SANMAN TRADE IMPEX LIMITED,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-4(4), MUMBAI, MUMBAI

2. On the facts and circumstance 2. On the facts and circumstances of the case as well as in law, the s of the case as well as in law, the Learned CIT(A) has erred in directing the assessing officer to examine Learned CIT(A) has erred in directing the assessing officer to examine Learned CIT(A) has erred in directing the assessing officer to examine therealization therealization therealization of of of exports, exports, exports, without without without considering considering considering the the the facts facts facts & & & circumstances of the case and the provisions of the Act. circumstances of the case and the provisions of the Act. 3. On the facts and circumstance 3. On the facts and circumstances of the case as well as in law, the s of the case as well as in law, the Learned CIT(A) has erred in restricting the addition to the extent of Rs. Learned CIT(A) has erred in restricting the addition to the extent of Rs. Learned CIT(A) has erred in restricting the addition to the extent of Rs. 29,63,580/-u/s 69C of the Act, without considering the facts & u/s 69C of the Act, without considering the facts & u/s 69C of the Act, without considering the facts & circumstances of the case. circumstances of the case.

M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 3 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 2.1 The grounds raised by the Revenue in its appeal in The grounds raised by the Revenue in its appeal in The grounds raised by the Revenue in its appeal in are reproduced as under: 3606/Mum/2023 are reproduced as under:

1. "On the facts and in the circumstances of the case, the Ld. CIT(A) "On the facts and in the circumstances of the case, the Ld. CIT(A) "On the facts and in the circumstances of the case, the Ld. CIT(A) erred in not considering the addition of amortization on goodwill of Rs. erred in not considering the addition of amortization on goodwill of Rs. erred in not considering the addition of amortization on goodwill of Rs. 16,16,00,000/- - to book profit for the purpose of MAT u/s 115JB of to book profit for the purpose of MAT u/s 115JB of the Act, 1961." 2. "On the facts and in the circumstances of the case, the Ld. CIT(A) "On the facts and in the circumstances of the case, the Ld. CIT(A) "On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition made towards disallowance of erred in deleting the addition made towards disallowance of erred in deleting the addition made towards disallowance of exemption claimed u/s 10AA of the Income Tax Act, 1961 of exemption claimed u/s 10AA of the Income Tax Act, 1961 of exemption claimed u/s 10AA of the Income Tax Act, 1961 of Rs.17,68,37,923/ Rs.17,68,37,923/- without appreciating the fact that the survey the survey findings had shown that the assessee has not carried out any genuine findings had shown that the assessee has not carried out any genuine findings had shown that the assessee has not carried out any genuine activity of software exports from SEZ," activity of software exports from SEZ," 3. "On the facts and in the circumstances of the case, the Ld. CIT(A) "On the facts and in the circumstances of the case, the Ld. CIT(A) "On the facts and in the circumstances of the case, the Ld. CIT(A) erred in restricting the addition made u/s 69C to 0.5% instead of erred in restricting the addition made u/s 69C to 0.5% instead of erred in restricting the addition made u/s 69C to 0.5% instead of addition made by the A0 at 1% of the circular transaction without addition made by the A0 at 1% of the circular transaction without addition made by the A0 at 1% of the circular transaction without appreciating that the estimate made by the AO is very reasonable." appreciating that the estimate made by the AO is very reasonable." appreciating that the estimate made by the AO is very reasonable." 3. The Ld. counsel for the assessee has also preferred additional The Ld. counsel for the assessee has also preferred additional The Ld. counsel for the assessee has also preferred additional ground vide letter dated 11.03.2024 which are reproduced as ground vide letter dated 11.03.2024 which are reproduced ground vide letter dated 11.03.2024 which are reproduced under:

1.1 That the CIT(A) erred on facts and in law in not appreciating that 1.1 That the CIT(A) erred on facts and in law in not appreciating that 1.1 That the CIT(A) erred on facts and in law in not appreciating that the reassessment order dated 30.03.2022 passed by the assessing the reassessment order dated 30.03.2022 passed by the assessing the reassessment order dated 30.03.2022 passed by the assessing officer is illegal and bad in law, being barred by limitation in terms of officer is illegal and bad in law, being barred by limitation in terms of officer is illegal and bad in law, being barred by limitation in terms of proviso to section 147 of the Act. proviso to section 147 of the Act. 1.2 That the CIT(A) erred on facts and in law in upholding validity .2 That the CIT(A) erred on facts and in law in upholding validity of .2 That the CIT(A) erred on facts and in law in upholding validity reassessment proceedings, despite the same having been initiated on reassessment proceedings, despite the same having been initiated on reassessment proceedings, despite the same having been initiated on the basis of mere change of opinion, without any new tangible the basis of mere change of opinion, without any new tangible the basis of mere change of opinion, without any new tangible material to the possession of the assessing officer M CI material to the possession of the assessing officer M CI material to the possession of the assessing officer M CITCA) subsequent to completion of assessment under section 143(3) subsequent to completion of assessment under section 143(3) subsequent to completion of assessment under section 143(3) r. w.s. 153A r.w.s. 144C(1) of the Act. 153A r.w.s. 144C(1) of the Act. 1.3 That the CIT(A) erred on facts and in law in not testing/examining 1.3 That the CIT(A) erred on facts and in law in not testing/examining 1.3 That the CIT(A) erred on facts and in law in not testing/examining the validity of the reopening strictly on the basis of the reasons the validity of the reopening strictly on the basis of the reasons the validity of the reopening strictly on the basis of the reasons recorded, and instead, referring to/relying upon finding not mentioned instead, referring to/relying upon finding not mentioned instead, referring to/relying upon finding not mentioned therein. 1.4 That the CIT(A) erred on facts and in law in not appreciating that 1.4 That the CIT(A) erred on facts and in law in not appreciating that 1.4 That the CIT(A) erred on facts and in law in not appreciating that reassessment is barred by limitation in terms of section 149 of the Act, reassessment is barred by limitation in terms of section 149 of the Act, reassessment is barred by limitation in terms of section 149 of the Act,

M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 4 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 since reasons recorded (that too, without cop since reasons recorded (that too, without copy of Sanction obtained y of Sanction obtained under section 151) were communicated much after the expiry of under section 151) were communicated much after the expiry of under section 151) were communicated much after the expiry of limitation period as prescribed in that section. limitation period as prescribed in that section. 1.5 That the CIT(A) erred on facts and in law in not appreciating that 1.5 That the CIT(A) erred on facts and in law in not appreciating that 1.5 That the CIT(A) erred on facts and in law in not appreciating that the reassessment order was without jurisdiction, il the reassessment order was without jurisdiction, illegal and bad in legal and bad in law, since sanction obtained under section 151 was not provided to law, since sanction obtained under section 151 was not provided to law, since sanction obtained under section 151 was not provided to the appellant, much less within limitation prescribed in section 149 of the appellant, much less within limitation prescribed in section 149 of the appellant, much less within limitation prescribed in section 149 of the Act. 1.6 That the CIT(A) erred on facts and in law in not appreciating 1.6 That the CIT(A) erred on facts and in law in not appreciating 1.6 That the CIT(A) erred on facts and in law in not appreciating that the reassessment ord the reassessment order was without jurisdiction, illegal and bad in er was without jurisdiction, illegal and bad in law, since sanction obtained under section 151 was since sanction obtained under section 151 was since sanction obtained under section 151 was without application of mind and without appreciating the facts of the case. application of mind and without appreciating the facts of the case. application of mind and without appreciating the facts of the case.

