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TMI Blog2022 (3) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... g income of Rs. 58,04,170/-. The return was duly processed under section 143(1) determining at the returned income. 2.2. A search under section 132 of the Act was conducted on 28.02.2017 at the business premises of the assessee at various premises from where certain papers/ documents belonging to the assessee were found and seized. In response to notice under section 153A of the I.T. Act, 1961 the assessee filed its return of income on 26.07.2018 declaring income of Rs. 58,04,170/-. 2.3. During the course of assessment proceedings, the A.O. noted that the assessee company has received an unsecured loan of Rs. 10,00,000/- from M/s White Collar Management Service Pvt. Ltd., He asked the assessee to furnish ITR, bank statement highlighting the transaction and confirmed copy of ledger from White Collar Management Service Pvt Ltd for the A.Y. 2012-13 in order to prove the identification, genuineness and creditworthiness. He also asked the assessee to produce the principle officer of M/s White Collar Management Service Pvt. Ltd. 2.4. Since the assessee could not produce the principle officer/director of M/s White Collar Management Service Pvt. Ltd., the A.O. asked the assessee to expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .04.2017 in the case of Mr. Himanshu Verma (Entry Operator) who is maintaining approx. 300 shell companies/concerns for providing accommodation entries in lieu of commission. During the course of search in the case of Mr. Himanshu Verma on 13.04.2017, statement on oath of Mr. Himanshu Verma was recorded under section 132(4) of Income Tax Act. 1961 and he was asked about his modus operandi for providing accommodation entries. He admitted that he provides bogus bills/entry of loans/capital to the beneficiaries and after rotating the amount received from the beneficiary in some of his bogus companies, he ultimately transfers the amount to its beneficiary. 2.8. The A.O. also referred to the statement of Mr. Shree Ram Yadav (dummy director) recorded under section 131(1A) wherein he admitted that he had been a dummy director in a number of bogus companies managed by Mr. Himanshu Verma. He further stated that he was getting Rs. 10,000/- per month for being the director in these companies. He admitted that he had been made director by Mr. Himanshu Verma in various companies totaling to 20 in number. 2.9. In view of the above, the A.O. held that the identity, genuineness and creditworthin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not tally this transaction with its books of account. Therefore, he made an addition of Rs. 4,25,975/- as unexplained expenditure under section 69C of the I.T. Act, 1961. 2.14. During the course of assessment proceedings, the A.O. noted that the assessee company has shown purchases of Rs. 5,34,76,626/- from the following parties during the year under consideration. Party Name Amount Delite Trading Co. 18,82,671 Ganesh Enterprises 19,65,386 Hans Trading Co 52,47,430 India Sales Corporation 68,88,893 Jai Shiv Enterprises 20,07,523 Luxmi Lubricants 1,05,53,090 Narika Enterprises 63,32,048 Navyug Enterprises 27,71,646 Rama Enterprises 1,42,26,757 Shree Shyam Enterprises 16,11,182 Total Purchases 5,34,76,626 2.15. He noted that during the search proceedings original vouchers/ bills of various concerns at premise 17/6. Hanspal Industrial Complex, Mathura Road, Faridabad were found and seized. Purchase parties namely M/s Jai Shiv enterprise. Delite Trading Co, And Ganesh Enterprises are connected with Sh Dalip Kumar, who is an identified accommodation entry provider. Statement of Sh Dalip Kumar was recorded on oath on 10.11,2016 and 17.12.2016 in w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove parties amounting to Rs. 5,34,76,626/- should not be treated as bogus and added to the total income of the assessee. 2.17. It was explained by the assessee that it had purchased the material from grey market. It has maintained stock register which tallies quantity wise and no discrepancy was found. Further, it had rendered services to the third parties. Actual stock was also found during the course of search and survey proceedings. It was submitted that no undisclosed asset or wealth relating to the assessee or any of the directors or family members were found. It was argued that the concession of Rs. 18.5 cores made by the assessee during the search operation was wrongly treated as surrender of ingenuine purchases by the department. Relying on various decisions, it was argued that no addition is called for. 2.18. However, the AO was not satisfied with the arguments advanced by the assessee. He noted that the assessee itself has admitted that it has purchased the material from grey market. He was of the opinion that mere submitting the value of opening and closing stock of various financial years without any documentary evidence would not satisfy the claim of the assessee. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incriminating material. However, the Ld. CIT(A) was not satisfied with the argument against the validity of the assessment and rejected the same. So far as addition of Rs. 10,00,000/- being loan from White Collar Management Services (P.) Ltd. is concerned, he upheld the same by observing as under:- "6.1 Vide ground Nos. 4, 5, 6 and 7, the appellant has contested the action of the AO in terms of making the addition of Rs. 10,00,000/- u/s 68 by treating the loan of Rs. 10,00,000/- received from M/s. White Collar Management Services Pvt. Ltd. (Now known as M/s. Mayurika Management Services Pvt. Ltd.) and disallowing the deduction of Rs. 55,726/- on account of interest on these loans. 6.2 The contention of the AR was that the loans were received through banking channels and were repaid. The TDS was deducted on the interest payment. The AR also stated that the AO has relied upon the statement of Sh. Himanshu Verma but Himanshu Verma only stated that he was providing bills for bogus sales and purchases. Sh. Himanshu Verma did not say that he was providing accommodation entries in form of loans. The AR also contended that the AO has relied upon statement of Shri Shree Ram Yadav as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nage them.''{ref. Para 30} 6.5 Hon'ble Delhi HC in case of CIT Vs. Nova Promoters & Finlease (P) Ltd. [2012] 18 taxmann.com 217 (Delhi) quoted from its earlier judgments as under, "....there cannot be two opinions on the aspect that the pernicious practice of conversion of unaccounted money through the masquerade or channel of investment as share capital must be firmly excoriated by the Revenue "{ref. Para 36}. 6.6 This is also a case of pernicious practice of conversion of unaccounted money through the masquerade or channel of obtaining (bogus) loan. 6.7 Hon'ble Delhi HC in case of CIT Vs. Navodaya Castles (P.) Ltd. [2014] 50 taxmann.com 110 (Delhi) has held, " Certificate of incorporation, PAN etc., are relevant for purpose of identification, but have their limitation when there is evidence and material to show that the subscriber was a paper company and not a genuine investor." {ref. Para 14}. 6.8 Regarding, cross examination, the AR could not show as to when the cross examination was demanded at the assessment stage. Moreover, these statements were recorded during the official duty carried out by the Officers of the Income Tax Department who were not AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16,11,182 Total Purchases 5,34,76,626 8.2. During the present appellate proceedings, the main contentions of the AR were that i) The assessment order indicated that letters were served upon certain parties. This proved their existence. ii) The books of account were audited, iii) The appellant was using the purchase material for doing job work and there was quantitative tally of purchases with the quantities of the material consumed in job work. At any point of time, the total of quantities of opening stock and purchases tallied with total of quantities of the material consumed in job work and closing stock. iv) Payments have been made through banking channels, v) Vide written submission 22.05.2019, the AR produced copy of stock register showing retevant entries of the items received and issued for consumption in job work. Copies of purchase bills for verification of closing stock were also produced to support the contention that there was proper accounting and item to item tally is possible to trace. vi) In none of the group cases, any addition has been made on account of discrepancy in stock found at the time of survey and as per books. The AR explained that al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer as well as before him and guided by the ratio of Hon'ble Gujarat High Court in the case of CIT v. Simit P. Seth [356 ITR 451] held that when the total sales are accepted by the Assessing Officer then the entire purchases cannot be added to the income of the assessee. Therefore, in view of the decision of the Hon'ble Gujarat High Court he held that only the fair profit ratio would be added back to the income of the assessee. Further Ld.CIT(A) also stated that similar basis was adopted in the case of Shri Kishore Kumar Agarwal for A.Y. 2011-12 and Shri Bimal Agarwal for A.Y. 2010-11 on identical and similar facts as that of the present case as both of them are the persons concerned or connected to the assessee's group. He also observed that similar basis was also adopted in assessee's own case for the Assessment Years 2010- 11 and 2011-12 on identical facts, wherein he computed the profit element on trading sales segments at 8% as the assessee earning Gross Profit slightly less than 8% from this segment and no addition was made in respect of Garden maintenance contract for the reason that the Gross Profit declared by the assessee was more than the es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Tax Department as suspicious/hawala operators indulging in providing accommodation entries has not been controverted by the assessee with necessary evidence. Though the assessee has