AI Drafter 
TaxTMI 
TaxTMI 
2022 (5) TMI 1087
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....rcle-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 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....
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.... of account, and consolidated with financial results of Appellant for the subject year as available in public 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 th....
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....e 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 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 fact....
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....t 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." 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/disall....
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....out 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. 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 le....
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.... CIT(A) has erred in affirming the impugned addition of INR 14,07,06,177/- 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 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. ....
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....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 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....
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.... 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 position that these issues were accepted/ considered in assessment proceeding for subject year completed under section 143(3) of the Act,....
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....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." 8. In ITA No.1202/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 40,68,38,614/- (separately dealt in grounds of appeal at Sl.no.2 to 5 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 material was unearthed during search 2.1 On the....
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....ermined by the Ld. AO was entirely on account of incorrect/estimated counting of stock-in-trade by officials of Income-tax Department without actual measurement thereof, and hence such estimation cannot be relied upon for purpose of making the impugned addition. The Appellant prays that the impugned addition made by the Ld. AO and affirmed by ld. CIT(A) is illegal/unjustified and liable to be deleted. Ground 5: The impugned addition of INR 2,05,94,826/- alleging the same as unaccounted money of the Appellant 5.1 On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in affirming addition/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 ....
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....e 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." 10. In ITA No.1339/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. 273,82,50,495/- 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 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'....
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....tia 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. 258,39,34,682/- 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 on facts and in law in deleting the addition of Rs. 258,39,34,682/- 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. 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....
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....dition was made in any earlier year cannot become the ground for holding that no such addition can be made in the present assessment year." 13. In ITA No.1342/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. 443,67,45,973/- by holding that in case of paddy purchases benefit of Rule 6DD(e) should be given to assessee. 2. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in relying upon case laws without appreciating that the facts of present case are distinguished from the facts of relied upon cases. 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. 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)....
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....e ground for holding that no such addition can be made in the present assessment year." 15. In ITA No.1344/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. 200,70,05,333/- by holding that in case of paddy purchases benefit of Rule 6DD(e) should be given to assessee. 2. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in relying upon case laws without appreciating that the facts of present case are distinguished from the facts of relied upon cases. 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.200,70,05,333/- 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 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.200,7....
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.... Purchase & Sale - Rs.4,76,843/-, earning of Dubai subsidiary. 18. The ld. CIT(A) deleted the addition u/s 40A(3) holding that since the search has been carried on 30.03.2016, the Assessment for the Assessment Year 2010-11 being unabated assessment, no addition can be made u/s 153A in the absence of any incriminating material found and seized during the search. The ld. CIT(A) confirmed the additions on account of Difference between Purchase & Sale, earning of Dubai subsidiary. 19. We find that the addition is not based on seizure of any incriminating material. The fact is not in dispute, hence, we decline to interfere with the order of the ld. CIT(A) in deleting the addition u/s 40A(3) and decline to affirm the addition confirmed by the ld. CIT(A). The only reason, the revenue filed appeal before us is that the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Meeta Gutgutia relied upon by the ld. CIT(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 incrimi....
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....7, 13441, 15002, 18398 & 13113 no of farmers during the AYs 2010-11, 2011-12, 2012-13, 2013-14, 2014-15, 2015-16 & 2016-17 respectively, but the complete address of not even one farmer had been provided and the only evidence relied upon by the appellant is a document called Form 6R which is issued by the appellant to the seller at the time of making purchase in Grain Mandis across UP. The appellant has claimed that Form 6R is given only to such persons who are cultivator producers/agriculturists. 23. The AO in para 5.6 of the assessment order tabulated the list of top 50 persons from whom the appellant has made purchases in cash in excess of Rs. 20,000/-, and it was noticed by the AO that quantum of purchases are quite huge purchases, however, the appellant could not provide the address of such persons and has merely claimed that such persons are agriculturists. In para 5.7 of the assessment order, the AO also made analysis of the 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....
