9911796707
TMI Blog2025 (3) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... search were heavily relied to make the addition without there being any incriminating material or any mismatch of purchase or closing stock brought on record to be treated as incriminating material found during the search.
In our considered view, the assessee has submitted all the relevant quantitative details of raw material supported by tax audit report for the impugned assessment years under consideration and no discrepancies were brought on record except on the basis of statements recorded from Mohan Lal Gupta and Devender Kumar prior to search and also heavily relied on the 3 STRs forwarded by the Investigation Wing.
There is no incriminating or corroborative evidence with the Revenue in conformity with the statements given by Mohan Lal Gupta and Devender Kumar. They made the statements prior to search and the Revenue must have gathered supporting evidence in line with the statements recorded.
Merely relying on circumstantial evidences without there being any corroborative evidence cannot be treated as incriminating material. Therefore, the assessment order is quashed. X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has maintained stock register properly as per the requirements and also submitted that the assessee has valued the stock at cost i.e. on acquisition cost, along with the details of closing stock for the relevant assessment year in Annexure 1 which contained the closing stock, details of raw material, packing material, oil and lubricants, finished goods and bardana for the total value of stock at Rs. 1,97,74,982.21. Subsequent to issue of other notices, the AO relied on the STR pertaining to M/s. Mohan Lal Gupta & Sons, M/s. T.R. Traders and M/s. Raghuveer Singh Devendra Kumar received from Investigation Wing, which showed peculiar nature of the transactions in the concerned bank accounts operated all these companies having transactions with Rama group based in Bulandshahr, UP. The AO by observing certain discrepancies from the bank statements of the abovesaid three entities wherein cash withdrawals were made below the threshold limit of Rs. 10 lakhs in a single day and the entire debits in the bank accounts were by way of cash withdrawals only and that too withdrawal below the threshold limit. By relying on the statement of Shri Mohan Lal Gupta, sole proprietor of M/s. T.R. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder u/s 153A, is bad in law and against the facts and circumstances of the case and the same is not sustainable on various legal and factual grounds. 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in sustaining the addition of Rs. 23,80,000/- made by Ld. AO on account of alleged bogus purchases made from M/s TR Traders, more so when no incriminating material has been found as a result of search and impugned addition has been made by recording incorrect facts and findings and without granting opportunity of cross examination of the entire adverse material and deponents used against the assessee and without observing the principles of natural justice. 4. That in any case and in any view of the matter, action of Ld. CIT(A) in sustaining the addition of Rs. 23,80,000/- made by Ld. AO on account of bogus purchases made from M/s TR Traders, is bad in law against the facts and circumstances of the case. 5. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in enhancing the income of assessee by Rs. 5,33,120/- (i.e. Rs. 2,38,00,000/- * 0.0224) on the alleged ground that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the statements of the persons who have supplied bogus bills and also corroborative evidences like mentioning of non-existent vehicle numbers in the bogus bills. 5. That the Ld. CITCA) has erred in facts and in law in making contradictory statements in the appeal order i.e. on one hand stating that from the statements of the persons it is not clear whether their supplied the goods and also stating that the assessee indeed undertake some manipulation in purchases but at the same time deleting 90% the additions made on account of purchases. 6. That the Ld. CITCA) has erred in facts and in law in only allowing enhanced GP on the purchases booked through the entry operators/ bogus bills providers but in reality these suppliers were bogus and also doubtful, (as he himself has mentioned in the appeal order) and accordingly the entire addition on account of bogus purchases should have been confirmed and not only the GP addition. 7. (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 grounds of appeal before or during the course of hearing of the appeal." 6. At the time of hear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the same was never supplied to the assessee. He further submitted that the abovesaid statements were recorded behind the assessee and, is there any search proceedings initiated against them were also not clear from the information supplied by the AO or mentioned in the assessment order. 8. Further it was submitted that subsequent statements recorded of Mohan Lal Gupta were never supplied to the assessee nor any opportunity was given for cross-examination. By relying on several case laws in its submission before ld. CIT (A), he submitted that the information gathered by the Revenue at the back of the assessee before the search proceedings in the case of the assessee and no corroborative evidence are incriminating material found during the search and the AO has relied heavily on the post search enquiry and statements recorded from Mohan Lal Gupta, again it was not supplied to the assessee for cross-examination and any material which was not found during the search cannot be used against the assessee particularly in the unabated assessment years. 9. Further he brought to our notice pages 26 & 27 of the appellate order and brought to our notice findings of the ld. CIT (A) and su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; and (iv) CIT vs. Raj Pal Bhatia (2011) 333 ITR 315 (Delhi). 12. Further he heavily relied on the decision of Shyam Sunder Jindal vs. ACIT (2024) 159 taxmann.com 1384 (Delhi) in which similar issue was considered by the Hon'ble Delhi High Court and decided the issue in favour of the assessee. 