KRBL LIMITED,DELHI vs. DCIT CENTRAL CIRCLE- 07, NEW DELHI

Per Bench: The assessee as well as the Revenue have been filed these cross appeals against the separate orders of the ld. CIT(A)-24, New Delhi, dated 11.03.2020.

2. In the assessee has raised following grounds of appeal:

“Ground 1: General

1.2 On the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate that the above referred additions/disallowances were made by Ld. AO merely on conjecture, surmises without due application of mind and/or affording reasonable opportunity of being heard to the Appellant, and in complete violation of the principles of natural justice.

Ground 2: No incriminating material was unearthed during search

2.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in affirming the additions made by the Ld. AO in the Impugned Assessment Order completed under section 153A of the Act for the subject year, without appreciating that no incriminating material/ information was unearthed during the course of search operations at Appellant’s premises, and therefore the additions made in absence of any incriminating material/ information are liable to be deleted.

2.2 On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming additions/ disallowances made in the Impugned Assessment Order for subject year by ignoring the factual and legal position that these issues were accepted/ considered in assessment proceeding for subject year completed under section 143(3) of the Act, and hence the additions made by Ld. AO and affirmed by Ld. CIT(A) are illegal and liable to be deleted.

Ground 3: Impugned addition of INR 4,76,843/- on account of alleged difference between purchase/sales made to certain parties treating these as ungenuine/bogus transactions and commission paid to such parties for arranging such alleged bogus bills

3.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in affirming the impugned addition of INR 4,76,843/- made by the Ld. AO by alleging that the Appellant has failed to discharge its onus to prove the genuineness of the transactions without appreciating evidences/records/ information/ submissions furnished before the Ld. AO & Ld. CIT(A) that clearly proves that these transactions were genuine and undertaken through normal banking channel and trading results of the Appellant for subject year have been duly accepted by the Income-tax Department.

3.2 On facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the above addition without appreciating that the Impugned Assessment Order was passed without confronting the Appellant in respect of alleged evidences/ information collected by the Ld. AO and without allowing cross examination of the witnesses whose statements/ letters were used against the Appellant, even after specific and repeated request of the Appellant.

Ground 4: Addition of INR 15,15,74,668/- in respect of the income earned by M/s KRBL DMCC, Dubai, a wholly owned subsidiary of the Appellant by alleging it as the income of the Appellant

4.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in affirming an addition of INR 15,15,74,668/- in respect of the income received by M/s KRBL DMCC, Dubai, a wholly owned subsidiary of the Appellant in Dubai from M/s Interdev Aviation Services Pte. Ltd. by alleging that the same belongs to the Appellant. The Ld. CIT(A) has erred in not appreciating that this income accrued to/ and was received by KRBL DMCC entirely outside India, and duly accounted in its books of account, and consolidated with financial results of Appellant for the subject year as available in public domain.

4.2 On facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating that KRBL DMCC is an independent legal entity incorporated in Dubai, and beyond the jurisdiction of Ld. AO, and hence transactions undertaken by it during the subject year with other non-resident entities are outside the scope of tax assessment in India.

4.3 On the facts and circumstance of the case and in law, the Ld. CIT(A) has failed to appreciate that no incriminating material was found during the course of search nor brought on record by the Ld. AO which may demonstrate that the said income belongs to the Appellant, and thus this addition made merely on conjecture and surmises should be deleted.

4.4 On the facts and circumstance of the case and in law, the Ld. CIT(A) has failed to appreciate that the transactions detailed in the Impugned Assessment Order for subject year between KRBL DMCC, Dubai and certain overseas entities and between Appellant and these overseas entities were bonafide commercial/ business transaction undertaken by the Appellant in its normal course of business through normal banking channels, in compliance with applicable Indian laws and duly accounted in the books of account of the Appellant.

4.5 On the facts and circumstance of the case and in law, the Ld. CIT(A) has failed to appreciate that the above income earned by KRBL DMCC Dubai, a wholly owned subsidiary of the Appellant was subsequently declared and distributed as divided to the Appellant, and duly offered to tax in India by the Appellant under section 115BBD of the Act in its return of income for the respective year of receipt.

4.6 Without prejudice to the above, even for the sake of argument, if it is presumed that the said income belongs to the Appellant, the necessary relief of the taxes already paid and discharged under section 115BBD of the Act should be granted to the Appellant, as the same income cannot be taxed twice under two different heads of income.

Ground 5: The impugned order passed by the Ld.AO is time barred in accordance with the provisions of section 153A/153B of the Act

5.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in holding that the Impugned Assessment Order passed by the Ld.AO for subject year is within the extended time limit prescribed under the provisions of the Act, and in not appreciating that the Impugned Assessment Order was passed on 31.12.2018 as against limitation period of on or before 31.12.2017, and consequently the same is bad-in-law, void and liable to be annulled.

Ground 6: Levy of interest under section 234A of the Act

6.1 That on the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in dismissing the ground raised by the Appellant with respect to levy of interest under section 234A of the Act, and has failed to appreciate that there was no delay in filing the return of income on part of the Appellant for the subject year. Thus, the interest levied under section 234A of the Act is unlawful/incorrect and liable to be deleted.”

3. In the assessee has raised following grounds of appeal:

“Ground 1: General

1.1 On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming additions/ disallowances aggregating to INR 29,98,74,335 (detailed in grounds of appeal at Sl.no.2 to 3 below) made by the Learned Deputy Commissioner of Income Tax, Central Circle-07, New Delhi (‘Ld. AO’) in the impugned order dated 31.12.2018 passed under section 153A read with section 143(3) of the Act (‘Impugned Assessment Order’) for the subject year.

1.2 On the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate that the above referred additions/disallowances were made by Ld. AO merely on conjecture, surmises without due application of mind and/or affording reasonable opportunity of being heard to the Appellant, and in complete violation of the principles of natural justice.

Ground 2: No incriminating material was unearthed during search

2.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in affirming the additions made by the Ld. AO in the Impugned Assessment Order completed under section 153A of the Act for the subject year, without appreciating that no incriminating material/ information was unearthed during the course of search operations at Appellant’s premises, and therefore the additions made in absence of any incriminating material/ information are liable to be deleted.

2.2 On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming additions/ disallowances made in the Impugned Assessment Order for subject year by ignoring the factual and legal position that these issues were accepted/ considered in assessment proceeding for subject year completed under section 143(3) of the Act, and hence the additions made by Ld. AO and affirmed by Ld. CIT(A) are illegal and liable to be deleted.

Ground 3: Impugned addition of INR 29,98,74,335/- on account of alleged difference between purchase/sales made to certain parties treating these as ungenuine/bogus transactions and commission paid to such parties for arranging such alleged bogus bills

3.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in affirming the impugned addition of INR 29,98,74,335/- made by the Ld. AO by alleging that the Appellant has failed to discharge its onus to prove the genuineness of the transactions without appreciating evidences/records/ information/ submissions furnished before the Ld. AO & Ld. CIT(A) that clearly proves that these transactions were genuine and undertaken through normal banking channel and trading results of the Appellant for subject year have been duly accepted by the Income-tax Department.

3.2 On facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the above addition without appreciating that the Impugned Assessment Order was passed without confronting the Appellant in respect of alleged evidences/ information collected by the Ld. AO and without allowing cross examination of the witnesses whose statements/ letters were used against the Appellant, even after specific and repeated request of the Appellant.

Ground 4: The impugned order passed by the Ld.AO is time barred in accordance with the provisions of section 153A/153B of the Act

4.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in holding that the Impugned Assessment Order passed by the Ld.AO for subject year is within the extended time limit prescribed under the provisions of the Act, and in not appreciating that the Impugned Assessment Order was passed on 31.12.2018 as against limitation period of on or before 31.12.2017, and consequently the same is bad-in-law, void and liable to be annulled.

Ground 5: Levy of interest under section 234A of the Act

5.1 That on the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in dismissing the ground raised by the Appellant with respect to levy of interest under section 234A of the Act, and has failed to appreciate that there was no delay in filing the return of income on part of the Appellant for the subject year. Thus, the interest levied under section 234A of the Act is unlawful/incorrect and liable to be deleted.”

4. In the assessee has raised following grounds of appeal:

“Ground 1: General

1.1 On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming additions/ disallowances aggregating to INR 5,27,159 (detailed in grounds of appeal at Sl.no.2 to 3 below) made by the Learned Deputy Commissioner of Income Tax, Central Circle-07, New Delhi (‘Ld. AO’) in the impugned order dated 31.12.2018 passed under section 153A read with section 143(3) of the Act (‘Impugned Assessment Order’) for the subject year.

1.2 On the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate that the above referred additions/disallowances were made by Ld. AO merely on conjecture, surmises without due application of mind and/or affording reasonable opportunity of being heard to the Appellant, and in complete violation of the principles of natural justice.

Ground 2: No incriminating material was unearthed during search

2.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in affirming the additions made by the Ld. AO in the Impugned Assessment Order completed under section 153A of the Act for the subject year, without appreciating that no incriminating material/ information was unearthed during the course of search operations at Appellant’s premises, and therefore the additions made in absence of any incriminating material/ information are liable to be deleted.

2.2 On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming additions/ disallowances made in the Impugned Assessment Order for subject year by ignoring the factual and legal position that these issues were accepted/ considered in assessment proceeding for subject year completed under section 143(3) of the Act, and hence the additions made by Ld. AO and affirmed by Ld. CIT(A) are illegal and liable to be deleted.

Ground 3: Impugned addition of INR 5,27,159/- on account of alleged difference between purchase/sales made to certain parties treating these as ungenuine/bogus transactions and commission paid to such parties for arranging such alleged bogus bills

3.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in affirming the impugned addition of INR 5,27,159/- made by the Ld. AO by alleging that the Appellant has failed to discharge its onus to prove the genuineness of the transactions without appreciating evidences/records/ information/ submissions furnished before the Ld. AO & Ld. CIT(A) that clearly proves that these transactions were genuine and undertaken through normal banking channel and trading results of the Appellant for subject year have been duly accepted by the Income-tax Department.

3.2 On facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the above addition without appreciating that the Impugned Assessment Order was passed without confronting the Appellant in respect of alleged evidences/ information collected by the Ld. AO and without allowing cross examination of the witnesses whose statements/ letters were used against the Appellant, even after specific and repeated request of the Appellant.

Ground 4: The impugned order passed by the Ld.AO is time barred in accordance with the provisions of section 153A/153B of the Act

4.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in holding that the Impugned Assessment Order passed by the Ld.AO for subject year is within the extended time limit prescribed under the provisions of the Act, and in not appreciating that the Impugned Assessment Order was passed on 31.12.2018 as against limitation period of on or before 31.12.2017, and consequently the same is bad-in-law, void and liable to be annulled.

Ground 5: Levy of interest under section 234A of the Act

5.1 That on the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in dismissing the ground raised by the Appellant with respect to levy of interest under section 234A of the Act, and has failed to appreciate that there was no delay in filing the return of income on part of the Appellant for the subject year. Thus, the interest levied under section 234A of the Act is unlawful/incorrect and liable to be deleted.”

5. In , the assessee has raised following grounds of appeal:

“Ground 1: General

1.1 On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming additions/ disallowances aggregating to INR 14,07,06,177/- (detailed in grounds of appeal at Sl.no.2 to 3 below) made by the Learned Deputy Commissioner of Income Tax, Central Circle-07, New Delhi (‘Ld. AO’) in the impugned order dated 31.12.2018 passed under section 153A read with section 143(3) of the Act (‘Impugned Assessment Order’) for the subject year.

1.2 On the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate that the above referred additions/disallowances were made by Ld. AO merely on conjecture, surmises without due application of mind and/or affording reasonable opportunity of being heard to the Appellant, and in complete violation of the principles of natural justice.

Ground 2: No incriminating material was unearthed during search

2.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in affirming the additions made by the Ld. AO in the Impugned Assessment Order completed under section 153A of the Act for the subject year, without appreciating that no incriminating material/ information was unearthed during the course of search operations at Appellant’s premises, and therefore the additions made in absence of any incriminating material/ information are liable to be deleted.

2.2 On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming additions/ disallowances made in the Impugned Assessment Order for subject year by ignoring the factual and legal position that these issues were accepted/ considered in assessment proceeding for subject year completed under section 143(3) of the Act, and hence the additions made by Ld. AO and affirmed by Ld. CIT(A) are illegal and liable to be deleted.

Ground 3: Impugned addition of INR 14,07,06,177/- on account of alleged difference between purchase/sales made to certain parties treating these as ungenuine/bogus transactions and commission paid to such parties for arranging such alleged bogus bills

3.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in affirming the impugned addition of INR 14,07,06,177/- made by the Ld. AO by alleging that the Appellant has failed to discharge its onus to prove the genuineness of the transactions without appreciating evidences/records/ information/ submissions furnished before the Ld. AO & Ld. CIT(A) that clearly proves that these transactions were genuine and undertaken through normal banking channel and trading results of the Appellant for subject year have been duly accepted by the Income-tax Department.

3.2 On facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the above addition without appreciating that the Impugned Assessment Order was passed without confronting the Appellant in respect of alleged evidences/ information collected by the Ld. AO and without allowing cross examination of the witnesses whose statements/ letters were used against the Appellant, even after specific and repeated request of the Appellant.

Ground 4: The impugned order passed by the Ld.AO is time barred in accordance with the provisions of section 153A/153B of the Act

4.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in holding that the Impugned Assessment Order passed by the Ld.AO for subject year is within the extended time limit prescribed under the provisions of the Act, and in not appreciating that the Impugned Assessment Order was passed on 31.12.2018 as against limitation period of on or before 31.12.2017, and consequently the same is bad-in-law, void and liable to be annulled.

Ground 5: Levy of interest under section 234A of the Act

5.1 That on the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in dismissing the ground raised by the Appellant with respect to levy of interest under section 234A of the Act, and has failed to appreciate that there was no delay in filing the return of income on part of the Appellant for the subject year. Thus, the interest levied under section 234A of the Act is unlawful/incorrect and liable to be deleted.”

6. In the assessee has raised following grounds of appeal:

“Ground 1: General

1.1 On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming additions/ disallowances aggregating to INR 49,72,24,635/- (detailed in grounds of appeal at Sl.no.2 to 3 below) made by the Learned Deputy Commissioner of Income Tax, Central Circle-07, New Delhi (‘Ld. AO’) in the impugned order dated 31.12.2018 passed under section 153A read with section 143(3) of the Act (‘Impugned Assessment Order’) for the subject year.

1.2 On the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate that the above referred additions/disallowances were made by Ld. AO merely on conjecture, surmises without due application of mind and/or affording reasonable opportunity of being heard to the Appellant, and in complete violation of the principles of natural justice.

Ground 2: No incriminating material was unearthed during search

2.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in affirming the additions made by the Ld. AO in the Impugned Assessment Order completed under section 153A of the Act for the subject year, without appreciating that no incriminating material/ information was unearthed during the course of search operations at Appellant’s premises, and therefore the additions made in absence of any incriminating material/ information are liable to be deleted.

2.2 On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming additions/ disallowances made in the Impugned Assessment Order for subject year by ignoring the factual and legal position that these issues were accepted/ considered in assessment proceeding for subject year completed under section 143(3) of the Act, and hence the additions made by Ld. AO and affirmed by Ld. CIT(A) are illegal and liable to be deleted.

Ground 3: Impugned addition of INR 49,72,24,635/- on account of alleged difference between purchase/sales made to certain parties treating these as ungenuine/bogus transactions and commission paid to such parties for arranging such alleged bogus bills

3.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in affirming the impugned addition of INR 49,72,24,635/- made by the Ld. AO by alleging that the Appellant has failed to discharge its onus to prove the genuineness of the transactions without appreciating evidences/records/ information/ submissions furnished before the Ld. AO & Ld. CIT(A) that clearly proves that these transactions were genuine and undertaken through normal banking channel and trading results of the Appellant for subject year have been duly accepted by the Income-tax Department.

3.2 On facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the above addition without appreciating that the Impugned Assessment Order was passed without confronting the Appellant in respect of alleged evidences/ information collected by the Ld. AO and without allowing cross examination of the witnesses whose statements/ letters were used against the Appellant, even after specific and repeated request of the Appellant.

Ground 4: The impugned order passed by the Ld.AO is time barred in accordance with the provisions of section 153A/153B of the Act

4.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in holding that the Impugned Assessment Order passed by the Ld.AO for subject year is within the extended time limit prescribed under the provisions of the Act, and in not appreciating that the Impugned Assessment Order was passed on 31.12.2018 as against limitation period of on or before 31.12.2017, and consequently the same is bad-in-law, void and liable to be annulled.

Ground 5: Levy of interest under section 234A of the Act

5.1 That on the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in dismissing the ground raised by the Appellant with respect to levy of interest under section 234A of the Act, and has failed to appreciate that there was no delay in filing the return of income on part of the Appellant for the subject year. Thus, the interest levied under section 234A of the Act is unlawful/incorrect and liable to be deleted.”

7. In the assessee has raised following grounds of appeal:

“Ground 1: General

1.1 On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming additions/ disallowances aggregating to INR 31,36,47,795/- (detailed in grounds of appeal at Sl.no.2 to 3 below) made by the Learned Deputy Commissioner of Income Tax, Central Circle-07, New Delhi (‘Ld. AO’) in the impugned order dated 31.12.2018 passed under section 153A read with section 143(3) of the Act (‘Impugned Assessment Order’) for the subject year.

1.2 On the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate that the above referred additions/disallowances were made by Ld. AO merely on conjecture, surmises without due application of mind and/or affording reasonable opportunity of being heard to the Appellant, and in complete violation of the principles of natural justice.

Ground 2: No incriminating material was unearthed during search

2.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in affirming the additions made by the Ld. AO in the Impugned Assessment Order completed under section 153A of the Act for the subject year, without appreciating that no incriminating material/ information was unearthed during the course of search operations at Appellant’s premises, and therefore the additions made in absence of any incriminating material/ information are liable to be deleted.

2.2 On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming additions/ disallowances made in the Impugned Assessment Order for subject year by ignoring the factual and legal position that these issues were accepted/ considered in assessment proceeding for subject year completed under section 143(3) of the Act, and hence the additions made by Ld. AO and affirmed by Ld. CIT(A) are illegal and liable to be deleted.

Ground 3: Impugned addition of INR 31,36,47,795/- on account of alleged difference between purchase/sales made to certain parties treating these as ungenuine/bogus transactions and commission paid to such parties for arranging such alleged bogus bills

3.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in affirming the impugned addition of INR 31,36,47,795/- made by the Ld. AO by alleging that the Appellant has failed to discharge its onus to prove the genuineness of the transactions without appreciating evidences/records/ information/ submissions furnished before the Ld. AO

& Ld. CIT(A) that clearly proves that these transactions were genuine and undertaken through normal banking channel and trading results of the Appellant for subject year have been duly accepted by the Income-tax Department.

3.2 On facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the above addition without appreciating that the Impugned Assessment Order was passed without confronting the Appellant in respect of alleged evidences/ information collected by the Ld. AO and without allowing cross examination of the witnesses whose statements/ letters were used against the Appellant, even after specific and repeated request of the Appellant.

Ground 4: The impugned order passed by the Ld.AO is time barred in accordance with the provisions of section 153A/153B of the Act

4.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in holding that the Impugned Assessment Order passed by the Ld.AO for subject year is within the extended time limit prescribed under the provisions of the Act, and in not appreciating that the Impugned Assessment Order was passed on 31.12.2018 as against limitation period of on or before 31.12.2017, and consequently the same is bad-in-law, void and liable to be annulled.

Ground 5: Levy of interest under section 234A of the Act

5.1 That on the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in dismissing the ground raised by the Appellant with respect to levy of interest under section 234A of the Act, and has failed to appreciate that there was no delay in filing the return of income on part of the Appellant for the subject year. Thus, the interest levied under section 234A of the Act is unlawful/incorrect and liable to be deleted.”

8. In the assessee has raised following grounds of appeal:

“Ground 1: General

1.1 On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming additions/ disallowances aggregating to INR 40,68,38,614/- (separately dealt in grounds of appeal at Sl.no.2 to 5 below) made by the Learned Deputy Commissioner of Income Tax, Central Circle-07, New Delhi (‘Ld. AO’) in the impugned order dated 31.12.2018 passed under section 153A read with section 143(3) of the Act (‘Impugned Assessment Order’) for the subject year.

1.2 On the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate that the above referred additions/disallowances were made by Ld. AO merely on conjecture, surmises without due application of mind and/or affording reasonable opportunity of being heard to the Appellant, and in complete violation of the principles of natural justice.

Ground 2: No incriminating material was unearthed during search

2.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in affirming the additions made by the Ld. AO in the Impugned Assessment Order completed under section 153A of the Act for the subject year, without appreciating that no incriminating material/ information was unearthed during the course of search operations at Appellant’s premises, and therefore the additions made in absence of any incriminating material/ information are liable to be deleted.

Ground 3: Impugned addition of INR 36,54,70,992/- on account of alleged difference between purchase/sales made to certain parties treating these as ungenuine/bogus transactions and commission paid to such parties for arranging such alleged bogus bills

3.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in affirming the impugned addition of INR 36,54,70,992/- made by the Ld. AO by alleging that the Appellant has failed to discharge its onus to prove the genuineness of the transactions without appreciating evidences/records/ information/ submissions furnished before the Ld. AO & Ld. CIT(A) that clearly proves that these transactions were genuine and undertaken through normal banking channel and trading results of the Appellant for subject year have been duly accepted by the Income-tax Department.

3.2 On facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the above addition without appreciating that the Impugned Assessment Order was passed without confronting the Appellant in respect of alleged evidences/ information collected by the Ld. AO and without allowing cross examination of the witnesses whose statements/ letters were used against the Appellant, even after specific and repeated request of the Appellant.

Ground 4: Impugned addition of INR 2,07,72,796/- on account of stock difference in rice during physical verification

4.1 On the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in confirming addition of INR 2,07,72,796/- on account of alleged difference in value of stock-in-trade and has failed to appreciate the details/documents/stock reconciliation laced on record that clearly reflects that there was no difference in stock-in-trade as per books of account and as per physical verification. The ld. CIT(A) has failed to appreciate that the impugned difference determined by the Ld. AO was entirely on account of incorrect/estimated counting of stock-in-trade by officials of Income-tax Department without actual measurement thereof, and hence such estimation cannot be relied upon for purpose of making the impugned addition. The Appellant prays that the impugned addition made by the Ld. AO and affirmed by ld. CIT(A) is illegal/unjustified and liable to be deleted.

Ground 5: The impugned addition of INR 2,05,94,826/- alleging the same as unaccounted money of the Appellant

5.1 On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in affirming addition/disallowance to the extent of INR 2,05,94,826/- on account of alleged unexplained credit in books of account of the Appellant. The Ld. AO and ld. CIT(A) have erred in not appreciating the details/information/submissions furnished by the Appellant during assessment and appellate proceedings that clearly explains and depicts the source and genuineness of the underlining transactions.

Ground 6: Levy of interest under section 234A of the Act

6.1 That on the facts and circumstance of the case and in law, the Ld. CIT(A) has erred in dismissing the ground raised by the Appellant with respect to levy of interest under section 234A of the Act, and has failed to appreciate that there was no delay in filing the return of income on part of the Appellant for the subject year. Thus, the interest levied under section 234A of the Act is unlawful/incorrect and liable to be deleted.”

9. In the Revenue has raised following grounds of appeal:

“1. Whether in the circumstances of the case, the Ld.CIT(A) has erred on facts and in law in deleting the addition of Rs. 182,02,93,457/- by holding that no incriminating material was found during search without appreciating the fact that incriminating material in the form of Annexures A-7, LP-1 & LP-2 was available on record.

2. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in holding that no addition can be made in completed assessments without incriminating material without appreciating that no such condition is stipulated by the provisions of section 153A of the Income Tax Act, 1961.

3. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 182,02,93,457/- by relying upon the decision of Hon’ble Delhi High Court in the case of CIT vs. Meeta Gutgutia without appreciating that the issue has been challenged by the department in various SLPs filed before the Hon’ble Supreme Court which is pending for adjudication.

4. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 182,02,93,457/- by holding that in view of Rules of Mandi Samiti and form 6 issued by the assessee company, it is clear that the purchases were made from producers without appreciating that the Mandi Samiti has no system of identifying a particular seller as producer or agent/middleman.

5. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 182,02,93,457/- without appreciating that in the light of incriminating material seized during search, the assessee has failed to discharge its onus to prove that the cash purchases were made from farmers and the benefit of Rule 6DD(e) is available to it.

6. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in propounding the theory of consistency without appreciating that every assessment under Income Tax Act is separate

assessment and the fact that no such addition was made in any earlier year cannot become the ground for holding that no such addition can be made in the present assessment year.”

10. In the Revenue has raised following grounds of appeal:

“1. Whether in the circumstances of the case, the Ld.CIT(A) has erred on facts and in law in deleting the addition of Rs. 273,82,50,495/- by holding that no incriminating material was found during search without appreciating the fact that incriminating material in the form of Annexures A-7, LP-1 & LP-2 was available on record.

2. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in holding that no addition can be made in completed assessments without incriminating material without appreciating that no such condition is stipulated by the provisions of section 153A of the Income Tax Act, 1961.

3. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 273,82,50,495/- by relying upon the decision of Hon’ble Delhi High Court in the case of CIT vs. Meeta Gutgutia without appreciating that the issue has been challenged by the department in various SLPs filed before the Hon’ble Supreme Court which is pending for adjudication.

4. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 273,82,50,495/- by holding that in view of Rules of Mandi Samiti and form 6 issued by the assessee company, it is clear that the purchases were made from producers without appreciating that the Mandi Samiti has no system of identifying a particular seller as producer or agent/middleman.

5. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 273,82,50,495/- without appreciating that in the light of incriminating material seized during search, the assessee has failed to discharge its onus to prove that the cash purchases were made from farmers and the benefit of Rule 6DD(e) is available to it.

6. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in propounding the theory of consistency without appreciating that every assessment under Income Tax Act is separate assessment and the fact that no such addition was made in any earlier year cannot become the ground for holding that no such addition can be made in the present assessment year.”

11. In the Revenue has raised following grounds of appeal:

“1. Whether in the circumstances of the case, the Ld.CIT(A) has erred on facts and in law in deleting the addition of Rs. 258,39,34,682/- by holding that no incriminating material was found during search without appreciating the fact that incriminating material in the form of Annexures A-7, LP-1 & LP-2 was available on record.

2. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in holding that no addition can be made in completed assessments without incriminating material without appreciating that no such condition is stipulated by the provisions of section 153A of the Income Tax Act, 1961.

3. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 258,39,34,682/- by relying upon the decision of Hon’ble Delhi High Court in the case of CIT vs. Meeta Gutgutia without appreciating that the issue has been challenged by the department in various SLPs

filed before the Hon’ble Supreme Court which is pending for adjudication.

4. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 258,39,34,682/- by holding that in view of Rules of Mandi Samiti and form 6 issued by the assessee company, it is clear that the purchases were made from producers without appreciating that the Mandi Samiti has no system of identifying a particular seller as producer or agent/middleman.

5. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 258,39,34,682/- without appreciating that in the light of incriminating material seized during search, the assessee has failed to discharge its onus to prove that the cash purchases were made from farmers and the benefit of Rule 6DD(e) is available to it.

6. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in propounding the theory of consistency without appreciating that every assessment under Income Tax Act is separate assessment and the fact that no such addition was made in any earlier year cannot become the ground for holding that no such addition can be made in the present assessment year.”

12. In the Revenue has raised following grounds of appeal:

“1. Whether in the circumstances of the case, the Ld.CIT(A) has erred on facts and in law in deleting the addition of Rs. 281,79,18,607/- by holding that no incriminating material was found during search without appreciating the fact that incriminating material in the form of Annexures A-7, LP-1 & LP-2 was available on record.

2. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in holding that no addition can be made in completed assessments without incriminating material without appreciating that no such condition is stipulated by the provisions of section 153A of the Income Tax Act, 1961.

3. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 281,79,18,607/- by relying upon the decision of Hon’ble Delhi High Court in the case of CIT Vs. Kabul Chawla and PCIT vs. Meeta Gutgutia without appreciating that the issue has been challenged by the department in various SLPs filed before the Hon’ble Supreme Court which is pending for adjudication.

4. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 281,79,18,607/- by holding that in view of Rules of Mandi Samiti and form 6 issued by the assessee company, it is clear that the purchases were made from producers without appreciating that the Mandi Samiti has no system of identifying a particular seller as producer or agent/middleman.

5. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 281,79,18,607/- without appreciating that in the light of incriminating material seized during search, the assessee has failed to discharge its onus to prove that the cash purchases were made from farmers and the benefit of Rule 6DD(e) is available to it.

6. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in propounding the theory of consistency without appreciating that every assessment under Income Tax Act is separate assessment and the fact that no such addition was made in any earlier year cannot become the ground for holding that no such addition can be made in the present assessment year.”

13. In the Revenue has raised following grounds of appeal:

“1. Whether in the circumstances of the case, the Ld.CIT(A) has erred on facts and in law in deleting the addition of Rs. 443,67,45,973/- by holding that in case of paddy purchases benefit of Rule 6DD(e) should be given to assessee.

2. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in relying upon case laws without appreciating that the facts of present case are distinguished from the facts of relied upon cases.

3. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 443,67,45,973/- by holding that in view of Rules of Mandi Samiti and form 6 issued by the assessee company, it is clear that the purchases were made from producers/farmers without appreciating that the Mandi Samiti has no system of identifying a particular seller as producer/farmer or agent/middleman.

4. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 443,67,45,973/- without appreciating that in the light of incriminating material seized during search, the assessee has failed to discharge its onus to prove that the cash purchases were made from farmers and the benefit of Rule 6DD(e) is available to it.

5. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in propounding the theory of consistency without appreciating that every assessment under Income Tax Act is separate assessment and the fact that no such addition was made in any earlier year cannot become the ground for holding that no such addition can be made in the present assessment year.”

14. In the Revenue has raised following grounds of appeal:

“1. Whether in the circumstances of the case, the Ld.CIT(A) has erred on facts and in law in deleting the addition of Rs. 355,12,10,948/- by holding that in case of paddy purchases benefit of Rule 6DD(e) should be given to assessee.

2. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in relying upon case laws without appreciating that the facts of present case are distinguished from the facts of relied upon cases.

3. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 355,12,10,948/- by holding that in view of Rules of Mandi Samiti and form 6 issued by the assessee company, it is clear that the purchases were made from producers/farmers without appreciating that the Mandi Samiti has no system of identifying a particular seller as producer/farmer or agent/middleman.

4. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 355,12,10,948/- without appreciating that in the light of incriminating material seized during search, the assessee has failed to discharge its onus to prove that the cash purchases were made from farmers and the benefit of Rule 6DD(e) is available to it.

5. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in propounding the theory of consistency without appreciating that every assessment under Income Tax Act is separate assessment and the fact that no such addition was made in any earlier year cannot become the ground for holding that no such addition can be made in the present assessment year.”

15. In the Revenue has raised following grounds of appeal:

“1. Whether in the circumstances of the case, the Ld.CIT(A) has erred on facts and in law in deleting the addition of Rs. 200,70,05,333/- by holding that in case of paddy purchases benefit of Rule 6DD(e) should be given to assessee.

2. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in relying upon case laws without appreciating that the facts of present case are distinguished from the facts of relied upon cases.

3. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs.200,70,05,333/- by holding that in view of Rules of Mandi Samiti and form 6 issued by the assessee company, it is clear that the purchases were made from producers without appreciating that the Marini Samiti has no system of identifying a particular seller as producer or agent/middleman.

4. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs.200,70,05,333/- without appreciating that in the light of incriminating material the assessee has failed to discharge its onus to prove that the cash purchases were made from the farmers and the benefit of Rule 6DD(e) is available to it.

5. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in propounding the theory of consistency without appreciating that every assessment under Income Tax Act is separate assessment and the fact that no such addition was made in any earlier year cannot become the ground for holding that no such addition can be made in the present assessment year.

6. Whether in the circumstances of the case, the ld. CIT(A) has erred on facts and in law in restricting the addition of Rs.31,06,44,235/- to Rs.2,05,94,826/- without appreciating that the addition was based on seized document and the same was correctly made by the A.O.

7. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in restricting the addition of Rs. 31,06,44,235/- to Rs. 2,05,94,826/- on the basis of peak balance by giving benefit of telescoping without appreciating that the seized cash book was not part of the regular cash book and therefore no benefit of telescoping should be given to the assessee.

8. Whether in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in restricting the addition of Rs. 31,06,44,235/- to Rs. 2,05,94,826/- without appreciating that cash withdrawals mentioned in the seized cash book were unexplained and unrecorded income of assessee company which was used for meeting out unexplained expenses and for re- depositing the same and hence benefit of telescoping should not be given to assessee.

A.Y. 2010-11 (Departmental Appeal) 1. Addition u/s 40A(3) A.Y. 2010-11 (Assessee’s appeal) 1. Difference between Purchase & Sale 2. Earnings of subsidiary A.Y. 2011-12 A.Y. 2012-13 and A.Y. 2013-14 Issues involved are same as above.

16. The assessee is a rice miller and engaged in milling paddy and manufacturing and dealing in rice. During the year, the assessee purchased paddy from various Mandi Samitis all over India where payments were made through cheques and cash.

Addition u/s 40A(3):

17. The AO made addition u/s 40A(3) of the Income Tax Act, 1961 pertaining to purchase of paddy and Difference between Purchase & Sale – Rs.4,76,843/-, earning of Dubai subsidiary.

18. The ld. CIT(A) deleted the addition u/s 40A(3) holding that since the search has been carried on 30.03.2016, the Assessment for the Assessment Year 2010-11 being unabated assessment, no addition can be made u/s 153A in the absence of any incriminating material found and seized during the search. The ld. CIT(A) confirmed the additions on account of Difference between Purchase & Sale, earning of Dubai subsidiary.

A.Y. 2014-15 (Departmental Appeal) A.Y. 2015-16 (Departmental Appeal) A.Y. 2016-17 (Departmental Appeal)

Disallowance under Rule 6DD(e):

The AO also found that the appellant itself has admitted that on various occasions some leader of farmer in the village collects the produce of many farmers and sells in a bigger lot in a mandi in his own name so as to procure a better price, which shows that the appellant has not made purchases directly from the farmers or producers but from their agents or village leaders or village traders.

“…………. that its entire purchases of paddy in the state of UP is governed by the UP Krishi Utpadan Mandi Adhiniyam, 1964 and UP Krishi Utpadan Niyamavali, 1965. In terms of the said j Adhiniyam, no farmer can sell his agricultural produce other than for home consumption except in a Mandi Samili Campus, if the said producer is located within 20 kms radius from the Mandi Samiti Campus. Similarly no person can buy agricultural produce directly from any farmer and has to purchase the same at the Mandi Samiti Campus if the buyer is located within 20 kms radius of the Mandi Samiti. For the said purpose section 9 of the Adhiniyam need to be seen which has been filed by the assessee vide Paper Book Pages No. j 4523 to 4583. Niyamavali is at page nos. 4584 to 4634. The assessee has stated that its factory at Bulandsher Road, Ghaziabad is located within 20 kms radius from Dadri Mandi Campus Hence, it could not procure any paddy from any fanner directly outside the Mandi Samiti Campus. The quantity of paddy purchased by the assessee from the farmers as per its books of account in the Mandi Samiti Campuses have also been certified by the Mandi Samiti officials as from the farmers only.

2. The assessee has also stated that as per the Rule 48 of the UP Krishi Uipadan Mandi Niyamvali, 1965 every Mandi Samiti has to maintain statutory records in respect of agricultural produce brought in a Mandi Samiti Campus and sold thereafter as per list placed at PB page nos. 4594 to 4596.

3. The assessee has also stated that sale of paddy in the Mandi Samiti Campus is subject levy of Mandi Cess which is recovered by the Secretary of the Mandi Samiti who is a government employee as Government Revenue and anybody who purchases paddy from the farmers in the Mandi Samiti Campus has to pay Mandi Cess thereon to the Mandi Samiti whose officials verify the transactions from beginning to end before issuing a gate pass for removal of the goods from the Mandi Samiti compound.

Brief facts of the case:

“Search & seizure operations under section 132 of the Income Tax Act, 1961 was carried out on KRBL Group on 30.03.2016 including the Assessee Company. This case was centralized to Central Circle-7, New Delhi as per the order passed u/s 127 of the I.T. Act, 1961 by the Pr. CIT-(C)-3, New Delhi. The assessment proceedings in the case of Assessee Company for A.Y.s 2010-11 to 2015-16 were completed u/s 153A/143(3) and for A. Y. 2016-17 the same was completed u/s 143(3) of the Act vide orders dated 31.12.2018 after making various additions/disallowances on account of non-genuine loss shown by the Assessee, commission paid on accommodation entry, amount paid in violation of section 40A(3) and undisclosed income.

Now, during the appellate proceedings before your goodself the Assessee Company has filed synopsis dated 11.09.2019 of written submissions for A.Y.s 2010-11 to 2016-17 and the under signed is directed to send comments on points 1 to 18 raised by the applicant in the synopsis. The requisite point wise comments are as under:-

In this regard, it is submitted that the Assessee Company without bringing any cogent evidence on record has simply contended that certain rules and regulations as to purchase of paddy in the Mandi Samiti exists and that the same should have been followed by it. Just because the provisions of UP Krishi Utpadan Mandi Adhiniyam, 1964 and UP Krishi Utpadan Niyamawali, 1965 prohibits the Assessee Company from procuring the paddy from open market does not mean that the Assessee Company has followed the same and has procured all of its purchases within the Mandi Samiti from farmers only. During the course of search proceedings in the case of assessee certain documents showing purchases of paddy by Assessee Company in cash were found and seized. During the course of assessment proceedings, the assessee failed to prove that the purchase of paddy was made within the Mandi Samiti and the same was made from farmers and therefore the same are not covered by the provisions of Section 40A(3) of the Act as provided in Rule 6DD of the I. T. Rules, 1962. The Assessee Company was unable to produce any evidence to prove that purchases were made from bonafide farmers and not from traders. The enquiries made by the AO through Inspectors and from Mandi Samiti officials shows that no record as to a particular person being a farmer is kept by the Mandi Samiti. Further, the Assessee Company in its reply has itself admitted that it has to believe that the seller itself is the producer of the agricultural produce and that sometimes the leader of the farmers collects the produce from many farmers and sell it in the Mandi in their own name to procure a better price which clearly prove that the Assessee Company has not made purchases directly from the farmers or producers but from their agents or village leaders or village traders. To sum up, the Assessee Company has not filed any evidence either during the assessment proceedings or during appellate proceedings to prove that it has made all of its purchases from persons mentioned in Rules 6DD and that the provisions of Section 40A(3) are not applicable in its case.

In this regard, it is submitted that during the course of Search proceedings in the case of Assessee Company certain documents related to cash purchases made by Assessee Company such as purchase invoices and vouchers for sellers, addresses of persons from whom rice/paddy was purchased were found with certain discrepancies and the same were seized. The same has been mentioned by the AO in assessment order passed u/s 153A of the Act. Hence, the contention of the Assessee Company that no incriminating material related to cash purchases was found during the course of Search is not acceptable and liable to be rejected. Further, the contention of the Assessee Company that no cross examination of any material or statement except Sh. Ashok Kumar Gupta was allowed to be done by the Assessee is also wrong and liable to be rejected. The cross examination of Sh. Ashok Kumar Gupta and Sh. Anuj Kumar Gupta was undertaken by the Assessee on 24.12.2018 and even during cross examination Sh. Ashok Kumar Gupta has stated that he had not made any genuine sale/purchase and that the transactions were in the nature of accommodation entries. Further, during assessment proceedings, the assessee has been intimated that the other persons whose statements were recorded during the course of Search are not available at the addresses given by them and even the Inspectors deputed to find these persons were unable to trace them. The Assessee was further intimated that since it has conducted sales/purchases transactions with these persons therefore the primary onus of proving the same as genuine is upon the Assessee Company and it cannot absolve from its onus by just alleging that no cross examination of such persons is allowed to it. Further, the revenue has not solely relied on the statements of these persons and apart from it there are other evidences proving accommodation entries being taken by Assessee Company. The last contention of Assessee Company that affidavits of Sh. Praveen Mittal, broker and Sh. Surender Sharma field by it have not been controverted and examined by the AO in the assessment order and therefore the same are deemed to be accepted is also wrong and liable to be rejected as the same have been duly discussed and considered by the AO while passing the assessment order.

4. In view of above, it is submitted that the contentions of the Assessee Company made in the written submissions may kindly be rejected and the additions/disallowance made by the AO may kindly be sustained.’’

“The assessing officer has raised the following averments in his remand report: a) During the search, certain documents showing purchase of paddy in cash were found and seized though as per the assessment order only for the period relevant to AY 2016-17 and duly very much recorded in the regular books of account of the appellant. b) The assessing officer has averred that the appellant company without bringing any cogent evidence on record has simply contended that certain rules and regulations as to purchase of paddy in the Mandi Samiti exist and that the same were followed in real spirit by it. c) The rules prohibits the appellant from procuring paddy from a place outside the Mandi Samiti Compound does not mean that the appellant company followed the same and procured all its purchases within the Mandi Samiti from farmers only. d) The appellant failed to prove that the purchase of paddy was made within Mandi Samiti and the same was made from farmers and therefore not covered u/s 40A(3) as provided by the Rule 6 of the IT Rules. e) The enquiries made by the AO through Inspectors from the Mandi Samiti Officials show that no record as to a particular person being a farmer is kept by the Mandi Samiti. f) The appellant admitted that it has to believe the seller itself that he is a producer of the agricultural produce and that sometimes the leader of the farmer collects the produce from many farmers and sells it in the Mandi in his own name to procure a better price for all which clearly proves that the appellant company has not made purchases directly from the farmers or producers but their agents/village leaders or traders. g) To sum up, the appellant company has not filed any evidence during the assessment proceedings or during the appellate proceedings to prove that it has made all of its purchases from the farmers. h) Certain documents related to cash purchases made by the appellant such as purchase invoices, vouchers for sellers, addresses etc. with certain discrepancies were found and were seized as mentioned in the assessment order. Thus, the contention of the appellant company that no incriminating material was found during search is not acceptable. i) The cross-examination of Mr. Ashok Kumar Gupta and Mr. Anuj Kumar Gupta was undertaken by the appellant wherein they stated that they have not made any genuine sale / purchase and that their transactions with the appellant were in the nature of accommodation entries. j) The appellant was intimated that the other persons whose statements were recorded during the course of search were not available at their given addresses. Since, the appellant has conducted sales and purchases from these parties, the onus of proving the same as genuine is upon the appellant and it cannot absolve from its onus by alleging that no cross-examination of such persons has been allowed. k) The revenue has not solely relied on the statements of these persons but there are other evidences proving the accommodation entries being taken by the appellant. l) The affidavits of Mr. Praveen Mittal and Mr. Surender Sharma cannot be deemed to be accepted as the same have been duly discussed and considered by the AO while passing the assessment order. m) As regards the contention of the appellant that the AO may be directed to report any deviation by it from the settled law of UP Mandi Adhiniyam, it is submitted that detailed necessary verification has been made by AO during assessment proceedings and therefore, there is no need to do the same again.

Submissions of the appellant

Purchases from farmers: No incriminating material at all was found during the course of search:

Mandi Samiti Officials are public servants and presumption is that they have acted in good faith and bonafide manner:

The purchases were made as per rules and regulations unless adverse evidence is brought on record:

Letters issued by the Mandi Samiti Vs. Enquiry made by the Inspectors:

Provisions of Mandi Samiti Act:

“131. Dispute regarding a person being a producer [Section 2(p)] (1) When any question arises as to whether any person is a producer or not for the purposes of the Act, the Director on receipt of a complaint in this behalf, shall make enquiries from the Tahsildar concerned, whether the person against whom complaint has been made, either cultivates the land himself or holds any lien in the land in any capacity under the U.P. Zamindari Abolition and Land Reforms Act, 1950, or is engaged in producing, rearing or catching any produce of agriculture, horticulture, apiculture, sericulture, animal husbandry or of forest in the Market Area.

(2) The Director shall also make enquiries whether the person against whom complaint has been made carries on any business of sale or purchase or storage or processing, or works as a trader or broker nr commission agent in respect of agricultural produce."

“Producer means a person who, whether by himself or through hired labour, produces, rears or catches, any agricultural produce, not being a producer who also works as a trader, broker or Dalai, commission agent or Arhatiya or who is otherwise ordinarily engaged in the business of storage of agricultural produce:

Provided that if a question arises as to whether any person is a producer or not for the purposes of this Act, the decision of the Director, made after an enquiry conducted in such manner as may be prescribed, shall be final.”

(i) A declaration from the person receiving the payment that he is a producer of meat; (ii) A confirmation that the payment, otherwise than by an account payee cheque or account payee bank draft, was made on his insistence; and (iii) A further confirmation from a veterinary doctor certifying that the person specified in the certificate is a producer of meal and that slaughtering was done under his supervision.

A] The farmer / producers who sell paddy to trader outside the campus B] The traders who purchase paddy outside campus C] The Mandi officials who allow paddy to enter campus unauthorizedly as paddy is always received in campus or in issuing bogus form to show taking out of paddy by the assessee D] The salaried staff of the assessee who actually buys from trader but show as purchased from farmer and prepare bogus documents for this purpose and E] All those who sign on cash payment receipts without receiving cash.

S.O.3427(E).- In exercise of the powers conferred by clause(v) of the proviso to section 194N of the Income-tax Act, 1961 (43 of 1961), the Central Government after consultation with the Reserve Bank of India, hereby specifies the commission agent or trader, operating under Agriculture Produce Market Committee (APMC), and registered under any Law relating to Agriculture Produce Market of the concerned State, who has intimated to the banking company or co-operative society or post office his account number through which he wishes to withdraw cash in excess of rupees one crore in the previous year along with his Permanent Account Number (PAN) and the details of the previous year and has certified to the banking company or co-operative society or post office that the withdrawal of cash from the account in excess of rupees one crore during the previous year is for the purpose of making payments to the farmers on account of purchase of agriculture produce and the banking company or co-operative society or post office has ensured that the PAN quoted is correct and the commission agent or trader is registered with the APMC, and for this purpose necessary evidences have been collected and placed on record.

Cross-examination of the parties has to be allowed:

• The AYs 2010-11 to 2014-15 were completed assessments and were not pending on the date of search since either the assessment orders u/s 143(2) were passed or the time to issue notice u/s 143(2) was passed much before the date of search on 30/03/2016.

• On perusal of the assessment order for the AY 2011-12, it would be seen that the additions have been made on the following issues: a) Addition for the commission received from M/s Interdev Aviation Services Pte Ltd. by KRBL DMCC, a subsidiary company of the assessee in the hands of the assessee though the said income was duly declared in the balance sheet of the said company. b) Disallowance of purchases u/s 40A(3) for the cash purchases of paddy from farmers in Mandi duly recorded in the books of account. c) Disallowance for alleged bogus purchases in excess of sales and commission paid on such purchase bills

• All these additions have been made on merely on surmises and conjectures and not on the basis of any incriminating material seized during the course of search. No documentary evidence was found during the course of search to show that a) the commission was actually received by the assessee or it was actually the income of the assessee. b) the purchases made in cash were not made from farmers. c) The purchases made from some parties were bogus as the assessing officer has not referred to any such incriminating seized material in the assessment order and the additions have been made without any reference to any seized material but on the basis of post search enquiries. The assessing officer has referred to some seized material which was a part of the record and books of account on the basis of which transactions were recorded in the books and were not incriminating at all. This clearly shows that no incriminating material was found during the course of search regarding the said additions. The scope of assessments made u/s 153A of the Act is limited. No cognizance of any material gathered or statements recorded after conclusion of the search in these proceedings can legally be taken.

• It is a settled law that in case of completed assessments, additions can be made only on the basis of incriminating seized material found during the course of search as has been held in the undernoted authorities. Copies of all these judgments can be submitted, if desired. a) CIT vs Kabul Chawla 2015-TIOL-2006-HC-DEL-IT b) Pr CIT vs Meeta Gutgutia 2017-TIOL-1000-HC-DEL-IT c) Pr CIT vs Kurele Paper Mills Pvt. Ltd. (2016) 380 ITR 571 (Delhi) (SLP dismissed by the Apex Court) d) Pr CIT vs Dharampal Premchand Ltd. 2017-TIOL-1649- HC-DEL-IT e) Pr CIT vs Lata Jain 2016-TIOL-886-HC-DEL-IT

• Thus, in absence of any incriminating material found from the premises of the appellant during the course of search, no addition can be made u/s 153A of the Act in case of completed but not abated assessments and thus the additions made should be deleted.”

• In A.Y. 2014-15, notice u/s 143(2) was issued before the search on 31.08.2015 and assessment proceedings u/s 143(3) were pending on the date of search i.e. 30.03.2016. In view of these facts, the assessment did not stand completed on the date of search and hence addition could be made even in the absence of incriminating material as held by Hon’ble Delhi High Court in the case of CIT vs Kabul Chawla [2016] 380 ITR 573 (Delhi).

• In A.Y. 2015-16, the appellant had not filed return of income upto date of search i.e. 30.03.2016. Return of income was filed on 25.08.2017 in response to notice u/s 153A of Income Tax Act. Hence, assessment proceedings did not stand completed on the date of search i.e. 30.03.2016. Since the appellant had not filed return of income for A.Y. 2015-16 upto the date of search, the assessment did not stand completed on the date of search and hence addition could be made even in the absence of incriminating material as held by Hon’ble Delhi High Court in the case of CIT vs Kabul Chawla [2016] 380 ITR 573 (Delhi).

• In A.Y. 2016-17, the appellant had not filed return of income upto date of search i.e. 30.03.2016. Return of income was filed on 25.08.2017 in response to notice u/s 153A of Income Tax Act. Hence, assessment proceedings did not stand completed on the date of search i.e. 30.03.2016. Since the appellant had not filed return of income for A.Y. 2016-17 upto the date of search, the assessment did not stand completed on the date of search and hence addition could be made even in the absence of incriminating material as held by Hon’ble Delhi High Court in the case of CIT vs Kabul Chawla [2016] 380 ITR 573 (Delhi).

Adjudication on the issue of disallowance u/s 40A(3):

“6DD. No disallowance under sub-section (3) of section 40A shall be made and no payment shall be deemed to be the profits and gains of business or profession under sub-section (3A) of section 40A where a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account [account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as prescribed under rule 6ABBA, exceeds ten thousand rupees] in the cases and circumstances specified hereunder, namely:— (a) …………………………. (b) ………………………… (e) where the payment is made for the purchase of— i. agricultural or forest produce; or ii. the produce of animal husbandry (including livestock, meat, hides and skins) or dairy or poultry farming; or iii. fish or fish products; or iv. the products of horticulture or apiculture, to the cultivator, grower or producer of such articles, produce or products;

A.Y. 2016-17 (Departmental Appeal) Restriction of addition of Rs.31.06 Crores to Rs.2.05 Crores:

A.Y. 2016-17: (Assessee’s Appeal): Ground No. 4

A.Y. 2014-15: (Assessee’s Appeal): Ground No. 3 A.Y. 2015-16: (Assessee’s Appeal): Ground No. 3 A.Y. 2016-17: (Assessee’s Appeal): Ground No. 3 Difference between Purchase/sale-Bogus Bills:

“5.4.64 As regards the statement of other parties, it is submitted that even if no cognizance is given to their statements and the same are ignored for the purpose of assessment, even then it is a fact that the notices u/s 133(6) of the Act issued to the said parties remained uncomplied with and the inspector report showed that the said parties were found non-existent at the given addresses. Once the issue of non- compliance of notice u/s 133(6) of the Act was brought to the notice of the appellant then the appellant was duty bound to bring confirmations from the parties and produce them before the assessing officer to prove the authenticity of the transactions as the onus again shifted on the appellant. Similarly, when the inspector report was brought to the notice of the appellant that the companies were found non-existent, then the onus shifted on the appellant to prove the physical existence of the said parties. However, the appellant merely filed replies stating that the inspector report is not reliable or that the appellant cannot force the parties to comply with the notices or that the parties may have left or changed their business premises but did not make any effort to file confirmations or reply to notices u/s 133(6) of the Act or to produce any one of them before the assessing officer. Thus, due to inquiries made in the inspector report and non- compliance of notices u/s 133(6) of the Act, the onus shifted back on the assessee which was not discharged by the appellant.

5.4.65 The appellant alleged that the report of the inspector was false and was prepared in the office of the income-tax department without visiting any of the premises as nothing about the enquiries from the neighbourhood, bank, person available at the time of visit etc. has been mentioned. Every inspector has its own way of writing the reports and he cannot be asked to write a report in a particular manner. The appellant could have produced some parties if not all to substantiate its allegation that the inspectors did not visit their premises. Thus, this allegation of the assessee is merely on presumption and without any basis.

5.4.66 The assessing officer has made detailed enquiries into the transactions of the appellant and how the money has been routed in case of transactions with these 36 parties. On perusal of the ledger accounts of various parties mentioned in the assessment order, the flow of funds from the appellant to these parties and then transferring back to the appellant through layering of funds was clearly apparent. The appellant did not bring any evidence on record to rebut that the said amount was not received back by it.

