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

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 reconciliation with cash book (iii) Trading account. (iv) GDR transaction (v) Project completion method of all the projects and revised working.

During the course of hearing before the AO, the AR was told to submit all details as a final 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 account of the assessee company, why the same should not be rejected under section 145(2).

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 efforts to reconcile any of the anomalies and has expressed his inability to provide any further.

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.

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 contract, 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 Tribunal 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 qua the reconciliation statement filed before the CIT(A), which was sent by CIT(A) to the AO for his comments. However, the AO kept silent covering almost six months, till the date of passing of appellate order by CIT(A).

It is clear from the order of the 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 entirely different wherein addition has 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.

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 assessee company had a total withdrawal of more than Rs.1 crore. AO observed that there are various impounded documents which shows cash transactions, specifically page No.15 of file 9 of Annexure A/1 impounded at Mumbai shows details of payment made by cash between 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 explanation that the cash deposits are made only from cash withdrawals was found to be devoid of any merit because of huge cash expenses 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.

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 Securities Pvt. Ltd. to the tune of Rs. 54.76 crore. These 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 more 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 impounded 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 Rs.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 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'.

In view of the above discussion, AO made following additions:- 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

Without controverting any of the findings so 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 activities. We observe that after pointing out so many defects and discrepancies with respect to the document found during the course of survey vis-à-vis entry made in the regular books of accounts the AO has rejected the book results and had applied the profit rate on contract receipt at 8% and trading receipt at 5%. Even with respect to the deposit of cash in bank, the AO has clearly observed that available cash was not sufficient, therefore, cash deposit in bank in excess of cash available was added. In view 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 disposing the appeal, the CIT(A) is duty bound to controvert the findings 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 bound 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 afresh after giving due cognizance to the findings of AO and also full opportunity to the assessee.

In the result, appeal of the Revenue is allowed for statistical purposes. Order pronounced in the open court on this 27/08/2018