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Showing 341 to 360 of 1482 Records
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2023 (6) TMI 1142
Exemption u/s 10(22) denied - misutilisation of funds - remuneration paid to the wife and children of the managing trustee of the trust and the electricity bills towards his residence - As per HC Tribunal incorrectly held that exemption u/s 10(22) cannot be denied on the basis of the provisions of section 13(2B)(sic) of the Act and documentary evidence would clearly go to show that the receipts which are in the name of the trust and donation collected amounts to profit-making motive and it cannot be the object or the purpose of running a charitable educational institution
HELD THAT:- No good ground and reason to interfere with the impugned judgment and hence, the present appeal is dismissed.
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2023 (6) TMI 1141
Validity of Assessment u/s 153C - whether proceedings initiated by issuance of notice u/s 153C are with or without jurisdiction? - As per HC very initiation of proceedings u/s 153C [2019 (6) TMI 746 - GUJARAT HIGH COURT] was without jurisdiction - HELD THAT:- As a batch of appeals were preferred before this Court and the very impugned common judgment has been set aside by this Court in Vikram Sujitkumar Bhatia [2023 (4) TMI 296 - SUPREME COURT] - Thus, the issue involved in the present appeals is squarely covered against the Assessee and in favour of the Revenue in view of the aforesaid decision of this Court.
Assessee has fairly conceded before this Court that the issue involved in the present appeals is squarely covered against the Assessee and in favour of the Revenue in view of the aforesaid decision of this Court.
In view of the above and for the reasons stated above and for the reasons stated in the decision of this Court in Vikram Sujitkumar Bhatia (supra), the present appeals are allowed. The impugned common judgment and order passed by the High Court is hereby quashed and set aside.
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2023 (6) TMI 1140
Validity of Reopening of assessment u/s 147 - new tangible material for initiating reopening - 'independent' v/s 'borrowed' or 'dictated' satisfaction - whether income has escaped the assessment or not? - Exemption claimed on land compulsory acquired - HELD THAT:- There is no independent application of mind by respondent authority and a bare perusal of the reasons recorded would clearly indicate that the main and substantial ground is that in respect of other co-owners in proceedings u/s 263 of the Act a different view is taken but then the authority while examining the issue about exemption as prayed for ought to have gone into the specific provisions alongwith the CBDT circular and ought to have applied its mind to the effect that contours of Sections 147 and 263 of the Act are altogether different and as such without analyzing this view is taken, which tentamounts to be a borrowed satisfaction and reflects no independent application of mind. At the best, the authority could have initiated Section 263 proceedings but that having not been done and after unreasonable period trying to reopen the assessment is not step which may be recognized in law.
If we peruse the reasons which are recorded it reflects no independent application of mind and as such we do not recognize this routine exercise of reopening of assessment and thereto after a period of almost two years. The authority is sufficiently couched with the power of revision u/s 263 and as such when the authority has resorted to Section 147 is appearing to be impermissible especially when there appears to be no subjective satisfaction independently arrived at that any income chargeable to tax has escaped the assessment for any assessment year. This reason to belief contemplated u/s 147 of the Act requires proper application before initiating the step which here appearing to be missing and as such we are quite satisfied that case is made out by the petitioner to call for any interference.
The conclusion of an authority on the issue as to whether income is escaped from the assessment is also not so cogent enough upon which we may permit the authority to reopen the assessment in view of the settled position of law.
Here also the land appears to be compulsory acquired and the income is rightly claimed as exempted and therefore, the conclusion of an authority that income has escaped assessment, appears to be erroneous. At this stage, learned advocate appearing for the petitioner has pointed out that co-owners Poonamben Modi whose assessment was also sought to be reopened under Section 148 of the Act for very same reasons and thereafter, an order was passed by revenue under Section 143(3) read with Section 147 order while accepting the submission of the assessee did not make any addition. So when that be so, it is ill-founded that in case of present petitioner reopening is justified. Decided in favour of assessee.
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2023 (6) TMI 1139
Reopening of assessment u/s 147 - respondent no.3 Jurisdiction to issue notice in lieu of transfer of case u/s 127 - HELD THAT:- Admittedly, the order under Section 127(2) of the Act was passed by respondent no.1 transferring to respondent no.4 at New Delhi, the power to assess the petitioner, which was with respondent no.3 (ITO, Ward No.1, Shimla). It was clearly mentioned therein that the said order would come into effect immediately with effect from 12.03.2022.
