TMI Blog2021 (11) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... e profit made by the Assessing Officer is far less than the income of such circular income disclosed by the assessee. In view of this, we do not find any reason to disturb the order of the ld. CIT (Appeals). Accordingly, the order of the ld. CIT (Appeals) deleting the addition confirmed. Disallowance of deduction u/s 80IB - deduction with respect to its software unit at Goa - HELD THAT:- As survey team took the action one year after the operations stopped at those units where the software was manufactured/developed. The signatory to the Excise record of the assessee was the same employee whose statement was used by the assessing officer. It is also a fact that the deduction under those sections were already allowed to the assessee u/s 143 (3) of the income tax act by the learned assessing officer after completely examining all these details. In view of this, we do not find any reason to interfere with the order of the learned CIT A deleting disallowance made by ld AO u/s 80IB of the act. No evidences were produced before us that there was no manufacturing facility available at those plants, the details submitted by the assessee with respect to the manpower available at those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inite finding by the learned assessing officer, naturally the disallowance made by the learned assessing officer is merely on conjectures and surmises which cannot be upheld and rightly deleted by the learned CIT A . Addition of advances given to the subsidiary company as written off by the assessee - HELD THAT:- Subsidiary company was engaged in the business of paging services and the loan and advances given to that company become not recoverable because of the usual losses suffered by that particular company. The fact was also noted that the entire capital of that particular subsidiary company was eroded by the accumulated losses by more than 2.5 times of itself capital. Thus, it was a bona fide decision of the assessee company to write of the above amount under the head of its finance business and claim it as a business loss. Merely because the subsidiary company has not shown the cessation of the liability, the claim of the assessee cannot be disallowed. CIT A after considering the various judicial pronouncements has allowed the claim of the assessee on both the above account. Before us, the revenue could not show that there were an incriminating evidences available wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - ITA No. 5741/Del/2013, ITA No. 6225/Del/2013, ITA No. 6226/Del/2013, ITA No. 765/Del/2014, ITA No. 766/Del/2014, ITA No. 816/Del/2014, ITA No. 817/Del/2014, ITA No. 2252/Del/2014, ITA No. 2253/Del/2014 - - - Dated:- 26-10-2021 - Shri Kul Bharat, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Revenue : Shri Najani [CIT] D.R.; For the Assessee : Shri Rakesh Joshi, C. A.; ORDER PER PRASHANT MAHARISHI, A. M. 1. These are the bunch of several appeals filed by the Revenue and certain cross appeals by the assessee for several years involving common issues and, therefore, both the parties argued them together. After hearing the arguments of the parties, these appeals are disposed of, by this common order. ITA No. 5741(Del)/2013 Assessment year 2002-03 2. I. T. Appeal No. 5741(Del)/2013 is filed by the ld. Dy. Commissioner of Income Tax, Central Circle I, New Delhi, against the order passed by the Commissioner of Income Tax (Appeals) 3, New Delhi, dated 21.08.2013 for assessment year 2002-03. 3. The Revenue has raised the following grounds of appeal:- 1. On the facts and in the circumstances of the case, the CIT(A) ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 153A read with Section 143(3) of the Act was passed by the Dy. Commissioner of Income Tax, Circle 1, New Delhi, on 29th December, 2009 wherein the assessed income was determined at ₹ 20,03,518/-. The ld. Assessing Officer made the following disallowances:- (i) ₹ 8,28,506/- being profit determined @ 1.5% on total sales of ₹ 5,52,33,750/-. The above sales turnover ₹ 5,52,78,782/- determined by the ld. Assessing Officer on account of circulating purchases and sales; (ii) A disallowance of ₹ 4,97,18,139/- on account of claim of deduction under Section 80IB of the Act; (iii) Disallowance of research and development expenditure of ₹ 6,30,75,938/-; (iv) Disallowance of travelling expenditure of ₹ 5,00,000/-; (v) Advances given to group companies written off amounting to ₹ 8,61,90,935/-. 8. The assessee aggrieved with the order of the ld. Assessing Officer preferred an appeal before the ld. CIT (Appeals) 3, New Delhi. i. With respect to the profit determined by the Assessing Officer of 1.5% on circular trading, the ld. CIT (Appeals) held that out of the total trading turnover of ₹ 141.19 crores the appellant h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05.2013. Based on these facts the ld. CIT (Appeals) held that the Assessing Officer ignoring the excise register RG23A, RG 23 C, PLA registers, copies of return filed with the Excise Department and sales records solely relied on the statement of the employees recorded during survey proceedings and ignored the submissions. He further held that the statement of employees do not have any evidentiary value unless corroborated by other evidence. He held that against the statement of the employees, the assessee has produced excise records and the details of payment of excise