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....lity & quantity of paddy and the name of such person is either told to them by such person or by Mandi Samiti representative and the appellant simply accepts the statement of the seller that he is the producer of the agricultural produce. The AO also found that the appellant itself has admitted that on various occasions some leader of farmer in the village collects the produce of many farmers and sells in a bigger lot in a mandi in his own name so as to procure a better price, which shows that the appellant has not made purchases directly from the farmers or producers but from their agents or village leaders or village traders. 26. In view of the same, it was found by the AO that the appellant has violated the provisions of section 40A(3) of the Act, as such, he issued a show cause notice on 03.12.2018 which has been reproduced in para 5.21 of the assessment order. In response to the show cause notice, the appellant filed its reply, which 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 ....
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.... Samiti, Dhankaur to DCIT, Central Circle-7, which was not received by the AO. It was found by the AO that Mandi Samiti officials as well as the appellant only believe that that person declaring himself a farmer is actually a farmer and therefore on this belief the appellant issues Form 6R and purchases the produce in cash without satisfying itself that it is actually purchasing such produce from an actual farmer. It was found that purchase made by appellant is not a single off transaction where a person came to him and sold his produce and walked off with his payment as the appellant has made several trades with most of these persons claimed to be farmers who had brought huge quantities of produce which is unlikely to be in the case of a farmer. The AO also illustrated the same when he found that from one Love Singh S/O Jagat Singh- J Bad, the appellant made 42 trades from 08.10.2013 to 28.12.2013, and purchased a huge quantity of 4645.70 quintal 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 appellan....
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.... Uipadan Mandi Niyamvali, 1965 every Mandi Samiti has to maintain statutory records in respect of agricultural produce brought in a Mandi Samiti Campus and sold thereafter as per list placed at PB page nos. 4594 to 4596. 3. The assessee has also stated that sale of paddy in the Mandi Samiti Campus is subject levy of Mandi Cess which is recovered by the Secretary of the Mandi Samiti who is a government employee as Government Revenue and anybody who purchases paddy from the farmers in the Mandi Samiti Campus has to pay Mandi Cess thereon to the Mandi Samiti whose officials verify the transactions from beginning to end before issuing a gate pass for removal of the goods from the Mandi Samiti compound. 4. The entire purchases of paddy or any agricultural produce in the Mandi Samiti Campus is through auction regulated by the Mandi Samiti Officials. 5. Then Mandi Samiti Officials issue gate pass for removal of agricultural produce from Mandi Samiti Campus 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....
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.... the assessee in respect of the records maintained there. The assessee also stated that no cross examination of any material gathered at the back of the assessee or of the Mandi Officials whose statements were relied on was allowed to the assessee though specifically demanded by the assessee. 12. The assessing officer has also not addressed the submissions of the assessee that in absence of complete record of farmers and their sales to the assessee in their campuses, the Mandi Samiti official could not give complete details of purchases made from the farmers by the assessee which tallied with the books of account of the assessee. It is mandatory for the Secretary Mandi Samiti to not only to keep proper records in the prescribed register of the agricultural produce brought in the Mandi Campus for which requisite dale pass in the prescribed form is issued but also to ensure proper safe custody and storage of the unsold stocks in the evening by maintaining proper records of the same. 13. It has also been stated 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 ....
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.... of the assessee may be taken." 29. The explanation of the assessee was remanded to the Assessing Officer. The remand report submitted by the Assessing Officer vide letter dated 17.10.2019 is as under: Brief facts of the case: "Search & seizure operations under section 132 of the Income Tax Act, 1961 was carried out on KRBL Group on 30.03.2016 including the Assessee Company. This case was centralized to Central Circle-7, New Delhi as per the order passed u/s 127 of the I.T. Act, 1961 by the Pr. CIT-(C)-3, New Delhi. The assessment proceedings in the case of Assessee Company for A.Y.s 2010-11 to 2015-16 were completed u/s 153A/143(3) and for A. Y. 2016-17 the same was completed u/s 143(3) of the Act vide orders dated 31.12.2018 after making various additions/disallowances on account of non-genuine loss shown by the Assessee, commission paid on accommodation entry, amount paid in violation of section 40A(3) and undisclosed income. Now, during the appellate proceedings before your goodself the Assessee Company has filed synopsis dated 11.09.2019 of written submissions for A.Y.s 2010-11 to 2016-17 and the under signed is directed to send comments on points....
