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TMI Blog2022 (12) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... orded a finding that very foundation for making the additions on account of unrecorded sales stands demolished and has no sound basis and the additions on account of additional net profit earned on alleged unrecorded sales were directed to be deleted. It is a settled position that for achieving certain turnover, the assessee has to deploy and invest certain funds/capital. Where a finding has already been recorded as in the instant case that there is no basis for determining unrecorded sales and the whole of the additions have been deleted, the question of capital employed for achieving such unrecorded sales/turnover doesn t arise for consideration. In view of the same, where there is no addition on account of unaccounted sales and the resultant additional net profit, then the question of alleged capital employed to carry out such alleged unaccounted sales and turnover as per the order of the Ld. Pr. CIT doesn t have any legal basis and the same deserve to be set-aside. In the result, the order of the ld PCIT passed u/s 263 of the Act is hereby set-aside. - Decide against revenue. - ITA No. 459/Chd/2022 - - - Dated:- 22-9-2022 - SMT.DIVA SINGH, JUDICIAL MEMBER AND SHRI VIKRAM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsider that the assessment have been framed on the basis of third party evidence and no corroborative evidence was found for alleged undisclosed investment in stock, which is purely on assumptions/presumptions, hence the conclusion drawn by the PCIT is against the facts circumstances of the case. 7. Notwithstanding the above said ground of appeal, the Ld. PCIT has erred in assuming the jurisdiction u/s 263 on the basis of audit objections, which is apparently wrong and incorrect in view of the judgment of Jurisdictional High Court in the case of Sohana Woollen Mill and other judgments of jurisdictional ITAT, Chandigarh Bench, Chandigarh in the case of M/s Ganga Acrowools Ltd. in ITA No.196/Chd/2021 and in the case of Sh. Surinder Pal Singh in ITA No. 576/Chd/2021 vide orders, dated 31.01.2022 and also that 263 proceedings have been initiated at the best of proposal sent by the Assessing Officer/Addl.CIT and, thus, the proceedings are void abinitio. 8. The appellant craves leave to add, amend, alter any of the above grounds during the appellate proceedings have been considered. 2. At the outset, the Ld. AR submitted that the assessee does not wish to press the Gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee company were also recorded u/s 14 of the Central Excise Act, 1944 which allegedly pointed out towards issuance of parallel invoices by the assessee company. As per the information available, there was evidence of unaccounted sales to third parties in the form of delivery sheets etc. In view of this information, the AO proceeded to reopen the assessee s case u/s 148 of the Act by recording reasons for the same. 3.2 During the course of re-assessment proceedings, the AO proceeded to reject the books of account maintained by the assessee u/s 145(3) of the Act and, thereafter, proceeded to complete the re-assessment at an income of Rs. 46,36,749/- after making an addition of Rs. 31,40,021/- on account of additional net profit by applying the net profit rate of 4.42% on the alleged undisclosed sales for the year determined at Rs. 3,62,60,331/- and the reassessment was accordingly completed under section 144 r.w.s 147 vide order dt. 29/12/2019. 3.3 The assessment records were subsequently called for and examined by the Ld. Pr. CIT, Ludhiana and a show cause dt. 28/03/2022 was issued to the assessee. In the show cause notice, the Ld. Pr. CIT stated that for carrying ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled the observation of the Ld. Pr. CIT about alleged capital employed in unaccounted sales having not been considered by the AO for the reason that no corroborative evidence have been found during the course of search by the Director General of GST (Intelligence) and further the AO has duly applied his mind on this issue as well. 5.1 It was further submitted that the assessment was framed under section 144 r.w.s 147 and the order itself as passed by the AO runs into 47 pages and while making the addition, the AO has threadbare discussed each and every issue and worked out the undisclosed sales at page no. 43 of the assessment order and applied the net profit rate and the said order of the AO was subject matter of appeal before the Ld. CIT, Ludhiana who gave part relief and thereafter the assessee filed further appeal before the Tribunal and the Tribunal deleted the entire addition on account of alleged sales outside the books of account and consequently the profit as calculated by the AO for which the part addition was sustained by the Ld. CIT(A) was also deleted. In this regard, our reference was drawn to the order of the Tribunal in ITA Nos. 82 to 86/Chd/2022 dt. 29/07/2022 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal in respect of the order so passed by the AO which is set aside to be decided afresh. Further, the ld CIT DR relied on the order and the findings of the ld PCIT and has also placed reliance on the following decisions: M/s V.M. Spinning Mills Vs. CIT(A)-II, Ludhiana [2011] 16 taxmann.com 119 (P H) CIT Vs. Jaykumar B. Patil [1999] 236 ITR 469 (SC) CIT Vs. Shri Arbunda Mills Ltd.[1998] 147 CTR 474 (SC) Shoreline Hotel (P.) Ltd. Vs. CIT, C-1 [2018] 259 Taxman 49 (Bom) 7. We have heard the rival contentions and purused the material available on record. Firstly, we don t agree with the contention of the ld CIT DR that the whole of the assessment order has been set-aside to the file of the AO. We have carefully gone through the show-cause notice, the submissions of the assessee before the ld PCIT and the detailed discussions and findings of the ld PCIT including the concluding findings at para 7 of the impugned order and find that the assessment order has been set-aside for the limited purposes of examining the matter relating to additional capital employed/invested for maintaining the minimum additional stock of Rs 61,66,723 to carry out unacc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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