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TMI Blog2022 (9) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... s not applicable in the present facts of the case. Considering the totality of the facts and circumstances of the case as observed above we reject the legal issue raised by the assessee. Addition of URD cash purchases during the course of assessment proceedings u/s 153C - From the AO observation of the AO, it has been stated that the details of the URD vendors of Iron Ore was not submitted before the AO and even it was not submitted before us. Considering the totality of facts and circumstances of the case for substantiating the URD purchase made by the assessee, we think it fit to send back the issue to the file of the AO for verifying from the list of the URD vendors as stated before the AO and AO shall decide the issue in accordance with law. The assessee shall be given reasonable opportunity of being heard and he is directed not to seek adjournment for early disposal of the case. Unexplained source of deposit - We observe that the assessee has deposited cash of Rs.22.00/- lakhs on 29/3/2010 in Axis bank account. Since we are remitting the issues for the assessment years 2008-09 and 2009-10 to the file of the AO, we remit this issue also to the file of AO for fresh exa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been provided to the appellant and thus the assessment has no legs to stand the test of law. 4. Without prejudice the orders of the authorities below are bad in law on the ground that: - a) The search initiated in the case of the appellant is illegal and ultra vires the provisions of section 132(1)(a), (b) (c) of the Act; b) That the search is conducted not on the basis of any prior information or material inducing any belief but purely on the suspicion and therefore, the action under section 132(2) is bad in law and consequent assessment is null and void-ab-initio on the parity of the ratio of the decision of the Hon'ble Apex Court in the case of UOI vs. Ajith Jam, reported in 260 ITR 80. c) The learned authorities below have not discharged the burden of proving that there is a valid initiation of search under section 132(1)(a), (b) (c) of the Act, its execution and its completion in accordance with law to render the proceedings valid under the facts and circumstances of the case. d) The learned CIT(A) failed to appreciate that the intention of the amendment to Section 132(1) of the Act was to maintain confidentiality of the source of info ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in violation of the settled principles of natural justice and thus the order of assessment needs to be set aside under the facts and circumstances of the case. b) The order of assessment is bad in law as the approval of the Additional Commissioner under section 153D of the Act presupposes the application of mind by the Joint Commissioner which is not discernible from the order of assessment on the facts of the case. 12. The appellant denies himself liable to be levied interest under sections 234A, 234B 234C of the Act and further the computation of interest was not provided to the appellant as regard to the rate, period and method of calculation of interest under the facts and circumstances of the case. The appellant expressly urges that the period of levy of interest is not in accordance with the provisions of the Act. 13. The Appellant craves leave to add, alter, delete or substitute any of the grounds urged above. 14. In view of the above and other grounds that may be urged at the time of the hearing of the appeal, the Appellant prays that the appeal may be allowed in the interest of justice and equity. 3. The brief facts of the case are that Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of the claim. 3.2 Accordingly, the AO completed the assessment, which is as under :- During the course of search proceedings documents and loose sheets marked as A/TBS/01 to A/TBS/02 were seized from the residence of Sri C.A. Rajasekhar, Vidyanagar, 5th Cross, Bellary on 25.10.2010. Also the documents and loose sheets marked as 1 to 9 (Volume-I), 1 to 12(Volume-II), 1 to 14 (Volume-Ill) were seized from, the office of M/s Chunduru Associated, No. 32, :Khaja Complex, Infantry Road, Bellary on 25.10.2010. One Sony CD containing data marked as 10(Volume-II) was also seized from the, office of M/s Chunduru Associated, No. 32, Khaja Complex, Infantry Road, Bellary on 25.10.2010. On continuation of search operation on 03/11/2010, documents and loose sheets marked as A-1/CAR/01 to A-1/CAR/03 were seized from the residence of Sri C.A. Rajasekhar, Vidyanagar, 5 Cross, Bellary. One Pen drive marked as A-i /CAR/03, containing data from computer was also seized on 03/11/2010.Detatls of the issues arising from the seized materials are discussed in the following paragraphs; It is seen from the books of accounts maintained in tally package seized on 25.10.2010 at M/s Chunduru Asso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extracted iron ore. Therefore the entire URD purchases can be disallowed under explanation to section 37(1) of IT. Act 1961. Since it was illegally extracted iron ore on which no royalty is being paid and there were no valid permits for transportation of material. The assessee did not produce the persons from whom the material was purchased. The assessee neither produced the persons from whom the URD cash purchases are made nor submitted the postal address, PAN and other basic details. Even though the assessee has stated that the he has enclosed the list of people along with the addresses from whom the material is purchased, but th submission letter was not enclosed with the same. From the above mentioned facts it is evident that the assessee is trying to misquote the exceptions to section 40(A)(3) which is mentioned in the form of rule DD. It is also clear that the assessee has made cash payments for the purchase of illegally extracted iron ore. It is clear from the ledger extracts of the URD purchases which is maintained in the tally software which was seized in the course of search on 25/10/2010 at the business premises of M/s Chunduru Associates at Bellary that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the undersigned: 1. Full and correct address of the parties along with their PANs from whom the unregistered iron ore is claimed to be purchased, for the purpose of verification by this office . 2. Substantiating evidences like cheque numbers and, bank statements vide which the payments to the unregistered dealers is claimed to be made.,- 3. Copies of mining license held, if any, by the parties from whom the unregistered purchase of iron ore has been made. 4. Cause the persons claimed as unregistered dealers with their details like name, address with PAN along with their identity card for the purpose of verification by this office. 5. If Cash purchase then party wise break yup along with confirmation with that effect. 6. Purchase invoices in proof of purchase. In response to the above, the assessee has submitted that his submissions vide his letter dated 25.03.2011 may be treated as his reply to the above query. As discussed above the assessee vide his letter dated 25.03.2011 has stated that unregistered purchase has been made from small farmers to dispose of the iron ore found in their forms and since they are one time sellers the payments are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning, given the fact that the assessee has failed to establish the genuineness of the unregistered dealers. The assessee hs not responded to the above query raised vide the final show cause notice dated 08.03.2013 1. The assessee firm has not produced any party /person to whom the payment is made in respect of the above URD Purchase for the purpose of verification by this office as called for. Vide this office notice dated 08.03.2013. 2. For the purchases not be treated as illegal expenditure, the onus is on the assessee to prove that the said purchase is within the legal permissibility, especially when it is proved beyond reasonable doubt that the said purchase is not genuine and it is a bogus entry as discussed in Para-I of this order. It is also a known fact that iron ore found in the area of business operation of the firm has been found to be traded illegally excavated without proper license from the department of Mines and Geology and clearances from ministry of Environment and Forests. In the light of the above the onus ties squarely on the assessee to substantiate the genuineness and legality of the unregistered purchase by producing evidences with regard to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the name of Shri. B. Nagendra (as per annexure 1). As the warrant was issued in the case of Shri. B. Nagendra only, assessment in the case of above mentioned assessee was rightly concluded u/s 153C as there was no case doing the same u/s 153A. 5.3 It is submitted that the statement of the AO that the warrant was not in the name of the assessee is factually incorrect and unfounded. It is relevant to state that the search was conducted on 25.10.2010 in the premises of the assessee and the Panchanama was prepared on the said date as per which the warrant was issued in the name of the assessee and the said warrant of authorisation was shown to the assessee by the authorised officer in presence of the Panchas. It is submitted that the assessee had furnished the copy of the Panchanama drawn on 25.10.2010 before the CIT(A) and the CIT(A) has confirmed the fact that the warrant was in the name of the assessee. He further submitted that the assessee had contended before the CIT(A) that the proceedings completed under section 153C of the Act are not in accordance with law and prayed for quashing the said assessment order. However, the CIT(A) dismissed the appeal of the assessee by holdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has not been given any notice under any law to state that there has been illegality in his transactions therefore, the provisions of sec.37(1) is not applicable to the instant case. Thus, the disallowance of purchase from unregistered dealers of Rs.7,55,58,161/- and Rs.1,07,27,670/- needs to be deleted. 6. The ld.DR reiterated the order of the lower authorities and further submitted that the warrant of authorization was issued in the name of Sri. B. Nagendra, which is evident from Warrant of authorization u/s 132 of the Act, in Form No.45, the search warrant was issued to search the premises of M/s. Chandru Associates Prop: C.A Rajasekhar, the assessee. It is further submitted that while preparing the Panchanama by the search team by oversight they had written in column No. a) of Panchanama, as Sri. C A Rajasekhar instead of Shri. B. Nagendra. (Copy of Panchanama is enclosed). However, the Form No.45 is clearly shows that Warrant is issued in the name of Shri. B. Nagendra and not in the name of Shri C.A Rajasekhar. Therefore, considering the contents mentioned in the warrant of Authorization dated 22.10.2010, assessment proceedings completed by AO invoking provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ADKPN 9671 M) and the address is Khaja Complex, 32 Rahim Manzil, Infantry Road, Cantonment, Bellary, office of C.A Rajasekar issued by DICT (Inv.), Bangalore dated 22.10.2010 and we found that the Revenue had issued the warrant of authorization in the name of Shri B Nagedra but not on the name of the assessee as contested by the ld.AR. Further, the assessment order was passed on 30/3/2013 after receipt of approval u/s 153D of the Act, the date of order mentioned in the assessment order is a typographical mistake which is clear from the remand report dated 12/02/2015, which is placed at paper book page No.85. We also observe that the notices were also issued by the AO and the assessee has participated in the assessment proceedings after the 15th March 2013. Therefore, it cannot be said that the order has been passed after 15th March, 2013. As per ground No.8 the assessee has contested that the seized material has not been provided to the assessee even after making request to the AO but during the course of hearing before us, he could not produce any evidence in this regard so tht it can be justified that the principal of natural justice has not been given and he has also not provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rities are similar as decided above, therefore, the decision in ITA No.1733/Bang/2018 shall apply mutatis mutandis in ITA No.1734/Bang/2018. Hence, this issue is also sent back to the AO as stated above. 8.1 In the result, the appeal is allowed for statistical purposes. ITA No.1735/Bang/2018 9. The legal issue raised by the assessee is similar as decided in ITA No.1733/Bang/2018, therefore on the legal issue shall apply mutatis mutandis in ITA No.1735/Bang/2018. 9.1 In the result, the legal issue raised by the assessee are rejected. 10. In regard to addition of Rs.22.00 lakhs the observation of the CIT is as under:- 10.1. The A.O. has observed that a sum of Rs.22,00,000/- cash deposits were made in the bank account of the appellant and sought for an -explanation for the same. The appellant has contended that the explanation was sought for in respect of cash deposit made on 3103.2010 and the same was explained. It is seen that the appellant has not explained the source of cash deposits during the financial year 200940. He has stated that the cash deposit of Rs.22,00,000/- into the Axis bank account is explainable and the addition was made on wrong appreciator ..... X X X X Extracts X X X X X X X X Extracts X X X X
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