9911796707
TMI Blog2018 (4) TMI 1969X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer has made a reasonable estimate on the basis of material seized. Being so, for the assessment year 2004-05, the Assessing Officer treated the agricultural income and treated balance as non agricultural income. Before us also, the assessee was not able to show any material to suggest that the entire income of Rs. 2,20,000/- for the assessment year 2004-05 is from only agriculture. Being so, for the assessment year 200405, we have no hesitation to confirm the order of the CIT(A) on this issue. This ground of appeal of the assessee is rejected. Addition towards unexplained credit in the bank accounts of the assessee - The assessee is operating bank account in the name of his employees which was admitted by the assessee in his sworn statement recorded u/s. 132(4) of the Act which itself is an evidence. The assessee though agreed to treat the account as suppressed receipts, the only plea was that the GP rate is to be considered on peak credit to estimate the income. In our opinion, whenever any unexplained deposits is found in the name of the assessee, then it is the duty of the assessee to explain the source of the same. In the present case, the assessee is not able to lead an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.4.2008. As per the report of the Valuation Office, the total cost of construction was arrived at Rs. 1,67,92,000/-. The assessee declared only a sum of Rs. 1,14,63,115/- as the cost of construction. Thus there was a difference of Rs. 53,28,885/- between the valuation report furnished by the DVO and the cost of construction declared by the assessee. Further, the Ld. AR submitted that the State PWD rates should be applied. If the assessee spent Rs. 20 lakhs after the assessment year 2008-09, then the difference would be only Rs. 14,22,641/- . In our opinion, there is force in the argument of the Ld. AR with regard to the consideration of State PWD rates for valuation of the construction. To that extent, we agree with the contention of the Ld. AR. Accordingly, we direct the AO to re-work the valuation of the property after applying State PWD rates. Regarding the actual cost of construction, the Ld. DR cannot have any objection. Hence, this ground of appeal of the assessee is partly allowed for statistical purposes. Agricultural lease rent received - The documents produced by the assessee are in the form of Xerox copies of the lease agreements which is only self-serving and no impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - HELD THAT:- At the time of search, manager of the assessee stated that it was a normal practice of inflating expenditure at the time of finalization of the accounts which was evident from the materials seized from the premises of the assessee and the statement alongwith the return. Since there was evidence in the form of seized material to suggest inflation of expenditure, the CIT(A) considered 10% of the gross profit as inflated expenditure. In view of this we do not find any infirmity in the order of the CIT(A). Accordingly, we confirm the same. This ground of appeal of the assessee is dismissed. Addition made on the basis of seized material found during the search - As assessee has not placed any material contrary to this. Hence we do not find any infirmity in the order of CIT(A) and confirm the same. Unexplained investment and on the basis of valuation report filed by the DVO - HELD THAT:- As there was no incriminating material or any statement of the assessee or his employee to indicate the fact of the under valuation of the machinery. In the absence of any incriminating material it is not possible for us to sustain the addition made by the Assessing Officer. In our opinion, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of income for the assessment years 2004-05 and 2006-07 declaring agricultural income at Rs. 2.80 lakhs and Rs. 2.88 lakhs respectively before the due date of filing of the returns. The Assessing Officer had not seized incriminating material to show that it is not agricultural income. According to the Ld. AR, the Assessing Officer should not have restricted the agricultural income without any seized material suggesting the above income as non agricultural income. 3.4 The Ld. DR on the other hand submitted that the assessee has not placed any evidence to show the earning of such agricultural income. As such, the Assessing Officer estimated the agricultural income on the basis of best judgment. 3.5 We have heard the rival submissions and perused the record. The return of income for the assessment year 2004-05 was filed on 19/12/2010 showing agricultural income at Rs. 2,80,000/- which was filed before the due date of filing the return of income. Whenever the assessee declared agricultural income in his return, burden is on the assessee to show that income is actually earned from agricultural and not from other sources. In the present case, there is no evidence placed with referenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with regard to the agricultural income. Being so, as discussed in the earlier assessment years, the addition is confirmed for the assessment year 2007-08. This ground of appeal is rejected. 