TMI Blog2020 (1) TMI 454X X X X Extracts X X X X X X X X Extracts X X X X ..... from time to time regarding statements obtained during search and survey operations, it is undisputedly clear that the lower authorities have not collected any other evidence to prove that the impugned income was earned by the assessee. From the details of seized document, The Assessing Officer presumed that it represents the sale of wheat products. There is no basis for such assessment order. The Assessing Officer had not examined any of the parties mentioned therein and he presumed that Shri P.K. Kunjumoideen was acted on behalf of the assessee and he was selling the wheat products like maida, sooji, atta and bran. For this, the Assessing Officer relied on the sworn statement of Shri P.K. Kunjumoideen, Shri Premil Deep and Shri Sabarigireesan. Further, these statements have no evidentiary value in view of retraction made by these persons immediately the next day. Hence, what was left to rely on was the seized document cited supra. The seized document suggest that the assessee was engaged in the sale of wheat products from Tee Kay Rice Mills. The sole basis on which the Assessing Officer presumed that the assessee was selling the wheat products through Shri P.K. Kunjumoidee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining the addition to the extent of 50% after finding that wheat is sold by the appellant company to Sri. P.K.Kunjumoideen. 6) For the above grounds and evidences produced at the time of hearing, the appellant may request the Hon'ble Income Tax Appellate Tribunal to cancel the assessment order. 3. The Revenue has raised the following common grounds of appeals: 1) The order of the CIT(A) is opposed to law, weight of evidence and facts of the case. 2) The CIT(A) erred in restricting the addition made by the Assessing Officer, on the issue of suppressed sales to 50%, without any reasoning, whereas the addition made by the Assessing Officer was arrived at scientifically on the basis of production data of the assessee s recorded transactions. 3) The CIT(A) has not pointed out any specific deficiencies in the methodology employed by the Assessing Officer in the assessment order for restricting the addition to 50%. 3.1 The crux of the above grounds is that the assessee was aggrieved by the sustenance of addition at 50% made by the Assessing Officer and the Department was aggrieved by the granting of relief of 50% to the assessee on the estimated profit from estimated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies on the day of the search to which he has described his Grocery business at Chengamanad as his source of income. This individual was not aware of the trading activities in his name at M/s. Teekay Rice Mill. He said that Shri. Abdul Kareem and Shri. Ameer Ali are his cousin brothers living at Palakkad and are owning the Prince Group of concerns and added that they are running some business in his names, for which he has given various signed forms and cheques to them and he is not aware of exactly what kind of business is run in his name. When questioned about his bank account, he could recall only his bank account at the local bank at Aluva and not that of the one at Palakkad. Eventually when reminded of the bank account in his name at Palakkad, he said that Shri. Abdul Kareem had obtained signatures from him on several forms and cheques and he himself had not operated any transactions in this account. 4.3 Shri. P.K. Kunjumoideen justified the necessity to lend his name for the business requirements of Prince Group as out of blood relationship and also the fact that family members of Prince Group used to pay to his bank account at Aluva amounts periodically in reciprocation. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depose on the modus operandi used by them in the same manner. Hence, there were no reasons to disbelieve their depositions. The assessee tried to save on its actual GP on the Wheal Quantity routed through M/s. Teekay Rice Mill and also on the VAT tax components therein. 4.7 Sales of Wheat to M/s Teekay Rice Mill The assesseswas found to have made the following Raw Wheat sales to M/s Teekay Rice Mills: FY Raw wheat sales to M/s. Teekay Rice Mill in Metric Tonnes 2007-08 - 2008-09 162,000 2009-10 7877.000 2010-11 5431.400 2011-12 2995.800 2012-13 3088.000 2013-14 2178.100 As per the finding of the search and related materials, the above quantum of Wheat was milled in the premises of PRFM itself and was sold to the market in its normal business channel. Calculation of Unaccounted incomes of M/s Prince Roller Flour Mills P Ltd. 5. The above said quantum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Value 1. Maida 99,990 61.72% 16752.32 16752.32 2. Sooji 13,622 8.41% 17479.25 238096.19 3. Atta 12.029 7.43% 16994.75 204436.19 4. Bran 33,577 20.73% 8881.48 2415802.09 98.29% Wheat sold to P.K. Kunjumoideen 162.000 Sale value of wheat to P.K. Kunjumoideen 2164672.28 Profit 25112981 The assessee's unaccounted income from the above trade practice was worked out below: Sale Value of milled Wheat Flours (as in Table 2) ₹ 21,64,672 Less: sale value of Wheat to P.K. Kunjumoideen ₹ 24,15,802 Income und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived in Column 4 and the average selling rate on real time basis was worked out in Column 7. On the above basis, the sale value of wheat products that could be produced from the circumvented sale of 12517.695MT for the A Y was worked out below: Table-2 Sl. No. Products Qty. Produced in Production yield % Average Selling Rate per tone Sale Value 1. Maida 4756.158 60.38 18231.90 86713810.82 2. Sooji 672.657 8.54 18791.62 12640311.45 3. Atta 12.029 7.35 17482.77 10127055.35 4. Bran 33,577 22.433 9927.58 17540892.57 127022070.19 Wheat sold to P.K. Kunjumoideen 7877.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4441.160 10956.94 98.64% Wheat milled 5431.400 The production yield was derived in Column 4 and the average selling rate on real time basis was worked out in Column 7. On the above basis, the sale value of wheat products that could be produced from the circumvented sale of 5431.400 MT for the A Y was worked out below: Table-2 Sl. No. Products Qty. Produced in Production yield % Average Selling Rate per tonne Sale Value 1. Maida 3187.989 58.70 19467.24 6261351.64 2. Sooji 468.502 8.63 19796.26 9274582.38 3. Atta 348.986 6.43 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1820.881 7.62 35064443.36 1817.269 19295.13 3. Atta 1261.643 5.28 23238391.53 1269.196 18300.89 4. Bran 5834.635 24.4 67499940.00 4441.160 10956.94 98.07% Wheat milled 23908.930 5.4 The production yield was derived in Column 4 and the average selling rate on real time basis was worked out in Column 7. On the above basis, the sale value of wheat products that could be produced from the circumvented sale of 2995.800 MT for the A Y was worked out below: Table-2 Sl. No. Products Qty. Produced in Production yield % Average Selling Rate per tonne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Deemed income u/s. 115JB ₹ 44,69,606/- AY 2013-14 Table 1 Sl. No. Products Qty. Produced in Production yield % Sale Value Sale Quantity Average Selling Rate per tone 1. Maida 12165.779 61.74% 265845916..6 12322.247 21574.47 2. Sooji 1506.042 7.64% 33669626.72 1514.622 19796.26 3. Atta 1206.178 6.12% 23768699.99 1198.925 19825.01 4. Bran 429.225 22.99% 64357599 4552.91 14135.42 98.49% Wheat milled 19704.550 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c) of the Income Tax Act were initiated separately. Accordingly, the assessment was completed as under: Income from Business[as returned] ₹ 4812959/- Addition (as per para 5.3] ₹ 18041977/- Total ₹ 22854956/- Less: Chapter VIA Deduction (80G) ₹ 2500/- Total Income Assessed ₹ 22852436/- AY 2014-15 Table 1 Sl. No. Products Qty. Produced in Production yield % Sale Value Sale Quantity Average Selling Rate per tone 1. Maida 13471.78 60.77 343938538 13552.485 25378.26 2. Sooji 1708.666 7.71 44029446.31 1711.706 25722.55 3. Atta 1572.911 7.10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its VAT levied and non levied items and could have priced it at the same rate. VAT rates were 4% for F.Y. 2013-14. Thus, there was an unfair enrichment of ₹ 1,08,37,719/- in the hands of the assesses out of this activity. Addition: ₹ 1,08,37,719/- There is an amount of ₹ 5,038/- booked as compounding fee in the P L a/c of the assessee. This expense will be disallowed. Addition:5,038/- Accordingly, the assessment was completed as under: Income from Business[as returned] ₹ 47,72,756/- Addition (as per para 5.3 ₹ 1,08,37,719/- Addition (as per para 5.4) ₹ 5,038/- Total ₹ 1,56,15,513/- Less: Chapter VIA Deduction (80G) ₹ 2500/- Total Income Assessed ₹ 1,56,13,013/- 6. On appeal, the CIT(A) observed that immediately after the search, all the employees, whose statements were recorded during the course of search decided to file affidavits retracting from statements given during the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Teekay Rice Mill was available and the AO had applied the manufacturing ratio of the assessee to work out production finished product and had then applied the market rate to reach the profits on the presumed sale of the same. On the facts and circumstances of the case, CIT(A) was of the opinion that the claim of the assessee was not