M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 5 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 5.1 Subsequently, a survey action u/s 133A of the Act was carried Subsequently, a survey action u/s 133A of the Act was carried Subsequently, a survey action u/s 133A of the Act was carried out in the case of the assessee on 23.03.2021 on its office premises out in the case of the assessee on 23.03.2021 on its office premises out in the case of the assessee on 23.03.2021 on its office premises and premises of Shri Nitin Kumar Didwania nd premises of Shri Nitin Kumar Didwania, who is promoter and who is promoter and director of the assessee group. According to the Assessing Officer director of the assessee group. According to the Assessing Officer director of the assessee group. According to the Assessing Officer during the course of the survey, the assessee was found engaged in during the course of the survey, the assessee was found engaged in during the course of the survey, the assessee was found engaged in evasion of taxes by creation of goodwill as a result of amalgamation evasion of taxes by creation of goodwill as a result of amalgamation evasion of taxes by creation of goodwill as a result of amalgamation of another company with the assessee and bogus claim of deduction of another company with the assessee and bogus claim of another company with the assessee and bogus claim u/s 10AA of the Act by way of export of software products. In view u/s 10AA of the Act by way of export of software products. In view u/s 10AA of the Act by way of export of software products. In view of the information, the assessment for the year under consideration of the information, the assessment for the year under consideration of the information, the assessment for the year under consideration was reopened by way of issue of notice u/s 148 of the Act dated was reopened by way of issue of notice u/s 148 of the Act dated was reopened by way of issue of notice u/s 148 of the Act dated 31.03.2021 after recording reasons and obta 31.03.2021 after recording reasons and obtaining necessary ining necessary approval. In response to the notice u/s 148 of the Act, the assessee approval. In response to the notice u/s 148 of the Act, the assessee approval. In response to the notice u/s 148 of the Act, the assessee filed return of income on 19.04.2021 declaring total income at filed return of income on 19.04.2021 declaring total income at filed return of income on 19.04.2021 declaring total income at Rs.20,98,970/-. Thereafter statutory notices were issued and hereafter statutory notices were issued and hereafter statutory notices were issued and reassessment proceedings were commenced. In the reassessment reassessment proceedings were commenced. In the reassessment proceedings were commenced. In the proceedings, proceedings, proceedings, the the the Assessing Assessing Assessing Officer Officer Officer made made made addition addition addition of of of Rs.16,16,00,000/- for disallowance of amortization expenses in for disallowance of amortization expenses in for disallowance of amortization expenses in respect of goodwill while computing total income under regular respect of goodwill while computing total income under regular respect of goodwill while computing total income under regular provisions of the Act provisions of the Act , disallowance of exemption claimed u/s 10 disallowance of exemption claimed u/s 10AA of the Act amounting to Rs.17,68,37,923/ of the Act amounting to Rs.17,68,37,923/- and undisclosed and undisclosed expenditure u/s 69C of the Act amounting to Rs.59,27,16,162/-. expenditure u/s 69C of the Act amounting to Rs.59,27,16,162/ expenditure u/s 69C of the Act amounting to Rs.59,27,16,162/ On further appeal, the Ld. CIT(A) deleted the disallowance of On further appeal, the Ld. CIT(A) deleted the disallowance of On further appeal, the Ld. CIT(A) deleted the disallowance of amortization of goodwill expenses. The Ld. CIT(A) also deleted the amortization of goodwill expenses. The Ld. CIT(A) also deleted the amortization of goodwill expenses. The Ld. CIT(A) also deleted the M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 6 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 disallowance of exemption claimed u/s 10AA of the Act. Regarding allowance of exemption claimed u/s 10AA of the Act. Regarding allowance of exemption claimed u/s 10AA of the Act. Regarding the disallowance u/s 69C of the Act, the Ld. CIT(A) restricted the the disallowance u/s 69C of the Act, the Ld. CIT(A) restricted the the disallowance u/s 69C of the Act, the Ld. CIT(A) restricted the disallowance to the extent of Rs.29,63,580/ disallowance to the extent of Rs.29,63,580/-.

8.1 Supporting the Supporting the additional ground No. 1.1, the Ld. counsel for ground No. 1.1, the Ld. counsel for the assessee submitted that as the assessee submitted that as per proviso to section 147 of the Act per proviso to section 147 of the Act, assessment cannot be reopened beyond four years from the end of assessment cannot be reopened beyond four years from the end of assessment cannot be reopened beyond four years from the end of the relevant assessment year, unless there is a failure on the part of the relevant assessment year, unless there is a failure on the part of the relevant assessment year, unless there is a failure on the part of the assessee to disclose all the material facts fully and truly which the assessee to disclose all the material facts fully and truly which the assessee to disclose all the material facts fully and truly which M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 7 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 are necessary for the assessment. The Ld. counsel referred to the y for the assessment. The Ld. counsel referred to the y for the assessment. The Ld. counsel referred to the copy of the reasons recorded, which are available on Paper Book which are available on Paper Book pages 1 to 3 and submitted that in the reasons re 1 to 3 and submitted that in the reasons recorded there is no corded there is no allegation of failure on the part of the assessee, ure on the part of the assessee, hence, the ure on the part of the assessee, assessment could not be reopened beyond four years from the end assessment could not be reopened beyond four years assessment could not be reopened beyond four years of relevant assessment year of relevant assessment year. The Ld. counsel for the assessee relied . The Ld. counsel for the assessee relied on the following decisions: on the following decisions:

 New Delhi Television Ltd. Vs. DCIT (2020) (271 Taxman 1)(SC) New Delhi Television Ltd. Vs. DCIT (2020) (271 Taxman 1)(SC) New Delhi Television Ltd. Vs. DCIT (2020) (271 Taxman 1)(SC)  Sound Casting(P) Ltd v. DCIT (2012) 250 CTR 119 (Bom.) Sound Casting(P) Ltd v. DCIT (2012) 250 CTR 119 (Bom.) Sound Casting(P) Ltd v. DCIT (2012) 250 CTR 119 (Bom.)  Tao Publishing (P) Ltd..v. Dy. CIT (2015) 370 ITR 135 (Bom.) Tao Publishing (P) Ltd..v. Dy. CIT (2015) 370 ITR 135 (Bom.) Tao Publishing (P) Ltd..v. Dy. CIT (2015) 370 ITR 135 (Bom.)  Tata Business support Ser. Ltd. v. DCIT 232 Taxman 702 Tata Business support Ser. Ltd. v. DCIT 232 Taxman 702 Tata Business support Ser. Ltd. v. DCIT 232 Taxman 702 (Bom)  Everest Kanto Cylinder Ltd. Vs UOI(159 Taxmann.com 51)(Bom) Everest Kanto Cylinder Ltd. Vs UOI(159 Taxmann.com 51)(Bom) Everest Kanto Cylinder Ltd. Vs UOI(159 Taxmann.com 51)(Bom)  Navkar Share and Navkar Share and Stock Brokers P. Ltd v. ACIT (393 ITR 362) Stock Brokers P. Ltd v. ACIT (393 ITR 362) (Guj) 8.2 This objection was raised by the assessee before the Ld. CIT(A) This objection was raised by the assessee before the Ld. CIT(A) This objection was raised by the assessee before the Ld. CIT(A) also however, the Ld. CIT(A) rejected the contention of the assessee also however, the Ld. CIT(A) rejected the contention of the assessee also however, the Ld. CIT(A) rejected the contention of the assessee following the decision of the Hon’ble Jurisdictional High Court in following the decision of the Hon’ble Jurisdictional High Court in following the decision of the Hon’ble Jurisdictional High Court in the case of 3i Infotech Ltd. v. ACIT (2010) 329 ITR 257 (Bom HC) e case of 3i Infotech Ltd. v. ACIT (2010) 329 ITR 257 (Bom HC) e case of 3i Infotech Ltd. v. ACIT (2010) 329 ITR 257 (Bom HC), in view of fresh information gathered in the form of survey report, view of fresh information gathered in the form of survey report, view of fresh information gathered in the form of survey report, statement of the employees and other evidence pursuant to the statement of the employees and other evidence pursuant to the statement of the employees and other evidence pursuant to the survey. The relevant finding of the Ld. CIT(A) is reproduced as survey. The relevant finding of the Ld. CIT(A) is reproduced a survey. The relevant finding of the Ld. CIT(A) is reproduced a under:

“5.1. I have perused the reasons for reopening produced by the appellant. It 5.1. I have perused the reasons for reopening produced by the appellant. It 5.1. I have perused the reasons for reopening produced by the appellant. It is seen that the AO has received information from the Investigation Wing is seen that the AO has received information from the Investigation Wing is seen that the AO has received information from the Investigation Wing regarding a survey conducted on Veritas Group on 23.03.2021. The AO has regarding a survey conducted on Veritas Group on 23.03.2021. The AO has regarding a survey conducted on Veritas Group on 23.03.2021. The AO has referred to new revelatio referred to new revelations emerging from the survey, the bogus claim u/s ns emerging from the survey, the bogus claim u/s 10AA. Besides, the AO has formed a view that the appellant has used an 10AA. Besides, the AO has formed a view that the appellant has used an 10AA. Besides, the AO has formed a view that the appellant has used an M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 8 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 instrument of amalgamation for evasion of tax by creation of goodwill and instrument of amalgamation for evasion of tax by creation of goodwill and instrument of amalgamation for evasion of tax by creation of goodwill and claim of amortization expenses. A perusal of the reasons recor claim of amortization expenses. A perusal of the reasons recor claim of amortization expenses. A perusal of the reasons recorded shows that the AO has coherently recorded the reasons and formed his that the AO has coherently recorded the reasons and formed his that the AO has coherently recorded the reasons and formed his independent view. Hence, the contention of the appellant that this amounts independent view. Hence, the contention of the appellant that this amounts independent view. Hence, the contention of the appellant that this amounts to borrowed satisfaction is REJECTED. to borrowed satisfaction is REJECTED. 5.2. One of the contentions of the appellant is that the reopening bey 5.2. One of the contentions of the appellant is that the reopening bey 5.2. One of the contentions of the appellant is that the reopening beyond 4 years was not correct. Explanation 1 to Sec. 147 of the Act states as under: years was not correct. Explanation 1 to Sec. 147 of the Act states as under: years was not correct. Explanation 1 to Sec. 147 of the Act states as under:- Explanation 1.- -Production before the Assessing Officer of account books or Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have other evidence from which material evidence could with due diligence have other evidence from which material evidence could with due diligence have been discovered by the been discovered by the Assessing Officer will not necessarily amount to Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. disclosure within the meaning of the foregoing proviso. 5.3. Useful guidance is received from the decision by Hon'ble Jurisdictional 5.3. Useful guidance is received from the decision by Hon'ble Jurisdictional 5.3. Useful guidance is received from the decision by Hon'ble Jurisdictional HC in the case of 329 ITR 257, 3i Infotech Ltd vs ACIT (Bom HC) 2010, HC in the case of 329 ITR 257, 3i Infotech Ltd vs ACIT (Bom HC) 2010, HC in the case of 329 ITR 257, 3i Infotech Ltd vs ACIT (Bom HC) 2010, wherein it was held as under: ein it was held as under:- "The Explanation 1 to section 147 stipulates that the production "The Explanation 1 to section 147 stipulates that the production "The Explanation 1 to section 147 stipulates that the production before the Assessing Officer of account books or other evidence from before the Assessing Officer of account books or other evidence from before the Assessing Officer of account books or other evidence from which material evidence could, with due diligence, have been which material evidence could, with due diligence, have been which material evidence could, with due diligence, have been discovered by the Assessing Office discovered by the Assessing Officer will not necessarily amount to a r will not necessarily amount to a disclosure within the meaning of the first proviso. In other words, disclosure within the meaning of the first proviso. In other words, disclosure within the meaning of the first proviso. In other words, an assessee cannot rest content merely with the assessee cannot rest content merely with the production of account production of account books or other evidences during the course of the books or other evidences during the course of the books or other evidences during the course of the assessment proceedings and challe proceedings and challenge the reopening of the assessment on the nge the reopening of the assessment on the ground that if the Assessing Officer was to initiate a line of enquiry, ground that if the Assessing Officer was to initiate a line of enquiry, ground that if the Assessing Officer was to initiate a line of enquiry, he could, with due diligence, have arrived at the material evidence. he could, with due diligence, have arrived at the material evidence. he could, with due diligence, have arrived at the material evidence. The primary obligation to disclose is on the assessee and the burden The primary obligation to disclose is on the assessee and the burden The primary obligation to disclose is on the assessee and the burden of making a full and true disclosure of material facts does not shift to making a full and true disclosure of material facts does not shift to making a full and true disclosure of material facts does not shift to the Assessing Officer. The assessee has to disclose fully and truly the Assessing Officer. The assessee has to disclose fully and truly the Assessing Officer. The assessee has to disclose fully and truly all material facts. Producing voluminous records before the all material facts. Producing voluminous records before the all material facts. Producing voluminous records before the Assessing Officer does not absolve the assessee of the obl Assessing Officer does not absolve the assessee of the obl Assessing Officer does not absolve the assessee of the obligation to disclose material facts and the assessee cannot be heard to say that disclose material facts and the assessee cannot be heard to say that disclose material facts and the assessee cannot be heard to say that if the Assessing Officer would have conducted a further enquiry, he if the Assessing Officer would have conducted a further enquiry, he if the Assessing Officer would have conducted a further enquiry, he would have come into possession of material evidence with the would have come into possession of material evidence with the would have come into possession of material evidence with the exercise of due diligence. An assessee cannot exercise of due diligence. An assessee cannot throw reams of paper throw reams of paper at the Assessing Officer and rest content in the belief that the Officer at the Assessing Officer and rest content in the belief that the Officer at the Assessing Officer and rest content in the belief that the Officer better beware or ignore the hidden crevices in the pointed material at better beware or ignore the hidden crevices in the pointed material at better beware or ignore the hidden crevices in the pointed material at his own peril." his own peril." 5.4. In the instant case, there is undisputedly fresh information in the fo 5.4. In the instant case, there is undisputedly fresh information in the fo 5.4. In the instant case, there is undisputedly fresh information in the form of survey report, statement of employees and other evidences/findings of survey report, statement of employees and other evidences/findings of survey report, statement of employees and other evidences/findings pursuant to the pursuant to the 5.5. Having considered the entire facts and judicial position on the issue, I 5.5. Having considered the entire facts and judicial position on the issue, I 5.5. Having considered the entire facts and judicial position on the issue, I am of the view that the assessee has not disclosed fully and truly all am of the view that the assessee has not disclosed fully and truly all am of the view that the assessee has not disclosed fully and truly all material facts necessary for the assessment and there has been a failure on material facts necessary for the assessment and there has been a failure on material facts necessary for the assessment and there has been a failure on M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 9 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 the part of the assessee. The r the part of the assessee. The reasons recorded by the AO make this clear. easons recorded by the AO make this clear. Hence, this part of the argument of the appellant is REJECTED. Hence, this part of the argument of the appellant is REJECTED. Hence, this part of the argument of the appellant is REJECTED.” 8.3 We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the relevant material on record. The Ld. counsel for the assessee relevant material on record. The Ld. counsel for the assessee relevant material on record. The Ld. counsel for the assessee invoked proviso to se invoked proviso to section 147 of the Act wherein it is wherein it is prescribed that no assessment can be reopened beyond the period of four years that no assessment can be reopened beyond the period of four years that no assessment can be reopened beyond the period of four years from the end of the relevant assessment year unless there is a from the end of the relevant assessment year unless there is a from the end of the relevant assessment year unless there is a failure on the part of the assessee in disclosing the material facts failure on the part of the assessee in disclosing the material facts failure on the part of the assessee in disclosing the material facts necessary before the assessment fully and truly. In the reasons efore the assessment fully and truly. In the reasons efore the assessment fully and truly. In the reasons recorded, the Assessing Officer has referred to information in recorded, the Assessing Officer has referred to information in recorded, the Assessing Officer has referred to information in relation to two items relation to two items, the first item is regarding claim of first item is regarding claim of amortization expenses in amortization expenses in relation to ‘goodwill’, the second item is , the second item is exemption claimed u/s 10AA of the Act. The Assessing Officer aimed u/s 10AA of the Act. The Assessing Officer has aimed u/s 10AA of the Act. The Assessing Officer referred to the survey carried out in the case of the assessee and referred to the survey carried out in the case of the assessee and referred to the survey carried out in the case of the assessee and statement of the employees of the assessee/group concern wherein statement of the employees of the assessee/group concern wherein statement of the employees of the assessee/group concern wherein the genuineness of the claim of the exemption u/s 10AA was the genuineness of the claim of the exemption u/s 10AA was the genuineness of the claim of the exemption u/s 10AA was doubted. The said information raising doubts on the genuineness information raising doubts on the genuineness information raising doubts on the genuineness of the exemption claimed u/s 10AA of the Act of the exemption claimed u/s 10AA of the Act on on export of the software product came to light for the first time during the course of software product came to light for the first time during the course of software product came to light for the first time during the course of the survey and this fact being material to the exemption u/s 10AA the survey and this fact being material to the exemption u/s 10AA the survey and this fact being material to the exemption u/s 10AA of the Act but was not disclosed during the assessment proceedings he Act but was not disclosed during the assessment proceedings he Act but was not disclosed during the assessment proceedings ,therefore, we are of the opinion that certainly there is failure on the therefore, we are of the opinion that certainly there is failure on the therefore, we are of the opinion that certainly there is failure on the part of the assessee in disclosing the material facts qua the issue of part of the assessee in disclosing the material facts qua the issue of part of the assessee in disclosing the material facts qua the issue of exemption u/s 10AA of the Act exemption u/s 10AA of the Act. Merely filing of the audit report he audit report,

M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 10 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 which is statutory requirement and which is statutory requirement and producing books of accounts books of accounts, the assessee cannot absorbed itself held by the Hon’ble Bombay the assessee cannot absorbed itself held by the Hon’ble Bombay the assessee cannot absorbed itself held by the Hon’ble Bombay High Court in the case of High Court in the case of 3i Infotech Ltd. (supra) which has been reproduced by the Ld. CIT(A) in para 5.3 extr reproduced by the Ld. CIT(A) in para 5.3 extracted above. The acted above. The decisions relied upon by the Ld. counsel for the assessee are on its decisions relied upon by the Ld. counsel for the assessee are on its decisions relied upon by the Ld. counsel for the assessee are on its own facts and distinguishable. The additional ground No. 1.1 of the own facts and distinguishable. The additional ground No. 1.1 of the own facts and distinguishable. The additional ground No. 1.1 of the appeal of the assessee is accordingly dismissed. appeal of the assessee is accordingly dismissed.

“5.6. The Next argument of the appellant is that there was a change of 5.6. The Next argument of the appellant is that there was a change of 5.6. The Next argument of the appellant is that there was a change of opinion and that there was no fresh tangible material. Having perused the opinion and that there was no fresh tangible material. Having perused the opinion and that there was no fresh tangible material. Having perused the paper book filed by the appellant, the appellant has not been able to paper book filed by the appellant, the appellant has not been able to paper book filed by the appellant, the appellant has not been able to adequately explain that the issue of goodwill was satisfactorily explained in adequately explain that the issue of goodwill was satisfactorily explained in adequately explain that the issue of goodwill was satisfactorily explained in a true and complete manner during the original proceedings. In any case, a true and complete manner during the original proceedings. In any case, a true and complete manner during the original proceedings. In any case, the AO has been in receipt of fresh tangible material from the Investigation the AO has been in receipt of fresh tangible material from the Investigation the AO has been in receipt of fresh tangible material from the Investigation Wing. Hence, I am unable to Wing. Hence, I am unable to uphold the view of the appellant that this uphold the view of the appellant that this tantamount to change of opinion. This view of mine also finds support of the tantamount to change of opinion. This view of mine also finds support of the tantamount to change of opinion. This view of mine also finds support of the decision of Hon'ble Kerala High Court in Innovative Foods Ltd. 409 ITR decision of Hon'ble Kerala High Court in Innovative Foods Ltd. 409 ITR decision of Hon'ble Kerala High Court in Innovative Foods Ltd. 409 ITR 415. 5.7. As observed by Hon'ble Supreme Court, in the case of As 5.7. As observed by Hon'ble Supreme Court, in the case of As 5.7. As observed by Hon'ble Supreme Court, in the case of Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 161 Taxman 316/291 ITR 500 Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 161 Taxman 316/291 ITR 500 Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 161 Taxman 316/291 ITR 500 (SC), "At the stage of issue of notice, the only question is whether there was (SC), "At the stage of issue of notice, the only question is whether there was (SC), "At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a relevant material on which a reasonable person could have formed a relevant material on which a reasonable person could have formed a requisite belief". requisite belief". 5.8. Guidance is also drawn from the decision of Hon'ble Apex Court in case Guidance is also drawn from the decision of Hon'ble Apex Court in case Guidance is also drawn from the decision of Hon'ble Apex Court in case of DCIT vs MR Shah Logistics P Ltd (arising out of Special Leave to Appeal DCIT vs MR Shah Logistics P Ltd (arising out of Special Leave to Appeal DCIT vs MR Shah Logistics P Ltd (arising out of Special Leave to Appeal (C) No. 22921/2019 dated 28.03.2022): 22921/2019 dated 28.03.2022):

M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 11 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 "21. In Phool Chand Bajrang Lal & Ors. vs. Income Tax Officer &Ors In Phool Chand Bajrang Lal & Ors. vs. Income Tax Officer &Ors In Phool Chand Bajrang Lal & Ors. vs. Income Tax Officer &Ors after reviewing the previous case law, and concluding that a valid reviewing the previous case law, and concluding that a valid reviewing the previous case law, and concluding that a valid reopening is one, preceded by specific, reliable and relevant reopening is one, preceded by specific, reliable and relevant reopening is one, preceded by specific, reliable and relevant information, and that the sufficiency of such reasons is not subject to information, and that the sufficiency of such reasons is not subject to information, and that the sufficiency of such reasons is not subject to judicial review judicial review – the only caveat being that the court can e only caveat being that the court can examine the record, if such material existed. record, if such material existed.

