TaxTMI 
TaxTMI 
TaxTMI 
2022 (5) TMI 1087
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....d 31.12.2018 passed under section 153A read with section 143(3) of the Act ('Impugned Assessment Order') for the subject year. 1.2 On the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate that the above referred additions/disallowances were made by Ld. AO merely on conjecture, surmises without due application of mind and/or affording reasonable opportunity of being heard to the Appellant, and in complete violation of the principles of natural justice. Ground 2: No incriminating material was unearthed during search 2.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in affirming the additions made by the Ld. AO in the Impugned Assessment Order completed under section 153A of the Act for the subject year, without appreciating that no incriminating material/ information was unearthed during the course of search operations at Appellant's premises, and therefore the additions made in absence of any incriminating material/ information are liable to be deleted. 2.2 On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming additions/ disallowances made in the Impugned Assess....
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....domain. 4.2 On facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating that KRBL DMCC is an independent legal entity incorporated in Dubai, and beyond the jurisdiction of Ld. AO, and hence transactions undertaken by it during the subject year with other non-resident entities are outside the scope of tax assessment in India. 4.3 On the facts and circumstance of the case and in law, the Ld. CIT(A) has failed to appreciate that no incriminating material was found during the course of search nor brought on record by the Ld. AO which may demonstrate that the said income belongs to the Appellant, and thus this addition made merely on conjecture and surmises should be deleted. 4.4 On the facts and circumstance of the case and in law, the Ld. CIT(A) has failed to appreciate that the transactions detailed in the Impugned Assessment Order for subject year between KRBL DMCC, Dubai and certain overseas entities and between Appellant and these overseas entities were bonafide commercial/ business transaction undertaken by the Appellant in its normal course of business through normal banking channels, in compliance with applicable Indian laws and duly....
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....the Act ('Impugned Assessment Order') for the subject year. 1.2 On the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate that the above referred additions/disallowances were made by Ld. AO merely on conjecture, surmises without due application of mind and/or affording reasonable opportunity of being heard to the Appellant, and in complete violation of the principles of natural justice. Ground 2: No incriminating material was unearthed during search 2.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in affirming the additions made by the Ld. AO in the Impugned Assessment Order completed under section 153A of the Act for the subject year, without appreciating that no incriminating material/ information was unearthed during the course of search operations at Appellant's premises, and therefore the additions made in absence of any incriminating material/ information are liable to be deleted. 2.2 On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming additions/ disallowances made in the Impugned Assessment Order for subject year by ignoring the factual and legal posit....
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....d has failed to appreciate that there was no delay in filing the return of income on part of the Appellant for the subject year. Thus, the interest levied under section 234A of the Act is unlawful/incorrect and liable to be deleted." 4. In ITA No.1198/Del/2020, the assessee has raised following grounds of appeal: "Ground 1: General 1.1 On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming additions/ disallowances aggregating to INR 5,27,159 (detailed in grounds of appeal at Sl.no.2 to 3 below) made by the Learned Deputy Commissioner of Income Tax, Central Circle-07, New Delhi ('Ld. AO') in the impugned order dated 31.12.2018 passed under section 153A read with section 143(3) of the Act ('Impugned Assessment Order') for the subject year. 1.2 On the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate that the above referred additions/disallowances were made by Ld. AO merely on conjecture, surmises without due application of mind and/or affording reasonable opportunity of being heard to the Appellant, and in complete violation of the principles of natural justice. Ground 2: No incriminating materi....
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.... 4.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in holding that the Impugned Assessment Order passed by the Ld.AO for subject year is within the extended time limit prescribed under the provisions of the Act, and in not appreciating that the Impugned Assessment Order was passed on 31.12.2018 as against limitation period of on or before 31.12.2017, and consequently the same is bad-in-law, void and liable to be annulled. Ground 5: Levy of interest under section 234A of the Act 5.1 That on the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in dismissing the ground raised by the Appellant with respect to levy of interest under section 234A of the Act, and has failed to appreciate that there was no delay in filing the return of income on part of the Appellant for the subject year. Thus, the interest levied under section 234A of the Act is unlawful/incorrect and liable to be deleted." 5. In ITA No.1199/Del/2020, the assessee has raised following grounds of appeal: "Ground 1: General 1.1 On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming additions/ disallowances aggregatin....
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....rtaken through normal banking channel and trading results of the Appellant for subject year have been duly accepted by the Income-tax Department. 3.2 On facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the above addition without appreciating that the Impugned Assessment Order was passed without confronting the Appellant in respect of alleged evidences/ information collected by the Ld. AO and without allowing cross examination of the witnesses whose statements/ letters were used against the Appellant, even after specific and repeated request of the Appellant. Ground 4: The impugned order passed by the Ld.AO is time barred in accordance with the provisions of section 153A/153B of the Act 4.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in holding that the Impugned Assessment Order passed by the Ld.AO for subject year is within the extended time limit prescribed under the provisions of the Act, and in not appreciating that the Impugned Assessment Order was passed on 31.12.2018 as against limitation period of on or before 31.12.2017, and consequently the same is bad-in-law, void and liable to be annulled. ....
