TaxTMI 
TaxTMI 
2026 (3) TMI 696
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....d CIT(A)] as under:- S. No. Assessment Year Department Appeal Assessee Appeal 1. 2016-17 1317/Del/2025 NA 2. 2017-18 1318/Del/2025 NA 3. 2018-19 1319/Del/2025 NA 4. 2019-20 1320/Del/2025 1180/Del/2025 5. 2020-21 1321/Del/2025 1170/Del/2025 6. 2021-22 1322/Del/2025 1097/Del/2025 7. 2022-23 1323/Del/2025 NA 8. 2023-24 1324/Del/2025 1102/Del/2025 3. We find that the revenue had preferred an appeal for Assessment Year 2016-17 against the order passed by the Learned CIT(A) deleting the additions made by the Learned AO on an estimated basis for unaccounted business receipts. The Learned CIT(A) deleted the same for want of incriminating material found during the course of search qua the completed assessment for Assessment Year 2016-17. Aggrieved, the revenue is in appeal before us. We find that there is no dispute with regard to the fact that there was absolutely no incriminating material found during the course of search for Assessment Year 2016-17. The provisions of section 149(1)(b) of the Act mandate the existence of incriminating material found during the course of search wh....
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....etails of parties with whom the purchases were made and it was claimed that Sh. Vijay Kumar Gulati has no relation with these companies. Thus, there was no nexus or correlation between the credits in the bank account of Sh. Rajiv Malhotra and Smt. Aditi Malhotra with the appellant company. 4.4.3 In this regard, the appellant company further submitted that the additions were made only on the basis of Exhibit-2 of the notice issued u/s 142(1) of the Act wherein no amount pertained to the year under consideration. In support thereof, vide submission dated 23.12.2024, the appellant company submitted a summary of the transaction as appearing in the said Exhibit-2 which has been relied upon by the AO in its assessment order. On perusal of the Exhibit-2 of the notice u/s 142(1) dated 24.02.2024 issued for the A.Y. 2016-17, it is found that in the said Exhibit, the assessing officer made an attempt to create a nexus between certain payments made by the appellant company from its bank accounts and the amounts received in the personal bank accounts of directors of the company and their family members. However, it is noticed that the amounts referred to in the said Exhibit pertain on....
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.... been controverted by the revenue before us by bringing contrary evidences on record. Hence we do not find any infirmity in the order of the Learned CIT(A) in this regard. Accordingly, the grounds raised by the revenue for Assessment Year 2016-17 are dismissed. 5. In the result, the appeal of the revenue for Assessment Year 2016-17 in ITA No. 1317/Del/2025 is dismissed. 6. With the consent of both the parties, the facts of Assessment Year 2022-23 are taken as the lead case and the decision rendered thereon shall apply mutatis mutandis for other assessment years also except Assessment Year 2016-17 and except with variance in figures. 7. We have heard the rival submissions and perused the materials available on record full stop. The assessee is engaged in the business of manufacturing and trading of copper wires and cables. A search and seizure operation was conducted under section 132 of the Act on the assessee on 12-12-2022 at the business premises of the assessee company along with residential premises of its Directors / Employees. Notice under section 143(2) of the Act stood issued to the assessee for the year of search and notice under section 148 of the Act stood issue....
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....ich would be eligible for grant of deduction out of the unaccounted income of Rs 152,01,87,166 arrived herein above. The unaccounted income figure of Rs 152,01,87,166 and unaccounted purchases of Rs 112,44,29,540 are not in dispute before us. The Learned AO accordingly worked out the gross profit for each year. The highest of gross profit was worked out at 46.65% for Assessment Year 2020-21, which was taken as sacrosanct and applied by the Learned AO for all the years under consideration and revised gross profit figures arrived by him. From this arrived gross profit for each year, the Learned AO further granted deduction towards salaries and wages totalling to Rs 30,99,61,802 as tabulated below:- Asst Year Amount of Salaries & Wages 2018-19 8,03,19,330 2019-20 8,26,08,565 2020-21 8,80,92,361 2021-22 4,15,19,102 2022-23 1,74,22,445 Rs 30,99,61,802 8.1. The aforesaid figure of salaries and wages of Rs 30,99,61,802 has been duly granted deduction by the Learned AO and there is no dispute on the same. 9. The unaccounted income figure of Rs 152,01,87,166 includes amounts added towards sale of scrap of Rs 47,02,45,231. This fact is a....
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....found during the course of search, both the lower authorities refused to grant deduction for the same while computing the net profit for various assessment years as above. Now the short point that arises for our consideration are two fold:- a) Whether gross profit rate reduction from 46.65% to 12.5% uniformly for all the assessment years under consideration is in order? b) Whether net profit is to be computed as per the seized documents after granting deduction of business promotion expenses and other business related expenses reflected in the very same seized documents ? 12. It is trite law that search assessments are to be framed based on the documents found and seized during the course of search. It is not in dispute that the seized documents do contain the details of unaccounted business receipts including sale of scrap, unaccounted purchases, unaccounted salaries and wages, unaccounted business promotion expenses, unaccounted other business related expenses and unaccounted personal expenses. The source of incurrence of all these expenses are not in dispute before us as all business and non-business related expenses are duly met out of unaccounted receipts.....
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....82,608,564.00 88,092,362.00 41,519,101.00 17,422.445.00 309,961,802.00 Business. Promotion Exp 1.359,000.00 7,541,000.00 3,976,919.00 11,331,981.00 5,038,400.00 19,269,630.00 9,951.000.00 58,467,950.00 Other Business Exp. 375,000.00 - $32,625.00 607,500.00 1,940,000.00 49,110,00 12,893,561.00 16,397,796.00 Total Expenses 67,295,400,00 105,569,400.00 198,025,449.00 298,824,525.00 300,197,478.00 250,037,590.00 288,307,246.00 1,509,257,088.00 Net Surplus Disclosed as additional Income in IR's 32,699,300.00 30,224,220.00 11,620,262.00 12,790,051.00 14,923,708.00 45,199,747.00 22,618,021.00 170,075,309.00 13. We hold that the undisclosed profitability statement is to be worked out based on the actual figures reflec....
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....xpenditure in other assessment years. It was submitted by the assessee that the company had taken a specified portion of the said farm house building for being allowed to be used by the Promoter and Director of the Company who was an old aged person, having also suffered from Covid -19 pandemic in first wave impacting his mobility and therefore keeping that in mind, the company allowed some portion of the residence to be used as office and bear the expenditure towards renovation and routine repairs from time to time in lieu of payment of rent, so as to allow use of such specified portion for business purposes. In that connection, even a Memorandum of Understanding (MOU) dated 1-4-2020 was executed between the Director and assessee company which was filed even at the stage of assessment proceedings. It was thus argued that the aforesaid expenditure was incurred for business purposes and was wrongly disallowed by the Learned AO holding it to be personal in nature. The Learned AR strongly supported the order of the Learned CIT(A) who had deleted the aforesaid disallowance after considering all the facts and evidences available on record. The Learned DR relied upon the order of the Lea....