M/S. STRAWBERRY CONSTRUCTION PVT LTD,MUMBAI vs. DCIT CENTRAL CIRCLE 3 (3), MUMBAI

The grounds of appeal are as under:

On the facts and circumstances of the case, the Ld. CIT(A) erred in relying on the judgement of Hon'ble Gujarat High Court in the case of Simit P. Sheth to sustain the addition to the extent of Rs. 2,67,071/- i.e., 12.5% of the alleged bogus purchases without appreciating the facts of the case and the documentary evidences submitted by the appellant company.

In all the above appeals, the assessee has contested the addition sustained by the ld.CIT(A) in respect of alleged bogus purchases at the rate of 12.5% in place of 100% addition made by the AO. In the cross appeals, the Revenue on the other hand, contested the action of the ld.CIT(A) in allowing substantial relief to the assessee in this regard. It is noticed that the AO based the addition on certain statements of a few individual who admitted the activity of providing accommodation entries and bogus bills.

1 The facts of the case are that search and seizure operation u/s 132 of the Act was conducted in Tank and Bharat Shah groups as also in the case of assessee being part of the group on 03.03.2014 and subsequently notices were issued u/s 153A of the Act were issued. All the grounds pertain to the additions made on account of bogus purchases. The additions are stated to have been made based on materials found

Common submissions were made by the assessee before the ld.CIT(A) in support of various grounds of appeal challenging the additions inter alia claiming that the AO made the addition without appreciating that the issues were already concluded by the Settlement Commission and were binding on the AO. The ld.CIT(A) has made detailed reference to the various aspects of the case and observed that the AO did not doubt the sales and therefore, entire purchases could not be added. He noted that the assessee produced various details in support of the purchases made in the form of purchase bills,transport invoices, deliverychallans etc. claiming that the all transactions were made though banking channels reflected in the bank statements. The ld.CIT(A) observed that the addition made was based on basis of materials seized from Sri Parmar during search though the same were discarded by ITSC having no evidentiary value. However, the department also took into consideration the statement of Sri Rajesh Doshi who also admitted having provided bogus bills. The ld.CIT(A) observed that the assessee failed to produce any tangible evidence to show that goods were actually purchased by it and the purchase bills etc. were found to be self serving documents only. The assessee could not P a g e | 6 ITA No. 2582 2584 2585 2586 3133 & 3136/Mum/2023 bring on record any material to disprove the statement of Sri Rajesh Doshi either before the Settlement commission or the during appellate and remand proceedings.The plea for cross examination was also rejected by him. However, he finally concluded based on the decision of Hon‟ble Gujarat High Court in CIT vs. Simit P. Sheth 356 ITR 451 and applied a rate of 12.5.% to the gross profit margin embedded in the bogus purchases.Similar decision was taken in all the appeals involved. Thus, the assessee was allowed part relief as balance amount was directed to be deleted.

Before us, the ld.AR has agitated the above addition claiming that that the addition is based on as per the material seized from the premises of Shri Daxesh Parmar from whom the asessee had allegedly taken bogus accommodation entries. Further, the Shri Rajesh Doshi, a broker, had admitted in statement that he was into business of providing accommodation entries and had provided bogus bills to the appellant .In this regard, it was submitted that Shri Daxesh Parmar is a blackmailer, who with the evil motive of extracting money from the assessee used to visit its office and site premises of the group with a view to gather information about projects of the group and subsequently he utilized this information to fabricate dummy documents. Shri Daxesh Parmar first approached the assessee and used threat for extracting money in P a g e | 7 ITA No. 2582 2584 2585 2586 3133 & 3136/Mum/2023 which he did not succeed and a police report was filed on 12.02.2014 The police had called Shri Daxesh Parmar and his statement was recorded on 17.02.2014 wherein he admitted that with a view to extract money, had fabricated dummy document and approached the assessee for extortion of money. On the intervention by the police, he apologized and promised not to harass Mr Nilesh Tank in future. In spite of this, he went on to prepare dummy records and connived with the Investigation Wing to conduct search and survey on the members of the assessee group. Once again on 01.04.2014 FIR was lodged by Shri Nilesh Tank against him. The assessee-company further submitted that reliance on the statement of Shri Daxesh Parmar by the A.O. was wholly misplaced. However, the A.O. overlooked these facts and made various additions in the hands of the assessee company solely based on the unreliable material seized from the premises of Shri Daxesh Parmar.

