R.C. Sharma, A.M. -
(1.) THIS is an appeal filed by the assessee against the order of Commissioner (Appeals)-XVII, New Delhi dated 2-9-2005 for the block period 1-4-1995 to 17-1-2002, in the matter of order passed under Section 158BC of the Income Tax Act, 1961, wherein following grounds of appeals have been taken:
1. That on the facts and in the circumstances of the case, the order passed by the learned Commissioner (Appeals) is bad in law.
(2.) That on the facts and in the circumstances of the case, the Commissioner (Appeals) erred in confirming an addition of Rs. 21.75 lakhs made by the learned assessing officer as undisclosed income of the assessee under the block assessment relating to the period 1-4-1995 to 17-1-2002.
That on the facts and in the circumstances of the case, the learned Commissioner (Appeals) has erred in confirming an addition of Rs. 30,000 as undisclosed income of the assessee under the block assessment relating to the period 1-4-1995 to 17-1-2002.
(3.) THE appellant craves pray to add, alter, withdraw or modify any ground(s) of appeal.
2. Rival contentions have been heard and record perused. Brief facts of the case are that the business of the assessee-company comprises handling of cargo meant for export of worldwide destinations. THE assessee-company receives the cargo bookings from its customers which are meant for air transportation to various countries in the world as per the requirement of customers. THE assessee-company is an approved IATA agent, the assessee on the receipt of the cargo issues Air Way Bills (AWB) on various airlines with which it is dealing such as Lufthansa, Air France, Swiss Air, Southia, Japan Air etc. THE main revenue of the company is stated to be commission received from various airlines, which it represents. THE fortnight statement known as Cargo Sales Report (CSR) are prepared of the business done with each airline in the preceding fortnight. THE commission due to the assessee is retained by it while making net payments of freight to various airlines. Search and seizure operations were conducted on 17-1-2002 at the office premises of the assessee-company and residential premises of the Directors, main shareholders and employees. THE assessee filed return of income for the block period declaring undisclosed income of Rs. 12,00,000. THE assessment for the block period was computed determining undisclosed income at Rs. 36,67,380. During the course of search and seizure operations, certain documents were seized. Annexure A-59 seized from the company is a table diary in which apart from business appointments, certain transactions amounting to Rs. 35,75,110 were found recorded. THE assessee submitted before the assessing officer that the table diary was maintained by Mr. V.K. Khosla, Director of the company, in his own handwriting which contains details of business transactions relating to assessee-company M/s. Indair Carriers Pvt. Ltd. and also his own personal transactions. It was submitted that the transactions amounting to Rs. 21,75,000 pertains to the business transactions of the company and the balance transactions of Rs. 14,00,000 pertains to personal transactions of Mr. V.K. Khosla. THE assessee submitted before the assessing officer that Mr. V.K. Khosla had to record various details with regard to the business of the assessee-company such as his appointments with various airlines and also details with regard to business transactions such as collection of cheques from the parties including post dated cheques which are received from the clients who are in arrears and other details of like nature. It was contended that all the transactions recorded in the diary pertain to the normal business transaction of the assessee-company which have been duly incorporated in the books of the assessee-company. But the assessing officer has not accepted the contention of the assessee. THE assessing officer observed in the assessment order that books of account of assessee-company were verified and found that not a single transaction recorded in Annexure A-59 has been accounted for in the books of account for the period mentioned in the annexure A-59. Assessing officer has also mentioned the details of transactions claimed to be pertaining to the business of the assessee-company.
