MOHAMMED ALI,KOLKATA vs. DCIT, KOLKATA

आयकर अपील�य अ�धकरण, कोलकाता पीठ ‘ए’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH KOLKATA Before Shri Sanjay Garg, Judicial Member and Shri Sanjay Awasthi, Accountant Member I.T(SS)A. Nos.45 to 47/Kol/2023 Assessment Years: 2019-20 to 2021-22 Mohammed Ali..….…………………..……………………....………....Appellant 4, Ballav Das Street, W.B – 700007. [PAN: ADMPA4278R] vs. DCIT, Circle-3(1), Kolkata….................................................…..…..... Respondent Appearances by: Shri Bisweswar Ghosh, AR, appeared on behalf of the appellant. Shri Subhendu Datta, CIT- DR, appeared on behalf of the Respondent. Date of concluding the hearing : September 10, 2024 Date of pronouncing the order : September 13, 2024 आदेश / ORDER संजय गग�, �या�यक सद�य �वारा / Per Sanjay Garg, Judicial Member: The captioned are the three appeals preferred by the assessee for different assessment years against the separate orders all dated 20.02.2023 of the Commissioner of Income Tax (Appeals)-21, Kolkata [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). Since common issues are involved in all the appeals, which are pertaining to the same search and seizure action, therefore, all the appeals have been heard together and are being disposed of by this common order. Assessee’s appeal in IT(SS)A No.45/Kol/2023 is taken as lead case. IT(SS)A No.45/Kol/2023 for A.Y. 2019-20– The assessee in 2. this appeal has taken the following ground of appeal:

“1. The Ld. CIT(Appeals)-21, Kolkata erred in confirming the addition made by the A.O by estimating profit at 8% of the turnover and thereby Rs.3,24,21,974/- added to the total income of the assessee, being the difference between the net profit in ITR and the net profit determined, that too in the absence of any incriminating material. 2. The Ld. CIT(Appeals)-21, Kolkata erred in confirming the addition made by the A.O to the tune of Rs.10,86,410/- on account of unexplained income which are baseless as the receipts belong to a year not relevant to the year under consideration. 3. The appellant craves leave to supplement, substitute, add, alter, amend, cancel or modify all or any grounds at the time of hearing.” 3. The brief facts of the case are that a search and seizure operation was carried out u/s 132 of the Act by the department on 13.01.2021 and subsequent dates in the premises of the Hospitality Group, the assessee named Mohammed Ali being the proprietor of the said concern, owned up everything and accordingly the assessment u/s 153A r.w.s. 143(3) of the Act was completed in the hands of the assessee making an addition of Rs.3,45,08,380/- on the following issues:

(i) Rs.3,34,21,974/- being difference of profit as estimated at the rate of 8% and the profit as quoted in the ITR.

(ii) Rs.10,86,410/- on account of unexplained income.

Ground No.1 – The assessee vide Ground No.1 has agitated 6. against the confirmation of addition on account of estimation of profits. The ld. counsel for the assessee apart from oral submissions has also filed the following written submissions:

(I) The AO made the addition in the absence of any incriminating material as nothing of that sort had been recovered during the search and seizure. (page-4 last para of the order) (II) The AO, while making addition contended that as the assessee has huge turnover so he must have enjoyed economies of scale so the net profit shown is low and the books prepared are whimsical and without any basis (page-4) but he failed to find out any defects in particular and therefore could not reject the books as well. Therefore in the absence of specific defects and books not being rejected, estimating profit @ 8% is bad in law as the same is based on conjectures and surmises. (III) The AO also contended that no corroborating evidences were produced, however the submission before the AO dated 28/03 /2022 speaks different as evident from point- 5 of the said submission under page- 83 and because the AO had all the corroborating evidences as well as the books of accounts, he could not find any specific defects to reject the books but whimsically estimated the profit at the rate 8% and such is bad in law and deserves to be deleted. (IV) That 8% profit estimation is derived from the provision to the section 44AD of the Income Tax Act, 1961 which is Presumptive Taxation for businesses is covered under section 44AD of the Income Tax Act. Any business which has a turnover of less than Rs 2 crore can opt to be taxed presumptively and as the assessee's turnover is more that Rs 2 Crore, so the provision of section 44AD is not applicable to the assessee. Now, against the unlawful action of the AO, the assessee preferred appeal before the CIT (Appeals)- 21, Kolkata and the CIT (A)- 21, Kolkata failed to appreciate the actual fact and continued to uphold the AO's contention for this year under consideration, when the AO made a copy paste order for the A/y- 2015-16, 2016-17, 2017-18, 2018-19 & 2019-20 for this particulars issue and the CIT(A) was pleased to give relief to the assessee for the last 4 years except this one.

The CIT(A)- 21l, Kolkata failed to appreciate the documents as produced before him or else he would not have made comments like "In any case, the appellant, I notice, has also not offered any explanation for the non- production of books as well as supporting primary evidences at the time of assessment" because the reply dated 28/03/2023 under point- 5 onwards corroborates the fact that the estimation was controverted and also the same was produced before the CIT(A)- 21 but he failed to go through it. That is why, the entire observation of the A.O as well as the CIT(A)-21, Kolkata is erroneous and hence it is humbly requested before your honour to delete the addition for the ends of justice.” 7 The ld. counsel for the assessee has submitted that the impugned additions have been made by the Assessing Officer on account of low gross profit rate. The ld. counsel in this respect has submitted that the Assessing Officer has estimated the profits only considering that the assessee has a huge turnover, whereas, the gross profit rate was low. The ld. counsel has submitted that the Assessing Officer has not found any defect in particular on this issue and even has not rejected the books of accounts. Further, he has submitted that it is well-known principle that in the business that the higher turnover, the lower gross profit rate will be. He has submitted that there was nothing abnormal in this respect. He has further submitted that even on the same issue, the Assessing Officer by verbatim observation has made additions in the assessment for assessment years 2015-16, 2016-17, 2017-18, 2018-19 and 2019-20 and the ld. CIT(A) has been pleased to give relief to the assessee on this issue for the last four years except for the assessment year under consideration. He has further submitted that even otherwise no incriminating material was found during the course of search action on this issue and therefore, in an assessment order framed u/s 153A, the additions cannot be made in the absence of any incriminating material found during the search action.

7.1 The sum and substance of the submissions of the ld. counsel for the assessee has been that the aforesaid additions have been made by the lower authorities on account of estimation of profits. That the aforesaid additions are not based on any incriminating material found during the search action. The ld. counsel in this respect has relied upon the latest decision of the Hon’ble Supreme Court in the case of ‘PCIT vs. Abhisar Buildwell Pvt. Ltd.’ reported in [2023] 149 taxmann.com 399 (SC), wherein, the Hon’ble Supreme Court has held that in case of non- abated/completed assessments, no addition can be made by the Assessing Officer in an assessment carried out u/s 153A of the Act in the absence of any incriminating material found during the search action. The relevant part of the of the said judgment of the Hon’ble Supreme Court is reproduced as under:

“Therefore, the intention of the legislation seems to be that in case of search only the pending assessment/reassessment proceedings shall abate and the AO would assume the jurisdiction to assess or reassess the 'total income' for the entire six years period/block assessment period. The intention does not seem to be to re-open the completed/unabated assessments, unless any incriminating material is found with respect to concerned assessment year falling within last six years preceding the search. Therefore, on true interpretation of Section 153A of the Act, 1961, in case of a search under section 132 or requisition under section 132A and during the search any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject to fulfilment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy.” 8. The ld. DR, on the other hand, could not rebut the aforesaid contentions of the ld. counsel for the assessee.

Bunch Page Documents belongs to A.Y Amount Remarks no. no. (Entity/assessee name) MXR/6 70-80 M/s MXA (Raju) 2019- 23,850 Undisclosed 2020 sales MXR/6 81-84 M/s MXA (Raju) 2019- 16,550 Undisclosed 2020 sales MXR/4 74-75 M/s MXA (Raju) 2019- 10,46,010 Undisclosed 2020 sales

“Now coming to the addition to the tune of Rs 10,86,410 on account of unexplained expenditure, please note that the AO alleged that from the search material he found Some hand notes and other bills and vouchers wherein there are noting of cash transactions which had been suppressed by the assessee in his books for the year under con sideration, and under Page- 30 of the order the AO mentioned the alleged transactions as follows: - MXR/6 70-80 M/s MXA 2019- 23,850 Dated Page- (Raju) 2020 11/01/2021 75 (FY 2020-21) MXR/6 81-84 M/s MXA 2019- 16,550 Dated Page – (Raju) 2020 12/01/2021 74 (FY 2020-21) MXR/4 74-75 M/s MXA 2019- 10,46,010 FY 2019-20 Page - (Raju) 2020 80

