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TMI Blog2025 (3) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... al Gupta and concluded that appellant has indeed undertaken some manipulation in terms of prices. However, this observation of Ld. CIT(A) is without establishing as to what was transaction under taken with Sh. Mohan Lal Gupta in the impugned year. We find that with very general observations the ld. Tax authorities have proceeded to doubt the purchases. As far doubting the use of transport vehicle is concerned, it is not the case of ld. AO that the assessee was making payments to the transporters. Then the owners of the transport agencies duly appeared before Ld. AO and their statement was record which are on record wherein they have confirmed the fact that goods were transported by them to the assessee company and the payments for the same were made by the suppliers. Thus for any discrepancy if any left in details of vehicles used cannot be basis to doubt the wholesome evidences of bills etc filed by the assessee. Thus, in view of the above we are of the considered view that the addition made by AO and sustained by Ld. CIT(A) is without any basis. Addition on account of alleged suppressed profit embedded in purchases from bogus entity - When the genuineness of the purchases have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... garwal, Advocate; Shri Saksham Agarwal, CA; & Shri Deepesh Garg, Advocate For the Revenue : Shri Javed Akhtar, CIT-DR ORDER PER ANUBHAV SHARMA, JM: These are appeals preferred by the Assessee as well as Revenue against the orders of the Ld. First Appellate Authority in appeals filed before him against the orders of the ld. Assessing Officer (hereinafter referred to as the Ld. AO, for short). Further details of the orders of the lower authorities are as under:- ITA No. & Assessment Year CIT(A) who passed the order Appeal No. & Date of order of the CIT(A) AO who passed the assessment order & Date of order Section of the IT Act under which the AO passed the order 7773/Del/2019 2014-15 CIT(A)-XXVI, New Delhi 10598/16-17, Dated 08.08.2019 ACIT, Central Circle-14, New Delhi, date: 31.12..2016 143(3) 8555/Del/2019 2014-15 - Do - Do- - Do - - Do - 2. Heard and perused the record. The relevant facts of the case are as that a search and seizure operation was carried out on the Rama Group of Companies on February 28, 2014. The case of assessee was also part of these search assessments. Some additions made by the ld. AO stand deleted by ld.CIT(A) and some confirmed for whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the fact that the details of un-reconciled turnover was based on the data seized from the assessee and accordingly, the entire addition on account of unreconciled turnover should have been confirmed and not only the GP addition. 9. That the Ld. CIT(A] has erred in facts and in law in deleting the additions of Rs. 7,14,123/- made by the AO on account of un-reconciled turnover based on the data seized during the search and seizure operation. 10. That the Ld. CIT(A) has erred in facts and in law in only allowing enhanced GP on the un-reconciled turnover without appreciating the fact that the details of un-reconciled turnover was based on the data seized from the assessee and accordingly, the entire addition on account of unreconciled turnover should have been confirmed and not only the GP addition. 11. That the Ld. CIT(A) has erred in facts and in law in deleting the additions of Rs. 19,83,94,520/- made by the AO on account of un-reconciled turnover based on the data seized during the search and seizure operation. 12. a. The order of the CIT (Appeals) is erroneous and not tenable in law and on facts. b. The appellant craves leave to add, alter or amend any / all of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and findings and in violation of principles of natural justice. 7. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not quashing the impugned assessment order passed by Ld. AO and in not deleting the various additions/disallowances made therein and that too without providing the opportunity of being heard. 8. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in charging interest u/s 234A & 234B of Income Tax Act, 1961. 9. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other." 3. On hearing, we find that Ld. DR has relied the order of ld. AO while ld. AR has relied the order of ld. CIT(A). Thus based on their rival stands we proceed to decide the grounds as follows. 