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TMI Blog2025 (2) TMI 579X X X X Extracts X X X X X X X X Extracts X X X X ..... nd profit declared by the assessee was added to the income declared by the assessee determining the total income at Rs. 4,92,17,410/-. 3. Later, a search was conducted on the assessee group on 11.08.2016 under section 132, and an assessment under section 153A was framed for AY 2013-14 on 28.12.2018 in the case of the assessee. In this assessment, the Assessing Officer made an addition of Rs. 93,83,826/- on account of purchases made from M/s Raja Construction, solely based on the fact that the said firm had shown sales of Rs. 93,83,826/- in its return for the relevant year, which were allegedly made to the assessee. When Kapil Tyagi, the director of the assessee company, was questioned about the firm being shown as a sundry creditor in AY 2014-15 in the books of the assessee, he allegedly accepted in his statement recorded under section 132(4) that the said firm was a bogus concern and was used to inflate the purchases of the assessee during AY 2014-15. 4. On appeal before the Ld. CIT(A), the CIT(A) vide order dated 08.06.2021 confirmed the addition to the extent of Rs. 26,10,031/- being the difference of total purchases of Rs. 93,83,826/- added by the AO and the addition of Rs. 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und that the books of the assessee do not show true results which was accepted by the Ld. CITCA) and income was estimated by applying an estimated GP ratio. 8. That the addition made by the Ld. AO and sustained by the Ld. CITCA) is without considering the submissions made and conclusive and contemporary evidences furnished by the assessee in the form of books of accounts and bills and vouchers, proof of payment through banking channel etc. 9. That the Ld. AO as well as Ld. CITCA) has erred in making the addition on basis of presumption and assumption without bringing on record any evidence that the purchases of Rs. 93,83,826/- made by the assessee were to reduce its profit and are inflated purchases. 10. That the impugned order passed by the Ld. AO is not in accordance with the principle of natural justice. 11. That the penalty proceedings initiated under Section 271(1)(c) of the Act are invalid. 12. That the grounds of appeal are independent and without prejudice to each other." 6. At the time of hearing, ld. AR of the assessee brought to our notice sequence of events before us, the same is reproduced below :- Date Particulars Remarks 12.09.2013 Assessee filed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the statement of Mr. Kapil Tyagi as relied upon by the Ld. AO as well as by the Ld. CIT(A) pertains to AY 2014-15 and not to the impugned year i.e AY 2013- 14; d) That the approval accorded by the Addl. CIT(A) u/s 153D of the Act is a mechanical approval without application of mind. A. No addition could be made in a completed year/unabated year sans any incriminating material found during the search upon the assessee 2. That the impugned year i.e. AY 2013-14 became completed/unabated year on the date of search upon the assessee on 11.08.2016, as an assessment u/s 143(3) had already been framed for the impugned year on 31.12.2015. Therefore, as per the settled position of law in the light of judgment of Hon'ble SC in the case of Pr. CIT v. Abhishar Buildwell (P.) Ltd. 454ITR 212 (SC), an addition in impugned year in search assessment u/s 153A could only be made on the basis of incriminating material unearthed during the search upon the assessee. 3. However, in the present case the impugned and sole addition of Rs. 93,83,826/-, which was later on confined to Rs. 26,10,031/- by the Ld. CIT(A), was made not on the basis of any incriminating material unearthed during the searc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an active director in your company and you are telling that you don't know Shri. Akash Tyagi and M/s Raja Construction and you don't have any relation with them. This proves that you are giving false statement because how is not possible that M/s Raja Construction whose proprietor is Shri Akash Tyagi is the sundry creditor of your company M/s. Raja Shyama Construction Pvt. Ltd. in AY 2014-15, and you and your company don't have any relation with them. Also the registration and address of above-mentioned M/s Raja Construction is only Flat No. 507, 5th floor Gulmohar Residency, near Kalyanpur Crossing, Kanpur, UP? Answer: As per my knowledge, M/s Raja Construction which is registered at our address i.e. Flat No. 507, 5th floor Gulmohar Residency, near Kalyanpur Crossing, Kanpur, UP has no existence. The firm has been shown as sundry creditor to book unaccounted expenses of M/s. Raja Shyama Construction Pvt. Ltd. by way of purchase through such firm in AY 2014-15." 7. In this regard, it is submitted that the reliance upon the above-mentioned statement by the Ld. AO as well as CIT(A) to substantiate their action of making impugned addition on account of sale declared i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kanpur" is incorrect as the actual address of such firm was "149, Sohanjani Tagan, Muzaffarnagar", which fact can be verified from the following:- * ITR Ack. Of Aakash Tyagi for AY 2013-14 (p.no. 66 of PB) * Ledger Account of M/s. Raja Construction in the books of Assessee (p.no.70 of PB) * Ledger Account of Assessee in the books of M/s. Raja Construction (p.no.72 of PB) * Purchase invoices issued by M/s. Raja Construction to the assessee Company (p.no. 74-94 of PB) * Bank Statement of M/s. Raja Construction (p.no. 102 of PB) C. That the statement of Mr. Kapil Tvagi as relied upon by the Ld. AO as well as by the Ld.CIT(A) pertains to AY 2014-15 and not to the impugned year i.e AY 2013-14 10. Without prejudice to our argument that statement of Kapil Tyagi cannot be relied upon to make addition in the hands of the assessee as it is not incriminating in absence of any corroborative material, even if said statement is said to be incriminating material, it only pertains to AY 2014-15 and not to the impugned year. This fact is clearly evident from the following: a) When Mr. Kapil Tyagi denied of having known or any relationship with M/s. Raja Construction, the Ld. Invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 24.12.2018 from the Ld. AO (F.No. DCIT/CC/GZB/VVIP & SSG Group/153D/2018-19/608) to Addl. CIT seeking approval and letter dated 28.12.2018 of Addl. CIT (F.No. Addl. CIT/CR/MRT/Approval/153D/2018-19/2003) granting approval under section 153D reveals the following facts: a) That Ld. AO sought approval in 35 cases, including seven of assessee, in case of VVIP & SSG As per group of cases on which search was conducted on 03.11.2016; a) As per letter dated 24.12.2018 seeking approval, only draft assessment orders in these 35 cases were sent to the Addl. CIT for approval; b) The Addl. CIT approved all 35 cases, including 7 of assessee company, vide single letter dated 28.12.2018; c) The approval granted by Addl. CIT dated 28.12.2018 is mechanical approval which was accorded without application of mind as evident from following facts" * The date of search mentioned in the letter seeking approval as well as the approval u/s 153D is 03.11.2016, whereas the search upon assessee group was conducted on 11.08.2016; * Search on the assessee group being conducted on 11.08.2016 was different from the search on M/s. VVIP/SSG Group of cases on 03.11.2016 in respect of which the appro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the following documents: a) ITR for AY 2013-14 of Aakash Tyagi, proprietor of M/s. Raja Construction alongwith its balance sheet, trading results, sale summary, (p. no. 66-69 of PB) b) Ledger Account of M/s. Raja Construction in the books of Assessee (p.no. 70- 71 of PB) c) Ledger Account of Assessee in the books of M/s. Raja Construction (p.no. 72- 73 of PB) d) Purchase invoices issued by M/s. Raja Construction to the assessee Company (p.no. 74-94 of PB) e) Bank Statements of the Assessee Company- evidencing the payment made to M/s. Raja Construction through banking channels (p.no. 96-101 of PB) f) Bank Statement of M/s. Raja Construction-evidencing the receipt of payment from the Assessee Company (p.no. 102- of PB) 19. Point a) & Point f) clearly establishes the fact that M/s. Raja Construction is a genuine concern which exited in reality and not a bogus concern as alleged by the Ld. AO. Similarly, point b) to point e) establish the genuineness of purchases made from the M/s. Raja Construction and payment made to it through banking channels. 20. Therefore, the assessee company has sufficiently discharged its burden of proving the genuine existence of M/s. Raja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n be placed upon the following judgments: a) C.I.T Orissa v. Orissa Corporation Pvt. Ltd., [1986] 159 ITR 78 (SC) b) CIT Vs. Nikunj Eximp Enterprises Pvt. Ltd. 372 ITR 619 (Bom.) c) DCIT Vs. Rohini Builders 256 ITR 360 (Guj). d) Phool Singh Vs. ACIT, ITA 22901/Del/2014, order dated 11.04.2017 In the light of the above-submissions, it is humbly prayed that assessment u/s 153A dated28.12.2018 for AY 2013-14 may kindly be quashed." 8. On the other hand, ld. DR of the Revenue submitted that assessee has raised ground on no incriminating material, however he submitted that it is not proper to claim that no incriminating material found during the search. He submitted that Assessing Officer has assumed the jurisdiction based on the incriminating material. Further he submitted that the key persons had confirmed that the transaction is bogus. Subsequent retraction will not affect the proceedings. On merits, he submitted that the assessee has not raised any ground during assessment proceedings nor raised any ground before the ld. CIT (A). He submitted that ld. CIT (A) has not given proper findings and relied on new facts that he gave a finding that no independent enquiry was made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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