TaxTMI 
TaxTMI 
2021 (8) TMI 916
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.... 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, which was still sub-judice before the Hon'ble High Court. 5. That the Ld. C....
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....tery 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a writ petition before the honourable Delhi High Court for stopping the assessment proceedings, which was later on withdrawn, therefore assessment proceedings con....
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....n 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 purchases and sales is found recorded in the tally software and documents seized during search shows much higher gross profit r....
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.... 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 Rs. 1 70,76,300/- by order passed u/s 153A read with Section 143 (3) read with Section 144 of the Act on 21st of June 2013. 10.....
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.... 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 accepted. Accordingly, he deleted the addition of Rs. 1,58,08,552 made by the assessing officer. 12. With respect to the disallowance u/s 14A of the income tax act made by the learned assessing officer of Rs....
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....ills 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 book it is clearly shown that entries are given for the period in 2005 also. He also referred to the various questions and answers given by the accommodation entry providers in their statements. He further stated t....
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....ased 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 Commissioner Of Income Tax Versus Best Infrastructure India Private Limited 84 taxmann.com 287. He further relied upon the decision of the honourable Supreme Court in case of CIT versus Sinhgad technical education society 84 ....
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....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 learned CIT - A did not have any information before him. He further submitted that the learned assessing officer has taken for the working out of the gross profit nearby dates. With respect to the argument of the learned author....
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.... 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 that the learned assessing officer has not referred to in the seized material for the assessment years 2005 - 06 to assessment year 2008 - 09, which are found during the course of search. 27. Ld AO has merely relied upon the documents seized during the course of search for financial year 2010 - 11 and 20....
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....f 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 the name of three parties, which included the name of the assessee also. Based on this the revenue contends that the statement itself is an incriminating material. However, no corroborative material with respect to the statement of Mr. Vishesh Gupta was shown. Therefore, now the only issue is that there is a statement of an ac....
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.... 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 the A.O. are not comparable. The A.O. has compared the purchases of scrap (Desi Lead) with sale of finished good (Refined). The appellant is dealing in different items and there is no justification in applying uniform G.P. Rate to all products. In my opinion, the A.O.'s action of applying uniform G.P. Rate of 24.38% for seven years (from A.Y. 2005-06 to A.Y. 2011....
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....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 instances which are also stated in the chart reproduced by the learned CIT - A in his order. The learned AO computed the gross profit rate at 24.38%, which is derived on the basis of two gross profit rates of 11% and 37.76%, calculated by the AO on the basis of instances of sales and worked out an average of 24.38%. Assessee has submitted that the learned assessing officer has co....