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TMI Blog2019 (4) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... ors. A.O has made a general observation that the assessee is having huge amount of cash purchases and cash sales but has not placed or referred to any evidence on record to prove that the assessee is indulged into unaccounted sales and purchases. All the expense are vouched. Ld. A.O has merely followed the order of his predecessor of previous years for making the impugned addition. It is well settled principal that before rejecting the book results, discrepancies should be pointed out in the regular books of accounts by the AO. Therefore we are of the considered view that CIT(A) has correctly allowed the assessee’s appeal by holding that the book results should be accepted and that the action of the A.O rejecting books of accounts and making the addition for low Gross Profit on sale of gold bar and sale of silver bar is devoid of any merit and uncalled for. No inconsistency in the finding of Ld. CIT(A) and the same deserves to be confirmed. Accordingly Grounds of the revenue’s appeal for Assessment Year 2012-13 stands dismissed. - IT(SS)A No.141/Ind/2016, CO No.38/Ind/2016, ITA No.353/Ind/2017 - - - Dated:- 9-4-2019 - Hon'ble Kul Bharat, Judicial Member And Hon'ble Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e legal ground raised by the assessee following the decision of the jurisdictional ITAT, Indore Bench in the case of Kalani Bros Ors ITA(SS) No.71/Indore/2014 order dated 6.11.15 and decision in the case of Anant Steels Ltd Vs. ACIT ITA(SS) No.133/Ind/2013 order dated 30.11.2015 and held the impugned assessments u/s 153A of the Act as invalid. 6. Now the revenue is in appeal against the finding of Ld. CIT(A) and the assessee has filed Cross Objections on the following grounds; Revenue Appeal No. IT(SS)ANo.141/Ind/2016, Assessment Year 2009-10 : On the facts and in the circumstances of the case the Ld. CIT(A) has erred by holding the proceedings u/s 153A as invalid in absence of incriminating documents whereas, as per the Income Tax Act and in the light of various case laws the assessment proceeding cannot be invalid when a search action u/s 132 of the Act was carried out and warrant of authorization was issued and executed against the assessee. Assessee s C.O. No. 38/Ind/2016, Assessment Year 2009- 10: 1. That, on the facts and in the circumstances of the case, the learned CIT(A) grossly erred in law in not admitting the additional ground of appeal raised by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmises, guess-work and whims and without confronting the respondent with the so-called market enquiries conducted by him and further without considering the material fact that the respondent had maintained regular financial books of account and quantitative records in its ordinary course of business. 5. That, on the facts and in the circumstances of the case, the learned CIT(A) grossly erred, both on facts and in law, in not deciding the issue on merits with respect to the ad-hoc addition of ₹ 30,00,000/- made by the AO in the respondent's income by making disallowance out of salary expenses amounting to ₹ 35,06,000/- actually incurred and claimed by the respondent company merely on conjectures, surmises, guess-work and whims. 6. That, on the facts and in the circumstances of the case, the learned CIT(A) grossly erred, both on facts and in law, in not deciding the issue on merits with respect to the ad-hoc addition of ₹ 3,09,035/- made by the AO in the respondent's income by restricting the genuine claim of the respondent in respect of the Computer System Charges and Computer Expenses to 50% only. 7. We will first take up revenue s appeal ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ult of action u/s 132. The additions already reflected in the original return of income filed and no incriminating material was found related to the above transactions warranting addition to the total income u/s 153A of the Income Tax Act, 1961. 5.2 The transactions were properly recorded in the accounts/return maintained/filed prior to the date of search. Appellant placed reliance on various judicial pronouncements in support of the above legal contention including the decision of the jurisdictional I.T.A.T. in the case of Anant Steels Ltd. vs. ACIT (Income-tax Act, 1961. No.133/Ind/2013 dated 30.11.2015) and in the case of Kalani Bros. Ors. ITA(SS) NO.71/Ind/2014 dated 06.11.2015 and the decision of the special bench of I.T.A.T., Mumbai in the case of All Cargo Global Logistics Ltd. vs. DCIT (20 ITJ 45) (Trib. Mumbai)(SB). 5.3 The material placed on record has been considered. In the case of Kalani Bros. the jurisdictional I.T.A.T. has observed as under: We have heard both the sides. We have also gone through the case laws relied upon by both the sides. We have also considered various relevant facts of the case. It is a settled legal position that once a search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 153A of the Act. Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla (supra) has considered various High Court decisions relied upon by the learned DR. The Hon'ble Delhi High Court has considered the cases of Canara Housing Development Co. vs. DCIT; Madugula vs. DCIT; CIT vs. Chetandas Laxmandas and CIT vs. Anil Kumar Bhatia (supra). The only decision of the Hon'ble Allahabad High Court in the case of CIT vs. Raj Kumar Arora; 367 ITR 517 relied on by the learned DR was not considered by Hon'ble Delhi High Court while deciding the issue in MCS Trading Company Pvt Ltd the case of Kabul Chawla. The Hon'ble Allahabad High Court has reversed the order of the Tribunal and remanded the issue to the Tribunal to consider the appeal of the department on merits. It is a settled legal position that when two views are possible on a particular issue then the view favourable to the assessee should be followed as held by the Hon'ble Apex Court in the case of CIT vs. Vegetable Products; 88 ITR 192. Respectfully following the decision of the Hon'ble Apex Court, we dismiss the ground of appeals of the Revenue. Departmental appeals are disposed accordingly. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years i.e. assessment years 2008-09 to 2012-13 and assessments are completed u/s 143(1) of the Act. Subsequently, a search action was conducted u/s 132 of the Act in the business group of the assessee and A.O. has asked the assessee to file returns of income for all the assessment years by issue of notice u/s 153A of the Act on 12.9.2014. In response to that, assessee has filed returns of income for A.Yrs. 2008-09 to 2013-14 on 7.11.2014. The case of the assessee is that the return for A.Y. 2012-13 was filed on 7.11.2012. As per section 143(2) of the Act, the last date on which notice for assessment would have been issued was 30.9.2013. All the other returns are filed on earliest date and the time limit for issue of notice u/s 143(2) of the Act in all those cases has expired. The search was initiated in the business premises of the assessee on 29.1.2014 and therefore the time limit for issue of notice u/s 143(2) of the Act is lapsed. All the assessment years from 2008-09 to 2012-13 are concluded and non abated assessments. The A.O. cannot reopen the assessments u/s 153A of the Act. In so far as the above submission is concerned from the assessment order and even from the Ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein. However, the scope of enquiry there of not confined essentially revolves around the search or the requisition u/s 132A of the Act as the case may be. The proviso deals with the cases where the assessment or reassessment, if any relating to assessment years falling within the period of 6 assessment years refer to in sub section 1 of section 153A of the Act were pending. If they were pending on the date of initiation of search u/s 132 of the Act or making requisition u/s 132A of the Act as the case may be, they abate. It is only binding precedence that would abate and not where there are orders made on assessment or reassessment and which are in force on the date of initiation of the search or making the requisition. 13. In the case of Commissioner of Income Tax (Central)-3 Kabul Chawla (2015) 61 Taxman.com 412 (Del.), the Hon ble Delhi High Court has considered the scope of section 132 of the Act and 153A(1) observed as under: 14. From the above decision, it is very clear that in respect of concluded assessments additions cannot be made without incriminating material. 15.The Hon ble Delhi High Court in the case of PCIT Vs. Meeta Gutgutia 395 ITR 296 (Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which says that once assessments are concluded without incriminating material, additions cannot be made by reopening u/s 153A of the Act. There are two decisions, one is of Hon'ble Kerala High Court in the case of E.N. Gopakumar (supra) and the second one is of Hon'ble Karnataka High Court in the case of Canara Housing Development Company Vs. DCIT Central Circle-1, Bangalore (supra) in favour of the revenue in which it was held that no incriminating material is necessary to reopen the assessments and to make an addition. In the present case, decisions of Hon ble Delhi, Gujarat and Bombay High Courts are in favour of the assessee. The decisions of Hon'ble Kerala High Court and Karnataka High Court are against the assessee. We find that after examining the facts and circumstances of the case, the judgement of the Hon'ble Supreme Court in the case of Vegetable Products (supra) has to be followed. The Hon'ble Supreme Court in the above case has held that if two reasonable constructions of a taxing provisions are possible, then that construction, which favours the assessee must be adopted. 13. We therefore respectfully following the above decision and examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the addition made by AO of ₹ 21,56,32,991/- and ₹ 5,41,62,993/- on account of estimation of gross profit on sale of Gold Bullion respectively, without appreciating the facts and evidences brought into light by the AO during assessment proceedings. 17. Brief facts relating to the Revenue s appeal for Assessment Year 2012-13 are that the assessee filed e-return of income filed on 21.09.2012 declaring income of ₹ 1,20,80,430/-. Case selected for scrutiny through CASS followed by issuance of notice u/s 143(2) and 142(1) of the Act. Ld. A.O examined the audited financial statements along with the Tax Audit Report. He further referring to the records pertaining to assessment completed u/s 153A r.w.s. 143(3) of the Act for the Assessment Year 2010-11 and 2011-12 on 28.3.2013, made an opinion that as for these two assessment years books of accounts were found defective and not reliable, same methodology should be adopted for Assessment Year 2012-13. Ld. A.O accordingly rejected the book results and estimated the income by making additions for low gross profit on sale of gold bar and low gross profit on sale of silver and assessed the income at ₹ 28,18,76,4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finding of Ld. CIT(A) deleting the addition made by Ld. A.O on account of estimation of Gross Profit on sale of gold and silver bullion. 21. We observe that search in the case of the assessee was conducted u/s 132 of the Act on 25.11.10. Certain additions were made by the Ld. A.O for Assessment Year 2009-10, 2010-11 and 2011-12. The matters relating to Assessment Year 2010-11 and 2011-12 travelled up to the Tribunal. Incriminating material was found only for Assessment Year 2011-12. Assessee is in the same type of business of trading of gold and silver bullion and consistently maintaining the books of accounts and quantitative details. From perusal of the order of the Tribunal in assessee s own case for Assessment Year 2007-08, 2010-11 and 2011-12 dated 8.12.2014 (placed at paper book page 113 to 198), we find that for Assessment Year 2011-12 Tribunal upheld the rejection of books of accounts only for the reason that excess stock during the search was found and accordingly estimated the gross profit rate of the appellant. However for Assessment Year 2010-11 as per the order of Tribunal vide IT (SS)A No.257,258,568/Ind/2015 dated 08.02.2016 books of accounts were held not to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Omprakash Dhanwani held in paragraph 15 as under:- 15. We also find that the assessee is dealing in precious metal like gold and silver and the rates are verifiable and available in open to every customer from MCX gold reports or Sarafa Publications. Thus, the customers who purchase goods from the assessee were well aware about the prevailing market price of these metals at the relevant time. Most of the purchases are from reputed dealers. Very few documents pertaining to the assessment year 2011-12were seized which suggest that the assessee indulged in trading which was not recorded in the books of accounts. For recorded purchases, the assessee was maintaining day to day stock register with quantities and purchase vouchers. The payments were also made through banking channels. Therefore, the learned CIT(A)'s action in enhancing the turnover by 17.5% for all the years is unjustified. There was seizure of documents which suggest unaccounted sales for the assessment year 2011-12 and with a view to plug the loopholes, we are of the view that the enhancement in turnover by 5% on the sales recorded in the books of accounts shall be reasonable for the assessment year 2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese aspects we sustain the gross profit rate of 1.25% on the enhanced turnover of gold bullion for the assessment years 2010-11 and 2011-12 and on the recorded turnover disclosed in the books of accounts, we direct to apply gross profit rate of 0.25%. 5.3.1 In the case of Shri Omprakash Dhamvani the Hon ble ITAT has accepted the GP rate declared for AY. 2009-10 in the absence of any incriminating document for the relevant period, better book results in comparison to succeeding years and the fact that no defect in the books of accounts was found by the Assessing Officer and CIT(A). The Hon ble ITAT did not accept the book results for A.Y. 2010-11 on account of sharp fall in G.P. rate as compared to A.Y. 2009-10 and for A.Y. 2011-12 due to incriminating documents seized during the search. The Hon'ble ITAT, Indore found it appropriate to enhance the turnover by 5 for AY s 2010-11 and 2011-12 and further sustained the addition of G.P @0.25% on the recorded turnover and @1.25% on the enhanced turn over for A.Ys 2010-11 and 2011-12. 5.4 The Hon ble ITAT, Indore in the appellant s own case in ITA No.257 and 258/ 2015 after taking into consideration the order passed in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of Hon'ble ITAT, Indore in appellant's own case it is held that the rejection of books of accounts cannot be accepted in the absence of any incriminating evidence and merely on the observation that huge number of cash sales are unverifiable, Ground No.2 is therefore allowed. 5.8 As the rejection of books of account has not been upheld the addition of ₹ 21,56,32,991/- made on account of estimation of gross profit on sale of gold bullion and ₹ 5,41,62,993/- on account of estimation of gross profit on sale of silver bullion is deleted. Ground Nos. 3(a) and 3(b)are allowed. 23. We therefore in the given facts and circumstances of the case and respectfully following the decision of the Co-ordinate Bench in assessee s own case for Assessment Year 2010-11 find that the facts of the case are similar. Books of accounts and stock records are consistently been maintained by the assessee in the similar fashion. Audited reports by the Auditor under the Companies Acts and Income Tax Act are placed on records. No error is pointed out by the Auditors. Ld. A.O has made a general observation that the assessee is having huge amount of cash purchases and cash s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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