9911796707
TMI Blog2024 (10) TMI 1615X X X X Extracts X X X X X X X X Extracts X X X X ..... Lacs has been made on 31-03- 2017. The aggregate provision as on 31-03-2017 was Rs. 29.53 Lacs which has fully been paid by the assessee through banking channels in the month of April and May, 2017 which is evident from ledger of salaries payable. Unexplained investment u/s 69 - Onus to prove - addition stem from excel sheet titled as 15% and 12% found during search - HELD THAT:- Upon perusal of loose excel sheet as extracted in the assessment order, it could be seen that these sheets lacks sufficient details to form an opinion of actual cash introduction by the partners of the firm. The same merely contain certain computation of interest only without suggesting anything more. The complete details of the transactions could not be deciphered from the same. The same do not have any details as to source of alleged capital introduction by the partners. Under these circumstances, not much credence could be given to this document to make impugned additions in the hands of the assessee in the absence of corroboration of entries as contained therein. As decided in the case of Kranti Impex Pvt. Ltd. [ 2018 (3) TMI 424 - ITAT MUMBAI] when the seized papers were undated having no acceptable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h assessment order under consideration was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law. 5. The CIT (Appeals) - 20, Chennai erred in confirming the addition of Rs. 4,05,91,502/- on the presumption of wages payable claimed in the month of March of the relevant assessment year as bogus without assigning proper reason and justification. 6. The CIT (Appeals) - 20, Chennai failed to appreciate that the wages expenses were actually incurred by the Appellant in the normal course of business and the disallowance of such expenses as not genuine was wholly unjustified and not sustainable both on facts and in law. 7. The CIT (Appeals) - 20, Chennai 'failed to appreciate that the Appellant had rectified the return of income filed u/s 153A of the Act in claiming the actual expenses relatable to the assessment year under consideration and further ought to have appreciated that the Assessing Officer having considered the reversal of such provision in the said return of income, the action to deny the claim of actual expenses relatable to the assessment year under consideration would distort the financial results of the Appellant Company. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to the assessment year under consideration would distort the financial results of the Appellant Company. 15. The CIT (Appeals) - 20, Chennai failed to appreciate that the salary expenses were wrongly denied both in the year of claim (as per original return of income) as well as in the actual year of outflow (as per 153A return) would defy the principles of fairness in taxation there by vitiating the related findings in the impugned order. 16. The CIT (Appeals) - 20, Chennai failed to appreciate that having not found any discrepancy in the expenditure incurred by the Appellant and further having not disputed the fact that the major portion of salary payable being paid through proper banking channels, the findings recorded in doubting the genuineness of such expenses was wholly unjustified and unwarranted thereby negating the related findings in the impugned order. 17. The CIT (Appeals) - 20, Chennai failed to appreciate that the return of income filed in response to the notice issued u/s 153A of the Act should be construed as implied retraction to the statement recorded at the time of search and further ought to have appreciated that the presumption of non retraction till date w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he factual position was further clarified by the Partner of the Appellant firm during the post search proceedings there by vitiating the related findings in the impugned order. 25. The CIT (Appeals)-20, Chennai failed to appreciate that in any event the assessment of such presumed investment as unexplained in the hands of the Appellant firm there by negating the addition made in this regard and further ought to have appreciated that the sustenance of the disputed sum in the hands of the Appellant was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 26. The CIT (Appeals) - 20, Chennai failed to appreciate that the entire re computation of the taxable total income on various facets was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 27. The CIT (Appeals)-20, Chennai failed to appreciate that there was no effective/reasonable opportunity granted before passing the impugned order and search assessment order and further ought to have appreciated that any order passed in violation to the Principles of Natural Justice should be reckoned as nullity in law. As is evident, the issues that fall for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .96 Lacs. The Ld. CIT(A) confirmed the same against which the assessee is in further appeal before us. 2.2 We find that identical issue has been decided by us in assessee s appeal for AY 2017-18, ITA No.1021/Chny/2024 as under: - Our findings and adjudication 4. Upon perusal of ledger extracts of wages payable and salaries payable as placed on record at Page Nos. 70 to 112 of the paper-book Volume-II, it could be seen that as on 01- 04-2016, the wages payable are for Rs. 62.75 Lacs which have fully been paid by the assessee by 30-04-2016. The assessee has made provision of wages payable for AY 2017-18 for Rs. 391.07 Lacs which, as per the statements made during the course of search proceedings, are booked artificially to suppress the profit of this year. The assessee has reversed / not considered this provision while filing the return of income u/s 153A and it has already offered additional income to that extent. The Ld. AO has already concurred with this fact. Another finding of Ld. AO is that on comparison of workers wages expenses for FY 2018-19 as maintained in Tally system vis- -vis actual wage payments as per excel sheets, it was found that for the month of April, 2018 to Jun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly unjustified Therefore, considering the fact of the case, the amount of Rs. 62.75 Lacs would be allowed as deduction to the assessee during AY 2017- 18. We order so. 6. Similarly, in respect of salaries payable, it could be seen that the assessee has reversed provision of Salaries payable for Rs. 14.84 Lacs during FY 2015-16 and claimed deduction of the same on actual payment basis. Therefore, the disallowance, to that extent, could not be upheld. The balance provision of Rs. 14.69 Lacs has been made on 31-03- 2017. The aggregate provision as on 31-03-2017 was Rs. 29.53 Lacs which has fully been paid by the assessee through banking channels in the month of April and May, 2017 which is evident from ledger of salaries payable as placed on Page No.109. Therefore, the impugned disallowance of Rs. 29.53 Lacs, in toto, is not sustainable in law. We order so. The corresponding ground raised by the assessee stand allowed. Facts being pari-materia the same in this year, taking the same view, we delete both the additions as made by Ld. AO. 3. Addition of unexplained investment u/s 69 3.1 This addition stem from excel sheet titled as 15% and 12% found during search. The same allegedly cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sworn statement would indicate any investment either by the firm or by the partners of the assessee-firm. All these were merely estimated project cost and expenditure for a particular project that may be forthcoming from TWAD project and the source which could be made and the cost of such source at 12% per annum or 15% per annum just to estimate the profits from the then forthcoming TWAD project during 2017-18. Hence, the proposed addition was merely only on surmise without an iota of evidence and therefore, it should not be considered as unaccounted income of the assessee especially when the assessee has income from the source of government projects alone. To support the submissions, the assessee relied on the decision of Hon ble High Court of Madras in the case of CIT vs. J. Dinesh Mehta (TCA No.84/2020). 3.3 However, Ld. AO alleged that the partners introduced unaccounted money generated by the firm through unaccounted cash generated, unaccounted interest received and repayment receipt of unaccounted loans given by the firm. The assessee did not explain as to why the names of partners were noted in the sheet and the amount was divided between the partners and why it was clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sworn statement recorded on 30-04-2021, stated that source for amount in hands of partners and family member was unaccounted cash generated by assessee firm and unaccounted loans of assessee firm refunded etc. The AO made addition u/s 69 based on statements made by Sh. Vinoth (GM) and Sh. Anandavadivel (MD). The assessee contended that the expenditure recorded in the excel sheet represents estimated expenditure for TWAD project during AYs 2018-19 and 2019-20. Another contention was that Ld. AO could not establish unaccounted loans by examining relevant parties. The seized excel sheet was without any corroborative evidence and therefore, would not hold any evidentiary value. The seized document does not specify whether transactions recorded are loans or investments. Further, entries in seized sheet had no relevance to income or investment either by firm or partners. 3.6 The Ld. CIT(A) rejected the submission on the ground that the seized document clearly showed that the transactions recorded were capital introduced by three partners Sri Anandavadivel (referred to as 'B' in seized sheet), Sri Aravindan ( referred to as 'A' in seized sheet), Sri V. Satyamurthy ( referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ails specified as capital and investment is mentioned. The Accountant, Shri Vinoth at the time of search (Page No. 46 47 of Volume I) had stated that the above sums were received as loan by the promoters in their individual capacity from Private Financiers for the purpose of TWAD WSIS, Namakkal Construction Project. It was further stated by him that the expenses / cash payments specified in the disputed loose sheet were not for business purposes. However, he also mentioned that though interest entries were there in the loose sheets, such entries were mere calculations made by him the same were not actual interest payments made. Upon perusal of the same, the only conclusion, if any, that could be drawn was that the mentioned sums could have been received in individual capacity from private financiers for TWAD construction project. Further, the sums were expanded for non-business purpose. He also stated that the computations were not actual interest payments but mere computations. Going by this statement, even if presumed to be true, in any eventuality such sums as mentioned in the sheets could not be considered to be the income of the assessee firm since the amounts, at the most, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that during the course of the assessment as well as appellate proceedings, the appellant had taken a stand that these sheets would have no evidentiary value since the same merely contain projections to examine the project feasibility of a construction project which has been carried out in subsequent years. As per the statement of Shri Vinoth, these are not actual interest payment but mere calculations of interest. The said statement, in our considered opinion, strengthens the version put forth by the assessee before lower authorities. When the loose sheets contains mere calculations and not actual interest payment then the same would lose its evidentiary value and no concrete conclusion could be drawn on the basis of the same. 8. Also, from the statement of Shri Vinoth, it is clear that he did not have complete knowledge of the transactions. He merely stated the above sum was received by the promoters in their individual capacity from private financiers for the purpose of construction project. He also mentioned that interest calculations made by him were not actual interest payments made. Apparently, that person lack complete knowledge of these transactions. No particulars of fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 153C, held that a sheet of paper containing typed entries and in loose form, not shown to form part of the books of accounts regularly maintained by the assessee or his business entities, do not constitute material evidence. The Hon ble Court referred to the decision of Hon ble Supreme Court in the case of CBI vs. V.C. Shukla (3 SCC 410) as well as another decision in Common Cause vs. UOI (supra) while arriving at such a conclusion. The Hon ble Supreme Court in the case of CBI vs. V.C. Shukla (3 SCC 410) held that every transaction as recorded in the regular books needs to be independently corroborated and proved when some liability is to be fastened in respect of such transactions. The legal principle as laid down by Hon ble Supreme Court is that independent corroborative evidence is required in respect of entries in regular books of accounts and the same would apply in the present case. Pertinently, Special Leave Petition (SLP) of revenue against this decision has been dismissed by Hon ble Supreme Court on 20-08-2024 which is reported as 165 Taxmann.com 846. We are of the opinion that aforesaid principle as laid down by Hon ble Court would apply to the facts of the present case b ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
