TMI Blog2024 (4) TMI 797X X X X Extracts X X X X X X X X Extracts X X X X ..... - incriminating material found as a result of search or not? - HELD THAT:- Assessee has challenged the assumption of jurisdiction u/s 153A of the Act on the ground that it is not based on any incriminating material found as a result of search on the assessee. We fail to find any merit in the grounds of appeal raised in the cross-objection since there was a material, incriminating in nature in the form of digital evidence under ID marked MB/HD/01, which gave jurisdiction to the AO to carry out the assessment proceedings. Thus, all the grounds raised in the cross-objections are dismissed. Unexplained expenditure u/s. 69C - assesses has failed to explain the transactions mentioned in the incriminating material (MB/HD/01) seized from the assessee's premises during the course of search - HELD THAT:- As per the audited books of accounts for FY 2017-18, the closing balance of M/s. Sati Oil Udyog Limited as on 31/03/2018 cannot be doubted. These audited financial statements were part of the income tax return filed by the assessee much prior to the date of search. Therefore, genuineness of the closing balance of M/s. Sati Oil Udyog Limited is established. The remaining amount, two fold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was just a matter of reconciliation of statements between M/s. Krishna Udyog and ld. CIT(A) for which the ld. CIT(A) had already directed the Assessing Officer to carry out the necessary verification. Thus, no interference is called for in the finding of the ld. CIT(A). Accordingly, Ground No. 2 raised by the revenue is dismissed. Addition under the head undisclosed profit - AO on examining the seized data MB/HD/04 which consists of tally data of the group and on analyzing the tally accounts for FY 2019-20 came to the conclusion that assessee has suppressed two digits while making the accounting - HELD THAT:- On going through the above finding and also observing that the assessee had offered income more than the income as per the seized tally data, there was no room available to estimate higher profit without placing any evidence of suppressed sales or inflated expenditure. We thus, fail to find any infirmity the finding of the ld. CIT(A) and accordingly dismiss Ground No. 3. Estimation of income - Bogus purchases - CIT(A) on considering the fact that sales of the assessee are not in dispute, work contracts have been executed and even if the purchases are bogus billings, there is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving turnover, purchases are required to be made, we confirm the view taken by the ld. CIT(A) sustaining the disallowance @ 5% of the total bogus purchases. - Shri Sanjay Garg, Hon ble Judicial Member And Dr. Manish Borad, Hon ble Accountant Member For the Assessee : Shri Vivek Malhotra, FCA For the Revenue : Shri Arun Bhowmick, JCIT Shri Soumendu Sekhar Das, Sr. D/R ORDER PER BENCH: The present appeals are filed at the instance of the revenue against the separate orders of the Learned Commissioner of Income Tax (Appeals) Central, North-East Region, Guwahati, passed u/s 250 of the Income Tax Act, 1961 (in short the Act ) evenly dt. 15/09/2022, for Assessment Years 2017-18, 2018-19, 2020-21 2021-22. The assessee has filed cross-objections for Assessment Years 2017-18, 2018-19 2020-21. 2. As the issues raised in all these appeals are identical, they were heard together and are being disposed off by way of this common order. 3. Facts in brief are that, a search and seizure operation was carried out in the case of assessee which is a limited company on 29/01/2021 and was part of the search carried out at Brahmaputra Group . Notice u/s. 153A of the Act were issued to carry out the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer failed to conduct any enquiry with the corresponding land revenue authority about the aforesaid land transactions, deleted the impugned addition observing as follows:- Thus, in the peculiar facts of the case, firstly, during the course of assessment proceedings, the Assessing Officer did not conduct any independent third- party enquiry, further the AO tad not brought on record any material which would even remotely prove that the Appellant did ever enter into any transaction with Sin M L KayaL Presuming and as admitted by the AO that the Appellant did receive cash from Sh. M L Kayal, there is m finding or observation of the AO that the aforesaid alleged cash received by the Appellant from Sh. M L Kayal was utilized, spend or exhausted by the Appellant In the absence of any such finding or observation that the aforesaid alleged cash received by the Appellant from Sh. M L Kayal was utilized, spend or exhausted by the Appellant, it would be only logical to hold that the alleged cash (even if presumed to be received) was available with the Appellant for being repaid to Sh. M L Kayal at the time-of cancellation of my purported land deal. Further, it is unfathomable and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sult of search on the appellant, as have been also held by the judgments of Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla reported in 580 ITR 573 and Pr. CIT vs. Meeta Gutgutia reported in 395 ITR 526. 3. That since approval obtained u/s 153D of the Act was mechanical, illegal and invalid approval, order of assessment made u/s 153A/143(3) is invalid and without jurisdiction. Prayer: It is therefore, prayed that it be held that notice issued u/s 153 A of the Act and also assessment framed u/s 153A of the Act are without jurisdiction. 