13. On the other hand, ld. DR of the Revenue however relied on the facts in the case of Rama Hygenic Products Pvt. Ltd. (2009-10) and submitted that the facts involved in all these cases are exactly similar and prayed that these facts may be considered as he has prepared the case based on these facts available in AY 2009-10 in Rama Hygenic Products Pvt. Ltd.. He brought to our notice page 1 of the assessment order and submitted that AO has issued several notices u/s 142(1) and assessee has not complied to all those notices. He brought to our notice page 23 of the appellate order wherein the case of Sanjeev Kumar was relied wherein non-compliance / nonexplanation of the issues was held to be non-genuine. Further he brought to our notice pages 4 to 7 of the assessment order and he took us through the various questions raised in the statement recorded with Mohan Lal Gupta and further he brou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.05.2024 and filed a copy of the same. 15. Considered the rival submissions and material placed on record. It is fact from the record submitted before us that the assessment years involved in these group cases are AY 2009-10 to 2014-15, further AYs 2009-10 to 2012- 13 are unabated assessment years. In brief all these assessment years are unabated, ld. AR has submitted the relevant information which is placed on record which clearly shows that AYs 2009-10 to 2012-13 are unabated assessment years and any addition can be made only on the basis of any incriminating material found during the search. In the present case, as per the record submitted before us, it shows that two statements were recorded prior to the search initiated in the case of the assessee i.e. on 28.02.2014 and a statement was recorded from Mohan Lal Gupta on 16.04.2012 and Devender Kumar on 26.07.2013. These statements were recorded prior to the search and the AO has relied on STRs received from the Investigation Wing during the assessment proceedings. As per the fact brought before us, 3 STRs are information received from the Investigation Wing which were collected prior to search was provided to the AO and subseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te that during the course of the search, in the statement made by the assessee, he denied having known Mr. Jindal. Since there was insufficient material to support the additions, the ITAT deleted the same. This finding of fact, based on evidence calls for no interference, as we cannot re-appreciate evidence while exercising jurisdiction under section 260A of the Act. 8. Next, we find that, the assessment has been framed under section 153A, consequent to the search action. The scope and ambit of section 153A is well defined. This court, in CIT v. Kabul Chawla,1 concerning the scope of assessment under Section 153A, has laid out and summarized the legal position after taking into account the earlier decisions of this court as well as the decisions of other High Courts and Tribunals. In the said case, it was held that the existence of incriminating material found during the course of the search is a sine qua non for making additions pursuant to a search and seizure operation. In the event no incriminating material is found during search, no addition could be made in respect of the assessments that had become final. Revenue's case is hinged on the statement of Mr. Jindal, which accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of Section 132(4) of the Act are read in the context of Section 158BB(1) read with Section 158B(b) of the Act, it is at once clear that a statement recorded under Section 132(4) of the Act can be used in evidence for making a block assessment only if the said statement is made in the context of other evidence or material discovered during the search. A statement of a person, which is not relatable to any incriminating document or material found during search and seizure operation cannot, by itself, trigger a block assessment. The undisclosed income of an Assessee has to be computed on the basis of evidence and material found during search. The statement recorded under Section 132(4) of the Act may also be used for making the assessment, but only to the extent it is relatable to the incriminating evidence/material unearthed or found during search. In other words, there must be a nexus between the statement recorded and the evidence/material found during search in order to for an assessment to be based on the statement recorded. 26. In CIT v. Sri Ramdas Motor Transport Ltd., (1999) 238 ITR 177 (AP), a Division Bench of Andhra Pradesh High Court, reading the provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee. As per the mandate of Section 153C, if this statement was to be construed as an incriminating material belonging to or pertaining to a person other than person searched (as referred to in Section 153A), then the only legal recourse available to the department was to proceed in terms of Section 153C of the Act by handing over the same to the AO who has jurisdiction over such person. Here, the assessment has been framed under section 153A on the basis of alleged incriminating material (being the statement recorded under 132(4) of the Act). As noted above, the Assessee had no opportunity to cross-examine the said witness, but that apart, the mandatory procedure under section 153C has not been followed. On this count alone, we find no perversity in the view taken by the ITAT. Therefore, we do not find any substantial question of law that requires our consideration." 16. Further he relied on the decision of Hon'ble Delhi High Court in the case of PCIT vs. Best Infrastructure (India) (P.) Ltd. (supra) wherein Hon'ble High Court held as under :- "37. Fourthly, a copy of the statement of Mr. Tarun Goyal, recorded under Section 132 (4) of the Act, was not provided to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also heavily relied on the 3 STRs forwarded by the Investigation Wing. Further, we observed that there is no incriminating or corroborative evidence with the Revenue in conformity with the statements given by Mohan Lal Gupta and Devender Kumar. They made the statements prior to search and the Revenue must have gathered supporting evidence in line with the statements recorded. On the contrary, they just presumed that the statements are genuine and no specific admission by Shri Sanjeev Kumar, Director, clearly shows that the Assessing Officer has merely presumed the activities by non-genuine without brining on record any corroborative evidences. Therefore, in the absence of any incriminating material or any corroboration of material in line with the statements recorded prior to the search were brought on record which cannot be treated as incriminating material. Merely relying on circumstantial evidences without there being any corroborative evidence cannot be treated as incriminating material. Ld. DR of the Revenue heavily relied on the decision of Hon'ble Kerala High Court and in our view, the facts are distinguishable and moreover the decision of Hon'ble jurisdictional High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