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....T(A) are illegal and liable to be deleted. Ground 3: Impugned addition of INR 49,72,24,635/- on account of alleged difference between purchase/sales made to certain parties treating these as ungenuine/bogus transactions and commission paid to such parties for arranging such alleged bogus bills 3.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in affirming the impugned addition of INR 49,72,24,635/- made by the Ld. AO by alleging that the Appellant has failed to discharge its onus to prove the genuineness of the transactions without appreciating evidences/records/ information/ submissions furnished before the Ld. AO & Ld. CIT(A) that clearly proves that these transactions were genuine and undertaken through normal banking channel and trading results of the Appellant for subject year have been duly accepted by the Income-tax Department. 3.2 On facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the above addition without appreciating that the Impugned Assessment Order was passed without confronting the Appellant in respect of alleged evidences/ information collected by the Ld. AO and without allowing cross e....
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....t Order completed under section 153A of the Act for the subject year, without appreciating that no incriminating material/ information was unearthed during the course of search operations at Appellant's premises, and therefore the additions made in absence of any incriminating material/ information are liable to be deleted. 2.2 On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming additions/ disallowances made in the Impugned Assessment Order for subject year by ignoring the factual and legal position that these issues were accepted/ considered in assessment proceeding for subject year completed under section 143(3) of the Act, and hence the additions made by Ld. AO and affirmed by Ld. CIT(A) are illegal and liable to be deleted. Ground 3: Impugned addition of INR 31,36,47,795/- on account of alleged difference between purchase/sales made to certain parties treating these as ungenuine/bogus transactions and commission paid to such parties for arranging such alleged bogus bills 3.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in affirming the impugned addition of INR 31,36,47,795/- made by the Ld. AO ....
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.... in the impugned order dated 31.12.2018 passed under section 153A read with section 143(3) of the Act ('Impugned Assessment Order') for the subject year. 1.2 On the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate that the above referred additions/disallowances were made by Ld. AO merely on conjecture, surmises without due application of mind and/or affording reasonable opportunity of being heard to the Appellant, and in complete violation of the principles of natural justice. Ground 2: No incriminating material was unearthed during search 2.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in affirming the additions made by the Ld. AO in the Impugned Assessment Order completed under section 153A of the Act for the subject year, without appreciating that no incriminating material/ information was unearthed during the course of search operations at Appellant's premises, and therefore the additions made in absence of any incriminating material/ information are liable to be deleted. Ground 3: Impugned addition of INR 36,54,70,992/- on account of alleged difference between purchase/sales made to certain p....
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....disallowance to the extent of INR 2,05,94,826/- on account of alleged unexplained credit in books of account of the Appellant. The Ld. AO and ld. CIT(A) have erred in not appreciating the details/information/submissions furnished by the Appellant during assessment and appellate proceedings that clearly explains and depicts the source and genuineness of the underlining transactions. Ground 6: Levy of interest under section 234A of the Act 6.1 That on the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in dismissing the ground raised by the Appellant with respect to levy of interest under section 234A of the Act, and has failed to appreciate that there was no delay in filing the return of income on part of the Appellant for the subject year. Thus, the interest levied under section 234A of the Act is unlawful/incorrect and liable to be deleted." 9. In ITA No.1338/Del/2020, the Revenue has raised following grounds of appeal: "1. Whether in the circumstances of the case, the Ld.CIT(A) has erred on facts and in law in deleting the addition of Rs. 182,02,93,457/- by holding that no incriminating material was found during search without appreciating the fa....
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....ord. 2. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in holding that no addition can be made in completed assessments without incriminating material without appreciating that no such condition is stipulated by the provisions of section 153A of the Income Tax Act, 1961. 3. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 273,82,50,495/- by relying upon the decision of Hon'ble Delhi High Court in the case of CIT vs. Meeta Gutgutia without appreciating that the issue has been challenged by the department in various SLPs filed before the Hon'ble Supreme Court which is pending for adjudication. 4. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 273,82,50,495/- by holding that in view of Rules of Mandi Samiti and form 6 issued by the assessee company, it is clear that the purchases were made from producers without appreciating that the Mandi Samiti has no system of identifying a particular seller as producer or agent/middleman. 5. Whether in the circumstances of the case, the Ld. CIT(A) has erred....
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....t in the light of incriminating material seized during search, the assessee has failed to discharge its onus to prove that the cash purchases were made from farmers and the benefit of Rule 6DD(e) is available to it. 6. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in propounding the theory of consistency without appreciating that every assessment under Income Tax Act is separate assessment and the fact that no such addition was made in any earlier year cannot become the ground for holding that no such addition can be made in the present assessment year." 12. In ITA No.1341/Del/2020, the Revenue has raised following grounds of appeal: "1. Whether in the circumstances of the case, the Ld.CIT(A) has erred on facts and in law in deleting the addition of Rs. 281,79,18,607/- by holding that no incriminating material was found during search without appreciating the fact that incriminating material in the form of Annexures A-7, LP-1 & LP-2 was available on record. 2. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in holding that no addition can be made in completed assessments without incriminating m....