7. For the assessment year 2008-09, the assessee declared agricultural income of Rs. 5,72,000/- from the landed property at Pang, Malappuram. The Assessing Officer restricted the agricultural income to Rs. 2 lakhs and treated the balance of Rs. 3,72,000/- as non agricultural income. The assessee carried the matter in appeal before the CIT(A). There was no discussion by the CIT(A) on this issue. However, he confirmed the order of the Assessing Officer on this issue. Against this the assessee is in appeal before us. As discussed in earlier years, for this year also, the assessee has not placed any evidence to suggest earning of agricultural income. The addition is sustained. 8. For the assessment year 2009-10, the assessee declared agricultural income of Rs. 6,40,000/-. The Assessing Officer restricted it to Rs. 3 lakhs and the balance of Rs. 3,40,000/- was treated as non agricultural income. For similar reason as in earlier years, we sustain the addition for the assessment year 2009-10. This g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed back/used for the purpose of the assessee. The assessee offered this as receipt and also requested to take the peak credit and apply GP rate only. However, the Assessing Officer considered the entire amount as income of the assessee. On appeal, the CIT(A) confirmed the addition made by the Assessing Officer. Against this, the assessee is in appeal before us. 11.3 We have heard the rival submissions and perused the material on record. The assessee is operating bank account in the name of his employees which was admitted by the assessee in his sworn statement recorded u/s. 132(4) of the Act which itself is an evidence. The assessee though agreed to treat the account as suppressed receipts, the only plea was that the GP rate is to be considered on peak credit to estimate the income. In our opinion, whenever any unexplained deposits is found in the name of the assessee, then it is the duty of the assessee to explain the source of the same. In the present case, the assessee is not able to lead any evidence on this. The whole deposits is to be considered as income of the assessee since the expenditure relating to the receipts has already been taken care of by the expenditure claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents which is not correct since while Shri Thomas and Shri Sathar had not stated that the credit represents profits from Tristar Investments, the assessee and Shri Thomas have categorically stated that the credits represents proceeds of suppressed sale of K.A. Treads which means the credits appearing in the bank account is in the name of Shri Thomas and Shri Sathar is suppressed sales of M/s. K.A. Treads whereas the credits appearing in Shri Jaffer's account is the income received from the investment made by the assessee with M/s. Hint Pub, Bangalore. The total credit in the Bank account of above three employees, namely Shri Jaffer, Shri Thomas and Shri Sathar as submitted by the assessee is as under: 31.3.06 31.3.07 31.3.08 31.3.09 31.3.2010 Thomas 14,27,795 98,600 5,20,000 Sathar 40,000 8,08,585 11,06,620 8,57,440 6,80,000 Jaffar 2,49,100 9,72,182 6,80,000 Thus for the year under consideration, the Assessing Officer noticed that the bank accounts of Shri Thomas, Shri Sathar and Shri Jaffar were credited with Rs. 5,20,000/-, Rs. 11,06,620/- and Rs. 2,49,100/- respectively. As a matter of fact, according to the Assessing Officer this amount pertains to cash depo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the employees in their statements u/s. 132(4) stated that these accounts were operated in the name of the employees and it is the income of the assessee. Admittedly, in this case, the assessee was not able to show it as trading profit of the assessee and incurring of any expenditure to earn this income. It means that it is concealed income of the assessee and all relevant expenditure relating to this income has already been taken care of in the regular books of account and there is no question of any further deduction out of this. The unaccounted deposit is to be considered as the income of the assessee and not the G.P on it. We do not find any infirmity in the order of the CIT(A) on this issue. Accordingly, this ground of appeal of the assessee is for the assessment year 2008-09 is rejected. 11.9 For the assessment year 2009-10, the total deposits in the accounts of the employees was at Rs. 18,29,621/-. As discussed in earlier assessment years, the addition for the assessment year 2009-10 is rejected. 11.9.1 For the assessment year 2010-11, the addition sustained is Rs. 6,80,000/-. It was stated by the assessee's employee Shri Jaffar that it was the amount received from Hint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the price was fixed by the assessee. The assessee had made payment of a sum of only Rs. 12,63,773/- It was submitted that the Assessing Officer based his findings on the statement of Shri Thomas though given on 5/11/2009, was brought to light when a copy was filed before the High Court in the writ petition. The Ld. AR submitted that the statement is too general and when purchases were from 16 persons and that too only of 11.34 acres for which power of attorney was obtained in his name. It was submitted that the payments were made in 2003. The Ld. AR submitted that it cannot be a case where the entire area was purchased at the same rate. 12.4 On the other hand, the Ld. DR submitted that the retraction statement was made after three year which cannot be acted upon. When the order was passed on the basis of the assessee's manager's statement, it should be sustained. 