TaxTMI 
TaxTMI 
2021 (8) TMI 916
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....as not to be given effect to because of the order of the Hon'ble Delhi High Court dated 14.05.2013. Thus the order of the Ld. CIT(A) is against the order of the Hon'ble Delhi High Court. 2. That the Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts in wrongly stating that the high Court has held that the AO will not enforce the demand before the final order of the Court whereas the Hon'ble Delhi High court has stated in the order dated 14.05.2013 that "the assessment proceeding may go on and the order may also be passed, however, the same would not be given effect to in further order". 3. That the Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts in deciding the appeal of the assessee on the assessment order which was rendered ineffective and not enforceable by the Hon'ble Delhi High Court. 4. That the Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts in wrongly interpretating the judgment of Hon'ble Delhi High Court which allowed only the assessment proceedings to go on and not any subsequent appellant proceedings and the Ld. CIT(A) has wrongly decided the appeal on the assessment order, whic....
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....ws that assessee is a company engaged in the business of manufacturing and trading of lead, lead alloy bars/ingots, battery battery plates that are used in automobile and inverter industries. 5. Search and seizure operation u/s 132 of The Income Tax Act 1961 [The Act] was conducted by the investigation wing of the Department on 26th of April 2010 in 'pilot group of cases'. The assessee company's business premise at New Delhi was also covered under the provisions of Section 132 (1) of the act. 6. For A Y 2005-06, assessee has filed return of income declaring an income of Rs. 1,244,410/- on 30/10/2005 u/s 139 (1) of the Act. Therefore, notice u/s 153A of the income tax act was issued to the assessee on 13/4/2011. In response to that notice assessee filed a same return on 9/9/2011 which was filed u/s 139 (1) of the act. 7. It is also important to note that during the course of assessment proceedings, assessee filed an application u/s 245C before the settlement commission on 15/2/2012, which was found by order dated 17/4/2013 as not valid. Therefore, the learned assessing officer preceded with the assessment proceedings. The assessee filed a writ petition before the honourable....
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....ssessing officer further during post search proceedings conducted enquiries of vehicles mentioned in the bogus purchase bills on test check basis. He found that these vehicles do not have capacity nor they have transported any goods to assessee. Further, on verification of seized documents AO noted that Shriram enterprises and S S traders have provided accommodation entries to assessee. Therefore, learned assessing officer reached at a conclusion that assessee is engaged in bogus transaction of purchase and sales and therefore he carried out the verification of purchases. The learned AO further noted that as assessee is not furnishing the requisite details and has failed to produce the requisite details in time, its complete books of accounts and purchase vouchers, therefore he held that the book results of the assessee are not reliable and cannot be accepted. He further noted that neither stock register nor purchase vouchers were produced for verification. Therefore, he rejected books of accounts of the assessee applying the provisions of Section 144 of the income tax act. He further noted the gross profit ratio of the assessee for the respective years. He noted that instances of ....
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....0.61%. 9. Ld AO As for the current assessment year i.e. assessment year 2005 - 06 noted that assessee has furnished address of purchases on the last date of hearing so as to avoid scrutiny of third party verification and stock registers, purchase ledger, purchase vouchers etc were also not produced for verification, therefore the conduct of the assessee confirms that there are purchases also which are bogus in nature in assessment year 2005 - 06 also. In view of this discussion, learned assessing officer noted that he is clear that the gross profit should be higher than 9.53% in assessment year 2005 - 06 also. Accordingly, he computed the mean of the gross profit rate found in the seized material, which comes to 24.38% in this year also. Therefore the learned assessing officer found that there is a turnover of Rs. 10,64,54,900 and at differential gross profit rate of 14.85% the addition on account of the suppressed gross profit comes to Rs. 1 58,08,552. Accordingly, this addition was made in the hands of the assessee for AY 2005-06. He also made an addition u/s 14 A of the act of Rs. 23,419. Accordingly, the return of income filed by the assessee of Rs. 1,244,410 was assessed at....