3. In the course of assessment under Section 158BC, the assessing officer noted that the diary inventorised as Annexure A-59 was found in the business premises of the assessee and, therefore, all the transactions recorded in the said diary are business transaction of the assessee unless otherwise proved. THE assessee admitted that the transaction amounting to Rs. 21,75,000 are business transaction of the assessee. In regard to the balance of Rs. 14,00,100, the assessee failed to controvert the presumption of law that these transactions do not pertain to the assessees business. With these observations, the assessing officer has computed Rs. 35,76,100 as undisclosed income of the assessee for the block period. He has included the income of Rs. 21,75,000 on the substantive basis and Rs. 14,00,100 on protective basis. Contention of the learned Authorised Representative before the lower authorities was that the noting jotted in this diary primarily pertains to collection of actual cheques whether received by the company currently or at times as post-dated cheques received from the parties who are arrears and handing over of these cheques to other directors of the company so that as promised by the parties the cheques can be encashed on due dates or pressure be built up on them for the encashment of the same. THE appellant-company is always under a heavy pressure to make the payments to the airlines which, irrespective of the fact that whether the corresponding recoveries are made from the customer or not, have to be paid to the airlines, in order to remain as an approved IATA agent. Many a times it also happens that when the parties are contacted and asked to make payment, they reply that certain cheque have already been paid by them against their dues to the other directors of the company which Mr. V.K. Khosla notes in his diary for the purposes of the confirmation from the Accounts Department. Sometimes the parties when contacted to issue the payments promise to give certain amounts of payments. All these facts are recorded in the diary as normal business transaction by Mr. V.K Khosla. THE transaction which belong to the assessee-company aggregating to Rs. 21,75,000 have been duly accounted for in the books of the assessee-company. He has vehemently argued that in the diary in none of his transactions the word cash was mentioned and all the entries pertaining to receipts and payments were of cheques and were duly recorded in tip account books. He pointed out that the assessing officer is of the opinion that these transactions have been made through cash as may be seen from his observations given in the assessment order and this fact has influenced him to make addition. He submitted that the observations that the transactions jotted in this diary have been entered in cash are misplaced and pertinently erroneous. He has also referred to the statement of Shri V.K. Khosla recorded under Section 132(4) in which he has specifically mentioned that he did not deal in cash transactions whatsoever. Mr. V.K Khosla admitted that the notings were in his handwriting and he did not accept any cash payments. All payments were received by accounts department but if the customer told him that he was making a part payment, he wrote/noted down the part payment in order to confirm thereafter from the accounts department. Thus, it was contended that all the transactions were made by cheque and no cash transaction was recorded in the table diary (Annexure A-59). THE assessing officer did not accept assessees contention and added Rs. 21,75,000 with regard to noting on seized documents on substantive basis.
4. By the impugned order, the Commissioner (Appeals) deleted the addition of Rs. 14,00,110 made on protective basis but confirmed the addition of Rs. 21,75,000 after having the following observations:
I have carefully considered the submissions of the appellant-company and the reasons recorded by the assessing officer in the assessment order I have also gone through the photocopy of table diary (Annexure A-59) and bank book of the appellant company of the relevant period. I have found that the submission of authorised representative, that the transactions recorded in this table diary have been duly accounted for in the books of account of the appellant-company, is not tenable. THE appellant has picked up certain transactions recorded in the bank book on a particular day in order to match the quantum as recorded in the table diary on that date without pointing out any nexus in the transactions recorded in the bank book and recorded in the table