correct and on the other side, the AO's estimation of profit, was definitely on the higher side. According to the CIT(A), since, such material was not available, on the basis of which exact calculation of suppressed profit could be done, the only option left was to make a reasonable estimate of profits. Thus, taking an overall view, in his opinion, if the profit was restricted to 50% of the profit estimated by the AO, it shall meet the ends of justice. Thus, the resultant suppressed profit shall be as follows: A.Y. Profit worked out by the A.O. 50% of the same 2009-10 1,51,130/- 1,25,565/- 2019-11 2,06,95,955/- 1,03,47,978/- 2011-12 91,40,121/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012-13 37373850.00 370038.00 2013-14 42118437.00 417014.00 2014-15 38276401.00 378974.00 7.2 Regarding Shri P.K. Kunjumoideen, it was submitted as follows: Shri P.K. Kunjumoideen started his business in Palakkad by taking M/s Teekay Rice Mill at Thathamangalam in 1986. He was given KCST Registration in the same year. M/s. Prince Roller Flour Mills (P) Ltd started in the year 1990 only i.e., 4 years after he started his business. Shri P.K. Kunjumoideen ran his business independently as proprietor. His trading activities included purchase and sale of wheat, steel scrap, paddy, gunny bags etc. He was an assessee under the rolls of the Income Tax Department from very early period which can be cross checked. He purchased wheat not only from M/s. Prince Roller Flour Mills (P) Ltd. but from various parties in North Indian Stales like Uttar Pradesh, Madhya Pradesh, Rajastan etc., through Railway Wagons. He purchased wheat from Food Corporation of India and Kerala State Civil Supplies Corporation Ltd. also through ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit invoices issued by the assessee and entries in the stock register, receipt of sale proceeds from him through proper banking channels, various statutory returns, monthly as well as annually filed by us and him before the VAT Authorities, remittance of tax to the slate exchequer on such sales etc. It was submitted that the assessment proceedings under the VAT Rules also stands completed without any adverse remarks. It was submitted that the assessee was selling wheat without manufacturing or processing to others (Quantities in Metric Tonne) for various years as follows: Sl. No. Name of Party A.Y. 2010-11 A.Y. 2011-12 A.Y.2012-13 A.Y. 2013-14 A.Y. 2014-15 1. Bindu Traders 125.60 86.310 2. Central Stores 62.090 3. Coimbatore Roller Flour Mills 239.23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to purchase, production, sale etc. periodically. Even on 12.07.2013, a few days before the search under section 132, there was an inspection by the VAT Authorities. The Ld. AR also submitted that copies of Mahasars dated 12.07.2013 and proceedings dated 30.01.2014 issued by the VAT Department to this effect were filed before CIT(A). The Ld. AR submitted that contrary to the proceedings under section 132 where no effort was made by the Department to physically verify and reconcile the stock available at the premises, the VAT Department had elaborately conducted physical verification of the entire stock at their premises and the alleged variation was very miniscule which itself is indicative of the fact that the transaction between P.K.Kunjumoideen and Prince Roller Flour Mills (P) Ltd. as recorded in the various books are genuine. An analysis of these facts goes to clearly prove that what was sold by Prince Roller Flour Mills (P) Ltd. was raw wheat only to P.K. Kunjumoideen 7.5 In the sworn statement taken from Shri Sabarigireesan, Accountant, it was stated that there was no actual sale of Wheat to Sri. P.K. Kunjumoideen but the items sold were wheat products viz. Maida, Sooji, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e previous day were made in the accounts on the subsequent day. Since the search had commenced at 10.30 am on 05 09 2013, the entry of the transaction could not be entered in the computer. It was submitted that the total amount of ₹ 1,50,985/- out of which ₹ 93,545/- were by way of Cheques and the balance of ₹ 57,440/- was in cash and after the search this transaction was entered in the accounts and the copy of seized document with the copies of ledger in respect of debtors mentioned in the seized documents were produced before the CIT(A) in Paper Book Page Nos. 157 to 198. Thus, it was submitted that the entire search and survey operation that took place at the premises of Prince Roller Flour Mills (P) Ltd. or Shri P.K. Kunjumoideen did not unearth even a single piece of paper which can point out unaccounted dealings like list of Sundry Debtors or collection. It was submitted that in a search assessment, additions can only be made on the strength of material evidences unearthed during the course of such proceeding, which in the present case was absent. It was submitted that there were no evidence or incriminating documents seized at the time of search and no docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09-10 ₹ 64940/- A.Y 2010-11 ₹ 3810662/- A.Y 2011-12 ₹ 2777084/- AY 2012-13 ₹ 1504498/- AY 2013-14 Nil A.Y 2014-15 Nil 7.9.1 It was submitted by the Ld. AR that there were documentary evidence in support of the contentions of the assessing officer that Wheat products were sold to Shri P.K. Kunjumoideen, Shri Sabarigireesan and Sri P.K. Kunjumoideen had filed retraction statements before the Assessing officer, but the Assessing Officer had not referred the retraction statements in the Assessment order. It was submitted that there were no other seized documents to indicate that wheat products were sold to Shri P.K. Kunjumoideen as claimed by the assessing officer. In the absence of any such evidence the assessment of the additional Income for the various assessment years by way of differential profit are liable to be cancelled. AY 2009-10 2,51,130/- AY 2010-11 2,06,95,955 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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. Although Section 153A 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 assessment has to be made under this Section only on the basis of seized material. 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. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in your name. Please explain. (A) There is a firm named Teekay Rice_Mills in my name. The day-to-day business are carried out by Shri T. K. Abdul Karim and Ameerally T. K. The cheque book of that account are already signed by myself and is kept by T. K. Abdul Karim and T. K. Ameerally. Hence the details of transactions are not known to me. The statement showing transactions from 17/9/2010 to 18/10/2010 are without my knowledge. Shri T. K. Abdul Karim and Shri. T. K. Ameerally can explain about these transactions. 10. Are you the Managing Partner of Teekay Rice Mill. (A) Since the firm is in my name, the above said persons took PAN in my name and has filed income tax return regularly at Palakkad Income Tax Office. For that purpose I do sign various forms. C.K.Nair Co, Chartered Accountants firm is filing my return. Sabari and Venkitesh are submitting the accounts to them. 11. Please explain about the Credit in the Bank Statement of A/c No. 746281754 of Indian Bank Chengamanad Branch. (A) The money received at Indian Bank, Chengamanad Branch are sent by T. K Abdul Karim, Ahamed Faizal, Anup Sha, Khadeeja, Aishabi on monthly basis. I guess it may be th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2013. I state that, I am executing this sworn affidavit so that I may make use of this affidavit in case the Income Tax Officials use my statements either against me or the above mentioned Companies. 9.3 Similarly, statement was recordedu/s. 132(4) of the Act from Shri M. Premil Deep, who was a manager of the assessee company on 05/09/2013 which reads as follows: Q. No. 3 Kindly explain the main duties attached to you in Prince Roller flour Mills (P) Ltd.? A. No. 3 I am mainly looking after the administrative side of Prince Roller Flour Mills. All the governmental as well as banking duties (liaison work) connected with the concern are attended by me. In addditlon, I am assisting the MD Shri T. K Abdul Karim in finalizing the payment of cheques to various parties and receipt of cheques. The verification of these cheques are done by me before finalization by MD. The verification of final accounts are also done by me. We are maintaining the books of accounts in the Tally software and monthly verification is done by me. The corrections with regard to the invoices is also look after for each and every bill before making the payment of those cheques is also one of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring have been fully accounted in the books of account. The profit from the above referred transaction can be explained in detail by Shri Sabari Gireesh. Q. No.7. How do you maintain the daily physical cash statements? Please explain the method of reporting to the MD. A. No. 7. The cashier prepares the cash statement and forwarded to the accounts department. After taking note of the same, they report it to the MD. Q. No. 8 . Do you have anything else to say? A.No. 8. Nothing. 