Now coming to page 70 to 80 and 81 to 84 of MXR/6 (under page 73-78), there are figures of 23,850 (page - 75) and 16,550 (page- 74) and they must not be read in isolation but along with the dates mentioned above them and the dates are 11/01/2021 and 12/01l/2021 and therefore the said transactions cannot be construed to be the transactions happened in the F/y- 2018-19, relevant to A/y- 2019-20. And coming to the figure of Rs.10,46,010 as found by the AO under page - 74 to 75 of MXR/4 (Page- 80 of the paper book), please find the same as attached for your kind perusal, wherein your honour will find that the transaction belong to F/y- 2019-20, relevant to A/y 2020-21. Hence the observation of the AO while making the addition is erroneous, which the CIT(A)-21, Kolkata also failed to appreciate and therefore, the same deserves to be deleted. Hence, in the light of the above facts, the addition for the A/y 2019-20 deserves to be deleted and therefore, it is humbly prayed to give relief to assessee and oblige.” 14.1 The ld. counsel has further invited our attention to relevant pages of the paper-book which are copies of the seized material from which the Assessing Officer made the view that the same were suppressed sales of the assessee. The ld. counsel for the assessee has invited our attention to page 74 of the revised paper-book, which is the copy of the relevant entry is relating to the amount of Rs.16,550/-, which is the copy of relevant incriminating material MXR/6 and the relevant entry on the said sheet reads as under:

14.2 The ld. counsel in this respect has submitted that along with the amount of Rs.16,550/-, the date has been mentioned as 12.01.2021 and the relevant financial year in this respect will be F.Y 2020-21 relevant to A.Y 2021-22. He has, therefore, submitted that the aforesaid entry does not pertain to the assessment year under consideration. Similarly, the ld. counsel has invited our attention to page 75, which is the copy of the seized material MXR/6, which is relating to the entry of Rs.23850/-, the relevant entry on the said sheet is dated 11.01.2021 which also pertains to A.Y. 2021-22:

14.3 The ld. counsel has further invited our attention to page 80 of the paper-book, which is the copy of the document seized material MXR/4, which is relating to the entry of Rs.1046010/-, the relevant entry on the said sheet reads as under:

14.4 The ld. counsel has demonstrated the aforesaid entry is dated 27.07.2019 which is related to F.Y. 2019-20 relevant to A.Y. 2020-21. He, therefore, has demonstrated that the said entries do not pertain to the assessment year under consideration.

“1. The total additions made in the year under consideration are without any basis and suffers from proper adjudication upon merit both during the assessment procedure and in the proceedings before the CIT(Appeals). 2. The Ld. CIT(Appeals)- 21, Kolkata erred in confirming the addition made by the AO on account of Unexplained expenditure to the tune of Rs 24,06,150/- u/s 69 C of the Act, as the same being transport expenses made over two years and the same being duly calibrated through the books of accounts. 3. The Ld. CIT(Appeals)- 21, Kolkata erred in confirming the addition made by the AO on account of Unexplained income to the tune of Rs.17,81,39,313/-, which are baseless as the receipts being duly calibrated through the books of accounts. 4. The Ld. CIT(Appeals)- 21, Kolkata erred in confirming the addition made by the AO on account of Unexplained expenditure to the tune of Rs 69,34,40,020/- us 69C of the Act, which are baseless and the addition made purely on the basis of conjectures and surmises. 5. The appellant craves leave to supplement, substitute, add, alter, amend, cancel or modify all or any grounds at the time of hearing.” Ground No.1 – Ground No.1 is general in nature. 20. Ground No.2 – The assessee vide Ground No.2 has agitated 21. against the action of the CIT(A) in confirming the addition made by the Assessing Officer on account of unexplained expenditure to the tune of Rs.24,06,150/-.

