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TMI Blog2018 (6) TMI 1378X X X X Extracts X X X X X X X X Extracts X X X X ..... ia (2017 (5) TMI 1224 - DELHI HIGH COURT) following the decision of CIT versus Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT], we agree with the order of the Ld. CIT – A that there is no incriminating material found during the course of search with respect to this addition. In view of this, we dismiss ground No. 1 and 2 of the appeal of the revenue. - ITA No. 1943, 1944/Del/2012, ITA No. 1907/Del/2012, ITA No. 60/Del/2014, ITA No. 2178 And 2177 /Del/2013 - - - Dated:- 25-6-2018 - SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Assessee : Shri Salil Aggarwal, Adv Shri Shailesh Gupta, CA For The Revenue : Shri Vijay Varma, CIT DR ORDER PER PRASHANT MAHARISHI, A. M. 1. These are the six appeals of two assesses Namely Taneja Developers and Infrastructure Limited and Taneja Developers and Infrastructure (Panipat) Limited of one group arising out of same search proceedings involving three assessment years. As they involve similar grounds those were heard together and disposed of by this common order. 2. First, we take up the appeal of Taneja Developers and Infrastructure Limited for Ay 2006-07 and 2007-08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO dismissed the claim of the assessee holding that that the provisions of section 153A are not for the benefit of the assessee but only for revenue, hence, no additional claim is allowable. The Ld. AO further stated that the assessments under section 153A are in relation to undisclosed income and therefore new claim of deduction, allowance cannot be entertained in the completed assessment. He therefore, held that additional claim of the assessee of ₹ 7 827 9586/- is disallowed. Further the Ld. AO found that assessee company has received an amount of ₹ 40,00,000/- from M/s cubic commercial resources Ltd which has been shown as an outstanding liability in the form of advance received. As on 31/3/2006 the outstanding have been shown at ₹ 4 0, 00, 000/ . Ld. assessing officer noted that survey under section 133A was conducted by investigation wing, New Delhi on 20/11/2007 at the business premises of Sh. S K Gupta , a chartered accountant. During the course of survey, it was noted that Shri S K Gupta was controlling various companies from a small office without having sufficient infrastructure and power for running the business affairs of such company. During the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 27.50 lakhs and therefore the financial worth of this company is not satisfactorily explained. The Ld. AO further noted that this company is controlled by the accommodation entry provider wherein the name of this company is mentioned. Further, the director of the group also agreed to offer the entries with Mr. S K Gupta as income of the assessee, in spite of that this amount has not been offered as additional income in the return of income of the assessee company . Therefore, the Ld. assessing officer made an addition of ₹ 40 Lacs as income of the assessee as unexplained credit under section 68 of the income tax act. Consequently the total taxable income of the assessee was determined at ₹ 62,19, 965/ . 9. The assessee aggrieved with the order of the Ld. assessing officer preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) A dismissed the claim of the assessee of allowability of the additional expenditure on account of interest holding that assessee is not entitled to the additional benefit in search cases. Even otherwise, on merits the claim of the assessee is not allowable. With respect to the addition of ₹ 40 lakhs on account of unexplained credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of Mr. Gupta was confronted to the director of the group, he surrendered a sum of ₹ 6.23 crores as undisclosed income provided by Mr. Gupta as accommodation entries. He referred to para No. 16 of assessment order. He further referred to para No. 17 of the order where the details of the transactions of ₹ 40 lakhs are mentioned. He further stated that the company from whom accommodation entries were taken by the assessee is the same party from whom advance against sale of plot is shown. He further stated that the same company is a conduit company. He referred assessment order wherein it has been shown that there is negligible net worth of this company. He further stated that assessee has failed to show that any transaction was carried out with this company. He submitted that all the documents shown by the assessee are make-believe statement. He stated that where the plot is situated is not proved by the assessee. Even before the coordinate bench, the assessee is unable to show which plot of land was transacted by the assessee with that company. He referred to the various documents relied upon by the assessee to show that there is no address given on these documents of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the plot, ownership and accounting in whose books of land at Moradabad, he referred to the decision of the ld CIT(A) and submitted that the order of the ld CIT(A) even on the merit is correct. He submitted that tribunal should not dislodge the finding of the ld CIT(A). To support his contention, he referred the decision of Hon‟ble Kolkata High Court in Prahlad Bhattacharya V CIT 386 ITR 708 para No. 20 wherein it has been held that Tribunal fell into an error in interfering with the order of the Commissioner of Income tax (Appeals) without first dislodging the reasons given by him. Assuming that another view was possible, that itself would be no ground to interfere with the order of the Commissioner of Income-tax (Appeals) unless it is shown that the appreciation of evidence by the Commissioner of Income-tax (Appeals) was either perverse or untenable and that in holding in favour of the assessee the Commissioner of Income-tax (Appeals) either ignored material evidence or that the view taken by him was patently untenable. Therefore his submission was that that unless the order of the Ld. CIT A is found to be perverse or patently untenable, then only the coordinate bench has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the issue of addition involved in the present appeal section 148 not have been invoked. He further referred to page number 345 to 347 of the paper book submitted by the assessee wherein the details of the amounts received by the assessee is mentioned. He further stated that the stamp paper is dated 17/3/2009, whereas the search took place on 5/1/2009, therefore, it is apparent that the document is created by the assessee immediately after the date of search just to avoid this consequence. He further stated that entry was squared up by the assessee immediately. He stated that these are the self-serving documents prepared by the assessee without any basis. He further challenged the assessee to show that which plot was transacted and who owned that. He further stated that assessee must show where this land is appearing in the balance sheet of the assessee of the identical sites and what was the price on the date of the transaction. He further stated that there is no whisper by the assessee why this transaction was cancelled by the assessee immediately after the search. He submitted that the documents are self-serving and does not prove that the transaction entered into by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incriminating evidence‟ found during the course of search. Even otherwise, each document found during the course of search cannot become an incriminating material based on which the addition can be made in the hands of the assessee. With respect to the statement of Mr. SK Gupta and the director of the assessee group Hon‟ble Delhi High Court[2017] 395 ITR 526 (Del) in The Principal Commissioner of Income Tax v. Meeta Gutgutia Prop. M/s. Ferns n Petals is categorically held that merely a statement cannot be an incriminating material. Even otherwise, the circular issued by the CBDT also states that merely a statement is not enough to sustain any addition in the hands of the assessee in absence of any corroborative material. As we have not been shown any corroborative material with respect to impugned transaction of ₹ 40 Lacs we are not inclined to interfere with the order of the Ld. CIT(A). 16. Further with respect to the argument of the Ld. Departmental Representative that when proceedings under section 153A were pending before the assessing officer the action cannot be taken under section 148 of the income tax act. This argument itself suggests that the materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court was of addition u/s 68 of ₹ 2,40,000/- of gift from blood relations. In that circumstances the findings were given. The issue before us is of disclosure of ₹ 6.23 crores of bogus accommodation entries accepted by the assessee‟s director in the statement u/s 132(4) of the Act when confronted with the statement of entry operator Mr. S.K. Gupta. Therefore, the facts of the case incline us to follow the decision of Hon'ble Delhi High Court. Despite query from the bench, assessee did not given the details of plot transacted. This is with reference to the nature of the documents produced by the assessee to justify the identity of the company, creditworthiness of the company and the genuineness of the transactions. We do not have any hesitation in holding that the documents produced by the assessee do not inspire any confidence in all the 3 ingredients of section 68 in the present case. We are in disagreement on the issue of findings of the ld CIT(A) that transaction of the Cubic Resource are genuine. Further, we are also in disagreement that cross examination of Shri S.K. Gupta should have been given to the assessee. According to us the assessee has failed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said expenditures were duly incurred during the impugned assessment year and as such, whether sales were made or not are irrelevant for the purpose of claiming the said expenditure. 2.3 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that income has to be computed as per the provisions of the Act and not only on the basis of books of accounts prepared by the appellant company. 2.4 That the learned Commissioner of Income Tax (Appeals) further grossly erred in relying on the judgments totally inapplicable to the facts of the case. 3. That the learned Commissioner of Income Tax (Appeals) has in any case failed to appreciate the fact that, amount claimed was of ₹ 6.93.97,767/- and not, ₹ 7,82,79,586/-.Thus, the learned Assessing Officer inadvertently disallowed excess amount of ₹ 88.81,819/- which should never have been disallowed, as it was never claimed by the appellant company and, as such, disallowance of ₹ 88,81,819/- may kindly be deleted. 4. That without prejudice to the above, if the said expenditure is not found to be allowable in the instant assessment year, then expenditure incurred of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,590/- as against returned loss of ₹ 12,12,11,760/- in an order of assessment u/s 153 A/143)3) of the Act. 2 That the Commissioner of Income Tax (Appeals) has further erred both in law and on facts in sustaining a disallowance of ₹ 13,17,52,079/- comprising of expenditures claimed in respect of brokerage of ₹ 5,17,04,540/- and interest expenses of ₹ 7, 09, 97, 580/- and other expenses of ₹ 90/19,959/-, stated t o be claimed in the return of income filed in response to the notice under section 153A of the I.T. Acts. 2.1 That the learned Commissioner of Income Tax (Appeals) further erred in law and on facts by ignoring the fact that proceedings under section 153A are denovo proceedings and once notice under section 153A is issued, than even the original return of income under section 139 (1) does not exist for the purposes of law. Thus, statutory condition of filing a fresh return of income under section 153 A in itself pre supposes the fact that fresh claim may be made by assessee, and in any case, claim made by the appellant was a legal claim and, not a fresh claim perse w hich should have been allowed as such. 2.2 That the learned Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nting in all of ₹ 134270655/ out of which only ₹ 25,18,576/ was claimed in the original return and therefore the balance of ₹ 13,17,52,079/ was the additional claim of expenditure allowability was made by the assessee. In the return of income the assessee pointed by putting up note that inadvertently the company could not claim interest, brokerage etc on accrual basis in the original return and therefore same is claimed in the return under section 153A is legally available under the law and accepted accounting principles. 