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TMI Blog2022 (2) TMI 578X X X X Extracts X X X X X X X X Extracts X X X X ..... cessed under section 143(1) of the I.T. Act, 1961. A search under section 132 of the Act was conducted on 28.02.2017 at the residential premises of the assessee at House No.128, Sector-16, Faridabad, Haryana from where certain papers/documents belonging to the assessee were fond and seized. Notice under section 153A of the Act was issued on 15.09.2017 and the assessee in response to the same filed return of income under section 153A on 04.10.2017 declaring total income of Rs. 23,75,500/-. The A.O. thereafter issued notice under section 143(2) on 25.01.2018. Subsequently notice under section 142(1) along with a questionnaire was also issued to the assessee asking her to file the requisite details and clarifications which the assessee complied with. 2.1. During the course of assessment proceedings the A.O. noted that the assessee, Smt. Lata Garg, Prop, of M/s Automek Systems & Autosystem Services has shown purchases of Rs. 1,90,43,829/- from the following parties during the year under consideration. Party Name Amounts Delite Trading Co. 16,81,502 India Sales Corporation 1,18,63,490 Shakshi Sales 10,50,975 Shivam Trading Company 9,76,016 Jai Shiv Enterprises 34,71,8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce under section 133(6) of the Act to various parties. However, all the notices except M/s. India Sales Corporation were received unserved. An Inspector of the Office was deputed to serve the notice under section 131 of the Act by hand to all the parties and he also could not serve the notices as these parties did not exist on the given address. Therefore, the A.O. asked the assessee to explain as to why the purchases made from the above parties should not be considered as bogus and be added to the total income of the assessee. Rejecting the various explanations given by the assessee and distinguishing the various decisions cited before him, the A.O. made addition of Rs. 47,60,957/- being 25% of the purchase price of Rs. 1,90,43,829/- accounted for in the books of account through such fictitious invoices in the name of the bogus parties. Similarly, the A.O. made addition of Rs. 1,04,741/- being commission for arranging such bogus purchases of Rs. 1,90,43,829/-. Thus, the A.O. determined the total income of the assessee at Rs. 72,41,198/- as against the returned income of Rs. 23,75,500/-. 2.4. Before the Ld. CIT(A), the assessee challenged the validity of assessment under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of commission income of Rs. 1,04,741/- is concerned, the Ld. CIT(A) sustained the same. 3. Aggrieved with such order of the Ld. CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds : 1. Because the action for initiation, continuation and conclusion of assessment proceedings u/s 153A at an amount of Rs. 72,41,198/- is being challenged on facts & law. 2. Because the action is being challenged on facts & law for making additions in assessment proceedings u/s 153A when there is no incriminating material/document found during the course of search u/ s 132 of the Act for the impugned year. 3. Because the action is being challenged on facts & law for completing the assessment u/s 153A having returned wrong findings of fact & evidence qua the denial/retraction of the surrendered amount, which is even contested since the quantum and relatability of the amount to the impugned year is not according to the document and material. 4. Because the action is being challenged on facts & law for making an disallowance of purchases amounting Rs. 47,60,957/- @2 5% of Purchases amounting Rs. 1,90,43,829/- by rejecting books of accounts u/s 145(2), hence the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the disposal of the same in the interest of substantial justice to the assessee." 3.1. The assessee has also raised the following additional grounds : Because the action is being challenged on facts & law for making additions in assessment proceedings u/s 153A wherein the seized documents relating to assessee were found from the premises of third parties, therefore the additions on the basis of the said documents can only be made u/s 153C of the Act & not u/s 153A of the Act. 3.2. However, at the time of hearing, the Learned Counsel for the Assessee did not press the additional ground, for which, the Ld. D.R. has no objection. Accordingly, the additional ground raised by the assessee is dismissed as 'not pressed'. 3.3. Grounds of appeal No.1 and 11 being general in nature are dismissed. 3.4. Learned Counsel for the Assessee did not press grounds of appeal Nos.2 and 3, for which, the Ld. D.R. has no objection. Accordingly, these grounds are dismissed. 3.5. Grounds of appeal Nos.4 to 8 relate to the order of the Ld. CIT(A) in giving part relief out of the addition of Rs. 47,60,957/- being 25% of the bogus purchases of Rs. 1,90,43,829/-. 4. Learned Counsel for the Assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ITA No. 4465, 4310, 4466, 4311, 4467/2010 dated 25.11.2011. 2. Hon'ble ITAT Mumbai Bench-H in the case of ACIT vs K.P. Sanghvi& Sons LLP in ITA No. 2455/2017 dated 28.09.2018. 3. Hon'ble ITAT Delhi Bench-G in the case of Aggarwal Associates (Promoters) Ltd. vs DCIT in ITA No. 787/2016 dated 09.07.2019. 4. Hon'ble ITAT Ahmedabad Bench-C in the case of Sonal Parekh vs ITO in ITA No. 91, 92 and 93 of 2017 dated 09.12.2019. 5. Hon'ble Bombay High Court in the case of PCIT vsRishabhdevTachnocable Ltd. in ITA No. 1330 of 2017 dated 10.02.2020. 6. Hon'ble Bombay High Court in the case of PCIT vs Pinaki D. Panani in ITA No. 1543 of 2017 dated 08.01.2020. 7. Hon'ble Bombay High Court Judgment in the case of PCIT vs Mohommad Haji Adam & Co. (2019) 104 CCH 0391 (Mum HC). 8. Hon'ble Supreme Court in the case of CIT vs M/s Odean Builders Pvt. in Review Partition (C) Diary No. 22394 of 2019 dated 21.08.2019. 9. Hon'ble Supreme Court in the case of PCIT vs Tejua Rohitkumar Kapadia in SLP(C) Diary No. 12670 of 2018 dated 04.05.2018. 4.5. He accordingly submitted that some reasonable profit should be estimated and not the disallowance of 20% of the purchases as held by the Ld. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce and this fact is found in the assessment order. Further, the books of account were audited, the payments were made through banking channels, the sales have been accepted and there was quantitative tally of purchases with the quantities of the material used in the job work. The stock register showing relevant entries of the items purchased and issued for consumption in job work shows that these items were tallied. Therefore, it is his submission that disallowance @ 25% of the purchases is highly unjustified and some reasonable profit rate only should be adopted. 6.1. We find some force in the above arguments of the Learned Counsel for the Assessee. It is an admitted fact that the sales declared by the assessee has not been disturbed. The assessment order indicates that letters were served upon certain parties which proves their existence. The books of account were also audited and auditors have not given any adverse remarks. All the payments have been made through banking channels. The assessee had produced the stock register showing relevant entries of the items purchased and issued for consumption in job work and the items were tallying and no discrepancy in the stock was fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT vs., Sonal Constructions 359 ITR 532 (Del.) has accepted the theory of benefit of telescoping. He accordingly submitted that in case there is an addition on account of bogus purchases, such additional income should be available to the assessee to meet the expenses towards commission. 10. The Ld. D.R. on the other hand has opposed the above submissions of the Learned Counsel for the Assessee. 11. After hearing both the sides, we find in the preceding paragraph we have already held that 3% of the total purchases of Rs. 1,90,43,829/- are bogus which comes to Rs. 5,71,314/-. Therefore, the A.O. is directed to allow the benefit of telescoping out of the said income to the assessee for meeting the expenses towards commission expenses. Grounds of appeal number.10 of the assessee is accordingly allowed. 12. In the result, ITA.No.9145/Del./2019 of the assessee is partly allowed. ITA.No.7187/Del./2019 - A.Y. 2012-2013 : 13. The only issue raised by the assessee in the grounds of appeal relates to order of the Ld. CIT(A) in confirming the addition of Rs. 6,41,725/- made by the A.O. under section 69C of the I.T. Act, 1961 on account of unexplained expenditure. 14. Facts of the case, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that in case the addition so sustained by him is ultimately deleted, then the present addition would be revived to the extent of the amount by which the addition on account of bogus purchases could be less than the amount of this expenditure of Rs. 6,41,725/-. It is the submission of the Learned Counsel for the Assessee that benefit of telescoping should be available to the assessee on account of addition, if any, in the case of other group concerns as a whole. The plea of the assessee, in our opinion, is not acceptable. The assessee can get the telescoping benefit for addition on account of bogus purchases in his case only and cannot get the telescoping benefit on account of the cash generated out of such bogus purchases in other group concerns for meeting the expenditure towards acquisition of gold coins amounting to Rs. 6,41,725/- for this year. The ground raised by the assessee is accordingly partly allowed for statistical purposes. 17. In the result, ITA.No.7187/Del./2019 of the assessee is partly allowed for statistical purposes. To sum-up, ITA.No.9145/Del./2019 is partly allowed and ITA.No.7187/Del./2019 is allowed for statistical purposes. Order pronounced in the ope ..... X X X X Extracts X X X X X X X X Extracts X X X X
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