M/S FLUOR DANIER INDIA PVT. LTD.,,NEW DELHI vs. DCIT, NEW DELHI

Order Assessment Assessment Order Nos. dated Order dated under section 1-2 & 31.07.2023 08.04.2021 153A r.w.s 143(3) C.O.-37/Del/2024 of the Income Tax [AY 2014-15] Act, 1961. 3-4 ITA No.2748/Del/2023 & -do- -do- -do- C.O.No.-38/Del/2024 [AY 2015-16] Page | 4 & 16.05.2023 -do- -do- C.O.No.-31/Del/2024 [AY 2016-17] 7. ITA No.3053/Del/2023 28.08.2023 -do- -do- [AY 2017-18] 8 ITA No.2944/Del/2023 -do- -do- -do- [AY 2017-18] 9 ITA No.231/Del/2024 24.11.2023 08.04.2021 -do- [AY 2018-19] 10 ITA No.128/Del/2024 24.11.2023 -do- -do- [AY 2018-19] 11-12 ITA No.340/Del/2024 17.11.2023 -do- -do- & C.O.44/Del/2024 [AY 2013-14] 13-14 ITA No.341/Del/2024 -do- -do- -do- & C.O.-45/Del/2024 [AY 2014-15] 15-16 ITA No.342/Del/2024 -do- -do- -do- & C.O.-46/Del/2024 [AY 2015-16]

2. The issues being common, interlinked and related to the different assessee in captioned appeals filed by Revenue and the assessee and Cross-objections filed by assessee for various Assessment years, therefore, all these appeals filed by the Revenue and the assessee and cross-objection filed by the assessee have been heard together and accordingly, adjudicated by a common order.

[Assessment Year 2016-17] 4. Brief facts of the case are that the assessee is a company, engaged in the business of manufacturing and retailing of designer garments, both pre-designed and customized garments. The return of income for the year under appeal was filed u/s 139(1) of the Act on 17.10.2016, declaring total income at INR 1,74,24,900/-. A search and seizure action u/s 132 of the Act was carried out by the Department on Ritika Private Limited Group (“RPL”) and its associates on 29.05.2018 and the business premises of the assessee company were covered under search. During the course of search, books of accounts and other particulars of job work parties namely, M/s Shama Enterprises, M/s Om Enterprises, M/s ADR Enterprises, M/s ASV Enterprises, M/s BD Fashion and M/s Stitch Lab were found from the possession of assessee company. Statements of the Directors of the assessee company and the job workers and certain employees were recorded wherein reference was also made to the books of accounts so found at the premises of assessee company pertaining to job workers. The AO alleged that proprietor of these firms are also the employees of assessee to whom salaries were paid besides, job work charges were also booked in their names with the intention to inflate expenditure and reduce tax liabilities. The AO discussed the statements and inquiries carried out in respect of these job workers in the assessment order and concluded that these job worker parties are bogus entities in whose names assessee booked bogus expenditure in the shape job charges and accordingly, job charges paid at INR 14,68,33,866/- to these parties was held as bogus and addition of the same was made in the hands of the assessee as bogus job Page | 6 workers charge claimed and total income of the assessee was assessed at INR 16,42,58,770/-.

5. Aggrieved by the said order, assessee filed an appeal before Ld.CIT(A) who after considering the submissions made by the assessee and remand report of the AO, give detailed findings and allowed the appeal of the assessee by deleting the disallowances made by AO of job charges by holding the same as genuine expenses.

6. Aggrieved by the order of Ld.CIT(A), the Revenue is in appeal before the Tribunal by taking following grounds of appeals:- 1. “The Ld. CIT(A) has erred in deleting the disallowance of Rs. 14,68,33,866/- on account of bogus expenses without appreciating the fact that all the activities to maintain the legal shell in respect of ADR Enterprises (Proprietor Ilyas Khan), ASV Enterprises (Proprietor Vijay Pratap Singh), Om Enterprises (Proprietor Ram Murti Yadav), Shama Enterprises (Proprietor Mohd. Ayub) and Stitch Lab (Proprietor Mahabat Molla) such as maintenance of financial records including books of account, blank signed cheques to transfer funds out of the bank account, digital signature credentials and bank passwords of the job work contractors were maintained by the assessee only.

2. The Ld. CIT(A) has erred in deleting the disallowance of Rs. 14,68,33,866/- on account of bogus expenses without countering the admission on oath by the Job workers that they had nothing to do with the bank account or the deposits therein on account of job work charges and they handed over the blank signed cheques to the accountant of the assessee and such conduct is wrongly confused by the CIT(A) as clerical assistance given by the assessee to its job workers.

3. The Ld. CIT(A) has erred in deleting the disallowance of Rs. 14,68,33,866/-on account of bogus expenses without negating the fact that digital signature and bank cheques were controlled by the assessee at its premise which, considering other facts, conclusively proves that the assessee was the actual owner of the job work contractor.

4. The Ld. CIT(A) has erred in deleting the disallowance of Rs. 14,68,33,866/-on account of bogus expenses without contravening the findings of the Assessing Officers that all job work contractors Page | 7 were actually receiving salary in their salary account from the assessee for supervising work which has been admitted on oath by them as the only amount received by them and, without prejudice, only amount of Rs. 21,19,200/- could have been deleted by the Ld. CIT(A) and not the entire amount of Rs. 14,68,33,866/-.

5. The Ld. CIT(A) has erred in disregarding the fact that the only transaction in the bank account of the job work contractors is the transfer of amounts as job work charges which were withdrawn just after deposit with the signed blank cheques handed over to them by the proprietors of the job work contractors in the current account which clearly establishes that these job contractors are not engaged in any regular business activity.

6. The Ld. CIT(A) has erred in holding that the additional evidences and the remand report established the genuineness of the claim of job work charges whereas neither the additional evidence nor the remand report countered the conclusion that the Job workers are merely paid employees additionally lending their names to the assessee.

7. The Ld. CIT(A) has erred in disregarding the fact that the assessee has not provided any conclusive evidence like PAN card or Adhar card to support its contention that the 51 common employeses of the assessee and the Job workers as alleged by the Department were actually different persons with established identities.

8. The appellant craves to add, amend any/all the grounds of appeal

before or during the hearing of the appeal.”

7. The assessee has also filed cross-objection wherein following grounds of appeal were taken:- 1. “On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye of law and on facts.

2. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the order passed by the learned AO under Section 153A is bad and liable to be quashed as the same has been framed consequent to a search which itself was unlawful and invalid in the eye of law.

3. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the action of the AO despite that the proceedings initiated under section 153A against the assessee and the assessment framed under section 153A read with section 143(3) are in violation of the statutory conditions of the Act and the procedure prescribed under the law and as such the same is bad in the eye of law and liable to be quashed. Page | 8

4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the additions made under Section 153A are bad in law in the absence of any incriminating material belonging to the assessee being found during the course of the search.

5. On the facts and circumstances of the case, learned CIT (A) has erred, both on facts and in law, in rejecting the contention of assessee that the proceedings initiated under section 153A against the assessee and the assessment framed under section 153A r.w.s 143(3) are in violation of mandatory provisions of Section 153D of the Act and as such the same is bad in eyes of law. The purported approval u/s 153D of the Act is illegal, bad in law and also without any application of mind.

6. On the facts and circumstances of the case, learned CIT (A) has erred, both on facts and in law, in confirming the action of the AO despite the fact that the assessment order passed is bad in the eyes of law as the same was passed in violation of circular no. 19/2019 issued by CBDT which mandates that no order shall be passed without there being Valid Document Identification Number (DIN). 7. That the respondent craves leave to add, amend or alter any of the grounds of appeal

.”

8. The ld. AR for the assessee submits that in the cross objections, validity of assessment order is challenged on account of mechanical approval by Addl. CIT u/s 153D of the Act however, such cross objections are not pressed thus, the C.O. filed by the assessee is dismissed.

9. Regarding the appeal filed by the assessee, before us, Ld. CIT DR for the Revenue submits stated that all the grounds taken by the assessee are in respect to the deletion of disallowances made by AO at INR 14,68,33,866/- therefore, he made the submissions on all the grounds together. Ld.CIT DR argued that during the course of search, proprietors of four major job workers namely, M/s Shama Enterprises, M/s ASV Enterprises, M/s ADR Enterprises and M/s Om Enterprises were available at the factory premises of the Page | 9 assessee. He submits that their books of accounts were also found available at factory premises of the assessee. Ld.CIT DR submits that during the course of search and post-search investigation, it was found that proprietors of these job worker firms were employees of the assessee prior to opening of their individual proprietor firm and still they remained employees of the assessee group which was evident from the digital data seized in the form of e-mails. He submits that this clearly established employer / employee relationship between the proprietors of these firms and assessee group.

11. As per ld. CIT DR, AO made categorical findings that several employees of these job work parties were received also salaries from assessee simultaneously therefore, expenses were booked multi- folds. Ld.CIT DR submits that AO in para 6.4 of the order AO tabulated the facts with respect to material found during the course of survey/search relating to these job workers and placed reliance on the same.

13. Ld.CIT DR drew our attention to para 6.17 onwards wherein AO referred few persons who are the employees of assessee company and received payment from job work parties also and finally in para 6.19 to 6.25, AO hold these parties as bogus. Ld.CIT Dr vehemently supported the assessment order in para 6.19 to 6.25 and submits that Ld.CIT(A) in appellate proceedings had ignored the evidences found during search and admitted additional Page | 11 evidences submitted by the assessee though in the Remand Report, AO has seriously objected to these additional evidences. He thus submits that the deletion made by Ld.CIT(A) deserves to be restored. He prayed accordingly.

14. On the other hand, Ld.AR for the assessee vehemently supported the orders of Ld. CIT(A) and submits that while alleging the job work charges paid to these parties as bogus, AO had made serious error of fact by ignoring that the entire job work charges paid was disallowed meaning thereby, assessee is engaged in the business of manufacturing/stitching ready-made / pre-ordered and customized garments and such activity is not possible without the help of specialized job workers who stitched the garments from fabric. If no expenditure is incurred towards the stitching how the fabric would take the shape of garment. Ld.AR submits that AO has disallowed the entire job charges claimed by the assessee. He further submits that assessee is renowned and established name in the readymade and fashion garment industry and is having various sales outlets run by skilled staff. The garments are manufactured by taking the services of job workers specialized and having skills to stich designer garments.

