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2015 (5) TMI 153 - ITAT DELHI

2015 (5) TMI 153 - ITAT DELHI - TMI - Validity of notice u/s 153C - Held that:- The satisfaction note available reveals exfacie that the same has been recorded by the AO in the capacity of the AO of the person other than the person searched, thus, the satisfaction note has been recorded by the AO of the assessee of the present cases but no satisfaction note has been recorded in the case of persons searched. This fact is also apparent from the RTI reply of DCIT, New Delhi dated 10.6.2013 also see .....

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uired to be made in the case of the person searched by the AO having jurisdiction over searched person which has not been recorded in the present case by the AO of person searched i.e. Shri B.K. Dhingra & Others and as per RTI reply dated 8.12.2014 (PB page 4-5) the only satisfaction has not been recorded in the file of other person viz. the assessee. In view of above, it can safely be held that no valid and required satisfaction note was recorded by the AO of the persons searched so as to fulfi .....

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not justified in making impugned disallowances and additions pertains to unexplained purchases u/s 69C of the Act and disallowance of expenses in all six assessment years and addition u/s 68 of the Act in regard to share capital for A.Y. 2003-04 without any justified basis and that is too without any incriminating material and thus, we are inclined to hold that the CIT(A) was correct in deleting the same.

Thus inclined to hold that the AO made additions without any justify basis and .....

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e sustainable by the CIT(A) and we have no reason to interfere with the plausible and correct conclusion of the CIT(A) in this regard and thus, we upheld the same. - Decided in favour of assessee. - ITA Nos. 6428 to 6433 /Del/2013, Cross Objection Nos. 347 to 352/Del/2014 - Dated:- 29-4-2015 - Shri S. V. Mehrotra And Shri C. M. Garg,JJ. For the Appellant : Sh. R.I.S. Gill, CIT-DR For the Respondent : Sh. B.K. Dhingra, CA ORDER Per Bench These appeals filed by the Revenue and cross objections fil .....

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s objections are that a search and seizure operation u/s 132 of the Income Tax Act, 1961 (the Act) was carried out in the cases of Shri B.K. Dhingra, Smt. Poonam Dhingra & M/s Madhusudan Buildcon Private Limited on 20/10/2008. During the course of search and seizure operation certain documents belonging to the present assessee were seized and on the basis of the same documents, so found belonging to the assessee company, proceedings were initiated u/s 153C read with section 153A of the Act. .....

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19/10/2010 u/s 127 of the Act on 10/11/2010 as sought by the assessee. 3. The AO rejected legal contentions of the assessee and made additions u/s 69C of the Act pertaining to unexplained purchases and also made disallowance of expenditure as per discussions in the respective assessment orders. 4. The assessee preferred an appeal before CIT(A) which was partly dismissed on legal contentions of the assessee but the CIT(A) partly allowed the appeal of the assessee on merits deleting the additions .....

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rred cross objections challenging the conclusion of the CIT(A) in not holding that the notice issued u/s 153C of the Act and assessment order passed u/s 153C/143(3) of the Act are illegal, bad in law and without jurisdiction. 5. The assessee has also challenged that the CIT(A) has erred in directing the AO to work out the peak from the entries in the cash book of the assessee company for the relevant assessment years. It is also relevant to mention that the AO also made an addition of ₹ 99 .....

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ard first. Hence, we are first taking up cross objections of the assessee for hearing and adjudication. Although the assessee has taken cross objections 1 to 4 in all six assessment years which are similarly worded but except main cross objection no. 1 other cross objections are argumentative and supporting to the main cross objection no. 1which reads as under: 1. That on the facts and circumstances of the case and the provision of law, the ld. CIT(A) has failed to appreciate that the notice iss .....

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ver 147 pages and case laws paper book spread over 209 pages. The ld. AR submitted that the documents found during the search and seizure operations as mentioned in the satisfaction note, recorded by the AO of the assessee (the person other than the person searched), do not belong to the assessee company as these were the part of working papers of Chartered Accountant of the assessee s company Shri B.K. Dhingra whose office was searched on 20/10/2008. The ld. AR also submitted that the proceedin .....

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ars under appeal were not pending on the date of recording of satisfaction u/s 153C of the Act (on 10/09/2010) and accordingly, the same did not abate for the purpose of initiation of proceedings u/s 153C of the Act and as such the reassessment order u/s 143(3) read with section 153C of the Act being bad in law, illegal and without jurisdiction deserves to be quashed. The ld. AR vehemently contended that the case of the assessee is squarely covered by the decision of ITAT A Bench in the case of .....