12.5 We have heard the rival submissions and perused the material on record. Admittedly there is a reference of statement of Shri K.C. Thomas in the assessment order. The Assessing Officer adopted the value of the property at Rs. 1550 per cent on the basis of the statement of Shri K.C. Thomas of 5/11/2009 in whose fav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... denied. Even though the documents impounded from the business premises of the assessee and the business premises of M/s Tristar investments, Bangalore revealed that Shri. K.A. Rauf had invested Rs. 67,00,000/-during the period relevant to the A.Y. 2006-07. The assessee stated that his calculation of profit from the firm was not based on the actual profit earned by the firm but whatever amount is taken by the other partners of the firm during specific intervals the same ratio is to be given to the assessee. For calculating the amount due to the assessee, he deputed his employees at periodical intervals and on going through the business transaction the employees prepared the statement and quantified the amount of each partners. Other partners withdrawal and the bank loan repayment were also taken to account for calculating the share of the assessee. The material seized from the business premises of the assessee (CHN-14/Nilambur/28) was more than that of Tristar Investments. This also confirmed that the assessee had contributed towards this firm based on agreement which is known to the assessee and Shri. Perinchery only. But this being the facts, the assessee's name was not seen in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccording to the Ld. AR in the statement given by Thomas dated 05/11/2009 and 06/11/2009 though he had spoken about Rauf's role in cross examination, he clearly admitted that he was not aware of the cash transactions. According to the Ld. AR, Paul was the person dealing but was not in a position to give assessment year information on dealings with the firm and Rauf. Further, it was submitted that he was not involved in the setting up of the firm and others were in charge. It was submitted that he was not involved in the maintenance of accounts and no money was handed over to him by Rauf nor had he seen a ledger relating to Rauf. It was submitted that Shri Paul was not examined or the statement recorded during the survey and even after the survey, since Shri Paul was indicated to be the person who was looking after the finances etc. he should have been examined. Further, it was submitted that the statement of Shri Thomas cannot take the case of the Department any further since he is totally ignorant about the financial matters. Further according to the Ld. AR, Form 3CB/3CD recovered do not show investment by Rauf, no partnership deed with his name, additional investment by Paul 2. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt by the assessee is not acceptable and the assessee had not shown this investment in the cash flow statement, therefore the investment made by the assessee during the period relevant to the assessment year 200607 is Rs. 67,00,000/- and the same is added to the total income of the assessee. Further, the bank account of Shri Jaffar also shows income received from such investments. Hence we have no hesitation in confirming the addition. Thus this ground of appeal for the assessment year 2006-07 is rejected. 14. The next ground for the assessment year 2007-08 is with regard to investment in M/s. Tristar Investments. For similar reasons as for assessment year 2006-07, the addition of Rs. 3 lakhs for the assessment year 2007-08 is sustained. Thus this ground of appeal for the assessment year 2007-08 is rejected. 15. The next ground for the assessment year 2008-09 is with regard to sustaining of addition of Rs. 33,28,885/- out of the investment in building at Rs. 53,35,885/-. 15.1 The facts of the case are that the during the period 1.3.2005 to 1.4.2008, assessee had constructed a factory and office building at Vazhakad and the same was referred to valuation cell u/s. 142A of the I.T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uer does not appear sound and logically correct. In fact several mitigating facts and circumstances- like the fact that steel/ truss/iron etc. have been purchased second hand from Coimbatore and other places for which due consideration has not been given. In fact, the Report does not indicate the boq for the engineering and structural works against which the value of second hand materials should have been applied. In any event, since the work is yet to be over and admittedly since the valuation report does not indicate the work done upto 31.03.2010 specifically. we feel it is only just and reasonable to consider the investment in building as well as equipments and machinery after the entire work is over." The assessee's contention was not accepted since, the valuation was made only on the basis of materials supplied by the assesses and the valuation officer had reported the period of construction 01.04.2005 to 01.03.2008. Further, the argument of the assessee was that the additional investment made