THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(3), AHMEDABAD vs. M/S. DESAI IMPEX PVT. LTD., AHMEDABAD

The Revenue has raised following grounds of appeal:- “1. On the facts and on the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition on account of unexplained entries in seized / impounded material of Rs.17,50,20,879/- out of total addition of Rs.20,74,80,608/-.

On the facts and on the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made on account of unexplained credit entries of Rs.6,39,44,941/- out of total addition of Rs.9,91,03,950/-.”

The grounds raised by the Assessee in the cross-objection are as under:-

Respectfully following the above judgment of the Hon’ble Apex Court, the additional grounds taken up by the assessee are hereby admitted.

Adjudication on additional grounds:- The Ld. AR relied on the judgment of the Hon’ble Supreme Court in the case of CIT Vs. Jasjit Singh, 458 ITR 437, on the other hand, ld. DR relied on the provisions of the Act and the orders of the Assessing Officer.

The pertinent facts for the adjudication of the case are as under:- • Date of search in the main case of - 06.02.2017 (AY 2018-19) Shri Mahendra Shantilal Patel • Date of satisfaction in the case of the - 10.09.2018 (AY 2019-20) assessee

Prior to 1st April, 2017, assessment under Section 153C could cover up to six assessment years, preceding the assessment year relevant to the previous - 5–

Further, the Hon’ble Delhi High Court in the case of Pr. CIT (Central) v. Ojjus Medicare (P.) Ltd. 465 ITR 101 held that the first proviso to Section 153C introduced a legal fiction on the basis of which the commencement date for computation of the six years block was to be reckoned from the date of receipt of seized material by the AO of the other person. Reference in this regard was also made to the decision of Supreme Court in the case of Jasjit Singh (supra) and ITO v. Vikram Sujitkumar Bhatia. Accordingly, contention of the revenue that the block periods would have to be reckoned with reference to the date of search was not acceptable and against the provisions of the Act and the judgement of the Hon’ble Supreme Court. The Hon’ble High Court of Karnataka in the case of Pr. CIT Vs. VSL Mining Company (P.) Ltd, 167 taxmann.com 373, has held that pursuant to a search, the Assessing Officer is required to follow procedure as contemplated under Section 153A, 153B and 153C and it is impermissible for Assessing Officer to continue regular assessment.

Since no notice u/s 153C of the Act has been issued by the Assessing Officer and the assessment has not been completed u/s 153C of the Act as envisaged by the Act, the assessment order is treated as null and void. In the result, the CO is dismissed as infructuous and the appeal of the Revenue stands dismissed.

The grounds raised by the assessee in this CO read as under:-

It was submitted that the assessee has filed revised return and removed the alleged bogus purchases from the total purchases. The revenue could not dispute this fact. Hence, we hold that no further addition is required to be made by the Assessing Officer. Accordingly, this ground of CO is allowed.

The assessee has submitted vouchers amounting to Rs. 25,000/-, Rs.50,000/, Rs.22,600/- and Rs.45,000/- at page no. 51 to 54 of the paper-book pertaining to the cash deposits. Hence, we hold that no addition is required to be made by the Assessing Officer. Accordingly, this ground of CO is allowed.

Unsecured loan of Rs.2,25,000/- is received from Hem Desai who is a director in the assessee company. The director has been paid a salary of Rs.10,80,000/-, hence, the identity, creditworthiness and genuineness of the loan has been proved. Hence, no addition is called for. The CO of the assessee on this ground is allowed.

Assessee has submitted that they have deducted tax on expenses aggregating to Rs.11,02,008/-. The assessee has obtained certificate from parties of no liability of tax u/s 172, to whom Freight Charges are paid. It was submitted that they are in process of obtaining certificates from other parties that they have already offered the income in their returns to meet the 2nd proviso to section 40(a)(ia). Hence, this matter is remanded to ld. AO with direction to obliterate addition on production of TDS returns and certificates from parties. Accordingly, this ground of CO is allowed in above terms.

In the result, the appeal of the Revenue bearing IT(SS) No. 10/Ahd/2023 and Cross-Objection of the assessee bearing CO No. 8/Ahd/2023 are dismissed, while Cross-Objections filed by the assessee bearing CO No.7/Ahd/2023 is allowed.