DCIT CEN CIR 8(1), MUMBAI vs. KSHITHIJA INFRASTRUCTURE P.LTD, MUMBAI

The present Appealfiled by the revenueis against the order of Commissioner of Income Tax (Appeals)-50, Mumbai, dated Kshithija Infrastructure Pvt. Ltd. 31.08.16 for AY 2012-13 on the grounds mentioned herein below:- 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 41,40,389/- onaccount of unverifiable purchases from M/s Riddhi Enterprises without appreciating the fact that the assessee has not fulfilled the pre-requisite conditions of substantiating its claim with supporting evidences during the assessment proceedings."

As per the facts of the present case, the assessee is one of the group concerns of M/s Lotus-Enpar Group, covered under search and seizure operation. A search and seizure action u/s 132 of the I.T. Act 1961 was carried out on 09.01.13 in the group cases belonging to M/s Lotus-Enpar Group. Therefore statutory notices u/s 153A(1)(a) was duly served upon the assessee and in response thereto, the assessee filed its return of income on 03.02.14 declaring total income of Rs. 4,50,712/-. Later on, after serving statutory notice and seeking reply, order of assessment u/s 153A r.w.s 143(3) was passed by AO thereby determined the total income assessee at Rs. 46,13,230/-.

We have heard the counsels for both the parties and we have also the orders passed by the revenue authorities as well as material placed on record. We find that the AO made additions on account of unverifiable purchases by holding that since the assessee could not produce the documentary evidence in respect of purchases made by it from M/s Riddhi Enterprises and M/s Yogeshwar Enterprises. It was further held that the key person of the group Shri Ravindra B. Lad had also recorded his statement on oath u/s 132(4) of the I.T. Act, 1961 in 13.01.13 and admitted Kshithija Infrastructure Pvt. Ltd. to offer the amount of purchases made from these two parties as in come from respective entities for respective years. Ld. CIT(A) deleted the additions by holding that Shri Ravindra B. Lad had no locus standi and was not competent to make any declaration regarding affairs of the assessee company. Ld. CIT(A) further held that M/s Riddhi Enterprises from whom the assessee had made purchases was a different entities which was mentioned by Shri Ravindra B. Lad in his statement. After having heard the counsels for both the parties at length, we find that there was no material before Ld. CIT(A) to hold that Shri Ravindra B. Lad had no locus standi and was not competent to make any declaration. Ld. CIT(A) while doing so, cited all the facts that the statement of Shri Ravindra B. Lad was recorded u/s 132(4) of the I.T. Act which was on oath and the same could not be discarded on flimsy ground. Moreover, assessee had relied upon the letter dated NIL which is at page no. 34 of the paper book and as per the assessee, the said letter was submitted to the DCIT in respect of statement of Shri Ravindra B. Lad u/s 132(4) of the I.T. Act. However, on perusal of the said letter, we find that assessee had nowhere mentioned that Shri Kshithija Infrastructure Pvt. Ltd. Ravindra B. Lad was having no locus standi or was not competent to record any statement, rather only ground taken in the said letter is that group had erroneously disclosed and aggregated the amount of Rs. 1,58,14,543/- as purchases from the parties i.e. M/s Riddhi Enterprises and M/s Yogeshwar Enterprises in the hands of various entities of the group for various financial years. We also noticed that certain documents were filed in the shape of invoices, etc. by the assessee during the course of appellate proceedings before the Ld. CIT(A) and the Ld. CIT(A) had sought the remand report from the AO which was never submitted. Therefore, without any verification in respect of all the documents filed by the assessee during the appellate proceedings and also in the absence of assessment records, Ld. CIT(A) deleted the additions.