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s order. 9. The ld. AR also pointed out that in the similar set off facts and circumstances ITAT Delhi H Bench in the case of Tanveer Collections Pvt. Ltd. vs. ACIT (2015) 168 TTJ 145 (DT) has categorically held that where the AO of the persons searched did not record any satisfaction that some money, bullion, jewellery or books of accounts or other documents found from these persons belong to assessee then initiation of proceedings u/s 153C of the Act on the assessee was void abinitio. 10. The .....

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copy of which is available on page 4 of the paper book, as under :- "Satisfaction Note for issuing Notice u/s 153C of the I.T. Act, 1961 in the case of M/s Tanveer Collection Pvt. Ltd., RZ-126, West Sagar Pur, Shankar Park, New Delhi, PAN: AACCT6679D for A.Y. 2003- 04 to 2008-09. 08.09.2010 In the case of Sh. B.K. Dhingra, Smt. Poonam Dhingra and M/s Madhusudan Buildcon Pvt. Ltd., search & seizure took place u/s 132 on 20.10.2008. The undersigned is the jurisdictional AO of this case. D .....

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, Shankar Park, New Delhi. This satisfaction note is recorded and is placed in the file before issuing notice u/s 153C. 13. It can be seen from the assessment order that notice u/s 153C was issued to the assessee by the ACIT, Central Circle-17 on 08.09.2010, being the same date on which the above satisfaction was recorded. It is apparent that it was : ' Satisfaction Note for issuing Notice u/s 153C of the I.T. Act, 1961 in the case of M/s Tanveer Collection Pvt. Ltd.' It is further notic .....

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of Income-tax, Central Circle-17, New Delhi to Shri B.K. Dhingra, Smt. Poonam Dhingra and M/s Madhusudan Buildcon Pvt. Ltd., under the provisions of RTI Act, 2005. The relevant part of the reply dated 10.6.2013 given to Sh. B.K. Dhingra, is as under:- "2. From the assessment records of Sh. Bhupesh Kumar Dhingra, which is covered under section 153A, for the Asst. years from 2003- 04 to 2008-09 (Block period) it is noticed that there is no 'satisfaction note' available/recorded in res .....

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ded by the AO in the cases of the persons searched u/s 132(1) of the Act (i.e. Shri B.K. Dhingra, Smt. Poonam Dhingra and M/s Madhusudan Buildcon Pvt. Ltd.) that some books of account or documents etc. belonging to the assessee were found which were handed over to the AO of the 'other person' (i.e. the assessee). The Satisfaction note as reproduced above has been prepared by the AO of the assessee. 15. The ld. DR vehemently accentuated on the point that since the AO of the persons search .....

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ng satisfaction by the AO of the person searched provided by the statute can be substituted with anything else. There is an underlying rationale in providing for recording of such satisfaction by the AO of the person searched. As the money, bullion, jewellery, books of account or documents etc. always come to the possession of the AO of the person searched who has to frame assessment, it is only he who can find out that which of such documents etc. do not belong to the person searched and are re .....

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on searched but to some other person, the legislature has provided for recording of such satisfaction by the AO of the person searched. It is not permissible under the law to require the AO of the other person to record such satisfaction by the AO. 17. As regards the other argument of the ld. DR that since the AO of both the persons searched and the assessee is the same person, hence the requirement of recording satisfaction by the AO of the persons searched should be deemed to have been fulfill .....

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ver the person searched who is obliged to record such satisfaction in the capacity of that AO and that too in the case of the person searched. The mere fact that the AO of the person searched and the assessee is the same person, does not, in any manner, obliterate the requirement of law necessitating the recording of satisfaction in the case of the person searched that money, bullion, jewellery, etc., found from the person searched belongs to the 'other person.' What is crucial to note i .....

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d that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person .........referred to in sub-section (1) of section 153A.' has been substituted as under : - 'and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of accoun .....

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ing upon the exercise of his assessment or reassessment. Therefore, now under the law, w.e.f. 1.10.2014 it has become obligatory not only for the AO of the person searched to record satisfaction before handing over books of account or documents, etc., to the AO of the 'other person', but, such AO of the 'other person' is also required to record satisfaction that the books of account or documents, etc. have a bearing on the determination of the total income of such other person. I .....

