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TMI Blog2024 (4) TMI 264X X X X Extracts X X X X X X X X Extracts X X X X ..... AY 2018-19 has been duly recorded in the books of accounts of the assessee company. It is seen from the regular Books of Account that the loyalty incentive income was recorded on 31/03/2018. After receipt of credit notes and necessary documents from the vendors the loyalty incentive were debited to the respective vendors ledgers. Copies of credit note, ledger accounts in the books of vender and ledger account in the books of the Assessee. Thus, it is apparent and clearly evident from the perusal of above extracts of the regular books of account that the income in respect of loyalty incentive been already recognized by the assessee company in its regular books of account. Considering the above facts and circumstances, we find no reason to interfere with the findings and conclusion of the CIT(A), accordingly the Ground No. 1 2 of the Revenue is dismissed. Unexplained investment in stock/suppression u/s 69B - difference between the amount as per books and amount as per the valuation was at a uniform and absolute percentage of 44.82%, which was applied on the basis of GP of the last available unaudited published result of the Company for the half year ending on 30.09.2017 - A.O. based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e find no reason to entertain the findings and the conclusion of the CIT(A) in deleting the addition in the appeals in hand. - Dr. B.R.R. Kumar, Accountant Member And Shri Yogesh Kumar U.S., Judicial Member For the Appellant : Sh. Gaurav Jain, Adv and Sh. Sweta Bansal, CA For the Respondent : Shri Vivek Vardhan, Sr. DR ORDER PER BENCH: All the three appeals are filed by the Revenue against the orders of Learned Commissioner of Income Tax (Appeals)-29 New Delhi [ Ld. CIT(A) , for short], dated 15/09/2020, 07/06/2021 and 15.09.2020 for Assessment Years 2018-19. 2. The Grounds taken by the Revenue are as under: ITA No.1846/Del/2020 1. That on the facts and in the circumstances of the case, the Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs. 23,30,303/- made u/s 69A by the AO, without appreciating the detailed reasons given in the assessment order and without appreciating the fact that incriminating documents, in form of price difference existed in certain items as supplied by specified vendors/suppliers at Chakan Plant only. 2. That on the facts and in the circumstances of the case, the Ld. CIT (A) has erred in law and on facts in deleting the addition of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts in deleting the addition of Rs. 1,10,98,473/-, made by the AO, without appreciating the fact that Shri Deepak Jain (MD) in his statement recorded u/s 132(4) of the 1. T. Act on 24.12.2017 had voluntarily offered the differential value of stock to be its undisclosed income and pay tax accordingly. 4. That the order of the CIT (A) is perverse, erroneous and is not tenable on facts and in law. 5. That the grounds of appeal are without prejudice to each other. 6. That the appellant craves leave to add, amend, alter or forgo any ground(s) of appeal ITA No.948/Del/2021 1. That on the facts and in the circumstances of the case, the Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs. 8,77,96,511/-, made by the AO, without appreciating the detailed findings given in the assessment order and without appreciating the fact that incriminating documents, in form of valuation details of stock recorded as the seized/impounded document, profit on which was worked out at 30.94% against the margin 17.04% shown by assessee company. 2. That on the facts and in the circumstances of the case, the Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs. 8,77,96,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ins details of price difference related to supplies by various vendors at Chakan Plant of the Assessee Company. The A.O relied on the statement of Sh. Girdhari Lal Goyal, General Manager and Sh. Ashok Kumar Gupta, Manager Accounts of the Assessee and Sh. Shailender Negi also the seized document and passed order under section 143(3) of the Act by making an addition of Rs. 23,30,303/- on account of over invoicing of purchase and Rs. 39,68,55,017/- on account of suppressed or under valuation of stock by assessing the income of the Assessee at Rs. 53,55,54,180/-. 5. Aggrieved by the assessment order dated 30/12/2019, the assessee preferred the appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 15/09/2020 allowed the appeal filed by the assessee by deleting the additions made by the AO. As against the order of the Ld. CIT(A), the Department of Revenue filed the present appeal on the grounds mentioned above. 6. Ground No.1 2 are regarding deletion of addition of Rs. 23,30,303/- made u/s 69A of the Act. The Ld. DR submitted that the Ld. CIT(A) deleted the addition without appreciating the detailed reasons given in the assessment order and without appreciating the fact that incr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e opinion/assumed that the over-pricing was in the range of 20% of the value of purchases recorded in the books of account from the relevant parties and made addition of the said notional amount in block period, i.e., AY 2012-13 to AY 2018-19, under section 69A of the Act. Accordingly, the assessing officer made addition of Rs. 23,30,303/- [1,16,51,517*20%] u/s 69A of the Act in the year under consideration alleging the same in the nature of over invoiced or bogus value of purchases which have been received back in cash by the assessee outside its books of account. In the appeal filed by the assessee, the Ld. CIT(A) deleted the said addition. 9. The Ld. CIT(A) found that the seized paper produced at page No.38 39 of the Paper Book, did not contain any information pertaining to year under consideration, i.e., Financial Year 2017-18, relevant to AY 2018-19. The addition was made on the basis of assumption of excessive purchase price, which renders the addition to be notional in nature. Further, the AO made addition considering the contents of data available on the desktop of Sh. Gridhar Lal Goyal as the price difference in supplies of goods received at Chakan Plant which was found to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 92C of the Act as held in following judgments:- The Hon ble Delhi High Court in the case of CIT vs. Indeo Airways (P) Ltd. [2012] 26 taxmann.com 244 (Delhi)/349 ITR 85 (Delhi) The Hon ble ITAT Delhi on the case of ACIT vs. M/s Vatika Green field (P) Ltd., [2009] 121 TTJ 208 (Delhi) The Hon ble Delhi High Court in the case of CIT vs. D.D. Gears Ltd., ITA No.896/2008 Golani Bros. vs. ACIT ; 75 ITD 1 (Pune) Vivek Kumar Kathotia vs. DCIT [2013] 32 taxmann.com 331 (Kol-Trib.). 11. It is also found that the survey u/s 133A of the Act was also conducted on total seven suppliers of the assessee company. Out of which five suppliers were surveyed at the same time, who have categorically denied having indulged in any over invoicing of supplies to the assessee company. The statements of those suppliers are enclosed at page No.116-118 of the Paper Book. The Ld. Counsel has relied on the statement of Sh. Shailender Negi and Sh. Amit Bohra. In the statement of Sh. Shailender Negi, it was nowhere mentioned that he was indulged in any payment of cash outside the books of account to the assessee company on account of over invoicing. The Ld. CIT(A) observed that the said Shailender Negi given confusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come to the extent of Rs. 2,21,75,00,000/- on account of loyalty incentive in its books of account for F.Y 2017-18 based on the written agreement entered into with the suppliers and after expiry of seven years from the date of agreement as has been provided in para 3.3 of the Agreements initial period in terms of Agreements. The assessee company recognizes its revenue and expenses as per the applicable accounting Standards (IndAS) and generally accepted accounting principles and has been constantly following the same over the years. The loyalty incentive accrued to the assessee Company in Assessment Year 2018-19 has been duly recorded in the books of accounts of the assessee company. It is seen from the regular Books of Account that the loyalty incentive income was recorded on 31/03/2018 for Rs. 2,21,75,000/-. A copy of the ledger account filed before Ld. CIT(A) is reproduced at page 356 of paper book are duly reproduced at page 21-23 of CIT(A)'s order. After receipt of credit notes and necessary documents from the vendors the loyalty incentive were debited to the respective vendors ledgers. Copies of credit note, ledger accounts in the books of vender and ledger account in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available unaudited published result of the Company for the half year ending on 30.09.2017. The same was stated to be worked out as under:- Particulars As per books-as per seized sheet (A) Addition on account of valuation as per seized sheet (B) Addition in (A/B x100) Moulds 61,35,18,580 27,49,57,847 44.82% Semi Finished Goods 7,64,54,893 3,42,64,444 44.82% Finished Goods 12,48,88,356 5,59,70,650 44.82% Stock in Transit finished goods 7,06,48,182 3,16,62,076 44.82% 20. The ld. CIT(A) after analyzing the above details was of the opinion that the difference was merely on account of valuation to an extent of absolute percentage which was seemingly applied to various items of stock as mentioned on the said sheet as on 30/11/2017. The seized material relied by the Revenue itself reflected the difference as valuation which was the sole basis of assuming the difference to be unexplained investment, has no legs to stand. 21. During the assessment proceedings, the AO ignored the vital evidences which formed part of the seized material. The evidences that the impugned valuation was wholly and exclusively notional in nature which was prepared for strategic purposes of presentation to prospect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of stock prepared for the purpose of investor representation which did not have any financial implication which has been wrongly added by the Ld. AO. No addition can be made on the basis of such notional figures either by Following the jurisprudence as well as principles of accounting in this respect. The Hon'ble Supreme Court including Jurisdictional and other High Courts have time and again held that no addition can be made on notional basis in following judicial pronouncements: i) Hon'ble Supreme Court in the decision of Sanjeev Woolen Mills v. CIT [279 ITR 434 (SC)] ii) CIT Vs Indian Sugar Gen. Industry Export Import [2012] 19 taxmann.com 42 (Delhi HC) iii) ITAT Delhi in I.T. A. Nos. 4611 4594/Del/2010 vi) Asstt. CIT v. Jyoti Woollen Mills (2009) 125 TTJ 810 (Delhi) v) PR.CIT vs GLADDER CERAMICS LTD (2018) 401 TTR 205 (Guj HC). 25. Further, Ld. AO placed reliance upon the statement of Sh. Deepak Jain. It is the case of the Assessee before us that there was no clear admission of any unexplained investment or undisclosed income on the aforesaid issue in the statement of Sh. Deepak Jain relied upon the Revenue. The statement of Sh. Deepak Jain states that, the said shee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to have been prepared for determining valuation of the stock for the purposes of presentation to the Strategic Investors as on 30/11/2017. The perusal of the impugned seized sheet, the difference was merely on account of valuation to an extent of absolute percentage of 44.82%, which was applied on the basis of GP of the last available unaudited published result of the Company for the half year ending on 30.09.2017. The evidence that the impugned valuation was wholly and exclusively notional in nature which was prepared for strategic purposes of presentation to prospective investors existed in the seized material itself, which were incorrectly brushed aside by the Assessing Officer. It is to be noted that the said seized document contained the similar details of three Companies i.e. M/s Lumax Industries Ltd., M/s Lumax Auto Technologies Ltd. and M/s Lumax D K Auto Industries. 30. We have already discussed elaborately of the similar Companies involved to the similar Companies in the case of Lumax Industries Ltd. in ITA No. 1846/Del/2020 and held that the Ld. CIT(A) has justified in deleting the addition. Finding the parity, in the instant Appeals for the reasons mentioned thereon, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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