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TMI Blog2024 (10) TMI 1148X X X X Extracts X X X X X X X X Extracts X X X X ..... firming the search assessment order passed in terms of Section 153A of the Act without assigning proper reasons and justification. 3. The CIT (Appeals) - 20, Chennai failed to appreciate that the search assessment completed by making the disputed addition(s) in the absence of valid incriminating seized material relatable to such addition(s) should be reckoned as nullity in raw and further ought to have appreciated that the judicial trend in this regard was completely over looked and brushed aside in passing the impugned order there by vitiating the related findings. 4. The CIT (Appeals) - 20, Chennai failed to appreciate that the search assessment order under consideration was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law. 5. The CIT (Appeals) - 20, Chennai erred in confirming the addition of Rs.4,93,51,199/- being purchases claimed in books of account maintained by the appellant based on excel sheet found at the time of search without assigning proper reasons and justification. 6. The CIT (Appeals) failed to appreciate that the disputed purchases were genuine and further ought to have appreciated that the confirma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the facts of the present case and further ought to have appreciated that the pre-requisite conditions for attracting the provisions in Section 69 of the Act were not satisfied in the present case there by vitiating the addition made in this regard. 15. The CIT (Appeals) - 20, Chennai failed to appreciate that the excel sheet relied upon by the Assessing Officer should not be construed as 'incriminating seized material' and further ought to have appreciated that the contents of the seized material had no evidentiary value in the absence of any corroborative evidence so as to justify the addition made in this regard. 16. The CIT (Appeals) - 20, Chennai failed to appreciate that there was no independent examination carried out by the Revenue to examine the said parties to test the stand of the Appellant and ought to have appreciated that there was no unaccounted financial transaction which could be deduced from the disputed seized material for making the addition. 17. The CIT (Appeals) - 20, Chennai failed to appreciate that financial transactions entered into by the Appellant during the financial year relevant to the assessment year under consideration were duly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s "Others", hence it is part of the excel sheet containing bogus purchases. 2.3 The Ld.CIT(A) failed to appreciate that the assessee did not provide break up of amount of Rs.2,09,86,608/- mentioned as "Others" and the assessee failed to prove that the said purchases are genuine by providing name and address of supplier and corresponding Invoices with supporting documents. As is evident, the issues that fall for our consideration in assessee's appeal are - (i) Addition of Bogus Purchases for Rs.493.51 Lacs; (ii) Disallowance of sub-contractor's expenses for Rs.16.82 Lacs; (iii) Addition of unexplained investment u/s 69 for Rs.9190 Lacs. The subject matter of revenue's appeal is relief granted by Ld. CIT(A) on account of bogus purchases for Rs.209.82 Lacs. 1.4 The Ld. AR advanced arguments and referred to various documents as placed on record. The Ld. CIT-DR also advanced arguments and supported the orders of lower authorities. This appeal was heard along with other appeals of the assessee for several assessment years. Having heard rival submissions and upon perusal of case records, our adjudication would be as under. 1.5 The assessee being resident firm filed return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) noted that Ld. AO could make one-to-one link in one or two cases between bogus purchases recorded in seized loose sheets in names of few parties and purchase bills raised in their names without supporting documents. Shri Vinoth identified 100% bogus purchases only from four parties viz. M/s Sivasakthi Steels, M/s Vinayaga Iron & Steel Corp., Sri Laxmi Traders and Sri Velmurgan Steels to the extent of Rs.522.52 Lacs. Shri Anandavadivel, in sworn statement, accepted that those bills with either signature of respective site-in-charge or seal of respective sites were genuine invoices and the remaining invoices having no supporting documents were bogus purchases. After examining the factual position vis-à-vis seized material and explanation furnished by the assessee, Ld. CIT(A) reached a conclusion that out of impugned addition, the party-wise break up with respect to purchases for Rs.209.82 Lacs was not provided by Ld. AO to the assessee. The same was simply categorized as 'others'. No reasons have been given by Ld. AO for not disclosing party-wise details of such purchases. Therefore, the addition, to that extent, could not be sustained. With respect to remaining purchases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance of sub-contractor's expenses for Rs.16.82 Lacs 3.1 The assessee was found booking bogus sub-contractors' expenses also. Though the payment was made through banking channels, cash was received subsequently. The quantum of expenditure for this year was quantified at Rs.157 Lacs. The assessee already admitted additional income of Rs.140.18 Lacs in the return of income and still there was balance of Rs.16.82 Lacs which was not offered to tax which represent GST component on these payments. The Ld. AO added the differential of Rs.16.82 Lacs for want for sufficient details as forthcoming from the assessee. Upon further appeal, Ld. CIT(A) confirmed the same. Aggrieved, the assessee is in further appeal before us. 3.2 We find that such expenses have been quantified at Rs.157 Lacs whereas the assessee has admitted partial income to the extent of Rs.140.18 Lacs only. The remaining component is GST component which also could not be allowed to the assessee on the ground that expense itself is bogus. The bogus GST component so paid has been adjusted from output GST liability. In other words, the assessee has avoided GST payment to that extent. Therefore, no interference is required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee had not done any financial transaction but noted the transactions for the limited purpose of management information regarding references made towards loans referred to friends on both sides. The same was clarified by Shri Anandavadivel in his statement dated 30-04-2021 wherein he deposed that the seized excel sheet had entries with respect to loans advanced and the parties under whose reference the loans are advanced. He confirmed that these loans were referred advances and not the real advances of the firm. It was also stated that the assessee did not earn any interest income out of these transactions. However, rejecting assessee' submissions, Ld. AO added the sum of Rs.91.90 Crores as unexplained investment u/s 69. Aggrieved, the assessee assailed the same before first appellate authority. 4.4 The Ld. CIT(A) noted that with respect of seized excel sheets, sworn statements were recorded from Sri Vinoth, GM and Shri Anandavadivel, on 30-10-2020 and 30-04-2021 respectively. They explained the nature of transactions as well as meaning of certain letters as mentioned against such transactions in seized material. Shri Vinoth identified the accounted as well as unaccounted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein. The copy of the same as placed on Page No.265 of Paper-book Volume-II read as under: - S.No Particulars Value IOR Per Mon % 1 G.F 6,00,00,000.00 1.25 7,50,000.00 15 2 PC 7,00,00,000.00 1.00 7,00,000.00 12 3 PPR 10,00,00,000.00 1.00 10,00,000.00 12 4 CRU 5,00,00,000.00 1.25 6,25,000.00 15 5 Amir Tham 3,50,00,000.00 1.70 5,95,000.00 20 6 PV Inf 1,00,00,000.00 1.00 1,00,000.00 12 7 Muthu M 20,00,000.00 1.00 20,000.00 12 8 Foods 20,00,000.00 1.50 30,000.00 18 Total 32,90,00,000.00 38,20,000.00 1 M.Fine 25,00,00,000.00 1.50 37,50,000.00 18 2 B.Inves 6,50,00,000.00 1.50 9,75,000.00 18 3 G.F. 12,00,00,000.00 1.25 15,00,000.00 15 4 PPR 4,50,00,000.00 1.40 6,30,000.00 16 5 ALEV 3,50,00,000.00 1.404 4,90,000.00 16 6 NSS 50,00,000.00 1.25 62,500.00 15 8 FOODS 35,00,000.00 1.00 35,000.00 12 7 Venkat 10,00,00,000.00 1.00 10,00,000.00 12 9 Karthi (ED) 75,00,000.00 1.60 1,20,000.00 19 10 Mani (ED) 50,00,000.00 1.50 75,000.00 18 11 RJM 15,00,000.00 1.50 22,500.00 18 TOTAL 63,75,00,000.00 86,60,000.00 1 NMS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee-firm. Therefore, this statement, if considered on standalone basis, could not be used to make the impugned addition in the hands of the assessee. 7. So far as the statement of Managing Partner is concerned, the same has been recorded during assessment proceedings on 30-04-2021 wherein he stated that the loans were lent out of unaccounted business income by virtue of inflation of expenses. Both the statements of Shri Vinoth and Managing Partner run contrary to each other. It could also be noted that the assessee was subjected to search proceedings and after considering each and every incriminating material as found therein, the assessee already admitted additional income and Ld. AO made further additions in earlier years. Therefore, even otherwise, each and every unaccounted income whatever has been earned by the assessee-firm in earlier years, the same has already been brought to tax and therefore, no further addition could be made in the hands of the assessee at the time of expansion thereof. The same lead to double taxation which is impermissible. All these factors lend credence to the arguments of Ld. AR. 8. During proceedings before lower authorities, the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oose form, not shown to form part of the books of accounts regularly maintained by the assessee or his business entities, do not constitute material evidence. The Hon'ble Court referred to the decision of Hon'ble Supreme Court in the case of CBI vs. V.C. Shukla (3 SCC 410) as well as another decision in Common Cause vs. UOI (supra) while arriving at such a conclusion. The Hon'ble Supreme Court in the case of CBI vs. V.C. Shukla (3 SCC 410) held that every transaction as recorded in the regular books needs to be independently corroborated and proved when some liability is to be fastened in respect of such transactions. The legal principle as laid down by Hon'ble Supreme Court is that independent corroborative evidence is required in respect of entries in regular books of accounts and the same would apply in the present case. Pertinently, Special Leave Petition (SLP) of revenue against this decision has been dismissed by Hon'ble Supreme Court on 20-08-2024 which is reported as 165 Taxmann.com 846. We are of the opinion that aforesaid principle as laid down by Hon'ble Court would apply to the facts of the present case before us and the same strengthens the arguments of Ld. AR. Similar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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