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....articular person being a farmer is kept by the Mandi Samiti. Further, the Assessee Company in its reply has itself admitted that it has to believe that the seller itself is the producer of the agricultural produce and that sometimes the leader of the farmers collects the produce from many farmers and sell it in the Mandi in their own name to procure a better price which clearly prove that the Assessee Company has not made purchases directly from the farmers or producers but from their agents or village leaders or village traders. To sum up, the Assessee Company has not filed any evidence either during the assessment proceedings or during appellate proceedings to prove that it has made all of its purchases from persons mentioned in Rules 6DD and that the provisions of Section 40A(3) are not applicable in its case. 2. In point 15 to 17 of the submission, the Assessee Company has contended that no incriminating material was found during the course of Search in respect of cash purchases which were duly recorded in books of accounts and accepted in the assessment order passed u/s 143(3) of the Act. It has been further contended that no cross examination of any material or state....
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....arma field by it have not been controverted and examined by the AO in the assessment order and therefore the same are deemed to be accepted is also wrong and liable to be rejected as the same have been duly discussed and considered by the AO while passing the assessment order. 3. In point 18 of the of the submission, the Assessee Company has contended that the AO may be directed to report any deviation by it from the settled law of UP Mandi Adhiniyam. In this regard, it is submitted that detailed necessary verifications has already been made by the AO during assessment proceedings and therefore there is no need to do the same again at this point. 4. In view of above, it is submitted that the contentions of the Assessee Company made in the written submissions may kindly be rejected and the additions/disallowance made by the AO may kindly be sustained.'' 30. The rejoinder of the assessee against the remand report dated 17.10.2019 was submitted before the ld. CIT(A) on 02.11.2019 which is as under: "The assessing officer has raised the following averments in his remand report: a) During the search, certain documents showing purchase of paddy in c....
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.... appellant was intimated that the other persons whose statements were recorded during the course of search were not available at their given addresses. Since, the appellant has conducted sales and purchases from these parties, the onus of proving the same as genuine is upon the appellant and it cannot absolve from its onus by alleging that no cross-examination of such persons has been allowed. k) The revenue has not solely relied on the statements of these persons but there are other evidences proving the accommodation entries being taken by the appellant. l) The affidavits of Mr. Praveen Mittal and Mr. Surender Sharma cannot be deemed to be accepted as the same have been duly discussed and considered by the AO while passing the assessment order. m) As regards the contention of the appellant that the AO may be directed to report any deviation by it from the settled law of UP Mandi Adhiniyam, it is submitted that detailed necessary verification has been made by AO during assessment proceedings and therefore, there is no need to do the same again. Submissions of the appellant 31. On perusal of the remand report, it would be seen that the assessing off....
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.... with no malafide against anybody including the officials of other government departments as has also been provided in the income-tax provisions and CrPC. 36. Thus, any error or negligence by the Mandi Samiti officials in maintaining statutory records as per the law cannot be considered against the appellant in any manner in this proceeding as there was no fault of the appellant for the same. The purchases were made as per rules and regulations unless adverse evidence is brought on record: 37. As per settled law of the land, law abiding actions of every person are presumed unless proved otherwise. There is no presumption in favour of illegality of a transaction; in fact the presumption is the other way round. When a particular transaction is subjected to a law, then intention of the parties is always to follow law. If one does not follow the law, then the government / concerned department / officials will definitely take action against the defaulters. 38. The appellant has explained in detail the rules and regulations regarding the working of the Mandi Samiti, documents to be kept by the Mandi Samiti Officials regarding the transactions undertaken in their Campus which ....
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....not followed the same, then some adverse action would have been taken by the Mandi officials / state government against the appellant. However, there is no such report on the record nor found during the search. Thus, the only and only presumption which can be drawn is that the appellant has followed all the rules and regulations and which is a fact. 42. Presuming but without admitting, even if the appellant had not followed the rules, the Mandi Samitis officials must have followed the same as per the presumption applicable for the public servants unless there is some evidence to the contrary. However, if the assessing officer was not satisfied, he could have summoned the officials and recorded their statements, he could have made further inquiries but the assessing officer chose to keep quite because somewhere he was satisfied that the Mandi officials are working as per rules and regulation. However, just for the sake of making additions, the assessing officer reiterated the averments made in the assessment order. Letters issued by the Mandi Samiti Vs. Enquiry made by the Inspectors: 43. The appellant has made a detailed analysis of the Inspectors' report in para 1.49 ....
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....t on the appellant got discharged and the onus shifted on the assessing officer to bring evidences on record to prove otherwise. The assessing officer did not bring any evidence on record except reiterating the facts staled in the assessment order. 47. The assessing officer did not take any cognizance of the letter issued by Dankaur Samiti slating that the said letter has not been directly placed on his record by the Samiti. Though the assessing office had paucity of time while completing the assessment proceedings, however, the assessing officer had sufficient time during the remand proceedings to carry out verification of the same if required. 48. The assessing officer has not mentioned single word about the letter issued by Dankaur Samiti either in the assessment order or in the remand report. This shows that either the assessing officer was satisfied with the facts staled in the said letter or did not get anything adverse in the verification done by him. Thus, the cognizance of the said letter has to be taken in these proceedings. The said letter has been discussed in detail in para 1.57 and 1.58 of the letter dated 14/03/2019. 49. The assessing officer made enquiries ....
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....arding the producer as to whether he cultivates the land himself or engaged in producing agriculture in the market area or he carries on the business as a trader etc. Thus, the Director will made all the requisite enquiries regarding land holding and other activities of the said cultivator to determine his status. This clearly shows that the appellant was not required to collect the said documents at the time of purchase. Such documentary evidences are to be collected by the director only when he enquires into the complaint regarding a particular cultivator. If the Mandi officials were required to obtain all these documents at the time of entry in the Mandi or the buyer was required to obtain the same before issuing form 6R, then the Director would not need to make such inquiries from the Tehsildar but would have verified the documents held by the Mandi Samili or the buyer. Thus this rule supports the contention of the appellant that the appellant was not required to obtain any documentary evidences regarding land area, cultivation etc. about the, seller. Thus, the assessing officer cannot ask the appellant to produce the said evidences to prove that the sellers were farmers. Howev....
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....the person receiving the payment that he is a producer of meat; (ii) A confirmation that the payment, otherwise than by an account payee cheque or account payee bank draft, was made on his insistence; and (iii) A further confirmation from a veterinary doctor certifying that the person specified in the certificate is a producer of meal and that slaughtering was done under his supervision." 57. However, no mechanism has been provided in respect of an agricultural produce and therefore, it is submitted compliance be examined on general legal principles and considering the facts and circumstances in view. It is only lately that the section 269 ST has been inserted to place specified requirements when cash payment exceeds Rs 200000/-. The AO cannot impose same burden of proof which is required for claiming exempt agricultural income u/s 10(1) and expect an assessee to produce land& revenue records, purchase of seeds/ fertilizer etc. of the seller. Manner and methodology of establishing applicability of the exception would always vary on the basis of purposes and characteristics of exception It was held by Supreme Court in ITC Ltd /2004j 2004 taxmann.com 349 (SC) tha....
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....ed the goods purchased, the Court held that it raised an irrebuttable presumption that the goods would be used for the purposes mentioned, since the purpose of the rule was to make the object of the provision of the act workable which was realization of tax at one single point, i.e. at the point of sale to the consumer, (p.511)..." 58. It is submitted that the present case falls under third category. The Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 imposes legal prohibition upon everyone not to buy paddy directly from the farmers within the Mandi Samiti specified controlled area other than in the Mandi Samiti Campus. All purchases were undisputedly in the Mandi Samiti campus and delivery of goods received in the Mandi campus as purchased paddy have been taken outside the Mandi campus through proper gale passes issued by the Mandi Samiti officials on the basis of Form no. VI issued to the farmers. Proof of transport of goods to the factory / warehouse from the Mandi Campus is on record. Mandi Samiti Officials have collected Mandi Samiti tax on the purchases of paddy by the assessee directly from the farmers in the Mandi Samiti Campus and this receipt of lax is recorded / au....
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....right. A purchasing dealer is entitled by law to rely upon the certificate of registration of the selling dealer and to act upon it. Whatever may be the effect of a retrospective cancellation upon the selling dealer, it can have no effect upon any person who has acted upon the strength of a registration certificate when the registration was current. The argument on behalf of the department that it was the duty of persons dealing with registered dealers to find out whether a state of facts exists which would justify the cancellation of registration must be rejected. To accept it would be to nullify the provisions of the statute which entitle persons dealing with registered dealers to act upon the strength of registration certificates". Thus, it is settled issue that everyone except the farmer has to take a license from the local Mandi Samiti to transaction about an agricultural produce in the Mandi Samiti area and also to pay Mandi Samiti tax on such purchases from farmers. Since, here the sellers of paddy to the assessee did not have any license to trade / sell their agricultural produce in the Mandi Samiti controlled area and were allowed to sell their produce by the Mandi Samiti ....
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....ial year, 2% TDS has to be made by the bank. However, to avoid such problems to payments to the farmers in Mandi Samiti complexes, a Notification no. 70/2019 has been issued by the CBDT on 20/09/2019 on the same for Income-tax Deduction at Source u/s 194N of the Act for cash withdrawals from the bank accounts by assessee which is as below: "S.O.3427(E).- In exercise of the powers conferred by clause(v) of the proviso to section 194N of the Income-tax Act, 1961 (43 of 1961), the Central Government after consultation with the Reserve Bank of India, hereby specifies the commission agent or trader, operating under Agriculture Produce Market Committee (APMC), and registered under any Law relating to Agriculture Produce Market of the concerned State, who has intimated to the banking company or co-operative society or post office his account number through which he wishes to withdraw cash in excess of rupees one crore in the previous year along with his Permanent Account Number (PAN) and the details of the previous year and has certified to the banking company or co-operative society or post office that the withdrawal of cash from the account in excess of rupees one crore during ....
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.... 0119 All HC All these transactions were properly recorded in the books of account and were accepted in the assessment orders passed u/s 143(3) of the Act upto the A Y 2013-14. The entire impugned addition is based on surmises. Thus, the appellant has discharged its onus as it provided the copies of bills, bank accounts of the parties and their addresses where they were found located. However, it appears that since the said parties have not recorded these transactions in their books of account properly, they have absconded. However, no adverse view of the same can be taken against the appellant who has discharged its onus. Moreover, since those were the witnesses of the revenue, it was incumbent on the revenue to produce them not only for cross examination but also for testifying the authenticity of the statements and deponents therein. 64. The assessing officer has stated in the remand report that he has not solely relied upon the statements but also on the other evidences. However, no such evidences have been mentioned in the remand report nor in the assessment orders. The appellant has filed detailed submissions as regards to the averments made in the assessment order and thu....
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.... found during the course of search regarding the said additions. The scope of assessments made u/s 153A of the Act is limited. No cognizance of any material gathered or statements recorded after conclusion of the search in these proceedings can legally be taken. • It is a settled law that in case of completed assessments, additions can be made only on the basis of incriminating seized material found during the course of search as has been held in the undernoted authorities. Copies of all these judgments can be submitted, if desired. a) CIT vs Kabul Chawla 2015-TIOL-2006-HC-DEL-IT b) Pr CIT vs Meeta Gutgutia 2017-TIOL-1000-HC-DEL-IT c) Pr CIT vs Kurele Paper Mills Pvt. Ltd. (2016) 380 ITR 571 (Delhi) (SLP dismissed by the Apex Court) d) Pr CIT vs Dharampal Premchand Ltd. 2017-TIOL-1649-HC-DEL-IT e) Pr CIT vs Lata Jain 2016-TIOL-886-HC-DEL-IT • Thus, in absence of any incriminating material found from the premises of the appellant during the course of search, no addition can be made u/s 153A of the Act in case of completed but not abated assessments and thus the additions made should be deleted." 67. T....
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....es is reproduced below: "6DD. No disallowance under sub-section (3) of section 40A shall be made and no payment shall be deemed to be the profits and gains of business or profession under sub-section (3A) of section 40A where a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account [account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as prescribed under rule 6ABBA, exceeds ten thousand rupees] in the cases and circumstances specified hereunder, namely:- (a) ............................... (b) .............................. (e) where the payment is made for the purchase of- i. agricultural or forest produce; or ii. the produce of animal husbandry (including livestock, meat, hides and skins) or dairy or poultry farming; or iii. fish or fish products; or iv. the products of horticulture or apiculture, to the cultivator, grower or producer of such articles, produce or products; 72. Rule 6DD (e) states that the provisions of section 40A(3) will not apply where the payment is made....