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stake and hence should not eclipse the assessment. Relying on certain judgments, the ld. DR submitted that the technicalities cannot be allowed to prevail in the course of indulgence of justice. 21. We agree in principle that technicalities cannot come in the way of dispensation of justice. However, it is important to note that the lack of jurisdiction by the AO cannot be put under the carpet in the guise of a technical defect. It goes without saying that no assessment or other proceedings can b .....

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onsequential assessments u/s 153C, under identical circumstances, have been quashed. The ld. DR contended that the above referred two Tribunal orders are per incurium and should not be followed. The main reason for declaring the tribunal orders as per incurium was the non-consideration of the judgment of the Hon'ble jurisdictional High Court in judgment in the case of SSP Aviation Ltd. VS. DCIT (2012) 346 ITR 177/207 Taxman 260/20 taxmann.com 214 (Delhi). 23. Let us examine the case of SSP A .....

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cles or books of account or documents belonging to the other person must conclusively reflect or disclose any undisclosed income. We find that there is no such controversy before us as was there before the Hon'ble High Court. It is not the case of the assessee before us in this ground that the documents etc. found from the persons searched did not positively indicate the existence of some income in the hands of the assessee. The argument is simply confined to non-recording of satisfaction by .....

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ver the searched person is that the valuable article or books of account or documents seized during the search belong to a person other than the searched person. There is no requirement in Section 153C(1) that the Assessing Officer should also be satisfied that such valuable articles or books of account or documents belonging to the other person must be shown to show to conclusively reflect or disclose any undisclosed income.' 24. It is pretty clear from the above extraction that the satisfa .....

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int. It is only if the subsequent bench feels itself unable to concur with the view taken earlier that it is required to refer the case for consideration by a special bench. In our considered opinion, these two orders of the co-ordinate benches are perfectly in accordance with law. 26. Coming back to facts of the instant case, it is palpable that the AO of Shri B.K. Dhingra, Smt. Poonam Dhingra and M/s Madhusudan Buildcon Pvt. Ltd., did not record any satisfaction that some money, bullion, jewel .....

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in the case of ACIT vs. Inley Marketing (supra) which was authored by one of us (C.M.Garg, J.M.) has held as under: 20. We further observe that in the cases of DSL Properties (P) Ltd. (supra), the ITAT Delhi held that even if the Assessing Officer of the persons searched and the Assessing Officer of the such other person other than searched is the same, then the Assessing Officer has to first record the satisfaction in the file of the person searched, thereafter, such note along with the seized .....

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ovision of section 153C of the Act inasmuch as while section 158BD of the Act stipulates that for transfer of file only when the Assessing Officer who conducted the search or who called for books of accounts was satisfied that the undisclosed income found therefrom belongs to any person other than the person searched who has to be assessed under Section 158BD r/w section 158BC of the Act. While under Section 153C of the Act for transferring the material or evidence collected during course of sea .....

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r evidence seized during the course of search of an assessee represents or disclosed undisclosed income of another assessee. 22. In the decision of the Hon ble Supreme Court in the cases of Calcutta Knitwears (supra), the ratio laid down in the case reads thus:- 38. Having said that, let us revert to discussion of Section 158BD of the Act. The said provision is a machinery provision and inserted in the statute book for the purpose of carrying out assessments of a person other than the searched p .....

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elating to such other person, the jurisdictional assessing officer may proceed to issue a notice for the purpose of completion of the assessments under Section 158BD of the Act, the other provisions of XIV-B shall apply. 39. The opening words of Section 158BD of the Act are that the assessing officer must be satisfied that "undisclosed income" belongs to any other person other than the person with respect to whom a search was made under Section 132 of the Act or a requisition of books .....

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ceedings under Section 158BC of the Act or after completion of the proceedings under Section 158BC of the Act. 23. We further note that the Hon ble Jurisdictional High Court of Delhi in the case of Pepsico India Holdings Pvt. Ltd. Vs ACIT (supra) after considering its own decision in the case of Pepsi Foods Pvt. Ltd. Vs ACIT WP(C) No. 415/2014 dated 07.08.2014 and the provisions of section 153C, 132(4A)(i) and 292 C(1)(i), it has been held thus:- Before we examine these writ petitions in detail .....

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r: "6. On a plain reading of Section 153C, it is evident that the Assessing Officer of the searched person must be "satisfied" that inter alia any document seized or requisitioned "belongs to" a person other than the searched person. It is only then that the Assessing Officer of the searched person can handover such document to the Assessing Officer having jurisdiction over such other person (other than the searched person). Furthermore, it is only after such handing ove .....