Therefore, with effect from 12.03.2022, the jurisdiction of respondent no.3 to make an assessment under Section 148 of the Act, qua the petitioner, got extinguished.
When respondent no.3 had issued notice under Clause (b) of Section 148A of the Act to the petitioner on 22.03.2022, the petitioner had brought this fact to the notice of respondent no.3 in his response on the Portal given on 28.03.2022. It was further stated that the order dt. 15.03.2022 issued under Section 127(2) of the Act that respondent no.1 was also available on the Income Tax Portal and a copy of the same was also attached to respondent no.3; and the specific plea was raised that notice dt. 22.03.2022 under Section 148 A (b) of the Act issued by respondent no.3 to the petitioner, was without jurisdiction.
Ignoring the same, the impugned notice under Section 148 of the Act was issued on 01.04.2022 by respondent no.3.
The fact that respondent no.3 had issued notice dt. 22.03.2022 under Section 148A(b) of the Act to the petitioner, would not be relevant because the said provision i.e., Section 148A of the Act deals with conduct of enquiry before issuance of notice under Section 148 of the Act, as rightly contended by the learned counsel for the petitioner.
Had the transfer of jurisdiction happened after the issuance of notice of Sec.148 of the Act, the situation would have been otherwise.
In the very order dt. 15.03.2022 passed under Section 127(2) of the Act it was mentioned specifically that respondent no.3 should get the PAN as well as relevant records transferred to respondent no.4. Without obeying the said directive of respondent no.1 and without transferring the PAN of petitioner and the relevant records to respondent no.4, respondent no.3 cannot take advantage of his own wrong and take the pretext that since the transfer of the PAN had not happened, he has the jurisdiction to issue the notice under Section 148 of the Act also.
No prejudice is caused to the respondents since the limitation for initiating action under Section 148 of the Act, in view of the amended Section 149 of the Act, is ten years, if the alleged income escaping assessment is more than Rs.50.00 lacs and since such period for the assessment year 2015-16 would only end on 31.03.2026.
Accordingly, the Writ petition is allowed; the notice issued u/s 148 by respondent no.3 is quashed and respondent no.3 is prohibited from taking any action pursuant thereto.
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2023 (6) TMI 1138
Revision u/s 264 - Rejection of application - Recovery of tax dues of the company from the Director u/s 179(1) - Director is now no more (deceased) - Petitioners are two out of the four legal heirs of one late assessee who was a Director of the company - HELD THAT:- We will have to proceed on the basis that no letter or notice was sent to the deceased before the order dated 7th May 2018 came to be passed. There is also nothing to indicate what steps were taken to trace the assets of the company. Moreover, the order dated 7th May 2018 passed u/s 179 of the Act does not satisfy any of the ingredients required to be met.
Before passing an order under Section 179 of the Act, the Assessing Officer should have made out a case as required under Section 179(1) of the Act that the tax dues from the company cannot be recovered. Only after the first requirement is satisfied would the onus shift on any Director to prove that non recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company.
The order impugned passed by respondent no. 1 u/s 264 of the Act is a very brief order in the sense that the only ground on which the application u/s 264 came to be rejected is contained in paragraph 4.2 of the impugned order. Respondent no. 1, without considering any of the submissions made by petitioners, has simply rejected the application under Section 264 of the Act noting that notice of the death of the deceased was not brought to the Assessing Officer by anybody and before the order under Section 179 of the Act was signed by the Assessing Officer and, therefore, as on the date of the passing of the order, there was nothing invalid.
In our view, not only this order but also the order passed u/s 179 require to be quashed and set aside. Considering the order there is no ground made out in the order for even commencing proceedings under Section 179.
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2023 (6) TMI 1137
Return uploaded with a delay of 21 seconds - Condonation of delay in filing of ITR - HELD THAT:- Undoubtedly, the petitioner ought not to have undertaken the exercise of filing of the return literally at the last second, but in our considered view, the 21 seconds delay could be considered to be a human error and condoned, bearing in mind the dictates of substantial justice.
Even as per the affidavit filed in support of the Writ Petition, the return had been filed only at 11.59 p.m. on 15.02.2021. The petitioner, being a company, ought to have ensured that the filing of return was sufficiently in time factoring in possible glitches or technical difficulties.
The defence is that there is nothing wrong in the rejection of the return, since the software is so programmed to automatically close the portal at midnight. This may well be right. The request for condonation has been considered not by a machine but a human being, who, in my view, could well have considered the request in proper perspective, condoning the delay of 21 seconds.
