has dealt with the issue on page 16 in para 9.3.The assessee urged that the AO may be directed to consider cash withdrawn against bearer cheques of ₹ 4,85,000/- as availa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught to have been given in preparation of pooled cash account. The assessee claimed that facts and circumstance relating the ground are same as ground Nos. 3 for A Y 2004-05. The assessee claimed that the AO may be directed to give credit for addition sustained on account of net profit in preparation of pooled cash account. 78. We direct the AO to give credit for addition sustained on account of net profit in preparation of pooled cash account and also if any addition is made to negative cash account on account of additions of earlier years. We direct the AO accordingly. This issue of assessee s appeal is allowed. 79. The next issue in ITA No. 7214/Mum/2013 of assessee s appeal for AY 2010-11 is as regards to the addition made on account of negative peak of ₹ 41,24,256/- and adjustment made in working of negative peak of ₹ 23,19,367/-. For this assessee has raised following ground Nos. 2 and 3: - 2 . That the learned Assistant Commissioner of Income Tax, Central Circle 22, Mumbai and the learned Commissioner of Income Tax ( Appeals ) - 39, Mumbai have grossly erred in law and on the facts and circumstances of the case in making addition and sustaining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 of statement dated 16.11.2009 and the assessee had stated that he had spent the said amount. The AO has debited the said amount as outgoing in pooled cash account on the date prior to date of search. The AO has dealt with the issue on page 15-16 and the CIT(A) has dealt with the issue at page 11 in para 9.3.The assessee claimed that the preliminary statement or the concluding statement is not in nature of evidence to hold that the assessee had spent the said amount and treat the same as unexplained expenditure. The assessee submits that the reading of the concluding statement does not lead to conclusion that the assessee has incurred unexplained expenditure of ₹ 44,71,000/- on 15.11.2009.The assessee prays that the AO may be directed to ignore the said amount as outgoing in considering pooled cash account. 82. After both the sides and going through the facts of the case, we direct the AO to allow the claim of the assessee and consider the availability of actual cash found of ₹ 11,00,750/- and ₹ 14,34,000/- and the same can be given effect to the cash. It does not lead to the fact that the assessee has incurred unexplained expenditure of ₹ 44,71,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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