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ved at - that the document is handed over to the Assessing Officer of the person to whom the said document "belongs". In the present cases it has been urged on behalf of the petitioner that the first step itself has not been fulfilled. For this purpose it would be necessary to examine the provisions of presumptions as indicated above. Section 132(4A)(i) clearly stipulates that when inter alia any document is found in the possession or control of any person in the course of a search it .....

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fore he/she arrives at the satisfaction that the seized document does not belong to the searched person but to somebody else. Surmise and conjecture cannot take the place of "satisfaction". xxxx xxxx xxxx xxxx xxxx "11. It is evident from the above satisfaction note that apart from saying that the documents belonged to the petitioner and that the Assessing Officer is satisfied that it is a fit case for issuance of a notice under Section 153C, there is nothing which would indicate .....

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he seized documents belong to a person other than the searched person. We are afraid, that going through the contents of the satisfaction note, we are unable to discern any "satisfaction" of the kind required under Section 153C of the said Act." 24. The coordinate bench of the Tribunal in the case of DSL Properties (P) Ltd. Vs DCIT in operative paras 15, 18 and 21 (supra) has held thus:- Held Action u/s 153C can be taken in respect of any other person than person searched if AO of .....

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at any undisclosed income belong to any person other than person searched, while, in case of S. 153C, AO of person searched is to be satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents belong to person other than person searched. Perusal of satisfaction note shows that paper does not indicate in whose case this satisfaction was recorded and who is officer recording satisfaction. Neither name of assessee of AO was mentioned and no seal .....

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imitation. Therefore, issue of notice u/s 153C issued by Revenue cannot be sustained on both counts, i.e., it is legally not valid as conditions laid down u/s. 153C has not been fulfilled and it is barred by limitation. Therefore, notice issued u/s 15and consequently, assessment completed in pursuance to such notice, is also quashed. Appeal allowed. 25. Even if the decisions of Hon ble Supreme Court in the cases of Manish Mahehswari (supra), Calcutta Knitwears (supra), decision of Hon ble High C .....

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record/files concerning person other than the present case. 26. The satisfaction note available on Paper Book No. 2 of the assessee at page 51 clearly reveals ex facie that the same has been recorded by the AO in the capacity of AO of the person other than person searched., meaning thereby assessee of the instant appeals. In these circumstances, it can safely be held that no valid satisfaction was recorded by the AO of person searched so as to fulfill requirement of valid assumption of jurisdic .....

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10 to which only seized material i.e. cheque book pertains to. Ld. DR has also not disputed the fact submitted by the assessee that the details of cheque book were duly reflected in the return of the assessee for AY 2009-10. Therefore, if the AO of the person other than person searched might have gone through the return of the assessee for AY 2009-10, which was admittedly filed on 30.09.2009, then he could have drawn a proper conclusion about further action of the proceedings for AY 2009-10 but .....

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see clearly reveals exfacie that the same has been recorded by the AO in the capacity of the AO of the person other than the person searched, thus, the satisfaction note has been recorded by the AO of the assessee of the present cases but no satisfaction note has been recorded in the case of persons searched. This fact is also apparent from the RTI reply of DCIT, New Delhi dated 10.6.2013, which is being annexed to this order as Annexure-A, B & C. From paper book page 4 & 5 we also see t .....

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the case of the person searched by the AO having jurisdiction over searched person which has not been recorded in the present case by the AO of person searched i.e. Shri B.K. Dhingra & Others and as per RTI reply dated 8.12.2014 (PB page 4-5) the only satisfaction has not been recorded in the file of other person viz. the assessee. In view of above, it can safely be held that no valid and required satisfaction note was recorded by the AO of the persons searched so as to fulfill the requireme .....

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d out that as per Revenue the only document which was found during the course of search and seizure operation on Shri B.K. Dhingra and others is counter foils of the cheque book which pertains the A.Y. 2009-10 for which no scrutiny assessment was made u/s 143(3) of the Act as the transactions reflected from the said cheque book were duly recorded in the books of accounts of the assessee of the relevant financial year/previous year, therefore, no incriminating material was found during the search .....