10. Perusal of the above grounds shows that the assessee has challenged the assumption of jurisdiction u/s 153A of the Act on the ground that it is not based on any incriminating material found as a result of search on the assessee. We fail to find any merit in the grounds of appeal raised in the cross-objection since there was a material, incriminating in nature in the form of digital evidence under ID marked MB/HD/01, which gave jurisdiction to the Assessing Officer to carry out the assessment proceedings. Thus, all the grounds raised in the cross-objections are dismissed. In the result, appeal by the revenue and cross-objection fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings, the ld. Assessing Officer asked the assessee to explain the transactions. The submissions were made stating that these transactions are duly recorded in the books of accounts and one of the transactions for Rs. 62,00,000/- which was actually entered in the subsequent years has wrongly been posted in the year under consideration. It was also submitted that the assessee has made a disclosure at Rs. 2,46,27,154/- as an additional income for the instant Assessment Year. However, the ld. Assessing Officer was not satisfied and made addition at Rs. 4,71,13,264/- being the entry, not explained by the assessee. In the proceedings before the ld. First Appellate Authority, assessee filed the details and satisfied the ld. CIT(A) and impugned addition was deleted. 13. The ld. D/R, vehemently argued supporting the order of the ld. Assessing Officer whereas the ld. Counsel for the assessee referred to the written submissions and, also relied on the finding of the ld. CIT(A) appearing at page 58 to 88 of the impugned order. 14. We have heard the rival contentions and perused the material placed before us. Revenue is aggrieved with the deletion of addition of unexplained expenditure u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee has requested for giving the set off of Rs. 49,70,000/- against the additional income offered in the income tax return. We fail to find any inconsistency in the finding of the ld. CIT(A) in holding that since the additional income offered was not specific and it was open for the assessee to claim telescoping benefit for unexplained expenditure and, therefore, the ld. CIT(A) has rightly given the set off of Rs. 49,70,000/- against the additional income disclosed in the additional income. Accordingly, Ground No. 2 raised by the revenue is dismissed. 16. Ground No. 3 is general in nature. 17. Now, we take up C.O. No. 28/GTY/2023. We find that grounds raised in this cross-objection are verbatim identical for Assessment Year 2017-18. Therefore, consistent with the view taken by us therein, that there is a material, incriminating in nature in the form of digital evidence under ID marked MB/HD/01, which gave jurisdiction to the Assessing Officer to carry out the assessment proceedings. Thus, all the grounds raised in the cross-objections are dismissed. In the result, appeal of the revenue and cross-objection for Assessment Year 2018-19 are dismissed. 18. Now, we take up the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so took us through the relevant finding of the ld. CIT(A) decided in favour of the assessee. 20. We have heard rival contentions and perused the material placed before us. Ground No. 1 is raised against the deletion of addition of Rs. 25,00,000/- made by the Assessing Officer for unexplained expenditure u/s 69C of the Act. We observe that in the seized material MB-02, at page 5, there were certain entries found in the form of summary of payments. One of the entries was Rs. 25,00,000/- mentioned against the Spanish Garden. We notice that the promoters, namely, Shri P.D. Deorah and Smt. Anju Deorah have acquired a flat in Spanish Garden Residential Complex. The payments appearing in page 5 of MB-02 were made through proper banking channels and it appeared to the Assessing Officer that amount of Rs. 25,00,000/- has been adjusted by the Assessing Officer against the amount payable by Deorahs for the flat purchased by them. Since these documents did not bear any date/s, it was presumed to be unexplained expenditure during the financial year 2020-21. We observe that no specific date is appearing in the incriminating material for the alleged transactions. There is no reference of any date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the disclosure of Rs. 15,00,27,097 made by the assessee was to cover up the undisclosed profit detected from the tally data found in MB/HD/04. In view of this, it was pointed out to the A/R that the disclosure was made as tabulated below: Assessment Year Turnover Estimated Business Income 2015-16 2,762,214,918.00 27,622,149.00 2016-17 2,228,931,207.00 22,289,312.00 2017-18 2,128,693,584.00 21,286,935.00 2018-19 2,462,715,464.00 24,627,154.00 2019-20 2,374,300,600.00 23,743,006.00 2020-21 1,485,853,903.00 14,858,539.00 2021-22 1,450,000,000.00(estimated business turnover) 14,500,000.00 2021-22 Sale of Scrap 11,00,000.00 TOTAL 15,00,27,097.00 Thus, the explanation of the A/R that the disclosure of Rs. 15,00,27,097 made by the assessee was to cover up the undisclosed profit detected from the tally data found in MB/HD/04 is acceptable only to the extent that the disclosure has been made in the financial year 2019-20 (i.e., AY 2020-21) or before. It is seen from the table above that disclosure amounting to Rs. 1,56,00,000/- (sum of Rs. 1,45,00,000 and Rs. 11,00,000) has been made in FY 2020-21 corresponding to AY 2021-22. Thus, the disclosure of Rs. 1,56,00,000/- made in the AY 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt or any other similar account out of opening balance of profit. Further for a ready reference an image of the relevant heading of the aforesaid Balance Sheet (as per the seized data whose image has been referred per supra) pertaining to Profit Loss A/c is also reproduced hereunder; 2. That, the Assessing officer had given any finding that as to why and how the profit of Rs. 15,78,63,456/- appearing in the balance sheet extracted from the seized tally data Is attributable only to the Impugned assessment year other assessment years covered under Section 153A of the Act (i.e. AY 2015-16 to AY 2019-20). The Impugned order is bereft of any observation or findings that the aforesaid Balance Sheet (as per the seized data whose image has been referred per supra) pertained ONLY to AY 2Q1S-16 to AY2020-21. 