9911796707
TMI Blog2024 (8) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in these two assessment years marked is having any relevance to for making addition in these two assessment years. If this seized material has no relevance in these assessment years 2011-12 2012-13, in such circumstances, these two assessments are being concluded assessments and these assessments cannot be reopened u/s 153A of the Act. In other words, if the assessee s case falls under below category for these two assessment years, the assessment cannot be reopened u/s 153A of the Act without any seized material found during the course of search action. AO is directed to examine this issue in the light of above observation and decide accordingly. This ground of appea is partly allowed for statistical purposes. Assuming jurisdiction u/s 132(1) of the Act is bad in law as there was no valid satisfaction recorded for conducting search action - In our opinion, this ground cannot be entertained at this stage in view of the insertion of explanation to section 132(1) with retrospective effect from 1.4.1962 by Finance Act, 2017. The said explanation prefers the appellate authorities to go into the reasons recorded by the concerned Income Tax authority for directing the search against th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come of the assessee in these assessment years only on the basis of seized material/incriminating material in the assessment year 2011-12 to 2016-17 and not solely on the basis of statement recorded u/s 132(4) of the Act. More so, assessee has been continuously before the ld. AO as well as ld. CIT(A) requesting to do the assessments on the basis of books of accounts and evidence found during the course of search since the declaration made by assessee during the course of search was lumpsum basis as there was no enough time to verify the correctness of the records which were voluminous. Before us, assessee filed additional evidence, those are admitted as discussed in the earlier para of this order and it is required to be examined by the authorities as they have vital impact on the computation of income of the assessee. Hence, the issue relating to the admission of additional income by the assessee in the returns filed u/s 153A of the Act and addition made by ld. AO while framing assessment u/s 153A of the Act is required to be re-examined in the light of additional evidences filed by the assessee. Approval given u/s 153D of the Act is mechanical - For this purpose, Assessee relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ER PER BENCH: All the appeals by assessee and revenue are directed against different orders of CIT(A) for the respective assessment years noted above. Since the issues in all these appeals is common except for figures, these are clubbed together, heard together and disposed of by this common order for the sake of convenience. ITA Nos. 982 to 987/Bang/2023 in the case of M/. John Distilleries Pvt. Ltd. for the AYs 2011-12 to 2016-17: 2. First, we will take up ITA Nos. 982 to 987/Bang/2023 for the assessment years 2011-12 to 2016-17. 2.1 These appeals are directed against common order of CIT(A) for the assessment years 2011-12 to 2017-18 dated 31.12.2018. Since the issues in these appeals are common, these are clubbed together, heard together and disposed of by this common order for the sake of convenience. 3. The assessee filed common additional ground in ITA Nos. 984, 986/Bang/2023 for assessment years 2013-14 2015-16 under Rule 11 of the I.T. Act along with petition as follows: Ground No. 9A: Without prejudice to the above, there was no transaction with the said contractors during the Previous Year 201213 and hence no addition was called for in this AY and thus the addition made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 17.12.2018 11-11 5 Revised Computation of Income 12-18 6 Copy of bills and vouchers for expenditure under the head Promotion-Sales schemes and discounts expenses . 19-212 7 Copy of bills and vouchers for expenditure under the head Carriage outward expenses . 213-2741 (iii) ITA Nos - 984/BANG/2023 A.Y 2013-14 Application under Rule 29 of Income Tax Appellate Tribunal Rules, 1962 INDEX Sl. No Particulars Page No. 1 Application u/r 29 of ITAT Rules, 1962 1-6 2 Annexure-A/1: Letter dated. 24.07.2017 7-7 3 Annexure-A/2: Letter dated 25.10.2018 8-10 4 Annexure-A/3: Letter dated 17.12.2018 11-11 5 Revised Computation of Income 12-19 6 Copy of bills and vouchers for expenditure under the head Promotion-Sales schemes and discounts expenses . 20-312 7 Copy of bills and vouchers for expenditure under the head Carriage outward expenses . 313-1383 (iv) ITA Nos - 985/BANG/2023 A.Y 2014-15 Application under Rule 29 of Income Tax Appellate Tribunal Rules, 1962 INDEX Sl.No Particulars Page No. 1 Application u/r 29 of ITAT Rules, 1962 1-6 2 Annexure-A/1: Letter dated. 24.07.2017 7-7 3 Annexure-A/2: Letter dated 25.10.2018 8-10 4 Annexure-A/3: Letter dated 17.12.2018 11-11 5 Revised Computation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as done without valid basis and without affording enough time to properly verify from the concerned persons and records which were voluminous. The persons who were queried by the Team were forced to give admissions when they were under tremendous stress and pressure. 7.2 Later on during the post search proceedings, the Management was made to give entity wise head-wise break of the income declared during search by declaring the same under two heads, namely, (1) Promotion Sales schemes and discounts expenses and (2) Carriage outward expenses. In the said statement recorded u/s 131(1A) of the Act in the office of the investigation wing of the I T Department, the CMD of the Company had categorically stated that the company has maintained all the bills and vouchers related to Promotion Sales expenditure as well as Carriage outward expenditure. However he was made to state that to the extent of the amount mentioned therein, the company was then unable to produce the bills / vouchers and hence the same may be disallowed. The said declaration was obtained in in lieu of the declaration obtained from the management on 4th and 7th November 2016. The final declaration so obtained from the MD i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) has also stated that no retraction statement, no revised computation and no revised return was filed by the appellant without appreciating this fact the assessee has been pleading to examine the books of accounts and all the bills and vouchers and accordingly give credit. 7.5 He submitted that the authorities below have not heeded to the request of the appellant to examine the books of accounts and bills and vouchers in respect of the additional income offered in the ITRs under protest and to exclude the same from total income. Thus, the appellant was not allowed opportunity to substantiate the expenses genuinely incurred for the purpose of business and duly supported by the underlying documents like bills and vouchers. It is submitted that this is a case which is covered by the situations visualized under Rule 29 of the ITAT Rules, 1963. The authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence on the subject disallowances included under protest in the ITR. This is also a case where this Hon ble Tribunal would require the additional evidence to enable it to pass order. This is also a case where the additional evidences are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e whole year for verification. 7.9 He prayed that the above documents may kindly be admitted in the interest of justice and fair play. If permitted the Appellant would also submit the balance documents for the entire year for verification. The company follows the system wherein the bills and vouchers of a particular month relating to all kinds of expenditure are bound together in to bound books at the end of the year and stored in godowns. Bills and vouchers etc of a particular head of expenditure cannot be separately taken out without breaking the bound books with a risk of the left margins getting torn. Hence the Appellant has, on sample basis, broken open few volumes of such book for each year for the period as above and producing the same for admission as additional evidence with a prayer to allow production of balance documents of the year on being convinced of the bona fide submission of the Appellant in the interest of justice. 7.10 He submitted that the non-submission of the present additional evidences before the AO or CIT(A) were not willful nor intentional. In this regard the appellant respectfully relies upon the ratio of the decision of the Hon ble High Court of Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter dated 24.07.2017 (filed on 31.7.2017) written to the DCIT Central Circle 1(1), Bangalore submitted that the additional income has been offered and tax has been paid under protest and in case if they are in a position to explain the bona fides of expenses, the benefit should be given to them. For clarity, we reproduce the said letter as follows: 9.1 Further, the assessee on 24.10.2018 (filed on 25.10.2018) written one more letter showing the details of expenditure which is kept on record. The assessee filed one more letter before DCIT Central Circle-1(1), Bangalore on 17.12.2018 filed on (18.12.2018), stating that in the final declaration Shri Paul P. John agreed for certain disallowances under the head trade discounts, repair maintenance and carriage outwards as they were unable to produce the bills during the time of search and requested extra time which were not provided. Now they are in a position to provide the same and requested the department to check the same and give them necessary credit/refund of taxes paid. On failure to get any relief from ld. AO on this count, the assessee also taken up this issue before ld. CIT(A) in all assessment years. However, the ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company of the Group, the search operation was carried out even in the Office premises of the Assessee at Bengaluru. During the course of search proceedings at M/s. John Distilleries Pvt. Ltd., Bangalore, certain incriminating documents/materials pertaining to assessee were found and serzed. Statements were recorded under oath from the employees, the key persons and the CMD of the Assessee Company. Notice u/s. 153A was issued on 29.06.2017 for the AYs 2011-12 to 2016-17. In response to the notice u/s. 153A, the assessee filed the return of come for the relevant AYs, the details of which are as under: 10.2 The details of undisclosed income as per the return of income filed by the assessee in response to notice u/s 153A, f r the AYs 2011-12 to 2016-17 are as under: 10.3 Pursuant to the issue of notice u/s 153A, the Income assessed in the orders passed by the AO u/s 153A r.w.s. 143(3) r.w.s. 153D, dated 31.12.2018 for the AYs 2011-12 to 2016-17 and u/s 143(3) r.w.s.153D 2017-18 dated 31.12.2018, are as under: 10.4 The additions made by the AO in the assessment order for the relevant AYs on various issues on which the Assessee has filed appeals, are as under: Against this assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in regular assessment u/s 143(3). 3. Return of Income filed by the assessee return processed and intimation issued u/s 143(1) Time limit for issue of notice u/s 143(2) not expired. Since intimation is not akin to assessment and time limit for notice u/s 143(2) hs not expired, even though return has been processed, it will be case where return has not attained finality. Consequently, AO would have authority/jurisdiction to assess the entire income, similar to jurisdiction in regular assessment u/s 143(3). 4. Return of income filed by the assessee. Intimation passed or not u/s 143(1) and time limit for issue of notice u/s 143(2) has expired. Return of income of the assessee shall be treated as having being accepted and attained finality. AO loses jurisdiction to verify the return of income Since, no assessment would be pending there would be no abatement of any proceedings. Accordingly, the scope of assessment u/s 153A would be restricted to incriminating material found during the course of search. 5. Notice u/s 143(2) issued and assessment pending u/s 143(3) Pending regular assessment proceedings would abate and would converge/merge in proceedings u/s 153A. Accordingly the scope of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discounts expenses. She drew our attention to the statement recorded from Sri. Paul P John, Chairman of M/S. JD L on 06.03.2017 and relevant portion of the statement is reproduced below: 14.1 She submitted that the assessee company has offered a sum of Rs. 2,23,19,384/- in its return of income as admitted during the search. From above it is clear case of concealment of income by the assessee and hence penalty proceedings u/s 271(1)(c) of the Act is initiated separately. 14.2 Regarding bogus carriage outward expenses the ld. D.R. submitted that during the course of the search, it was noticed that JDPL was inflating the carriage outwards to certain extent as the same modus followed under the head of sales promotion expenses. During the course of the search the same has been confronted to Sri Krishnan, Director of JDPL on 3.11.2016 and she drew our attention to the relevant portion of the statement which is reproduced below: 14.3 The same facts were confronted to the Chairman of M/s. JDPL, Sri Paul P. John on 27.2.2017 and on 6.3.2017 and he admitted that M/s. JDPL had not maintained the proper bills and vouchers for carriage outwards. Statement was recorded from Sri Paul P John on 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vt. Ltd., Bangalore 3.11.2016 and admitted that return income earned out of trucks owned by JDPL has not accounted in the books of accounts. She drew our attention to the relevant portion of the statement which is reproduced below: 14.9 She submitted that like Sri. Srinivasan, CFO of M/S. JDPL Sri. Krishnan, Director of JDPL has been admitted that, income earned from return trip transport income was not properly accounted in the books of accounts. She drew our attention to the relevant portion of Sri Krishnan's statement which is reproduced below: 14.10 She submitted that the director of the company Sri. Paul P John did not accept that income earned out of return trips of trucks was not accounted. However, the facts are different from the statement recorded from Sri. Mohan Duraiswamy, Sri. Mathew, Sri. Srinivasan, Sri. N Krishnan of M/S. JDPL. Considering the above facts, it is understood that Rs. 8 lakhs per month was being earned from these unaccounted transport services. 14.11 She submitted that it could be seen from the profit and loss account enclosed to the return of income filed by the assessee that the assessee was offering certain incomes under the head other income. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 982 983/Bang/2023 is partly allowed for statistical purposes. 15. Next ground in all these assessee s appeals is with regard to assuming jurisdiction u/s 132(1) of the Act is bad in law as there was no valid satisfaction recorded for conducting search action. In our opinion, this ground cannot be entertained at this stage in view of the insertion of explanation to section 132(1) with retrospective effect from 1.4.1962 by Finance Act, 2017. The said explanation prefers the appellate authorities to go into the reasons recorded by the concerned Income Tax authority for directing the search against the assessee. This view is fortified by Hon ble Karnataka High Court in the case of Pratibha Jewellery House Vs. CIT 88 taxmann.com 94 (Karn.), wherein held as follows: That even the law has been amended by insertion of the aforesaid Explanation by Parliament in Section 132 of the Act by the Finance Act, 2017 with retrospective effect from 1.4.1962. That Explanation also prohibits the Appellate Authorities to go into the reasons recorded by the concerned Income Tax Authority for directing Search against the assessee or tax payer. (iii) That this Amendment came after both, ITAT passed the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irmation of additional income offered in return u/s 153A of the Act under protest: (i) Inflated sales and promotion expenses, (ii) Bogus carriage expenses, (b) Addition made in the assessment order: (i) Undisclosed income from transport business, (ii) Undisclosed income from bogus contractors, (iii) Inflated bogus purchase and inflated transport expenses (c) The additional ground is that there is no transaction with the said contractors during the assessment year 2013-14 and 2015-16 and hence no addition called for in these assessment years. 18.1 The ld. A.R. submitted that there was no incriminating material found during the course of search action. The ld. AO exclusively relied on the statement recorded u/s 132(4)/131 of the Act from the employees as well as from the MD of the assessee company, as such, the assessee retracted the same before the ld. AO and also offered the additional income not produced which shall be deleted. Further, it was submitted that even otherwise, assessee could produce all the necessary bills, vouchers and receipts in support of the various claims of expenditure made in the books of accounts of the assessee. For this purpose, he relied on various judgem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Ld DR, the evidences found are self-speaking, self- explanatory, unambiguous and incriminating against the appellant. explanation offered by the appellant justifies the claim and does not stand in the way of the evidences found and the assessment made in this regard. 19.2 Further, she relied on the following case laws: (i) Judgement of Hon ble Supreme Court of India in the case of Video Master Vs. JCIT reported in (2015) 378 ITR 374 (SC), wherein held as under: A search and seizure operation was carried on at premises of the assessee firm and others where in partner of the assessee disclosed certain undisclosed income. Accordingly, an addition was made to the income of the assessee. The Tribunal held that statement made by partner could be used as evidence and accordingly upheld the assessment order. The High Court dismissed appeal of the assessee. Held that it is not possible to say that this is a case of no evidence at all inasmuch as evidence in the form of the statement made by the assessee himself and other corroborative material are there on record. (ii) Judgement of Hon ble High Court of Kerala in the case of CIT, Kozhikode Vs. O. Abdul Razak reported in (2013) 350 ITR 71 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an impossible burden on the Assessing Officer, having regard to the observations of the Supreme Court that the assessee cannot be permitted to take advantage of his own illegal acts, that it was his duty to place all facts truthfully before the assessing authority, that if he fails to do his duty She cannot be allowed to say that assessing authority failed to establish suppression of income, that the facts are within his personal knowledge and therefore it was the burden of the assessee to prove that there was no suppression. Thirdly, the Tribunal has stated that there was no corroborative material to substantiate the contents of the loose papers found during the search. We are not impressed by this reason at all. The papers are not denied or disputed by the assessee. The CIT (Appeals) has found that the partners of the assessee firm had admitted to the practice of suppressing the profits. The papers themselves show two different rates, one higher and the other lower and on comparison with the sale bills it has been found that the sale bills show the lower rate and these findings have not been denied by the assessee. The Tribunal, therefore, erred in looking for some other corrobor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e document within the meaning of explanation under sub-section 4 of section 132 of the Act. 20. We have heard the rival submissions and perused the materials available on record. The lower authorities made the addition by observing as under: As seen from the above, during the course of search action, statement was recorded from Shri Paul P. John on 27.2.2017 and 6.3.2017and he has admitted that assessee has not maintained proper bills and vouchers for the promotion of sales schemes and discount expenses and on 6.3.17 as answer to question No. 40, he submitted that total expenditure incurred from assessment years 2010-11 to 2016-17 is as follows: 20.1 Out of this, he agreed that the following expenditure for these assessment years to be disallowed: 20.2 Further, vide statement recorded from Shri Krishna, Contractor of the assessee company on 3.11.2016 admitted in question No. 6 that assessee is engaged in inflating carriage outward expenditure under head sales promotion expenses in these assessment years. This has been confirmed by Paul P. John in his statement recorded on 27.2.2017 and 6.3.2017 as answer to question No. 41 20.3 Further, there was seized material marked as A/JDPL/12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139. (b) Assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years; Provided further that assessment or reassessment, if any relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate. (2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) of section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to subsection (1), shall stand r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has offered certain additional income in respect of issue raised before us and assessee prayed before us that the assessment in the case of assessee to be completed on the basis of audited books of accounts and not on the basis of admission or offer made in the course of search action vide statement recorded u/s 132(4)/131 of the Act. 20.11 In our opinion, these additions cannot be based alone on statement recorded u/s 132(4) of the Act, it should be corroborated by seized material/incriminating material suggesting impugned additions. Now we will consider various decisions for the above proposition. 20.12 In the case of CIT Vs. Dr. N. Thippa Setty (322 ITR 525) (Karn.), the jurisdictional High Court has held as under: Held, dismissing the appeals, that it was clear that the statements made by the assessee under section 132(4) of the Act were retracted not once but twice and that the Department had accepted the retraction. No cogent and valid reasons had been assigned by the Assessing Officer for reopening the assessment. There were no good or sufficient reasons for reopening of the assessment under section 148 of the Act against the assessee. 20.13 Further, the ld. AO can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also of the view that from the statement recorded at such odd hours cannot be considered to be a voluntary state ment, if it is subsequently retracted and necessary evidence is led contrary to such admission. Hence, there is no reason not to disbelieve the retrac tion made by the Assessing Officer and explanation duly supported by the evidence. We are, therefore, of the view that the Tribunal was not justified in making addition of Rs. 6 lakhs on the basis of statement recorded by the Assessing Officer under section 132(4) of the Act. The Tribunal has com mitted an error in ignoring the retraction made by the assessee. [Emphasis supplied] 22. Further, the position with respect to whether a statement recorded under Section 132(4) of the Act could be a standalone basis for making assessment was clarified by this Court in the case of CIT v. Harjeev Aggarwal2, wherein, it was held that merely because an admission has been made by the assessee during the search operation, the same could not be used to make additions in the absence of any evidence to corroborate the same. The relevant paragraph of the said decision is extracted herein below: - 20. In our view, a plain reading of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al grounds raised by the assessee in the case of M/s Pavitra Realcon Pvt. Ltd. And M/s Delicate Real Estate Pvt. Ltd. are accepted. Since the assessee succeeds on this legal ground, we refrain ourselves from adjudicating the issue on merit as far as these two cases are concerned. 25. Also, the Supreme Court in the case of CIT v. Abhisar Buildwell (P) Ltd., has clarified that in case no incriminating material is found during the search conducted under Section 132 of the Act, the AO will have no jurisdiction to make an assessment. The relevant paragraph is reproduced herein below: - 36.4. In case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/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 132-A of the 1961 Act. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the condi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision while speaking of AYs' falling within the block of six AYs' or for that matter all years forming part of the block of ten AYs', appears to have been put in place to cover all possible contingencies. The aforesaid provisions clearly appear to have been incorporated and made applicable both with respect to Section 153A as well as Section 153C ex abundanti cautela. Which however takes us back to what had been observed earlier, namely, the existence of the power being merely enabling as opposed to a statutory compulsion or an inevitable consequence which was advocated ***** 56. We also bear in mind the pertinent observations made in RRJ Securities when the Court held that merely because an article or thing may have been recovered in the course of a search would not mean that concluded assessments have to necessarily be reopened under Section 153C and that those assessments are not liable to be revised unless the material obtained have a bearing on the determination of the total income. This aspect was again emphasised in para 38 of RRJ Securities with the Court laying stress on the existence of material that may be reflective of undisclosed income being of vital impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ys' consequent to the addition of the stipulation of relevant assessment year and which was defined to mean those years which would fall beyond the six year block period but not later than ten AYs'. The block period for search assessment thus came to be enlarged to stretch up to ten AYs'. The 2017 Amending Act also put in place certain prerequisite conditions which would have to inevitably be shown to be satisfied before the search assessment could stretch to the relevant assessment year . The preconditions include the prescription of income having escaped assessment and represented in the form of an asset amounting to or likely to amount to INR 50 lakhs or more in the relevant assessment year or in aggregate in the relevant assessment years . C. Section 153C, on the other hand, pertains to the nonsearched entity and in respect of whom any material, books of accounts or documents may have been seized and were found to belong to or pertain to a person other than the searched person. As in the case of Section 153A, Section 153C was also to apply to all searches that may have been undertaken between the period 01 June 2003 to 31 March 2021. In terms of that provision, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... putation of the six AYs' hinges upon the phrase immediately preceding the assessment year relevant to the previous year of search, the ten year period would have to be reckoned from the 31st day of March of the AY relevant to the year of search. This, since undisputedly, Explanation 1 of Section 153A requires us to reckon it from the end of the assessment year . This distinction would have to necessarily be acknowledged in light of the statute having consciously adopted the phraseology immediately preceding when it be in relation to the six year period and employing the expression from the end of the assessment year while speaking of the ten year block. [Emphasis supplied] 29. It is thus seen that in order to determine block of six AYs, one must first identify the FY in which the search occurred, leading to the identification of the AY relevant to the previous year of the search. The block of six AYs will then be those immediately preceding the AY relevant to the search year. For a search assessment under Section 153C of the Act, the only difference is that the previous year of the search is replaced by the date or year in which the seized books of accounts, documents, and asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the adjudicating authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the adjudicating authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the adjudicating authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross- examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their exfactory prices remain static. It was not for the Tribunal to have guesswork as to for what purposes the appellant wanted to crossexamine those dealers and what extraction the appellant wanted from them. [Emphasis supplied] 32. Additionally, the Supreme Court in the case of State of Kerala v. K.T. Shaduli Grocery Dealer2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -B. Return of income, etc., not to be invalid on certain grounds. No return of income, assessment, notice, summons or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act. 34. Reliance can also be placed upon the decision in the case of CIT v. Micron Steels P. Ltd.11, whereby, it was held that the jurisdictional defects cannot be cured under Section 292B of the Act and they render the entire proceedings null and void. 35. In the present case, it is seen that the Revenue has failed to allude to any steps which were taken to determine that the seized material belonged to the respondent-assessee group. Notably, the satisfaction note has also been prepared in a mechanical format and it does not provide any details about the incrimin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds of the applicant firm on the basis of these documents. The petitioner, Common Cause, impugned the orders before the Hon ble Supreme Court. Dismissed the petition Supreme Court clarified that the evidence that had surfaced was not credible and cogent. The Attorney General contended that documents which have been filed by the Birla as well as Sahara Group are not in the form of Account books maintained in the regular course of business. They are random sheets and loose papers and their correctness and authenticity even for the purpose of income mentioned therein have been found to be unreliable having no evidentiary value, by the concerned authorities of Income Tax. Analysing the veracity of the evidences procured from the companies, the Supreme Court, relied upon the ratio laid in V.C. Shukla case and observed that the entries in loose sheets of papers are not in the form of Books of Accounts and has held that such entries in loose papers/sheets are irrelevant and not admissible u/s 34 of Indian Evidence Act, and that only where the entries are in the Books of Accounts regularly kept depending on the nature of the occupation, that those are admissible. 20.15 Tribunal in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. In the above facts and circumstances there is no reason to disbelieve the statement given by the assessee that the payments were given for meeting petty cash or miscellaneous expenses. The Ld.CIT(A) following the decisions of Hon ble Jurisdictional High Court as well as this Tribunal held that on the basis of notings and loose sheets found from third parties and the statement of third parties, the additions cannot be made without having corroborative / independent evidences. For the sake of clarity and convenience, we extract relevant part of the order of Ld.CIT(A) in para No. 6.2 of page No. 13 which reads as under: 6.2. I have considered the assessment order and submissions of the appellant. It is seen that the addition made by the AO is solely based on the social media (whatsapp) messages exchanged between the appellant and Mr. Anil Kumar, an employee of M/s Navaratna Estates. A statement u/s.132 recorded from Mr. L, Anil Kumar during the course of Search during which Mr. L. Anil Kumar was questioned and he explained the nature and 'details of messages exchanged by him with the appellant. The messages contain details of transactions in digits. Those were explained to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dismissed. 20.16 In the light of the above decisions, statements recorded u/s 132(4) of the I.T. Act, 1961 solely cannot constitute as incriminating material so as to make these additions. 20.17 The Hon ble Supreme Court in Andaman Timber Industries v. Commissioner of Central Excise, 281 CTR 241 (SC) held as follows:- Not allowing the assessee to cross-examine the witness by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovide to support further conclusions to be deduced from them, which conclusions may themselves be conclusions of fact and such inferences from facts proved or admitted could be matters of law. The court would be entitled to intervene if it appears that the fact finding authority has acted without any evidence or upon a view of the facts, which could not reasonably be entertained or the facts found are such that no person acting judicially and properly instructed as to the relevant law would have come to the determination in question. The High Court treated this finding of the Tribunal as a mere finding of fact and recognised this position in effect but went wrong in applying the true principles of interference with such findings of fact to the present case. Really speaking the Tribunal had not indicated upon what material it held that Rs. 30,000 should be treated as secret profit or profits from undisclosed sources and the order passed by it was bad. The assessee had furnished a reasonable explanation for the possession of the high denomination notes of the face value of Rs. 61,000 and there was no justification for having accepted it in part and discarded it in relation to a sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officers. The Assistant Director of Investigation examined him on August 4, 1987, and in reply to question No. 2 in that deposition he confirmed that he was a dealer in lubricating oil since 1977. In reply to question No. 3, he confirmed having been assessed to income-tax. Again, in reply to question No. 4, he explained that he used to purchase lubricating oil from different garages as well as through various brokers. Such lubricating oil was processed by him in his factory for sale. All payments were received by him through account payee cheques. In reply to question No. 5, he stated that he had seven full-time employees whose names are mentioned by him. He also claimed to have maintained books of account like sales books, purchase books, cash books and sale bills. In reply to question No. 18, he, on his own, stated that his big customers were the Reliance Oil Mills and Eastern Commercial Enterprises, the assessee, in the present reference. As for his cash withdrawals, he explained that his business required ready cash for purchase of raw materials which explained his large drawings of cash from the bank. Learned counsel then cited a host of decisions to bring home the point that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the department from employees cannot be considered as a reliable unless it is substantiated. 20.22 Reliance on this incomplete statement cannot be appreciated as held by the Hon ble Supreme Court in the case of Kishinchand Chellaram v. CIT, 125 ITR 713 (SC) as follows:- Held, reversing the decision of the High Court, (i) on the facts, that the two letters dated February 18, 1955 , and March 9, 1957 did not constitute any material evidence which the Tribunal could take into account for the purpose of arriving at the finding that the sum of Rs.1,07,350 was remitted by the assessee from Madras, and if these two letters were eliminated, there was no material evidence at all which could support its finding. The statements of managers in those two letters were based on hearsay, as in the absence of evidence, it could not be taken that he must have been in charge of the Madras office on October 16, 1946, so as to have personal knowledge. The department ought to have called upon the manager to produce the documents and papers on the basis of which he made the statement and confronted the assessee with those documents and papers. It was true that proceedings under the income-tax law were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrary and in this behalf, placed great emphasis on the judgment of the Supreme Court in GOETZE's case. A perusal of the said judgment would show that the issue which arose for consideration before the Supreme Court, was, as to whether a claim for deduction could be made by way of a letter before the Assessing Officer, if, it did not form part of the original return. The Supreme Court ruled and, while doing so, to our minds, carefully noted that, though the Assessing Officer did not have the power to entertain the claim for deduction made after the return was filed, otherwise than by filing a revised return, it did not exclude the power of the Tribunal to consider the claim in exercise of its appellate power under Section 254 of the Act. This aspect of the matter is quite clearly brought to light in the operative paragraph of the judgment, i.e., paragraph 4. 11. 1. For the sake of convenience, the said observations are extracted hereafter: ''4. The decision in question is that the power of the Tribunal under S. 254 of the IT Act, 1961, is to entertain for the first time a point of law provided the fact on the basis of which the issue of law can be raised before the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rders thereon as it thinks fit. The power of the Tribunal in dealing with appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, we do not see any reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of that item. We do not see any reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner of Income-tax (Appeals). Both the assessee as well as the Department have aright to file an appeal/cross objections before the Tribunal. We fail to see why the Tribunal should be prevented from considering questions of law arising in assessment proceedings although not raised earlier. 12.3 In the case of Jute Corporation of India Ltd. v. CIT (1991) 187 ITR 688, this court, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Madras) and, in the judgment rendered in: T.C. (A) No. 878 of 2014 dated 18.11.2014, titled CIT vs. Malind Laboratories P. Ltd. As a matter of fact, the Delhi High Court has also, in two separate judgments, come to the same conclusion. These judgments are rendered in: CIT vs. Sam Global Securities Ltd., (2013) 38 taxmann.com 129 (Delhi) and CIT vs. Jai Parabolic Springs Ltd., (2008) 306 ITR 42 (Delhi). 12.4. Furthermore, a Division Bench of the Bombay High Court has also taken the same view in the judgment rendered in CIT vs. Pruthvi Brokers Shareholders P. Ltd., (2012) 349 ITR 336 (Bom.). The issue, with which, the Bombay High Court was grappling, was, that a claim for deduction under Section 43B of the Act had not been made qua the relevant assessment year in the original return, but was made via a letter. The Division Bench of the Bombay High Court held even while assuming and, in that sense, accepting the argument of the Revenue, that though, an amendment to the original return could not be made by filing a letter - it would be open to the appellate authorities to consider the claim and adjudicate upon the same. In this behalf, the Bombay High Court made the following observati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n disposing of such an appeal the Appellate Assistant Commissioner may, in the case of an order of assessment, confirm, reduce, enhance or annul the assessment; under clause (b) thereof he may set aside the assessment and direct the Income Tax Officer to make a fresh assessment. The Appellate Assistant Commissioner has, therefore, plenary powers in disposing of an appeal. The scope of his power is co-terminus with that of the Income-tax Officer. He can do what the Income tax Officer can do and also direct him to do what he has failed to do.(emphasis supplied) The above observations are squarely applicable to the interpretation of Section 251(1)(a) of the Act. The declaration of law is clear that the power of the Appellate Assistant Commissioner is coterminus with that of the Income Tax Officer, if that be so, there appears to be no reason as to why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the Income Tax Officer. No exception could be taken to this view as the Act does not place any restriction or limitation on the exercise of appellate power. Even otherwise an Appellate Authority while hearing appeal against the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame could not have been raised earlier for good reasons. The satisfaction of the Appellate Assistant Commissioner depends upon the facts and circumstances of each case and no rigid principles or any hard and fast rule can be laid down for this purpose. [emphasis supplied] 17. The underlined observations in the above passage do not curtail the ambit of the jurisdiction of the appellate authorities stipulated earlier. They do not restrict the new/additional grounds that may be taken by the assessee before the appellate authorities to those that were not available when the return was filed or even when the assessment order was made. The sentence read as a whole entitles an assessee to raise new grounds/make additional claims :- if the ground so raised could not have been raised at that particular stage when the return was filed or when the assessment order was made.... or if the ground became available on account of change of circumstances or law 18. The appellate authorities, therefore, have jurisdiction to deal not merely with additional grounds, which became available on account of change of circumstances or law, but with additional grounds which were available when the return was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see for deduction under Section 35 B of the Act without examining the facts of the case. The assessee, evidently, had neither made a claim before the ITO nor the AAC nor, had he, furnished particulars of the expenditure incurred by it. It is in this context that the Supreme Court observed that the onus of proving facts and obtaining the benefit of a deduction lay on the assessee. It was further observed that since the assessee failed to prove its claim before the ITO or the AAC, the Tribunal could not have allowed the claim on assumption of facts. 15. As indicated above, the ratio on the said judgment is entirely different and therefore, has no applicability to the facts of the instant case. 16. Similarly, the judgment of the Allahabad High Court in the matter of G.S. Rice Mills is distinguishable, inasmuch as the assessee had neither made a claim before the ITO nor was any material placed on record in support of the claim. The High Court, in this context, held that the Tribunal was not justified in entertaining the claim made under Section 80G of the Act and thereupon, issuing a consequent direction to the ITO to examine the same on merits. 16. 1. As would be evident from the narr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome the assessee had made claim on account of bad debts written off for Rs. 96,35,224/-. During the course of assessment it was found by the assessee that the assessee had by mistake claimed lesser amount on account of bad debts, and therefore, it made further claim on account of bad debts written off of Rs. 40,81,493/- u/s. 36(1)(vii) of the Act. The additional claim made by the assessee was rejected by the AO in view of the judgment of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. v. CIT, 284 ITR 323. Being aggrieved, the assessee filed an appeal before the Tribunal, wherein the claim of the assessee on account of bad debts made during the course of the assessment proceedings was allowed on the ground that the aforesaid judgment of the Hon'ble Supreme Court was not applicable on the appellate authority. The CIT(A) also relied 3 M/s. CMS Securitas Ltd. upon the circular issued by the Central Board of Direct Taxes No. 14 dt. 11.4.1955, wherein it was guided by the Board to the revenue officers of the Income Tax Department that they must not take advantage of the ignorance of the assessee and that it was one of the duties of the officers to assist the tax pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave first decided the question of entertainability of the assessee's higher claim of depreciation by a letter and not by a revised return, before deciding the merits of the claim. In Goetze (India) Ltd. v. CIT (2006) 204 CTR (SC) 182 : (2006) 284 ITR 323 (SC), the Supreme Court held that the assessee can make a claim for deduction, which has not been claimed in the return, only by filing a revised return within the time allowed. In the same decision, it was made clear that the power of the Tribunal to admit an additional ground under s. 254 is not affected by its decision. It was however clarified that the case was concerned with only the power of the assessing authority and not the appellate authority. Under s. 250(5), the CIT(A) has the power to allow the appellant to go into any ground of appeal not specified in the grounds of appeal if he satisfied that the omission of the ground from the form of appeal was not willful and unreasonable. Dealing with such a power, the Bombay High Court in CIT v. Prabhu Steel Industries (P) Ltd. (1988) 171 ITR 530 (Bom), held that where a claim for special deduction was made by the assessee not in his return but in the course of the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sputed by ld. DR that the assessee has actually written off in the assessment year under consideration as bad debts of Rs. 1,87,70,011/-. The Honble Apex Court in the case of T.R.F. Ltd. V/s CIT (2010) 323 ITR 397 (SC) has held that w.e.f. 1-4-1989, it is enough if bad debt is written off as irrecoverable in accounts of assessee to satisfy the condition of Section 36(1)(vii) of the Income-tax Act, 1961 . In view of the above amendment w.e.f. 1-41989 the assessee is entitled to claim deduction as it would satisfy the purpose of the Act. In view of above, in the facts of case, we uphold the order of ld. CIT(A) and reject ground of appeal taken by the department. Hence, appeal of the department is dismissed. 