24.1 The Ld. Counsel, pointing out to page 20 of the Assessment order, has demonstrated that the list of alleged unexplained expenditure as given by the AO in his order amounting to Rs.24,06,150/- is as follows:-

P.T.O 24.2 Ld. Counsel in this respect has made the following submissions: “Now from the above table, if a random example is taken then the matter will be more lucid to understand and that is, please come to page 14-16 of MXR 8, which are as follows:- Now the correlation as given below corroborates the fact that page – 14 of MXR 8 denotes Rs.55000/- paid in cash and the actual expenses are booked to the tune of Rs.58000/- from 01/10/19 to 07/10/19 in the same way page 15 denotes Rs.56000/- paid, and the expenses are booked as per actuals from 14.10.19 to 18.10.19 to the tune of Rs.40000/- and page 16 denotes Rs.25000/- paid and the expenses are booked as per actuals from 22.10.19 to 24.10.19 to the tune of Rs.23000/-, which corroborates the fact that the assessee is booking expenses as per actuals.

Dates of Amount record in MXR 8 Amount as per Slip Recording in books Total Page No books (as per actual) 14 55000 01.10.19 5000 02.10.19 10000 03.10.19 8000 04.10.19 10000 05.10.19 5000 6.10.19 10000 7.10.19 10000 58000

15 56000 14.10.19 10000 15.10.19 5000 16.10.19 10000 17.10.19 5000 18.10.19 10000 40000

16 25000 22.10.19 8000 23.10.19 10000 24.10.19 5000 23000 Total 136000

Now please come to actual slip as well as the extract of the transport ledger as follows:- PAGE 14 MXR8 Page 14 of MXR 8 which says Rs.55000/- paid on 30.09.19 and are booked from 01.10.19 to 07.10.19 in the following manner:-

P.T.O PAGE 15 MXR8 Page 15 of MXR 8 which says Rs.56000/- paid on 14.10.19 and are booked from 14.10.19 to 18.10.19 in the following manner:-

PAGE 16 MXR8 Page 16 of MXR 8 which says Rs.25000/- paid on 18.10.19 and are booked from 22.10.19 to 24.10.19 in the following manner:-

During the assessment stage, the submission of the assessee categorically stated that the expenditures are ad hoc payments for transportation and they are not purchases, along with entire correlation between the slips and the transport ledger was produced but the Assessing Officer never looked at it. It is also evident from the assessment order that the Assessing Officer never made any comments regarding why the alleged addition is not transportation expenses as he never bothered to understand the actual fact, but only concentrated to look the figures in the purchase register and upon not finding the same, he concluded the same to be unexplained expenditure, which is not at all the true fact, and continued to make the alleged addition to the tune of Rs 24,06,150/- as unexplained purchases. Please also find enclosed the accounts of the assessee, where the schedules to the accounts for the year under consideration also corroborates the fact that the actual transport expenditure is actually Rs 23,56,500/- and it corroborates with the transport ledger as well. Now just the AO looking for the alleged figure in the wrong place and could not find the same does not mean that the assessee had incurred and therefore the same deserves to be deleted for the want of justice and oblige.” 25. The assessee from the above, has duly demonstrated that the aforesaid amount noted in the slips was on account of ad hoc payment to the transporters and the expenses on actual basis were duly recorded in the books of accounts. Further all above reproduced entries along with ledger and books of accounts were duly demonstrated and explained before the lower authorities but the same have been conveniently ignored by them. After considering the submissions of the assessee and correlating the relevant entries with the documents and copies of the accounts of the assessee, we do not find justification on the part of the lower authorities in making/confirming the impugned addition and the same is ordered to be deleted. Ground No.3 - The assessee vide Ground No.3 has agitated 26. against the action of the CIT(A) in confirming the addition made by the Assessing Officer of Rs.17,81,39,313/- on account of unexplained income. 27. The Assessing Officer noticed that during the course of survey proceedings, u/s 133A of the Act, at the office premises of the proprietorship concern of the assessee, certain copies of sale bills were seized. These sale bills were cross-verified with the books of account of the assessee and the sales ledger but no such transactions were found noted in the sales ledger. Even no ledger of the parties was found in the books of account, whose names were appearing in the incriminating documents. On being asked to explain, the assessee submitted that the sales made by the assessee were duly accounted for in the books of account. That certain slips to whom the Assessing Officer mistook as sale bills were, in fact, the documents showing credit limits to be given to the parties and not business transactions. However, the Assessing Officer did not agree with the aforesaid submissions of the assessee and made the impugned additions on account of undisclosed sales. He taxed the entire amount as unaccounted income of the assessee. 28. In appeal, the ld. CIT(A), however, observed that from the incriminating material impounded during the survey, it had appeared that out of recorded purchases in the books of account of the assessee, a part of the purchases was sold by the assessee out of his books and the remaining sales were reflected in the books of account. However, the assessee had failed to reconcile the figures with dates and names. That the assessee had failed to prove that the said figures written in the seized documents were credit limits. In the absence of any reconciliation, the ld. CIT(A) confirmed the addition so made by the Assessing Officer.

