9911796707
TMI Blog2023 (10) TMI 257X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. 3. The Cross Objections filed by the assessee for both the assessment years are delayed by 11 days in filing the CO, for which, the assessee has filed affidavits for condonation of delay, to which the ld. DR has not raised any serious objection. Consequently, since the assessee was prevented by sufficient cause, the delay of 11 days in filing the COs stands condoned and admits the Cross Objections for adjudication. 4. The Revenue has raised following grounds for the AY 2013-14: 1. The order of the ld.CIT(A) is contrary to the provisions of the Income Tax Act, Rules and facts of the case. 2. The CIT(A) has deleted the additions made by the Assessing Officer under the head special salary, additional salary, management salary, special management salary, sworn statement given by the commission etc. The learned CIT(A) failed to note the Executive Director, D Kabilan, one of the Directors on 17.11.2015. 3. (a) The learned CIT(A) deleted the additions made to the contractors on the ground that they are labourers and TDS deduction is not applicable to such payments. The seized materials verification reveal that the payments were made under salary head and not under contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has explained that as per SAP, the wastage of packing materials were deducted only at the end of the each financial year. Also it was explained that as per the SAP, the closing stock Was valued at weighted average rate of raw material, but as per the return the closing stock was valued at the cost price existing at the end of the month i.e. 31st March which is the accounting standard followed by the company. The assessee has not explained clearly about the grounds on which the difference has cropped up. In assessment year 2014-15, the Revenue has raised following grounds: 1. The order of the ld.CIT(A) is contrary to the provisions of the Income Tax Act, Rules and facts of the case. 2. The CIT(A) has deleted the additions made by the Assessing Officer under the head special salary, additional salary, management salary, special management salary, commission etc. The learned CIT(A) failed to note the sworn statement given by the Executive Director, D Kabilan , one of the Directors on 17.11.2015. 3. (a) The learned CIT(A) deleted the additions made to the contractors on the ground that they are labourers and TDS deduction is not applicable to such payments. The seized mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o note the sworn statement given by the Executive Director, D Kabilan, one of the Directors on 17.11.2015. 3. (a) The learned CIT(A) deleted the additions made to the contractors on the ground that they are labourers and TDS deduction is not applicable to such payments. The seized materials verification reveal that the payments were made under salary head and not under contract head. Further from the verification of the materials it is observed that the EPF deduction is made to the labourers who are working under the contractors. Mere coverage of staff of the contractors under EPF does enable them to claim as labourers. (b) The learned CIT(A) has erred in disallowing the addition by subscribing to the views of the representative that they are labourers having regular PF subscription and for the convenience the payment is made through head labourers. It is pertinent to note that during the course of search proceedings, Shri S Murugesan, Accountant has categorically deposed that entire sum was paid to the respective contractors were given payment through bearer cheques, without effecting TDS. The assessee's claim that the labours are enrolled for EPF and payments routed throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cost price existing at the end of the month i.e. 31st March which is the accounting standard followed by the company. The assessee has not explained clearly about the grounds on which the difference has cropped up. 7. The learned CIT(A) had deleted the addition made by the AO regarding on money payment made by the assessee company for Rs. 17,68,655/-. The assessee company has produced bank account copies, and the relevant copy of property registration for having made the payment of Rs. 17,68,655/-. The assessee has produced the bank details for the source for having made the payment and also property registration document. However, second appeal is suggested to consider the case on merits. 8. The learned CIT(A) has deleted the additions made by the AO under purchase of copra from market committee on the ground that the assessee company has not made direct purchase from market committee and purchases of copra were from traders and which were recorded in the books. The assessee has furnished reply to the AO at the time of search assessment proceedings. Also suitable reply was furnished in letter dated 29.02.2016 address to the ADIT (Inv.), Tirunelveli. On verification of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO at the time of search assessment proceedings. Also suitable reply was furnished in letter dated 29.02.2016 address to the ADIT (Inv.), Tirunelveli. On verification of the details available on record, the purchases of copra were made through traders and not directly from the market committee. Second appeal is suggested to consider the issue on merits. 