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TMI Blog2022 (10) TMI 845X X X X Extracts X X X X X X X X Extracts X X X X ..... to be served on the assessee before the expiry of 6 months from the end of the financial year in which the return under section 139 or in response to notice under section 142(1) of the Act is furnished. Thus, the time period provided in the aforesaid section for issuance of notice is in respect of return filed under section 139 or in response to notice under section 142 (1) of the Act. However, in the present case, reassessment proceedings were initiated by the AO under section 147 and notice under section 143(2) was issued only pursuant there to. Thus, in view of the above, in absence of any other material available on record we are of the considered view that notice u/s 143(2) of the Act was served to the assessee within the prescribed time pursuant to initiation of reassessment proceedings in the present case. Thus, the ground raised by the assessee pertaining to this issue is dismissed. Addition on account of alleged purchases out of books - We find that details/books of accounts were not produced by the assessee despite various opportunities - the assessee though claimed that all his record/books of accounts were destroyed in the fire, however, neither produced the parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see pertaining to this issue is dismissed. Ad hoc disallowance of administrative expenses - We find that the assessee did not produce any details/evidence in support of its claim of admission to expenses. In absence of the details, the AO disallowed 10% of administrative expenses by the assessee and added the same to total income. During the appellate proceedings before the learned CIT(A), assessee submitted that administrative expenses constitute only minuscule portion of the total turnover. We find that apart from the aforesaid submission nothing has been brought on record to prove that the administrative expenses as claimed was incurred for purpose of business. Thus, in view of the above, we find no infirmity in the impugned order passed by the learned CIT(A) upholding the disallowance of 10% of administrative expenses claimed by the assessee. Thus, the ground raised by the assessee pertaining to this issue is dismissed. Levy of interest under section 234A - We deem it appropriate to remand this aspect to the file of AO for de novo adjudication after necessary examination of the fact whether the return of income was filed by the assessee within the prescribed time unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first time, facts pertaining to same are discussed accordingly. (a) Invocation Of Reassessment Proceedings 5. The assessee company is engaged in the business of trading and manufacturing of knitted fabrics hosiery cloth and garments. For assessment year 2009 10, reassessment proceedings were initiated by the Assessing Officer ( AO ) and notice under section 148 of the Act was issued on 27/02/2015. The AO provided reasons recorded for reopening the assessment to the assessee and same reads as under: A survey under section 133A of Income tax act 1961 in the case of KSL/Tayal Group cases was carried out by the investigation wing, Mumbai on 10/09/2013. The information from the investigation wing has been received as under: 2. It was found that M/s. Ginger Enterprises Ltd has shown purchases from the following concerns/companies: 1. Advik Textiles and Realpro Pvt Ltd. 2. Bilpower Textiles and Conpro Pvt Ltd. 3. Omrade Lease Finvest Pvt Ltd. 4. Encare Textiles and Properties Pvt. Ltd. 5. Gamin Traders Pvt. Ltd. 6. Hotline Textiles and Infra Pvt. Ltd. 7. Instant Traders Pvt. Ltd. 8. Jade Traders Pvt. Ltd. 9. Loren Leasi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total: 117.00 4. Further, It was also found that M/s. Ginger Enterprises Ltd has also claimed purchase of plant and machinery of Rs.100 Crores from M/s. Advik Textiles and Realpro Ltd during the financial year 2008-09. During the course of survey proceedings, the assessee was asked to furnish copies of purchase invoices, date of installation of machinery, place of installation and details of professionals involved in installation of machinery etc. But, Shri Sanjay Kumar Tayal has stated that the required information is not available with him and the same will be furnished in due course. He further stated that the said expenses claimed have not been made in purchase of plant and machinery and the substantial amount has gone in up-gradation of the plant, construction of factory building. But, he has not furnished any documentary evidence in support of his claim. The assessee has neither has furnished any information during the course of survey proceedings u/s. 133A conducted on 10.09.2013 to 11.09.2013 In respect of the expenses of Rs.100 Crores on account of plant. and machinery from M/s. Advik Textiles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Name of the supplier F.Y. 1. Advik Textiles and Realpro Pvt. Ltd. Gala no.6, Kamath Industrial Estate, Opp. Siddhi Vinayak Temple, Prabhadevi, Mumbai 2. Bilpower Textiles and Conpro Pvt. Ltd. 1st Floor, Raghuvanshi Compound, Lower, Parel Mumbai 3. Comrade Lease Finvest Pvt. Ltd. Gala no.6, Kamath Industrial Estate, Opp. Siddhi Vinayak Temple, Prabhadevi, Mumbai 4. Encare Textiles and Properties Pvt. Ltd. do 5. Gamin Traders Pvt. Ltd. do 6. Hotline Textiles and Infra Pvt. Ltd. do 7. Instant Traders Pvt. Ltd. do 8. Jade Traders Pvt. Ltd. do 9. Loren Leasing and Infotech Pvt. Ltd. do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 147 of the IT act. The notice u/s 148 r.w.s 147 is, therefore being issued to the assessee to reassess such income and also any other income chargeable to tax which has escaped the assessment, which comes to my office subsequently in the course of proceedings for reassessment for AY 2009-10. 