TaxTMI 
TaxTMI 
2023 (9) TMI 1458
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...., the Ld CIT(A) erred in deleting the addition u/s 68 of the Income Tax Act, 1961 amounting to Rs. 4,63,52,504/- made by the assessing officer, without considering the facts and circumstances of the case and settled position of law 2 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition u/s 694 of the Income Tax Act, 1961 amounting to Rs. 2,27,19,500/- made by the assessing officer, without considering the facts and circumstances of the case and settled position of law 3 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition u/s 69A of the Income Tax Act 1961 amounting to Rs 9,00,000/- made by the assessing officer without considering the fact and circumstances of the case and settled position of law. 4 Whether on the facts and circumstances of the case and in law, the Ld CIT(A) erred in deleting the addition w/s 69C of the Income Tax Act 1961 amounting to Rs 4,72,00,000/- made by the assessing officer, without considering the facts and circumstances of the case and settled position of law. 5 Whether on the facts and circumstances of the c....
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.... CIT(A) in the following manner:- (i) At the residential premises of Shri Manoj Sharma, loose papers in respect of cash sales and invoices issued by the appellant in the name of M/s Samaira Enterprises, were found and seized /impounded by the search party. Identical set of documents in the name of BAFPL and M/s. Sangeeta Enterprises were also found and impounded. (ii) These invoices are bogus in nature as no actual sales were made to M/s Samaira Enterprises and M/s Sangeeta Enterprises. (iii) The appellant and BAFPL were involved in making cash sales which were not accounted in their books of accounts. (iv) Shri Manoj Sharma was managing all the four entities viz, the appellant, BAFPL, M/S Samaira Enterprises and M/s Sangeeta Enterprises on the instructions of Shri Jagdish Joshi. (v) As per the statement of Shri Manoj Sharma (reply to Q.no. 15A, reproduced in page no 24 of the assessment order) the appellant has made cash sales of herbal nuts to concerns other than M/s Samaira Enterprises. Two parties identified are M/s. Jeet products, Hyderabad and M/s M K. Enterprise, Delhi. The sale proceeds of these sales are received in cash. Such c....
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....nbsp; 3,12,76,150 Unicot Food Products Pvt. Ltd. 2,05,99,225 1,06,76,925 6 10, 11 & 12 2021-22 2,27,19,500 Unicot Food Products Pvt. Ltd. 2,27,19,500 8. Accordingly, AO held that the cash amount received through hawala for the relevant year of Rs.2,27,19,500/- is treated as unexplained money U/S.69A the Act. 9. Further, AO observed that there were certain loose documents in respect of sales invoices issued by M/s. Unicot Food Products Pvt. Ltd in the name of M/s. Samaira Enterprises which was also seized from JMJ House, G.K. Nagar, Coimbatore, Tamilnadu at the premises of Shri Manoj Kumar Sharma. He further observed that on enquiry with employees namely, Shri Arvind Kumar Singh and Shri Ganesh Gopi on the loose papers, it was found that these invoices we....
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.... as per the instruction of Shri Jagdish Joshi. Accordingly, he held that assessee might have paid cash for the balance price of Rs.11,20,000/- and same was treated as unexplained expenditure u/s.69C. 12. Lastly, he has made an addition on account of cash expenditure of Rs.13,85,294/- on the basis that loose sheet No.27 was found and seized and which has been summarized by the ld. AO at page No.44 of his order in the following way:- Table 1: Manoj: Mularam Contractor: Unaccounted cash expenditure: AY 21-22. Rs 1,81,000/- Table 2: Ganesh Gopi-Manoj Ji A/c Unexplained money: AY 21-22, Rs.50000/- Table 3: Ganesh Gopi - Manoj ji A/c: Unaccounted cash expenditure: AY 21-22, Rs.4,55,294/- Table 4: Ganesh Gopi - Manoj ji A/c: Unaccounted cash expenditure: AY 21-22, Rs.6,99,000/- From the above, AO concluded that the entries in these table represent cash receipts by Shri Manoj Sharma and given to Shri Ganesh Gopi of Rs. 13,85,294/-. 13. AO further observed that as per the statement of Shri Ganesh Gopi, there were certain expenses incurred in order to bring the labour back to the assessment company at Coimbatore during Covid 19 Lockdown period and....
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....ording to the appellant, all the figures mentioned in the loose papers are summed up and considered as unexplained cash amount by the A.O. Further, aggregate of the numbers scribbled on the left hand side of the sheet are considered as unexplained cash credit and added u/s 69A while total of numbers mentioned or the right hand side of the sheet is considered as unexplained cash expenses and added u/s 69C. g) According to the appellant, loose sheet numbered 3 has been inflated by Rs.84,00,325, loose sheet numbered 4 is inflated by Rs.28,33,550/- while loose Sheet no. 6 is inflated by Rs.49,11,150/- Elaborate explanation in this regard has been given during the appellate proceedings. (h) There is no abnormality with respect to recovery of purchase invoices of M/s Samaira Enterprises being found from the residential premises of Mrs. Sangeetha, as she is a partner in the said firm. i) There purchases and cash sales by M/s Samaira Enterprises are genuine as established by invoices, e-way bills, all payments being made through banking challans. The books of accounts of the appellant have not been rejected. The AO has accepted the inflow and outflow of goods and....
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....8-19 3,25,00,989 7,13,46,835 1,76,28,090 24.71% 3. 2019-20 2,44,56,556 2,44,56,556 2,50,51,250 1,32,60,212 23.01% 4. 2020-21 6,85,97,917 7,24,37,751 4,21,43,750 55,05,508 7.60% 6.6.3 Thus, it is seen that out of total sales of Rs.7,24,37,7517- by the appellant, during F.Y. 2020-21 relevant to A.V. 2021-22, Rs. 4,2143,750/- has been made to M/s Samaira Enterprises, which constitute 58% of the total sales. In my opinion, the findings in the assessment order regarding the cash sales transactions shown in the loose paper constituting unaccounted cash sales of the appellant company, got two fallacies- (i) It completely ignores the existence of M/s Samaira Enterprises (ii) Although accept the sale transaction related to the product manufactured and sold by the appellant, but treats the entire sale transactions as bogus and unaccounted, that too without disturbing the corresponding purchases and other figures viz., closing....
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....he name of M/s Samaira Enterprises. There is no doubt that these cash sales are related to Herbal nuts manufactured by the appellant for which purchases are made and duly accounted for in its books of accounts. 6.8 In this regard, there is substance in the argument of the appellant that if cash sales are directly treated as effected by the appellant, the purchases made by M/s Samaira Enterprises will be nil. Hence, entire sales by the appellant to M/s Samaira will also be nil in the books of accounts of the appellant. In such a Scenario, the entire sales made by M/s Samaira should be considered as sales of the appellant. Effectively, the gross profit of M/s Samaira should be considered addition to the net profit of the appellant resulting into nil turnover, profit and income of M/s Samaira As M/s Samaira Enterprises has already shown the gross profit in its return of income, no addition is warranted even as per the observation of the A.O. It appears that the A.O. has completely ignored this aspect while making the impugned addition as an 6.9 Under any circumstance, there is no justification for addition of entire cash sales when the corresponding purchases made du....
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...., the AO has simultaneously made addition of Rs.4,63,52,504/- with respect to sales by the appellant to M/s Samaira Enterprises during FY 2020-21(till 05.02.2021). On the other hand, the appellant has stated that the correct figure of sales is Rs 4,21,43,750/-. I found that the figure of Rs. 4,63,52,504/- as taken by the AO, is based on the statements recorded during search & survey proceedings. In this regard, the AO is directed to call for the necessary records and ascertain the correct figure of sales made to M/S Samaira Enterprise. In case of any discrepancy. necessary remedial measures in the case of M/s Samaira enterprise will be taken, as the same would constitute corresponding purchases by M/s Samaira Enterprises With the above direction, the addition of Rs.4,63,52,504/- is directed to be deleted in the hands of appellant following the same rationale as discussed in the preceding paragraphs. Thus, grounds of appeal no, 1 and 2 are allowed, with the aforesaid direction to the AO 15. After considering the above submissions made by the ld. CIT DR as well as ld. Counsel for the assessee we find that before the ld. AO as well as ld. CIT (A), assessee had stated that in order ....
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.... cannot be the case, because this entity has shown sales and is assessed to tax since past. Thus, based on these documents and the ld. CIT (A) has given his elaborate finding for his conclusion and given direction to the ld. AO in para 6.10 and 6.11 as incorporated above, wherein, he has directed the ld. AO to verify and cross check, whether the sales adopted by him from the loose sheets appears in the cash book / bank book / sales of M/s. Samaira Enterprises or not and similar exercise to be undertaken with respect to expenses of the outgoing in the loose sheets seized and impounded from the search proceedings. We do not find any reason to tinker with such a direction which is based on the facts and material on record. Accordingly, order of the ld. CIT(A) is confirmed on the grounds raised by the Revenue is dismissed. 16. With regard to addition of Rs.4,72,00,000/- which has been made by the ld. AO on account of unaccounted purchases and treated as unexplained expenditure u/s.69C by the ld. AO, we find that assessee in support of this purchase had submitted following evidences before the ld. AO. (i) Purchase invoices from SPC. (ii) Transport invoices from the ....
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....mmarily rejected without finding any lacuna in it. 8.10 The employees, whose statements the AO has relied upon have later clarified before the Investigation Wing that (i) The Spice Compound has been used to give different tastes to the herbal nuts at the manufacturing stage during FY 2020-21. (ii) The mixing of Spice Compound being trade secret, is discreetly informed to the concerned staff only (iii) It is not possible that e-way bill has been generated and there is no physical transportation of goods. (iv) The e mail for generation of GRN should be read in totality, which actually demonstrate the goods are actually transported and received at the appellant's end. 8.11 These clarifications are also available at the time of assessment proceedings. It is observed that the AO has neither sought further clarification nor examined these employees / relevant persons, if he had any doubt on the veracity of later clarification made by these employees 8:12 Apart from the above, I found that the appellant has consistently claimed that for the first time Spice compound was used in the manufacturing of herbal nuts during FY 2020-21. As....
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....remedial measures in the case of M/s Samaira enterprise will be taken, as the same would constitute corresponding purchases by M/s Samaira Enterprises. With the above direction, the addition of Rs.4,63,52,504/- is directed to be deleted in the hands of appellant following the same rationale as discussed in the preceding paragraphs. Thus, grounds of appeal no, 1 and 2 are allowed, with the aforesaid direction to the AO". 19. Thus, once ld. AO is being directed to verify the assessee records and ascertain the correct figure of sales made to M/s. Samaira Enterprises and if there is any discrepancy, then remedial action has to be taken in the case of M/s. Samaira Enterprises as the same would constitute corresponding purchases in its hand. It is only with the direction ld. CIT(A) has directed to delete in the hands of the assessee. We do not find any infirmity in such direction because all these transactions have been stated to be recorded in the books of accounts of M/s. Samaira Enterprises. 20. Coming to the addition of Rs.9,00,000/- on account of addition made by the ld. AO of Rs.13,85,294/-, the ld. CIT(A) has dealt this issue in the following manner:- 7.5 On careful....
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....voices showing purchase of Tukda Nirmali Seeds at a lower price. (ii) Goods receipt note and transport copy. (iii) Ledger copy of M/s MS. Product showing all payments in cheques. 23. The ld. CIT (A) has deleted the said addition after observing as under:- "9.7. On careful consideration of above submission of the appellant, I do not find any merit in the impugned addition of Rs.11,20,000/-. Nowhere in the e mail, there is any mention of payment to be made in cash or under invoicing or under reporting. It simply says:- "32 Ton of Nirmali Seeds ordered x Rs 70 per kg = Rs 22,40,000/- 50% payment to be done le. Rs.11,20,000/" 9.7.1 This 50% payment has been reflected as paid to M/s MS. Product as per the Ledger account. 9.8 No documentary evidence has been brought on record by the AO that balance 50% payment was made in cash. Even the statement of Shri Arvind Kumar Singh as reproduced above, nowhere states that the balance payment was made in cash In my considered view, this is just the guess work of the AO, not supported by any documentary evidence. The AO has also not contradicted documentary evidences submitted, during the ass....