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Income Tax Appellate Tribunal, MUMBAI BENCHES “A”, MUMBAI
Before: Shri R C Sharma & Shri Amarjit Singh
per their 22nd 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 comparison 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 assessee’s 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. Asahi Infrastructure & Project Ltd. FZE, Dubai separately. Thus it was 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 subsidiary 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
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Department or BSE about tax payable or not 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 Euram 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 interest accrued on the said amount was held in balance. AO also observed that 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 crores 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 that assessee has to pay tax on Rs. 35.15 crore, but 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/-. 19. In view of the above 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
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under section 133A. Thereafter, a survey action u/s. 133A was carried out in the premises of assessee company at (1) 1st 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 Mandir, 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. During 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 Laxminarayan Rathi, Managing Director of the assessee company was also recorded at the site of Jhujhunu on the very same day. A statement of the Shri Paresh Rathi, Director of the assessee company and also CFO of the company was also recorded. All the questions 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 also provided with Xerox copies of all the documents impounded during course of survey and copy of statement is recorded. Thereafter, AO mentioned various documents impounded during course 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
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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 reconciliation with cash book (iii) Trading account. (iv) GDR transaction (v) Project completion method of all the projects and revised working. 21. 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). 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 efforts to reconcile any of the anomalies and has expressed his inability to provide any further.
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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. 24. 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
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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 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. 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 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
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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. 28. 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
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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'. 29. 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
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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. 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/- Sd/- (AMARJIT SINGH) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 27/08/2018 Karuna Sr.PS
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Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. सत्यापित प्रतत //True Copy//
BY ORDER, (Asstt. Registrar) ITAT, Mumbai