P.T.O 29.1 The ld. counsel for the assessee in this respect has demonstrated that out of the total amount of Rs.17,81,39,313/-, the transactions relating to Rs.73699541/- were not sales at all but the figures are purchase figures and outstanding credit limits of the customers of MXA- Raju, Sheetal Enterprise & M/s Sheetal Agrifresh Products Pvt. Ltd. The ld. counsel has further submitted that M/s Sheetal Agri fresh Products Pvt. Ltd. was a separate entity and that the entries pertaining to the said entity cannot be taken into consideration for the purpose of assessment of the income of the assessee in his individual capacity.

29.2 The Ld. Counsel in this respect has made the following submissions:

“By outstanding credit limit, it is meant that every party is given a credit limit upto which he can buy fruits. For example, if party “A” has a been given a credit limit of Rs 1,00,000/- and he has already taken fruits of Rs 60,000/-, then the outstanding credit limit of party “A” remains to be Rs 40,000/-. So, this outstanding credit limit figure neither represent purchase nor sales but are for internal management purpose only. Therefore, out of the total alleged addition of Rs 17,81,39,313/-, please note that Rs 7,36,99,541/- are not sales at all but are figures of purchase and outstanding credit limit figures in the following manner:-

PURCHASE MXA FIGURE AS PER MATERIAL (PAGE – 262) 125000 ( PAGE – 263) 865092 990092 M/S SHEETAL AGRIFRESH PRODUCTS PVT LTD (a separate entity) (PAGE – 264) 98640 (PAGE – 268) 98640 197280 M/S SHEETAL ENTERPRISE (O/S CREDIT LIMIT) (PAGE – 265) 6901050 (PAGE – 268) 135900 7037040 MXA(RAJU) (O/S CREDIT LIMIT) (PAGE – 266) 48392509 (PAGE – 266) 9278798 ( PAGE – 266) 114700 ( PAGE – 268) 7689122 65475129 73699541

So, from the alleged figure of unexplained income, the figure of Rs 7,36,99,541/- are not sales at all but are figures of purchase and outstanding credit limit figures and therefore the same should not be part of the addition and therefore the rest amount of Rs 10,44,39,772/- comes as sales and they are duly incorporated in the books on different dates and the same was explained before the AO including that the sales figures even does not belong to the year under consideration but of the subsequent FY and the AO did not pay heed to the assessee and continued to make addition looking for the figures in the current year books and made the following comment:-

From the comment of the AO while making the alleged addition on account of Unexplained income to the tune of Rs 17,81,39,313/-, it is evident that the AO straightway came to the conclusions that the assessee had made undisclosed sales, without giving any reason why he concludes such transactions as undisclosed sales when the assessee explains that the transactions contain purchases, outstanding credit limit of MXA (RAJU), Sheetal Enterprise and M/s Sheetal Agrifresh Pvt Ltd, which is a separate entity and does not have any relation with the assesse as the assessee is an individual and sales that are duly entered in the books of accounts. So this order of the AO is without any reason and is a non speaking order and therefore the addition ought to be deleted for the want of justice. Now, checking the figures randomly, and corelating them with the assessee’s books it can be seen that the picture is quite contrary to the AO’s observation in the following lines:- Purchase Bills MXR 4 - 44

Outstanding Credit Limit Sheetal Agrifresh Products Pvt Ltd (a different entity altogether) MXR 4 – 66A

Shetal Enterprise MXR 4 – 67 MXA RAJU MXR 4 – 68A-69 So, from the above sample of vouchers, which are more elaborately attached in the paperbook, corroborates the fact that the above documents are not part of the sales and therefore the same as sales is bad in law. Now coming to sales, please note that out of the total addition of Rs 17,81,39,313/-, Rs 10,44,39,772/- actually comes out to be sales and they are as follows:- So these above figures represent sales, and all are corroborated in the books on different dates and for example if we take randomly the figure of Rs 2,41,700/- (MXR/4 – 58), please note that the figure is from one slip and on 23.10.19 sales made to IIH NAUSAD AGROS through agent SUDHIR SONERPORE to the tune of Rs 4,00,000/- and the extract of the sales register is given below for your kind perusal.

23-Oct- By IIH NAUSHAD SUPER Journal 1768 400000.00 19 AGROS

In this regard, the assessee also iterated the same before the AO while replying to show cause notice and the same is covered under point 17 of page 114 of the paper-book, the extract of which is as follows:-

So from the above it is evident that all the sales are covered on different dates, but the AO did not pay heed to the assessee’s contention and went out to make addition on a baseless manner and therefore the same deserves to be deleted for the want of justice and oblige.”

• “the ordered items and the rate does vary because of demand and supply variations, that is, the suppliers may not have the quantity as asked for and also the price of the produce varies as per the demand. • The goods received from the supplier may not be in a condition fit to sale and also climate plays an important role in the quality and the timely delivery of the goods and all these are also a reason for the variation between the actual goods ordered and received.”

34.1 The Ld. Counsel has further submitted that the Assessing Officer made the addition on the basis of the statement given by Mr Pawan Kumar Agarwal u/s 131 of the Act, to which the assessee during the assessment stage opposed and also sought opportunity to cross examine Mr Pawan Kumar Agarwal, which was denied by the Assessing Officer. That even the copy of the said statement was not provided to the assessee for rebuttal. He has further submitted that said Mr. Pawan Kumar Agarwal had retracted the said statement before the CIT(A) by an affidavit, copy placed at page 421 of the paper book, stating therein that his actual statement was not recorded and he was forced, threatened and coerced to sign on the statement as presented by Assessing Officer in his order. The Ld. counsel has also referred to the ledger of parties (pages 269-286 of the paper book) from whom the purchases against the purchase order in question were made and also referred to the bank statements (paper book pages- 364 - 420) to corroborate the payments made as enumerated in the ledger against the purchases made as mentioned in the excel sheet. The Ld. Counsel, therefore, has submitted that the Assessing Officer’s contention that the purchases were nowhere found in the purchase ledger was not correct and that all the purchase against the purchase order in question were duly mentioned and duly corroborated with the documents. 34.2 The Ld. Counsel has further submitted that the ld. CIT(A) was not justified in confirming the impugned additions solely on the basis of already retracted statement of Mr. Pawan Agarwal. 34.3 The Ld. Counsel has further submitted that if the assessee would have been in making unaccounted purchases as alleged by the Assessing Officer amounting to Rs.69,34,40,020/- in cash, there might have been found some unaccounted cash during the search action. But in fact, no cash was found during the search action. Moreover, the purchases were made from several parties spreading in different states and it was not possible that the Assessee could have carried out such sales in cash and the department was not justified in making the impugned additions without finding any corroborating evidence of such transactions. The Ld. Counsel, therefore, has submitted that in the absence of such proof from the end of the Assessing Officer, this addition of Rs.69,34,40,020/- on account of unexplained expenditure was not sustainable. He has further submitted that even preponderance of probabilities also suggest that no such transactions were carried out. 35. The Ld. DR on the other hand has relied upon the findings of the Assessing Officer and has further submitted that the additions have been rightly made by the Assessing Officer on the basis of incriminating material found from the mobile of the accountant.

36.2 The Ld. Counsel for the assessee has further relied upon the judgment of the Hon'ble Supreme Court in the case of Andaman Timber Industries Vs Commissioner of Central Excise reported in (2016) 38 GSTR 117 (SC), Principal Commissioner of Income Tax (Central) Vs Oriental Power Cables Ltd reported in (2022) 143 taqxmann.com 371 (SC) and Kishinchand Chellaram (AIR 1980 14 SC 2117) wherein, it has been held that adjudicating authority's denial of the assessee's claim to cross- examine the witnesses though the statements of those witnesses were made the basis of the order, was a serious flaw which nullified the order since it was a violation of the principle of natural justice.

