TaxTMI 
TaxTMI 
2023 (11) TMI 338
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....T (A)] in DIN & Order No. ITBA/APL/S/250/2022-23/1046438026(1), dated 21/10/2022 arising out of the order passed by the Ld. AO u/s. 143(3) r.w.s 153A of the Income Tax Act, 1961 [the Act] for the AY 2015-16. The assessee has filed cross objections. 2. Brief facts of the case are that the assessee is a Private Limited Company engaged in trading of Tobacco and filed its return of income for the AY 2015-16 on 28/12/2015 admitting a total income of Rs. 24,01,89,770/- comprising of 'income from other sources' of Rs. 13,91,496/- and 'Long Term Capital Gains' of Rs. 23,87,98,274/-. Subsequently, the assessment was completed u/s. 143(3) wherein the Ld. AO made an addition of Rs. 5,86,00,000/- towards LTCG by disallowing the cost of improvement. ....
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.... Amarnath has withdrawn the amount of Rs. 14.47 Crs from the bank account of M/s. Polisetty Somasundaram Pvt Ltd [M/s. PSSPL]. Mr. Polisetty Somasundaram further submitted that the fixed assets of the company i.e., M/s. PSSPL were partitioned between himself and his brother Sri Polisetty Amarnath as per the MoU dated 22/7/2008 wherein Sri Polisetty Amarnath received factory premises of M/s. PSSPL including plant and machinery as part of his share. Subsequently, Mr. Polisetty Amarnath sold his share of property for a consideration of Rs. 30 Crs to M/s. Jyothirmaye Properties Pvt Ltd. Sri Polisetty Somasundaram further submitted that Sri Polisetty Amarnath withdrew Rs. 14.47 Crs from the sale proceeds deposited into the State Bank of Hyderaba....
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.... search. Aggrieved by the order of the Ld. AO, the assessee filed an appeal before the Ld. CIT(A), Visakhapatnam. During the first appellate proceedings, the Ld. Counsel for the assessee submitted that the assessee did not claim any expenditure in the impugned assessment year for the purchase of tobacco. Further, the Ld. Counsel for the assessee also submitted that the stock which was written off during the AY 2019-20 was also not claimed as an expenditure by the assessee during the impugned assessment year. Considering these submissions, the Ld. CIT(A) allowed the appeal of the assessee. Aggrieved by the order of the Ld. CIT(A), the Revenue is in appeal before us by raising the following grounds of appeal: "1. The order of the Ld.....
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.... holding that the addition of Rs. 17,71,40,620/- made by the Assessing Officer towards bogus purchase is outside the scope of additions that could be made in the assessment u/s. 143(3) r.w.s 153A of the Act. 2. The Ld. CIT(A) is justified in deleting the addition made by the Assessing Officer by treating the opening stock of Rs. 3,39,29,117/- and purchases of Rs. 14,32,13,500/- aggregating to an amount of Rs. 17,71,40,620/- as bogus purchases. 3. The Ld. CIT (A) is justified in deleting the addition of Rs. 5,86,00,000/- made under the head 'long term capital gains'. 4. Any other ground of cross objection that may be raised at the time of hearing." 5. At the outset, the Ld. Departmental Representative [DR] refer....
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....order of the Ld. CIT(A) be upheld. 6. We have considered the rival submissions and perused the material available on record as well as the orders of the Ld. Revenue Authorities. It is an admitted fact that the assessee in his own deposition has stated that purchases of tobacco was made out of the withdrawals from the bank account of the assessee company to the extent of Rs. 14.47 Crs. We also find that the assessee has admitted the sale proceeds of Rs. 30 Crs towards the sale of property and has offered the capital gains tax while filing the return of income. The Ld. AO has not disputed the source for the withdrawals however, has considered the purchases as bogus. From the submissions of the Ld. AR and from the materials placed before us....
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..... From the copies of accounts submitted during the assessment it was explained that the purchase of Rs. 14,32,13,500/- was incurred from the cash balance available out of the sale proceeds of property amounting to Rs. 30 Crs. The capital gains arising from the sale of impugned property was admitted as income and was assessed in the assessment u/s. 143(3) of the Act on 30/11/2017. In view of the above facts on record the sources for the purchases cannot be considered as unexplained nor disallowed as no expenses have been claimed under the head purchases by the appellant for the purpose of computation of income under the Act.........." 7. Further, we find that the Ld. AO has not brought on record any material to corroborate the seized mate....