TMI Blog2016 (8) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... tment by Smt. Renuka Jain Gupta, CIT (DR) Assessee by Sh. Anil Jain, Adv. ORDER Per Bench These six appeals of the Revenue and the six cross objections of the assessee are emanated from the common order of the learned Commissioner of Income-tax (Appeals)-II, Delhi, dated 24/11/2011 for assessment year 2003-04 to assessment year 2008-09 respectively. In these appeals of the Revenue and assessee s cross objections, common and identical grounds have been raised, therefore, we are disposing of these appeals and cross objections by this consolidated order for the sake of convenience. 2. Since common grounds have been raised by the Revenue in all the appeals, except difference in amount, the grounds raised in ITA No. 559/Del/2012 (AY 2003-04) are only reproduced as under for the sake of brevity: 1. That the learned CIT(A) erred in law and on facts of the case in deleting the addition of ₹ 33,03,880/- made on account of unexplained purchase u/s 69C of the I.T. Act. 2. That the learned CIT(A) erred in law and on facts of the case in accepting the transaction made in cash by the assessee company regarding sale and purchase. 3. That the learned CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case and the provisions of the law, the Ld CIT (A) has erred in not considering the fact that the assessment proceeding for the year under appeal was not pending on the date of the recording of satisfaction u/s 153C of the Act and accordingly the same did not abate for the purpose of initiation of proceedings u/s 153C and as such the assessment being bad in law deserves to be quashed. 7. That the respondent reserves the right to add/amend/alter the grounds of cross objection. 4. The Revenue also filed additional grounds in all the appeals in ITA Nos. 559 to 564/Del/2012 in respect of assessment year 2003-04 to 2008-09, which are identical, therefore, for the sake of brevity we are only reproducing the additional grounds in ITA No. 559/Del/2012 in respect of assessment year 2003-04 as follows: i. The Ld. CIT(A) has erred in law and on the facts and circumstances of the case by allowing the appeal of the assessee whereas the assessee has failed to file Statement of facts before the Ld. CIT (A) being mandatory for filing appeal before the first appellate authority. The appeal of the assessee was defective and should have been rejected by the Ld. CIT(A). ii. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the assessee are before the Tribunal raising the grounds of appeal and cross objections respectively as reproduced above. 6. First, we proceed to decide the admissibility of the additional ground. 6.1 The learned Commissioner of Income Tax (Departmental Representative) submitted that issue involved in grounds are purely legal in nature and no further investigation of facts was required and it is settled law that additional ground can be raised at any stage of appellate proceedings. She, accordingly, requested that the additional grounds raised might be admitted. Whereas on the contrary, the learned Authorized Representative (AR) of the assessee submitted that application for the additional grounds has been filed after a period of more than three years from the filing of appeal, hence the same might not be admitted. 6.2 We have heard the rival submissions on the issue of admissibility of the additional grounds. We find that the issue raised in additional grounds are purely legal in nature and no further examination of fact is required. It is settled law that legal ground can be raised at any stage of appellate proceedings in view of the finding of the Hon ble Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed DR are devoid of merit. Defects in the return of income filed, defects on Form No. 35 which is the form of appeal etc. are to be considered by the respective authorities before whom these are filed and the maintainability of the appeal before us cannot be challenged. The right of appeal is a substantive right. Procedural issues cannot take away substantial rights of a person. This cannot be a ground for the Revenue to challenged the order of the learned CIT(A), which is in this case in favour of the Revenue. The arguments, to say the least are farfetched. Hence, we dismiss the same. 7.3 Since the present controversy has already been decided by the above decision of the Tribunal, following the above finding we dismiss the additional ground No. 1 of the appeal. 8. The second additional ground relates to filing of appeal before the learned Commissioner of Income Tax(Appeals) with the delay of one-day and the learned Commissioner of Income Tax(Appeals) passed the order without condoning the delay. 8.1 In respect of the ground, the learned Authorized Representative of the assessee submitted that due date of filing of the appeal before the learned Commissioner of Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Representative), relying on the orders of the lower authorities, vehemently argued that contention of the learned Authorized Representative that no incriminating material was found, was totally incorrect. According to her, in the post search proceedings, the statement of Sh. Rajiv Khurana, Director of M/s. Indu Surveyors and Loss Assessor was recorded and the purchases of the assessee have been disallowed on the basis of his statement and evidence of any stock not found during the course of search. She referred to the judgment of the Jurisdictional High Court in the case of Kabul Chawla (supra) and submitted that information gathered in post search proceedings was also the material relying on which completed assessment could have been interfered with by the Assessing Officer while making the assessment under section 153A of the Act. 10.3 We have heard the rival submissions and perused the material on record including the paper book of the assessee. The issue in dispute in the cross objection in ground No. 3 raised by the assessee is that no incriminating material was found in the course of search belonging to the assessee and, therefore, no addition could have been made in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riminating in nature and the addition of ₹ 33,03,880/- for unexplained purchases under section 69C has been made on the statement of Sh. Rajiv Khurana, Director of M/s Indu Surveyors and Loss Assessor, which was recorded in post search proceedings by the Investigation Wings. The relevant findings of the Assessing officer are reproduced as under: 6. During the current year the assessee has purchased, textile goods of ₹ 33,03,880/- and has made sales of ₹ 37,25,270/- 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 transactions. During the course of assessment proceedings the assessee was asked to give break up of cash or cheque purchases. In response thereto a reply has been filed and placed on record in which assessee has declared its entire purchase as cash/cheque purchases of ₹ 33,03,880/-. Assessee company has also stated that it did not maintain any b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eclare this premises as their godown but no such claim was made during search proceedings. 8. In the case of present assessee all the purchases sales are in cash. The items purchased sold are textile fabrics. The name and style of the textiles fabrics are Denim, fabrics K-lll Super line (N). fabric (PS), fabric (PS) Embroidery. fabric (PS) Excel, fabrics, Kashmiri fabrics-l. Kashmiri fabrics-l(D) etc. From these items it can be seen that the assessee is not dealing in branded items. There 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 ₹ 4,04,85,052/-. This year the figure is ₹ 4,04,72,632/- which us almost the same. Therefore, purchases sales are only out of current year transactions which are held unverifiable and bogus. It is highly improbable that with a huge stock inventory of goods which change in fashion and taste the assessee has to make sales from fresh purchases only. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs in which both the disclosed and the undisclosed income would be brought to tax . iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar to the case of present assessee. We find that the question of law which was decided by the Hon ble High Court in the case of R.R.J. Securities (supra) was as under: Whether the AO had jurisdiction to assess and re-assess the income of the assessee under section 153C in respect of assessment year 2003-04 to 2008-09. 10.8 The Hon ble High Court after considering the judgment in the case of Kabul Chawla (supra) and judgment in the case of SSP Aviation Ltd Vs. Deputy Commissioner of Income Tax (2012) 346 ITR 177 held as under: 37. As expressly indicated under Section 153C of the Act the assessment or reassessment of income of a person other than a searched person would proceed in accordance with the provision of Section 153A of the Act. The concluded assessments cannot be interfered with under Section 153A of the Act unless the incriminating material belonging to the Assessee has been seized. 38. As indicated above, in the present case, the documents seized had no relevance or bearing on the income of the Assessee for the relevant assessment years and could not possibly reflect any undisclosed income. This being the undisputed position, no investigation was nec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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