9.4 Shri M. Premil Deep had retracted the above statement vide affidavit dated 06/09/2013 which reads as follows: I, Premil Deep. M, aged 53 years residing at H.No. B, Access Revera, Checkdam Road, Yakkara , Palakkad solemnly state as under: I state that I am Manager of M/s. Prince Roller Flour Mills (P) Ltd, 9/75, Anappuramkadu, Kinassery Post, Palakkad 678707. I state that the Income Tax Officials conducted a search u/s 132 of the Income Tax Act in the above company on 05.09.2013 at around 10.30 am and in the course of investigation the officers recorded my statement at the late night on the same day. The officers forced me to sign the statement written and prep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Invoices, Bills and vouchers. 5) What is the approximate percentage of yield from the processing of wheat in M/s. Prince Roller Flour Mill (P) Ltd (A) The approximate percentage of yield from the processing of wheat is as under 1. Maida 59% 2. Atta 7% to 8% 3. Sooji 24% 4. Bran 25% 59% Depending upon the quality of wheat there will be a slight variation in yield of wheat, in addition to the above there will be approximately 2% wastage also. 6) While conducting the search by the Income Tax Department in this firm today, the records shows there are sales of raw wheat as well as purchase of raw wheat in huge volume from/to Sri. P. K. Kunjumoideen, when officials asked about these to Sri. Balasubramanian who is the personal accountant of Sri. P. K. Kunjumoideen and the Managing Director of this firm Sri. T. K. Abdul Karim, they have stated that the purchase and sales with Sri. P. K. Kunjumoideen are bogus. Please explain in detail. (A) The Sales and Purchase of wheat with Sri. P. K. Kunjumoideen is recorded in the books of accounts and the supporting sales bills and purchased invoice are maintained. But in reality there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in books of accounts. Considering these facts profit from these transactions should be very high. What is your comment on this. (A) As you said by processing these wheat into products and selling it could have earned more than 1% shown in the books of accounts. The cost of purchases as well as production costs are included in the books of accounts. 10) What will be the approximate profit margin earned while transacting these products. (A) It could only be ascertained by calculating rate of purchase and sales and other related details of each year. 11) We are showing the materials marked CHN/11/13-14/EAM/A36, CHN/11/13-14/EAM/A-37, paper bunch seized by Income tax, today while conducting search. Please check and explain. I have checked it. These are computer printout of ledger account of Sri. P. K. Kunjumoideen prepared in Tally software. 12) We are showing the materials marked CHN/ 11/ 13-14/EAM/A38 seized by Income tax, today while conducting search. Please check and explain. I have checked it. From page 1 to 20, the details of arrival of wheat load. Page 21 contains collection details of cheque and cash received on 04/09/2013 from variou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome Tax Officials on 05.09.2013. I state that, I am executing this sworn affidavit so that I may make use of this affidavit in case the Income Tax Officials use my statements either against me or the above mentioned Company. 10. On the statements recorded from Sri.P.K. Kunjumoideen and the employees, the Assessing Officer noticed that the assessee group in the Wheat flour manufacturing front, resorted to different methodologies to generate unaccounted sales and income from the trade. The assessee had used Shri. P.K. Kunjumoideen (PAN- AHDPK83Q1E) as a front. Shri. P.K. Kunjumoideen was shown as the proprietor of M/s. Teekay Rice Mill with premises at Pallimukku, Thathamangalam, Palakkad. The property at the said address was owned by Shri. T.K. Abdul Karim himself and many of his other concerns had offices in the same address itself. At the time of the search, Shri. P.K. Kunjumoideen was not available in the business address of his. He was found to be residing at Chengamanad near Aluva running a Grocery shop there. He had been living and seeking a living out of the business for the past 20 years at Chengamanad. The assessee had used the business address of M/s. Teekay Ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of M/s. Prince Roller Hour Mills P Ltd. Kinassery, (PRFM) Palakkad had also deposed on the day of the search that the accounts for the concern of M/s. Teekay Rice Mill were actually controlled from the business premises of M/s Prince Roller Flour Mills P Ltd. Kinassery, Palakkad and the accounts were maintained by one Subramaniyam. Shri Premil in his deposition had stated that actually no raw wheat was passed on to the firm M/s. Teekay Rice Mill and the wheat billed in the name of M/s Teekay Rice Mill was milled at M/s Prince Roller Flour Mills itself and is sold in the market as Wheat flour in the form of Atta. Maida, Sooji etc. The Billing to M/s. Teekay Rice Mill is seen done at the instructions of Shri. Abdul Kareem. The sale proceeds of M/s. Teekay Rice Mill was remitted into its bank account by the Roller Flour Mill staff only from moneys given to them by Shri. Abdul Kareem. The amount payable to PRFM is then remitted from its account into PRFM account. 