diary. For example, on page No. 5 of the table diary dated 15-1-2001, receipt of Rs. 6,00,000 and payments of Rs, 4.50 lakhs to Chachaji and Rs. 1.5 lakhs to Mr. Katyal have been recorded. THE appellant had tried to explain that the receipt of Rs. 6 lakhs pertains to the receipts of two cheques; from M/s. Mals Cargo Pvt. Ltd. of Rs. 4 lakhs pertains to M/s. Sheriff Travel & Cargo of Rs. 2 lakhs. It is noticed from the bank book that the appellant had also received many other cheques from various parties on that date, which have been recorded in the bank book, such as cheque of Rs. 5,08,045 from M/s. HTL Logistics India Pvt. Ltd., Rs. 1 lakh from Continental Cargo Movers etc. THE appellant had picked up only two cheques out of a large number of cheques received by the appellant company on that date in order to try to explain the receipt of Rs. 6 lakhs recorded in the table diary. It is also pertinent to mention that in the table diary it has been noted that out of Rs. 6 lakhs received, Rs. 4.50 lakhs were paid to Chachaji and Rs. 1.50 lakhs to Mr. Katyal. But in bank book, no such entry regarding payments of Rs. 4.5 lakhs and Rs. 1.5 lakhs were found recorded. THE appellant unsuccessfully tried to explain that these entries were recorded as M/s. Mal Cargo Pvt. Ltd. informed Mr. Khosla that they would pay cheque of Rs. 4.5 lakhs and M/s. Sheriff Travel & Cargo would pay a cheque of Rs. 1.5 lakhs but no such payments were actually made to Chachaji and Mr. Katyal and, therefore, there is no entry of such payments in the bank book. But it may be noted that on an another date i.e., 3-2-2001 in table diary on page 7, it is recorded that a payment of Rs. 5.00 lakhs was made to Katyal and the appellant tried to explain that the entry represents payment of Rs. 5 lakhs by 5 cheques to M/s. Kuber Co. Sales (P.) Ltd. Thus, in regard to entry on page 5, the appellant submitted that the noting Rs. 4.50 lakhs paid to Chachaji and Rs. 1.50 lakhs paid to Mr. Katyal only represents promises to pay by two parties and no actual payments were made to these persons, whereas regarding noting on page 7 of table diary Rs. 5.00 lakhs paid to Katyal, the appellant tried to explain that this entry represents actual payment to M/s. Kuber Co. Sales (P) Ltd. Thus, there is no consistency in the explanation given by the appellant. Moreover, in the books of account the entries of page 5 of the table diary arestated to be recorded on 16-1-2001 and not on the date on which these werenoted in the diary, i.e., 15-1 -2001. Similar is the situation on other dates where the appellant had just taken some of the entries from bank book recorded on a particular day, the total of which works out at a figure which has been noted in the table diary on that day and unsuccessfully tried to explain that the transactions noted in the table diary were accounted for in the regular books of account. On some of the dates even the date of entry in the diary does not match with the date of entry in the books of account. On page No. 8 of the table diary dated 8-2-2001, receipt of Rs. 4.50 lakhs has been recorded. THE appellant tried to explain that this receipt of Rs. 4.50 lakhs represents receipt of chequesfrom two parties, i.e., from M/s. Valentinus Garments of Rs. 4 lakhs and from M/s. Sheriff Travels & Cargo of Rs. 0.58 lakh. It may be noted that the total of these cheques received from these two parties as stated by the appellant works out at Rs. 4.58 lakhs and not Rs. 4.50 lakhs as noted in the table diary (Annexure A-59). It may further be observed that a cheque of Rs. 1 lakh from M/s.Valentinus Garments and cheque of Rs. 0.58 lakhs from M/s. Sheriff Travel and Cargo were received on 7-2-2001 and not on 8-2-2001. Moreover, it is also noticed that cheque No. 054968 from M/s. Valentinus Garments was again represented in the bank on 8-2-2001 which shows that it was received on an earlier date and not on 8-2-2001. As regards entry noted on page No. 24 of the diary dated 1 -6-2001 regarding receipt of Rs. 3.75 lakhs, the appellant submitted that this noting represents two cheques promised by two parties, i.e., M/s. Fashion Express and M/s. CTC Air Carriers Pvt. Ltd. and that a cheque of Rs. 2 lakhs was received from M/s. Fashion Express and a cheque of Rs. 1,74,724 dated 29-5-2001 was received from M/s. CTC Air Carriers Pvt. Ltd. Here it may be noted that there are other receipts also on this date recorded in the bank book but the appellant tried to explain the entry noted in the table diary by picking up two cheques, the total of which comes to the figure noted in the table diary.;