5. Brief facts of the case are that the assessee, M/s. VVD and Sons (P) Limited is engaged in manufacture & sale of coconut oil & gingili oil, in operating wind mill and also in letting out ware-house etc. The assessee originally filed its return of income for the assessment year 2013-14 on 30.09.2013 admitting a total income of Rs..16,84,97,950/-. A search and seizure operation under section 132 of the Income Tax Act, 1961["Act" in short] was conducted on 17.11.2015 in the group cases of M/s. VVD and Sons (P) Ltd. During the course of search, several incriminating documents relating to unaccounted transactions were stated to have been unearthed and seized. A notice under section 153A of the Act dated 27.12.2016 was issued to the assessee and in response thereto, the assessee has filed its return of income for the assessment year 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the AO solely relied on the oral statement of Mr. Kabilan recorded at the time of search in the late hours of the night and did not conduct further enquiry with the persons to whom salary and remuneration was paid. After going through the assessment order and the submissions of the AR it is seen that the assessing officer did not examine the nature of services rendered by them and did not record a finding that that the remuneration paid was unreasonable and excessive compared to similar services in other cases. This onus of proof lies on the assessing officer, which he failed to discharge, and he miserably failed to make out a case under section 40A(2). Further as pointed out by the AR, the very same officer did not make any disallowance while completing the assessment under section 143(3) r.w.s. 147 for AY 2009-10 on 31/12/2016 and under section 143(3) on 31/12/2017 for AY 2016-17. Further, the AO has not examined the individuals (recipients) separately to bring on record and to prove that either they did not render any service warranting any payments or that the payments are not commensurate with the services rendered by them. This amply proves that the addition was made as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into consideration the other material in respect of completed assessment/ unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961. In order to implement the law laid down by the Hon'ble Supreme Court in the above judgement, the CBDT issued Instruction No. 1 of 2023 dated 23.08.2023 vide letter F. No. 279/Misc./M-54/2023-ITJ. Under the above facts and circumstances, without any incriminating material evidence found during the course of search under section 132 of the Act, the assessment order passed under section 143(3) r.w.s. 153A of the Act for all the assessment years under appeal are liable to be quashed in view of the above decision of the Hon'ble Supreme Court as well as subsequent instructions notified by the CBDT. However, we proceed to decide the issues on merits also. 8.4 With regard to the deletion of additions made by the Assessing Officer under the head special salary, additional salary, management salary, special management salary, commission, etc. the only content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 1,17,55,663 Since the assessee has not deducted tax at source on the above payments of Rs..1,17,55,663/- to contractors for the assessment year 2013- 14, the Assessing Officer invoked the provisions of section 40(a)(ia) and made the disallowance. Similarly, the Assessing Officer disallowed Rs..1,28,43,955/- for the assessment year 2014-15 Rs..1,53,27,125/- for the assessment year 2015-16 and Rs..1,13,62,992/- for the assessment year 2016-17. 9.1 The assessee carried the matter in appeal before the ld. CIT(A). While deleting the addition, the ld. CIT(A) has observed as under: 6.2. Coming to the ground relating to payment made to contractors without making TDS, it is submitted by the AR that S/Shri Uthirapandi, Navaneethan, Easakkimuthu, Veerapandi and Kumar are the head-labourers and the workers under them are in the muster roll of the appellant and are covered by the ESI/ PF Act. Deductions towards ESI/PF have also been duly made and deposited to the respective accounts. It is a general practice to issue a bearer cheque to the head-labour, who will in turn make payments to the individuals. This has been scrupulously followed in all the five contract-labourers' cases. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,13,892/- (AY 2014-15) is hereby confirmed. Hence the grounds of appeal for the above two AYs are dismissed. For the AY 2015-16, the AO disallowed 30% of Rs. 1,02,11,284/- The contractor Shri Chandrasekar has filed the return of income on 18.10.2016 which is within the time limit prescribed u/s. 139. For the AY 2016-17 the AO disallowed 100% i.e. Rs. 77,14,276/-. For this AY Shri Chandrasekar has filed the return of income on 17.10.2016 which is within the due date u/s. 139. Accordingly the disallowance made for the AYs 20 15-16 (Rs.30,63,385- 30% of Rs. 1,02,11,284) & 2016-17 (Rs.77,16,274) is hereby deleted. This ground of appeal for the above two AYs is allowed. 