TaxTMI 
TaxTMI 
2026 (3) TMI 1020
X X X X Extracts X X X X
X X X X Extracts X X X X
....wing grounds of appeal: "1) In the facts and on the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the Addition of Rs. 3,85,22,432/- on account of estimation of Gross profit on unaccounted purchase ignoring the seized documents and statement r3ecorded during search/post-search proceedings." 2) The Revenue craves leave to add/alter/armed and/or substitute any or all of the grounds of appeal." 3. The brief facts of the case are that the assessee-company is engaged in the business of manufacturing of mouth fresheners and filed its original return of income on 30/01/2021 declaring total income of Rs. 9,97,16,300/- for the AY 2020-21. A search action u/s. 132 of the Income Tax Act, 1961 (in short "the Act") was carried out in the case of a third party, namely, Mustufamiyan Hussainmiya Shaikh and his group companies (MHS Group) on 16/11/2021. Simultaneously, a search and seizure action was carried out at the residential premises of Shri Mayank Ashokbhai Khatri, an employee of the assessee company on 16/17 November, 2021, wherein, certain documents (loose sheets marked as pages 156 to 159 of Annexure A/3) allegedly pertaining to assessee co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssing Officer (AO), the assessee preferred appeal before the Ld. CIT(A). 5.1 Before the Ld. CIT(A), the assessee submitted that the seized loose sheets did not contain the name of the assessee, the name of any purchaser, description of goods, quantity, rate, mode of transport, place of delivery, or details of payment; that a search had also been conducted in the case of the alleged purchaser group (MHS Group), but no incriminating material was found evidencing any unrecorded purchases by the said group or any of its concerns from Zen Group, no excess physical stock was found and no unrecorded cash payments to Zen Group were detected; and that the regular transactions between the assessee and entities of the MHS Group were duly recorded in both sets of books and fully verifiable from the ledgers. It was also pointed out that in his statement, Shri Rashmin M. Majithia had categorically disowned the seized pages 156 to 159 as pertaining to Zen Group and denied any unaccounted sales in cash to Mustufamiyan H. Shaikh or Sojas Corporation; that Shri Mayank Khatri himself later clarified, in his statement recorded under section 131 and in a duly notarised affidavit, that the impugned l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ring the course of search. Further, it is also a fact that neither the purchaser party i.e. MHS group entities nor the seller party i.e. Rashmin M. Majithia, director of the appellant company and M/s. Zen Tobacco Pvt. Ltd. had admitted in the statement recorded during the course of search action or post search action that the said seized page no. 156 to 159 was related to the appellant or his group concern regarding unaccounted sale of tobacco or other products. 4.5 It is further observed that the appellant has stated that after recording the statement before the AO during the course of Assessment proceedings, Shri Mayank Ashokbhai Khatri had filed an affidavit and retracted from his earlier statement, however, the AO had not provided the cross objection of Shri Mayank Ashokbhai Khatri. It is also a fact noticed from the record that Shri Mayank Ashokbhai Khatri in his statement dated 31.12.2021, has stated that the transaction mentioned in the said seized documents may be related to sales made to M/s. Mustufa Sales Agency (Prop. Mustufamiyan H. Shaikh) & M/s. Sojas Corporation and the figure may be in lacs, which shows that he was not 100% sure about the statement given. S....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... CIT (A), deleting the entire addition of alleged purchase in the hands of M/s Mustufa Sales Agency (Prop: Mustufamiyan H Shaikh) & M/s. Sojas Corporation group, the AO is directed to delete the addition made of Rs. 3,85,22,432/- on account of estimation of GP on alleged sale transactions based on the said seized page nos: 156 to 159. Since, the addition made by the AO has been deleted, therefore, the technical/ legal plea taken by the appellant becomes infructuous, hence not adjudicated. Thus, the grounds nos. 1 to 7 of the appeal are allowed." 6. Being aggrieved by the aforesaid order of the Ld. CIT(A), the Revenue has come in appeal before us. 6.1. The Ld. Departmental Representative (DR) has relied upon the assessment order and submitted that the seized papers were found from the custody of an employee of Zen and that the statement of that employee referred to sales to Mustufa Sales Agency and Sojas Corporation. He has further submitted that even the Director of the assessee-company had admitted that those concerns were buyers of its products. He has further submitted that these circumstances clearly established that the writings on pages 156 to 159 represented cash sale....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... unaccounted purchases. These findings have been subsequently affirmed by the co-ordinate Bench of this Tribunal in ITA Nos. 1888 and 1889/Ahd/2024 dated 30.04.2025 (supra), wherein the Tribunal, after noticing the same factual matrix, held as follows: "It is pertinent to note that the statement of Shri Mayank Ashokbhai Khatri was not confronted to the assessee while recording the assessee's statement by the Assessing Officer. Further the assessee during the assessment proceedings produced copy of ledger account from where the assessee demonstrated that the assessee has regular transactions of purchases from Zen Group and all the transactions of sales and purchase have been duly recorded in the regular books of accounts. While rejecting the books of account, the Assessing Officer has not followed the basis given under provisions of Section 145(3) of the Income Tax Act, 1961, but only rejected the said books on the ground that no record of cash sales viz. name of the party, contract no., exact amounts were maintained by the assessee as DSR after making entries in tally software and the same was destroyed on daily basis. The Assessing Officer has not given any finding as....