6. Thereafter, notice issued under section 143(2) and 142(1) of the Act were issued and served to the assessee. In response to same, authorised representative of the assessee attended the reassessment proceedings and furnished the requisite details called for. During the course of hearing, learned DR submitted that neither before the AO nor before the learned CIT(A), the assessee challenging invocation of reassessment proceedings and this issue has been raised for the first time in appeals before us. We find that though, this fresh issue should have been raised by way of an application seeking admission of additional ground, however, the assessee has raised the same in its appeals. It is settled that being a legal issue, same can be raised at any stage of proceedings, if the basic facts are available on record. Therefore, we proceed to deal with same. From the reasons recorded, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment, then proceedings under section 147 of the Act can be validly initiated. Further, it is also well settled that sufficiency or correctness of the material is not a thing to be considered at the stage of recording of reasons. From the reasons recorded for reopening the assessment in the case of assessee it is also evident that the assessee has not disclosed truly and fully all material facts. As a result, we find no infirmity in the reassessment proceedings initiated by the AO under section 147 of the Act. Thus, the grounds raised by the assessee pertaining to this issue are dismissed. (b) Notice under section 143(2) was not served within the prescribed period 8. During the course of hearing, learned DR submitted that neither before the AO nor before the learned CIT(A), the assessee raised this issue and it has been raised for the first time in appeals before us. We find that though, this fresh issue should have been raised by way of an application seeking admission of additional ground, however, the assessee has raised the same in its appeals. It is settled that being a legal issue, same can be raised at any stage of proceedings, if the basic facts are available on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nayyar was the director of the 12 companies from which the assessee had shown purchases of fabrics at Rs. 117 crore in assessment year 2009 10. The addresses of these companies were shown as gala No. 6, 1st floor, Raghuvanshi Mills compound, lower Parel, Mumbai. These premises belong to Tayal Group of companies. On further investigation, it was found that Shri Kulvinder Kumar Nayyar was an employee of Tayal group of company. His statement was recorded on 08/05/2014, wherein he confirmed that he was employed with the assessee company. He also admitted that 12 companies are floated by Shri Sanjay Kumar Tayal and are managed and controlled by him. He also admitted that he was a dummy director and the companies were managed by Shri Sanjay Kumar Tayal. The AO vide order 30/03/2016 passed under section 147 r/w section 143 (3) of the Act treated the purchase of Rs. 117 crore to be out of books and the corresponding sales are also treated to be made out of books. Since, the assessee has shown gross profit @7.04%, therefore, addition of Rs. 8,23,68,000 was made to the total income of the assessee. 10. The learned CIT(A) vide, the impugned order dated 15/12/2017, dismissed the appeal fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee on this issue, by observing as under: 6.4 I have considered the submissions carefully. The factual back ground has been narrated earlier. Shri Sanjay Tayal, after initially promising to produce books of accounts and supporting bills and vouchers, immediately after the survey action claimed that its books of accounts had perished in a fire that occurred shortly after the survey on 29.9.2013 The lack of genuineness of transactions of 12 entities including M/s.Advik Textiles and M/s.RealproPvt. Ltd. has been noted earlier and has been highlighted in the assessment order. It is noted that the appellant group companies were using bogus bills from various entities operated by Mahaveer Duggar and Dilip Mehta CA to siphon out money. Wherever and whatever bills of Tayal Group were found either in survey u/s 133A on 10.9.2013, search action u/s 132 on 23.12.2008 or from banks such as UCO bank to whom appellant had submitted the bills (refer records of M/s Actif Corporation Ltd.), the bills have been found to be bogus. It is no wonder that the appellant is seeking refuge under the claim of fire to not produce the basic evidence. The valuers, YardiPrabhu Consultants Valuers P. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the metallic plate on the machines which contains all the technical details of the particular machines i.e. machines serial No., model No., year of manufacturing, electrical ratings, operating diagram, make and various details of the machinery was missing. The valuers further submitted that there was no basis to ascertain the model and the year of manufacture and the year of installation of the machines. Further, the valuers submitted that ownership of the machines cannot be verified in absence of invoices and fixed assets register. In absence of details as sought by the lower authorities, the bills produced by the assessee were found to be bogus. Thus, in view of the above findings, we find no infirmity in the impugned order passed by the learned CIT(A) on this issue. As a result, addition made by the AO on this issue is upheld. Thus, the ground raised by the assessee pertaining to this issue is dismissed. (e) Disallowance of payment of interest expenses 15. Since, borrowed funds have been siphoned off the interest claimed by the assessee was disallowed by the AO. The learned CIT(A) also dismissed the appeal filed by the assessee on this issue, by observing as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X
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