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TMI Blog2021 (5) TMI 535X X X X Extracts X X X X X X X X Extracts X X X X ..... Department is not binding on Income Tax Department. The seized material is only for the purpose of calculating rebate and there is no such evidence regarding fake purchases for the purpose of Income Tax. CIT(A) has passed a detailed and reasoned order after considering the entire facts of the case. No contrary facts or law is brought to our notice to take other view. Thus, we affirm the order passed by Ld. CIT(A). Ground No.1 raised by the Revenue is dismissed. Disallowance u/s 80HHC - assessee submits that the addition under section 80HHC of the Act is not based on incriminating material found during the search carried out under section 132 - HELD THAT:- Perusal of the report of AO, it is clear that addition under 80HHC of the Act has no relevance with the seized material. CIT(A) while deleting the addition also held that AO exceeded his jurisdiction while sitting over the finding of the Tribunal. No addition can be made in the completed assessment in absence of incrementing material found during the search, hence, we uphold the order of ld. CIT(A). No contrary facts or law is brought to our notice to take other view. Accordingly, the Ground No.2 of the Revenue is also di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e computation of income the assessee also claimed deduction under section 80HHC of the Act of ₹ 58,11,629/-. The assessee firm shown Gross Profit (GP) of ₹ 4.88 crores on the total turnover of ₹ 33.3 crores, which is 14.79 %. The Assessing Officer (AO) after serving a statutory notice under section 143(2) and 142(1) of the Act, proceeded for assessment. During the assessment, the AO, on the basis of seized documents noted that assessee has shown purchases of ₹ 91,91,937/- of grey clothes from the various fake parties. During the search at the premises of assessee light colored brown file of Rivaa Export Ltd., found and seized as per Annexure-BS-1. This file contained the order passed by Excise Authorities regarding withdrawal of Excise Duty Rebate availed by the assessee. Excise authorities finding are that the assessee and its associate concerns namely Rivaa Export Ltd., and Riva Fashions Pvt Ltd. has wrongly availed the rebate of consumption of duty paid on grey clothes. The Excise Authority conclusively proved that those suppliers were non-existent, fictitious and simply bogus. Rivaa Export Ltd., and Rivaa Fashions Pvt. Ltd., is amalgamated in R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise Duty rebate by the assessee. The AO on the basis of his aforesaid observation treated the purchase of ₹ 91,91,237/- as bogus and added to the income of assessee. 4. The AO further noted that, the assessee claimed deduction under section 80HHC of the Act. The assessee while computing the working, has not reduced the sale proceed received from sale of DEPB Duty Entitlement Pass Book for arriving the profit of books entitled for deduction under 80HHC of the Act. The assessee has only taken profit sale of DEPB i.e. thus, between sale proceed from DEPB and DEPB granted to arrive at eligible profit of business. The AO during the assessment under section 143(3) of the Act passed on 22.12.2006 revised the computation in accordance with the provision of section 80HHC of the Act and reworked profit of business for computing 80HHC of the Act. The assessee filed appeal before the ld.CIT(A), which was dismissed vide order dated 25.07.2007. On further appeal by the assessee before the Tribunal, the Tribunal restored the issue to the file of the AO to recompute the deduction u/s.80HHC of the Act in accordance with the amendment brought in Income Tax Act w.e.f 01.04.1998. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties carefully. Ground no.1 relates to deleting the addition on bogus purchases. The learned CIT-DR for the revenue submits that a search action under section 132 of the Act was carried out at the premises of assessee on 20.01.2009. In the search, certain incriminating material indicating the bogus purchases shown by the assessee was recovered. In the search a file containing order of Excise Department was recovered. In the said file, there was order of Excide Department regarding withdrawal of Excise Duty rebate availed by the assessee. Order of withdrawal of Excise Duty rebate was confirmed by ld.Commissioner of Excise. The assessee was given opportunity to prove the genuineness of purchases. The assessee failed to produce the parties for verification. The AO after detailed discussion held that assessee failed to produce the suppliers, all the suppliers was not existent party. The assessee failed to prove the genuineness of transaction, thus, the AO disallowed the entire purchases. The ld. CIT(A) allowed relief to the assessee by taking view that circular and order of Excise Department are not binding on Income Tax Authorities. The learned CIT-DR prayed to uphold the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d after 6.5 years from the closure of CEN-VAT scheme and due to lapse of time between transaction and the passage of time so many things may have happened, they may have close their business or have migrated from the place of work, in such situation, production of parties were beyond the control of assessee and that the payments were made through account payee cheques and goods were received. And the purchases cannot be treated as bogus. 9. We have noted that the AO has not made any independent investigation. The AO solely relied upon the alleged incriminating material i.e. order of Excise Department Authority withdrawing the Excise Duty Rebate availed by the assessee. The books of accounts of assessee was not rejected. The AO is not identified the ratio of alleged bogus purchases qua the overall purchases of grey material consumed in the production of new material. The previous or subsequent years Gross Profit was not compared by AO. No adverse material was brought by the AO on record except relying upon the orders of Excise Department. We have noted that the ld. CIT(A) on the submission of assessee called the remand report of the AO. The AO furnished the remand report dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditions made for the AY 2004-05 of ₹ 58,11,629/- u/s 80HHC has no relevance with seized material as the same does emanate from any seized material. However the addition on account of disallowance of bogus purchase amounting to ₹ 91,91,936/- has been made on the basis of seized material contained in Annexure BS-1, (Page 1 to 282). Attested copies of the same are enclosed herewith. Further, it is submitted that order u/s 143(3) r.w.s 254 not reflected on ITBA system being old case. It might have been passed manually as assessment records in this case are with o/o the CIT(DR), D Bench, ITAT-4, Ahmedabad (proof enclosed) hence not verifiable. 14. We have considered the submissions of the parties and also perused the report of A.O. referred above. Perusal of the report of AO, it is clear that addition under 80HHC of the Act has no relevance with the seized material. The ld.CIT(A) while deleting the addition also held that AO exceeded his jurisdiction while sitting over the finding of the Tribunal. Considering the aforesaid factual and legal discussion that no addition can be made in the completed assessment in absence of incrementing material found during the sea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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