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TMI Blog2024 (12) TMI 382X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Hon'ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT ] Accordingly, ground No. 1 of Rule 27 petition is hereby allowed. Addition of bogus purchase - Admittedly, purchases made by the assessee from the aforesaid 3 parties have already been accounted by the assessee in its regular books of account. This books of account were not rejected by the ld AO or by the ld CIT(A). Payments for this purchase have already been made by the assessee out of the monies available in the disclosed bank account. Hence, the source of incurrence of such expenditure together with the payments made thereon are duly explained from the books of account of the assessee itself. It is not the case of the revenue that the purchase made from aforesaid 3 parties were made out of books and for which assessee is not able to explain the source of making payment. Hence, the provisions of section 69C of the Act per se cannot be applied to the facts of the instant case. When the provisions of section 69C are sought to be invoked, the revenue does not doubt the genuineness of incurrence of such expenditure. Only the source of such expenditure is being doubted by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ising the following grounds:- 1. The CIT(A) erred in upholding the action of the Assessing Officer in framing the assessment order for the year under consideration under section 153A of the Act, being a non-abated assessment, in the absence of any incriminating material found during the course of search action. 2. The CIT(A) erred in upholding the validity of the order of the Assessing Officer notwithstanding the fact that the appropriate authority under section 153D has not properly complyed with the provisions of section 153D of the Act, and having not so complied, the impugned assessment order is bad in law and ought to be quashed. 4.2 We find that these grounds were also raised by the assessee before the ld CIT(A) with regard to non-existence of incriminating material for making an addition by the ld AO. The ld CIT(A) observed that though various Hon'ble High Courts had rendered decision qua this issue in favour of the assessee, the Hon ble Allahabad High Court in the case of CIT Vs. Raj Kumar Arora reported in 367 ITR 517 (All) had held the issue in favour of the revenue. Accordingly, by following the decision of the Hon ble Allahabad High Court, the ld CIT(A) dismissed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor-121, Noida (possession started in 2017) and upcoming project Blue Casa, Noida. 4.5 In the search assessment proceedings for AY 2014-15, the following additions were made by the ld AO:- a. unsecured loan received by the assessee form two parties treating as accommodation entries u/s 68 of the Act Rs. 2,30,00,000/- b. Estimated commission expenditure on the aforesaid accommodation entries Rs. 23,000/- c. Unsecured loan added u/s 68 of the Act Rs. 2,17,00,000/- d. Addition on account of bogus purchases Rs. 37,68,447/- 4.6 We have perused the entire assessment order and we find not a single seized material has been referred to by the ld AO in respect of any of the addition made by him in the assessment. Hence, it could be safely concluded that there is absolutely no incriminating material found during the course of assessment for making the aforesaid 4 additions. Hence, in the absence of any incriminating material during the course of search, no addition could be made in a completed assessment as per the decision of the Hon'ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd referred supra. Accordingly, ground No. 1 of Rule 27 petition is hereby allowed. Since, the ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24,469/- 5.3 We have gone through the assessment order and we find that there is absolutely no whisper about the existence/ usage of any incriminating material or search material qua the aforesaid three additions. Hence, it could be safely concluded that there is absolutely no search material at all in respect of the aforesaid additions. The ld CIT(A) conceded the fact that there is no incriminating material in respect of the aforesaid additions by placing reliance on the decision of the Hon'ble Allahabad High Court in the case of CIT Vs. Raj Kumar Aggarwal(supra) holding that there is no need for incriminating material for making any addition in an unabated assessment. This issue has been recently decided by the Hon'ble Supreme Court in the case of PCIT v. Abhisar Buildwell (P.) Ltd. reported in 454 ITR 212 (SC) wherein, it was categorically held that the if an AO wants to make any addition in an unabated assessment on the date of search, he could do so only if there is any incriminating material found during the course of search qua the issue on which addition is sought to be made qua the relevant assessment year. 5.4 Respectfully following the said decision of the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax (Appeals)-4, Kanpur [hereinafter referred to as ld. CIT(A) , in short] in Appeal No. CIT(A)- IV/KNP/10743/2018-19 dated 15.07.2021 against the order of assessment passed u/s 153A/143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) dated 31.12.2018 by the Assessing Officer, DCIT, Central Circle-I, Noida (hereinafter referred to as ld. AO ). 7.1 This is exactly identical to ITA No. 1165/Del/2021 for AY 2014-15 (supra) and hence, the decision rendered thereon shall apply mutatis mutandis for AY 2015-16 also except with variance in figures and dates. 7.2 In the result, the appeal of the assessee for AY 2015-16 in ITA No. 1166/Del/2021 is allowed. County Infrastructure Pvt. Ltd in ITA No. 1167/Del/2021 for AY 2016-17 (Assessee s appeal) 8. The appeal in ITA No.1167/Del/2021 for AY 2016-17, arises out of the order of the Commissioner of Income Tax (Appeals)-4, Kanpur [hereinafter referred to as ld. CIT(A) , in short] in Appeal No. CIT(A)- IV/KNP/10751/2018-19 dated 15.07.2021 against the order of assessment passed u/s 153A/143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) dated 31.12.2018 by the Assessing Officer, DCIT, Central Circle-I, No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Area, Bijoli, Jhansi No such concern in the name of Hari Om Steel could be located there. From the local enquiry, no trace of Hari Om Steel Could be found at the given address. 8.7 The ld AO observed that in response to the various documents called for by him from the assessee, only ledger account of the suppliers and some bill copies were enclosed for verification by the ld AO. Further, notice u/s 133(6) of the Act dated 10.12.2018 was issued to the concerned suppliers seeking to examine the identity of the parties and genuineness of the transactions. Out of this, part replies were received from Hari Om Steel. Remaining parties did not respond before the ld AO by furnishing the requisite details. The assessee was also asked to produce the Principal Officer of these suppliers together with the requisite documents for which summons were also issued to them. None of these parties responded to the summons. Accordingly, the ld AO proceeded to treat the concerned suppliers as non-existent suppliers and the purchase made from them by the assessee to be bogus and made addition to the extent of 100% of the value of purchases made from them in the sum of Rs. 1,14,72,216/- and completed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts of the assessee which were not rejected by the lower authorities. Hence on this ground itself, the addition deserves to be deleted. Reliance in this regard has been rightly placed by the ld AR before us on the decision of the Hon ble Bombay High Court in the case of PCIT Vs. Sanjay Dhokad in Income Tax Appeal No. 795/2018 dated 09.11.2023, wherein, the Hon'ble Bombay High Court adjudicated the identical issue of addition made on account of in genuine purchases u/s 69C of the Act on the ground that the suppliers did not supply any material and had merely provided accommodation entry bills. The Hon ble High Court held as under:- 15. Section 69C of the Income Tax Act, reads as under: 69C. Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year. The provisions would be attracted to a case where the assessee offers no explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents indicating that purchases were made, has held as under: We have considered the submission on behalf of the revenue. However, from the order of the Tribunal dated 30.04.2010, we find that the Tribunal has deleted the additions on account of bogus purchases not only on the basis of stock statement i.e. reconciliation statement, but also in view of the other facts. The Tribunal records that the Books of Accounts of the respondent assessee have not been rejected. Similarly, the sales have not been doubted and it is an admitted position that substantial amount of sales have been made to the Government Department i.e. Defence Research and Development Laboratory, Hyderabad. Further, there were confirmation letters filed by the suppliers, copies of invoices for purchases as well as copies of bank statement all of which would indicate that the purchases were in fact made. In our view, merely because the suppliers have not appeared before the Assessing Officer or the CIT(A), one cannot conclude that the purchases were not made by the respondent-assessee. The Assessing Officer as well as CIT(A) have disallowed the deduction of Rs. 1.33 crores on account of purchases merely on the basis o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by the assessee for AY 2016-17 and hence, decision rendered for AY 2016-17 (supra) shall apply mutatis mutandis for this assessment year also except with variance in figures. In AY 2017-18, no additional ground was raised by the assessee. Hence, decision for additional ground for AY 2016-17 shall not be applicable for AY 2017-18. 9.2 In the result, the appeal of the assessee for AY 2017-18 in ITA No. 1168/Del/2021 is partly allowed. IV County Infrastructure Pvt. Ltd in ITA No. 1171/Del/2021 for AY 2016-17 (Assessee s appeal) 10. The appeal in ITA No.1171/Del/2021 for AY 2016-17, arises out of the order of the Commissioner of Income Tax (Appeals)-4, Kanpur [hereinafter referred to as ld. CIT(A) , in short] in Appeal No. CIT(A)- IV/KNP/10756/2018-19 dated 15.07.2021 against the order of assessment passed u/s 153A/143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) dated 31.12.2018 by the Assessing Officer, DCIT, Central Circle-I, Noida (hereinafter referred to as ld. AO ). 10.1 The original grounds raised by the assessee for AY 2017-18 are exactly identical with those raised for AY 2016-17 in the case of County Infrastructure Pvt. Ltd in ITA No.1167/Del/2021. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material available on record. Shri Amit Modi, the key person of the assessee group gave a statement u/s 132(4) of the Act at the time of search and offered certain amount to tax. This statement was later retracted by him vide retraction letter dated 21.02.2017 submitted before DDIT, Investigation Unit-2, Noida. The ld AO rejected the said retraction statement stating that the said retraction was made after a delay of 110 days by the assessee. Further, the ld AO observed that there is no material on record which suggests that disclosure made at the time of search was under pressure or coercion or threat or undue influence. The ld AO observed that cash was deposited in the bank account of the assessee out of surrendered income as declared during the course of search in the statement. The ld AO observed that in the seized document along with other directors, name of the assessee company has also been mentioned with an amount of Rs. 450 lakhs against the name of the assessee company. The assessee had deposited Rs. 270 lakhs in the bank account subsequent to the search and included the same in the return of income filed for AY 2017-18. Therefore, the ld AO added the balance amount of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undisclosed income, cash was subsequently deposited by the assessee and other parties, post search, in their bank accounts pursuant to the announcement of demonetization by the Govt. of India. Ultimately a sum of Rs. 11.55 crores was deposited in the bank account by 9 persons of the group which includes Rs. 2.70 crores belonging to assessee herein. This clearly goes to prove that actual income received by the assessee was only Rs. 2.70 crores and not Rs. 4.50 crores. Accordingly, the assessee along with 8 others had to file a retraction statement before the Investigation Wing itself stating the actual figure of undisclosed income. Further, the very same seized documents vide page 1 of the summary of receipts contain the account of account of Cleo County project developed by assessee together with the amounts received by the assessee every month which reads as under:- Month Amount June 2016 32.80 lakhs July 2016 85.30 lakhs August 2016 70.90 lakhs September 2016 65.20 lakhs October 2016 15.80 lakhs Total 270 lakhs 12.4 For the same, rounds of trucks was also mentioned as 328 rounds, 853 rounds, 709 rounds, 652 rounds, 158 rounds, thus totaling to 2700 rounds. The seized documents a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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