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TMI Blog2023 (9) TMI 1458X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax Act, 1961 amounting to Rs. 4,63,52,504/- made by the assessing officer, without considering the facts and circumstances of the case and settled position of law 2 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition u/s 694 of the Income Tax Act, 1961 amounting to Rs. 2,27,19,500/- made by the assessing officer, without considering the facts and circumstances of the case and settled position of law 3 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition u/s 69A of the Income Tax Act 1961 amounting to Rs 9,00,000/- made by the assessing officer without considering the fact and circumstances of the case and settled position of law. 4 Whether on the facts and circumstances of the case and in law, the Ld CIT(A) erred in deleting the addition w/s 69C of the Income Tax Act 1961 amounting to Rs 4,72,00,000/- made by the assessing officer, without considering the facts and circumstances of the case and settled position of law. 5 Whether on the facts and circumstances of the case and in law, the Ld CIT(A) erred in deleting the addition u/s 69C of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices issued by the appellant in the name of M/s Samaira Enterprises, were found and seized /impounded by the search party. Identical set of documents in the name of BAFPL and M/s. Sangeeta Enterprises were also found and impounded. (ii) These invoices are bogus in nature as no actual sales were made to M/s Samaira Enterprises and M/s Sangeeta Enterprises. (iii) The appellant and BAFPL were involved in making cash sales which were not accounted in their books of accounts. (iv) Shri Manoj Sharma was managing all the four entities viz, the appellant, BAFPL, M/S Samaira Enterprises and M/s Sangeeta Enterprises on the instructions of Shri Jagdish Joshi. (v) As per the statement of Shri Manoj Sharma (reply to Q.no. 15A, reproduced in page no 24 of the assessment order) the appellant has made cash sales of herbal nuts to concerns other than M/s Samaira Enterprises. Two parties identified are M/s. Jeet products, Hyderabad and M/s M K. Enterprise, Delhi. The sale proceeds of these sales are received in cash. Such cash received from unaccounted sales are booked as sales made to M/s Samaira Enterprises. The cash is deposited in the bank accounts of M/s Samaira Enterprises and later ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nagar, Coimbatore, Tamilnadu at the premises of Shri Manoj Kumar Sharma. He further observed that on enquiry with employees namely, Shri Arvind Kumar Singh and Shri Ganesh Gopi on the loose papers, it was found that these invoices were prepared and managed on the directions of Shri Manoj Kumar Sharma and according to him, these invoices are bogus and no actual sales were made to M/s. Samaira Enterprises and M/s. Sangeeta Enterprises by the assessee and its predecessor company, M/s. Bhishma Agro Food Products Pvt. Ltd., Accordingly, he noted that the following cash sales have not been accounted in the books of accounts:- Sr. No. FY Sales claimed by Unicot Foods Products Pvt. Ltd. to Samaira Enterprises 1 2019-20 Rs. 2,63,03,814 2 2020-21 (till 05.02.2021) Rs. 4,63,52,504 Total Rs. 7,26,56,318 Accordingly, AO added Rs.4,63,52,504/- u/s.68. 10. Thereafter ld. AO has proceeded to make addition of Rs.4,72,00,000/- u/s.69C on account of unexplained expenditure. The AO noted that during the course of survey it was seen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i, there were certain expenses incurred in order to bring the labour back to the assessment company at Coimbatore during Covid 19 Lockdown period and other loose sheets denotes cash handed over to Shri Ganesh Gopi by Shri Manoj Kumar Sharma and the expenses incurred by Shri Ganesh Gopi out of the same. Thus, he treated the cash receipts of Rs.13,85,294/- as unexplained money u/s.69A. 14. Before the ld. CIT (A) the assessee has given detailed explanation alongwith various documentary evidences for each and every addition made by the AO and rebutted each and every finding given in the assessment order, which has been dealt and incorporated in detail in the impugned order. In so far as the addition of Rs.2,27,19,500/- made u/s.69A based on certain cash transactions mentioned in the loose papers found at the residential premises of Shri Manoj Kumar Sharma, the ld. CIT(A) summarized the ld. AO‟s finding as well as assessee's submissions which are as under:- (a) There are no unaccounted sales made by the appellant in cash. All the sales are duly recorded in the books of accounts of the appellant. (b) The loose papers, referred to by the A.O. are dumb documents found at the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant have not been rejected. The AO has accepted the inflow and outflow of goods and the closing stock of