1 It is further submitted that the AO consciously chose not to follow the findings and observations of the Hon'ble Income Tax Settlement Commission (ITSC) in their order dated 20.08.2014 passed u/s 245D(4) of the Act in the appellant's own case for A.Y. 2010-11 to 2012-13 wherein the Hon'ble ITSC categorically observed that the material seized from the premises of Shri Daxesh Parmar was completely unreliable and did not have any evidentiary value. The P a g e | 8 ITA No. 2582 2584 2585 2586 3133 & 3136/Mum/2023 Hon'ble Settlement Commission dated 20.08.2014 passed u/s 245D(4) of the Actand finally concluded that the evidence seized from the residential premise of Shri Daxesh Parmar was prima-facie ambiguous and not supported with any corroborative evidence.

2 Viewed in backdrop of the categorical findings of the Hon'ble ITSC, the Pen drive/other material seized from the premises of Shri Daxesh Parmar and his statement as referred in the notice u/s 142(1) of the Act dated 02.03.2016 in the case of the assessee is the same material which was in consideration before Hon'ble Settlement Commission. Therefore, no reliance can be placed on the same in the case of the assessee-company as has been held by the Hon'ble Settlement Commission. The allegations in the notice u/s 142(1) of the Act dated 02.03.2016 in the case of the assessee, did not deserve any consideration on the issue of alleged on-money receipt and bogus purchases since it was entirely based on the document seized from the premises of Shri Daxesh Parmar and statement recorded thereon. It was further claimed that Settlement Commission has followed this order in the group concern namely M/s Ramnagar Corporation Development wherein the issues raised were arising out of the same proceeding based on same facts,pronounced in the order that that no addition can be made on the basis of the 4GB pendrive/material seized from the P a g e | 9 ITA No. 2582 2584 2585 2586 3133 & 3136/Mum/2023 premises of Shri Daxesh Parmar and relied on its earlier order in the case of assessee-company. The decision of Hon'ble Settlement Commission in the case of appellant being final and conclusive is binding on the Department. In these circumstances, the Department could not be allowed to rake up the same stand and story in the re- assessment/assessment proceedings in the case of the assessee which against principle of consistency repeatedly propagated and upheld by the courts. Reliance for this proposition is made on the case of Bharat Sanchar Nigam Ltd and another v. Union of India and othersreported at (2006)282 ITR 273 (SC).

3 It was further submitted that even the Department had accepted the stand of the assessee that the statement/documents seized from Shri Daxesh Parmar are unreliable. Department on the basis of the statement/documents seized from Shri Daxesh Parmar had reopened assessment u/s 148 of the Act for the assessment year 2007-08 in the cases of M/s Akshar Shanti Realtors Pvt Ltd and Shri Bharat Shah. However, no addition was made in the respective cases and the reassessment proceedings were dropped.

4 In so far as the statement of Shri Nilesh Tank is concerned, it is submitted that the Assessing Officer has relied on his statement

5 The assessee requested the Assessing Officer to provide copies of all the material as referred to in the notice u/s 142(1) of the Act vide letter 22.03.2016 and 23.03.2016.Butdid not provide the copies of the material relied upon by him for making the assessment. Nor was the assessee granted any opportunity to refute the material being relied on against him. Further, no opportunity to cross-examine Shri Daxesh Parmar, Shri Rajesh Doshi or Shri Ajay Trivedi was granted to the assessee even though specific requests were made by it vide letters dated

6 The Ld. CIT(A) after considering all the above facts of the case deleted all the additions made by the Ld. A.O. for Α.Υ. 2008-09, 2009- 10, 2013-14 and 2014-15 except the addition on account of alleged bogus purchase which was upheld to the extent of 12.5% of the amount of addition based on the uncorroborated and unreliable statement of Shri Rajesh Doshi. The amount of addition upheld by the Ld. CIT(A)-51, Mumbai for each of the year is tabulated below:

7 It is submitted that while upholding the above additions relied on the statement of one Shri Rajesh Doshi who was neither an employee nor a director of the assessee company. Infact, Shri Rajesh Doshi was not related to the assessee in any manner and the assessee

The ld.DR on the other hand submitted that the assessee failed to establish the genuineness of the purchases. It is contended that the ld.CIT(A) has admitted the evidentiary value of the statement of Sri Rajesh Doshi. As such, he was not justified in giving part relief. It is also stated that the ld.CIT(A) has adopted the profit element withoutappreciating that the instant case involved search and seizure operation and the addition is based on seized materials and the statement of the entry provider. Mere submission of certain bills etc.did not prove the genuineness of the purchases.He relied on the decision of hon‟ble Bombay High Court in Kanak Impex P.Ltd.172 taxmann.com 283(Bom) wherein it was held that entire bogus purchases are liable to be taxed. Also, reliance has been placed on the decision in the case of N.K.Proteins Ltd 72 taxmann.com 289(Guj). The learned CIT(DR) has P a g e | 15 ITA No. 2582 2584 2585 2586 3133 & 3136/Mum/2023 also placed reliance upon the following judicial pronouncements to contend that the entire amount of purchases is liable to be treated as bogus.

