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TMI Blog2024 (4) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... t destination is hardly 30 km away from the place of dispatch of goods to the destination of delivery of goods. Even otherwise, from the excise records of the assessee, the goods have been shown as dispatch to the Sangeeta enterprises and relevant quantity of goods are reduced from the stock. Such stock has been sold by Sangeeta enterprises and sales is assessed in the hence of Sangeeta enterprises. Even in the case of unicot food products private limited the dispute was with respect to the sales made by that entity to Samaira enterprises, the coordinate bench has upheld in favour of the assessee. Therefore, we do not find any reason to deviate from the finding of the coordinate bench in that case. We confirm the order of the learned CIT A deleting the addition. Addition u/s 69C - advertisement expenditure incurred by the assessee on video shooting of its product santoor not recorded in the books of account of the assessee - HELD THAT:- As the product Santoor is owned by the assessee, marketed by the assessee and manufactured by the assessee naturally the expenditure is belonging to the assessee only. Thus, the argument that these expenses do not belong to the assessee is devoid of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017 18 and 2018 19 by order dated 25/4/2023 and another appellate order passed on that date also for assessment year 2020 21 and 2021 22. For assessment year 2015 16 parties have filed cross appeals and for other years the Deputy Commissioner of Income Tax, Central Circle 2 (2), Mumbai (The Learned AO) is in appeal. 2. These appeals are as under:- i. ITA number 2377/M/2023 is filed by The Deputy Commissioner of Income Tax, Central Circle 2 (2), Mumbai (the AO) for assessment year 2014 15 wherein the appeal filed by the assessee against the assessment order passed under section 153C of The Income Tax Act dated 31/3/2022 was partly allowed. Following grounds of appeal are raised:- 1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition u/s 68 of the Income Tax Act, 1961 amounting to Rs. 1,81,00,000/- made by the assessing officer, without considering the facts and circumstances of the case and settled position of law. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition u/s 69C of the Income Tax Act 1961 amounting to Rs. 1,49,48,661/ made by the assessing officer, witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounting to Rs. 1,54,28,550/- made by an assessing officer, without considering the facts and circumstances of the case and settled position of law. iv. ITA number 2375/M/2023 is filed by the learned assessing officer for AY 2017-18 against the appellate order passed by the learned CIT A wherein the assessment order passed under section 143 (3) read with section 153C of the act was partly allowed. Following grounds of appeal are raised:- 1. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) erred in deleting the addition was 68 of the Income Tax Act, 1961 amounting to Rs. 1,76,47,599/- made by the assessing officer without considering the facts and circumstances of the case and settled position of law. 2. Whether on the facts and circumstances of the case and in law, Ld. CIT (A) erred in deleting the addition u/s 69A of the Income Tax Act, 1961 amounting to Rs. 1,18,80,500/- made by the assessing officer. Without considering the facts and circumstances of the case and settled position of law. 3. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) erred in deleting the addition u/s 69C of the Income Tax Act 1961 amounting to Rs. 1,47,84 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions and instructions of Mr Jadish Joshi and Mr. Sharma is a relative of Mr JadishJoshi. Mr Manoj Sharma executed all the transactions at the behest of and under the instruction of Mr Jadish Joshi. v. Several materials were seized and found an impounded during search. It was found that Mr Manoj Sharma is handling business operations and other duties in India and in foreign countries. vi. During search based on the seized documents it was admitted by Mr Sharma in his statement that the cash handling work and hawala transaction of Mr Jadish Joshi's companies like Bhisma Agro foods products. Mr Sharma also managed Unicot Food products private limited. vii. In Income tax return, Mr Manoj Sharma has shown only nominal income that is below ₹ 5 lakhs. viii. During search it was found that his wife Mrs. Sangeeta Sharma is merely a partner on paper in the group entities of Mr Jadish Joshi holding 20% share of profit in the smart perfumery and essential oil, Samaira enterprises, director in global technology and trademark private limited, BV, partner in Sangeeta enterprises etc. ix. Therefore, it was concluded by the revenue authorities that the family of the Manoj Sharma is work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the name of Samaira enterprises. xiv. Thus, the transactions are up to assessment year 2017 18 between and related to Bhisma Agro food products private limited relate to sales of Sangeeta enterprises and thereafter of Unicote