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of the Act. The present case is squarely covered by the decision of Hon ble High Court in the case of Pepsico (supra). Thus, assumption of jurisdiction was not valid, bad in law and void ab initio. Accordingly, cross objections from 1 to 4 of the assessee being legal contentions are hereby allowed. Cross objection nos. 5 to 12 of the assessee and ground no. 1 to 3 in A.Y. 2003-04 & ground no. 1 & 2 of the Revenue for A.Y. 2004-05 to 2008-09 of the Revenue. 15. The ld. AR contended that .....

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s in the textile trading and income earned from such business was offered to tax right from commencement of business till date. The ld. DR supported the orders of the authorities below. 16. On careful consideration of above submissions from assessment order para 4 at page 2 we note that the AO has noted that the assessee belongs to the Thapor Group of cases but we are unable to see any details or evidence or basis to support this observation from the assessment order. In the same manner the CIT( .....

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usible basis as the Revenue could not substantiate this fact that the assessee company or its directors have any connection with Thapar Group closely by or even remotely. Now we proceed to deal with other arguments at both the sides. 17. We note that the Revenue has challenged deletion of the additions made by the AO on account of unexplained purchases u/s 69C of the Act and on account of disallowance of expenses in all six assessment years and the Revenue has also disputed the deletion of addit .....

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Therefore, we find it just and proper to adjudicate grounds of the Revenue as well as cross objections of the assessee on the merits together by the subsequent part of this order. 18. The ld. DR submitted that the AO and the CIT(A) have held that the purchases, sales and expenses made by the assessee during the relevant assessment period are bogus and unverifiable by nature. Therefore, the AO was justified and making additions in regard to unexplained purchases and expenses in all assessment yea .....

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g that of the AO. 19. Replying to the above, the ld. AR submitted that when the books of accounts maintained by the assessee company in the normal course of business reflects amounts of purchases, sales, opening stock and closing stock which were produced before the AO and no deficiency or defect was pointed out then the only inference which can be drawn is that the books of accounts and results are accepted by the AO. The ld. AR also submitted that the assessee carried on trading of textile and .....

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all six assessment years and the AO rejected the same without any consideration (point 16 Paper Book page 25). 20. From the assessment order it is apparently seen that AO issued notice and questionnaire on 10.11.2010 asking to produce books of accounts, the nature of business activities, the names and addresses of the parties with whom purchase and sales transactions were made. The AO also asked to submit Ledger Account, Stock Register maintained and the details of expenses etc. We also note tha .....

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sses and these entities also confirmed the transactions which the assessee effected during relevant financial period or year. Under above noted facts and circumstances the conclusion of the AO is not sustainable that all cash purchases are unverifiable and bogus. On the other hand, the CIT(A) deleted the same. The ld. AR, on this issue, has relied on the judgments of the Hon ble High Court of Madras in the cases of CIT vs. Shakuntla Devi Khetan, 352 ITR 484 (Mad.) and CIT vs. Anandha Metal Corpn .....

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stock and cash found at the time of search had been examined by the AO and was compared with the stock and cash position as per books. The stock and cash position as per the books had been arrived at after the effect of the aforesaid cash sales. The stock position as well as the cash position as per the said books had been accepted by the AO. The Commissioner of Income Tax (Appeals) also noted that the appellant had furnished the complete set of books of accounts and the cash books and no discr .....

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observed that it is not in dispute that the sum of ₹ 24,58,400/- was credited in the sale account and had been duly included in the profit disclosed by the assessee in its return. It is in these circumstances that the Tribunal observed that the cash sales could not be treated as undisclosed income and no addition could be made once again in respect of the same. 22. The ld. AR could not controvert this contention of the assessee that the AO has not pointed out any deficiency or mistake in t .....

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addition u/s 68 of the Act. The ld. DR further contended that the CIT(A) deleted the said addition without any basis, therefore, impugned order may be set aside by restoring that of the AO. The ld. AR, placing reliance on the submissions before CIT(A) vide dated 19.11.2010 (Paper Book page at 26 point 26) pointed out that the assessee company has allotted 9960 bonus shares out of profits and reserves to the existing shareholders during Financial Year 2002-03 and details of bonus allotment were .....

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he addition and in view of assessee s explanation and uncontroverted contra accounting entries we are in agreement with the view taken by the CIT(A) that addition u/s 68 of the Act is not sustainable and we upheld the same. 24. The ld. AR also drawn our attention towards assessment order para 4 and submitted that the AO proceeded on the basis of surmises and conjectures without having any incriminating material or substance by imagining a modus operandi at his own without any justified basis and .....