9.2 Aggrieved, the Revenue is in appeal before the Tribunal. The Ld. CIT-DR submitted that the payments were contractual in nature which would require TDS u/s 194C of the Act. 9.3 On the other hand, the ld. Counsel for the assessee has strongly supported the order passed by the ld. CIT(A). 9.4 We have heard the rival contentions, perused the materials available on record and gone through the orders of authorities below. In the assessment order, the Assessing Officer made disallowance towards payment made to contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in stock, during the course of search proceedings, a sworn statement was recorded on 19-11- 2015 from Shri D. Kabilan, director of the assessee-company. While answering to Question No.9, Shri Kabilan had admitted before the Assessing Officer that the variation between physical verification of stock and the books stock in respect of production of oil. It has been submitted that as per SAP software application maintained, the yield ratio for copra to coconut oil was prefixed as 63%, whereas the actual production is higher than that of 63% leading to discrepancy. The said discrepancy is noted in the books of accounts as 'vain'. Also, it was noticed that there was invariable excess stock in the physical inventory ranging from 500 to 1000 litres than the stock as per computerized SAP for each year. The details of adjustment entries made for the earlier period prior to F.Y 2014- 15 could not be obtained during the course of search proceedings. Therefore, based on the available data for the complete financial year of 2014-15, the total quantity of adjustment entries for the F.Y 2008-09 to 2013-14 were calculated as below: Total quantity of coconut oil sold for F.Y 2014-15: 1,08,89,160 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9-10 to 2015-16 without taking any figures in the earlier year records. Any addition has to be made on finding of material evidences only. For the financial year 2009-10 to 2013-14 no such evidence was found. The simple arithmetic calculation will not be applicable for the earlier years. Further the AO has not proved, admitting for a while that there was excess stock, that such excess stock was sold and unaccounted income has been earned through the same. By following the same methodology the AO reworked the excess and notional stock for the earlier AYs viz., 2010-11 to 2015-16 also. In the circumstances, the AR pleaded for deletion of the entire addition made in all the AYs i.e. 2010-11 to 2016-17. I have gone though the elaborate submissions made by the AR. It is an admitted fact that the output of oil as a result of crushing copra would depend on the quality of the raw material. The result may vary and the quantity of output may go up or come down. As per the AR this variation has been booked as (+) or (-). The AO had mistakenly considered the (+) as excess stock and arrived at the value of such notional stock and thereby calculated the value and added the same as excess stock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) has observed that Assessing Officer had mistakenly considered the (+) as excess stock and arrived at the value of such notional stock and thereby calculated the value and added the same as excess stock. Moreover, in the assessment order, the Assessing Officer has not anywhere brought on record that such excess stock was sold in the market and resultant unaccounted income was earned. The standard yield of oil of 63% fixed by the assessee was to monitor the quality of copra for internal purposes and it does not mean that the appellant did not account the actual production in excess of 63%. The actual production whether more or less than 63% was accounted in the stock book and further shown as sales in the Profit and Loss Account. In view of the above facts, the ld. CIT(A) has held that there was no excess stock and the consequent addition made on the notional excess stock is nothing but an illusion and accordingly, deleted the additions made by the Assessing Officer for all the assessment years under appeal. Thus, we find no infirmity in the order passed by the ld. CIT(A) on this issue and the ground raised by the Revenue is dismissed for all the AY under appeal. 11. With re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opra from the farms at Pollachi. " 6.2 During the course of search assessment proceedings Shri Kandasamy, a broker of copra purchase of M/s, VVD & Sons, was issued a summons u/s. 131 and a sworn statement was recorded from him on 16.11.2017. The reply to Q. No, 8, 9 & 10 are reproduced as under: About the details of traders arranged by him Shri Kandasamy stated that the following are the traders in Kerala who supply copras to M/s. VVD & Sons viz. 1. Achu Traders, Palakkad 2. Appu Traders, Palakkad 3. Madeena Traders, Palakkad. 4. Alfas Traders, Palakkad. 