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TMI Blog2021 (12) TMI 781X X X X Extracts X X X X X X X X Extracts X X X X ..... ts made to M/s Banni Mines and Minerals Ltd. The fact remains that the purchases from the above said concern has been duly recorded and further the assessee has also sold them. The sale transactions have been accepted by the AO. It is also a fact that M/s Banni Mines and Minerals have filed VAT returns under Sales tax Act and it has reported the sales made by it to the assessee. Further Shri Basavaraj Banni has filed revised return of income disclosing the sales made to the assessee. His return of income has been accepted by the department in an order passed subsequent to the date of search. Shri Basavaraj Banni has later accepted that he has given wrong statement earlier and has given reasons for doing so. We notice that Shri Basavaraj Banni is changing his stands and is non-co-operative with the department. Hence we are of the view that his statements could not be relied upon. The fact remains that the materials available on record disproves his earlier statement. We do not find any reason to disbelieve the purchases as well as payments made to M/s Banni Mines and Minerals. Accordingly, we are of the view that the addition made in AY 2008-09 cannot be sustained. Payment made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,98,65,880 5,53,18,500 -- Payments made to Sri Jagdish N. Devadiya -- 2,51,00,000 65,00,000 3. Besides the above, the assessee has raised two legal issues. The first legal issue relates to the validity of search proceedings and this ground has been urged in all the three years. At the time of hearing, the Ld. A.R. did not press this legal ground in all the 3 years. Accordingly, the grounds relating to this issue are dismissed as not pressed. 4. In assessment year 2008-09 2009-10, the assessee has raised another legal issue by way of an additional ground. The legal issue urged in the additional ground is that the additions made during assessment years 2008-09 and 2009-10 are not valid, since assessments of these two years did not abate as per provisions of sec.153A and further no incriminating material relating to the additions made in these two years were found during the course of search. 4. The facts relating to the case are discussed in brief. The assessee is a partnership firm and is engaged in the business of trading and transpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is of post search enquiries, i.e., the AO has disbelieved the purchases of minerals and payment of transportation charges on the basis of post search enquiries and made impugned additions. Hence the additions made by the AO are liable to be deleted on the basis of above said legal ground. He submitted that, even on merits these additions are liable to be deleted. 8. The Ld D.R, however, submitted that the AO is entitled to make any addition in the case of unabated assessment years also as per the decision rendered by jurisdictional Hon'ble Karnataka High Court in the case of Canara Housing Development Company vs. DCIT (274 CTR 122)(Kar). He submitted that the parties to whom the payments were made for purchase of minerals and transportation charges have disowned the transactions. Accordingly, he submitted that the AO was justified in making the impugned additions. 9. In the rejoinder, the Ld A.R submitted that the parties had initially denied transactions. However, they have filed letters subsequently, accepting the transactions and they have explained as to why they denied the transactions earlier. In respect of purchase of minerals, the assessee has produced the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -09-2021) and it has been held that the AO, while passing order u/s 153A r.w.s 143(3) of the Act, ordinarily cannot disturb the assessment/reassessment order which has attained finality, unless the materials gathered in the course of proceedings establishes that the finalized assessments are contrary to the material unearthed during the course of search. We notice that the Hon'ble Karnataka High Court also considered the decision rendered by it in the case of Canara Housing Development Company (supra) and also the decision rendered in the case of IBC Knowledge Park (P) Ltd (385 ITR 346)(Kar) while rendering its decision as stated above. The relevant observations made by Hon'ble jurisdictional High Court in the case of Delhi International Airport (P) Ltd (supra) are extracted below:- 26. In the light of these judgments, we have analyzed Section 153A of the Act vis- -vis the material on record. Strong reliance was placed by the Revenue on the Canara Housing Development Company supra, in support of the contention that search under Section 132 of the Act is sine qua non for initiation of proceedings under Section 153A of the Act but it is not dependent on any undisclosed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant to the previous year in which the search was conducted under Section 132 or requisition was made under Section 132A. Thus, it is clarified that the appeal, revision or rectification proceedings pending on the date of initiation of search under Section 132 shall not abate. 28. Section 153B provides for the time limit for completion of search assessments. 