AI Drafter 
TaxTMI 
TaxTMI 
2024 (10) TMI 1795
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....de to the total income of the appellant in the absence of any incriminating documents/ material found and seized during the course of search warranting such addition. 2. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming various additions made by the Assessing Officer to the total income of the appellant even when no unrecorded/ undisclosed assets were found during the course of search. 3. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs. 1,68,94,039/- made by the Assessing Officer to the total income of the appellant on account of multiplication of ad-hoc GP rate of 15% (Actual GP rate was 7.31%) with the amount of alleged suppressed sales of Rs. 11,26,26,928/- without properly appreciating the facts of the case and submissions made before him and that too merely by extrapolating the sales of the appellant even when the appellant was not involved in any suppression of sales during the year under consideration. 4. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs. ....
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....initiation of search u/s 132 of the Act on 04.01.2019. Ld. AR of the assessee has submitted that the AO has made addition on account of gross profit on alleged suppressed sales by adopting GP @ 15%, cash received against out of book sales as well as cash deposit in the bank account and transactions in the bank account of employees of the assessee treated as bogus. He has pointed out that all these additions were made by the AO without any incriminating material found or seized during the course of search and seizure action disclosing any undisclosed income for A.Y. 2013-14 to 2017-18. He has pointed out that whatsoever documents were found during the course of search were related to A.Y. 2018-19 & 2019-20 but the AO has extrapolating those transactions for all years and consequently made addition on account of GP on alleged suppressed sales, cash received against out of book sales and unaccounted purchases. The other addition on account of unsecured loan and cash deposit in the bank account were made on the basis of the entries in the books of account. Therefore, all these additions for A.Y. 2013-14 to 2017-18 were made without any incriminating material found or seized during the ....
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....ns are not sustainable in absence of any incriminating material found. Ld. AR has relied upon the judgment of Hon'ble Supreme Court in case of Pr. CIT, Central-3 v. Abhisar Buildwell (P.) Ltd. reported in [2023] 454 ITR 212 (SC) and submitted that the Hon'ble Supreme Court has held that the intention of the legislation seems to reopen the completed/unabated assessments, unless any incriminating material is found with respect to concern assessment year falling within last six years preceding the search in assessment u/s 153A. The AO would have jurisdiction to assessee or reassess the total income of any unabated/completed assessment by taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns if any furnished by the assessee as well as undisclosed income. However, in case during the search no incriminating material is found, in case of complete/unabated assessment only remedy available to the revenue to initiate reassessment proceedings u/s 147/148 of the Act, subject to fulfilment of the conditions mentioned in section 147/148 of the Act. This view has been reiterated by the Hon'....
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....hat the assessee firm has issued Pakka bills @ 50% of the actual cost. Thus, the purchaser has to pay 50% amount through banking channels and balance amount in cash. Further discrepancies in the sale price was found during the course of search in respect of the rate as mentioned in the bills for the sale of Mareen Gold 18MM & Mareen Gold 12MM in comparison to the DPL of the same product was found @1/4th of the rate mentioned in the bill. Thus, Ld. DR has submitted that the additions were made by the AO based on the seized material revealing practice of the assessee in suppressing sales by manipulating the sale price in the invoices and regarding supressed sale in the books of account. He has relied upon the order of the CIT(A) on this issue and submitted that the CIT(A) has considered objections of the assessee on this legal point in the light of the seized material and therefore, the AO was having jurisdiction to make additions in respect of the assessment years 2013-14 to 2017-18. 4. We have considered rival submissions as well as relevant material on record. The assessee and other group concerns were subjected to search and seizure action u/s 132(1) of the Act carried out on ....
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....s income Rs 2,57,38,408/- Add: As per para 4.16 U/s 69A Rs 1,12,745/- Add: As per para 8 u/s 68 Rs 37,50,000/- Add: As per para 10 u/s 68 Rs 4,95,33,500/- Add: As per para 11 u/s 69A Rs 15,30,962/- Total Assessed Income Rs 8,30,99,045/- A.Y. 2017-18 Income Shown in the Return u/s 153A Rs 30,94,650/- Add: As per para 4.15 as business income Rs 2,98,83,007/- Add: As per para 4.16 U/s 69A Rs 1,13,546/- Add: As per para 5 U/s 69B Rs 1,20,42,864/- Add: As per para 7 U/s 69B Rs 94,60,568/- Add: As per para 10 U/s 68 Rs 4,09,84,300/- Add: As per para 11 U/s 69A Rs 6,84,775/- Total Assessed Income Rs 9,62,63,710/- 4.2 Thus, the AO has made three additions for A.Y. 2013-14 to 2014-15 on account of GP addition on suppressed sale, unaccounted sales and on account of unsecured loan. The addition made on account of unsecured loan is undisputedly on the basis of entries in the books of accounts and therefore, the said addition is undisputedly not based on any incriminating material found or seized during the course of search and seizure action. So far as the addition made on account of GP on suppressed sale is....
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....e AO on the presumption that the assessee might have suppressed sales for these assessment years which is a pure guess work and as the AO has no jurisdiction u/s 153A to make such addition by estimating income of the assessee without any incriminating material related to these assessment years which were not pending as on the date of search and were not got abated by virtue of search and seizure action. The Hon'ble Supreme Court has settled this issue in case of Pr. CIT vs. M/s Abhisar Buildwell Pvt. ltd. 424 ITR 212 as under: 9. While considering the issue involved, one has to consider the object and purpose of insertion of Section 153A in the Act, 1961 and when there shall be a block assessment under Section 153A of the Act, 1961. 9.1 That prior to insertion of Section 153A in the statute, the relevant provision for block assessment was under Section 158BA of the Act, 1961. The erstwhile scheme of block assessment under Section 158BA envisaged assessment of 'undisclosed income' for two reasons, firstly that there were two parallel assessments envisaged under the erstwhile regime, i.e., (i) block assessment under section 158BA to assess the 'undis....
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.... such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under Section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search under Section 132 or making of requisition under Section 132-A, as the case may be, shall abate. (2) If any proceeding initiated or any o....
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....eem to be to re-open the completed/unabated assessments, unless any incriminating material is found with respect to concerned assessment year falling within last six years preceding the search. Therefore, on true interpretation of Section 153A of the Act, 1961, in case of a search under Section 132 or requisition under Section 132A and during the search any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject to fulfilment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of u....
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....; ii) all pending assessments/reassessments shall stand abated; iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present ....
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....efore him and that too merely by extrapolating the sales of the appellant even when the appellant was not involved in any suppression of sales during the year under consideration. 4. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs. 2,98,03,955/- made by the Assessing Officer to the total income of the appellant on account of multiplication of ad-hoc GP rate of 15% with the amount of alleged suppressed sales of Rs. 19,86,93,035/- more so when only the element of net profit embedded therein could have been subject to tax and not the element of gross profit. 5. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs. 6,07,006/- made by the Assessing Officer to the total income of the appellant on account of alleged amount of cash received against out of books sales by treating it as undisclosed income/ money under section 69A r.w.s. 115BBE of the Income-Tax Act, 1961 without properly appreciating the facts of the case and submissions made before him even when the appellant was not involved in making any out of books sales. ....
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....ditions fell within the purview of income under the head 'Income from Business or Profession' thereby leaving no scope for invoking the provisions of section 68 to 69D of the Income-Tax Act, 1961 and for consequentially charging tax as per the provisions of section 115BBE of the Income-Tax Act, 1961. 11. The appellant reserves the right to add, alter and modify the grounds of appeal as taken by it." 5. Ground no. 1 & 2 are regarding sustainability of the addition made by the AO in absence of any incriminating material found and seized during the search and seizure action. 6. We have heard Ld. AR as well as Ld. DR and considered the relevant material on record. At the outset we note that the assessment year 2018-19 was pending as on the date of search carried out on 04.01.2019 as time to issue notice u/s 143(2) was up to 30.09.2019 and therefore, this assessment year is abated assessment and assessment u/s 153A would be in the nature of regular assessment and not in the nature of re-assessment of income of the assessee. Therefore, in view of the judgment of Hon'ble Supreme Court in case of Pr. CIT vs. Abhishar Buildwell (supra) the AO has jurisdiction to a....
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....e AO as suppressed sale received in cash. He has submitted that only one sales invoice is prepared in the business by the assesse firm. There is no practice of preparing separate printed invoice generated on a parallel system as alleged by the AO showing 1/10 of the actual sale price. The partner of the assessee firm has explained that the difference in the purchase and sale price is only on account of freight charges GST and profit about 4% which is understood by the AO as 40%. Further the small diaries marked as BS-9/BS-10 containing day to day income and expenditure details made in cash, nowhere contain the name of the assessee firm even these notes BS9/BS10 are rough notes maintained by Shri Shashi Nihalchandani which have no financial impact whatsoever in the case of the assessee firm. Ld. AR has further submitted that Shri Shashi Nihalchandani was merely a marketing and collection agent of M/s Shiv Shankar Plywood and Veener House and M/s Rahul Laminates. The various loose papers and diaries found from his possession did not contain the name of the assessee firm and therefore, it cannot be assumed that the details of transactions in the loose papers and diaries representing t....
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....stablishes that the assessee along with suppliers and the retailers indulged in suppression of sale price. 9. We have considered rival submissions as well as relevant material on record. During the course of search and seizure action certain loose paper as well as diaries were found from the possession of the employees of the assessee Shri Shashi Nihalchandani. From the said seized record the AO found that the assessee is maintaining parallel invoices one is shown actual amount of purchase and sales and another invoice is representing entries in the books of account which is 50% to 60% suppressed from the actual amount of purchase and sale. The AO has concluded that the assessee is receiving goods from suppliers and in some of the cases the price shown as 40-60 ratio and the payment made in cash is suppressed and corresponding sales is also in the same ratio by suppressing almost 60% of the sale price which is received as per the AO in cash. Accordingly the AO has applied the said ratio of suppressed sale and purchase for all the assessment years and consequently entire turnover for all assessment years was reworked by the AO and then calculated the suppressed sale by applying r....
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.... additions are generally based on estimates. In matters of estimation some amount of latitude is required to be shown to the Assessing Officer, particularly when relevant documents are not forthcoming. However, it does not mean that the Assessing Officer can arrive at any figure without any basis by adopting an arbitrary method of calculation. In the present matter, A3, A4 and A6 nowhere records the turnover of the assessee as found by the Tribunal and yet on the wrong basis of the incoming and outgoing cash transactions, the Assessing Officer has arrived at the turnover. Moreover, the peak investment was Rs. 40,14,806 for three months. However, there is no material seized to justify any figure to be included for a period earlier to the said period of three months. In the circumstances, the Tribunal has recorded a finding of fact and has held that the addition of Rs. 3.40 crores was totally unjustified. The entire finding of the Tribunal is based on the facts. No substantial question of law arises. Hence, the appeal is dismissed." 9.1 Similarly the Hon'ble Gujarat High Court in case of CIT vs. Standard Tea Processing CO (supra) has held in para 6 as under: "6. We ar....
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.... A.Y 2015-16 :- Rs 27,552/- A.Y 2016-17 :- Rs 1,12,745/- A.Y 2017-18 :- Rs 1,13,546/- A.Y 2018-19 :- Rs 6,07,006/- A.Y 2019-20 :- Rs 24,41,459/- 10.1 For A.Y. 2018-19 the AO has made addition of Rs. 6,70,006/-. The Ld. AR of the assessee has reiterated his contention as advance in respect of the issue of addition made by the AO by taking gross profit @ 15% of suppressed sales and submitted that all sales are duly recorded in the books of account which is verified and examined by the VAT, etc. CST as well as GST/Department while scrutinizing the return filed by the assessee. The Ld. AR has further contended that all the relevant records including ledger account of the parties to whom the goods were sold were produced before the AO along with confirmation of the account by the parties. He has also submitted that when the addition made on account of cash sales then the source and nature of the income as business income of the assessee is not in dispute and therefore, the provisions of section 69A of the Act are not attracted and consequently the provisions of section 115BBE are also not applicable. 11. On the other hand, ld. DR has rel....
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....ssee filed complete details of the amounts shown as other payables outstanding as on 31.03.2018 along with copy of ledger account of these parties in the books of the assessee for the year under consideration and subsequent years. The assessee also produced copies of supporting purchase bills in respect of which amount was outstanding to substantiate the fact that the amount was outstanding as on 31.03.2018 as due due to the suppliers. The assessee has also filed leger account of these parties in the books for the year under consideration and for the subsequent year to establish the fact that the goods were sold to the parties in the subsequent year and consequently outstanding amount was either paid off or converted to actual sale. The AO ignoring the details filed by the assessee has made addition of Rs. 58,11,406/- to the total income of the assessee on account of other payable/outstanding on the ground that the assessee did not submit complete documents such as bills/vouchers in some cases and merely submitted ledger account of those parties. Ld. AR has submitted that the assessee has filed the record to show the subsequent sales as well as amount which was outstanding to the e....
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....t due to suppliers on account of purchase of goods, advance received from customers against sale of goods and amount payable to employees. The appellant filed details with supportive evidences, ledger accounts, purchase bills which were partly considered genuine. However, the ld AO made addition of Rs. 58,11,406/- for which as per ld AO no documentary evidence was filed by the appellant. The appellant before me has stated that the necessary documents with supportive ledger account were furnished, however, the same were not considered by the ld AO. I find that the ld AO is factually incorrect, the appellant alongwith its written submission has filed desired details which have also been mentioned in the body of assessment order. The appellant before me has filed copies of all the relevant evidences which were also filed before ld AO. The appellant through its written submission has further contended that out of total outstanding amount of Rs. 58,11,406/-, addition of Rs. 47,77,716/- has been made in respect of two group concerns and filed following details :- S. No Name of the concern PAN Amount outstanding as on 31-03-2018 [in Rs.] Remarks 1 Bee Cee Hardware ....
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....lance of Rs. 7 lakhs as on 1-4-2013. The assessee took a loan of Rs. 4 lakhs on 1-1-2014. Interest was paid and TDS was deducted and the closing balance was at Rs. 11,00,000/-. Further, during the year under appeal i.e F.Y 2014-15 from perusal of paper book at page-34, we find that in confirmation of accounts there is no transaction during the year and interest has been charged on the opening balance. Other documentary evidence in the form of bank statement has also been filed to prove that the alleged fund was not received during the assessment year under consideration. This fact remains undisputed at the end of the ld. DR also. We, therefore, under the facts and circumstances of the case, are of the considered view that since the alleged sum of Rs. 4 lakhs was not received during the A.Y under consideration, the addition made u/s. 68 of the Act is not called for during the A.Y under consideration. We, thus, set aside the finding of the ld. CIT(A) and delete the addition of Rs. 4 lakhs made u/s. 68 of the Act. Accordingly, ground nos. 5 & 6 of assessee's appeal are allowed." 3.12.3 Regarding balance addition of Rs. 10,33,690/-, the appellant submitted that the said am....
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.... Village Choral, Mhow 7,600 Employee 20 Narayans ADLPL7591F 202, Lakkad Pitha Maharana Pratap Bus Stand, Mandsaur- 458001 (Mobile No .: 9826081090) 20,393 Employee 21 Naresh Plywood & H/w AIYPA0191J 116, Station Road, Opp. Nilam Guest House, Ratlam (Mobile No .: 9074782048) 18,119 Employee 22 Om Sai Agro Agency 40,000 Employee 23 Others 112,560 24 Ply King BDXPS8811C 61, Jawahar Marg, Near Prem Sukh Talkies, Indore (Mobile No .: 9826058452) 1,310 25 Ply Palace ABPPC9063K Kanadia Road, Indore (Mobile No .: 9893088624) 238 26 Pradeep Hardware & Ply Place ATUPB8859P Main Road, Lateri-464114 (Mobile No .: 9893530071) 1,674 27 Prakash Driver Choral Village District Mhow 8,500 Employee 28 Raj Enterprises Vikas Chouraha, Ujjain (Mobile No .: 7898148555) 5,527 29 Raj Hans Home Decore CJOPP6958H Alirajpur Road, Opp. Gas Agency, Kukshi (Mobile No .: 9575143000) 60,847 Trader 30 Rameshwar Yadav Village ....
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....ell as advances received against sales and come to the conclusion that when the AO has accepted the expenses debited in lieu of the payments to the employees as genuine then the addition on account of outstanding payment to the employees is not justified. Similarly the majority of the amounts as explained by the assessee in the table reproduced by the CIT(A) in para No. 3.12.2 and impugned order shows that a sum of Rs.47,77,716/- was opening outstanding balance and not a fresh credit entries during the year under consideration. Accordingly in view of the facts emerging from record we do not find any error or illegality in the impugned order of the CIT(A) in deleting the addition to the extent of the amount representing opening outstanding balance as well as the amount received as advance from the traders and it was subsequently adjusted against the sales made in the next year. Consequently Ground No.7 of the assessee's appeal and Ground No.6 of the Departments appeal stand dismissed. Ground No. 8 & 9: 17. These grounds are regarding the addition made by the A. O on account of transactions appearing in the bank accounts of the employees by treating them as bogus and unexpl....
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....AR has submitted that in view of the binding judicial precedents the addition made by the AO without issuing the show cause notice is not sustainable and liable to be quashed. He has relied upon the decision of this tribunal dated 31.10.2023 in case of Ganesh Realmart Private ltd. vs. DCIT in IT(SS) no. 30 & 31/Ind/2022 dated 31.10.2023 wherein an identical issue has been considered and decided by this tribunal arising from the same search and seizure action. 17.3 The Ld. AR has further contended that the assessee did not entered into any transaction with these persons namely Shri Govind Cheema and Deepak Kushwaha during the assessment year 2016-17 and 2019-20 however, the assessee paid commission to Shri Deepak Kushwaha during the assessment year 2017-18 and 2018-19 as an incentive to boost the sales. The commission amount paid to the employee was subjected to TDS and through banking channel. Thus, the Ld. AR has submitted that the transactions being entries in the bank account do not related to any amount paid or transferred by the assessee except the payment of commission which is duly recorded in the books of accounts of the assessee and also subjected to TDS. 17.4 On the....
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....ha was recorded on 19.11.2020. In their statement both of them admitted that their account have been used by key person of appellant group including Shri Naresh Navlani and Shri Sunny Choudhary. Funds were transferred in their bank accounts and were subsequently withdrawn in cash by Shri Sunny Kushwaha and were subsequently handed over to Shri Naresh Navlani. On perusal of written submission filed alongwith ledger account of both the parties, it has been observed that appellant during AY 2017-18 and 2018-19 has paid amount of Rs. 2.06.575- and Rs. 1,11,898 respectively on account of commission for boosting sales. It is important to mention that Shri Deepak Kushwaha was employed as 'cashier with the appellant and therefore, there was no justification of paying commission to a cashier on account of boosting up sales. The payment of commission seems justified to sales or marketing representatives and not to cashier or accountant. Therefore, transaction of commission seems suspicious and not justified. However, no amount was transferred in AYS 2016-17 & 2019-20. Further, no amount was transferred by appellant in bank account of Shri Govind Cheema. Therefore. the AO was not justifie....
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....eepak Kushwaha. The CIT(A) noted that except few payments to Shri Deepak Kushwaha through NEFT direct bank transfer there was no other transaction found between the assessee and the said employee. The CIT(A) has restricted the addition to the direct payments for the respective Assessment Years. It is pertinent to note that the assessee has claimed that the said payment was made on account of commission to these employees which is also subjected to TDS. This fact has not been disputed by the department that the amount which was paid by the assessee is duly recorded in the books of accounts and was subjected to TDS. The claim of commission payment may be questioned by the A.O while considering the allowability deduction of expenditure but the transactions cannot be questioned as bogus when the said transaction is through banking channel and subjected to TDS. The A.O has not disallowed any claim of expenditure and therefore, the addition sustained by the CIT(A) by not accepting the payment being in the nature of commission is not justified. We further note that this tribunal in case of Ganesh Realmart Pvt. Ltd. VS. DCIT in ITANo.30 & 31/Ind/2022 has considered an identical issue in pa....
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....shall consider assessee's all submissions including those made before us and stay uninfluenced by his previous order. 16. We would, at this stage, also like to address one more contention raised by Ld. AR. He has submitted that the invocation of section 69C itself is wrong in present case because the expenditure is already recorded in books of account and the source of expenditure is not at all in doubt. We find the contention raised by Ld. AR is very much correct but, in numerous judicial rulings, it has been vehemently held that mere mention of wrong section cannot give any benefit to assessee. Therefore, the argument of Ld. AR cannot be accepted. Moreover, since we are remitting this issue back to the file of AO, the AO shall take necessary care in this regard while re-framing his order." 17.7 Moreover the additions sustained by the CIT(A) cannot be treated as unexplained money u/s 69A of the Act when these transactions are recorded in the books of accounts of the assessee and consequently the provision of Section 69A r.w.s 115BBE of the Act are not applicable. Accordingly the ground No.8 & 9 of the appeal of the assessee is allowed and Ground No.2 of the revenue....
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.... appreciating the facts of the case and submissions made before him even when the appellant was not involved in making any unaccounted purchases in cash from the suppliers. 5. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs. 33,03,045/- on account of multiplication of ad-hoc GP rate of 15% (Actual GP rate was 9.45%) with the amount of alleged unaccounted purchases, out of addition of Rs. 2,20,20,299/- made by the Assessing Officer to the total income of the appellant on account of alleged unaccounted purchases by treating it as undisclosed investment under section 69B of the Income-Tax Act, 1961 more so when only the element of net profit embedded therein could have been subject to tax. 6. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs. 24,08,380/- on account of multiplication of ad-hoc GP rate of 15% (Actual GP rate was 9.45%) with the amount of alleged unaccounted purchases, out of addition of Rs. 1,41,99,342/- made by the Assessing Officer to the total income of the appellant on account of alleged unaccounted purchas....
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....sions of section 115BBE of Income-Tax Act, 1961 in respect of various additions made to the total income more so when such additions fell within the purview of income under the head 'Income from Business or Profession' thereby leaving no scope for invoking the provisions of section 68 to 69D of the Income-Tax Act, 1961 and for consequentially charging tax as per the provisions of section 115BBE of the Income-Tax Act, 1961. 11. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming various additions made by the Assessing Officer to the total income of the Legal c appellant without allowing proper set-off of additions made in the earlier years as well as during the year under consideration which is neither legal nor proper. 12. The appellant reserves the right to add, alter and modify the grounds of appeal as taken by it." 20. Ground No. 1 to 8 & 10 are common to the grounds of appeal for Assessment Year 2018-19 and the same stand disposed off in the same terms as for Assessment Year 2018-19. 21. There is only an extra ground for Assessment Year 2019-20 as raised in ground No.9 regarding addition made by t....
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....e is no justification for making the addition on account of alleged difference in the valuation of stock based on the valuation done by the valuer when there was no discrepancy found in the quantity of stock. He has further submitted that the valuation was taken on adhoc basis by the valuer without considering the actual measurement of thickness of individual sheets of various items therefore, the difference in the value without any difference in the quantity cannot be a ground for addition. Thus, he has pleaded that the addition made by the A. O and sustained by CIT(A) is not justified and same is to be deleted. 22. On the other hand Ld. DR has submitted that the stock was physically verified in the presence of the key persons of the assessee. The valuation was done by the Government approved valuer without any bias therefore, the same cannot be questioned. Further during the course of search and seizure proceedings the assessee was found in suppressing the purchase as well as sales to the extent of 60% and therefore the under valuation of the stock cannot be ruled out. He has relied upon the orders of authorities below. 23. We have considered the rival submissions as well a....
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....rates which are higher than that shown by appellant in its books of accounts. The appellant has also contended that the valuer did not determined value of stock item wise and has measured the thickness of complete lot. I find claim of the appellant factually correct. The registered valuer in its report has clearly mentioned that the stock has been measured on volumetric basis for the reason that individual counting of stock was not practically feasible. However, I find that the method of valuation of stock is not in anyway prejudicial to appellant There is no difference in quantity of stock as per books of appellant and as measured by the valuer. Now the moot question arises out here is whether the valuer was justified in determining value of stock as per market survey and on average basis. I find that the appellant has shown stock in its books of account at cost price which is supportive of evidences (purchase bills) furnished by appellant before the AO as well as before me. However, the purchase recorded in the books of account of the appellant are suppressed. Various evidences relating to suppression of purchase price and making payments in cash to the suppliers has also been se....
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....e or realization value whichever is less. Therefore, the addition made by the A.O and confirmed by the CIT(A) purely on the basis of difference between the valuation recorded by the assessee in the books of accounts and valuation done by the valuer at the time of search and seizure is not justified. The A. O as well as CIT(A) has made this addition on the assumption that the assessee has suppressed the value of the stock in the same manner as purchase and sales are suppressed and a separate addition was made on account of suspicion of sales and purchases. In any case when the valuation of stock of the current year will be taken as opening stock of the subsequent year of same value then the addition made purely on the basis of valuation difference without any discrepancy in the quantity is highly arbitratory and not justified and the same is deleted. This Ground is allowed. 24. Revenue has raised common grounds for 2016-17 to 2019- 20 as under: Assessment Year 2016-17 "1 [1A] Whether on the facts and on the circumstances of the case and in law, Ld. CIT(A) was justified in deleting the addition of Rs. 4,95,33,500/- made on account of unexplained cash deposits in bank a....
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....ash deposits in bank accounts ignoring, inter alia, that: a) the assessee has failed to explain the sources of such cash deposits? b) during the course of search, it was noticed that bank accounts of the employees were misused by the key persons of the group for routing their unaccounted money (para 10.3 of AO)? c) No cash books and other books of account were found during the course of search proceedings (para 10.2 of AO)? 2 [2A] Whether on the facts and on the circumstances of the case and in law, Ld. CIT(A) was justified in deleting the addition of Rs. 4,78,200/- made on account of bogus payments to contractors? [2B] Whether on the facts and on the circumstances of the case and in law, Ld. CIT(A) was justified indeleting the addition of Rs. 4,78,200/- made on account of bogus payments to contractors, ignoring. inter alia, that Shri Govind Cheema and Shri Deepak Kushwaha, the employees of the assessco, have admitted under oath (para 10.2 of AO) that: a) the assessee has misused their bank accounts? b)Amounts were transferred in their accounts primarily at the behest of the key persons of the assessee group? c....
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....ssment Year 2018-19 1 [1A] Whether on the facts and on the circumstances of the case and in law, Ld. CIT(A) was justified in deleting the addition of Rs. 2,30,52,000/- made on account of unexplained cash deposits in bank accounts? [1B] Whether on the facts and on the circumstances of the case and in law, Ld. CIT(A) was justified in law in deleting the addition of Rs. 2,30,52,000/- made on account of unexplained cash deposits in bank accounts ignoring, inter alia, that: a) the assessee has failed to explain the sources of such cash deposits? b) during the course of search, it was noticed that bank accounts of the employees were misused by the key persons of the group for routing their unaccounted money (para 10.3 of AO)? c) No cash books and other books of account were found during the course of search proceedings (para 10.2 of AO)? 2 [2A] Whether on the facts and on the circumstances of the case and in law, Ld. CIT(A) was justified in deleting the addition of Rs. 21,79,808/- made on account of bogus payments to contractors? [2B] Whether on the facts and on the circumstances of the case and in law, Ld. CIT(A) was justifi....
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....ditions were made (para 5 of AO) on the basis of incriminating material found during the course of search and evidences on record? b) Gross profit derived from suppressed sale covers only profit derived while the addition made seeks to cover the unexplained investment in unaccounted purchases? c) For any unaccounted sale to take place, first the assessee has to make investment in unaccounted purchases? Assessment Year 2019-20 "1 [1A] Whether on the facts and on the circumstances of the case and in law, Ld. CIT(A) was justified in deleting the addition of Rs. 12,37,783/- made on account of bogus payments to contractors? [1B] Whether on the facts and on the circumstances of the case and in law, Ld. CIT(A) was justified in deleting the addition of Rs. 12,37,783/- made on account of bogus payments to contractors, ignoring, inter alia, that Shri Govind Cheema and Shri Deepak Kushwaha, the employees of the assessee, have admitted under oath (para 10.2 of AO) that: a) the assessee has misused their bank accounts? b) Amounts were transferred in their accounts primarily at the behest of the key persons of the assessee group? ....
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....of Rs. 1,87,17,254/-on account of unexplained investment in unaccounted purchases on the ground that AO has already determined concealed sales by applying GP@15% which, in view of Ld. CIT(A), in view of Ld. CIT(A), covers all unaccounted expenses including unaccounted purchases, without appreciating, inter alia, that: a) The additions were made (para 5 of AO) on the basis of incriminating material found during the course of search and evidences on record? b) Gross profit derived from suppressed sale covers only profit derived while the addition made seeks to cover the unexplained investment in unaccounted purchases? c) For any unaccounted sale to take place, first the assessee has to make investment in unaccounted purchases?" 25. While deciding the assessee's appeals we have deleted the addition made by the A. O for the Assessment Years 2012-13 to 2016-17 on the ground of absence of any incriminating material found or seized during the course of search and seizure action because these assessment years were not pending on the date of initiation of search therefore, the appeal of the revenue for Assessment Year 2016-17 & 2017-18 stands dismissed. ....
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....e and sales. 29.2 On the other hand Ld. AR of the assessee submitted that during the search and seizure proceedings the assessee explained that the alleged messages found in the mobile of Shri Shashi Nishal Chandani do not represent the transactions of the assessee. The Ld. AR further submitted that in those messages there is no mention of assessee so as to relate the transactions with the assessee. The A. O has drew an adverse reference from the alleged messages found from the mobile of Shri Shashi Nishal Chandani and relied upon the statement of Shri Shashi Nishal Chandani the employee of the assessee where he has explained the nature of transactions. He has further contended that those employees were not involved in the business transactions of the assessee and therefore, in the absence of any incriminating information in the alleged messages the addition made by the A. O purely on the basis of suspicion is not justified. Alternatively the Ld. AR has submitted that when these are considered as hawala transactions related to the purchase and sale of goods by the assessee then no separate addition can be made once the A.O has already made addition on account of suppressed purch....
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....1;रश्न 22- जैसा कि आपने प्रश्न क्रमांक 21 के प्रतिउत्तर में आपने अपने whatsapp chat से कुछ लोगों के नाम देखकर बताया था कि वे मेसर्स शिवशंकर प्लायवुड एवं मेसर्स राहुल लेमिनेट से संबंधित cash transaction करते हैं । कृपया आपके chat में "NN" के साथ whatsapp chat....