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2022 (7) TMI 740 - AT - Income TaxRejection of books of accounts - net profit estimation - HELD THAT:- We find that the book results of the assessee were rejected by the ld. AO u/s.145(3) of the Act. This action of the AO was upheld by the ld. CIT(A). We find that the said book results of the assessee had been rejected with valid reasons which have already been stated supra. No evidences were filed by the assessee either before the ld. AO or before the ld. CIT(A) or before us to controvert the said findings of the lower authorities. Hence, we uphold the action of the lower authorities in rejecting the book results u/s.145(3) of the Act. Accordingly, the ground raised by the assessee in its cross objections are dismissed. NP estimation - Once the book results are rejected u/s.145(3) of the Act and net profit @1% is estimated by the ld. AO, then there cannot be further disallowance that could be made separately on account of commission expenses, travelling and conveyance expenses and depreciation by looking into the same entries in the books. Hence, we hold that the ld. CIT(A) had rightly deleted the disallowance made on account of commission, travelling and conveyance and depreciation. Accordingly, the grounds raised by the Revenue are dismissed. Addition made u/s.69C on account of bogus purchases - alleged seized materials found during the course of search - HELD THAT:- The book results of the assessee had been rejected by the lower authorities for not addressing the defects pointed out by the lower authorities. Hence, once the book results are rejected as stated supra, there cannot be separate addition that could be made on account of purchases which are already reflected in the book results, based on alleged seized material. Hence, we direct the ld. AO to delete the addition made on account of bogus purchase as the said issue also gets subsumed in the net profit estimated at 1% of turnover. Accordingly, the ground Nos. 11 & 12 raised by the assessee in its cross objections are allowed. Validity of the search assessment on the ground that notice u/s.143(2) of the Act was not served - HELD THAT:- The assessee before the ld. CIT(A) had challenged the non-issuance of notice u/s 143(2) of the Act which had been rightly adjudicated by the ld. CIT(A). Before us, the assessee had challenged the non-service of notice u/s 143(2) of the Act. This fact was never raised before the lower authorities and not raised before us by way of an additional ground. No further evidences in this regard were produced by the assessee in support of this contention. Hence we hold that this ground raised before us does not emanate from the orders of the lower authorities . Hence, the ground raised by the assessee in its cross objections is hereby dismissed as not maintainable. Validity of search assessment framed in the hands of the assessee by challenging on the ground that search assessment is barred by limitation u/s.153B - As per assessee search assessment completed on 28/03/2013 is barred by limitation in terms of Section 153B - HELD THAT:- We find that this objection was also raised by the assessee before the ld. CIT(A) and the ld. CIT(A) addressed the issue in detail by stating that though the search was conducted on 23/02/2010, the last authorisation of search was issued on 19/04/2010 and panchanama was duly drawn thereon and there were seizure of books of accounts and certain documents on the said date. Hence, the search conducted on 19/04/2010 was a valid search. While this is so, the date for completion of assessment should be reckoned from 19/04/2010, in which case, the last date to complete assessment would be 31/03/2013. In the instant case, the search assessment has been completed on 28/03/2013 and hence, the objection raised in this regard by the assessee is devoid of merits and hence dismissed. Disallowance made on account of proportionate interest - HELD THAT:- As stated in earlier grounds of the Revenue, once the net profit is estimated @1% of turnover, there cannot be further addition made on account of business income either by way of disallowance of interest on borrowed funds or by way of adding notional interest income on loans and advances. This is in view of the fact that the said interest addition would get subsumed in the determination of net profit @1% of turnover. Hence, we direct the ld. AO to delete the addition made in the sum of Rs.3,14,160/-. Accordingly, the ground Nos. 13 & 14 raised by the assessee in its cross objections are allowed. Addition made in the search assessment completed u/s.153A - HELD THAT:- We hold that a statement recorded u/s.132(4) of the Act does not constitute any incriminating material found during the course of search within meaning of Section 153A to 153D of the Act. Reliance in this regard is placed on the decision in the case of PCIT vs Best Infrastructure (India) (P) Ltd. [2017 (8) TMI 250 - DELHI HIGH COURT] - In view of the above, we hold that no additions could be made in the search assessment completed u/s.153A of the Act for the A.Y.2007-08. Hence, the grounds raised by the Revenue are dismissed
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