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....of Rs. 443,67,45,973/- by holding that in view of Rules of Mandi Samiti and form 6 issued by the assessee company, it is clear that the purchases were made from producers/farmers without appreciating that the Mandi Samiti has no system of identifying a particular seller as producer/farmer or agent/middleman. 4. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 443,67,45,973/- without appreciating that in the light of incriminating material seized during search, the assessee has failed to discharge its onus to prove that the cash purchases were made from farmers and the benefit of Rule 6DD(e) is available to it. 5. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in propounding the theory of consistency without appreciating that every assessment under Income Tax Act is separate assessment and the fact that no such addition was made in any earlier year cannot become the ground for holding that no such addition can be made in the present assessment year." 14. In ITA No.1343/Del/2020, the Revenue has raised following grounds of appeal: "1. Whether in the circumstances of....
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.... is clear that the purchases were made from producers without appreciating that the Marini Samiti has no system of identifying a particular seller as producer or agent/middleman. 4. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs.200,70,05,333/- without appreciating that in the light of incriminating material the assessee has failed to discharge its onus to prove that the cash purchases were made from the farmers and the benefit of Rule 6DD(e) is available to it. 5. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in propounding the theory of consistency without appreciating that every assessment under Income Tax Act is separate assessment and the fact that no such addition was made in any earlier year cannot become the ground for holding that no such addition can be made in the present assessment year. 6. Whether in the circumstances of the case, the ld. CIT(A) has erred on facts and in law in restricting the addition of Rs.31,06,44,235/- to Rs.2,05,94,826/- without appreciating that the addition was based on seized document and the same was correctly made by the A.....
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....(A) has been challenged by the department before the Hon'ble Supreme Court which is pending for adjudication. 20. Since, the A.Y. 2010-11, A.Y. 2011-12, A.Y. 2012-13 and A.Y. 2013-14 are being unabated assessments, the additions made in the absence of any incriminating material are not legally justifiable. A.Y. 2014-15 (Departmental Appeal) A.Y. 2015-16 (Departmental Appeal) A.Y. 2016-17 (Departmental Appeal) Disallowance under Rule 6DD(e): 21. In para 5 of the assessment order, the AO has discussed the payments made in violation of Section 40A(3) of the Act. In respect of this issue, the AO in para 5.1 of the assessment order noted the relevant material i.e. Annexure A-7, Annexure LP-1 and Annexure LP-2 seized from the appellant's premises at village Achheja, Bulandshahar Road, Dadri, Gautam Budh Nagar UP. It was noted by the AO that such documents are related to the purchases made in cash by the appellant. It was found by the A.O that during the course of the search, statement of Shri Govind Mittal, Sr. Manager was recorded however, he could not provide any explanation with regard to the discrepancies in respect of the same. During the course of assessment proceedings t....
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....e purchases made in cash from the alleged farmers and it was found that in most of the cases the purchases were made in huge quantity from the alleged farmers. On the basis of the analysis, it was noticed by the AO that huge purchases running into crores have been claimed to have been made from agriculturists which is quite unusual. The AO in paras 5.9-5.11 of the assessment order brought out analysis of the average production per acre and average land holding per person, and on that basis it was found that in normal circumstances average yield of Basmati paddy per farmer will be around 44.5 Quintals per farmer, however, as per the details of the appellant it was found that average purchase made by the appellant per farmer from AY 2010-11 to 2016-17 was ranging between approx. 82 quintals to 102 quintals, which shows that the appellant has not made purchases from the farmers. 24. In respect of the contention of the appellant that purchases were duly entered into the Mandi Shulk Register maintained by the Mandi Samiti, it was found by the AO that as per the Rules governing the Mandi transactions, Mandi Shulk Register is simply maintained for record of tax paid by the buyers in resp....
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....hich is extracted in para 5.22 of the assessment order. From the reply of the appellant, it was found by the AO that the appellant has again admitted that it does not have any power and method to verify that the seller in the mandi samiti campus is not a farmer. The AO also wrote to the Secretary Mandi Samiti, Dadri on 04.12.2018 with regard to the procedure followed by them regarding the verification of seller being actual farmers and such letter written has been extracted in para 5.24 of the assessment order. The reply of the Secretary Mandi Samiti has been received by the AO on 07.12.2018 and the same has also been extracted in para 5.25 of the assessment order. On the basis of the reply of the Secretary, Mandi Samiti, it was found that Mandi Samiti does not maintain any record of the persons selling their produce if they are actual farmers and there is no check of the persons selling their produce being actual farmers as the identity of such persons being farmers is not recorded in records of the Mandi Simiti. It was also stated that the particulars in From No. 6R is filled by the buyer/trader and the Mandi Simiti has no role while particulars in Form No. 6R are filled in. The ....
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....intal from this person. It was therefore stated that if a person who is like a permanent seller of his produce to the appellant and he is selling such huge quantities of paddy to the appellant frequently, in the first instance only the appellant should come to know that the person from whom purchase are being made cannot be a farmer. The appellant cannot just rely upon the statement or declaration given by such person that he is a farmer and make payments in cash. Similar analysis was also done by the AO in respect of few other sellers in para 5.33 of the assessment order. On the basis of the aforesaid analysis, the AO held that entire purchase made by the appellant from the persons claimed to be farmers shows similar pattern. Accordingly, the AO held that since the appellant has acted in belief without any satisfaction by obtaining relevant evidences from such persons before making cash payments to such persons and hence the appellant has not been able to prove that the purchase made in cash in violation of section 40A(3) of the Act were made from the actual cultivators of produce and therefore, payments made by the appellant in excess of Rs. 20,000/- in making such purchases amou....
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....s only after complete verification of quantity of agriculture produce brought in and which have been subjected to levy of Mandi Cess. 6. In case a person in the Mandi Samiti Campus who has purchased the goods from the farmer on the strength of the Form No 6 and has paid the Mandi Samiti Cess thereon, sells the agriculture produce to anybody else in the Mandi Samiti Campus then he sells the same by issuing a Form no. 9 which certifies that the agricultural produce in the said sates has already been subjected to levy of Mandi Cess. 7. The assessee has also slated that all purchases in the Mandi Samiti Campus from other ahartiyas and not from the farmers were certified by the sellers on the strength of Form 9 issued by them and for the entire purchases made by assessee in the Mandi Samiti Campus from farmers has been subject to Mandi Cess paid by the assessee on the strength of Form 6 which is the only basis for recovery of Mandi Cess by the revenue and the same is always correct except for minor clerical errors which are rectified on learning. The said form is basically a treasury receipt for payment of Mandi Cess to the government on first purchases from the farmers in a Mandi....
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....ated that any delinquency in maintaining the statutory records by the Mandi Samiti officials would have caused revenue loss and which has not been reported by the State Government and this fact has not been denied by the assessing officer who made the addition merely on surmise and conjectures. The law has not prescribed any rules to take any evidence of agriculturist while making purchases from them by an assessee on the platform of Mandi Samitis. The circumstantial and direct evidence clearly demonstrate that the said purchases were from the agriculturists. 14. The assessee has also contended that wherever the subject is of the Stale exchequer proper rules are framed and scrupulously followed by every and all as otherwise the same is a crime and accordingly punishable. 15. No incriminating material was found during the course of search in respect of the said cash purchases duly recorded in the regular books of account and which were very much accepted in the assessment orders passed u/s 143(3) of the Act till the AY 2013-14. 16. The assessee has also stated that no cross examination of any material or statement taken by the revenue in respect of rice purchases and sold i....
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....9 of written submissions for A.Y.s 2010-11 to 2016-17 and the under signed is directed to send comments on points 1 to 18 raised by the applicant in the synopsis. The requisite point wise comments are as under:- 1. In points no. 1 to 14 of the submissions, the Assessee Company has contended that its entire purchases of paddy in the slate of UP is governed by UP Krishi Utpadan Mandi Adhiniyam, 1964 and UP Krishi Utpadan Niyamawali, 1965 which prohibits farmers & purchases from selling/purchasing of agricultural produce except in a Mandi Samiti Campus, if the producer/purchaser is located within 20 kms radius from Mandi Samiti Campus The Assessee Company has filed the copies of relevant section and niyamawali of above Act and Rules as pages 4523 to 4634 of paper book The Assessee Company has further stated that its factory is located within 20 Kms radius from Dadri Maridi Samiti Campus and hence it could not procure any paddy from any farmer directly outside the Mandi Samiti Campus. The Assessee Company has also alleged that quantity of paddy purchased by it from fanners as per books of accounts has also been certified by the Mandi Samiti officials as purchased from farmers only. ....
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....3) of the Act. It has been further contended that no cross examination of any material or statement except Sh. Ashok Kumar Gupta was done by the Assessee and that to controvert the averments of Sh. Ashok Kumar Gupta made in his statement, the Assessee Company has filed affidavits of Sh. Praveen Mittal, broker and Sh. Surender Sharma which have not been controverted and examined by the AO in the assessment order and therefore the same are deemed to be accepted. In this regard, it is submitted that during the course of Search proceedings in the case of Assessee Company certain documents related to cash purchases made by Assessee Company such as purchase invoices and vouchers for sellers, addresses of persons from whom rice/paddy was purchased were found with certain discrepancies and the same were seized. The same has been mentioned by the AO in assessment order passed u/s 153A of the Act. Hence, the contention of the Assessee Company that no incriminating material related to cash purchases was found during the course of Search is not acceptable and liable to be rejected. Further, the contention of the Assessee Company that no cross examination of any material or statement except ....
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....ng the search, certain documents showing purchase of paddy in cash were found and seized though as per the assessment order only for the period relevant to AY 2016-17 and duly very much recorded in the regular books of account of the appellant. b) The assessing officer has averred that the appellant company without bringing any cogent evidence on record has simply contended that certain rules and regulations as to purchase of paddy in the Mandi Samiti exist and that the same were followed in real spirit by it. c) The rules prohibits the appellant from procuring paddy from a place outside the Mandi Samiti Compound does not mean that the appellant company followed the same and procured all its purchases within the Mandi Samiti from farmers only. d) The appellant failed to prove that the purchase of paddy was made within Mandi Samiti and the same was made from farmers and therefore not covered u/s 40A(3) as provided by the Rule 6 of the IT Rules. e) The enquiries made by the AO through Inspectors from the Mandi Samiti Officials show that no record as to a particular person being a farmer is kept by the Mandi Samiti. f) The appellant admitted that it has to believe the s....
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....t mentioned anything about the commission received from Inter dev and thus, no comments on the said ground are required. Moreover, this amount has already been received by the appellant as dividend from KRBL DMCC in its books of account and declared as income. Purchases from farmers: No incriminating material at all was found during the course of search: 32. No material pertaining to the AYs 2010-11 to 2015-16 was seized during the course of search to suggest that the appellant did not purchase the paddy from fanners. Thus, no adverse cognizance can be taken for the said years at all. 33. Some documents evidencing the cash purchases were seized from Dadri office for the FY 2015-16 i.e. AY 2016-17 (refer para 5.1 of the assessment order) but those were not at all incriminating as those documents did not show that purchases were not genuine rather the said documents formed part of the primary record of the appellant and the books of account. Detailed submission explaining the nature of the said seized material has been made on pages no. 46-47 of the letter dated 14/03/2019. The assessing officer has not controverted the same or referred to any other seized material in the reman....
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....mary arrival, register showing secondary arrival, Arrival register in the form no. 51 and entry slip in the form no. 53 at the entry gate containing details of all persons bringing material in the campus, farm no. 44A i.e. Krishi Utpadan Krya and Vikrya Register where the arrival is recorded by the Mandi official and form no. 44B i.e. daily arrival and sale register by the arahatiya. Form VIII i.e. Auction Register, gate pass in form V-A and many more. As explained in the above paragraphs and earlier, the presumption is that the Mandi officials have acted in good faith and in bonafide manner and must have maintained all the registers as required by the relevant Act, Rules and Regulations. 39. The Mandi Samiti is required to maintain the said documents statutorily which have evidentiary value. The record of purchases, calculation of Mandi Cess to be paid thereon have the same evidentiary value as the assessment order determining the assessable income as both these documents have been maintained by the government officials as per the powers provided to them as, per the relevant statutes. 40. Thus, form 6R is not the only document to prove that the purchases were made from farmers b....
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....nd explained the inconsistencies therein. The assessing officer has not mentioned anything about the said inconsistencies in his remand report. In view of the same, the inspectors' report is not at all a reliable evidence. 44. Even as per para (it) of the said report, the Mandi Samiti officials have admitted that the Form no. VI is issued to the farmers only. As per the Inspector report, the Secretary stated that Farmer's record is not maintained by the Mandi Samiti but by the arhatiya / trader. However, the same secretary in his letter dated 0 7/1 Z'2018, (reproduced at page 75 of the assessment order) submitted in reply to the letter issued by the assessing officer confirmed the claim that the 87862.44 Quintals of paddy were purchased from the farmers by the appellant and the information is entered into Register 44A by the Samiti official in addition to the Form 6R. Detailed discussion about the said letter has been made in para 1.531.54 of the letter dated 14/03/2019 which has not been controverted by the assessing officer. 45. Undisputedly, the secretary of the Mandi Samiti is a public servant. The letter given in writing by the Secretary of the Mandi Samiti is a ....
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....he appellant had purchased the agricultural produce from the farmers. The Mandi Samitis also staled about the documents maintained by them regarding the first arrival (form no. 44A, 44B, 51 and 53). Thus, it has been confirmed by the Samiti that the Form 6R filled in by the appellant is not the only evidence to prove that the sellers were farmers but there are various other records required to be maintained by the samiti mandatorily which prove that the sales were made by the farmers. 50. The assessing officer has neither brought anything adverse on record in support of his averments, nor controverted the facts stated in the letters issued by Mandi Samiti Officials but has merely reiterated his averments made in the assessment order for which detailed submissions have already been made. Provisions of Mandi Samiti Act: 51. The only question for consideration of the addition is whether the sellers of the agricultural produce were farmers or not and which authority and documents will determine their status as farmers. However, the Form 6R and the documents maintained by the Mandi Samiti officials are sufficient to prove their status as farmers. However, in case of any dispute, the....
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.... of a complaint that the appellant had purchased agricultural produce from non-farmers in the Mandi Samiti Campus on the strength of Form no. 6R. However, the same was not done by him, a duty which he should have performed while discharging his official function. He, thus, now cannot allege infraction of the legal provisions merely on his surmises. 53. The Section 2(p) of the U.P. Krishi Utpadan Mandi Adhiniyam, 1964 is as under: "Producer means a person who, whether by himself or through hired labour, produces, rears or catches, any agricultural produce, not being a producer who also works as a trader, broker or Dalai, commission agent or Arhatiya or who is otherwise ordinarily engaged in the business of storage of agricultural produce: Provided that if a question arises as to whether any person is a producer or not for the purposes of this Act, the decision of the Director, made after an enquiry conducted in such manner as may be prescribed, shall be final." 54. Thus, there exist specific provisions in the said Statute to resolve this debate but for the reasons best known to the AO, he refrained from those despite the fact that complete Act and Rules were placed on his re....
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....different characteristics and consequences depending upon the nature of the declaration. A declaration may be (1) an assurance of an existing state of affairs or (2) an assurance of a future course of conduct by the declarant himself or (3) a statement of required conduct by a third party. In the first two kinds of declarations the onus is on the declarant to make good the declaration. In other words the truth of the declaration may be verified. But when all that is stated in the declaration is a requirement to be fulfilled by another, what is to be enquired into is the compliance with the requirement and not be correctness of the declaration itself. ....Declaration to be furnished in Form 'C' by registered purchasing dealers under Section 8(1) of the Central Sales Tax Act, 1956 which certify that the purchasing dealer is a registered dealer in respect of commodities mentioned in the declaration, are illustrative of the first kind of declaration. Thus it was held in the State of Madras v. M/s. Radio and Electricals Ltd. (1966) Suppl. SCR 198 that the Sales Tax Authority was competent to scrutinize the certificate to find out whether it is genuine. He could also made an enqu....
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....re bogus as the Mandi Samiti officials have accepted those forms and collected tax from the assessee. Further, the assessee has also purchased paddy from various ahartiyas from the Mandi for which tax was paid by aharliyas to the Mandi Samiti. It is utmost important to note that only the farmers and the Ahartiyas registered u/s 9 of the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 can sell paddy in the Mandi Samiti Campus. Kind reference is invited to section 50 of this Adhiniyam "PROVIDING THAT all carts / sellers shall assemble at a fixed place and at fixed time etc., when Samiti officials permit sellers to enter and sell their paddy in campus. Any purchaser is entitled to believe that those who are not registered ahartiyas are farmers as there is no reason to guess otherwise. Employees / staff of the Assessee being involved in astronomical amount purchases of paddy year after year do recognise the registered ahartiyas well. It is pertinent to note that there is no advantage to the assessee to purchase paddy in cash as mandi tax is to be borne by the assessee in respect of the purchases from the farmers. As far as cash is concerned, the assessee maintained bank accounts wit....
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....therwise the Mandi Samiti would have subjected them to the levy of tax on their sales as per the law. Reliance for such rule is supported by the judgment of the Apex Court in Virendra Kumar & others vs Krishi Utpadan Mandi Samiti and others 1987 SCC (4) 454. It is submitted that Madras High Court decision in Lakshminarayana Reddy vs Subhadri Ammal (1903) 13 MLJ 7 holding that "I may also refer to the case of the Hire Purchase Furnishing Co v. Rishens L.R. 20 Q. B.D. 387 in the Court of Appeal, in which Bowen L.J., stated the law in the following terms: "There, is a broad principle that where a defendant is attempting to set aside a transaction for illegality and the facts connected with it are equally consistent with the transaction being legal or illegal, it lies on the defendant to prove the illegality. The law presumes against illegality and this presumption holds in all civil and other proceedings for whatever purposes originated." Applies in full force to present case. 59. In this regard if the averment of the AO is accepted then it will tantamount to attribute unlawful acts and illegality at least to following: "A] The farmer / producers who sell paddy to trader outside th....
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....ve society or post office has ensured that the PAN quoted is correct and the commission agent or trader is registered with the APMC, and for this purpose necessary evidences have been collected and placed on record." 61. In the above circular also, the CBDT has not directed a payer to collect any information and evidence of the payee farmer as a farmer while making payment to him in cash for his agricultural produce in the Mandi Samiti campus and has accepted that the Mandi Samitis work as per the legal framework prescribed for them by the Statute. Factually also, there is no scope of any infraction of the same as the same is a big source of revenue collection of the Stale Government on agricultural produce which is normally not subject to VAT etc. The State Government is very conscious in regulating the same, particularly, the form 6R which is basis of collecting Mandi Cess on the sale value mentioned therein. Cross-examination of the parties has to be allowed: 62. No incriminating seized material was found during the course of search to suggest that the purchases or sales of rice made from / to the said 35 parties are not genuine. The assessing officer made some post search ....
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....ed submissions on which no comment to controvert those has been made by the AO in the report. 65. At the outset, we are taking up the issue of assessment u/s 153A and validity thereof. 66. The AR of the appellant submitted their arguments in writing dated 26.08.2019 before the ld. CIT(A) which have been reiterated before us. * The AYs 2010-11 to 2014-15 were completed assessments and were not pending on the date of search since either the assessment orders u/s 143(2) were passed or the time to issue notice u/s 143(2) was passed much before the date of search on 30/03/2016. * On perusal of the assessment order for the AY 2011-12, it would be seen that the additions have been made on the following issues: a) Addition for the commission received from M/s Interdev Aviation Services Pte Ltd. by KRBL DMCC, a subsidiary company of the assessee in the hands of the assessee though the said income was duly declared in the balance sheet of the said company. b) Disallowance of purchases u/s 40A(3) for the cash purchases of paddy from farmers in Mandi duly recorded in the books of account. c) Disallowance for alleged bogus purchases in excess of sales and commission paid on such....
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....) were pending on the date of search i.e. 30.03.2016. In view of these facts, the assessment did not stand completed on the date of search and hence addition could be made even in the absence of incriminating material as held by Hon'ble Delhi High Court in the case of CIT vs Kabul Chawla [2016] 380 ITR 573 (Delhi). * In A.Y. 2015-16, the appellant had not filed return of income upto date of search i.e. 30.03.2016. Return of income was filed on 25.08.2017 in response to notice u/s 153A of Income Tax Act. Hence, assessment proceedings did not stand completed on the date of search i.e. 30.03.2016. Since the appellant had not filed return of income for A.Y. 2015-16 upto the date of search, the assessment did not stand completed on the date of search and hence addition could be made even in the absence of incriminating material as held by Hon'ble Delhi High Court in the case of CIT vs Kabul Chawla [2016] 380 ITR 573 (Delhi). * In A.Y. 2016-17, the appellant had not filed return of income upto date of search i.e. 30.03.2016. Return of income was filed on 25.08.2017 in response to notice u/s 153A of Income Tax Act. Hence, assessment proceedings did not stand completed on the date of s....
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....agricultural produce for fulfillment of condition under Rule 6DD. No specific rule or provision of law as per the Income-tax has been brought on record by the assessing officer which required the assessee to collect any evidences to prove that the sellers were producer or cultivators. On perusal of Rule 6DD, specific Circular for animal husbandry and in the absence of any such conditions in case of agricultural produce and failure of the assessing officer to bring the relevant provision or rule requiring collection of evidences regarding sellers on record, I agree with the contention of the appellant that there is no specific requirement under the Income-tax Act or Rules to collect any evidences regarding the sellers in case of agricultural produce and furnishing of documentary evidence to show that paddy was purchased through Form No. 6 of Mandi Samiti would suffice as evidence to show that the appellant had purchased agricultural produce from cultivator, grower or producer of paddy. 73. Further, on perusal of the Mandi Samiti Act and rules, it was observed that these did not require the buyer to obtain any evidence from the seller for his verification as producer / farmer. On pe....
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....s for purchase of paddy. 76. Principle of consistency is applicable considering the fact that the case of the appellant was completed u/s 143(3) of Income Tax Act in earlier years prior to search where similar cash purchases had been made but no disallowance was made. Even in assessment order u/s 143(3) for A.Y.2017-18, similar cash purchases have been accepted by the Assessing Officer. In view of Mandi Samiti rules, all agricultural produce sold through Form No.6 constituted sale from producers and appellant was entitled to exception to Section 40A(3) provided in Rule 6DD(e) of Income Tax Rules. 77. Before us, the ld. DR relied on the Assessment Order and the ld. AR relied on the order of the ld. CIT(A). 78. Heard the arguments of both the parties and perused the material available on record. 79. Taking into consideration, the undisputed fact of purchases being made from Mandi Samiti, provisions of Mandi Samiti Act, 1964, provisions of Rule 6DD, Circular No. 8 of 2006 of CBDT and the judgments of various Hon'ble High Courts on the issue of disallowance u/s 40A(3), applicability of the provisions of Rules 6DD for purchase of paddy, we decline to interfere with the order of the ....
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....he chart placed on record and held that some entries were found recorded in the regular books of account whereas some entries were not. It was held that the said cash book is not part of regular books of account but contained some undisclosed and unrecorded transactions of cash receipts and payments. Since the source of the said receipts and payment has not been explained by the assessee during the assessment proceedings or the appellate proceedings, the same cannot be considered as explained and are held as undisclosed income of the appellant. However, the assessing officer has made addition for the entire amount received by the appellant without giving any benefit of telescoping for the payments made. The seized day book was maintained by one person i.e. Shyam Lal and it contained transactions from 01.01.2016 to 31.03.2016. Since there are regular cash deposits and withdrawals during the period, it is logical to conclude that withdrawals were available for subsequent deposits. 86. Hence, benefit of telescoping has to be allowed for undisclosed cash receipts and cash payments and addition can be made only for the peak balance. The assessee was asked by the Ld.CIT(A) to submit the....
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....e between Purchase/sale-Bogus Bills: 93. The Assessing Officer made an addition of Rs. 49,72,24,635/- for A.Y. 2014-15, Rs. 31,36,47,795/- for A.Y. 2015-16, Rs. 36,54,70,992/- for A.Y. 2016-17 on account of commission paid to the parties for arranging bogus purchase/ sale bills of rice. On perusal of the Annexures A1-A3, it was observed that these registers contain the detail of the arrival of rice in the factory. On the basis of examination of these registers, the assessing officer became suspicious for certain arrivals as the entries were with different handwriting and their particulars were written in a different way. Further, bills of Aastha overseas were found during the course of search which did not contain transport bill, dharamkanta parchi and fake truck numbers were mentioned thereon. The AO held that these seized material indicated that the appellant was involved in some bogus purchases / sale. The JMD of the appellant company and VP (accounts) could not explain the nature of these documents and the discrepancy therein. Though the transactions mentioned in these registers were recorded in the books of account but the seized material along with post search inquiries cle....
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....hifted on the appellant. Similarly, when the inspector report was brought to the notice of the appellant that the companies were found non-existent, then the onus shifted on the appellant to prove the physical existence of the said parties. However, the appellant merely filed replies stating that the inspector report is not reliable or that the appellant cannot force the parties to comply with the notices or that the parties may have left or changed their business premises but did not make any effort to file confirmations or reply to notices u/s 133(6) of the Act or to produce any one of them before the assessing officer. Thus, due to inquiries made in the inspector report and non- compliance of notices u/s 133(6) of the Act, the onus shifted back on the assessee which was not discharged by the appellant. 5.4.65 The appellant alleged that the report of the inspector was false and was prepared in the office of the income-tax department without visiting any of the premises as nothing about the enquiries from the neighbourhood, bank, person available at the time of visit etc. has been mentioned. Every inspector has its own way of writing the reports and he cannot be asked to write ....
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.... accepted this fact that these 36 parties gave only bills on commission basis and goods were not actually purchased from them. If this is the case, then requisite addition is required to be made in the hands of the appellant. 5.4.69 In view of the above facts, it is established that appellant booked bogus sale / purchase transaction with these said 36 parties to claim non-genuine loss and to set off profit and reduce payment of taxes. The assessing officer has made addition for the excess of purchases over sales and no addition has been made where the sale value was more than purchases. Thus, the assessing officer has correctly made the addition only in those years where more bogus purchases were made to book loss. 5.4.70 Broadly, the following evidences were collected by the Department to show that the appellant was making bogus purchases: (i) Statement on oath of Shri Arun Gupta, JMD of M/s KRBL Ltd., recorded u/s 132(4) of Income Tax Act in which he could not explain about the reason as to how a firm M/s Aastha Overseas with which M/s KRBL Ltd is doing business doesn't exist at the address. He was confronted with the fake/bogus truck numbers (verified from govt., portal....
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..... Ravi Agricultural Industries: 117 ITD 338 (Agra) 100. The second being, where sales in quantity and value have been accepted, corresponding purchase could not be disallowed. * Ashok Nanda vs. DCIT: 54 ITR(T) 54 (Indore Trib.) * ACIT vs. Mahesh Shah: 184 TTJ 702 (Mum) * Ganesh Dass Piara Lai Jain vs. ITO: 49 ITR(T) * Fancy Wear vs. ITO: 194 TTJ 125 (Mum) * ITO vs. Pushpal Kumar Das: ITA No. 1442/Kol./2012 101. The third argument being, transactions with parties cannot be doubted and adjustment thereof cannot be made to the income of the assessee, merely because the parties fail to appear or respond to notices issued by the Assessing Officer. * CIT vs. Fancy International: 166 Taxman 183 (Delhi) * CIT vs. Nikunj Eximpt Enterprises P Ltd: ITA No.5604 of 2010 (Bombay HC) * M/s Lalsons Jewellers Ltd vs. ACIT: ITA No.5726/Del/2010 (Del Trib.) * M/s Lalsons Jewellers Ltd vs. ACIT: ITA No.5241/Del/2004 (Del Trib.) 102. Further, the assessee submitted details of sales and purchase which are as under: 103. As per the table reproduced above, page no. 827, the total weight as per the books was 3,56,194 Quintals amounting to Rs.109,45,62,503/- which tallies with the char....
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.... i.e. 92,40,810 quintals during the relevant period as is mentioned in its audited balance sheet. A photocopy of the Annexure XV part of the tax audit report for the relevant period showing quantitative details of the quantity Imndled Juis heen, placed at page no. 5351 of the common paper book. Thus, as per an established fact, the weight of any agricultural produce increases or decreases seasonally due to dampness / dryness etc. even if there is no pilferage or theft / consumption by the labour. Further, it is physically impossible to weigh the actual quantity lying at a particular place in a day or two without putting each rice bag on the weighing scale as quantity in each bag varies but which at the time of receipt / recording in the books of account is based on actual measurement on scales. The entire stock is maintained on SAP with full control for inwards and outwards. Any laxity therein will doom the company as the workers /staff will loot the same as the management is not there. The difference was because the Revenue Officials estimated the physical quantity of rice without any actual measurement. Further, the assessee also submitted that the excess stock found varied from ....