duty, which is also appearing in the audited accounts, and in the remand report the ld. Assessing Officer has confirmed the items of goods manufactured with the books of accounts. The addition / disallowance is not sustainable. He further held that excise records are also periodically verified by the excise authorities. The ld. CIT (Appeals) also held that there was an existence of plant and machinery and manufacturing activities were carried out consequent to which the assessee has made sales to various Public Sector Undertakings. It was further held by him that the search took place in 2007 and the manufacturing ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,00,000/- for the reason that some family members of the Directors had travelled abroad with the Directors and, therefore, Assessing Officer disallowed ₹ 5,00,000/- on ad-hoc basis. The ld. CIT (Appeals) deleted the above disallowance for the reason that the ld. Assessing Officer has not brought on record any specific instances of company s fund use for the travel of the family members. Further, the disallowance was made only based on assumptions and presumptions. This disallowance was fully allowed in assessment proceedings under Section 143(3) of the Act. Therefore, he deleted the ad-hoc disallowance of ₹ 5,00,000/-. v. With respect to the disallowance of ₹ 8,61,90,935/- on account of write off of the advances to the group companies Microwave Company Limited. The Assessing Officer noted that assessee has given advance to its subsidiary, which was not recoverable and, therefore, the assessee has written off the same treated it as a business loss. The ld. Assessing Officer disallowed the same for the reason that the subsidiary company has not treated the same as cessation of liability and, therefore, such unilateral action of the assessee with no corresponding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivity in this unit of the company and only repair and annual maintenance work is undertaken at that unit. Further paragraph number 6.4 of the assessment order was referred stating that the only activity, which is carried out by the assessee, is to stamp the components imported into dispatch it to various units of BSNL and MTNL as per tender. Therefore there is no manufacturing activity was carried out. As specific reference was made to the outcome of survey proceedings in paragraph number 6.5 of the order. The learned DR further referred to the paragraph number 6.9 of the assessment order to show that Mr. Guleria also confirmed that there is no manufacturing activity carried out at those units. Therefore, the learned assessing officer has heavily relied upon the statement of the senior officers and physical examination of the activities of the factory during survey and held that there is no manufacturing activity carried out at Solan unit. With respect to the manufacturing activity at Goa the learned here referred paragraph number 6.12 of the assessment order wherein the learned assessing officer has specifically stated that assessee has never been engaged in the business of manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orised representative also submitted a written note and a paper book on all the issues involved in the appeal. The main crux of the issue argued by the learned authorised representative are as Under:- i. With respect to the issue of profit on circular trading transaction, it was submitted that there is no legal bar on making both purchase and sales from the same party. It was further stated that the sale transaction and the purchase transaction with the Balaji Electronics private limited duly confirmed u/s 133 (6) of the income tax act. Further in the assessment year 98 99 the assessee has accepted the profit at the rate of 1.09% because in that particular case the resultant profit arriving from those parties with whom the circular trading transactions were entered into was only 0.53%. However, in the present case the gross profit shown by the assessee is higher than the normal gross profit determined by the learned assessing officer. It was further stated that the profit of 2.28% is earned on sales made to Balaji Electronics and the learned assessing officer is determined profit of only 1.5%, which is less than the profit already disclosed by the assessee therefore the additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect to the Ministry of science and technology, which shows that the research and development unit exist. It was further stated that the learned assessing officer has merely brushed aside the reports of the research and development by the assessee stating that these are merely general reports. He submitted that if no research and development activities are carried out the learned assessing officer should not have allowed the substantial portion of the research and development expenditure. iv. With respect to the travelling expenditure disallowed by the learned assessing officer it was submitted that this disallowance has been made by the learned assessing officer merely on conjectures and surmises. There is nothing like personal expenditure incurred by the company, as it is a case of the limited company. The assessee placed reliance on the case of Friends Clearing Agency Private Limited 332 ITR 269 and Widex India Private Limited versus DCIT 66 DTR. It was further stated that there is no instances available with the assessing officer that any expenditure is incurred by the assessee, which