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TMI Blog2023 (12) TMI 880X X X X Extracts X X X X X X X X Extracts X X X X ..... son and when there was no incriminating document was found. 2. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in assuming jurisdiction and framing the impugned assessment order u/s 153C, is bad in law and against the facts and circumstances of the case and the same is not sustainable on various legal and factual grounds . 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in exercising his jurisdiction in making addition of Rs. 89,36,4211- (i.e. 5% of Rs. 17,87,28,439/-) on account of alleged commission/brokerage as business income and that too without giving show cause notice in this regard and impugned addition made by Ld. CIT(A) is bad in law as no incriminating material has been found as a result of search warranting such addition and by recording incorrect facts and findings and merely on the basis of surmises and conjectures and without giving the opportunity of being heard and without observing the principles of natural justice. 4. That in any case and in any view of the matter, action of Ld. CIT(A) in making addition of Rs. 89,36,421/- on account of alleged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operated by the owner's of M/s Orient Craft Limited for the purposes of evasion of taxes. 6.2 Further, in view of the findings, it is a fit case for rejection of books of accounts and therefore, the books of accounts of the company is hereby rejected is] s 145(2) of the Income. Tax Act, 1961. 6.3 Accordingly the expenses booked by the assessee during the year under consideration are worked out and disallowed which are amounting to Rs. 17,78,99,299/-." 4. Against the above order, assessee appealed before the ld. CIT (A). Ld. CIT (A0 deleted the addition but made protective addition of 5% as under :- "I have gone through the assessment order and submissions of the appellant and following observations are made :- (i) The AO disallowed the total amount of Rs. 17,87,17,045/- in the case of M/s. Orient Craft Ltd. for AY 2013-14 as it was held that these purchases made from M/s. Super Connections India Pvt. Ltd. were not found to be genuine on following grounds as discussed at pre-page 26 & 27 of this order :- (a) The bulk of purchases have been made from entities controlled by Sh. Sanjay Jindal. (b) The fund trail discussed in the issue of purchases from M/s Akansha Fash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (vi) As it has been held that the appellant company in the years under consideration was only being used as conduit for booking bogus purchases by M/s Orient Craft Ltd., it is apparent that the appellant company would have been paid commission/brokerage for providing entries for bogus purchases by M/s Orient Craft Ltd. In view of the general practice as seen in the case of entry operators, the commission/brokerage paid to the appellant company is estimated at 5% and addition of Rs. 89,36,421/- to the business income of the appellant on account of the same made by the AO in 2013-14 is sustained to that extent. Similarly, addition @ 5% of the total sales booked in the name of M/s Orient Craft Ltd by the appellant company is also confirmed to the extent in other years under consideration as follows:- AY 2014-15 : 5% of Rs. 26,37,58,427/- Rs. 1,31,87,921/- AY 2015-16 : 5% of Rs. 1,96,74,569/- Rs. 98,37,284/-" 5. Against the above order, assessee is in appeal before us. 6. Ld. Counsel of the assessee has summarized his submissions as under :- "It is respectfully submitted that the facts of the case are that the appellant has supplied fabric to M/s Orient Craft Limited. Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y prayed that the addition confirmed by Ld. CIT(A) may please be deleted. It is not out of place to submit that there is no appeal by the revenue to the best of the knowledge of the appellant. Further, it is respectfully submitted that similar matter in the case of other concerns from whom M/s Orient Craft Ltd. had made purchases have been decided by the Hon'ble Tribunal and the similar addition confirmed by Ld. CIT(A) have been deleted by the Hon'ble Tribunal in the following cases: * M/s Starline Clothing P Ltd. vs. DCIT, ITA No.7657 & 7658/Del/2019 dated 14.07.2022 for AYs 2014-15 and 2015-16 (PB 466, 471; PB 540) * Sh. Subhash Chandra Gupta vs. DCIT, ITA No. 7654, 7655 & 7666/Del/2019 dated 14.07.2022 for AYs 2013-14, 2014-15 and 2015-16 (PB 459, 465; PB 507-508) * Trendy Attire Pvt. Ltd. vs. DCIT, ITA o. 7659 & 7660/Del/2019 dated 30.06.2022 for A Y s 2014-15 and 2015-16 (PB 474,476 - 477; PB 540) In view of the above facts and circumstances of the case, it is humbly prayed that the addition confirmed by Ld. CIT(A) deserves to be deleted and may please deleted." 7. Per contra, ld. DR for the Revenue relied upon the orders of the authorities below. 8. We hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5/- is deleted." 9. Similarly, ITAT in the case of Orient Craft Ltd. in ITA Nos.3311/Del/2019 & 5038/Del/2019 for AY 2014-15 vide order dated 24.09.2021 deleted the substantive addition in the hands of the aforesaid assessee by holding as under :- "In view of the above pleadings and evidences filed by the assessee the disallowance made in the assessment order and confirmed by CIT(A) is not sustainable on merit. Assessee has proved that the material was purchased from the vendors involved here and payments have been made through banking channel. Other evidences as referred clearly establish the purchase made by the assessee. We do not want to discuss each and every evidence and it would suffice to hold that in the light of these evidences which have not been rebutted with the help of any cogent material, purchases made by the assessee from the above said vendors cannot be disbelieved. The adverse observations made by the A.O. in the assessment order have been met by the assessee one by one and paper pages 1702- 1708 reproduced also above by us and we have taken ourselves to these adverse observations and response of the assessee and we agree with the Ld. Counsel for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the adverse observations of the A.O. only which in our opinion are misplaced on facts. Contention of CIT(A) that evidence filed by the assessee self-serving documents and circumstantial evidence leads to the conclusion of A.O. It would be enough for us to say that voluminous documentary evidences filed by the assessee are clearly establishing the genuineness of purchases fabric from M/s Super Connection India P. Ltd. & other vendor companies. Other indicators such as percentage ratio of material to sale etc also establish the genuineness of the purchases. We do not agree with the observations made by the first appellate authority. In our considered opinion, assessee has been successful to discharge the burden of proving the purchase from M/s Super Connection India P Ltd. & other vendor companies. In the result, ground no. 7 to10 of the assessee's appeal of the assessee are allowed and the aggregate addition of Rs. 7,67,79,726/- is deleted." 11. From the above, it is evident that Tribunal had held that purchases made by M/s. Orient Craft Ltd. from the assessee were genuine. Hence, protective addition in the hands of the assessee in all the assessment years under consideration here ..... X X X X Extracts X X X X X X X X Extracts X X X X
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