M/s Timblo Private Limited., Margao V. The Assistant Commissioner of Income Tax, Central Circle, Panaji., Panaji

ITSSA 90/PAN/2016

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4330 (ITAT-PANAJI)
• Duration Of Justice: 5 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-05-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: WT(D)
• Assessment Year: 2010-2011
• Appeal Filed On: 15-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Corroborative evidences; Revised return
• Section: 132; 69C; 143(3); 153A; 80G; 139(5); 13; 153

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T. (SS) A. No. 78/PAN/2016 Assessment Year: 2010-11 Deputy Commissioner of Income Tax, Central Circle, Pundalik Niwas, Rua-De-Ourem, Panaji, Goa Vs. M/s Timblo Pvt. Ltd. Kadar Manzil, Near Hari Mandir,Margao – Goa [PAN: AABCT 1944N] (Appellant) (Respondent) I.T. (SS) A. No. 90/PAN/2016 Assessment Year: 2010-11 M/s Timblo Pvt. Ltd. Kadar Manzil, Near Hari Mandir,Margao – Goa 403601 [PAN: AABCT 1944N] Vs. Asstt. Commissioner of Income Tax, Central Circle, Panaji, Goa (Appellant) (Respondent) Appellant by : Shri M. R. Hegde, CA & Shri Shravan Swarup, CA Respondent by: Shri Manoj Joshi CIT, DR Date of Hearing: 04.04.2022 Date of Pronouncement: 13.05.2022 2 IT(SS)A Nos.78 & 90/PAN/2016 Assessment Year: 2010-11 ORDER Per Dr. M. L. Meena, AM: These cross appeals by the Revenue and the assessee have been filed against the impugned order dated 30.08.2016 passed by the Ld. Commissioner of Income Tax (Appeals)-2, Panaji, in respect of the Assessment Year 2010-11. 2. The revenue has raised the following grounds of appeal in IT(SS)A No. 78/PAN/2016: “1. Whether the CIT(A) is right in directing AO to consider revised return submitted beyond expiry of one year from the end of assessment year, which is contrary to the provision of section 139(5) of the I.T. Act, 1961? 2. Whether the Ld. CIT(A) was right in deleting addition made on account of legal expenses of Rs. 2,00,00,000/-, despite the said entry appearing in seized diary during the course of search action u/s 132 of the I.T. Act on 21.04.2010? 3. Whether the Ld. CIT(A) was right in deleting addition made on account of unexplained expenditure of Rs. 2,28,54,314/- despite the said entry appearing in seized diary during the course of search action u/s 132 of the I.T. Act on 21.04.2010. 4. Whether the Ld. CIT(A) was right in accepting the assessee’s version that some entries in dairy are mere estimation while all others are actual expenses? 5. For the above grounds and any additional grounds that may be agitated during the course of the hearing it is prayed that the order of the Ld. CIT(A)-2, Panaji may be quashed and that of the AO restored.” 3. The assessee in cross appeal, has raised the following grounds of appeal in IT(SS)A No. 90/PAN/2016: 3 IT(SS)A Nos.78 & 90/PAN/2016 Assessment Year: 2010-11 “1. The impugned Order passed by the learned Commissioner of Income- tax [Appeals]-2, Goa dated 30/08/2016, in so far as it is against the Appellant is opposed to law, equity, weight of evidence, probabilities and the facts and circumstances in the Appellant’s case. 2. The appellant denies itself liable to be assessed under section 143 [3] r.w.s. 153A of the Act under the impugned order on the ground that:- i. The search initiated in the case of the appellant is illegal and ultra vires the provisions of section 132 [1] [a], [b] & [c] of the Act; ii. That the search is conducted not on the basis of any prior information or material inducing any belief but purely on the suspicion and therefore, the action under section 132 [2] is bad in law [ 224 ITR 19 [SC] ] and consequent assessment under section 153 A is null and void-ab-inito on the parity of the ratio of the decision of the Hon’ble Apex Court in the case of Ajith Jain, reported in 260 ITR 80. iii. That the appellant contends that the revenue has to discharge its burden of proving that there is a valid initiation of search under section 132 [1] [a], [b] & [c] of the Act, its execution and its completion in accordance with law to render the proceedings valid and to assume jurisdiction to make an assessment under section 153 A of the Act. Reliance is placed on the decision of the Hon’ble Karnataka High Court in the case of C. Ramaiah Reddy Vs. ACIT, reported in [2011] 61 DTR 82. iv. That the appellant contends that a valid search is a sine qua non for making a valid assessment under section 153 A of the Act on the parity of the ratio of the decision of the Hon’ble Apex Court in the case of Ajit Jain, reported in 260 ITR 80. 3. The learned Commissioner of Income-tax [Appeals] failed to appreciate that the warrant of authorization which is alleged to have been issued to search the appellant has not been executed and consequently the subsequent order of assessment passed under section 143[3] r.w.s. 153A of the Act is bad in law, under the facts and circumstances of the case. 4. The Appellant craves leave to add, alter, delete or substitute any of the grounds urged above. 4 IT(SS)A Nos.78 & 90/PAN/2016 Assessment Year: 2010-11 5. In the view of the above and other grounds that may be urged at the time of the hearing of the appeal, the Appellant prays that the appeal may be allowed in the interest of justice and equity.” 4. Briefly, facts as per records are that the assessee is engaged in the business of mining, extraction, processing, trading and export of iron ore. A search & seizure action u/s. 132 of the Act was conducted in the business premises of the assessee company on 21.04.2010. Subsequently, notice u/s 153A dated 04-08-2010 was issued. In response to the said notice the Appellant filed return of income declaring total income of Rs.54,51,02,479I- on 30/09/2010. The appellant filed a revised return declaring a taxable income of Rs.53,88,63,187/- on 13/12/2012. The assessment was completed u/s 153A by an order dated 31/12/2012 by determining the taxable income at Rs.58,79,56,793/-. 4.1 During the course of search, a Diary was found with certain entries towards payment to different persons. It was admitted by Smt Radha S. Timblo the Managing Director of the assessee company on the 10.06.2010 in her statement under section 132(4) that the Diary 2002 contained entries of payments made for business purposes and a sum of Rs, 1,94,09,686/- was admitted as ‘unexplained expenses’ and was declared for the AY 2010-11. 4.2 On verification of the seized dairy, during the course of assessment the AO observed that the total payments appearing in the seized dairy to the extent of Rs. 6,22,64,000/- (being Rs. 4,22,64,000/- and Rs. 2 Crore scribbled as legal expenses) and sought explanation from the assessee. The assessee company has explained to the AO that the said Dairy which is seized is of 2002 and out of total sum of Rs. 6,22,64,000/- a sum of Rs. 1,94,09,686/- is offered to tax in the return of income for the Assessment Year 2010-11, in assessee’s company hands and Rs. 2 Crore legal 5 IT(SS)A Nos.78 & 90/PAN/2016 Assessment Year: 2010-11 expenses is only an estimate and has not incurred any expenditure and the balance amount i.e. Rs. 2,28,54,314/- [Rs. 4,22,64,000/- minus Rs. 1,94,09,686/-] are all pertaining to earlier years and the same has been declared and offered to tax in the group concern of the assessee company for the A.Y. 2007-08 i.e. Rs. 76,09,624/- in M/s. Timblo Private Limited and another sum of Rs. 7,48,690/- was declared in the hands of M/s. Timblo Minerals Private Limited and further sum of Rs. 1,44,96,000/- was offered in the hands of Timblo Enterprise as withdrawal from capital account. 4.3 The A.O. passed the assessment by passing assessment order u/s. 153A r.w.s. 143(3) dated 31/12/2012 by making an addition of Rs. 4,28,54,314/- i.e. Rs. 2 crores and Rs. 2,28,54,314/- by holding that the assessee company has not been able to co-relate its claim that the amount of Rs. 4,22,64,000/- are out of income disclosed in the earlier years and has not produced supporting evidence, as to when the payments have been made and further the assessee has not been able to justify its stand that Rs. 2 Crore is an estimate and arrived at a conclusion that the said expenditure of Rs. 4,28,54,314/- is an expenditure incurred outside the books of account. In appeal, the Ld. CIT(A) has deleted addition of Rs.4,28,54,314/- on merits, however confirmed on legal issue regarding validity of proceedings u/s 153A of the Act. 5. The department being aggrieved by order of the CIT(A), the deleting addition of Rs.4,28,54,314/-, has preferred this appeal and the assessee company being aggrieved by the findings of the CIT(A) on legal issues has preferred cross appeal before us. 6. Firstly, we take up department’s appeal in ITA(SS)A No. 78/PAN/2016. 6 IT(SS)A Nos.78 & 90/PAN/2016 Assessment Year: 2010-11 6.1 The Ground No. 5 of revenue is general in nature and the same does not require separate adjudication and hence dismissed. 6.2 The first ground of appeal is relating to the directions given by the CIT(A) to the AO to consider the revised return submitted which is beyond the provisions of section 139(5) of the Act. 6.2.1 That a search was conducted in the premises of the assessee Company on the 21.04.2010 and Notice u/s 153A dated 04.08.2010 was issued. In response, the assessee company has filed return of income on the 30.09.2010 declaring total income of Rs. 54,51,02,479/- for the assessment year 2010-11. During the course of assessment proceedings, the assessee company filed a revised statement of total income rectifying certain mistakes/errors found in the calculations in the original return of income filed wherein the mistake being a sum of Rs. 62,13,914/- was included in the total income, as “Long Term Capital Gain”. The assessee claimed that the said figure of gain was picked up purely by clerical mistake, instead of taking Rs. 48,66,784/- as “Long Term Capital Loss”, computed after considering indexed cost. Further a sum of Rs. 74,626/- ‘Loss on sale of assets’ which was indicated in the Schedule 15 “Administrative & Other Expenses” attached to and forming part of the Profit & Loss account which was not added back to the total income and also a sum of Rs, 2,00,000 was paid to Madkai Gram Education Society Marciam Goa 403 404 paid as donation which was an approved institute u/s 80G which was not claimed deduction u/s 80G. Accordingly, after rectifying the said mistakes the assessee company filed a revised statement of income arriving at Total Income of a sum of Rs,53,88,63,187/-. The A.O. in the assessment order treated the revised return as non-est since the said return is filed beyond the period as prescribed as per the provisions of section 139(5) of the Act and the assessment is completed based on the original return filed on 7 IT(SS)A Nos.78 & 90/PAN/2016 Assessment Year: 2010-11 30.09.2010, by disallowing the claim of capital loss as it has not been claimed in the original return of income filed. The Ld. CIT(A) after considering the submissions of the assessee company that there was a mistake in computation while filing the original return of income and the said mistakes are being apparent mistakes on record and so held that the same ought to have been considered by the A.O., while completing the assessment; that the assessee relied upon the circular issued by the Board in Circular No. 14 (XI-35) of 1955, dated 11 th April 1955, has directed the A.O. to consider the assessee company claim of deduction u/s. 80G; to verify the arithmetical accuracy of the claim made by way of indexation on the long term capital gains of Rs. 62,13,914/- and to allow the claim to the extent it is correct and further directed the A.O. to add back the loss on sale of asset of Rs. 74,626/- to the income which was added back in the revised total income filed by the assessee. 6.2.2 In this regard, the relevant observations of the CIT(A) is reproduced hereunder: 6.1. The Appellant had originally filed a return on 30/9/2010, declaring total income of Rs.54,51,02,479. The Appellant on observing the following discrepancies revised the total income to Rs.53,88,63,191/- and filed a revised return to the said effect on 13/12/2012. Excess Long Term Capital Gain Wrongly Computed Without considering Indexation (Rs.62,13,914/-) Deduction u/s 80G not claimed (Rs. 1,00,000/-) Loss on sale of asset not added back Rs. 74,626/- 6.2. The assessing officer refused to take note of the revised return on the ground that it was not permissible to file revised return after the expiry of one year from the end of assessment year and hence did not consider these discrepancies. The appellant, in his submissions, placed reliance on the Circular No.14 (XI-35) of 1955, dated 11th April 1955, wherein officers of the department are not expected to take advantage of the ignorance of the assessees and that it is their duty to assist a 8 IT(SS)A Nos.78 & 90/PAN/2016 Assessment Year: 2010-11 tax payer and guide him and ensure that the correct income is brought o tax. 6.3. The arguments of the appellant are well placed and reliance on the board circular is apt under the present circumstances. Despite the fact that a Revised Return cannot be filed in the present case, it is incumbent upon the assessing officer to see that mistakes arising in the return are corrected and the correct income is ^brought to tax. The fact that the Mistake may be favourable or un favourable to the appellant is immaterial. The AO is directed to consider the appellant's claim of deduction u/s. 80G and the same is found to be allowable, the same be allowed to the appellant in the computation. 6.4. As regards the reduction in Income from Long Term Capital Gain of Rs.62,13,914/-, the assessing officer is directed to verify arithmetical accuracy of the claim made by way of indexation and allow the same to the extent it is correct. Thus ground no.3A is allowed. 6.5. As regards the write back of loss on sale ofassetofRs.74,626/-the appellant did not add to the income in computation as a result of which the income of the appellant stood reduced to the extent of Rs.74,626/-. The assessing officer is directed to add the same, as it is in favour of the revenue. Thus Ground No.3 B is allowed. 6.2.3 The Ld. DR argued that the directions given by the CIT(A) is not correct for the reason that the claims made by the assessee in the revised computation filed or the revised return filed by the assessee is a non-est return which is filed beyond the period as specified in section 139(5) of the Act and consequently the CIT(A) ought not to have given directions to the A.O. to verify the claims made in the revised return and allow the claim. He relied upon the findings of the AO, in the assessment order. 6.2.4 The Learned counsel of the assessee submitted that the claims made in the revised computation of income and the revised return of income filed with abundant caution are all allowable claims which due to inadvertence and by mistake the same were not claimed in the original return of income. In support, he relied upon the circular issued by the Board in Circular No. 14 9 IT(SS)A Nos.78 & 90/PAN/2016 Assessment Year: 2010-11 (XI-35) of 1955, dated 11th April 1955 and submitted that the CIT(A) has given the directions to verify the claim and if found correct then to allow the same. He further submitted that it is well settled law that taxes have to be collected in accordance with law and there can be no estoppel against law. It is also settled law that consent cannot confer jurisdiction and an admission made erroneously can always be rectified by the assessee in accordance with law. He relied upon the decision of the Hon’ble Apex Court in the case of National Thermal Power Co., Ltd., Vs. Commissioner of Income-tax 229 ITR 383 and also the decision of the Hon’ble High Court of Bombay in the case of Commissioner of Income-tax Vs. Pruthvi Brokers and Shareholders P. Ltd., [2012] 349 ITR 336. Accordingly, he prayed that the directions given by the CIT(A) is just and proper and no interference is required. 6.2.5 We have considered the rival contentions and perused the material on record. Admittedly, there was a mistake crepted in the computation of income filed in original return of income which has been rightly claimed by rectifying the computation by the appellant assessee during the assessment proceedings. We concur with the observation, findings and the directions of the CIT(A). As submitted by the AR, it is settled principle of law that taxes have to be collected in accordance with law and there can be no estoppel against law. Further, it is incumbent upon the taxing authorities to assess the tax liability of an assessee in accordance with law. In this regard we place our reliance on the decision of the Apex Court in the case of “National Thermal Power Co., Ltd., Vs. Commissioner of Income-tax”, 229 ITR 383, wherein the Hon’ble Apex Court has observed as under: “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 10 IT(SS)A Nos.78 & 90/PAN/2016 Assessment Year: 2010-11 example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it if found that a non-taxable item is taxed or a permissible deduction is denied, there is no 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 the item”. 6.2.6. Respectfully, following the Hon’ble Apex court, we confirm the directions given by the CIT(A) who has directed the A.O. to verify the claims made by the assessee in the revised computation of income properly and if the claim of the assessee is found proper, the same is requires to be allowed in accordance with law. Thus, this ground of appeal is hereby dismissed. 6.3 In Ground No’s 2, 3 & 4, the department objected to the deletion of addition amounting to Rs. 4,28,54,314/- by the CIT(A) which was added by the A.O. as unexplained expenditure based on the entries found in the seized dairy during the course of search. The relevant observations and finding of the Ld. CIT(A) on this issue are reproduced hereunder: “7.1. During the course of search conducted in the case of the appellant a diary pertaining to the year 2002 was seized and the said dairy contained certain scribbling which were made by the MD of appellant company Mrs. Radha Timblo. The details contained certain expenditure incurred by the appellant. The appellant during the course of recording of statement had stated that in its return of income filed for the assessment year 2007-08 it had offered a sum of 2,28,54,314/- as unexplained expenditure during the earlier search and seizure operation conducted on the appellant on 15/11/2006, wherein the search party had found unexplained shortage of cash on hand to the extent of Rs. 2,28,54,314/-. This deficit was offered to tax in the returns of income filed in the following group entities: M/s. Timblo Private Limited Rs. 76,09,624/- M/s. Timblo Enterprise Rs. 1,44,96,000/- 11 IT(SS)A Nos.78 & 90/PAN/2016 Assessment Year: 2010-11 M/s. Timblo Minerals[P] Ltd., Rs. ---7,48,690/- Total Amount Rs. 2,28,54,314/- 7.2. The seized dairy which contains scribbling which suggested payment made to various people aggregating to Rs. 6,22,64,000/-. This amountofRs.6,22,64,000/- can be divided into 3 figures ie. 2,28,54,314/-, 2,00,00,000/- and Rs. 1,94,09,686/-. The appellant offered the third figure ie. Rs. 1,94,09,686/- for taxation in the return filed in response to notice u/s.153A. Hence, the AO has made the addition of the other two figures in the assessment order. 7.3. The appellant had explained that out of the said amount of Rs. 6,22,64,000/- a sum of Rs. 2 crore which was scribbled as "Legal-2Cr" was not a payment and the same was only an estimate made by the appellant as regard to the likely expenditure that it might have to incur in future with regard to the various legal issues that it was facing in mining relating to forest and environmental clearances. I have seen the copy of the seized material wherein, the other figures are written in full figures like Rs.10,00,000/-, Rs.13,75,000/-, Rs.17,10,000/- etc. Further, the said amount of actual expenditure is written on left hand side of the page. On the right hand side, two figures which are there on the left hand side i.e. Rs.10,00,000/- and Rs.13,75,000/- are written and below these two figures "legal- 2 Cr" is written. The contention of the appellant before the AO was that this is not the amount of expenditure incurred but it was estimated expenditure of legal charges and hence, it was not written in full figure. The AR also submitted that this fact was also brought to the notice of the DDIT (lnv.) during the course of recording of statement on 10.06.2010 that I tis not the expenditure incurred. 7.4. I have gone through the relevant page of the diary which was seized during the course of search. I have also gone through the affidavit filed by the MD of the appellant company before AO explaining its position relating to the expenditure of Rs.2 Crore for legal recourse. On verification of the diary which is for the year 2002 and the notings therein are without any dates. This shows that the same diary is used for certain notings from 2002 till the date of search i.e. 21.04.2010. In this period of about 8 years, the appellant was searched twice i.e. on 15.11.2006 and 21.04.2010. In the first search on 15.11.2006 the diary in question was not found. However, as the physical cash available was less than 12 IT(SS)A Nos.78 & 90/PAN/2016 Assessment Year: 2010-11 the cash as per the cash books of group of companies, the appellant along with other sister concerns offered an amount of Rs.2,28,54,314/- as unexplained expenditure. It was pleaded that the entire expenditure in question was for the purposes of business but the same was not claimed in the P & L Account for the reason that the said expenditure was not supported by any vouchers and the payments were made in cash and hence, the same was offered as additional income to buy peace with the department. 7.5. The appellant states that considering the above facts and to buy peace and to avoid protracted litigation it has offered a sum of. Rs. 1,94,09,686/- [ Rs. 6,22,64,000/- minus Rs. 2,28,54,314/- and minus Rs. 2 Crore] to tax. The appellant also placed reliance on the provisions of section 69C of the Act which reads as under: "Unexplained expenditure, etc. 69C. Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year: Provided that, notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income." 7.6. The appellant submits that the very pre condition for the purpose of invoking the provisions of section 69C is that the assessee has to firstly incur expenditure and having incurred the same is unable to offer proper & satisfactory explanation about the source for incurring such expenditure & it is only then that the provisions of section 69C of the Act can be invoked and the said expenditure can be brought to tax as income under the provisions of section 69C of the Act. 7.7. It is submitted that the phraseology in section 69C of the Act goes to show that before invoking the provisions of section 69C of the Act it must be conclusively established by evidence or material that the amount is actually spent & that such amount spent is an expenditure incurred by the assessee and that the source for the same is not satisfactorily proven or explained. The appellant states that in its, case the primary onus is on the revenue to prove the same against appellant. In the instant case it is submitted that the appellant has from the very beginning been contending that the said amount 13 IT(SS)A Nos.78 & 90/PAN/2016 Assessment Year: 2010-11 of Rs. 2 Crore mentioned in the seized dairy is only an estimate and the appellant has not incurred the said expenditure. To this effect the appellant had also filed an affidavit explaining the same. 7.8. The appellant submits that it is also important to note the fact that the said seized dairy is unsigned. Further it is submitted that the learned assessing officer has, not brought anything on record to demonstrate that the said alleged expenditure of Rs. 2 Crore has indeed been incurred by the appellant and has not made any enquiry as regard to the veracity of the loose and dumb papers on which he is relying upon. 7.9. The appellant placed reliance on the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Lubtec India Ltd., reported in 311 ITR 175. Wherein the Hon'ble Court has held that "It is quite clear that what is postulated in section 69C of the Income-tax Act, 1961 is that first of all the assessee must have incurred that expenditure and thereafter, if the explanation offered by the assessee about the source of such expenditure is not found satisfactory by the Assessing Officer, the amount may be added to his income. 7.10. The appellant further placed reliance on yet another decision of the Hon'ble Delhi High Court in the case of CIT Vs. Anil Bhalla, reported in 322 ITR 191, wherein the Hon'ble Court has held that if there is no corroborative evidence found by the assessing officer as regard to the expenditure incurred by the appellant then the addition undersection 69C of the Act is not correct. Further the Hon'ble Court confirming the order of the CIT[A] and Tribunal has confirmed the findings that to support the addition on account of unexplained expenditure on the basis of jottings on a loose sheet of paper, it is necessary to establish that the notings represent unaccounted transaction, with the help of independent corroborative evidence. In this case apart from the notings, on the said paper which is, also undated, no other independent material or evidence has been brought on record. 7.11. It is further submitted that the affidavit filed by the appellant cannot be brushed aside and the affidavit filed by the appellant has to be considered as a valid piece of evidence and it cannot be discarded. Reliance is placed on the parity of reasoning and the principle laid down in the decision of the Hon'ble apex court in , the case Mehta Parikh & Co., Vs. CIT, 30 ITR 181. 7.12. I have carefully considered the submissions made by the appellant and also the written submissions filed and the documents placed before me. I find merit in the submissions made by the appellant and also on the case laws relied upon by it in support of its claim. I find no 14 IT(SS)A Nos.78 & 90/PAN/2016 Assessment Year: 2010-11 justification in making these 2 additions for the reason that the appellant in the statement recorded had mentioned that the appellant had already offered a sum of Rs. 2,28,54,314/- as unexplained expenditure and the said diary in which the notings are made is pertaining to 2002 and the appellant vide an affidavit has also explained that the said amount of Rs. 2,28,54,314/- is offered in the hands of M/s. Timblo Private Limited of Rs. 76,09,624/-; M/s. Timblo Enterprises of Rs. 1,44,96,000/- and in M/s. Timblo Minerals [P] Ltd., of Rs. 7,48,690/-. The appellant has also filed an affidavit to this extent which cannot be ignored as held by various courts. Thus, the unexplained expenditure of Rs.2,28,54,314/- has already been offered to tax after the first search on the basis of shortage of cash compared to the book cash. The details regarding the same were found in the diary, which was not found during the first search. The diary was found in the second search but cash was excess than the cash book, the said excess cash has already brought to tax. Hence, the same amount which is taxed during the first search on the basis of one piece of evidence cannot be taxed again on second piece of evidence found relating to the same expenditure. Therefore, the addition made by the AO of Rs.2,28,54,314/- cannot be sustained. 7.13. As could be seen from the seized material the addition made by the A.O. on account of legal of Rs. 2 Crore is concerned it is not discernable whether the appellant has actually paid the said amount towards the legal expenses. There is no date mentioned nor any other information can be gathered to say that the said amount of Rs. 2 crore the appellant has incurred towards legal expenses. Further, the said seized material is also not supported with any other corroborative evidences. Further, all other expenses admitted by the appellant ' are in full figures and not abbreviated. Only this figure is abbreviated and is on right side of the page whereas the full figures of expenses incurred are written on the left side of the page. Hence, the contention of the appellant that Rs.2 crores written in the diary is the estimated expenditure the group expected to incur over a period of time to win and defend various litigations in the business of mining seems to be correct. It is also relevant to point out that the appellant itself has offered a sum of Rs. 1,94,09,686/- out of the total amounts considered by the A.O. of Rs. 6,22,64,000/-from the seized material less Rs. 2,28,54,314/-which is offered in the earlierassessmentyear2007-08 in various group entities and less Rs. 2 Crore being the estimation of expenses and not the actual expenditure. Thus, the legal expenditure of Rs.2 Crore added by the AO cannot be sustained for the reason that the said expenditure is not 15 IT(SS)A Nos.78 & 90/PAN/2016 Assessment Year: 2010-11 actually incurred which is apparent from the noting in the diary. 7.14. Therefore, the addition made by the AO amounting to Rs.4,28,54,314/- (2,28,54,314+ 2,00,00,000-) as unexplained expenditure on the facts of the appellant's case and on perusal of the seized material as analysed above cannot be sustained and hence, the same is hereby deleted. In the result Grounds No. 4, 5 &6 are allowed. 6.3.1. The ld. DR contended that the CIT(A) was not justified in deleting the additions made by the AO amounting to Rs. 4,28,54,314/- was being added as unexplained expenditure and that the assessee company was unable to prove to co-relate its claim that the amount of Rs. 4,22,64,000/- are out of income disclosed in the earlier years pertaining to the group entities of the assessee company and has not produced supporting evidence, as to when the payments have been made and further the assessee company has not been able to justify its stand that Rs. 2 Crore is an estimate. He relied upon the findings and observations of the A.O. as recorded vide para 13 of the assessment order and prayed for confirming the assessment order. 6.3.2. Per contra, the Ld AR reiterated the submissions made before the CIT(A) by stating that said additions made by the AO in the assessment order is based on suspicion and surmises and are arbitrary in nature. The counsel argued that the AO has not appreciated the submissions made during the assessment proceedings as regard to the explanations given by the assessee on the addition made of Rs. 2 Crore regarding legal expenses which was scribbled as “Legal – 2Cr” was not a payment and the same was only an estimate made by the assessee company as regard to the likely expenditure that might be incurring by the assessee in the future considering various legal issues that the assessee was to meet in its regular business activity. This aspect was clarified by the assessee on various occasions but 16 IT(SS)A Nos.78 & 90/PAN/2016 Assessment Year: 2010-11 however the AO failed to appreciate the same and erroneously made the addition of Rs. 2 crores which is nothing but an estimation. Further, the AO has not brought anything contrary on record to demonstrate that the said alleged expenditure of Rs. 2 Crore has indeed been incurred by the assessee company by way of any enquiry as regard to the veracity of the loose and dumb papers on which he has relied upon, thus the addition, requires to be deleted. 6.3.3. The Ld. Counsel further submitted as regard to the other balance addition of Rs. 2,28,54,314/- that during the course of search conducted in the case of the assessee company a dairy pertaining to the year 2002 was seized and during the course of recording of statement had emphatically stated and submitted that the group concerns of the assessee company in its return of income filed for the assessment year 2007-08 had offered a total sum of 2,28,54,314/- as unexplained expenditure which was not supported with the evidence, in the return of income filed by the respective group entities i.e. Rs. 76,09,624/- in M/s. Timblo Private Limited and another sum of Rs. 7,48,690/- was declared in the hands of M/s. Timblo Minerals Private Limited and further sum of Rs. 1,44,96,000/- was offered in the hands of Timblo Enterprise. The said disclosure to the extent of Rs. 2,28,54,314/- was declared by the respective group concern of the assessee company during the earlier search and seizure operation conducted on the assessee on 15/11/2006, wherein the search party had found shortage of cash on hand to the extent of Rs. 2,28,54,314/-. This deficit was reconciled and was explained that the said amount of Rs. 2,28,54,314/- in aggregate have been offered in the respective hands as mentioned above in the return of income for the year ended 31/03/2007 and the same has not been claimed by the assessee as an allowable expenditure. The assessee company considering the above facts and to buy peace and to avoid protracted litigation the 17 IT(SS)A Nos.78 & 90/PAN/2016 Assessment Year: 2010-11 assessee company offered a sum of Rs. 1,94,09,686/- [ Rs. 6,22,64,000/- less (Rs. 2,28,54,314/- + Rs. 2 Crore)] and the same was offered to tax by the assessee company in its return of income. 6.3.4. The AR also submitted that the assessee company filed an affidavit dated 11/12/2012 in this regard, that clarified the position and facts of the case, which has not been properly appreciated by the AO and that the AO based on the assumption and presumption and conjectures made the addition to the extent of Rs. 4,28,54,314/-. The assessee company relied upon the decision of the Hon’ble Delhi High Court in the case of “CIT Vs. Anil Bhalla”, reported in 322 ITR 191, wherein the Hon’ble Court has held that if there is no corroborative evidence found by the assessing officer as regard to the expenditure incurred by the assessee then the addition under section 69C of the Act is not correct. The assessee company to this effect has also filed an affidavit explaining the same and the AO without any corroborative evidences made the addition. The Ld. AR supported the findings of the CIT(A). It was argued that the affidavit filed by the assessee company cannot be ignored and that the affidavit filed by the assessee has to be considered as a valid piece of evidence and it cannot be discarded. He placed reliance on the parity of reasoning and the principle laid down in the decision of the Hon’ble apex court in the case “Mehta Parikh & Co., Vs. CIT”, 30 ITR 181. Accordingly, He prayed that the addition made by the AO requires to be deleted and the order passed by the CIT(A) does not call for any interference. 6.3.5. We have heard the rival contentions and carefully considered the arguments placed by both the parties and also perused the paper book filed by the assessee company. We note that there are two components in the addition made of Rs. 4,28,54,314/- comprising of firstly, Rs. 2,28,54,314/- towards expenses incurred by the assessee company and secondly, the balance Rs. 2 Crores is relating to legal expenses as scribbled in the seized 18 IT(SS)A Nos.78 & 90/PAN/2016 Assessment Year: 2010-11 dairy. The assessee has filed a paper book consisting of 213 pages before us and the same is taken on record. Further the assessee has also filed a common list of dates & synopsis as regard to the legal issues are concerned as well as on merits on the department appeal on the deletion of addition by CIT(A) of Rs. 4,28,54,314/-. 6.3.6. The Ld. AR of the assessee company drew our attention to the paper book compilation filed in which copies of the return of income filed by its group entities are filed and a sum of Rs. 2,28,54,314/- in total has been offered to tax for the earlier AY 2007-08 as other income. The details of the same are reproduced for reference as under: M/s. Timblo Private Limited Rs. 76,09,624/- M/s. Timblo Minerals Private Limited Rs. 7,48,690/- M/s. Timblo Enterprise. Rs. 1,44,96,000/- 6.3.7. It is seen that the diary which is seized during the course of search is relating to 2002 and the entries found in the said diary as argued by the Ld. AR were probably be for the earlier period as well. The assessee in the statement recorded itself had categorically stated that a total amount of Rs. 2,25,54,314/- has been declared in the group entity of the assessee company for the AY 2007-08. We have seen the copies of the returns filed by the group companies and it is an undisputed fact that the group companies having offered income on account of unexplained expenditure for the AY 2007-08 in their respective hands totalling to Rs. 2,28,54,314/- can be considered as an explanation and coupled with the fact that the department has not disproved the contention of the assessee company with any corroborative evidences. Further the assessee company in support of its stand has in fact filed an affidavit and the contents of the affidavit has not 19 IT(SS)A Nos.78 & 90/PAN/2016 Assessment Year: 2010-11 been disproved by the AO and no further inquiry has been appeared from the record to be carried out by the AO. The AO based only on the presumption has arrived at a belief that the contents in the said seized dairy are pertaining to the instant AY 2010-11. The CIT(A) on this issue has given a detailed findings in the appellate order which is reproduced herein above in a well reasoned order. Therefore, in our view, no interference is called for in this regard. Thus, the grounds raised by the department on the issue of addition of Rs. 2,28,54,314/- is dismissed. 6.3.8. As regards to next addition of Rs. 2 Crore relating to legal expenses made by the AO, we have perused the assessment order and the order of CIT(A) and we have gone through the seized material i.e. dairy wherein “legal of Rs. 2 Crore” is mentioned and it is not discernable whether the assessee has actually paid the said amount towards the legal expenses, as no date is mentioned nor any other information can be gathered to say that the said amount of Rs. 2 crore has been incurred towards legal expenses by the assessee company and no corroborative evidences have been brought on record by the A.O. The assessee company has to this effect has filed an affidavit as well, which cannot be brushed aside since the averments made in the duly sworn affidavit are to be accepted as correct since the same have not been disproved by the A.O during the course of assessment proceeding or before the ld. CIT(A) or before us. The reliance placed by the assessee on the decision of the Hon’ble Supreme Court in the case of “Mehta Parikh & Co., Vs. CIT”, 30 ITR 181 [SC] support the above. Thus, we are of the view that the addition made by the AO of Rs. 2 Crore requires to be deleted. The CIT(A) on this issue has given a detailed findings in the appellate order which is reproduced above is a well reasoned order and as such no interference is called for in this regard. Accordingly, the 20 IT(SS)A Nos.78 & 90/PAN/2016 Assessment Year: 2010-11 grounds raised by the department on the issue of addition of Rs. 2 Crore is dismissed. 6.4. In the result, the appeal filed by the revenue is dismissed. 7. In the cross appeal, the assessee, in ITA(SS)A No. 90/PAN/2016. has raised 5 grounds of appeal challenging the validity of jurisdiction of search and the consequent proceedings u/s 153A of the Act. Since we have dismissed the appeal of the department, hence, the cross appeal filed by the assessee becomes academic and is hereby dismissed as infructuous. 8. In the result, the appeal of the Revenue in IT(SS)A No. 78/PAN/2016 and cross appeal by the assessee in IT(SS)A No. 90/PAN/2016 are dismissed. Order pronounced in the open court on 13.05.2022. Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member Date: 13.05.2022 Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T True Copy By Order