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TMI Blog2013 (7) TMI 1082X X X X Extracts X X X X X X X X Extracts X X X X ..... ue. In the course of search, evidences were found for A.Y. 2007-08 to 2009-10 that the cash component collected by the assessee is in respect of the broiler birds only and not in respect of layer birds. The seized papers indicated that the assessee had received cash on account of cull sales and this fact was accepted by the assessee in the course of search. In response to query in this regard, the assessee admitted unaccounted income received on account of Cull sales and offered the same to tax in the returns filed for A.Y. 2007-08 to 2009-10. But at the same time, it was submitted on behalf of the assessee that no evidence was found of any unaccounted income generated on Cull sales for A.Y. 2003-04 to 2006-07. This fact could also not be disputed by Revenue. Hence in the absence of any evidence of any unaccounted income generated on cull sales, the assessee company did not offer any income to tax for A.Y. 2003-04 to 2006- 07. 2.1. The Assessing Officer has not accepted the stand of the assessee. According to him, the assessee must have carried out similar practice in the earlier years as well and hence, on the basis of the evidences gathered for A.Y. 2007-08 to 2009-10, the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . M. Abdulali, 246 ITR 761 (Bom) which is applicable to the facts of the case. On the other hand, the learned Authorised Representative supported the order of the CIT(A). 2.4. After going through the rival submissions and perusing the material on record, we find that the addition has been made on presumptions and surmises that the assessee might have received any amount over and above the amount noted in the books for A.Y.2003-04 to 2006-07. Accordingly in the absence of any evidence for these four years, the addition is not justified. It was also submitted that no income can be estimated for the above years on the basis of evidence found for one particular year especially when no incriminating evidence was found for the years under consideration. The Pune Bench of the Tribunal in the case of M/s. Ramdeo Oil Industries (supra) has dealt with similar issue. In the said case, a diary was seized wherein certain dispatches of goods have been recorded relating to the period of 1-5-2004 to 22-9-2004. On verification, it was found that only part of the transactions of dispatches was recorded in the books of the assessee. The Assessing Officer calculated the average monthly unaccounted tu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les are to be estimated only for the year for which information or document has been found or seized for a part of the accounting period and not for the period for which no information is available on the basis of seized record. 2.4.3. We also find that Hyderabad Bench of the Tribunal in the case of ACIT Vs. Ambica Food Industries Ltd (2007) 110 TTJ (Hyd) 680 held that the addition of notional income could not be made in the block assessment on the assumption that since there was suppression of turnover in a specific period there was suppression of turnover/income in the earlier years and subsequent years/period also. Once there was no suppression of turnover or unaccounted business in earlier years, there was no question of making any addition on account of investment for running unaccounted business in earlier years. Similarly, we find that the Hon'ble Orissa High Court in the case of State of Orissa Vs. J.P. Sikiria 67 STC 101 (Orissa) held that evidence of one year cannot be utilised for making an addition in another year. 2.4.4. The Delhi bench of the Tribunal in the case of H.C. Chandna P. Ltd. Vs. DCIT 91 TTJ (Del) 243 held that even under the amended provisions of sec. 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alling within the block period. Thus the issue arose that on the basis of evidence found for sale of certain plots, can the Assessing Officer estimate the income in respect of other plots for which no evidence was found. The Third Member held that the evidence was found that the assessee was taking the on money for sale of plots for the various years of the block period and hence, the Assessing Officer could estimate the on money in respect of sale of other plots even though the evidence was not found. Hence against the distinguishing factor, the evidence was found for all the years and not some of the years and therefore, the Assessing Officer was not justified in estimating the unaccounted income for the other years in this case. In the case of Khopade Kisanrao Manikrao (supra), the issue was whether evidence of one year can be used for making an addition in the other year was not raised simply because certain evidence was found for each of the years. In view of our above discussion, the Assessing Officer was not justified in applying the ratio in the case of Khopade Kisanrao Manikrao (supra). In the circumstances, therefore, the CIT(A) was justified in deleting the impugned addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same. This takes care of the issue raised by way of revenue's appeal captioned above. 4. Now, we shall deal with assessee's appeals In ITA No. 753/PN/2012 to 755/PN/2012 for A.Y. 2003-04 to 2005-06 raising common grounds. For the sake of brevity, the grounds of appeal for A.Y. 2003-04 are reproduced hereunder: "1. The learned CIT(A) erred in confirming the addition to the extent of ₹ 63,50,000/- being 5% of ₹ 1277.65 lakhs being expenditure incurred on entertainment, sales promotion, conveyance, travelling, car running and repairs/depreciation, telephone, aircraft expenses and gifts as personal/nonbusiness expenditure. 2. The learned CIT(A) failed to appreciate that the expenditure of ₹ 1277.65 lakhs incurred on entertainment, sales promotion, conveyance, travelling, car running and repairs/depreciation, telephone, aircraft expenses and gifts was purely for the purposes of the business and hence there was no reason to disallow the same. 3, The earned CIT(A) erred in not appreciating that no such addition could be made in the case of a company and hence the disallowance of ₹ 63,50,000/- may kindly be deleted." 4.1. The Assessing Officer has stated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additions on issues which are already settled and taken into account while completing the original assessment u/s 143(3) in the absence of any incriminating material found as a result of search. I find considerable force in this argument of the appellant. It was claimed that the various loose papers found during the course of search contained notings regarding expenditure on account of conveyance, hotels, vehicles, travel and entertainment etc. which are duly recorded in the books of accounts. The AO has also accepted this fact in the assessment order. It was claimed that Statutory Auditors and the Tax Auditors, in their CARO Report and Tax Audit Report, had reported that no personal expenses have been charged to revenue account, other than those payable under contractual obligation or in accordance with generally accepted business practices. This clearly indicates that no instance of unrecorded expenditure has been brought on record by the AO. Further, no instance of any personal expenditure has also been brought on record by the AO, I also find force in the submission of the appellant that is having a turnover of ₹ 367 crores during the year and has various units across ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Nasik Breeding and Research Farm Ltd. Vs. DCIT reported in 77 ITD 581 and the decision of Hon'ble Gujarat High Court in the case of Sayaji Iron and Engineering Co. Vs. ITO reported in 253 ITR 749. Without prejudice to the above he submitted that since the disallowance made is very high the same may kindly be reduced since in the scrutiny orders passed u/s.143(3) earlier for this year no such disallowance is made by the Assessing Officer in the original assessment proceedings. 4.5 The Ld. Departmental Representative on the other hand heavily relied on the order of the CIT(A). He submitted that as against the disallowance of 10% the Ld.CIT(A) has already reduced the same to 15% of the total expenses. Therefore, the same being very reasonable no further relief should be granted. 4.6 We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer disallowed 10% of the expenses on adhoc basis on the ground that the assessee was unable to explain or give concrete evidence t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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