9911796707
TMI Blog2024 (10) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... der was passed the Assessing Officer, u/s 153A read with Section 143(3) of the Income Tax Act. , 1961 (hereinafter referred to as "the Act"). As per the assessment order dated 20.12.2019, passed by DCIT, Central Circle-32, New Delhi, the Assessing Officer, income of the assessee was computed at Rs. 16,39,97,716/-, by making addition of Rs. 15,85,66,266/- , on the basis of income from undisclosed sources. This addition includes a sum of Rs. 15,69,963/- by way of commission paid at the rate of 1%. While passing assessment order, Assessing Officer also ordered for issuance of show cause notice to the assessee for initiating penalty proceedings u/s 271(1)(c) of the Income Tax Act. 4. As per record, by filing Income tax return, the assessee declared its income as Rs. 54,31,454/- for the assessment year 2014-15. 5. On 20.4.2017, a search and seizure operation was carried out at various premises of M/s. Bajaj Group and its associates including the assessee company, Directors and others. Said operation led to seizure of various documents and books of account etc. During investigation, statement of various persons are also stated to have been recorded in connection with said search and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and the detailed questionnaire dated 23.10.2019, the Assessing Officer had asked the assessee to explain as to why an amount of Rs. 15,69.96,303/- , as described in para 6.33 of the said notice, should not be added to the income of the assessee, as an income from undisclosed source, in addition to commission amounting to Rs. 15,69,963/- said to have been paid at the rate of 1%, as regards the assessment year 2014-15. 11. As mentioned in the assessment order, in reply to the above said query, the assessee filed only certain documents including VAT Registration No., CST Registration No. and GST Registration No. The Assessing Officer considered the reply submitted by the assessee and took into consideration the facts unearthed during search operation, and found that it was not tenable. In this regard, he observed that every entry operator can manage such type of papers. The Assessing Officer also took into consideration the facts unearthed during search operation, the confession made on oath by the dummy property partners and directors of the dummy concerns and Shri Nirmal Kumar Sarda, CA the entry provider. The Assessing Officer also observed that Shri Nirmal Kumar Sarda, CA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant cannot be rejected. The fact that Bajaj group was engaged in Wool Trading activity further finds support from fact that only receipts pertaining to the alleged bogus/shell concerns operated by Shri Nirmal Kumar Sarda have been doubted, however the sales made to the other parties were not tinkered with. However, at the same time the sales reported in the name of doubtful parties namely M/s. Bhoomika Enterprises and M/s. Shree Chamunda Enterprises and any possible revenue leakage in respect of such sales cannot be ignored. In such circumstances, the sales reported by the appellant in the name of these parties can be regarded as sales where the real identity of the buyer is in question, however, the movement of stock/sale of goods is not in question. Accordingly, it would be prudent to assess additional profit margin arising out of such sales which the appellant would have earned in the entire process instead of making addition of entire sales receipts. Now the only question left here is how much profit element should be taxed in the hands of the assessee so as to protect the possible revenue leakage. In this regard it is noticed that wool trading is a small scale in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eged without prejudice to the other grounds raised therein, that learned CIT(A) has erred in ignoring the alternative contention of the assessee that profit embedded in the transactions cannot be more than 1.28% of the total sales transaction with said parties. In this regard, it needs to be mentioned here that no such ground was raised by the appellant before Learned CIT(A) to the effect that profit embedded in these transactions cannot be more than 1.28% of the total sales with said parties. On behalf of the revenue/department, Ld. DR has candidly admitted that the assessment order passed as regards the assessee in relation to the preceding year 2013-14 was based on same allegations leading to similar addition and further that CIT(Appeal) had partly allowed the appeal filed by the assessee, by making same observations and recording similar findings, thereby restricting the addition, but when the matter came up before the Co-ordinate Bench of this Appellate Tribunal, The appeal filed by the assessee was led thereby deleted the entire addition upheld by the CIT(Appeal) on the ground that nothing incriminating was found from the premises of the assessee and that the issue which ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents, meaning thereby, in respect of completed or unabated assessments, no addition can be made by the Assessing Officer in the absence of any incriminating material having been found during the course of search under section 132 or requisition under section 132A of the Act. However, completed or unabated assessments can be reopened by the Assessing Officer in exercise of powers under section 147 or 148 of the Act, subject to fulfilment of the conditions as envisaged or mentioned under section 147 or 148 of the Act and those powers are saved." 19. Consequently, the assessment order relating to the financial year 2013-14 qua the assessment order was set aside by the Co-ordinate Bench, as the same was found to be devoid of any incriminating material. 20. In view of the same facts , documents and statements and while applying the law laid down in the case of Abhisar Buildwell, and having regard to the decision by the Co-ordinate Bench of the Appellate Tribunal, regarding the preceding year, the impugned order Ld. CIT(Appeal) also deserves to be set aside, when there is no incriminating material said to have been recovered or found at the time of search and seizure, involving the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tails were accepted by the Assessing Officer. 22. In view of all this, it is beyond comprehension as to how the Assessing Officer invoked the provisions of section 68 of the Act. Calculation of a different Profit Margin 23. As noticed above, vide impugned order Ld. CIT(Appeal) calculated the profit margin on the sales made to M/s. Bhoomika Enterprises and M/s. Shree Chamunda Enterprises at the rate of 8%. 24. In view of the above discussion, when provisions of section 68 of the Act could not be invoked the calculation of the profit margin at the rate of 8%, by Ld. CIT(Appeal) deserves to be set aside. Even otherwise, in the case of the assessee itself, referred to above, as regards findings about profit margin relating to sales made to the three parties mentioned therein, Co-ordinate Bench of the Appellate Tribunal expressed surprise over applying rate of profit margin different from the profit margin applied to the rest of the sales, and consequently held the impugned order to be erroneous. 25. Similarly, here, the impugned order passed by Learned CIT(A) applying rate of profit margin different from the profit margin applied to the rest of the sales, deserves to be set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X
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