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TMI Blog2012 (8) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... al while upholding deletion also noted that such a course adopted by the CIT(Appeals) in another case, namely, ACIT vs. Om Prakash Bhatia has been upheld by the Tribunal - Held that:- CIT(Appeals) in the impugned proceedings has no doubt deleted the addition made in respect of Hawala business, but that is only because the Appellate Tribunal for Foreign Exchange had set aside the order passed by the Adjudicating Officer, Enforcement Directorate. These directions of the CIT(Appeals) have been confirmed by the Tribunal in the impugned order and in our opinion rightly so – Decided in favor of assessee. - ITA Nos.1731, 1733, 1734/2010 - - - Dated:- 7-8-2012 - MR. JUSTICE SANJIV KHANNA, MR. JUSTICE R.V. EASWAR, JJ. For Appellant: Ms.Rashmi Chopra, Sr.Standing Counsel. For Respondent: Mr. Kirti Uppal, Sr.Adv. with Mr.Krishna Kumar Mr. Arvind Bansal, Advs. R.V. EASWAR, J.: In these appeals by the Revenue under Section 260A of the Income Tax Act, 1961 ( Act‟), the following substantial questions of law were framed on 14th May, 2012 and the appeals were heard: - ITA 1731/2010 (1) Whether the Income Tax Appellate Tribunal was right in holding that the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2002-03 No sales 2003-04 (-) 13.86% 2004-05 (-)3.97% 2005-06 6.69% 2006-07 10.98% According to the Assessing Officer the gross profits rates declared by the Assessee were low and in respect of two assessments years, the assessee had declared negative gross profit. From these details, the Assessing Officer came to the conclusion that the assessee was manipulating the accounts to return profits according to his whims and fences. The Assessing Officer also adverted to the fact that the group, of which the assessee is a part, was engaged in the import of Hing and its processing. In the course of the search in the business and residential premises of another member of the group (name not mentioned) certain loose papers referred to as Annexure A-6 in the assessment order, were seized. These documents were seized from the residential premises No.31-B, Rajpur Road, Delhi by the search party. The papers are related to the business transactions of the group between 1.11.2005 and 18.11.2005. According to the Assessing Officer, these seized papers disclosed that the assessee was indulging in suppression of sales. He re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n record to suggest that the trading results disclosed by the appellant do not represent true and correct profits. It is to be noted that the assessee is subjected search U/s 142 of IT Act, still no incriminating material had been found or recovered from him suggesting that there exists suppression of sales or purchase or excess/short of stock, so that it can be deemed the profits disclosed are not correct. Reference to documents relating to some other year cannot be a ground to estimate the GP every year uniformly at same rate. Estimation always should be preceded by some material but not on the basis of pure guess work. Under the circumstances and facts of the case, addition on estimate basis without any record of evidence is unsustainable. AO is directed to delete the addition of Rs.17,05,123/- on account of low gross profit. (underlining ours) On this basis, the additions for all three years were deleted. 6. The Revenue carried the matter in appeals before the Tribunal. The Tribunal noted that the addition was made by the Assessing Officer without any material which was relevant for the assessment years, that no incriminating material was found during the search on the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct the assessee with those sale bills. In the light of this position, their finding that no addition can be made to the gross profit by substituting the sale price mentioned in the seized sale bills cannot be said to be vitiated as unreasonable. In such circumstances, we are unable to hold that the Tribunal was not right in deleting the additions made to the gross profit declared by the assessee. Accordingly, we answer the question No.2 in ITA Nos. 1731/10 1733/10 and Question No.1 in ITA No.1734/2010 in the affirmative, in favour of the assessee and against the Revenue. 8. So far as the first question in ITA No.1731 and 1733/10 is concerned, there is no categorical finding in the order of the Tribunal that the assessment proceedings could not have been validly initiated under Section 153A of the Act. It is seen that the assesse did make out a grievance before the CIT(Appeals) that the assessment proceedings have been completed without the permission of the Joint Commissioner of Income Tax. The CIT(Appeals), however, held that there is no justification for such a grievance because the approval has been obtained for all the years along with the other cases belonging to the group ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Adjudicating Authority under FERA and this has also been confirmed in the assessment order. The Tribunal has also held in the impugned order (para 15) that the Assessing Officer has not processed any material independent of the order of the Adjudicating Officer, FERA and that the addition for Hawala transaction had been made solely on the basis of FERA transaction. In these circumstances, the Tribunal found that the CIT (Appeals) has rightly set aside the addition made in the assessment order with the direction to the Assessing Officer to pass necessary consequential orders as per law after obtaining the order of the Adjudicating Authority, Enforcement Directorate, passed in pursuance of the directions of the Appellant Tribunal for Foreign Exchange. The Tribunal also noted that such a course adopted by the CIT(Appeals) in another case, namely, ACIT vs. Om Prakash Bhatia in ITA No.1688/Del/09 has been upheld by the Tribunal vide order dated 11.8.2009. In the order dated 11.8.2009, the following observations have been made:- From the above, we find that Ld. CIT(A) has directed the Assessing Officer to make fresh assessment consequent to the order of Adjudicating Authority in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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