The impugned orders are set aside and the delay is condoned. The return of the petitioner for assessment year 2020-2021 shall be taken to have been filed in time with all consequences thereof.
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2023 (6) TMI 1136
Validity of Reopening of assessment - validity of order passed u/s 148A(d) as different form notice issued u/s 148A(b) - HELD THAT:- A perusal of the said notice shows that it is alleged that income chargeable to tax had escaped assessment, on account of transaction referred to therein. The transaction, which is referred to in the said notice, concerns the purchase of shares by the petitioner, involving a company going by the name, Lendingkart Technologies Pvt. Ltd.
A perusal of the order u/s 148A(d) would show that the petitioner’s explanation with regard to the source of investment was accepted. This is evident upon a plain reading of paragraph 5 of the said order. What went against the petitioner is that it had not submitted the following documents: a copy of the share subscription agreement, a copy of the share certificate issued by LTPL and copy of valuation report on the date of purchase of share.
AO, thus, concluded, in our view erroneously, that in the absence of the valuation report, it could not be determined whether shares were purchased at fair market value, as per the provisions of Section 50CA of the Act, or not.
Undoubtedly, this aspect of the matter was never put to the petitioner in the notice issued u/s 148A(b) of the Act.
Since even according to the respondent/revenue, this was a case where an investment was made and not a transaction involving the transfer of shares, facially, the provisions of Section 50CA perhaps, were not applicable.
Accordingly, in our view, the best way forward would be to set aside the impugned order passed u/s 148A(d).
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2023 (6) TMI 1135
Claiming full amount of TDS - Deductor has deducted the TDS but only small portion of the amount of TDS was deposited with the revenue - Bar against direct demand on assessee - petitioner avers that instead of being granted credit for the tax deducted at source by CAL, a demand was raised against it - HELD THAT:- While respondent/revenue cannot recover the deficit tax at source from the petitioner, which was deducted and pocketed by CAL, and they cannot also refuse to grant credit for the same. The rationale being what the appellant/revenue cannot do directly, it is impermissible for it to reach the same end indirectly.
Given this position, the prayer made in the writ petition is allowed. Revenue will refund to the petitioner, as prayed.
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2023 (6) TMI 1134
Reopening of assessment - validity of order u/s 148A(d) - as argued since limitation had not expired at the relevant point in time, the notice issued u/s 148A(b) is sustainable, notwithstanding reference, as contended by to the judgment of the Supreme Court in Ashish Aggarwal’s case[2022 (5) TMI 240 - SUPREME COURT]
HELD THAT:- As notice issued u/s 148A(b) cannot be declared as being untenable in law, since even according to Mr. Jain, the limitation qua AY 2019-20 would have expired only on 31.03.2023.
Merely because there is a reference to the judgment of Supreme Court in Ashish Aggarwal’s case, which according to Mr Jain would not apply qua the AY in issue, would have render the notice untenable, as it is common case of counsel for parties that after 01.04.2021, notices could have issued only under the new regime.
Petitioner cannot but accept that the notice dated 23.05.2022 has been issued under the new regime, i.e., under Section 148A(b) of the Act.
However Petitioner argument carry weight insofar as the second aspect is concerned, i.e., that since proceedings on the very same aspects have been dropped in other AYs, that aspect required attention of the AO.
Since according to Petitioner assessment order has not been passed, the assessing officer will advert to the record of the earlier assessment years before passing the assessment order.
As rule of res-judicata does not apply, i.e., that each assessment year is different. That being said, if the reasons for reopening are consistently similar or same, the assessing officer needs to apply the principle of consistency before passing the assessment order. [See Radhasaomi Satsang v CIT (1991 (11) TMI 2 - SUPREME COURT)]
AO will issue a notice to the petitioner which would indicate the date and time of the hearing. AO will pass a speaking assessment order wherein the aforementioned aspect would be dealt with, i.e., that assertion that assessments have been completed for the AYs 2018-19 and 2020-21, involving aspects which are subject matter of the AY in issue.
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2023 (6) TMI 1133
Revision u/s 263 by CIT - under-assessment by virtue of the fact that the valuation that had been placed by the concerned authority for affixation of stamp duty was higher - HELD THAT:- As the value for the purpose of stamping was pegged at Rs. 387,64,76,000/- The record, thus, reveals that it was not the respondent/assessee who effectuated the sale of the subject land. The subject land was sold by the secured lenders to recover from dues owed by the respondent/assessee.