5. Shajahan Traders, Palakkad The actual purchases made Pollachi were shown as if they were bought in Kerala. Shri Shajahan has also admitted that he acts as a 'commission agent' only for raising of bogus invoices in his four traders' name and sales invoices to M/s. VVD & sons, which are verifiable with reference to the statements recorded from Shri Shajahan during the search on 17.11.2015 in Q.No. 2 & 3 which are reproduced as under: "I have been working as a copra commission agent from 2003 to various companies, after the demise of my father, I am also an agent of M/s. VVD & Sons Pvt. Limited. Apart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the money deposited by M/s. VVD & Sons (P) Limited for his having supplied to copra t M/s. VVD & Sons. The assessee has also stated that the money transactions are known only to Shri Chinna, Senthil and Natarajan. 6.4 From the above facts, it is learnt that the real suppliers are Shri Chìnna, Senthil and Natarajan of Pollachi and not Shajahan since he has supplied the copras in the capacity of a commission agent alone and not as a seller. This fact is also confirmed from the above mentioned facts and also from the statements recorded from the three persons Shri Chinna, Natarajan and Senthil. 6.5 During the search assessment proceedings while recording sworn statement recorded u/s. 131 from shri Gothandapani @ Chinna on 16.11.2017 it is ascertained that shri Gothandapani has made purchases of copra from farmers at Pollachi and supplied copras to M/s. VVD & Sons from his own concern name i.e. M/s. Sree Karpagam traders through Shri Kandasamy, the broker of M/s. VVD & Sons, who is a Tuticorin based broker for VVD & Sons. 6.6 Also it is ascertained from Shri Natarajan that he has purchased copras from farmers at Pollachi and supplied copras to M/s. VVD & Sons, on inform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' identity such as name, address, quantity purchase, PAN No. Whether any returns filed in their names, bank account details of the farmers made by them. It is worth to mention the three persons have made note of purchase of copra from farmers in loose sheets only, that would be destroyed by them then and there, as averred by them in their statement. The said three persons stated during hearing that they do not maintained any books of accounts for such a voluminous purchase of copras and supply. It is surprised to note that the purchases made by the three persons from farmers runs into crores of rupees but during search as well as search assessment proceedings the three including Shajahan failed to disclose the farmers particulars, which is a significant information in ascertaining the real truthfulness of the sales them to M/s. VVD & Sons. 6.8 From the above narration, it is found that Shri Shajahan and his concerns are not real suppliers of copra from his firms run by Shri Shajahan are found to be only "colorable devices" used by the assessee-company M/s. VVD & Sons P. Ltd. to accommodate for raising sales bill for their copra purchases from traders in Pollachi to avoid sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra to VVD & Sons, since Shajahan and the three persons remains silent and stated throughout the proceedings that they are only the agents for supplying copras by getting only commission payment. 6.12 From the findings made as discussed in the earlier paragraphs, a fact is obvious that Shri Shajahan has been paid by the VVD & Sons only a sum of 1000/- to 2500/- per load as his part of commission. Shri Shajahan was asked to raise fake purchase invoices to M/s. VVD & Sons and provide sales accommodation entries, for which act he has been paid commission. The entire payment towards fake purchase of copras from Shajahan including the commission paid for raising such fake invoices are considered unlawful u/s. 37(1) of the I.T. Act, which warrant disallowance of the same. Further "As per the provisions of Section 40A(3) of the Income Tax Act, 1961 where the assessee-company incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day otherwise than by way of an account payee cheque drawn on a bank or an account-payee bank draft, exceed Rs. 20,000/-, no deduction shall be allowed in respect of such expenditure." The entire financial transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n for the A.Y 2012-13, since the payments towards purchase from Shajahan were made through bearer-cheques and not through account payee cheques or account-payee demand drafts as required u/s 40A(3). 6.16 It is abundantly clear that actually no sale of copra took place between M/s. Appu Traders and M/s. VVD & Sons. Only in order to reduce the tax liability as well as to avoid provisions of Sec. 40A(3) , M/s. VVD & Sons had resorted to a kind of dubious method, as if through purchases were made from Shajahan and his group concerns. The whole exercise is only a colourable device employed by M/s. VVD & Sons to reduce the tax liability by utilizing the name of Shajahan and his group concerns, as supplier of copras. 