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TMI Blog2020 (9) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The Ld. Commissioner of Income-tax (Appeals) has erred in law and in facts in rejecting the books of accounts of the appellant. 3. The Ld. Commissioner of Income-tax (Appeals) has erred in law and in fact in confirming addition of unexplained investment of 38,08,416/-. 4. The Ld. Commissioner of Income-tax (Appeals) has erred in law and in facts in confirming addition of unexplained deposits in bank account of the appellant amounting to 85,225/-. 5. The Ld. Commissioner of Income-tax (Appeals) has erred in law and in facts in confirming addition of share of profit of MIs. Sunrise Enterprises amounting to 252075/-. 6. The Ld. Commissioner of Income-tax (Appeals) has erred in law and in facts in confirming disallowance of interest expenditure amounting to 2.76,76,843/- 7. The Ld. Commissioner of Income-tax (Appeals) has erred in law and in facts in not considering the claim of the appellant relating to deduction u/s. 80L of the Act amounting to Rs. 12,000/-. 8. The Ld. Commissioner of Income-Tax (Appeals) has erred in law and in facts that in confirming the levy of interest u/s. 234A, 234B and 234C of the Act. 9. The Ld. Commissioner of Income-tax (Appeals) has erre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the AO completed the assessment u/s 144 r.w.s. 254 of the Act determining the income to the tune of Rs. 3,62,50,724/- after making the following additions.:- (i) Unexplained investment Rs. 1,16,51,516/- 2. Unexplained receipts Rs. 1,62,327/- 3. Profit from Sunrise Ent. Rs. 2,52,075/- 4. Dividend and interest income Rs. 60,61,163/- 5. Share Trading Profit. Rs. 1,56,96,071/- 6. Long Term Capital Gain Rs. 23,61,869/- 7. Salary Income Rs. 65,703/- Thereafter the assessee filed an appeal before the CIT(A) who partly allowed the claim of the assessee, therefore, the assessee has filed the present appeal before us. ISSUE NO. 1 5. This issue was not pressed by the Ld. Representative of the assessee, therefore, this issue is being decided in favour of the revenue against the assessee being not pressed. ISSUE NO.2 6. Under this issue the assessee has challenged the issue of rejection of the books of account by the AO which was confirmed by CIT(A). It is a third round of the appeal before the Hon'ble ITAT. Initially assessment was completed u/s 144 of the Act on 28.02.1995. The books of accounts were rejected by AO. The said issue was upheld by CIT(A) vide its order dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the details explanation to each of the objection by virtue of letter dated 20.02.2015 which has not been discussed and decided by the AO. The assessee has given the following explanation of the objection.:- a) As regards non furnishing of certified copy of bank statement, it is submitted that while completing the original assessment u/s 144 of the Act on 28.02.1995, the copy of the bank statements was called from the RBI and was available with the assessing officer. [Pg. 6-7 of PB]. b) The objections in the Special Audit Report dated 06.02.2002 were mainly because certain documents were not submitted to the auditors due to its unavailability at the relevant point of time i.e. in 2001. This was mainly because, Late Shri Harshad Mehta had expired on 31.12.2001 and there was complete imbalance in the family. However, later in 2006, complete, books of account and explanations have been submitted before the Assessing Officer with respect to these discrepancies at the time of assessment proceedings. Hence, reference to the observations of special auditor is of no relevance as complete books of account have been filed subsequent to the report of the special auditor. In any case, the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect as there is no business/professional carried out by the assessee. In any case, even presuming that audit was required to be carried out but not done so, the assessing officer should have verified the books of accounts independently and could have rejected the same only if specific defects were found in the books of account. h) As regards day to day drawing of books of account, it is submitted that at the time of search, incomplete books of account were seized. The books of account could not be fully drawn due to notification and other difficulties. The assessee could draw it's complete books in 2006. These books of account were filed before the assessing officerand hence ought to have been examined by the assessing officer and could not have been rejected at the threshhold. Hence, the aforesaid observation is not relevant now. i) As regards uniform drawings of Rs. 5,000/- per month, it is submitted that the same is factually incorrect. There are no uniform drawings of such amount in case of the assessee. On perusal of ledger account of Drawings at Page 177, it can be seen that there are different amount of drawings by the assessee. j) Since the purchase and sale of sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Goa Carbon 53,250 3 Additions based on seized assets 58,652 4 Ispat Alloys Ltd. 4,410 5 Manglore Chemicals and Fertilizers Ltd. 1,638 6 Onida 81,763 7 Singer India Ltd. 1,000 8 Southern Petrochemcal Ind. Corp. Ltd. 3,05,044 9 Reliance Capital and Finance Trust Ltd. 1,24,000 10 MRF Ltd. 1,34,625 11 Steel Tubes of India Ltd. 85,100 12 Indo Rama Synthetics India Ltd. 3,84,800 Total 12,38,857 10. The Ld. Representative of the assessee has argued that the AO nowhere provided company letter of scrips corresponding the addition of Rs. 5,09,932/- on account of following parties.:- Sr. No. Nature of scrip Amount 1 Bihar Alloys & Steels Ltd. 4,175 2 Goa Carbon 53,250 3 Additions based on seized assets 58,652 4 Ispat Alloys Ltd. 4,410 5 Manglore Chemicals and Fertilizers Ltd. 1,638 6 Onida 81,763 7 Singer India Ltd. 1,000 8 Southern Petrochemcal Ind. Corp. Ltd. 3,05,044 Total 5,09,932 11. The basic contention of the assessee is that the AO nowhere provided company letter of scrips before addition, therefore, in the interest of justice, the company letter/material should be given before raising the addition in ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence, the figures stated in the custodian letter cannot be relied." 