is not wholly and exclusively incurred for the purposes of the business. He therefore submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chase consideration to that party. Therefore, the Assessing Officer issued notice under Section 133(6) of the Act to the above party, who confirmed the transactions. Assessing Officer was of the view that in the sale and purchase bill shown the description of the material only as electronic goods and the manner of the creation of the circular activity is also doubtful. He also rejected the claim of the assessee that it has earned the profits. Assessing Officer was also guided by the fact that in assessment years 1998-99 and 1999-2000, assessee has created such a circular trading and has an accepted profit rate of 1.09% on the same. The ld. CIT (Appeals) deleted the above addition that assessee has disclosed profit of 11.52% on the trading activity and further the purchase and sale from Balaji Enterprises has also not held to be bogus. He further noted that assessee itself has shown a profit of 2.28% on total sales to Balaji Enterprises, which is more than 1.5% estimated by the Assessing Officer. We find that as such the Assessing Officer could not show any legal bar of making purchases and sales from the same party. Further Balaji Electronics Pvt. Ltd. in response to notice under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Goa unit was set up in 1995-96 for manufacturing of optical fiber cable. It was stated that wherever the manufacturing activities are carried out the relevant excise records of the appellant, which were duly checked by the act authorities regularly and therefore there cannot be any doubt about the existence of the manufacturing activities. So far as the work force is concerned it was stated by the assessee that it has of course of 511 employees therefore there cannot be a question that assessee did not have the enough work force to manufacture the goods. Further during the course of survey on 10 May 2007 the inventory of stock of the cable unit was also taken along with the various type of raw materials for manufacturing of the cable therefore the existence of manufacturing activity could not have been denied. With respect to the statement of employees, the claim of the assessee was that such statement could not be relied upon in view of overwhelming evidence regarding the operations of the unit and the products manufactured which were supplied to the public sector undertaking. It was further stated that orders of the public sector undertaking force various supply of goods or the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t matched with the books of accounts of the assessee and there is a production according to those records. In view of these overwhelming evidences, we confirm the order of the learned CIT appeal and dismiss ground number 2 of the appeal of the AO. 15. Coming to the ground number 3 with respect to the deletion of the disallowance of ₹ 63,075,938 made on account of expenditure on research and element expenditure, the learned assessing officer has made the disallowance for the reason that according to him there was no research and development facility existing at Solan. In fact the assessee has claimed deduction of expenditure with respect to research and development unit at Gurgaon. The ld. Assessing Officer examined the research and development activity of the assessee where the Revenue and capital expenditure both have been claimed as deduction under Section 35(i) and 35(iv) of the Act. The fact shows that assessee has incurred the total research and development expenditure of ₹ 111,077,050/ out of which the capital expenditure of ₹ 497,81,944 and revenue expenditure of ₹ 61,295,106 was claimed. The learned AO out of the above expenditure allowed the cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verification of the complete details at the time. In absence of any definite finding by the learned assessing officer, naturally the disallowance made by the learned assessing officer is merely on conjectures and surmises which cannot be upheld and rightly deleted by the learned CIT A. We confirm the order of the learned CIT A and dismiss ground number 4 of the appeal. 17. Ground number 5 is with respect to the deletion of the disallowance of ₹ 86,190,935/ made on account of advances given to the subsidiary company, which has been written off by the assessee during the year. The fact shows that assessee has given certain advances to a group company microwave communication Ltd which have been written off by the assessee. This deduction was already allowed to the assessee in assessment proceedings u/s 143 (3) of the act. No incriminating evidences were found during the course of search with respect to the above issue. The learned assessing officer on appraisal of the annual accounts of the assessee made this disallowance. Assessee has claimed the same as a business loss. The learned assessing officer disallowed for the reason that since the subsidiary company has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the learned assessing officer for assessment year 2003 04 against the order passed by The Commissioner Of Income Tax (Appeals) III, New Delhi dated 10 September 2013 raising following grounds of appeal:- 1. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of ₹ 1,07,68,795/- made on account of profit of circular transaction. 2. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the disallowance of ₹ 2,86,68,390/- made on account of disallowance of deduction claimed u/s 80IB of the I.T. Act 3. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the disallowance of ₹ 3,67,36,076/- made on account of disallowance of expenditure on Research Development. 4. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the disallowance of ₹ 5,00,000/- made on account of travelling expenses incurred on the family members of the directors of the company. 5. The order of the CIT(A) is erroneous and is not tenable on facts and in law. 20. Both the parties confirmed that identical issue is wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the learned CIT A in the above disallowance. For the similar reasons we confirm the order of the learned CIT A deleting the disallowance of deduction claimed u/s 80 IB of the income tax act of ₹ 28,668,394 this year. Accordingly, ground number two of the appeal of the AO is dismissed. 24. Ground number 3 of the appeal of the AO is with respect to the deletion of the disallowance of ₹ 36,736,076/ out of the research and development expenditure incurred by the assessee. This ground is identical to the ground number 3 of the appeal of the learned assessing officer for assessment year 2002 03 wherein we have confirmed the order of the learned CIT A in deleting the above disallowance. For the similar reasons we also, uphold the order of the learned CIT A in deleting the disallowance of ₹ 36,736,076/ on account of research and element expenditure. Thus, ground number 3 of the appeal is dismissed. 25. Ground number 4 of the appeal of the learned assessing officer is with respect to the disallowance of ₹ 5 lakhs out of the foreign travel expenditure incurred on the family members of the directors of the company. This ground of appeal is iden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 143 (3) of the act was passed on 29th of December 2009 wherein the total loss of the assessee was determined at ₹ 1,301,517,361. The assessee preferred an appeal before the learned CIT A who allowed the appeal of the assessee and deleted the disallowances made by the learned assessing officer. Therefore, revenue is in appeal. 30. Both the parties agreed that the identical issues have been covered in the case of the assessee for assessment year 2002 03 and therefore they also made the same arguments as were advanced in those years. It was also confirmed there is no change in the facts and circumstances of the case. 31. We have carefully considered the rival contention and perused the orders of the lower authorities. 32. The first ground of appeal is with respect to the deletion of the addition of ₹ ₹ 4,294,272/ made on account of the profits of circular transactions. This ground is identical to ground number one of the appeal of the learned assessing officer for assessment year 2002 03. There is no change in the facts and circumstances of the case and the learned CIT A has categorically held that assessee has disclosed the higher profit in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances of the case and therefore for the similar reasons we also confirmed the order of the learned CIT capital and deleting the disallowance of ₹ 150,010,660/ . Accordingly, ground number 4 of the appeal of the learned assessing officer is dismissed. 36. Ground number 5 is with respect to the disallowance of ₹ 1.50 crores made on account of unverified expenditure deleted by the learned CIT A. The learned assessing officer has made the above disallowances out of expenses on ad hoc basis due to the nonproduction of the books of accounts. The learned CIT A is also noted that for assessment year 2002 03 and 2003 04 the learned assessing officer has not made any such disallowance on the similar set of facts and circumstances. The learned CIT A also noted that no such disallowances were made in the assessment proceedings u/s 143 (3) of the act. It was also found that there is no incriminating evidence found during the course of search with respect to the expenditure incurred by the assessee. The learned CIT capital has also noted that the books of accounts are duly audited and there is no qualification by the auditor with respect to non-availabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) has erred in deleting the disallowance of ₹ 1,50,00,000/- made on account of unverified expenditure. 6. The order of the CIT(A) is erroneous and is not tenable on facts and in law. 40. The brief facts of the case shows that assessee filed its return of income declaring loss of ₹ 2,402,187,478/ . The assessment order was also passed u/s 143 (3) of the act determining the total income of the assessee at the same amount. Subsequently search took place on 10 May 2017 and therefore the assessment order u/s 153A read with Section 143 (3) of the act was passed on 29th of December 2009 wherein the total taxable income of the assessee was determined at a loss of ₹130,15,17,361/-by making the several disallowances/addition. The assessee preferred an appeal before the learned CIT A allowed the appeal of the assessee and therefore revenue is in appeal before us. 41. Both the parties confirmed that the identical issues have been raised in this appeal of the learned assessing officer, which were already part of the appeal for the assessment year 2002 03, 2003 04, and 2004 05. It was also confirmed by both the parties that there is no change in the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the act. The learned CIT A has deleted the above disallowances respectfully following the decision of the honourable Supreme Court in case of Vinay Cements and honourable Delhi High Court in case of Aimil Ltd and directed the learned assessing officer to verify with evidence if the payments are made before the due date of filing of the return then allow the expenditure to that extent. We find that the learned assessing officer has been directed by the learned assessing officer to verify whether the above payment have been made before the due dates of the filing of the return of income by the assessee or not and if the same is paid before that date, the same is required to be allowed and otherwise the disallowance was confirmed. 