6.17 Tax planning must be a legitimate provided it is within the framework of law. The assessee company had employed colourable devices, which cannot be part of its tax planning and it cannot encouraged or entertained on the belief that it is honourable to avoid the payment of tax by resorting to dubious methods. It could be concluded that the method adopted by the assessee company is only a sham transaction arranged for purchase of copras, which was got executed through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and all the payments were through RTGS, invoking the provisions of section 40A(3) is not correct and hence the resultant disallowance also is uncalled for. Further, the main contention of the appellant is that all the payments to the group concerns of Mr. Shajahan were made by RTGS and the same is not disputed by the AO. On the other hand, the assessing officer relied on the books of accounts seized from the residential premises of Mr Shajahan without giving an opportunity to the appellant for cross examination. In this regard, a copy of the letter addressed by the AR to the AO is reproduced below: [attached copy of the letter] The AR submitted that seized material or evidences collected at the back of the appellant has no evidentiary value unless an opportunity of cross examination is given. Even after thorough investigation by Investigation team, there is absolutely no evidence brought on record to prove that part of the amount paid by RTGS came back to the appellant. Any disallowance under section 40A(3) can be considered only in the case of group concerns of Shri Shajahan and not in the hands of the appellant. The AR also brought to the notice of the undersigned that simil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with an eye on the quality of the same. As per the invoices raised by the Kerala suppliers, payments were made by the assessee through RTGS. However, the Assessing Officer disallowed the entire expenditure by holding that the assessee made bogus purchase. On appeal, the ld. CIT(A) has noted from the documents produced before the him as was furnished to the Assessing Officer that all the payments to the Kerala supplier were through banking channel i.e. RTGS. The Assessing Officer has also not disputed this fact. From the evidence available, the ld. CIT(A) noted that bearer cheques were issued only by the Kerala supplier to his clients. The issuance of bearer cheque by the Kerala supplier does not in any way disprove the claim of the assessee that they sent the entire payment through RTGS. If the Kerala supplier issued bearer cheques, then action at best can be taken only at their end and not in the hands of the assessee. Thus, the ld. CIT(A) has held that disallowance in the case of the assessee is not warranted and rightly deleted the additions made by the Assessing Officer. 11.7 We have gone through the paper book filed by the assessee and find that the payments made by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I- is treated as bogus purchase from Shajahan group concerns for the A.Y 2013-14. The same is disallowed and added. 12.1 Similarly, the Assessing Officer made disallowance towards bogus purchase of copra for the assessment year 2014-15 of Rs..1,08,59,175/- and for the assessment year 2015-16 of Rs..1,13,40,886/-. 12.2 On appeal, with regard to the deletion of addition made towards bogus purchase and rate variation, the ld. CIT(A) has observed as under: 6.5. The next ground relates to bogus purchase and rate variation: The AO resorted to the impugned addition based on the illogical conclusion that there is rate variation in the purchase of copra resulting in inflation of purchase price. The AR explained the reason for rate variation and attributed the same to quality of copra acquired. Depending on the quality of the copra prices tend to vary from supplier to supplier. Without taking into consideration this basic fact, the AO resorted to the impugned addition. The AR further submitted that the AO erred in resorting to disallowance towards alleged bogus purchase without even referring to the specific entries in the seized material and without explaining how the excess rate was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there is rate variation in the purchase of copra resulting in inflation of purchase price. After considering the submissions of the assessee, the ld. CIT(A) has observed that the assessee was in the business for the past several years and has acquired a reputation for its products. It was further observed that in order to get high quality of end product (oil), it is essential and unavoidable for the assessee to acquire high standard of copra for crushing and consequently it has to pay a higher price. Without taking into account this basic requirement for consideration, indulging in an exercise to make such an addition was not correct. The ld. CIT(A) has further observed that neither the investigation team nor the Assessing Officer has brought any material on record to show that part of the purchase price was received back by the assessee. Accordingly, the ld. CIT(A) has held that the addition was made purely based on doubt, suspicion, assumption and surmises and deleted the additions made by the Assessing Officer for all the assessment years under appeal. We find no reason to interfere with the order passed by the ld. CIT(A) on this issue and accordingly, the ground raised by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,25,318/-. 