filed purchase bills and payment proof for such purchases, in the backdrop of clear cut finding of the Sales Tax Department the purchases from the above parties cannot be considered as genuine in total. In these circumstances, one has to see what needs to be considered, whether it is the entire purchases from the above parties to be added because they are bogus in nature or only the profit element embedded in such purchases could be added. The issue is no longer res integra. The Hon'ble Gujarat High Court in the case of CIT Vs. Simit P. Sheth (supra) has considered similar case wherein the Hon'ble court held that when the total sales is accepted by the AO, then the entire purchases cannot be added to the total income of the assessee. The court further held that in the case of bogus purchases only profit element embedded in such purchases needs to be added but not total purchases made from those parties. The Hon'ble Gujarat High Court in the case of CIT vs. Vijay Proteins Ltd (2015) 58 Taxm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isting at given address but inquiries have confirmed that some of these parties were existing at the given addresses. Since, the books of accounts are audited and stock has been tallied which is evident from the fact that in-spite of noticing shortage in stock, at the time of survey, no addition has been made on that account. Therefore, the argument of the AR that discrepancy in stock was explained cannot be brushed aside. At the most question can be raised about the rate of purchase. 8.9 I have also observed that the AO has added 25% of bogus purchases stating as under. "8.20 Hon'ble Gujrat High Court in its judgment dated 09-12-2014 in the case of Vijay Protein Limited vs CIT [appeal No.243/2002] has observed that "It is a matter of fact that the goods were not received from the parties from whom it is shown to have been purchased but, such material was received from a different surce which is exclusively within the knowledge of the assessee and none else. Therefore, it is evident that the assessee had inflated the expenditure in question by showing higher amount of purchase price O/ITR/139/1996 JUDGMENT through the fictitious invoices in the name of 33 bogus suppliers. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and are not figuring adversely in any of the statements (including statements of Sh. Dalip Kumar/ Vikas Kumar /Ms. Jyoti Bisht/Vishnu Kumar Garg), the disallowance is restricted to 20% of the amount of such purchases. 8.13 In view of the above discussion, these grounds (Nos. 9-12) of the appeal are partly allowed. 3.2. So far as the addition of Rs. 2,94,121/- u/s 69C of the Act is concerned, the Ld. CIT(A) upheld the same by observing as under:- "9.1. Vide ground No. 13, the appellant has contested that the addition of Rs. 2,94,121/- was not maintainable on merits. 9.2. The action of the AO in terms of treating the purchases of Rs. 5,34,76,626/- as bogus has been confirmed above. There is material in form of statements of S/Shri Vishnu Kumar Garg, Vikas Kumar, Dalip Kumar, Ishwar Chand Agarwal and Ms. Jyoti Bisht etc. to the effect that accommodation entries were being procured by the appellant. It is logical that the entries were procured by paying commission. Therefore, the action of the AO in terms of holding that certain payments were made in cash in form of commission for procuring the accommodation entries has been upheld, in principle. In view of the above discussion, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 for addition u/s 68 amounting Rs. 10,00,000/- is being challenged on facts and law while all parameters for the provision of law required by assessee fulfilled as revealed in findings from acquiescence by silence. 5. Because the action is being challenged since the addition of Rs. 10,00,000/- has been made without making proper investigation from the other party whereby assessee has discharged the onus by providing all relevant documents. 6. Because the action is being challenged since the addition of Rs. 10,00,000/- has been made without having provided the cross examination of the person on whose state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks of account on the date of search. 13. Because the action is being challenged on facts and law for making addition of Rs. 1,33,69,157/-on account of disallowance of purchases considering whole purchases amounting Rs. 5,34,76,626/- as bogus purchases whereas per assessee documents in support of genuine purchases has been duly submitted and AO has verified the said parties too and additionally in the alternative the quantum thereof too is being disputed. 14. Because the action is being challenged on facts and law for making addition on account of commission expenses amounting Rs. 2,94,121/-. 15. Alternatively and without prejudice to above, the action for not allowing telescoping of addition on account of u/s 68, u/s 69C & commission expenses against addition on account of bogus purchases is challenged on facts and law as both additions cannot be made simultaneously." 