15. Ld. AR submits that the AO has not doubted purchases of raw material nor the sales of the garments therefore, it is impossible to manufacture the garments without the help of the job workers who though are skilled workers however, they are coming from unorganized, uneducated or semi-educated sector where maintenance of day to day records including books of accounts is almost impossible. Therefore, to obtain the services of these job Page | 12 workers, labour supervisors are provided the services in the shape of job contractors who manage and control these skill labours and get the job work done from these labours.

16. Ld.AR of the assessee drew our attention to various salary sheets of the employees of job work parties which are filed in the paper Book, copies of ledger accounts of them as appearing in the books of assessee, copies of bills issued by them to assessee, copy of their computation of income, copy of their 26AS statements and their financial statements, tax audited reports, bank statements of job workers to establish that they have provided services to the assessee. It is further submitted by ld. AR that the income declared form such job work receipts by all these parties was not doubted by the AO even after alleging the payment made to them as bogus in the hands of assessee company. Ld.AR has also filed detailed submission wherein allegations made by the AO are rebutted. The submission so made is reproduced as under:- 1. “This is an appeal filed by the Revenue against the order dated 16.05.2023 passed by CIT(A) deleting the disallowance made by AO on account of Job Work Expenses amounting to Rs. 14,68,33,866/- 2. Brief facts of the case are that the assessee company is in the business of manufacturing and retailing of designer garments, both pre designed and customized garments. 3. During the assessment year under consideration, the assessee had filed his return of income on 17.10.2016 declaring total income of Rs.1,74,24,900/- (A Copy of Acknowledgement of ITR alongwith computation of income is placed at PB Pg.1-3). 4. However, a search and seizure action u/s 132 of the Act was carried out at the premises of the assessee on 29.06.2018 and a notice u/s 153A of the Act was issued to the assessee company on 03.02.2020 which is placed at PB Pg.285. A copy of Panchnama is placed at PB Pg. 138-145 & 146-151. During the course of search, the books of accounts of the following job workers were found and maintained within the factory premises of the assessee: Page | 13 i. Sharma Enterprises ii. OM Enterprises iii. ADR Enterprises iv. AVS Enterprises v. BD Fashion vi. BD Enterprises vii. RS Enterprises viii. Stich Lab 5. Thereafter, during the course of proceedings, the assessee was asked vide notice dated 19.12.2020 (PB Pg. 288-307) to justify job work expenses claimed by the assessee in the P&L A/c.

6. Thereafter, the assessee vide reply dated 11.02.2021 (PB Pg.383- 391) explained that: i. That, the assessee is engaged in the business of manufacturing and marketing of various ready-made garments and the assessee has over the years established a niche for itself in the fashion industry. ii. The employee base of the company includes lower base staff comprising of Office boy/Field Boy. Stores Keeper, store managers etc. who are on payroll of the company. iii. However, the garments manufactured by the assessee involve intricate craftmanship and tailoring which is performed by various job workers specializing in various skills and involving extensive manual labour and without whom sale and volume of production done by the company and consequent sale affected by the company would not have been possible. iv. That, the assessee operates two units located in Gurugram and Kolkata where garments are primarily manufactured, packed and dispatched to its own stores and to franchisee stores. The assessee company employs job workers who perform various manufacturing and tailoring works assigned to them. v. In Gurugram, the assessee company has employed 4 such head job workers, namely- ADR Enterprises (Proprietor: Ilyas Khan), ASV Enterprises (Properietor: Vijay Oratap Singh). Om Enterprises (Proprietor: Ram Murti Yadav) and Shama Enterprises (Proprietor: Mohd. Ayub). whereas in Kolkata, there is only one such job worker namely: M/s Stitch Lab (Proprietor Mohabbat Molla). vi. Further, the assessee also explained the flow of activities undertaken by the Job workers and the manner of payments made to them. vii. It was also explained that since majority of these job workers were manual skilled workers belonging to disadvantaged and uneducated sections of the society, the assessee had volunteered to undertake statutory compliances and extend full assistance to ensure that such job workers are in compliance with respective laws. viii. The assessee further submitted the details of salary and wages paid by various job work contractors to their employees (PB Pg. 392), copy of Acknowledgement of ITR along with audited financial statements of the respective job work contractors (PB Pg.393-404) and attendance sheet of employees of the job work contractors on the date of search i.e. 29.05.2018 (PB Pg. 405-447). Also, the lot wise process chart showing various processes carried out on a lot is placed at PB Pg.465-472.

7. All these facts, documents and volume of production and quantum of turnover at which the assessee operates substantiate the fact that the assessee has engaged the services of job workers for manufacturing of the garments.

8. However, Ld. AO ignored the above detailed explanation along with documents and evidences filed by the assessee and completed the assessment making a disallowance of Job Work Expenses amounting to Rs. 14,68,33,866/- by making the following observations: i. There is no consistent pattern of salary receipt by these employees from these job work parties i.e. in first few months, these employees receive salary from one job work party and then suddenly start receiving salary from any other job work party. ii. In many of the cases same employee had received payment more than once in single month in same bank account. iii. In many of the cases same employee had received payment from more than one in house job work party in same month. iv. In many of the cases same employee had received payment from RPL as well as from in house job work party.

10. During the course of appellate proceedings, the assessee submitted an application under Rule 46A along with the following additional evidences:

vi. However, no such pattern of credits was observed pre demonetisation which itself justifies the explanation furnished by the assessee. vii. Further, the assessee has submitted a sheet containing details of the respective employees, period of salary and employer who has credited those funds in the bank accounts of the persons pointed out by the AO at page 48 of the assessment order. The supporting evidences have also been filed by the assessee as additional evidences which are placed at PB Pg. 474-569 viii Relevant extracts of salary register of respective employer /job workers have also been submitted by the assessee depicting the recording of salary in their books. ix. Thus, from the above mentioned explanation and documents furnished by the assessee, it is aptly clear that there is no case of booking of multiple salary expenditure.

12. Considering the detailed explanation and additional evidences furnished by the assessee, such details were sent to the Id. AO for his verification and remand report on the same.

15. Moreover, as regards the CTC details for common employees, the assessee furnished a list of alleged common employees between the assessee and job work parties and between job work parties, Copy of Form 16 on sample basis (PB Pg. 702-734) in respect to the employees who were on the payroll of the assessee during the year under consideration and ID Proofs of the employees (PB Pg. 602-609).

16. During the course of remand proceedings, the Id. AO also called upon and recorded the statement of the following labourers working with job contractors. A copy of their statements is placed at below mentioned pages: i. Md. Yusuf Ali (copy enclosed at PB pg. no. 752-760) ii. Jamshed Alam (copy enclosed at PB pg. no. 735-744) iii. Md. Salam (copy enclosed at PB pg. no. 745-751) 17. In these statement these persons have confirmed the following facts: i. At the time of demonetization some of the workers/labourers/karigars employeed under job workers did not have any bank account in their name and because of said reason they had requested to deposit the salary in the bank accounts of friends or kin from the work place. ii. Job workers namely ADR Enterprises, Shama Enterprises, ASV Enterprises and OM Enterprises were independent concerns working for the assessee company on job work basis. iii. Workers/labourers/karigars employed under these job workers used to draw salary in cash before demonetization and through cheque in their respective bank account post demonetization. iv. The Workers/labourens/karigars had worked for ADR Enterprises, Shama Enterprises, ASV Enterprises and OM Enterprises at different points of time depending upon the requirement of the work on rotation basis. But have never worked under more than one employer (job worker) at same point of time. 18. Thereafter, Remand Report dated 15.02.2023 was submitted by AO wherein no adverse inference was drawn as regards the documents and explanation submitted by the assessee in response to each observation made by the AO in the Assessment Order dated 08.04.2021. A copy of remand report furnished by the AO is placed at PB Pg. 570-597. 19. Thereafter the assessee filed its rejoinder on 15.02.2023 (PB. Pg. no. 761-787) analysing the statements recorded by the Ld. AO during the course of remand proceedings vis-a-vis the observations made by the AO in Para 6.16 of the Assessment Order. Whereas Para 6.16 of the Assessment Order depicts the observation of the AO as regards multiple salary receipt entries in the bank accounts of employees of job work parties during the demonetisation period, the explanation furnished by the assessee that it was only due to the fact that salary of friends of such employees were also received in their bank accounts owing to the demonetisation period and cash crunch. This fact is further supported by the statements recorded by the AO during the course of remand proceedings. A copy of statements recorded by the AO is placed at PB Pg. 179-284.

20. Thereafter, the assessee has also submitted detailed written submissions explaining the job work expenses claimed by the assessee. A copy of such written submissions is placed at PB Pg.788-987.

21. The Ld. CIT(A) after considering the detailed submissions, remand report, rejoinder and the plethora of documents furnished by the assessee in regard to the job work expenses and its viability as regards the business profile of the assessee is concerned deleted the disallowance of Rs. 14,68,33,866/- made by the AO by holding as under: 40. In view of above observations, it can be concluded that there is no doubt regarding the job work services rendered by the job workers and their respective team of workers/laborers/karigars employed under them to the appellant company on its factory premises. The job worker are compensated in the form of job work charges which further utilized by the job workers to pay off salaries/wages/ESI/PF/LWF/workers/laborers/karigars working under them. The AO in the remand report has verified the supporting evidences submitted by the appellant in this regard and has not drawn any adverse inference with respect to the genuineness of these payments. The plethora of documentary evidences filed by the appellant, various statements of job worker and of documentary evidences filed by the appellant, various statements of job worker and labourers available on record which were recorded at different stages and independent verifications being made by the AO in this regard during the remand proceedings, substantiates the genuineness of the job work expenses incurred by the appellant. Hence, the disallowance of job work expense made by the AO is hereby deleted.

22. Aggrieved by the order passed by CIT(A), the Revenue is now in appeal before Your Honours.

23. It is to be noted here that survey proceedings were initiated in the case of these job work contractors and nothing adverse was found in the course of their respective assessment proceedings. A copy of the assessment order of each of the Job Work Contractor for AY 2012-13 is placed at PB Pg.448-462.

ii. In order to perform these complex tasks involving intricate craftmanship and tailoring, job workers have been engaged by the assessee who have further employed labourers to perform different tasks as required. iii. These job workers are provided with the raw material on which the job work is performed by these job work parties and final product is delivered to the assessee for ultimate sale in the market. iv. The business profile as well as the process flow of the assessee has not been doubted by the AO. No discrepancy has been pointed out by the AO with respect to the quantitative details of material purchased, issued to the job workers, goods received back from job workers after job work, the finished garments dispatched to the stores and the products finally sold to the customers. v. Moreover, the AO has cherry picked certain portions of the statement of the job workers to portray a malafide and inappropriate picture that these job workers were employees of the assessee. It is submitted that none of the job workers have admitted booking of any bogus expenses by them in the name of salary/wages in their books of accounts. It has nowhere been claimed/stated by them that the workers/karigars/laborers working under the job workers are employees of the appellant company, Infact they have admitted the following facts in their statements: Sh. Mohabat Molla (proprietor Stitch Lab), has categorically explained the following facts in his statement dated 29.05.2018 (PB Pg. 170-176) under section 131 of the Act: a) That he is the proprietor of Stitch Lab which is a registered concern. (question no. 2 at page no. 172 of the paper book) b) That he is working for appellant company as job worker engaged in cutting and stitching job. (question no. 3 at page no. 172 of the paper book) c) That the job work was carried out through the workers/labourers/karigars working under him. (question no. 3 at page no. 172 of the paper book) d) That he has given the complete details of number of workers/labourers/karigars working under different profiles in his proprietorship concern. (question no. 6 at page no. 174 of the paper book) e) That he has given the detail of salaries/wages being given to these workers/labourers/karigars under his proprietorship concern. (question no. 7 at page no. 174 of the paper book) Page | 24 Sh. Ilyas Khan (proprietor ADR Enterprises), has categorically explained the following facts in his statement dated 06.10.2018(PB Pg. 129-139) under section 131 of the Act a) That he is the proprietor of ADR Enterprises under which he provides manpower in the form of tailors and helpers to the assessee company and also supervises their work. (question no. 10 at page no. 132-133 of the paper book) b) As regard to the day to day operations of his proprietorship concern he has explained that the workers/laborers/karigars of his concern provides stitching, weaving and embroidery services to the assessee company which is being supervised by him. Further, as regards the rate of compensation to his workers/laborers/karigars, he has stated that the same is being decided by the staff of the assessee company. (question no. 13 at page no. 133-134 of the paper book) c) He has given the complete details of number of workers/labourers/karigars working under different profiles in his proprietorship concern. Further, as regard the appointment of these employees, he has explained that they are being appointed through advertisements and use of personal contacts and the appointment work is personally looked into by him. He also explained that the quantum/number of employees is dependent on the work pressure involved. (question no.18-19 at page no. 135 of the paper book) d) That he has given the detail of salaries/wages being given to these workers/labourers/karigars under his proprietorship concern. (question no. 20 at page no. 135 of the paper book) e) Lastly, he has also given details of total number of workers/labourers/karigars in his concern as well as in the other job worker proprietorship concern. (question no. 27 at page no. 138 of the paper book) Sh. Ram Murti Yadav (proprietor Om Enterprises), has categorically explained following facts in his statement dated 06.10.2018(PB Pg.140-162) under section 131 of the Act a) He has been engaged in providing workers/laborers/karigars from past 7-8 years to the assessee company for job work. (question no. 4 at page no. 141 of the paper book) b) His proprietorship concern Om Enterprises was incorporated in year 2011 and since then he has been working under the said concern. (question no. 7 at page no. 144 of the paper book) c) He has given detail of total number of workers/laborers/karigars working at the premises of the assessee company at 121 Pace City, Gurgaon under different job workers including Om Enterprises, Shama Enterprises and RS Enterprises. (question no. 15 at page no. 150 of the paper book) d) He has also explained the different employee codes used for different workers/laborers/karigars working under different job workers. (question no. 16 at page no. 150-151 of the paper book) e) The employees on the payroll of the appellant company were not engaged in the job work process. (question no. 16 at page no. 151 of the paper book) f) He has acknowledged that the database and other documents pertaining to his employees as well as the employees of the appellant company are being maintained at personnel department of the appellant company. (question no. 19 at page no. 152-153 of the paper book) g) Lastly, he has also given detail of rate of salary/wages given to each category of workers/laborers/karigars working under his concern as well as the other job work concerns. (question no. 19 at page no. 152-153 of the paper book) Sh. Mohd. Ayub (proprietor Shama Enterprises), has categorically explained the following facts in his statement dated 06.10.2018(PB Pg.112-128) under section 131 of the Act: a) He has acknowledged that he is working for the assessee company under his proprietorship concern Shama Enterprises which has an employee base of around 180 persons (question no. 20 at page no. 121 of the paper book) b) He has explained that the attendance, salary, ESI and PF etc. details pertaining to 180 workers working under him are being maintained at 121 Pace City, Gurgaon. For the purpose of distribution of salary he sits with RP Yadav of the assessee company and disburses the payments into the bank account of respective workers. (question no. 20 at page no. 121 of the paper book) c) He has acknowledged that the total number of workers/labourers/karigars working under Shama Enterprises, ADR Enterprises, ASV Enterprises and Om Enterprises at the premises of the appellant company is 550. (question no. 21 at page no. 121 of the paper book) d) He has stated that the attendance record of the workers/labourers/karigars working under Shama Enterprises as well as other job workers is maintained through biometrics machine by employees of appellant company. (question no. 29 at page no. 124 of the paper book) e) Lastly, he has also given detail of rate of salary/wages given to each category of workers/laborers/karigars working under his concern as well as the other job work concerns. (question no. 32 at page no. 125 of the paper book) Sh. Vijay Pratap Singh (proprietor ASV Enterprises), has categorically explained the following facts in his statement dated 06.10.2018(PB Pg.817-828) under section 131 of the Act a) He has been engaged in providing workers/laborers/karigars from past 7-8 years to the assessee company for job work. (question no. 7 of page 819-820 of paperbook) b) The salary payments of labour provide by him to the appellant is made from the current account of his proprietorship concem. The cheque book, pass book and net banking detail are with RP Yadav. His mobile is registered with the bank and he receives SMS from bank time to time with respect to the transactions. (question no. 10 of page 821 of paperbook) c) He has given detail of total number of workers/laborers/karigars working under his proprietorship concern ASV Enterprises and rate at which salaries and overtime allowance are given to the different category of labour including helper, tailors and checkers. (question no. 11 of page 821-822 of paperbook) d) He has explained that before demonetization, he used to the go to bank with staff of the appellant company for cash withdrawal from the bank account of his proprietorship concern, for the purpose of making payment to the labour, however post demonetization bank accounts of the laborers under ASV Enterprises were opened and now salary payments were directly to these bank account of laborers from his current account. (question no. 19 of page 825 of paperbook) vi. Thus, upon reading the statements in entirety, it is to be noticed that none of the parties have denied rendering of job work services to the assessee. Thus, AO has gone wrong in misinterpreting the statements by picking only a certain portion of the statement. It is a settled law that cherry picking of data is not permissible. Reliance is placed on the following judicial pronouncement in this regard  RELIANCE INDUSTRIES LIMITED VERSUS SECURITIES AND EXCHANGE BOARD OF INDIA & ORS., 2022 (8) TMI 423-SUPREME COURT, Dated: -5-8-2022 "The aforesaid principle is often referred to as the 'Cherrypicking principle.

58. In the case at hand, SEBI could not have claimed privilege over certain parts of the documents and to the same time, agreeing to disclose some part. Such selective disclosure cannot be countenanced in law as it clearly amounts to cherrypicking." vii. It is an undisputed fact that the manufacturing activity was not possible without the engagement of job workers. viii. Also, the assessee has submitted ample evidences to substantiate the genuineness of job work charges paid to the job workers. ix. The Ld. AO had only doubted the job work expenses on the observations which have been duly rebutted by the assessee by furnishing ample additional evidences and explanations during the course of remand proceedings. x. Infact, the AO himself has also verified the additional evidences and explanations furnished by the assessee. xi. Moreover, before sending the remand report, the AO had made independent enquiries by issuing summons to few of the employees of job work parties and recorded their statements which supported the explanations given by the assessee and nothing adverse was observed in the their statements. xii. It was only after thorough verification that the remand report was issued by the AO wherein no adverse inference was drawn regarding any of the documents or explanations furnished by the assessee. Infact, the AO has duly acknowledged each and every evidence filed by the assessee to rebut the key observations which formed the basis for disallowance of expenses. xiii. Reliance is placed on the following judicial pronouncement wherein a similar disallowance was made by the AO of job work expenses which was deleted by the Hon'ble Delhi Tribunal in the case of ORIENT CRAFT LTD., VERSUS DCIT, CENTRAL CIRCLE-II, GURGAON, VICE VERSA, 2021 (10) TMI 154ITAT DELHI, Dated. September 24, 2021. Relevant extract of the judgement is as under "22. In fact following pleadings and documentary evidences were filed to Ld. A.O. during the course of assessment proceeding, which establish the genuineness of the M/s Sai Exports and job work carried out by the said firm for the appellant company.

PB 157-179, 606-634 is the Copy of income tax return, computation of income, Audited Balance sheet, Profit & Loss account and Tax audit report for A.Y. 2013-14 of the job worker M/s Sai Exports PB 234-255 are the copies of statements of Mr. Mohinder Kumar Garg, and Mr. Rajiv Poddar recorded during the survey which establish that job work was being done by Mis Sal Exports PB 598-605 is the copy of letter dated 01.12.2017 filed by the assessee to Ld. A.O. explaining in great details about the job work expenses incurred and paid to M/s Sai Exports PB 635-657 is the Sample copy of Muster roll of all the employees employed by the firms for 2 months for all the respective years under consideration. PB 658-740 is the Sample copy of Salary sheet for 2 months of the year under consideration of payment of wages on sample basis. PB 741-771 is the Sample copy of Bonus register maintained as per requirement of "The payment of Bonus Act' showing actual payment proof of bonus to employees. PB 772-777 is the Sample copy of Leave register maintained as per legal requirement. PB 778-795 is the copy of Month wise PF/ESI deduction and deposit along with sample copy of 2 months challans for each year along with ledger account of PF. PB 800 is the Copy of Licence for registration u/s 6 of the Factory Act and approval of factory building plan. PB 807 is the copy of Pollution certificate from Noida Authorities. PB 826-845 is the copy of Rent Agreement along with complete ledger account of Rent for all the years under consideration. PB 846-857 is the copy of Sample copy of electricity bills in the name of Landlord M/s Grandways Electronics Pvt. Ltd along with ledger account of electricity all respective years. PB 858-865 Copy of invoices raised by M/s Sai Export for the job work charges in the name of the appellant company. PB 866-892 is the Copy of complete Bank statement along with complete bank book for all respective years.