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not empowered to make a pure guess work in making assessment without any reference to any cogent evidence or material and there must be some incriminating material more than baseless suspicion to support additions and disallowances in the assessment order u/s 143(3) of the Act. The ld. AR also alleged that the seized material belonging to the assessee is the counter foils of the cheque book related to F.Y. 2008-09 pertaining to A.Y. 2009-10 which in fact was admitted by the department that the .....

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sale/purchase of the goods except the bank transactions. The ld. DR also pointed out that the AO was correct in holding that the assessee has declared its entire purchases as cash purchases which was bogus and when the assessee has itself declared sales then the sales rightly held to be represent income from undisclosed sources u/s 68 of the Act. The ld. DR further pointed out that the AO rightly held that the expenses claimed by the assessee in the profit and loss account were also not verifia .....

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purchases u/s 69C of the Act and entire amount of expenditure in all six assessment years and also deleting the addition of ₹ 99,600/- on account of cash capital u/s 68 of the Act for A.Y. 2003-04. The ld. DR streneously contended that the CIT(A) was not correct in directing the AO to work out the peak from the entries in the cash book of the assessee for the relevant year and to make a singular addition of said peak amount. The ld. DR finally prayed that the impugned order may be set asi .....

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e and additions. The ld. AR also drawn our attention towards paragraph no. 7.15 of the impugned order and submitted that the CIT(A) was right in deleting the impugned additions but the CIT(A) directed the AO to work out peak from the entries in the cash book of the assessee without any reason or basis. The ld. AR further pointed out that the CIT(A) himself was not sure in directing the AO as to where the work out peak amount has to be added and, therefore, the CIT(A) has made a vague direction t .....

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s and results of the assessee in the respective assessment year 2009-10 and, therefore, the additions made by the AO and peak addition as directed by the CIT(A) is not justified and sustainable. 29. On careful consideration of above submissions, we note that the AO in A.Y. 2003-04 has made additions with following primary observations: 4. The assessee company belongs to the Thapar Group of cases. One of the main allegations against the group is that several concerns have been floated by the grou .....

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-04 (previous year 01.04.2002 to 31.03.2003). It is noticed that the company was incorporated on 05.08.1993 and has been filing its return with income tax regularly. As per the facts of the case the assessee has declared a closing stock of ₹ 12,05,41,280/- as on 31.03.2002, which forms the opening stock for the previous year under consideration. 6. The inquires indicate that the directors/shareholders are not a man of means and the premises and the premises are not commercial premises. The .....

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ings. 7. During the current year the assessee has purchased, textile goods of ₹ 26,02,864/- and has made sales of ₹ 32,51,426/- . The assessee was directed to prove its trading activities and to produce sale tax records. The assessee has claimed that since it deals with tax free goods only there is no necessity for it to file sales tax returns. Thus, it seems that except the declaration of the assessee, there is no independent proof of sale/purchase of the goods except the bank trans .....

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hases are made are: 1) M/s Pole Star Fabrics ₹ 26,02,864/- The above is actually unit of Thapar group companies and the unit is mentioned in correspondence to hide the true persons. The above concerns is part of the Thapar group of companies having similar modus operandi. This has been assessed u/s 153C in the this circle and in these case also the business transactions has been held to be not genuine. Similar the sales are declared to have been made in cash to concerns of Thapar group onl .....

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re is no name of any company in these products. Shawls are purchased and sold in pieces and rest other items are sold in meters. It is further seen that the purchases & sales are within M/s Thapar Homes Group of cases. In inventories of Fabric & Textile Goods shown in the balance sheet the closing stock of last year stands at ₹ 12,05,41,280/-. This year the figure is ₹ 12,02,60,068/- which is almost the same. Therefore, purchases & sales are only out of current year trans .....

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um of ₹ 26,02,864/- is disallowed. (The opening stock is of the period before the block period of section 153C). Penalty proceedings u/s 271(c) are being initiated for furnishing inaccurate particulars of income. Since, the entire cash purchases of ₹ 26,02,864/- are bogus and are brought to tax as unaccounted expenditure u/s 69C of the I T Act, no further addition is made u/s 40A(3) of the I.T. Act since the entire amount of cash purchases is brought to tax. 10. As the purchases have .....

