TMI Blog2023 (5) TMI 789X X X X Extracts X X X X X X X X Extracts X X X X ..... ined by Commissioner (Appeals) in different assessment years under dispute deserves to be deleted. Appeal of assessee allowed. - ITA Nos. 4362 to 4366/Del/2019 And ITA Nos.5172 to 5176/Del/2019 - - - Dated:- 16-5-2023 - Shri Saktijit Dey, Judicial Member And Shri M. Balaganesh, Accountant Member For the Assessee : Sh. Ashwani Kumar, CA, Sh. Aditya Kumar, CA And Sh. Hitesh Minhas, CA For the Department : Ms. Sapna Bhatia, CIT (DR) ORDER PER BENCH: Captioned cross appeals by the assessee and the Revenue arise out of separate orders of learned Commissioner of Income Tax (Appeals)-3, Gurgaon, pertaining to assessment years 2005- 06, 2006-07, 2007-08, 2008-09 and 2009-10. 2. Since the appeals relate to the same assessee and involve identical issues, they have been clubbed together and disposed of in a consolidated order, for the sake of convenience. 3. The only common issue arising in all these appeals relate to addition/deletion made on account of estimation of profit on alleged bogus sales. 4. Briefly the facts are, the assessee is a resident corporate entity. As stated by the Assessing Officer, the assessee is engaged in the business of import a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade Centre and M/s. J.S. Enterprises are proprietary concern of Sh. Ram Kishan. He observed that the address given on the two bank accounts are bogus and not real address of the concerned person. The Assessing Officer observed that the photograph of Sh. Ram Kishan attached to the bank account does not indicate that he is a business man having turnover of more than Rs. 70 crores. The Assessing Officer observed, independent inquiry carried out by him to ascertain the existence of M/s. Dee Kay Trade Centre and M/s. J.S. Enterprises did not bear any result as the letters/summons issued returned back undelivered. In view of the aforesaid, the Assessing Officer called upon the assessee to produce the proprietor of M/s. Dee Kay Trade Centre and M/s. J.S. Enterprises. However, the assessee failed to produce them. From the sale invoices relating to these two entities, the Assessing Officer observed that such invoices do no bear vehicle number, GR number, date of discharge etc. No gate pass was also produced. Thus, based on the aforesaid facts available before him, the Assessing Officer concluded that the amount received from the aforesaid two parties towards sale of products are in the natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment Year 2006-07 1,08,79,648 Assessment Year 2007-08 48,06,806/- Assessment Year 2008-09 54,99,242/- Assessment Year 2009-10 18,36,657/- 7. Being aggrieved with aforesaid decision, both assessee and the Revenue are before us. While the assessee is seeking deletion of the additions sustained by learned Commissioner (Appeals), the Revenue is aggrieved with partial relief granted by learned Commissioner (Appeals) qua the additions made by the Assessing Officer. 8. Before us, learned counsel appearing for the assessee submitted that the additions made by the Assessing Officer and partly sustained by learned First Appellate Authority are not based on any incriminating material found in course of search and seizure operation conducted on the assessee. Drawing our attention to the assessment orders, he submitted, there is no reference to any incriminating material while making additions. He submitted, the Assessing Officer has made the additions purely on estimate basis by substituting the GP rates disclosed by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer was justified in making the additions on account of bogus sales. In support of such contention, she relied upon a decision of the Hon ble Supreme Court in case of CIT Vs. S. Ajit Kumar, [2018] 404 ITR 526. 11. As regards the merits of the addition, learned Departmental Representative submitted, the assessee failed to furnish any evidence to establish on record that the transactions with M/s. Dee Kay Trade Centre and M/s. J.S. Enterprises are genuine. She submitted, the inquiry conducted by the Assessing Officer clearly revealed that both the aforesaid entities are not in existence. Therefore, the sales effected by the assessee to the concerned parties are non-genuine. She submitted, when the assessee indulged in the activity of bogus sales and the books of account have been rejected, the GP rate adopted by the Assessing Officer has to be applied to the entire sales turnover. Thus, she submitted, the additions made by the Assessing Officer may be restored. 12. We have considered rival submissions and perused the materials on record. Insofar as factual aspect of the issue is concerned, there is no dispute that as on the date of search on 16.03.2011, assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urisdiction to assess or reassess the 'total income' taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject to fulfilment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy. 12. If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs. 13. As could be seen from the aforesaid observations of Hon ble Supreme Court, in case, no incriminating material is unearthed during the search, the Assessing Officer cannot assess or reassess income taking into consideration the other materials in respect of completed unabated assessments. Keeping in pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong case on merits as well. As discussed earlier, the additions made by estimating the GP rate is based on the reasoning that two parties to whom the assessee had effected sales are not traceable and appear to be non-genuine. It is evident, though, the Assessing Officer has stated that the parties were not found at the given address, however, it is a fact on record that the proprietor of both the concerned parties is having PAN issued by the department. Thus, it is a fact that the concerned part is on the rolls of the department. It is further evident, in course of assessment proceeding, the Assessing Officer has issued notices under section 133(6) of the Act to various banks, wherein, the concerned purchasing parties were having their accounts. In response to the notices issued under section 133(6) of the Act, the concerned banks have provided details of bank accounts of the concerned parties/entities. On verifying these bank accounts statements, the Assessing Officer has noticed that just prior to issuance of cheques to the assessee, cash deposits have been made in bank accounts. The Assessing Officer has further stated that from the photograph of the proprietor in the bank accou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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