after the date of construction was incorrect since the valuation was made only on the date 30/11/2011 and based on the material supplied by the assessee. Therefore, the difference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also not assigned year-wise investment made by the assessee. The CIT(A) observed that there are numerous factors which have been applied in order to estimate the valuation which cannot be established with accuracy. If the assessee's contention is accepted that the construction of the building was not completed during the reference period to Valuation, according to the CIT(A), the addition made on account of excess valuation would have no basis. Given the over all facts and circumstances of the case, it was found that there are some facts lacking in the valuation report and, at the same time certain facts raised by the assessee during the course of assessment proceedings had not been considered. The CIT(A) found that the assessee had not maintained books of accounts, hence no work-in-progress on yearly basis can be verifiable. The CIT(A) observed that it was only through cash flow statement, the assessee had given the details of cash out flow. In view of the fact that the assessee claimed for spending Rs. 20 lakhs, even after the period of reference for valuation, which had not been considered by the DVO, the same was allowed. However, the CIT(A) confirmed the addition of balanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd if there existed any additional investment, the same should have been assessed only in the hands of the Pvt. Ltd. Co. According to the Ld. AR the assessee is also entitled to have the additional income assessed for the various years to be adjusted in the cash flow while arriving at unexplained investment. 15.5 We have heard the rival submissions and perused the material on record. The assessee had constructed a factory and office building at Vazhakad during the period 1.3.2005 to 1.4.2008. As per the report of the Valuation Office, the total cost of construction was arrived at Rs. 1,67,92,000/-. The assessee declared only a sum of Rs. 1,14,63,115/- as the cost of construction. Thus there was a difference of Rs. 53,28,885/- between the valuation report furnished by the DVO and the cost of construction declared by the assessee. Further, the Ld. AR submitted that the State PWD rates should be applied. If the assessee spent Rs. 20 lakhs after the assessment year 2008-09, then the difference would be only Rs. 14,22,641/- . In our opinion, there is force in the argument of the Ld. AR with regard to the consideration of State PWD rates for valuation of the construction. To that extent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement was only Rs. 1,40,000/- by the assessee which was insufficient to meet his personal expenditure and the investment made in Mahindra Holidays is more than the amount drawn, therefore Rs. 1,73,135/- was added to the total income. 17.2 On appeal, the CIT(A) rejected the contention of the assessee that investment in Mahindra Holidays had been made out of the personal drawings because as per the cash flow statement, the personal drawings was only Rs. 1,40,000/-. Since the addition was based on the analysis of the cash flow statement, following the same discipline, the CIT(A) confirmed the addition of Rs. 1,73,135/- as investment in Mahindra Holidays. 17.3 We have heard the rival submissions. There is no evidence of drawings with reference to this investment. Being so, the addition is sustained. This ground of appeal is rejected. 18. The next ground for the assessment years 2007-08 and 2008-09 is with regard to agricultural lease rent received at Rs. 32,62,500/-. 18.1 The facts of the case are that the agricultural land, purchased in Maharashtra, was leased out to different persons and, for which agreements were made with such cultivators. The assessing officer found that the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e evidence by superceding the other facts and substantial evidence. The Assessing Officer found that there has been no evidence for the assessee to be the owner of the land, as the land was not mutated in his favour. According to the Assessing Officer, there was no break up of the chronological evidence for the receipt of the cash and, at the same time, the land was sold by the original owners to some other person and for which, the assessee is in dispute, and had filed case before the appropriate authorities. The details of such case filing to establish that the assessee was in possession of the land, the land was cultivated under an arrangement of lease and the lease rentals amounted to Rs. 32,62.500/-, according to the Assessing Officer have nowhere been disclosed, despite insistence was placed on the assessee to produce and establish the same, during the appeal proceedings. In view of this, it was held that the claim of agricultural income from the lease rentals of Rs, 32,62,500/- each, for the asst. years 2007-08 and 2008-09, is nothing but an adjustment of figures where the assessee had brought his own cash in the garb of exempted agricultural income, Accordingly, the additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence has been brought out by the assessee. In the absence of the identity of the person from whom the amount has been received, the addition is sustained. This ground of appeal for the assessment year 2007-08 is rejected. 