12. In support of his contention the Assessee has also relied upon the decision of the Hon'ble ITAT in the case of Growmore Leasing & Investments Ltd. Vs. DCIT for A.Y.1992-93 dated 17.11.2017 in ITA. No.2192/M/2015. No doubt, this issue is required to be examined on the basis of the decision of the Hon'ble ITAT in the case of Growmore Leasing & Investment Ltd. (supra) so far as the addition of Rs. 82,775/- and Rs. 62,400/- is concerned, the contention of the assessee is that the no material was given to the assessee before raising the said addition. Anyhow in the interest of justice, the relevant record/ opportunity is liable to be given to the assessee before raising the addition, hence, taking into account all the transaction mentioned above, we are of the view that the same is also required to be re-examined in view of the directions mentioned above. Hence we set aside the finding of the CIT(A) on this issue and restore the issue before the AO to decide the matter of controversy afresh in view of the directions mentioned above in accordance with law. Accordingly, we decide this issue in favour of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unrise Enterprises in the hands of the assessee. Anyhow when the profit figure has been taken from the M/s. Sunrise Enterprises, therefore, it is necessary to determine the matter of controversy on the basis of the final figure of profit determined in the case of M/s. Sunrise Enterprises. Accordingly, we set aside the finding of the CIT(A) on this issue and direct the AO to decide the matter of controversy afresh, after obtaining the final figure of the profit determining in the case of M/s. Sunrise Enterprises. Accordingly, this issue is decided in favour of the assessee against the revenue. ISSUE NO. 6 16. Under this issue the assessee has challenged the disallowance of interest expenditure amounting to Rs. 2,76,76,843/- It is argued that the interest expenses have been allowed in ITA. No.4430/M/2017 for the A.Y.2012-13 dated 27.12.2017, therefore, in the said circumstances, the interest expenses is liable to be allowed in the interest of justice. It is also argued that in the case of brother of the assessee Ashwin S. Mehta Vs. ACIT in ITA. No.2474/M/2015 dated 07.12.2018, the expences has also allowed the expenses, therefore, the claim of the assessee is liable to be allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o between 01.04.1991 to 06.06.1992 if the custodian finds that these contracts have been entered into fraudulently or to defeat the provisions of the Special Court Act. In A. Y. 1990-91. the AO in the assessment order passed under Section 143(3) dated 26.03.1993 allowed the interest expenses to the assessee to the extent of F5,86,4041-. From page 75 of the paper book which contains the computation of income for A. Y. 1990-91, we noted that the assessee has disclosed the loan taken for the purchase of investment The assessee is consistently following mercantile system of accounting which is apparent even from the assessment order of A. V. 1990-91 as well as from the impugned assessment year The order for A. Y 1990-91 in fact has been passed by the AO after the date of notification and the enactment of the Special Court Act. We have gone through the order passed by the CJT(A) in the case of Shri Ashwin S Mehta assessment years 2010-11 and 2011-12, where we noted that this issue of taxability of interest income of the assessee and other parties has specifically been dealt with by the CIT(A) and accordingly interest income of Rs. 10,68,83,732/- was brought to tax. In view of this fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee in Ashwin S. Mehta Vs. ACIT bearing ITA. No.2474/M/2015 dated 07.12.2018 is on the file in which the relevant finding is hereby reproduced as under.:- "9. Since, the coordinate Bench has already dealt with the identical issue and decided the same on merits in favour of the assessee in assessee's own case for the earlier assessment years, we do not find any reason to deviate from the findings of the coordinate Bench. The revenue has not brought on any order passed by the courts of law, contrary to the decision of the coordinate Bench. Hence, respectfully following the decision of the coordinate Bench, we allow this ground of appeal of the assessee and set aside the findings of the Ld. CIT(A). We accordingly direct the AO to delete the addition." 19. The copy of order in the case of Cascade Holding Pvt. Ltd. Vs. ACIT & vice-versa bearing ITA. No.937 & 938/M/2017 dated 04.04.2019 is on the file in which the relevant finding is hereby reproduced as under.:- "13. The facts of the present case are similar to the facts of the case of Sudhir Mehta vs. DCIT, discussed above and the issues involved in both the cases are identical. Since, the coordinate Bench of the Tribunal has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see, custodian letter appearing from page 133 to 151, affidavit filed by the 3rd parties showing purchases on behalf of the assessee as appearing from page 186 to 211 and other relevant details, in respect of the following scrips as per which the discrepancies as worked out by the AO earlier stands explained. Scrip Name Balance Unexplained Investment Value of unexplained investment Alkyl Amines 550 90063 Andhra Valley Caprihans 545 850200 Gajra Bevel 100 6500 Great Eastern Ship 213 62137 Indian Seamless DEB 540 54000 ITC Ltd. 12185 6068130 L&T DEB 110 13200 Metalman Pipe 3600 343800 Modi Cement 1290 62081 Mukund Steel-DEB 150 15000 Swaraj Engines 350 47688 Universal luggage 4900 2303000 Total 7843099 Therefore, the balance addition of Rs. 38,08,416 is confirmed in the and of the assessee. Thus, this ground taken by the assessee is partly allowed." 24. On appraisal of the above mentioned finding, we noticed that the assessee has furnished the detailed explanation in nature of company letter including share holdings of the assessee company and the custodian letters and affidavit of third parties showing the purchase on behalf of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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