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TMI Blog2018 (7) TMI 2154X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of Disallowance U/s 14A r.w Rule 8D which is factual in nature? 4. Whether on the facts and circumstances of the case & in law, the Ld. CIT(A) erred in deleting the addition of Rs. 1,59,96,419/- made by the AO being loss on share trading and termed as speculation loss? 5. Whether on the facts and circumstances of the case & in law, the Ld. CIT(A) erred in deleting the addition of Rs. 1,50,00,000/- made by the AO on diminution of value of property as the properties were held as capital assets and during the year it was converted to stock in trade only to set off the profit of paper business, thought it has not treated in properties neither in past nor during the year of consideration? 6. Whether on the facts and circumstances of the case & in law, the Ld. CIT(A) erred in deleting the addition of Rs. 6,25,31,613/- (9,25,31,613 - 3,00,00,000) made by the AO on account of the transactions contained in slip pad marked as an annexure A-18, A19, A-32, A-33 treated as transaction made out of unaccounted cash? 7. Whether on the facts and circumstances of the case & in law, the Ld. CIT{A} erred in deleting the addition of Rs. 10,82,900/- made by the AO on account of Annexure A-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness of trading in all kinds of papers. It was also having business of sale and purchase of properties during the year under consideration. 2.2. A survey u/s 133A of the Act was conducted on 25.11.2008 by Investigation Wing of the department. During the course of survey, large number of loose papers and computerized materials were found, which was impounded by Investigation Wing. Report was prepared on various issues in the light of statements of Directors recorded during the course of survey and subsequently u/s 131 of the Act, with reference to regular books of assessee. Ld.AO in assessment order recorded that assessee has not complied with the queries and details as called for by Ld.AO. Ld.AO also observed during survey and post survey proceedings that, assessee has also been carrying on activities such as lending of money and investment in properties which, assessee was not recording in its books of accounts as well as the return of income. It is also observed that during assessment proceedings sum of Rs. 5 crores has been surrendered by assessee, break-up of which is as under: * Rs. 3 crores has been surrendered as income from gutkas/slip pads and also against other news p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of shipment of imported car is 31.03.2009 and therefore, it could not have been used in the F.Y.2008-09. It has also not been examined whether the funds for purchase of car were paid by the company and if yes, did it amount to perquisite in the hands of director. Moreover, the CIT(A) made wrong observation on page 10 of the order that in the case of companies the RTO registers a car in the name of director not in the name of company. 6.1. We have perused the submissions advanced by Ld.CIT,DR on the basis of records placed before us. 6.2. It is observed that Ld.CIT(A) has without verifying any details allowed claim of assessee. No doubt that assessee is eligible to claim of depreciation on vehicle, though purchased in the name of Director which must be proved to have been used exclusively for the purposes of business. In the present case assessee has not provided any Log Book maintained to establish that the vehicle was used during the relevant F.Y. for the purposes of business to be eligible for depreciation. Ld.CIT(A) has not called for/verified any such details. Further a very categorical observation by Ld.AO regarding the date of purchase of vehicle being 31.03.2009 esta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been submitted by assessee before Ld.CIT(A) that, it fulfils all required criteria of S.43(5)(d) of the Act, and, therefore, profit and loss accrued to assessee cannot be considered as speculative as per Explanation to Sec.73(1) of the Act. Before Ld.AO assessee submitted that an additional activity of trading in shares has been carried out by the assessee company during the year under consideration against which a loss has been incurred. Thus, assessee admits to the fact that trading in shares was undertaken by assessee during the year under consideration for the first time and it has been able to show that it was an investment company. Explanation to Sec.73 is attracted the moment any assessee does not fall within the excluded categories stated therein and such assessee shall be deemed to be carrying on speculation business to that extent for the purposes of Sec.73. The application of the said Explanation has to be considered as a whole and not in part. The Explanation has the import of treating the transaction of purchase and sale of shares which otherwise is not of speculative nature, deemed to be a speculation business. Therefore, to interpret that the said Explanation appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vey small slip pads were seized which contain the details of cash transactions. The assessee was asked to explain these transactions. However, at the time of survey no explanation was furnished. Later on it was claimed that these transactions are of circulating nature of unaccounted money lending operations for cycle not exceeding 30 days on which a commission of 1.5% is charged. The assessee's explanation is mentioned on page 16 & 17 of the assessment order. Vide para 24.1 of the order, the AO rejected the claim of the assessee for claiming benefit of peak and rotation of funds. As per the assessment order page 19, the assessee did not file the working of peak arrived at Rs.l.93 crs nor did it furnish the details of daily payment and receipts with the balance cash available every day. In para 24.2, the AO also discusses some instances where the cash transactions were in respect of sales. Some other instances are also discussed in the said para to establish that there has been no rotation of funds. Similar illustration has been given in para 24.3, 24.4 & 24.5 as well. As mentioned in para 24.5 certain transactions could not be explained at all. In this background the AO added t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osure of the assessee did not cover the corresponding seized documents and cannot be set off against the same for the reason that the assessee's contention of the peak theory itself was rejected. 11.1. We have perused the submissions advanced by Ld.CIT, DR on the basis of records placed before us. It is observed from assessment order that the peak credit computed by assessee of Rs. 68,37,238/-being transaction totalling in Annexure A 3 at page 36 and 37 of the seized documents includes Rs. 7,79,000/-. Ld. AO has very categorically observed that the peak referred by assessee is in respect of the entries contained in slip pads marked as Annexures A 17- A 33 and not in respect of Annexure A3 contained at page 33 and 36. It is also observed by Ld. AO that Rs. 3 crores surrendered by assessee was in respect of unaccounted transactions recorded in slip pads Annexures A 17- A 33 which covers the addition of Rs. 9,25,31,613/- which has already been taken into consideration in paragraphs 24.6 of the assessment order. It is further observed that Ld. CIT has at the outset upheld additions on merits, however, he has wrongly given set off of the said amount against the surrendered income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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