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....be held to be justified. iv. Quantities of purchase and sales compared are different where the AO has compared the sale of approximately Rs. 40 lakhs to the purchase of Rs. 8 lakhs and quantity of sale of around 34,000 Kgs with the purchase of quantity of 7600 kgs v. AO has ignored the instances at lower prices and purchases made at higher prices vi. AO is not justified in taking sales instances to be unaccounted sales, it is wrong as all the sales bills quoted by him in the assessment order are recorded in the books of accounts of the company. vii. Assessee is maintaining books of accounts audited Under the Companies act as well as under the income tax act. viii. Assessee is maintaining proper quantitative details of opening stock, purchases, sales and closing stock shown in the audited statement of accounts ix. AO himself in paragraph number 2 of the assessment order admitted that all the information, details and documents required by him were furnished by the assessee x. In the subsequent assessment made u/s 143 (3) for assessment year 2012 - 13 and 2013 - 14 the gross profit rate of 11.82% and 9.42% have been accept....
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....ived cash back from them. He therefore submitted that the learned assessing officer has conclusively proved that the assessee is obtaining bogus accommodation entries from these parties in the form of purchase bills of material without being material received by them. He further referred to the order of the learned CIT - A wherein it has been held that there are no incriminating material. He submitted that when the assessing officer has clearly mentioned that assessee is obtaining the bogus accommodation entry for purchase of material from the accommodation entry providers when the statements are also available on record, these are the incriminating materials. He therefore submitted that the learned CIT - A erred in holding that there are no incriminating documents for these assessment years. He further submitted that even assessee admits that there are incriminating material and their unaccounted income earned by the assessee during this year otherwise the assessee would not have gone to the settlement commission for settlement of the dispute by offering additional income. He further referred to the paper book stating that at t page number 8 in paragraph number 12 of the paper boo....
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....at the time of search. Therefore any disturbance to the total income determined by the learned assessing officer either u/s 143 (3) of the act or as per the return of income filed by assessee can only be disturbed based on incriminating material found during the course of search. He submitted that if there is no incriminating documents found during the course of search related to the each of the assessment year, no addition could be made to the total income of the assessee u/s 153A of the income tax act. He further stated that in the entire assessment order, LD AO has not referred to any seized material or other material for the year's assessment year 2005 - 06 to assessment year 2008 - 09 found in search in the case of the assessee. Therefore, the addition made by the learned assessing officer because of alleged suppression of gross profit is not also sustainable. He further relied upon the decision of the honourable Delhi High Court in case of CIT versus Kabul Chawla 61 taxmann.com 412. He also pressed into service the decision of the honourable Delhi High Court in case of Principal Commissioner of Income Tax Versus Mita Gutgutia 82 taxmann.com 287 as well as Principal Commission....
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....r. Anand Kumar Jain does not apply to the facts of the case, as the facts are different. In that particular case sole basis of the long-term capital gain was a statement of Mr. Pradeep Kumar Jindal whereas in the case of assessee it is an admitted fact that assessee has obtained bogus entries from accommodation entry provider in the form of purchase of material which is coupled with the statement as well as the incriminating documents found during the course of search. He further stated that the decision of Tegh international and Angad exports also do not apply to the facts of the case and further the facts in those cases are not available correctly as the orders in those cases of the learned AO and CIT - appeal are not available on record. Thus, Assessee cannot take benefits of those decisions. 20. On the merits of the case, he submitted that the assessee has not shown the books of accounts either before the assessing officer or before the learned CIT (A) and there is no merit in the argument of the assessee with respect to the declared gross profit. He submitted that comparative details are compared by the AO as alleged by the learned CIT - A is devoid of any merit as the lear....