25. The Ld. assessing officer disallowed the claim of the assessee stating that the provisions of section 153A are for the benefit of revenue only and no additional claim is allowable under section 153A relying on the decision of the Hon‟ble Supreme Court in case of CIT versus sun engineering works private limited 107 CTR 209. He also placed the reliance on the decision of Jodhpur bench of tribunal in case of Sun City Alloys private limited versus ACIT (2009) 124 TTJ 674. 26. Consequently he passed order under section 153A read with section 143 (3) of the act on 31/12/2010 determining total income of ₹ 9 372591/ at original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal in ITA No. 60/Del/2014 for the Assessment Year 2007-08:- 1. On the facts and in the circumstances of the case, the ld CIT(A) has erred in cancelling the penalty of ₹ 44347750/- levied by the AO under section 271(1)(c) of the Income Tax Act, 1961. 2. The order of the ld CIT(A) is erroneous and is not tenable on facts and in law. 34. The brief facts of the case up to level of assessment and 1st appeal are already described in ITA No. 1944/del/2012 for assessment year 2007- 08. This appeal is against the order of the Ld. assessing officer levying penalty on disallowance of fresh claim made by the assessee in return filed under section 153A of the act. 35. As narrated earlier in the return filed under section 153A of the income tax act the assessee made claim of expenses which were not originally claimed in the original return filed by the assessee amounting to ₹ 1 3, 17, 52, 079/- on account of interest, brokerage paid and accrued to the assessee. The claim of the assessee was that that assessee has incurred the expenditure of expenses, interest and brokerage amounting to ₹ 1 3, 42, 70, 655/ and out of that in the original return filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance of expenditure on which penalty for furnishing inaccurate particulars cannot be levied. He relied vehemently on the order of the Ld. CIT A wherein he has held that claim of the assessee is legal, which was rejected by the Ld. AO. 40. We have carefully considered the rival contentions and the orders of the lower authority of assessment as well as of penalty. The present case the assessee has made a fresh claim under section 153A of the income tax act of the proportionate expenditure, which was originally claimed, partly in the original return and the balance was claimed in the return under section 153A of the income tax act. Admittedly the balance expenditure which is claimed by the assessee in return filed under section 153A of the income tax act was already shown in the project expenditure for that year at the close of the year which carried forward in the next year as opening project work in progress. Therefore, in the subsequent year the same are also claimed as expenditure. We do not find any infirmity in the order of the Ld. assessing officer to this finding. However, with respect to the penalty the claim of the assessee was rejected at the threshold itself b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee has raised the following grounds of appeal in ITA No. 2178/Del/2013 for the Assessment Year 2006-07:- 1. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in sustaining a disallowance of ₹ 3, 57, 79, 780/- representing expenditure incurred on brokerage of ₹ 3, 56, 77, 663/- and other expenses of ₹ 1, 02, 118/- claimed in the return of income filed in response to the notice under section 153 A of the Act. 1.1 That the learned Commissioner of Income Tax (Appeals) has erred in law and on facts in failing to appreciate that, proceedings under section 153A are denovo proceedings and once notice under section 153A is issued, than even the original return of income under section 139 (1) does not exist for the purposes of law. Thus, statutory condition of filing a fresh return of income under section 153A itself pre supposes the fact that fresh claim may be made by assessee, and in any case, claim made by appellant was a legal claim and, not a fresh claim perse which should have been allowed as such. 1.3 That the learned Commissioner of Income Tax (Appeals) has further erred in law and on facts in fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by appellant was a legal claim and, not a fresh claim perse which should have been allowed as such. 1.3 That the learned Commissioner of Income Tax (Appeals) has further erred in law and on facts in failing to appreciate that, the said expenditures were duly incurred during the impugned assessment year and as such, whether sales were made or not are irrelevant for the purpose of claiming the said expenditure. 1.4 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that income has to be computed as per the provisions of the Act and not based on books of accounts prepared by the appellant company. 1.5 That the learned Commissioner of Income Tax (Appeals) further grossly erred in relying on the judgments totally inapplicable to the facts of the case of the appellant company. 2. That without prejudice to the above, if the said expenditure is not found to be allowable in the instant assessment year, then expenditure incurred of ₹ 22, 98, 89, 297/- may be directed to be allowed as part of the cost of project in proportion to sales booked by the appellant company under the percentage of completion method in various assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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