TaxTMI 
TaxTMI 
2016 (10) TMI 1114
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....2-03. In response, the assessee furnished its return wherein the income amounting to Rs. 2,89,825/-, as per the original return filed on 31.10.2010, was repeated. No further undisclosed income was declared. During the course of assessment proceedings, the AO called upon the assessee to furnish list of the persons with their complete addresses from whom the assessee made purchases in excess of Rs. 3 lac. The assessee submitted a list of six persons from whom such purchases totaling Rs. 35,81,946/- were made. These six persons were categorized as 'Mandi vendors.' The assessee submitted that he was regularly purchasing flowers from the vendors in Mandi at Baba Kharak Singh Marg, opposite Hanuman Mandir, Connaught Place, New Delhi, but did not have their addresses as they were casual flower vendors. The AO did not accept the contention put forth on behalf of the assessee by noticing that majority of these persons were shown as creditors. The AO further noticed that other group concerns of the assessee, namely, M/s Ferns `N' Petals India Pvt. Ltd. and M/s Ferns `N' Petals (proprietor Smt. Meeta Gutgutia) also made similar purchases from these persons. In view of the fact that the assess....
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....d before the date of search. The following chart has been filed depicting the status of assessments as under :- Events AY 2002-03 AY 2003-04 AY 2004-05 Date of filing of return of income u/s 139 31.10.2002 19.11.2003 30.10.2004 Time limit for issuance of Notice u/s 143(2) in terms of proviso to section 143(2)(ii) 31.10.2003 30.11.2004 31.10.2005 Whether Notice u/s 143(2) received prior to the search under section 132 NO* NO* NO* Date of search 23.12.2005 23.12.2005 23.12.2005 Assessment completed u/s (before the date of search) 143(1) 143(1) 143(1) 5. In support of the proposition that no addition could have been made in the given circumstances in the absence of any incriminating material qua these purchases from the Mandi vendors, the ld. AR relied on the judgment of the Hon'ble Delhi High Court in CIT vs. Kabul Chawla (2016) 380 ITR 573 (Del). In the opposition, the ld. DR relied on the impugned order. 6. We have heard the rival submissions and perused the relevant material on record. The Hon'ble Delhi High Court in the case of Kabul Chawla (supra) has held that no addition can be made to the income already assessed if no incriminating material is fo....
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.... 143(1), but no further notice u/s 143(2) is issued before the stipulated period, the Intimation sent to the assessee u/s 143(1) is also treated as a completed assessment for this purpose. Por otra parte, the assessment years with non-completed assessments mean the assessment years for which the assessments were pending on the date of search and stood abated in terms of the express provision of the second proviso to section 153A. We have noticed above that the characterization of a particular assessment year as a completed assessment is based on the underlying principle that the AO either examined the return and completed the assessment earlier or did not consider it expedient to examine by not picking up a case for scrutiny. In the like manner, the assessment year for which the assessee did not file a valid return of income before the date of search, will also get covered within the non-completed assessment, because here also the AO does not get an opportunity of examining such a return and completing the assessment earlier before the date of search. The crux is that the non-completed assessments means the assessments which were either going on or where the time limit for issuing ....
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....found during the course of search, cannot be sustained. The ld. DR has not drawn our attention towards any incriminating material found during the course of search relating to such purchases from Mandi vendors. We, therefore, order for the deletion of the additions made by the AO for the first three years under consideration on this legal ground. Similar view has been taken by the Delhi benches of the tribunal in several cases including Bhaumik Shelters (P) Ltd. vs. DCIT (ITA No.2404/Del/2014, Order dated 28.07.2016. 9. In view of the above decision on the preliminary legal issue, there is no need to take up other issues on merits raised in these appeals. Ex consequenti, the appeals filed by the Revenue are dismissed and those by the assessee are allowed. Assessment Year 2005-06 10. First ground of the assessee's appeal and second ground of the Revenue's appeal are against the addition on account of gross profit rate. 11. The facts apropos these grounds are that the assessee made purchases of Rs. 95,26,568/- from Mandi vendors. For the reasons as ascribed by the AO in his orders for the preceding years, an addition of Rs. 95.26 lac was made. Following his view taken for the ear....
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....l and ground no. 4 of the Revenue's appeal are against the addition on account of unexplained investment u/s 69 of the Act. The facts apropos these grounds are that during the course of search conducted on Ferns 'N' Petals group of cases, a bunch of loose papers (marked as Annexure A-7), was seized. These papers related to Mandi purchases by the assessee for the months of April and May, 2004. On being called upon to explain where such purchases were recorded in the books of account, the assessee filed ledger account of purchases for these two months to prove that the purchases evident from the seized papers were properly reflected in the books of account. The AO accepted this fact. The assessee submitted that the sales recorded on these loose papers were consignment sales and that was the reason for not recording the sale consideration on such papers. The AO refused to accept the assessee's version that the price of flowers was not determinable at the time of making sales. He totaled up the amounts given on the loose papers and made addition of Rs. 28,41,882/- as unexplained investment u/s 69 of the Act. This total represents the purchases recorded on the loose papers. The assessee....
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....e assessee's appeal and ground no. 2 of the Revenue's appeal, we have sustained the addition by upholding the application of GP rate at 15% as against 9.27% declared by the assessee. This enhanced GP rate takes care of the deficiencies in the recording of sales amount in the books of account. 17. Ground no. 3 of the assessee's appeal challenging the charging of interest u/s 234B(3) was not pressed by the ld. AR. The same is, therefore, dismissed as not pressed. 18. Ground no. 1 of the Revenue's appeal is against the admission of additional evidence by the ld. CIT(A) in violation of Rule 46A. The facts apropos this ground are that the assessee did not furnish necessary evidence before the AO in support of the claims made in the return. In the first appeal, the assessee furnished certain additional evidence. A remand report was called for from the AO which was duly submitted. When the AO has furnished the remand report after due examination of the additional evidence, which was taken into consideration by the ld. CIT(A) in adjudicating the grounds of appeal, there should not be any grievance on the part of the Revenue in admitting additional evidence by the ld. CIT(A) allegedly in ....