36.3 Further, the Hon’ble Supreme Court of India in New India Assurance Company Ltd. v. Nusli Neville Wadia & Anr., AIR 2008 SC 876, while considering a case under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971, held that though the statute may not provide for cross- examination, the same being a part of Principles of Natural Justice should be held to be an indefeasible right. It was held as follows:

“If some facts are to be proved by the landlord, indisputably the occupant should get an opportunity to cross-examine. The witness who intends to prove the said fact has the right to cross-examine the witness. This may not be provided by under the statute, but it being a part of the principle of natural justice should be held to be indefeasible right"

36.4 In the case of Rajiv Arora v. Union of India and Ors. AIR 2009 SC 1100, Hon'ble Supreme Court observed that “effective cross-examination could have been done as regards the correctness or otherwise of the report, if the contents of them were proved. The principles analogous to the provisions of the Indian Evidence Act as also the principles of natural justice demand that the maker of the report should be examined, save and except in cases where the facts are admitted or the witnesses are not available for cross-examination or similar situation. The High Court in its impugned judgment proceeded to consider the issue on a technical plea, namely, no prejudice has been caused to the Appellant by such non-examination. If the basic principles of law have not been complied with or there has been a gross violation of the principles of natural justice, the High Court should have exercised its jurisdiction of judicial review.” The aforesaid decision makes it evident that, not only should the opportunity of cross-examination be made available, but it should be an effective cross examination, so as to meet the requirement of the principles of natural justice. In the absence of such an opportunity, it cannot be held that the matter has been decided in accordance with law, as cross-examination is an integral part and parcel of the principles of natural justice. 36.5 Even, the said Mr. Pawan Kumar Agarwal had retracted the said statement before the CIT(A) by an affidavit stating therein that his actual statement was not recorded and he was forced, threatened and coerced to sign on the said statement. Even the Assessing Officer did not make any effort to verify the veracity of the said data from the purchasers/customers of the assessee in whose name the said purchase orders were mentioned. Even no corroborative evidence or unexplained cash or unaccounted stock was found during the search action. The Hon’ble A.P. High Court in the case of “Naresh Kumar Agarwal” (2015) 53 taxmann.com 306 (Andhra Pradesh) has observed that where, in the absence of any incriminating material etc. found from the premises of the assessee during the course of search, statement of assessee recorded under section 132(4) of the Act would not have any evidentiary value. Similar view has been adopted by the Jaipur bench of the Tribunal in the case of “Shree Chand Soni vs. DCIT” (2006) 101 TTJ 1028 (Jodhpur). The Hon’ble Delhi High Court in the case of “CIT vs. Harjeev Agarwal” in ITA No.8/2004 vide order dated 10.03.16 has observed that a statement made under section 132(4) of the Act on a stand-alone basis, without reference to any other material discovered during search and seizure operation, would not empower the AO to make a block assessment merely because any admission was made by the assessee during search operation. In the case of “Commissioner of Income Tax vs. Sunil Agarwal” (2015) 64 taxman.com 107 (Delhi-HC), it has been held that although, a statement under section 132(4) of the Act carries much greater weight than the statement made under section 133A of the Act, but a retracted statement even under section 132(4) of the Act would require some corroborative material for the AO to proceed to make additions on the basis of such statement. In the case of “Basant Bansal vs. ACIT” reported in (2015) 63 taxmann.com 199 (Jaipur Trib.), while relying upon various case laws of the higher authorities observed that it is well settled legal position that merely on the basis of a statement, which is not supported by the department with cogent corroborative material, cannot be a valid basis for sustaining such ad-hoc addition. The co-ordinate Jaipur Bench of the Tribunal (supra) further observed that the issue of existence of pressure, threat, coercion during search proceedings is to be judged by reference to the existing facts and circumstances, human conduct and preponderance of possibilities. The Co-ordinate Bench of the Tribunal (supra) while holding so, apart from relying upon various decisions of the higher courts has also relied upon the decision of the Tribunal in the case of “Dy CIT vs. Pramukh Builders” (2008) 112 ITD 179 (Ahd.) wherein it has been held that even in the absence of proof of coercion or pressure, the statement by itself cannot be taken as conclusive.

36.6 In view of the above discussed legal position, the uncorroborated and retracted statement of Sh. Pawan Kumar Aggarwal, even otherwise cannot be relied upon especially when the assessee has duly explained all the transactions. 37. In view of the discussion made above, the impugned addition is not sustainable and the same is ordered to be deleted. This appeal of the assessee stands allowed. IT(SS) No.47/Kol/2023 for A.Y. 2021-22 – The assessee in this 38. appeal has taken the following grounds of appeal:

“1. The total additions made in the year under consideration are without any basis and suffers from proper adjudication upon merit both during the assessment procedure and in the proceedings before the CIT(Appeals). 2. The Ld. CIT(Appeals)- 21, Kolkata erred in confirming the addition made by the AO on account of Unexplained expenditure to the tune of Rs 14,50,631/- u/s 69C of the Act, as the same being transport expenses made over two years and the same being duly calibrated through the books of accounts. 3. The Ld. CIT(Appeals)- 21, Kolkata erred in confirming the addition made by the AO on account of Unexplained income to the tune of Rs.92,22,187/-, which are baseless as the receipts being duly calibrated through the books of accounts.

