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TMI Blog2022 (11) TMI 624X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessee. 5. Without prejudice the addition is excessive arbitrary and excessive and ought to be reduced substantially. 6. The learned CIT(A) erred in upholding the interest under sec 234A, 234B and 234C of the Act. 7. For these and such other grounds that may be urged at the time of hearing the Assessee prays that the appeal may be allowed." 3. The assessee further raised additional grounds as follows. However the ld AR did not press for these grounds and hence the same is dismissed as not pressed. 1. The mandatory sanction under 151 of the Act is not taken and the assessment proceedings are void ab initio on the facts and circumstances of the case. 2. Without prejudice, the mandatory sanction under section 151 of the Act is not taken in accordance with law and the assessment proceedings are void ab initio on the facts and circumstances of the case 4. The assessee also raised the following additional grounds of appeal:- "1. The learned CIT(A) was not justified in confirming the addition of Rs.6,64,180/- without appreciating the submissions and documents filed on the facts and circumstances of the case 2. The learned CIT(A) was not justified in appreciating that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat during the course of survey, a diary which is the daily planner of the Director was impounded and the AO found entries in the daily planner which is not reflected in the books of accounts of the assessee. The reasons recorded by the AO is that the cumulative cash credits of the entries in the diary of the director are not recorded in the books of accounts should be brought to tax and that is the reason for reopening of the assessment. It is the contention of the ld. AR that the satisfaction recorded by the AO is not clear and the reason to suspect cannot replace the reason to believe for reopening of assessment u/s. 147. In this regard, the ld. AR relied on the Chhugamal Rajpal v. S.P. Chaliha [1971] 79 ITR 603 (SC) and ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC). The ld. AR also drew our attention to the sworn statement recorded by Sri Rajagopal Gilada, Director (page 287 to 296 of paper book), wherein while answering Q.No.4, the Director has clearly given the various companies/firms in which the Director is part of and therefore the entries made in the daily planner cannot be solely related to the assessee where the AO has made the addition. 8. The ld. DR relied on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax ; (b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return ; (c) where an assessment has been made, but- (i) income chargeable to tax has been underassessed ; or (ii) such income has been assessed at too low a rate ; or (iii) such income has been made the subject of excessive relief under this Act ; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed.] 10. The proviso and the explanations to section 147 are not applicable in the case of the assessee as the AO has re-opened the assessment within 4 years from the end of relevant assessment year in which the assessment u/s.143(3) was completed. Hence what is relevant here is the AO's 'reason to believe' that any 'income has escaped assessment' where the original assessment is completed. 11. The reasons for the formation of the belief must ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot / 250 mtrs. Rs.6,40,800/- - 60/- 3204000 Rs.22,40,000/- - 240/- 2883600 Rs.28,88,800/- - 300 USD 13. The assessee submitted before the AO that these are calculations regarding material that are going to be imported by sister concern M/s. Ajay Constructions. The AO did not accept the submissions of the assessee and held that this noting of similar nature made in diaries pertaining to AY 2005-06 where the assessee company was engaged in high sea sale of steel scrap and lot of cash transactions were made. The AO further held that the assessee company has not furnished any evidence of above transactions in the books of sister concern, M/s. Ajay Constructions and therefore all transactions entered in the diary pertains to the assessee and made an addition of Rs.32,04,000 as undisclosed income by sale of steel scrap. 14. The CIT(A) confirmed the addition by holding that similar addition was confirmed in AY 2005-06 and therefore the addition during the year under consideration is also upheld. 15. The AO also made an addition of Rs.17,00,000 based on the entry in page No.60 of the diary where the cash flow from various sources and payments to various persons have been noted. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (page 150-151, 20/07/2007) in AY 2008-09 and the same is reflected in the bank accounts and also in the ledger accounts of the respective parties. The said entry in the planner of the director was a mere noting for future cash flows and there was no sale of scrap by the assessee. The documents filed by the assessee and the creditor are ample proof that the fund flow was anticipated to meet the requirement of the assessee's financial requirement, which was entirely explained and accounted in the books of both the parties. In view of the above, the entire addition of Rs. 17,00,000/- as a sale transaction was a mere speculation by the assessing officer and is required to be deleted in full. 19. We have heard the rival submissions and perused the material on record. The AO made two additions towards suppressed sale of scrap. The first addition is for an amount of Rs.32,04,000 based on the noting made on 3.2.2007 which is extracted in the earlier part of this order. The ld AR during the course of hearing drew our attention to the submissions made before the lower authorities stating that the MD has made note of a proposed import from SAIT (which is the short form for Society Afric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount noted as receivable should have been received on that day or any future date and that the assessee company has not furnished any evidence to show that such receipt was accounted in any future date either in the hands of the assessee or in the hands of any other sister concern. We find that this conclusion is arrived at not based on perusal of any materials produced before the AO. We also notice that the CIT(A) has upheld the addition merely on the basis that the during AY 2006-07 also similar issue is noticed and the unaccounted income arising out of the business transaction needs to taxed. The CIT(A) has not recorded any finding based on the details submitted and has not brought anything on record to state that the details submitted are not correct. The CIT(A) has instead decided on the earlier year which in our view is not the right way to arrive at the decision. The assessment of each year is different and have to considered based on the facts pertaining to that particular assessment year. The submission of the ld AR that the noting of Rs.17,00,000 relates to the subsequent receipt of Rs.20,00,000 needs to be examined, though there is no other payment received from M/s.Ajay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons made in the personal capacity of the director and not related to the primary activities of the assessee. The monies receivable from Kanishk Steels, Chennai, of Rs. 13,60,485/- were an actual outstanding arising out of sale of goods during the earlier year and the same was a closing balance (page 168 of paper book) in the books of the assessee and received through banking channels in the following assessment year. Further, the transactions of the director with the sister concerns of the assessee, were stated to be recorded in their respective books and the same could not have been added as unexplained in the hands of the assessee. It was further submitted that the learned CIT(A) has also given a perverse finding that the assessee has furnished additional details and filed for the first time, which is contrary to record, when the details of the transaction were explained to the AO during assessment proceedings and thus the additions ought to have been deleted by the CIT(A). 24. Without prejudice, the ld. AR submitted that the payments for personal purposes would be paid from the personal resources of the director and could in no instance be considered as payments made by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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