ASSTT. COMMISSIONER OF INCOME TAX CENTRAL-CIRCLE-2(1) , MUMBAI vs. M/S GM MODULAR PVT LTD, MUMBAI

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 2 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

PER BENCH

The captioned appeals by the Rev The captioned appeals by the Revenue are directed against enue are directed against respective orders passed by the Ld. Commissioner of Income-tax respective orders passed by the Ld. Commissioner of Income respective orders passed by the Ld. Commissioner of Income (Appeals)-48, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 48, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 48, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2014-15 to 2019-2020 in the case of assessee namely 2020 in the case of assessee namely ‘GM Modular 2020 in the case of assessee namely Pvt. Ltd’. and assessment year 201 . and assessment year 2014-15 in the case of the assessee 15 in the case of the assessee namely ‘G Trade and Capital Venture Pvt. Ltd G Trade and Capital Venture Pvt. Ltd’. In all these appeals . In all these appeals identical identical issues issues permeating permeating from same same set set of of facts facts and and circumstances are involved and therefore, these appeals were heard circumstances are involved and therefore, these appeals were heard circumstances are involved and therefore, these appeals were heard together and disposed off by way together and disposed off by way of this consolidated order for of this consolidated order for convenience and avoid repetition of facts. First of all convenience and avoid repetition of facts. First of all, , we take up the appeals of the assessee GM Modular Pvt. Ltd. for assessment year appeals of the assessee GM Modular Pvt. Ltd. for assessment year appeals of the assessee GM Modular Pvt. Ltd. for assessment year 2014-15 to 2019-2020. 2020.

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 3 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

unaccounted turnover ;(ii) ;(ii) Addition on account of accommodation entry of Addition on account of accommodation entry of unsecured loan u/s 68 of IT. Act unsecured loan u/s 68 of IT. Act ;(iii) Addition on account of unexplained Addition on account of unexplained expenditure u/S. 69C of the I.T expenditure u/S. 69C of the I.T. Act- ;(iv) Interest on accommodation entry of ) Interest on accommodation entry of unsecured loan ;(v) Commission for arranging accommodation entry of unsecured ) Commission for arranging accommodation entry of unsecured ) Commission for arranging accommodation entry of unsecured loan ; (vi) Addition on account of disallowance of unverified labour services Addition on account of disallowance of unverified labour services Addition on account of disallowance of unverified labour services ;(vii) Addition on account of personal expenditure o Addition on account of personal expenditure of etc.

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 4 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

in the case, assessment years before us, from AY 20 assessment years before us, from AY 20 assessment years before us, from AY 2014-15 to 2018- 19 are unabated assessments. 19 are unabated assessments.

3.1 The second set of appeals are in The second set of appeals are in respect of respect of which the assessment was not completed as on the date of search, and thus assessment was not completed as on the date of search, and thus assessment was not completed as on the date of search, and thus same got abated. In the case of the assessee search was conducted . In the case of the assessee search was conducted . In the case of the assessee search was conducted on 13/11/2019, so relevan relevant assessment year 2020 t assessment year 2020-21, is the year of the search and regular return of income was due for filing of the search and regular return of income was due for filing of the search and regular return of income was due for filing subsequent to the date of the search, therefore, the assessment subsequent to the date of the search, therefore, the assessment subsequent to the date of the search, therefore, the assessment year 2020-21 is in category of the abated assessment. 21 is in category of the abated assessment. 21 is in category of the abated assessment. Similarly, regular return of income f regular return of income for assessment year 2019 or assessment year 2019-20 i.e. for the previous year from 01.04.2018 to 31.03.2019 was due on previous year from 01.04.2018 to 31.03.2019 was due on previous year from 01.04.2018 to 31.03.2019 was due on 30.11.2019 and notice u/s 143(2) of the Act could have been issued 30.11.2019 and notice u/s 143(2) of the Act could have been issued 30.11.2019 and notice u/s 143(2) of the Act could have been issued for assessment year 2019 for assessment year 2019-2020 up to 30.09.2020 and therefore, the 2020 up to 30.09.2020 and therefore, the assessment year 2019 assessment year 2019-2020 also falls in the category of the abated so falls in the category of the abated assessment.The Ld CIT(A) The Ld CIT(A), however in para 3.1 of his order for AY 3.1 of his order for AY 2019-20 has wrongly wrongly mentioned that assessment under section mentioned that assessment under section 143(3) was completed for assessment year 2019 143(3) was completed for assessment year 2019-20. The fact of non 20. The fact of non- issue of notice under sec issue of notice under section 143(2) of the Act for the AY 2019 for the AY 2019-20 has been verified from the information available on the database of has been verified from the information available on the database of has been verified from the information available on the database of the Income tax department ncome tax department, which wassubmitted submitted by the learned departmental representative departmental representative (DR).

3.2 In first set of appeals i.e In first set of appeals i.e. for AY 2014-15 to AY 201 AY 2018-19, the assessee filed appeals before the ld CIT(A) against the assessment assessee filed appeals before the ld CIT(A) against the assessment assessee filed appeals before the ld CIT(A) against the assessment order passed u/s 153A of the Act order passed u/s 153A of the Act and challenged and challenged validity of

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 5 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

reassessment u/s 153A of the Act on the ground that no reassessment u/s 153A of the Act on the ground that no reassessment u/s 153A of the Act on the ground that no incriminating material was found during the course of search. The incriminating material was found during the course of sea incriminating material was found during the course of sea Ld. CIT(A) accordingly deleted the additions made by the Assessing Ld. CIT(A) accordingly deleted the additions made by the Assessing Ld. CIT(A) accordingly deleted the additions made by the Assessing Officer except for the assessment year 2015 Officer except for the assessment year 2015-16 wherein, the 16 wherein, the assessee also declared/offered undisclosed income in respect of assessee also declared/offered undisclosed income in respect of assessee also declared/offered undisclosed income in respect of transactions as reflected in Annexure A transactions as reflected in Annexure A-2 to A-4 found f 4 found from the residence of one of the residence of one of the directors, which were not recorded in regular , which were not recorded in regular books of accounts.

4.1 Before us, the assessee has also challenged the validity of the Before us, the assessee has also challenged the validity of the Before us, the assessee has also challenged the validity of the reassessment passed u/s 153A reassessment passed u/s 153A of the Act, utilizing material found utilizing material found during the course of the search at third party i.e. Director of the during the course of the search at third party i.e. during the course of the search at third party i.e. assessee company, by company, by way of an application under Rule 27 of the application under Rule 27 of the ITAT Rules, 1963(in short the ‘Rules’) for AY 2014- -15 to AY 2019- 20.As the application cations filed under Rule 27, challenges the jurisdiction of the Assessing officer, admissibility jurisdiction of the Assessing officer, admissibility of same is taken of same is taken up first for adjudication. first for adjudication.

Application under Rule 27 of the ITAT Rules Application under Rule 27 of the ITAT Rules

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 6 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

case, the addition for suppression case, the addition for suppression of sales i.e. undisclosed i.e. undisclosed business income applying gross profit rate on unaccounted business income applying gross profit rate on unaccounted business income applying gross profit rate on unaccounted turnover,has been made on the basis of certain diaries (Annexure has been made on the basis of certain diaries (Annexure has been made on the basis of certain diaries (Annexure A-2, A-3 and A-4), which were found and seized from the premises which were found and seized from the premises which were found and seized from the premises of ‘Shri Kumarpal Banda Shri Kumarpal Banda’ and not from the prem and not from the premises of the assessee-company, therefore, addition based on those diaries therefore, addition based on those diaries, could therefore, addition based on those diaries be made in the hands of the assessee be made in the hands of the assessee only by way only by way of invoking the provisions of u/s 153C of the Act and not u/s 153A of the Act. He /s 153C of the Act and not u/s 153A of the Act. He /s 153C of the Act and not u/s 153A of the Act. He placed reliance on the decision of the Delhi placed reliance on the decision of the Delhi Tribunal in the case of Tribunal in the case of Mr. Trilok Chand Chaudhary v. ACIT [ITA No. 5870/Del/2017]. Mr. Trilok Chand Chaudhary v. ACIT [ITA No. 5870/Del/2017 Mr. Trilok Chand Chaudhary v. ACIT [ITA No. 5870/Del/2017 The specific grounds The specific grounds raised under Rule 27 of the application are raised under Rule 27 of the application are reproduced as under for ready reference:

i. The assessee submits that a search was conducted The assessee submits that a search was conducted The assessee submits that a search was conducted on Mr. Kumarpal B on Mr. Kumarpal Banda on 13.11.2019. During the anda on 13.11.2019. During the course of search, certain diaries (Annexure A-2, A-3 course of search, certain diaries (Annexure A course of search, certain diaries (Annexure A and A and A-4) was found and seized which pertain to AY 4) was found and seized which pertain to AY 2015-16. The copy of the panchanama is enclosed as 16. The copy of the panchanama is enclosed as 16. The copy of the panchanama is enclosed as Annexure Annexure-1 ii. Thereafter, based on the document found from Mr. Thereafter, based on the document found from Mr. Thereafter, based on the document found from Mr. Kumarpal Ba Kumarpal Banda pertaining to AY 2015-16, the Ld. 16, the Ld. AO has made an addition of Rs. 41,83,30,486/- by AO has made an addition of Rs. 41,83,30,486/ AO has made an addition of Rs. 41,83,30,486/ applying GP rate on alleged unaccounted sale. The applying GP rate on alleged unaccounted sale. The applying GP rate on alleged unaccounted sale. The Ld. AO has passed the order dated 12.08.2021 u/s Ld. AO has passed the order dated 12.08.2021 u/s Ld. AO has passed the order dated 12.08.2021 u/s 153A of the Act. 153A of the Act. iii. The assessee submits that the aforesaid addition is The assessee submits that the aforesaid addition is The assessee submits that the aforesaid addition is made based on the material found during the course ade based on the material found during the course ade based on the material found during the course of search in the case of third party i.e. Mr. Kumarpal of search in the case of third party i.e. Mr. Kumarpal of search in the case of third party i.e. Mr. Kumarpal Banda. Therefore, the addition, if any, should be Banda. Therefore, the addition, if any, should be Banda. Therefore, the addition, if any, should be made by invoking the procedure u/s 153C of the Act made by invoking the procedure u/s 153C of the Act made by invoking the procedure u/s 153C of the Act and not u/s 153A of the Act. Thus, the addition made and not u/s 153A of the Act. Thus, the addition ma and not u/s 153A of the Act. Thus, the addition ma by the Ld. AO in the order u/s 153A of the Act is bad- by the Ld. AO in the order u/s 153A of the Act is bad by the Ld. AO in the order u/s 153A of the Act is bad in-law and liable to be deleted. Reliance can be law and liable to be deleted. Reliance can be law and liable to be deleted. Reliance can be placed on the decision of the Hon'ble Delhi Tribunal in placed on the decision of the Hon'ble Delhi Tribunal in placed on the decision of the Hon'ble Delhi Tribunal in

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the case of Mr. Trilok Chand Chaudhary Versus ACIT the case of Mr. Trilok Chand Chaudhary Versus ACIT the case of Mr. Trilok Chand Chaudhary Versus ACIT [ITA No.5870/Del/2017]. [ITA No.5870/Del/2017]. 5.1 The Ld. Counsel The Ld. Counsel submitted that aforesaid ground being a submitted that aforesaid ground being a jurisdictional ground and goes to the ro jurisdictional ground and goes to the root of the matter t of the matter, same can be raised at any point of be raised at any point of time, including in application under rule including in application under rule 27 of the ITAT Rules 27 of the ITAT Rules and in support of above proposition and in support of above proposition, he relied on the decision of the Hon’ble Jurisdictional Bombay High Court in ion of the Hon’ble Jurisdictional Bombay High Court in ion of the Hon’ble Jurisdictional Bombay High Court in the case of Mr. Peter Vaz and Mr. Edgar Braz Afonso v. ACIT Mr. Peter Vaz and Mr. Edgar Braz Afonso v. ACIT Mr. Peter Vaz and Mr. Edgar Braz Afonso v. ACIT (2021 (4) TMI 605).

5.2 We have heard rival submission of the parties on the issue of We have heard rival submission of the parties on the issue of We have heard rival submission of the parties on the issue of admissibility of application under Rule 27 of the ITAT Rules. We admissibility of application under Rule 27 of the ITAT admissibility of application under Rule 27 of the ITAT may note that against the order of the Ld. First Appellate Authority, may note that against the order of the Ld. First Appellate may note that against the order of the Ld. First Appellate only Revenue has preferred these appeals and assessee has not only Revenue has preferred these appeals and assessee has not only Revenue has preferred these appeals and assessee has not preferred any appeals or cross preferred any appeals or cross-objections. The assessee has filed objections. The assessee has filed only application under Rule 27 of the ITAT Rules only application under Rule 27 of the ITAT Rules. Regarding the . Regarding the admissibility of the application of the admissibility of the application of the assessee, it assessee, it is relevant to reproduce said Rule as under: as under:

“The respondent, though he may not have appealed, may The respondent, though he may not have appealed, may The respondent, though he may not have appealed, may support the order appealed against on any of the grounds against on any of the grounds support the order appealed decided against him decided against him.” (emphasis supplied externally) (emphasis supplied externally) 5.3 Before us, the Ld. Departmental Representative (DR) referred Before us, the Ld. Departmental Representative (DR) referred Before us, the Ld. Departmental Representative (DR) referred to Rule 27 and submitted that said rule can be invoked by the Rule 27 and submitted that said rule can be invoked by the Rule 27 and submitted that said rule can be invoked by the respondent assessee in respect of any of the grounds decided respondent assessee in respect of any of the grounds decide respondent assessee in respect of any of the grounds decide against the assessee and not on the issues which are not decided by against the assessee and not on the issues which are not decided by against the assessee and not on the issues which are not decided by

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 8 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

the CIT(A). For raising the issues which are not decided, the option the CIT(A). For raising the issues which are not decided, the option the CIT(A). For raising the issues which are not decided, the option before the respondent assessee was to file either appeal or cross before the respondent assessee was to file either appeal or cross before the respondent assessee was to file either appeal or cross objection, which in the case has not been filed, therefore, the objection, which in the case has not been filed, th objection, which in the case has not been filed, th assessee is not authorised in law for raising the issue of jurisdiction assessee is not authorised in law for raising the issue of jurisdiction assessee is not authorised in law for raising the issue of jurisdiction of the AO under Rule 27 of ITAT Rules. He referred to the decision of the AO under Rule 27 of ITAT Rules. He referred to of the AO under Rule 27 of ITAT Rules. He referred to of the Hon’ble Bombay High Court in the case of B.R. Bamasi v. B.R. Bamasi v. of the Hon’ble Bombay High Court in the case of CIT 83 ITR 223 (Bombay) CIT 83 ITR 223 (Bombay). The Hon’ble Bombay High Court in the ay High Court in the said case has held that has held that assessee could use the argument only to assessee could use the argument only to sustain the order of the ld sustain the order of the ld. first appellate authority, but not to get for but not to get for the relief and have the assessment itself annulled and thus the relief and have the assessment itself annulled and thus the relief and have the assessment itself annulled and thus adversely affect the appellant and p adversely affect the appellant and place it in a position worse than if lace it in a position worse than if it had not appealed at all it had not appealed at all. According to the Hon’ble Bombay High According to the Hon’ble Bombay High Court,further held that further held that if the respondent has not himself taken any if the respondent has not himself taken any proceeding to challenge order in appeal, the Tribunal cannot set aside proceeding to challenge order in appeal, the Tribunal cannot set aside proceeding to challenge order in appeal, the Tribunal cannot set aside the order appealed against invoking rule 27 of the ITAT rules aled against invoking rule 27 of the ITAT rules aled against invoking rule 27 of the ITAT rules. The relevant finding of the Hon’ble Bombay High Court is reproduced as relevant finding of the Hon’ble Bombay High Court is reproduced as relevant finding of the Hon’ble Bombay High Court is reproduced as under:

“39. Now there is no doubt that, as the assessee had already 39. Now there is no doubt that, as the assessee had already 39. Now there is no doubt that, as the assessee had already filed a voluntary return, the notice under filed a voluntary return, the notice under section 34(1)(a) section 34(1)(a) was wrongly issued and the proceedings of assessment which wrongly issued and the proceedings of assessment which wrongly issued and the proceedings of assessment which took place in pursuance of that notice are invalid. This is the took place in pursuance of that notice are invalid. This is the took place in pursuance of that notice are invalid. This is the ratio laid down by the Supreme Court in its said judgment in ratio laid down by the Supreme Court in its said judgment in ratio laid down by the Supreme Court in its said judgment in the case of the case of Commissioner of Income-tax v. Ranchhoddas tax v. Ranchhoddas Karsondas. Mr. Joshi has not disputed this position. The only . Mr. Joshi has not disputed this position. The only . Mr. Joshi has not disputed this position. The only question is whether the Tribunal was entitled in law to refuse question is whether the Tribunal was entitled in law to refuse question is whether the Tribunal was entitled in law to refuse to allow the assessee to urge that ground in the appeal to allow the assessee to urge that ground in the appeal to allow the assessee to urge that ground in the appeal before it. Now a Division Bench of this High Court in it. Now a Division Bench of this High Court in Commissioner Commissioner of Income-tax v. Hazarimal Nagji & Co tax v. Hazarimal Nagji & Co., after considering the ., after considering the relevant sections of the relevant sections of the Income-tax Act and the relevant and the relevant

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Rules made thereunder, held that the powers of the Appellate Rules made thereunder, held that the powers of the Appellate Rules made thereunder, held that the powers of the Appellate Tribunal are similar to the powers of an appellate court under Tribunal are similar to the powers of an appellate court under Tribunal are similar to the powers of an appellate court under the Civil Procedure Code. It has further held that the the Civil Procedure Code. It has further held that the the Civil Procedure Code. It has further held that the respondent in an appeal is undoubtedly entitl respondent in an appeal is undoubtedly entitled to support the ed to support the decree which is in his favour on any grounds which are decree which is in his favour on any grounds which are decree which is in his favour on any grounds which are available to him, even though the decision of the lower court in available to him, even though the decision of the lower court in available to him, even though the decision of the lower court in his favour may not have been based on those grounds. It has his favour may not have been based on those grounds. It has his favour may not have been based on those grounds. It has further held that if the appellant in his challenge to the further held that if the appellant in his challenge to the further held that if the appellant in his challenge to the decree of the lower court is entitled to take a new ground not agitated of the lower court is entitled to take a new ground not agitated of the lower court is entitled to take a new ground not agitated in the court below by leave of the court, there appears to be no in the court below by leave of the court, there appears to be no in the court below by leave of the court, there appears to be no reason why a respondent in support of the decree in his reason why a respondent in support of the decree in his reason why a respondent in support of the decree in his favour passed by the lower court should not be entitled to favour passed by the lower court should not be entitled to favour passed by the lower court should not be entitled to agitated a new ground and subject to the same limitation. A tated a new ground and subject to the same limitation. A tated a new ground and subject to the same limitation. A Division Bench of the Allahabad High Court has taken a Division Bench of the Allahabad High Court has taken a Division Bench of the Allahabad High Court has taken a similar view in similar view in Kanpur Industrial Works v. Commissioner of Kanpur Industrial Works v. Commissioner of Income-tax. That judgment has con . That judgment has considered the position of an sidered the position of an appeal under appeal under section 33 of the Income-tax Act along with the tax Act along with the relevant Rules and that of an appeal under the Code of Civil relevant Rules and that of an appeal under the Code of Civil relevant Rules and that of an appeal under the Code of Civil Procedure and the provisions of Order XLI, rule 22. The Procedure and the provisions of Order XLI, rule 22. The Procedure and the provisions of Order XLI, rule 22. The judgment holds that when the department files an appeal for judgment holds that when the department files an appeal for judgment holds that when the department files an appeal for an increase in the assessed income, the subject an increase in the assessed income, the subject-matter of the matter of the appeal is the increase claimed by the department and the appeal is the increase claimed by the department and the appeal is the increase claimed by the department and the assessee can urge any ground of defence even though it might assessee can urge any ground of defence even though it might assessee can urge any ground of defence even though it might have been rejec have been rejected by the Appellate Assistant Commissioner ted by the Appellate Assistant Commissioner for showing that there should be no increase. It has further for showing that there should be no increase. It has further for showing that there should be no increase. It has further held that that the assessee is not liable to be assessed at all held that that the assessee is not liable to be assessed at all held that that the assessee is not liable to be assessed at all is a ground for showing that there should be no further is a ground for showing that there should be no further is a ground for showing that there should be no further assessment and the department's assessment and the department's appeal can therefore be appeal can therefore be resisted on that ground and that there is no incongruity in resisted on that ground and that there is no incongruity in resisted on that ground and that there is no incongruity in maintaining the assessment order passed against the maintaining the assessment order passed against the maintaining the assessment order passed against the assessee and yet refusing to increase it on the ground that he assessee and yet refusing to increase it on the ground that he assessee and yet refusing to increase it on the ground that he was not liable to be assessed at all. The judgment point The judgment points was not liable to be assessed at all. out however that if the Tribunal accepts the ground of out however that if the Tribunal accepts the ground of out however that if the Tribunal accepts the ground of defence that the assessee was not liable to be assessed, defence that the assessee was not liable to be assessed, defence that the assessee was not liable to be assessed, it can only refuse to increase the assessed income as it can only refuse to increase the assessed income as it can only refuse to increase the assessed income as only such an order would be within the scope of the only such an order would be within the scope of the only such an order would be within the scope of the appeal filed by the department and a appeal filed by the department and any other order ny other order such as annulling the assessment would be outside the such as annulling the assessment would be outside the such as annulling the assessment would be outside the scope of the appeal scope of the appeal. That judgment holds that the position of . That judgment holds that the position of an appeal under an appeal under section 33 of the Income-tax Act and an tax Act and an appeal under the appeal under the Code of Civil Procedure is identical. A Full Code of Civil Procedure is identical. A Full Bench of the Madras High Court has in Bench of the Madras High Court has in Venkata Rao v. Venkata Rao v. Satyanarayanamurthy Satyanarayanamurthy, held that it was open to a respondent , held that it was open to a respondent

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in appeal who had not filed cross objection wit in appeal who had not filed cross objection with regard to the h regard to the portion of the decree which had gone against him to urge in portion of the decree which had gone against him to urge in portion of the decree which had gone against him to urge in opposition to the appeal of the plaintiff a contention which it opposition to the appeal of the plaintiff a contention which it opposition to the appeal of the plaintiff a contention which it accepted by the trial court would have necessitated the total accepted by the trial court would have necessitated the total accepted by the trial court would have necessitated the total dismissal of the suit, but the decree in so far as it dismissal of the suit, but the decree in so far as it dismissal of the suit, but the decree in so far as it was against him would stand. The judgment of the Tribunal in our case him would stand. The judgment of the Tribunal in our case him would stand. The judgment of the Tribunal in our case clearly shows that, although the assessee wanted to raise a clearly shows that, although the assessee wanted to raise a clearly shows that, although the assessee wanted to raise a new point as a ground of defence in the appeal, he specifically new point as a ground of defence in the appeal, he specifically new point as a ground of defence in the appeal, he specifically stated that he wanted to rely upon it only for the purpose of stated that he wanted to rely upon it only for the purpose of stated that he wanted to rely upon it only for the purpose of having the appeal by the department for enhancement in having the appeal by the department for enhancement in having the appeal by the department for enhancement in income-tax dismissed. But even if the assessee had not made tax dismissed. But even if the assessee had not made tax dismissed. But even if the assessee had not made such a statement, the above judgment shows that the such a statement, the above judgment shows that the such a statement, the above judgment shows that the assessee would be entitled to raise a new ground, provided it assessee would be entitled to raise a new ground, provided it assessee would be entitled to raise a new ground, provided it is a ground of law and does is a ground of law and does not necessitate any other not necessitate any other evidence to be recorded, the nature of which would not only be evidence to be recorded, the nature of which would not only be evidence to be recorded, the nature of which would not only be a defence to the appeal itself, but may also affect the validity a defence to the appeal itself, but may also affect the validity a defence to the appeal itself, but may also affect the validity of the entire assessment proceedings. If the ground succeeds, of the entire assessment proceedings. If the ground succeeds, of the entire assessment proceedings. If the ground succeeds, the only result would be that the appea the only result would be that the appeal would fail. The l would fail. The acceptance of the ground would show that the entire acceptance of the ground would show that the entire acceptance of the ground would show that the entire assessment proceedings were invalid, but yet the Tribunal assessment proceedings were invalid, but yet the Tribunal assessment proceedings were invalid, but yet the Tribunal which hears that appeal would have no power to disturb or to which hears that appeal would have no power to disturb or to which hears that appeal would have no power to disturb or to set aside the order in favour of the appellant against which set aside the order in favour of the appellant against which set aside the order in favour of the appellant against which the appeal has been filed. The ground would serve only as a peal has been filed. The ground would serve only as a peal has been filed. The ground would serve only as a weapon of defence against the appeal. If the respondent If the respondent weapon of defence against the appeal. has not himself taken any proceedings to challenge the has not himself taken any proceedings to challenge the has not himself taken any proceedings to challenge the order in appeal, the Tribunal cannot set aside the order order in appeal, the Tribunal cannot set aside the order order in appeal, the Tribunal cannot set aside the order appealed against. That order would appealed against. That order would stand and would stand and would have full effect in so far as it is against the respondent. have full effect in so far as it is against the respondent. have full effect in so far as it is against the respondent. The Tribunal refused to allow the assessee to take up allowed The Tribunal refused to allow the assessee to take up allowed The Tribunal refused to allow the assessee to take up allowed to be urged and succeeded, the Tribunal would have not only to be urged and succeeded, the Tribunal would have not only to be urged and succeeded, the Tribunal would have not only to dismiss the appeal, but also to set aside the entire to dismiss the appeal, but also to set aside the entire to dismiss the appeal, but also to set aside the entire assessment. The point would have served as a weapon of ssessment. The point would have served as a weapon of ssessment. The point would have served as a weapon of defence against the appeal, but it could not be made into a defence against the appeal, but it could not be made into a defence against the appeal, but it could not be made into a weapon of attack against the order in so far as it was against weapon of attack against the order in so far as it was against weapon of attack against the order in so far as it was against the assessee. the assessee.” 5.4 The Ld. DR also referred to the decision of the ITAT, The Ld. DR also referred to the decision of the ITAT, The Ld. DR also referred to the decision of the ITAT, Ahmedabad in the case of bad in the case of DCIT v. Sandip M Patel ITA Nos. 866 DCIT v. Sandip M Patel ITA Nos. 866 to 871 and 1016 and 1339 (Ahd.) of 2008 to 871 and 1016 and 1339 (Ahd.) of 2008 to support that the to support that the Rule 27 sanction defendant only to support order of the Ld. CIT(A) Rule 27 sanction defendant only to support order of the Ld. CIT(A) Rule 27 sanction defendant only to support order of the Ld. CIT(A)

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 11 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

and not permitting to attack the judgment and not permitting to attack the judgment of the LD CIT(A). T of the LD CIT(A). The Ld. DR submitted that respondent mitted that respondent may support the verdict of the First support the verdict of the First Appellate Authority and side by side can argue against any of the Appellate Authority and side by side can argue against any of the Appellate Authority and side by side can argue against any of the ground held against ground held against him, but noton any of the ground which has any of the ground which has not been adjudicated by the Ld. CIT(A). The relevant finding of the not been adjudicated by the Ld. CIT(A). The relevant finding of the not been adjudicated by the Ld. CIT(A). The relevant finding of the Tribunal(supra) is reproduced as under: is reproduced as under:

“3.5 From the above reproduction few important points of law 3.5 From the above reproduction few important points of law 3.5 From the above reproduction few important points of law emerges, to be highlighted so as to resolve the controversy. (1) emerges, to be highlighted so as to resolve the controversy. (1) emerges, to be highlighted so as to resolve the controversy. (1) An appeal lies from operative part of the judgment and not An appeal lies from operative part of the judgment and not An appeal lies from operative part of the judgment and not from the reasons in support of from the reasons in support of it.Naturally certain findings it.Naturally certain findings ought to have been given, whether on facts or on law, on ought to have been given, whether on facts or on law, on ought to have been given, whether on facts or on law, on which the operative part of the judgment is based, but those which the operative part of the judgment is based, but those which the operative part of the judgment is based, but those ought not to be the ground of an appeal. (2) A successful ought not to be the ground of an appeal. (2) A successful ought not to be the ground of an appeal. (2) A successful party, i.e. presently the respondent party, i.e. presently the respondent- assessee, cannot appeal annot appeal merely in respect of a finding given adversely to get corrected, merely in respect of a finding given adversely to get corrected, merely in respect of a finding given adversely to get corrected, as notwithstanding the said adverse finding, the operative as notwithstanding the said adverse finding, the operative as notwithstanding the said adverse finding, the operative judgment is in his favour. He is not aggrieved by the outcome judgment is in his favour. He is not aggrieved by the outcome judgment is in his favour. He is not aggrieved by the outcome of the judgment. (3) An appeal lies by an aggrieved litig of the judgment. (3) An appeal lies by an aggrieved litig of the judgment. (3) An appeal lies by an aggrieved litigant, if not aggrieved no appeal. There is no gain by appealing not aggrieved no appeal. There is no gain by appealing not aggrieved no appeal. There is no gain by appealing against an adverse finding. That could be a cause of grumble against an adverse finding. That could be a cause of grumble against an adverse finding. That could be a cause of grumble but not a cause of grievance. An appeal is a redress or but not a cause of grievance. An appeal is a redress or but not a cause of grievance. An appeal is a redress or recompense or restitution of a substantial grievance for an recompense or restitution of a substantial grievance for an recompense or restitution of a substantial grievance for an aggrieved party aggrieved party arising from the result of a judgment. (4) A arising from the result of a judgment. (4) A cross-objection is a substitute for an appeal. It is not objection is a substitute for an appeal. It is not objection is a substitute for an appeal. It is not permissible simply to file a cross permissible simply to file a cross-objection against the objection against the rejection of any argument or point of attack. (5) When one line rejection of any argument or point of attack. (5) When one line rejection of any argument or point of attack. (5) When one line of of defence defence is is accepted accepted but but the the other ot her rejected, rejected, the the defendant/respondent in an appeal, filed by the aggrieved defendant/respondent in an appeal, filed by the aggrieved defendant/respondent in an appeal, filed by the aggrieved party against the judgment, has a right to defend that part of party against the judgment, has a right to defend that part of party against the judgment, has a right to defend that part of the finding which was adversely expressed, though not the finding which was adversely expressed, though not the finding which was adversely expressed, though not appealed against by him.Rule 27 covers this situation only. appealed against by him.Rule 27 covers this situation only. appealed against by him.Rule 27 covers this situation only. The defendant has a right to urge under Rule 27 that a defendant has a right to urge under Rule 27 that a defendant has a right to urge under Rule 27 that a particular finding was wrongly given and if that adverse particular finding was wrongly given and if that adverse particular finding was wrongly given and if that adverse finding is upheld than the favourable result of the appeal may finding is upheld than the favourable result of the appeal may finding is upheld than the favourable result of the appeal may get over-turned,(6) That a cross turned,(6) That a cross-objector has a legal right to objector has a legal right to support an order of t support an order of the first appellate authority but no right is he first appellate authority but no right is enshrined under Rule 27 to attack that judgment. (7) That enshrined under Rule 27 to attack that judgment. (7) That enshrined under Rule 27 to attack that judgment. (7) That

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 12 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

Rule 27 sanctions a defendant only to "support" the order of Rule 27 sanctions a defendant only to "support" the order of Rule 27 sanctions a defendant only to "support" the order of CIT(A) and not permitted to "attack" the judgment. (8) That by CIT(A) and not permitted to "attack" the judgment. (8) That by CIT(A) and not permitted to "attack" the judgment. (8) That by the very language of Rule 27 the very language of Rule 27 a respondent can support the a respondent can support the verdict of the first appellate authority and side by side can verdict of the first appellate authority and side by side can verdict of the first appellate authority and side by side can argue against any of the grounds held against him. This argue against any of the grounds held against him. This argue against any of the grounds held against him. This shows that the grounds against the respondent is within the shows that the grounds against the respondent is within the shows that the grounds against the respondent is within the circumference of the favourable judgment. Such fi circumference of the favourable judgment. Such fi circumference of the favourable judgment. Such finding or the grounds thus are linked to the final verdict of the issue grounds thus are linked to the final verdict of the issue grounds thus are linked to the final verdict of the issue decided and has a direct link with the final view taken. The decided and has a direct link with the final view taken. The decided and has a direct link with the final view taken. The ground is not independent of the issue decided, because ground is not independent of the issue decided, because ground is not independent of the issue decided, because whilearriving to the conclusion, in between the process of whilearriving to the conclusion, in between the process of whilearriving to the conclusion, in between the process of drafting of an order, there is a possibility of taking an adverse of an order, there is a possibility of taking an adverse of an order, there is a possibility of taking an adverse view by rejecting any of the argument or the grounds of view by rejecting any of the argument or the grounds of view by rejecting any of the argument or the grounds of defence taken. (9) Lastly, how a respondent can support "any defence taken. (9) Lastly, how a respondent can support "any defence taken. (9) Lastly, how a respondent can support "any of the grounds decided against him as worded in Rule 27?. of the grounds decided against him as worded in Rule 27?. of the grounds decided against him as worded in Rule 27?. But the Hon'ble Courts h But the Hon'ble Courts have removed this confusion by ave removed this confusion by explicitly mentioning that the judgment being favourable but explicitly mentioning that the judgment being favourable but explicitly mentioning that the judgment being favourable but could have an adverse finding or reasoning and that ground could have an adverse finding or reasoning and that ground could have an adverse finding or reasoning and that ground though against the respondent can be defended in Rule 27, though against the respondent can be defended in Rule 27, though against the respondent can be defended in Rule 27, nevertheless by supporting the final verdict. Th nevertheless by supporting the final verdict. The interpretation e interpretation of the word "grounds" is in wider sense because the same is of the word "grounds" is in wider sense because the same is of the word "grounds" is in wider sense because the same is not at par with the "ground" of appeal. not at par with the "ground" of appeal. 3.6 On this issue, there is one more decision pronounced by 3.6 On this issue, there is one more decision pronounced by 3.6 On this issue, there is one more decision pronounced by the Hon'ble Bombay High Court in the case of B.R.Bamasi the Hon'ble Bombay High Court in the case of B.R.Bamasi the Hon'ble Bombay High Court in the case of B.R.Bamasi (supra), wherein the as (supra), wherein the assessee wanted to raise a new point as sessee wanted to raise a new point as a ground of defence in the appeal but stopped to raise due to a ground of defence in the appeal but stopped to raise due to a ground of defence in the appeal but stopped to raise due to the reason that such new point may affect the validity of the the reason that such new point may affect the validity of the the reason that such new point may affect the validity of the entire assessment proceedings. The Court has said that the entire assessment proceedings. The Court has said that the entire assessment proceedings. The Court has said that the point would have served as a weapon point would have served as a weapon of defence against the of defence against the appeal, but it could not be made a weapon of attack against appeal, but it could not be made a weapon of attack against appeal, but it could not be made a weapon of attack against the order insofar as it was against the assessee. Relevant the order insofar as it was against the assessee. Relevant the order insofar as it was against the assessee. Relevant portion of this judgment is reproduced below: portion of this judgment is reproduced below:- "It has further held that the respondent in an appeal is "It has further held that the respondent in an appeal is "It has further held that the respondent in an appeal is undoubtedly entitled to support the decree which is in his ly entitled to support the decree which is in his ly entitled to support the decree which is in his favour on any grounds which are available to him, even favour on any grounds which are available to him, even favour on any grounds which are available to him, even though the decision of the lower Court in his favour may not though the decision of the lower Court in his favour may not though the decision of the lower Court in his favour may not have been based on those grounds. It has further held that if have been based on those grounds. It has further held that if have been based on those grounds. It has further held that if the appellant in his challen the appellant in his challenge to the decree of the lower Court ge to the decree of the lower Court is entitled to take a new ground not agitated in the Court is entitled to take a new ground not agitated in the Court is entitled to take a new ground not agitated in the Court below by leave of the Court, there appears to be no reason below by leave of the Court, there appears to be no reason below by leave of the Court, there appears to be no reason why a respondent in support of the decree in his favour why a respondent in support of the decree in his favour why a respondent in support of the decree in his favour

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 13 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

passed by the lower Court should not be entitl passed by the lower Court should not be entitled to agitate a ed to agitate a new ground and subject to the same limitation. A Division new ground and subject to the same limitation. A Division new ground and subject to the same limitation. A Division Bench of the Allahabad High Court has taken a similar view Bench of the Allahabad High Court has taken a similar view Bench of the Allahabad High Court has taken a similar view in Kanpur Industrial Works v. CIT [1966] 59 ITR 407 (All). That in Kanpur Industrial Works v. CIT [1966] 59 ITR 407 (All). That in Kanpur Industrial Works v. CIT [1966] 59 ITR 407 (All). That judgment has considered the position of an appeal under s. judgment has considered the position of an appeal under s. judgment has considered the position of an appeal under s. 33 of the IT Act along with the relevant Rules and that of an of the IT Act along with the relevant Rules and that of an of the IT Act along with the relevant Rules and that of an appeal under the CPC and the provisions of O. XLI, r. 22. The appeal under the CPC and the provisions of O. XLI, r. 22. The appeal under the CPC and the provisions of O. XLI, r. 22. The judgment holds that when the Department files an appeal for judgment holds that when the Department files an appeal for judgment holds that when the Department files an appeal for an increase in the assessed income, the subject an increase in the assessed income, the subject-matter of the matter of the appeal is the increase claimed by the Department and the the increase claimed by the Department and the the increase claimed by the Department and the assessee can urge any ground of defence even though it might assessee can urge any ground of defence even though it might assessee can urge any ground of defence even though it might have been rejected by the AAC for showing that there should have been rejected by the AAC for showing that there should have been rejected by the AAC for showing that there should be no increase. It has further held that that the assessee is be no increase. It has further held that that the assessee is be no increase. It has further held that that the assessee is not liable to be assessed not liable to be assessed at all is a ground for showing that at all is a ground for showing that there should be no further assessment and the Department's there should be no further assessment and the Department's there should be no further assessment and the Department's appeal can therefore be resisted on that ground and that there appeal can therefore be resisted on that ground and that there appeal can therefore be resisted on that ground and that there is no incongruity in maintaining the assessment order passed is no incongruity in maintaining the assessment order passed is no incongruity in maintaining the assessment order passed against the assessee and yet refusing against the assessee and yet refusing to increase it on the to increase it on the ground that he was not liable to be assessed at all. The ground that he was not liable to be assessed at all. The ground that he was not liable to be assessed at all. The judgment points out however that if the Tribunal accepts the judgment points out however that if the Tribunal accepts the judgment points out however that if the Tribunal accepts the ground of defence that the assessee was not liable to be ground of defence that the assessee was not liable to be ground of defence that the assessee was not liable to be assessed, it can only refuse to increase the assessed inco assessed, it can only refuse to increase the assessed inco assessed, it can only refuse to increase the assessed income as only such an order would be within the scope of the appeal as only such an order would be within the scope of the appeal as only such an order would be within the scope of the appeal filed by the Department and any other order such as annulling filed by the Department and any other order such as annulling filed by the Department and any other order such as annulling the assessment would be outside the scope of the appeal. the assessment would be outside the scope of the appeal. the assessment would be outside the scope of the appeal. That judgment holds that the position of an appeal under s. 33 That judgment holds that the position of an appeal under s. 33 That judgment holds that the position of an appeal under s. 33 of the IT Act and an appeal under the CPC is identical. A Full Act and an appeal under the CPC is identical. A Full Act and an appeal under the CPC is identical. A Full Bench of the Madras High Court has in Venkala Rao Bench of the Madras High Court has in Venkala Rao Bench of the Madras High Court has in Venkala Rao v.Satvanaravanamurthy ILR 1944 Mad 147 : AIR 1943 Mad. v.Satvanaravanamurthy ILR 1944 Mad 147 : AIR 1943 Mad. v.Satvanaravanamurthy ILR 1944 Mad 147 : AIR 1943 Mad. 698 (FB) held that it was open to a respondent in appeal who 698 (FB) held that it was open to a respondent in appeal who 698 (FB) held that it was open to a respondent in appeal who had not filed cross had not filed cross-objection with regard to the portion of the egard to the portion of the decree which had gone against him to urge in opposition to the decree which had gone against him to urge in opposition to the decree which had gone against him to urge in opposition to the appeal of the plaintiff a contention which if accepted by the appeal of the plaintiff a contention which if accepted by the appeal of the plaintiff a contention which if accepted by the trial Court would have necessitated the total dismissal of the trial Court would have necessitated the total dismissal of the trial Court would have necessitated the total dismissal of the suit, but the decree insofar as it was a suit, but the decree insofar as it was against him would gainst him would stand. The judgment of the Tribunal in our case clearly shows stand. The judgment of the Tribunal in our case clearly shows stand. The judgment of the Tribunal in our case clearly shows that, although the assessee wanted to raise a new point as a that, although the assessee wanted to raise a new point as a that, although the assessee wanted to raise a new point as a ground of defence in the appeal, he specifically stated that he ground of defence in the appeal, he specifically stated that he ground of defence in the appeal, he specifically stated that he wanted to rely upon it only for the purpose of havin wanted to rely upon it only for the purpose of havin wanted to rely upon it only for the purpose of having the appeal by the Department for enhancement in income appeal by the Department for enhancement in income appeal by the Department for enhancement in income-tax dismissed. But even if the assessee had not made such a dismissed. But even if the assessee had not made such a dismissed. But even if the assessee had not made such a statement, the above judgment shows that the assessee statement, the above judgment shows that the assessee statement, the above judgment shows that the assessee would be entitled to raise a new ground, provided it is a would be entitled to raise a new ground, provided it is a would be entitled to raise a new ground, provided it is a

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ground of law and does not ground of law and does not necessitate any other evidence to necessitate any other evidence to be recorded the nature of which would not only be a defence be recorded the nature of which would not only be a defence be recorded the nature of which would not only be a defence to the appeal itself but may also affect the validity of the to the appeal itself but may also affect the validity of the to the appeal itself but may also affect the validity of the entire assessment proceedings. If the ground succeeds, the entire assessment proceedings. If the ground succeeds, the entire assessment proceedings. If the ground succeeds, the only result would be that the appeal would only result would be that the appeal would only result would be that the appeal would fail. The acceptance of the ground would show that the entire acceptance of the ground would show that the entire acceptance of the ground would show that the entire assessment proceedings were invalid, but yet the Tribunal assessment proceedings were invalid, but yet the Tribunal assessment proceedings were invalid, but yet the Tribunal which hears that appeal would have no power to disturb or to which hears that appeal would have no power to disturb or to which hears that appeal would have no power to disturb or to set aside the order in favour of the appellant against which set aside the order in favour of the appellant against which set aside the order in favour of the appellant against which theappeal has theappeal has been filed. The ground would serve only as a been filed. The ground would serve only as a weapon of defence against the appeal. If the respondent has weapon of defence against the appeal. If the respondent has weapon of defence against the appeal. If the respondent has not himself taken any proceedings to challenge the order in not himself taken any proceedings to challenge the order in not himself taken any proceedings to challenge the order in appeal, the Tribunal cannot set aside the order appealed appeal, the Tribunal cannot set aside the order appealed appeal, the Tribunal cannot set aside the order appealed against. That order would stand a against. That order would stand and would have full effect nd would have full effect insofar as it is against the respondent. The Tribunal refused to insofar as it is against the respondent. The Tribunal refused to insofar as it is against the respondent. The Tribunal refused to allow the assessee to take up this ground under an incorrect allow the assessee to take up this ground under an incorrect allow the assessee to take up this ground under an incorrect impression of law that if the point was allowed to be urged impression of law that if the point was allowed to be urged impression of law that if the point was allowed to be urged and succeeded, the Tribunal would have not o and succeeded, the Tribunal would have not only to dismiss nly to dismiss the appeal, but also to set aside the entire assessment. The the appeal, but also to set aside the entire assessment. The the appeal, but also to set aside the entire assessment. The point would have served as a weapon of defence against the point would have served as a weapon of defence against the point would have served as a weapon of defence against the appeal, but it could not be made into a weapon of attack appeal, but it could not be made into a weapon of attack appeal, but it could not be made into a weapon of attack against the order insofar as it was against the assessee." against the order insofar as it was against the assessee." against the order insofar as it was against the assessee." 3.7 An another legal proposition has been raised that the n another legal proposition has been raised that the n another legal proposition has been raised that the Tribunal passes an order u/s. 254(1) of IT Act and empowered Tribunal passes an order u/s. 254(1) of IT Act and empowered Tribunal passes an order u/s. 254(1) of IT Act and empowered to "pass such orders thereon as it thinks fit. Section is to "pass such orders thereon as it thinks fit. Section is to "pass such orders thereon as it thinks fit. Section is reproduced below: reproduced below:- Sec.254 (1) The Appellate Tribunal may, after giving both the Sec.254 (1) The Appellate Tribunal may, after giving both the Sec.254 (1) The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such ties to the appeal an opportunity of being heard, pass such ties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. orders thereon as it thinks fit. The word "thereon" restricts the jurisdiction of the Tribunal to The word "thereon" restricts the jurisdiction of the Tribunal to The word "thereon" restricts the jurisdiction of the Tribunal to the subject matter of appeal. If this word the subject matter of appeal. If this word "thereon" is to be read in conjunction with Rule 27, th "thereon" is to be read in conjunction with Rule 27, th "thereon" is to be read in conjunction with Rule 27, then the respondent is to support the order appealed against but respondent is to support the order appealed against but respondent is to support the order appealed against but required to confine to the subject matter of the appeal. required to confine to the subject matter of the appeal. required to confine to the subject matter of the appeal. Interestingly, in the present case though the first appellate Interestingly, in the present case though the first appellate Interestingly, in the present case though the first appellate authority has decided the issue of the applicability of the authority has decided the issue of the applicability of the authority has decided the issue of the applicability of the provisions of provisions of section 153C of IT Act, which was one of the section 153C of IT Act, which was one of the ground of appeal raised by the assessee before Id. CIT(A), but ground of appeal raised by the assessee before Id. CIT(A), but ground of appeal raised by the assessee before Id. CIT(A), but even after an adverse decision of the CIT(A) on the said legal even after an adverse decision of the CIT(A) on the said legal even after an adverse decision of the CIT(A) on the said legal

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ground, no appeal was preferred by the assessee. Because of ground, no appeal was preferred by the assessee. Because of ground, no appeal was preferred by the assessee. Because of this reason, the Tribunal this reason, the Tribunal is not empowered to pass an order is not empowered to pass an order "thereon" on the subject matter which is not in appeal as per "thereon" on the subject matter which is not in appeal as per "thereon" on the subject matter which is not in appeal as per the appeal memo to be adjudicated upon. As far as the the appeal memo to be adjudicated upon. As far as the the appeal memo to be adjudicated upon. As far as the question of withdrawal of cross question of withdrawal of cross-objection is concerned, in our objection is concerned, in our humble opinion, in the light of the above humble opinion, in the light of the above discussion, had the discussion, had the cross-objection was not withdrawn, even then, such a legal objection was not withdrawn, even then, such a legal objection was not withdrawn, even then, such a legal issue was beyond the scope of the adjudication through a issue was beyond the scope of the adjudication through a issue was beyond the scope of the adjudication through a cross-objection under Sec. 253(4) of IT Act because the objection under Sec. 253(4) of IT Act because the objection under Sec. 253(4) of IT Act because the impugned legal issue was altogether an independent as well impugned legal issue was altogether an independent as well impugned legal issue was altogether an independent as well as a separate issue, then the issue decided in favour of the separate issue, then the issue decided in favour of the separate issue, then the issue decided in favour of the assessee which are to be supported but w/s. 27 of Appellate assessee which are to be supported but w/s. 27 of Appellate assessee which are to be supported but w/s. 27 of Appellate Tribunal Rules. The applicability as also the operation of Sec. Tribunal Rules. The applicability as also the operation of Sec. Tribunal Rules. The applicability as also the operation of Sec. 253(4) of IT. Act (i.e. the procedure of filing of cross 253(4) of IT. Act (i.e. the procedure of filing of cross 253(4) of IT. Act (i.e. the procedure of filing of cross-objection) is distinct than the area of operation of Rule 27. In any case, nct than the area of operation of Rule 27. In any case, nct than the area of operation of Rule 27. In any case, provisions of Rule 27 and the provisions of Sec. 253(4) do not provisions of Rule 27 and the provisions of Sec. 253(4) do not provisions of Rule 27 and the provisions of Sec. 253(4) do not over-lap each other; rather operate in two different situations. lap each other; rather operate in two different situations. lap each other; rather operate in two different situations. Admittedly, right now, we are not on the adiudication of a Admittedly, right now, we are not on the adiudication of a Admittedly, right now, we are not on the adiudication of a cross-objection but on the question of granting permission to on but on the question of granting permission to on but on the question of granting permission to argue an independent legal ground under the shelter of Rule argue an independent legal ground under the shelter of Rule argue an independent legal ground under the shelter of Rule 27 of the Tribunal Rules.” 27 of the Tribunal Rules. The Ld. DR also referred to the decision CIT, New Delhi CIT, New Delhi 5.5 The Ld. DR also referred to the decision (Central) v. ADward Keventer (Successor) Pvt. Ltd. (1980) 123 (Central) v. ADward Keventer (Successor) Pvt. Ltd. (1980) 12 (Central) v. ADward Keventer (Successor) Pvt. Ltd. (1980) 12 ITR 200 (Del) and submitted that and submitted that while the appellant appellant should not be made to suffer and be deprived of the benefit given to him by the made to suffer and be deprived of the benefit given to him by the made to suffer and be deprived of the benefit given to him by the lower authorities, where the other side has not appealed where the other side has not appealed, equally the where the other side has not appealed procedural Rules should not be interpreted or appl procedural Rules should not be interpreted or applied so as to confer ied so as to confer on the appellant a relief to which he cannot be entitled if the points on the appellant a relief to which he cannot be entitled if the points on the appellant a relief to which he cannot be entitled if the points decided in his favour on the same matter by the lower court are also decided in his favour on the same matter by the lower court are also decided in his favour on the same matter by the lower court are also considered considered as as requested requested by by the the respondent. respondent . The The Ld. Ld. DR DR furtherreferred to the decision of the Hon’ble Supreme Court in ’ble Supreme Court in furtherreferred to the decision of the the case of State of Kerala v. Vijaya Stores [1979] AIR 355, 1979 the case of State of Kerala v. Vijaya Stores [1979] the case of State of Kerala v. Vijaya Stores [1979] SCR (1)and submitted that the respondent is entitled to support the and submitted that the respondent is entitled to support the and submitted that the respondent is entitled to support the judgment of the first judgment of the first appellate authority on any ground open him, any ground open him, but he is not entitled to raise a but he is not entitled to raise a ground so as to work adversely to ground so as to work adversely to the appellant and his favour. the appellant and his favour. The Hon’ble Supreme Court (supra) ble Supreme Court (supra) held thatthe elementary principle found in the Code of he elementary principle found in the Code of he elementary principle found in the Code ofCivil

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 16 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

Procedurethat the respondent the respondent who hasneither preferred hisown preferred hisown appealnor filed cross cross-objections in the appealpreferred by the appealpreferred by the appellant must be deemed to be satisfiedwith thedecision of the be deemed to be satisfiedwith thedecision of the be deemed to be satisfiedwith thedecision of the lower authority andthat hewill lower authority andthat hewill not be entitled to seek reliefagainst entitled to seek reliefagainst a rival party in an appeal preferred party in an appeal preferred by thelatter,is equally applicable equally applicable torevenue proceedings revenue proceedings. 5.6 The relevant finding of the Hon’ble Supreme Court is The relevant finding of the Hon’ble Supreme Court is The relevant finding of the Hon’ble Supreme Court is reproduced as under: reproduced as under:

“ It is true that the two Bombay decisions reported in 13 I.T.R. 272 and 31 It is true that the two Bombay decisions reported in 13 I.T.R. 272 and 31 It is true that the two Bombay decisions reported in 13 I.T.R. 272 and 31 I.T.R. 844 (supra) on which the High Court has relied `have been rendered in I.T.R. 844 (supra) on which the High Court has relied `have been rendered in I.T.R. 844 (supra) on which the High Court has relied `have been rendered in relation to s. 33(4) of Indian Income Tax Act, 1922 but in our view the said of Indian Income Tax Act, 1922 but in our view the said of Indian Income Tax Act, 1922 but in our view the said provisions of Income Tax Act Income Tax Act is in pari materia with the provision of s.39(4) of is in pari materia with the provision of s.39(4) of the Kerala General - -Sales Tax Act, 1963. Moreover, the Bombay High Court , 1963. Moreover, the Bombay High Court has pointed out in those decisions that has pointed out in those decisions that s. 33(4) merely enacted what was the merely enacted what was the elementary principle to be elementary principle to be found in Civil Procedure Code that the respondent found in Civil Procedure Code that the respondent who has neither preferred his own appeal nor filed cross who has neither preferred his own appeal nor filed cross-objections in the objections in the appeal preferred by the appellant, must be deemed to be satisfied with the appeal preferred by the appellant, must be deemed to be satisfied with the appeal preferred by the appellant, must be deemed to be satisfied with the decision of the lower authority and he will not be enti decision of the lower authority and he will not be entitled to seek relief against tled to seek relief against a rival party in an appeal preferred by the latter. In the first mentioned case a rival party in an appeal preferred by the latter. In the first mentioned case a rival party in an appeal preferred by the latter. In the first mentioned case the elementary principle is stated at page 282 of the report thus: the elementary principle is stated at page 282 of the report thus: the elementary principle is stated at page 282 of the report thus: "Apart from statute, it is elementary that if a party appeals, he is "Apart from statute, it is elementary that if a party appeals, he is "Apart from statute, it is elementary that if a party appeals, he is the party who comes before the Appellate Tribunal to redress a o comes before the Appellate Tribunal to redress a o comes before the Appellate Tribunal to redress a grievance alleged by him. If the other side has any grievance, he grievance alleged by him. If the other side has any grievance, he grievance alleged by him. If the other side has any grievance, he has a right to file a cross has a right to file a cross-appeal or cross-objections. But if no objections. But if no such thing is done, the other party, in law, is deemed to be such thing is done, the other party, in law, is deemed to be such thing is done, the other party, in law, is deemed to be satisfied with the decision. He is, of course, entitled to support th the decision. He is, of course, entitled to support th the decision. He is, of course, entitled to support the judgment of the first officer on any ground open to him, but the judgment of the first officer on any ground open to him, but the judgment of the first officer on any ground open to him, but he is not entitled to raise a ground so as to work adversely to he is not entitled to raise a ground so as to work adversely to he is not entitled to raise a ground so as to work adversely to the appellant and in his favour." the appellant and in his favour." 5.7 The Ld. DR further referred to the The Ld. DR further referred to the decision in the case of decision in the case of CIT v. Infracon Pvt. Ltd., 2015 64 taxmann.com 472 (Delhi) wherein v. Infracon Pvt. Ltd., 2015 64 taxmann.com 472 (Delhi) v. Infracon Pvt. Ltd., 2015 64 taxmann.com 472 (Delhi) it is held that Rule 27 of the ITAT Rules would not extend to Rule 27 of the ITAT Rules would not extend to Rule 27 of the ITAT Rules would not extend to permitting the respondent to expand the scope of an appeal and permitting the respondent to expand the scope of an appeal and permitting the respondent to expand the scope of an appeal and

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assail the decision on issues, which ar assail the decision on issues, which are not subject matter of the e not subject matter of the appeal.

5.8 However before us, the Ld. Counsel of the assessee has However before us, the Ld. Counsel of the assessee has However before us, the Ld. Counsel of the assessee has referred to the decision of the Hon’ble Jurisdictional High Court in referred to the decision of the Hon’ble Jurisdictional High Court in referred to the decision of the Hon’ble Jurisdictional High Court in the cases of Peter Vaz v. CIT, [2021] 436 ITR 616 (Bom.) Peter Vaz v. CIT, [2021] 436 ITR 616 (Bom.) Peter Vaz v. CIT, [2021] 436 ITR 616 (Bom.) wherein following substantial ques following substantial question of law was raised before the Hon’ble tion of law was raised before the Hon’ble High Court :

"Whether in the facts and circumstances of the present case, it was "Whether in the facts and circumstances of the present case, it was "Whether in the facts and circumstances of the present case, it was open to the appellant/assessee to have supported the orders of the open to the appellant/assessee to have supported the orders of the open to the appellant/assessee to have supported the orders of the Commissioner (Appeals), based on the ground that the jurisdictional Commissioner (Appeals), based on the ground that the jurisdictiona Commissioner (Appeals), based on the ground that the jurisdictiona parameters prescribed under section 153C of the I.T. Act were not parameters prescribed under section 153C of the I.T. Act were not parameters prescribed under section 153C of the I.T. Act were not fulfilled, even without the necessity of fulfilled, even without the necessity of filing any cross objections?” filing any cross objections?”

5.9 The Hon’ble Jurisdictional High Court after analyzing the The Hon’ble Jurisdictional High Court after analyzing the The Hon’ble Jurisdictional High Court after analyzing the provisions of Rule 27 of the ITAT Rules held provisions of Rule 27 of the ITAT Rules held that the i that the issue which was not raised before the Ld. CIT(A) and which goes root of the was not raised before the Ld. CIT(A) and which goes root of the was not raised before the Ld. CIT(A) and which goes root of the jurisdiction of the Assessing Officer to initiate the proceedings, can be jurisdiction of the Assessing Officer to initiate the proceedings, can be jurisdiction of the Assessing Officer to initiate the proceedings, can be raised by way of a petition under Rule 27 of the ITAT Rules and the raised by way of a petition under Rule 27 of the ITAT Rules and the raised by way of a petition under Rule 27 of the ITAT Rules and the Tribunal should allow the assessee to r Tribunal should allow the assessee to raised such an issue in the aised such an issue in the appeal instituted by the Revenue, even without the necessity of filing appeal instituted by the Revenue, even without the necessity of filing appeal instituted by the Revenue, even without the necessity of filing any cross objections. any cross objections. The relevant observations of the Hon’ble Court The relevant observations of the Hon’ble Court (supra) in the aforesaid decision are as under: in the aforesaid decision are as under:

"26. To begin with therefore we propose t "26. To begin with therefore we propose to consider the issue o consider the issue as as as to to to whether whether whether there there there was was was any any any necessity necessity necessity for for for the the the Appellants/assessees to file cross Appellants/assessees to file cross-objections before the ITAT objections before the ITAT to to to raise raise raise the the the jurisdictional jurisdictional jurisdictional issue issue issue of of of compliance compliance compliance with with with

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jurisdictional parameters before any proceedings could be jurisdictional parameters before any proceedings could be jurisdictional parameters before any proceedings could be initiated under initiated under section 153C of the IT Act. 27. In this case, admittedly, the CIT (Appeals) had decided the 27. In this case, admittedly, the CIT (Appeals) had decided the 27. In this case, admittedly, the CIT (Appeals) had decided the matters in favor of the assessees and even set aside the matters in favor of the assessees and even set aside the matters in favor of the assessees and even set aside the orders made by the Assessing Officers. Therefore, the orders made by the Assessing Officers. Therefore, the orders made by the Assessing Officers. Therefore, the assessees did not have to institute any further appeals to the sessees did not have to institute any further appeals to the sessees did not have to institute any further appeals to the ITAT. The Revenue in this case had appealed to the ITAT ITAT. The Revenue in this case had appealed to the ITAT ITAT. The Revenue in this case had appealed to the ITAT against the orders made by the CIT (Appeals). Therefore, the against the orders made by the CIT (Appeals). Therefore, the against the orders made by the CIT (Appeals). Therefore, the issue is, whether the assessees could have raised the issue of issue is, whether the assessees could have raised the issue of issue is, whether the assessees could have raised the issue of non-compliance compliance with with jurisdictional jurisdictional parameters parameters set set out out under section 153C section 153C of the IT Act, before the ITAT, even of the IT Act, before the ITAT, even without filing any cross without filing any cross-objections before the ITAT. objections before the ITAT. 28. At least, prima facie, non 28. At least, prima facie, non-compliance with jurisdicti compliance with jurisdictional parameters set out under parameters set out under section 153C of the IT Act, if of the IT Act, if established, will go to the root of the matter and even nullify established, will go to the root of the matter and even nullify established, will go to the root of the matter and even nullify the very action initiated under the very action initiated under section 153C of the IT Act. of the IT Act. Based on the material furnished to the assessees, it was the Based on the material furnished to the assessees, it was the Based on the material furnished to the assessees, it was the case of the assessees that what was found in the course of case of the assessees that what was found in the course of case of the assessees that what was found in the course of search proceedings under search proceedings under section 132 of the IT Act in of the IT Act in the premises of the said firm and the said company, were the premises of the said firm and the said company, were the premises of the said firm and the said company, were the books of accounts belonging to the said firm and the said books of accounts belonging to the said firm and the said books of accounts belonging to the said firm and the said company. It is the case of the assessees that no books of company. It is the case of the assessees that no books of company. It is the case of the assessees that no books of accounts belonging to the assessees i.e. Peter Vaz and Edgar accounts belonging to the assessees i.e. Peter Vaz and Edgar accounts belonging to the assessees i.e. Peter Vaz and Edgar Afonso were found Afonso were found in the search proceedings under in the search proceedings under Section 132 in the premises of the said firm and the said company. in the premises of the said firm and the said company. in the premises of the said firm and the said company. Therefore, it was the case of the assessees that no Therefore, it was the case of the assessees that no Therefore, it was the case of the assessees that no proceedings under proceedings under section 153C of the IT Act could ever have of the IT Act could ever have been initiated against these assessees. been initiated against these assessees. 29. Mr. Pardial stressed that the provisions of 29. Mr. Pardial stressed that the provisions of 29. Mr. Pardial stressed that the provisions of Section 153C as amended up to the year 2013 required the as amended up to the year 2013 required the as amended up to the year 2013 required the Assessing Officer to be satisfied that the books of the accounts Assessing Officer to be satisfied that the books of the accounts Assessing Officer to be satisfied that the books of the accounts belonging to the assessees who were proposed be proceeded belonging to the assessees who were proposed be proceeded belonging to the assessees who were proposed be proceeded with under section 153C ought to have been found, as a ought to have been found, as a precondition for any action precondition for any action under section 153C of the IT Act. of the IT Act. For this purpose, he compared the provisions of For this purpose, he compared the provisions of For this purpose, he compared the provisions of Section 153C as amended up to 2020, in which, there is a significant as amended up to 2020, in which, there is a significant as amended up to 2020, in which, there is a significant departure. Amended provisions, which did not apply to the parture. Amended provisions, which did not apply to the parture. Amended provisions, which did not apply to the present present present case, case, case, provided provided provided that that that the the the action action action under section under under 153C was competent was competent was competent even if the even if the even if the books books books of accounts of accounts of accounts "pertaining to" and belonging to the assessee w "pertaining to" and belonging to the assessee w "pertaining to" and belonging to the assessee were found

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during the search under during the search under section 132 upon a person not upon a person not referred to in referred to in Section 153A of IT Act. He submitted that this of IT Act. He submitted that this was an issue of law and the was an issue of law and therefore, the ITAT should have refore, the ITAT should have permitted the assessees to raise this issue even without the permitted the assessees to raise this issue even without the permitted the assessees to raise this issue even without the necessity of filing any cross necessity of filing any cross-objections. He referred to Rule 27 objections. He referred to Rule 27 of the Appellate Tribunal Rules, 1963 to contend that this Rule of the Appellate Tribunal Rules, 1963 to contend that this Rule of the Appellate Tribunal Rules, 1963 to contend that this Rule gives a right to the Respondent Page gives a right to the Respondent Page | 11 Shri Shaunak | 11 Shri Shaunak Jitendra Parikh, A.Y. 1999 Jitendra Parikh, A.Y. 1999-2000 Shri Jay Ketan Parikh, A.Y. 2000 Shri Jay Ketan Parikh, A.Y. 1999-2000 Shri Raj Hiten Parikh, A.Y. 1999 2000 Shri Raj Hiten Parikh, A.Y. 1999-2000 Shri Milan 2000 Shri Milan Kavin Parikh, A.Y. 1997 Kavin Parikh, A.Y. 1997-1998 & Shri Milan Kavin Parikh, A.Y. 1998 & Shri Milan Kavin Parikh, A.Y. 1999-2000 in an appeal before the ITAT to support the orde 2000 in an appeal before the ITAT to support the order 2000 in an appeal before the ITAT to support the orde appealed against on any of the grounds decided against him, appealed against on any of the grounds decided against him, appealed against on any of the grounds decided against him, even though he may not have appealed against the order. even though he may not have appealed against the order. even though he may not have appealed against the order. 30. Rule 27 of the Appellate Tribunal Rules, 1963 reads as 30. Rule 27 of the Appellate Tribunal Rules, 1963 reads as 30. Rule 27 of the Appellate Tribunal Rules, 1963 reads as follows:- "Respondent may support order on grounds decided against "Respondent may support order on grounds decided against "Respondent may support order on grounds decided against him. 27. The respondent, though he may not have appealed, may respondent, though he may not have appealed, may respondent, though he may not have appealed, may support the order appealed against on any of the grounds support the order appealed against on any of the grounds support the order appealed against on any of the grounds decided against him." decided against him." 31. In this case, the assessees merely wanted to support the 31. In this case, the assessees merely wanted to support the 31. In this case, the assessees merely wanted to support the order made by the CIT (Appeals), which was entirely in their order made by the CIT (Appeals), which was entirely in their order made by the CIT (Appeals), which was entirely in their favor. The assessees wished to raise an issue, that was at . The assessees wished to raise an issue, that was at . The assessees wished to raise an issue, that was at least prima facie going to the root of jurisdictions initiate least prima facie going to the root of jurisdictions initiate least prima facie going to the root of jurisdictions initiate proceedings under proceedings under section 153C of the IT Act. Having regard of the IT Act. Having regard to the provisions of rule 27 to the provisions of rule 27 referred to above, the ITAT in our referred to above, the ITAT in our opinion should have permitted the assessees who were opinion should have permitted the assessees who were opinion should have permitted the assessees who were Respondents before it, to support the orders of CIT (Appeals) Respondents before it, to support the orders of CIT (Appeals) Respondents before it, to support the orders of CIT (Appeals) on this ground, even without the necessity of filing any cross on this ground, even without the necessity of filing any cross on this ground, even without the necessity of filing any cross- objections. 32. In Dahod Sahakari Kharid V 32. In Dahod Sahakari Kharid Vechan Sangh Ltd. (supra), the echan Sangh Ltd. (supra), the Division Bench of Gujarat High Court was deciding whether, Division Bench of Gujarat High Court was deciding whether, Division Bench of Gujarat High Court was deciding whether, on the facts and in the circumstances of the case, the Tribunal on the facts and in the circumstances of the case, the Tribunal on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee needed to file was right in law in holding that the assessee needed to file was right in law in holding that the assessee needed to file cross-objections despite fully succeeding objections despite fully succeeding in appeal and in appeal and therefore, being unable to challenge the finding of the CIT therefore, being unable to challenge the finding of the CIT therefore, being unable to challenge the finding of the CIT (Appeals) that the assessee was guilty of concealment of (Appeals) that the assessee was guilty of concealment of (Appeals) that the assessee was guilty of concealment of income and/or furnishing inaccurate particulars. income and/or furnishing inaccurate particulars.

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the correctness of the finding on the bar of Order II Rule 2 the correctness of the finding on the bar of Order II Rule 2 the correctness of the finding on the bar of Order II Rule 2 rendered by the trial Court. rendered by the trial Court. 38. In the present case, it is not as if the issue of non 38. In the present case, it is not as if the issue of non 38. In the present case, it is not as if the issue of non- fulfillment of jurisdictional parameters of ment of jurisdictional parameters of Section 153C Section 153C was raised but rejected by the CIT (Appeals). Such an issue was raised but rejected by the CIT (Appeals). Such an issue was raised but rejected by the CIT (Appeals). Such an issue was not raised before the CIT (Appeals). Having regard to the not raised before the CIT (Appeals). Having regard to the not raised before the CIT (Appeals). Having regard to the provisions of Rule 27 of the Appe provisions of Rule 27 of the Appellate Tribunal Rules, 1963 us llate Tribunal Rules, 1963 us also the provisions of also the provisions of section 260A(7) read with Order XLI read with Order XLI Rule 22 of CPC as interpreted by the Hon'ble Supreme Court in Rule 22 of CPC as interpreted by the Hon'ble Supreme Court in Rule 22 of CPC as interpreted by the Hon'ble Supreme Court in S. Nazeer Ahmed (supra) we think that the ITAT should S. Nazeer Ahmed (supra) we think that the ITAT should S. Nazeer Ahmed (supra) we think that the ITAT should not have precluded the assessees from raising the issue in the have precluded the assessees from raising the issue in the have precluded the assessees from raising the issue in the appeals instituted by the Revenue, even without the necessity appeals instituted by the Revenue, even without the necessity appeals instituted by the Revenue, even without the necessity of filing any cross of filing any cross-objections. Accordingly, the additional objections. Accordingly, the additional substantial question of law is required to be answered in substantial question of law is required to be answered in substantial question of law is required to be answered in favor of the Appellants/assessees and against the Revenue." Appellants/assessees and against the Revenue." Appellants/assessees and against the Revenue." 5.10 We find that the issue in dispute raised in the application the issue in dispute raised in the application the issue in dispute raised in the application under Rule 27 of the ITAT Rules of the assessee is identical to the under Rule 27 of the ITAT Rules of the assessee is identical to the under Rule 27 of the ITAT Rules of the assessee is identical to the facts in the case of Peter Vaz (supra) decided by the Hon’ble facts in the case of ) decided by the Hon’ble Jurisdictional High Court High Court. In the instant case also the issue of n the instant case also the issue of completion of the assessment u/s 153 completion of the assessment u/s 153A of the Act vis vis-à-vis section 153C of the Act is involved is involved,which goes to the root of the goes to the root of the matter,therefore, following following the Hon’ble Jurisdiction urisdictional High Court (supra), we admitted the applications of the assessee under Rule 27 of the assessee under Rule 27 for adjudication.

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company and therefore, said material could only have utilized in the company and therefore, said material could only have company and therefore, said material could only have case of the assessee invoking section 153C of the Act and not case of the assessee invoking section 153C of the Act and not case of the assessee invoking section 153C of the Act and not otherwise therefore, addition made on the basis of the seized diaries otherwise therefore, addition made on the basis of the seized diaries otherwise therefore, addition made on the basis of the seized diaries under the proceedings u/s 153A of the Act is under the proceedings u/s 153A of the Act is without without jurisdiction and therefore, deserve to be deleted. and therefore, deserve to be deleted. In support, the Ld Counsel support, the Ld Counsel referred to the decision of Delhi Bench of Tribunal in the case of referred to the decision of Delhi Bench of Tribunal in the case of referred to the decision of Delhi Bench of Tribunal in the case of Trilok Choudhary (supra). Trilok Choudhary (supra).

6.1 On the contrary, according to the Ld. DR Shri Kumarpal On the contrary, according to the Ld. DR Shri Kumarpal On the contrary, according to the Ld. DR Shri Kumarpal Banda is director of the assessee company and he has been Banda is director of the assessee company and he has been Banda is director of the assessee company and he has been searched as a part of searched as a part of the search of the assessee company and the search of the assessee company and therefore, it cannot be said that Shri Kumarpal Banda was therefore, it cannot be said that Shri Kumarpal Banda was therefore, it cannot be said that Shri Kumarpal Banda was subjected to separate and subjected to separate and an independent search. Thus independent search. Thus, according to the Ld. DR the diaries found during the course of the search are to the Ld. DR the diaries found during the course of the search are to the Ld. DR the diaries found during the course of the search are part of the search proceed part of the search proceedings of the assessee company and ings of the assessee company and therefore, the Assessing Officer has validly made the addition in the therefore, the Assessing Officer has validly made the addition in the therefore, the Assessing Officer has validly made the addition in the case of the assessee on the basis of those diaries. case of the assessee on the basis of those diaries. He submitted that He submitted that facts of the case of Trilok Choudhary( supra) are distinguishable. facts of the case of Trilok Choudhary( supra) are distinguishable. facts of the case of Trilok Choudhary( supra) are distinguishable.

6.2 We find that when any money, bullion, jewellery or other t when any money, bullion, jewellery or other t when any money, bullion, jewellery or other valuable article or books of account or other documents /material is valuable article or books of account or other documents /material is valuable article or books of account or other documents /material is found during the course of search action of a person and those found during the course of search action of a person and those found during the course of search action of a person and those money, bullion, jewellery or the documents belonged to the money, bullion, jewellery or the documents belonged to the money, bullion, jewellery or the documents belonged to the searched person the searched person then, w.e.f. 1/6/2003 the assessments in the n, w.e.f. 1/6/2003 the assessments in the hands of the searched person has to be carried out u/s 153A of the hands of the searched person has to be carried out u/s 153A of the hands of the searched person has to be carried out u/s 153A of the Act. Further, We find that the find that the prior to amendment by prior to amendment by way of

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Finance Act, 2015 w.e.f Finance Act, 2015 w.e.f. 1/6/2015, where the Assessing officer of 2015, where the Assessing officer of searched person is sa searched person is satisfied that any money, jewellery or other tisfied that any money, jewellery or other valuable articles or documents seized from searched person valuable articles or documents seized from searched person valuable articles or documents seized from searched person belonged to third or other person, then belonged to third or other person, then the Section 153C of the Act Section 153C of the Act could be invoked in be invoked in the hand of third or other person person for making assessments.

6.3 W.e.f. 1/6/2015 .f. 1/6/2015 the proceedings u/s 153C can be invoked in the proceedings u/s 153C can be invoked in the hands of third or other person the hands of third or other person, if the Assessing officer of if the Assessing officer of searched person is satisfied that: searched person is satisfied that:

(a) any money, bullion, jewellery or other valuable article or any money, bullion, jewellery or other valuable article or any money, bullion, jewellery or other valuable article or things seized or requisitioned, belongs to things seized or requisitioned, belongs to or (b) , any books of account or documents, seized or requisitioned any books of account or documents, seized or requisitioned any books of account or documents, seized or requisitioned pertains or pertain to , or any information contained therein , pertains or pertain to , or any information contained therein , pertains or pertain to , or any information contained therein , relates to the third person or other person. the third person or other person.

6.4 The assessing officer of searched person is he assessing officer of searched person is he assessing officer of searched person is required to be hand over the said assets or material or documents id assets or material or documents to the Assessing to the Assessing Officer having jurisdiction Officer having jurisdiction over such other person, person, in accordance with the provision of section 153C of the Act. Thus, for invoking with the provision of section 153C of the Act. Thus with the provision of section 153C of the Act. Thus section 153C of the Act the Assessing Officer of the searched person section 153C of the Act the Assessing Officer of the search section 153C of the Act the Assessing Officer of the search has to first satisfied that the material or assets seized during the to first satisfied that the material or assets seized during the to first satisfied that the material or assets seized during the course of the searched person belongs to third person. In the case course of the searched person belongs to third person course of the searched person belongs to third person before us, the issue in dispute is whether the three diaries before us, the issue in dispute is whether the three diaries before us, the issue in dispute is whether the three diaries

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(labeledas A-2 to A-4 ) 4 ) seized from the residence of Shri Kuma of Shri Kumarpal Banda, which is basis in the addition of suppressed of sale in the which is basis in the addition of suppressed of sale in the which is basis in the addition of suppressed of sale in the case of the assessee, , have been found during the course of search have been found during the course of search on the assessee or not or not. There is no dispute on the There is no dispute on the fact that Shri Kumarpal Banda is director of the assessee Kumarpal Banda is director of the assessee-company a company and his residence has been search has been searchedas part of the search proceedings in the search proceedings in the case of the assessee company and therefore, said material is part of case of the assessee company and therefore, said material is part of case of the assessee company and therefore, said material is part of the search conducted and carried out on the assessee. Hence, the the search conducted and carried out on the assessee the search conducted and carried out on the assessee Assessing Officer has Assessing Officer has validly used said seized said seized documents for making addition in the case of the assessee in the case of the assessee u/s 153A of the Act u/s 153A of the Act. It may be noted that assessee himself has declared undisclosed may be noted that assessee himself has declared undisclosed may be noted that assessee himself has declared undisclosed income of more than Rs.10 crores on the basis of those diaries in income of more than Rs.10 crores on the basis of those diaries in income of more than Rs.10 crores on the basis of those diaries in the return of income filed for assessment year 2 the return of income filed for assessment year 2015 015-16, thus the assessee has himself has treated those diaries as part of the search assessee has himself has treated those diaries as part of the search assessee has himself has treated those diaries as part of the search action carried out on the assessee action carried out on the assessee. As far as the decision in the case As far as the decision in the case of Trilok Choudhary (sura) is of Trilok Choudhary (sura) is concerned, we find that the addition we find that the addition in the case of Trilok Choudhary in the case of Trilok Choudhary for items given on marriage of his for items given on marriage of his daughter and found from the premises of Sh Ashok Chaudhary was daughter and found from the premises of Sh Ashok Chaudhary was daughter and found from the premises of Sh Ashok Chaudhary was made. The Tribunal (supra) has noted that search in the case of search in the case of Trilok Choudhary is independent of the search carried out at the Trilok Choudhary is independent of the search carried out at the Trilok Choudhary is independent of the search carried out at the Premise of Sh Ashok Choudhary Premise of Sh Ashok Choudhary. There was no link of both . There was no link of both searches and thus Tribunal held that searches and thus Tribunal held that material found found during search of one person cannot be used in the assessment of third person of one person cannot be used in the assessment of third person of one person cannot be used in the assessment of third person without invoking section 153C of the Act. Thus, facts of Trilok without invoking section 153C of the Act. Thus, facts of Trilok without invoking section 153C of the Act. Thus, facts of Trilok Choudhary Choudhary (supra) (supra) are are distinguishable.In distinguishab n the the facts and

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circumstances of the case, of the case, we reject the contention of the Ld. we reject the contention of the Ld. Counsel of the assessee that assessment in respect of diaries Counsel of the assessee that assessment in respect of diaries Counsel of the assessee that assessment in respect of diaries should have been made invoking section 153C of the Act. In the should have been made invoking section 153C of the Act. In the should have been made invoking section 153C of the Act. In the result, the issue-in in-dispute raised in grounds u grounds under Rule 27 application is dismissed. dismissed.

7.1 In the assessment year 2015 In the assessment year 2015-16, the Ld. CIT(A) has upheld the 16, the Ld. CIT(A) has upheld the existence of the incriminating material qua the addition of existence of the incriminating material qua the addition of existence of the incriminating material qua the addition of undisclosed income based on suppression of the sales, whereas for undisclosed income based on suppression of the sales undisclosed income based on suppression of the sales AYs 2014-15 and 2016 15 and 2016-17 to 2018-19, held that no incriminating held that no incriminating material exist qua the addition of suppression of sales. erial exist qua the addition of suppression of sales. erial exist qua the addition of suppression of sales.

Appeal: ITA No. 3034/Mum/2022 for AY 2015 3034/Mum/2022 for AY 2015-16 16

7.2 Therefore, now, , we take up the appeal of assessment year assessment year 2015-16 for adjudication. The grounds of appeal raised by the 16 for adjudication. The grounds of appeal raised by the 16 for adjudication. The grounds of appeal raised by the Revenue for assessment year 2015 Revenue for assessment year 2015-16 are accordingly reproduced 16 are accordingly reproduced as under:

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vs.Continental WarehousingCorporation 2015 374 IT 645] vs.Continental WarehousingCorporation 2015 374 IT 645] vs.Continental WarehousingCorporation 2015 374 IT 645] ignoring the fact that appeal is pending before the Hon'ble ignoring the fact that appeal is pending before the Hon'ble ignoring the fact that appeal is pending before the Hon'ble Supreme Court of India on this issue of power conferred by Supreme Court of India on this issue of power conferred by Supreme Court of India on this issue of power conferred by section 153A o section 153A of the Act' which was not adjudicated upon', f the Act' which was not adjudicated upon', 7.3 During uring the the course course of of hearing, the the Ld. Ld. Departmental Departmental Representative (DR) filed revised grounds of the appeal challenging Representative (DR) filed revised grounds of the appeal challenging Representative (DR) filed revised grounds of the appeal challenging all the additions deleted by the Ld. CIT(A). The grounds raised by the additions deleted by the Ld. CIT(A). The grounds raised by the additions deleted by the Ld. CIT(A). The grounds raised by the Revenue relate to relate to following additions, which were made by the following additions, which were made by the Assessing Officer:

(i) addition of rupees 41,83,30,486/ (i) addition of rupees 41,83,30,486/- for unaccounted business for unaccounted business turnover appearing in diaries A turnover appearing in diaries A-2 to A-4, computed applying computed applying gross profit rate on such unaccounted unaccounted turnover,

(ii) accommodation ent (ii) accommodation entry of unsecured loan of rupees 2,40,00,000/ ry of unsecured loan of rupees 2,40,00,000/- held as unexplained cash credit under section 68 of the Act held as unexplained cash credit under section 68 of the Act held as unexplained cash credit under section 68 of the Act

(iii) unexplained expenditure under section 60 9C of the act for(a) (iii) unexplained expenditure under section 60 9C of the act for(a) (iii) unexplained expenditure under section 60 9C of the act for(a) interest on accommodation entry of unsecured loan of rupees, interest on accommodation entry of unsecured loan of rupees, interest on accommodation entry of unsecured loan of rupees, 31,22,296/- (b) commis (b) commission for arranging accommodation entry of sion for arranging accommodation entry of unsecured loan of ₹ 60,000/ 60,000/-

(iv) disallowance of unverified labour services of allowance of unverified labour services of ₹ 78, 27, 700/ 78, 27, 700/-

(v) personal expenditure of Rs. 63, 496/ (v) personal expenditure of Rs. 63, 496/-

8.0 Regarding the additions Regarding the additions of accommodation entry of unsecured of accommodation entry of unsecured loan [ items no. (ii) and (iii) above] loan [ items no. (ii) and (iii) above] , the Assessing Officer the Assessing Officer recorded

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the information in respect of unsecured loan parties and observed information in respect of unsecured loan parties and observed information in respect of unsecured loan parties and observed as under:

(i) EssarIndia Ltd: (i) EssarIndia Ltd: Kolkata Investigation Directorate in its Investigation report Kolkata Investigation Directorate in its Investigation report Kolkata Investigation Directorate in its Investigation report (Ref:F.NO 75A/2015 (Ref:F.NO 75A/2015-16/257-273 dated 27.04.2015 of Pr.DIT 273 dated 27.04.2015 of Pr.DIT (Inv.), Kolkata)had given the finding th (Inv.), Kolkata)had given the finding that the company M/s at the company M/s Esaar(India) Ltd is a penny scrip and it is being used to Esaar(India) Ltd is a penny scrip and it is being used to Esaar(India) Ltd is a penny scrip and it is being used to provide accommodation entries to various beneficiaries provide accommodation entries to various beneficiaries provide accommodation entries to various beneficiaries through rigging of shares. The name of the company also through rigging of shares. The name of the company also through rigging of shares. The name of the company also features in the list of confirmed shell companies as circulated features in the list of confirmed shell companies as circulated features in the list of confirmed shell companies as circulated by FlU IND. The Entry operators and Exit providers recorded lU IND. The Entry operators and Exit providers recorded lU IND. The Entry operators and Exit providers recorded during 133A of the Income tax Act, have accepted that the during 133A of the Income tax Act, have accepted that the during 133A of the Income tax Act, have accepted that the scrip of Esaar(India) Ltd has been used for providing scrip of Esaar(India) Ltd has been used for providing scrip of Esaar(India) Ltd has been used for providing accommodation entries. Mr. Kumarpal Banda, the director of accommodation entries. Mr. Kumarpal Banda, the director of accommodation entries. Mr. Kumarpal Banda, the director of the company M/s GM Modular Pv the company M/s GM Modular Pvt Ltd in his statement t Ltd in his statement recorded us 132(4) of the Income recorded us 132(4) of the Income-tax Act, 1961 on 14.11.2019, tax Act, 1961 on 14.11.2019, has accepted that the loans taken from M/s Esaar(India) Ltd has accepted that the loans taken from M/s Esaar(India) Ltd has accepted that the loans taken from M/s Esaar(India) Ltd are not genuine. Further an opportunity was given to the are not genuine. Further an opportunity was given to the are not genuine. Further an opportunity was given to the assesseei.e. Mr.Jayantilal Jain, Promoter of M Group o assesseei.e. Mr.Jayantilal Jain, Promoter of M Group o assesseei.e. Mr.Jayantilal Jain, Promoter of M Group on 12.01.2020, to produce the party to verify its claim that the 12.01.2020, to produce the party to verify its claim that the 12.01.2020, to produce the party to verify its claim that the unsecured loan is genuine. But the assessee failed to produce unsecured loan is genuine. But the assessee failed to produce unsecured loan is genuine. But the assessee failed to produce the party and thus has failed to discharge its onus to explain the party and thus has failed to discharge its onus to explain the party and thus has failed to discharge its onus to explain the source of credit. the source of credit. (ii)Mora Industries Ltd: (ii)Mora Industries Ltd: The registered add The registered address of the company MIs Morya Industries ress of the company MIs Morya Industries Ltd is C 313, Morya House, New Link Road, Andheri (W), Ltd is C 313, Morya House, New Link Road, Andheri (W), Ltd is C 313, Morya House, New Link Road, Andheri (W), Mumbai- 400053.Mr. Kumarpal Banda, the director of M/s 400053.Mr. Kumarpal Banda, the director of M/s 400053.Mr. Kumarpal Banda, the director of M/s GM Modular Pt Ltd in his statement recorded u/s 132(4) of the GM Modular Pt Ltd in his statement recorded u/s 132(4) of the GM Modular Pt Ltd in his statement recorded u/s 132(4) of the Income-tax Act, 1961 on 14.11.2019, has adm tax Act, 1961 on 14.11.2019, has admitted that loans itted that loans taken from M/s MoryalndustriesLtdis not genuine. An taken from M/s MoryalndustriesLtdis not genuine. An taken from M/s MoryalndustriesLtdis not genuine. An opportunity was given to the assessee i.e. Mr. Jayantilal Jain, opportunity was given to the assessee i.e. Mr. Jayantilal Jain, opportunity was given to the assessee i.e. Mr. Jayantilal Jain, Promoter of GM Group on 12.01.2020 to produce the party to Promoter of GM Group on 12.01.2020 to produce the party to Promoter of GM Group on 12.01.2020 to produce the party to verify its claim that the unsecured loan is genuine. But verify its claim that the unsecured loan is genuine. But verify its claim that the unsecured loan is genuine. But theassessee failed to produce the party and thus failed to ssee failed to produce the party and thus failed to ssee failed to produce the party and thus failed to discharge its onus to explain the source of credit discharge its onus to explain the source of credit.” .” (iii) NCL Research and Financial Services Ltd (iii) NCL Research and Financial Services Ltd (iii) NCL Research and Financial Services Ltd –

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The company is a proven penny scrip as per the report of The company is a proven penny scrip as per the report of The company is a proven penny scrip as per the report of Kolkata Investigation Directorate(Ref: F. No 7 Kolkata Investigation Directorate(Ref: F. No 7 Kolkata Investigation Directorate(Ref: F. No 75A/2015- 16/257-273 dated 27.04.2015 of Pr.DIT (Inv.), Kolkata). 273 dated 27.04.2015 of Pr.DIT (Inv.), Kolkata). 273 dated 27.04.2015 of Pr.DIT (Inv.), Kolkata). Statement of Mr. Mahavir Prasad Saraswat one of the director Statement of Mr. Mahavir Prasad Saraswat one of the director Statement of Mr. Mahavir Prasad Saraswat one of the director of the company Ms NCL Research and Financial Services Ltd of the company Ms NCL Research and Financial Services Ltd of the company Ms NCL Research and Financial Services Ltd was recorded u/s 131 of the Income was recorded u/s 131 of the Income-tax Act. 1961 on tax Act. 1961 on 27.05.2015 by DDIT(In 27.05.2015 by DDIT(In) Kolkata. He was asked about the ) Kolkata. He was asked about the business activities of the company, questions about the books business activities of the company, questions about the books business activities of the company, questions about the books of accounts of the company and the number of AGM attended. of accounts of the company and the number of AGM attended. of accounts of the company and the number of AGM attended. He was not able to answer these questions. He has agreed He was not able to answer these questions. He has agreed He was not able to answer these questions. He has agreed that he is just a dummy director in the comp that he is just a dummy director in the company and has no any and has no knowledge about the business of the company. A statement of knowledge about the business of the company. A statement of knowledge about the business of the company. A statement of Mr. Vijay Poddar, the director of Ms NCL Research and Mr. Vijay Poddar, the director of Ms NCL Research and Mr. Vijay Poddar, the director of Ms NCL Research and Financial Services Ltd was also recorded u/s 131 of the Financial Services Ltd was also recorded u/s 131 of the Financial Services Ltd was also recorded u/s 131 of the Income-tax Act, 1961 on 27.05.2015 during the process of tax Act, 1961 on 27.05.2015 during the process of tax Act, 1961 on 27.05.2015 during the process of Survey u/s 133 Survey u/s 133A of the Income-tax Act, 1961 at the registered tax Act, 1961 at the registered premises of the company. In reply to Q.56 Mr. Vijay Poddar premises of the company. In reply to Q.56 Mr. Vijay Poddar premises of the company. In reply to Q.56 Mr. Vijay Poddar had accepted that the company is a penny stock company and had accepted that the company is a penny stock company and had accepted that the company is a penny stock company and is in the business of providing accommodation entries. A is in the business of providing accommodation entries. A is in the business of providing accommodation entries. A survey action us 133A of the Inco survey action us 133A of the Income-tax Act. 1961 was tax Act. 1961 was carried out at the registered address of the company on carried out at the registered address of the company on carried out at the registered address of the company on 13.11.2019. Statement of Mr. Mayank Singh, the CFO of the 13.11.2019. Statement of Mr. Mayank Singh, the CFO of the 13.11.2019. Statement of Mr. Mayank Singh, the CFO of the company was recorded us 131 of the Income company was recorded us 131 of the Income-tax Act, 1961 on tax Act, 1961 on 15.11.2019. Mr. Mayank Singh in his statement has accepted 15.11.2019. Mr. Mayank Singh in his statement has accepted 15.11.2019. Mr. Mayank Singh in his statement has accepted that Mr. Goutam Bose is now the Managing Director of the t Mr. Goutam Bose is now the Managing Director of the t Mr. Goutam Bose is now the Managing Director of the company. Statement of Mr. Goutam Bose was recorded by company. Statement of Mr. Goutam Bose was recorded by company. Statement of Mr. Goutam Bose was recorded by DDIT (Inv) Kolkata on 27.05.2015. Mr. Goutam Bose in his DDIT (Inv) Kolkata on 27.05.2015. Mr. Goutam Bose in his DDIT (Inv) Kolkata on 27.05.2015. Mr. Goutam Bose in his statement has accepted that he is a dummy director in the statement has accepted that he is a dummy director in the statement has accepted that he is a dummy director in the company and has no idea about the company and has no idea about the affairs of the company. affairs of the company. An opportunity was given to the assessee i.e. Mr. Jayantilal An opportunity was given to the assessee i.e. Mr. Jayantilal An opportunity was given to the assessee i.e. Mr. Jayantilal Jain, Promoter of GM Group on 12.01.2020, to produce the Jain, Promoter of GM Group on 12.01.2020, to produce the Jain, Promoter of GM Group on 12.01.2020, to produce the party to verify its claim that the unsecured loan is genuine. party to verify its claim that the unsecured loan is genuine. party to verify its claim that the unsecured loan is genuine. But the assessee failed to produce the party and th But the assessee failed to produce the party and th But the assessee failed to produce the party and thus failed to discharge its onus to explain the source of credit. discharge its onus to explain the source of credit. (iv) Tanaya Vincom P Ltd : (iv) Tanaya Vincom P Ltd : A survey action us 133A of the Income A survey action us 133A of the Income-tax Act, 1961 was tax Act, 1961 was carried carried carried out out out in in in the the the premises premises premises of of of the the the company company company M/s M/s M/s TanayaVincomPt Ltd on 13.11.2019. The survey authorization TanayaVincomPt Ltd on 13.11.2019. The survey authorization TanayaVincomPt Ltd on 13.11.2019. The survey authorization could not be served as the company was not found at the could not be served as the company was not found at the could not be served as the company was not found at the premises. Efforts were also made to record the statement of premises. Efforts were also made to record the statement of premises. Efforts were also made to record the statement of

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Mr. Sandip Kumar Jain and Mr. Om PrakashSaraswat, Mr. Sandip Kumar Jain and Mr. Om PrakashSaraswat, Mr. Sandip Kumar Jain and Mr. Om PrakashSaraswat, Directors of the company but the same were not traceable at Directors of the company but the same were not traceable at Directors of the company but the same were not traceable at the address provided in the IT the address provided in the IT. An opportunity was given to . An opportunity was given to the assessee i.e. Mr. Jayantilal Jain, Promoter of GM Group the assessee i.e. Mr. Jayantilal Jain, Promoter of GM Group the assessee i.e. Mr. Jayantilal Jain, Promoter of GM Group on12.01.2020, to produce the party to verify its claim that the on12.01.2020, to produce the party to verify its claim that the on12.01.2020, to produce the party to verify its claim that the unsecured loan is genuine. But the assessee failed to produce unsecured loan is genuine. But the assessee failed to produce unsecured loan is genuine. But the assessee failed to produce the party and thus failed to discharge i the party and thus failed to discharge its onus to explain the ts onus to explain the source of credit. source of credit. (v) Ojas Assets Reconstruction Ltd (v) Ojas Assets Reconstruction Ltd : The company was Non filer for the assessment year in which The company was Non filer for the assessment year in which The company was Non filer for the assessment year in which loan has been given. The company is said to be transacting in loan has been given. The company is said to be transacting in loan has been given. The company is said to be transacting in huge transaction to the tune of Rs.37 lacs and still a no huge transaction to the tune of Rs.37 lacs and still a no huge transaction to the tune of Rs.37 lacs and still a non filer adds credence to the fact that this could be merely a book adds credence to the fact that this could be merely a book adds credence to the fact that this could be merely a book entry. The identity of the lender is not established.Mr. entry. The identity of the lender is not established.Mr. entry. The identity of the lender is not established.Mr. Kumarpal Banda, the director of M/s GM Modular Pt Ltd in his Kumarpal Banda, the director of M/s GM Modular Pt Ltd in his Kumarpal Banda, the director of M/s GM Modular Pt Ltd in his statement recorded u/s 132(4) of the Income statement recorded u/s 132(4) of the Income-tax Act, 1961 on tax Act, 1961 on 14.11.2019 has submitted that they have accepted loan has submitted that they have accepted loan entries from the company M/s Ojas Assets Reconstruction Ltd. entries from the company M/s Ojas Assets Reconstruction Ltd. entries from the company M/s Ojas Assets Reconstruction Ltd. The family members of the group have also declared the The family members of the group have also declared the The family members of the group have also declared the amount taken as LTCG in the company scrip in Income amount taken as LTCG in the company scrip in Income amount taken as LTCG in the company scrip in Income Declaration Scheme Declaration Scheme-2016 (IDS-2016).An opport 2016).An opportunity was given to the assesseei.e. Mr. Jayantilal Jain, Promoter of GM given to the assesseei.e. Mr. Jayantilal Jain, Promoter of GM given to the assesseei.e. Mr. Jayantilal Jain, Promoter of GM Group on 12.01.2020 to produce the party to verify its claim Group on 12.01.2020 to produce the party to verify its claim Group on 12.01.2020 to produce the party to verify its claim that the unsecured loan is genuine. But the assessee failed to that the unsecured loan is genuine. But the assessee failed to that the unsecured loan is genuine. But the assessee failed to produce the party and thus failed to discharge its onus to produce the party and thus failed to discharge its onus to produce the party and thus failed to discharge its onus to explain the source of credit xplain the source of credit 8.1 The Ld. CIT(A) following the jurisdictional High Court in the he Ld. CIT(A) following the jurisdictional High Court in the he Ld. CIT(A) following the jurisdictional High Court in the case of Continental warehousing Corporation (supra) Continental warehousing Corporation (supra) Continental warehousing Corporation (supra) deleted the additions on the ground that there was no incriminating material additions on the ground that there was no incriminating material additions on the ground that there was no incriminating material found during the course of the se found during the course of the search qua those additions. arch qua those additions. The relevant funding of the Ld. CIT(A) is reproduced as under: relevant funding of the Ld. CIT(A) is reproduced as under: relevant funding of the Ld. CIT(A) is reproduced as under:

“6.19 Conclusion 6.19 Conclusion-The aforesaid detailed discussion with The aforesaid detailed discussion with respect to various judicial decisions clearly laid down the respect to various judicial decisions clearly laid down the respect to various judicial decisions clearly laid down the following principles following principles -

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(i)the assessments which hav (i)the assessments which have been concluded u/s 143(3) of e been concluded u/s 143(3) of the Act and not pending at the time of search proceedings, do the Act and not pending at the time of search proceedings, do the Act and not pending at the time of search proceedings, do not abate. (ii) for this purpose, intimation w/ 143(1) would constitute an for this purpose, intimation w/ 143(1) would constitute an for this purpose, intimation w/ 143(1) would constitute an assessment, relying on the decision of Hon'ble Bombay High assessment, relying on the decision of Hon'ble Bombay High assessment, relying on the decision of Hon'ble Bombay High Court in CIT V/s Gurinder Sin Court in CIT V/s Gurinder Singh Bawa (79 taxmann.com 398) gh Bawa (79 taxmann.com 398) (iii) the proceedings us 153A of the Act do not empower the the proceedings us 153A of the Act do not empower the the proceedings us 153A of the Act do not empower the Assessing officer to re Assessing officer to re-adjudicate the settled issues again, adjudicate the settled issues again, unless fresh incriminating material for the relevant year is unless fresh incriminating material for the relevant year is unless fresh incriminating material for the relevant year is found during the course of search proceedings found during the course of search proceedings. (iv) the Assessing officer does not have jurisdiction to make (iv) the Assessing officer does not have jurisdiction to make (iv) the Assessing officer does not have jurisdiction to make additions/disallowances which are not based on relevant additions/disallowances which are not based on relevant additions/disallowances which are not based on relevant incriminating material found during the course of search incriminating material found during the course of search incriminating material found during the course of search proceedings. proceedings. (v) in the case of completed/un in the case of completed/un-abetted assessments, where abetted assessments, where no incriminatingmaterial is found during the course of search, iminatingmaterial is found during the course of search, iminatingmaterial is found during the course of search, the assessment w/s 1534 of the Act is to be made on the assessment w/s 1534 of the Act is to be made on the assessment w/s 1534 of the Act is to be made on originally assessed/returned income and no addition or originally assessed/returned income and no addition or originally assessed/returned income and no addition or disallowance can be made de hors the incriminating evidence disallowance can be made de hors the incriminating evidence disallowance can be made de hors the incriminating evidence for the relevant year are recover for the relevant year are recovered during the course of ed during the course of search. (vi)Any admission or confession needs corroboration with (vi)Any admission or confession needs corroboration with (vi)Any admission or confession needs corroboration with evidence. In order to make a genuine and legally sustainable evidence. In order to make a genuine and legally sustainable evidence. In order to make a genuine and legally sustainable addition on the basis of admission or confession during search addition on the basis of admission or confession during search addition on the basis of admission or confession during search action, it is necessary that some incrimina action, it is necessary that some incriminating material must ting material must have been found to correlate the undisclosed income with have been found to correlate the undisclosed income with have been found to correlate the undisclosed income with such statement. such statement. (vii)Any statement recorded under section 132(4) cannot be (vii)Any statement recorded under section 132(4) cannot be (vii)Any statement recorded under section 132(4) cannot be considered as incriminating material found in the course of considered as incriminating material found in the course of considered as incriminating material found in the course of search search search as as as these these these are are are recorded recorded recorded to to to elicit elicit elicit more more more information/explanation nformation/explanation nformation/explanation of of of the the the search search search person person person on on on the the the incriminating documents/gold/jewellery found during search. incriminating documents/gold/jewellery found during search. incriminating documents/gold/jewellery found during search. 6.20 After carefully going through the remand report & 6.20 After carefully going through the remand report & 6.20 After carefully going through the remand report & assessment order, written submission & rejoinder filed by the assessment order, written submission & rejoinder filed by the assessment order, written submission & rejoinder filed by the appellant, it is observed th appellant, it is observed that the remaining five additions i.e., at the remaining five additions i.e., on account of accommodation entry of unsecured loan us 68 of on account of accommodation entry of unsecured loan us 68 of on account of accommodation entry of unsecured loan us 68 of Rs. 2,40,00,000/ Rs. 2,40,00,000/-, unexplained expenditure us. 69C related to , unexplained expenditure us. 69C related to

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interest on accommodation entry of unsecured loan of Rs. interest on accommodation entry of unsecured loan of Rs. interest on accommodation entry of unsecured loan of Rs. 31,22,296/-& commission for arranging & commission for arranging accommodation entry accommodation entry of unsecured loan of Rs.60,000/, disallowance of unverified of unsecured loan of Rs.60,000/, disallowance of unverified of unsecured loan of Rs.60,000/, disallowance of unverified labour services of Rs.78,27,700/ labour services of Rs.78,27,700/- and personal expenditure of and personal expenditure of Rs. 4,63,496/ Rs. 4,63,496/- are not connected with any incriminating are not connected with any incriminating documents found/seized during the search proceedings at th documents found/seized during the search proceedings at th documents found/seized during the search proceedings at the business/residential business/residential business/residential premises premises premises of of of the the the assessee's assessee's assessee's group group group concerns. As far as these five (5) additions are concerned, concerns. As far as these five (5) additions are concerned, concerns. As far as these five (5) additions are concerned, neither there is mention of any Annexure to the panchanama neither there is mention of any Annexure to the panchanama neither there is mention of any Annexure to the panchanama prepared at the time of search proceedings, reflecting prepared at the time of search proceedings, reflecting prepared at the time of search proceedings, reflecting detection or seizure of an detection or seizure of any incriminating document nor y incriminating document nor mention of any statement recorded during the search mention of any statement recorded during the search mention of any statement recorded during the search proceedings which can remotely be connected with any proceedings which can remotely be connected with any proceedings which can remotely be connected with any incriminating document found and/or seized during the incriminating document found and/or seized during the incriminating document found and/or seized during the search action at the premises of the appellant or it's group search action at the premises of the appellant or it's group search action at the premises of the appellant or it's group concerns. s. s. Considering Considering Considering the the the totality totality totality of of of thefacts thefacts thefacts and and and circumstances, I am of the considered view that these five (5) circumstances, I am of the considered view that these five (5) circumstances, I am of the considered view that these five (5) additions cannot survive de hors the incriminating evidences additions cannot survive de hors the incriminating evidences additions cannot survive de hors the incriminating evidences as held in the above binding judicial decisions. The AO is as held in the above binding judicial decisions. The AO is as held in the above binding judicial decisions. The AO is accordingly directed to delet accordingly directed to delete the impugned additions made in e the impugned additions made in the assessment order. Thus, the ground of appeal no. 1 & 2 the assessment order. Thus, the ground of appeal no. 1 & 2 the assessment order. Thus, the ground of appeal no. 1 & 2 are allowed to the extent of these five (5) additions only. are allowed to the extent of these five (5) additions only. are allowed to the extent of these five (5) additions only.” 8.2 We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant mate dispute and perused the relevant material on record. record. It is the contention of the contention of the learned departmental learne departmental representative representative that that Assessing Officer has referred to information and observations Assessing Officer has referred to information and observations Assessing Officer has referred to information and observations during the course of the search including the confessional during the course of the search including the confessional during the course of the search including the confessional statement of Sh Kumarpal Banda statement of Sh Kumarpal Banda, who is director o who is director of the assessee company and also sh company and also sh Jayantilal Jain, who is one of the main who is one of the main promoters of the assessee company. The learne of the assessee company. The learned d departmental representative also referred to the information gathered in respect of representative also referred to the information gathered in respect of representative also referred to the information gathered in respect of the unsecured loan parties in the unsecured loan parties in period prior to sear prior to search and post search period and also survey carried out and also survey carried out independently independently under section 133A of the A Act. The learnedcounsel of the assessee on the of the assessee on the

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other hand submitted that sh Kumar Pal Banda has already other hand submitted that sh Kumar Pal Banda has already other hand submitted that sh Kumar Pal Banda has already retracted from his statement and there was no corroborating retracted from his statement and there was no retracted from his statement and there was no material to his statement. Regarding the statement of the Jayantilal to his statement. Regarding the statement of the Jayantilal to his statement. Regarding the statement of the Jayantilal Jain, it was submitted that same was recorded in post search it was submitted that same was recorded in post search it was submitted that same was recorded in post search proceeding and not part of search proceeding. Regarding surveys proceeding and not part of search proceeding. Regarding surveys proceeding and not part of search proceeding. Regarding surveys under section 133A of the under section 133A of the Act also he submitted that same ct also he submitted that same were conducted independently and cannot be said as part of the search conducted independently and cannot be said as part of the search conducted independently and cannot be said as part of the search proceeding in the case of the assessee. proceeding in the case of the assessee.

8.3 On perusal of On perusal of the observation of the Assessing Officer observation of the Assessing Officer reproduced above, we find that he has referred mainly to the , we find that he has referred mainly to the , we find that he has referred mainly to the information gathered in res information gathered in respect of unsecured loan parties in pect of unsecured loan parties in proceedings carried out prior to the search the case of the assessee. proceedings carried out prior to the search the case of the assessee. proceedings carried out prior to the search the case of the assessee. For example, in the case of in the case of ‘Essar India Ltd’, the Assessing Officer , the Assessing Officer has referred to the letter of Principal director of Income-tax has referred to the letter of Principal director of has referred to the letter of Principal director of (Investigation) alleging the Essar India Ltd ging the Essar India Ltd as accommodation as accommodation entry provider,which is dated 27/04/2015, is dated 27/04/2015, i.e. much prior to the much prior to the date of the search in the case of the assessee. the search in the case of the assessee. Similarly in the case of Similarly in the case of ‘NCL Research and financial services Ltd Research and financial services Ltd’, the Assessing Officer has , the Assessing Officer has referred to the statement of ed to the statement of ‘Mr Gautam Bose Mr Gautam Bose’ recorded on 27/05/2015 by the Deputy director of 27/05/2015 by the Deputy director of Income-tax (Inv), Kolkatta. tax (Inv), Kolkatta. The relevant information being not found or seized during the information being not found or seized during the information being not found or seized during the course of the search in the case of the assessee course of the search in the case of the assessee ,therefore cannot be therefore cannot be invoked for making addition in the assessment year under for making addition in the assessment year under for making addition in the assessment year under consideration consideration consideration being being unabated being unabated unabated assessment assessment assessment as as as held held by held by by the the the

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jurisdictional High Court in the case of continental warehousing jurisdictional High Court in the case of continental warehousing jurisdictional High Court in the case of continental warehousing Corporation (supra). The Assessing Officer Corporation (supra). The Assessing Officer has further has further supported the addition of unsec the addition of unsecured loan relying on the confessional on the confessional statement of Sri, Kumar pal Banda, which was retracted later on. In statement of Sri, Kumar pal Banda, which was retracted later on. In statement of Sri, Kumar pal Banda, which was retracted later on. In the case of PCIT v. Best Infrastructure (India) Pvt. Ltd. 2017 (8) PCIT v. Best Infrastructure (India) Pvt. Ltd. 2017 (8) PCIT v. Best Infrastructure (India) Pvt. Ltd. 2017 (8) TMI 250,it is held that a confessional statement made during the it is held that a confessional statement made during the it is held that a confessional statement made during the course of the search cannot be held to be an incriminating material ch cannot be held to be an incriminating material ch cannot be held to be an incriminating material on the stand-alone basis unless supported by alone basis unless supported by alone basis unless supported by corroborating evidences. In the case of the assessee no incriminating information . In the case of the assessee no incriminating information . In the case of the assessee no incriminating information or observations have been gathered by the search team. The or observations have been gathered by the search team. The or observations have been gathered by the search team. The Assessing Officer has also referred to statement of sh Jayanti Lal as also referred to statement of sh Jayanti Lal as also referred to statement of sh Jayanti Lal Jain that he failed to produce the parties during the course of the Jain that he failed to produce the parties during the course of the Jain that he failed to produce the parties during the course of the search to discharge his onus. But said statement has been recorded search to discharge his onus. But said statement has been recorded search to discharge his onus. But said statement has been recorded in post search proceedings on 12/01/2020 and therefore cannot be search proceedings on 12/01/2020 and therefore cannot be search proceedings on 12/01/2020 and therefore cannot be said to be even part of the search proceedings. be even part of the search proceedings. The information The information gathered in other independent survey under section 133A of the Act gathered in other independent survey under section 133A of the gathered in other independent survey under section 133A of the in the case of ‘Tanaya Vincom P Ltd Tanaya Vincom P Ltd’ is also not part of the search is also not part of the search proceedings in the case of the assessee. proceedings in the case of the assessee.

8.4 On the issue of con On the issue of confessional statement of Sri Kumar Pal fessional statement of Sri Kumar Pal Banda and statement of Sri Jayantilal Jain, Banda and statement of Sri Jayantilal Jain, the coordinate bench of the coordinate bench of the Tribunal in the case of a sister concern of assessee namely in the case of a sister concern of assessee namely M/s in the case of a sister concern of assessee namely G-Ninemodular p Ltd in ITA No. p Ltd in ITA No. 3214/Mum/2022 3214/Mum/2022 and othersheld it to be to be non-incriminating,relying on the decision of relying on the decision of

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hon’ble Delhi High Court in the case of Be hon’ble Delhi High Court in the case of Best Infrastructure p Ltd st Infrastructure p Ltd (supra), observing as under: observing as under:

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he stated that part of the unsecured loan was not genuine he stated that part of the unsecured loan was not genuine he stated that part of the unsecured loan was not genuine and settled in cash. The Ld. Counsel has submitted that and settled in cash. The Ld. Counsel has submitted that and settled in cash. The Ld. Counsel has submitted that the said statement has already been withdrawn. No other the said statement has already been withdrawn. No other the said statement has already been withdrawn. No other corroborative evidence or seized material has b corroborative evidence or seized material has b corroborative evidence or seized material has been found during the course of the search which could indicate that during the course of the search which could indicate that during the course of the search which could indicate that those unsecured loans are not genuine. The Ld. Counsel those unsecured loans are not genuine. The Ld. Counsel those unsecured loans are not genuine. The Ld. Counsel has referred to the decision of the Hon’ble Delhi High Court has referred to the decision of the Hon’ble Delhi High Court has referred to the decision of the Hon’ble Delhi High Court in the case of PCIT v. Best Infrastructure (India) Pvt. PCIT v. Best Infrastructure (India) Pvt. PCIT v. Best Infrastructure (India) Pvt. Ltd. 2017 (8) T Ltd. 2017 (8) TMI 250.The relevant finding of the Hon’ble The relevant finding of the Hon’ble Delhi High Court (supra) is reproduced as under: Delhi High Court (supra) is reproduced as under: Delhi High Court (supra) is reproduced as under: “38. Fifthly, statements recorded under Section 132 (4) of the Act of “38. Fifthly, statements recorded under Section 132 (4) of the Act of “38. Fifthly, statements recorded under Section 132 (4) of the Act of the Act do not by themselves constitute incriminating material as the Act do not by themselves constitute incriminating material as the Act do not by themselves constitute incriminating material as has been explained by this C has been explained by this Court in Commissioner of Income Tax v. ourt in Commissioner of Income Tax v. Harjeev Harjeev Harjeev Aggarwal Aggarwal Aggarwal (supra). (supra). (supra). Lastly, Lastly, Lastly, as as as already already already pointed pointed pointed out out out hereinbefore, the facts in the present case are different from the hereinbefore, the facts in the present case are different from the hereinbefore, the facts in the present case are different from the facts in Smt. Dayawanti Gupta v. CIT (supra) where the admission facts in Smt. Dayawanti Gupta v. CIT (supra) where the admission facts in Smt. Dayawanti Gupta v. CIT (supra) where the admission by the Assessees themselves o by the Assessees themselves on critical aspects, of failure to n critical aspects, of failure to maintain accounts and admission that the seized documents maintain accounts and admission that the seized documents maintain accounts and admission that the seized documents reflected transactions of unaccounted sales and purchases, is non- reflected transactions of unaccounted sales and purchases, is non reflected transactions of unaccounted sales and purchases, is non existent in the present case. In the said case, there was a factual existent in the present case. In the said case, there was a factual existent in the present case. In the said case, there was a factual finding to the effect that the finding to the effect that the Assessees were habitual offenders, Assessees were habitual offenders, indulging in clandestine operations whereas there is nothing in the indulging in clandestine operations whereas there is nothing in the indulging in clandestine operations whereas there is nothing in the present case, whatsoever, to suggest that any statement made by present case, whatsoever, to suggest that any statement made by present case, whatsoever, to suggest that any statement made by Mr. Anu Aggarwal or Mr. Harjeet Singh contained any such Mr. Anu Aggarwal or Mr. Harjeet Singh contained any such Mr. Anu Aggarwal or Mr. Harjeet Singh contained any such admission.” In the case of B Kishore Kumar (supra), B Kishore Kumar (supra), the 8.1.1 In the case statement/confession of assessee was duly corroborated statement/confession of assessee was duly corroborated statement/confession of assessee was duly corroborated with incriminating material/documents found during the with incriminating material/documents found during the with incriminating material/documents found during the course of search and therefore, such statement was course of search and therefore, such statement was course of search and therefore, such statement was accepted by the Hon’ble High Court as basis for confirming accepted by the Hon’ble High Court as basis for confirming accepted by the Hon’ble High Court as basis for confirming the addition. The relevant finding of the Hon’ble High addition. The relevant finding of the Hon’ble High addition. The relevant finding of the Hon’ble High Court is reproduced as under: Court is reproduced as under:

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is in the range of Rs.25 Lakhs to 30 Lakhs. The rate of interest is is in the range of Rs.25 Lakhs to 30 Lakhs. The rate of interest is is in the range of Rs.25 Lakhs to 30 Lakhs. The rate of interest is 18% (i.e. Rs.1.50 per 100 per month). The interest income is also not 18% (i.e. Rs.1.50 per 100 per month). The interest income is also not 18% (i.e. Rs.1.50 per 100 per month). The interest income is also not shown in the accounts. The borro shown in the accounts. The borrowers have committed defaults in wers have committed defaults in repaying the loans and more than 50% of the outstandings are to be repaying the loans and more than 50% of the outstandings are to be repaying the loans and more than 50% of the outstandings are to be treated as bad debts. All the advances were not disclosed in the treated as bad debts. All the advances were not disclosed in the treated as bad debts. All the advances were not disclosed in the returns filed.'This has been relied upon by the Tribunal in full force. returns filed.'This has been relied upon by the Tribunal in full force. returns filed.'This has been relied upon by the Tribunal in full force. 6. With regard to th 6. With regard to the undisclosed income of Rs.52,73,920/ e undisclosed income of Rs.52,73,920/- supported by printouts, in the sworn statement dated 29.8.2006, the supported by printouts, in the sworn statement dated 29.8.2006, the supported by printouts, in the sworn statement dated 29.8.2006, the assessee says that he had separate business income which was not assessee says that he had separate business income which was not assessee says that he had separate business income which was not included in his income tax returns. Therefore, admission of included in his income tax returns. Therefore, admission of included in his income tax returns. Therefore, admission of undisclosed income of Rs undisclosed income of Rs.52,73,920/- is categoric and undisputed. is categoric and undisputed. The assessee in the sworn statement made on 10.10.2006, stated The assessee in the sworn statement made on 10.10.2006, stated The assessee in the sworn statement made on 10.10.2006, stated that outstanding loans to the tune of Rs.25 Lakhs to 30 Lakhs are to that outstanding loans to the tune of Rs.25 Lakhs to 30 Lakhs are to that outstanding loans to the tune of Rs.25 Lakhs to 30 Lakhs are to be recovered with interest at the rate of 18%. This is a clear be recovered with interest at the rate of 18%. This is a clear be recovered with interest at the rate of 18%. This is a clear admission. This amo admission. This amount has also been calculated and added as unt has also been calculated and added as undisclosed income. When there is a clear and categoric admission undisclosed income. When there is a clear and categoric admission undisclosed income. When there is a clear and categoric admission of the undisclosed income by the assessee himself, in our considered of the undisclosed income by the assessee himself, in our considered of the undisclosed income by the assessee himself, in our considered opinion, there is no necessity to scrutinize the documents. The opinion, there is no necessity to scrutinize the documents. The opinion, there is no necessity to scrutinize the documents. The document can be of some relevance, if the undisclosed income is of some relevance, if the undisclosed income is determined higher than what is now determined by the department. determined higher than what is now determined by the department. determined higher than what is now determined by the department. Moreover, it is not the case of the assessee that the admission made Moreover, it is not the case of the assessee that the admission made Moreover, it is not the case of the assessee that the admission made by him was incorrect or there is mistake. In fact, when there is a by him was incorrect or there is mistake. In fact, when there is a by him was incorrect or there is mistake. In fact, when there is a clear admission, voluntarily made, by the assessee, that would admission, voluntarily made, by the assessee, that would admission, voluntarily made, by the assessee, that would constitute a good piece of evidence for the Revenue. constitute a good piece of evidence for the Revenue. 7. The learned counsel for the assessee relied upon a decision of the 7. The learned counsel for the assessee relied upon a decision of the 7. The learned counsel for the assessee relied upon a decision of the Delhi High Court in Delhi High Court in Commissioner of Income Tax v. Girish sioner of Income Tax v. Girish Chaudhary, [2008] 296 ITR 619 to plead that loose sheets of papers , [2008] 296 ITR 619 to plead that loose sheets of papers , [2008] 296 ITR 619 to plead that loose sheets of papers should not be taken as a basis for determining undisclosed income. should not be taken as a basis for determining undisclosed income. should not be taken as a basis for determining undisclosed income. However, in the case on hand, loose sheets found during the search However, in the case on hand, loose sheets found during the search However, in the case on hand, loose sheets found during the search are not the sole basis are not the sole basis for determining the tax liability. It is a piece of for determining the tax liability. It is a piece of evidence to prove undisclosed income. The printout statements of evidence to prove undisclosed income. The printout statements of evidence to prove undisclosed income. The printout statements of undisclosed income is not disputed by the assessee and in his undisclosed income is not disputed by the assessee and in his undisclosed income is not disputed by the assessee and in his sworn statements it is accepted. In fact, he admitted that sworn statements it is accepted. In fact, he admitted that sworn statements it is accepted. In fact, he admitted that outstanding loans outstanding loans to be recovered are in the range of Rs.25 Lakhs to to be recovered are in the range of Rs.25 Lakhs to 30 Lakhs. We find no error in the procedure followed by the 30 Lakhs. We find no error in the procedure followed by the 30 Lakhs. We find no error in the procedure followed by the Assessing Officer on admitted facts. The entire exercise by the Assessing Officer on admitted facts. The entire exercise by the Assessing Officer on admitted facts. The entire exercise by the department to bring to tax undisclosed income, we find has been department to bring to tax undisclosed income, we find has been department to bring to tax undisclosed income, we find has been generous and simp generous and simple. There appears to be no confusion in the le. There appears to be no confusion in the quantification of the tax liability and we uphold the order of the quantification of the tax liability and we uphold the order of the quantification of the tax liability and we uphold the order of the Tribunal.

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8.1.2 The decision in the case of B Kishore Kumar (supra) 8.1.2 The decision in the case of B Kishore Kumar (supra) 8.1.2 The decision in the case of B Kishore Kumar (supra) is therefore distinguishable on facts. In view of decision of is therefore distinguishable on facts. In view of decision of is therefore distinguishable on facts. In view of decision of the Hon’ble Del the Hon’ble Delhi High Court in the case of Best hi High Court in the case of Best Infrastructure p Ltd (supra), it is undisputed that merely on Infrastructure p Ltd (supra), it is undisputed that merely on Infrastructure p Ltd (supra), it is undisputed that merely on the basis of the confession u/s 132(4) of the Act, without the basis of the confession u/s 132(4) of the Act, without the basis of the confession u/s 132(4) of the Act, without any other corroborative material found, no addition could any other corroborative material found, no addition could any other corroborative material found, no addition could be made treating the statement u/s 132(4) o be made treating the statement u/s 132(4) of the Act as f the Act as incriminating material. incriminating material.

8.2 Secondly, the learned DR has referred to the , the learned DR has referred to the , the learned DR has referred to the statement of Sri Jayantilal Otmaljain dated 30/11/2019 statement of Sri Jayantilal Otmaljain dated 30/11/2019 statement of Sri Jayantilal Otmaljain dated 30/11/2019 to support that same constitute incriminating material. On to support that same constitute incriminating material. On to support that same constitute incriminating material. On perusal of the copy of said statement, which is produce perusal of the copy of said statement, which is produce perusal of the copy of said statement, which is produced before us by the learned departmental representative, we before us by the learned departmental representative, we before us by the learned departmental representative, we find that he was questioned to comment on the confession find that he was questioned to comment on the confession find that he was questioned to comment on the confession of Sri Kumarpal Banda of unsecured loan parties being not of Sri Kumarpal Banda of unsecured loan parties being not of Sri Kumarpal Banda of unsecured loan parties being not genuine, but he simply replied that at the time he was not genuine, but he simply replied that at the time he was not genuine, but he simply replied that at the time he was not able to reply as he had able to reply as he had to check it. The relevant question to check it. The relevant question and answer is reproduced for ready reference: and answer is reproduced for ready reference:

“Q.17 Mr. Kumarpal Banda in his statement in reply to Q.30 & 31 “Q.17 Mr. Kumarpal Banda in his statement in reply to Q.30 & 31 “Q.17 Mr. Kumarpal Banda in his statement in reply to Q.30 & 31 has stated that unsecured loans from various parties in different has stated that unsecured loans from various parties in different has stated that unsecured loans from various parties in different financial years have been settled later in c financial years have been settled later in cash and they are not ash and they are not genuine. The same is reproduced as under for your convenience. genuine. The same is reproduced as under for your convenience. genuine. The same is reproduced as under for your convenience. Q.30 Kindly explains the name of the parties form which unsecured Q.30 Kindly explains the name of the parties form which unsecured Q.30 Kindly explains the name of the parties form which unsecured loan has been taken by the company M/s. G.M Modular Pvt. Ltd. loan has been taken by the company M/s. G.M Modular Pvt. Ltd. loan has been taken by the company M/s. G.M Modular Pvt. Ltd. Also explain the creditworthiness and genuin Also explain the creditworthiness and genuineness of unsecured eness of unsecured loan taken by M/s. G.M Modular Pvt. Ltd. loan taken by M/s. G.M Modular Pvt. Ltd.

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Ans. Sir, M/s. G.M Modular Put. Ltd. has taken loans from various Ans. Sir, M/s. G.M Modular Put. Ltd. has taken loans from various Ans. Sir, M/s. G.M Modular Put. Ltd. has taken loans from various parties in different financial years and the same have been settled parties in different financial years and the same have been settled parties in different financial years and the same have been settled later. However I can recollect the following names of parties from which However I can recollect the following names of parties However I can recollect the following names of parties the unsecured loan is taken and they are not genuine: the unsecured loan is taken and they are not genuine:- 1. M/s. Essar india Ltd. 1. M/s. Essar india Ltd. 2. M/s. Matarani Commodities Pvt. Ltd. 2. M/s. Matarani Commodities Pvt. Ltd. 3. M/s. Morya Industries Ltd. 3. M/s. Morya Industries Ltd. 4. M/s. NCL Research Financial Service Ltd. 4. M/s. NCL Research Financial Service Ltd. 5. M/s. Shivam Investment & Consultancy Ltd. 5. M/s. Shivam Investment & Consultancy Ltd. 6. M/s. Ojas Assets Reconstruction Company Ltd. Ojas Assets Reconstruction Company Ltd. Q.31 On what basis you are saying that the loans from the above Q.31 On what basis you are saying that the loans from the above Q.31 On what basis you are saying that the loans from the above mentioned parties is not genuine. mentioned parties is not genuine. Ans. Sir, I confirm that the above mentioned parties from which the Ans. Sir, I confirm that the above mentioned parties from which the Ans. Sir, I confirm that the above mentioned parties from which the unsecured loan has been taken by M/s. G.M Modular Pvt. Ltd are unsecured loan has been taken by M/s. G.M Modular unsecured loan has been taken by M/s. G.M Modular not genuine as they are settled in cash during repayment to these not genuine as they are settled in cash during repayment to these not genuine as they are settled in cash during repayment to these parties. Please offer your comments. Please offer your comments. Ans: Sir, at present I am not able to comment as I have check it.” Ans: Sir, at present I am not able to comment as I have check it.” Ans: Sir, at present I am not able to comment as I have check it.” 8.3 He was further asked to provide contact details of He was further asked to provide contact details of He was further asked to provide contact details of the parties from the parties from whom unsecured loans were taken by the whom unsecured loans were taken by the assessee company and other entities of the group, in assessee company and other entities of the group, in assessee company and other entities of the group, in response to which also he replied that at the time he was response to which also he replied that at the time he was response to which also he replied that at the time he was not able to provide the details as he had to check it. not able to provide the details as he had to check it. not able to provide the details as he had to check it.

8.5 Regarding the issue whether the information gathered during 8.5 Regarding the issue whether the information ga 8.5 Regarding the issue whether the information ga independent survey u/s 133A of the Act constitute as the independent survey u/s 133A of the Act constitute as the independent survey u/s 133A of the Act constitute as the

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 42 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

incriminating material found during the course of search, the incriminating material found during the course of search, the incriminating material found during the course of search, the Tribunal in the case of M/s G-Nine modular p Ltd in ITA No. Nine modular p Ltd in ITA No. Tribunal in the case of 3214/Mum/2022 and others and others Observed as under:

8.5 We note that i We note that in the case of ‘Ella Fintex Co. P ltd’, the n the case of ‘Ella Fintex Co. P ltd’, the assessee was intimated regarding negligible profit of said assessee was intimated regarding negligible profit of said assessee was intimated regarding negligible profit of said company and directors of the said company being non company and directors of the said company being non company and directors of the said company being non-filer of ITR. Further it was intimated that the area in which of ITR. Further it was intimated that the area in which of ITR. Further it was intimated that the area in which said unsecured loan party located was a said unsecured loan party located was a well-known hub known hub of shell companies. In our opinion, certain information of shell companies. In our opinion, certain information of shell companies. In our opinion, certain information regarding the unsecured loan party gathered by the regarding the unsecured loan party gathered by the regarding the unsecured loan party gathered by the investigation wing pre search period and thereafter investigation wing pre search period and thereafter investigation wing pre search period and thereafter confronted the same to the key person of the assessee confronted the same to the key person of the assessee confronted the same to the key person of the assessee company during the course o company during the course of search, cannot be said that f search, cannot be said that incriminating material was found during the course of the incriminating material was found during the course of the incriminating material was found during the course of the search qua the addition. Similar observations have been search qua the addition. Similar observations have been search qua the addition. Similar observations have been made in respect of the other unsecured loan parties. made in respect of the other unsecured loan parties. made in respect of the other unsecured loan parties. Further, independent survey was carried out in the case of Further, independent survey was carried out in the case of Further, independent survey was carried out in the case of ‘Ella Fintex Co Pvt Ltd’ Ella Fintex Co Pvt Ltd’ and ‘KathakaliVincom P Ltd’ ‘KathakaliVincom P Ltd’ on 13/11/2019 and those parties were not found at the on 13/11/2019 and those parties were not found at the on 13/11/2019 and those parties were not found at the registered address, however this fact of nonavailability of registered address, however this fact of nonavailability of registered address, however this fact of nonavailability of those parties at the registered address was only those parties at the registered address was only those parties at the registered address was only communicated to sh Jayantilal Jain in po communicated to sh Jayantilal Jain in po communicated to sh Jayantilal Jain in post-search proceeding on 12/01/2020 and therefore also it cannot be proceeding on 12/01/2020 and therefore also it cannot be proceeding on 12/01/2020 and therefore also it cannot be said that said information was confronted to the assessee said that said information was confronted to the assessee said that said information was confronted to the assessee

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during the course of search proceeding. Regarding, the during the course of search proceeding. Regarding, the during the course of search proceeding. Regarding, the unsecured loan party namely ‘NCL Research and NCL Research and unsecured loan party namely ‘ Financial Services ltd’ Financial Services ltd’, the Assessing Officer observed Assessing Officer observed that that that in in in the the the information information information gathered gathered gathered by by by the the the Kolkata Kolkata Kolkata investigation report dated 27/04/2015, said party has investigation report dated 27/04/2015, said party has investigation report dated 27/04/2015, said party has been referred. Further during the survey action, the CFO of been referred. Further during the survey action, the CFO of been referred. Further during the survey action, the CFO of the company under section 131 of the Act dated the company under section 131 of the Act dated the company under section 131 of the Act dated 15/11/2019 stated th 15/11/2019 stated that Mr Gautam was the managing at Mr Gautam was the managing director of the said company, but that fact in itself is not director of the said company, but that fact in itself is not director of the said company, but that fact in itself is not any incriminating material. In case of the other unsecured any incriminating material. In case of the other unsecured any incriminating material. In case of the other unsecured loan parties i.e Ojas Assets Reconstruction Ltd Ojas Assets Reconstruction Ltd and loan parties i.e TanayaVincom P Ltd TanayaVincom P Ltd also there is no reference of any also there is no reference of any incriminating material except statement of Sri Kumarpal ncriminating material except statement of Sri Kumarpal ncriminating material except statement of Sri Kumarpal banda and sh Jayantilal jain, which we have already banda and sh Jayantilal jain, which we have already banda and sh Jayantilal jain, which we have already dealt above.

8.6 Further, we agree with the contention of the Ld. Further, we agree with the contention of the Ld. Further, we agree with the contention of the Ld. Counsel of the assessee that those survey proceedings are Counsel of the assessee that those survey proceedings are Counsel of the assessee that those survey proceedings are independent action thoug independent action though carried out simultaneously. h carried out simultaneously. Those inquiries are not part of the search proceedings u/s Those inquiries are not part of the search proceedings u/s Those inquiries are not part of the search proceedings u/s 132 of the Act. The ld DR referred to decision in the case of 132 of the Act. The ld DR referred to decision in the case of 132 of the Act. The ld DR referred to decision in the case of CIT v. Sky Infra Pvt. Ltd. by the Tribunal in order CIT v. Sky Infra Pvt. Ltd. by the Tribunal in order CIT v. Sky Infra Pvt. Ltd. by the Tribunal in order dated 28.02.2023 dated 28.02.2023, to support that information found i , to support that information found in simultaneous survey could be treated as incriminating simultaneous survey could be treated as incriminating simultaneous survey could be treated as incriminating material. But we find that in said case of CIT v. Sky Infra material. But we find that in said case of CIT v. Sky Infra material. But we find that in said case of CIT v. Sky Infra

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Pvt. Ltd. (supra) , inquiries were carried out by the Pvt. Ltd. (supra) , inquiries were carried out by the Pvt. Ltd. (supra) , inquiries were carried out by the Inspectors of the income Inspectors of the income-tax department as part of the tax department as part of the search proceedings itself, the search proceedings itself, therefore facts of said case are refore facts of said case are distinguishable. distinguishable.

8.7 Further, the information gathered during independent 8.7 Further, the information gathered during independent 8.7 Further, the information gathered during independent survey actions was not confronted to the assessee during survey actions was not confronted to the assessee during survey actions was not confronted to the assessee during the course of search proceedings and it was only the course of search proceedings and it was only the course of search proceedings and it was only confronted in post search proceedings on 20/0 confronted in post search proceedings on 20/01/2020. 1/2020.

8.8 For invoking sustaining addition in proceedings u/s For invoking sustaining addition in proceedings u/s For invoking sustaining addition in proceedings u/s 153A of the Act in case of non 153A of the Act in case of non-abated assessments , the abated assessments , the prerequisite is that incriminating material should be found prerequisite is that incriminating material should be found prerequisite is that incriminating material should be found during the course of search at the premises of the during the course of search at the premises of the during the course of search at the premises of the assessee qua the adition assessee qua the adition. If any material is found during . If any material is found during the course of search of third party or material is found the course of search of third party or material is found the course of search of third party or material is found during the course of other actions i.e. like survey or by the during the course of other actions i.e. like survey or by the during the course of other actions i.e. like survey or by the action of other agencies, then, the provisions to deal with action of other agencies, then, the provisions to deal with action of other agencies, then, the provisions to deal with those materials or observations, are differ those materials or observations, are different from the ent from the provisions u/s 153A of the Act. provisions u/s 153A of the Act. 8.6 Respectfully, following above finding of the Tribunal (supra), Respectfully, following above finding of the Tribunal (supra), Respectfully, following above finding of the Tribunal (supra), we hold that there is no incriminating material qua the addition of we hold that there is no incriminating material qua the addition of we hold that there is no incriminating material qua the addition of unsecured loans u/s 68 of the Act and related additions of interest unsecured loans u/s 68 of the Act and related additions of interest unsecured loans u/s 68 of the Act and related additions of interest and commission expenses ission expenses thereon for obtaining those unsecured for obtaining those unsecured loans.

9.0 Regarding unverified labour job work Regarding unverified labour job work expenses, expenses, also the Ld. Assessing Officer made observation as under: Assessing Officer made observation as under:

“4) Addition on account of unverified labour “4) Addition on account of unverified labour-Job Work: Job Work:-

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 45 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

(i)M/s GM Modular Pt Ltd and (i)M/s GM Modular Pt Ltd and Mis Goldmedal Electricals Pvt Mis Goldmedal Electricals Pvt Ltd are among the leading manufacturers of the switches, Ltd are among the leading manufacturers of the switches, Ltd are among the leading manufacturers of the switches, cables and other electrical accessories in India. The main cables and other electrical accessories in India. The main cables and other electrical accessories in India. The main persons of the company MIs GM Modular Pvt Ltd and M/s persons of the company MIs GM Modular Pvt Ltd and M/s persons of the company MIs GM Modular Pvt Ltd and M/s Goldmedal Electricals Pt Ltd are Shri JayantilalOtmal Ja Goldmedal Electricals Pt Ltd are Shri JayantilalOtmal Ja Goldmedal Electricals Pt Ltd are Shri JayantilalOtmal Jain and Shri JugrajOtmal Jain respectively. The both of the and Shri JugrajOtmal Jain respectively. The both of the and Shri JugrajOtmal Jain respectively. The both of the concerns are runned by family members. During the course of concerns are runned by family members. During the course of concerns are runned by family members. During the course of Search action us 132 of the Income Search action us 132 of the Income-fax Act, 1961 in the office fax Act, 1961 in the office premises of Ms Goldmedal Electricals Pvt Ltd and subsequent premises of Ms Goldmedal Electricals Pvt Ltd and subsequent premises of Ms Goldmedal Electricals Pvt Ltd and subsequent verification o verification of documents, it is clearly established that certain f documents, it is clearly established that certain purcases from the following parties remained unexplained: purcases from the following parties remained unexplained: purcases from the following parties remained unexplained:- Sl. No. Name of Supplier 1. Walambia Plastics Pvt Ltd 2. Arihant Polymer 3. Bijal Polymer 4. Aashirwad Polymer 5. Hirasons 6. Satyam Plast 7. Shreenath Enterprises 8. Innovative Turnomatics 9. Bhavna Electrical Industries 10. JMK Petrochem 11. Shyam Enterprise 12. Arihant Industries 13. Shivam Enterprises 1. During course of furher verification, It was found that there 1. During course of furher verification, It was found that there 1. During course of furher verification, It was found that there are 3 common parties who features in the lis are 3 common parties who features in the list of vendors of the t of vendors of the company M/s GM Modular Pvt Ltd. The same are M/s company M/s GM Modular Pvt Ltd. The same are M/s company M/s GM Modular Pvt Ltd. The same are M/s Hirasons, M/s Satyam Plast and M/s Shivam Enterprise.The Hirasons, M/s Satyam Plast and M/s Shivam Enterprise.The Hirasons, M/s Satyam Plast and M/s Shivam Enterprise.The statements of employees and Director responsible for making statements of employees and Director responsible for making statements of employees and Director responsible for making purchases and responsible for mainting stock were recorded purchases and responsible for mainting stock were recorded purchases and responsible for mainting stock were recorded and the sam and the same was confronted wherein it is clearly established e was confronted wherein it is clearly established that certain purchases remains unverified due to lack of that certain purchases remains unverified due to lack of that certain purchases remains unverified due to lack of supporing documentary evidences. This fact was confronted to supporing documentary evidences. This fact was confronted to supporing documentary evidences. This fact was confronted to ShriJayantilal Jain, promoter of the company M/s GM ShriJayantilal Jain, promoter of the company M/s GM ShriJayantilal Jain, promoter of the company M/s GM Modular Pvt. Ltd and he was not abl Modular Pvt. Ltd and he was not able to provide any e to provide any explanation for the same. The assessee vide letter dated explanation for the same. The assessee vide letter dated explanation for the same. The assessee vide letter dated 28.08.2020 has submitted that the company Ms GM Modular 28.08.2020 has submitted that the company Ms GM Modular 28.08.2020 has submitted that the company Ms GM Modular Pt Ltd has done Job work/ Labour as well as purchases from Pt Ltd has done Job work/ Labour as well as purchases from Pt Ltd has done Job work/ Labour as well as purchases from the above said three parties.The submissions made by the the above said three parties.The submissions made by the the above said three parties.The submissions made by the assessee are perused. Invoices were examined on test check re perused. Invoices were examined on test check re perused. Invoices were examined on test check basis and in view of the submission of assesseee a basis and in view of the submission of assesseee a basis and in view of the submission of assesseee a

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verification of these purchases have been made from the verification of these purchases have been made from the verification of these purchases have been made from the documents available and submitted by the assesse and it is documents available and submitted by the assesse and it is documents available and submitted by the assesse and it is unearthed that the purchase and labour / unearthed that the purchase and labour / job work charges job work charges claimed against three parties namely M/s Hirasons, M/s claimed against three parties namely M/s Hirasons, M/s claimed against three parties namely M/s Hirasons, M/s Satyam Plast and M/s ShivamEnterprise are not verifiable for Satyam Plast and M/s ShivamEnterprise are not verifiable for Satyam Plast and M/s ShivamEnterprise are not verifiable for certain years. The summary of the chart is as under : certain years. The summary of the chart is as under : certain years. The summary of the chart is as under : FY AY Unverified Unverified Unverified Lavour Lavour Purchase amount job work (in Rs.) job work (in Rs.) 2012-13 2013-14 2013 - 26,91,945 26,91,945 2013-14 2014-15 2014 - 26,98,730 26,98,730 2014-15 2015-16 2015 - 78,27,700 78,27,700 2015-16 2016-17 2016 - 1,88,77,132 1,88,77,132 2016-17 2017-18 2017 2,77,66,390 1,86,71,188 1,86,71,188 2017-18 2018-19 2018 36,36,12,754 2,47,63,799 2,47,63,799 2018-19 2019-20 2019 9,47,53,780 4,73,42,487 4,73,42,487 Total l Purchases Purchases & & 68,61,32,923 7,55,30,494 7,55,30,494 Labour/Job Work Unverified Labour/Job Work Unverified In view of the above, the assessee was show caused vide In view of the above, the assessee was show caused vide In view of the above, the assessee was show caused vide notice dated 20.01.2021as to why the unverified Purchase notice dated 20.01.2021as to why the unverified Purchase notice dated 20.01.2021as to why the unverified Purchase and Labour/job work as per the above assessment year wise and Labour/job work as per the above assessment year wise and Labour/job work as per the above assessment year wise should not be cons should not be considered as unverified expenditure and idered as unverified expenditure and should not be disallowed and added to your total income should not be disallowed and added to your total income should not be disallowed and added to your total income.” 9.1 The Assessing Officer further in para 4.2 of the assessment The Assessing Officer further in para 4.2 of the assessment The Assessing Officer further in para 4.2 of the assessment order held the job work charges paid to 3 firms namely M/s order held the job work charges paid to 3 firms namely M/s order held the job work charges paid to 3 firms namely M/s Hirasons, M/s Satyam Plast and M/s Shi Hirasons, M/s Satyam Plast and M/s Shivam Enterprse as vam Enterprse as Sh Rahul Dinesh Jha’, an nongenuine based on the statement of nongenuine based on the statement of ‘Sh Rahul Dinesh Jha employee of the assessee company recorded on 14/11/2019 during employee of the assessee company recorded on 14/11/2019 during employee of the assessee company recorded on 14/11/2019 during the course of the survey proceedings. The Assessing Officer has the course of the survey proceedings. The Assessing Officer has the course of the survey proceedings. The Assessing Officer has reproduced relevant question reproduced relevant question-and-answer in impugn in impugned assessment order. But we find that in his statement But we find that in his statement, he has nowhere admitted he has nowhere admitted that those job work charges were not genuine se job work charges were not genuine. H He simply stated that original bills were maintained at head office at Andheri. During that original bills were maintained at head office at Andheri. During that original bills were maintained at head office at Andheri. During

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 47 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

the course of search the course of search action, the statement of Sri Rahul Dinesh was of Sri Rahul Dinesh was confronted to sh Jayantilal Jain ayantilal Jain, promoter of the company, but he , promoter of the company, but he took time for responding. Thus took time for responding. Thus, the statement of shri Rahul Dinesh the statement of shri Rahul Dinesh and Jayantilal are not incriminating information qua the addition. and Jayantilal are not incriminating information qua the addition. and Jayantilal are not incriminating information qua the addition. Therefore, same cannot be basis same cannot be basis for making addition in the year for making addition in the year under consideration being year of unabated assessment. under consideration being year of unabated assessment. under consideration being year of unabated assessment.

10.0 The Assessing Officer has also made disallowance under The Assessing Officer has also made disallowance under The Assessing Officer has also made disallowance under section 36(1)(va) of the section 36(1)(va) of the Act amounting to Rs.4,63,496/ 496/- for payment deposited to employees contribution to deposited to employees contribution to provident fund (PF) and provident fund (PF) and employees State insurance (ESI) on the basis of the information employees State insurance (ESI) on the basis of the information employees State insurance (ESI) on the basis of the information under tax audit report(TAR). The Ld. CIT(A) has deleted the addition under tax audit report(TAR). The Ld. CIT(A) has deleted the addition under tax audit report(TAR). The Ld. CIT(A) has deleted the addition holding it not to be based on the incriminating material. There is no holding it not to be based on the incriminating material. holding it not to be based on the incriminating material. reference of incriminating ma reference of incriminating materials in relation to disallowance qua disallowance qua section 36(1)(va) of the Act. section 36(1)(va) of the Act.

11.0 In the facts and circumstances of the case, we are of the In the facts and circumstances of the case, we are of the In the facts and circumstances of the case, we are of the opinion that the Assessing Officer has neither made any reference opinion that the Assessing Officer has neither made any reference opinion that the Assessing Officer has neither made any reference of incriminating material found during the course of search not Ld. of incriminating material found during the course of sea of incriminating material found during the course of sea DR brought to our notice brought to our notice any incriminating material qua these any incriminating material qua these additions and therefore, we do not find any error in the order of the additions and therefore, we do not find any error in the order of the additions and therefore, we do not find any error in the order of the Ld. CIT(A) in concluding that additions are not justified any case of Ld. CIT(A) in concluding that additions are not justified any case of Ld. CIT(A) in concluding that additions are not justified any case of non-abated assessment abated assessment otherwise then the aid of the incriminating aid of the incriminating material has held by the Hon’ble Bombay High Court in the case of material has held by the Hon’ble Bombay High Court in the case of material has held by the Hon’ble Bombay High Court in the case of Continental Warehousing Corporation Continental Warehousing Corporation (supra), Accordingly, (supra), Accordingly, we uphold the finding of the Ld. CIT(A) that there was no incriminating uphold the finding of the Ld. CIT(A) that there was no incriminating uphold the finding of the Ld. CIT(A) that there was no incriminating

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material qua the addition material qua the additionsof (i) accommodation entry commodation entry of secured loan alongwith interest and commission thereon (ii) alongwith interest and commission thereon (ii) alongwith interest and commission thereon (ii) addition on account of unverified labour job work and account of unverified labour job work and (iii) disallowance under allowance under section 36(1)(va) of the of the Act.

12.1Brief facts qua the issue Brief facts qua the issue-in-dispute of addition in respect of of addition in respect of unaccounted business turnover unaccounted business turnover are that during the course of the are that during the course of the search at the residence nce of Mr. Kumar Pal Banda,the director of the the director of the company, documents documents labeledas “Annexure A-2, A- -3 and A-4” are seized. Shri Kumar Pal in his statement recorded u/s 132(4) of the Shri Kumar Pal in his statement recorded u/s 132(4) of the Shri Kumar Pal in his statement recorded u/s 132(4) of the Act stated that the Act stated that the Annexure A-2 contains entries of cash entries of cash transaction made to employees and transaction made to employees and Annexure A-3 and A 3 and A-4 contains ledger entries in respect of certain individual firms. Mr. Jayanti Lal ledger entries in respect of certain individual firms. Mr. Jayanti Lal ledger entries in respect of certain individual firms. Mr. Jayanti Lal Jain, the promoter of the GM Group stated that entries in those Jain, the promoter of the GM Group stated that entries in th Jain, the promoter of the GM Group stated that entries in th documents i.e. A-2 to A 2 to A-4 , were not recorded in the books of were not recorded in the books of accounts of the assessee comp accounts of the assessee company for financial year 2014 any for financial year 2014-15 i.e. assessment year 2015 assessment year 2015-16. He acknowledged that in the entries e acknowledged that in the entries appearing in the seized documents double digits were suppressed appearing in the seized documents double digits were suppressed appearing in the seized documents double digits were suppressed while recording the actual transactions. while recording the actual transactions. The Assessing Assessing officer analysed analysed the the diaries diaries and and held held that th at the the assessee assessee carried carried unaccounted business and transactions recorded in those diaries business and transactions recorded in those diaries business and transactions recorded in those diaries are related to that unaccounted business. are related to that unaccounted business. The assessee in the The assessee in the

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return of income filed in response to notice u/s 153A for AY 2015- return of income filed in response to notice u/s 153A return of income filed in response to notice u/s 153A 16,offered undisclosed income of Rs.10,1 offered undisclosed income of Rs.10,14,21,500/ 4,21,500/- applying net profit rate on the gross profit rate on the gross sales transactions appearing in the said transactions appearing in the said seized documents, whereas the Assessing Officer applied gross whereas the Assessing Officer applied gross whereas the Assessing Officer applied gross profit profit rate rate on on the the unaccounted unaccounted sale transactions transactionsof Rs. 275,73,04,969/-recorded in diaries recorded in diaries for AY 2015 for AY 2015-16 and made addition of the unaccounted income of Rs.51,97,51,986/-. addition of the unaccounted income of Rs.51,97,51,986/ addition of the unaccounted income of Rs.51,97,51,986/

12.2 On further appeal, the Ld. CIT(A) following the judicial On further appeal, the Ld. CIT(A) following the judicial On further appeal, the Ld. CIT(A) following the judicial precedents , restricted the addition to the extent of the net profit on restricted the addition to the extent of the net profit on restricted the addition to the extent of the net profit on unaccounted sales, which was offered by the assessee which was offered by the assessee in return of which was offered by the assessee income and therefore, the addition made by the Assessing Officer income and therefore, the addition made by the Assessing Officer income and therefore, the addition made by the Assessing Officer was deleted observing as under: observing as under:

“5.4 In my considered view, the only question to be decided here 5.4 In my considered view, the only question to be decided here 5.4 In my considered view, the only question to be decided here is whether on is whether on \ the unaccounted turnover (as reflected from the the unaccounted turnover (as reflected from the seized documents seized documents for F.Y 2014-15 related to AY 2015 15 related to AY 2015-16), net profit percentage or gross profit percentage will be applied. This profit percentage or gross profit percentage will be applied. This profit percentage or gross profit percentage will be applied. This question is no more res integra and already settled with the question is no more res integra and already settled with the question is no more res integra and already settled with the plethora of judicial decisions. The decisions are reproduced as plethora of judicial decisions. The decisions are reproduced as plethora of judicial decisions. The decisions are reproduced as below- Hon'ble Juris Hon'ble Jurisdictional High Court in the case of CIT Vs. Shri dictional High Court in the case of CIT Vs. Shri Hariram Bhambhani [2015 (2) TMI 907 Bombay High Court], Hariram Bhambhani [2015 (2) TMI 907 Bombay High Court], Hariram Bhambhani [2015 (2) TMI 907 Bombay High Court], wherein net profit rate was applied to unaccounted sales. The wherein net profit rate was applied to unaccounted sales. The wherein net profit rate was applied to unaccounted sales. The relevant head notes of the decision are in relevant head notes of the decision are in-below: reproduced below: reproduced here Income from undisclosed Income from undisclosed sale - Tribunal upholding the order of Tribunal upholding the order of the CIT(A) directing AO to tax 4% net profit on unaccounted sales the CIT(A) directing AO to tax 4% net profit on unaccounted sales the CIT(A) directing AO to tax 4% net profit on unaccounted sales of 7 35 lakhs of 7 35 lakhs – entire sales which are unaccounted cannot be undisclosed income of sales which are unaccounted cannot be undisclosed income of sales which are unaccounted cannot be undisclosed income of the assessee, particularly as the purchase had been accounted the assessee, particularly as the purchase had been accounted the assessee, particularly as the purchase had been accounted for held by tribunal eld by tribunal - Held that:- Grievance of the Revenue that Grievance of the Revenue that

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 50 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

Section 69C of the Act is to be invoked and entire amount of Section 69C of the Act is to be invoked and entire amount of Section 69C of the Act is to be invoked and entire amount of undisclosed sales has to be brought to tax is unacceptable as we undisclosed sales has to be brought to tax is unacceptable as we undisclosed sales has to be brought to tax is unacceptable as we are unable to appreciate how Section 69C of the Act which are unable to appreciate how Section 69C of the Act which are unable to appreciate how Section 69C of the Act which speaks of un speaks of unexplained expenditure is all at relevant for this explained expenditure is all at relevant for this appeal. We are not concerned with any unexplained expenditure in this We are not concerned with any unexplained expenditure in this We are not concerned with any unexplained expenditure in this case. CIT(A) and Tribunal have came to the concurrent finding that the CIT(A) and Tribunal have came to the concurrent finding that the CIT(A) and Tribunal have came to the concurrent finding that the purchases have been recorded and only some of the sales are purchases have been recorded and only some of the sales are purchases have been recorded and only some of the sales are unaccounted. ounted. Thus, both the authorities held that it is not the entire sales Thus, both the authorities held that it is not the entire sales Thus, both the authorities held that it is not the entire sales consideration which is to be brought to tax but only the profit consideration which is to be brought to tax but only the profit consideration which is to be brought to tax but only the profit attributable on the total unrecorded sales consideration which attributable on the total unrecorded sales consideration which attributable on the total unrecorded sales consideration which alone can be subject to income tax. alone can be subject to income tax. The view taken by the The view taken by the authorities is a reasonable and a possible authorities is a reasonable and a possible view.Decided against revenue. view.Decided against revenue. Hon'ble M. P. High Court in the case of Man Mohan Sadani Hon'ble M. P. High Court in the case of Man Mohan Sadani Hon'ble M. P. High Court in the case of Man Mohan Sadani Versus Commissioner of Income Versus Commissioner of Income-Tax 2007 (10) TMI 246 Tax 2007 (10) TMI 246 - MADHYA PRADESH HIGH COURT. The relevant head notes of MADHYA PRADESH HIGH COURT. The relevant head notes of MADHYA PRADESH HIGH COURT. The relevant head notes of the decision are the decision are reproduced here-in-below: Entire sale proceeds should not be regarded as profit or treated Entire sale proceeds should not be regarded as profit or treated Entire sale proceeds should not be regarded as profit or treated as undisclosed income of the assessee as undisclosed income of the assessee-On the contrary, it is the On the contrary, it is the net profit rate which has to be adopted in such cases net profit rate which has to be adopted in such cases net profit rate which has to be adopted in such cases-held that the entire sale proceeds of the asse the entire sale proceeds of the assessee should not be added to ssee should not be added to his income Hon'ble Kolkata Tribunal in the case of Dinanath Ornament Hon'ble Kolkata Tribunal in the case of Dinanath Ornament Hon'ble Kolkata Tribunal in the case of Dinanath Ornament Stores C/O., D.J. Stores C/O., D.J. Shah And Co Versus ITO [2019 (6) TMI 160 Shah And Co Versus ITO [2019 (6) TMI 160 - ITAT Kolkata], after ITAT Kolkata], after relying on the aforesaid judgments, has held that net profit rate relying on the aforesaid judgments, has held that net profit rate relying on the aforesaid judgments, has held that net profit rate should be adopted instead of gross profit to assess the income dopted instead of gross profit to assess the income dopted instead of gross profit to assess the income from undisclosed sales. Further, the Hon'ble Tribunal has also from undisclosed sales. Further, the Hon'ble Tribunal has also from undisclosed sales. Further, the Hon'ble Tribunal has also held that the net profit rate shall be that which the assesseehad held that the net profit rate shall be that which the assesseehad held that the net profit rate shall be that which the assesseehad disclosed in its regular books of account the said Assessment disclosed in its regular books of account the said Assessment disclosed in its regular books of account the said Assessment Year on recor Year on recorded sales. The relevant headnotes of the decision ded sales. The relevant headnotes of the decision are as below: are as below:

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 51 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

Assessment of suppressed sales Assessment of suppressed sales - Gross profit or net profit Gross profit or net profit - HELD THAT: As relying on MAN MOHAN SADANI [2007 (10) TMI HELD THAT: As relying on MAN MOHAN SADANI [2007 (10) TMI HELD THAT: As relying on MAN MOHAN SADANI [2007 (10) TMI 246 - MADHYA PRADESH HIGH COURT), BALCHAND AJIT MADHYA PRADESH HIGH COURT), BALCHAND AJIT MADHYA PRADESH HIGH COURT), BALCHAND AJIT KUMAR. (2003 (4) TMI 76 KUMAR. (2003 (4) TMI 76 - MADHYA PRADESH HIGH COURT] MADHYA PRADESH HIGH COURT] and SHRI HARIRAM BHAMBHANI (2015 (2) TMI907 BOMBAY and SHRI HARIRAM BHAMBHANI (2015 (2) TMI907 BOMBAY and SHRI HARIRAM BHAMBHANI (2015 (2) TMI907 BOMBAY HIGH COURT] we direct the AO to assess the income from HIGH COURT] we direct the AO to assess the income from HIGH COURT] we direct the AO to assess the income from undisclosed sales in question by applying the net profit rate in undisclosed sales in question by applying the net profit rate in undisclosed sales in question by applying the net profit rate in place of the "gross profit rate" as undisclosed sales. Th "gross profit rate" as undisclosed sales. The net profit rate shall e net profit rate shall be that which the assessee had disclosed in its regular books of be that which the assessee had disclosed in its regular books of be that which the assessee had disclosed in its regular books of account for the said Assessment Year on recorded sales. In the account for the said Assessment Year on recorded sales. In the account for the said Assessment Year on recorded sales. In the result, this ground of the assessee is allowed in part. result, this ground of the assessee is allowed in part. result, this ground of the assessee is allowed in part. 5.5 Respectfully following the binding decision 5.5 Respectfully following the binding decision 5.5 Respectfully following the binding decision of the Hon'ble Jurisdictional High Court and other judicial pronouncements,I do Jurisdictional High Court and other judicial pronouncements,I do Jurisdictional High Court and other judicial pronouncements,I do not have any option but to held that under the existing not have any option but to held that under the existing not have any option but to held that under the existing circumstances, addition, if any, is required to be madeon the circumstances, addition, if any, is required to be madeon the circumstances, addition, if any, is required to be madeon the basis of net profit ratio instead of gross profit ratio, a basis of net profit ratio instead of gross profit ratio, a basis of net profit ratio instead of gross profit ratio, as shown in the regular books of accounts.Accordingly, the AO is directed to the regular books of accounts.Accordingly, the AO is directed to the regular books of accounts.Accordingly, the AO is directed to apply the net profit ratio on the unaccounted sales of apply the net profit ratio on the unaccounted sales of apply the net profit ratio on the unaccounted sales of Rs.275,73,049.69/ Rs.275,73,049.69/-, which is relevant to AY2015 , which is relevant to AY2015-16 and not Gross profit ratio. If after applying net profit ratio, the comput Gross profit ratio. If after applying net profit ratio, the comput Gross profit ratio. If after applying net profit ratio, the computed amount amount amount exceeds exceeds exceeds the the the disclosed disclosed disclosed unaccounted unaccounted unaccounted income income income of of of Rs.10,14,21,500/ Rs.10,14,21,500/-, the excess will only be the net addition. This , the excess will only be the net addition. This ground is decided accordingly. The ground no. 3 is treated as ground is decided accordingly. The ground no. 3 is treated as ground is decided accordingly. The ground no. 3 is treated as Allowed for statistical purposes. Allowed for statistical purposes.” 12.3 The Revenue is aggrieved with the The Revenue is aggrieved with the addition deleted. Since, the addition deleted. Since, the Ld. CIT(A) has not deleted the addition on the ground of no Ld. CIT(A) has not deleted the addition on the ground of no Ld. CIT(A) has not deleted the addition on the ground of no incriminating material and therefore, issue before us in respect of incriminating material and therefore, issue before us in respect of incriminating material and therefore, issue before us in respect of this addition is whether for determination of the undisclosed this addition is whether for determination of the undisclosed this addition is whether for determination of the undisclosed income,‘gross profit rate gross profit rate’ should be applied over the unrecorded applied over the unrecorded transactions or ‘net profit rate net profit rate’ should be applied over the should be applied over the unrecorded transactions. In the case, there is no dispute on the unrecorded transactions. In the case, there is no dispute on the unrecorded transactions. In the case, there is no dispute on the quantum of turnover recorded in the seized documents. Only quantum of turnover recorded in the seized documents. quantum of turnover recorded in the seized documents. dispute between the parties is in respect w dispute between the parties is in respect whether for determination hether for determination

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 52 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

of undisclosed income gross profit rate should be applied or net of undisclosed income gross profit rate should be applied or net of undisclosed income gross profit rate should be applied or net profit rate should be applied. Before us, the Ld. DR submitted that profit rate should be applied. Before us, the Ld. DR submitted that profit rate should be applied. Before us, the Ld. DR submitted that assessee is engaged in the business of manufacturing of electrical assessee is engaged in the business of manufacturing of electrical assessee is engaged in the business of manufacturing of electrical switches and accessories. The t switches and accessories. The turnover recorded in the seized urnover recorded in the seized documents is also in respect of items manufactured by the documents is also in respect of items manufactured by the documents is also in respect of items manufactured by the assessee. According to the Ld. DR, the assessee has already claimed assessee. According to the Ld. DR, the assessee has already claimed assessee. According to the Ld. DR, the assessee has already claimed indirect expenses in its books of account in its books of account in respect of both in respect of both transactions, i.e. sale transaction transactions, i.e. sale transaction recorded in books of accounts as corded in books of accounts as well as in respect of sale transactions sale transactions recorded in seized documents recorded in seized documents and therefore, no additional benefit of the indirect expenses and therefore, no additional benefit of the indirect expenses and therefore, no additional benefit of the indirect expenses corresponding to the transactions recorded in the seized documents corresponding to the transactions recorded in the seized documents corresponding to the transactions recorded in the seized documents should be allowed to the as should be allowed to the assessee. He submitted that in the seized sessee. He submitted that in the seized documents, there is no evidence to suggest that any separate there is no evidence to suggest that any separate there is no evidence to suggest that any separate indirect expenses were indirect expenses were incurred by the assessee for carrying out incurred by the assessee for carrying out trading transactions recorded in the seized documents i.e. trading transactions recorded in the seized documents i.e. trading transactions recorded in the seized documents i.e. transactions not recorded in re transactions not recorded in regular books accounts. He submitted gular books accounts. He submitted that the decisions relied upon by the Ld. CIT(A) are factually that the decisions relied upon by the Ld. CIT(A) are factually that the decisions relied upon by the Ld. CIT(A) are factually distinguishable and in case where indirect expenses corresponding distinguishable and in case where indirect expenses corresponding distinguishable and in case where indirect expenses corresponding to the unrecorded trading activity are not recorded in the regular to the unrecorded trading activity are not recorded in the regular to the unrecorded trading activity are not recorded in the regular books accounts, in such c in such cases for allowing the benefit of the ases for allowing the benefit of the estimated indirect expenses estimated indirect expenses, net profit rate might be invoked net profit rate might be invoked on the trading turnover recorded out the books of accounts, but where trading turnover recorded out the books of accounts trading turnover recorded out the books of accounts there are no evidence to suggest that any indirect expenses have there are no evidence to suggest that any indirect expenses have there are no evidence to suggest that any indirect expenses have been incurred by the a been incurred by the assessee for carrying out transactions out of ssessee for carrying out transactions out of books of accounts, only gross profit rate can be applied. , only gross profit rate can be applied. , only gross profit rate can be applied.

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 53 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

12.4 On the contrary, the Ld. Counsel of the assessee relied on the On the contrary, the Ld. Counsel of the assessee relied on the On the contrary, the Ld. Counsel of the assessee relied on the order of the Ld. CIT(A) and submitted that profit on the transactions order of the Ld. CIT(A) and submitted that profit on the transactions order of the Ld. CIT(A) and submitted that profit on the transactions recorded in seized documents should be restricted to the net profit ized documents should be restricted to the net profit ized documents should be restricted to the net profit only. In support of his contentions, he relied on the decision of the only. In support of his contentions, he relied on the decision of the only. In support of his contentions, he relied on the decision of the in the case ACIT v. M/s SSOM and SSSMD Industries IT(SS) A ACIT v. M/s SSOM and SSSMD Industries IT(SS) A ACIT v. M/s SSOM and SSSMD Industries IT(SS) A Nos. 16 & 271/CTK/2014 and CO No. 34/CTK/2014. He also Nos. 16 & 271/CTK/2014 and CO No. 34/CTK/2014 Nos. 16 & 271/CTK/2014 and CO No. 34/CTK/2014 relied on the decision of the Kolkata Bench of the Tribunal in the sion of the Kolkata Bench of the Tribunal in the sion of the Kolkata Bench of the Tribunal in the case of New Barh Jewellers v. ITO in ITA No. 1302 & Barh Jewellers v. ITO in ITA No. 1302 & Barh Jewellers v. ITO in ITA No. 1302 & 1303/Kol/2017.

12.5 We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and peruse the relevant material on record. As far as the dispute and peruse the relevant material on record. As far as the dispute and peruse the relevant material on record. As far as the issue of the existence of incriminating material qua the addition is of the existence of incriminating material qua the addition is of the existence of incriminating material qua the addition is concerned, same is not in dispute before us. concerned, same is not in dispute before us. The only dispute is in The only dispute is in respect of the application of gross profit rate adopted by the respect of the application of gross profit rate adopted by the respect of the application of gross profit rate adopted by the Assessing Officer on the unaccounted business turnover as against Assessing Officer on the unaccounted business turnover as agai Assessing Officer on the unaccounted business turnover as agai the net profit rate adopted by the assessee. We find that in the the net profit rate adopted by the assessee. We find that in the the net profit rate adopted by the assessee. We find that in the instant case in the seized instant case in the seized diaries, evidence of indirect expenses evidence of indirect expenses incurred for salary, transport et cetera are recorded, which shows incurred for salary, transport et cetera are recorded, which shows incurred for salary, transport et cetera are recorded, which shows that for carrying out this unaccounted business, the assessee that for carrying out this unaccounted business that for carrying out this unaccounted business separately incurred indirect expenses. The Assessing Officer while separately incurred indirect expenses. The Assessing Officer while separately incurred indirect expenses. The Assessing Officer while working out the profit based on the transactions in the seized working out the profit based on the transactions in the seized working out the profit based on the transactions in the seized diaries has applied gross profit diaries has applied gross profit rate, which means only purchases which means only purchases and direct expenses have been reduced from the unaccounted sales and direct expenses have been reduced from the unacc and direct expenses have been reduced from the unacc for working out unaccounted profit and no for working out unaccounted profit and no deduction has been eduction has been

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 54 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

given for expenses incurred for salary and other indirect expenses. given for expenses incurred for salary and other indirect expenses. given for expenses incurred for salary and other indirect expenses. In the case of the assessee the unaccounted business being similar In the case of the assessee the unaccounted business being In the case of the assessee the unaccounted business being to the accounted business, and therefore the profit from the to the accounted business, and therefore the pr to the accounted business, and therefore the pr unaccounted business can also be measured applying same unaccounted business can also be measured applying same unaccounted business can also be measured applying same yardstick and for that purpose yardstick and for that purpose, comparison of the net profit comparison of the net profit declared in the books of accounts is one of the best available in the books of accounts is one of the best available in the books of accounts is one of the best available yardstick. The Tribunal in the case of New Barh Jewellers (sup ribunal in the case of New Barh Jewellers (supra) ribunal in the case of New Barh Jewellers (sup for estimating profit on the unaccounted business directed to apply for estimating profit on the unaccounted business directed to apply for estimating profit on the unaccounted business directed to apply net profit rate observing as under: net profit rate observing as under:

“8. The last ground that is agitated before us is the issue of 8. The last ground that is agitated before us is the issue of 8. The last ground that is agitated before us is the issue of taxation of excess stock found by the revenue during the course taxation of excess stock found by the revenue during the course taxation of excess stock found by the revenue during the course of survey. During the of survey. During the course of survey done u/s 131 of the Act, course of survey done u/s 131 of the Act, for the Assessment Year 2009 for the Assessment Year 2009-10, the survey team found 10, the survey team found difference between the physical stock and the book stock. The difference between the physical stock and the book stock. The difference between the physical stock and the book stock. The physical stock was more than the stock recorded in the books. physical stock was more than the stock recorded in the books. physical stock was more than the stock recorded in the books. The difference was assessed as inc The difference was assessed as income. The ld. Counsel for the ome. The ld. Counsel for the assessee relied on the judgment of the Hon'ble Jurisdictional assessee relied on the judgment of the Hon'ble Jurisdictional assessee relied on the judgment of the Hon'ble Jurisdictional High Court in the case of High Court in the case of Principal Commissioner Of Income vs Principal Commissioner Of Income vs M/S. Subarna Rice Mill M/S. Subarna Rice Mill in ITAT 196 of 2015, GA 404 in ITAT 196 of 2015, GA 4047 of 2015, judgment dt. 20/06/2018 and argued that in such a situation, judgment dt. 20/06/2018 and argued that in such a situation, judgment dt. 20/06/2018 and argued that in such a situation, only the gross profit on such stock can be taxed. This judgment only the gross profit on such stock can be taxed. This judgment only the gross profit on such stock can be taxed. This judgment was followed by the ITAT Kolkata Bench in the case of was followed by the ITAT Kolkata Bench in the case of was followed by the ITAT Kolkata Bench in the case of DCIT vs. Smt. Madhu Chhanda Sirkar Madhu Chhanda Sirkar reported in 2018 (9) TMI 1775 reported in 2018 (9) TMI 1775 - ITAT Kolkat, wherein this Bench of the Tribunal at para 15, 16 & ITAT Kolkat, wherein this Bench of the Tribunal at para 15, 16 & ITAT Kolkat, wherein this Bench of the Tribunal at para 15, 16 & 17 held as follows: 17 held as follows:- "15. We have heard the representative of both the parties and "15. We have heard the representative of both the parties and "15. We have heard the representative of both the parties and perused the materials available on record. We find from perused the materials available on record. We find from perused the materials available on record. We find from the records that the entire amount has been added on the basis of records that the entire amount has been added on the basis of records that the entire amount has been added on the basis of the undisclosed stock of the business. The question arises as to the undisclosed stock of the business. The question arises as to the undisclosed stock of the business. The question arises as to whether the discrepancy in stock addition or the gross profit whether the discrepancy in stock addition or the gross profit whether the discrepancy in stock addition or the gross profit embedded therein is to be considered for addition. The issue h embedded therein is to be considered for addition. The issue h embedded therein is to be considered for addition. The issue has been settled by the following judgement relied upon by the been settled by the following judgement relied upon by the been settled by the following judgement relied upon by the representatives of the assessee passed by the jurisdictional High representatives of the assessee passed by the jurisdictional High representatives of the assessee passed by the jurisdictional High Court with the following observations : Court with the following observations :-

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 55 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

"The assessee's appeal before the Commissioner (Appeals) failed "The assessee's appeal before the Commissioner (Appeals) failed "The assessee's appeal before the Commissioner (Appeals) failed and by an order of Augu and by an order of August 25, 2014, the assessment order of st 25, 2014, the assessment order of March 28, 2013 was upheld. The Commissioner looked into the March 28, 2013 was upheld. The Commissioner looked into the March 28, 2013 was upheld. The Commissioner looked into the facts, the statements made by or on behalf of the assessee and facts, the statements made by or on behalf of the assessee and facts, the statements made by or on behalf of the assessee and the books of the assessee that had been looked into at the time the books of the assessee that had been looked into at the time the books of the assessee that had been looked into at the time of survey which the assessee sub of survey which the assessee subsequently claimed sequently claimed I.T.A. No. 1290/Kol/2017 1290/Kol/2017 Assessment Assessment Year: Year: 2007-08 2007 08 I.T.A. I.T.A. No. No. 1291/Kol/2017 Assessment Year: 2009 1291/Kol/2017 Assessment Year: 2009-10 Barh Jewellers had 10 Barh Jewellers had been lost or destroyed and, in respect whereof, no complaint had been lost or destroyed and, in respect whereof, no complaint had been lost or destroyed and, in respect whereof, no complaint had been lodged by the assessee. On facts, the Commissione been lodged by the assessee. On facts, the Commissione been lodged by the assessee. On facts, the Commissioner (Appeals) found no grounds to interfere with the quantum of (Appeals) found no grounds to interfere with the quantum of (Appeals) found no grounds to interfere with the quantum of excess stocks discovered by the assessing officer in course of the excess stocks discovered by the assessing officer in course of the excess stocks discovered by the assessing officer in course of the survey. The Commissioner also agreed with the assessing officer survey. The Commissioner also agreed with the assessing officer survey. The Commissioner also agreed with the assessing officer as to the quantum of income which had escaped assessment." as to the quantum of income which had escaped assessment." as to the quantum of income which had escaped assessment." There are two aspects to the order impugned dated June 30, e are two aspects to the order impugned dated June 30, e are two aspects to the order impugned dated June 30, 2015 passed by the Appellate Tribunal: the factual findings of 2015 passed by the Appellate Tribunal: the factual findings of 2015 passed by the Appellate Tribunal: the factual findings of the Commissioner (Appeals) as appear to have been interfered the Commissioner (Appeals) as appear to have been interfered the Commissioner (Appeals) as appear to have been interfered with by the Appellate Tribunal; and, the direction given for with by the Appellate Tribunal; and, the direction given for with by the Appellate Tribunal; and, the direction given for taking sales of taking sales of rice and bran into account before arriving at the rice and bran into account before arriving at the additional income which could be said to have escaped additional income which could be said to have escaped additional income which could be said to have escaped assessment. assessment. Before the Commissioner (Appeals), the assessee had relied on a Before the Commissioner (Appeals), the assessee had relied on a Before the Commissioner (Appeals), the assessee had relied on a document signed by an official of the Food Corporation of India document signed by an official of the Food Corporation of India document signed by an official of the Food Corporation of India that evidenced the stock figures at the relevant point of time. The ed the stock figures at the relevant point of time. The ed the stock figures at the relevant point of time. The Commissioner (Appeals) dealt with such aspect of the matter in Commissioner (Appeals) dealt with such aspect of the matter in Commissioner (Appeals) dealt with such aspect of the matter in great detail and by referring to the admitted statements of the great detail and by referring to the admitted statements of the great detail and by referring to the admitted statements of the representatives of the assessee, which were not sought to be representatives of the assessee, which were not sought to be representatives of the assessee, which were not sought to be controverted controverted at any point of time on behalf of the assessee, at any point of time on behalf of the assessee, concluded that it was the physical verification of the stocks concluded that it was the physical verification of the stocks concluded that it was the physical verification of the stocks undertaken by the Assessing Officer in course of the survey undertaken by the Assessing Officer in course of the survey undertaken by the Assessing Officer in course of the survey operation operation operation that that that was was was to to to be be be given given given primacy. primacy. primacy. Indeed, Indeed, Indeed, the the the Commissioner (Appeals) found that Commissioner (Appeals) found that there was no evidence that there was no evidence that the FCI official who had issued the certificate had undertaken the FCI official who had issued the certificate had undertaken the FCI official who had issued the certificate had undertaken any physical verification of the stock at the rice mill of the any physical verification of the stock at the rice mill of the any physical verification of the stock at the rice mill of the assessee and the document appeared to have been filled up by assessee and the document appeared to have been filled up by assessee and the document appeared to have been filled up by the assessee and merely signed by the FCI the assessee and merely signed by the FCI official. Such part of official. Such part of the order of the Commissioner (Appeals) was unexceptionable the order of the Commissioner (Appeals) was unexceptionable the order of the Commissioner (Appeals) was unexceptionable and could not have been interfered with by the Appellate and could not have been interfered with by the Appellate and could not have been interfered with by the Appellate Tribunal. Indeed, no reasons have been furnished by the Tribunal. Indeed, no reasons have been furnished by the Tribunal. Indeed, no reasons have been furnished by the Appellate Tribunal in disregarding the physical verificatio Appellate Tribunal in disregarding the physical verificatio Appellate Tribunal in disregarding the physical verification of the stocks carried out by the Assessing Officer. Further, the area of stocks carried out by the Assessing Officer. Further, the area of stocks carried out by the Assessing Officer. Further, the area of

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 56 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

the godown as indicated in the FCI certificate was of no the godown as indicated in the FCI certificate was of no the godown as indicated in the FCI certificate was of no consequence since the Assessing Officer found stocks piled consequence since the Assessing Officer found stocks piled consequence since the Assessing Officer found stocks piled outside the godown at the time of the survey. outside the godown at the time of the survey. Accordingly, to the Accordingly, to the extent that the Appellate Tribunal accepted extent that the Appellate Tribunal accepted the quantum of additional stocks on the basis of the certificate the quantum of additional stocks on the basis of the certificate the quantum of additional stocks on the basis of the certificate issued by the concerned FC! official, such order is unacceptable issued by the concerned FC! official, such order is unacceptable issued by the concerned FC! official, such order is unacceptable and is set aside. The order of the Commissioner (Appeals) in and is set aside. The order of the Commissioner (Appeals) in and is set aside. The order of the Commissioner (Appeals) in such regard is resto such regard is restored. The additional quantum as discovered red. The additional quantum as discovered during the course of the survey operation win fasten to the during the course of the survey operation win fasten to the during the course of the survey operation win fasten to the assessee. However, the other aspect of the matter was dealt assessee. However, the other aspect of the matter was dealt assessee. However, the other aspect of the matter was dealt with by the Appellate Tribunal on a point of principle and such with by the Appellate Tribunal on a point of principle and such with by the Appellate Tribunal on a point of principle and such matter does not call for any i matter does not call for any interference. According to the Appellate Tribunal the value of the entire According to the Appellate Tribunal the value of the entire According to the Appellate Tribunal the value of the entire quantity of additional stocks that were discovered in course of quantity of additional stocks that were discovered in course of quantity of additional stocks that were discovered in course of the survey operation could not be regarded as the additional the survey operation could not be regarded as the additional the survey operation could not be regarded as the additional income of the assessee and amenable to tax. There was a income of the assessee and amenable to tax. There was a income of the assessee and amenable to tax. There was a specific ground taken before the Appellate Tribunal which was a ecific ground taken before the Appellate Tribunal which was a ecific ground taken before the Appellate Tribunal which was a legal question, as to whether the undisclosed purchase could be legal question, as to whether the undisclosed purchase could be legal question, as to whether the undisclosed purchase could be taken as the additional income without reference to the possible taken as the additional income without reference to the possible taken as the additional income without reference to the possible sale of the paddy when converted. sale of the paddy when converted. The assessee refers to a judgme The assessee refers to a judgment of the Gujarat High Court nt of the Gujarat High Court reported at 388 ITR reported at 388 ITR 377. The principle enunciated in such judgment is that when 377. The principle enunciated in such judgment is that when 377. The principle enunciated in such judgment is that when undisclosed purchases of such nature are discovered, it is only undisclosed purchases of such nature are discovered, it is only undisclosed purchases of such nature are discovered, it is only the profit embedded in the transaction which can be added to the profit embedded in the transaction which can be added to the profit embedded in the transaction which can be added to the total income. The the total income. The Gujarat High Court relied on some of its Gujarat High Court relied on some of its previous judgments to hold that "not the entire purchase price previous judgments to hold that "not the entire purchase price previous judgments to hold that "not the entire purchase price but only the profit element embedded in such purchases can be but only the profit element embedded in such purchases can be but only the profit element embedded in such purchases can be added to the income of the assessee." added to the income of the assessee." In the circumstances and particularly since the fact In the circumstances and particularly since the fact In the circumstances and particularly since the factual findings rendered by the Commissioner (Appeals) as to the quantum of rendered by the Commissioner (Appeals) as to the quantum of rendered by the Commissioner (Appeals) as to the quantum of additional stocks have now been restored, the order impugned additional stocks have now been restored, the order impugned additional stocks have now been restored, the order impugned on the methodology for the ascertainment of the income which on the methodology for the ascertainment of the income which on the methodology for the ascertainment of the income which escaped assessment would pass muster. escaped assessment would pass muster. I.T.A. No. 1290/Kol/201 I.T.A. No. 1290/Kol/2017 Assessment Year: 2007 7 Assessment Year: 2007-08 I.T.A. No. 1291/Kol/2017 Assessment Year: 2009 1291/Kol/2017 Assessment Year: 2009-10 Barh Jewellers The 10 Barh Jewellers The Appellate Tribunal merely directed the gross profit that the Appellate Tribunal merely directed the gross profit that the Appellate Tribunal merely directed the gross profit that the additional purchase was capable of generating to be regarded additional purchase was capable of generating to be regarded additional purchase was capable of generating to be regarded

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as the additional income for tax to be as the additional income for tax to be assessed on such basis. assessed on such basis. Such view of the Appellate Tribunal does not call for any Such view of the Appellate Tribunal does not call for any Such view of the Appellate Tribunal does not call for any interference. Accordingly, ITAT NO.196 of 2015 and GA N0 interference. Accordingly, ITAT NO.196 of 2015 and GA N0 interference. Accordingly, ITAT NO.196 of 2015 and GA N0- 4047 of 2015 are disposed of by modifying the judgment and 4047 of 2015 are disposed of by modifying the judgment and 4047 of 2015 are disposed of by modifying the judgment and order of the Appellate Tribunal dated June 30, 2015 as order of the Appellate Tribunal dated June 30, 2015 as order of the Appellate Tribunal dated June 30, 2015 as indicated. There will be no order as to costs." There will be no order as to costs." 16. The coordinate Bench of this Tribunal held as follows : 16. The coordinate Bench of this Tribunal held as follows : 16. The coordinate Bench of this Tribunal held as follows :- "5. Now comes the equally Important question as to whether the "5. Now comes the equally Important question as to whether the "5. Now comes the equally Important question as to whether the- entire discrepancy in stock addition or only the profit element entire discrepancy in stock addition or only the profit element entire discrepancy in stock addition or only the profit element embedded therein is embedded therein is to be considered for the impugned addition. to be considered for the impugned addition. We find this issue to be no more res integra as co We find this issue to be no more res integra as co- -ordinate bench of this tribunal in of this tribunal in M/s Subarna Rice Mill vs. ITO ITA M/s Subarna Rice Mill vs. ITO ITA No.1781/Ko1/2014 decided on 30.06.2015 .1781/Ko1/2014 decided on 30.06.2015 holding only the holding only the profit element liability to be added in such circumstances; stand profit element liability to be added in such circumstances; stand profit element liability to be added in such circumstances; stand upheld by hon'ble jurisdictional high court's recent judgment upheld by hon'ble jurisdictional high court's recent judgment upheld by hon'ble jurisdictional high court's recent judgment dated 20.06.2018 in ITAT 196 of 2015 GA NoA047 of 2015. We dated 20.06.2018 in ITAT 196 of 2015 GA NoA047 of 2015. We dated 20.06.2018 in ITAT 196 of 2015 GA NoA047 of 2015. We therefore conclude that the impugned former additio therefore conclude that the impugned former additio therefore conclude that the impugned former addition of the entire discrepancy in stock deserves to be deleted. We entire discrepancy in stock deserves to be deleted. We entire discrepancy in stock deserves to be deleted. We accordingly accordingly accordingly accept assessee's former substantive accept assessee's former substantive accept assessee's former substantive ground ground ground challenging correctness thereof. Its latter substantive ground challenging correctness thereof. Its latter substantive ground challenging correctness thereof. Its latter substantive ground stands declined in view of our foregoing discussion. We confirm stands declined in view of our foregoing discussion. We confirm stands declined in view of our foregoing discussion. We confirm the gross profit addition of Rs.6,94,832/ profit addition of Rs.6,94,832/- in these peculiar facts in these peculiar facts and circumstances." and circumstances." 17. Respectfully relying upon these judgments we observe that 17. Respectfully relying upon these judgments we observe that 17. Respectfully relying upon these judgments we observe that only the gross profit can be added to the income of the assessee only the gross profit can be added to the income of the assessee only the gross profit can be added to the income of the assessee and not the entire undisclosed stock. We thus delet and not the entire undisclosed stock. We thus delet and not the entire undisclosed stock. We thus delete the addition made by the authorities below." made by the authorities below." 9. Consistent with the view taken therein, and as no contrary 9. Consistent with the view taken therein, and as no contrary 9. Consistent with the view taken therein, and as no contrary judgment is brought to our notice by the revenue, we direct the judgment is brought to our notice by the revenue, we direct the judgment is brought to our notice by the revenue, we direct the Assessing Officer to tax only the gross profit embedded in the Assessing Officer to tax only the gross profit embedded in the Assessing Officer to tax only the gross profit embedded in the excess stock found f excess stock found for the Assessment Year. The balance or the Assessment Year. The balance addition is hereby deleted. In the result this ground of the addition is hereby deleted. In the result this ground of the addition is hereby deleted. In the result this ground of the assessee is allowed in part. assessee is allowed in part.”

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 58 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

12.6 Similarly the C Coordinate bench of Tribunal in the case of ribunal in the case of SSSOM and SSSMD industries SSSOM and SSSMD industries (supra), directed to apply net profit , directed to apply net profit rate on the undisclose disclosed sales observing as under:

“10. The ratio of the judgment in CIT vs. Balchand Ajit Kumar 10. The ratio of the judgment in CIT vs. Balchand Ajit Kumar 10. The ratio of the judgment in CIT vs. Balchand Ajit Kumar (supra) is that the total undisclosed sales of Rs.1,58,75,339/ (supra) is that the total undisclosed sales of Rs.1,58,75,339/ (supra) is that the total undisclosed sales of Rs.1,58,75,339/- in this case could not be recorded as profit of the assessee. The net this case could not be recorded as profit of the assessee. The net this case could not be recorded as profit of the assessee. The net profit rate had to be adopted and once it was adopted, it could had to be adopted and once it was adopted, it could had to be adopted and once it was adopted, it could not be said that there was perversity of approach. Whether the not be said that there was perversity of approach. Whether the not be said that there was perversity of approach. Whether the rate was low or high would depend on each case. While rate was low or high would depend on each case. While rate was low or high would depend on each case. While following the aforesaid decision rendered by Hon’ble Madhya following the aforesaid decision rendered by Hon’ble Madhya following the aforesaid decision rendered by Hon’ble Madhya Pradesh High Court in CIT Pradesh High Court in CIT vs. Balchand Ajit Kumar (supra), the vs. Balchand Ajit Kumar (supra), the ld. CIT (A) estimated the profit @ 22% and worked out addition to ld. CIT (A) estimated the profit @ 22% and worked out addition to ld. CIT (A) estimated the profit @ 22% and worked out addition to the total income of the assessee to the tune of Rs.34,92,575/ the total income of the assessee to the tune of Rs.34,92,575/ the total income of the assessee to the tune of Rs.34,92,575/-. 11. Following the law laid down by Hon’ble Madhya Pradesh 11. Following the law laid down by Hon’ble Madhya Pradesh 11. Following the law laid down by Hon’ble Madhya Pradesh High Court in CIT vs. Balchand High Court in CIT vs. Balchand Ajit Kumar (supra), we are of the Ajit Kumar (supra), we are of the considered view that total sales of Rs.1,58,75,339/ considered view that total sales of Rs.1,58,75,339/ considered view that total sales of Rs.1,58,75,339/- cannot represent the income of assessee on account of undisclosed represent the income of assessee on account of undisclosed represent the income of assessee on account of undisclosed sales which is price received by the seller of the goods for the sales which is price received by the seller of the goods for the sales which is price received by the seller of the goods for the acquisition of which the assessee has acquisition of which the assessee has already incurred the cost. already incurred the cost. So, in the given circumstances, the only way out is to adopt the So, in the given circumstances, the only way out is to adopt the So, in the given circumstances, the only way out is to adopt the net profit by the Revenue authorities, but the same has to be net profit by the Revenue authorities, but the same has to be net profit by the Revenue authorities, but the same has to be adopted judiciously in the facts and circumstances of the case. adopted judiciously in the facts and circumstances of the case. adopted judiciously in the facts and circumstances of the case. In the instant case, there is not an In the instant case, there is not an iota of evidence on file as to iota of evidence on file as to how the net profit is estimated at exorbitant rate of 22%. how the net profit is estimated at exorbitant rate of 22%. how the net profit is estimated at exorbitant rate of 22%. Assessee cannotbe compared broadly with M/s. Bhaskar Assessee cannotbe compared broadly with M/s. Bhaskar Assessee cannotbe compared broadly with M/s. Bhaskar Traders which has shown gross profit @ 22%. So, keeping in Traders which has shown gross profit @ 22%. So, keeping in Traders which has shown gross profit @ 22%. So, keeping in view the net profit shown by the assessee in the earli view the net profit shown by the assessee in the earli view the net profit shown by the assessee in the earlier year @ 16%, we do not find any evidence on record to reach at the 16%, we do not find any evidence on record to reach at the 16%, we do not find any evidence on record to reach at the conclusion that in the next year, net profit is increased by 6%. conclusion that in the next year, net profit is increased by 6%. conclusion that in the next year, net profit is increased by 6%. So, in these circumstances, we find it appropriate to estimate the So, in these circumstances, we find it appropriate to estimate the So, in these circumstances, we find it appropriate to estimate the net profit @ 16% on the undisclosed sales of Rs.1,58,75 net profit @ 16% on the undisclosed sales of Rs.1,58,75 net profit @ 16% on the undisclosed sales of Rs.1,58,75,339/-.” 12.7 In view of above above discussion, we do not find any error in the discussion, we do not find any error in the order of the Ld. CIT(A) in applying net profit rate for computation of order of the Ld. CIT(A) in applying net profit rate for computation of order of the Ld. CIT(A) in applying net profit rate for computation of unaccounted profit from the unaccounted business transactions unaccounted profit from the unaccounted business transactions unaccounted profit from the unaccounted business transactions recorded in the seized diaries qua the year unde recorded in the seized diaries qua the year under consideration. r consideration.

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 59 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

Accordingly, we uphold the finding of the Ld. CIT(A) on the issue in we uphold the finding of the Ld. CIT(A) on the issue in we uphold the finding of the Ld. CIT(A) on the issue in dispute.

13.0 The ground no The ground nos. 1to 4 of the appeal of the revenue are the appeal of the revenue are accordingly dismissed. The ground No. 5 has been raised merely for dismissed. The ground No. 5 has been raised merely for dismissed. The ground No. 5 has been raised merely for the reason that revenue had filed the reason that revenue had filed appeal before the Hon’ble appeal before the Hon’ble Supreme Court against the decision of the Hon’ble Bombay High Supreme Court against the decision of the Hon’ble Bombay High Supreme Court against the decision of the Hon’ble Bombay High Court in the case of continental warehousing Corporation (supra). Court in the case of continental warehousing Corporation (supra). Court in the case of continental warehousing Corporation (supra). Since the said decision of the Hon’ble Bombay High Court has not Since the said decision of the Hon’ble Bombay High Court Since the said decision of the Hon’ble Bombay High Court been stayed by the Hon’ble Supreme C by the Hon’ble Supreme Court and therefore same ourt and therefore same being in operation, we are bound to follow the same. Accordingly, being in operation, we are bound to follow the same. Accordingly being in operation, we are bound to follow the same. Accordingly the ground No. 5 of the the Revenue is also dismissed.

Appeal : ITA No. 3033/Mum/2022 for AY 2014 Appeal : ITA No. 3033/Mum/2022 for AY 2014-15 15

14.0 Now, we take up the appeal of the assessee for assessment we take up the appeal of the assessee for assessment we take up the appeal of the assessee for assessment year 2014-15. The grounds raised by the The grounds raised by the Revenue evenue are reproduced as under:

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 60 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 61 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

“6.19 Conclusion 6.19 Conclusion-The aforesaid detailed discussion with respect The aforesaid detailed discussion with respect to various judicial decisions clearly laid down the following to various judicial decisions clearly laid down the following to various judicial decisions clearly laid down the following principles - (1)the assessments which have been concluded us 143() of the (1)the assessments which have been concluded us 143() of the (1)the assessments which have been concluded us 143() of the Act and not pending at the time of search proceedings, do not Act and not pending at the time of search proceedings, do not Act and not pending at the time of search proceedings, do not abate. (ii)for this purpose, intimation u/s 143(1) would constitute an (ii)for this purpose, intimation u/s 143(1) would constitute an (ii)for this purpose, intimation u/s 143(1) would constitute an assessment, relying on the decision of Hon'ble Bo assessment, relying on the decision of Hon'ble Bo assessment, relying on the decision of Hon'ble Bombay High Court in CIT V/s Gurinder Singh Bawa (79 taxmann.com 398) Court in CIT V/s Gurinder Singh Bawa (79 taxmann.com 398) Court in CIT V/s Gurinder Singh Bawa (79 taxmann.com 398) (iii)the proceedings us 153A of the Act do not empower the ii)the proceedings us 153A of the Act do not empower the ii)the proceedings us 153A of the Act do not empower the Assessing officer to re Assessing officer to re-adjudicate the settled issues again, adjudicate the settled issues again, unless fresh incriminating material for the relevant years found unless fresh incriminating material for the relevant years found unless fresh incriminating material for the relevant years found during the course of search proceedings. ing the course of search proceedings. (iv) (iv) (iv) the the the Assessing Assessing Assessing officer officer officer does does does not not not have have have jurisdictionTO jurisdictionTO jurisdictionTO makeadditions/disallowances which are not based on relevant makeadditions/disallowances which are not based on relevant makeadditions/disallowances which are not based on relevant incriminating material found during the course of search incriminating material found during the course of search incriminating material found during the course of search proceedings. proceedings. (v) in the case of completed/un (v) in the case of completed/un-abetted assessments, where no abetted assessments, where no incriminating material is found during the course of search, the incriminating material is found during the course of search, the incriminating material is found during the course of search, the assessment us 153A of the Act is to be made on originally assessment us 153A of the Act is to be made on originally assessment us 153A of the Act is to be made on originally assessed/returned income and no addition or disallowance can assessed/returned income and no addition or disallowance can assessed/returned income and no addition or disallowance can be made de hors the incriminating evidence be made de hors the incriminating evidences for the relevant s for the relevant yearare recovered during the course of search. yearare recovered during the course of search. (vi) Any admission or confession needs corroboration with Any admission or confession needs corroboration with Any admission or confession needs corroboration with evidences. In order tothe assessee, was added to the total evidences. In order tothe assessee, was added to the total evidences. In order tothe assessee, was added to the total income of the appellant for the year under consideration. income of the appellant for the year under consideration. income of the appellant for the year under consideration. From the above, From the above, it is apparent that this addition is not linked it is apparent that this addition is not linked with any incriminating material found during the search with any incriminating material found during the search with any incriminating material found during the search pertaining to AY 2014 pertaining to AY 2014-15. The addition is based on the seized 15. The addition is based on the seized record related to AY 2015 record related to AY 2015-16. (i) Addition of unsecured loans u/s. 68 of the Act amountin (i) Addition of unsecured loans u/s. 68 of the Act amountin (i) Addition of unsecured loans u/s. 68 of the Act amounting to Rs. 2,00,00,000/ Rs. 2,00,00,000/- From the assessment order, it is also observed that the From the assessment order, it is also observed that the From the assessment order, it is also observed that the appellant, during F.Y. 2013 appellant, during F.Y. 2013-14 relevant to AY 2014 14 relevant to AY 2014-15 had shown unsecured loans from two parties namely, M/s shown unsecured loans from two parties namely, M/s shown unsecured loans from two parties namely, M/s

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 62 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

Kamalakshi Finance Corporation (Rs. 50,00,000/ Kamalakshi Finance Corporation (Rs. 50,00,000/- -) and M/s NCL Research and Financial Services Ltd (Rs. 1,50,00,000/ h and Financial Services Ltd (Rs. 1,50,00,000/-). The h and Financial Services Ltd (Rs. 1,50,00,000/ loan taken from these two parties are treated by the AO as loan taken from these two parties are treated by the AO as loan taken from these two parties are treated by the AO as nongenuine. nongenuine. nongenuine. The The The appellant appellant appellant also also also submitted submitted submitted during during during the the the assessment proceedings that there exists no incriminating assessment proceedings that there exists no incriminating assessment proceedings that there exists no incriminating material which suggests that the material which suggests that the unsecured loans were bogus unsecured loans were bogus and accordingly no addition in this regard could have been and accordingly no addition in this regard could have been and accordingly no addition in this regard could have been made. Since the loan from these two parties form part of the regular Since the loan from these two parties form part of the regular Since the loan from these two parties form part of the regular books of accounts, in my considered view, there is no basis to books of accounts, in my considered view, there is no basis to books of accounts, in my considered view, there is no basis to treat it forming part of incriminating treat it forming part of incriminating material found during the material found during the course of search proceedings. course of search proceedings. (iii) Disallowance of interest expenses of Rs. 10,02,740/ ) Disallowance of interest expenses of Rs. 10,02,740/- paid to ) Disallowance of interest expenses of Rs. 10,02,740/ lender by treating the same as unexplained expenditure us. 69C lender by treating the same as unexplained expenditure us. 69C lender by treating the same as unexplained expenditure us. 69C of the Act: Regarding this addition, it is observed that during the y Regarding this addition, it is observed that during the y Regarding this addition, it is observed that during the year under consideration, the appellant had claimed interest expense under consideration, the appellant had claimed interest expense under consideration, the appellant had claimed interest expense to the tune of Rs. 10,02,740/ to the tune of Rs. 10,02,740/- paid on the outstanding paid on the outstanding unsecured loans to two lenders M/s Gromo Trade &Consultancy unsecured loans to two lenders M/s Gromo Trade &Consultancy unsecured loans to two lenders M/s Gromo Trade &Consultancy Services Ltd. and M/ NCL Research and Financial Services Ltd. Services Ltd. and M/ NCL Research and Financial Services Ltd. Services Ltd. and M/ NCL Research and Financial Services Ltd. The interest expenses have been disallowed by the AO us 69C of t expenses have been disallowed by the AO us 69C of t expenses have been disallowed by the AO us 69C of the Act.Clearly this addition is also not linked with any Clearly this addition is also not linked with any Clearly this addition is also not linked with any incriminating material found during the search pertaining to AY incriminating material found during the search pertaining to AY incriminating material found during the search pertaining to AY 2014-15. 6.21 Hence, only conclusion that can be drawn is that the 6.21 Hence, only conclusion that can be drawn is that the 6.21 Hence, only conclusion that can be drawn is that the figures related figures related to these additions are either extrapolation or to these additions are either extrapolation or germinate from regular books of accounts and not forming part of germinate from regular books of accounts and not forming part of germinate from regular books of accounts and not forming part of any incriminating material found and seized during the search any incriminating material found and seized during the search any incriminating material found and seized during the search actionwhich can be relevant to AY 2014 actionwhich can be relevant to AY 2014-15. Considering the 15. Considering the totality of the facts totality of the facts and circumstances, I am of the considered and circumstances, I am of the considered view that these additions cannot survive de hors the view that these additions cannot survive de hors the view that these additions cannot survive de hors the incriminating evidences held in the above binding judicial incriminating evidences held in the above binding judicial incriminating evidences held in the above binding judicial decisions. The AO is accordingly directed to delete the impugned decisions. The AO is accordingly directed to delete the impugned decisions. The AO is accordingly directed to delete the impugned additions made in the assessment orde additions made in the assessment order. Thus, the ground of r. Thus, the ground of appeal no. 1 & 2 are allowed. appeal no. 1 & 2 are allowed.” 14.2 The Ld CIT(A) held that there was no incriminating material The Ld CIT(A) held that there was no incriminating material The Ld CIT(A) held that there was no incriminating material qua the addition of unsecured loans, unverified job work expense of unsecured loans, unverified job work expense of unsecured loans, unverified job work expense

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 63 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

etc. The Ld CIT(A) further with respect to the addition of profit of etc. The Ld CIT(A) further with respect to the addition of profit of etc. The Ld CIT(A) further with respect to the addition of profit of unaccounted ccounted ccounted business business business observed observed observed that that that qua qua qua the the the year year year under under under consideration no incriminating material was found and the addition consideration no incriminating material was found and the addition consideration no incriminating material was found and the addition was made by the by AO by extrapolating the material pertaining to was made by the by AO by extrapolating the material pertaining to was made by the by AO by extrapolating the material pertaining to AY 2015-16. Before us also the learne efore us also the learned DR could not substantiate DR could not substantiate or brought on record any incriminating material qua the additions, ght on record any incriminating material qua the additions, ght on record any incriminating material qua the additions, and hence following the ratio in the case of continental warehousing and hence following the ratio in the case of continental warehousing and hence following the ratio in the case of continental warehousing Corporation(supra), no addition could have been made in the case Corporation(supra), no addition could have been made in the case Corporation(supra), no addition could have been made in the case of the assessee for assessment year under consideration. The of the assessee for assessment year under consideration. The of the assessee for assessment year under consideration. The grounds of the appeal of the rounds of the appeal of the Revenue accordingly dismissed. evenue accordingly dismissed.

ITA Nos. 3035 to 3037/Mum/2022 for AY 2016 ITA Nos. 3035 to 3037/Mum/2022 for AY 2016-17 to 2018 17 to 2018-19:

15.0 In assessment year 2016 n assessment year 2016-17 to AY 2018 17 to AY 2018-19, facts and circumstances and grounds raised being identical circumstances and grounds raised being identical to AY 2014 to AY 2014-15 , the relevant grounds are adjudicated mutatis mutandis to the unds are adjudicated mutatis mutandis to the unds are adjudicated mutatis mutandis to the grounds adjudicated in assessment year 2014 adjudicated in assessment year 2014-15.

ITA NO. 3038/Mum/2022 for AY 2019 ITA NO. 3038/Mum/2022 for AY 2019-20

16.0 Now, we take up the appeal of the we take up the appeal of the Revenue for assessment evenue for assessment year 2019-20. In the assessment order passed for the year under 20. In the assessment order passed for the year under 20. In the assessment order passed for the year under consideration under section 153A of the Act, the Assessing Officer consideration under section 153A of the Act, the Assessing Officer consideration under section 153A of the Act, the Assessing Officer has made following three additions/disallowances: has made following three additions/disallowances:

(a) disallowance for unverified purchases of disallowance for unverified purchases of ₹ 9,47,53, 9,47,53,780-

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 64 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

(b) disallowance for unverified labour expenses of rupees for, 73, disallowance for unverified labour expenses of rupees for, 73, disallowance for unverified labour expenses of rupees for, 73, 42, 487/- (c) disallowance for disallowance for employee’s contribution to PF/ESI deposited contribution to PF/ESI deposited after due date under relevant act amounting to after due date under relevant act amounting to after due date under relevant act amounting to ₹ 26, 72, 885/-

16.1 In the grounds raised before us n the grounds raised before us, the Revenue has challenged venue has challenged finding of the Ld. CIT(A) in respect of the disallowance of unverified finding of the Ld. CIT(A) in respect of the disallowance of unverified finding of the Ld. CIT(A) in respect of the disallowance of unverified purchases of ₹9,47,53, 9,47,53,780/- and disallowance of and disallowance of employee’s contribution to PF/ESI amounting to contribution to PF/ESI amounting to ₹26,72,885/-.

17.0 The facts in brief qua the ground No The facts in brief qua the ground Nos. 1 (one) an and 2(two) of the appeal are concerned appeal are concerned, we find that during the course of the search we find that during the course of the search proceeding in the case of M/s Goldmedal proceeding in the case of M/s Goldmedal Electrical’s private lectrical’s private limited(i.e.a concern related to a concern related to assessee), the search team found , the search team found that purchases from certain parties were remai that purchases from certain parties were remained unverified. Out ned unverified. Out of those parties, three parties namely M/s Hirasons, M/s Satyam of those parties, three parties namely M/s Hirasons, M/s Satyam of those parties, three parties namely M/s Hirasons, M/s Satyam Plast and M/s Shivam Enterprise also featured in the list of the Plast and M/s Shivam Enterprise also featured in the list of the Plast and M/s Shivam Enterprise also featured in the list of the vendors of the assessee company. During the course of the search vendors of the assessee company. During the course of the search vendors of the assessee company. During the course of the search in the case of the assessee statement of S in the case of the assessee statement of Sh Rahul Dinesh Jha , h Rahul Dinesh Jha , an employee of the assessee was recorded, wherein he stated that bills employee of the assessee was recorded, wherein he stated that employee of the assessee was recorded, wherein he stated that of purchases from aforesaid entities were directly entered into of purchases from aforesaid entities were directly entered into of purchases from aforesaid entities were directly entered into accounting system used by the godown accounting system used by the godown staff. This statement of . This statement of sh Rahul Dinesh was confronted toSh Ja Dinesh was confronted toSh Jayantilal Jain, promoter of the assessee company, but he failed to substantiate the purchases from assessee company, but he failed to substantiate the purchases from assessee company, but he failed to substantiate the purchases from those parties. During the course of the assessment proceeding, the those parties. During the course of the assessment proceeding, the those parties. During the course of the assessment proceeding, the Assessing Officer issue Assessing Officer issueda detailed show cause notice detailed show cause notice as why the

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 65 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

purchases from said parties purchases from said parties during the period from assessment during the period from assessment year 2014-15 to AY 2020 15 to AY 2020-21, might not be disallowed. The assessee 21, might not be disallowed. The assessee substantiated the purchase with purchase substantiated the purchase with purchase invoice, copies of stock register, delivery challan from delivery challan from supplier, bank statement of assessee bank statement of assessee company, ledger conf ledger confirmation from those parties. After considering After considering the submission of the assessee, the Assessing Officer bifurcated the the submission of the assessee, the Assessing Officer bifurcated the the submission of the assessee, the Assessing Officer bifurcated the purchases from those parties for the period prior to introduction of purchases from those parties for the period prior to introduction of purchases from those parties for the period prior to introduction of e-way bill under the GST and under the GST and post the period the introduction of e period the introduction of e- way bill under the GST. Relevant table of purchases reproduced by bill under the GST. Relevant table of purchases reproduced by bill under the GST. Relevant table of purchases reproduced by the Assessing Officer on page 40 of the assessment order is the Assessing Officer on page 40 of the assessment order is the Assessing Officer on page 40 of the assessment order is extracted as under:

Name Financial With Eway Without Eway Before Before July July Total Year Bill (After bill (July 2017 17 17 Before Bef July 2018) to June 2018) GST After In GST Prior to Before GST Before GST Introduction E-way Bill of E Way bill Hirasons 2016-17 11,01,16,363 11,01,16,363 2017-18 - 15,23,55,280/- 6,27,10,588 6,27,10,588 2018-19 15,61,09,770 1,70,54,525 2019-20 5,68,10,363 Total 21,29,20,133 16,94,09,805 17,28,26,951 17,28,26,951 55,51,56,889 Satyam 2016-17 11,76,50,027 11,76,50,027 Plast 2017-18 8,78,97,813 3,49,32,034 3,49,32,034 2018-19 13,59,66,299 3,46,01,997 2019-20 9,50,11,571 Total 23,09,77,870 12,24,99,810 15,25,82,061 15,25,82,061 50,60,59,740 Shivam 2016-17 2017-18 84,568 2,57,17,039 2018-19 9,19,47,619 4,30,97,258 2019-20 7,15,55,191 Total 16,35,87,378 6,88,14,297 0 23,24,01,675 Grand total 60,74,85,381 36,07,23,911 32,54,09,012 32,54,09,012 1,29,36,18,304 16.2 Out of the above purchases from three parties, the As Out of the above purchases from three parties, the As Out of the above purchases from three parties, the Assessing Officer verified the purchases of Officer verified the purchases of ₹60,74,85,381/-for the period of for the period of

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post introduction of the e of the e-way bill as corresponding transport of the way bill as corresponding transport of the goods was duly verified from thewebsite of GST portal. The relevant goods was duly verified from thewebsite of GST portal. The relevant goods was duly verified from thewebsite of GST portal. The relevant finding of the Assessing Officer is reprodu finding of the Assessing Officer is reproduced as under: ced as under:

“(ix) The analysis of these purchases have been made as under: “(ix) The analysis of these purchases have been made as under: “(ix) The analysis of these purchases have been made as under: 1. Purchases from 3 parties for FY 2017 1. Purchases from 3 parties for FY 2017-18 onwards for which E 18 onwards for which E way Bill is available is of an amount Rs. 60,74,85,381/ way Bill is available is of an amount Rs. 60,74,85,381/ way Bill is available is of an amount Rs. 60,74,85,381/-: The E way bill mentions the transport details like transpo The E way bill mentions the transport details like transpo The E way bill mentions the transport details like transporter name with Vehicle Numbers. The numbers given in the E way name with Vehicle Numbers. The numbers given in the E way name with Vehicle Numbers. The numbers given in the E way bill were verified form the Transport Ministry website of Vahan bill were verified form the Transport Ministry website of Vahan bill were verified form the Transport Ministry website of Vahan on test check basis and the said vehicles were found to be on test check basis and the said vehicles were found to be on test check basis and the said vehicles were found to be Goods vehicle. E way Bill is a contemporary document and is Goods vehicle. E way Bill is a contemporary document and is Goods vehicle. E way Bill is a contemporary document and is generated from the website of GST portal. E way Bill is a from the website of GST portal. E way Bill is a from the website of GST portal. E way Bill is a contemporary document and is generated from the website of contemporary document and is generated from the website of contemporary document and is generated from the website of GST portal. The E way Bill is a contemporary document which GST portal. The E way Bill is a contemporary document which GST portal. The E way Bill is a contemporary document which hasbeen introduced by Government as an efficient way of hasbeen introduced by Government as an efficient way of hasbeen introduced by Government as an efficient way of tracking of goods shipped through tracking of goods shipped through transport. Thus, being a transport. Thus, being a contemporary document it is generated for transport of goods contemporary document it is generated for transport of goods contemporary document it is generated for transport of goods and thus cannotbe generated post facto. The same vehicle is and thus cannotbe generated post facto. The same vehicle is and thus cannotbe generated post facto. The same vehicle is verified form the Transport Ministry website of Vahan and the verified form the Transport Ministry website of Vahan and the verified form the Transport Ministry website of Vahan and the vehicle was found to be Goods vehicle. The same vehicle was found to be Goods vehicle. The same vehicle was found to be Goods vehicle. The same was done on test check basis. Further for these purchases transporter test check basis. Further for these purchases transporter test check basis. Further for these purchases transporter invoices were produced by the assessee. invoices were produced by the assessee. Thus there exists a third party evidence in the nature of E way Thus there exists a third party evidence in the nature of E way Thus there exists a third party evidence in the nature of E way bill for delivery of goods and therefore the purchase of an bill for delivery of goods and therefore the purchase of an bill for delivery of goods and therefore the purchase of an amount Rs.60.74 crore amount Rs.60.74 crores is taken as verified.” 16.3 But regarding the balance purchases of ut regarding the balance purchases of Rs. 68, 61,32,923/ 68, 61,32,923/-, the Assessing Officer Assessing Officer rejected the sameas unverified due to absence s unverified due to absence of watchmen inward register, absence of e of watchmen inward register, absence of e-way bill and certain way bill and certain minor discrepancies in the stock r minor discrepancies in the stock register. The Assessing Officer ster. The Assessing Officer accordingly rejected the purchases relevant to the assessment year accordingly rejected the purchases relevant to the assessment year accordingly rejected the purchases relevant to the assessment year under consideration amounting to under consideration amounting to ₹9,47,53,780/- holding the same holding the same

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is unverified. The relevant finding of the Assessing Officer is The relevant finding of the Assessing Officer is The relevant finding of the Assessing Officer is reproduced as under: reproduced as under:

“b) Purchases for which no E way Bill is available for an amount ases for which no E way Bill is available for an amount ases for which no E way Bill is available for an amount Rs.68,61,32,923/ Rs.68,61,32,923/- - i)Goods purchased from M/s Hirasons for an amount of i)Goods purchased from M/s Hirasons for an amount of i)Goods purchased from M/s Hirasons for an amount of Rs.34,22,36,756/ Rs.34,22,36,756/-: Purchases fromHirasons are like vibro ding dong bell, PXSF 12 Purchases fromHirasons are like vibro ding dong bell, PXSF 12 Purchases fromHirasons are like vibro ding dong bell, PXSF 12 00 7 white with a narration CASAVIVA Glossy Wh 00 7 white with a narration CASAVIVA Glossy Wh 00 7 white with a narration CASAVIVA Glossy White, JS 04 103 with narration Slim Surface box, Round plate, Fan junction Plate, with narration Slim Surface box, Round plate, Fan junction Plate, with narration Slim Surface box, Round plate, Fan junction Plate, Medium, Junction plate, etc. The stock register has been Medium, Junction plate, etc. The stock register has been Medium, Junction plate, etc. The stock register has been examined but cannot be accepted because of the reason that in examined but cannot be accepted because of the reason that in examined but cannot be accepted because of the reason that in stock register of month of October 2016 for 16Amp Axton stock register of month of October 2016 for 16Amp Axton stock register of month of October 2016 for 16Amp Axton 3 pin top with indicator it is seen that issue is of quantity 3450 top with indicator it is seen that issue is of quantity 3450 top with indicator it is seen that issue is of quantity 3450 whereas the receipt is of 2700. The copy of whereas the receipt is of 2700. The copy of whereas the receipt is of 2700. The copy of the same is reproduced below: reproduced below:

(i) Considering the above inconsistencies the stock register Considering the above inconsistencies the stock register Considering the above inconsistencies the stock register is not relied upon to corelate sales with purchases is not relied upon to corelate sales with purchases is not relied upon to corelate sales with purchases made. The invoices were checked on sample basis. It did not The invoices were checked on sample basis. It did not The invoices were checked on sample basis. It did not contain verification stamp from stores department. For these contain verification stamp from stores department. For these contain verification stamp from stores department. For these purchases, assessee submitted thatwatchmen Inward purchases, assessee submitted thatwatchmen Inward purchases, assessee submitted thatwatchmen Inward register is not available. There is no proof of delivery of register is not available. There is no proof of delivery of register is not available. There is no proof of delivery of

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goods in absence of watc goods in absence of watchman inward register and E way hman inward register and E way bill . Thus in absence of verifiable document for delivery of bill . Thus in absence of verifiable document for delivery of bill . Thus in absence of verifiable document for delivery of Goods the purchase of Rs.34,22,36,756/ Goods the purchase of Rs.34,22,36,756/-remains unverified remains unverified and thus unexplained. and thus unexplained. (ii)Goods purchased from M/s Satyam Plast for an amount )Goods purchased from M/s Satyam Plast for an amount )Goods purchased from M/s Satyam Plast for an amount of Rs.27,50,81,870/ of Rs.27,50,81,870/-: The invoices were checked on sample basis. It did not nvoices were checked on sample basis. It did not nvoices were checked on sample basis. It did not contain verification stamp from stores department. For these contain verification stamp from stores department. For these contain verification stamp from stores department. For these purchases, assessee submitted that watchmen Inward purchases, assessee submitted that watchmen Inward purchases, assessee submitted that watchmen Inward register is not available. There is no proof of delivery of register is not available. There is no proof of delivery of register is not available. There is no proof of delivery of goods in absence of watchman inward goods in absence of watchman inward register and E way register and E way bill. Thus in absence of verifiable document for delivery of bill. Thus in absence of verifiable document for delivery of bill. Thus in absence of verifiable document for delivery of Goods the purchase of Rs.27,50,81,870/ Goods the purchase of Rs.27,50,81,870/-remains unverified remains unverified and thus unexplained. and thus unexplained. ii) Goods purchased from Ms Shivam Enterprises for an ii) Goods purchased from Ms Shivam Enterprises for an ii) Goods purchased from Ms Shivam Enterprises for an amount of Rs.6,88,14,2971 amount of Rs.6,88,14,2971-: The invoices The invoices were checked on sample basis. It did not were checked on sample basis. It did not contain verification stamp from stores department. For these contain verification stamp from stores department. For these contain verification stamp from stores department. For these purchases, assessee submitted that watchmen Inward purchases, assessee submitted that watchmen Inward purchases, assessee submitted that watchmen Inward register is not available. There is no proof of delivery of register is not available. There is no proof of delivery of register is not available. There is no proof of delivery of goods in absence of watchman inward registe goods in absence of watchman inward registe goods in absence of watchman inward register and E way bill. Thus in absence of verifiable document for delivery of bill. Thus in absence of verifiable document for delivery of bill. Thus in absence of verifiable document for delivery of Goods the purchase of Rs.6,88, 14,297/ Goods the purchase of Rs.6,88, 14,297/-remains unverified remains unverified and thus unexplained. and thus unexplained. Thus as discussed above, purchases of Rs.68.58 Crores out Thus as discussed above, purchases of Rs.68.58 Crores out Thus as discussed above, purchases of Rs.68.58 Crores out of total purchase of Rs. 129.36 Crores is to of total purchase of Rs. 129.36 Crores is to be considered as be considered as unexplained in the case of M/s GM Modular Pvt Ltd. unexplained in the case of M/s GM Modular Pvt Ltd. unexplained in the case of M/s GM Modular Pvt Ltd. (x)It is seen that from these 3 parties assessee has claimed (x)It is seen that from these 3 parties assessee has claimed (x)It is seen that from these 3 parties assessee has claimed to to to avail avail avail labour labour labour services services services and and and paid paid paid charges charges charges of of of Rs.7,55,30,494/ Rs.7,55,30,494/- to these 3 parties in the case of GM to these 3 parties in the case of GM Modular Prt Ltd. No supporti Modular Prt Ltd. No supporting documents have been ng documents have been submitted for these. Hence the amount of Rs.7,55,30,494/ submitted for these. Hence the amount of Rs.7,55,30,494/ submitted for these. Hence the amount of Rs.7,55,30,494/- is considered unexplained in the case of M/s GM Modular is considered unexplained in the case of M/s GM Modular is considered unexplained in the case of M/s GM Modular Pvt Ltd. • СОМЕ ТА Y DEPARTME • СОМЕ ТА Y DEPARTME

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(xi)The assesse vide its submission dated 11.03.2021 has (xi)The assesse vide its submission dated 11.03.2021 has (xi)The assesse vide its submission dated 11.03.2021 has tried to explain the genuiness o tried to explain the genuiness of the transactions, however it f the transactions, however it has failed in subbstanting the claim of purchases/labour has failed in subbstanting the claim of purchases/labour has failed in subbstanting the claim of purchases/labour work as the asssesse could not make rebuttal of work as the asssesse could not make rebuttal of work as the asssesse could not make rebuttal of discrepancies pointed above in respect of documentation discrepancies pointed above in respect of documentation discrepancies pointed above in respect of documentation and records of the purchases. The assesse failed in and records of the purchases. The assesse failed in and records of the purchases. The assesse failed in producing th producing third party evidences in respect of claim of ird party evidences in respect of claim of purchases. purchases. purchases. Statements Statements Statements of of of concerned concerned concerned persons persons persons clearly clearly clearly establish the deviation/discrepancies in respect of recording establish the deviation/discrepancies in respect of recording establish the deviation/discrepancies in respect of recording of purchases in the books of the assessee. The assessee of purchases in the books of the assessee. The assessee of purchases in the books of the assessee. The assessee failed in submitting watchman inward registe failed in submitting watchman inward registe failed in submitting watchman inward register and E-way bills. None of the satisfactory documents were produced by bills. None of the satisfactory documents were produced by bills. None of the satisfactory documents were produced by assessee in respect of labour services/job work. All the assessee in respect of labour services/job work. All the assessee in respect of labour services/job work. All the relevant extract/documents requested by the asessee were relevant extract/documents requested by the asessee were relevant extract/documents requested by the asessee were supplied to the assesseee, however it has failed in proving supplied to the assesseee, however it has failed in proving supplied to the assesseee, however it has failed in proving the genuine the genuineness of purchases held to be bogus in above ness of purchases held to be bogus in above paras with supporting documentary evidences maintained paras with supporting documentary evidences maintained paras with supporting documentary evidences maintained in the case of genuine purchases. in the case of genuine purchases. (xii)Thus Purchase addition Summary in the case of M/s GM (xii)Thus Purchase addition Summary in the case of M/s GM (xii)Thus Purchase addition Summary in the case of M/s GM Modular Pvt Ltd is tabulated as under: Modular Pvt Ltd is tabulated as under: FY AY Unverified Purchases amount Unverified Labour/Job Work Unverified Labour/Job Work (in Rs) (in Rs) 2012-13 2013-14 - 26,91,945 26,91,945 2013-14 2014-15 - 26,98,730 26,98,730 2014-15 2015-16 - 78,27,700 78,27,700 2015-16 2016-17 - 1,88,77,132 1,88,77,132 2016-17 2017-18 22,77,66,390 1,86,71,188 1,86,71,188 2017-18 2018-19 36,36,12,754 2,47,63,799 2,47,63,799 2018-19 2019-20 9,47,53,780 4,73,42,487 4,73,42,487 Total Total Unverified Unverified 68,61,32,923 7,55,30,494 7,55,30,494 Purchases & Labour Job Purchases & Labour Job Work (xiii) (xiii) (xiii) Thus Thus Thus an an an amount amount amount of of of Rs.9,47,53,780/- Rs.9,47,53,780/ Rs.9,47,53,780/ and Rs.4,73,42,487/ Rs.4,73,42,487/- on account of unverified purchases and on account of unverified purchases and unverified labour/job work respectively is d unverified labour/job work respectively is d unverified labour/job work respectively is disallowed and added to the total income of the assessee for AY 2019 added to the total income of the assessee for AY 2019 added to the total income of the assessee for AY 2019-20. 16.4 On further appeal, the assessee file On further appeal, the assessee filed details submission before details submission before the ld CIT(A). The ld CIT(A) called for comments of the Assessing The ld CIT(A) called for comments of the Assessing The ld CIT(A) called for comments of the Assessing Officer on those submissions. Officer on those submissions. After considering the submission of the submission of

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the assessee, the Ld. CIT(A) has given his comment on the the assessee, the Ld. CIT(A) has given his comment on the the assessee, the Ld. CIT(A) has given his comment on the observation of the Assessing Officer and deleted the addition of observation of the Assessing Officer and deleted the addition of observation of the Assessing Officer and deleted the addition of observing as under:

5.7 It is observed that during the year under consideration, 5.7 It is observed that during the year under consideration, 5.7 It is observed that during the year under consideration, the Appellant had made following p the Appellant had made following payments to three parties ayments to three parties on account of purchases, in the following manner: on account of purchases, in the following manner: (i) M/s. Shivam Enterprises (i) M/s. Shivam Enterprises- Rs.4,30,97,258 (ii) M/s. Satyam Plast (ii) M/s. Satyam Plast- Rs. 3,46,01,997 (iii) M/s. Hirasons (iii) M/s. Hirasons- Rs. 1,70,54,525 TOTAL Rs. 9,47,53,780 TOTAL Rs. 9,47,53,780 5.8 The impugned disallowances were ma 5.8 The impugned disallowances were made as in the opinion de as in the opinion of the AO, the purchases were unverified expenditure. The of the AO, the purchases were unverified expenditure. The of the AO, the purchases were unverified expenditure. The issue has been discussed in para 1.2, of the assessment order issue has been discussed in para 1.2, of the assessment order issue has been discussed in para 1.2, of the assessment order in the following manner in the following manner- "(i Various statements recorded in the case of Gold Medal "(i Various statements recorded in the case of Gold Medal "(i Various statements recorded in the case of Gold Medal Group and discrepancies pointed Group and discrepancies pointed out in respect of recording of out in respect of recording of above purchases clearly establish that these Groups are above purchases clearly establish that these Groups are above purchases clearly establish that these Groups are involved in recording non involved in recording non-genuine purchases/labour job work genuine purchases/labour job work in its books of accounts. It was found that there are 3 common in its books of accounts. It was found that there are 3 common in its books of accounts. It was found that there are 3 common parties who feature in the list of vendors of parties who feature in the list of vendors of the company M/s the company M/s GM Modular Pvt Ltd which is group concern of M/s G Nine GM Modular Pvt Ltd which is group concern of M/s G Nine GM Modular Pvt Ltd which is group concern of M/s G Nine Modular Pvt Ltd.The same are M/s Hirasons, M/s Satyam Modular Pvt Ltd.The same are M/s Hirasons, M/s Satyam Modular Pvt Ltd.The same are M/s Hirasons, M/s Satyam Plast and M/s Shivam Enterprise.The statement of Shri Rahul Plast and M/s Shivam Enterprise.The statement of Shri Rahul Plast and M/s Shivam Enterprise.The statement of Shri Rahul Dinesh Jha, an employee of M/s GM Modular Pvt Ltd was Dinesh Jha, an employee of M/s GM Modular Pvt Ltd was Dinesh Jha, an employee of M/s GM Modular Pvt Ltd was recorded on 14.1 recorded on 14.11.2019 during the course of Survey at Vima 1.2019 during the course of Survey at Vima Building No. B, Plot No. 93, Survey No. 66, His No. 1/1, Waliv Building No. B, Plot No. 93, Survey No. 66, His No. 1/1, Waliv Building No. B, Plot No. 93, Survey No. 66, His No. 1/1, Waliv Village, Vasai (E) Village, Vasai (E)-401208." Comment on the Observation of the A0: The AO has heavily Comment on the Observation of the A0: The AO has heavily Comment on the Observation of the A0: The AO has heavily relied on the statement of Shri Rahul Dinesh Jha, which is relied on the statement of Shri Rahul Dinesh Jha, which is relied on the statement of Shri Rahul Dinesh Jha, which is also quoted in the order. On carefully going through the uoted in the order. On carefully going through the uoted in the order. On carefully going through the statement of Shri Rahul Dinesh Jha, I find that he has stated statement of Shri Rahul Dinesh Jha, I find that he has stated statement of Shri Rahul Dinesh Jha, I find that he has stated that the bills of M/s Hirasons, M/s Satyam Plast and M/s that the bills of M/s Hirasons, M/s Satyam Plast and M/s that the bills of M/s Hirasons, M/s Satyam Plast and M/s Shivam Enterprise are directlyentered into the accounting Shivam Enterprise are directlyentered into the accounting Shivam Enterprise are directlyentered into the accounting system used by the godown. N system used by the godown. No where in the statement, Shri o where in the statement, Shri

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 71 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

Rahul Dinesh Tha has admitted that the bills pertaining to Rahul Dinesh Tha has admitted that the bills pertaining to Rahul Dinesh Tha has admitted that the bills pertaining to these three parties are non these three parties are non-genuine. The AO has not made genuine. The AO has not made clear as to how this method of entering into the accounting clear as to how this method of entering into the accounting clear as to how this method of entering into the accounting software one can draw conclusion that the purchas software one can draw conclusion that the purchas software one can draw conclusion that the purchases are non- genuine. 5.9 Thereafter, in page no. 42, the AO, while concluding the 5.9 Thereafter, in page no. 42, the AO, while concluding the 5.9 Thereafter, in page no. 42, the AO, while concluding the issue has submitted that issue has submitted that "b) Purchases for which no E way Bill is available for an "b) Purchases for which no E way Bill is available for an "b) Purchases for which no E way Bill is available for an amount Rs.68,61,32,923/ amount Rs.68,61,32,923/- i)Goods purchased from M/s Hirasons for an amount of i)Goods purchased from M/s Hirasons for an amount of i)Goods purchased from M/s Hirasons for an amount of Rs.34,22,36,75 Rs.34,22,36,756/-: Purchases from Hirasons are like vibro ding dong bell, PXSF Purchases from Hirasons are like vibro ding dong bell, PXSF Purchases from Hirasons are like vibro ding dong bell, PXSF 12 00 7 white with a narration CASAVIVA Glossy White, JS 12 00 7 white with a narration CASAVIVA Glossy White, JS 12 00 7 white with a narration CASAVIVA Glossy White, JS 04 103 with narration Slim Surface box, Round plate, Fan 04 103 with narration Slim Surface box, Round plate, Fan 04 103 with narration Slim Surface box, Round plate, Fan junction Plate, Medium Junction plate, etc. The stock register junction Plate, Medium Junction plate, etc. The stock register junction Plate, Medium Junction plate, etc. The stock register has been exami has been examined but cannot be accepted because of the ned but cannot be accepted because of the reason that in stock register of month of October 2016 for reason that in stock register of month of October 2016 for reason that in stock register of month of October 2016 for 16Amp Axton 3 pin top with indicator it is seen that issue is of 16Amp Axton 3 pin top with indicator it is seen that issue is of 16Amp Axton 3 pin top with indicator it is seen that issue is of quantity 3450 whereas the receipt is of 2700. The copy of the quantity 3450 whereas the receipt is of 2700. The copy of the quantity 3450 whereas the receipt is of 2700. The copy of the same is reproduced below: same is reproduced below: Table on page no. 43 ble on page no. 43 (i) Considering the above inconsistencies the stock register is (i) Considering the above inconsistencies the stock register is (i) Considering the above inconsistencies the stock register is not relied upon to corelate sales with purchases made. The not relied upon to corelate sales with purchases made. The not relied upon to corelate sales with purchases made. The invoices were checked on sample basis. It did not contain invoices were checked on sample basis. It did not contain invoices were checked on sample basis. It did not contain verification verification verification stamp stamp stamp from from from stores stores stores department. department. department. For For For these these these purchases, assessee submitted that watchmen Inward chases, assessee submitted that watchmen Inward chases, assessee submitted that watchmen Inward register is not available. There is no proof of delivery of goods register is not available. There is no proof of delivery of goods register is not available. There is no proof of delivery of goods in absence of watchman inward register and E waybill. Thus, in absence of watchman inward register and E waybill. Thus, in absence of watchman inward register and E waybill. Thus, in absence of verifiable document for delivery of Goods the in absence of verifiable document for delivery of Goods the in absence of verifiable document for delivery of Goods the purchase of Rs.34,22,3 purchase of Rs.34,22,36,756/-remains unverified and thus remains unverified and thus unexplained. unexplained. ii)Goods purchased from M/s Satyam Plast for an amount of )Goods purchased from M/s Satyam Plast for an amount of )Goods purchased from M/s Satyam Plast for an amount of Rs.27,50,81,870/: Rs.27,50,81,870/: The invoices were checked on sample basis. It did not contain The invoices were checked on sample basis. It did not contain The invoices were checked on sample basis. It did not contain verification verification verification stamp stamp stamp from from from stores stores stores department. department. department. For For For these these these purchases, assess purchases, assessee submitted that watchmen Inward ee submitted that watchmen Inward

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 72 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

register is not available. There is no proof of delivery of goods register is not available. There is no proof of delivery of goods register is not available. There is no proof of delivery of goods in absence of watchman inward register and E way bill. Thus in absence of watchman inward register and E way bill. Thus in absence of watchman inward register and E way bill. Thus inabsence of verifiable document for del inabsence of verifiable document for delivery of Goods the ivery of Goods the purchase of R purchase of Rs.27,50,81,870/-remains unverified and thus unverified and thus unexplained. unexplained. iii) Goods purchased from M/ Shivam Enterprises for an ) Goods purchased from M/ Shivam Enterprises for an ) Goods purchased from M/ Shivam Enterprises for an amount of Rs.6,88,14,297/ amount of Rs.6,88,14,297/-: The invoices were checked on sample basis. It did not contain The invoices were checked on sample basis. It did not contain The invoices were checked on sample basis. It did not contain verification verification verification stamp stamp stamp from from from stores stores stores department. department. department. For For For these these these purchases, assessee submi purchases, assessee submitted that watchmen Inward tted that watchmen Inward register is not available. There is no proof of delivery of goods register is not available. There is no proof of delivery of goods register is not available. There is no proof of delivery of goods in absence of watchman inward register and E way bill. Thus in absence of watchman inward register and E way bill. Thus in absence of watchman inward register and E way bill. Thus in absence of verifiable document for delivery of Goods the in absence of verifiable document for delivery of Goods the in absence of verifiable document for delivery of Goods the purchase of Rs.6,88,14,297/ purchase of Rs.6,88,14,297/-remains unverified and thus ed and thus unexplained. unexplained. Thus as discussed above, purchases of Rs.68.58 Crores out of Thus as discussed above, purchases of Rs.68.58 Crores out of Thus as discussed above, purchases of Rs.68.58 Crores out of total purchase of Rs. 129.36 Crores is to be considered as total purchase of Rs. 129.36 Crores is to be considered as total purchase of Rs. 129.36 Crores is to be considered as unexplained in the case of M/s GMModular Pvt Ltd." unexplained in the case of M/s GMModular Pvt Ltd." unexplained in the case of M/s GMModular Pvt Ltd." Comment on the Observation of the AO: Comment on the Observation of the AO:-* 5.9.1 The entire pur 5.9.1 The entire purchase of Rs.34,22,36,756/ chase of Rs.34,22,36,756/- from M/s Hirasons, Hirasons, Hirasons, M/s M/s M/s Satyam Satyam Satyam Plast Plast Plast for for for an an an amount amount amount of of of Rs.27,50,81,870/ Rs.27,50,81,870/- and M/ Shivam Enterprises for an amount and M/ Shivam Enterprises for an amount of Rs.6,88,14,297/ of Rs.6,88,14,297/-have been disallowed on the pretext of have been disallowed on the pretext of (i) One instance of discrepancy in the stock register One instance of discrepancy in the stock register One instance of discrepancy in the stock register (ii) Absence of Watchman inward register and E waybill for bsence of Watchman inward register and E waybill for bsence of Watchman inward register and E waybill for these purchases these purchases 5.9.2 Regarding inconsistencies in the stock register, the 5.9.2 Regarding inconsistencies in the stock register, the 5.9.2 Regarding inconsistencies in the stock register, the appellant appellant appellant has has has submitted submitted submitted a a a detailed detailed detailed explanation explanation explanation and and and documents before the AO, to substantiate reasons for documents before the AO, to substantiate reasons for documents before the AO, to substantiate reasons for difference. According to difference. According to the appellant, the appellant had the appellant, the appellant had received an order on 22.10.2016 from M/s. Imperial Shah received an order on 22.10.2016 from M/s. Imperial Shah received an order on 22.10.2016 from M/s. Imperial Shah Stores which was inadvertently booked in the stock register Stores which was inadvertently booked in the stock register Stores which was inadvertently booked in the stock register based on delivery order generated, however the actual based on delivery order generated, however the actual based on delivery order generated, however the actual delivery and invoicing against the same was done in delivery and invoicing against the same was done in delivery and invoicing against the same was done in the month of Nov' 2016 on 07.11.2016. Due to this error, the issue month of Nov' 2016 on 07.11.2016. Due to this error, the issue month of Nov' 2016 on 07.11.2016. Due to this error, the issue quantity for one item was more than receipt quantity. Before quantity for one item was more than receipt quantity. Before quantity for one item was more than receipt quantity. Before

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 73 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

the undersigned too, the appellant has submitted the the undersigned too, the appellant has submitted the the undersigned too, the appellant has submitted the documents to substantiate the difference. In this regard, I documents to substantiate the difference. In this regard, I documents to substantiate the difference. In this regard, I agree with the agree with the appellant that a stray inconsistency in the appellant that a stray inconsistency in the stock register cannot form the basis to arrive at a conclusion stock register cannot form the basis to arrive at a conclusion stock register cannot form the basis to arrive at a conclusion that the entire purchase is non that the entire purchase is non-genuine. Moreover, a plausible genuine. Moreover, a plausible explanation has been given by the appellant which is just explanation has been given by the appellant which is just explanation has been given by the appellant which is just rejected by the AO without g rejected by the AO without giving reasons for the same. iving reasons for the same. Moreover, the discrepancy is with respect to just 750 units Moreover, the discrepancy is with respect to just 750 units Moreover, the discrepancy is with respect to just 750 units which is apparently very little in comparison to the total which is apparently very little in comparison to the total which is apparently very little in comparison to the total purchases. I am of the considered view that even with this purchases. I am of the considered view that even with this purchases. I am of the considered view that even with this small discrepancy, entire purchases cannot be disa small discrepancy, entire purchases cannot be disa small discrepancy, entire purchases cannot be disallowed. It is also pointed out by the appellant that although the is also pointed out by the appellant that although the is also pointed out by the appellant that although the discrepancy is w.r.t M/s Hirasons only, the entire purchase discrepancy is w.r.t M/s Hirasons only, the entire purchase discrepancy is w.r.t M/s Hirasons only, the entire purchase from the three parties were disallowed. Certainly there is from the three parties were disallowed. Certainly there is from the three parties were disallowed. Certainly there is merit in this argument of the appellant too. merit in this argument of the appellant too. 5.9.3 As far as non 5.9.3 As far as non-production of Watchman register and tion of Watchman register and absence of verification stamp from stores department are absence of verification stamp from stores department are absence of verification stamp from stores department are concerned, the appellant has submitted that the company concerned, the appellant has submitted that the company concerned, the appellant has submitted that the company didn't have the policy/procedure of maintaining watchmen didn't have the policy/procedure of maintaining watchmen didn't have the policy/procedure of maintaining watchmen inward registers and the same was not maintained by the inward registers and the same was not maintained by the inward registers and the same was not maintained by the company. The procedures as followed by the management of company. The procedures as followed by the management of company. The procedures as followed by the management of the the the company company company are are are uniformly uniformly uniformly followed followed followed throughout throughout throughout the the the organisation for all the purchases made over the period of time organisation for all the purchases made over the period of time organisation for all the purchases made over the period of time and hence watchmen register is not maintained as the same and hence watchmen register is not maintained as the same and hence watchmen register is not maintained as the same is not mandated under any l is not mandated under any law and the management didn't aw and the management didn't feel suitable to maintain the same. The watchmen register feel suitable to maintain the same. The watchmen register feel suitable to maintain the same. The watchmen register was started to be maintained by the company from was started to be maintained by the company from was started to be maintained by the company from 01.10.2018 which was verified by the search party during 01.10.2018 which was verified by the search party during 01.10.2018 which was verified by the search party during search/survey action. However, cognizance of the same search/survey action. However, cognizance of the same search/survey action. However, cognizance of the same cannot be drawn to the purchases/transaction/ business drawn to the purchases/transaction/ business drawn to the purchases/transaction/ business done by the appellant company prior to that period comparing done by the appellant company prior to that period comparing done by the appellant company prior to that period comparing the same with that. the same with that. 5.9.4 In my considered view, if before 01.10.2018, the 5.9.4 In my considered view, if before 01.10.2018, the 5.9.4 In my considered view, if before 01.10.2018, the management of the appellant company had uniform policy of management of the appellant company had uniform policy of management of the appellant company had uniform policy of not maintaining not maintaining watch man register and the same was watch man register and the same was uniformly followed throughout all departments/ sections of for uniformly followed throughout all departments/ sections of for uniformly followed throughout all departments/ sections of for all purchases made over the period, the absence of such all purchases made over the period, the absence of such all purchases made over the period, the absence of such registers cannot form the basis for disallowance, if other registers cannot form the basis for disallowance, if other registers cannot form the basis for disallowance, if other registers viz, sale and purchase registers registers viz, sale and purchase registers, stock registers , stock registers support impugned purchases. Tagging requirement of stock support impugned purchases. Tagging requirement of stock support impugned purchases. Tagging requirement of stock

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 74 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

registers with these three parties only and overlooking other registers with these three parties only and overlooking other registers with these three parties only and overlooking other parties is, in my opinion, is not justifies. parties is, in my opinion, is not justifies. 5.9.5 As far as electronic way bill viz. E 5.9.5 As far as electronic way bill viz. E-Way Bill is concerned, Way Bill is concerned, the appellant has submitted before the AO that this was llant has submitted before the AO that this was llant has submitted before the AO that this was introduced from 03rd Jun, 2018 by the amendment in the GST introduced from 03rd Jun, 2018 by the amendment in the GST introduced from 03rd Jun, 2018 by the amendment in the GST laws and it was made compulsory to issue E laws and it was made compulsory to issue E laws and it was made compulsory to issue E-way bill fortransporting the goods above Rs.50,000/ fortransporting the goods above Rs.50,000/-. According to the . According to the appellant, the appellant, the observation of the A observation of the AO that no e-way bill was produced in way bill was produced in respect of the transaction of purchase of goods before the respect of the transaction of purchase of goods before the respect of the transaction of purchase of goods before the amendment is certainly unjustified and cannot be accepted. amendment is certainly unjustified and cannot be accepted. amendment is certainly unjustified and cannot be accepted. Prior to 03.06.2018, for transport of goods and all purchase Prior to 03.06.2018, for transport of goods and all purchase Prior to 03.06.2018, for transport of goods and all purchase- sales transactions entered the business sales transactions entered the business didn't have the didn't have the requirement of preparing the E requirement of preparing the E-ways bills. I find merit in these ways bills. I find merit in these arguments of the appellant. arguments of the appellant. 5.9.6 It is also strange that for the period prior to e 5.9.6 It is also strange that for the period prior to e 5.9.6 It is also strange that for the period prior to e-way bills' requirement, all purchases from these three parties are requirement, all purchases from these three parties are requirement, all purchases from these three parties are treated by the AO, as no treated by the AO, as non-genuine. However, after the scheme of However, after the scheme of -way bills was introduced way bills was introduced during the relevant F.Y. itself, the purchases from the same during the relevant F.Y. itself, the purchases from the same during the relevant F.Y. itself, the purchases from the same three parties have been treated as genuine. Can it be said three parties have been treated as genuine. Can it be said three parties have been treated as genuine. Can it be said that before a cut off date, all purchases from a party is bogus that before a cut off date, all purchases from a party is bogus that before a cut off date, all purchases from a party is bogus & non-genuine and after the cut off date, the same party genuine and after the cut off date, the same party genuine and after the cut off date, the same party becomes genuine just because the scheme of e becomes genuine just because the scheme of e-way bills was way bills was introduced by the Central Govt. In my considered view, such a introduced by the Central Govt. In my considered view, such a introduced by the Central Govt. In my considered view, such a stand of the AO cannot be approved. stand of the AO cannot be approved. 5.10 The final conclusion of the AO is in page 4 5.10 The final conclusion of the AO is in page 4 5.10 The final conclusion of the AO is in page 44 of the assessment order, wherein he states as under assessment order, wherein he states as under- "(xi)The assessee vide its submission dated 11.03.2021 has "(xi)The assessee vide its submission dated 11.03.2021 has "(xi)The assessee vide its submission dated 11.03.2021 has tried to explain the genuineness of the transactions, however tried to explain the genuineness of the transactions, however tried to explain the genuineness of the transactions, however it has failed in substantiating the claim of purchases/labour it has failed in substantiating the claim of purchases/labour it has failed in substantiating the claim of purchases/labour work work as as the the assess assessee ee could could not not make make rebuttal rebuttal of of discrepancies pointed above in respect of documentation and discrepancies pointed above in respect of documentation and discrepancies pointed above in respect of documentation and records of the purchases. The assessee failed in producing records of the purchases. The assessee failed in producing records of the purchases. The assessee failed in producing third party evidences in respect of claim of purchases. third party evidences in respect of claim of purchases. third party evidences in respect of claim of purchases. Statements of concerned persons clearly establish t Statements of concerned persons clearly establish t Statements of concerned persons clearly establish the deviation/discrepancies in respect of recording of purchases deviation/discrepancies in respect of recording of purchases deviation/discrepancies in respect of recording of purchases in the books of the assessee. The assessee failed in in the books of the assessee. The assessee failed in in the books of the assessee. The assessee failed in

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 75 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

submitting watchman inward register and E submitting watchman inward register and E-way bills. None way bills. None of the satisfactory documents were produced by assessee in of the satisfactory documents were produced by assessee in of the satisfactory documents were produced by assessee in respect of labour serv respect of labour services/job work. All the relevant ices/job work. All the relevant extract/documents requested by the assessee were supplied extract/documents requested by the assessee were supplied extract/documents requested by the assessee were supplied to the assessee, however it has failed in proving the to the assessee, however it has failed in proving the to the assessee, however it has failed in proving the genuineness of purchases held to be bogus in above paras genuineness of purchases held to be bogus in above paras genuineness of purchases held to be bogus in above paras with supporting documentary evidences maintained in the with supporting documentary evidences maintained in the with supporting documentary evidences maintained in the case of genuine purchases." case of genuine purchases." Comment on the Observation of the AO: Comment on the Observation of the AO:- 5.10.1 In this regard, the appellant has submitted that it has 5.10.1 In this regard, the appellant has submitted that it has 5.10.1 In this regard, the appellant has submitted that it has already furnished the numerous documents and details already furnished the numerous documents and details already furnished the numerous documents and details available with the appellant company before theAO to available with the appellant company before theAO to available with the appellant company before theAO to substantiate the cl substantiate the claim of the aforesaid expenditures incurred. aim of the aforesaid expenditures incurred. These documents are again submitted during the appellate These documents are again submitted during the appellate These documents are again submitted during the appellate proceedings. Briefly these are. proceedings. Briefly these are. i.Purchase Invoices as received from the Vendors: It is i.Purchase Invoices as received from the Vendors: It is i.Purchase Invoices as received from the Vendors: It is explained that based on the requirements as placed in the PO explained that based on the requirements as placed in the PO explained that based on the requirements as placed in the PO by the appellant company, they sent the goods to the required e appellant company, they sent the goods to the required e appellant company, they sent the goods to the required warehouse/factors premises of the assessee company along warehouse/factors premises of the assessee company along warehouse/factors premises of the assessee company along with the copy of the Tax Invoice incorporating the details of the with the copy of the Tax Invoice incorporating the details of the with the copy of the Tax Invoice incorporating the details of the goods sold by the vendor, Vehicle details through which goods goods sold by the vendor, Vehicle details through which goods goods sold by the vendor, Vehicle details through which goods is transported is transported, premises at which goods is transported etc. , premises at which goods is transported etc. ii.Stock register of each of the stocks purchased from alleged ii.Stock register of each of the stocks purchased from alleged ii.Stock register of each of the stocks purchased from alleged concerns: According to the appellant, once the Goods are received at the According to the appellant, once the Goods are received at the According to the appellant, once the Goods are received at the premises of the assessee company, an entry is being made in premises of the assessee company, an entry is being made in premises of the assessee company, an entry is being made in the Material I the Material Inward Register maintained by the stock keepers nward Register maintained by the stock keepers maintaining the details of the goods and materials received at maintaining the details of the goods and materials received at maintaining the details of the goods and materials received at the premises. The copy of the stock inward and outward the premises. The copy of the stock inward and outward the premises. The copy of the stock inward and outward registers as maintained by the appellant company reflecting registers as maintained by the appellant company reflecting registers as maintained by the appellant company reflecting the movement of goods. the movement of goods. iii.Delivery Challan/ Stock in from Supplier report: The very Challan/ Stock in from Supplier report: The very Challan/ Stock in from Supplier report: The delivery challan as issued by the alleged vendor while delivery challan as issued by the alleged vendor while delivery challan as issued by the alleged vendor while transporting the goods incorporating the details of vehicles transporting the goods incorporating the details of vehicles transporting the goods incorporating the details of vehicles through through through which which which the the the goods goods goods are are are imported, imported, imported, vehicle vehicle vehicle no., no., no., transporters name etc. transporters name etc.

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 76 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

iv. Bank Statemen Bank Statements of the Appellant company: On successful ts of the Appellant company: On successful receipt of the goods from the parties, the assessee company receipt of the goods from the parties, the assessee company receipt of the goods from the parties, the assessee company within the decided credit period makes the payment to the within the decided credit period makes the payment to the within the decided credit period makes the payment to the vendors. v. Ledger Confirmation from the three parties: The copies of Ledger Confirmation from the three parties: The copies of Ledger Confirmation from the three parties: The copies of the duly signed ledger co the duly signed ledger confirmations from the three parties nfirmations from the three parties reflecting and confirming the transactions. reflecting and confirming the transactions. According to the appellant, the after producing the above According to the appellant, the after producing the above According to the appellant, the after producing the above documents, the appellant company has discharged its onus to documents, the appellant company has discharged its onus to documents, the appellant company has discharged its onus to prove the genuineness of the transaction. prove the genuineness of the transaction. 5.10.2 In my cons 5.10.2 In my considered view, after submitting the above idered view, after submitting the above documents, the onus is on the AO to point out the defects in documents, the onus is on the AO to point out the defects in documents, the onus is on the AO to point out the defects in these documentary evidences, which the AOhas failed to do these documentary evidences, which the AOhas failed to do these documentary evidences, which the AOhas failed to do so. Only citing a solitary instance of discrepancy, will not so. Only citing a solitary instance of discrepancy, will not so. Only citing a solitary instance of discrepancy, will not establish any thing, once the reason establish any thing, once the reason for such difference has for such difference has been successfully explained before the AO. In this regard, the been successfully explained before the AO. In this regard, the been successfully explained before the AO. In this regard, the reliance of the appellant in the judicial decisions viz., Hon'ble reliance of the appellant in the judicial decisions viz., Hon'ble reliance of the appellant in the judicial decisions viz., Hon'ble Supreme Court in the case of CIT vs. Odeon Builders (P.) Supreme Court in the case of CIT vs. Odeon Builders (P.) Supreme Court in the case of CIT vs. Odeon Builders (P.) Ltd.(20191 IlO taxmann.com 64 (SC), Innovator Ltd.(20191 IlO taxmann.com 64 (SC), Innovator Ltd.(20191 IlO taxmann.com 64 (SC), Innovators Façade Systems Systems Systems Pvt. Pvt. Ltd. Pvt. Ltd. Ltd. VS. VS. VS. ACIT ACIT ACIT [ITA [ITA [ITA No.5450, 3451 No.5450, No.5450, 3451 3451 & & & 5452/Mum/20151, M/s. Adeshwer Enterprise Versus Dcit, 5452/Mum/20151, M/s. Adeshwer Enterprise Versus Dcit, 5452/Mum/20151, M/s. Adeshwer Enterprise Versus Dcit, Central Circle Central Circle-01 Thane, ITA Nos.4335 to 4338/Mum/2017, 01 Thane, ITA Nos.4335 to 4338/Mum/2017, are in order, 5.11 Conclusion 5.11 Conclusion- Considering the totality of the facts and Considering the totality of the facts and circumstances of circumstances of the issues involved, as discussed in the the issues involved, as discussed in the preceding paragraphs, in my considered view, the addition of preceding paragraphs, in my considered view, the addition of preceding paragraphs, in my considered view, the addition of Rs. Rs.9,47,53,780/ Rs. Rs.9,47,53,780/- on account of unverified purchases on account of unverified purchases deserved to be deleted. The AO is directed accordingly. Thus deserved to be deleted. The AO is directed accordingly. Thus deserved to be deleted. The AO is directed accordingly. Thus ground of appeal no. 1 is Allowed. ground of appeal no. 1 is Allowed.” 16.5 We have heard rival submission e have heard rival submissions of the parties on the issue in of the parties on the issue in dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. We find that purchases from the three parties, namely M/s /s Hirasons, M/s purchases from the three parties Satyam Plast and M/s Shivam Enterprises Satyam Plast and M/s Shivam Enterprises for the period from for the period from April to June of the relevant financial June of the relevant financial year, have been held to be been held to be unverified by the Assessing Officer for the reason that no e-way bill unverified by the Assessing Officer for the reason that no e unverified by the Assessing Officer for the reason that no e

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 77 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

corresponding to those purchases were found. The Assessing Officer corresponding to those purchases were found. The Assessing Officer corresponding to those purchases were found. The Assessing Officer has noticed that no inward register of watchmen in resp noticed that no inward register of watchmen in resp noticed that no inward register of watchmen in respect of those purchases was found. Before the Assessing Officer, it was explained purchases was found. Before the Assessing Officer, it was explained purchases was found. Before the Assessing Officer, it was explained by the assessee that requirement of e by the assessee that requirement of e-way bill was made applicable way bill was made applicable under the GST rules from 03/06/2018 only and therefore prior to under the GST rules from 03/06/2018 only and therefore prior to under the GST rules from 03/06/2018 only and therefore prior to that there was no requirement of maintaining that there was no requirement of maintaining e-way bill under the way bill under the relevant law. Regarding the inward watchman register also it was relevant law. Regarding the inward watchman register also it was relevant law. Regarding the inward watchman register also it was explained by the assessee explained by the assessee that at the relevant time there was no that at the relevant time there was no policy/procedure of maintaining watchmen inward Register. The policy/procedure of maintaining watchmen inward Register. The policy/procedure of maintaining watchmen inward Register. The Assessing Officer disregarded the submissi Assessing Officer disregarded the submissions. We find that Ld. ons. We find that Ld. CIT(A) after taking into those submissions has correctly deleted the CIT(A) after taking into those submissions has correctly deleted the CIT(A) after taking into those submissions has correctly deleted the disallowance made by the Assessing Officer. We do not find any disallowance made by the Assessing Officer. We do not find any disallowance made by the Assessing Officer. We do not find any infirmity in the finding of the Ld. CIT(A) on the issue in dispute, and infirmity in the finding of the Ld. CIT(A) on the issue in dispute, and infirmity in the finding of the Ld. CIT(A) on the issue in dispute, and accordingly, we uphold the sam we uphold the same. The ground Nos s. 1(one) and 2 (two) of the appeal of the of the appeal of the Revenue accordingly dismissed. evenue accordingly dismissed.

17.0 In ground No. 3 ( No. 3 (three), theRevenue has has challenged the deletion of disallowance of employee deletion of disallowance of employee’s contribution to PF/ESI s contribution to PF/ESI amounting to ₹26,72, 26,72,885/- deposited after the due date of the the due date of the payment under the relevant act. The Ld. CIT(A) deleted the payment under the relevant act. The Ld. CIT(A) deleted the payment under the relevant act. The Ld. CIT(A) deleted the disallowance of observing as under: disallowance of observing as under:

“7.2 In my considered view the issue under consideration, 7.2 In my considered view the issue under consideration, 7.2 In my considered view the issue under consideration, for AY 2019- for AY 2019-20, is if the employee contribution towards PF 20, is if the employee contribution towards PF is paid before the due d is paid before the due date of filling of return of income, ate of filling of return of income, whether the same would be allowed as expenses and can whether the same would be allowed as expenses and can whether the same would be allowed as expenses and can be allowed under section 36 (1)(va). The issue is covered by be allowed under section 36 (1)(va). The issue is covered by be allowed under section 36 (1)(va). The issue is covered by the Jurisdictional High Court decision in the case of CIT vs. the Jurisdictional High Court decision in the case of CIT vs. the Jurisdictional High Court decision in the case of CIT vs.

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 78 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

Ghatge Patil Transports Ltd. [2014 (10) TMI Ghatge Patil Transports Ltd. [2014 (10) TMI 999 999 - Bombay High Court] and Hon'ble Karnataka High Court decision in High Court] and Hon'ble Karnataka High Court decision in High Court] and Hon'ble Karnataka High Court decision in the case of CIT v. Spectrum Consultants India (P.) Ltd. the case of CIT v. Spectrum Consultants India (P.) Ltd. the case of CIT v. Spectrum Consultants India (P.) Ltd. [2014] 49 taxmann.com 29 (Karnataka). These decisions [2014] 49 taxmann.com 29 (Karnataka). These decisions [2014] 49 taxmann.com 29 (Karnataka). These decisions are already quoted in the submission of the he appellant, are already quoted in the submission of the he appellant, are already quoted in the submission of the he appellant, which is not prod which is not produced for the sake of brevity. Hence, the uced for the sake of brevity. Hence, the A.O is directed to allow Rs. 26,72,885/ A.O is directed to allow Rs. 26,72,885/- as contribution as contribution received from employees towards ESI and EPF and ground received from employees towards ESI and EPF and ground received from employees towards ESI and EPF and ground of appeal no. 3 is Allowed. of appeal no. 3 is Allowed.” 17.1 We have heard rival submission e have heard rival submissions of the parties on the issue in of the parties on the issue in dispute and perused the relevant material on record. In view of the e and perused the relevant material on record. In view of the e and perused the relevant material on record. In view of the decision of the Hon’ble Supreme Court in the case of Checkmte decision of the Hon’ble Supreme Court in the case of decision of the Hon’ble Supreme Court in the case of services p ltd in Civil Appeal No. 2833 of 2016, in Civil Appeal No. 2833 of 2016, an assessee is in Civil Appeal No. 2833 of 2016, not eligible for deduction under section 36(1)(va) of the Act in not eligible for deduction under section 36(1)(va) of the Act in not eligible for deduction under section 36(1)(va) of the Act in respect of the employee pect of the employee’s contribution to PF/ESI deposited after the s contribution to PF/ESI deposited after the due date prescribed under the relevant Acts. due date prescribed under the relevant Acts. Therefore, r Therefore, respectfully following the decision of the Hon’ble Supreme Court (supra), the following the decision of the Hon’ble Supreme Court (supra), the following the decision of the Hon’ble Supreme Court (supra), the finding of the Ld. CIT(A) on the issue in dispute is set aside and the finding of the Ld. CIT(A) on the issue in dispute is set finding of the Ld. CIT(A) on the issue in dispute is set disallowance made by the Assessing Officer is sustained. The disallowance made by the Assessing Officer is sustained. The disallowance made by the Assessing Officer is sustained. The ground No. 3 of the appeal of the ground No. 3 of the appeal of the Revenue is accordingly allowed. accordingly allowed.

ITA No. 3211/Mum/2022 for AY 2014 ITA No. 3211/Mum/2022 for AY 2014-15 M/s G Trade and 15 M/s G Trade and capital venture ltd: capital venture ltd:

18.0 Now we take up the appeal of the Now we take up the appeal of the revenue in ITA No. revenue in ITA No. 3211/Mum/2022 in the case of M/s G Trade and capital venture 3211/Mum/2022 in the case of M/s G Trade and capital venture 3211/Mum/2022 in the case of M/s G Trade and capital venture ltd for assessment year 2014 ltd for assessment year 2014-15. The grounds raised by the revenue 15. The grounds raised by the revenue reproduced as under: reproduced as under:

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 79 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 80 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

“3.1 In the assessment made, the AO has made various In the assessment made, the AO has made various In the assessment made, the AO has made various additions to the returned income, which are as under: additions to the returned income, which are as under: additions to the returned income, which are as under: 1. Addition Addition Addition on on on account account account of of of accommodation accommodation accommodation entry entry entry of of of unsecured loan u/s 68 of Rs.2,50,00,000/ unsecured loan u/s 68 of Rs.2,50,00,000/-. . 2. Addition on account of unexplain Addition on account of unexplained expenditure u/s 69C ed expenditure u/s 69C on account of interest on accommodation entry of on account of interest on accommodation entry of on account of interest on accommodation entry of unsecured loan of Rs.18,30,674/ unsecured loan of Rs.18,30,674/-. 3. Addition on account of unexplained expenditure u/s 69C Addition on account of unexplained expenditure u/s 69C Addition on account of unexplained expenditure u/s 69C on account of commission for arranging accommodation on account of commission for arranging accommodation on account of commission for arranging accommodation entry of unsecured loan of Rs.62,500/ entry of unsecured loan of Rs.62,500/-. 4. Addition u/s 43B of I.T. Act of Rs.3,70,800/ dition u/s 43B of I.T. Act of Rs.3,70,800/ dition u/s 43B of I.T. Act of Rs.3,70,800/-. Against these additions/disallowances, the appellant is in the Against these additions/disallowances, the appellant is in the Against these additions/disallowances, the appellant is in the present appeal present appeal”. 20.0 the Ld. CIT(A) has deleted the additions mainly on the ground the Ld. CIT(A) has deleted the additions mainly on the ground the Ld. CIT(A) has deleted the additions mainly on the ground that the year under consideration being unabated assessment, no that the year under consideration being unabated that the year under consideration being unabated addition could have been made without the aid of the incriminating addition could have been made without the aid of the incriminating addition could have been made without the aid of the incriminating material. The Ld. CIT(A) has summarised the submission of the material. The Ld. CIT(A) has summarised the submission of the material. The Ld. CIT(A) has summarised the submission of the assessee and the finding of the Assessing Officer as under: assessee and the finding of the Assessing Officer as under: assessee and the finding of the Assessing Officer as under:

“6.1 I have carefully considered the facts of the case, I have carefully considered the facts of the case, I have carefully considered the facts of the case, submissions of the Appellant, the observations of the A s of the Appellant, the observations of the A s of the Appellant, the observations of the A contained in the assessment order and the other materials on contained in the assessment order and the other materials on contained in the assessment order and the other materials on record on this issue. In this Ground, the appellant has record on this issue. In this Ground, the appellant has record on this issue. In this Ground, the appellant has contended that the assessment order passed u/s 153A r.w. contended that the assessment order passed u/s 153A r.w. contended that the assessment order passed u/s 153A r.w. 143(3) of the Act for the impugned a 143(3) of the Act for the impugned assessment year is bad in ssessment year is bad in law as - (i)there were no assessment proceedings pending as on the (i)there were no assessment proceedings pending as on the (i)there were no assessment proceedings pending as on the date of search action us 132 of the Act which is a prerequisite date of search action us 132 of the Act which is a prerequisite date of search action us 132 of the Act which is a prerequisite for assessing the income escaped to tax. for assessing the income escaped to tax. (ii)there is no nexus between the additions made in the (ii)there is no nexus between the additions made in the (ii)there is no nexus between the additions made in the assessment essment essment order order order to to to that that that of of of incriminating incriminating incriminating material material material found/seized pursuant to the search action. found/seized pursuant to the search action. 6.2 The sum and substance of these grounds raised by the 6.2 The sum and substance of these grounds raised by the 6.2 The sum and substance of these grounds raised by the appellant is that the additions made in the assessment order appellant is that the additions made in the assessment order appellant is that the additions made in the assessment order

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 81 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

are not based on or connected with any incrimi are not based on or connected with any incrimi are not based on or connected with any incriminating documents found or seized during the search proceedings. documents found or seized during the search proceedings. documents found or seized during the search proceedings. Moreover, as on the date of search action us 132 of the Act, Moreover, as on the date of search action us 132 of the Act, Moreover, as on the date of search action us 132 of the Act, there were no pending assessment proceedings for the there were no pending assessment proceedings for the there were no pending assessment proceedings for the impugned AY, which got abated. impugned AY, which got abated. 6.3 It is observed that the AO has remained sil 6.3 It is observed that the AO has remained silent on the issue ent on the issue of any incriminating material found and/or seized during the of any incriminating material found and/or seized during the of any incriminating material found and/or seized during the search action, based on which the impugned additions are search action, based on which the impugned additions are search action, based on which the impugned additions are made. The Id. ARs, on the other hand, has emphatically stated made. The Id. ARs, on the other hand, has emphatically stated made. The Id. ARs, on the other hand, has emphatically stated that the impugned additions are not based on any material that the impugned additions are not based on any material that the impugned additions are not based on any material found/seized during the course of search action at the premises ound/seized during the course of search action at the premises ound/seized during the course of search action at the premises of the appellant.The appellant has also relied on a no. of of the appellant.The appellant has also relied on a no. of of the appellant.The appellant has also relied on a no. of judicial decisions on this issue. judicial decisions on this issue. 6.4 On perusal of the impugned assessment order, it is evident 4 On perusal of the impugned assessment order, it is evident 4 On perusal of the impugned assessment order, it is evident that the Ad has not referred to any s that the Ad has not referred to any seized material found eized material found during the course of search to make the impugned additions. during the course of search to make the impugned additions. during the course of search to make the impugned additions. The original return of income, in this case was filed on The original return of income, in this case was filed on The original return of income, in this case was filed on 30.11.2014. The due date for issuing notice us 143(2) was 30.11.2014. The due date for issuing notice us 143(2) was 30.11.2014. The due date for issuing notice us 143(2) was 30.09.2015, which had already expired on the date of search 30.09.2015, which had already expired on the date of search 30.09.2015, which had already expired on the date of search i.e., 13.11.2019. Since, the proceedings for A.Y. 2014 i.e., 13.11.2019. Since, the proceedings for A.Y. 2014 i.e., 13.11.2019. Since, the proceedings for A.Y. 2014-15 had not abated, the contention of the Id. ARs that the AO was not abated, the contention of the Id. ARs that the AO was not abated, the contention of the Id. ARs that the AO was empowered to make additions based on the incriminating empowered to make additions based on the incriminating empowered to make additions based on the incriminating material found and seized during the course of search material found and seized during the course of search material found and seized during the course of search operation, appears to be tr operation, appears to be true, as held in a no. of judicial ue, as held in a no. of judicial decisions including the decision of jurisdictional High Court. decisions including the decision of jurisdictional High Court. decisions including the decision of jurisdictional High Court.” 20.1 Thereafter, the Ld. CIT(A) has relied on the decision in the Ld. CIT(A) has relied on the decision in the following cases:

a. Continental warehousing Corporation Continental warehousing Corporation Continental warehousing Corporation b. Vimal Kumar Rathi Vimal Kumar Rathi c. Murli Agro Gurider sin Murli Agro Gurider singh d. All Cargo Logistics All Cargo Logistics e. Meeta Gutgatia Meeta Gutgatia f. Kabul Chawala Kabul Chawala

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 82 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

g. Saumya Construction Saumya Construction h. Allied perfumers Allied perfumers i. Jasmin K Ajmera Jasmin K Ajmera j. Jay Ketan Parikh Jay Ketan Parikh

20.2 The Ld. CIT(A) then deleted the he Ld. CIT(A) then deleted the addition observing as under: observing as under:

“6.15 Conclusion 6.15 Conclusion-The aforesaid detailed discussion with The aforesaid detailed discussion with respect to various judicial decisions clearly laid down the to various judicial decisions clearly laid down the to various judicial decisions clearly laid down the following principles following principles - (i) the assessments which have been concluded u/s 143(3) of (i) the assessments which have been concluded u/s 143(3) of (i) the assessments which have been concluded u/s 143(3) of the Act and not pending at the time of search proceedings, do the Act and not pending at the time of search proceedings, do the Act and not pending at the time of search proceedings, do not abate. (ii) for this purpose, intimation us 143(1) woul for this purpose, intimation us 143(1) would constitute an d constitute an assessment, relying on the decision of Hon'ble Bombay High assessment, relying on the decision of Hon'ble Bombay High assessment, relying on the decision of Hon'ble Bombay High Court in CIT V/s Gurinder Singh Bawa (79 taxmann.com 398) Court in CIT V/s Gurinder Singh Bawa (79 taxmann.com 398) Court in CIT V/s Gurinder Singh Bawa (79 taxmann.com 398) (iii)the proceedings us 153A of the Act do not empower the ii)the proceedings us 153A of the Act do not empower the ii)the proceedings us 153A of the Act do not empower the Assessing officer to re Assessing officer to re-adjudicate the settled issues again, adjudicate the settled issues again, unless fresh incriminating material for the relevant year is ess fresh incriminating material for the relevant year is ess fresh incriminating material for the relevant year is found during the course of search proceedings. found during the course of search proceedings. (iv)the Assessing officer does not have jurisdiction to make (iv)the Assessing officer does not have jurisdiction to make (iv)the Assessing officer does not have jurisdiction to make additions/disallowances which are not based on relevant additions/disallowances which are not based on relevant additions/disallowances which are not based on relevant incriminating material found durin incriminating material found during the course of search g the course of search proceedings. proceedings. (v) in the case of completed/un (v) in the case of completed/un-abetted assessments, where abetted assessments, where no incriminating material is found during the course of search, no incriminating material is found during the course of search, no incriminating material is found during the course of search, the assessment us 153A of the Act is to be made on originally the assessment us 153A of the Act is to be made on originally the assessment us 153A of the Act is to be made on originally assessed/returned income and no add assessed/returned income and no addition or disallowance ition or disallowance can be made de hors the incriminating evidences for the can be made de hors the incriminating evidences for the can be made de hors the incriminating evidences for the relevant year are recovered during the course of search. relevant year are recovered during the course of search. relevant year are recovered during the course of search. (vi)Any admission or confession needs corroboration with (vi)Any admission or confession needs corroboration with (vi)Any admission or confession needs corroboration with evidences. In order to make a genuine and legally sustainable evidences. In order to make a genuine and legally sustainable evidences. In order to make a genuine and legally sustainable addition on the basis of admission or confession during search dition on the basis of admission or confession during search dition on the basis of admission or confession during search action, it is necessary that some incriminating material must action, it is necessary that some incriminating material must action, it is necessary that some incriminating material must

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 83 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

have been found to correlate the undisclosed income with have been found to correlate the undisclosed income with have been found to correlate the undisclosed income with such statement. such statement. (vii) Any statement recorded under section 132(4) cannot be (vii) Any statement recorded under section 132(4) cannot be (vii) Any statement recorded under section 132(4) cannot be considered as incriminating material found in the course of considered as incriminating material found in the course of considered as incriminating material found in the course of search search search as as as these these these are are are recorded recorded recorded to to to elicitmore elicitmore elicitmore information/explanation information/explanation information/explanation of of of the the the search search search person person person on on on the the the incriminating documents/gold/jewellery found during search. incriminating documents/gold/jewellery found during search. incriminating documents/gold/jewellery found during search. 6.16 Conclusion 6.16 Conclusion- In the present case, additions have been itions have been made on account of accommodation entry of unsecured loan of made on account of accommodation entry of unsecured loan of made on account of accommodation entry of unsecured loan of Rs.2,50,00,000/ Rs.2,50,00,000/-, as unexplained expenditure us. 69C due to , as unexplained expenditure us. 69C due to interest on accommodation entry of unsecured loan of Rs. interest on accommodation entry of unsecured loan of Rs. interest on accommodation entry of unsecured loan of Rs. 18,30,674/-, as unexplained expenditure us. 69C due to , as unexplained expenditure us. 69C due to , as unexplained expenditure us. 69C due to commission for arranging accommodation entry of unsecured ion for arranging accommodation entry of unsecured ion for arranging accommodation entry of unsecured loan of Rs.62,500/ loan of Rs.62,500/- and as addition u/S. 43B of Rs. and as addition u/S. 43B of Rs. 3,70,800/-. As stated above, the AO has not brought on record . As stated above, the AO has not brought on record . As stated above, the AO has not brought on record through the assessment order or through any communication through the assessment order or through any communication through the assessment order or through any communication regarding any incriminating docum regarding any incriminating document or material found or ent or material found or seized during the Search and Seizure action us 132 of the Act, seized during the Search and Seizure action us 132 of the Act, seized during the Search and Seizure action us 132 of the Act, which can be linked /correlated with the impugned additions which can be linked /correlated with the impugned additions which can be linked /correlated with the impugned additions made. Considering the totality of the facts and circumstances made. Considering the totality of the facts and circumstances made. Considering the totality of the facts and circumstances of the issues involve, I am of the considered of the issues involve, I am of the considered opinion that these opinion that these additions cannot survive de hors the incriminating evidences additions cannot survive de hors the incriminating evidences additions cannot survive de hors the incriminating evidences as held in the above binding judicial decisions. The A is as held in the above binding judicial decisions. The A is as held in the above binding judicial decisions. The A is accordingly directed to delete the impugned additions made in accordingly directed to delete the impugned additions made in accordingly directed to delete the impugned additions made in the assessment order. Thus, the grounds of appeal no. 1 the assessment order. Thus, the grounds of appeal no. 1 the assessment order. Thus, the grounds of appeal no. 1 & 2 are allowed. are allowed.” 20.3 Before us the learne efore us the learned departmental representative relied on departmental representative relied on the finding of the Assessing Officer in respect of the addition for the finding of the Assessing Officer in respect of the addition for the finding of the Assessing Officer in respect of the addition for unsecured loans which were held by the Assessing Officer as unsecured loans which were held by the Assessing Officer unsecured loans which were held by the Assessing Officer accommodation entry and added under section 6 accommodation entry and added under section 68 of the 8 of the Act. In respect of the other additions also he relied on the finding of the respect of the other additions also he relied on the finding of the respect of the other additions also he relied on the finding of the Assessing Officer.

20.4 We have heard rival submission We have heard rival submissions of the parties on the issue in of the parties on the issue in dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. We find that

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 84 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

the Assessing Officer made the addition relying on following icer made the addition relying on following icer made the addition relying on following observations:

“(ii) Essarindia Ltd: (ii) Essarindia Ltd: - Kolkata Investigation Directorate in its Kolkata Investigation Directorate in its Investigation report (Ref: F.No 75A/2015 Investigation report (Ref: F.No 75A/2015-16/257 16/257-273 dated 27.04.2015 of Pr.DIT (Inv.), Kolkata)had given the finding that 27.04.2015 of Pr.DIT (Inv.), Kolkata)had given the finding that 27.04.2015 of Pr.DIT (Inv.), Kolkata)had given the finding that the company the company M/s Esaar(India) Ltd is a penny scrip and it is M/s Esaar(India) Ltd is a penny scrip and it is being used to provide accommodation entries to various being used to provide accommodation entries to various being used to provide accommodation entries to various beneficiaries through rigging of shares.The name of the beneficiaries through rigging of shares.The name of the beneficiaries through rigging of shares.The name of the company also features in the list of confirmed shell companies company also features in the list of confirmed shell companies company also features in the list of confirmed shell companies as circulated by FlU IND. The Ent as circulated by FlU IND. The Entry operators and Exit ry operators and Exit providers recorded during 133A of the Income tax Act, have providers recorded during 133A of the Income tax Act, have providers recorded during 133A of the Income tax Act, have accepted that the scrip of Esaar(India) Ltd has been used for accepted that the scrip of Esaar(India) Ltd has been used for accepted that the scrip of Esaar(India) Ltd has been used for providing accommodation entries. Mr.Kumarpal Banda, the providing accommodation entries. Mr.Kumarpal Banda, the providing accommodation entries. Mr.Kumarpal Banda, the director of the company M/s GM Modular Pt Ltd in his director of the company M/s GM Modular Pt Ltd in his director of the company M/s GM Modular Pt Ltd in his statement recorded u/s 132(4) of the Income ement recorded u/s 132(4) of the Income-tax Act, 1961 on tax Act, 1961 on 14.11.2019, in reply to Q.30 and Q.31 has accepted that the 14.11.2019, in reply to Q.30 and Q.31 has accepted that the 14.11.2019, in reply to Q.30 and Q.31 has accepted that the loans taken from Ms Esaar(India) Ltd are not genuine. Further loans taken from Ms Esaar(India) Ltd are not genuine. Further loans taken from Ms Esaar(India) Ltd are not genuine. Further an opportunity was given to the assesseei.e. Mr.Jayantilal an opportunity was given to the assesseei.e. Mr.Jayantilal an opportunity was given to the assesseei.e. Mr.Jayantilal Jain, Promoter of Jain, Promoter of GMGroup on 12.01.2020, Mr.Jugraj Jain, GMGroup on 12.01.2020, Mr.Jugraj Jain, Promoter of Goldmedal Group on 27.11.2019 and Mr. Kapil Promoter of Goldmedal Group on 27.11.2019 and Mr. Kapil Promoter of Goldmedal Group on 27.11.2019 and Mr. Kapil Jain, Director of M/s Goldmedal Electricals Pt Ltd on Jain, Director of M/s Goldmedal Electricals Pt Ltd on Jain, Director of M/s Goldmedal Electricals Pt Ltd on 11.01.2020 to produce the party to verify its claim that the 11.01.2020 to produce the party to verify its claim that the 11.01.2020 to produce the party to verify its claim that the unsecured loan is genuine. But the assessee fa unsecured loan is genuine. But the assessee failed to produce iled to produce the party and thus has failed to discharge its onus to explain the party and thus has failed to discharge its onus to explain the party and thus has failed to discharge its onus to explain the source of credit. the source of credit. 1. Kamalakshi Finance Corporation/ Gromo Trade and 1. Kamalakshi Finance Corporation/ Gromo Trade and 1. Kamalakshi Finance Corporation/ Gromo Trade and Consultancy Ltd: Consultancy Ltd: The SEBI has passed order u/s 11, 11(4) and 11B of the The SEBI has passed order u/s 11, 11(4) and 11B of the The SEBI has passed order u/s 11, 11(4) and 11B of the Securities and Exchange Board of Securities and Exchange Board of India Act, 1992 on India Act, 1992 on 20thFebruary, 2015in the matter ofM/s Kamalakshi Finance 20thFebruary, 2015in the matter ofM/s Kamalakshi Finance 20thFebruary, 2015in the matter ofM/s Kamalakshi Finance Corporation (Now known as Gromo Trade and Consultancy Corporation (Now known as Gromo Trade and Consultancy Corporation (Now known as Gromo Trade and Consultancy Ltd) for making illegal gains and to convert ill gotten gains into Ltd) for making illegal gains and to convert ill gotten gains into Ltd) for making illegal gains and to convert ill gotten gains into genuine one. An opportunity was given to the assesseeie. M genuine one. An opportunity was given to the assesseeie. M genuine one. An opportunity was given to the assesseeie. Mr. Jayantilal Jain, Promoter of GM Group on 12.01.2020, Jayantilal Jain, Promoter of GM Group on 12.01.2020, Jayantilal Jain, Promoter of GM Group on 12.01.2020, Mr.Jugraj Jain, Promoter of Goldmedal Group on 27.11.2019 Mr.Jugraj Jain, Promoter of Goldmedal Group on 27.11.2019 Mr.Jugraj Jain, Promoter of Goldmedal Group on 27.11.2019 and Mr.Kapil Jain, Director of M/s Goldmedal Electricals Pt and Mr.Kapil Jain, Director of M/s Goldmedal Electricals Pt and Mr.Kapil Jain, Director of M/s Goldmedal Electricals Pt Ltd on

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 85 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

11.01.2020 to produce the party to verify its claim that the 11.01.2020 to produce the party to verify its claim that the 11.01.2020 to produce the party to verify its claim that the unsecured loan unsecured loan is genuine. But the assessee failed to produce is genuine. But the assessee failed to produce the party and thus failed to discharge its onus to explain the the party and thus failed to discharge its onus to explain the the party and thus failed to discharge its onus to explain the source of credit. source of credit. The assessee vide its submission dated 03.02.2021 has tried The assessee vide its submission dated 03.02.2021 has tried The assessee vide its submission dated 03.02.2021 has tried to explain the Identity, genuineness and creditworthiness of to explain the Identity, genuineness and creditworthiness of to explain the Identity, genuineness and creditworthiness of the transactions of loan, however the same is not acceptable ansactions of loan, however the same is not acceptable ansactions of loan, however the same is not acceptable as the facts remains that the promoter of G.M. Group has as the facts remains that the promoter of G.M. Group has as the facts remains that the promoter of G.M. Group has failed in producing the lenders for verification. Further, the failed in producing the lenders for verification. Further, the failed in producing the lenders for verification. Further, the lender parties have accepted in their statement that they are lender parties have accepted in their statement that they are lender parties have accepted in their statement that they are involved in providi involved in providing accommodation entries. All the relevant ng accommodation entries. All the relevant extract/documents extract/documents extract/documents were were were supplied/communicated supplied/communicated supplied/communicated to to to the the the assessee to substantiate the claim of genuineness of loan, assessee to substantiate the claim of genuineness of loan, assessee to substantiate the claim of genuineness of loan, however it has failed in discharging its onus. The parties are however it has failed in discharging its onus. The parties are however it has failed in discharging its onus. The parties are not available on their addresses. The a not available on their addresses. The assessee failed in ssessee failed in producing the parties for verification. producing the parties for verification. The financial credentials as discussed above also indicate The financial credentials as discussed above also indicate The financial credentials as discussed above also indicate that the lenders have no creditworthiness to provide such that the lenders have no creditworthiness to provide such that the lenders have no creditworthiness to provide such huge amount of loan. huge amount of loan. Merely filing of return by lenders are not sufficient to pro Merely filing of return by lenders are not sufficient to pro Merely filing of return by lenders are not sufficient to prove their creditworthiness. their creditworthiness. In view of the above findings/report, it is clear that the In view of the above findings/report, it is clear that the In view of the above findings/report, it is clear that the identity of the loan creditor as well as creditworthiness and identity of the loan creditor as well as creditworthiness and identity of the loan creditor as well as creditworthiness and genuineness of the transaction is not established. In view of genuineness of the transaction is not established. In view of genuineness of the transaction is not established. In view of the same, amount of Rs. 2,50,00,000/ the same, amount of Rs. 2,50,00,000/- is added is added to the total income of the asssessee as unexplained cash credit u/s 68 of income of the asssessee as unexplained cash credit u/s 68 of income of the asssessee as unexplained cash credit u/s 68 of the Income Tax Act. the Income Tax Act. Penalty proceedings u/s 271(1)(c )are initiated for furnishing Penalty proceedings u/s 271(1)(c )are initiated for furnishing Penalty proceedings u/s 271(1)(c )are initiated for furnishing inaccurate par inaccurate particulars Income leading to concealment of Income leading to concealment of Income.” 20.5 We find that there is no ref e find that there is no reference of any incriminating erence of any incriminating material found during the course of the search action in the material found during the course of the search action material found during the course of the search action assessment order qua the additions made assessment order qua the additions made. In case of unsecured . In case of unsecured loan parties namely M/s Essar India Ltd loan parties namely M/s Essar India Ltd, information received from information received from income tax investigation Department of income tax investigation Department of Kolkata dated 27/04/2015 Kolkata dated 27/04/2015

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 86 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022

has been referred. No other incriminating material has been found has been referred. No other incriminating material has been referred. No other incriminating material in relation to said party. in relation to said party. In respect of similar observation imilar observations in the case of GM Modular private Limited for AY 2015-6 in ITA No. case of GM Modular private Limited for AY 2015 case of GM Modular private Limited for AY 2015 3034/Mum/2022, we have held that sa we have held that said information do id information do not constitute incriminating material. In respect of the other party incriminating material. In respect of the other party incriminating material. In respect of the other party namely M/s Erudite Shares and Securities p Erudite Shares and Securities p Ltd, an independent survey was carried out u/s 133A of the Act, and therefore cannot be survey was carried out u/s 133A of the Act, and therefore cannot be survey was carried out u/s 133A of the Act, and therefore cannot be considered for the purpose of incrimin considered for the purpose of incriminating material found during ating material found during the course of the search the course of the search. In the case of the assessee, assessee, the Ld DR also referred the statement of sh Kumar pal Band and Jayantila also referred the statement of sh Kumar pal Band and Jayantila also referred the statement of sh Kumar pal Band and Jayantila Jain as constituting incriminating Jain as constituting incriminating material. We have already given We have already given the detailed finding in respect of the unsecured loan parties in the the detailed finding in respect of the unsecured loan parties in the the detailed finding in respect of the unsecured loan parties in the case ofGM Modular private Limited for AY 2015-6 in ITA No. case ofGM Modular private Limited for AY 2015 case ofGM Modular private Limited for AY 2015 3034/Mum/2022 as why the statement of Sh Kumarpal Banda and 3034/Mum/2022 as why the statement of Sh Kumarpal Banda and 3034/Mum/2022 as why the statement of Sh Kumarpal Banda and Jayantilal Jain do not constitute incriminati Jayantilal Jain do not constitute incriminating material found in ng material found in the course of the search in the case of the assessee. To have the course of the search in the case of the assessee. To have the course of the search in the case of the assessee. To have consistency in our finding on the issue in dispute, in the instant consistency in our finding on the issue in dispute, in the instant consistency in our finding on the issue in dispute, in the instant appeal also, we uphold the finding of the Ld. CIT(A) that there appeal also, we uphold the finding of the Ld. CIT(A) that there appeal also, we uphold the finding of the Ld. CIT(A) that there existed no incriminating material qua the existed no incriminating material qua the additions and hence no additions and hence no addition could have been made without the aid of incriminating addition could have been made without the aid of incriminating addition could have been made without the aid of incriminating material material material in in in the the the instant instant instant assessment assessment assessment year year year being being being unabated unabated unabated assessment. The grounds of the appeal of the revenue accordingly assessment. The grounds of the appeal of the revenue accordingly assessment. The grounds of the appeal of the revenue accordingly dismissed.

M/s GM Modular Pvt. Ltd. & M/s G Trade and M/s GM Modular Pvt. Ltd. & M/s G Trade and 87 Capital Venture Pvt. Ltd.. ITA No. 3033 to 3038/M/2022 & 3211/M/2022 ITA No. 3033 to 3038/M/2022 & 3211/M/2022