ACIT CIR 6(1), MUMBAI V. ASAHI INFRASTRUCTURE AND PROJECTS LTD, AKOLA

ITA 5555/MUM/2013

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2534 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 26-08-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR; VIRENDER SINGH
• Keywords: Unexplained cash credit; Rejection of books of accounts; Loose papers; Corroborative evidences
• Section: 44AD; 133A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI R C SHARMA, ACCOUNTANT MEMBER & SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO.5555/MUM/2013 (ASSESSMENT YEAR 2010 - 11) ACIT CIR 6(1)(2) R.NO.563, AAYAKAR BHAVAN M.K. ROAD, CHURC HGATE MUMBAI 400 020 VS. M/S. ASAHI INFRASTRUCTURE AND PROJECTS LTD., C/O. SURESH SINGH CHAVAN NEAR KALA MARUTI MANDIR RANPISE NAGAR AKOLA 440 001 PAN AAACA8777F (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI V.VIDHYADHAR & SHRI VIRENDER SINGH A SSESSEE BY SHRI ANIL THAKRAR DATE OF HEARING 2 9/06 /2018 DATE OF PRONOUNCEMENT 27 / 08 /2018 O R D E R PER R.C.SHARMA, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) - 14, MUMBAI DATED 14/06/2013 FOR A.Y .2010 - 11 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT, 1961. 2. THE FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENUE: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW ,THE LD.CIT(A) HAS ERRED IN NOT UPHOLDING THE DECISION OF THE A O TO REJECT THE BOOKS OF ACCOUNTS OF THE ASSESSEE U/S 145(3), IGNORING THE FACT THAT THE MATERIAL EVIDENCE IMPOUNDED DURING THE SURVEY U/S 133A, ITA NO . 5 555 /MUM/201 3 ASAHI INFRASTRUCTURE AND PROJECTS LTD 2 AS DISCUSSED IN THE ASSESSMENT ORDER WAS NOT SATISFACTORY, EVASIVE AND NOT CORROBORATED BY SUPPORTING EVIDENCE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW ,THE LD.CIT(A) HAS ERRED IN ASSUMING THAT THE AO HAS COMPUTED THE INCOME FROM CONTRACT RECEIPTS OF RS. 51,38,21 21 - U/S 44AD AND PROFIT FROM THE REAL ESTATE ACTIVITY OF RS. 2,96,24,698/ - U/S 44AF, IGNORING THE FACT THAT THE AO HAS ONLY TOOK GUIDANCE FROM THE ABOVE MENTIONED SECTIONS AS MENTIONED IN THE INCOME TAX ACT, 1961 TO COMPUTE THE INCOME. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CLT(A) HAS ERRED IN DELE TING THE ADDITION OF RS. 1,09,72,807/ - MADE U/S 68, BY FAILING TO APPRECIATE THAT THE EXPLANATION FURNISHED BY THE ASSESSEE RELATING TO THE CASH DEPOSITS IN THE BANK ACCOUNT WAS NOT SATISFACTORY AND WAS NOT SUPPORTED BY CORROBORATIVE EVIDENCE' 4. THE APP ELLANT PRAYS THAT THE ORDER OF LD. CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE TO FILE OF AO OR CONFIRM THE ORDER OF THE AO. 5. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3. RIVAL CONTENTIONS HAVE B EEN HEARD AND RECORD PERUSED. IN THIS CASE, THE RETURN OF INCOME WAS E - FILED ON 15/10/2010 DECLARING TOTAL INCOME OF RS . 69,02,873/ - WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. LATER, SCRUTINY PROCEEDINGS WERE TAKEN UP AND THE AO HAS ASSESSED THE TOTAL INCOME OF THE ASSESSEE AT RS.9,89,04,720/ - . 4. THE BRIEF FACTS OF THE CASE ARE THAT IN THE COURSE OF ASSESSMENT THE AO NOTED THAT IN THE CURRENT YEAR, THE ASSESSEE HAD DECLARED CONTRACT SALES OF RS.6. 4 2 C RORES AS COMPARED TO THE CONTRAC T SALES OF RS. 45.50 CRORES IN THE ITA NO . 