21. Next ground for the assessment year 2007-08 is with regard to loan received from Shri Rahiman at Rs. 10 lakhs. As discussed in the earlier para, there is no evidence regarding the receipt of loan from Shri Rahiman. Being so the addition is sustained. This ground of appeal is rejected. 22. The next ground for the assessment year 2007-08 is the addition of loan Rs. 12.50 lakhs received from Smt. Rajeena. For the same reasons as in the earlier ground, the addition is sustained. Hence, this ground of appeal for the assessment year 2007-08 is rejected. 23. The next ground for the assessment year 2008-09 is with regard to purchase of agricultural land at Vazhakad at Rs. 2,23,000/-. 23.1 The facts of the case are that the addition was made on account of specific document seized for the agreement dated 7th March, 2007 attached to the registered document of the property, purchased by the assessee at Vazhakad @ Rs. 14,000/- per cent from Shri Mohd. Abdu Rahiman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rous bank cheques and signed blank stamp papers to him as security. He was forced to sign two cheques for an amount of Rs. 2.3 crores in the name of the assessee. The amount was received in cash, the oral agreement was to pay interest @ 10% and if he fails, he has to pay penal interest and also revise the interest @ 20% per month on the balance outstanding. He made repayment of about Rs. 2.5 crores to the assessee as on date and all these payments were made in cash and no receipts were given to this effect. In October, 2007, the assessee explained to him that he was liable to pay an amount of Rs. 1.6 crores and explain the manner in which he has worked out the amounts payable fortnightly interest is calculate. He has evidenced his re-payment with the bank withdrawals from October, 2007 to April, 2008. The source for this was the sale proceeds of land and building of M/s. Blue Diamond Theatre, Calicut. When this was pointed out to the assessee, the assessee requested cross examination of Shri Mohanraj. A summon was issued to the assessee to appear for cross examination but Shri Mohanraj could not attend stating health reasons. An affidavit dated 22/12/2011 was signed by Shri U.K. Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d claimed repayments of loan and interst out of three bank accounts maintained with Karnataka Bank, Vysaya Bank and Federal Bank and the repayments were made from October 2007 to April 2008. The CIT(A) noted that unless the fact emanating from the statement of UK Mohanraj is verified with further evidence such as the repayments stated by him should have been verified with his bank account details, there could be no evidentiary value of such statement. Further it was noted that the assessee had demanded cross examination of Shri Mohanraj but was not provided an opportunity by the Assessing Officer. Without verification of facts and allowing cross examination to the assessee, the Assessing Officer came to the conclusion that the assessee gave loan of Rs. 55 lakhs to Shri Mohanraj and also interest income of Rs. 107.45 lakhs for the assessment year 2008-09 and Rs. 64 lakhs for the assessment year 2009-10. Thus the CIT(A) held that the statement of Shri Mohanraj relied upon by the Assessing Officer despite the statement recorded u/s. 132(4) cannot be treated as sufficient evidence to conclude that the sum of Rs. 55 lakhs was given by the assessee as loan to Shri Mohanraj and an interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his mother. Thereafter, he was preoccupied with the ceremonies in connection with the same. The delay in filing these appeals was beyond the control of the assessees herein and it was neither willful nor deliberate and prayed to condone the delay. The Ld. DR did not object to the condonation petition filed by the assessee. 25.1 We have gone through the condonation petition filed by the assesses and affidavit filed by Shri K.A. Rauf on behalf of the assesses herein. In our opinion, substantial justice is of prime importance, expression "sufficient cause" should perceive a liberal construction. In these cases, there was a delay of 77/76 days as the case may be in filing these appeals before this Tribunal. There is sufficient cause for condonation of the delay and when the delay was for short duration, a liberal view should be taken. In our opinion, when there is sufficient cause for not filing the appeals within the period of limitation, the delay has to be condoned. Further, Shri K.A. Rauf has filed affidavit on behalf of the assesses herein, explaining the delay. However, there was no counter affidavit opposing the application of the assessee for condoning the delay. In our opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s u/s. 153A r.w.s. 153C of the Act. Accordingly, we reject this ground of appeals of the assessee for all the assessment years 26.3 The next common ground in these appeals is with regard to addition made towards lease rent from property in Maharashtra as agricultural income. 26.4 The facts of the case are that assessee had shown Rs. 2,50,000/- received from cultivation of agricultural land taken on lease from Mr.Chandrakant Nivrutti Patil. The advocate who notarized the document admitted that the said document was signed for the purpose of keeping a copy and not for producing it before any authority and the same is not legally valid. Being a deed of lease, it should be executed in a stamp paper having required value as per Stamp Act. This was not accepted by the Assessing Officer for the following reasons: 1. The lease agreement do not have any legal validity as same is not executed in a stamp paper. 2. The assessee does not have easement right (Pokkuvarau) in the said property and therefore it is not in the assessee's possession. 3. The credit worthiness of lessee is not proved. 4. Sublease rent was paid in cash. 5. The assessee could not give the name and address of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he time of hearing the same was put before the assessee and the assessee vide letter dated 15/11/2011 clarified that the figures shown in the seized item No. 21 & 22 are made by Shri Rauf. These are the sales of tread rubber or rubber compound by K.A. Treads to Mr. Dhanajayan, Deepak Trading Company and Shri Babu, Suntech Enterprises, Bangalore and that to the best of his knowledge these transactions are reflected in the books of his accounts. But the assessee failed to reconcile these entries with that of the books of accounts and he has shown three interstate sales which is matching with the ledger copy produced at the time of hearing said to be the party's account maintained by the assessee. The Ld. AR could not reconcile the entries with respect to the seized material. The employee of the assessee, Shri K. Jaffar, in the statement recorded at the time of search also confirmed the sales suppression in M/s. K.A. Treads was almost 50% of the sales accounted for the financial year 2007-08. 26.9 On appeal, the CIT(A) considered 10% of GP on the suppressed sales in respect of entire turnover as income of the assessee. Against this the assessee is in appeal before us. 26.9.1 We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee, the CIT(A) confirmed the addition made by the Assessing Officer. 27.3 We have heard the rival submissions and perused the record. In this case, the assessee has not brought on record cogent evidence to show that the said amount has been received from Shri Ziad. In the absence of specific evidence, we are not in a position to accept the genuineness of the claim of the assessee. Hence, this ground of appeals for both the years is rejected. The appeals in ITA Nos. 413 to 416/Coch/2016 are dismissed. ITA Nos. 417 & 418/Coch/2016 : Smt. K.R. Raiza 28. This first common ground in ITA Nos. 417&418/Coch/2016 is with regard to validity of issue of notice u/s. 153A r.w.s. 153C of the Act. 28.1 The facts of the case are that certain investments in the purchase of agricultural land by Shri K.A. Rauf in the name of self and his family members were found during the search. Since there was substantial undisclosed investment in the purchase of property and the owners were different members of the family, the Assessing Officer issued notice u/s. 153A r.w.s. 153C as a direct linkage could be established based on the facts as well as the circumstances. 28.2 On appeal the CIT(A) confirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 132 of the Act and seized books and documents. Therefore the Assessing Officer observed that the assessee's arguments were without knowing and understanding the case covered by clause © of 132(1) and 132(1) (A)(1) of I.T. Act. If the argument of the assessee was correct what is the reason for the increase in total income in the return of income filed by the assessee in response to the notice u/s. 153A(a) from that of original return of income. At the time of hearing the assessee stated that all the investments as per the records and activities have been done by Shri K.A. Rauf, assessee's husband and she is only a partner and director of the business concerns. 29.2 On appeal the CIT(A) observed that the assessee is a director with her husband, Shri K.A. Rauf in K.A. Latex Pvt. Ltd., partner with her husband in M/s. Nilambur Traders and proprietor of M/s. K.A. Treads. The CIT(A) observed that certain documents suggesting investment as well as cash deposits made into the bank account of M/s. K.A. Treads were found and later confirmed at the strength of the seized materials. According to the CIT(A) a linkage was established initially based on certain power of attorney given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer issued notice u/s. 153A r.w.s. 153C of the Act as a direct linkage could be established based on the facts as well as the circumstances. 31.3 On appeal, the CIT(A) confirmed the order of the Assessing Officer on this issue. 31.4 Against this the assessee is in appeal before us. As discussed in para 26.2, we do not find any infirmity in the issue of notice u/s. 153A r.w.s. 153C of the Act and confirm the same. This ground of appeal of the assessee is dismissed. Thus the appeal of the assessee is dismissed. ITA Nos. 419 & 420/Coch/2016 : Nilambur Traders 32. These two appeals filed by the assessee are directed against the order of the CIT(A)-IV dated 31/03/2016 and pertain to assessment years 2009-10 and 2004-05. 