4. The Ld. Counsel for the assessee did not press ground of appeal no. 1, 2 and 3 for which the Ld. DR has not objected. Accordingly, these grounds are dismissed as not pressed. 5. In ground of appeal Nos. 4 to 6, the assessee has challenged the order of the Ld. CIT(A) in confirming the addition of Rs. 10 la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) should be deleted. 7. The ld. DR, on the other hand, heavily relied upon the order of the ld. CIT(A). He submitted that the assessee failed to substantiate with evidence to the satisfaction of the Assessing Officer regarding the genuineness of the said loan of Rs. 10 lakhs obtained from M/s White Collar Management Services Pvt. Ltd. Therefore, the Assessing Officer has rightly made the addition of Rs. 10 lakhs and disallowed the interest of Rs. 55,726/- and the Ld. CIT(A) has rightly upheld the same. 8. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case made addition of Rs. 10 lakhs being unsecured loan obtained by the assessee from M/s White Collar Management Services Pvt. Ltd. on the ground that the assessee could not produce the principal officer/director of M/s White Collar Management Services Pvt. Ltd. Further, shri Himanshu Verma in his statement recorded u/s 132(4) in reply to question no.7 had mentioned that he is doing business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er authorities. Under these circumstances and in view of the overwhelming evidences filed by the assessee during the course of assessment proceedings, which are not found to be false or untrue, we hold that the Ld. CIT(A) is not justified in sustaining the addition of Rs. 10 lakh shown by the assessee as loan which has been repaid in the subsequent year and much before the date of search. Accordingly, the order of the Ld. CIT(A) is set-aside and ground of appeal 4, 5 and 6 are allowed. 10. Ground no.7 relates to disallowance of interest amounting to Rs. 55,726/-. After hearing both the sides, we find the Assessing Officer, in the instant case, disallowed the interest treating the loan as bogus. Since we have already held that the loan is not bogus and since we have allowed the grounds raised by the assessee on this issue, therefore, the disallowance of interest made by the Assessing Officer and sustained by the Ld. CIT(A) is directed to be deleted. The ground of appeal no.7 filed by the assessee is accordingly allowed. 11. Ground no.8 by the assessee relates to addition of Rs. 4,22,975/- u/s 69C of the Act. 12. After hearing both the sides, we find the Assessing Officer made add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (part-I) having the address, TIN, PAN Nos. along with Income Tax return, audited balance sheet, etc. were already brought before the AO. He submitted that the list of billing grey market vendors having address for the impugned year is as under:- S. No. TIN No. Party Name Party Address Amount Documents attached. 1 06291214187 Shree Shyam Enterprises Plot No.2191, H.B. Colony, Sector-7A, Faridabad 1,611,182 1. ITRV for AY 2010-11 to AY 2016-17 2. Haryana VAT RC 3. Confirmation of Account TOTAL 1,611,182 15. He submitted that the AO and the Ld. CIT(A) both have considered that all the purchases are bogus purchases. The ld. Counsel for the assessee submitted that the sales of the assessee are not doubted and therefore by disallowing the purchases at 25%, the profit percentage will come to an absurd figure, which is not possible for this type of business. Referring to various decisions, he submitted that a reasonable profit rate should be adopted on account of such grey market purchases. 16. The ld. Counsel for the assessee submitted that documents from purchase to utilization of material have been submitted in the for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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. 20. He accordingly submitted that some reasonable profit should be estimated and not the disallowance of 20% of the purchases as held by the Ld. CIT(A). So far as the commission estimated by the A.O. at 0.55% on such purchases are concerned, he submitted that the same is also on the higher side. 21. The Ld. D.R. on the other hand, heavily relied on the order of the Ld. CIT(A) and submitted that when the assessee has admittedly indulged in bogus purchases a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant entries of the items purchased and issued for consumption in job work shows that these items were tallied. The survey party found physical stock at the time of search and survey. Therefore, it is his submission that disallowance @ 25% of the purchases is highly unjustified and some reasonable profit rate only should be adopted. 23. 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 have 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 found at the time of survey. Under these circumstances, we are of the considered opinion that disallowance of 20% of the purchases appears to be on the higher side especially when some of the parties to whom letters were issued were served a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rring to the decision of Hon'ble Delhi High Court in the case of CIT vs.Sonal Construction reported in [2013] 359 ITR 532 (Del.) has accepted the theory of benefit of telescoping. We, therefore, hold that the assessee is entitled to the benefit of telescoping of the addition on account of unexplained expenditure of Rs. 4,25,975/- out of the additions made on account of bogus purchases, etc. The ground of appeal no.15 is accordingly allowed. 29. Ground of appeal no.16 being general in nature is dismissed. 30. In the result, the appeal filed by the assessee for Assessment Year 2012-13 is partly allowed for statistical purpose. ITA No.9154/Del/2019 (AY 2013-14) 31. Grounds of Appeal raised by the assessee for Assessment Years 2013-14 are as under:- 1. Because the action for initiation, continuation and conclusion of assessment proceedings u/s 153A at an amount of Rs. 1,96,33,239/- 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Because the action is being challenged on facts and law for making addition on account of commission expenses amounting Rs. 3,02,040/-. 10. Alternatively and without prejudice to above, the action for not allowing telescoping of addition on account of commission expenses against addition on account of bogus purchases is challenged on facts and law as both additions cannot be made simultaneously. 11. For any consequential relief and/or legal claim arising out of this appeal and for any addition, deletion, amendment and modification in the grounds of appeal before the disposal of the same in the interest of substantial justice to the assessee. 32. The ld. Counsel for the assessee did not press grounds of appeal no. 1, 2 and 3 for which the ld. DR has no objection. Accordingly, the grounds 1, 2 and 3 raised by the assessee are dismissed as not pressed. 33. Grounds of appeal No.4 to 8 by the assessee relate to the order of the Ld. CIT(A) in confirming the addition of Rs. 1,37,29,109/- being 25% of the purchase amounting to Rs. 5,49,16,434/- by rejecting the book and giving direction to the AO to restrict the same to 20% in case of parties, which were found in existence by the Wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the addition of Rs. 25,00,000/ - has been made without making proper investigation from the other party whereby assessee has discharged the onus by providing all relevant documents. 6. Because the action is being challenged since the addition of Rs. 25,00,000/- has been made without having provided the cross examination of the person on whose statement or information the addition has been made which is in violation of the settled principle of law. 7. Because the action is being challenged on facts & law for making an disallowance of purchases amounting Rs. 1,16,24,050/- @ 25% of Purchases amounting Rs. 4,64,96,203/- by rejecting books of accounts u/s 145(2), hence the basis of addition is against the commercial expediency, business exigency and accepted modus operandi of the business and business operations and additionally in the alternative the quantum thereof too is being disputed. 8. Because the action is being challenged on facts and law for making addition on account of disallowance of purchases amounting Rs. 1,16,24,050/- on estimation basis (25% of purchases Rs. 4,64,96,203/-) overlooking and ignoring the Pleadings, Facts, Evidences, Provisions of Act, Principles of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that during the course of assessment proceedings, the AO noted that the assessee company has received an unsecured loan of Rs. 25 lakhs from M/s Vigilant Paper Pvt. Ltd.. The AO asked the assessee to furnish the ITR, bank statement highlighting the transaction and confirmation copy of ledger from M/s Vigilant Paper Pvt. Ltd. in order to prove the identity and creditworthiness of the loan creditor and genuineness of the transaction. Since, the assessee did not furnish the ITR, bank statement of the lendor company and was not able to produce the principal officer of M/s Vigilant Paper Pvt. Ltd., the AO invoking the provisions of section 68 of the Act made addition of Rs. 25 lakhs to the total income of the assessee. 44. In appeal, the ld. CIT(A) confirmed the action of the AO by observing as under:- 17.1 Vide ground Nos. 4, 5 and 6, the appellant has contested addition of Rs. 25,00,000/-. As stated above, this addition has been made because the AO found that equivalent amount of credit entry in books of accounts, was shown as unsecured loan from M/s. Vigilant Papers Pvt. Ltd. The appellant could not discharge the onus of proving identity and creditworthiness of the lender and genu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or channel of investment as share capital must be firmly excoriated by the Revenue "{ref. Para 36}. 17.9 This is also a case of pernicious practice of conversion of unaccounted money through the masquerade or channel of obtaining (bogus) loan. 17.10 Hon'ble Delhi HC in case of CIT Vs. Navodaya Castles (P.) Ltd. [2014] 50 taxmann.com 110 (Delhi) has held, "Certificate of incorporation, PAN etc., are relevant for purpose of identification, but have their limitation when there is evidence and material to show that the subscriber was a paper company and not a genuine investor." {ref. Para 14}. 17.11 Regarding, cross examination, the AR could not show as to when the cross examination was demanded at the assessment stage. Moreover, these statement were recorded during the official duty carried out by the Officers of the Department who were not AO and there is no provision under their charter of official duties to allow cross examination to each and every person who can be adversely affected by such statement. Nor, it is practically possible for such Officer to allow cross examination to each and every person who can be adversely affected by such statement. It is a trite that rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in whose case a search or requisition has been initiated. Obviously there cannot be several orders for the same assessment year determining the total income of the assessee. In order to ensure this state of affairs namely, that in respect of the six assessment years preceding the assessment year relevant to the year in which the search took place there is only one determination of the total income, it has been provided in the second proviso of sub Section (1) of Section 153A that any proceedings for assessment or reassessment of the assessee which are pending on the date of initiation of the search or making requisition "shall abate". Once those proceedings abate, the decks are cleared, for the Assessing Officer to pass assessment orders for each of those six years determining the total income of the assessee which would include both the income declared in the returns, if any, furnished by the assessee as well as the undisclosed income, if any, unearthed during the search or requisition. The position thus emerging is that where assessment or reassessment proceedings are pending completion when the search is initiated or requisition is made, they will abate making way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Paragraph 5 of its order, the Tribunal itself has referred to the contention that no document much less incriminating material was found during the search of the assessee's premises, except one unsigned undertaking for loan. Again in Paragraph 10 of its order, while dealing with the assessee's contention against the addition of Rs. 1,50,000/- being unexplained loan given to Mohini Sharma, the Tribunal has stated that it has analyzed "the subject document carefully, recovered from search" suggesting that the document was recovered during the search from the assessee. The Tribunal has even proceeded to delete the addition of Rs. 1,50,000/- as well as the notional interest on merits, holding that the document was unsigned, that Mohini Sharma was not examined by the income tax authorities and there was no corroboration of the unsigned document. If it is not in dispute that the document was found in the course of the search of the assessee, then Section 153A is triggered. Once the Section is triggered, it appears mandatory for the Assessing Officer to issue notices under Section 153A calling upon the assessee to file returns for the six assessment years prior to the year in wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material which has a live link with the Search & Seizure operation, in view of back ground facts and circumstances being emnating from Search & Seizure operation. 17.16 In view of the above discussion, these grounds (Nos. 4, 5, and 6) are dismissed." 45. Aggrieved with such order of the Ld. CIT(A), the assessee is in appeal before the Tribunal. 46. The ld. Counsel for the assessee strongly challenged the order of the Ld. CIT(A) in confirming the addition of Rs. 25 lakhs made by the AO. The ld. Counsel for the assessee submitted that the assessee has received an amount of Rs. 25 lakhs as interest bearing loan from M/s Vigilant Paper Pvt. Ltd. on 23.04.2013. Before the AO, the assessee filed the copy of bank statement evidencing the repayment of loan, balance sheet as on 31.03.2014, Form- 16, interest on TDS etc. to substantiate the identity and creditworthiness of the party and genuineness of the transaction. He submitted that the AO without conducting any enquiry and in absence of any other material in her possession to show that the document/particulars filed by the assessee are false or untrue made the addition which is not correct. Referring to various pages of the paper bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 14,75,802 Repayment of Loan and interest on loan through Banking Channel, Bank Statement is at pg. 50. We find during the course of assessment proceedings, the assessee has filed confirmation from the said party, copy of its PAN No., bank statement of the assessee evidencing the receipt and the repayment of loan, balance sheet as on 31.03.2014, Form-16 for deduction of TDS, etc. is an admitted fact the loan has been repaid before the date of search. The Ahmadabad Bench of the Tribunal in the case of Rohini Builders vs DCIT, reported in (2002) 76 TTJ 521 (Ahd Tb.) has held that when loan has been received through proper banking channel and the same has been repaid through proper banking channel and the other party has confirmed the receipt of the loan then no addition could be made in the hand of the assessee u/s 68 of the Act. We find the above decision of the Ahamdabad Bench of the Tribunal has been upheld by the Hon'ble Gujarat High Court, reported in (2002) 256 ITR 360 (Guj.). Since, the assessee has accepted and repaid the loan through banking channel, due taxes has been deducted on the interest so paid and the amount has been repaid prior to the date of search and the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral in nature is dismissed. ITA No.9156/Del/2019 (AY 2015-16) 58. The assessee has raised following grounds of appeal:- 1. Because the action for initiation, continuation and conclusion of assessment proceedings u/s 153A at an amount of Rs. 1,36,41,377/- is being challenged on facts & law. 2. Because the action is being challenged on facts & law for making additions in assessment proceedings u/s 153 A 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. 93,33,960/- @ 25% of Purchases amounting Rs. 3,73,35,843/- by rejecting books of accounts u/s 145(2), hence the basis of addition is against the commercial expediency, business exigency and accepted modus op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. 59. The ld. Counsel for the assessee did not press grounds of appeal no. 1, 2 and 3 for which the ld. DR has no objection. Accordingly, the grounds 1, 2 and 3 raised by the assessee are dismissed as not pressed. 60. Ground No.4, 5, 6,7and 8 of this appeal relates to the order of the ld. CIT(A) in sustaining the disallowance of Rs. 93,33,960/- being 25% of purchases amounting to Rs. 3,73,35,843/-by rejecting the books of accounts u/s 145(3) of the Act and directing the Assessing Officer to restrict the disallowance to 20% in cases the parties are found to be in existence by Ward Inspector. 61. After hearing the both the sides, we find the above grounds are identical to grounds of appeal no.9 to 13 in ITA No.9153/Del/2019. We have already decided this issue and the grounds raised by the assessee has been partly allowed, wherein, we have directed the Assessing Officer to restrict the profit on such purchases at 2% of the total purchases. Following similar reasoning, we direct the Assessing Officer to restrict the disallowance at 2% of the bogus purchases. The grounds raised by the assessee are accordingly partly allowed. 62. Grounds of appeal no.9 relates to the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he action is being challenged on facts and law for making addition on account of disallowance of purchases amounting Rs. 1,03,22,034/- (25% of purchases Rs. 4,12,88,138/-) on the basis of Honble supreme court in the case of Vijay Protein Ltd. whereas per assessee the facts of said case law is distinguishable and additionally in the alternative the quantum thereof too is being disputed. 6. Because the action is being challenged on facts and law for making addition on account of disallowance of purchases amounting Rs. 1,03,22,034/- on the basis that no stock details submitted whereas per assessee stock register was duly submitted before AO both quantitatively as well as qualitatively and the stock physically tallied with the books of account on the date of search. 7. Because the action is being challenged on facts and law for making addition of Rs. 1,03,22,034/- on account of disallowance of purchases considering whole purchases amounting Rs. 4,12,88,138/- as bogus purchases whereas per assessee documents in support of genuine purchases has been duly submitted and AO has verified the said parties too and additionally in the alternative the quantum thereof too is being disputed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 50,000/- lump sum on estimate basis. Following similar reasoning, we direct the Assessing Officer to restrict the addition to Rs. 50,000/-. The above grounds by the assessee is partly allowed. 73. Ground no.9 relates to the order of the Ld. CIT(A) in confirming the addition of Rs. 33,83,239/- on account of incentive paid for business exigencies and commercial expediency. 74. Facts of the case, in brief, are that during the search proceedings at premises 17/6, Hanspal Industrial Complex, Mathura Road, Faridabad, Pages 54 and 97 of Annexure-A7 were found which contains the details of incentives given in cash of Rs. 33,83,239/-. The A.O, therefore, asked the assessee to furnish the details of such incentives paid and show caused as to why such amount should not be considered as unaccounted cash and added back to the total income of the assessee. It was explained by the assessee that the cash generated out of billing grey market purchases were used for incurring business expenses i.e. incentives, etc and the amount paid to individual persons is less than Rs. 15,000/-. However, the Assessing Officer was not satisfied with the explanation given by the assessee and made the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts and law for making addition on account of disallowance of purchases amounting Rs. 1,05,98,837/- on estimation basis (25% of purchases Rs. 4,23,95,347/-)overlooking and ignoring the Pleadings, Facts, Evidences, Provisions of Act, Principles of law advanced hence unsustainable addition and additionally in the alternative the quantum thereof too is being disputed. 5. Because the action is being challenged on facts and law for making addition on account of disallowance of purchases amounting Rs. 1,05,98,837/- (25% of purchases Rs. 4,23,95,347/-) on the basis of Hon'ble supreme court in the case of Vijay Protein Ltd. whereas per assessee the facts of said case law is distinguishable and additionally in the alternative the quantum thereof too is being disputed. 6. Because the action is being challenged on facts and law for making addition on account of disallowance of purchases amounting Rs. 1,05,98,837/- on the basis that no stock details submitted whereas per assessee stock register was duly submitted before AO both quantitatively as well as qualitatively and the stock physically tallied with the books of account on the date of search. 7. Because the action is being challenge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts u/s 145(3) of the Act and directing the Assessing Officer to restrict the disallowance to 20% in cases the parties are found to be in existence by Ward Inspector. 83. After hearing the both the sides, we find the above grounds are identical to grounds of appeal no.9 to 13 in ITA No.9153/Del/2019. We have already decided this issue and the grounds raised by the assessee has been partly allowed wherein we have directed the Assessing Officer to restrict the profit on such bogus purchases at 2% of the total purchases. Following similar reasonings, we direct the Assessing Officer to restrict the disallowance at 2% of the bogus purchases. The grounds raised by the assessee are accordingly partly allowed. 84. Ground no.8 by the assessee relates to the order of the Ld. CIT(A) in sustaining the commission expenses of Rs. 2,33,174/-. 85. After hearing both the sides, we find the above ground is identical to the ground of appeal no 14 in ITA No.9153/Del/2019 wherein we direct the Assessing Officer to restrict the disallowance to Rs. 50,000/- lump sum on estimate basis. Following similar reasoning, we direct the Assessing Officer to restrict the addition to Rs. 50,000/-. The above groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the advance because work of equivalent amount was done and bill was issued for the same. Since, neither the advance of Rs. 6 Lakhs nor the bill for work of Rs. 85,238/- was found recorded in the books of accounts, we do not find any infirmity in the order of the Ld. CIT(A) in sustaining the addition of Rs. 6 lakhs. Accordingly, the order of the Ld. CIT(A) is upheld. Ground raised by the assessee on this issue is dismissed. 93. Ground no.11 by the assessee relates to the order of the ld. CIT(A) in sustaining the unexplained expenditure of Rs. 13,32,207/- u/s 69C of the Act. 94. After hearing both the sides, we find the AO made addition of Rs. 13,32,207/- on the basis of seized document Annexure A12 which contains details of salary paid to employees of the assessee. The above seized document reflects disbursement of Rs. 13,32,207/- on account of salary in cash for the month of November, December 2016 and January, 2017. The assessee could not give any satisfactory reply for which the AO made addition of Rs. 69C of the Act. This has been upheld by the ld. CIT(A). 95. After hearing both the sides, we do not find any infirmity in the order of the ld. CIT(A) on this issue in absence o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AR could not give any plausible explanation as to why this receipt/expenditure was not recorded in books. Therefore, I find no reason to interfere in the action of AO. In view of above discussion, in principle, this ground (No. 11) is dismissed. 99. Aggrieved with such order of the ld. CIT(A), the assessee is in appeal before the Tribunal. 100. After hearing both the sides, we do not find any infirmity in the order of the ld. CIT(A) in sustaining the addition of Rs. 9,80,410/-, the reasons of which have already been reproduced in the preceding paragraph. The ld. Counsel for the assessee also could not give any satisfactory explanation as to how the order of the Ld. CIT(A) is wrong. We, therefore, uphold the order of the ld. CIT(A) on this issue. The ground raised by the assessee on this issue is dismissed. 101. Ground no.13 by the assessee relates to telescoping. 102. After hearing both the sides we find the above ground is identical to ground no. 15 in ITA No.9153/Del/2019. We have already decided this issue and the benefit of telescoping is allowed. Therefore, following similar reasoning, the above ground by the assessee is allowed. 103. Ground No.14 being general in natur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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