5 555 /MUM/201 3 ASAHI INFRASTRUCTURE AND PROJECTS LTD 3 IMMEDIATELY PRECEDING YEAR. THE AO FURTHER OBSERVED THAT THE FIGURE OF TRADING SALES OF RS.59.24 CRORES WAS IN DEEP CONTRAST WITH THE INFORMATION GIVEN BY THE ASSESSEE TO BOMBAY STOCK EXCHANGE (BSE) AS PER THE AGM OF THE COMPANY HELD ON 30/09/2010. AS PER THIS INFORMATION, THE TRADING SALES WERE SHOWN AT RS.379.30 CRORES AND AS PER THE ANNUAL REPORT PUBLISHED ON THE WEBSITE OF THE ASSESSEE (WWW.ASAHIINFRA.IN), THE SAID FIGURE WAS RS.367.60 CRORES. THE AO HAS GIVEN FURTHER COMPARISON OF VARIOUS FIGURES OF THE ASSESSEE COMPANY AS PER THE RECORDS SUBMITTED WITH THE INCOME TAX DEPARTMENT AND AS PER THE SUBMISSIONS OF THE ASSESSEE WITH THE BSE ON PAGES 3 TO 5 OF HIS ASSESSMENT ORDER. SUCH DIFFERENCES IN FIGURES HAVE ALSO BEEN DI SCUSSED BY THE AO FURTHER, IN THE ASSES SMENT ORDER ON PAGES 5, 6 AND 7. 5 . ON ACCOUNT OF ABOVE DISCREPANCIES IN FIGURES DISCLOSED TO THE INCOME TAX DEPARTMENT AND TO THE BSE, THE AO CARRIED OUT A SURVEY OPERATION ON 21.1.2013 UNDER SECTION 133A OF THE ACT AT VARIOUS PREMISES OF THE ASSESSEE . DURING THE COURSE OF SURVEY OPERATION, A NUMBER OF DOCUMENTS HAVE BEEN IMPOUNDED, AND STATEMENTS OF THE CONCERNED PERSONS WERE RECORDED IN RESPECT THEREOF. THE ASSESSING OFFICER HAS EXTENSIVELY EXTRACTED THESE STATEMEN TS IN THE ASSESSMENT ORDER. ITA NO . 5 555 /MUM/201 3 ASAHI INFRASTRUCTURE AND PROJECTS LTD 4 6 . AFTER POINTING OUT ANOMALIES AND DISCREPANCIES IN THE BOOKS OF ACCOUNT, THE ASSESSING OFFICER REJECTED THE SAME AND COMPUTED THE TOTAL INCOME IN THE FOLLOWING MANNER: - 1) INCOME FROM REAL ESTATE ACTIVITY: FOR THIS PURPOSE, T HE AO HAS AGGREGATED THE RECEIPTS FROM CONTRACT WORK AT 7 PLACES AS PER ANNEXURE A/9, PAGE 21 AT RS.6,42,27,6557 - AND HAS APPLIED THE PROVISIONS OF SECTION 44AD TO WORK OUT THE PROFIT OF RS.51,38,212 / - . 2) INCOME FROM TRADING ACTIVITY: FOR THIS PURPOSE, T HE AO HAS ADOPTED THE FIGURE OF TRADING SALES DISCLOSED BY THE APPELLANT AT RS.59,24,93,9687 - AND HAS APPLIED THE PROVISIONS OF SECTION 44AF TO WORK OUT THE PROFIT AT RS.2,96,24,698/ - . 3) CASH DEPOSITS : THE AO NOTED THAT THERE WERE CASH DEPOSITS IN THE BA NK ACCOUNTS OF THE APPELLANT TO THE TUNE OF RS. 1,09,72,807/ - . THIS AMOUNT HAS BEEN TREATED AS UNEXPLAINED CASH CREDIT BY THE AO UNDER SECTION 68 OF THE ACT. 4) GLOBAL DEPOSITORY RECEIPT (GDR) FROM THE IMPOUNDED DOCUMENTS, THE AO NOTED THAT THE APPELLANT HAS BENEFITED FROM THE TRANSACTION OF GDR ACTIVITY. FROM THESE DOCUMENTS, THE AO TOOK OUT THE FIGURE OF RS.5,31,69,000/ - AND DEEMED THE SAME TO BE THE PROFIT OF THE APPELLANT FROM GDR ACTIVITY AND ASSESSED THE SAME AS 'INCOME FROM OTHER SOURCES'. 7 . THUS , THE TOTAL INCOME OF THE A SSESSEE WAS ASSESSED AT RS.9,89,04,720/ - BY THE AO. THE ASSESSEE , AGGRIEVED FROM THE SAME HAS PREFERRED APPEAL BEFORE THE CIT(A). 8 . BY THE IMPUGNED ORDER, THE CIT(A) DELETED THE ADDITION OBSERVING AS UNDER: ITA NO . 5 555 /MUM/201 3 ASAHI INFRASTRUCTURE AND PROJECTS LTD 5 10.3 I HAVE CONSIDER ED THE ABOVE SUBMISSIONS OF THE APPELLANT AS WELL AS THE FACTS OF THE CASE. IN MY OPINION, THE ABOVE ADDITION IN RESPECT OF AN AGGREGATE AMOUNT OF CASH DEPOSITS OF RS. 1,09,72,807/ - IN THE BANK ACCOUNT OF THE APPELLANT UNDER SECTION 68 OF THE ACT HAS NO LO GIC. THE AO HAS NOT CHECKED THE BOOKS OF ACCOUNT I.E. THE CASH BOOK ETC OF THE APPELLANT AND HAS NOT GIVEN ANY FINDING AS TO WHETHER SUCH CASH DEPOSITS MADE IN THE BANK ACCOUNT ARE NOT RECORDED IN THE REGULAR BOOKS OF THE APPELLANT. IN THE FACE OF THIS FAC T, THEREFORE, THIS ADDITION CANNOT BE SUSTAINED. 10.4 SO FAR AS THE AO'S RELIANCE ON PAGE 15 OF THE LOOSE PAPER FILE NO. 9 IS CONCERNED, IT IS SEEN THAT DURING THE COURSE OF THE STATEMENT OF SHRI LAXMINARAYAN RATHI, THIS PAGE WAS SHOWN TO HIM AND HE HAD R EPLIED THAT THE ENTRIES ON PAGE 15 ARE ESTIMATED CALCULATIONS AND ALL THE ACTUALS HAVE BEEN DULY RECORDED IN THE BOOKS OF ACCOUNTS. THE APPELLANT CLAIMS THAT THE ENTIRE CASH DEPOSITS IN THE BANK ACCOUNT HAVE BEEN ROUTED THROUGH ITS BOOKS OF ACCOUNT I.E. CA SH BOOK, WHICH WAS AVAILABLE WITH THE AO. THE AO HAS NOT GIVEN ANY FINDING THAT THE CASH DEPOSITED IN THE BANK IS OUT OF THE BOOKS OF ACCOUNT OF THE APPELLANT. IN VIEW OF THESE FACTS THEREFORE, IT WAS WRONG ON THE PART OF THE AO TO CONCLUDE THAT THE AGGREG ATE AMOUNT OF CASH DEPOSITS OF RS.1,09,72,807/ - IN THE BANK ACCOUNT OF THE APPELLANT WAS UNEXPLAINED CASH DEPOSIT. THE AO SHOULD HAVE VERIFIED THE BOOKS OF ACCOUNT OF THE APPELLANT AND BASED ON THE SAME, HE SHOULD HAVE GIVEN A FINDING THAT NONE OF SUCH CAS H DEPOSITS ARE RECORDED IN THE BOOKS OF ACCOUNT OF THE APPELLANT BEFORE MAKING ANY SUCH ADDITION. HENCE, THE ADDITION OF RS.1,09,72,807/ - MADE BY THE AO UNDER SECTION 68 OF THE ACT IS HEREBY DELETED. 9 . FURTHER, THE LEARNED CIT(A) DELETED THE ADDITION OF RS. 5,31,69,000,/ - BY OBSERVING AS UNDER: 11.3 I HAVE CONSIDERED THE ABOVE SUBMISSIONS OF THE APPELLANT AS WELL AS THE FACTS OF THE CASE. FIRSTLY, IT IS SEEN THAT THE GDR TRANSACTIONS DO NOT PERTAIN TO THE CURRENT YEAR AT ALL. HENCE ANY ADDITION COULD NO T HAVE BEEN MADE IN THE HANDS OF THE APPELLANT IN THE CURRENT YEAR. FROM THE RELEVANT DOCUMENTS I.E. PAGES 58 AND 60 OF FILE NO. 9 OF ANNEXURE A/1 AND PAGE 215 OF FILE NO. 1 OF ANNEXURE A/1 IMPOUNDED AT MUMBAI, IT IS EVIDENT THAT THESE TRANSACTIONS PERTAIN TO SUBSEQUENT YEARS, IN WHICH THE APPELLANT HAS RECEIVED SHARE APPLICATION MONEY. ON PAGE 215 OF FILE NO. 1 OF ITA NO . 5 555 /MUM/201 3 ASAHI INFRASTRUCTURE AND PROJECTS LTD 6 ANNEXURE A/1 IMPOUNDED AT MUMBAI, IS SEEN THAT SOME ENTRIES (AS PER CHART IN LOWER HALF) PERTAIN TO THE CURRENT YEAR. BUT THE AO HAS NOT BASED H IS ADDITION ON THESE FIGURES. 11.4 IT IS ALSO SEEN THAT DURING THE COURSE OF HIS STATEMENT, SHRI LAXMINARAYAN RATHI HAD EXPLAINED THE ENTRIES ON PAGES 58 & 60 (FILE NO. 9/MUMBAI), WHEREIN HE HAD STATED THAT ALL THE EXPENSES WERE RECORDED IN THE BOOKS OF ACCOUNTS. SAME IS AS PER HIS STATEMENT EXTRACTED BY THE AO IN THE BODY OF ASSESSMENT ORDER. FURTHERMORE, IT IS EVIDENT THAT PAGE NOS. 58 & 60 DO NOT PERTAIN TO AY 2010 - 11. THEREFORE THERE WAS NO JUSTIFICATION ON THE PART OF THE AO FOR MAKING A NY ADDITION I N AY 2010 - 11. T HE AO HAS ALSO NOT CHECKED AND VERIFIED THESE TRANSACTIONS FROM THE REGULAR BOOKS OF ACCOUNT OF THE APPELLANT FOR THE CONCERNED YEAR. I ALSO AGREE WITH THE ARGUMENT OF THE APPELLANT THAT ANY ADDITION IN RESPECT OF SHARE APPLICATION MONEY CA NNOT BE MADE UNLESS THE IDENTITY OF THE INVESTORS IS ESTABLISHED TO BE BOGUS AND THEIR CREDITWORTHINESS IS PROVED TO BE DOUBTFUL. HENCE, I HAVE NO OPTION THAN TO DELETE THE ADDITION OF RS.5,31,69,000 / - MADE BY THE ASSESSING OFFICER. 1 0 . AGAINST THE ABOVE ORDER OF THE CIT(A), THE REVENUE IS IN FURTHER APPEAL BEFORE US. 1 1 . IT WAS ARGUED BY LEARNED DR THAT CIT(A) HAS DELETED THE ADDITION WITHOUT CONTROVERTING DETAILED FINDINGS SO RECORDED WITH RESPECT TO THE DISCREPANCY FOUND IN THE BOOKS OF ACCOUNTS VIS - - V IS DOCUMENTS IMPOUNDED DURING COURSE OF SURVEY. IT WAS FURTHER ARGUED THAT AO HAS GIVEN CLEAR FINDING WITH REGARD TO CASH DEPOSIT IN THE BANK ACCOUNT WHICH WAS MORE THAN AVAILABLE CASH WITH THE ASSESSEE AND CONTENDED THAT CIT(A) HAS WRONGLY DELETED THE ADD ITION WITHOUT GIVING ANY POSITIVE FINDING FOR THE AVAILABILITY OF SURPLUS CASH WITH THE ASSESSEE. 12 . ON THE OTHER HAND, LEARNED AR CONTENDED THAT T HE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE DULY AUDITED AND AUDIT REPORT U/S 44AB DULY SIGNED BY ITA NO . 5 555 /MUM/201 3 ASAHI INFRASTRUCTURE AND PROJECTS LTD 7 THE CHARTERE D ACCOUNTANT WAS SUBMITTED TO THE ASSESSING OFFICER. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAD SUBMITTED ALL THE DETAILS CALLED FOR. DURING THE COURSE OF SURVEY ACTION U/S 133A OF THE IT. ACT, THE ASSESSING OFFICER HAD IMPOUNDED CERTAIN BOOKS/DOCUMENTS. THE ASSESSING OFFICER HAD RECORDED STATEMENT OF SHRI LAXMINARAYAN RATHI, MANAGING DIRECTOR OF THE ASSESSEE COMPANY. DURING THE COURSE OF RECORDING OF STATEMENT, THE ASSESSING OFFICER HAD ASKED HIM TO EXPLAIN THE CONTENTS OF THE IMPOUNDED MATERIAL. THE SAME WAS DULY EXPLAINED TO THE ASSESSING OFFICER . 13 . IT WAS FURTHER CONTENDED THAT IN RESPECT OF ANOMALIES CLAIMED BY THE AO ON ACCOUNT OF PROJECT COMPLETION METHOD (PAGE NO 32 AND 33 OF ASSESSMENT ORDER). THE AO ON PERUSAL OF FILE NO 8 PAGE NO 3O STATED THAT IT IS A CHART WHICH CONTAINS TRANSACTION RECEIPT 18.13 CRORES AND CONSTRUCTION MONEY SPENT OF RS. 19.67 CRORES AND THIS CHART DOES NOT SHOW ANY DATE BUT IRRESPECTIVE OF THAT AS PER PERCENTAGE COMPLETION METHOD ALMOST 60% OF THE WORK IS C OMPLETED. BESIDES THE AO REFERRED THE FILE NO 4 PAGE NO 59 & 63 SHOWING THE STATEMENT OF WORK IN HAND AS ON 20.9.2012 AND DETAILS OF WORK COMPLETED AS ON 01.05.2012 AND FILE NO 9 SHOWING WORK COMPLETED UPTO 28.02.2011 AT RS. 21.7 CRORES AND BALANCE WORK TO BE COMPLETED AT RS. 93.07 CRORES. THUS THE CLAIM OF THE AO THAT THE WORK IN PROGRESS HAS BEEN COMPLETED OF 60% IS INCORRECT AND CANNOT BE A GROUND FOR REJECTION OF BOOKS OF ACCOUNTS. ITA NO . 5 555 /MUM/201 3 ASAHI INFRASTRUCTURE AND PROJECTS LTD 8 14 . AS PER LEARNED AR AS REGARDS THE CASH TRANSACTION OF PAYMENTS MADE AND CASH DEPOSIT IN THE BANKS IS CONCERNED THE AO HAS RELIED ON SOME OF THE SCRIBBLING DONE BY THE STAFF OF THE ASSESSEE COMPANY. THE AO HAS NOT EVEN MENTIONED AS TO FROM WHOM CASH WAS RECEIVED OR TO WHOM IT WAS PAID. THE AO HAS ONLY ASSUMED THAT WHAT IS R ECORDED ON LOOSE PAPER IS UNACCOUNTED CASH RECEIPT OR PAYMENT WITHOUT ANY SUPPORTING EVIDENCES. IN THIS REGARD THE DIRECTOR HAS EXPLAINED THE DETAILS OF CASH PAYMENT/RECEIPT AND IT HAS BEEN CLEARLY EXPLAINED THAT ALL THE ACTUAL TRANSACTION OF CASH DEPOSIT AND PAYMENTS HAVE BEEN ROUTED THROUGH CASH BOOK ONLY. 15 . LEARNED AR ALSO RELIED ON THE ORDER OF THE CO - ORDINATE BENCH IN CASE OF ASSESSEE IN ITA NO.5760/MUM/2012 DATED 20/07/2016 FOR THE A.Y.2007 - 08 AND CONTENDED THAT SIMILAR ADDITION MADE WAS DELETED BY CIT(A) AND THE TRIBUNAL HAVE CONFIRMED THE ORDER OF THE CIT(A). ACCORDINGLY, THE ISSUE UNDER CONSIDERATION WAS COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE. 16 . RIVAL CONTENTIONS HAVE BEEN CONSIDERED AND RECORD PERUSED. FACTS IN BRIEF ARE TH AT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF CONSTRUCTION WORK, TRADING IN IRON & STEEL. THE COMPANY CLAIMS TO BE ENGAGED IN URBAN INFRASTRUCTURE DEVELOPMENT OF SMALL TOWNS FOR LOWER INCOME GROUP OF PEOPLE. DURING THE COURSE OF ASSESSMENT, AO OBSE RVED THAT THE FIGURE OF TRADING SALES OF RS. 59.24 CRORE IS IN DEEP CONTRAST WITH THE INFORMATION PROVIDED BY THE COMPANY WITH BOMBAY STOCK EXCHANGE (BSE) AS ITA NO . 5 555 /MUM/201 3 ASAHI INFRASTRUCTURE AND PROJECTS LTD 9 PER THEIR 22 ND AGM ON 30 - 09 - 2010 ALSO AS PER THEIR INFORMATION IN THEIR WEBSITE WWW.ASAHIINFRA.IN . AS PER THE INFORMATION SUBMITTED BY THE ASSESSEE IN THE BSE THAT TRADING SALES IS SHOWN TO RS. 379.30 CRORE AND AS PER THE ANNUAL REPORT IN THE ASSESSEE'S WEBSITE RS. 367.60 CRORE. THIS DIFFERENCE IN TRADING SALES FIGURE CALLED FOR BY THE AO , DETAILED CO MPARISON AND RECONCILIATION OF PROFIT & LOSS ACCOUNT, BALANCE SHEET SUBMITTED BY THE ASSESSEE TO THE DEPARTMENT AND SUBMITTED BY THE ASSESSEE COMPANY TO THE BOMBAY STOCK EXCHANGE (BSE) AND AVAILABLE IN THE ASSESSEES WEBSITE WAS MADE BY AO . THE AO OBSERVED WITH RESPECT TO ANNUAL REPORT AVAILABLE IN THE ASSESSEE'S WEBSITE THAT THE ASSESSEE HAS SHOWN RS.367.6 CRORES IN THE CONSOLIDATED FASHION BUT HE HAS NOT SUBMITTED STANDALONE ACCOUNTS OF ASSESSEE COMPANY AS WELL AS ITS SUBSIDIARY COMPANY I.E. ASAH I INFRASTRUCTURE & PROJECT LTD. FZE, DUBAI SEPARATELY. THUS IT WA S NOT CLEAR WHETHER THE DIFFERENCE OF RS. 300 CRORES TRADING WAS DONE ONLY THROUGH DUBAI SUBSIDIARY IF SO .ASSESSEE HAS MADE PROFIT OF RS. 33.97 CRORE PROFIT HAS ARISING ONLY FROM DUBAI SUBSI DIARY UNIT. AO FURTHER OBSERVED THAT THE ASSESSEE IS MAKING PROFIT OF ONLY RS. 1.18, CRORE OUT OF RS. 78.2 CRORE TRADING IN INDIA BUT HE WAS ABLE TO MAKE PROFIT OF RS. 33.97, CRORE OUT OF RS. 301.1 CRORE OF TRADING FROM THE SUBSIDIARY COMPANY AT DUBAI. 17 . AO ALSO OBSERVED THAT THE ASSESSEE HAS NOT PAID ANY TAX ON THE INCOME EARNED BY SUBSIDIARY IN DUBAI AND HAS NOT MADE ANY QUALIFICATION IN ANY PLACE IN THE ANNUAL REPORT OR ANY OF THE SUBMISSION WITH THE INCOME TAX ITA NO . 5 555 /MUM/201 3 ASAHI INFRASTRUCTURE AND PROJECTS LTD 10 DEPARTMENT OR BSE ABOUT TAX PAYABLE OR NO T PAYABLE REGARDING THE PROFIT OF SUBSIDIARY COMPANY OF RS. 33.97 CRORE. AO ALSO OBSERVED THAT DURING THIS PERIOD, ASSESSEE HAS RAISED CERTAIN GDR THROUGH DUBAI SUBSIDIARY WHICH ASSESSEE HAS NOT MENTIONED ANYWHERE. CAPITAL RAISED THROUGH GDR WAS HELD IN E URAM BANK TILL DECEMBER 2009 AND AFTER REPARTRIATING $ 3 LAKH TO INDIA. THE AO OBSERVED THAT VEST OF THE AMOUNT HAS BEEN INVESTED IN A SUBSIDIARY IN DUBAI (FIZ) , HOWEVER, ONLY THE INTER EST ACCRUED ON THE SAID AMOUNT WA S HELD IN BALANCE. AO ALSO OBSERVED TH AT ASSESSEE HAS NOT EXPLAINED HOW MUCH AMOUNT ASSESSEE WAS ABLE TO RAISE THROUGH GDR AND WHAT WAS THE APPLICATION OF THE SAME IN THE FILE . 18 . AO ALSO OBSERVED THAT DURING THE YEAR ENDING 31 - 03 - 2010 ASSESSEE HAS INCREASED ITS SHARE CAPITAL FROM RS. 3.71 CR ORES TO RS. 33.62 CRORE. THIS INFUSION OF RS. 29.91 CRORE IS NOT CLEARLY EXPLAINED IN THE NOTES. ASSESSEE HAS ONLY STATED THAT AROUND MAY 2010, 336,296,000 EQUITY SHARES HAVE BEEN ISSUED OF RS. 1 EACH. FURTHER AS PER THE CONSOLIDATED ACCOUNT, AO OBSERVED T HAT ASSESSEE HA S TO PAY TAX ON RS. 35.15 CRORE, B UT HE HAS SHOWN NET PROFIT OF ONLY RS.1.21 CRORE AND PAID SELF ASSESSMENT TAX OF RS. 10.17 LAKHS ON 14 - 10 - 2010, THEREBY HE HAS CONCEALED INCOME TO THE TUNE OF RS.33,94,00,177/ - . 1 9 . IN VIEW OF THE AB OVE DISCUSSION, AO OBSERVED THAT ASSESSEE TRANSACTIONS MAINLY IN RESPECT TO TAXATION CLOUDED WITH LOT OF IRREGULARITIES, MAINLY TO CONCEAL THE TAXABLE INCOME WHICH NEEDS A DETAILED SURVEY ACTION ITA NO . 