the Appellant. (j) The sales made to M/s. samaira has been duly offered as income by the appellant and requisite tax has been paid. Similarly, the counter sales made by M/s. Samaira has also been offered to tax by M/s. Samaira in its return of income. (K) On the retraction of statement of Mr. Sharma, it is stated that the copies of statements recorded on 10 Feb, 12 Feb, and 16 March, 2021 were provided on 5 May, 2021 vide email from the Income Tax Department. Moreover, he being a NRI, did not have much knowledge of day-to-day operations of the appellant and that of M/s. Samaira. (1) Once sales made to M/s. Samaira have already been offered to tax as income, there arise no question of any further addition of the same transaction/income u/s.68 of the LT. Act. Even applicability of sec. 69A cannot be invoked in the present case. 6.6 Upon giving a thoughtful consideration of entire facts on record, observations of the A.0. in the assessment order and detailed submission of appellant, I find that the impugned addition of Rs.2,27,19,500/-u/s 69A of the Act related to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erprises has neither been denied by the employees of the assessee Co. nor by Mr. Manoj Sharma. Mr. Manoj Sharma, in reply to question no.15(reproduced at page 15 of the assessment clearly stated that he is looking after the day to day affairs of M/s Samaira Enterprises. In reply to Q.No.5, Shri Ganesh Gopi (reproduced at page 19 of the assessment order) has also accepted that he was also assigned works in M/s Samaira Enterprises by Shri A.K. Singh. The A.O. has also given a finding in page 20 of the assessment order that sales invoices of the appellant company in the name of M/s Samaira Enterprises and cash sales invoices issued by M/s Samaira Enterprises were found and impounded from the same premises from where the loose papers, based on which impugned additions have been made, were found. Hence, existence of M/s Samaira Enterprises cannot be denied. 6.6.5 If the existence of M/s Samaira Enterprises is not denied, whether activities undertaken by Samaira Enterprises can be doubted? As highlighted by the Ld. AR, the appellant as well as M/s Samaira Enterprises are maintaining regular books of accounts and no defect in their books of accounts have been found during the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Even if cash sales are made to other parties, but accounted for in the book of M/s Samaira Enterprises, only extra/additional profit benefited by the appellant over and above the gross profit shown by the appellant or M/s Samaira Enterprises, could be added by the A.O, as held in numerous judgement of Hon'ble Courts. However, for this purpose, the A.O. has to brought on record through some material that extra/additional profit has actually been earned by the appellant. Nothing has been brought on record by the AO in this respect. 6.10 Considering the totality of the facts and circumstance of the issues involve, in my considered view, the transactions shown in the loose sheets found at the residential premises of Mr. Manoj Sharma, even though represent cash sales and corresponding outgoings/expenses etc have not been established by the A.O. as unexplained and unaccounted when the combined sales made by the appellant to M/s Samaira Enterprises and corresponding cash sales shown by M/s Samaira Enterprises to end users, in its books of accounts, are taken into consideration. In this regard, the AO is directed to cross-check whether these sales, as adopted by him from the loose s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etailers and small vendors which was M/s. Samaira Enterprises. The assessee would sell the product to M/s. Samaira Enterprises which in turn would sell the products to the small and unorganized pan masala customers from its office / depot as over the counter sales. These retailers used to buy the products in cash. All the sales made to M/s. Samaira Enterprises has been duly reflected in the books of accounts of the assessee company and also offered as income on which VAT, GST has also been collected and paid. Further, the counter sales made by M/s. Samaira Enterprises have also been recorded in its books of accounts and have been offered to tax in its return of income. It is also a matter of fact that in the statement recorded by Shri Manoj Kumar Sharma, he has merely stated that he was handling the cash sales on behalf of M/s. Unicot Food Products Pvt. Ltd. and M/s. Samaira Enterprises belong to his wife Ms. Sangeeta Sharma. Before the ld. CIT(A), assessee had clarified and reconciled each and every entry of the loose sheets which has been dealt and incorporated in the appellate order at pages 15 & 16 and also assessee has given point-wise rebuttal of ld. AO's observations. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt (v) Quantitative inventory details showing raw material inwards and outwards including bifurcation of WIP of unfinished product (the Spice Perfumery Compound in WIP was weighing 5,370 kgs. In fact WIP as on 08/02/2021 which included the stock of Spice Perfumery Compound of 5,370 kg were duly reflected in the panchnama prepared by the search party which was also brought to the notice of the ld. AO. The assessee had also submitted copies of inventory of stock prepared during the course of survey proceedings by the search / survey teams where as in the last item tabulated was mentioned as "WIP unfinish" and the quantity against was shown as 70 Tons. The stocks summary which has been incorporated in the appellate order clearly shows that 25000 kg of Spice Perfumery Compound was purchased by the assessee during the F.Y.2020-21 that there was outward movement of 19,630 kg leaving balance as on the date of survey. Based on this factual fact, the ld. CIT (A) has deleted the addition in the following manner:- 8.8 In my considered view, once the claim of existence of closing stock of 5370 kg of Spice Perfumery Compound has been made before the AO, through stock register, the AO is boun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n controverted by the AO as apparent from the assessment order. 8.13 Looking to the totality of the facts and circumstances of the issue involved, in my considered view, the appellant has brought on record sufficient documentary evidences to justify its claim of genuineness of purchase of Spice Compound, which have not been controverted by the AO during assessment proceedings. No adverse view has been taken by the AO with respect to veracity of various documentary evidences or the claim made. The AO has solely relied on the statements of two employees, which have later been clarified by the deponents Considering these facts, the addition of Rs 4,72,00,000/ as unexplained expenditure u/s.69C of the Act is deleted. Thus, ground of appeal no.4 is allowed. 17. The aforesaid finding of the ld. CIT (A) which is based on material on record cannot be tinkered with and the same has also not been rebutted before us. Therefore, the aforesaid finding of the ld. CIT (A) is confirmed and consequently, the ground raised by the Revenue is dismissed. 18. With regard to addition of Rs.4,63,52,504/- made u/s.68, this issue is with respect to the sales made by the assessee to M/s. Samaira Enterpr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs.4,55,294/, Rs.4,00,000/ has been claimed to be deposited in the bank account of M/s Samaira Enterprises. As per statement of Shri Ganesh Gopi, this amount has already been taken in the sales receipts of M/s Samaira Enterprises. The AO is required to verify whether Rs 4,00,000/- has been reflected as sales of M/s Samaira Enterprises and allow the same, if the correspondence entries are found accounted for. Finally, the balance amount of Rs. 55,294/- is confirmed as accounted cash expenditure, with the outcome of verification as stated above. (ii) As far as table no.4 is concerned, there is claim of cash deposit of gs-5,00,000/- in the bank account of M/s Samaira Enterprises. The AO is required to make similar verification as mentioned above, from the turnover of M/s Samaira Enterprises. Thus Rs.1,99,000 is confirmed as unaccounted cash expenditure with the outcome of verification as stated above. (iii) As far as table 1 & 2 are concerned, there is nothing on record which suggest that the amount of Rs.1,81,000/- and Rs. 50,000/- are reflected in the books of accounts of any group concerns. Hence, addition of Rs.2,31,000/- is confirmed as unaccounted cash expenditure. 7.6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sustained. Thus, the addition made u/s.69C of Rs. 11,20,000/- is deleted. Hence, the ground of appeal no. 5 is allowed 24. Thus, once it has been found that there is no evidence of cash payments against the purchase of nirmali seeds from the said party, then addition made by the ld. AO itself does not have any basis, accordingly, the ld. CIT(A) has rightly deleted the said addition. 25. Similarly, in A.Y.2019-20 & 2020-21 the following grounds have been raised:- 2019-20 "1. Whether on the facts and circumstances of the case and in law, the Ld CIT(A) erred in deleting the addition u/s 694 of the Income Tax Act, 1961 amounting to Rs. 66,00,000/- made by the assessing officer, without considering the facts circumstances of the case and settled position of law and 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition u/s 69C of the Income Tax Act 1961 amounting to Rs. 66,36,647/- made by the assessing officer, without considering the facts and circumstances of the case and settled position of law. 2020-21 1. Whether on the facts and circumstances of the case and in law, the Ld CIT(A) erred in deleting the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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