PB 893-900 is the copy of ledger account of M/s Sai Exports together with copy of bank book showing that the payments were made through account payee cheques, TDS deducted. PB 901 is the copy of TDS returns showing the names of the job workers and copies of Form No. 26AS. PB 906-907 & 902-905 is the copy of ledger account of M/s Sai Exports in the books of assessee's company & vice versa, which shows that job work activities done by the said job worker during the year under appeal. PB 879-892 is the copy of bank book of M/s Sai Export in the books of appellant to show that payment has been made through account payee cheque for fabrication charges paid to the said job worker. PB 1307-1337 is the Copy of income tax return, computation of income, Audited Balance sheet, Profit & Loss account and Tax audit report for A.Y. 2012-13 of the job worker M/s Sai Exports, which are already enclosed in the paper book for A.Y. 2012-13 in assessee's own case. PB 4730-4755 is the Copy of income tax return, computation of income, Audited Balance sheet, Profit & Loss account and Tax audit report for A.Y. 2011-12 of the job worker M/s Sai Exports, which are already enclosed in the paper book for A.Y. 2011-12 in assessee's own case. PB 4756-4757 is the copy acknowledgment of return and computation of income for A.Y. 2010-11 of the job worker M/s Sai Export, which is already enclosed in the paper book for A.Y. 2011-12 in assessee's own case.

26. It is seen from the evidences placed before us and relied upon by Ld. Counsel for the assessee that the job worker M/s Sai Export has raised invoice and payment have been made through account payee cheques and tax having been deducted at source and documents at page 598 to 907 of the paper book establish the existence of the job worker and the job work carried out by M/s Sai Exports. We have also seen the statement of Mr. Mohinder Kumar Garg and Sh. Rajiv Poddar placed at page234 to 255 of the paper book, which also establish the job work done by M/s Sai Export. We have also referred to sample copy of muster roll of the all the employees, employed by the job worker for two months for all the years involved and so have we seen salary sheet for two months on sample basis, on account of payment of wages Similarly pages 741 to 771 is the sample copy of bonus register showing actual payment proof of bonus to the employees of job workers and paper book page 772 to 777 is the sample copy of Leave register of the employee of the job Page | 30 workers. Similarly paper book page 778 to 795 is the copy of month wise PF and ESI deduction and deposit and sample copy of two months challan of each year along with ledger account of PF, other evidences of the paper book at pages 800 to 807,826-845, 846-857, 858-865, 866-892, 893-900, 901, 906-907, 902-905, 879-892, 1307-1337, 4730-4755 are of M/s Sai Export and filed the return of income of prior years. All these evidences clearly establish that genuineness of job work charges incurred by the assessee company through M/s Sai Export and therefore the disallowance made in the assessment order and confirmed by CIT (A) is not sustainable even on merit. The adverse observations made by the A.O. in the assessment order have been met by the assessee one by one and paper pages 2969 to 2972 and we have taken ourselves to these adverse observations and response of the assessee and we agree with the Ld. Counsel for the assessee that the adverse observations made by the A.O. are not of substance and misplaced on facts.

in the appeal of the assessee are allowed& the addition of ₹ 1,29,01,751/- is hereby deleted."

25. In view of the above-mentioned facts and circumstances of the case and ample evidences furnished by the assessee as regards the genuineness of job work expenses and the remand report issued by the AO, the assessee has duly discharged his onus and the disallowance made by AO of Rs. 14,68,33,866/-is not sustainable and has been rightly deleted by the CIT(A).”

17. During the course of hearing, specific query was raised by the Bench with respect to turnover and gross profit declared by the Page | 31 assessee and the expenses claimed towards the job work charges. The assessee has filed the necessary reply, a perusal of which it is found that the turnover of the assessee had increased from INR 113.23 crores in AY 2014-15 to INR 172.26 crores in AY 2018-19 and the G.P of the assessee is ranges between 42.75 % to 43.81 %.

18. Ld. AR thus, submits that the assessee has been able to declare the progressive results and AO has doubted the job charges however, raised no doubts about day-to-day quantitative details maintained, purchases made and other expenses claimed and also accepted the trading results declared by the assessee. He thus, submits that Ld.CIT(A) after considering these facts, had deleted the disallowance which order deserves to be uphold.

19. Heard the contentions of both the parties and perused the maternal available on record. In the instant case, AO has doubted the payment of job work charges to the five parties made during the year. Sole basis for making such allegation is documents found during the course of search wherein it was observed by the AO that these parties were mere paper firms and assessee was maintaining their books of accounts as well as bank statements. It was also the case of the AO that some of the job workers are getting salary payments directly from the assessee company. The AO concluded that these parties are controlled and operated by the assessee group and payments shown to these parties, is basically nothing but the device developed to claim inflated expenses under the job work expenses.

20. In order to make verification of these facts, we ask the assessee to file year-wise chart of gross profit earned and total payments made to these parties which were disallowed by the AO. On perusal of the said chart, we find that despite of claiming these job work expenses, the assessee has been able to maintain the gross profit level in parity with the preceding Assessment years. We also ask the assessee to file the copies of financial statements with respect to the job charge claimed and it is seen that AO has disallowed majority of the job charge expenses claimed by the assessee in all these years and for the year under consideration i.e. AY 2016-017, as against total fabrication charges claimed at INR 39,42,75,527/- and job work payments of INR 14,88,33,866/- were disallowed by the AO which is around 9.83% of the total turnover. Ld.CIT(A) while deleting the addition made, had given his findings on all the issues raised by AO and rebutted by the assessee which are in para 15 to 40 of the appellate order. The said observations of Ld. CIT(A) are reproduced as under:-

19. The AO's doubt in the assessment order only revolves around the job work charges paid by the appellant company. Here, it is relevant to look in the aspect, whether the job workers and their team of workers/karigars with respect to whom these job work charges are claimed by the appellant, were actually present at the factory premises of the appellant company at the time of search action. In this regard, it is noticed that there is no observation/allegation of the AO in the entire assessment order that the said job workers or the teams working under them were not present at the factory premise of the appellant company during the course of search action. Also it is noticed that even in the statements of the job workers, there is no query challenging the presence of the job workers or team of karigars/workers under them on the date of the search at the factory premise of the appellant. Further, the appellant has substantiated the presence of the job workers and the workers/karigars/labourers working under them by submitting copy of attendance sheet of employees of the job workers on date of search le.29.05.2018 before the AO. The AO in the assessment order has nowhere. doubted the said attendance sheet submitted by the appellant. This proves that the presence of job workers and their team of karigars/workers at the time of search is not in question.

21. Now, another question that arises here is whether the manufacturing activity carried out by the appellant was otherwise possible had the company not engaged the alleged job workers for the respective job works carried out by them. The AO in this regard has not doubted the explanation of the appellant that the garment manufacturing activity carried out by it on these factory premises involves craftsmanship and tailoring which is performed in house by various job workers and artisans specializing in various skills and involving extensive manual labour who are basically semi-literate/uneducated tailors and craftmen. In order to substantiate various job work activities carried out by different jobworkers on the different lot of garments manufactured, the appellant company had submitted a sheet containing detail of job work carried out by different job workers on the different lots of garments under manufacturing. The said data submitted by the appellant is not in doubt in the assessment order.

22. Further, in order to substantiate the job work activity by the job workers the appellant had submitted copy of invoices raised by different job workers along with the detail of lots in which job worked goods were received from the job workers as additional evidences. The sald additional evidences submitted by the appellant were verified by the AD and no adverse remark or any discrepancy in this regard has been pointed out by the AO in the remand report dated 15.02.2023.

23. The appellant has claimed that employees on its payroll are not involved in the core manufacturing activities such cutting, weaving, embroidery, tailoring, stitching etc., such works are assigned to the job workers only. In this regard it is relevant to quote an extract of submission of the appellant that "employees on the payroll of the assessee company includes employees such as accountants, finance executives/managers, IT executives/managers, data entry operators, textile designers, garment designers, brand managers, sampling and product development executives and managers, sampling dept workers, creative artists, khaka makers, pattern masters, CAD operators, bespoke executives, production merchandisers, production co-ordinators, production managers, retail merchandiers, business development analysts & managers, marketing executives, ecommerce executives, alteration workers, quality checkers, finishing and packing workers, raw material store room personnels, finished goods store personnels, office boy, field runners, retall executives & managers in showrooms, etc. who are not involved in the job work process of the retail garments traded by the assessee company."

24. It is not the case of the AO where the assessee is alleged to have employed its team of karigars/workers on its payroll claiming them to be engaged in the manufacturing acitivites of cutting, weaving, embroidery, tailoring, stitching etc of garments and simultaneously also engaged job workers for the same work. regard, it is further noted from the question no. 16 of the statement of Ram Murti Yadav (proprietor Om Enterprises), wherein he has categorically stated that the employees on the payroll of the appellant company were not engaged in the job work process. Meaning thereby, the role of job workers and their team of karigars/workers under them in manufacturing of readymade garments/job work activities such as cutting, weaving, embroidery, tailoring, stitching etc cannot be questioned. 25. Now, another question that arises here is when the role of job workers and their team of karigars/workers in manufacturing of readymade garments/job work activities is established then how were they compensated/remunerated. 26. In order to substantiate the job work charges paid to job workers the appellant had submitted copy of bills raised by the job workers which includes description of job worked garments, their style number, quantity and the rate of jobwork. Further, the appellant has also Page | 36 submitted copy of ledger account of these job workers in its books of channel after deduction of TDS. The appellant has also submitted copy of bank statements of the job workers evidencing the job work charges being paid by it. These evidences were submitted as additional evidences which have been verified by the AO during the remand proceedings and no adverse inference has been drawn in this regard by the AO in the remand report.

27. With respect to the team of karigars/workers/labourers working under job workers as their employees, the appellant has submitted copy of month wise register of these karigars/workers/labourers. On perusal of the said registers, it is noticed that each entry salary/wages along with blometric attendance records of In the salary/wages register have been duly signed by the karigars/workers/labourers acknowledging the salary/wages received by them. The appellant has submitted that the salary/wages to the karigars/workers/labourers employed under the job workers were paid in cash before demonetization and after demonetization the said payments were made directly in the bank accounts of karigars/workers/labourers. The said contention has been further supported by the copy of cash books maintained in the books of accounts of the job workers. The appellant has also submitted chart containing details of contributors made to various funds namely EST, provident fund and Labour Welfare Fund alongwith the banking transaction number/ID and date of deposit. These documents/details are submitted in the form of additional evidences under Rule 46A, which have been verified by the AO during the remand proceedings and no adverse Inference has been drawn in this regard by the AO in the remand report. The AO has verified the genuineness of the salary/wages paid by job workers to the karigars/workers/labourers employed under them by recording statement of two of such karigars/workers/labourers during the remand proceedings namely Jamshed Alam S/o Alimuddin Ansari and Mohd. Salam S/o Mohd. Mujeeb. The statements recorded by the AO were annexed with the remand report. In these statements Jamshed Alam and Mohd. Salam have stated that they were employed under job workers Shama Enterprises, Om Enterprises, ADR Enterprises and ASV Enterprises at different point of times. It has also been stated that these job work concerns used to work for the appellant company. Further, it has been stated by them that before demonetization they had received salary in cash and post demonetization they had opened their bank account with HDFC Bank and started receiving salary in the same.

30. On perusal of these statements it is noticed that the job workers have nowhere denied job work services rendered by them to the appellant company under their proprietorship concerns. These lob workers were well aware of the number of karigars/workers/labourers employed under them as well as the other job workers working at the factory premises of the appellant company. They were also aware of the amount of salary being given to them and how the same is disbursed. In fact one of the job workers Sh. Mohd. Ayub (proprietor Shama Enterprises), has categorically stated at question no.20 of his statement that he used to sit with RP. Yadav of the assessee company and disburses the payments into the bank account of respective workers which proves the employment of karigars/workers/labourers under the job workers as well as the genuineness of the salary payments being made to them. Another job worker Sh. Ram Murti Yadav (proprietor Om Enterprises), in his statement has explained different employee codes used for different workers/laborers/karigars working under different job workers and also stated that the employees on the payroll of the appellant company were not engaged in the job work process which proves the role of job workers in the manufacturing process and services being rendered by them. Another job worker Sh. Ilyas Khan (proprietor ADR Enterprises) has admitted in his statement that workers/laborers/karigars are being appointed through advertisements and use of personal contacts and the appointment work is personally looked into by him. He also stated that the quantum/number of employees is dependent on the work pressure involved. This proves that the appointment/employment of workers/laborers/karigars was under their control. It is relevant to note here that these are same statements which have been relied upon by the AO in the assessment order and he has not doubted these portion of the statements.

31. Considering the statements in entirety, it is noticed that since these job workers have been working for the appellant company/RPL group from past many years and Initially, at the time when they started their professional carrier with the RPL group, they used to work as the employees of the RPL group. However, as the time passed by and they Page | 38 gained work experience in the RPL group they incorporated their own proprietorship concerns on the suggestion of the management of the RPL group. Since, these job workers belonging to disadvantaged and uneducated section are exclusively working for the appellant company, even after the incorporation of their proprietorship concerns, whatever profit/gain they make out of job work services under the said concerns, they withdraw the same as fixed amount on monthly basis and accordingly, consider the same as salary being drawn by them from the company. However, at the same time, the fact that they are aware of the number of workers/laborers/karigars employed under them, work being assigned to them and the salary being drawn by them and other facts emerging out of the statements of the job worker as noted above, cannot be ignored.

33. As regards the allegation that the job workers were not aware of how their books of accounts are maintained, it is noticed from the statements of the job workers recorded at the time of survey on their premises (which has also been relied upon by the AO in the assessment order) as well as their statements recorded during the course of reassessment proceedings in the case of Kalamkari Designs Pvt Ltd. (as quoted by the AO in the reassessment order), the job workers were well aware of the fact that their books of accounts are being maintained at the factory premises of the appellant company with the help/support of staff of the appellant company and further the books are subject to audit by their Auditor, CA Alok Periwal.

34. As far as the maintenance of books of accounts, statutory compliances and operation of their bank accounts are concerned, I agree with the contention of the appellant that these job workers are not educated/skilled/technically qualified enough to handle these things on their own, accordingly they rely on the help and support extended to them by the employees of the appellant company. Further, finding of books of accounts of the job workers at the factory premises of the appellant company cannot be taken as the adverse material more so when it has been the case that job workers were exclusively working for the appellant company only and that to at the premises of the appellant company.

36. It has further been alleged by the AO that the bank accounts of these proprietorship concerns are controlled by the employees of the appellant company who make payments in the name of job work charges to these concerns and subsequently withdraw the said funds from these bank accounts in cash and the said cash withdrawn is handed over to the management of the appellant company. In this regard, it is noticed that the allegation of withdrawal of cash from the current account of job work concerns and handing over the same to the management of the appellant company is merely the apprehension of the AO in the assessment order which is not supported by any documentary evidence or any incriminating material found during the course of search.. It is noticed that there is no admission of any person on record including staff of the appellant company, job workers and karigars/workers/labourers employed under them, confirming the said apprehension of the AO. Simply because the cash withdrawal from the current accounts of the job workers were made with the help/support of staff of the appellant company, the same cannot be interpreted to mean that the cash withdrawn was handed over to the management of the appellant company. It has been explained by the appellant that its staff was providing technical support to the job workers in maintenance of their books of accounts, making legal compliances and handling their bank accounts, since, the job workers were not educated enough to handle these things on their own. In this regard, it is noticed that the AO in the assessment order has simply turned his blind eye towards the fact that the cash withdrawals were utilized for the payment of salary/wages to the team of karigars/workers/labourers employed under job workers. In this regard, the role of the job workers and the team of karigars/workers/labourers in the garments manufacturing process have already been analyzed in the preceding paras. A collective reading of bank statement of the job workers, cash books and the salary/wages register/ sheets proves that the cash withdrawals were mainly utilized by the job workers for the purpose of making salary/wages payments. The apprehension of the AO in the assessment order further gets negated by the statement on oath given by the Jamshed Alam and Mohd. Salam during the remand proceedings, wherein they have confirmed there employment under the job workers Page | 40 and the salary received by them in cash prior to demonetization period. The contents of the statements recorded have not been doubted by the AO in the remand report.

21. As observed above, AO disallowed the entire job charges of INR 14.88 crores which is 9.82 % of the total turnover and if the same is added back to the gross profits, the resultant gross profit would be 55% approximately which is impossible profit rate looking to the past history of the assessee as well as in subsequent assessment years where gross profit is ranging from 42.75% to 46.49%.

22. It is further seen that without obtaining the services of these job work parties, manufacturing and sale of garments would not be Page | 42 possible. From the perusal of the financial statement it is seen that total sales of the manufactured products was of INR 151.48 crores during the AY 2016-17 and it is impossible to get the goods manufactured from the fabric if services of the job work parties were not obtained.

3. Relevant extracts of salary register of respective employer /job workers were submitted depicting the recording of salary in their books.

6. Manufacturing activity was not possible without the engagement of job workers.

24. The Hon'ble Delhi Tribunal in the case of Orient Craft Ltd. Vs DCIT dt. 24.9.2021 reported in 2021 (10) TMI 154 under similar circumstances where the said party was also engaged in same line of business after considering the details filed made following observations: 26. It is seen from the evidences placed before us and relied upon by Ld. Counsel for the assessee that the job worker M/s Sai Export has raised invoice and payment have been made through account payee cheques and tax having been deducted at source and documents at page 598 to 907 of the paper book establish the existence of the job worker and the job work carried out by M/s Sai Exports. We have also seen the statement of Mr. Mohinder Kumar Garg and Sh. Rajiv Poddar placed at page234 to 255 of the paper book, which also establish the job work done by M/s Sai Export. We have also referred to sample copy of muster roll of the all the employees, employed by the job worker for two months for all the years involved and so have we seen salary sheet for two months on sample basis, on account of payment of wages Similarly pages 741 to 771 is the sample copy of bonus register showing actual payment proof of bonus to the employees of job workers and paper book page 772 to 777 is the sample copy of Leave register of the employee of the job workers. Similarly paper book page 778 to 795 is the copy of month wise PF and ESI deduction and deposit and sample copy of two months challan of each year along with ledger account of PF, other evidences of the paper book at pages 800 to 807,826-845, 846-857, 858-865, 866-892, 893-900, 901, 906-907, 902-905, 879-892, 1307-1337, 4730-4755 are of M/s Sai Export and filed the retum of income of prior years. All these evidences clearly establish that genuineness of job work charges incurred by the assessee company through M/s Sai Export and therefore the disallowance made in the assessment order and confirmed by CIT (A) is not sustainable even on merit. The adverse observations made by the A.O. in the assessment order have been met by the assessee one by one and paper pages 2969 to 2972 and we have taken ourselves to these adverse observations and response of the assessee and we agree with the Ld. Counsel for the assessee that the adverse observations made by the A.O. are not of substance and misplaced on facts. 27. CIT (A) have mentioned in his order the adverse observations of the A.O. only, which in our opinion are misplaced on facts Contention of CIT (A) that evidence filed by the assessee self-serving documents and circumstantial evidence leads to the conclusion of A.O. that Sh. Mohinder Kumar Garg was an old employee of the assessee company cannot take the case of revenue anywhere. It would be enough for us to say that voluminous documentary evidences filed Page | 45 by the assessee& considered by us are clearly establishing the genuineness of the job work expenses incurred in relation to M/s Sai Exports. In the face of above mentioned direct documentary evidences, how can the so called circumstantial evidences be relied. Documentary evidences filed by the assessee before the lower authorities which have been referred by CIT(A) at page 60 of his appeal order to which reference has also been made in the written submissions filed by the assessee and to which our attention was drawn clearly establish & mentioned by us above that job work expense claimed by the assessee to have been paid to Mis Sai Exports are quite genuine and established in the result, the grounds of appeal

in the appeal of the assessee are allowed& the addition of ₹ 1,29,01,751/- is hereby deleted."

25. We also find force in the arguments of the Ld.AR that since these job work parties are not very literate and could not be able to maintain day-to-day books of accounts and making statutory compliance therefore, in order to help them out and get their best output, assessee arranged the professional which are hired by the it. However, it is not the case of the Revenue the payments to these professionals towards their services rendered to these job work parties was made by the assessee. Therefore, this allegation of the AO is that these job workers are masked job workers and controlled by the assessee cannot be accepted. Further, as observed above, if the payments to these job workers are held to be bogus, there would be a position where the goods manufactured by the assessee, could not be done in the absence of payment made to the job workers. Further, if entire job work charges added, there would be a situation of impossible profit rate which could not be achieved in this line of trade and the past history of the assessee.