13.2 On appeal, the ld. CIT(A) has observed as under: 6.9. The last ground relates to AY 2013-14 to 2015-16 purported suppression of closing stock. The AR submitted that during the FY 2011-12 the appellant company switched over from Tally system of accounting to SAP system of accounting. The AO was of the view that there is variation in the value of stock as per SAP system and the value of stock reported in the return of income. The appellant duly given a reconciliation statement and reasons for the difference before the AO. Unfortunately this was not considered properly. The appellant vide its letter dated 14/ 12/2017 submitted as under "5. At the end of the financial year, the actual value of closing stock (with quantity) is furnished to central excise department. The copy is enclosed herewith. 6. In the SAP, the closing stock is valued at the weighted average rate for raw material and packing material. In the balance sheet, the closing stock is valued at cost price prevailing at the end of the month i.e. 31st March. It is the accounting standard followed by the company. 7. In the SAP, the wastage of packing materials are not taken into account It was ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee switched to SAP based accounting software. 13.5 We have considered the rival contentions. In the assessment order, the Assessing Officer has noted that there is variation in the value of stock as per SAP system and the value of stock reported in the return of income. Accordingly, the assessee has duly submitted the reconciliation statement and reasons for the difference before the Assessing Officer, which was unfortunately not considered. Before the ld. CIT(A) the assessee has produced copy of the actual value of closing stock (with quantity) as furnished to the Central Excise Department. After considering the detailed written submission filed by the assessee as was submitted before the Assessing Officer, which was not considered by him, the ld. CIT(A) has also considered the value of closing stock of Rs..2,47,72,535/- added by the Assessing Officer which was deleted in the appellate order dated 16.04.2018 and the Tribunal also confirmed the order of the ld. CIT(A) on further appeal by the Revenue. Accordingly considering the above addition in the closing stock, for the assessment year 2012-13, the addition on account of telescopic effect was made in the assessment years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pting the gross profit ratio adopted at 20.16%. The gross profit of undisclosed production out of unaccounted copra purchases for the A.Y. 2015-16 is worked out at Rs. 2,09,10,485/-. A total sum of Rs. 3.45,57,133/- is treated as income earned out of unaccounted and undisclosed income of the assessee company and hence added to the total income. 14.1 Similarly, the Assessing Officer made addition of Rs..4,53,75,915/- for the assessment year 2016-17. 14.2 On appeal, while deleting the addition for both the assessment years, the ld. CIT(A) has observed as under: 6.7. The next ground relates to purchases made from Market Committee and the consequential addition in AY 2015-16 and 2016-17: The appellant acquires copra through various sources. One such source is obtaining copra from Market Committee. But the appellant cannot straight away acquire copra from Market Committee directly. The Market Committee conducts auction and the participant bid the auction. Without knowing the techniques of the auction, the appellant is not in a position to participate in the auction. Hence persons knowing the techniques participate in the auction. From the successful bidder the appellant acquires t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings, I am of the view that the explanation offered by the appellant are plausible. The permit to move the copra from the place of origin to the place of destination that is the factory of the appellant etc. has been gone through. Even admitting but not accepting for a while that the appellant had indulged in purchases from market committee directly, neither the Investigation Team nor the AO has found out any corroborative documents either to prove that the appellant indulged in purchase directly from the market committee or for corresponding unaccounted sales. After taking into account all these into consideration, I am convinced that the addition made on this count is unwarranted and accordingly the addition of Rs..3,45,57,133/- for the AY 2015-16 and Rs..4,53,75,915/- for the AY 2016-17 is deleted. This ground of appeal for both the AYs is allowed. 14.3 Aggrieved, the Revenue is in appeal before the Tribunal. 14.4 The Ld. CIT-DR submitted that the assessee was unable to furnish any plausible explanation with respect to cash purchases made from market committee. The Ld. AR submitted that sufficient evidences were adduced by the assessee to support its claim. 