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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 ..... er And Shri Anubhav Sharma, Judicial Member For the Assessee : Shri Ajay Wadhwa, Advocate, Shri Shivam Garg, CA For the Revenue : Shri Pitambar Das, CIT DR ORDER PER S.RIFAUR RAHMAN, AM: 1. This appeal has been filed by the assessee against the order of ld. Commissioner of Income-tax (Appeals)-4, Kanpur dated 08.06.2021 for the Assessment Year 2013-14. 2. Brief facts of the case are that the assessee company is a private limited company engaged in the business of contractual work of road construction. For the impugned year, the assessee filed its original return on 12.09.2013 declaring an income of Rs. 4,24,43,610/- which was selected for scrutiny and consequently an assessment u/s 143(3) of the Income-tax Act, 1961 (for short 'the Act') was framed on 31.12.2015 wherein the books of account of the assessee were rejected and amount of Rs. 67,73,795/- being the difference between the net profit calculated by the Assessing Officer and 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 sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue has been settled by the Hon'ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd. (4541TR 212). 5. That the Ld. AO has erred relying on the statement of Sh. Kapil Tyagi recorded under section 132(4) of the Act without confronting the same to the assessee during the course of assessment proceedings and without allowing the opportunity of cross examine him to the assessee. 6. That the Ld. AO as well as Ld. CIT(A) has erred in making/sustaining the addition in respect of inflated purchases solely on' the basis of statement of Sh. Kapil Tyagi without bringing on record any corroborative material/evidence or even any evidence which remotely suggest that the purchases were bogus. 7. That the Ld. AO as well as Ld. CITCA) has erred in law and on facts in making addition/disallowance of purchases placing reliance on books of the assessee contrary to the fact that the books were himself rejected by the Ld. AO on the ground 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 consideri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of purchases made from M/s. Raja Construction 08.06.2021 CIT(A) confined the addition of Rs. 93,83,826/- to Rs. 26,10,031/- Para No. 7.4 at P.No. 23 of CIT(A) order. 7. Further the ld. AR for the assessee submitted the facts during the hearing and also filed his written submissions, the same is reproduced as under :- 1. That the assessment order dated 28.12.2018 passed u/s 153A, as partly affirmed by the Ld. CIT(A) vide order dated 08.06.2021 is illegal, bad in law and void-ab-initio for the following reasons: a) That the impugned year was a completed year on the date of search and no addition could be made in the hands of assessee sans any incriminating material found during the search; b) The reliance made by the Ld. AO, as affirmed by the Ld. CIT(A), upon the statement of Mr. Kapil Taygi for making impugned addition is erroneous and bad in law as it is an uncorroborated and unverified statement; c) That 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment is based is that when Mr. Kapil Tyagi, who had been an active director of the assessee company during impugned year, was asked about the M/s. Raja Construction appearing as sundry creditor in the books of assessee for AY 2014-15, he in his statement recorded u/s 132(4) allegedly accepted that M/s. Raja Construction has no existence and the assessee company had inflated its purchases through the said firm in AY 2014-15. True Typed and Translated copy of the portion of statement so relied upon by the Ld. AO & C1T(A) is reproduced as under: "Q11. Please tell what is your relation with Shri Akash Tyagi and M/s Raja Construction? Answer: I don't know Shri Akash Tyagi or M/s Raja Construction and I don't have any relation with them. Q12. In company's books of accounts for A.Y 2014-15, M/s Raja Construction whose proprietor is Shri. Akash Tyagi has been shown as sundry creditor of the company by your A.R. You are 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther pertinent to mention that portion of the statement of Kapil Tyagi relied upon by the Ld. AO as well as by the CIT(A) was recorded on the pretext of misrepresentation of facts by the investigation wing which is evident from the following facts: a) As per question 11, when Kapil Tyagi was asked about the relationship with Aakash Tyagi Prop. M/s. Raja Construction, he completely denied having known to them or his relation with them. b) However, at question 12 the Ld. Officer once again asked the Kapil Tyagi about his relationship with M/s. Raja Construction and mentioned that address and registration of M/s. Raja Construction is "Flat 507, Gulmohar Residency, Kalyanpur Crossing, Kanpur" i.e. the site office of the assessee company. c) In this regard it is pertinent to note that this fact mentioned by investigation wing that M/s. Raja Construction's address/registered address is "Flat 507, Gulmohar Residency, Kalyanpur Crossing, 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 Constructi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Commissioner of Income-tax, [2013] 36 taxmann.com 523 (Rajasthan)- Rajasthan High Court d) Commissioner of Income-tax v. Sinhgad Technical Education Society, [2015] 378 ITR 84 (Bom.)- Bombay High Court [affirmed by Hon'ble sc in [2017] 397 ITR 344 (SC)] D. That the approval accorded by the Addl. CIT(A) u/s 153D of the Act is a mechanical approval without application of mind. 13. The assessment order passed by the Ld. AO under section 153A dated 28.12.2018 for impugned year indicates that it was issued after obtaining approval under section 153D from the Addl. CIT, Central Range-Meerut. This approval was granted by the Addl. CIT via letter F.No. Addl. CIT/CR/MRT/Approval/153D/2018-19/2003 dated 28.12.2018. (Copy of letter dated 24.12.2018 written by Ld. AO to Addl. CIT seeking approval is enclosed at P.No. 109 of PB & copy of approval of Addl. CIT dated 28.12.2018 is annexed at P.no. 110 of PB) 14. A perusal of the letter dated 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT v. Savna Gupta 20231 147 taxmann.com 288 (All.). In these cases the Hon'ble Jurisdictional High Court and Hon'ble Allahabad High Court have categorically held that the approval must be qua "each assessee" and qua "each assessment year". 17. However, in present case the approval so granted is neither qua "each assessee" nor qua "each assessment year". Therefore, such approval is bad in law being mechanical in nature rendering all proceedings consequent to it null and void. E. That the assessee sufficiently discharged its burden to show that purchases made from M/s. Raja Construction were genuine purchases and accordingly shifted the burden on the Department, which it utterly failed to discharge 18. That when the assessee was show caused regarding the purchases made through M/s. Raja Construction alleging it to be bogus purchases, the assessee sufficiently discharged its burden by showing the genuineness of purchases by submitting 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 As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons under Section 131 to the creditor is insufficient to discharge the burden placed upon the department, especially when no defect has been pointed out by the department in the explanation and documentary evidence submitted by the assessee, which establish the genuineness of the concern. 23. Moreover, non-compliance of summons under section 131 by the suppliers cannot be the concern of the assessee. It is not the case of the revenue that assessee was asked to produce the supplier. As the supplier is separately assessed to tax the issue of the low balance is required to be addressed by it and it cannot be a reason for dis-allowance of the purchases from that party, as many times purchases are also made from bank borrowers. Further, the learned Commissioner (Appeals) confirmed the finding of the learned assessing officer without giving any reason but merely reiterating the findings of the assessing officer. Reliance in these regard can 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. In his statement which is placed at page 129 of the paper book wherein he has denied having any connection with Raja Construction. However, we observed that the query raised by the Assessing Officer relates to AY 2014-15. Therefore, the finding in search was not relevant to the present assessment year. Further we observed that the addition made by the Assessing Officer in original assessment u/s 143(3) was relating to the same transaction. Further we observed that the year under consideration is unabated and there is no material on record which shows that income escaped in the current assessment year. The findings during search relating to AY 2014-15, therefore, there is no incriminating material relevant for the current assessment year. Therefore, it is settled position of law that no addition can be made u/s 153A without there being any incriminating material relating to unabated assessment year. Therefore, we are inclined to delete the additions made in the assessment order. 10. Further we observed that assessee has raised other grounds of appeal on approval accorded u/s 153D is not proper and relating to purchases made from Raja Construction are genuine, are not adjudic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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