TMI Blog2017 (10) TMI 992X X X X Extracts X X X X X X X X Extracts X X X X ..... Varma, CIT DR For The Assessee : Shri RS Singhvi, CA ORDER PER PRASHANT MAHARISHI, A. M. 1. These are the appeals filed by the revenue and cross objections filed by the assessee for the Assessment Year 2005-06 to 2007-08. 2. The revenue has raised the following grounds of appeal in ITA NO. 904/Del2014 for Assessment Year 2005-06:- 1. That the Commissioner of Income Tax (appeals) erred in law and on facts of the case in deleting the addition of ₹ 8303147/- made by AO on account of undisclosed sales without examining and adjudicating upon the merits of the case. 2. Whether CIT(A) has erred in law and facts as well in not invoking the provisions of section 250(4) of the IT Act, which empowers ltd CIT(A) to conduct further enquiry on the issues involved in this case. 3. (a) The order of the CIT(A) is erroneous and not tenable in law and on facts. 3. The assessee has raised the following grounds of appeal in CO No. 279/Del/2016 for Assessment Year 2005-06:- l(i) That the assessment order u/s 153A is illegal, arbitrary and without jurisdiction inabsence of any incriminating material found during the course of search u/s 132 of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny addition in terms of provisions of section 153 A of the Income Tax Act, 1961. 6. The revenue has raised the following grounds of appeal in ITA No. 906/Del/2014 for Assessment Year 2007-08:- 1. That the Commissioner of Income Tax (appeals) erred in law and on facts of the case in deleting the addition of ₹ 110192860/- made by AO on account of undisclosed sales without examining and adjudicating upon the merits of the case. 2. Whether CIT(A) has erred in law and facts as well in not invoking the provisions of section 250(4) of the IT Act, which empowers ltd CIT(A) to conduct further enquiry on the issues involved in this case. 3. (a) The order of the CIT(A) is erroneous and not tenable in law and on facts. 7. The assessee has raised the following grounds of appeal in CO No. 280/Del/2016 for Assessment Year 2007-08:- l(i) That the assessment order u/s 153A is illegal, arbitrary and without jurisdiction in absence of any incriminating material found during the course of search u/s 132 of the Income Tax Act, 1961. (ii) That seizure of incriminating material is sine qua non for initiation of proceedings u/s 153A and in the absence of same, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence it is unaccounted sales and therefore gross profit of the undisclosed sales is required to be added. Therefore, on the basis of the above seizure made by the Central excise department he valued the total maximum retail price of the product at ₹ 45362420/ discounted it to 80 % percent and worked out the sale price of ₹ 36289936/-. On the above sales, the Ld. assessing officer computed the gross profit ratio of 22.88 % and worked out the gross profit thereon of ₹ 8303137/ as income of the assessee on account of the above seizure made by the Central excise department. Consequently, assessment under section 153A, read with section 143 (3) of the income tax act was passed on 28/12/2010 determining total income of the assessee of ₹ 11880627/-against the returned income of ₹ 3577490/ wherein the addition of ₹ 8303137/ was made. Appeal before CIT(A) 12. Assessee aggrieved with the order of the Ld. assessing officer preferred appeal before the Ld. CIT (A) who vide order dated 29/11/2013 deleted the above addition after obtaining the remand report from the Ld. assessing officer and rejoinder of the assessee giving following reasons:- a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purely on the basis of the Central excise show cause notice where there are no evidences of unrecorded sales have been found. He vehemently submitted that there is no incriminating material found during the course of the search and this is the assessment made by the Ld. assessing officer u/s 153 A of the act without any incriminating metal found during the course of the search of the income tax department. He further submitted that his cross objections filed are solely contesting the above issue, relying on the several decision of the Hon‟ble Delhi high court wherein it has been held that no addition can be made in the search assessment without finding any material during the course of the search of the income tax Department. He relied vehemently on the decision of the Hon‟ble Delhi High Court in principle CIT versus Meeta Gutgutia 395 ITR 526. He submitted that even in the case of the appeal by the revenue. He can invoke the provisions of rule 27 of the income tax appellate tribunal rules to say that no addition can be made without any incriminating evidence found during the course of search. He also submitted that finding of the ld CIT (A) to that effect in para no 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders of the lower authorities on this issue. Admittedly during the course of search by income tax authorities, no evidence were found against the assessee of unrecorded sales and as the assessment order has been framed under section 153A of the income tax act, only the additions based on the incriminating materials can be made which were unearthed during the course of the search by the income tax Department. This issue have been decided by the Hon‟ble Delhi High Court in case of CIT versus Kabul Chawla 380 ITR 573 (Delhi) and further reiterated by Hon‟ble Delhi High Court in case of CIT versus Meeta Gutgutia 395 ITR 526. The addition deserves to be deleted on the single issue also. 17. Furthermore before the Central excise authorities, assessee has submitted that assessee has already accounted for the sales of 2404 bags of guthka , which were sold to buyers under invoice No. 101 122 issued between 08/10/2006 to 14/10/ 2006. The above sales have already been accounted for in the books of the assessee and also entered into the excise records of the assessee. The Central excise authorities have rejected these bills for the reason that these invoices are been raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales have been not made at the market rate to those individuals, the rate of sales are below the market rate and profit earned thereon has not been shown by the assessee. c. Furthermore the goods released by the Central excise authorities have also been entered by the assessee in to excise records and there is no allegation by the Ld. assessing officer that above goods are not included in the closing stock or have not been sold further. d. The redemption of goods by payments of excise duty and fine is the normal course of getting the goods released under the Excise rules. It cannot be the basis of the addition of profit on account of unrecorded sales as the material has come back to the assessee. It is merely the removal of goods by the assessee utmost, without payment of duty. When the goods have come back to the assessee, it cannot be said that same goods have been sold unrecorded by the assessee. e. The ld AO has not found any error in the excise records of the assessee with respect to quantity details such as purchases, sales, opening and closing stock. 18. Furthermore, the reliance placed by the Ld. CIT DR on the decision of Hon‟ble Delhi High Court in CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ady accounted for in the books of accounts. Over and above, there was no material found by the Central excise authorities also. Therefore the facts of the appeal are that that the sales of 55 bags stated by the Central excise authorities as clandestinely removal of goods was already accounted for in the books of the assessee prior to the date of search by the Central excise authorities. 22. It is also an admitted fact that during the course of search made by the income tax department no incriminating evidence were found pertaining to this year. 23. The only difference in this appeal is that that additional director of DGCEI has alleged that the assessee has produced and sold goods worth ₹ 28.01 crores during the period of December 2005 to February 2007. The Ld. assessing officer has held that the total period in the above time is of 15 months and only 4 months pertain to assessment year 2006 0 C1, therefore, he estimated a sum of ₹ 7 469 3336/ as the sales value of the product sold by the assessee from December 2005 to March 2006 and therefore estimated gross profit of 13.81% thereon amounting to ₹ 1 031 5150/ and the same is added in the hands of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y removal of goods was already accounted for in the books of the assessee prior to the date of search by the Central excise authorities. 30. It is also an admitted fact that during the course of search made by the income tax department no incriminating evidence were found pertaining to this year. 31. The only difference in this appeal is that that additional director of DGCEI has alleged that the assessee has produced and sold goods worth ₹ 28.01 crores during the period of December 2005 to February 2007. The Ld. assessing officer has held that the total period in the above time is of 15 months and only 11 months pertain to assessment year 2007-08, therefore, he estimated the sales value of the product sold by the assessee from April 2006 to October 2006 and therefore estimated gross profit of 18.93 % thereon amounting to ₹ 110192860/- and the same is added in the hands of the assessee. 32. The Ld. CIT (A) has deleted the above addition vide order dated 29/11/2013. 33. The Ld. departmental representative and the Ld. authorised representative submitted that the facts of the case are similar to the issue involved in the appeal of the assessee and revenue for a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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