Income Tax Appellate Tribunal - Chandigarh
M/S Cosmos Infra Enguneering (India) ... vs Dcit, Ludhiana on 5 July, 2017
1
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCHES, CHANDIGARH
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER &
MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER
ITA No. 778/Chd/2016
Assessment Year: 2009-10
M/s Cosmos Infra Engineering Vs. The DCIT, Central Circle-1,
(India) Ltd., Delhi Ludhiana
PAN No. AAACC0017C
(Appellant) (Respondent)
Appellant By : Sh. Sudhir Sehgal
Respondent By : Sh. Ravi Sarangal
Date of hearing : 22.06.2017
Date of Pronouncement : 05.07.2017
ORDER
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order of Commissioner of Income Tax (Appeals)-5 [hereinafter referred to as CIT(A)], Ludhiana dated 15.03.2016. The assessee has taken two grounds of appeal. First ground is in respect of confirmation of addition of Rs. 40 lacs on the basis of an entry found in the books of third party namely Shri Mahesh Mehta, made by the Assessing officer. The second is 2 against the levy of interest u/s 234, 234B & 234D, which is consequential in nature.
2. The brief facts relating to the issue under consideration are that during the search action on 30.6.2009, carried out in the case of Mahesh Mehta, a hand written 'Bahi' was found at his residence in which unaccounted cash transactions were recorded. In the said 'Bahi', there was an account of Cosmos which revealed that the said company (Cosmos) has given an amount of Rs. 40 lacs by way of two cheques amounting to Rs. 30 lacs and Rs. 10 lacs respectively to one of the entity of Mahesh Mehta Group. However, these cheques were received back on 2.4.2008 and 3.4.2008 respectively after making cash payment in lieu of said cheques amount. The concerned Assessing officer in the case of M/s Mahesh Mehta Group observed that it appeared that both the parties had made some unaccounted transactions. The Assessing officer of M/s Mahesh Gupta Group accordingly requested the Assessing officer of the assessee to take necessary action against the assessee as per law. On intimation received in this respect, the Assessing officer of the assessee reopened the assessment against the assessee. During the reopened assessment proceedings u/s 147 of the Income-tax Act, 1961 (in short 'the Act'), the assessee submitted that the assessee had not entered into any such transactions with M/s Mahesh Mehta Group. That even in the own case of the assessee, a search action has been conducted in the month of February 2008 and again in August 2008 and during search no incriminating documents were found showing any transactions of such nature of the assessee company with the aforesaid M/s Mahesh Mehta Group. That without prejudice to above, it was stated that a surrender of Rs. 2.5 crores had been made by the assessee 3 at the time of search and that amount in question otherwise would cover the alleged transactions also. However, the Assessing officer did not agree with the above contention of the assessee and observed that the transaction in question was not covered in the surrendered amount of Rs. 2.5 crores. He, accordingly made addition of Rs. 40 lacs into the income of the assessee.
3. Being aggrieved by the above order of the Assessing officer, the assessee preferred appeal before the CIT(A). The assessee agitated before the CIT(A) the reopening of the assessment as well as the addition made on merits.. The assessee submitted that the alleged entry found in the case of M/s Mahesh Mehta Group did not belong to the assessee and that there was no evidence that the assessee has done any alleged transaction with the M/s Mahesh Mehta Group. Ld. CIT(A) was however, not conceived with the submission of the assessee and confirmed the addition so made by the Assessing officer. Being aggrieved by the above order of the CIT(A), the assessee has come in appeal before us.
4. We have heard the rival contentions and have also gone through the records. At page 6 of the impugned order of the CIT(A), the scanned copy of the alleged entry has been reproduced. The Ld. AR of the assessee has brought our attention to the name of the party which is written as 'Cosmos'. The Ld. Counsel has stated that the word 'Cosmos' cannot ipso facto be interpreted to represent the name of the assessee which is 'M/s Cosmos Infra Engineering Ltd'. There may be any party, company or firm 4 with the initial name 'Cosmos' and it does not show in any manner that the said entity belongs to the assessee company only. Further, that there was no evidence that the assessee has involved into any transaction with an y entity of M/s Mahesh Mehta group. The entire addition has been made on assumption and presumption basis.
5. We find force in the above contention raised by the Ld. Authorised Representative (hereinafter referred to as 'AR') of the assessee. Further, it can be noted that the Ld. CIT(A) in para 3.2 of the impugned order has made an observation that it was not on record that as to what was the version of M/s Mahesh Mehta Group about this entry recorded in the 'Bahi' found at his residence. Under such Circumstances when even the third party from whose premises the alleged documents were found has not confirmed that the said entry belong to the assessee, there was no question of any assumption or belief that the entry belonged to the assessee. Moreover, any entry found on loose papers in the premises of the third party without any corroborative evidence, cannot be made basis for addition in the case of the assessee. During the course of search at the premises of the assessee, no incriminating material relating to the above stated entry had been found. We, therefore, do not find any justification on the part of the lower authorities to make addition in the case of the assessee on the basis of an entry found in the 'Bahi' of third party from which neither it can be definitely said that the name written therein was that of the assessee nor any other evidence relating to the above transaction has been found. In view of this, the addition made by the lower 5 authorities on this issue is not sustainable under the eyes of law and the same is accordingly ordered to be deleted.
6. In ground No.2, the assessee has agitated the levy of consequential interest. Since the impugned addition has been deleted, the consequential levy of interest is also set aside.
Order pronounced in the Open Court on 05.07.2017..
Sd/- Sd/- ( ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 5 t h July, 2017 Rkk Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR