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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM & MS. KAVITHA RAJAGOPAL, JM
O R D E R Per Kavitha Rajagopal, J M:
This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals)-48, Mumbai (‘ld.CIT(A) for short), passed u/s.144 r.w.s. 153A of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2007-08.
The assessee has raised an additional ground that there was no incriminating material found during the search and the impugned order being an unabated assessment year, the Assessing Officer (A.O. for short) ought not to have passed the assessment order u/s. 153A of the Act in the absence of any incriminating material. In view of the decision of the Hon'ble Apex Court in the case of National Thermal Power Co. Ltd. v.
(A.Y. 2007-08) M/s. Miki Industries & Companies Pvt. Ltd. vs. DCIT CIT [1998] 229 ITR 383 (SC), we hereby admit the additional ground raised by the assessee. Since the additional ground goes to the very root of this appeal, we proceed to hear this ground of appeal raised by the assessee.
The brief facts of the case are that the assessee filed its return of income dated 15.02.2011, declaring total income of Rs.69,59,576/- pursuant to the search and seizure action u/s. 132 of the Act carried out at the business premises of Reliable Paper (India)
Pvt. Ltd. and its group concerns. The assessee company was simultaneously covered u/s. 132 of the Act based on the incriminating documents found in the Reliable Paper (India)
Pvt. Ltd. groups. The A.O. issued notice u/s. 153A of the Act dated 31.01.2011, in response to which the assessee filed its return of income and the assessment order u/s. 144 r.w.s. 153A of the Act was passed dated 25.03.2014 where the A.O. determined the total income at Rs.26,56,06,170/- by making various additions.
The assessee was in appeal before the ld. CIT(A), challenging the impugned addition who had partly allowed the appeal filed by the assessee. The assessee is in appeal before us challenging the assessment order passed u/s. 144 of the Act and also the disallowance restricted to Rs.1,11,50,050/- being 15% of the total bogus purchase of Rs.7,43,33,679/-. It is observed that the Tribunal vide order dated 09.11.2017 has decided to restrict the addition on bogus purchases @ 12.5% as against 15% confirmed by the ld. CIT(A). Subsequent to this, the assessee had filed a Miscellaneous Application to recall the said order on the ground that the Tribunal has not decided the issue on the basis that there was no incriminating material found during the course of search and since the A.Ys.
2004-05 to 2008-09 unabated assessments, the impugned addition made was not (A.Y. 2007-08) M/s. Miki Industries & Companies Pvt. Ltd. vs. DCIT warranted. The Tribunal vide order dated 20.04.2022 held that the Revenue has not proved that there was incriminating seized material in the assessee’s case and, hence, in the absence of the same, no addition could have been made u/s. 153A of the Act. The Tribunal allowed this ground of appeal raised by the assessee.
It is further observed that though all the appeals related to A.Ys. 2004-05 to 2010- 11 were heard and disposed together, there was an inadvertent error where the A.Y. 2007-08 pertaining to was not heard and the same was not listed. It is also observed that while listing all the appeals of the assessee and the Revenue, pertaining to A.Y. 2004-05 to 2010-11, was inadvertently missed out in the cause list on 07.03.2022. Hence, this present appeal was heard before us.
The learned Authorised Representative (ld. AR for short) for the assessee contended that the Tribunal vide order dated 20.04.2022 has held that the addition on the earlier years and subsequent year are to be deleted on the ground that there was no incriminating material found during the search of the assessee. The ld. AR further stated that since this year also relates to unabated assessment, the addition cannot be made on this same ground. The ld. AR relied on the order of the ITAT in 2417 & 2419/Mum/2015 vide order dated 20.04.2022.
The learned Departmental Representative (ld. DR for short) for the Revenue had nothing to controvert the said fact and relied on the order of the lower authorities.
(A.Y. 2007-08) M/s. Miki Industries & Companies Pvt. Ltd. vs. DCIT 8. We have heard the rival submissions and perused the materials available on record. It is evident that the addition in case of the assessee was made on bogus purchases alleged to be made from M/s. Bright Global Paper Pvt. Ltd. alleged to be accommodation entry provider. It is also evident that the impugned assessment year is an unabated assessment year and Tribunal for previous years, i.e., A.Ys. 2005-06, 2006-07 and subsequent year 2008-09 has held that there was no incriminating seized material found during search proceeding and, hence, deleted similar addition made on the basis of the bogus purchases for these years. There is no iota of doubt that this impugned year is also covered by the same search and the Revenue has failed to contradict the fact that there was no incriminating seized material. The relevant extract of the decision of Tribunal for other years are cited hereunder for ease of reference:
5. Heard both the sides and perused the material on record. The ITAT vide its order dated 18.05.2018 has allowed the M.A. of the assessee by recalling its order for adjudicating the ground no. 3(a) to 3(c) afresh on merit as referred in the order of the ITAT dated 18.05.2018. During the course of assessment the Assessing Officer treated the purchases made by the assessee from M/s Bright Global Paper Pvt. Ltd. as bogus purchases on account of various reasons as mentioned in the assessment order based on finding of search conducted by Sales Tax & Income Tax Department. Before the ld. CIT(A) the assessee submitted detail of purchases made from BGPPL and bank statement showing payments made by account payee cheques. The assessee submitted before ld. CIT(A) that A.O has merely doubted the transaction on the basis of some seized material which were not related to it. The ld. CIT(A) has called the remand report from the Assessing Officer relating to assessee’s transaction with BGPPL. It is stated that the A.O has issued notices u/s 133(6) to parties to whom sales were made and majority of the replies were received and examined. All these parties confirmed the sales made by the assessee, however, no transport document/stock register were provided by these parties. The ld. CIT(A) further stated in his finding in para 5.3 that though A.O has not stated in the remand report, the reference was apparently to non production of delivery challan in respect of purchases from BGPPL. The ld. CIT(A) also stated that the assessee had submitted the details of corresponding sales against purchases from BGPPL to the A.O and there cannot be sales without corresponding purchases. If the purchases were considered to be bogus, the sales must also be bogus and the ld. CIT(A) held that the assessee might have made purchases from grey market, therefore, he has restricted the disallowance to the extent of 15% of the impugned purchases. This appeal was recalled by the ITAT on the limited issue of addition made by the A.O without any incriminating document. The ld. CIT(A) has restricted the addition to 15% of such purchases and the (A.Y. 2007-08) M/s. Miki Industries & Companies Pvt. Ltd. vs. DCIT ITAT vide order dated 09.11.2017 sustained the addition to the extent of 12.5% of such purchases. During the course of assessment the A.O has relied on pages 72 to 88 of annexure 9. In this regard the assessee has also enclosed the copies of annexure 9 in its submission demonstrating that these copies were pertained to the regular ledger account of M/s Bright Global Paper Pvt. Ltd. in the books of account of the assessee and there was no any incriminating material referred by the A.O and these ledger account were as per the regular books of account of the assessee company and this was not an incriminating material. It is further submitted that assessment in the case of the assessee was already completed and same was not abated assessment. In this regard the ld. Counsel has also placed on the following decisions: (i) Continental Warehousing Corporation (NHAVA SHEVA) Ltd. 374 ITR 645 (Bom) (ii) Murli Agro Products Ltd. 49 taxman.com 172 (Bom) (iii) All Cargo Global Logistics 23 taxman.com 03 (ITAT, Mum) (SB) After considering the relevant material on record we consider that it is an undisputed fact that in the case of the assessee assessment u/s 143(3) was already made and case of the assessee was unabated for the purpose of making assessment u/s 154A of the Act. In this regard, no addition can be made in respect of unabated assessment which have become final if no incriminating material is found during search. The revenue could not prove contrary that there was incriminating seized material in the case of the assessee and could not disprove the contention of the assessee that material referred in the assessment order was the copy of ledger account of the assessee which was regularly accounted in the books of account of the assessee. Therefore, in the light of the above facts and circumstances we consider that when assessment in the case of the assessee already had been completed prior to date of search in such circumstances in the absence of any incriminating material the addition made by the A.O is not justified, therefore, this ground of appeal of the assessee is allowed.
9. From the above observation, we are of the considered view that even in this year in the absence of any incriminating material and by placing reliance on the decision of the Hon'ble Jurisdictional High Court in the case of Continental Warehousing Corporation (NHAVA SHEVA) Ltd. 374 ITR 645 (Bom), Murli Agro Products Ltd. 49 taxman.com 172 (Bom) and All Cargo Global Logistics 23 taxman.com 03 (ITAT, Mum)
(SB), we delete the impugned addition made by the A.O. and confirmed by the ld. CIT(A) and also restricted to 12.5% on bogus purchases by the Tribunal order. Hence, we allow the additional ground of appeal raised by the assessee. As the additional ground is allowed, the other grounds of appeal raised by the assessee become academic in nature.
(A.Y. 2007-08) M/s. Miki Industries & Companies Pvt. Ltd. vs. DCIT 10. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 04.07.2023 Sd/- Sd/- (Prashant Maharishi) (Kavitha Rajagopal) Accountant Member Judicial Member Mumbai; Dated : 04.07.2023 Roshani, Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT - concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER,