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Income Tax Appellate Tribunal, “K”, BENCH MUMBAI
Before: SHRI PRAMOD KUMAR, AM & SHRI PAWAN SINGH, JM
PER PAWAN SINGH, JM: 1. These four appeals filed by the assessee against the orders of CIT(A)-15, Mumbai dated 20.10.2011 in respect of Assessment Years(AYs) 2003-04, 2004- 05, 2005-06 & 2006-07 were heard together and are being disposed of by common order as most of the grounds raised
in the present appeals are identical.
2. These appeals came up hearing on 13.01.2016 and none appeared on behalf of the assessee despite repeated calls and waiting, hence we have no option to hear the Departmental Representative (DR) for the revenue and to proceed further.
3. We have noticed that even on earlier occasion on 16.04.2015 none-appeared on behalf of assessee. Even for today neither the assessee nor representative of the assessee appeared and nor any application for adjournment had made moved by the assessee,hence the appeal(s) were heard ex-party .
4. The brief facts of the case are that a search and seizure u/s 132 was carried out on 20.10.2005 at the premises of assessee. The notice u/s 153A was served upon the assessee on 07.11.2006 and the assessee filed return of income in compliance to the notice on 13.10.2006 in respect of AYs- 2003-04 to 2006-07 and after serving statutory notice u/s 143(2) and 142(1), the AO passed the order of assessment dated 22.12.2007. In the return of income for AY 2003-04 to 2006- 07 it was noticed by revenue that assessee had export diamonds to its associated concerned M/s Dialete Import Corporate at New York. As the total export was more than 10 Crore, the case was referred to Transfer Pricing Officer (TPO) to determine the Arms Length Price (ALP) and the TPO passed its order u/s 92CA(1) of the I.T. Act, considering which the assessment order dated 22.12.2007was passed.
5. Against the order of AO, separate appeals were filed in respect of different AYs before CIT(A), and the CIT(A) confirmed all the additions in its order dated 20.11.2011 in respect of different AYs, against which four appeals on identical grounds were filed before us.
6. In appeal no. 762/M/2012, the assessee raised the following material grounds: (a) Addition u/s. 68 of I.T. Act. (b) Addition u/s. 92CA(1) for Arms Length Price Adjustment. (c) Disallowance u/s 80HHC. (d) Disallowance of donation.
The AO made an addition of Rs. 14,50,000/- u/s 68 of I.T. Act by observing that a loan of Rs. 44,50,000/- was accepted by assessee and during assessment assessee file a loan confirmation of one parties only and no confirmation was filed for rest of the four parties and thus addition was made only in respect of loans from those parties amounting to Rs. 14,50,000/-. The CIT(A) while hearing the appeal on this ground seek the remand report from AO. The AO submitted its remand report wherein it was submitted that assessee produced loan confirmation report in respect of one person only. The CIT(A) concluded that the assessee failed to produce complete address of the alleged creditors and that the loan was taken through brokers and that assessee failed to give any evidence that creditors were Income-tax assessee.
We have noticed that the assessee neither proved the genuineness of source of fund nor nature of credit of the parties, thus the addition/disallowance was rightly confirmed by the CIT(A), hence, the finding of CIT(A) does not require any interference at our end. 9. Next ground for our consideration is addition u/s. 92CA(1) on account of Arms Length Transfer Pricing Adjustment. The AO while making the addition of Rs. 87,90,000/- on the basis of order u/s. 92CA(1) passed by TPO and the assessee was asked to furnish its comments on the report of TPO but no comments/objection was filed till the passing of order, hence the adjustment recommended by TPO was added in the income of assessee. 10. The CIT(A) while dealing with this ground has observed that TPO issued notice to the assessee and representative of the assessee attended the proceeding before TPO but no compliance was made to the questionnaire issued to him. The CIT(A) further observed in its order that assessee requested that the matter be referred to DRP u/s. 144C. The CIT(A) concluded that there is no provision whereby CIT(A) can refer the case to DRP for the relevant period moreover, the reference to DRP brought in the statute w.e.f. 01.04.2009 to file objection on the draft assessment order and that no further material could be brought which may give inference that determination of the adjustment suggested by TPO is not in- conformity with ALP determined by TPO. 11. We have perused the order of AO as well as CIT(A) and find that the assessee was given sufficient opportunity to explain as to why the adjustment suggested by the TPO be not accepted, however, the assessee failed to furnish any comments before the AO nor to bring any incriminating material before the CIT(A). Hence, we do not find any illegality or infirmity in the order passed by CIT(A), rather raised such plea before CIT(A) which were legally not tenable , hence this ground of this appeal is dismissed.
Next ground for our consideration is disallowance u/s 80HHC.
The AO while dealing with addition/disallowance in assessment order has observed that assessee claimed deduction of Rs. 46,76,667/- u/s. 80HHC and submitted the details of invoice wise export realization along with bank realization certificate wherein amount of Rs. 28,21,253/- was not realized and thus the assessee was not entitled for deduction of this amount.
The CIT(A) while dealing with this ground concluded that section 80HHC(2)(a) applies to all goods or merchandise other those specified in clause (b), if sale proceed of such goods or merchandise exported out of India are received in, or brought into, India by assessee, within a period of 6 months from the end of previous year or such further period as the competent authority may allow in this behalf and that assessee has not submitted any evidence or receipt of such proceed within the time allowed by the competent authority and confirmed the addition.
We have carefully examined the disallowance/addition made by AO and the finding of CIT(A) and do not find any infirmity or illegality in order passed by CIT(A) which is based on the proper appreciation of statutory provision and does not require any interference at our end and thus this ground of appeal
is dismissed.
16. The next ground for our consideration is disallowance of donation of Rs. 61,500/-, the AO while making the addition of Rs. 61,500/- on account of donation on the ground that assessee has not filed any receipt and the exemption certificate, hence, the deduction claimed u/s. 80G was declined. The CIT(A) while dealing with this ground has observed that it was argued before him, that donation was made for business expediencies and the assessee was eligible for deduction u/s. 80G. The CIT(A) concluded that the deduction claimed u/s. 80G cannot be accepted for business expediency and confirmed the addition.
17. We have gone through the order of AO as well as CIT(A). The CIT(A) correctly appreciated the provisions of 80G and 37 of I.T. Act that the disallowance claimed u/s.80G is not acceptable for business expediency. Hence, the order passed by CIT(A) does not require any interference from our end, hence this ground of appeal is dismissed.
18. The next ground which is raised in the present appeal are in respect of levy of penalty interest u/s. 234A, 234B & 234C which are consequential in nature, as all the ground raised
in the present appeal are dismissed, hence this ground is also dismissed.
19. In the result, appeal filed by the assessee is dismissed.
20. In this appeal, the assessee has raised the following material ground. (a) Disallowance u/s 40A(3). (b) Addition u/s. 68 of I.T. Act. (c) Addition on account of undisclosed income. (d) Addition u/s. 92CA adjustment for ALP. (e) Disallowance of donation.
21. The AO while making the addition/disallowance u/s. 40A(3) for Rs. 1,16,98,432/- and for presumptive payment commission of Rs. 1,46,230/- observed that assessee is dealing in diamond export and during search and seizure it was found that assessee is purchasing diamond from local parties by paying cash and obtaining accommodation bills from loan parties and from extensive enquiries from parties from whom assessee purchase the diamond, has confirmed that they have issued accommodation bills and charged commission@ .25% on the amount of bills and during AYs-2003-04 to 2006-07 those parties have not sold diamonds to the assessee. The AO further observed that such seven parties were not available at the given address and on the basis of total purchases for AY-2004-05 for Rs. 5,84,92,158/- disallowed 20% u/s. 40A(3) and further disallowed a commission paid @.25% and thus disallowed Rs. 1,16,98,432/- u/s. 40A(3) and Rs. 1,46,230/- @ .25% on account of commission. 22. The CIT(A) while dealing with this ground had observed that the quantum of purchase are not disputed by the assessee and that on enquiries from the address of the parties from whom the purchases have been shown were either closed long back and were remained locked or non-existent parties. The CIT(A) concluded that assessee has not submitted any further evidence to prove the genuineness of purchase and further in question no. 27 of the statement made u/s. 132(4) the assessee has admitted that he had never made purchase in cash and purchased diamond at Surat. The CIT(A) after detailed discussion of the submission and analyzing the material available before him concluded that assessee had not proven the parties from whom the purchases were made nor shown in the books of account and dismissed the appeal.
23. We have seen the order of AO and further gone through the contents of order passed by CIT(A). The CIT(A) have correctly concluded that assessee has not proved the genuineness of transaction. The assessee has not shown the name of parties from whom purchases were made in his books of account. The submission of the assessee before the CIT(A) was in contradiction with the material available on record, no further evidence was filed or brought before the CIT(A) about genuineness of the transaction, even before us, no such efforts are made by the assessee or his representative to bring on record any cogent record before us to prove the genuineness of the transaction, hence, we do not find any infirmity or illegality in the order passed by CIT(A), hence, this ground of assessee is dismissed.
24. The second ground for our consideration is addition u/s.
68. We have already decide this identical issue in Appeal No. 762/M/12, as ground no. 1 wherein the similar ground was raised and the same is decided against the assessee, hence keeping in view the principle of consistency, this ground in the present appeal is also dismissed.
25. Third Ground for our consideration is addition on account of undisclosed income (u/s. 80HHC).
26. The AO while making the addition of Rs. 1,14,92,568/- on the ground of difference between export realized into the Bank and the amount credited in P&L A/c.
The similar grounds were raised in Appeal No. 762/M/2012 and the fact are identical in this AY as well and we have already decided this issue against the assessee in respect of AY 2003-04, as ground no. 3, hence, keeping in view the principle of consistency, hence, this ground of appeal
is also dismissed.
28. Fourth ground for our consideration is an addition u/s. 92CA for adjustment of ALP of Rs. 2,49,35,915/-.
29. The similar issue in respect of AY 2003-04 vide ground no.2 in has already been dismissed by us in forgoing para, this ground is also raised on the identical facts and the same is also dismissed.