10.4 A similar deposition was given by Shri Sabarigireesan, Accountant of the assesses. He also stated that no Raw wheat was sent to M/s. Teekay Rice Mill. He stated that only two wheal purchases made from Food Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing officer has made the following additions in respect to the following assessment years. AY Sale value of wheat to P.K.Kunjumoideen Excluding VAT (Amount in Rs.) Mark up profit @1% included in Col.2 (Amount in Rs.) 2009-10 2164672.00 21432.00 2010-11 106326114.00 1052734.00 2011-12 83439380.00 826132.00 2012-13 37373850.00 370038.00 2013-14 42118437.00 417014.00 2014-15 38276401.00 378974.00 11.2 Shri P.K. Kunjumoideen started his business in Palakkad by taking M/s Teekay Rice Mill at Thathamangalam in 1986. He was given KCST Registration in the same year. M/s. Prince Roller Flour Mills (P) Ltd started in the year 1990 only i.e., 4 years after he started his business. Shri P.K. Kunjumoideen ran his business independently as proprietor. His trading activities included purchase and sale of wheat, stee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks of accounts impounded. The copies of confirmation of wheat from M/s Yamuna Roller Flour Mills were filed before the lower authorities in Paper Book page nos. 20 to 22. The authorities ought to have compared these evidences with the findings emanating from the sworn statements. 11.3 In the proceedings under section 133A, in the case of Shri. P.K. Kunjumoideen, no material evidences to the contrary were recovered from his premises or from the premises of Prince Roller Flour Mills (P) Ltd. The entire sale of wheat effected by the assessee to P.K.Kunjumoideen were duly supported by credit invoices issued by the assessee and entries in the stock register, receipt of sale proceeds from him through proper banking channels, various statutory returns, monthly as well as annually filed by us and him before the VAT Authorities, remittance of tax to the state exchequer on such sales etc. The assessment proceedings under the VAT Rules also stands completed without any adverse remarks.The assessee was selling wheat without manufacturing or processing to others (Quantities in Metric Tonne) for various years as follows: Sl. No. Name of Party ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013 and proceedings dated 30.01.2014 issued by the VAT Department before the lower authorities which also did not yield any adverse findings. Contrary to the proceedings under section 132 where no effort was made by the Department to physically verify and reconcile the stock available at the premises, the VAT Department had elaborately conducted physical verification of the entire stock at their premises and the alleged variation was very miniscule which itself is indicative of the fact that the transaction between P.K.Kunjumoideen and Prince Roller Flour Mills (P) Ltd. as recorded in the various books were genuine. An analysis of these facts goes to clearly prove that what was sold by Prince Roller Flour Mills (P) Ltd. was raw wheat only to P.K.Kunjumoideen. 11.4.1 Further, all the sales details of Teekay Rice Millwere accepted by the VAT authorities and there was no adverse report from the VAT authorities. As held by CIT vs. Anandha Metal Corporation 273 ITR 262 (Mad.)wherein it was held that return accepted by the Commercial Tax Department under the Tamil Nadu General Sales Tax Act is binding on the income-tax authorities and the Assessing Officer has no power to scrutinize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were sale of Wheat or Wheat Products. 11.8 The seized materials as reference to section 132(4) statement from Shri B. Sabarigireesan are as follows: S.No. Search Doc. Reference No. Contents 1. CHN/11/13-14/EAM/A-36 Bunch of Loose Sheets serially numbered from 1 to 13 containing ledger accounts in the case of the appellant regarding wheat sold to P.K. Kunjumoideen for the Financial Year 2012-13 2. CHN/11/13-14/EAM/A-37 Bunch of Loose Sheets serially numbered from 1 to 13 containing ledger accounts of Shri P.K. Kunjumoideen from 1.4.2013. 3. CHN/11/13-14/EAM/A-38 Bunch of Loose Sheets serially numbered from 1 to 21 containing wheat receipt from Godown and Daily Collection report as on 04.09.2013. 11.8.1 In the present case, theone seized document bearing reference no. CHN/11/13-14/EAM/A-38 reads as follows: Jayashree Strores 41000 Fathima Sugars 19990 Ramachandran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome in the assessment and in the absence of any evidences to indicate that the Wheat is sold as Wheat Products, the Assessment after assuming the Quantity of Wheat is sold as Wheat Products is improper. 11.8.5 In these cases, the lower authorities assumed that the assessee sold wheat products to Shri P.K.Kunjumoideen of M/s. Teekay Rice Mill without any evidence. The lower authorities have come to the conclusion that wheat products were sold without any evidences seized at the time of search. It is to be noticed that the Assessing Officer verified the stock, production and sales records of wheat products and could not find out any mistake. In addition to this, the sale of wheat products to Shri P.K. Kunjumoideen was not evidenced at the time of search by supporting documents. There was no evidence brought on record by the lower authorities for sale of wheat products by M/s. Teekay Rice Mill, proprietor Sri.P.K. Kunjumoideen. There were no sales invoices, gate out passes, transport documents found during the course of search in support of sale of wheat products. There were no seized materials to suggest the conversion of wheat into wheat products in the form of electricity bills, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 88,727.00 Anilkumar Sanjaykumar, Shajahanpur 9. 0911615/31.12.09 20,38,800.00 Kerala State Civil Supplies Corporation Ltd. 2011-12 10. 043/01.05.10 39,40,700.00 R.L. Enterprises, Shajahanpur 11. 3522/01.05.10 31,91,214.00 Rahul Rice Traders, Delhi 12. 01-41/01.05.10 22,97,403.00 Ambey Edible Food Products (P) Ltd., Shajahanpur 13 027/01.05.10 23,71,950.00 Sudhir Trading Co., Shajahanpur 14 682/-34/01.05.10 26,36,100.00 Food Corporation of India, Palakkad 15 269-18/07.09.12 1,33,46,300.00 Food Corporation of India, Thrissur 2013-14 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer. He has totally ignored the same. Further, the statement recorded from Shri P.K. Kunjumoideen on 05/09/2013 was not confronted to the assessee for cross examination. From that point of view also the statement recorded u/s. 132(4) is not having any evidentiary value. 12.1 Further, u/s. 153A of the Act, the statement recorded u/s. 132 of the I.T. Act, the books of accounts, or other documents or any assets or requisition u/s. 153A, the Assessing Officer after issuing notice to furnish income of the assessee in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition made, the Assessing Officer shall assess or reassess the total income of each assessment year falling within six assessment years immediately preceding the assessment year relating to the previous year in which the search is conducted or requisition made,as the case may be, of bringing on record material to show that there is undisclosed income of the assessee. In other words, there should be material on record to show that income is assessed on the basis of material or documents i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement, threat, coercion or by any improper means, that statement must be rejected brevi manu. At the same time, it is to be noted that, merely because a statement is retracted, it cannot be recorded as involuntary or unlawfully obtained. It is only for the maker of the statement who alleges inducement, threat, promise, etc. to establish that such improper means have been adopted. However, even if the maker of the statement fails to establish his allegations of inducement, threat, etc., against the officer who recorded the statement, the authority, while acting on the inculpatory statement of the maker, is not completely relieved of his obligation at least subjectively to apply its mind to the subsequent retraction to hold that the inculpatory statement was not extorted. It thus boils down to this that the authority or any Court intending to act upon the inculpatory statement as a voluntary one should apply its mind to the retraction and reject the same in writing. It is only on this principle of law that this Court, in several decisions, has ruled that, even in passing a detention order on the basis of an inculpatory statement of a detenu who has violated the provisions of the Fore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the power under section 133A, section 132(4) enables the authorized officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the Income-tax Act. On the other hand, whatever statement is recorded under section 133Aof the Income-tax Act it is not given any evidentiary value obviously for the reason that the officer is not authorised to administer oath and to take any sworn statement which alone has evidentiary value as contemplated under law; (iii) The expression such other materials or information as are available with the Assessing Officer contained in Section 158BB of the Income-tax Act, 1961, would include the materials gathered during the survey operation under Section 133A; (iv) The material or information found in the course of survey proceeding could not be a basis for making any addition in the block assessment; (v) Finally, the word may used in Section 133A(3)(iii) of the Act, viz., record the statement of any person which may be useful for, or relevant to, any proceeding under this Act, as already extracted above, makes it clear that the materials collected and the statement recorded duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtaining admission of undisclosed income under coercion/undue influence. 3. In view of the above, while reiterating the aforesaid guidelines of the Board, I am directed to convey that any instance of undue influence/coercion in the recording of the statement during Search/Survey/Other proceeding under the IT Act, 1961 and/or recording a disclosure of undisclosed income under undue pressure/coercion shall be viewed by the Board adversely. 12.9 From the above Circular, it is amply clear that the CBDT has emphasized on its officers to focus on gathering evidences during search/survey operations and strictly directed to avoid obtaining admission of undisclosed income under coercion/under influence. Keeping in view the guidelines issued by the CBDT from time to time regarding statements obtained during search and survey operations, it is undisputedly clear that the lower authorities have not collected any other evidence to prove that the impugned income was earned by the assessee. 12.9.1 In view of the above discussion, the statement of Shri P.K. Kunjumoideen cannot be the basis to hold that he is acted and carried on business of wheat products on behalf of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e seized document mentioned in para 11.8 and 11.8.1 of this order. The Assessing Officer presumed that it represents the sale of wheat products. There is no basis for such assessment order. The Assessing Officer had not examined any of the parties mentioned therein and he presumed that Shri P.K. Kunjumoideen was acted on behalf of the assessee and he was selling the wheat products like maida, sooji, atta and bran. For this, the Assessing Officer relied on the sworn statement of Shri P.K. Kunjumoideen, Shri Premil Deep and Shri Sabarigireesan. Further, these statements have no evidentiary value in view of retraction made by these persons immediately the next day. Hence, what was left to rely on was the seized document cited supra. The seized document suggest that the assessee was engaged in the sale of wheat products from Tee Kay Rice Mills. The sole basis on which the Assessing Officer presumed that the assessee was selling the wheat products through Shri P.K. Kunjumoideen is collapsed. The estimation of production of wheat products and selling thereof have no basis and it is only a presumption without any basis. The CIT(A), though agreed that estimation made by the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sactions of M/s. Teekay Rice Mill were only paper transactions and was at the behest of the assessee. Therefore, no addition can be made on account of transactions of M/s. Teekay Rice Mill in the hands of the present assessee by treating the entire transactions as pertaining to assessee s business. Similarly there cannot be any addition on savings on account of VAT collections in the hands of the assessee as we are of the opinion that there is no undisclosed sales of wheat products. Accordingly, we delete the additions made by the Assessing Officer towards undisclosed sales of wheat products for all the assessment years. Thus, the appeals of the assessee are allowed. 16. Since we have allowed the appeals of the assessee, the appeals filed by the Revenue have become infructuous and hence, they are dismissed as infructuous. Even otherwise Revenue appeals in ITA Nos.36, 38 to 41/Coch/2019 for the assessment years 2009-10 and 2011-12 to 2014-15, wherein the tax effect involved herein is less than ₹ 50 lakh and as per CBDT Circular No.17/2019 dated 8th August, 2019, and the Department is precluded from filing the appeals before the Tribunal. 17. In the result, appeals of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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