26. In the instant case as has been seen from the submission of the assessee, every plausible details were filed by the assessee in order to establish that the job work parties had worked independently and the services rendered by them are inevitable for the business of the assessee and before us, the revenue has failed to bring on record any further evidence/ material to rebut these details filed by the assessee. The ld. CIT DR support the observations and finding given by the AO in the assessment order which as stated above, are controverted by the assessee by placing on record overwhelming evidences and material based on which ld. CIT(A) has deleted the disallowance. It is further seen that Ld.CIT(A) has dealt with every aspect and deleted the additions/disallowances made by the AO and before us, the Revenue has failed to controvert such findings of ld. CIT(A) by placing on record any contrary material or providing any details to hold that the observations made by Ld.CIT(A) are not correct or perversed.

27. In view of the facts and circumstances of the case, we find no infirmity in the order of Ld. CIT(A) in deleting the disallowances. Thus by respectfully following the judgement of the coordinate bench in the case of Orient Crafts (supra) and the discussion made herein above, the order of Ld. CIT(A) is hereby upheld. All the grounds of appeal raised by the Revenue are accordingly, dismissed.

ITA 28. In the result, appeal of the Revenue in No.2279/Del/2023 and C.O.No.31/Del/2024 of the assessee for Assessment Year 2016-17, both are dismissed.

[Assessment Year 2017-18] ITA 29. Now we take appeal of the assessee in No.3053/Del/2023 for Assessment Year 2017-18. Page | 47

31. Aggrieved by the said order, assessee preferred an appeal before Ld. CIT(A) who vide impugned dated 28.08.2023 had allowed part relief wherein disallowance of job charges was deleted however, the addition of INR 2.50 crores on account of cash deposit during demonization period is reduced to INR 2,39,99,886/-.

32. Against the said order, the assessee preferred appeal before the Tribunal wherein following grounds of appeal are taken:- Page | 48

1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye of law and on facts.

2. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the order passed by the learned AO under Section 153A. is bad and liable to be quashed as the same has been framed consequent to a search which itself was unlawful and invalid in the eye of law.

3. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the action of the AO despite that the proceedings initiated under section 153A against the appellant and the assessment framed under section 153A read with section 143(3) are in violation of the statutory conditions of the Act and the procedure prescribed under the law and as such the same is bad in the eye of law and liable to be quashed.

4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the additions made under Section 153A are bad in law in the absence of any incriminating material belonging to the assessee being found during the course of the search.

5. On the facts and circumstances of the case, learned CIT (A) has erred, both on facts and in law, in rejecting the contention of assessee that the proceedings initiated under section 153A against the appellant and the assessment framed under section 153A r.wis 143(3) are in violation of mandatory provisions of Section 153D of the Act and as such the same is bad in eyes of law. The purported approval u/s 153D of the Act is illegal, bad in law and also without any application of mind.

6. On the facts and circumstances of the case, learned CIT (A) has erred, both on facts and in law, in confirming the action of the AO despite that the assessment order passed is bad in the eyes of law as the same was passed in violation of circular no. 19/2019 issued by CBDT which mandates that no order shall be passed without there being Valid Document Identification Number (DIN). 7. (i)On the facts and circumstances of the case, leamed CIT(A) has erred both on facts and in law in confirming the addition of Rs. 2,39,99,886/- on account of cash deposited in the bank account treating the same as unexplained invoking the provisions of section 68 read with section 115BBE of the Act. (ii) That the abovesaid addition has been confirmed rejecting the detailed submissions and explanations brought on record by the assessee explaining source of cash deposited by the assessee.

8. On the facts and circumstances of the case the learned CIT(A) has erred both on facts and in law in confirming the addition despite the fact that the assessee has been maintaining proper books of accounts and cash sales have been made out of the purchases which have not been doubted and rejected by the AO.

9. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition, despite the fact that the assessee has regularly maintained complete stock records, books of accounts are audited as per law and nothing adverse were pointed out both by the AG as well as CIT(A).

10. On the facts and circumstances of the case, learned CIT(A) has erred both on facts and in law in confirming the addition despite the fact that the quantity purchased and sold being completely tallying, the addition made by the AO cannot be sustained.

11. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the above additions by indulging in surmises without bringing on any direct evidence against the assessee, only on the basis of presumptions and assumptions.

12. On the facts and circumstances of the case, learned CIT(A) has erred, both on facts and in law, in confirming the addition relying upon the judgements of various courts which are clearly distinguishable and facts of those judgements are contrary to the facts of the case of the appellant. 13. (i) On the facts and in the circumstances of the case, the learned CIT(A) has erred in confirming the addition rejecting the contention of the assessee that the addition on account of cash deposits has been made by the AO without making adjustment in respect thereof in the profit of the assessee which ought to have been adjusted as the assessee has already credited the amount of cash deposits by way of sales in the Profit and Loss Account which has been accepted by the AO. (ii) That the addition has been confirmed despite the fact that the above action of the AD has resulted into double taxation of the same amount in the hands of the assessee. 14. (i)On the facts and in the circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO in determining tax liability as per Section 115BBE of the Act in respect of income which has already been included in the Return of Income. (ii) That the CIT(A) has erred in confirming the addition without appreciating the fact that the income which has already been declared in return cannot be deemed to be undisclsoed income as per Section 68 of the Act and therefore Section 115BBE is not applicable in this case.

15. That the appellant craves leave to add, amend or alter any of the grounds of appeal

.”

33. Ground of appeal Nos. 1 to 6 raised by the assessee are with respect to the legality of assessment order passed without following the proper procedure and the approval was mechanical given without independent application of mind. Assessee also challenged the order of Ld. CIT(A) passed without DIN. However, during the hearing, Ld.AR for the assessee not pressed these grounds of appeal therefore, Grounds of appeal Nos. 1 to 6 raised by the assessee are dismissed.

34. Ground of appeal Nos. 7 to 14 raised by the assessee are with respect to the addition made and confirmed by Ld. CIT(A) to the extent of INR 2,39,99,886/- on account of cash deposited in bank during the period of demonetization as unexplained credits u/s 68 r.w.s. 115BBE of the Act.

35. The AO in the assessment order observed that during the course of search, certain conversations were found between the employees and senior management directing them to stop generating bills from billing software used by the assessee from the date of demonetization. AO further observed that certain e-mails were found dated 19.11.2016 & 18.11.2016 exchanged between employees where the instructions were given to branches to provide the details of cash status to the management with date the on the op of the sheet as “09.11.2016”. AO further observed that the assessee has shown sales of INR 8 to 10 Lakhs per day in the normal course of business however, on 08.11.2016, cash sales of INR 2.50 crores was declared as made in old currency i.e. in a Page | 51 single day. Accordingly, AO asked the assessee to explain why the amount of INR 2.50 crores should not be treated as unexplained cash receipts. In reply, the assessee made a detailed submission which is reproduced at pages 60 to 63 of the assessment order. However, the AO has not accepted the submissions of the assessee and by observing that assessee has not provided complete details of the customers who had purchased goods from on 08.11.2016, had held the cash deposited during demonetization as unexplained. Ld. CIT(A) concurred the findings of the AO in this regard and confirmed the addition however, allowed the credit of INR 17,87,391/- out of the total cash deposited in SBN during demonetization of INR 2,57,87,277/- as the said amount was actually deposited on 08.11.2016 however, due to some technical error, the same was appearing as deposit on 09.11.2016 when the banks were declared to be closed for making preparation for post- demonetization distribution of new currency. Therefore, Ld. CIT(A) has accepted the contention of the assessee to this extent and confirmed the balance addition of INR 2,39,99,886/-.

36. Before us, Ld.AR submits that main allegation of the Revenue was with respect to WhatsApp chat between Shri Vikas Dutt, retail head and Shri Nihal Batra, DGM, Finance wherein it is advised to stop billing through billing software and to generate bills manually from the date of demonetization i.e. from 08.11.2016. Ld.AR further submits that AO also based his conclusion on the mails exchanged between senior management on 18.11.2016 and 19.11.2016 wherein it was instructed to various store managers to submit cash status by mentioning on top as 09.11.2106. These two had made the sole basis for alleging that cash deposited during demonetization was not the explained money. Ld.AR submits that assessee is maintaining ERP system and a copy of which is still under seizure with the Department since the date of search wherein both the purchases and sales alongwith supporting bills and invoices are available however, no effort was made by the AO for making verification of the claim made by the assessee of cash sales. It is further submitted by Ld.AR that starting from the purchase of raw material till production of garments, lots were given and after manufacturing Bar Codes are assigned. With the help of these bar codes, stock at each sales outlet is duly controlled and recorded by the assessee company. All these details were available in the accounting software under seizure with the Department. Further, no defect whatsoever was pointed out by the AO in the stock register maintained by the assessee. Ld. AR of the assessee further submits that month-wise details of sales and purchase and cash sales and cash deposit during the previous year and during the year under appeal upto the date of demonetization, copy of VAT returns and service tax returns and every possible details such as details of cash sales were submitted before the AO. The AO has failed to point out any error in the details so submitted by the assessee. It is the submissions of the assessee that no soon the demonetization was announced by the Hon’ble Prime Minster, there was unprecedented surge in customer footfall at all the retail outlets of the assessee as the public was keen to utilize their old currency notes for high-end goods. For the smooth handling of the crowd at such late hours, it was advised to the retail counters to generate bills manually. With respect to the mail dt. 18.11.2016 & 19.11.0216, it is submitted by Page | 53 Ld.AR that immediately after demonetization stores managers were asked to deposit the cash in bank with RBI mandated guidelines and further they were advised to provide the cash position in the opening hours of 09.11.2016 to control and manage the cash available at each branch and there was nothing unnatural in giving these type of instructions. It is further submitted by the assessee that in the month of November, 2016, total sales were of INR 4,40,98,566/- which was consistent with the sales of corresponding period of preceding year where cash sales of INR 4,96,69,527/- was declared. Ld. AR further submits that cash sales made on 08.11.2016 was duly backed by the stock available with the assessee and he submits that there was no shortage of stock vis-a- vis sales made and no defect whatsoever was pointed out by the AO in the stock available with the assessee. Ld.AR further submits that AO has not invoked the provision of section 145(3) and trading results declared were accepted. As per Ld.AR, G.P rate declared in AY 2017-18 was of 43.81% on the turnover of INR 172.26 crores as against G.P. rate of 45.08% on the turnover of 151.48 crores in immediately preceding year and the AO has not doubted such profit rate. It is further submitted by Ld.AR that cash sales made which was claimed as the source of cash deposits during demonetization, was accepted and profit declared on cash sales was also assessed as such. Therefore treating the said cash deposit as unexplained is double taxation of an income firstly, by accepting profits on cash sales and secondly, by making addition of such sales as unexplained cash u/s 68 of the Act. Ld.AR also placed reliance on the various judgements which are part of written submissions. The submission so filed is reproduced as below: Page | 54 “AO has not rejected the books of accounts AND Cash deposits made from regular sale in business cannot be doubted when the sale is not doubted- 17. At the outset, the assessee has placed the reliance on the judgement of Hon'ble Delhi High Court in the case of CIT v. Kailash Jewellery House in Appeal No. ITA 613/2010, 2010 (4) TMI 1070, Dated April 09, 2010 to held that stock position as well as the cash position as per the books of the assessee had been duly accepted by the Assessing Officer and no any discrepancy had been pointed out by the AO books of accounts.

18. Further reliance in this regard is being on the following judicial pronouncements passed in passed in consonance of above judgement of Hon'ble Delhi High Court- * ITAT Delhi in the case of DCIT. V. Subhash Chand Gupta 2023 (5) TMI 1110, dated- May 25, 2023 wherein it was held that the sales cannot be added u/s 68 unless they are proved as bogus on the basis of some reliable evidences. * ITAT Delhi in the case of M/S Godwin Tourism Pvt. Ltd. V. DCIT 2024 (8) TMI 1173, dated-August 21, 2024, held that 19. Considered the rival submissions and material placed on record, we observed that the assessee has submitted cash book in the Paper Book wherein assessee has received share application money on various dates and received the same by way of cash on verification of the cash book submitted before us. We observed that on various dates, the assessee has maintained sufficient cash which are out of share application money and some bank withdrawals and it is substantiated that sufficient source of cash available with the assessee to make the bank deposit of Rs. 8 facs. After considering the facts on record, we observed that assessee has sufficient cash in hands to make above said dash deposit. Accordingly, additions made by the Assessing Officer is deleted. * In the case of ITO V. M/s J.K. Wood India Pvt Ltd, 2024 (1) TMI 1262, dated 03.01.2024, Hon'ble ITAT Delhi held that- 14. We have given thoughtful consideration to the factual matrix discussed hereinabove. The undisputed fact is that there is not even a whisper of any defect, error or infirmity in the books of account maintained by the assessee which were audited both under the Companies Act and under the income tax Act. The books of account have been maintained in the regular course of business and cash deposits in the books of account are duly reflected in the books of account.

15. Sales made by the assessee and shown in the regular books of account have been accepted as such by VAT authorities while framing the VAT assessment. The assessee was having sufficient stock in hand for making the impugned sales during the demonetization period and it is not the case of the Assessing Officer that the assessee has shown bogus purchases to show bogus sales to cover up cash deposited during the demonetization period" * In the case of JCIT V. M/s Pari Agencies Pvt Ltd.

dated 14.12.2023, Hon'ble ITAT Delhi held that- 11. Nowhere in the assessment order the Assessing Officer has mentioned that after inflating the alleged cash sales the assessee has frequently revised its VAT returns. It is not the case of the Assessing Officer that the assessee has shown alleged cash sales without having sufficient stock in hand during that period. Not a single instance of defect is pointed out in the audited books of account. The entire assessment is based on assumptions/presumptions, surmises and conjecturers de hors of the facts on record. * Further reliance in this regard is being placed on the Judgment of ITAT Visakhapatnam in the case of ACIT, CC 1 Visakhapatnam V. M/S Hirapanna Jewellers And (Vice-Versa), 2021 (5) TMI 447, dated: 12-5-2021 held as under: 9. In view of the foregoing discussion and taking into consideration of all the facts and the circumstances of the case, we have no hesitation to hold that the cash receipts represent the rightly offered for taxation. We have gone through the trading account and find that there was sufficient stock represent the sales which the assessee has to effect the sales and we do not find any defect in the stock as well as the sales. Since, the assessee has already admitted the sales as revenue receipt, there is no case for making the addition uls 68 or tax the same us 1158BE again. This view is also supported by the decision of Hon'ble Delhi High Court in the case of Kailash Jewellery House (Supra) and the Hon'ble Gujarat High Court in the case of Vishal Exports Overseas Ltd. (supra). Hence, we do not see any reason to interfere with the order of the Ld CITIA) and the same is upheld.” * ITAT Delhi in the case of M/S. Fine Gujaranwala Jewellers V. ITO, 2023 (3) TMI 1196-ITAT Delhi, dated March 27, 2023, where Hon'ble Tribunal observed that where assessee has filed its submiss evidence on record, then it is the duty of AD to act fairly as a reasonable person and examine the fact of the case submissions and placed in the light evidence available and should not come to a conclusion on the basis of surmises and conjectures Tribunal further held that AO without rejecting the books of accounts cannot come to a conclusion that sales are not genuine, relevant finding are as under- "When the assessee gives any reply or submission or any documents to the Assessing Officer, it is duty of the Assessing Officer to examine the same in the light of the available evidence. In the present case the Assessing and the id CIT(A) have concluded the findings on the bases of conjectures and surmises. The Assessing Officer has to establish the link between the evidence collected by him and the addition to be made. The Page | 56 entire case has to be dependent on the Rule of evidence, the assessee in this case explained the source of bank deposits are from cash sales. The Assessing Officer proceeded to disbelieve the explanation of the assessee on the presumption basis without bringing the corroborative maternal on record The Assessing Officer is required to act fairly as reasonable person and not arbitrarily capriciously. The assessment should have been made based on the adequate material and it should stand on its own leg. The Assessing Officer without examining any parties to whom the goods are sold by the assessee, came to conclusion that the sales are not genuine without even rejecting the books of account which is in our opinion is erroneous"  Further the above decision of the coordinate bench has been followed by ITAT Mumbai in case of SANJAY SUMERMAL SONI VERSUS INCOME TAX WARD 2 (2), THANE, 2023 (9) TMI 378-ITAT MUMBAI, dated 28.08.2023.

27. Reliance is being placed on the judgement of ITAT Mumbai in the case of MIS MANGAL ROYAL JEWELS PVT LTD. VERSUS ACIT-CC-1 (3), MUMBAI AND DY. CIT-CC 4 (3), CENTRAL RANGE-4, MUMBAI VERSUS MIS MANGAL ROYAL JEWELS PVT LTD. Wherein honourable ITAT has held that - 29. The CIT(A) has considered the details of sales, the stock register and the consistency of the turnover. The assessee has submitted the details of cash sales/receipts and party wise details of sales above and below Rs 2 lakhs were submitted. Further the Ld AR demonstrated the sample Tax Invoice below Rs. 2 lakhs in the demonetization period and the invoice contains, name and address etc. and the Ld AR referred to the details of deposits made out of the cash sales and the assessee has been consistently maintaining the stock of Rs. 21. 10 crs for the FY 2015-16 and for FY 2016-17 it was maintained at Rs. 17 69crs as per the audited financial statements, further the cash sales are part of the stocks maintained by the assessee which is not disputed. Since the cash sales proceeds/receipts received from the customers are reflected in the Audited Profit & Loss account as income/receipts and again if the cash deposits are added under section 68 of the Act, it will amount to double taxation once as sales and again as unexplained cash credit which is against the principles of taxation The AO has not pointed out any specific adversity but made a generalize additions covering the demonization period, cash deposits and RTGS credits without considering the factual aspects and primary evidences. The AO has failed to make further enquiries on the information filed and the assessee has discharged the initial burden placed by submitting the information and details. We find that the Assessing Officer has not disputed on the quantity of stocks maintained in the register, and stock valuation in the Audited financial statements and also the turnover reflected by way of cash sales and bank credits. The assessing officer has accepted the sales and corresponding nexus with the purchases and closing stock of goods. We find the CIT(A) has dealt on the facts provisions of law, submissions and judicial decisions and has passed a conclusive and reasoned order Accordingly, we do not find any infirmity in the order of the CIT(A) on the disputed issues and uphold the same and dismiss the grounds of appeal

of the revenue.

28. Further reliance is being placed on following judicial pronouncements- * ANANTPUR KALPANA VERSUS ITO, WARD-1, KOPPAL 2021 (12) TMI 599-ITAT BANGALORE * CHIRAGBHAI S. GADHIYA VERSUS I.T.O., WARD-3 (2) (6), SURAT. 2023 (7) TMI 1280-ITAT SURAT * DCIT, CIRCLE-2 (1) (1), MUMBAI VERSUS MIS. KUNDAN JEWELLERS PVT LTD 2023 (6) TMI 477-ITAT MUMBAI * M/S. RAMA HYGIENIC PRODUCTS PVT. LTD. VERSUS ACIT, CC-14, DELHI AND (VICE-VERSA) 2023 (10) TMI 202-ITAT DELHI Dated: -27-9-2023 * 2024 (5) TMI 641-ITAT CHANDIGARH FASHION ZONE VERSUS THE JCIT WARD III (2), LUDHIANA Dated: 20-3-2024 * RAKESH MALHOTRA VERSUS ITO, WARD-36 (4), CIVIC CENTRE, NEW DELHI 2024 (5) TMI 1239-ITAT DELHI Dated: 17-5- 2024 * ACIT, CENTRAL CIRCLE-14, NEW DELHI VERSUS DELHI SPOT BULLION TRADING CO. PVT. LTD. 2024 (6) TMI 95-ITAT DELHI Dated: 23-4-2024 * ITO, Ward-50 (1), Kolkata Versus Joydeb Kundu LT.A. No. 8/Kol/2021 Dated:-16-5-2023 ITAT Mumbai * Dy. Commissioner of Income Tax Circle-3 (1) Visakhapatnam Versus Sri Sriram Manchukonda and (Vice-Versa) I.T.A.No.37/Viz/2021, Cross Objection No. 34/Viz/2021 (Arising out of L.T.A.No.37/Viz/2021) Dated: 08-09-2021 ITAT Visakhapatnam * Atish Singla, New Delhi vs Ito, Ward-43(7), New Delhi, ITA.No. 1185/Del./2021, Dated: 06.04.2022 ITAT Delhi. AO cannot reject the explanation offered by the assessee without bringing any clinching evidence on record, 29. It is also relevant to mention here that no other corroborative evidence has been confronted to the assessee by the Ld. AO suggesting any sales made outside his books of accounts.