6. We have gone through the aforesaid judgment of the Tribunal and other judgments relied upon by the Tribunal in its order. The claim on account of bad debts written off is now settled on the basis of judgment of the Hon'ble Supreme Court in the case of T.R.F Ltd. v. CIT, 323 ITR 397. There is no dispute on facts that bad debts have been written off. Thus, as per law, the assessee is undisputedly eligible for the claim. The only hurdle created by the AO was that since the cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d wrongly taken while filing the return. Quite apart from it, it was incumbent on the income-tax department to find out whether a particular income was assessable in the particular year or not. Merely because the assessee wrongly included the income in its return for a particular year, it could not confer jurisdiction on the department to tax that income in that year even though legally such income did not pertain to that year. Therefore the income from dividend was not assessable during the assessment year 1958-59, but it was assessable in the assessment year 1953-54. It could not, therefore, be taxed in the assessment year 1958-59. 8. Further reliance is placed by us on another judgment of Hon‟ble Gujarat High Court, in the case of, S.R. Koshti 276 ITR 165 (Guj) in which relief was granted to assessee with following observations: The authorities under the Act are under an obligation to act in accordance with law. Tax can be collected only as provided under the Act. If an assessee, under a mistake, misconception or on not being properly instructed, is over-assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. We do not see any reason to restrict the power of the Tribunal under s. 254 only to decide the grounds which arise from the order of the CIT(A). Both the assessee as well as the Department have a right to file an appeal/cross-objection before the Tribunal. We fail to see why the Tribunal should be prevented from considering questions of law arising in assessment proceedings although not raised earlier. 15. Reference may also be made to Gedore Tools (P) Ltd. vs. CIT (2000) 161 CTR (Del) 472 : (1999) 238 ITR 268 (Del), wherein the apex Court decision in National Thermal Power Co. Ltd. (supra) has been followed. 16. In the case of Jute Corporation of India Ltd. vs. CIT (1990) 88 CTR (SC) 66 : (1991) 187 ITR 688 (SC) while dealing with the powers of the AAC, the Supreme Court observed that : An appellate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations, if any, prescribed by the statutory provisions. in the absence of any statutory provision, the appellate autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, we find that the ld. CIT(A) has rightly allowed the claim made by the assessee during the course of assessment proceedings and that the order passed by him is within the provisions of law, and nothing wrong therein could be pointed out by the ld. DR, and therefore, we uphold the same. 13. As a result, the appeal of the revenue is dismissed. 20.25 In the case of Srikanth G. Shah v. ITO (ITAT Mum) (2008) (300 ITR 324) (AT) it was held as under: 18. We have given a careful consideration to the rival submissions made before us. We have also carefully gone through the relevant facts and the judicial pronouncements cited before us. In our view, the grounds raised by the assessee in appellate proceedings to the effect that the interest income disclosed by him in the returns of income filed in response to notices issued Under Section 148 must be excluded from his total income, has to be entertained and dealt with on merits. The Hon'ble Jurisdictional High Court's decision in the case of Nirmala L Mehta (supra) squarely applies to the facts of this case. In that case also the Hon'ble Bombay High Court observed that merely because the assessee offered the prize money wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unauthorisedly converting the clients money for his own benefit but such income cannot be brought to the charge of tax. The case of the assessee is on a better footing. The assessee has maintained separate account and has also apportioned the interest income to the respective accounts of the clients. It is notable that even the learned CIT(A) held on merits that the interest income was not taxable legally in the hands of the assessee. At para 4.2 of his order, the learned CIT(A) held as under: From the facts of the case, the Rules of Hon'ble Bombay High Court and the judgments relied upon by the appellant, it is clear that interest accrued on bank account referred above, would not belong to the appellant as long as the appellant apportioned the interest accrued to the respective clients' account. 20. Thus, while accepting the claim of the assessee on merits, the learned CIT(A) refused to allow any relief to the assessee on the ground that the income was voluntarily disclosed by him. It is true that when the assessee did not disclose the interest income in the original returns of income filed by him, he wrongly claimed deduction for TDS. As per the provisions of Section 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) was issued. Notices for the relevant assessment years were issued Under Section 148 for the limited purpose of bringing to the charge of tax the interest income. However, during the course of re assessment proceedings, the assessing officer made enquiries regarding various expenses and thereafter he made disallowances. It is argued that this is not permissible under law. The learned Counsel strongly relied on the decision of Hon'ble Punjab Haryana High Court in the case of Vipan Khanna v. CIT 255 ITR 220 (P H). The relevant part of the ratio of this case is reproduced from the head notes as under: According to the law laid down by the Hon'ble Supreme Court in CIT v. Sun Engineering works p. ltd 198 ITR 297, when proceedings Under Section 147 of the Act are initiated, the proceedings are open only qua items oj under assessment. The finality of assessment proceedings on other issues remains undisturbed. It makes no difference whether the assessment proceedings have become final on account of framing of an assessment Under Section 143(3) oj the Act or on account of non-issue of a notice Under Section 143(2) of the Act within the stipulated period. The amendments made in Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2. For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely: (a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of 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 understood 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 lax has been under assessed; 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.] 26. From the above, it may be seen that once re-asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess or re assess such income, profits or gains. Therefore, once assessment is reopened by issuing a notice under Subsection (2) of Section 22, the previous under assessment is set aside and the whole assessment proceedings start afresh. Once valid proceedings are started Under Section 34(1)(b) the ITO not only had the jurisdiction but it was his duty to levy tax on the entire income that had escaped assessment during that year. 28. The Hon'ble Supreme Court was concerned with the interpretation of Section 34 of the Indian Income tax Act, 1922, which is now replaced by Section 147 of the Income Tax Act, 1961. It was observed by the Hon'ble Supreme Court that once valid proceedings arc started Under Section 34(1)(b), the ITO not only had jurisdiction but it was his duty to levy tax on the entire income that had escaped assessment during that year. The scope and ambit of the aforesaid Hon'ble Supreme Court decision has been explained by the Hon'ble Supreme Court in the case of ITO v. Sun Engineering works Pvt. Ltd. 198 ITR 297 (SC). We deem it proper to reproduce below the relevant part of the decision as under from pages 319 to 321 of the report: The principle laid do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision in that case. It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this court, divorced from the context of the question under consideration and treat it to be the complete law declared by this court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions, which were before this court. A decision of this court takes its colour from the questions involved in the case in which it is rendered and, while applying the decision to a later case, the court must carefully try to ascertain the true principle laid down by the decision of this court and not to pick out words or sentences from the judgment, divorced from the context of the questions under consideration by this court, to support their reasonings. In Madhav Rao Jwaji Rao Scindia Bahadur v. Union of India , this court cautioned (at page 578 of AIR 1971 SC): It is not proper to regard a word, a clause or a sentence occurring in a judgment of the Supreme Court, divorced from its context, as containing a full exposition of the law on a question when the question did not even all to be answered in that judgment. Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are relevant only in respect of the income, which had not been brought to tax during the course of original assessment. A matter not agitated in the concluded original assessment proceedings also cannot be permitted to be agitated in the reassessment proceedings unless relatable to the item sought to be taxed as escaped income . Indeed, in the reassessment proceedings for bringing to lax items, which had escaped assessment, it would be opened to an assessee to put forward claims for deduction of any expenditure in respect of that income or the non-taxability of the items at all. Keeping in view the object and purpose of the proceedings under Section 117 of the Act, which are for the benefit of the Revenue and not an assessee, an assessee cannot be permitted to convert the reassessment proceedings as his appeal or revision, in disguise, and seek relief in respect of items not claimed in the original assessment proceedings, unless relatable to escaped income , and re-agitate the concluded matters. 29. The legal position which emerges from the decisions of Hon'ble Punjab Haryana High Court and Hon'ble Supreme Court referred to above may summarised as follows: Once the re-asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 147 and in the light of the legal position as discussed above, the assessing officer is within his jurisdiction to disallow part of the expenses which are not wholly and exclusively incurred for the purpose of the assessee s profession 31. Coming to the merits of the disallowances, no material was produced before us to controvert the finding of the learned CIT(A) or to show that no part of the expenditure is in the nature of personal expenditure of the assessee The learned CIT(A) has sustained disallowance merely at 10% of the telephone expenses, motor car and depreciation on motor car In the facts of the case, this cannot be said to be un reasonable or excessive The disallowance of printing and stationery expenses have been deleted by the learned CIT(A) except for the assessment year 95 96 We fail to understand as to why such disallowance shoald be sustained for the assessment year 95 96 when for all the assessment years there is a consistency finding by the learned CIT(A) that this expenditure was entirely for professional purpose Therefore, for the assessment year 95-96, we modify the order of the learned CIT(A) to the extent that the disallowance from out of the printing and st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... down the approach that the authorities must adopt in such matters in the fo//owing terms: 'The Supreme Court has observed in numerous decisions, including Ramlal v. Rewa Coa/fie/ds Ltd. AIR 1962 SC 361, State of West Benga/ v. Administrator, Howrah Municipality AIR 1972 SC 749 and Babutmal Raichand Oswal v. Laxmibai R. Tarte AIR 1975 SC 1297, that the State authorities should not raise technical pleas if the citizens have a lawful right and the lawful right is being denied to them merely on technical grounds. The State authorities cannot adopt the attitude which private litigants might adopt. 9. From the above, it is revealed that the income of the assessee should not be over assessed even if there is a mistake made by the assessee. As such the legitimate deduction for which the assessee is entitled should be allowed while determining the taxable income. In view of the above and after considering the facts in totality, we are of the view that the claim of the assessee cannot be denied as it was not reported in the tax audit report especially in the circumstances where other evidence is available on record suggesting the deduction in pursuance to the provisions of section 43B on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and thus, it is not valid and cannot be sustained. Thereafter, the Assessee filed an application under Section 264 of the IT Act on 25.01.2018, admittedly, within one year from the date of the order rejecting the rectification return. The respondent before whom, the said revision was filed, passed the impugned order, wherein at Paragraph Nos. 9, 10, 11 he observed as follows: 9. The Assessee in its P L account had claimed expenditure under the grouping Compensation to Employees inclusive of labour charges of Rs. 56,12,426/- wages of Rs. 75,14,652/- and salary and bonus of Rs. 56,55,166/-. However, as against the total of Rs. 1,87,82,244/- the Assessee had entered an amount of Rs. 1,38,59,509/-. The difference on account of the wrong entry being Rs. 49,22,735/- the amount that was reckoned as the income of the Assessee for the assessment year in question. 10. It would be of significance to mention that the Assessee had in the certified copy of P L account uploaded along with the return of income, placed on records and perused by me, has booked the expenditures on account of labour charges at Rs. 56,12,426/-, wages at Rs. 75,14,652/- and Salary bonus at Rs. 56,55,166/-. 11. From th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Principal Commissioner or Commissioner] may, if he is satisfied that the assessee was prevented by sufficient cause from making the application within that period, admit an application made after the expiry of that period. d. The [Principal Commissioner or Commissioner] shall not revise any order under this section in the following cases - (a) where an appeal against the order lies to the Deputy Commissioner (Appeals) or to the 4[Principal Commissioner or Commissioner] (Appeals) or to the Appellate Tribunal but has not been made and the time within which such appeal may be made has not expired, or, in the case of an appeal to the 4[Principal Commissioner or Commissioner] (Appeals) or to the Appellate Tribunal, the assessee has not waived his right of appeal; or (b) where the order is pending on an appeal before the Deputy Commissioner (Appeals); or (c) where the order has been made the subject of an appeal to the 4[Principal Commissioner or Commissioner] (Appeals) or to the Appellate Tribunal. (5) Every application by an assessee for revision under this section shall be accompanied by 1[a fee of five hundred rupees]. [(6) On every application by an assessee for revision under this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 264 of the IT Act to conduct an enquiry to be made and to pass such orders, as he thinks fit. In the impugned order, the Commissioner proceeds on the basis that the petitioner had not filed a revised return for the year 2008-09. It is pointed out by the petitioner that the time for filing a revised return had already expired and once the said period has expired, revised return cannot be filed. The question is whether, in the absence of filing a revised return, a claim for deduction for the aforesaid amount is permissible for the assessment year 2008-09. As held by a Division Bench in Parekh Brothers (supra), there is no limit to exercise the jurisdiction under Section 264 of the IT Act. That was also a case in which the claim was not made by the assessee in the return or at the time of arguments when the assessment was made. In such an instance, the Division Bench held that, even assuming that the assessment order was correct, still it is open for the assessee to seek the revisional jurisdiction in respect of an item which was not made by way of a mistake. Therefore, the jurisdiction of the Commissioner to pass orders even if a revised return is not filed, is very much av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry and subject to the provisions of the Act, either suo-moto or on an application by the assessee. Though the remedies over lap, power under section 264 is significantly wider and the wisdom of choosing one over the other would really depend on the facts and legal position of each case. 16. In [2018] 402 ITR 271 (Mad), M/s.Bali Trading Pvt. Ltd., Vs. Principal CIT., the learned Single Judge of this Court observed that power under Section 264 of the IT Act, is a wider power and intended to prevent miscarriage of justice. It is also observed therein that the powers under Section 264 of the IT Act, is to enable the Commissioner to provide relief to an Assessee, where the law permits the same. 17. In [2016] 386 ITR 643 (Del.), Vijay Gupta Vs. CIT, the Division Bench of the Delhi High Court, after referring to the Circular No. 14/1955 dated 11.04.1955 has observed at Paragraph Nos. 22, 35, 36 39 as follows: Circular No. 14(XL-35) : MANU/DTCR/0004/1955 of 1955, dated 11.4.1955, issued by the Central Board of Direct Taxes and relied upon by the Petitioner reads as under: Officers of the department must not take advantage of ignorance of an assessee as to his rights. It is one of their dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law. Article 265 of the Constitution of India and section 114 of the State Constitution imposes an embargo on imposition and collection of tax if the same is without authority of law. When the commissioner was called upon to examine the revision application under section 264 of the Act, all the relevant material was already available on the record of the assessing officer. The commissioner instead of merely examining whether the intimation was correct based on the material then available should have examined the material in the light of the Circular No. 14(XL-35) : MANU/DTCR/0004/1955 of 1955, dated 11.4.1955 and Article 265 of the Constitution of India. The commissioner has erred in not doing so and in failing to exercise the jurisdiction vested in him on mere technical grounds. 18. Perusal of the above decisions would show that the powers conferred on the Commissioner under Section 264 of the IT Act, is not only wider in its scope and also intended for the purpose of preventing miscarriage of justice and for providing relief to an Assessee, which he is otherwise entitled to, but for the order under challenge in revision. 19. No doubt Section 139(5) provides for filing a revised r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LRs and others, that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred. The Apex Court has also gone to the extent of saying that the Courts may in the larger interests of administration of justice may excuse or overlook a mere irregularity or a trivial breach of law for doing real and substantial justice to the parties. The relevant observation made at Paragraph 49, is extracted hereunder: When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred and the Courts may in the larger interests of administration of justice may excuse or overlook a mere irregularity or a trivial breach of law for doing real and substantial justice to the parties and pass orders which will serve the interest of justice best. 21. Likewise, the Apex Court in [2013] 4 SCC 186, Union of India and others Vs. Ex-Gnr Ajeet Singh, has observed at Paragraph Nos. 24 26 as follows: 24. The expression failure of justice would appear, sometimes, as an etymological chameleon. The Court has to examine whether there is really a failure of justic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Certainly, the denial for repayment of such excess collection would amount to great injustice to the Assessee. 25. Even though the Statute prescribes a time limit for getting the relief before the Assessing Officer by way of filing a revised return, in my considered view, there is no embargo on the Commissioner to exercise his power and grant the relief under Section 264 of the IT Act. In other words, for granting the relief to an Assessee, which the Commissioner finds that the Assessee is entitled to otherwise, no time restriction is provided under Section 264 of the IT Act, if such revisional jurisdiction is invoked by the Assessee by making an application under Section 264 of the IT Act. However, the Commissioner is not entitled to revise any order under Section 264 on his own motion, if the order has been made more than an year previously. Thus, it is manifest that only suo-motu power of the Commissioner under Section 264 of the IT Act, is restricted against an order passed within one year, whereas no such restriction is imposed on the Commissioner to exercise his power in respect of an order, which has been passed more than on year, if such revisional power is sought to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary. We accede to the request of the assessee counsel in the interest of justice that this is the assessment consequent to search action and the income returned u/s 153A of the Act consequent to search and addition made by ld. AO shall be based on the incriminating material found during the course of search as held by Hon ble Supreme Court in the case of PCIT Vs. Abhisara Buildwell Pvt. Ltd. in ITA No. 454 ITR 212 wherein it was held that no addition can be made in respect of assessment framed u/s 153A of the Act without any seized material supporting such additions. 20.32 Accordingly, we direct the ld. AO to determine the income of the assessee in these assessment years only on the basis of seized material/incriminating material in the assessment year 2011-12 to 2016-17 and not solely on the basis of statement recorded u/s 132(4) of the Act. More so, assessee has been continuously before the ld. AO as well as ld. CIT(A) requesting to do the assessments on the basis of books of accounts and evidence found during the course of search since the declaration made by assessee during the course of search was lumpsum basis as there was no enough time to verify the correctness of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the light of our above observations. 21. Next ground No. 9 in this appeal is with regard to approval given u/s 153D of the Act is mechanical. For this purpose, he relied on the judgement in the case of PCIT Vs. Sapna Gupta (2022) SCC Online (Allahabad) 1294 of Hon ble Allahabad High Court and in the case of CIT Vs. Anju Bansal (2022) SCC Online (Delhi) 4159 of Delhi Bench of Tribunal. However, the assessee was not able to demonstrate how there was no subjective satisfaction recorded for granting approval u/s 153D of the Act by competent authority. Hence, this ground of appeals is dismissed. 22. In the result, all the appeals of the assessee in ITA Nos. 982 to 987/Bang/2023 for the AYs 2011-12 to 2016-17 are partly allowed for statistical purposes. ITA Nos. 961, 962 1012/Bang/2023 (AYs 2015-16, 2016-17 2014-15) (M/s. John Distilleries Pvt. Ltd.) (Revenue s appeals): 23. The grounds raised by the revenue in all these appeals are common, which reads as follows: i. Whether the CIT(A) was correct on law and facts in holding that no specific evidence existed for the AYs 2014-15, 2015-16 2016-17 in respect of the inflated purchases and inflated transportation expenses and consequently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30-295 7 Copy of bills and vouchers for expenditure under the head Repairs and maintenance . 296-430 8 Copy of bills and vouchers for expenditure under the head Commission Expenses . 431-467 ITA Nos - 839/BANG/2023 M/s. Paul Resorts and Hotels Pvt Ltd. vs DCIT,CC(1)(1), Bengaluru A.Y 2012-13 Application under Rule 29 of Income Tax Appellate Tribunal Rules, 1962 INDEX Sl. No Particulars Page No. 1 Application u/r 29 of ITAT Rules, 1962 1-6 2 Annexure-A/1: Letter dated. 30.10.2018 7-15 3 Annexure-A/2: Letter in dated 30.10.2018 in reply to notice u/s 142(1) of the Act. 16-18 4 Annexure-A/3: Letter dated 17.12.2018 19-20 5 Revised Computation of Income 21-25 6 Copy of bills and vouchers for expenditure under the head Travelling Expenditure . 26-119 7 Copy of bills and vouchers for expenditure under the head Repairs and maintenance . 120-512 8 Copy of bills and vouchers for expenditure under the head Commission Expenses . 513-593 ITA Nos - 840/BANG/2023 M/s. Paul Resorts and Hotels Pvt Ltd. vs DCIT, CC(1)(1), Bengaluru A.Y 2013-14 Application under Rule 29 of Income Tax Appellate Tribunal Rules, 1962 INDEX Sl. No Particulars Page No. 1 Application u/r 29 of ITAT Rules, 1962 1-6 2 Anne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter dated 17.12.2018 19-20 5 Revised Computation of Income 21-27 6 Copy of bills and vouchers for expenditure under the head Travelling Expenditure . 28-104 7 Copy of bills and vouchers for expenditure under the head Repairs and maintenance . 105-207 8 Copy of bills and vouchers for expenditure under the head Commission Expenses . 208-693 27. With regard to admission of additional evidences, the contention of the ld. A.R. is that the present application is filed under Rule 29 r/w Rule 18(4) of the Income Tax Appellate Tribunal Rules, 1962 seeking admission of additional evidences in the above matter vide applications dated 6.5.2024. 27.1 The ld. A.R. submitted that a survey under section 133A of the Act was initiated in the case of the Assessee along with seizure action u/s 132 of the Act initiated in the case of John Distilleries Pvt Ltd, a group company of the Assessee on 3rd November 2016. The search and survey teams did not find any concealed income that they probably thought the assessee company might be having. In spite of that the search team obtained from the Assessee group a declaration of undisclosed income of huge amount of Rs. 129 crore u/s 132(4) of the Act spread ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of accounts, bills and vouchers etc maintained in respect of all the three subject heads of expenditure and to exclude the additional income included in the ITRs. Kind reference is invited to the letter dated 17.12.2018 wherein after giving background of the declaration obtained during search and survey action, it was submitted that the Assessee was in a position to furnish all the bills and vouchers in respect of all the three heads of expenditure and the AO was requested to check the same and give credit to the expenses incurred and refund the taxes paid under protest. 27.4 However he submitted that the Ld. AO did not consider the Assessee s request and passed the assessment order in a hurry. It is submitted that the assessment proceedings were started very late in the day and the AO completed the assessment without considering the Assessee s request in this regard. 27.5 The ld. A.R. submitted that before the Ld CIT(A) the assessee took the relevant grounds stating that the search team as well as the AO did not give opportunity to produce the bills and vouchers relating to the said expenses and that the disallowance confirmed by him was unwarranted. This plea duly noted by the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based merely on the declaration obtained under pressure without the corresponding incriminating material. As stated earlier, the declaration by way agreeing to disallowance of the expenditure was made with an understanding and assurance that the same would be allowed and deleted when the company substantiates it during the assessment proceedings. Both the authorities below did no appreciate the spirit behind and the bona fide actions of the Assessee in adhering to the declaration, though given under pressure. The CIT(A) even went on to the extent of holding that the same was an after-thought which, it is humbly submitted, is contrary to the facts on record. 27.8 He submitted that tax authorities have no authority to bring to tax income included in the ITR which is otherwise not taxable. It is submitted that CBDT as well as the Courts have time and again held that AO should not take advantage of the actions of the taxpayers and bring to tax that income which is otherwise not-taxable. According to Article 265 of the Constitution of India No tax can be levied or collected except by authority of law . 27.9 He submitted that in this background, the Assessee has submitted the present app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rror or omission on the part of one of the parties to lead evidence. 27.13 Without prejudice to the above, the Assessee submitted that ITAT is the last fact finding authority under the Act and hence empowered to look into the question of fact also, even if not raised earlier in order to determine the correct tax liability of the Assessee. In this regard the Assessee respectfully relies upon the ratio of the decision of the Hon ble Apex Court in Commissioner Of Income-Tax, Madras vs Mahalakshmi Textile Mills 1968 AIR 101 wherein it has been held that all questions whether of law or of fact which relate to the assessment of the assessee may be raised before the Tribunal . 27.14 In light of the above the ld. A.R. respectfully prayed for admission of the following additional documents / evidences under Rule 29 r/w Rule 18(4) of the ITAT Rules, 1962: a) Revised computation of income (COI) excluding the additional income included in ITR under protest. b) Bills and vouchers supporting the expenditures under the head Travel Expenditure Eight vouchers with supporting document for the year as a sample lot. c) Bills and vouchers supporting the expenditures under the head Repairs and Maintenan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds. Accordingly, we confined to our adjudication to the grounds mentioned in the chart only. 31. First ground in these appeals is general in nature, which do not require any adjudication. 32. Next ground for our consideration is that no assessment could be made in the case of unabated assessment without any incriminating material found during the course of search action. This is common ground in all these appeals. The assessee raised this ground in ITA No. 838 to 843/Bang/2023 for the assessment years 2011-12 to 2016-17. 33. Next common ground in all these appeals is that assessment in these assessment years u/s 153C r.w.s. 143(3) of the Income Tax Act, 1961 (in short The Act ), which is bad in law as the ld. AO assessed the income already offered for taxation by the assessee in the regular assessment, as such framing assessment u/s 153C of the Act in case of unabated assessment is bad in law as there was no seized/incriminating material found during the course of search. 34. The ld. A.R. for the assessee submitted that search was took place in these cases on 3.11.2016 u/s 132 of the Act in case of M/s. John Distilleries Pvt. Ltd., M/s. Amrut Distilleries Pvt. Ltd., M/s. Madhu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce u/s 153C of the Act was issued. Further, she submitted that the following seized material relating to the present assessee found during the course of search action in the case of M/s. John Distilleries Pvt. Ltd. and examining the same notice u/s 153C of the Act has been issued. 1. A1/TPB-01- Commission payment page No. 17 2. A1/TPB-01-Cash payment page No. 1 to 54 3. A/PRH/06-Commission payment page Nos. 1 to 26 4. A/PO/PRH/02 page 2 Payment to KGA. 5. A/PO/PRH/02 page 6 Cash payment to Sudhir Appachu 6. A/PO/PRH/02 page 9 11 Cash payment to Joy. 36. We have heard the rival submissions and perused the materials available on record. The scope of provisions of section 153A of the Act was summarized in para 13.1 of this order as per the order of the Mumbai Special Bench in the case of All Cargo Global Logistics Ltd. Vs. Deputy Commissioner of Income-tax (23 taxmann.com 103). 36.1 In the present case, in these assessment years 2011-12 to 2015-16, the assessment has been already concluded either by issue of notice u/s 143(3) of the Act or by lapse of time. The concluded assessment cannot be basis for reopening assessment u/s 153C of the Act as discussed in the case of M/s. John Disti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court affirming this view of the Tribunal is, therefore, without any blemish. Before us, it was argued by the respondent that notice in respect of the Assessment Years 2000-01 and 2001-02 was time barred. However, in view of our aforementioned findings, it is not necessary to enter into this controversy. 20. Insofar as the judgment of the Gujarat High Court relied upon by the learned Solicitor General is concerned, we find that the High Court in that case has categorically held that it is an essential condition precedent that any money, bullion or jewellery or other valuable articles or thing or books of accounts or documents seized or requisitioned should belong to a person other than the person referred to in Section 153A of the Act. This proposition of law laid down by the High Court is correct, which is stated by the Bombay High Court in the impugned judgment as well. The judgment of the Gujarat High Court in the said case went in favour of the Revenue when it was found on facts that the documents seized, in fact, pertain to third party, i.e. the assessee, and, therefore, the said condition precedent for taking action under Section 153C of the Act had been satisfied. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the face of the record. The Delhi High Court judgment, therefore, will not carry the case of the revenue any further. We, thus, do not find any merit in these appeals. 22. We now advert to the implication of the fact which has been emphasised in para 15. As pointed out in the said para, the assessment order passed by the AO covers eight Assessment Years. Assessment done in six Assessment Years is under Section 153C of the Act. Assessment order is set aside only in respect of four such Assessment Years that too on the technical ground, noted above. This objection pertaining to the four Assessment Years in question does not relate to the other two Assessment Years, namely, 2004-05 and 2005-06. Likewise, this decision has no bearing in respect of assessment done qua Assessment Year 1999-2000 as well as Assessment Year 200607. The necessary consequence would be that insofar as the conclusions of the AO in his assessment order regarding the activities of the trust not being genuine and not carried out in accordance with the trust deed or cancellation of registration, denial of benefits of Sections 11 and 12 etc. are concerned, the same would not be affected by this judgment. It is, thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act on 28.12.2018 as the time limit to issue notice for those assessment years has been already lapsed, as such no notice u/s 153C of the Act to be issued for the assessment years 2011-12 2012-13. 36.4 In our opinion section 153C of the Act is to empower the Assessing Officer of the person searched to handover the money, gold, jewellery or other relevant articles/things or books of account or documents belonging to the other person to the Assessing Officer of that other person and the Assessing Officer of that other person is empowered to proceed against such other person to assess undisclosed income resulting from such money, bullion, jewellery and valuable articles or things, books of account or other documents. The proviso introduced by the Finance Act, 2005 with effect from 1-6-2003 makes a change in the date for reckoning the initiation of the assessment proceedings of the earlier year in the case of other person. In the case of person searched provisions of section 153A are applicable. Provisions of sub-section (1)(b) empower the Assessing Officer to assess or reassess total income of the six assessment years immediately preceding the assessment year relevant to the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r part of this order in the case of M/s. John Distilleries Pvt. Ltd. by placing reliance on the judgement of jurisdictional High Court in the case of Pratibha Jewellery House Vs. CIT 88 taxmann.com 94 (Karn.). This ground of appeals in all these appeals is dismissed. 39. Next ground in all these appeals is with regard to violation of principles of natural justice and perversity in the orders of the lower authorities. 39.1 This ground of appeals of the assessee is dismissed on similar lines as discussed in the case of M/s. John Distilleries Pvt. Ltd. as discussed in earlier part of this order. 40. Next common grounds in all these appeals is ground Nos. 7 9 are with regard to addition merely on statement recorded u/s 132(4) /131(1A) of the Act and in violation of CBDT Circular F. No. 286/2/98/2013-IT (Inv.) dated 10.3.2003 and No. 286/2/98/2013-IT(Inv.) dated 18.10.2014 on the reason that: (a) Inflating of expenses under bogus travelling expenses (b) Undisclosed income under the head bogus repairs and maintenance (c) Undisclosed income under the head bogus commission expenses, which the income has been included in the ITR due to pressure, mistaken belief and on the false assurance. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of expenditure, which are not considered by him even the assessee has retracted the statement which was observed by the ld. AO after thought. A. He submitted that claim to be entertained even if not made in ITR and income to be assessed and tax to be collected as per Art 265 of Constitution: For this proposition, he relied on the following judgements:- 1. CIT v. Abhinitha Foundation P. Ltd. 2017 396 ITR 251 2. DCIT V. CMS Securities Ltd., (2016) 47 ITR (Trib) 378 wherein held that the authorities under the Act are under an obligation to act in accordance with law. Tax can be collected only as provided under the Act. If an assessee, under a mistake, misconception or on not being properly instructed, is over assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected. 3. Srikant G. Shah vs. ITO (ITAT)(Mum) (2008) 300 ITR (AT) 324 4. M/s. Maruti Enterprise, Amreli Vs. The ADIT (CPC), Bangalore (2023) ITA No. 10/Rjt/2023 dated 20 March, 2024 (ITAT, Rajkot) 5. Sharp Tools vs. Principal Commissioner of Income Tax (2020) 421 ITR 90 (HC-Madras) 41.6 He submitted that the claim of the assessee to be entertained even if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n paid. She drew our attention to the relevant part of the order of the AO in para 7.1 to 7.5 which is reproduced below: 42.4 She submitted that it is evident from the above paragraphs in the order of the ld. AO that the assessee admitted: a) to claiming bogus commission expenses in books of accounts, which were in the nature of accommodation entries b) that the bills and vouchers for such expenses claimed, were not available and could not be produced. 42.5 She submitted that on account of the evidence unearthed during the search and based on admissions of key employees and the CMD, the Assessee filed return of income in response to notice u/s 153C declaring the undisclosed income in relation to bogus commission expenses and following the admissions made in the statements recorded under oath during the search. Reference is made to the sworn statement of Shri Paul P John, Chairman and Managing Director ( CMD ) of John Distilleries Group, recorded on 4.11.2016, 7.11.2016, 27.02.2017 and 6.3.2017. These statements were submitted by the Assessee on 24th August 2023, in the case of John Distilleries Pvt Ld. 42.6 She drew our attention to Q. No. 7 and Q. No. 10 of statement dt 4.11.2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to travel expenses, repairs and maintenance and commission paid, is not correct as these expenses are supported by bills and vouchers. It is only an afterthought on part of the Assessee, to raise the issue during appellate proceedings that opportunity was not given to produce bills and vouchers relating to undisclosed income under travel expenses, repairs and maintenance and commission paid, when such undisclosed income was offered by the Assessee in response to notice u/s 153C. She also submitted that it is also noticed that the assessee has failed to make a case that any declaration of undisclosed income during the search and post search proceedings, was made under duress or that the declaration made was incorrect based on additional evidence furnished. The fact remains that the declarations were made on account of bogus expenses claimed to generate cash funds, which is clearly discussed in the assessment order passed. The assessees claim that the TDS is deducted on commission payments claimed does not hold ground as the core issue to be decided is genuinity of the expenses claimed. Once it is proved that the expenses claimed itself is bogus, any colorable device/methodology used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, which is consequential and mandatory in nature to be computed accordingly. 46. In the result, assessee s appeals in ITA Nos. 838 to 843/Bang/2023 are partly allowed for statistical purposes. ITA Nos. 845 to 847/Bang/2023 (AYs 2014-15 to 2016-17) (M/s. John Developers) (Assessee s appeals): 47. The assessee filed lengthy grounds in these cases of assessee also. However, the assessee filed concise ground-wise chart which has been considered for adjudication, herein below. 47.1. The assessee filed a ground-wise chart in these appeals, the same is considered for adjudication. 48. Brief facts of the case; since the facts are common, we consider the facts in the assessment year 2014-15 for brevity. 48.1 The assessee is in the business of development of residential Sites near Bangalore. The Assessee is a Partnership Firm engaged in the business of development of land and sale thereof For the Asst. Year 201415 originally the Assessee had filed return of income, declaring an income of Rs. 43,24,914/-. There was a Survey in the month of Sept., 2016 in the case of the Assessee and at the time of Survey the Assessee had voluntarily agreed to add a sum of Rs. 60,00,000/- as additional inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Accordingly, this issue also remitted to the file of ld. AO to reconsider it as we have discussed in the case of M/s. John Distilleries PVt. Ltd. in ITA Nos. 982 to 987/Bang/2023, as the assessment cannot be framed without any seized material for the assessment years if they are already concluded on the date of search on 3.11.2016. Ordered accordingly. 52. In ground No. 4 the assessee included the income in these assessment years i.e. 2014-15 to 2016-17 due to wrong belief and also accompanied with pressure and false assurance and he submitted that assessment in these assessment years to be made only on the basis of seized material and he drew our attention to the additional evidences filed before us and submitted that all the evidences are available with the assessee to demonstrate various expenditure claimed by assessee. 52.1. The ld. D.R. strongly opposed the argument of assessee s counsel. 52.2. The assessee has taken this ground before the ld. CIT(A) also, however, he relied on the statement recorded u/s 132(4)/131 of the Act. In our opinion, the assessment to be framed in accordance with law after considering the available evidences as discussed in earlier para. Accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reproduced in the assessment order passed at para 6.1 6.2. The assessee has not filed any retraction statement, however as against additional income admitted of Rs. 4,10,14,889/- declared only an amount of Rs. 3,58,71,002/- resulting in short declaration of income to the tune of Rs. 51,43,887/- brought to tax in the assessment order passed. 55.1 During the course of appellate proceedings, it is claimed by the assessee that the income declared on account of cash transaction and additions made are already added in the case of M/S John Distilleries Pvt. Limited. These declaration and additions made are claimed as double taxation. Further, it is also claimed that the declaration made amounting to Rs. 4,10,14,889/- included share of profit from partnership firm of Rs. 52,82,110/- and since the books were not finalized, the declarations were made on estimated income. The submissions made during the course of appellate proceedings are in line with the grounds of appeal raised in the appeal filed. 55.2 The ld. CIT(A) observed that the contentions raised by the AR are not acceptable. He observed that the assessee has been contradicting his own statements recorded on oath without any suppor ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
