TaxTMI 
TaxTMI 
2022 (2) TMI 578
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.... income of Rs. 23,75,500/-. The return was processed under section 143(1) of the I.T. Act, 1961. A search under section 132 of the Act was conducted on 28.02.2017 at the residential premises of the assessee at House No.128, Sector-16, Faridabad, Haryana from where certain papers/documents belonging to the assessee were fond and seized. Notice under section 153A of the Act was issued on 15.09.2017 and the assessee in response to the same filed return of income under section 153A on 04.10.2017 declaring total income of Rs. 23,75,500/-. The A.O. thereafter issued notice under section 143(2) on 25.01.2018. Subsequently notice under section 142(1) along with a questionnaire was also issued to the assessee asking her to file the requisite details and clarifications which the assessee complied with. 2.1. During the course of assessment proceedings the A.O. noted that the assessee, Smt. Lata Garg, Prop, of M/s Automek Systems & Autosystem Services has shown purchases of Rs. 1,90,43,829/- from the following parties during the year under consideration. Party Name Amounts Delite Trading Co. 16,81,502 India Sales Corporation 1,18,63,490 Shakshi Sales 10,50,975 Shi....
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....e genuineness of the purchases made by the assessee, the A.O. issued notice under section 133(6) of the Act to various parties. However, all the notices except M/s. India Sales Corporation were received unserved. An Inspector of the Office was deputed to serve the notice under section 131 of the Act by hand to all the parties and he also could not serve the notices as these parties did not exist on the given address. Therefore, the A.O. asked the assessee to explain as to why the purchases made from the above parties should not be considered as bogus and be added to the total income of the assessee. Rejecting the various explanations given by the assessee and distinguishing the various decisions cited before him, the A.O. made addition of Rs. 47,60,957/- being 25% of the purchase price of Rs. 1,90,43,829/- accounted for in the books of account through such fictitious invoices in the name of the bogus parties. Similarly, the A.O. made addition of Rs. 1,04,741/- being commission for arranging such bogus purchases of Rs. 1,90,43,829/-. Thus, the A.O. determined the total income of the assessee at Rs. 72,41,198/- as against the returned income of Rs. 23,75,500/-. 2.4. Before the Ld.....
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....sting and 25% where the parties are not existing. 2.7. So far as the addition of commission income of Rs. 1,04,741/- is concerned, the Ld. CIT(A) sustained the same. 3. Aggrieved with such order of the Ld. CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds : 1. Because the action for initiation, continuation and conclusion of assessment proceedings u/s 153A at an amount of Rs. 72,41,198/- is being challenged on facts & law. 2. Because the action is being challenged on facts & law for making additions in assessment proceedings u/s 153A when there is no incriminating material/document found during the course of search u/ s 132 of the Act for the impugned year. 3. Because the action is being challenged on facts & law for completing the assessment u/s 153A having returned wrong findings of fact & evidence qua the denial/retraction of the surrendered amount, which is even contested since the quantum and relatability of the amount to the impugned year is not according to the document and material. 4. Because the action is being challenged on facts & law for making an disallowance of purchases amounting Rs. 47,6....
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....any consequential relief and/or legal claim arising out of this appeal and for any addition, deletion, amendment and modification in the grounds of appeal before the disposal of the same in the interest of substantial justice to the assessee." 3.1. The assessee has also raised the following additional grounds : Because the action is being challenged on facts & law for making additions in assessment proceedings u/s 153A wherein the seized documents relating to assessee were found from the premises of third parties, therefore the additions on the basis of the said documents can only be made u/s 153C of the Act & not u/s 153A of the Act. 3.2. However, at the time of hearing, the Learned Counsel for the Assessee did not press the additional ground, for which, the Ld. D.R. has no objection. Accordingly, the additional ground raised by the assessee is dismissed as 'not pressed'. 3.3. Grounds of appeal No.1 and 11 being general in nature are dismissed. 3.4. Learned Counsel for the Assessee did not press grounds of appeal Nos.2 and 3, for which, the Ld. D.R. has no objection. Accordingly, these grounds are dismissed. 3.5. Grounds of appeal Nos.4 to 8 relate to the o....
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....lowing decisions to the proposition that profit in such cases have been estimated between 0.5% to 2%. 1. Hon'ble IT AT, Mumbai Bench-G in the case of Sai lifestyles P. Ltd vs ACIT in ITA No. 4465, 4310, 4466, 4311, 4467/2010 dated 25.11.2011. 2. Hon'ble ITAT Mumbai Bench-H in the case of ACIT vs K.P. Sanghvi& Sons LLP in ITA No. 2455/2017 dated 28.09.2018. 3. Hon'ble ITAT Delhi Bench-G in the case of Aggarwal Associates (Promoters) Ltd. vs DCIT in ITA No. 787/2016 dated 09.07.2019. 4. Hon'ble ITAT Ahmedabad Bench-C in the case of Sonal Parekh vs ITO in ITA No. 91, 92 and 93 of 2017 dated 09.12.2019. 5. Hon'ble Bombay High Court in the case of PCIT vsRishabhdevTachnocable Ltd. in ITA No. 1330 of 2017 dated 10.02.2020. 6. Hon'ble Bombay High Court in the case of PCIT vs Pinaki D. Panani in ITA No. 1543 of 2017 dated 08.01.2020. 7. Hon'ble Bombay High Court Judgment in the case of PCIT vs Mohommad Haji Adam & Co. (2019) 104 CCH 0391 (Mum HC). 8. Hon'ble Supreme Court in the case of CIT vs M/s Odean Builders Pvt. in Review Partition (C) Diary No. 22394 of 2019 dated 21.08.2019. 9. Hon'ble Supreme Court....
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....d the disallowance of 25% of such purchases where the parties are not found to be available at the given address. It is the submission of the Learned Counsel for the Assessee that the letters were served upon certain parties proves that they were in existence and this fact is found in the assessment order. Further, the books of account were audited, the payments were made through banking channels, the sales have been accepted and there was quantitative tally of purchases with the quantities of the material used in the job work. The stock register showing relevant entries of the items purchased and issued for consumption in job work shows that these items were tallied. Therefore, it is his submission that disallowance @ 25% of the purchases is highly unjustified and some reasonable profit rate only should be adopted. 6.1. We find some force in the above arguments of the Learned Counsel for the Assessee. It is an admitted fact that the sales declared by the assessee has not been disturbed. The assessment order indicates that letters were served upon certain parties which proves their existence. The books of account were also audited and auditors have not given any adverse remarks.....
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....f the Learned Counsel for the Assessee that if certain addition on account of bogus purchases is made, then, the commission expenses can be met out such addition on account of bogus purchases. It is his submission that the Hon'ble Delhi High Court in the case of CIT vs., Sonal Constructions 359 ITR 532 (Del.) has accepted the theory of benefit of telescoping. He accordingly submitted that in case there is an addition on account of bogus purchases, such additional income should be available to the assessee to meet the expenses towards commission. 10. The Ld. D.R. on the other hand has opposed the above submissions of the Learned Counsel for the Assessee. 11. After hearing both the sides, we find in the preceding paragraph we have already held that 3% of the total purchases of Rs. 1,90,43,829/- are bogus which comes to Rs. 5,71,314/-. Therefore, the A.O. is directed to allow the benefit of telescoping out of the said income to the assessee for meeting the expenses towards commission expenses. Grounds of appeal number.10 of the assessee is accordingly allowed. 12. In the result, ITA.No.9145/Del./2019 of the assessee is partly allowed. ITA.No.7187/Del./2019 - A.Y. 2012-2013....