Tribunal concluded that the PCIT had failed to notice the underlying facts, while invoking his powers under Section 263 of the Act.
Tribunal correctly appreciated the law on the subject, which is that for invoking powers under Section 263 of the Act, two conditions have to be met, i.e., not only the order should be erroneous, but it should also be prejudicial to the interest of the revenue.
Twin conditions were not met. The Tribunal has correctly interdicted the view taken by the PCIT.
Given the facts obtaining in the instant case, we are in agreement with the Tribunal, that the power under Section 263 of the Act was wrongly exercised by the PCIT. No substantial question of law.
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2023 (6) TMI 1132
Correct head of income - gains received on sale of property - business income or capital gains - whether the assessee is eligible for claim of deduction u/s 54F of the Act in respect of reinvestment made in residential property? - HELD THAT:- We find that the assessee had bought the properties from financial year 2008-09 till assessment year 2010-11 in the capacity of investor, which has been accepted by learned Assessing Officer. Part of these assets were sold by the assessee in assessment years 2011-12 and 2012-13.
The capital gains arising out of such sale has duly been disclosed by the assessee in assessment year 2011-12 and accepted as such by the revenue, though u/s 143(1) of the Act.
For the purpose of arriving at the capital gains in respect of sale of property in assessment year 2012-13, we find that the assessee had indeed considered the sale price as determined by the Stamp Valuation Authority in terms of section 50C of the Act as the actual sale consideration was less than the circle rate. This clearly shows the intention of the assessee that she always wanted to remain only as an investor and never intended to carry on any business on the property.
Thus we are of the considered view that the gains arising on the sale of the property to the assessee has to be taxed only as capital gains and not as income from business. Consequently, the assessee would be eligible for deduction u/s 54F of the Act in respect of reinvestment of capital gains made in the house property.
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2023 (6) TMI 1131
Revision u/s 263 in the case of deceased person - HELD THAT:- As no power has been vested on the PCIT u/s 263 of the Act for passing order in the hands of the L/R after the death of the person [assessee] as there is no reference to section 263 in the afore-mentioned provisions of the Act.
Thus, in light of the decision of the Hon'ble Gujarat High Court in the case of Late Bhupendra Bhikalal Desai, through his L/H Shri Raju Bhupendra Desai [2021 (3) TMI 892 - GUJARAT HIGH COURT] it can be said that the action of the PCIT by passing order u/s 263 of the Act in the hands of the deceased is outside the scope of law provided u/s 159 of the Act.
We set aside the order framed u/s 263 by the PCIT in the name of a deceased person as bad in law. Appeal of assessee allowed.
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2023 (6) TMI 1130
Clubbing of business income of trading of bidis of husband and wife - business income of the wife of the assessee by clubbing it with the assessee’s income - HELD THAT:- Accounts of the assessee have been duly subjected to tax audit in terms of section 44AB of the Act.
When the assessee’s wife is independently assessed to income tax, having separate sales tax registration number and conducting the trading of bidis business at totally different addresses with that of the assessee and more especially when she had offered the business income from trading of bidis in her individual capacity in her income tax returns, it would be unfair to club her income with that of the business income of the assessee.
We find that the assessee is already in high tax bracket and there is no need for him to split the profits between him and his wife. Hence, there is absolutely mala fide [sic] on the part of assessee. No contrary evidence to this fact has been brought on record by the Revenue, except relying on statement recorded during survey proceedings.
Thus action of the lower authorities in clubbing the business income of assessee’s wife with that of the assessee is dismissed. Decided in favour of assessee.
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2023 (6) TMI 1129
Cash deposits during the demonetization period - CIT-A confirmed part addition - Sale of car - HELD THAT:- It is not in dispute that the assessee owns a car which was sold during the year on 05.06.2016. This sale has happened 5 months prior to the announcement of the demonetization by the Government. The assessee sold his car and that sum is available as a cash source for the assessee explaining the cash deposit.
Sale of Poplar Trees - whether the assessee had sold Poplar trees or not? - Assessee claimed that he had sold 727 Poplar trees to Sh. Prakash for Rs. 6 lakhs for which photocopy of the receipt was filed before AO.
Assessee had indeed sold poplar trees. Merely because the assessee is not able to produce Sh. Prakash (buyer of the Popular trees), transaction carried out by the assessee cannot be disputed or suspected. It is a fact that the assessee has declared 9,50,000/- as agricultural income in the return of income and these are also reflected in the affidavit furnished by him before the CIT(A). Hence, the cash source disclosed by the assessee for the sum of Rs. 6 lakhs towards sale of poplar trees is to be accepted as the source available for explaining the cash deposit.
