TRENDY ATTIRE (P) LTD,NEW DELHI vs. DCIT CENTRAL CIRCLE-II, GURGAON

These appeals have been preferred by the assessee against the appellate order dated 23.07.2019 for assessment year 2014-15 & 2015-16 passed by Commissioner of Income Tax(Appeals)-3,Gurgaon (hereinafter referred to as the First Appellate Authority in short ‘Ld. F.A.A.’) in regard to appeal before it against assessment order dated 26.12.2017 passed u/s 153C r.w.s 153A/ 143(3) of the Income Tax Act, 1961 (hereinafter referred to as & 7660/Del/2019 M/s. Trendy Attire (P) Ltd. 2 “The Act”) by Dy. Commissioner of Income Tax, Central Circle-II, Gurgaon (hereinafter referred as the ‘AO’). Both the appeals raise similar grounds so to avoid contradictory findings are adjudicated by this common orde and for convenience the facts and grounds of AY 2014-15 are being taken on record.

“That having regard to the facts and circumstances of the 1. case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in assuming jurisdiction u/s 153C and that too for this year and further erred in passing the impugned assessment order, more so when ‘satisfaction’ has not been recorded by AO of the searched person and when there was no incriminating document was found. That in any case and in any view of the matter, action of 2. Ld. CIT(A) in confirming the action of Ld. AO in assuming jurisdiction and framing the impugned assessment order u/s 153C, is bad in law and against the facts and circumstances of the case and the same is not sustainable on various legal and factual grounds. That having regard to the facts and circumstances of the 3. case, Ld. CIT(A) has erred in law and on facts in exercising his jurisdiction in making addition of Rs. 1,78,779/- (i.e. 5% of Rs.35,75,585/-) on account of alleged commission/brokerage as business income and that too without giving show cause notice in this regard and impugned addition made by Ld. CIT(A) is bad in law as no incriminating material has been found as a result of search warranting such addition and by recording incorrect facts and findings and merely on the basis of surmises and conjectures and without giving the opportunity of being heard and without observing the principles of natural justice. That in any case and in any view of the matter, action of 4.

& 7660/Del/2019 M/s. Trendy Attire (P) Ltd. 4

Ld. CIT(A) in making addition of Rs. 1,78,779/- on account of alleged commission/brokerage as business income, is bad in law and against the facts and circumstances of the case and the same is outside the purview of the impugned proceedings u/s 153C of the Act. That having regard to the facts and circumstances of the 5. case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in rejecting the books of accounts u/s 145(3) of the Act. That in any case and in any view of the matter, addition 6. made by Ld. CIT(A) in the impugned order are beyond jurisdiction and illegal also for the reason that these could not have been made since no incriminating material has been found as a result of search. That having regard to the facts and circumstances of the 7. case, Ld. CIT( A) has erred in law and on facts in confirming the action of Ld. AO in passing the impugned assessment order without there being requisite approval in terms of section 153D and in any case approval if any is mechanical without application of mind and is no approval in the eyes of law. That having regard to the facts and circumstances of the 8. case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in charging interest u/s 234B of Income Tax Act, 1961. That the appellant craves the leave to add, modify, amend 9. or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.”

4. Heard and perused the record.

5. On behalf of the assessee it was submitted by the Ld. AR, that in the case of M/s. Orient Craft Ltd., the substantive addition have been deleted therefore, the additions in the hands of appellant cannot survive. Ld. DR however, submitted that as Ld. CIT(A) had observed that the additions in the & 7660/Del/2019 M/s. Trendy Attire (P) Ltd. 5 hands of assessee are being deleted on protective basis and will revive in case, substantive addition is deleted, therefore, assessee cannot take advantage of the ITAT order in favour of M/s. M/s. Orient Craft Ltd..

6. Appreciating the matter on record it can be observed that in ITAT order dated 24.09.2021 in for assessment year 2015- 16 and ITA No. 3311/Del./2019 for assessment year 2014-15 the substantive additions in the hands of M/s. Orient Craft Ltd. have been deleted. It can be observed that in para no. 49 in ITA No. 3311/Del/2019 and para no. 21 of ITA no. 3312/Del/2019 it has been held that M/s. Orient Craft Ltd. has proved that the material was purchased from vendors involved and payments have been made through banking channel. It was further held that the voluminous documentary evidences filed by M/s. Orient Craft Ltd. clearly established the genuineness of purchase of fabric from the present assessee / appellant.

6.1 That being so there is no force in the contention of the Ld. DR that if substantive additions are deleted then as per orders of ld. CIT(A) the protective assessment in the hands of present assessee / appellant will still revive. In fact the findings arrived by the Tribunal in case of M/s. Orient Craft Ltd. are to the effect that the purchases made from the present assessee were genuine therefore, the Bench is of firm view that protective additions in the hands of the assessee/ appellant was never sustainable.

Order pronounced in the open court on 30th June, 2022.