5.4.67 The appellant submitted that transport department have not uploaded complete and correct information and further enquiries from the transport authority and owners of vehicles should have been made and no adverse cognizance can be taken for the fake truck number. What enquiries are to be conducted is the prerogative of the assessing officer who conducted enquiries through the official website of transport department and found the truck numbers to be fake. The appellant did not bring any evidence to controvert the allegation of the assessing officer. The appellant made mere allegation that the information on the website is not correct and complete that too without producing a single evidence to show how this vague presumption has been drawn. The fake number of trucks on the bills proves that the said goods have actually not been transported and the truck numbers have been mentioned to fulfill the particulars in the bills. The appellant could not explain the reason beyond the fake truck numbers during the course of search as well as during the appellate proceedings but made submissions merely on presumptions.

5.4.68 The appellant argued that the bogus purchases are of two categories and the case of the assessee falls in the category where the actual purchases have been made from one party but the bills are provided by the other party and even in that case no addition should be made in the hands of the appellant as the appellant has undertaken the transactions on the prevalent market price and declared high gross profit on these transactions. This shows that the appellant has itself accepted this fact that these 36 parties gave only bills on commission basis and goods were not actually purchased from them. If this is the case, then requisite addition is required to be made in the hands of the appellant.

5.4.69 In view of the above facts, it is established that appellant booked bogus sale / purchase transaction with these said 36 parties to claim non-genuine loss and to set off profit and reduce payment of taxes. The assessing officer has made addition for the excess of purchases over sales and no addition has been made where the sale value was more than purchases. Thus, the assessing officer has correctly made the addition only in those years where more bogus purchases were made to book loss.

5.4.70 Broadly, the following evidences were collected by the Department to show that the appellant was making bogus purchases:

(i) Statement on oath of Shri Arun Gupta, JMD of M/s KRBL Ltd., recorded u/s 132(4) of Income Tax Act in which he could not explain about the reason as to how a firm M/s Aastha Overseas with which M/s KRBL Ltd is doing business doesn’t exist at the address. He was confronted with the fake/bogus truck numbers (verified from govt., portal “VAAHAN” and Haryana Govt.’s website https://haryanatransport.gov.in /SRReports/vahan/report/jsp/ SearchDetails.jsp) written on some of the bills issued by M/s Aastha Overseas such as Page 30 of Annexure A-6 seized from KRBL Ltd’s corporate office (Premise Code-K02). He was again evasive and said that he had nothing to say.

(ii) Statement of Sh. Vipul Goel, VP(Accounts) of KRBL Ltd. was also recorded u/s 132(4) of I T Act, 1961. Sh. Vipul Goel stated that in case of purchases from suppliers transporters LR or GR may not be available with the bills. However, transporters details, truck numbers are mentioned on the bills. In case of FOR purchases, transporters LR/GR may be missing. When he was confronted with the fact that truck number written on many bills were found to be fake/non- genuine on being verified from the official application of transport dept. “VAHAN”, he said that he has no knowledge about it.

(iii) Statement on oath of Sh. Dinesh Jain and Shri Rajpal Sharma

(iv) Statement on oath of Sh. Vijay Kumar, Sh. Amit Goel, Sh. Vinod Kumar Goel, Sh. Yogender Kumar, Sh.

Manoj Kumar, Sh. Tejpal, Sh. Vikas Bansal, Sh. Rajesh Kumar and Sh. Data Ram (v) Funds of some firms being routed back to the appellant (vi) Non compliance to notices u/s 133(6) notices

(vii) Inspectors report stating parties were non-existent at the given addresses 5.4.71 The above evidences were duly confronted to the appellant. In view of above evidences, onus had shifted to the appellant to prove that the purchases from 36 parties were genuine. The appellant has failed to discharge this onus. Hence, addition of Rs. 49,72,24,635/- for A.Y. 2014-15, Rs. 31,36,47,795/- for A.Y. 2015-16, Rs. 36,54,70,992/- for A.Y. 2016-17 on account of non- genuine losses as well as commission paid to the parties for arranging bogus purchase/ sale bills of rice is hereby confirmed and Ground No. 3 for A.Y. 2014-15 to 2016-17 are dismissed.

 CIT vs. Paradise Holidays: 325 ITR 13 (Del)

 Pr. CIT vs. Santha Build-Tech India Pvt. Ltd.: TCA Nos. 161 to 164 of 2017 (Madras HC)  ACIT vs. Ravi Agricultural Industries: 117 ITD 338 (Agra)

 CIT vs. Fancy International: 166 Taxman 183 (Delhi)  CIT vs. Nikunj Eximpt Enterprises P Ltd: of 2010 (Bombay HC)  M/s Lalsons Jewellers Ltd vs. ACIT: ITA No.5726/Del/2010 (Del Trib.)  M/s Lalsons Jewellers Ltd vs. ACIT: ITA No.5241/Del/2004 (Del Trib.)

Stock Difference:

“2. The fourth ground of appeal is to challenge the addition of Rs 2,07,72,796/- made on account of value of alleged extra stock of rice found at the time of search on 6 locations of the appellant, rejecting the explanation given as per the assessment order mentioned in para 7.2, 7.3 and 7.4 alongwith a reconciliation of stocks available as per the books of account and physically inventorized at the time of search. The Assessing Officer ignored that at the time of search the assessee had 3,32,339 metric tons i.e. 33,23,390 quintals of rice as per books of account duly mentioned in its audited books of account us on 31.03.2016 when the search was continuing. This quantity’ was equivalent to 33,200 truck load and could not be actually physically verified in such a short period. Further, as per the said balance sheet, the assessee handled a total quantity of 9,24,081 metric tons i.e. 92,40,810 quintals during the relevant period as is mentioned in its audited balance sheet. A photocopy of the Annexure XV part of the tax audit report for the relevant period showing quantitative details of the quantity Imndled Juis heen, placed at page no. 5351 of the common paper book. Thus, as per an established fact, the weight of any agricultural produce increases or decreases seasonally due to dampness / dryness etc. even if there is no pilferage or theft / consumption by the labour. Further, it is physically impossible to weigh the actual quantity lying at a particular place in a day or two without putting each rice bag on the weighing scale as quantity in each bag varies but which at the time of receipt / recording in the books of account is based on actual measurement on scales. The entire stock is maintained on SAP with full control for inwards and outwards. Any laxity therein will doom the company as the workers /staff will loot the same as the management is not there. The difference was because the Revenue Officials estimated the physical quantity of rice without any actual measurement. Further, the assessee also submitted that the excess stock found varied from 300 quintals to 2,400 quintals at a site. In fact, on perusal of the chart in the assessment order, it would be seen that the quantity of rice available in those premises was 5,50,358 quintals in which an excess stock of 6,180 quintals was determined which is little over 1%. The books of account of the assessee have not been rejected. No evidence of any purchases outside the regular books of account was found from any premises at the time of search so as to suggest that unaccounted stock could be there in any manner. The assessee has valued its closing stock on the basis of quantity available in its stocks. The value of rice including stock as on 31.03.2016 as per the balance sheet of the assessee was Rs 995,52,85,000/- (almost Rs 1000 crores) and the impugned difference is just 0.20%. The difference is only due to human error in estimating the quantity which was in the said 6 locations almost 5,500 trucks of 100 quintals each.

Admittedly, no actual weighment was undertaken by the Revenue Officers. Thus, the addition of Rs 1,88,14,912/- made on this account on surmises should be deleted.

4.1 Further, the Assessing Officer made another addition of Rs 19,57,884/- alleging undisclosed gross profit on quantity of rice valued at Rs 84,28,258/- which was allegedly found short in other locations. The appellant submitted that this shortage was due to estimation and partly due to evaporation in sorting etc. which is accounted at the yearend in the books of account. No evidence was found at the time of search of any sale of rice outside books of account. On perusal of the said chart in the assessment order it would be seen that the quantity of rice as per the books was 16,60,622 quintals and the percentage of shortage is negligible at 0.167%. The quantity in stock was almost 16,240 trucks and it could not be physically measured by the Revenue Officers. Thus, the said addition has to be deleted. Presuming but without admitting that the figures of the Revenue are correct then telescoping has to be made for the extra stock found against the shortage and the addition could only be made for the net quantity found excess.”