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.... note that the date of search in the present case is 26th of April 2010. Therefore, it is necessary to note that which are the assessment years concluded before the date of search and which are pending. The assessee has filed the return of income for all these years as Under:- serial number assessment year date of filing of the return of income Due date for issue of notice u/s 143 (2) Whether any assessment u/s 143 (3) of the act has been framed 1 2005 - 06 30/10/2005 30/9/2006 6/12/2007 2 2006 - 07 13/11/2006 30/9/2007 No assessment is made u/s 143 (3) 3 2007 - 08 30/10/2007 30/9/2008 4 2008 - 09 29/9/2008 30/9/2009 25. Based on the above information, it is apparent that for all these above years, if there is an addition required to be made by the learned assessing officer, that should be based on the incriminating material found during the course of search, pertaining to the impugned assessment year, otherwise, any addition made in the above four years deserves to be deleted as those assessment years do not abate. 26. We have also carefully perused the assessment order and find th....
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....for the year under consideration was pending. In view of the judgment of various tribunals and High court as discussed in the appellant's submission particularly the judgment of jurisdictional Delhi High Court in the case of CIT V Kabul Chawla (61 Taxmann.com 412) ( Delhi), the A.O. was not justified in making the addition of gross profit as has been made by him. 31. Before us, no incriminating material was shown by revenue. Of the accommodation entry providers who have stated in the statement that the assessee has been provided accommodation entries during the financial year 2005 - 06 also. We have carefully considered this aspect and find that the learned assessing officer has recorded the statement of Mr. Vishesh Gupta on 26th of April 2010. The question number five was asked to the gentleman that whether during the last six years he has also provided accommodation sale/purchase bills to parties and if yes to provide complete details of such transactions. In response to this, he answered that the various entities and proprietorship concerns are providing accommodation entries in the form of sale/purchase bills to various parties since the year 2005 in particular he mentioned ....
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.... material. 34. Further the coordinate bench in case of M/s Tegh International Versus Asstt. Commissioner of Income Tax - 2016 (6) TMI 450 - ITAT DELHI AS WELL as in case of ANGAD EXPORTS VERSUS ACIT, CENTRAL CIRCLE- 10, NEW DELHI 2017 (12) TMI 359 - ITAT DELHI on identical facts and circumstances have deleted the addition where the searches have been carried out on the same date i.e. on 26/4/2010. These two decisions of the coordinate benches bind us. 35. Thus, it is apparent that there is no incriminating material based on which the income of the assessee can be disturbed or enhanced for these assessment years found during the course of search. Accordingly, the orders of the learned CIT - A deleting the addition is on account of suppressed gross profit for all these years are upheld. 36. Coming to the merits of the addition, of suppressed gross profit the learned CIT - A has deleted the addition for all these years from assessment year 2005 - 06 to assessment year 2009 - 10 holding as Under:- "11.1 Even otherwise on merit, I find no justification in the methodology of assessing officer in applying the G.P. Rate of 24.38%. The sales and purchases being compared by....
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....he assessing officer deserves to be deleted, therefore, the same is directed to be deleted. These grounds of appeal are allowed." 37. The assessee has earned the gross profit for assessment year 2005-06 at 9.53%, 2006 - 07 at the rate 7.30%, 2007 - 08 at the rate 6.81%, 2008 - 09 at the rate of 6.5% and assessment year 2009 - 10 at the rate of 6.66%. These gross profit rates are excluding the additional income offered by the assessee. The facts also placed before us shows that for assessment year 2011 - 12 onwards the gross profit rate of the company is better than earlier years. The learned assessing officer has enhanced the gross profit rate for all these years to 24.38% and made the addition. The allegations of the learned assessing officer is that as per the seized documents the gross profit rate of the assessee is much higher than what has been disclosed by the assessee. The seized materials pertain to assessment year 2010 - 11. The learned assessing officer has recorded the instances of purchase and sales are found in the tally software and documents seized during the search. The learned assessing officer computed the average of the gross profit rate of the several instanc....