In rejoinder,the ld.AR has made a written submission claiming that no addition is justified in respect of this allegation of bogus purchase because the material seized from Mr. Daxesh Parmar was discarded by Settlement Commission and for statement of Mr. Rajesh Doshi, opportunity of cross examination was not provided to the assessee. It is further submitted that the cited decisions were distinguishable on facts and, therefore, have no application to the present case. The assessee actively participated in the assessment proceedings and furnished complete documentary evidence including purchase invoices, ledger accounts, bank statements, delivery challans and other supporting records establishing the genuineness of the purchases.No independent enquiry whatsoever had been by the AO. No incriminating material had been found from the assessee‟s premises. The documentary evidence furnished by it had never been found to be false or fabricated. No defect had been pointed out in the purchase invoices, ledger 9. We have carefully considered all relevant facts of the case. While the AO based on the statements of certain entry providers, added

1 In view of recent decisions of hon‟ble jurisdictional High Court in several cases concerning similar issue of bogus purchases through entry providers, such purchases if not proved by the assessee are liable to be treated as non-genuine or bogus and there is no question

The CIT(A) has also given a finding against the respondent- assessee in paragraph 5.2.1, stating that the respondent-assessee failed to prove the genuineness and source of the purchases and confirmed its involvement in the modus operandi. In our view, CIT(A) was not justified after giving such a finding that the additions should be restricted only to 12.5% of such purchases and not entire purchases. The issue before the CIT(A) was not whether the profit disclosed by the respondent-assessee was low so as to justify the estimation of the profit of 12.5%. The issue before CIT(A) was whether the purchases had been proved and the CIT(A), having observed against the respondent-assessee on this issue, ought to have confirmed the additions of the entire purchases. In our view, the CIT(A) misdirected himself by estimating a profit of 12.5%.

It was nobody's case that both the sales and purchases are unaccounted. If that be so and the purchases have been recorded in books of account by accommodation entry, then same gets automatically reflected in the books of account. In the instant case, since the purchases are recorded by accommodation entry in the books of account and sales have not been disputed, the CIT(A) was not justified in estimating the profit, when the basis of addition was not low profit.

In our view, both the Appellate Authorities ought to have appreciated that the issue before them was whether the respondent-assessee had proved the P a g e | 19 ITA No. 2582 2584 2585 2586 3133 & 3136/Mum/2023 purchases of which the claim for deduction was made. The respondent- assessee, having failed to discharge its onus on this issue before all three authorities, in our view, the additions made in the assessment order by the AO was justified.

If the approach of the Appellate Authorities of estimating the profit on such purchases is to be accepted, then, in effect, the consequence would be that even if respondent-assessee has failed to prove its claim of deduction of purchases, still by estimating profit, impliedly deduction of purchases is given. For example, if the purchases by accommodation entries are Rs.100/- and a profit of 10% is estimated, then to the extent of Rs.90/- deduction on account of purchases is deemed to have been given by the Appellate Authorities. This approach would not be correct since it is nobody's case that the respondent- assessee has made sales out of books by purchasing the goods out of books.

If the approach of the Appellate Authorities is accepted, then the provision of Section 69C, which is an enabling provision, would become redundant. Section 69C provides that where an assessee has incurred any expenditure and offers no explanation about the source of expenditure or the explanation offered is not in the opinion of the AO satisfactory, then the amount of expenditure may be deemed to be the income of the assessee and such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income. In our view, if the approach of the CIT(A) and the Tribunal is accepted, then it would amount to endorsing outright conduct of illegality, contrary to the express provisions of Section 69C of the Act, which the Appellate Authorities have entirely ignored. In the above example, by estimating 10% and thereby impliedly giving a deduction of Rs.90/-, in the teeth of the provisions of Section 69C of the Act, which expressly bars the allowability of unexplained expenditure.