P.T.O Please note that the expenditure is a transport charges, as evident from the transport ledger as attached and the assessee has to make adhoc payments to the representative of the vendors, who in turn pay to the transporters on behalf of the assessee and accordingly the actual figures are booked as per the date of occurrence. The reason the amounts are given to the representative of the vendors because the trucks carrying the fruits comes in the middle of the night so it is easier, so that the representative of the vendors instantly makes payment to the truck drivers and the correlation of the payments as per the transport ledger (paperbook page-50-53) as attached for your kind perusal will corroborate the fact the figure of Rs 14,50,631/- as unexplained expenses has been taken from the Financial years 2019-20 (AY 2020-21) and 2020-21 (AY 2021-22) so the ledgers as attached for your kind perusal { transport ledger for the FY 2019-2020 (AY 2020-21)}) is attached with the submission made before your honour for the ASSESSMENT YEAR 2020-21. Hence the addition made to the tune of Rs.14,50,631/-as unexplained expenses are actually booked in two different years as they belong to different years and none of them are out of books. Now just because the AO was looking for the figures in the wrong place, does not render the same as unexplained and therefore the same deserves to be re-adjudicated for the ends of justice.” 42. The ld. DR has fairly agreed that the issue is identical to that has been raised vide Ground No.2 in ITA No.46/Kol/2023, which has been discussed/adjudicated in earlier paras of this order. 43. The ld. AR has duly demonstrated that some of the figures did not pertain to the assessment year under consideration and further the remaining figures were on account of transportation charges, which were duly recorded by the assessee in the books of account. The issue has been extensively discussed above while adjudicating Ground No.2 of ITA No.46/Kol/2023. Our findings given above will mutatis mutandis apply to this Ground also. This Ground of the appeal of the assessee is, accordingly, allowed. Ground No.3 – Vide Ground No.2, the assessee has agitated 44. against the action of the ld. CIT(A) in confirming the addition made by the Assessing Officer on account of unexplained income. 45. The ld. counsel for the assessee, at the outset, has submitted that the facts and the issue is identical to that has been raised and discussed Ground No.3 of the assessee’s appeal in ITA No.46/Kol/2023. The ld. counsel has made the following submissions on this issue: “3. That in the matter of addition on account of unexplained income to the tune of Rs.92,22,187/-, it is pertinent to bring to your kind attention to page no.44 of the order where the A.O made the addition in the following manner:

From the above, the last figure of Rs 12,32,450/- consist of Rs 6,50,000/- as cash received from MIC/ BABL00(MICB) between 01/04/2020 to 31/10/2020 and Rs 5,82,450 for sales made to him from 01/11/2020 to 24/11/2020 (paperbook page - 98-99). And rest of the transactions are covered in the books on various dates which is Rs (92,22,187 - 12,32,450) = Rs.79,89,737/-. Therefore, the whole observation of the AO is wrong as stated by the assessee during the assessment stage in his reply dated 20/03/2022 and for this reason the same deserves to be re-adjudicated for the ends of justice.” 45.1 The ld. counsel has duly demonstrated that some of the figures taken by the Assessing Officer did not belong to the assessment year under consideration and that the remaining transactions have been duly recorded in the books of account of the assessee. 46. The ld. DR has fairly agreed that the issue is identical that has been discussed above while adjudicating Ground No.3 in the assessee’s appeal in ITA No.46/Kol/2023. 47. In view of the discussion made above, we do not find justification on the part of the lower authorities in making/confirming the impugned addition and the same is, therefore, ordered to be deleted. This Ground of the appeal stands allowed. 48. Ground No.4 is general in nature and does not require any adjudication. 49. In the result, in view of the discussions made above, all the appeals of the assessee stand allowed. Kolkata, the 13th September, 2024. Sd/- Sd/- [Sanjay Awasthi] [Sanjay Garg] लेखा सद�य/Accountant Member �या�यक सद�य/Judicial Member Dated: 13.09.2024. RS Copy of the order forwarded to: 1. Mohammed Ali 2. DCIT, Circle-3(1), Kolkata 3.CIT (A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches