TaxTMI 
TaxTMI 
2023 (5) TMI 572
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....e of Rs. 30,03,000/-. The case of the assessee was selected for scrutiny through CASS on account of "Low net profit shown from large gross receipt". The assessment was completed u/sec 143(3) of the Act at income of Rs.15,95,44,120/- i.e after making an addition of Rs. 15,65,41,118/-by rejecting the audited books of accounts of the assessee. Appeal was filed before the ld. CIT(A) against the order of the AO. The ld. CIT(A) partly allowed the appeal. The addition was restricted amount to Rs. 15,54,20,000/- against the assessee. Being dissatisfied on the order of appeal, the assessee has agitated the grounds before us. The status of the issues on account of which additions were made by the ld. AO is as follows: S.No Issues on account of which additions have been made Amount (Rs.) CIT(A) ITAT 1. Rejection of books of accounts u/sec 145(3) of the Act NA Ground Rejected In appeal 2. Introduction of own cash by showing bogus sales (Addition made u/sec 68 r.w.s 115BBE of the Act) 15,54,20,000/- Ground Rejected In appeal 3. Applying GP rate of 11.87% (But the addition of Rs. 2,72,17,362, were covered by the AO in addition of Rs. 15,54,20....
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....Fazilka Central Co-operative Bank, Jalalabad. After opening Bank Account in it, I received the cheque book from the Fazilka Central Co-operative Bank, Jalalabad & the same cheque books were handed over to. the said persons after duly signing on it. Against the such activity, I received Rs 1 lakh per annum from the said persons. Sir, I have never deposited a single penny in my account in the Fazilka Central Co-operative Bank, Jalalabad. I have never withdrawn any amount from the said Bank. The Bank was operated but the said party i.e. M/S Ganesh Rice Mills' itself Q: Please state why the such transactions have been made by you in lieu of a penny amount. Do you know that such transactions are illegal & even leads to prosecution? Ans: Due to financial crisis and to meet both ends. I do not know the consequences of the transactions made by the said party. Q: Have you made any purchases from M/S Ganesh Rice Mills, Mukatsar during the financial year 201314 and onwards? Ans: I have not made any purchases from M/S Ganesh Rice Mills, Mukatsar during the financial year 2013-14 & onwards. Sh Rajesh Dhawan also filed an affidavit, confirming his....
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....zepur between the period from 15.03.2014 to 22.03.2015 i.e within a period of 7 days. The whole of such amount was transferred to the following concerns during the year itself on various dates- S.S. Enterprises, Jalalabad Rs.3,62,93,300/- Narinder Joson& Co., Jalalabad Rs.6,11,56,000/- Amrinder& Sons, Jalalabad Rs. 2,00,00,000/- Gurkirat Enterprises, Jalalabad Rs. 2,00,00,000/- Nawab Trading Rs. 1,07,06,700/- Josan Food Pvt. Ltd., Rs. 2,00,00,000/-" The ld. Counsel, Mr. Sehgal further placed the observation of the ld. CIT(A) in appeal order page-11& 12 "4.3 I have given careful consideration to the above and find that the question of bogus sales and consequential sale amount finding entrance into books of account was under consideration of Hon'ble jurisdictional High Court in the cases of Self Knitting Works Vs. CIT [20141 51 taxmann.com 137 (P & H) and CIT vs. Sanjay Chhabra 120121 21 taxmann.com 221 (Punjab & Haryana). It has been concluded and adjudicated in these cases that in the event where any assessee fails to establish the sales as a transaction, thereafter any amount found credited in the books of account of the assessee....
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....bove mentioned grounds of appeal are dismissed. 6.0 Ground of Appeal no. 7: This ground of appeal is related to ad hoc addition of Rs.11,21,118/- made by the Assessing Officer being disallowance of various expenses debited to profit and loss account as an ad hoc addition. In the course of appellate proceedings it has been vociferously contested that the addition has been made by the Assessing Officer without any justification and pointing out the defect. I have given careful consideration to the contention above and also read the relevant part of assessment order. The Assessing Officer without pointing out any defect in the claim of the appellant has disallowed the expenses on surmises and conjunctures. It is settled principle of law that the claim expenditure cannot be denied until and unless it is proved that either the claimed expense is bogus or not for the purposes of business. The Assessing Officer has not based his disallowance on any independent enquiries; therefore such addition cannot be sustained and hence deleted. The ground of appeal is allowed. 7.0 Ground of Appeal no. 8: In the assessment proceedings, the Assessing Officer made an addition ....
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....is regard is being placed on the judgment of: Sona Builders vs. Union of India 251 ITR 197 (S. C.). The relevant paragraphs are extracted as follows: - "6. There is no doubt in our mind that on both counts there has been a gross breach of the principles of natural justice because adequate opportunity to meet the case made out in the notice was not given to the appellant. 7. Having regard to the statutory limit within which the appropriate authority has to act and his failure to act in conformity with the principles of natural justice, we do not think we can remand the matter to the appropriate authority. We must set his order aside. 8. The appeal is, accordingly, allowed. The judgment and order under appeal is set aside. The order of the appropriate authority dated 31-5-1993 is quashed." M/s. Fortune Metaliks Ltd. in ITA No. 82/Chd/2021 for A.Y. 2016-17 The self-serving statement and affidavit of Shri Rajesh Dhawan Prop. M/s Vasudev Sales Corp. by itself does not establish that whatever has been stated by him is true and whatever has been stated by the assessee is not correct so long as such depositions are not supported with documentary evidence....
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....nting out any specific defect in the books of account, impugned addition was rightly deleted and no substantial question of law arises for determination." 4. Issue-2, the application of section 115BBE for addition U/s 68. In argument the ld. Counsel has mentioned that the provisions of sec 68 of the Act are not at all applicable in the case of the Assessee. The amount of Rs. 15,54,20,000/- pertains to the sales as made by the assessee to M/s Vasudev Sales Corporation. The entire amount has been received by the assessee through banking channels. The assessee is not concerned about the bank account of M/s Vasudev Sales Corporation. If cash has been deposited in the Bank account of M/s Vasudev Sales Corporation, it would not mean that the cash belongs to the assessee as the amount has been received by the assessee after the deposit of cash by the party. The question regarding the source of cash and the applicability of the provisions of sec 68 of the Act must only be in the hands of the M/s Vasudev Sales Corporation and not in the hands of the assessee. The assessee is maintaining regular books of accounts and such amount of sales have been recorded in the regular books of....
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....ble details and, thereafter, recorded the findings in favour of the assessee. It is well-settled that this Court, while exercising appellate jurisdiction under section 260A of the Act cannot arrogate to itself the function of recording a finding by re-appreciating evidence taking a view different than the one recorded by the Tribunal. It is well-settled that merely because another view is possible, would not constitute a basis for us to reverse the findings after re-appreciating evidence. In that regard; we place reliance on a judgment of Hon'ble the Supreme Court in the case of Santosh Hazari v. Purushottam, Tiwari [2001] 251 ITR 84. Therefore, we are of the view that no opportunity is provided to set aside the findings recorded by the Tribunal that the amount of Rs. 13,56,000 has been deposited by the sons of the assessee, which was realized after selling the pilferage stocks outside the books of account. There is no merit in the appeal as no substantive question of law for its admission would arise." 4.3. In argument, it is placed that the assessee is even liable to provisions of VAT and the book results of the assessee have even been accepted by the Sales Tax/VAT department.....
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....jesh Kumar had been recorded at the back of the assessee and no opportunity was given to cross examine him. The assessee has duly requested the department for the same. Relevant copy of reply is placed in the APB at Page-48-49. 4.6. Reliance in this regard is being placed upon the following Judgments wherein it has been held that the statements taken at the back of the assessee cannot be used for making additions unless a chance to cross examine has been given to the assessee. It has also been held that the ld. AO cannot make such additions only on the basis of surmises and conjectures: - i) Shri Sanjay Singhalvs DCIT in ITA No. 708,710,711/Chd/2018 order dated 20.09.2021 ii) Parkash Chand Kothari vs. DCIT as reported in 94 ITR (Trib.) 49 Jaipur Bench iii) Great India Steel Fabricators in ITA No. 746/Chd/2014 dated 03.03.2017 vii) CIT, Delhi vs. SMC Share Brokers Ltd. (2007) 288 ITR 345 (Del) The observation of the Hon'ble Delhi High Court is extracted as below:- "6. Learned counsel for the revenue relied upon One-up Shares &Stock Brokers (P.) Ltd. v. R.R. Singh, CIT [2003] 262 ITR 2751 to contend that the statement of Manoj Aggarw....
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....tablished and relevant credit of Rs. 37.30 lakhs in profit and loss account was as cash credit in nature of cash credit - Whether Tribunal was justified in sustaining addition * The case law as relied upon by the CIT(A) is based on cash sales but the case of the Assessee is entirely different and entire amount has been received through banking channels. * The cash sale parties were missing in the case law as relied upon by CIT(A). But in the case of the Assessee the Assessee has made the sale to a party which is not missing but the party is denying the purchase as he has deposited cash in the bank account to make payment to the Assessee. * No cash has been deposited in the bank account of the Assessee. * If any cash has been deposited by M/s Vasudev Sales Corp, the question of source of the said cash must have been done from him. * The Assessee has received sale amount through banking channel and the same cannot be doubted. CIT vs Sanjay Chhabra 21 taxmann.com 221 (P&H HC) Assessee was engaged in business of a commission agent and derived income by way of commission from sale of vegetables and fruits on behalf of farmers and traders - During course of survey at bu....
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....ATE 2013-14 7.98% 2014-15 7.89% 2015-16 7.89% 6.1. The entire addition is made on the statement recorded from Mr. Rajesh Dhawan prop. M/s. Vasudeva Sales Corp. But the statement recorded in survey u\/s. 133 was not served to assessee. The entire gross sales amount to Rs.15,65,41,118/- was duly declared in the turnover of the assessee during the filing of return. There are no discrepancies in the purchase or in stock of the assessee. The only discrepancies found in sales on the basis of recorded statement of the party which was finally added back to the total income of the assessee. The books of accounts are rejected u/s. 145(3) of the Act without finding any lacuna in the books of assessee. We respectfully relied on the order of the jurisdictional High Court in the case of CIT vs. Om Overseas & Hon'ble high Court of Chattisgarh ACIT Vs. Roopchand Tharani, supra to find that there is no specific discrepancy for rejecting books of accounts by the assessee u/s. 145(3). So, grounds taken by the assessee- in this context is fully allowed. 6.2. Related to the addition on the basis of statement of the party is uncalled for. The assessee was not allowed to cross exa....
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....The assessee disclosed the entire sales, payment was received through banking channel. The assessee is not at all beneficial of the said amount. The stock of goods and purchase was duly accepted in the order of assessment and in the subsequent assessment order. The entire submissions were submitted before the revenue authorities by the assessee including stock statement and the details of purchase. The recorded statement of the part had the evidentiary value. But without the cross examination, the statement is itself in nullity, respectfully relied on SMC Share Brokers Ltd, supra. The addition cannot be made mere on the basis of doubts or conjecture. We are setting aside the appeal order passed by the ld. CIT(A). Considering the above, the addition amount of Rs 15,54,20,000/- is quashed. 7. In the result the appeal of the assessee ITA No. 287/ASR/2018 is allowed. Order pronounced in the open court on 15.02.2023 ============= Document 1 SPECIAL ADV AFFIDAVIT Rajesh Dhawan S/o Sh. Ram Parkash Dhawan hereby solemnly affirm and declare 1 That, I am resident of H No 17/7, Jhandi Mohalla, Ferozepur City-152002 2. That, I am doing business of whole sale surgical ....