We may also observe that the views expressed by us in the present appeal is also supported by the decision of the Co-ordinate Bench of this Court in the case Shoreline Hotel (P.) . In that case based on information received from the Sales Tax Department, the purchases made by the assessee were held to be non-genuine purchases even though the assessee had filed the documentary evidence. However, the AO based on the submissions made by the assessee added only 15% of such purchases as income. The CIT invoked revisional jurisdiction under Section 263 of the Act and observed that the entire purchases ought to have been added and not only 15%. This finding and the revisional order of the CIT was confirmed by the Tribunal. On an appeal by the assessee before this Court, the Co-ordinate Bench of this Court observed that the reasons assigned by the CIT are cogent and satisfactory. The Court further observed that once the assessee could not produce any material nor he could ensure the presence of the suppliers before the AO, citing difficulties and agreeing to the additions of gross profit of the purchases would mean that the AO was expected to complete the exercise in accordance with law and there was no reason for the AO to accommodate the assessee in the manner done. The Hon'ble High Court therefore approved the reasoning of the CIT

We may observe that CIT(A) in paragraph 5.2.1 has given a clear finding of fact that the respondent-assessee was involved in getting bogus bills. This finding has not been challenged by the respondent-assessee before the Tribunal, and only submission made before the Tribunal was on the estimation of gross profit by relying upon the decision in the case of Mohammad Haji Adam & Co. (supra).

In our view, in the instant case, the respondent-assessee has offered no explanation of the source of the expenditure incurred on account of purchases of Rs.20,06,80,150/- and, therefore, the AO was justified in making an addition of the said amount and the Appellate Authorities were not justified in estimating the profit rate and thereby impliedly grant deduction of such unexplained expenditure which is contrary to the express provision of Section 69C of the Act.

2 We find that the instant case is duly covered by the above decision since the ld.CIT(A) upheld the conclusion of the AO that the assessee failed to prove the genuineness of the impugned purchases and despite this finding he restricted the addition to 12.5% only.

3 In another case of Shree Ganesh Construction in ITA No.719/2028(Bom) dated 05.03.2025 hon‟ble Bombay High Court observed and held as under:

4 In view of the above discussion, we do not approve of the ld.CIT(A) applying certain profit percentage and restricting the addition made by the AO at 100% to a mere 12.5 percent, in complete contrast to his own findings and also defying the ratio of the decision in the case of N.K. Protein(supra) also in the light of decisions of the jurisdictional High Court(supra).As regards the reliance placed by the ld.AR on coordinate benches of ITAT claimed to be distinguishing the decisions of Kanak Impex etc. is concerned, we do not find much merits in view of the clear cut findings and decisions of the aforesaid decisions of hon‟ble jurisdictional High Court which have binding effect on all subordinate

In the light of the legal position emerging from the above cited decisions and the facts of the instant case being identical, we are of the considered view that the assessee has failed to discharge the primary onus in proving the impugned purchases as genuine and also the ld.CIT(A) erred in restricting the disallowance to 12.5% of the impugned sums, thus in the view of the hon‟ble Court legitimising the balance non genuine transaction.

However, it is noticed that the Revenue has not agitated the appellate order in appeals for AYs 2008-09 and 2009-10.Therefore,the action of the appellate authority is upheld to the extent of 12.5% of bogus purchases as adopted by him.

The Revenue has, however, contested the appellate order in Cross appeals for AYs 2013-14 and 2015-16 wherein similar additions

Consequently, all the above captioned appeals filed by the assessee stand dismissed. Deputy Commissioner of Income v/s. M/s. Strawberry Construction Tax, Central Circle – 3(3), Room बनाम Private Limited No. 1923, 19th Floor, Air India 11th Floor, The Plaza, Hughes Buiding, Nariman Point, Road, 55, Gamdevi – 400 007, Mumbai – 400 021, Maharashtra Maharashtra स्थायी लेखा सं./जीआइआर सं./ PAN/GIR No: AABCS1396K Appellant/अपीलार्थी .. Respondent/प्रतिवादी 1 On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in restricting the addition made on account of bogus purchase to the extent of Gross Profit Margin @ 12.5% without appreciating the fact that the assessee was not able to prove genuineness of the purchase transactions. 2 On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that the AO was not correct in taking a different view than that taken by Hon'ble Settlement Commission and deleting various additions made by the Assessing Officer without considering the fact that orders of the Hon'ble Settlement Commission are for the particular year and particular issue only.

On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the sum of Rs. 3,61,07,000/- towards cash loan interest expenses and a sum of Rs 99,90,901/- towards unaccounted cash expenses without realizing the fact that retraction statement filed by Shri Nilesh Tank and others are self-serving and afterthought documents.

On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the sum of Rs. 36,10,7000/- towards cash loan interest expenses and a sum of Rs 99,90,901/- towards unaccounted | cash expenses without realizing the fact that the statement recorded from Shri Rajesh Doshi was used by the Hon'ble Settlement Commission itself in estimating the income of the assessee.

Ground no.1 pertains to the addition in respect of bogus purchases from certain parties. It may be state here that while dealing with the appeals of the assessee in para 12 (supra), we have already restored the addition made by the AO. Therefore, the grounds of appeal are allowed.

Rest of the grounds pertain to the deletion of various additions made by the AO in the above two assessment years based on certain incriminating materials seized during search operations. It is seen that the AO made the impugned additions as detailed below:

The facts of the case are reiterated that a Search and Seizure operation u/s 132 of the Act was conducted on 03.03.2014 on the Tank Group and Bharat Shah Group and other related entities. Pursuant to the search action, notice u/s 153A of the Act was issued by the A.O. During assessment proceedings, the AO issued notice u/s 142(1) of the Act requiring the assessee to provide certain details. It is further noticed that the AO proceeded to make additions of above sums with the observations that it did not submit any detail as sought by him in this regard. In para 13 of the assessment order on page-4 of the order concluded that the assessee failed to discharge the onus in this regard in AY 2013-14 with similar observations and conclusion in para 17/18 on page-6/7 of the assessment orders.

In the subsequent appeal before the ld.CIT(A), the assessee agitated the impugned additions claiming that they were based on the seizure made from one Daxesh Patel, denying any relation or connection with him as he was neither an agent nor an employee of the assessee. The contentions made are already discussed in the appeal of the assessee in preceding paras. The assessee claimed that no addition could be made on the basis of seized materials as concluded by the hon‟ble Settlement Commisison. On perusal of the said order, it is observed that the issue with respect to evidentiary value of the material seized by the P a g e | 28 ITA No. 2582 2584 2585 2586 3133 & 3136/Mum/2023 Department from the possession of Mr. Daxesh Parmar was agitated by both the assessee and the department and was discussed in the detail by the Hon‟ble ITSC. It was further stated that one of the group concerns i.e. M/s. Ramnagar Development Corporation in which the appellant is a partner, had also filed an application dated 30.11.2015 before Hon‟ble Settlement Commission for A.Y. 2009-10 to A.Y. 2015-16 under the provisions of Section 245D(1) of the Act. The Hon‟ble Settlement Commission passed order dated 07.03.2017 u/s 245D(4) of the Act in the case of M/s Ramnagar Development Corporation. On perusal of the said order, it is observed that the Hon‟ble Settlement Commission followed its own order passed u/s 245D(4) in case of M/s. Strawberry Constructions Pvt. Ltd. wherein it was held that no addition could be made on the basis of 4GB pendrive/material seized from the premises of Shri Daxesh Parmar. The Hon‟ble Commission discarded the evidentiary value of the material seized from the possession of Mr. Daxesh Parmar and held that it cannot be relied upon to make any addition. The said order passed u/s 245D(4) by the Hon‟ble ITSC was not challenged by either the department or M/s. Ram Nagar Development Corporation before a competent court and thus this order is final and binding on lower authorities.

2 According to the ld.CIT(A),on perusal of the remand report and submissions filed by the appellant, it is observed that the appellant vide letter dated 10.05.2019 had challenged the remand proceedings initiated by this office and refused to file any details before the AO. The primary contention of the appellant with regard to the validity of the remand directions was that the Hon‟ble Settlement Commission had discarded the evidentiary value of the statement recorded and material seized from the possession of Mr. Daxesh Parmar and that the order of the Hon‟ble Settlement Commission had become final and conclusive with respect to the matters contained therein. The ld.CIT(A) observed that it was evident from the assessment order thattheadditions made by the AO are completely based on the materials seized from the premises of Mr. Daxesh Parmar.

4 It was also contended before him that even though there was no seizure of cash, valuables or incriminating material from the business premises of the applicant and the residential premises of the P a g e | 31 ITA No. 2582 2584 2585 2586 3133 & 3136/Mum/2023 Directors or employees, Shri Nilesh Tank, the Director and the employee of the applicant company, Shri Yatin Manani were coerced into making confessional statements. Shri Nilesh Tank, the Director and Shri Yatin Manani, employee of the applicant and Shri Tarun Shah had sworn in affidavits to narrate the circumstances in which the confessional statements were obtained. It was accordingly, contended by the ld.AR that the Department had uses physical force and coercion in recording the statements u/s 132(4) and 131 and hence there is no evidentiary value of such coerced statements recorded by the Investigation Wing. It is worth noticing that the main director Shri Bharat Shah was also subjected to search. There was no seizure of any incriminating material pertaining to the applicant from his premises. In the statement recorded u/s 132(4) Shri Bharat Shah strongly refuted the suggestion that any cash transactions were made by the applicant company. It is surprising that the Commissioner's report has not make any reference to the inconvenient deposition of the Director Shri Bharat Shah. Despite repeated request copy of his statement had not been provided by the Department.