46. We find that the issue squarely covered in favour of the assessee by the decision of the honourable Delhi High Court in case of principal Commissioner of income tax 7, New Delhi versus Pro interactive services private limited ITA 983/2018 dated 10 September 2018 wherein the honourable High Court has held as Under In view of the judgement of the Division Bench of Delhi High Court in Commissioner of Income-Tax versus Aimil Limited, (2010) 321 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e found during the course of search with respect to the expenditure incurred by the assessee. The learned CIT capital has also noted that the books of accounts are duly audited and there is no qualification by the auditor with respect to non-availability of any vouchers or the details of the expenses. As the learned assessing officer has made the above disallowances on ad hoc basis without pointing out any defect in the details submitted before him which was also verified by him during the course of original assessment proceedings u/s 143 (3) of the act, the learned CIT A deleted the about disallowance. Before us, the learned DR could not produce any material to show that the disallowance made by the learned assessing officer was based on any particular incident of or instances of expenditure debited by the assessee that are not incurred wholly and exclusively for the purposes of the business. Appeal of the learned assessing officer for assessment year 2004 05 wherein similar disallowances were made out of the total expenditure incurred by the assessee is deleted by us confirming the order of the learned CIT A. There is no change in the facts and circumstances of the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in partly confirming the addition to the extent of 1.09% of the transactions, stating that in the A.Y. 1998-99 and 1999-00, profit had been added @ 1.09% by the A.O. u/s 147/143(3) of the Act, against which no appeal was filed by the assessee, whereas the facts are that the A.O. had made addition for the A.Y. 1998-99 @ 0.54% giving benefit of profit already disclosed at G.P. rate of 0.55% and he did not make any addition for the A.Y. 1999-00, fully considering the fact that the profit disclosed by the assessee at G.P. rate of 0.53% on the alleged circular trading transactions was more than the profit ratio of the trading business of the Company on the transactions other than the trading transactions of circular nature, which was of 0.39% only. Similarly for the year under consideration, the profit has been shown on alleged aggregate circular trading transactions at the G.P. rate of 7.29%, which is far more than the G.P. rate of 1.09% held by the CIT (A) to be fair, just and reasonable. 4. By confirming addition @ 1.09%, the Ld. CIT (A) ignored the fact that it is not necessary that every transaction would generate profit at uniform rate. In this way, the addition confirmed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has erred in deleting the disallowance of ₹ 5,00,000/- made on account of travelling expenses incurred on the family members of the directors of the company. 4. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the disallowance of ₹ 11,83,20,000/- made on account of advances given to group company written off. 5. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the disallowance of ₹ 1,50,00,000/- made on account of unverified expenditure. 6. The order of the CIT(A) is erroneous and is not tenable on facts and in law. 57. Assessee aggrieved with the order of the learned CIT A has raised the following grounds of appeal:- 1. That on the facts and in the circumstances of the case, Ld. CIT (A) erred in partly confirming the addition to the extent of 1.09%, which was made by A.O. @ 1.5% on account of G.P. rate on alleged circular trading transactions, ignoring the fact that the assessee had already declared profit on such alleged circular trading transactions at the G.P. rate of 0.24%. 2. That on the facts and in the circumstances of the case, Ld. CIT (A) erred in partl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 58. Both the parties confirmed that the issue involved in this appeal are similar to the issue is already arising and decided in the appeals of the assessee for the earlier years. They submitted that their arguments are also similar. It was also claimed that there is no change in the facts and circumstances of the case. 59. We first take up the appeal of the learned assessing officer in ITA number 766/del/2014 wherein following grounds of appeal are taken:- 60. The First ground of appeal relates to the deletion of the addition of ₹ 6,086,146 made on account of profit of circular trading transactions. The learned assessing officer made the addition at the rate of 1.5% of the profit on the circular trading amounting to ₹ 6,086,146. The learned CIT A relying on the order in the assessee s own case for assessment year 1998 1999 and 1999 2000 reduced the above profit from 1.5% to 1.09%. Therefore, both the parties are in appeal before us. This is the solitary issue in the appeal of the assessee. We find that identical issue has been decided by us for assessment year 2005 06 wherein we have upheld the action of the learned CIT A of upholding the addition to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the learned CIT A for this year also on this issue and therefore ground number 4 of the appeal of the learned assessing officer is dismissed. 