32.1 There was a delay of 77 days in filing these appeals before the Tribunal. The assessee has filed a condonation petition accompanied by affidavit stating that the affairs of the firm were looked after by Shri K.A. Rauf, the managing partner of the assessee-firm. It was explained by the assessee in the condonation petition accompanied by affidavit that the delay was due to the illhealth of Shri K.A. Rauf's mother during the month of May, 2016 and fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The repairs and maintenance accounts were seized as provisional trading and Profit and Loss account. Therefore the statement given by the employee was substantiated with the material found. Therefore the inflation of expenditure was quantified at 10% of the gross profit declared before the department. The gross profit shown in the account was Rs. 44,54,253/- and inflated expenditure was quantified at Rs. 4,45,425/- and the same was added to the total income of the assessee. 32.5 The CIT(A) observed that during the course of search, certain paper relating to the working of opening stock, closing stock, purchases, sales and expenses such as wages, allowances food expenses, etc. were found. According to the CIT(A), the AO had considered that the Gross Profit was shown at Rs. 44,54,253/- and 10% of such Gross Profit was treated as inflated expenditure and the same was added to the total income. According to the CIT(A), the assessee's contention was that the AO has no basis for applying the rate of 10% of the Gross Profit to have arrived at the inflated expenditure and at the most, the difference in the particular head of expenses as shown to that of with the amount shown in seized p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cordingly, we confirm the same. This ground of appeal of the assessee in ITA No. 420/Coch /2016 is dismissed. 33. The next ground in ITA No. 419/Coch/2016 is with regard to finding of the CIT(A) that as per CHN/14/Nilambur/25(5), the net profit was at Rs. 37,55,858/-. 33.1 The facts of the case are that at the time of search, profit and loss account of the assessee was seized from the business premises of the assessee (CHN/14/Nilambur/25(5) in which the net profit was shown at Rs. 37,55,858/-. The Assessing Officer found that the assessee failed to reconcile the accounts submitted by the assessee and seized from the business premises of the assessee. The sales value in both the accounts were identical stock value and the purchase value mentioned by the assessee was excess of Rs. 7940/- with that of seized documents. On going through both the statements, it was seen that the assessee had claimed the following expenses: Item As per return of income As per materials seized Food expenses 10,44,665 3,04,414 Vehicle maintenance 17,35,882 13,33,535 Salary 9,29,039 7,99,039 Utensils 75, 793 49,653 The Assessing Officer observed that the assesse had claimed depreciation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 306/Coch/2016: Revenue appeal 34. This appeal filed by the Revenue is directed against the order of the CIT(A)-IV, Kochi dated 31/03/2016 and pertains to the assessment year 2008-09. 34.1 The first ground is with regard to unexplained investment of Rs. 75,50,000/- in the purchase of machinery by M/s. K.A. Reclaims proprietary concern of Smt. K.R. Raiza. 34.2 The facts of the case are that the machinery was actually purchased by the assessee for Rs. 26 lakhs as per purchase bills. The Dy. Director (Engg.) of the Rubber Board visited the premises of the assessee on 12/01/2010 with IT Officers and valued the machinery based on the prevailing market rates and physical condition of the items. The value was fixed at Rs. 101.5 lakhs and the difference assessed in the hands of the assessee. Before finalizing the valuation no opportunity was given nor any opportunity was given before the inspection by the Rubber Board Authority. The assessee was not required to produce the bills and the valuation of the machinery was done under the belief that the purchase is undervalued which was not supported by any material at all. 34.3 The CIT(A) relied on the findings in the case of K.A. Rauf wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected the fact that the machineries are pre-used and imported. The contentions raised by the appellant that appropriate opportunities were not considered by the valuer and when the issue raised before the assessing officer the assessing officer has also followed the valuation report which were got evaluated by the ADIT (Inv). The Assessing Officer's observation that the machineries was not pre-used and not new, is not acceptable because the valuation party did not value the Glove manufacturing unit and they do not have any data on the price of this type of old machinery. 9.6. The assessing officer has rejected the contentions raised by the appellant and has held that the assessee's arguments are subjective and only an afterthought to avoid the tax liability. The machinery was not installed till 14.12.2011, as per letter by the Managing Director of the Company, only the investment appears in the cash flow statement showing the cost of machinery at Rs. 57,09,248/-. 9.7. It is seen that the issue of valuation of machinery appears to have certain lacuna so much so that the appellant's plea have not found proper consideration either at the end of the valuation or at the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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