5 555 /MUM/201 3 ASAHI INFRASTRUCTURE AND PROJECTS LTD 11 UNDER SECTION 133A. THEREAFTER, A SURVEY ACTION U/S. 133A WAS CARRIED OUT IN THE PREMISES OF ASSESSEE COMPANY AT (1) 1 ST FLOOR, KORADIA HOUSE, 53 MARUTI LANE FORT, MUMBAI - 400 001 (2) S - 21, RADHA KUNJ, GANGA NAGAR, WASHIM BYE PASS ROAD, OLD CITY, AKOLA, MAHARASHTRA (3) C/O. SURESH SINGH CHAVAN, NEAR KALA MARUTI MAN DIR, RANPISE NAGAR, AKOLA, MAHARASHTRA - 444 001. IN CONTINUATION BASED ON THE INFORMATION COLLECTED DURING THE DAY OF SURVEY, SURVEY U/S. 133A WAS ALSO CONDUCTED AT JHUJHUN, NEW PROJECT SITE OF ASSESSEE AT RAJASTHAN AND ALSO AT BRANCH OFFICE IN NAGPUR. DU RING THE COURSE OF SURVEY, A STATEMENT OF SHRI SAGAR DEVIDAS BOBADE, ACCOUNTING OFFICER OF THE ASSESSEE COMPANY WAS RECORDED ON 08/01/2013. FURTHERMORE, A STATEMENT OF SHRI PRAKASH PARAG, OFFICE ASSISTANT AT MUMBAI WAS ALSO RECORDED. A STATEMENT OF SHRI LA XMINARAYAN RATHI, MANAGING DIRECTOR OF THE ASSESSEE COMPANY WAS ALSO RECORDED AT THE SITE OF JHUJHUNU ON THE VERY SAME DAY. A STATE MENT OF THE SHRI PARESH RATHI, DIRECTOR OF THE ASSESSEE COMPANY AND ALSO CFO OF THE COMPANY WAS ALSO RECORDED. ALL THE QUESTI ONS ASKED DURING THE COURSE OF STATEMENT AND THEIR REPLY WAS ELABORATELY MENTIONED BY AO IN HIS ORDER FROM PAGE NO.7 TO 31. ASSESSEE WAS ALS O PROVIDED WITH XEROX COPIES OF ALL THE DOCUMENTS IMPOUNDED DURING COURSE OF SURVEY AND COPY OF STATEMENT IS RECORDE D. THEREAFTER, AO MENTIONED VARIOUS DOCUMENTS IMPOUNDED DURING C OURSE OF SURVEY WHICH INDICATED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE WHICH ARE CLAIMED TO BE WRONGLY MAINTAINED BY HIM. THE AO OBSERVED THAT NONE OF THE STATEMENTS MADE BY THESE PERSONS IS EITHER ITA NO . 5 555 /MUM/201 3 ASAHI INFRASTRUCTURE AND PROJECTS LTD 12 CLARIFIED OR NULLIFIED. THE AO ELABORATELY DISCUSSED THE DOCUMENTS IMPOUNDED DURING THE COURSE OF SURVEY AT PAGE 32 - 36. 20 . ASSESSEE'S REPRESENTATIVE HAS BEEN OFFERED OPPORTUNITIES BY THE AO TO CLARIFY THE ABOVE ISSUES IN VARIOUS HEARINGS CONDUCTED ON 21.01.2013, 07.02.2013 AND ALSO ON 12.03.2013. DURING THE COURSE OF HEARING ON 12.03.2013, THE AR OF THE ASSESSEE WAS ASKED TO SUBMIT THE DETAILS RELATING TO : (I) RECONCILIATION OF BANK ACCOUNT AS PER SURVEY FINDING (II) CASH DEPOSITS AND RECONCILI ATION WITH CASH BOOK (III) TRADING ACCOUNT. (IV) GDR TRANSACTION (V) PROJECT COMPLETION METHOD OF ALL THE PROJECTS AND REVISED WORKING. 21 . DURING THE CO URSE OF HEARING BEFORE THE AO , THE AR WAS TOLD TO SUBMIT ALL DETAILS AS A FI NAL OPPORTUNITY ON OR BEFORE 20/ 03 / 2013. FURTHER, AR ALSO SERVED WITH A SHOW CAUSE NOTICE DATED 12 / 03 / 2013 WHY IN THE CONTEXT AND CONSIDERATION OF ABOVE ANOMALIES IN THE BOOKS OF A CCOUNT OF THE ASSESSEE COMPANY, WHY THE SAME SHOULD NOT BE REJECTED UNDER SECTION 145(2). 22 . DURING THE FINAL HEARING ON 28 /03/ 2013, THE AR OF THE ASSESSEE HAS NOT SUBMITTED ALL THE RELEVANT DETAILS, VOUCHERS ETC. IN SUPPORT ITS CLAIM NOR MADE ANY EFFOR TS TO RECONCILE ANY OF THE ANOMALIES AND HAS EXPRESSED HIS INABILITY TO PROVIDE ANY FURTHER. ITA NO . 5 555 /MUM/201 3 ASAHI INFRASTRUCTURE AND PROJECTS LTD 13 23 . IN VIEW OF THE ABOVE, THE AO HAS NO OPTION OTHER THAN TO COMPUTE THE INCOME OF THE ASSESSEE IN THE BEST JUDGEMENT MANNER AFTER REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE. 2 4 . BY APPLYING THE PROVISIONS OF SECTION 145(2), AO FRAMED ASSESSMENT U/S.144. AFTER HAVING A DETAILED DISCUSSION, AO REJECTED BOOK RESULTS AND APPLIED 8% PROFIT ON CONTRACT RECEIPT AND 5% PROFIT ON THE TRADING RECEIPTS. 25 . WITH REGARD TO THE ORDER OF THE CO - ORDINATE BENCH DATED 20/07/2016 AS RELIED ON BY LEARNED AR, WE FOUND THAT FACTS WERE CLEARLY DISTINGUISHABLE AND THE TRIBUNAL HAVE CONFIRMED THE ORDER OF CIT(A) ON THE PLEA THAT DURING THE COURSE OF APPELLATE PROCEEDINGS, THE CIT(A) HAS CALLED FOR A REMAND REPORT VIDE LETTER DATED 23/02/2011. THE TRIBUNAL IN ITS ORDER HAVE OBSERVED THAT ASSESSEE HAS FILED A COMPLETE RECONCILIATION AND DIFFERENCE IN LABOUR RECEIPTS AROSE DUE TO THE FACT THAT AO HAS NOT GONE INTO DETAILS OF WORK CONTR ACT, SERVICE TAX AND NET SALES AND SALES RETURNS TO DODSAL. THE TRIBUNAL HAVE ALSO FOUND THAT PAYMENTS TOWARDS SERVICES TO DODSAL AMOUNTING TO RS.42,88,111/ - WAS SUBJECT TO TDS AND ASSESSEE HAS DEDUCTED THE SAME. FURTHERMORE, THE MAIN ISSUE BEFORE THE TRI BUNAL WAS WITH REGARD TO DELETION OF ADDITION BY CIT(A) BY RELYING ON THE FRESH EVIDENCE FILED BEFORE CIT(A) . IN THIS REGARD THE TRIBUNAL HAVE OBSERVED THAT THERE IS NO VIOLATION OF PROVISIONS OF RULE 46A IN SO FAR AS AO WAS GIVEN SUFFICIENT OPPORTUNITY QU A THE RECONCILIATION STATEMENT FILED BEFORE THE CIT(A) , WHICH WAS SENT BY CIT(A) TO THE AO FOR HIS ITA NO . 5 555 /MUM/201 3 ASAHI INFRASTRUCTURE AND PROJECTS LTD 14 COMMENTS . HOWEVER, THE AO KEPT SILENT COVERING ALMOST SIX MONTHS, TILL THE DATE OF PASSING OF APPELLATE ORDER BY CIT(A). 26 . IT IS CLEAR FROM THE ORDER OF TH E TRIBUNAL THAT GRIEVANCE OF REVENUE WAS BASICALLY ON THE GROUND OF ACCEPTING THE FRESH EVIDENCES BY THE CIT(A) WITHOUT GIVING OPPORTUNITY TO THE AO. HOWEVER, THE FACTS AND ISSUE DURING THE YEAR UNDER CONSIDERATION ARE ENTIRE LY DIFFERENT WHEREIN ADDITION H AS BEEN MADE BY THE AO IN TERMS OF THE DOCUMENTS IMPOUNDED DURING THE COURSE OF SURVEY WHICH DID NOT FIND PLACE IN THE REGULAR BOOKS OF ACCOUNTS. ACCORDINGLY, THE ISSUE DECIDED BY THE TRIBUNAL VIDE ORDER DATED 28/07/2018 ARE NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE. 27. WITH REGARD TO THE CASH DEPOSIT IN THE BANK ACCOUNT, THE AO OBSERVED THAT CLOSE PERUSAL OF BANK STATEMENTS OF THE ASSESSEE COMPANY REVEALS CASH DEPOSITS TO THE TUNE OF RS.1,09,72,807/ - . IT WAS SUBMITTED BEFORE THE AO THAT THE ASSESSE E COMPANY HAD A TOTAL WITHDRAWAL OF MORE THAN RS.1 CRORE. AO OBSERVED THAT T HERE ARE VARIOUS IMPOUNDED DOCUMENTS WHICH SHOWS CASH TRANSACTIONS , S PECIFICALLY PAGE NO.15 OF FILE 9 OF ANNEXUR E A/1 IMPOUNDED AT MUMBAI SHOWS DETAILS OF PAYMENT MADE BY CASH BETW EEN 08 - 05 - 2009 TO 14 - 09 - 2009 TO THE EXTENT OF RS. 96.18 LAKHS. ALSO REGARDING LABOUR PAYMENT BETWEEN 04 - 05 - 2009 TO 05 - 10 - 2009 TO THE EXTENT OF RS. 50.4 LAKHS. THIS PERTAINS TO AY 2010 - 11 UNDER CONSIDERATION . ONLY FOR THIS PERIOD (MAY 2009 TO SEPTEMBER 2009 ) TOTAL CASH EXPENSES SHOWS AROUND RS.1.46 CRORES MUCH MORE THAN COMPANY' S CASH WITHDRAWAL FROM THE BANK. THUS, ASSESSEE'S ITA NO . 5 555 /MUM/201 3 ASAHI INFRASTRUCTURE AND PROJECTS LTD 15 EXPLANATION THAT THE CASH DEPOSITS ARE MADE ONLY FROM CASH WITHDRAWALS WAS FOUND TO BE DEVOID OF ANY MERIT BECAUSE OF HUGE CASH EXPEN SES INCURRED BY THE COMPANY AS FOUND IN LOOSE PAPERS. ACCORDINGLY, AO TAXED THE CASH DEPOSITS OF RS.1,09,72,807/ - AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE INCOME - TAX ACT, 1961. 2 8 . WITH REGARD TO THE GLOBAL DEPOSITARY RECEIPT (GDR), AO OBSERVED THAT FILE NO. 9 / MUMBAI - PAGE NO. 58 - SHOWS CERTAIN TRANSFER FROM 31/10/2010 TO 27/05/2011 BETWEEN DEUTSCHE BANK TRUST CO. AMERICA, INDIA FOCUS CARDINAL FUND KLL LTD., BASMATI SECU RITIES PVT. LTD. T O THE TUNE OF RS. 54.76 CRORE. T HESE PARTIES NAME ALSO APPEAR IN THE SEBL INVESTIGATION REPORT RELATING TO GDR ISSUE. FROM THIS AO OBSERVED THAT INCOME TAX PAID FOR DIVIDEND IS MATCHING WITH ASSESSEE'S BOOKS OF ACCOUNT, WHICH IS SHOWN AS PROVISION FOR TAXATION FOR THE A.Y. 2010 - 11. THIS MAKES, THE LOOSE PAPER 60 & 58 M ORE AUTHENTIC. FURTHER, IT IS ALSO MATCHES WITH TOTAL GDR TRANSACTION OF RS.29.91 CRORES. THIS PAPER BEING AUTHENTIC, IT IS CLEAR THAT THE PROCEEDS OF GDR, WHICH ARE NOT BROUGHT TO THE BOOKS OF ACCOUNT AS PER PAGE 58, 60 OF FILE NO.9 OF ANNEXURE A/1 IMPOUN DED AT MUMBAI AND PAGE 215 OF FILE NO.1 OF ANNEXURE A/1 IMPOUNDED AT MUMBAI AROUND RS.860.29 LAKHS AND FURTHER THE WORD 'NET AMOUNT DUE TO - YOU/ +US' INDICATES THE FIGURE OF RS.531.69 LAKHS. SINCE THE FIGURE IS IN POSITIVE IT IS CLEAR THAT THE BENEFIT OF R S.531.69 LAKHS IS FOR THE ASSESSEE I.E, 'US'. THUS CONSIDERING THE ABOVE IMPOUNDED PAPERS, STATEMENTS RECORDED , THE AO OBSERVED THAT ASSESSEE HAS GOT BENEFIT ITA NO . 5 555 /MUM/201 3 ASAHI INFRASTRUCTURE AND PROJECTS LTD 16 RS.5,31,69,000/ - FROM THE GDR TRANSACTION NOT IN THE NORMAL COURSE OF GDR UTILIZATION BUT IN TERMS OF OTHER BENEFIT WHICH IS NOT RECORDED IN THE BOOKS OF ACCOUNTS. ACCORDINGLY, AN AMOUNT OF RS.5,31,69,000/ - WAS ADDED TO THE INCOME OF THE ASSESSEE UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. 2 9 . IN VIEW OF THE ABOVE DISCUSSION, AO MADE FOLLOWING ADDITION S: - RS. RS. (A) INCOME FROM REAL ESTATE ACTIVITY 51,38,212 (B) INCOME FROM TRADING ACTIVITY 2,96,24,698 (C) CASH DEPOSITS 1,09,72,807 (D) INCOME FROM OTHER SOURCES (GDR) 5.31.69,000. TOTAL INCOME 9,89,04,717 ROUNDED OFF TO 9,89,04,720 30 . WITHOUT CONTROVERTING ANY OF THE FINDINGS S O RECORDED BY THE AO, THE CIT(A) JUMPED TO THE CONCLUSION THAT AO HAS WRONGLY APPLIED THE PROVISIONS OF SECTION 44AD AND 44AF FOR ESTIMATING INCOME ON CONTRACT RECEIPT AND TRADING ACTI VITIES. WE OBSERVE THAT AFTER POINTING OUT SO MANY DEFECTS AND DISCREPANCIES WITH RESPECT TO THE DOCUMENT FOUND DURING THE COURSE OF SURVEY VIS - - VIS ENTRY MADE IN THE REGULAR BOOKS OF ACCOUNTS THE AO HAS RE JECTED THE BOOK RESULTS AND HAD APPLIED THE PRO FIT RATE ON CONTRACT RECEIPT AT 8% AND TRADING RECEIPT AT 5%. EVEN WITH RESPECT TO THE DEPOSIT O F CASH IN BANK, THE AO HAS CLEARLY OBSERVED THAT AVAILABLE CASH WAS NOT SUFFICIENT, THEREFORE, CASH ITA NO . 5 555 /MUM/201 3 ASAHI INFRASTRUCTURE AND PROJECTS LTD 17 DEPOSIT IN BANK IN EXCESS OF CASH AVAILABLE WAS ADDED. IN VI EW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN THE ACTION OF THE CIT(A) DELETING THE ADDITIONS SO MADE BY AO AFTER HAVING ELABORATE DISCUSSION IN HIS ORDER WHICH WAS NOT CONTROVERTED BY CIT(A) BY BRINGING ANY POSITIVE MATERIAL ON RECORD. WHILE DIS POSING THE APPEAL, THE CIT(A) IS DUTY BOUND TO CONTROVERT THE FI NDINGS RECORDED BY THE AO . JUST BY POINTING OUT FAULT ON THE PART OF AO BY SAYING THAT AO SHOULD HAVE EXAMINED THE THINGS, CIT(A) CANNOT DELETE THE ADDITION WITHOUT RECORDING POSITIVE FINDINGS FOR THE SAME. POWERS OF CIT(A) IS CO - TERMINUS WITH THAT OF AO, WHAT THE AO HAS FAILED TO DO , THE CIT(A) IS DUTY B OUND TO DO. ACCORDINGLY, WE SET ASIDE THE ORDER OF CIT(A) AND IN ALL FAIRNESS AND MATTER IS RESTORED BACK TO THE FILE OF CIT(A) FOR DECIDING A FRESH AFTER GIVING DUE COGNIZANCE TO THE FINDINGS OF AO AND ALSO FULL OPPORTUNITY TO THE ASSESSEE. 31 . IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 / 08 /2018 SD/ - (AMARJIT SINGH) SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED 27 / 08 /2018 KARUNA SR. PS ITA NO . 5 555 /MUM/201 3 ASAHI INFRASTRUCTURE AND PROJECTS LTD 18 COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CI T(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//