Sale proceeds of Crop sold in October 2016 - As on a conservative basis, even if this sum of Rs. 2 lakhs is taken together with the aforesaid two receipts of on sale of car and sale of Poplar trees, this would explain the entire cash deposits made by the assessee, which is the subject matter of dispute.
Old Personal Savings - The assessee claimed old personal savings of Rs. 1,17,500/- as a cash source available for explaining the cash deposit, which was accepted by learned CIT(A) to the extent of Rs. 1 lakh. Even, this is taken together with the aforesaid three receipts it would explain the entire cash deposits by the assessee during the demonetization period. Hence, on merits, the entire cash deposits stands proved with proper source.
Thus preponderance of probability theory would go in favour of the assessee in the instant case. The predominant income available with the assessee is only the agricultural income. No other source of income is brought on record by AO and it is not in dispute that the assessee is not engaged in any business or profession. The source of income in any manner whatsoever could only emanate from agricultural income. We direct the learned Assessing Officer to delete the addition made in respect of cash deposits made during the demonetization period in demonetized currency - Decided in favour of assessee.
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2023 (6) TMI 1128
Addition on account of cash deposit in the bank account - income from undisclosed sources u/s 69 - HELD THAT:- As the assessee who has failed to appear before the A.O. after filing the present Appeal has not appeared even single occasion and produced any document to refute the findings of the CIT(A). The assessee has failed to give any explanation regarding cash found to be credited in the bank accounts of the Assessee, further we do not find any infirmity in the addition made by the A.O. which has been sustained by the CIT(A). Thus, we find no merit in grounds of appeal of the assessee accordingly, the Ground No. 1 to 9 of the assessee are dismissed.
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2023 (6) TMI 1127
Validity of reassessment proceedings - reopening notice, being issued before the end of the assessment year - belated return of income filed - DR argued that since the assessee had not filed the original return of income u/s 139(1) the AO was duly justified in reopening the assessment u/s 147 - HELD THAT:- When the return of income is not filed within the due date prescribed u/s 139(1) AO is entitled as per the statute to issue notice under section 142(1) of the Act calling for the return of income. Without resorting to this statutory provision, the learned AO cannot directly proceed to reopen the assessment.
In any case, when the due date for filing the return of income is available in terms of section 139(4) to the assessee, how there could be any satisfaction on the part of the AO to conclude that the income of the assessee has escaped assessment. Hence, the very basis of reopening deserves to be quashed for want of any satisfaction that could be legally recorded. The reopening made by learned AO deserves to be quashed on this count also.
As the return filed by the assessee on 06.10.2015 is a return filed belatedly u/s 139(4) of the Act. Nothing prevented the learned Assessing Officer to select this return for scrutiny and frame the assessment in accordance with law. When this provision is available with the learned Assessing Officer, where is the need for him to issue reopening notice that too before the end of the assessment year itself. Hence the reopening notice issued u/s 148 of the Act in the instant case is to be declared premature.
Revenue cannot resort to reopening proceedings merely because a particular return is not selected for scrutiny. Reopening of an assessment cannot be resorted to as an alternative for not selecting a case for scrutiny. There should be conscious formation of belief based on tangible information that income of an assessee had escaped assessment. No hesitation to quash the reassessment proceedings framed by learned AO as void ab-initio - Decided in favour of assessee.
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2023 (6) TMI 1126
Addition u/s 68 - receipt of loan unexplained - lender had confirmed the fact of advancing the loan to the assessee - HELD THAT:- As the assessee had discharged its primary onus of fulfilling the three ingredients of Sec.68. The lender, in sworn statement, admitted the fact of granting of loan and thus, the assessee stood discharged. The onus was now on revenue to make further enquiries from the lenders to ascertain their financial capacity to lend the loans. Turnover alone could not be considered as source of loan as advanced to the assessee. In the absence of such a fact based-finding to prove that assessee’s own money was routed through banking channels in the garb of loan, the impugned addition could not be sustained in law.
The assessee was not expected to prove the source of source as held by Hon’ble Supreme Court in the case of M/s Lovely Exports (P.) Ltd.[2008 (1) TMI 575 - SC ORDER] - Therefore, we direct Ld. AO to delete the impugned addition. The assessee’s appeal stand allowed accordingly.