14.5 We hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Rs..4,53,75,915/- and no gross profit has been worked out and surprisingly added the entire purchase cost. It is needless to say that the value of purchases made from the traders, who participated in the auction conducted by the Market Committee, has already been booked in the regular accounts. Thus it is clear that the Assessing Officer indulged in a futile exercise in making the impugned addition. By considering various documents produced by the assessee such as Permit to move the copra from the market committee to the assessee, proof of cess payment by the successful bidder etc. which were furnished before the Assessing Officer during assessment proceedings, copy of the same were part of the appellate order, the ld. CIT(A) opined that the explanation offered by the assessee are plausible. After examining the permit to move the copra from the place of origin to the place of destination that is the factory of the assessee etc., the ld. CIT(A) further opined that even admitting but not accepting for a while that the assessee had indulged in purchases from market committee directly, neither the Investigation Team nor the Assessing Officer has found out any corroborative document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of land. This addition relates to the AY 2015-16. The facts are that the company has purchased 5.96 Acre of land at Meliyur Village for Solar power project for Rs. 6,27,420/- on 23.01.15. Apart from that, the payment details are given below: Rs. On money payment 14,70,655 Brokerage & other expenses 87,639 Total 15,58,294 As per the AR, for the purpose of the above payments Rs. 19,00,000/- was withdrawn (Rs.950000 on 05.01.15 & 950000/- on 06.01.15) from Axis bank, Tuticorin; out of this withdrawal Rs. 15,42,855/- (Rs. 1558294 less TDS Rs15439) was paid to Mr.R.Jeyabalaserma Ganesan who is the intermediary and broker for the purchase of the land. The balance Rs. 3,57,145/- was deposited in the Axis bank (A/c. No. 105010200002875) on 24.01.15. This payment was made as land development charges and TDS was made. So the payment was made by withdrawing from the bank and duly accounted in the books of accounts, It is not an unaccounted transaction. The AR further submitted that on the contrary the AO based on a message in the e mail came to the conclusion that on-money payment was involved in the transaction. The AO was misdirected by the message wherein in addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r giving telescopic effect consequent to the offer made was also not acceded by the AO. I have gone through the assessment order and the submissions of the appellant. The AR explained in detail with reference to the books of account that the source for the entire payment, including on-money was from accounted source. This is evident from the entries in the books of account. Even admitting but not accepting for a while that there was on-money payment, the AR's request for telescopic effect is certainly to be considered favourably. In the circumstances I direct the AO to delete this addition of Rs. 17,68,655/- for the AY 2015-16. This ground of appeal is allowed. 15.2 Aggrieved, the Revenue is in appeal before the Tribunal. 15.3 The Ld. CIT-DR submitted that the additions is based on certain communication. However, Ld. AR submitted that the entire payment was accounted for by the assessee in the books of accounts. 15.4 We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In the assessment order, the Assessing Officer made addition on account of alleged on-money payment in acquisition of land. The case of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Mr. A. Chandrasekar has duly disclosed the payments in his individual return of income, in support of which, Form 26A has been filed during the course of assessment itself. However, the ld. CIT(A) confirmed the addition on the ground that the contractor has filed his return of income for the AYs 2013-14 and 2014-15 belatedly as per section 139 of the Act. 16.1 Before us, by reiterating the above submissions, the ld. Counsel for the assessee has submitted that once the payment was duly declared as income in the return filed by the payee (Mr. Chandrasekar), no addition could be made in the hands of the assessee and prayed for deleting the addition confirmed by the ld. CIT(A) for the assessment years 2013-14 and 2014-15. It was further submission that the ld. CIT(A) has confirmed the addition merely because the return of income has been filed belatedly by the recipients. However, the aforesaid fact would not jeopardise the claim of the assessee. 16.2 On the other hand, the ld. DR supported the order of the ld. CIT(A) on this issue. 16.3 We have heard the rival contentions and gone through the orders of authorities below. It is an undisputed fact that Mr. A. Chandrasekar has duly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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