TMI Blog2018 (12) TMI 1261X X X X Extracts X X X X X X X X Extracts X X X X ..... can be subjected to tax. The assessee has already surrendered a sum of ₹ 123.13 lakhs, being, payment of unaccounted income to Sushil Agarwal. If we reduce the outflow of unaccounted income of ₹ 123.13 lakhs from the inflow of unaccounted income generated by procuring accommodation bills at ₹ 130.88 lakhs, any further addition which is warranted, can be a sum of ₹ 7.75 lakhs. We, therefore, direct to restrict the addition to a sum of ₹ 7.75 lakhs. Bogus purchases - Addition in respect of entries recorded in the seized document - Held that:- We have already directed to include a sum of ₹ 7.75 lakhs in the income of the assessee for the preceding year on the basis of profit of 25% on total bogus purchases of ₹ 5.23 crore for both the years, as reduced by the surrender of ₹ 123.13 crore made by the assessee for the instant year. If we view total bogus purchases pertaining to both the years in juxtaposition to the surrender made by the assessee in income for the instant year, there remains nothing more to be added on this score to the total income of the assessee for the year under consideration. We, therefore, order to delete the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 4,95,14,491/-. The assessee remained unsuccessful before the ld. CIT(A) in his challenge to non-conducting of any search against him, which has now been assailed before us. 4. We have heard both the sides and perused the relevant material on record. The main contention of the ld. AR is that no search action was taken against the assessee and hence, the assessment made u/s. 153A be quashed. We are not convinced with the submission tendered on behalf of the assessee. The fact that search was carried out is amply evident from various facts. Firstly, it is an admitted position and has also been accepted by the ld. AR as well that warrant of authorization dated 17-09-2010 was issued, inter alia , in the name of the assessee. A copy of such warrant is placed at page 361 of the paper book which prominently shows the name of the assessee in Form No.45, being the warrant of authorization u/s. 132 of the Act. The premises covered under the warrant of authorization is Room No.102 and 103, B-Wing, Parmar Trade Centre, Sadhu Vaswani Chowk, Pune 01. Then, a Panchanama dated 18-09-2010 was drawn, whose copy has been placed at pages 364 and 365 of the paper book. It indicates the factum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a careful circumspection of section 153A in conjunction with section 132(1)(i), it becomes vivid that a search can be carried out, inter alia , at a place where it is suspected that the books of account or other documents etc. of the person searched, are kept. 6. The whole case of the assessee is that the search was conducted at 102 and 103, B-Wing, Parmar Trade Centre, Sadhu Vaswani Chowk, Pune, and he is in no way connected with it, whereas the Revenue has built its case on the premise that this is a place where the assessee was suspected to have kept its books of account or other documents. The contention of the ld. AR in this regard, in our considered opinion, is bereft of any force. 7. Undoubtedly this premises searched were in the possession of Uniglory Infra Projects Pvt. Ltd., NNK Constructions, proprietorship of N.N. Krishnani, Devgiri Engineering etc. But several `documents of the assessee were found to have been kept there. It is found as an admitted position that premises at 102 and 103, B-Wing, Parmar Trade Centre, Sadhu Vaswani Chowk, Pune was covered in the search warrant and was also searched. Panchanama drawn also indicates finding of certain loose p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial required for the project would be purchased by the sub-contractors and delivery of goods would be taken by them alone . He further stated that :`all the other relevant material regarding receipt of goods i.e. delivery challan, stock register, transport memos etc. were regularly kept at site and as on to-day it may be in the possession of my sub-contractors, hence I am unable to produce the same before your honour . The sub-contractors referred to by the assessee are Sh. Bubaji and Sh. Nankani etc., who were in possession of the searched premises. Even during the course of statement u/s 132(4), the assessee admitted in response to question no. 5 that : `Sh. N.B. Krishnani and Sh. Murlidhar Bubaji were looking after the Sangamner project and also purchasing construction material for the said project. From the above narration of facts, it is palpable that the `documents of the assessee were kept at the premises No.102 and 103, B-Wing, Parmar Trade Centre, Sadhu Vaswani Chowk, Pune and it is on the basis of such documents that the assessee chose to surrender income of ₹ 123.13 lakhs or disputed the taxability of income in respect of document No.25, which we shall adver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeared in the warrant of authorization nor its address was given therein. Obviously, this case also does not assist the assessee in any manner. 13. The other decisions relied on by the assessee for quashing the assessment are also distinguishable having no resemblance to the facts of the case. 14. In view of the foregoing discussion, we hold that action u/s. 132 of the Act was validly taken against the assessee, pursuant to which the assessment got completed u/s. 153A of the Act. No illegality can be found in the framing of assessment u/s. 153A of the Act. 15. Ground No.2 is against the confirmation of addition of ₹ 3,07,02,754/-. 16. Factual matrix of this ground is that certain loose papers were found and seized from the searched premises. Page no. 25 of such loose papers has been reproduced in para No.7 of the assessment order. This loose paper contains date-wise details of cheques issued with certain particulars and amounts. Total of all the items on page No. 25 was given as ₹ 5,23,53,697/-. The AO noticed that this page contained purchases of steel amounting to ₹ 5.23 crore on different dates, some falling in this year while others in the succe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prove the genuineness of the transactions by lorry receipts, gate pass etc. to the sub-contractors, which ought to have been proved by him alone as these were the transactions recorded in his books of account. 17. At this juncture, it is pertinent to note that page No.14 of the loose documents records certain payments made by the assessee to Sushil Agarwal. The AO observed from page 14 of the seized documents that the assessee paid a sum of ₹ 307.8466 lakhs to Sushil Agarwal. The assessee agreed to surrender his share of 40% as additional income and 60% by M/s. Devgiri Engineering. The AO observed that contents of page 13 of the seized documents indicated that another ₹ 216 lakhs was shared amongst interested parties. If this amount of ₹ 216 lakhs was added to ₹ 307.8466 lakhs given to Sushil Agarwal, the total at ₹ 523.8466 lakhs was close to the total on page 25 of the seized document, being, a sum of ₹ 5,23,53,697/-. On the basis of the relevant material, the AO drew an inference that Sushil Agarwal was acting as middleman for extracting contracts for the assessee and others and it was for this purpose that he was paid kickbacks amounting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which records the expenses to the tune of ₹ 5.23 crore. Murlidhar Bubaji and Shri Nanak B. Krishnani admitted before the authorities that these were accommodation entries recorded by the assessee in his books of account. When the AO called upon the assessee to prove the actual movement of goods from the place of sale to its destination, the assessee miserably failed to do so and tried to shift burden on Murlidhar Bubaji and Nanak B. Krishnani, who also turned the table towards the assessee by putting forth that no such record was with them. The ld. AR tried to prove the genuineness of such transactions before us by placing on record copies of invoices which have been referred to at page 25 of the seized documents. There is no dispute on the fact that the assessee, in fact, produced the invoices and made payment against them through banking channels, which is always a pre-condition for any accommodation entry of purchase of material. However, except for a lip service about the genuineness of the transactions, the assessee failed to show any primary and external evidence to prove the movement of goods from such suppliers and receipts by him along with its consumption in the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on ble Gujarat High Court in Vijay Trading Company Vs. ITO (2016) 388 ITR 377 (Gujarat) has held that the entire amount of bogus purchases cannot be added but only the profit element embedded therein would be subjected to tax. The Hon ble High Court in that case restricted the disallowance to 25% of cost of such purchases. In another judgment in NK Industries Ltd. Vs. DCIT (2016) 292 CTR 354 (Gujarat) , their Lordships held that the Tribunal was justified in retaining the addition on account of alleged bogus purchases at 25%. If we apply the percentage of 25% to the total bogus purchases recorded by the assessee in its books of account to the tune of ₹ 5.23 crore for both the years, the total amount of addition comes to ₹ 130 lakhs. 22. Now, we are confronted with a situation in which the outgo to Sushil Agarwal, as per page 14 of the seized documents, is ₹ 307.8466 lakhs for procuring irrigation contracts and there are certain fictitious bills recorded by the assessee as per page 25 of the seized documents. If there is certain inflow of unaccounted income and there is some outflow of unexplained payments, both inflow and outflow cannot be charged to tax. E. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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