Foods products private limited with Samaira enterprises. xv. Thus, after assessment year 2017 18, the names of the entities and the business operations were carried out in the different entities in similar manner. xvi. During search, at the premises of Unicot food products private limited, cash invoices issued by two entities namely M/s Samaira enterprises and M/s Sangeeta enterprises were found. The employees of the group stated that these invoices are prepared and managed in the premises of Unicote Food products private limited at the direction of Mr Manoj Sharma. xvii. It was further stated that these cash sales invoices prepared in the name of Samaira enterprises and Sangeeta enterprises are bogus in nature as no actual sales are ever made by these entities to the other parties. xviii. Unicote food products private limited and Bhisma Agro food products private limited are the entities who made the cash sales which were not accounted in the books of thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mited and Unicote food products private limited. It was also found that both these dummy entities i.e., Samaira enterprises and Sangeeta enterprises have also shown some sales made by them to Bhisma Agro food products private limited and Unicote food products private limited for which there were no supporting documents either in the form of lorry receipt, transport details, delivery challans etc. Therefore, a sale made by these two dummy entities to the assessee and Unicote food products private limited is also not genuine. Thus, based on the lose documents found AO reached at the conclusion that :- i. Sales shown by Samaira enterprises is in fact unaccounted sale of Unicote food products private limited and sales shown by Sangeeta enterprises is unaccounted sale of Bhisma Agro food products private limited. ii. Purchases made by Unicote food products private limited from Samaira enterprises and from Sangeeta enterprises by Assessee are bogus sales of these entities as there were no supporting documents. 5. Thus, in the hands of Unicote food products private limited for assessment year 2020 21 and 2021 22 and for assessment year 2016 17 and 2017 18, unaccounted sales are added u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rajeev Arrora. The figures in the statement were mentioned in Kgs wherein 1 KG stands for ₹ 1 lakh. This was confirmed from document number 335 and 334. The document number 335 is a cash voucher dated 4/6/2014 stating 25 Kgs. Based on the actual cash voucher dated 5/6/2014 show the payment of ₹ 25 lakhs. Thus, the AO held that 1 KG refers to ₹ 1 lakh. Assessee was questioned about the explanation about advertisement expenditure of Rs 2.88 crores. Assessee could not show the substantial proof, or the cash transaction carried out between the assessee and Mr Rajeev Arrora. As assessee failed to establish the genuineness and the creditworthiness of the cash, transaction of Rs 2.88 crore given to Mr Rajeev Aurora the addition was made as unexplained expenditure under section 69C of the act. 11. Consequently, assessment order under section 153C of the Act was passed on 31/3/2022 wherein the returned income of a loss of ₹ 19,714,768/- was assessed at ₹ 130,245,908/-. It resulted into an addition of unexplained income under section 68 of the act of ₹ 101,445,908/- and unexplained expenditure under section 69C of the act of ₹ 288 lakhs. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of unaccounted advertisement expenditure has resulted into appeal filed by the assessee before us. 15. On the ground of appeal of the learned AO, the learned departmental representative made a written submission on 13/2/2024 wherein he has discussed the various statements recorded during search. He submits that a statement of Mr Manoj Sharma was recorded on 10/2/2021 wherein in answer to question number 16 18 that there is an unaccounted sale in case of Unicote food products private limited. He also referred to the statement recorded of Mr Arvind Kumar Singh wherein he has specifically confessed in answer to question number 16 that Samaira enterprises did not make any sales. Cash is given by Mr Manoj to employees and is deposited in the account of Samaira. Ultimately, this cash deposited in the bank account of Samaira Enterprise was shown as sales in the books of Samaira Enterprises. He further referred to the statement of Mr Ganesh Gopi recorded on 9/2/2021 wherein also the above statement is confirmed. He vehemently submitted that. i. Sales made by the assessee to Sangeeta enterprises are completely bogus as there is no evidence of movement of goods from assessee to Sangeeta ente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee i.e. Bhisma Agro Food products private limited and Sangeeta enterprises. This is admitted by the LD AO in assessment order itself. iii. sales are accounted for in the books of the assessee, quantitative details are produced, it is an excise duty chargeable product which has been sold, same is also recorded in the books of the assessee as sales, purchases are recorded in the books of Sangeeta enterprises, books of accounts of the assessee are not rejected but accepted, the