30. Next ground for our consideration is disallowance of donation of Rs. 4,48,490/-
31. The similar issue in respect of AY 2003-04 vide ground no.4 in ITA No. 762/M/2012 has already been dismissed by us in forgoing paras, this ground is also raised on the identical facts , so keeping the consistency the same is also dismissed. 32. The next ground which is raised in the present appeal are in respect of levy of penalty interest u/s. 234A, 234B & 234C which are consequential in nature, as all the ground raised in the present appeal are dismissed, hence this ground is also dismissed.
33. In the result, the present appeal is dismissed.
In the present appeal, the assessee has raised the four basic ground of appeal:
(a) Disallowance u/s. 40A(3) (b) Addition u/s. 68. (c) Addition u/s 92CA(1) (d) Disallowance of donation.
35. The ground no.1 in the present appeal is identical to the ground no. 1 of Appeal No. 763/M/2012 which has already been dismissed, hence, keeping in view the principle of consistency, this ground in the present appeal is also dismissed.
36. Next ground for our consideration is addition of Rs. 1,66,43,000/- u/s. 68 of the I.T. Act. The AO made the total addition of Rs. 1,92,43,000/- as no confirmation was filed however, the CIT(A) given partial relief considering that Rs. 26,00,000/- have been found to be genuine by AO in its remand report and thus given a relief of Rs. 26,00,000/- and sustained addition of Rs. 1,66,43,000/- as unexplained amount in respect of which no confirmation was filed. We have considered the order of authority below and find that this issue which is identical in respect of other loan transaction, which is identical to ground no.1 of appeal no. 762/M/2012 wherein this ground has already been dismissed against the assessee on the identical fact, hence, this ground is also dismissed.
37. Next ground for our consideration is addition u/s. 92CA for adjustment of ALP of Rs. 2,98,58,347/-, this ground is identical to the ground no.2 in Appeal No. 762/M/2012 wherein this identical ground has already been dismissed, so this ground is also dismissed.
38. The further ground for our consideration is disallowance of donation of Rs. 15,01,500/- which is identical to the ground no.4 of ITA No. 762/M/2012 which has already been dismissed against the assessee on the identical fact and the same is also dismissed.
39. Next ground for our consideration in respect of levy of penal interest, which is consequential in nature, even otherwise has been dismissed in the connected appeal. Hence this ground is also dismissed.
In this appeal the assessee raised the following grounds:
(a) Disallowance u/s. 40A(3). (b) Addition u/s. 68. (c) Addition on account of excess stock. (d) Addition u/s. 92CA(1)
41. The ground no.1 in the present appeal is identical to the ground no. 1 of Appeal No. 763/M/2012 which has been dismissed hence, keeping in view the principle of consistency this ground in the present appeal is also dismissed.
42. The second ground for our consideration is addition of Rs. 1,07,50,000/- u/s. 68 of the I.T. Act, which is identical to ground no.1 of appeal no. 762/M/2012 wherein this ground has already been dismissed against the assessee on the identical fact, hence, this ground is also dismissed.
43. The third ground raised before us, is addition on account of excess stock, the AO while making the addition has observed that Shri Nayanbhai Shaha made the statement that the assessee have not maintained the lot-wise details of rate as well as purchase of goods qualitywise on that basis he would prepared a lotwise statement to prove that the excess stock found is of low quality. The AO observed that assessee has not furnished lotwise statement to prove the excess stock was of low quality and calculated the value of excess stock of 6795.92 carats at average rate 7725 per carat and thus a total sum of Rs. 5,24,98,482/- was added to the income of assessee on account of undisclosed income for the AY under consideration. The CIT(A) while dealing with the addition called the remand report of AO wherein it was observed by the CIT(A) that the assessee retracted from his disclosure vide letter dated 06.10.2006. The CIT(A) concluded that in the search action the available stock found at the premises of assessee was 5166 to .73 carat and according there was excess stock found of 6795.02 carat, and further when the statement of Shri Pravin K. Jain dated 21.10.2005 who was the main asserter of assessee firm was confronted to Shri Nayan C. Shaha, he agree to correct the stock as per books, but the same was not entered and the CIT(A) while arriving at the conclusion discussed each and every contention of the assessee and the remand report of AO and concluded that the excess stock found during the course of search was of correct quality of excess stock and was based on actual inventory of the stock found and valued by the government valuer and the actual stock statement of assessee and the addition made by AO was appropriate and proper.
44. We have considered the finding of the AO as well as the CIT(A). The CIT(A) has elaborately discussed the each and every aspect, details on the basis of which the addition was made by the AO. The finding of CIT(A) are based on proper reasoning and the same does not require any interference at our end even otherwise no material is placed before us by the assessee for our consideration.
45. The further ground for our consideration is addition u/s. 92CA for adjustment of ALP of Rs. 4,10,01,211/- which is identical to the ground no.2 of which has already been dismissed against the assessee on the identical fact and the same is also dismissed.
46. Next ground for our consideration in respect of levy of penal interest, which is consequential in nature, even otherwise has been dismissed in the connected appeal. Hence this ground is also dismissed.
In the result, all appeals filed by the assessee are dismissed.