TMI Blog2021 (6) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... riginal party namely M/s Greenwell Orchard has shown the entire amount of sale as agriculture income without showing any expenses. Accordingly the AO in the assessment of M/s Greenwell Orchard has allocated 20% of the sales value as expenses which was subsequently reduced by the learned CIT (A) to the tune of 5% of the sales value. Assessment framed in the case of M/s Greenwell Orchard under section 143(3) read with section 147 of the Act has been set aside by the learned Pr. CIT under section 263 on the reasoning that the entire amount of sale proceeds is unaccounted income of the assessee. From all these above details, it is revealed that it was the Greenwell Orchard which was engaged in generating/converting its unaccounted income into agriculture income wherein the assessee was only one of the conduit - entire amount of sales cannot be taxed in the hands of the assessee as unexplained cash credit - the amount of income generated by the assessee, in the capacity of acting as a conduit, i.e. commission on such entries provided by it which may be brought to tax. Thus the entire amount of sales cannot be treated as income of the assessee. Hence, the order of the l d. CIT under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conducting inquiries and evaluating evidences which had been furnished before him and completed the assessment making addition by estimating the G.P. at 8% and not 100%. 6. The Learned Comm. Of Income Tax, Ahmedabad-5 ought to have considered that fact that in the case of seller Greenwell Orchard assessment has been completed u/s.143(3) of the Act and therefore, when the sales made by them have been accepted question of disputing the purchase made by the appellant can not arise. 7. The Learned Comm. Of Income Tax, Ahmedabad-5 has erred in not appreciating the fact that the order sought to be revised u/s.263 of the Act has been reopened on the same earlier reasons and therefore there is only substitution of opinion which cannot be considered as erroneous for invoking revision proceedings. 8. The Learned Comm. of Income Tax, Ahmedabad-5, has erred in making as observation that Shri Sunil Agarwal Partner of M/s.Greenwell Orchard has due to his inability to explain the impugned sale transaction voluntarily included as income from alleged sale as a part of unaccounted income for A.Y. 2013-14. 9. The appellant craves leave to add, amend or modify any of the grounds o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 143(3) of the Act. 4.4 But the AO finally enhanced the GP from 2.34% to 8% and made addition of ₹ 22,73,910/- only on the ground that the assessee has not furnished the reason for the lower Gross Profit. 5. Subsequently the Pr. CIT from the assessment records observed that the assessment framed under section 147 is erroneous insofar prejudicial to the interest of Revenue for the reason that once it was held by the AO that the purchase of standing tree from M/s Greenwell Orchard was bogus based on the information received from survey team, the AO should have held the amount credited in the books of the assessee for the payment made to M/s Greenwell Orchard against bogus purchase as unexplained cash credit under section 68 of the Act. Instead the AO only enhanced the GP which is erroneous insofar prejudicial to the interest of the Revenue. Accordingly the learned Pr. CIT issued show cause notice to the assessee. 6. The assessee in reply besides reiterating the submission made during the income escapement proceeding under section 147 of the Act claimed that it has sold the goods to Shri Mohanbhai Gaganbhai Rathod which has been accepted by the Revenue in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bt on the transaction of purchase and sales carried out by the assessee. The learned AR in support of his contention drew our attention on the assessment orders under section 143(3) read with section 147 of the Act in the case of M/s Greenwell Orchard and Shri Mohanbhai Gandabhai Ratod which are placed on pages 76 to 96 of the paper book. The learned AR further contended that the AO has taken one of the possible view by working out the income after rejecting the books of accounts on estimated basis. Therefore, there cannot be fault with the order of the AO. 10. On the other hand, the learned DR contended that the assessment was framed by the AO without conducting the necessary enquiries. The learned DR supported the order of the learned CIT. 11. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion we note that there was a survey operation carried out under section 133A of the Act at the business premises of M/s Raghuvir Synthetic Ltd. However, during survey operation certain documents relating to the party namely M/s Greenwell Orchard were also found from the premises. During survey the statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far prejudicial to the interest of revenue and set aside the matter to the AO for de novo assessment after making necessary enquiries/ investigations of fresh. 11.5 Now the question arises for our adjudication whether the AO has taken a view in the case on hand which was contrary to his own finding as well as against the provisions of law. Admittedly, the proceedings initiated under section 147 of the Act after obtaining the details of the survey conducted at the premises of M/s Raghuvir Synthetic Ltd. under section 133A of the Act. In the details, it was doubted that the purchases made by the assessee were bogus. But, the AO after conducting necessary enquiries has reached to the conclusion that the gross profit declared by the assessee was very low. In other words the AO admitted the purchases and sales as genuine. The enquiries conducted by the AO from the assessee are summarized as under: (a) There was no VAT paid either on purchase or on subsequent sales of teakwood. There was also no TIN number mentioned of any party on sales and purchase bills which lead to conclusion that purchases and subsequent sales are not genuine. Further, the gross profit disclosed on subsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer accepting the same as such will be erroneous and prejudicial to the interests of the revenue. 11.8 Moving further, the case law as relied by the ld. CIT i.e. M/s wadhawan Design (supra) is distinguishable from the facts of the case on hand as in that case the identity of the supplier was not established whereas in the present case it is not so. Accordingly, in our humble understanding, the principles laid down by the Hon ble Delhi High Court in the case of M/s wadhawan Design (supra) are not applicable in the present case. 11.9 In addition to the above, we also note that even for the sake of adjudication, we assume that the purchases viz a viz sales are bogus in the given facts and circumstances, then also the entire amount of sales cannot be treated as unexplained cash credit of the assessee. It is because the assessee has not shown the gross amount of sales as agricultural income rather it has shown only the difference between the purchase and sales whereas the original party namely M/s Greenwell Orchard has shown the entire amount of sale as agriculture income without showing any expenses. Accordingly the AO in the assessment of M/s Greenwell Orchard has allocated 20% ..... X X X X Extracts X X X X X X X X Extracts X X X X
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