sale consideration is received by cheque, quantitative details are not disputed either by the excise authorities, VAT authorities either in the case of the assessee or in the case of Sangeeta enterprises, these facts are not in dispute. iv. Addition is merely, made on basis of statements of employees who have already retracted the same and hence, reliance on such statements cannot be made. None of the employees is examined during the assessment proceedings. v. The learned AO could not have made addition of the sales already recorded in the books of the assessee and on which profits are shown. vi. For cash credit assessee has proved identity of M/s Sangeeta Enterprises, Creditworthiness also as it is an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal representative vehemently stated that. i. In the ITAT , CIT (A) and ld. AO order of Unicote Food products Private Limited there is no recording of the fact that whether the goods have travelled in the same lorry or not, the coordinate bench has also not given any finding of the fact but has merely reproduced the order of the learned CIT A. In absence of any independent finding by the coordinate bench, that order does not bind the coordinate bench. ii. Even otherwise that decision is distinguishable on the fact that over and above the other allegations of the revenue, it is conclusively proved by the revenue that the lorry which has been mentioned in all the invoices is one, the distance stated between the two places i.e. source and the destination insofar as that such a lorry could not have transported the goods in which the timings are stated in the invoices. iii. He submits that the coordinate bench in the case of Unicote for products private limited has accepted the contentions of the learned authorised representative regarding the sales made by that company to Samaira enterprises only on the basis of the turnover, gross profit, net profit of the Samaira enterprises and has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e recorded under section 153C does not have document identification number and therefore it is invalid. As satisfaction note is invalid, assessment based on that is also invalid. The learned authorised representative relied upon the decision of the honourable Bombay High Court in case of Ashok commercials enterprises [2023] 154 taxmann.com 144 (Bombay)/[2023] 459 ITR 100 (Bomb. Wherein it has been held that if an order/communication is to be issued without a DIN, it can be done only after recording reasons in writing in file and with prior written approval of Chief Commissioner/Director General of Income Tax. Therefore, the learned authorised representative submitted that the satisfaction not provided does not have a DIN; therefore, the assessment order itself is bad. Thus, issue is squarely covered in favour of the assessee. 19. The learned departmental representative vehemently submitted that the argument made by the learned authorised representative is devoid of any merit. He submits that there is no communication of satisfaction note to any other person other than the assessing officer. When there is no communication, behaviour is the need of document identification number. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by assessee to Sangeeta enterprises and from assessment year 2018 19 onwards unicote food products Ltd has made its sale to Samaira enterprises. Such sale is recorded in the books of the assessee for the respective period and of Unicote food products private limited post FY 2017 18 that is bogus and therefore the addition under section 68 of the income tax act has been made. As far as the issue is concerned, up to assessment year 2017 18 and after 2018 19 in the case of assessee as well as Unicote Food products private limited is identical. The case of the unique court food products private limited has been decided by the learned CIT A which has travelled before the coordinate bench in coordinate bench has upheld the order of the learned CIT A deleting the addition under section 68 of the income tax act made by the AO with respect to sales made by unicote food products private limited to Samaira enterprises. The coordinate bench has held in those cases of M/s. Unicot Food Products Pvt. Ltd. [ITA No. 1803-1805/Mum/2023 (Assessment Year: 2019-2020, 2020-21 2021-22)] dated 30/09/2023 as under:- 15. After considering the above submissions made by the ld. CIT DR as well as ld. Coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ira Enterprises. If that premise of the AO is to be accepted then sale of M/s. Samaira Enterprises would be nil which cannot be the case, because this entity has shown sales and is assessed to tax since past. Thus, based on these documents and the ld. CIT (A) has given his elaborate finding for his conclusion and given direction to the ld. AO in para 6.10 and 6.11 as incorporated above, wherein, he has directed the ld. AO to verify and cross check, whether the sales adopted by him from the loose sheets appears in the cash book / bank book / sales of M/s. Samaira Enterprises or not and similar exercise to be undertaken with respect to expenses of the outgoing in the loose sheets seized and impounded from the search proceedings. We do not find any reason to tinker with such a direction which is based on the facts and material on record. Accordingly, order of the ld. CIT(A) is confirmed on the grounds raised by the Revenue is dismissed. 22. We find that only difference in that order of the coordinate bench is that instead of the name of Samaira enterprises, it is Sangeeta enterprises and the change for sales. Thus, the amount of sales recorded by the assessee in its books of accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act of ₹ 288 lakhs. On careful consideration of the order of the learned CIT A in fact it is the ground of appeal of assessee as the learned CIT A has not deleted the addition but has confirmed the addition. Therefore, this ground of appeal of the learned assessing officer is erroneously taken. This fact has also confirmed by the learned departmental representative that in fact the learned CIT A confirmed the addition of ₹ 288 lakhs. Accordingly, ground number 2 of the appeal of the AO is dismissed. 25. In the result, appeal filed by the learned AO is dismissed. 26. Now we come to the appeal of assessee wherein the only ground raised is with respect to the confirmation of addition by the learned CIT A ₹ 288 lakhs under section 69C of the act. The fact shows that there is advertisement expenditure incurred by the assessee on video shooting of its product santoor . From the seized material it is noticed by the learned AO that assessee has incurred total cost of ₹ 28,822,000 comprising of video shooting expenditure of ₹ 21,072,000 and cost of actors of ₹ 7,750,000 which is not recorded in the books of account of the assessee and therefore the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended that a sum of ₹ 64 lakhs is shown to be given by Mr Rajeev Arora and as such should not be considered the expenses of the appellant hence it could not be added even otherwise in the hands of assessee. His submission was that when the sum is given by Mr Rajeev Aura how the same could have been added in the hands of the assessee. He further stated that a sum of ₹ 5,922,000 is stated to be given to Rajeev and Soham and as such, the amount is not paid, hence it cannot be considered for making the unexplained expenditure in the hands of the assessee. He further stated that when the expenditure itself has not been incurred by the assessee, how the addition can be made. He further submitted that the learned CIT A at the time of confirmation of the addition did not give any logic of confirming the addition in the hands of the assessee. Thus, his argument was that expenditure does not belong to this year, and even if it belongs to this year, part of the expenditure has not been incurred by the assessee as the relevant cheques have not been cleared and the document itself says that certain expenditure has been incurred by the other parties. 28. The learned departmental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is mentioned that on 4/3/2014 a cheque is given to Mr Rajeev of ₹ 2,224,728/ which has not yet been cleared. Thus, it is apparent that out of the total payment to be made of the expenditure of ₹ 28,222,000 the payment of ₹ 229 lakhs belongs to the period prior to 4/3/2014. Thus, the above payment, if at all made, does not belong to financial year 2014 2015. Thus, addition could not have been made for assessment year 2015 2016. There is another angle to this document. Apparently, the total amount of the expenditure that has been incurred is ₹ 28,822,000/ . These amounts of expenditure have been met by the assessee by payment made in cash to Mr Rajeev Aurora of ₹ 165 lakhs. Further sum of ₹ 64 lakhs has been paid by Mr Rajeev Aurora to various actors. Thus, ₹ 229 lakhs have either been paid by Mr Rajeev Aurora directly or already paid by the assessee to Mr Rajeev. Further this leaves the balance of ₹ 5,922,000 which is still stated to be payable to Mr Rajeev Aurora. Out of the sum, a cheque of ₹ 2,224,728-dated 4/3/2014 is given to Mr Aurora, which has yet not been cleared. Therefore, still balance of ₹ 3,697,272 remains. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer found that addition of Rs 1 43,45,325/ is required to be made under section 69A and a sum of ₹ 4,945,000/ is required to be made under section 69C of the act as unexplained expenditure. Similarly, a loose paper number 4 was found wherein the cash transaction of ₹ 19,050,003 and 25 were found. The learned assessing officer noted that a sum of ₹ 9,566,775/ is required to be added as an unexplained money under section 69A of the act and sum of ₹ 9,483,550/ is required to be made under section 69C of the act. Despite the various opportunities, assessee could not furnish the explanation to the satisfaction of the learned assessing officer. The learned AO noted that as Mr Manoj Sharma has failed to prove either loose papers were found in his possession and the details of the newspapers were not related to him stop further from the statement recorded during the search of Mr Sharma and others it is clear that the unaccounted money of Unicote food products private limited and assessee were