3. That, there is nothing on record which can negate that the profit appearing in the aforesaid Balance Sheet (as per the seized data whose image has been referred per supra) did not pertained to any assessment year(s) prior to the AY 2015-16. 4. That, it is a settled law that income can be taxed in the year in which it has been earned by an assesses not in the year in which the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a), the AO had himself averred that the Appellant had recorded the transactions entered into bv the Appellant through the regular bank accounts of the Appellant as well. Thus, it is evident that the aforesaid Balance Sheet (as per the seized data whose image has been referred per supra) of the Appellant did not pertain solely to the cash incoming or cash outgoings but it is palpable that even the regular banking transactions of the Appellant are duly recorded In the aforesaid balance sheet. Thus, it would be reasonable to presume that the profit appearing in the aforesaid Balance Sheet (as per the seized data whose image has been referred per supra) includes profit / income earned by the Appellant In respect of its regular banking transactions which are also recorded in the impugned tally data. Therefore, it is dear that the profit appearing in the impugned profit and loss account of the aforesaid Balance Sheet (as per the seized data whose image has been referred per supra) includes profit of the Appellant from regular banking transactions as well as from outside books transactions OR in other words the profit as appearing the aforesaid balance sheet (As per seized tally data) is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit percentage of the preceding years and the subsequent years, sustained the disallowance only to the extent of 5% of the alleged bogus purchases. We observe that the assessee is consistently engaged in the business of work contracts for past many years and the chart of total turnover, expenditure, net profit and NPP of preceding and subsequent Assessment Years is reproduced below:- Sr. No. Particulars AY 2018-19 AY 2019-20 AY 2020-21 AY 2021-22 1 Total Income 2,48,30,49,330 2,44,07,1,952 1,64,97,66,143 1,62,88,84,875 2 Total Expenditure 2,52,24,24,173 2,53,31,53,227 1,68,64,35,066 1,57,90,31,947 3 Profit before tax (-)3,93,74,843 (-)9,24,41,275 (-)3,66,68,923 4,98,52,928 4 Exceptional items (exp.) (-)5,42,75,771 (-)9,33,46,056 t-)4,36,89,176 (-)4,11,84,733 5 Net profit 1,49,00,928 9,04,781 70,20,253 86,68,195 6 Net profit ratio 0.60% 0.04% 0.43% 0.53% 26.1. On provision of the above chart we notice that the NPR (Net Profit Rate) of 0.430% declared for Assessment Year 2020-21, is higher than the preceding year. The turnover of this company is mainly on account of work contracts of turnkey projects. There is no evidence on record to prove that the assessee has shown bogus sales bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts of the case and in law, the Ld. CIT(A) has erred by deleting the addition to the tune of Rs. 5,24,61,589/- @95% of total bogus purchase billing of Rs. 5,52,22,725/- under the head of bogus purchase by not taking considering the fact that the total sale turnover of the assessee is about Rs. 163 crores and the bogus purchase of Rs. 5,52,22,725/-were taken to reduce the income but not to increase the sales. Ld. CIT(A) has also not denied the findings of the AO regarding bogus purchase. 4. The appellant craves the leave to add/modify/ alter any or all the grounds during the course of hearing/ pendency of appeal. 30. We have heard rival contentions and perused the material placed before us. The first ground is against the deletion of addition of Rs. 7,96,000/- out of the total amount of Rs. 8,00,000/- under the head unexplained money. We notice that the ld. Assessing Officer based on the seized document MB-06 having reference Commission Jorhat to Guwahati , inferred that there is a cash transfer of Rs. 8,00,000/- against fixed commission of Rs. 500/- per lakh. However, this finding of the Assessing Officer was not having any basis. As per the assessee, this can be entry of dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndisclosed income was utt esf by the Appellant Thus, there is nothing on record which would even remotely suggest either the computation or determination of the aforesaid additional undisclosed income or the manner of application/utilization of the aforesaid additional undisclosed income. In the absence of any enquiry by the AO as to the mode and manner of earning and computation of aforesaid additional undisclosed income as well as in the absence of any further material pointing to the application/utilization of the aforesaid additional undisclosed income, the alternative contention of the Appellant that the impugned amount on account of alleged transaction with M/s Krishna Udyog and M/s Tirupati Steel be engulfed/ subsumed m additional undisclosed income admitted by the Appellant in respect of the impugned assessment year appears to be reasonable. Thus, it is held that the aforesaid additional undisclosed income offered to tax by the Appellant in respect of the impugned assessment year also included the amount received by the Appellant m the form of cash from M/s Krishna Udyog and M/s Tirupati SteeL In view of the above discussion, even though the impugned transaction between the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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