M/S.JAWAHAR SAW MILLS PRIVATE LIMITED,MUMBAI vs. ACIT CENTRAL CIRCLE-8(2), MUMBAI

The present appeal filed by the assessee is challenging against the order of Commissioner of Income Tax (Appeals)-50, Mumbai dated 29.01.18 for AY 2014-15. M/s Jawahar Saw Mills Pvt. Ltd.

The brief facts of the case are that assessee is engaged in the business of Timber and manufacture of wood products. The return of income for the year under consideration was filed declaring a total income of Rs.1,35,84,300/-. Thereafter, search and seizure action u/s 132(1) of the Act was carried on 24.02.14 at the premises of associate group to which assessee belongs to. In the course of search action, a pendrive was seized from the residence of Raghvan Koodathodi, an employee of the group. The said pendrive consist of a sheet in excel format, which was confronted to said Raghvan, who in his statement recorded on oath had accepted that the said sheet consist of data pertaining to unaccounted sale of the group. Subsequently, the said statement alongwith data found in the pendrive was also confronted to the key person of the group Shri Manohor Agicha, who in his statement recorded u/s 132(4) admitted that the group had sold goods in cash, which transactions are noted on the said sheet, but not recorded in the books of accounts. The AO after discussing the issue involved in the assessment proceeding, passed an order making an additions of Rs. 18,58,366/- being alleged suppressed sales. M/s Jawahar Saw Mills Pvt. Ltd. Aggrieved by the order of AO, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the case of both the parties, dismissed the appeal of the assessee.

Ld. AR reiterated the same arguments as were raised by him before the revenue authorities. It was submitted that Ld. CIT(A) had erred in confirming the action of AO in taking the cognizance of only unrecorded sales without taking note of the expenses incurred relating to the very transactions, which were found noted on the very paper, without appreciating that as held by various courts, it was not open to him to ignore that portion of M/s Jawahar Saw Mills Pvt. Ltd. paper where expenses incurred for earning the income were found noted and considered the other part, where notings for gross sales were mentioned. It was argued that the AO at page 26 of the assessment order had stated that sum total of unaccounted sales was Rs. 3,64,71,937/- as against which, assessee had offered an income of Rs. 3,46,13,571/- under the head other income. Thus, in this way, the AO after completing the assessment, had added the difference i.e. 18,58,366/- to the returned income of the assessee. It was submitted that Shri Raghvan and Shri Manohar were confronted with the contents of the said pendrive and both the persons in their statement recorded u/s 132(4) had admitted that group concerns had sold goods in cash, which transactions were noted on the said sheet. It was further submitted that the AO had considered the unaccounted sales transactions from the said sheet, but on the said very sheet, there was also mentioned of assessee company having incurred expenses directly relatable to the un-recorded sales and accordingly, the net sale amount of such transaction after deducting the expenses of Rs. 23,21,600/- which comes to Rs. 3,41,50,337/- had credited to its profit and loss account under the M/s Jawahar Saw Mills Pvt. Ltd. head other income, but the AO while completing the assessment had disallowed the deduction of said sum of Rs. 23,21,600/-. In this respect, Ld. AR relied upon the decision of Hon’ble Gujrat High Court in the case of Glass Line Equipment Vrs. CIT 253 ITR 454, wherein it was held that the contents of documents must be read as a whole. It is not permissible to accept a part and ignore the rest of the document. Further, Ld. AR relied upon the decision of ITAT in the case of Chandra Mohan Vrs. ACIT 71 ITD 245, Dhanvarsha Builder Vrs. DCIT 102 ITD 375, etc. and requested that quantum of expenditure claimed by the assessee against un-recorded sales may be allowed.

On the other hand Ld. DR relied upon the orders passed by the revenue authorities.

We have heard the counsels for both the parties at length and we have also perused the material placed on record, judgment cited by the parties as well as orders passed by lower authorities, we find that the facts of the present case are not in dispute, therefore the same are not being reproduced. The M/s Jawahar Saw Mills Pvt. Ltd. assessee during the proceedings before the revenue authorities had asked for the reduction of Rs. 23,21,600/- the bifurcation of which is given below:- i) Tax – Rs. 7,08,305/- ii) Commission – Rs. 4,43,585/- iii) CD (Cash Discount) – Rs. 11,69,710/- Total – Rs. 23,21,600/-

According to Ld. AR, the amount of Rs. 23,21,600/- was also mentioned on the same paper sheet where the un-accounted sales of Rs. 3,64,71,937/- was recorded. We have perused the said paper sheet which is at page no. 11 of the paper book. On the perusal of the same, we found that the details of unaccounted /un-recorded sales mentioned in excel sheet computerized written a sum of Rs. 3,64,71,937/-. However, the other amount as claimed by the assessee as expenses are hand written on the lower part of the said paper sheet as 23,21,600/-. It is true that the document is to be read and taken into consideration as a whole. However, now the question before us is as to whether the alleged expenditure claimed by the assessee of Rs. 23,21,600/- is M/s Jawahar Saw Mills Pvt. Ltd. recorded on the said excel sheet or not. No doubt, the said figure is appearing in the seized paper, but the same is hand written and not computerized written in the said excel paper sheet. We have to consider as to what is the effect of this figure of 23,21,600/-. Admittedly, the lower part is in the hand written and the upper part is computerized typed written on the excel sheet. The Ld. CIT(A) had considered the said figure in para no. 9.8 to 9.11 of its order, where according to the assessee, the bifurcation of the said amount has been mentioned. However, Ld. AR has failed to state and to substantiate its contention as to how the taxes paid can remain unaccounted item. Further assessee had also failed to substantiate by submitting the copies of commission account, cash discount account and the taxes account to confirm whether the sum of Rs. 23,21,600/- mentioned on the said seized paper are indeed unaccounted.

The judgments relied upon by the assessee are not applicable to the facts of the present as in the present, the Ld. CIT(A) had taken into consideration the statements contained in the said seized paper as a whole, but the assessee had failed to substantiate by submitting the required supportive documents in M/s Jawahar Saw Mills Pvt. Ltd. order to prove his claim. Thus, in our view, Ld. CIT(A) has not committed any error while deciding this ground.

Moreover, no new facts or contrary judgments have been brought on record before us in order to controvert or rebut the findings so recorded by Ld CIT (A). Therefore, there are no reasons for us to interfere into or deviate from the findings recorded by the Ld. CIT (A). Hence, we are of the considered view that the findings so recorded by the Ld. CIT (A) are judicious and are well reasoned. Resultantly, these grounds raised by the assessee stands dismissed.