handled by Mr Manoj Sharma and park it as per the direction of Mr Jagdish Joshi. The details and nature of cash transactions newspapers were found in the possession of Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after reasons and its decisions are given which is as under:- 15. After considering the above submissions made by the ld. CIT DR as well as ld. Counsel for the assessee we find that before the ld. AO as well as ld. CIT (A), assessee had stated that in order to cater to the demand of herbal nut in the state of Tamilnadu, there was another entity which was handling the supply chain to various retailers and small vendors which was M/s. Samaira Enterprises. The assessee would sell the product to M/s. Samaira Enterprises, which in turn would sell the products to the small and unorganized pan masala customers from its office / depot as over the counter sales. These retailers used to buy the products in cash. All the sales made to M/s. Samaira Enterprises has been duly reflected in the books of accounts of the assessee company and offered as income on which VAT, GST has also been collected and paid. Further, the counter sales made by M/s. Samaira Enterprises have also been recorded in its books of accounts and have been offered to tax in its return of income. It is also a matter of fact that in the statement recorded by Shri Manoj Kumar Sharma, he has merely stated that he was handling th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar except the change in the amount and the order of the learned AO and the learned CIT A are also identical,, respectfully following the decision of the coordinate bench we dismiss ground number 2 of the appeal of the AO and confirmed the order of the learned CIT A deleting the addition of ₹ 23,912,100/ made by the learned AO under section 69A of the act. 37. Ground number 3 of the appeal is with respect to the addition of u/s. 69C of ₹ 15,428,550/ made by the assessing officer which was deleted by the learned CIT A. This is also based out of same seized paper number three and number four wherein part of the addition was made under section 69A of the act of ₹ 23,912,100 and part of the addition is made under section 69C of ₹ 15,428,550. This ground is identical to the ground number 3 of the appeal of the learned AO for assessment year 2020 21 in case of Unicote Food products private limited. As the addition with respect to the loose paper number 6 12 has been deleted by the coordinate bench in case of unique products private limited, as this addition is also arising out of the same, respectfully following the decision of the coordinate bench where the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 2016 17, we also for the similar reasons, dismiss ground number 2 and 3 of the appeal of the AO for assessment year 2017 18. 41. Accordingly, appeal of the learned assessing officer for assessment year 2017 18 in ITA number 2375/M/2023 is dismissed. ITA number 2373/M/2023 AY 2018-19 42. ITA number 2373/M/2023 is filed by the learned assessing officer for assessment year 2018 19 wherein the only ground of appeal is with respect to the deletion of addition of ₹ 11,405,099 made under section 68 of the income tax act by the learned assessing officer with respect to the sales made by the assessee to M/s Sangeeta enterprises. This ground is identical to ground number 1 of the appeal for assessment year 2015 16, 2016 17 and 2017 18 of the appeal of the learned AO. The facts relating to that ground, orders of the lower authorities, arguments of the parties are identical except the change in the amount. While deciding all those grounds for those assessment years, we have upheld the order of the learned CIT A because of the reason that such order based on the appellate order of the first appellate authority, travelled up to the coordinate bench and confirmed by ITAT. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect to the addition under section 68 of the act of ₹ 4,188,000 and another ground of addition under section 69A of ₹ 4,279,483/deleted by the learned CIT A. 48. Ground number one is identical to ground number 1 in appeal of the learned assessing officer for all other years wherein the addition is made with respect to the sales made by the assessee to M/s Sangeeta Enterprises. This has been dealt with in appeals of the assessing officer for earlier years as per ground number 1 of those appeals wherein the order of the learned and CIT A has been confirmed. As there is no change in the facts and circumstances of the case, we confirm the order of the learned CIT A for this year also. Ground number 1 is dismissed. 49. Ground number 2 is with respect to the addition under section 69A of ₹ 4,279,483 made by the learned AO under section 69A of the act. The fact of the case shows that during survey physical inventory of stock was taken which was valued at ₹ 8,061,408/ . Statement of supervisor was recorded. During survey, stock register was not found. At the premises covered under survey, balance sheet was found as on 8/2/2021 which had the closing stock value o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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