64. The ground number 5 of the appeal is with respect to the deletion of the disallowance of ₹ 1.5 crores made by the learned assessing officer on ad hoc basis out of various expenditure. Both the parties confirm that this issue is identical to ground number 5 of the appeal of the AO for assessment year 2005 06 wherein identical disallowance was made out of the total expenditure incurred by the assessee. For that assessment year, we have upheld the order of the learned CIT A deleting the ad hoc disallowance is out of the total expenditure incurred by the assessee giving detailed reasons. For the similar reasons we also confirm the order of the learned CIT A in deleting the ad hoc disallowance of ₹ 1.5 crores out of the total expenditure. Accordingly, ground number 5 of the appeal of the learned assessing officer is dismissed. 65. In the result ITA number 766/del/2014 filed by the learned assessing officer for assessment year 2006 07 is dismissed. 66. Now we come to the appeal of the assessee for assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. (OPM) to be bogus purchases by not appreciating the fact that the A.O. had not provided opportunity to the assessee to cross examine Sh. Ashish Madan, Director of OPM, whose statement was relied upon by him to make the edition. 2. The Ld. CIT (A) erred in law and the circumstances of the case by confirming the addition made by treating purchases from ,0PM as bogus when complete details of purchases alongwith confirmation of account were made available to the A.O. Purchase consideration was duly paid through the banking channel and Sh. Ashish Madan, Director of OPM did not specifically denied the transactions of purchases and rather confirmed the transactions. 3. That on the facts and in the circumstances of the case, Ld. CIT (A) erred in partly confirming the addition to the extent of 1.09%, which was made by the A.O. @ 1.5% on account of G.P. rate on alleged circular trading transactions, ignoring the fact that the assessee had already declared profit on such alleged circular trading transactions at the G.P. rate of 0.45%. 4. That on the facts and in the circumstances of the case, Ld. CIT (A) erred in partly confirming the addition made on the basis of G.P. rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee for assessment year 2005 06 and 2006 07 wherein we have upheld the order of the learned CIT A estimating the profit at the rate of 1.09%. We find no reason from deviate from the same. Accordingly we uphold the order of the learned CIT A estimating the profit at the rate of 1.09% on circular trading transactions entered into by the assessee. Accordingly appeal filed by assessee is dismissed. 71. For assessment year 2008 09 the fact shows that the assessee filed its return of income on 28/9/2008 declaring a total loss of ₹ 713,444,037 which was assessed u/s 143 (3) of the act on 29th of December 2009 wherein the learned assessing officer has made an addition at the rate of 1.5% of the circular trading transactions which was deleted by the learned CIT A and retained the addition to the extent of 1.09% of the circular trading. Therefore the assessee is aggrieved with that order of the learned CIT A and has preferred this appeal. 72. The assessee has raised the following grounds of appeal in ITA No. 2253/Del/2014 for Assessment Year 2008-09:- 1. That on the facts and in the circumstances of the case, Ld. CIT (A) erred in confirming the additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t already disclosed at G.P. rate of 0.55% and he did not make any addition for the A.Y. 1999-00, fully considering the fact that the profit disclosed by the assessee at G.P. rate of 0.53% on the alleged circular trading transactions was more than the profit ratio of the trading business of the Company on the transactions other than the trading transactions of circular nature, which was of 0.39% only. Similarly for the year under consideration, the profit has been shown on alleged aggregate circular trading transactions at the G.P. rate of 0.47%, which is in addition to the G.P. rate of 1.09% held by the CIT (A) to be fair, just and reasonable, which is contrary to the fact that for the A.Y. 1999-00, the then AO had fully accepted the G.P. rate of 0.53% as disclosed by the assessee company on the alleged circular trading transactions. 6. By confirming addition @ 1.09%, the Ld. CIT (A) ignored the fact that it is not necessary that every transaction would generate profit at uniform rate. In this way, the addition confirmed to the extent of 1.09% of the transactions is over and above the profit already disclosed on the said transactions i.e. @ 0.47%. Therefore, there is no case f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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