9911796707
TMI Blog2022 (11) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order passed u/s 143(3) r.w.s. 153C of the IT Act as invalid. 2.1 The learned CIT(A) ought to have appreciated the fact that the Chennai Tribunal in the case of ACIT vs. Leela Distilleries P. Ltd. (ITA no.2714- 2716/Mds/2016 dt 28.07.2017) that where no asst. u/s.!43(3) has been completed, even though no incriminating materials were found during the course of search', the AO has jurisdiction to make additions U/S.153A. 2.2 The learned CIT(A) ought to have appreciated the fact that the Hon'ble Supreme Court in the case of CIT vs. S.Ajit Kumar (404 ITR 526) has held in the context of asst. U/S.158BC, that survey conducted simultaneously can be brought within the scope of asst. u/s.158BC. 2.3 The learned CIT(A) ought to have appreciated that the addition was made by the AO based on the fact that M/s.Butterfly Gandhimathi Appliances Ltd.(BGAL) was inflating its purchases of wet grinders and spare parts, of which the major supplier was Ms.A. Gandhimathi, as a higher price was claimed to be paid for the materials purchased from the assessee. 3. The learned CIT(A) erred in deleting the disallowance by the AO of purchases from unregistered dealers. 3.1 The lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the course of search, it was further noted that M/s.BGAL was inflating its expenditure in respect of its purchases. Therefore, a survey operation u/s.133A of the Act, was conducted in the case of the assessee on 19.03.2015. Consequent to survey, notice u/s.153C of the Act, dated 29.03.2016 was issued calling for return of income. In response, the assessee had filed her return of income on 08.06.2016 admitting total income of Rs.78,17,460/-. 4. During the course of assessment proceedings, the AO noticed that the assessee has made unregistered dealer purchases of Rs.5,25,66,330/- and for which, a sum of Rs.4,73,26,975/-, has been paid through banking channel. Further, a sum of Rs.10,95,793/- has been paid in cash, but each cash payment was less than Rs.20,000/-. The assessee had also made cash payment of Rs.41,43,562/- against unregistered dealer purchases and each cash payment is more than Rs.20,000/-. Therefore, the AO after considering relevant facts and also taken note of report submitted by the DDIT (Inv.), Unit-1, Coimbatore, opined that unregistered dealer purchases claims to have made from certain persons, is not genuine which is not supported by necessary evidences. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissions to the DDIT(Inv), Unit 1, Coimbatore; to cause enquiry regarding the genuineness of the supplies made by the unregistered dealers to the assessee. The DDIT(Inv), Unit 1, Coimbatore after causing enquiry and verification in respect of some of the unregistered dealers stated that in response to summons issued to Eashwaran on 14.12.2016, he appeared before the DDIT(Inv.), Coimbatore, and has categorically stated that no transaction were done with. Smt. A Gandhimathi. Also summons issued to Nachimutthu and Verakumar by the DDIT(Inv.), Coimbatore were returned un-served due to insufficient addresses. Also the postal addresses given by the assessee in respect* of Kasi and Aayakannu are not clear. These findings were confronted to the assessee who did not have any further submission to be made. During the course of scrutiny proceedings, the AR also stated that the VAT was paid by the assessee on behalf of the suppliers. It is not clear why the assessee should pay VAT on behalf of the suppliers. It casts a doubt on genuineness of the purchases. This therefore appears to be last minute attempt to prove the purchases as genuine. However, such a stance is selfserving and not cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, the AO cannot frame the assessment u/s.153C of the Act. The relevant findings of the Ld.CIT(A) are as under: 5. I have perused the Asst. Order, statement of facts, grounds of appeal, written submissions, remand report and the rejoinder. After going through the same, the issue is decided as under: 5.1 While vehemently contending against the additions made in all the A.Ys, the stand taken by the appellant was that when there were no incriminating documents seized in the course of search at the premises of M/s. Butterfly Gandhimathi Appliances P Ltd, (the main person) relating to such other person (here the appellant) issuance of notice u/s. 153C is not legally correct. 5.2 The AR further contended that even in the satisfaction note it has been clearly mentioned that there was only a survey operation u/s. 133A. This clearly renders the issuance of notice u/s. 153C not sustainable. 5.3. As can be seen from the records, the action (survey u/s. 133A) in the case of the appellant was not consequent to unearthing of any incriminating documents during search in the case of the main person. This inference is drawn from the fact that both the search in the main case and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse of search in the case of M/s.BGAL on 19.03.2015, the fact of inflation of purchases made from the assessee was noticed and on this basis, the AO recorded satisfaction that income of the assessee is under assessed and thus, invoked the provisions of Sec.153C of the Act. The Ld.CIT(A) without appreciating the above facts simply deleted the additions made by the AO. In this regard, he relied upon the following judicial precedents: 1. CIT v. Anil Kumar Bhatia [2012] 24 Taxmann.com 98, Delhi. 2. Kamlesh Bhai Dhamashibha Patel v. CIT [2013] 31 Taxmann.com 50, Gujarat. 3. Canara Housing Development Co. v. DCIT [2014] 49 Taxmann.com, 98 Karnataka. 4. CIT, Thichur v. St. Francis Clay Décor Tiles [2016] Taxmann.com 234, Kerala 5. E.N.Gopakumar v. CIT [2016] 75 Taxmann.com 215, Kerala 9. The Ld.AR for the assessee, on the other hand, supporting the order of the Ld.CIT(A) submitted that during the course of search in the case of M/s.BGAL, nothing was found which belongs to the assessee and her business. However, the AO has framed assessment u/s.153C of the Act, only on the basis of statement recorded from Mr.V.M.Seshadri, Managing Director of M/s.BGAL, even though, not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scaped from tax and further, the AO of such other person should hand over books of accounts and other money, bullion, jewellery, etc., to the AO having jurisdiction over the other person. In this case, nothing was found which belongs to the assessee during the course of search on 19.03.2015 in the case of M/s.BGAL, except a statement from Mr.V.M.Seshadri, Managing Director of M/s.BGAL. No other incriminating material was found and seized during the course of search which suggest undisclosed income belongs to the assessee. Further, even if you go through statement u/s.132(4) of the Act, recorded from Mr.V.M.Seshadri, Managing Director of M/s.BGAL, he never accepted inflation of purchases made from the assessee, but what he was stated in the statement is that for one lot of purchases, they have paid Rs.20/- per piece extra when compared to purchases from other parties, which is once against based on demand and supply and requirement of the business. Therefore, from the above statement nothing can be found that any undisclosed income or money or jewellery or bullion etc., belongs to the assessee was found during the course of search. Therefore, in our considered view, in absence of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resh M Mehta stated that he looked after project clearance and tenant association matter and that these areas required Jot of cash which was spent through onmoney taken in cash on sale of flats. Even in respect of statements of employees of group, nowhere they have specifically attribute the name of the assessee with reference to receipt of on-money while answering questions to statement recorded during the course of search. All along the director as well as the employees made a general statement about receipt of on-money with reference to a question posed by the Investigation wing without any reference to particular seized material found as a result of search. Similarly, the AO has taken circumstantial evidence of cash and unexplained jewellery found during the course of search to argue that the assessee is in the habit of suppression of sales by showing under valuation which was used in its business, but on perusal of cash and other assets found during the course of search it was very clear that the cash was found from 112-122, Hira Bhavan, Rajaram Mohan Roy Road, Prarthana Samaj, Mumbai, which was common premises for four entities of the assessee group and that the total cash fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the concerned person, but it is also equally true that a statement per se by itself is not conclusive evidence. In this case, the AO has failed to bring any corroborative evidence to support the statement of directors as well as employees in order to support his action of estimation of on-money on sales declared by the assessee for the relevant financial years. Therefore, AO was erred in estimating adhoc onmoney received from sale of flats on the basis of statement of some employees even after such statement has been retracted and a/so nothing on record to indicate that the assessee is in receipt of on-money. (Para 16) ITAT has accepted the fact that if the date of search, i.e. on 26-05-2011 is considered, the assessment for AY 2009-10 is unabated, because the assessment for the impugned assessment is completed u/s 143(3) on 31- 12-2009 and further, no proceedings of whatsoever was pending as on the date of search. Once an assessment is unabated as on the date of search, it is a settled law that no addition can be made in absence of any incriminating material found as a result of search. There is no doubt of whatsoever with regard to the reference of incriminating material fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come pertains to these assessment years. Therefore, we are of the considered view that the AO ought not to have made assessment u/s.153C of the Act, and made additions towards purchases made from unregistered dealers. The Ld.CIT(A) has rightly apprised the facts and held that the action of the AO in framing the assessment u/s.153C of the Act, was only survey u/s.133A of the Act, conducted is legally incorrect. 13. Having said so, let us come back to additions made towards purchases from unregistered dealers. The assessee has declared said purchases to Commercial Tax Authorities and paid VAT applicable to URD purchases. The assessee claimed that it has purchased wet grinders and accessories from unregistered dealers who are mainly a cottage industry situated in remote areas. The assessee further claimed that they do not have any VAT registration and PAN. Therefore, merely for the reason of non-furnishing of confirmation from them, additions cannot be made, more particularly when the assessee has filed all details including invoices for purchases, payment by cheque and VAT returns filed for relevant months which contains details of URD purchases. We find that as claimed by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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