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o extra addition is made in the present order on bogus sales. It is also held that the assessee was not doing any genuine business and was only giving accommodation entries to other parties. 11. During the year the assessee has increased share capital from 400 to 100000/-. Vide questionnaire dated 12.11.2010 the assessee was asked to file details of the shareholders, their PAN and to produce shareholder register. The assessee has not produced any detail except giving the name of shareholders. No .....

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ries in the cash book of the assessee with following observations and conclusions: 7.14. These findings also lead to the inescapable conclusion that eh appellant was one of the several entities in the whole scheme of network of companies, created by B.K. Dhingra to infuse unaccounted money in other companies of the group, through a well orchestrated arrangement of seemingly accounted transactions, emanating from their audited financial statements/ books, but where in reality, the only activity w .....

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oup and creatures of B K Dhingra, and there is a widespread web of inter se transactions amongst them, keeping their separate juridical identity in mind, the ends of justice will be met if in each case, addition of the peak of financial transaction, as worked out from the relevant cash book of each entity, is made. Incidentally, this is what the appellant has also prayed for by pleading for telescoping in ground 16 of its appeal. Therefore, the addition made by the AO needs to be revisited. It m .....

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in the cash book of the appellant for the relevant year and make a singular addition of the said amount, as unexplained investment/expenditure/cash credit. As a result, grounds 9, 10 & 17 of the appeal are dismissed and grounds 8,11, 12 & 16 of the appeal are partly allowed. 31. In view of above, we are of the considered view that the AO firstly make up his mind for making additions and noted some general allegations in paragraph no. 4, 5 & 6 and without bringing out any deficiency a .....

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se or expenditure in share capital and directed the AO to work out peak from the entries in the cash book of the assessee for the relevant assessment years and to make a singular addition of the said amount. But the CIT(A) has not given any specific direction that the amount of peak has to be added as either unexplained investment or expenditure or cash credit and the direction of the CIT(A) is vague and not sustainable. 32. Under above noted facts and circumstances, we are of the considered vie .....

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A.Y. 2009-10 and the same stood entered in the books of accounts and audited balance sheet for A.Y. 2009-10 and the assessee has filed its return of income for A.Y. 2009-10 on 17/09/2009 and in absence of any notice, we may safely infer that the assessment has been finalized in this regard and there is no scrutiny assessment. 33. The ld. AR seeking our attention towards the judgment of Hon ble Rajasthan High Court in the case of Jai Steel (India), Jodhpur vs. ACIT (2013) 259 CTR 281 (Raj.) submi .....

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AO, however, he fairly accepted that no other incriminating material, except cheque counterfoils related to A.Y. 2009-10, was found during search and seizure operations on 20.10.2008 upon Shri B.K. Dhingra and others. In view of above contention of the assessee we are inclined to hold that this issue of addition on account of unexplained purchase u/s 69C of the Act, disallowance of expenses in A.Y. 2003-04 to 2008-09 i.e. all six assessment years and addition made u/s 68 of the Act pertaining t .....

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and purport of the said provision, which is intricately linked with search and requisition under sections 132 and 132A of the Act, it is apparent that: (a) The assessments or reassessments, which stand abated in terms of II proviso to section 153A of the Act, the AO acts under his original jurisdiction, for which, assessments, have to be made; (b) Regarding other cases, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material .....

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ain the total income of the person is required to be done, however, the same would in that case not result in any addition and the assessments passed earlier may have to be reiterated. 23. The reliance placed by the counsel for the appellant on the case of Anil Kumar Bhatia (supra) also does not help the case of the assessee. The relevant extract of the said judgment reads as under: 19. Under the provisions of sec. 153A, as we have already noticed, the AO is bound to issue notice to the assessee .....

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nt proceedings were preserved, resulting in multiple assessments. Under section 153A, however, the AO has been given the power to assess or reassess the total income of the six assessment years in question in separate assessment orders. This means that there can be only one assessment order in respect of each of the six assessment years, in which both the disclosed and the undisclosed income would be brought to tax. 27. The Allahabad High Court in Smt. Shaila Agarwal s (supra) has held as under: .....

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ment or reassessment proceedings are complete, and the matter is pending in appeal in the Tribunal, the entire proceedings will abate. 20. There is another aspect to the matter, namely that the abatement of any proceedings has serious causes and effect in as much as the abatement of the proceedings, takes away all the consequences that arise thereafter. In the present case after deducting bogus gifts in the regular assessment proceedings, the proceedings for penalty were drawn u/s 271(1)(c) of t .....

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