29. Section 153C provides that where an Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account documents seized or requisitioned belong or belongs to a person other than the person referred to in Section 153A, then the books of account, or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A. 30. Thus, it is clear that the Assessing Officer while passing the order under Section 153A read with Section 143[3] of the Act, ordinarily cannot disturb the assessment/reasse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) and based on the said decision, the CBDT has also issued circular dated 31.12.2015 vide No.24/ 2015.The relevant extract of the circular for ready reference can be extracted as under: .. As regards the pending assessments are concerned only one assessment shall be made separately for each assessment year on the basis of the income unearthed during search and any other material existing or brought on the record of the Assessing Officer. Even in the absence of any incriminating material abated assessment or reassessment could be done. The returns filed under Section 139 of the Act gets replaced by the returns filed under Section 153A[1] of the Act. Pending proceedings in appeal, revision/application shall not abate subsequent to initiation of Section 153A proceedings. Further, recording of satisfaction under Section 153A may not be necessary unlike Section 153C of the Act which mandates recording of satisfaction. For the reasons aforesaid, substantial question of law in ITA Nos.322/2018 to 324/2018, 354/2018 and 355/2018, substantial question of law No.1 in ITA Nos.380/2018, 382/2018 to 385/2018 and 197/2021 to 199/2021 and substantial question of law Nos.1 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... system of accounting, the A.O. took the view that the assessee should have offered the above said amount of ₹ 1,51,44,860/- during the assessment year 2008-09 itself. Accordingly, the AO assessed the above said difference amount as income for the assessment year 2008-09 and also reduced the same from the total income of assessment year 2009-10 in order to avoid double taxation. It is also pertinent to note that Shri Prakash G. Hegde, partner of the assessee firm also agreed for inclusion of the difference amount of ₹ 1,51,44,860/- in the total income for assessment year 2008-09. 14. Before Ld. CIT(A), the assessee challenged the above said addition contending that the right to receive the above said payment accrued to the assessee only in the succeeding year and accordingly, it has been offered correctly as income of assessment year 2009-10. The said contention was not accepted by Ld. CIT(A) and accordingly he confirmed the addition. 15. We have held that the assessing officer could not have made any addition in AY 2008-09 since no incriminating material relating to this addition was unearthed during the course of search. A perusal of the assessment order of AY 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the bank account of the assessee in most cases. Accordingly, the A.O. came to the conclusion that M/s. Banni Mines Mineral Traders has not done any kind of business activity and it has provided only accommodation entries to the assessee. 18. When these findings were confronted to the assessee, it was submitted that the assessee has purchased iron ore from Banni Minerals to the tune of ₹ 6.83 crores and the payment of ₹ 5.98 crores was made towards the above said purchases. It was also submitted that he has filed VAT returns before the sales tax authorities declaring the above said turnover. The assessee also submitted that Shri Basavaraj Banni has filed return of income. Accordingly, it was submitted that Shri Basavaraj Banni is not giving true picture. The AO did not accept the explanations of the assessee and accordingly treated the payment of ₹ 5.98 crores made to Shri Basavaraj Banni as bogus expenditure and added the same to the total income of the assessee in AY 2008-09. Similarly, the AO added ₹ 5,53,18,500/- in AY 2009-10. The Ld. CIT(A) also confirmed the same. 19. The Ld. A.R. submitted that during the financial year 2007- 08, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ging to Basavaraj Banni. Accordingly, the Ld. A.R. contended that the impugned addition is liable to be deleted. 20. On the contrary, the Ld. D.R. supported the order passed by Ld. CIT(A). 21. We heard the parties on this issue. It is an admitted fact that the assessing officer has disbelieved the payments made to M/s Banni Mines and Minerals Ltd. The fact remains that the purchases from the above said concern has been duly recorded and further the assessee has also sold them. The sale transactions have been accepted by the AO. It is also a fact that M/s Banni Mines and Minerals have filed VAT returns under Sales tax Act and it has reported the sales made by it to the assessee. Further Shri Basavaraj Banni has filed revised return of income disclosing the sales made to the assessee. His return of income has been accepted by the department in an order passed subsequent to the date of search. Shri Basavaraj Banni has later accepted that he has given wrong statement earlier and has given reasons for doing so. We notice that Shri Basavaraj Banni is changing his stands and is non-co-operative with the department. Hence we are of the view that his statements could not be relied upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement was filed before the AO. Since the retraction was made almost after two years, the AO did not accept the same. The assessee asked the AO to provide opportunity of cross examination, but the AO rejected the same also. Accordingly, he disallowed the transport payments of ₹ 2,51,00,000/- in AY 2009-10 and ₹ 65,00,000/- in Asst. Year 2010-11.The Ld CIT(A) also confirmed the addition made in both the years. 26. The Ld A.R submitted that Shri Jagadish Devadiga has provided transportation services to the assessee. He submitted that before the AO, the assessee has furnished copies of invoices given by Shri Jagadish Devadiga, which included working sheets relating to the transportation services. He submitted that the assessee has also furnished copies of income tax returns, tax audit report of Shri Jagadish Devadiga. He submitted that the AO has not considered material evidences, but relied upon the statement given by Shri Jagadish Devadiga at the time of search, even though the said statement is contrary to the materials available and further the said statement has been retracted. He submitted that Shri Jagadish Devadiga is not the person, who has been subjected to s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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