Validity of reassessment proceedings - absence of any tangible material - HELD THAT:- We find that the original return of income was scrutinized u/s 143(3). The case was reopened within 4 years. The perusal of assessment order would show that Ld. AO has not referred to any tangible material coming into his possession which would lead to formation of a belief that certain income escaped assessment in the hands of the assessee. Apparently, reassessment has been initiated on the same set of material as available before Ld. AO during original assessment proceedings. This being so, the reassessment proceedings would be nothing would review of the order which is impermissible.
In absence of any new tangible material, the case could not be reopened on mere change of opinion - See M/S. KELVINATOR OF INDIA LIMITED [2010 (1) TMI 11 - SUPREME COURT] - Reassessment proceedings are bad in law and hence, liable to be quashed - Decided in favour of assessee.
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2023 (6) TMI 1125
Addition of long term capital gain - Addition made by AO on sale of undisputedly rural agricultural land u/s 2(14) - difference between the rural agricultural land u/s 2(14) and urban agricultural land subjected u/s 54B - HELD THAT:- AO misdirected himself in applying provision of section 54B of the Act which are applicable on urban agricultural land claiming deduction u/s 54B of the Act and not agricultural activity in showing in agricultural land carried out agricultural land activity thereon obtaining crops therefore, therefrom and thereafter in the same status rural agricultural land she sold land to 3rd party then such transaction of sale does not fall within the meaning of section 2(14) read with section 54B of the Act attracting levy of tax on account long term capital gain. Therefore, grounds of assessee are allowed and AO is directed to delete the addition. Decided in favour of assessee.
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2023 (6) TMI 1124
Income deemed to accrue or arise in India - amount received by the assessee towards provision of Management Support Services to be in the nature of Fees for Technical Services [FTS] under Article 12 of the India – Singapore DTAA - whether services provided by the assessee do not make available any technical knowledge, skill, know-how to the recipient ?
HELD THAT:- As in A.Ys 2013-14 and 2014-15 [2023 (3) TMI 1187 - ITAT DELHI], with respect to taxability of Management Support cost, under Article 12(4)(b) of the DTAA held as facts show that the agreements for user of brand name and for Management Support Services are independent of each other, hence, not connected or dependent upon each other. It is also relevant to observe, while the license agreements for user of brand name are with various third party hotels in India, the agreement for provision of Management Support Services is with the Indian subsidiary. Therefore, it cannot be said that the amount received from provision of Management Support Services is ancillary and subsidiary to the license agreement.
A threadbare analysis of Management Support Services Agreement and the fee received under various heads in pursuance to such agreement, in assessee’s own case in assessment year 2012-13 [2021 (10) TMI 443 - ITAT DELHI] has given a categorical finding that it does not come under Article 12(4) of India-Singapore DTAA. The decision of the Co-ordinate Bench as aforesaid, will also apply mutatis-mutandis to this appeal. Thus we direct the Assessing Officer to delete the impugned addition.
Short credit of TDS - The assessee is entitled for credit of TDS as per provisions of section 199 of the Act r.w.r 37BA(2) of the Rules. We, therefore, direct the Assessing Officer to grant credit of TDS as per relevant provisions of the law and rules.
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2023 (6) TMI 1123
Estimation of income - Unexplained expenditure on bogus purchases u/s. 69C - addition of 2% of said amount on account of commission paid for obtaining accommodation entry - main contention of assessee is that the AO have not rejected books of accounts of assessee and therefore no addition can be made on estimation basis, Also even if the purchases are treated as bogus as the assessee did not sold the stock purchased during relevant period and same was shown as including in the closing stock as on 31.03.2010 - HELD THAT:- When the purchases have been shown in the books of accounts and the stock/goods purchases was remained unsold in the end of financial period thus including in the closing stock then no profit was flowing from such transaction if it is gathered that the Assessing Officer alleged the same as bogus purchases. When the goods is physically available and shown in the stock register of assessee and even the assessee did not pay any sale consideration during the relevant financial period, in such a situation we are unable to see any accruing of any benefit or profit to the assessee which may attract charging provisions of tax.
To cover up all possible leakage of revenue we find it appropriate to follow the preposition rendered in the case of PCIT vs. Mohd. Hazi Adam [2019 (2) TMI 1632 - BOMBAY HIGH COURT] and restrict the addition to the element of profit embedded therein.
Restrict the addition to the tune of 8% of total impugned sales which is sufficient to cover all possible leakage of revenue. Accordingly, additions upheld by the CIT(A) are substituted by the 8% of total alleged purchases. Accordingly, the grounds of assessee are partly allowed.
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