4. Ground No. 1 -5 of Departmental Appeal and Ground No. l-2 of assessee's appeal: These grounds relate to the addition of Rs. 36,55,931/- made by Ld. AO on account of alleged bogus purchase of Maida and Choker (wheat bran) from the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B page 59-60 is the copy of bill wise detail of purchase of above mentioned goods made from M/s Raghuveer Sing Devinder Kumar by assessee-company during the impugned year showing the bill wise date of purchase, quantity purchase, vehicle no. in which the goods were transported, qty. purchased, total amount of purchase bill wise which aggregates. It further shows that the assessee purchased total 4,88,58.5 Qtl of goods having value of Rs. 36,55,931/-. PB 61-70 is the copy of invoices issued by M/s Raghuvir Singh Devindra Kumar to assessee along with the corresponding transport receipt issued by the transporter for transport of such good. These invoice shows the quantity of goods purchased, nature and particulars of good purchased, its weight, rate per unit, total amount. It further shows the truck/wagon no. in which such good is transported to the assessee. It further shows the complete detail of M/s Raghuvir Singh Devindra Kumar such as contact no., complete address. Its corresponding transport receipt shows the name of consignor i.e., M/s Raghuvir Singh Devindra Kumar, name of consignee i.e., assessee company, further details such as goods are transported from Delhi to Bulandshahr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the goods being suspicious. However, the sales are not doubted and the ld. CIT(A) has mentioned in point vii and viii of pages 37-38 of impugned order that the addition of entire purchases would lead to absurd profits and thus, only profit element can be taxed. Ld. DR could not dispute the principle that the gross profit embedded in the bogus purchases can be added and not the entire purchases. Reliance for this can be placed on decision in CIT vs. Simit F. Sheth, (2013) 356 ITR 451, (Gujarat). 9. Now quite apparently the assessee has provided all the relevant and necessary evidences to the ld. AO to establish genuineness of the purchases. However, with out commenting anything on same and unable to point any deficiency in these documentary evidences the ld. AO has relied oral statements. Further these observation of Ld. AO are based upon the statements recorded by Ld. AO behind the back of assessee and were not confronted to assessee during the course of assessment proceedings and thus, any observations based on such statements could have been relied upon. 10. Then Ld. CIT(A) has highlighted the observation of Ld. AO in his remand report that Sh. Mohan Lal Gupta in his statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit embedded in purchases from bogus entity. Now as a matter of fact, Ld. CIT(A) in the earlier part of his order has accepted the purchases of Rs. 31,90,338 (Rs. 36,55,338/- less Rs. 3,65,593/-) and therefore there is no question of any profit suppressed in these purchase accepted as genuine. Thus, no addition of Rs. 1,11,465/- (Rs. 31,90,338/- x 0.0357) on this account could be made. In respect of balance addition of Rs. 13,052/- (Rs. 1,30,517/- less Rs. 1,17,465/-) when the genuineness of these purchases have also been accepted here above by us therefore addition of profit embedded in such purchases cannot be sustained. 14. Ground No. 7-10 of departmental grounds and 5 of assessee's appeal: This ground relate to an addition of Rs. 8,92,482/- and Rs. 7,14,123/- made by Ld. AO on the basis of seized tally data seized by team RU 1 marked as annexure A-35 relating to M/s Hygienic Purchase A/c and M/s Rama Hygienic Store by alleging the same to be data of sale made by assessee outside the books. However, the same is restricted by Ld. CIT(A) to Rs. 57,356 [(Rs. 8,92,482/- + Rs. 7,14,123/-) x 0.357%] 15. At PB page 84-86 is the copy of the said document which shows that this docum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the survey on 28.02.2014 was Rs. 1,36,57,684/- however, as per books account the stock was shown at Rs. 4,15,79,778/-. Therefore, it was alleged that the difference of Rs. 2,79,22,094/- is the sales made outside the books of account and thus, Ld. AO made addition on account of gross profit at the rate of 4.33% on such alleged sales. 18. Now before us on the basis of PB page 310, which is the copy of written submissions filed before Ld. AO, the ld. AR has submitted that survey had taken place on 28.02.2014, however, the comparison was drawn with the closing stock as per books as on 31.01.2014 and therefore, such comparison would not give accurate result and cannot be relied upon in any manner. Moreover, no basis of the valuation or the estimates taken to value the stock has been provided to the assessee. 19. In this context we find that at PB page 88-89 is the copy of profit and loss a/c of assessee for the period 01.04.2013 to 31.01.2014 which shows that assessee has shown closing stock in the books as on 31.01.2014 at Rs. 4,15,79,778/- and thus the comparison drawn by Ld. AO on 28.02.2014 could not be taken into consideration. Even otherwise without any basis, evidence or mate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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