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2022 (10) TMI 1060 - HC - Income TaxAssessment u/s 153A - Additions made on account of gross profit on bogus purchases - HELD THAT - As both the appellate authorities below have recorded concurrent findings of facts that while calculating the GP ratio, the Assessing Officer has compared the purchase of scrap of desi led with the sale of finished goods without considering that the assessee is dealing in different types of items such as led, tin, selenium, arsenic etc. and that each of these items have different qualities having wide price fluctuation and therefore the Assessing Officer has erred in making a comparison between incomparable products. The appellate authorities below also noted that for the Assessment Year 2005- 06 to Assessment Year 2008- 09, there is no evidence available with respect to suppression of the gross profit by obtaining bogus purchase bills by the assessee and that the Assessing Officer has merely relied upon the documents seized during the course of search for Financial Year 201011 and 2011-12 even when the present batch of cases pertains to the Assessment Years 2005-06 to 2009-10. The Supreme Court in the case of Ram Kumar Aggarwal Anr. vs. Thawar Das (through LRs), 1999 (8) TMI 1008 - SUPREME COURT has reiterated that under Section 100 of the Code of Civil Procedure the jurisdiction of the High Court to interfere with the orders passed by the Courts below is confined to hearing on substantial question of law and interference with finding of the fact is not warranted if it involves re-appreciation of evidence. Consequently, this Court is of the view that no substantial question of law arises of consideration in the present appeals and accordingly, the same are dismissed.
Issues Involved
1. Error in upholding the order of CIT(A) and deleting additions made on account of gross profit. 2. Error in not appreciating the evidentiary value of statements recorded under Section 132(4) of the Income Tax Act. 3. Distinction between scrutiny assessment under Section 143(3) and summary assessment under Section 143(1) concerning Section 153A. 4. Reliance on the judgment of CIT vs. Kabul Chawla despite the issue pending before the Supreme Court. Detailed Analysis 1. Error in Upholding the Order of CIT(A) and Deleting Additions Made on Account of Gross Profit The appellant contended that the ITAT erred in upholding the CIT(A)'s order, which deleted the additions made on account of gross profit. The additions were made after rejecting the books of account, which the appellant claimed did not reflect the true and correct state of affairs of the Assessee Company. The ITAT and CIT(A) found that the Assessing Officer (AO) had compared the purchase of scrap with the sale of finished goods, ignoring the fact that the assessee dealt in various items with different qualities and price fluctuations. The ITAT noted that the AO's comparison was between incomparable products and that the gross profit rates of subsequent years were accepted by the AO without any additions. 2. Error in Not Appreciating the Evidentiary Value of Statements Recorded Under Section 132(4) of the Income Tax Act The appellant argued that the ITAT failed to appreciate that the statements recorded under Section 132(4) during search proceedings constituted 'incriminating material'. However, both CIT(A) and ITAT found no corroborative material to support the statements of Mr. Vishesh Gupta. The court reiterated that statements recorded under Section 132(4) alone, without any other material discovered during search, cannot justify additions. This position was supported by previous judgments, including PCIT vs. Anand Kumar Jain (HUF) and CIT v. Harjeev Aggarwal. 3. Distinction Between Scrutiny Assessment Under Section 143(3) and Summary Assessment Under Section 143(1) Concerning Section 153A The appellant's distinction between scrutiny assessment under Section 143(3) and summary assessment under Section 143(1) was deemed irrelevant for the purposes of Section 153A. The court emphasized that if no incriminating material is found during a search, no addition can be made for assessments that had attained finality. This was supported by the judgment in Principal Commissioner of Income Tax vs. Bhadani Financiers Pvt. Ltd. 4. Reliance on the Judgment of CIT vs. Kabul Chawla Despite the Issue Pending Before the Supreme Court The appellant contended that the ITAT erred in relying on the judgment in CIT vs. Kabul Chawla, as the issue was pending before the Supreme Court. However, the court noted that there was no stay on the Kabul Chawla judgment. Consequently, the issue was considered covered by the judgments in Bhadani Financiers Pvt. Ltd. and Kabul Chawla. Conclusion The court concluded that no substantial question of law arose for consideration. The concurrent findings of fact by the appellate authorities were upheld, and the appeals were dismissed. The court reiterated that it would not interfere with findings of fact unless there was a substantial question of law, in line with the Supreme Court's rulings in cases like Ram Kumar Aggarwal & Anr. vs. Thawar Das and Hero Vinoth (Minor) vs. Seshammal.
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