5 As regard the evidences found and the statements recorded from various persons, pertaining to the activities and affairs of the applicant vis-à-vis the receipt of on-money on the sale of constructed

6 It may also be mentioned here that department had not at all verified the authenticity of the statement made by Shri Daxesh Bhika bhai Parmar under section 132(4) of the Act on 03.03.2014 that he had been working as an assistant for PNK group for the last three and half years and has been receiving salary of approximately Rs. 20,000/- in P a g e | 33 ITA No. 2582 2584 2585 2586 3133 & 3136/Mum/2023 cash from PNK group, through one of its manager, Shri Ajay A. Trivedi, as no such statement has been made by Shri Daxesh Parmar before the Police Department. Neither the department appeared to have verified whether Shri Daxesh Bhikhabhai Parmar has disclosed the above income from salary in his returns of income for the relevant assessment years. Similarly, the Department did not appear to have verified any business connection/employer-employee relationship or any other relationship of Shri Ajay Trivedi and Shri Tarun Shah with the applicant company, though their statements had been recorded and relied upon by the department. In the absence of any such verification, the discovery of any document, paper or any such evidence found and seized from the places/custody of the above persons and its utilization against theapplicant company is of no relevance. It is in this context that the applicant was apparently aggrieved due to surpassing the Settlement Commission‟s exclusive jurisdiction u/s 245F of the Act by the department.

7 It was submitted that on perusal of the order dated 20.08.2014 passed by Hon‟ble Settlement Commission it was observed that the Hon‟ble ITSC has held that the evidence seized from the residential premise of Mr. Daxesh Parmar was ambiguous and not supported with any corroborative evidence. The Hon‟ble Settlement

8 The provisions of Section 245I of the Act make it sufficiently clear that the matters adjudicated upon by the Hon‟ble Settlement Commission are conclusive and cannot be reopened in any proceedings under the Act. This proposition is supported by the decision of Hon‟ble Delhi High Court in case of Omaxe Ltd & Anr. Vs DCIT, W. P. (C.) 1451/2013wherein the Hon‟ble Court has held as under:

9 Further, once the material seized during the course of search and seizure proceedings in case of the appellant has been thoroughly considered and discarded by the Hon‟ble Settlement Commission, being a higher authority, it cannot be again used by the department in other proceedings to make additions as the matter is no longer untouched. This is further fortified by the fact that the P a g e | 35 ITA No. 2582 2584 2585 2586 3133 & 3136/Mum/2023 department had not challenged the order of Hon‟ble Settlement Commission before a competent court.

The ld.CIT(A) stated that in light of the contentions placed by the assessee a clarification was sought i.e. whether any Writ Petition was filed by the Department against the order passed on 20.08.2014 and 07.03.2017 u/s. 245D(4) of the Act by the Hon‟ble Settlement Commission. The Assessing Officer in response submitted that no Writ Petition had been filed against the relevant orders of the Hon‟ble ITSC Therefore, he concluded that it could be safely concluded that the matter which is already decided upon and put to rest by a higher authority cannot be tampered with and the decision rendered therein cannot be ignored by the lower authorities. The department could not keep changing its stance by using the same material against the appellant which was accepted by them as having no evidentiary value based on the order passed by Hon‟ble ITSC. Once the issue had been decided against a party i.e. department in thepresent case and not subsequently challenged by them before a competent court, the „doctrine of issue estoppel‟ applies in that case.

1 The Hon‟ble Settlement Commission in its order dated 07.03.2017 u/s 245D(4) of the Act in the case of M/s Ramnagar

2 Based on the facts of the case discussed above, the orders passed by the Hon‟ble Settlement Commission, the orders passed by the department in the case of the appellant and Akshar Shanti Realtors Pvt. Ltd. and the decisions of Hon‟ble Apex Court in the cases of Bhanu Kumar Jain vs. Archana Kumar & Anr. and Excel Industries Ltd. and the decision of Hon‟ble Jurisdictional High Court in the case of Vinod M. Chitalia, which state that once the pending litigation between the parties is decided by a competent court which has not been challenged, any court or authority is not allowed to take a different view than what has already been decided, the ld.CIT(A) concluded that the AO was not correct in taking a different view than that taken by Hon‟ble Settlement Commission in the case of M/s. Strawberry Constructions Pvt. Ltd. and M/s. Ramnagar Development Corporation which are related concerns of P a g e | 37 ITA No. 2582 2584 2585 2586 3133 & 3136/Mum/2023 the appellant. Also, since the addition made by the AO in case of these concerns basedon the statement and material seized from the possession of Shri Daxesh Parmar are also deleted in the respective appeals filed by them, accordingly the following additions made by the AO relying on the material seized from Mr. Daxesh Parmar and his statement, were deleted.

Before us, the ld.DR has made oral as also written submissions. It is contented that the group filed application before the Settlement commission for AY 2011-12 and 2012-13 and the order passed by it were not applicable to the impugned assessment years. The order passed was therefore, specific to the issues involved in those particular years and could not be considered applicable to these years. It was further stated that the ld.CIT(A) did not take due cognizance of the statements of various persons including the director during search operation though the same carried profound significance and could not be set aside by superficial and self serving retractions. Reliance has been placed on the decision of hon‟ble Supreme Court in Bannala Jat Constructions P.LTd 106 taxmann.com 128 inter alia held that retraction of the statement latercould not make the statement unacceptable. The burden lay on the assessee to show that the admission was made by him in the earlier statement was wrong. He also relied on the decision in the P a g e | 38 ITA No. 2582 2584 2585 2586 3133 & 3136/Mum/2023 case of Thiru A.J. Ramesh Kumar 139 taxmann.com 190(Mad) wherein it was inter alia held that once a statement is made u/s 132(4) of the Act, it is open for the AO to rely and proceed on the basis of such statement. Statement u/s 132(4) of the Act has a strong evidentiary value and is binding on the persons making it.

1 In the light of above case laws, it was stated that the statement of Sri Nilesh Tank, the key person voluntarily disclosed the intricate coded methodology of parallel accounting system, the burden to proving that this highly synchronised matching data was wrong or dummy rested completely on the assessee. The retraction was merely an afterthought. Unlike cases of isolated confessions, the statement of the independent broker Sri Rajesh Doshi directly matched the codes mapped inside the digital files. The CIT(A) also committed a fundamental error in law by treating such complex, cross verified electronic ledger entries as unsubstantiate ignoring their evidentiary value. He was also not justified in taking cognizance of retracted statement ignoring the original statement of Sri Tank though the burden was on the assessee to prove wrong doing and coercion by the Revenue.

In the rejoinder, it is stated by the ld.AR that an order passed by the Hon‟ble Income-tax Settlement Commission under section 245D

1 It was further stated that on perusal of the initial pages of the assessment orders in each year, it is evident that the case was re- opened by relying on the same material seized from the P a g e | 40 ITA No. 2582 2584 2585 2586 3133 & 3136/Mum/2023 premises/custody of Shri Daxesh Parmar, which constituted the foundation of the proceedings before the Settlement Commission. No fresh incriminating material, independent enquiry, corroborative evidence or new information pertaining specifically to Assessment Year 2013-14 and 2014-15 had been brought on record. Thus, the very basis on which the belief of escapement of income has been formed is the identical material whose credibility and evidentiary worth already stood examined by the Hon‟ble Settlement Commission. Therefore, even the reopening in both these years is not as per law. Significantly, the Hon‟ble Settlement Commission, after a detailed examination of the search material, recorded the following findings in the order dated 20.08.2014 passed u/s 2450 (4) in case of M/s Strawberry Construction P Ltd:

2 Moreover, the assessee accepted that each assessment year is separate and that the principle of res judicata does not strictly apply to income-tax proceedings. However, the Revenue cannot ignore the findings of the Settlement Commission regarding non-reliability of the very same seized material forming the basis of the impugned reopening. Regarding the statements the appellant does not dispute this settled legal proposition. However, the controversy in the present case does not revolve merely around the retraction of the statement of Shri Nilesh Tank. The fundamental issue is that the Revenue had failed to substantiate the alleged disclosure with any independent corroborative

3 It is argued that the Revenue has also sought to rely upon the statement of Shri Rajesh Doshi. Such reliance is wholly misconceived. Shri Rajesh Doshi is an unrelated third party whose statement was recorded without affording the appellant any opportunity to cross-examine him. More importantly, he had not identified or referred to any specific transaction involving the appellant. A general and untested statement of a third party cannot constitute corroborative evidence for making additions in the hands of the appellant.

4 Likewise, the seized digital data, by itself, does not establish the receipt of any on-money. Unless the Revenue is able to P a g e | 43 ITA No. 2582 2584 2585 2586 3133 & 3136/Mum/2023 decode and substantiate the alleged entries through independent evidence, such as statements of purchasers, banking records, cash trails, or other contemporaneous material, the digital data remains unverified and incapable of forming the sole basis for an addition. The judicial decisions relied upon by the Learned CIT(DR), namely Bannalal Jat Constructions (P.) Ltd. and Thiru A.J. Ramesh Kumar, are clearly distinguishable on facts. In those cases, the statements were supported by independent corroborative evidence, and the assessee involved in that case failed to disprove their admissions. Moreover, reliance was placed on the judgment delivered by Hon‟ble ITAT, Mumbai in case of Amita Jatia vs. ACIT reported at 181 taxmann.com 472 where it was held that merely on the basis of statement without any corroborating evidence, no addition could be made.

We have carefully considered all aspects of the case.Certain facts have emerged from the above discussion which are as under:

The ITSC as per the claim of the assesee did not give much credence to the materials seized from Sri Parmar stating them to be unambiguous and unreliable and the additions made by the AO solely on such materials in the impugned years.

It is noticed that the statements of certain other persons recorded during search operation have not been countered by the assessee in any manner.

The ld.CIT(A) did not consider it necessary to remand the matter to the AO or even call for factual reports from his end and took into account the contentions of the assessee and agreeing with it deleted all the additions. Infact, it was stated that the the appellant vide letter dated 10.05.2019 had challenged the remand proceedings initiated by this office and refused to file any details before the AO. The stand taken by the ld.CIT(A) by not referring the matter to the AO lacks any substance. The assessee could not have dictated terms to the appellate authority in using his prerogative once he was of the opinion that the matter required comments of the AO. The ld.CIT(A) admitted that the assessee opposed remanding the matter to the AO and such request was accepted by him without realising and appreciating that the AO made the additions in the absence of replies submitted by the assesee before him.

The ld.CIT(A) did admit that certain enquiries were not conducted by the AO. However, he being an authority with co- terminuspowers of the AO, neither made any enquiries nor got it done through the him.

The ld.CIT(A) deleted the additions mainly on the ground that the Department did not contest the order of the Settlement Commission which achieved finality without making any effort to examine the issues involved independently. The ld.CIT(A) erred in holding that the Commission gave a blanket immunity to the entire group in subsequent years as well.

Further, the ld.CIT(A) himself admitted in the order that the authorities are not stopped from independently examining the seized materials vis-a-vis the books of account. Thus, his action in deleting the addition based on the report of ITSC is self contradictory.

It is also noted that the assessee requested the Assessing Officer to provide copies of all the material as referred to in the notice u/s 142(1) of the Act vide letter 22.03.2016 and 23.03.2016. However, the Assessing Officer had not provided the appellant with the copies of the material relied upon by him for making the assessment, nor was the assessee granted any opportunity to refute the material being relied on against him. Further, no opportunity to cross-examine Shri Daxesh Parmar, Shri Rajesh Doshi or Shri Ajay Trivedi was granted to the assessee even though specific requests were made by it vide letters dated 22.03.2016. 10. The ld.CIT(A) did not appreciate the statements of the director Sri Nilesh Tank recorded on 04.03.2014 in proper perspective and his claim of coercion was accepted based his contentions only. The said statement had a great bearing on the entire factum of the case. Nothing has been brought on record to demonstrate that the original statement was made under any coercion or for that P a g e | 46 ITA No. 2582 2584 2585 2586 3133 & 3136/Mum/2023 matter, the person concerned lodged in this regard took up before the higher Departmental authorities or not.

It is not clear from the assessment order that all the additions were pertaining to the seizure from the possession of Sri Parmar as the assessee did not make due compliance before him.

1 Considering the totality of the facts and peculiar circumstances of the case, we are of the considered view that entire matter requires revisit by the AO with the assessee requiring to furnish relevant replies and details to buttress its case. The AO would pass supply all relevant materials relied upon by him including statements of certain individual which have been relied upon by him in making the impugned additionsde novo assessment order after allowing adequate opportunity of hearing to the assessee.

In the result, the grounds of appeal of the Revenue are allowed for statistical purposes.

Consequently, the appeal of the assessee in ITA No. 2582/2584/2585 and 2586/MUM/2023 are dismissed while Revenue‟s appeal in ITA No. 3126 and 3133 /MUM/2023 are partly allowed.