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2022 (5) TMI 1087 - AT - Income TaxAssessment u/s 153A - Addition on difference between purchase/sales made to certain parties treating these as ungenuine/bogus transactions - Whether No incriminating material at all was found during the course of search? - HELD THAT:- In A.Y. 2014-15, notice u/s 143(2) was issued before the search on 31.08.2015 and assessment proceedings u/s 143(3) were pending on the date of search i.e. 30.03.2016. In view of these facts, the assessment did not stand completed on the date of search and hence addition could be made even in the absence of incriminating material as held by Hon’ble Delhi High Court in the case of CIT vs Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] In A.Y. 2015-16, the appellant had not filed return of income upto date of search i.e. 30.03.2016. Return of income was filed on 25.08.2017 in response to notice u/s 153A of Income Tax Act. Hence, assessment proceedings did not stand completed on the date of search i.e. 30.03.2016. Since the appellant had not filed return of income for A.Y. 2015-16 upto the date of search, the assessment did not stand completed on the date of search and hence addition could be made even in the absence of incriminating material as held by Hon’ble Delhi High Court in the case of CIT vs Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] In A.Y. 2016-17, the appellant had not filed return of income upto date of search i.e. 30.03.2016. Return of income was filed on 25.08.2017 in response to notice u/s 153A of Income Tax Act. Hence, assessment proceedings did not stand completed on the date of search i.e. 30.03.2016. Since the appellant had not filed return of income for A.Y. 2016-17 upto the date of search, the assessment did not stand completed on the date of search and hence addition could be made even in the absence of incriminating material as held by Hon’ble Delhi High Court in the case of CIT vs Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] Assessing Officer was justified in making additions u/s 153A and u/s 143(3) of Income Tax Act in A.Ys. 2014-15 to 2016-17 even in the absence of incriminating material. Hence, we affirmed the order of the ld. CIT(A). Disallowance u/s 40A(3) - CIT(A) held that the factum of purchase has been confirmed by the Mandi Samiti Officials and deleted the addition - HELD THAT:- The assessee is not required to collect any evidence from the seller to show that he is a farmer or producer once paddy has been purchased through Form No. 6. The status of the seller as farmer or trader is determined by the Mandi Samiti at the time of his entry and the assessee undertakes transactions on the basis of said determination. It is also clear from the provisions of Mandi Act that the authority to decide whether the seller is a farmer or not is solely in the domain of Director of the Mandi Samiti as per the relevant Act and not the Assessing Officer. It is also a settled law that when an authority has been designated for the purpose, then none else can decide the said issue. The assessing officer has not brought on record any case where any person claimed as farmer by the assessee has been declared otherwise by the Director of Mandi Samiti. In the absence of the any such adjudication, no adverse cognizance can be taken and the sellers declared as farmers by the assessee and confirmed by the Mandi Samiti officials has to be considered as conclusive proof of the fact that the purchases were made from farmers. Taking into consideration, the undisputed fact of purchases being made from Mandi Samiti, provisions of Mandi Samiti Act, 1964, provisions of Rule 6DD, Circular No. 8 of 2006 of CBDT and the judgments of various Hon’ble High Courts on the issue of disallowance u/s 40A(3), applicability of the provisions of Rules 6DD for purchase of paddy, we decline to interfere with the order of the ld. CIT(A) on this issue. Addition of unexplained credits on the basis of seized material - scope of benefit of telescoping - CIT(A) has perused the seized cash book and the chart placed on record and held that some entries were found recorded in the regular books of account whereas some entries were not thus restricted the addition - HELD THAT:- Since the source of the said receipts and payment has not been explained by the assessee during the assessment proceedings or the appellate proceedings, the same cannot be considered as explained and are held as undisclosed income of the appellant. However, the assessing officer has made addition for the entire amount received by the appellant without giving any benefit of telescoping for the payments made. The seized day book was maintained by one person i.e. Shyam Lal and it contained transactions from 01.01.2016 to 31.03.2016. Since there are regular cash deposits and withdrawals during the period, it is logical to conclude that withdrawals were available for subsequent deposits. Hence, benefit of telescoping has to be allowed for undisclosed cash receipts and cash payments and addition can be made only for the peak balance. The assessee was asked by the Ld.CIT(A) to submit the working of the peak balance. The appellant submitted peak balance of cash as per the said chart was computed at Rs. 1,67,95,639/-. However, from perusal of above chart, Ld. CIT(A) held that highest peak cumulative balance on 22.02.2016 was Rs.2,05,94,826/-. Hence, addition on account of peak balance of Rs. 2,05,94,826/- was confirmed and balance addition of Rs.29,00,49,409/- was deleted. Addition on basis of peak balance - HELD THAT:- The assessee submitted that peak balance of the cash as per the chart would be Rs.1.67 Crores. The ld. CIT(A) observed that the peak cumulative balance was Rs.2.05 Crores. While the remission of Rs.29.00 crores is not being interfered by us, we deem it proper to remand the matter to the file of the Assessing Officer for the purpose of re-computation and determine the peak balance. Difference between Purchase/sale-Bogus Bills - commission paid to the parties for arranging bogus purchase/ sale bills of rice - onus to prove - AO held that the cases where the statement of the parties have been recorded by the department where they have accepted that they were not doing genuine business transactions and copies of the same were provided to the appellant for rebuttal and the cases where the Assessing Officer has issued notices u/s 133(6) of the Act and the same were either not served and returned back or were not complied with - HELD THAT:- Since, there is no qualitative, quantitative difference or any difference in the value of the sales & purchases, no addition is called for on this account. Stock Difference in rice - as per AO total quantity of 6,180.98 quintals of rice was found excess and therefore the addition of Rs. 1,88,14,912/ was made by applying the rate of Rs. 3,044/- per quintal - We find that the assessee has handled a total quantity of 92,40,810 Quintals and had 33,23,290 Quintals as on 31.03.2016 which is equal to approximately 33,200 truck loads. The excess stock of 6,180 Quintals of excess stock is just little over 1% of the total quantity at the premises. Similarly, the shortage of quantity of 2,768 Quintals was 0.16% of 16,60,600 Quintals of the rice as per the books. While dealing with such high volume, there could be error of computation of quintals/sacks/bags of price. It is also an undisputed fact that no actual weighment was undertaken during the process of stock taking at the time of search. Hence, keeping in view the peculiar facts of the business of the instant case, we hold that no addition on account of stock difference is called for.
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