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....egarding land area, cultivation etc. about the seller even under the provisions of Mandi Act. 74. In view of discussion above, it is observed that the assessee is not required to collect any evidence from the seller to show that he is a farmer or producer once paddy has been purchased through Form No. 6. The status of the seller as farmer or trader is determined by the Mandi Samiti at the time of his entry and the assessee undertakes transactions on the basis of said determination. It is also clear from the provisions of Mandi Act that the authority to decide whether the seller is a farmer or not is solely in the domain of Director of the Mandi Samiti as per the relevant Act and not the Assessing Officer. It is also a settled law that when an authority has been designated for the purpose, then none else can decide the said issue. The assessing officer has not brought on record any case where any person claimed as farmer by the assessee has been declared otherwise by the Director of Mandi Samiti. In the absence of the any such adjudication, no adverse cognizance can be taken and the sellers declared as farmers by the assessee and confirmed by the Mandi Samiti officials has to be ....
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....e entries were verifiable from the cash book of the appellant but certain other entries under the category "I owe you" were not found recorded in the cash book. The credit of the said amount was Rs.30,53,58,167/- and the debit side was short by Rs.52,86,068/- and thus, an addition of Rs.31,06,44,235/- was made. 82. A copy of the said Annexure A-2 along with the chart explaining the transaction placed on record is reproduced below: 83. It was submitted by the appellant that this cash book was maintained by one Mr. Shyam Lal who was not an employee of the appellant therefore, there could be many transactions which could not pertain to the appellant. 84. The appellant submitted that 'I owe you' is never recorded in the books of account in the business circle. It is an amount given to an employee or connected person as imprest for short period for expenses to be incurred by him for the appellant. Many times, no expenses are incurred for which the money and amounts are refunded but whenever expenses are incurred against the 'I owe you', those are directly recorded in the cash book and I owe you slip is tom or cancelled and taken out from the cash box. The appellant also submitt....
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....nd, Cash Book - H.O. with reconciliation of cash-in-hand, Cash Book - Alipur plant with reconciliation of cash-in-hand, unpaid dividend, other non operating income, farmers purchases of paddy through bearer cheque/cash (in excess of Rs.20,000/- for each transaction), account statement of KRBL (amalgamated company), additional depreciation u/s 32(1)(iia) and reconciliation of income/TDS as per Form 26AS. 91. Further, at page no. 651 to 683 of the Paper Book Vol.-II, the details pertaining to copy of cash book of assessee maintained at head office at C-32, Sector-62, Noida-201301 from 31.12.2015 to 31.03.2016, copy of ledger a/c and voucher of Shri Arun Kumar Gupta in the books of Khushi Ram Behari Lal, copy of voucher of cash deposited and relevant page of bank statement of HDFC bank of Khushi Ram Behari Lal, Details of cash withdrawal from banks by Shri Anil Kumar Mittal & Shri Arun Kumar Gupta alognwith the relevant pages of bank statement and copy of voucher of cash deposited and relevant page of bank statement of HDFC bank of KRBL Foods Ltd. 92. The assessee submitted that peak balance of the cash as per the chart would be Rs.1.67 Crores. The ld. CIT(A) observed that the p....
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....tted various evidences like bills, PAN, VAT particulars of these parties and showed that all the transactions were undertaken through banking channel. 95. The AO held that the cases where the statement of the parties have been recorded by the department where they have accepted that they were not doing genuine business transactions and copies of the same were provided to the appellant for rebuttal and the cases where the Assessing Officer has issued notices u/s 133(6) of the Act and the same were either not served and returned back or were not complied with and the same was confronted with the appellant, then the onus cannot be said to be discharged merely on the submission of such evidences which can be given by paper entities as no entity can carry out the even the accommodation transactions without PAN, VAT registration and bank account. 96. The ld. CIT(A) while confirming the addition made by the AO held as under: "5.4.64 As regards the statement of other parties, it is submitted that even if no cognizance is given to their statements and the same are ignored for the purpose of assessment, even then it is a fact that the notices u/s 133(6) of the Act issued to th....
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....as not received back by it. 5.4.67 The appellant submitted that transport department have not uploaded complete and correct information and further enquiries from the transport authority and owners of vehicles should have been made and no adverse cognizance can be taken for the fake truck number. What enquiries are to be conducted is the prerogative of the assessing officer who conducted enquiries through the official website of transport department and found the truck numbers to be fake. The appellant did not bring any evidence to controvert the allegation of the assessing officer. The appellant made mere allegation that the information on the website is not correct and complete that too without producing a single evidence to show how this vague presumption has been drawn. The fake number of trucks on the bills proves that the said goods have actually not been transported and the truck numbers have been mentioned to fulfill the particulars in the bills. The appellant could not explain the reason beyond the fake truck numbers during the course of search as well as during the appellate proceedings but made submissions merely on presumptions. 5.4.68 The appellant ar....
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....th the fact that truck number written on many bills were found to be fake/nongenuine on being verified from the official application of transport dept. "VAHAN", he said that he has no knowledge about it. (iii) Statement on oath of Sh. Dinesh Jain and Shri Rajpal Sharma (iv) Statement on oath of Sh. Vijay Kumar, Sh. Amit Goel, Sh. Vinod Kumar Goel, Sh. Yogender Kumar, Sh. Manoj Kumar, Sh. Tejpal, Sh. Vikas Bansal, Sh. Rajesh Kumar and Sh. Data Ram (v) Funds of some firms being routed back to the appellant (vi) Non compliance to notices u/s 133(6) notices (vii) Inspectors report stating parties were non-existent at the given addresses 5.4.71 The above evidences were duly confronted to the appellant. In view of above evidences, onus had shifted to the appellant to prove that the purchases from 36 parties were genuine. The appellant has failed to discharge this onus. Hence, 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 non- genuine losses as well as commission paid to the parties for arranging bogus purchase/ sale bills of rice is hereby confir....
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....0,43,561/-. 106. Similarly, page nos. 830 & 831, the total weight as per the books was 337899 Quintals amounting to Rs.96,64,94,516/- which tallies with the chart prepared by the Income Tax Department on gross terms and there is no difference between the purchases as per the books and as per material before the revenue. 107. Since, there is no qualitative, quantitative difference or any difference in the value of the sales & purchases, no addition is called for on this account. Stock Difference: 108. Vide ground no. 4, the assessee has contended that the Assessing Officer making an addition of Rs. 2,07,72,796/- on account of stock difference in rice where there was no difference as explained during the course of assessment proceedings that the same was on account of estimated counting of rice stocks at some locations by the revenue officials. Thus, the addition must be deleted. 109. The submission of the assessee before the revenue authorities is as under: "2. The fourth ground of appeal is to challenge the addition of Rs 2,07,72,796/- made on account of value of alleged extra stock of rice found at the time of search on 6 locations of the appellant, rejecti....
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....nner. The assessee has valued its closing stock on the basis of quantity available in its stocks. The value of rice including stock as on 31.03.2016 as per the balance sheet of the assessee was Rs 995,52,85,000/- (almost Rs 1000 crores) and the impugned difference is just 0.20%. The difference is only due to human error in estimating the quantity which was in the said 6 locations almost 5,500 trucks of 100 quintals each. Admittedly, no actual weighment was undertaken by the Revenue Officers. Thus, the addition of Rs 1,88,14,912/- made on this account on surmises should be deleted. 4.1 Further, the Assessing Officer made another addition of Rs 19,57,884/- alleging undisclosed gross profit on quantity of rice valued at Rs 84,28,258/- which was allegedly found short in other locations. The appellant submitted that this shortage was due to estimation and partly due to evaporation in sorting etc. which is accounted at the yearend in the books of account. No evidence was found at the time of search of any sale of rice outside books of account. On perusal of the said chart in the assessment order it would be seen that the quantity of rice as per the books was 16,60,622 quintals a....
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.... seized from KRBL Firm LahoriGate Entries Not In Anx A-2 In Cash Books of KRBL LTD In Cash Books of Associates I Owe You (Lahori Gate) Closing Cumulative Peak Owe You (Mandies) Closing Balance In Cash Books of KRBL LTD Cash Book of lowe You Cash In Balance Dally Peak KRBL Ltd Hand Date Credit 2/20/2016 Debit 1,500,000 Credit Debit Credit -8,195,000 Debit 12,002,200 2/21/2016 2/22/2016 5,000,000 325,000 -9,769,005 2/23/2016 721,885 5,690,136 5,690,136 27,383,500 18,630,731 19,352,516 3,807,200 Credit 2,980,231 -4,000,000 Debit Credit -802,630 Peak bal net of cash in hand Debit 1,000 2,980,231 17,614,595 20,594,826 -17,500,000 -1,188 20,594,826 2/24/2016 528,717 19,881,333 20,594,826 2/25/2016 182.109 -14,000,000 6,063,442 -14,000,000 6,594,826 14,000,000 2/26/2016 143,880 3,500 6,210,822 3,500 6,598,326 8,865,378 -519,769 8,345,609 -5,365,378 8,865,378 -519,769 8,345,609 -5,365,378 14,171 4,204,361 -405,174 3,799,187 16,795,639 1,218 4,927,464 -405,174 4,522,290 16,072,536 ....
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....359,200 23,300,000 14,647,269 11,940,800 15,069,014 -12,000,000 3/17/2016 -7,550,000 1,500,000 8,597,269 -6,050,000 9,019,014 6,100,000 2,550 3/18/2016 -5,000,000 3,597,269 9,019,014 3/19/2016 223,240 3,820,509 9,019,014 -59,987 -120,852 -19,610 -4,599 9.050,590 -80.986 8,979,504 -24,793 4,035,797 -80,986 3,954,811 -23,302 1,300,000 5,535,735 -80,986 5,454,749 3,900 5,466,025 -501,786 4,964,239 313,480 7,680,754 -72,286 7,608,468 7,680,754 -72,286 7,608,468 23,802 7,644,569 -72,286 7,572,283 2,394 8,769,320 -71,786 8,697,534 312,929 9,062,639 -130,986 8,931,653 -$66,025 4,480,754 -4,480,754 4,444,569 -5,569,320 6,137,361 39,410 5,064,203 3,564,265 3/20/2016 3,820,509 9,019,014 3/21/2016 3,820,509 9,019,014 -2,658 3/22/2016 1,230,555 -5,051,054 -5,051,064 3,967,950 5,000,000 3/23/2015 3,967,950 3/24/2016 3,967,950 3/25/2015 182,300 182,300 3,967,950 3/26/2015 88,630 -29,100 370,000 611,830 340,900 4,308,850 -250,000 -90,314 -13,618 167,483 3/27/2015 611,830 4,30....
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....andan, Naya 7206917626 AAUHS7138F Bazar, Delhi-110005 37,818.81 80,441,813 37,818.81 80,441,813 Dharu Kumar Rudra Kumar 2712/6, 2nd Floor, Pattey Wali Gal, 7606978290 DWZPS6930R Delhi-110006 9,036.13 16,865,066 9,036.13 16,865,066 Krishan Kumar Anuj Kumar 2257, 2nd Floor, Gali Raghunandan, 7906917435 AHPPK8387C Delhi-110006 47,321.95 126,176,257 47,321.95 126,176,257 Sivani Traders 2257 2nd Floor, Gali Raghunandan, 7536920985 AALHR4474C Delhi-110006 19,543.14 41,058,857 19,543.14 41,058,857 Haryana Agro Food Products 2612/13, P&S Bank, Bldg, 3rd Floor, 7670328109 AAEFH6525M Delhi-110006 18,334.24 104,243,545 18,334.24 104,243,545 Shiv Shakti Agro Foods 2269/71, Gali Raghunandan, Naya 7850417055 BQSPP6776R Bazar, Delhi-110006 9,980.00 46,709,821 9,980.00 46,709,821 Aastha Overseas 2269/2271, Gali Raghunandan, Naya 7690474665 AAHHV6362H Bazar, Delhi-110006 905.12 3,166,468 905.12 3,166,468 Aashta Overseas 2269/2271. Near Akash Ganga 7690474665 Courier, Naya Bazar Delhi, Delhi- 3,003.98 14,210,785 3,003.98 14,210,785 110006 Sand....