30. In this regard a reference needs to be made to the provisions of section 68 of the Act. In terms of the said provisions, where any sum it found credited in the books of the assessee, the primary onus is on the assessee to offer bonafide explanations with regard to the sum so credited in the present case under consideration, the assessee submitted a detailed explanation along with relevant explanatory proof that the cash deposits made in the bank account represents the available cash in hand and cash sales made by the assessee during the year under consideration. Accordingly, it can be said that assessee has successfully discharged his primary onus and has duly substantiated the sales made by the assessee and explained the amount in credits appearing in the books of accounts.

23. In this view of the matter and by considering facts and circumstances of the case and also by respectfully following the decision of coordinate bench of ITAT, Chennai in the case of ITO vs M/s Sahana Jewellery Exports Pvt Ltd (Supra), we are of the considered view that the assessee has satisfactorily explained source for cash deposits into bank account during demonetization period, out of cash balance in hand as on 08 11.2016 and further, said cash in hand has been explained out of known source of income. The Assessing Officer, without appreciating relevant facts simply made additions towards cash deposits u/s 68 of the Act and also brought to tax u/s 11588E of the Act. The id CIT(A), after considering relevant facts, has rightly deleted additions made by the Assessing Officer Thus, we are inclined to uphold the findings of the Id. CIT(A) and dismiss appeal filed by the revenue.

24. In the result appeal filed by the revenue is dismissed Therefore, on the basis of above judicial pronouncements, CIT(A) confirming the addition of Rs 2,39,99,886/-made by the AO on account of cash deposited in the bank account treating the same as unexplained is liable to be deleted.”

38. In view of above submission, it was prayed by ld. AR to delete the addition so confirmed by Ld. CIT(A).

39. On the other hand, Ld.CIT DR for the Revenue supports the order of the lower authorities and submits that in the present case, there was an exceptional sale as on the date of demonetization after the demonetization declared by Hon’ble Prime Minister. He submits that during the period of less than four hours, assessee had shown cash sales of more than INR 02 crores which cannot be accepted. Looking to the fact that he is dealing in ready-made garments where customers bought the goods only after fully satisfied about the Page | 64 fitting etc. of the garments and it is not a kirana goods where the goods were picked up without looking further. He further submits that conduct of the assessee in instructing the staff to record sales through manual bills and further instructing to report the cash position to store managers by placing title on top of sheet “as on 09.11.2016” further proves that assessee had tried to introduce its unaccounted cash in the shape of sales in books of accounts. It is further submitted by Ld. CIT DR that assessee has tried to back dating the entries of sales to manage the cash position and under the grab of such cash sales, an attempt was made to explain the unexplained cash. He further placed reliance on the order of Ld.CIT(A) wherein he has followed the order of Co-ordinate Bench of Hyderabad in the case of Vaishnavi Bullion Pvt. Ltd. vs ACIT in & 561/Hyd/2020 wherein the Co-ordinate Bench has upheld the addition of cash credit claimed as receipt of sales immediately after declaration of demonetization. Ld. CIT DR further submits that assessee has failed to prove the identity and other details of the persons who were claimed to have purchased goods from the assessee on the closing hours on 08.11.2016 in SBN immediately after announcement of demonetization. In view of these facts, Ld.CIT DR submits that the assessee has failed to establish the identity of the parties and genuineness of the transactions and therefore, he requests to confirm the additions made by Ld.CIT(A).

40. Heard the contentions of both the parties and perused the material available on record. In the instant case, total cash deposited by the assessee during the period of demonetization was at INR 2,57,87,277/- out of which INR 2.50 crores was held as unexplained by AO. Ld. CIT(A) accepted plea of the assessee that cash of INR 17,87,391/- was deposited on 08.11.2016 however, due to some technical glitch, the entry was appearing on 09.11.2016 when the banks were closed and accordingly, Ld. CIT(A) reduced this amount out of total cash deposited and sustained the addition of INR 2,39,99,886/- [INR 2,57,87,277/- (-) INR 17,87,391/-]. With respect to the source of said cash, it was explained by assessee that there were cash sales of more than INR 2.50 crores immediately after the announcement of demonetization by the Hon’ble Prime Minister. It is submitted there was unexpected flow of customer at all the retail outlets of the assessee. It is a known fact that when demonetization was announced, there was a surge in the market at shops of jewellery, electronics and garments etc. where public made extensive buying to utilize their old currency in exchange of the goods to avoid handing of old currency. Due to this fact, assessee being trading in ready-made garments, customers fall out was increased and cash sales was increased multi-fold where the customers were tried to buy the garments even without considering the fittings etc. and this has resulted into the large cash sales. It is not the case of the Revenue that goods have been sold without stock and the assessee has been able successfully demonstrate that goods were sold out of the stock available.

[Assessment Year 2018-19]

2. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO despite the fact that the additions made by the AD under 153A r.w.s 143(3) of the Act are bad in law in the absence of any incriminating material being found during the course of the search.

3. On the facts and circumstances of the case, learned CIT (A) has erred, both on facts and in law, in rejecting the contention of assessee that the proceedings initiated under section 153A against the appellant and the assessment framed under section 153A r.w.s 143(3) are in violation of mandatory provisions of Section 153D of the Act and as such the same is bad in eyes of law. The purported approval u/s 1530 of the Act is illegal, bad in law and also without any application of mind.

4. On the facts and circumstances of the case, learned CIT (A) has erred, both on facts and in law, in confirming the action of the AO despite the fact that the assessment order passed is bad in the eyes of law and liable to be quashed as the same was passed in violation of circular no. 19/2019 issued by CBDT which mandates that no order shall be passed without there being Valid Document Identification Number (DIN) quoted in the body of the order.

5. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law, in ignoring the contention of the assessee that the AO has erred in not considering returned income as offered in return filed under section 153A of the Act, which is same as income offered in revised return filed under section 139(5) le. Rs. 4,70,08,030 as the return filed under section 139(5) replaces the original return filed under section 139(1). 6. (i) On the facts and circumstances of the case, the learned GIT (A) has erred in confirming the disallowance of the deduction of Rs. 32,14,874/- claimed by the assessee under section 80JJAA of the Act by restricting the same to Rs. 45,48,937/- as against the deduction of Rs. 77,63,811/- claimed by the assessee. (ii) That the above disallowance has been confirmed despite the fact that such clairn is made in the Revised Income Tax Return ("ITR") filed under section 139(5) as well as ITR filed in response to section 153A of the Act. (iii) That the abovesaid disallowance has been confirmed despite the fact that the assessee has fulfilled all the conditions specified under section 80JJAA of the Act and hence eligible for the entire deduction of Rs. 77,63,811/- claimed by the assessee. Page | 69 (iv) That the abovesaid disallowance has been confirmed despite the fact the assessee claim for deduction under section 80JJAA of the Act is duly substantiated by the 'audit report' filed by a Chartered accountant in 'Form No.10DA' submitted along with the return of income. (v) That the abovesaid disallowance has been confirmed despite the fact that deduction under section 80JJAA of the Act amounting to Rs. 77,63,811/-has already been allowed and accepted in the Intimation order dated 02.10.2019 passed under section 143(1) of the Act. (vi) That the abovesaid addition has been confirmed rejecting the detailed submissions and explanations along with the evidences brought by the assessee in this regard.

7. On the facts and circumstances of the case, learned CIT (A) has erred, both on facts and in law in ignoring the settled position of law that it is the duty of the income tax authorities to assess the true and correct income of the assessee.

8. That the appellant craves leave to add, amend or alter any of the grounds of appeal

.”

48. Ground of appeal Nos. 1 to 4 raised by the assessee are with respect to the legality of assessment order passed without following the proper procedure and the approval was mechanical given without independent application of mind. Assessee also challenged the order of Ld. CIT(A) passed without DIN. However, during the hearing, Ld.AR for the assessee not pressed these grounds of appeal therefore, Grounds of appeal Nos. 1 to 4 raised by the assessee are dismissed.

51. Against that order, assessee field appeal before Ld. CIT(A) who vide impugned order dated 24.11.2023 while dealing with this issue in para 59 of its order, had directed the AO to consider the amount of amortization of lease hold improvement of INR 4,74,28,909/- claimed in the revised return however, not allowed the enhanced claim of deduction u/s 80JJAA of the Act as made in revised return of INR 32,14,874/- by observing that there is no provision in the Act to claim revised amount of deduction u/s 80JJAA of the Act.

52. Against such action of Ld. CIT(A), the assessee is in appeal before the Tribunal.

53. Before us, Ld.AR of the assessee submits that AO has not allowed the additional claim of deduction u/s 80JJAA of the Act by ignoring the fact that return was revised by the assessee u/s 139(5) within the stipulated time limit prescribed under the Act and additional claim of deduction was already admitted and allowed by CPC in the order passed u/s 143(1) of the Act. Therefore, there is no occasion to disallow the same when additional claim was made in revise return field much before the date of centralization of case of assessee as a result search and also prior to the notice issued u/s 153A of the Act. Once the revised return as admitted by CPC and the same was processed u/s 143(1) of the Act, AO has no right to deny such additional claim. He further submits that AO has deliberately ignored the revised return and in assessment order, has wrongly observed that income was declared less in the return filed in response to notice u/s 153A as against income declared in the return field u/s 139(1) of the Act. Ld.AR further submits that assessee has furnished Form 10DA alongwith revised return of income wherein correct calculation of deduction claimed and necessary Audit Report were filed which have not been considered. Under these circumstances, it is prayed that additional claim of deduction u/s 80JJAA of the Act made by the assessee deserves to be allowed.

54. On the other hand, Ld. CIT DR supports the orders of the lower authorities and submits that assessee has made revised claim of deduction u/s 80JJAA of the Act which is not permissible under Page | 72 the Act therefore lower authorities had rightly disallowed such claim which order deserves to be uphold.

CO No. Asstt. Year Name of Assessee Disallowance of No. job charges (in INR) 1-2 [R]* [AY 2014-15] Reliance Ritu Kumar 3,66,50,155/- & C.O.-37/Del/2024 [A]* Pvt.Ltd. 3-4 ITA No.2748/Del/2023 [R] [AY 2015-16] Reliance Ritu Kumar 6,25,18,345/- Pvt.Ltd. & C.O.No.-38/Del/2024[A] 5. ITA No.2944/Del/2023 [R] [AY 2017-18] Reliance Ritu Kumar 17,10,52,156/- Pvt.Ltd.