TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 1367
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....as facilities for precision heavy engineering, fabrication machining and assembly. It filed its return of income for the impugned assessment year on 16.10.2015 declaring total income of Rs. 48,59,880/-. The return was processed u/s 143(1)(a) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') on 13.11.2019. Subsequently the case was selected for limited scrutiny through CASS for verification of 'share premium'. The Assessing Officer passed an order u/s 143(3) of the Act on 05.01.2021 accepting the returned income. 3. Subsequently a survey u/s 133A of the Act was carried out at the business premises of M/s. Siasons Trade and Industry Pvt. Ltd. (STIPL) by the DDIT (Inv), Unit 5(1), Mumbai on 21.01.2021. During the course of survey it was found that STIPL is indulged in receiving accommodation entries in the form of bogus purchases and bogus sales which were admitted by Shri Siddharth C. Shah, director of STIPL in his sworn statement recorded on oath u/s 131 of the Act during the course of survey operation. He had admitted that STIPL had carried out only paper entry transactions without actual movement of goods / material being bogus purchases and bogus sales as circ....
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....ding such false entries in its books of account. He, therefore, added an amount of Rs. 3,60,11,804/- being the commission @ 2% on such bogus sales amounting to Rs. 1,80,05,90,205/- as unexplained credit u/s 68 of the Act. 7. Before the Ld. CIT(A) / NFAC the assessee submitted that the figure of Rs. 1,80,05,90,205/- which forms the basis of the action of the Assessing Officer comprised of the following amounts: Sr. No. Name of the Party Amount (in Rs.) 1 M/s. Siasons Trade and Industry Pvt. Ltd. (STIPL) 5,05,31,847/- 2 M/s. Forum Enterprises 4,14,30,000/- 3 Mirage Multiventures Pvt. Ltd. 64,32,91,958/- 4 Curzen Infraprojects Pvt. Ltd. 46,15,10,400/- 5 Blue Sea Commodities 60,38,26,000/- Total 180,05,90,205/- 8. He submitted that the assessee had not shown any transactions with M/s. Forum Enterprises during the year and the said fact was submitted before the Assessing Officer during the course of assessment proceedings vide reply dated 18.11.2022. So far as M/s. Curzen Infraprojects Pvt. Ltd. is concerned, it was submitted that the said company was formerly known as M/s Blue Sea Commodities Pvt. Ltd. in the b....
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....e its purchases from the above parties which were found to be bogus by the AO. It is found that appellant has submitted various documents in support of the purchases made from the above parties. It has also been submitted before the AO that it has not entered into any transactions with M/s Forum Enterprises during the year under consideration amounting to Rs. 4,14,30,000/-. However, while estimating the commission @ 2% from the bogus sales corresponding to the bogus purchase this amount was also included without rebutting the submission of the appellant. 5.11 Appellant has submitted various supporting documents in respect of purchases made from above parties to substantiate the genuineness of the transaction like copies of invoices, e-way bills, L/R's and transporter bills (which were also filed before the Assessing Officer). The e-way bills which are digitally generated on the GST portal give complete details including place of origin and destination of the goods, consignor/consignee, mode of transportation, vehicle details etc. From the details submitted it is evident that the Appellant Company has made purchases of material from the above parties which is duly recor....
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....of e-way bills issued providing origin and destination of the goods, consignor/consignee, mode of transportation, vehicles details etc., bank statement evidencing payment to the above parties as well other documents as mentioned above were also uploaded by the appellant. Some of the payments have been made to the parties in the subsequent financial years also. Therefore, I find force in the contention of the appellant that AO has miserably failed to point out any defect in the above supporting documents submitted during the course of assessment proceedings and he has not properly appreciated the material and documents available on record before making the impugned addition. 5.14 I also find that the Assessing Officer has only adopted a one-sided approach by treating the purchases from the above parties as bogus on the basis of survey report carried out on an third party. Appellant Company has a regular system for maintenance of books of accounts which have been duly subjected to the audit. AO had duly accepted the correctness and accuracy of the audited books of accounts and accepted the various items which form part of the Profit and Loss Account including, in particular,....
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....y on information received from external sources is unjustified :- (i) Commissioner of Income Tax-7, New Delhi v. Odeon Builders (P.) Ltd. [2019] 110 taxmann.com 64 (SC) (ii) Principal Commissioner of Income Tax, Surat-1 v. Tejua Rohitkumar Kapadia [(2018)] 94 taxmann.com 325 (SC)] (iii) Principal Commissioner of Income-tax v. Nitin Ramdeoji Lohia [2022] 145 taxmann.com 546 (Bombay)] (iv) Principal Commissioner of Income-tax v. Shapoorji Pallonji & Co. Ltd [2020] 117 taxmann.com 625 (Bombay) (v) Principal Commissioner of Income-tax v. Jagdish Thakkar [2022] 145 taxmann.com 414 (Bombay) (vi) Principal Commissioner of Income-tax, Mumbai v. Chawla Interbild `Construction Co. (P.) Ltd [2019] 104 taxmann.com 402 (Bombay) (vii) Pr. Commissioner Of Income Tax - 13 vs Vaman International [2020] 422 ITR 0520 (Bom) (viii) Principal Commissioner of Income-tax v. Tirupati Earth Neerprima JV [2023] 154 taxmann.com 197 (Bombay) The sum and substance of the above judicial decisions are that the purchase cannot be disallowed merely on the information received from sales tax department that assessee was beneficiary of a....
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.... as additional evidence, thereby violating the mandate contained in sub-rule (2) of Rule 46A. 3. On the facts and circumstances of the case and in law, the ld. CIT(A) erred in admitting the additional evidences furnished by the assessee without giving the AO reasonable opportunity to examine the same and to furnish any evidence to rebut the same, thereby grossly disregarding the requirements as mandated in Rule 46A(3) of the IT Rules. 4. Without prejudice to the above, the ld. CIT(A), while allowing the appeal, has erred in accepting the contention of the assessee and disregarding the Assessing Officer's findings that several lorry receipts lacked bill numbers and GST charges, certain transportation bills reflected unrealistic charges significantly below prevailing market rates, and some bills were issued against vehicles with expired registration/insurance, indicating a systematic scheme by the assessee's group to create invoices, transport bills, and related records to portray paper transactions as genuine. Furthermore, the CIT(A) failed to accord due weight to the reliable findings of the Department's survey action, which substantiated the inauthent....
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.... and therefore, the authenticity of his statement recorded u/s 131 during the course of survey u/s 133A of the Act is doubtful and cannot be the basis for making addition in the hands of the assessee. 13. Referring to the decision of Hon'ble Madras High Court in the case of CIT vs. S.Khader Khan Son reported in (2008) 300 ITR 157 (Mad), the Ld. Counsel for the assessee submitted that the Hon'ble High Court in the said decision has held that section 133A of the Act does not empower any ITO to examine any person on oath. Therefore, the statement recorded under section 133A has no evidentiary value and any admission made during such statement cannot be made the basis of addition. He submitted that the SLP filed by the Revenue against the order of Hon'ble Madras High Court was dismissed by the Hon'ble Supreme Court as reported in (2013) 352 ITR 480 (SC). 14. Referring to the decision of Hon'ble Delhi High Court in the case of CIT vs. Dhingra Metal Works reported in (2010) 328 ITR 384 (Del), he submitted that the Hon'ble High Court in the said decision has held that for a statement to have evidentiary value, the survey officer should have been authorized to administer oath and to ....
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..... Dharam Pal Prem Chand Ltd. (2008) 167 Taxman 168 (Del) viii) Prakash Chand Nahta vs. CIT (2008) 170 Taxman 520 (MP) ix) Cannon Industries (P.) Ltd. Vs. DCIT (2015) 59 taxmann.com 65 18. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case made addition of Rs. 3,60,11,804/- u/s 68 of the Act being commission @ 2% of the bogus sales amounting to Rs. 180,05,90,205/- on the ground that the assessee had shown false entries of purchases made from non-existing entities. Therefore, the assessee's claim of sales out of such purchases is also bogus and the assessee would have earned only the commission for providing such false entries in its books of accounts. We find the Ld. CIT(A) / NFAC deleted the addition, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. DR that the Ld. CIT(A) / NFAC, without appreciating the factual findings given by the Assessing Officer that the purcha....
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....to the assessee or without allowing cross examination. 20. We find the Hon'ble Madras High Court in the case of CIT vs. S.Khader Khan Son has held that section 133A of the Act does not empower any ITO to examine any person on oath. Therefore, the statement recorded u/s 131 during the course of survey u/s 133A of the Act has no evidentiary value and any admission made during such statement cannot be made the basis for addition. The relevant observations of Hon'ble High Court read as under: "7. From the foregoing discussion, the following principles can be culled out:- (i) An admission is extremely an important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect and that the assessee should be given a proper opportunity to show that the books of accounts do not correctly disclose the correct state of facts, vide decision of the Apex Court in Pullangode Rubber Produce Co. Ltd. v. State of Kerala [(1973) 91 I.T.R. 18]; (ii) In contradistinction to the power under section 133A, section 132(4) of the Income-tax Act enables the authorised officer to examine a person on ....
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.... be conclusive and it is open to the person who has made the admission to show that it is incorrect. 23. Further, the Hon'ble High Court has held that section 133A of the Act does not permit to examine a person on oath and the material collected and the statement recorded during the survey are not conclusive piece of evidence by themselves. The relevant observations of Hon'ble High Court read as under: "12. From the aforesaid, it is apparent that while Section 132(4) of the Act specifically authorizes an officer to examine a person on oath, Section 133A does not permit the same. 13. The Kerala High Court in Paul Mathews & Sons Vs. Commissioner of Income Tax, (2003) 263 ITR 101 (Kerala) and Madras High Court in CIT Vs. Kader Khan, (2008) 300 ITR 157 have also taken a similar view. The relevant portion of the Kerala High Court judgment in the case of Paul Mathews & Sons (supra) is reproduced hereinbelow :- "The provision also enables the income-tax authority to impound and retain in his custody for such period as he thinks fit any books of account or other documents inspected by him, provided the authority records his reasons for doing so and also shall ....
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....t the AO could not have made the aforesaid addition solely on the basis of the statement made on behalf of the respondent-assessee during the course of survey. 17. In view of the aforesaid, present appeal being bereft of merit, is dismissed." 24. We find the Hon'ble Delhi High Court in the case of CIT vs. Sunrise Tooling System (P.) Ltd. has held that the statement recorded during the course of survey u/s 133A of the Act has no evidentiary value and therefore, the Tribunal was justified in deleting the addition made by the authorities below on the basis of survey statement. 25. We find the Jaipur Bench of the Tribunal in the case of Unique Art Age vs. ACIT (supra) has held that the statement recorded u/s 133A on oath during survey could not be relied as evidence. 26. The various other decisions relied on by the Ld. Counsel for the assessee, copies of which are placed in the paper book, also support his case to the proposition that section 133A of the Act does not empower any ITO to examine any person on oath and the statement recorded u/s 133A of the Act has no evidentiary value and therefore, any admission made during such statement, cannot be made the basis for ....