148 was issued within 5 hours of receipt 148 was issued within 5 hours of receipt of information. In the present case, of information. In the present case, it is evident that the AO has linked up the information and drawn his it is evident that the AO has linked up the information and drawn his it is evident that the AO has linked up the information and drawn his independent satisfaction. independent satisfaction. 5.11. In the case of Abhisar Build Well Pvt, Ltd., Civil appeal No. 6580 of 5.11. In the case of Abhisar Build Well Pvt, Ltd., Civil appeal No. 6580 of 5.11. In the case of Abhisar Build Well Pvt, Ltd., Civil appeal No. 6580 of 2021 dt. 24.04.2023, the Hon'ble Supreme Court 24.04.2023, the Hon'ble Supreme Court held as follows: held as follows:- i. that in case of search u/s 132 or requisition u/s 132A, the AO that in case of search u/s 132 or requisition u/s 132A, the AO that in case of search u/s 132 or requisition u/s 132A, the AO assumes the jurisdiction for block assessment u/s 153A, assumes the jurisdiction for block assessment u/s 153A, assumes the jurisdiction for block assessment u/s 153A, ii. all pending assessments/ reassessments shall stand abated, all pending assessments/ reassessments shall stand abated, all pending assessments/ reassessments shall stand abated, iii. in case any incriminating material is found/unearthed, eve in case any incriminating material is found/unearthed, eve in case any incriminating material is found/unearthed, even, In case of unabated/completed assessments, the AO would assume the of unabated/completed assessments, the AO would assume the of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into jurisdiction to assess or reassess the 'total income' taking into jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search consideration the incriminating material unearthed during the search consideration the incriminating material unearthed during the search and the other material available with the AO includ and the other material available with the AO includ and the other material available with the AO including the income declared in the returns and, declared in the returns and, iv. in case no incriminating material is unearthed during the search, the in case no incriminating material is unearthed during the search, the in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other AO cannot assess or reassess taking into consideration the other AO cannot assess or reassess taking into consideration the other material material material in in in respect respect respect of of of completed completed completed assessments/unabated assessments/unabated assessments/unabated assessments. Meaning th assessments. Meaning thereby, in respect of completed/unabated ereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any assessments, no addition can be made by the AO in absence of any assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search u/s 132 or incriminating material found during the course of search u/s 132 or incriminating material found during the course of search u/s 132 or requisition requisition requisition u/s u/s u/s 132A 132A 132A of of of the the the Act, Act, Act, 1961. 1961. 1961. However, However, However, the the the completed/unabated assessments completed/unabated assessments can be re-opened by the AO in opened by the AO in exercise of powers u/s 147/148 of the Act, subject to fulfilment of exercise of powers u/s 147/148 of the Act, subject to fulfilment of exercise of powers u/s 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned u/s 147/148 of the act and the conditions as envisaged/mentioned u/s 147/148 of the act and the conditions as envisaged/mentioned u/s 147/148 of the act and those powers are saved." those powers are saved." 5.12. As per the decision of Hon'ble Supreme Court in Abhisar Build 5.12. As per the decision of Hon'ble Supreme Court in Abhisar Build 5.12. As per the decision of Hon'ble Supreme Court in Abhisar Build Well Pvt. Ltd. (supra), "the completed/unabated assessments can be re Ltd. (supra), "the completed/unabated assessments can be re Ltd. (supra), "the completed/unabated assessments can be re-opened by the AO in exercise of powers u/s 147/148 of the Act, subject to by the AO in exercise of powers u/s 147/148 of the Act, subject to by the AO in exercise of powers u/s 147/148 of the Act, subject to fulfillment of the conditions as envisaged/mentioned u/s 147/148 of the act fulfillment of the conditions as envisaged/mentioned u/s 147/148 of the act fulfillment of the conditions as envisaged/mentioned u/s 147/148 of the act and those powers are saved." Thus, t and those powers are saved." Thus, there is no bar in the AO resorting here is no bar in the AO resorting to proceedings u/s 147, as long as the conditions mentioned therein are proceedings u/s 147, as long as the conditions mentioned therein are proceedings u/s 147, as long as the conditions mentioned therein are fulfilled.” 9.1 Before us, the Ld. counsel for the assessee referred to Paper Before us, the Ld. counsel for the assessee referred to Paper Before us, the Ld. counsel for the assessee referred to Paper Book Pages 275 to 278 and submitted 275 to 278 and submitted that in the course of regular in the course of regular assessment specific questions were sment specific questions were raised under the notice issued raised under the notice issued u/s 142(1) of the Act dated 08.02.2017, wherein both the issues of the Act dated 08.02.2017, wherein both the issues of the Act dated 08.02.2017, wherein both the issues were raised and in response to which, the assessee had furnished were raised and in response to which, the assessee had furnished were raised and in response to which, the assessee had furnished desired details, a copy of which is available on Paper Book Page a copy of which is available on Paper Book Page a copy of which is available on Paper Book Pages

M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 13 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 279 to 280. According to the Ld. counsel for the assessee, in the 279 to 280. According to the Ld. counsel for the assessee 279 to 280. According to the Ld. counsel for the assessee reasons recorded also the Assessing Officer has mentioned that the reasons recorded also the Assessing Officer has mentioned reasons recorded also the Assessing Officer has mentioned deduction u/s 10AA A of the Act has been addressed during of the Act has been addressed during prior assessment proceedings proceedings. Further, according to the Ld. counsel . Further, according to the Ld. counsel for the assessee, no survey was conducted at no survey was conducted at the unit the unit at ‘Surat’ in respect of which exemption has been claimed respect of which exemption has been claimed and the Assessing and the Assessing Officer relied on the statement made during survey of the unit, on the statement made during survey of the unit, on the statement made during survey of the unit, which is situated at which is situated at ‘Nagpur’. According to the Ld. counsel . According to the Ld. counsel therefore, reassessment has been initiated merely on the herefore, reassessment has been initiated merely on the herefore, reassessment has been initiated merely on the ‘change of opinion’ which was already framed in regular assessment which was already framed in regular assessment which was already framed in regular assessment proceedings. The Ld. counsel for assessee relied on following proceedings. The Ld. counsel for assessee relied on following proceedings. The Ld. counsel for assessee relied on following decisions:

 Jetair (P) Ltd. Vs DCIT (148 Taxmann.com 185)(Bom) Jetair (P) Ltd. Vs DCIT (148 Taxmann.com 185)(Bom) Jetair (P) Ltd. Vs DCIT (148 Taxmann.com 185)(Bom)  German Remdeis Ltd vs. DCIT (2006) 287 ITR 494 (Bom) mdeis Ltd vs. DCIT (2006) 287 ITR 494 (Bom) mdeis Ltd vs. DCIT (2006) 287 ITR 494 (Bom)  Citius Citius Citius Tech Tech Tech Healthcare Healthcare Healthcare Tech. Tech. Tech. P P P Ltd. Ltd. Ltd. Vs Vs Vs DCIT DCIT DCIT (155 (155 (155 Taxmann.com 334) (Bom) Taxmann.com 334) (Bom)  Tirupati Foam Ltd. v. Dy. CIT (2016) 380 ITR 493 (Guj.) (HC) Tirupati Foam Ltd. v. Dy. CIT (2016) 380 ITR 493 (Guj.) (HC) Tirupati Foam Ltd. v. Dy. CIT (2016) 380 ITR 493 (Guj.) (HC)  Gujarat Eco Textile Park Ltd. v.ACIT (2015) 372 ITR 584 (Guj.) Gujarat Eco Textile Park Ltd. v.ACIT (2015) 372 ITR 584 (Guj.) Gujarat Eco Textile Park Ltd. v.ACIT (2015) 372 ITR 584 (Guj.) (HC)  Nirmal Bang Nirmal Bang Securities (P) Ltd. v. ACIT. (2016) 382 ITR 93 Securities (P) Ltd. v. ACIT. (2016) 382 ITR 93 (Bom.) Pandesara Infrastructure Ltd v. Dy. CIT (2019) 263 (Bom.) Pandesara Infrastructure Ltd v. Dy. CIT (2019) 263 (Bom.) Pandesara Infrastructure Ltd v. Dy. CIT (2019) 263 Taxman 366 (Guj.) (HC) Taxman 366 (Guj.) (HC) 9.2 On the contrary, the Ld. Departmental Representative (DR) ary, the Ld. Departmental Representative (DR) ary, the Ld. Departmental Representative (DR) referred to the survey proceedings and the information obtained referred to the survey proceedings and the information obtained referred to the survey proceedings and the information obtained therein and submitted that the basis of the reasons recorded is the herein and submitted that the basis of the reasons recorded is the herein and submitted that the basis of the reasons recorded is the fresh information obtained during the course of the survey which fresh information obtained during the course of the survey which fresh information obtained during the course of the survey which constitute at tangible material. Further, the Ld. DR submitted that constitute at tangible material. Further, the Ld. DR submitted that constitute at tangible material. Further, the Ld. DR submitted that M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 14 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 the employees of the group company specifically stated that no the employees of the group company specifically stated t the employees of the group company specifically stated t development of the software product was carried out at the SEZ and development of the software product was carried out at the SEZ and development of the software product was carried out at the SEZ and only packaging was done. This admission was with reference to the only packaging was done. This admission was with reference to the only packaging was done. This admission was with reference to the assessee and its group company and therefore, it constitutes a assessee and its group company and therefore, it constitutes a assessee and its group company and therefore, it constitutes a tangible material and hence contention of the Ld. counsel for the tangible material and hence contention of the Ld. cou tangible material and hence contention of the Ld. cou assessee the reopening has been initiated merely on the basis of the assessee the reopening has been initiated merely on the basis of the assessee the reopening has been initiated merely on the basis of the change of the opinion is liable to be rejected. change of the opinion is liable to be rejected.

9.3 We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the relevant material on record. It is settled principle to the law as held relevant material on record. It is settled principle to the relevant material on record. It is settled principle to the by the Hon’ble Supreme Court in by the Hon’ble Supreme Court in CIT vs Kelviantor India Ltd. Kelviantor India Ltd. 320 ITR 561 (SC) that the the reassessment proceedings cannot be initiated reassessment proceedings cannot be initiated on the basis of mere ‘change of the opinion’ by the Assessing Officer the Assessing Officer on the same set of the facts and on the same set of the facts and circumstances. But in the instant circumstances. But in the instant case, we find that in the course of the survey at the premises of the case, we find that in the course of the survey at the premises of the case, we find that in the course of the survey at the premises of the assessee as well as its group concern assessee as well as its group concern, adverse information was information was gathered relating to the issue of amortization expenses of goodwill relating to the issue of amortization expenses of goodwill relating to the issue of amortization expenses of goodwill as well as exemption as well as exemption claimed on export of software. During the claimed on export of software. During the course of the survey on the employees of group concern Shri course of the survey on the employees of group concern course of the survey on the employees of group concern Gajananad Thakerey Gajananad Thakerey admitted that in the SEZ units software CDs admitted that in the SEZ units software CDs were merely packed, , which were supplied from the Bombay office. which were supplied from the Bombay office. The entire claim of exempti exemption u/s 10AA of the Act is available for on u/s 10AA of the Act is available for development of the software products from the SEZ unit but in view development of the software products from the SEZ unit but in view development of the software products from the SEZ unit but in view of statement, the genuineness of the entire claim of the assessee of statement, the genuineness of the entire claim of the assessee of statement, the genuineness of the entire claim of the assessee

M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 15 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 and its group companies was and its group companies was not free from doubts. not free from doubts. In the case of Raymond wollen Mills ls 236 ITR 34(SC), Hon’ble supreme Court Hon’ble supreme Court has held that sufficiency or correctness of material/ information is not held that sufficiency or correctness of material/ information is not held that sufficiency or correctness of material/ information is not to be seen at the stage of recording reasons. to be seen at the stage of recording reasons. The relevant finding of The relevant finding of Hon’ble Supreme Court is reproduced as under: Hon’ble Supreme Court is reproduced as under:

“3. In this case, we do 3. In this case, we do not have to give a final decision as to whether not have to give a final decision as to whether there is suppression of material facts by the assessee or not. We have there is suppression of material facts by the assessee or not. We have there is suppression of material facts by the assessee or not. We have only to see whether there was prima facie some material on the basis of only to see whether there was prima facie some material on the basis of only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or which the Department could reopen the case. The sufficiency or which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. rrectness of the material is not a thing to be considered at this stage. rrectness of the material is not a thing to be considered at this stage. We are of the view that the court cannot strike down the reopening of the We are of the view that the court cannot strike down the reopening of the We are of the view that the court cannot strike down the reopening of the case in the facts of this case. It will be open to the assessee to prove that case in the facts of this case. It will be open to the assessee to prove that case in the facts of this case. It will be open to the assessee to prove that the assumption of facts made in the notice was erroneous. The assessee the assumption of facts made in the notice was erroneous. The assessee may also prove that no new facts came to the knowledge of the Income may also prove that no new facts came to the knowledge of the Income- may also prove that no new facts came to the knowledge of the Income tax Officer after completion of the assessment proceeding. We are not tax Officer after completion of the assessment proceeding. We are not tax Officer after completion of the assessment proceeding. We are not expressing any opinion on the merits of the case. The questions of fact expressing any opinion on the merits of the case. The questions of fact expressing any opinion on the merits of the case. The questions of fact and law are left open to be investigated and decided by the assessing aw are left open to be investigated and decided by the assessing aw are left open to be investigated and decided by the assessing authority. The appellant will be entitled to take all the points before the authority. The appellant will be entitled to take all the points before the authority. The appellant will be entitled to take all the points before the assessing authority. The appeals are dismissed. There will be no order assessing authority. The appeals are dismissed. There will be no order assessing authority. The appeals are dismissed. There will be no order as to costs.”

9.4 Therefore, in view of the herefore, in view of the tangible material tangible material/information gathered during survey survey action on the premises of the assessee as action on the premises of the assessee as well group concerns, the Assessing Officer has , the Assessing Officer has validly validly reopened the assessment. In our opinion, this is not a case of mere change of assessment. In our opinion, this is not a case of assessment. In our opinion, this is not a case of M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 16 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 opinion on same set of facts opinion on same set of facts and circumstances of the case in and circumstances of the case in prior assessments but it is based on the subsequent tangible information but it is based on the subsequent tangible information but it is based on the subsequent tangible information and hence, the decisions relied upon by the Ld. counsel for the and hence, the decisions relied upon by the Ld. counsel for the and hence, the decisions relied upon by the Ld. counsel for the assessee are distinguishable. The ground No. 1.2 of the appeal of assessee are distinguishable. The ground No. 1.2 of the appeal of assessee are distinguishable. The ground No. 1.2 of the appeal of the assessee is accordingly dismissed ordingly dismissed.

11. The ground Nos s. 1.4 and 1.5 appeal were not pressed by the . 1.4 and 1.5 appeal were not pressed by the Ld. counsel for the assessee and therefore, same are dismissed as Ld. counsel for the assessee and therefore, same are dismissed as Ld. counsel for the assessee and therefore, same are dismissed as infructuous.

M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 17 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 obtained u/s 151 of the Act tained u/s 151 of the Act , which is issued by the Ld. Pr. CIT issued by the Ld. Pr. CIT Central, Mumbai-3, a copy of which is available on Paper Book a copy of which is available on Paper Book Pages 263 to 266. The Ld. counsel for the assessee referred to page 263 to 266. The Ld. counsel for the assessee referred to page 263 to 266. The Ld. counsel for the assessee referred to page 263 of the Paper Book and submitted that th 263 of the Paper Book and submitted that the relevant column for e relevant column for the the the income income escaping income escaping escaping assessment assessment assessment was was was left left left blank blank blank and and and no no no quantification was made quantification was made in that column, whereas in the reasons hereas in the reasons recorded, recorded, recorded, the the the amount amount amount of of of income income income escaped escaped escaped recorded is Rs.33,84,37,923/-, break up of which has been discussed in the break up of which has been discussed in the break up of which has been discussed in the reasons recorded. According to the Ld. ons recorded. According to the Ld. Counsel, this clearly shows this clearly shows that Ld. PCIT has not read the proposal form at all. Further, the Ld. that Ld. PCIT has not read the proposal form at all. Further, the Ld. that Ld. PCIT has not read the proposal form at all. Further, the Ld. counsel submitted that along with proposal, counsel submitted that along with proposal, a copy of the reasons copy of the reasons was forwarded to the PCIT, forwarded to the PCIT, seventh paragraph of of which reads as under:

“The case is within the four years from the end of assessment year under The case is within the four years from the end of assessment year under The case is within the four years from the end of assessment year under consideration, in compliance to the Proviso to Sec. 151(2) of the Income Tax consideration, in compliance to the Proviso to Sec. 151(2) of the Income Tax consideration, in compliance to the Proviso to Sec. 151(2) of the Income Tax Act 1961, permission of the Joint/Addl. Commissioner of Income tax, Central Act 1961, permission of the Joint/Addl. Commissioner of Income tax, Central Act 1961, permission of the Joint/Addl. Commissioner of Income tax, Central Range- 5, Mumbai 5, Mumbai is hereby sought to re-open the case of the assessee for open the case of the assessee for A. Y. 2014-15 by issue of notice u/s. 15 by issue of notice u/s. 148 of the Income Tax Act 1961.” 148 of the Income Tax Act 1961.” 12.1 The Ld. counsel for the assessee referred to above para The Ld. counsel for the assessee referred to above para The Ld. counsel for the assessee referred to above paragraph and submitted that the Ld. PCIT has granted the approval and submitted that the Ld. PCIT has granted the approval and submitted that the Ld. PCIT has granted the approval mechanically without reading above nically without reading above paragraph. The Ld. counsel for . The Ld. counsel for the assessee relied on the decision of the Hon’ble Bombay High the assessee relied on the decision of the Hon’ble Bombay High the assessee relied on the decision of the Hon’ble Bombay High Court in the case of Sharvah Multitrade Company (P.) Ltd. v. IT Sharvah Multitrade Company (P.) Ltd. v. IT Court in the case of 134 Taxmann.com 134 (Bombay) 134 Taxmann.com 134 (Bombay). He also relied on the decision of . He also relied on the decision of M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 18 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 the Hon’ble Bombay High Court in the case of the Hon’ble Bombay High Court in the case of Vodafone India Ltd. Vodafone India Ltd. v. DCIT Writ Petition No. 2108 of 2023 v. DCIT Writ Petition No. 2108 of 2023.

12.2 On the contrary, the Ld. DR submitted that in the column for On the contrary, the Ld. DR submitted that in the column for On the contrary, the Ld. DR submitted that in the column for approval u/s 151 of the Act approval u/s 151 of the Act, it is clearly mentioned that income it is clearly mentioned that income escaped was more th escaped was more than Rs. 1 lakh and in the relevant column it has an Rs. 1 lakh and in the relevant column it has been affirmed by way of mentioning by way of mentioning ‘yes’, therefore, therefore, leaving the subsequent column as as blank, was not a material issue which could not a material issue which could invalidate the approval u/s 151 of the Act. According to him, the invalidate the approval u/s 151 of the Act. According to him, the invalidate the approval u/s 151 of the Act. According to him, the Ld. PCIT has seen the s seen the substance of reasons recorded in the light of reasons recorded in the light of the object and purpose for which the legislature has inserted the the object and purpose for which the legislature has inserted the the object and purpose for which the legislature has inserted the provisions for reopening of the assessment. Regarding the provisions for reopening of the assessment. Regarding the provisions for reopening of the assessment. Regarding the paragraph 7 of the reasons recorded paragraph 7 of the reasons recorded, the Ld. DR submitted that Ld. the Ld. DR submitted that Ld. PCIT was authorized to grant approval in this case and therefore, authorized to grant approval in this case and therefore, authorized to grant approval in this case and therefore, after due application of the mind after due application of the mind, he has granted approval for he has granted approval for reopening of the assessment and therefore, reopening of the assessment and therefore, contention of the contention of the assessee are liable to be rejected assessee are liable to be rejected.

12.3 We have heard rival submission o We have heard rival submission of the parties and perused the f the parties and perused the relevant material on record. In our opinion, the contention raised by relevant material on record. In our opinion, the contention raised by relevant material on record. In our opinion, the contention raised by the Ld. counsel for the assessee that income escaping amount was the Ld. counsel for the assessee that income escaping amount the Ld. counsel for the assessee that income escaping amount incorrectly mentioned mentioned in proforma for approval u/s 151 of the Act, in proforma for approval u/s 151 of the Act, are baseless. We do not . We do not find any infirmity in the approval granted in the approval granted

M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 19 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 by the ld PCIT. The relevant part of the proforma of . The relevant part of the proforma of . The relevant part of the proforma of approval u/s 151 is reproduced as under: 151 is reproduced as under:

“

Approving Authority Approving Authority PCIT/CIT PCIT/CIT Category Assessment Assessment Income Escaped Amount >= 1 Lakh Income Escaped Amount >= 1 Lakh Yes Income Escaping Assessment Income Escaping Assessment (Rs.) ”

12.4 On perusal of the above proforma, it is evident that already On perusal of the above proforma, it is evident that already On perusal of the above proforma, it is evident that already income escaped amount was stated income escaped amount was stated to be more than Rs.1 to be more than Rs.1 lakh , therefore, it is not significant to mention the amount of income therefore, it is not significant to mention the amount of income therefore, it is not significant to mention the amount of income escaping assessment in the subsequent row. The amount has escaping assessment in the subsequent row. The amount escaping assessment in the subsequent row. The amount already been specifically mentioned in reasons recorded and already been specifically mentioned in reasons recorded and already been specifically mentioned in reasons recorded and therefore, it was not a material fact on the basis of which the entire therefore, it was not a material fact on the basis of which the entire therefore, it was not a material fact on the basis of which the entire approval could be invalidated approval could be invalidated. This contention of the Ld. counsel for his contention of the Ld. counsel for the assessee is accordingly rejected. Regarding, the second the assessee is accordingly rejected. Regarding, th the assessee is accordingly rejected. Regarding, th contention of the Ld. counsel that in the reasons recorded it was contention of the Ld. counsel that in the reasons recorded it was contention of the Ld. counsel that in the reasons recorded it was stated that reasons was to be approved by the Joint/Additional the Joint/Additional Commissioner of Income Commissioner of Income-tax. However, we find that the Ld. PCIT tax. However, we find that the Ld. PCIT after following the due procedure of the law and after following the due procedure of the law and under under the authority granted in relevant section relevant section, has granted approval. We do not find has granted approval. We do not find any infirmity in the approval granted by the Ld. PCIT and any infirmity in the approval granted by the Ld. PCIT and any infirmity in the approval granted by the Ld. PCIT and accordingly the objection accordingly the objections of the assessee are rejected. of the assessee are rejected.

M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 20 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023

M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 21 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 The assessee company created security premium (without actual The assessee company created security premium (without actual The assessee company created security premium (without actual cash flow) of Rs.84,34,72,537/ ) of Rs.84,34,72,537/- in the process of amalgamation and in the process of amalgamation and goodwill of Rs.80,80,00,000/ goodwill of Rs.80,80,00,000/- was created in the books of account was created in the books of account of the assessee. In the books of accounts, the assessee amortized of the assessee. In the books of accounts, the assessee amortized of the assessee. In the books of accounts, the assessee amortized said goodwill over a period of 5 years but for the purpose of said goodwill over a period of 5 years but for the purpose of said goodwill over a period of 5 years but for the purpose of computation of the income under the provisions of the Act utation of the income under the provisions of the Act utation of the income under the provisions of the Act, said amortization was added back to the profit as per books of account. amortization was added back to the profit as per books of account. amortization was added back to the profit as per books of account. The exercise of creation of the goodwill in the books of accounts of The exercise of creation of the goodwill in the books of accounts of The exercise of creation of the goodwill in the books of accounts of the assessee and its valuation was held to be without any basis by the assessee and its valuation was held to be without any ba the assessee and its valuation was held to be without any ba the Assessing Officer the Assessing Officer. According to the Assessing Officer . According to the Assessing Officer, there was no actual cash flow and only corresponding book low and only corresponding book entry in the low and only corresponding book liability side in the name liability side in the name of reserve was created to match the created to match the balance sheet. The Assessing Officer in para 3.2.5 of the impugned balance sheet. The Assessing Officer in para 3.2.5 of th balance sheet. The Assessing Officer in para 3.2.5 of th assessment order held that amortization of the goodwill was not assessment order held that amortization of the goodwill was not assessment order held that amortization of the goodwill was not allowable for the purpose of the computation of the books profit. allowable for the purpose of the computation of the books profit. allowable for the purpose of the computation of the books profit. The relevant finding of the Assessing Officer is reproduced as The relevant finding of the Assessing Officer is reproduced as The relevant finding of the Assessing Officer is reproduced as under:

“3.2.5 The goodwill was created in asset side 3.2.5 The goodwill was created in asset side and matchedwith and matchedwith reserve in liability side. These entries were created by passing the reserve in liability side. These entries were created by passing the reserve in liability side. These entries were created by passing the bookentry. There was no actual transfer of assets and no actual bookentry. There was no actual transfer of assets and no actual bookentry. There was no actual transfer of assets and no actual cash flow for thisclaimed asset of goodwill. There was no cash flow for thisclaimed asset of goodwill. There was no cash flow for thisclaimed asset of goodwill. There was no consideration of any kind paid by M/s Sanman Tra consideration of any kind paid by M/s Sanman Trade Impex Ltd to de Impex Ltd to M/s Hazel Metals and Minerals Pvt Ltd. After creation of the M/s Hazel Metals and Minerals Pvt Ltd. After creation of the M/s Hazel Metals and Minerals Pvt Ltd. After creation of the goodwillthe same were amortized which was claimed as expenses goodwillthe same were amortized which was claimed as expenses goodwillthe same were amortized which was claimed as expenses in Profit & Lossaccount by debiting the same. By claiming the same in Profit & Lossaccount by debiting the same. By claiming the same in Profit & Lossaccount by debiting the same. By claiming the same as expense assessee hasreduced its book profit and as expense assessee hasreduced its book profit and thus reduced thus reduced its tax liability under MAT. Thisamortization of goodwill is not its tax liability under MAT. Thisamortization of goodwill is not its tax liability under MAT. Thisamortization of goodwill is not allowable for purpose of computation of bookprofit which the allowable for purpose of computation of bookprofit which the allowable for purpose of computation of bookprofit which the assessee has claimed to reduce its taxable profit. assessee has claimed to reduce its taxable profit.”

M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 22 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 16.1 Further, after detailed discussion, the Assessing Officer a Further, after detailed discussion, the Assessing Officer a Further, after detailed discussion, the Assessing Officer added this amount of the goodwill amortization expenses amounting to this amount of the goodwill amortization expenses this amount of the goodwill amortization expenses Rs.16,16,00,000/- to the income of the assessee for the purpose of to the income of the assessee for the purpose of to the income of the assessee for the purpose of the computation of the regular income. The relevant finding of the the computation of the regular income. The relevant finding of the the computation of the regular income. The relevant finding of the Assessing Officer is reproduced as under: Assessing Officer is reproduced as under:

“3.2.11 Thus from the above exhaustive discussionon the basis of facts and from the above exhaustive discussionon the basis of facts and from the above exhaustive discussionon the basis of facts and legal position, it is clear that, the amortization claimed by the assessee on legal position, it is clear that, the amortization claimed by the assessee on legal position, it is clear that, the amortization claimed by the assessee on goodwill after the scheme of amalgamation is incorrect and inadmissible goodwill after the scheme of amalgamation is incorrect and inadmissible goodwill after the scheme of amalgamation is incorrect and inadmissible under the Income tax provisions. The assess under the Income tax provisions. The assessee failed to explain the ee failed to explain the discrepancies in the projected values taken for revenue and EBITDA from discrepancies in the projected values taken for revenue and EBITDA from discrepancies in the projected values taken for revenue and EBITDA from thereal values have. With such huge difference in real value and projected thereal values have. With such huge difference in real value and projected thereal values have. With such huge difference in real value and projected value, the valuation itself is not reliable. Merevaluation by an independent value, the valuation itself is not reliable. Merevaluation by an independent value, the valuation itself is not reliable. Merevaluation by an independent professional is not sufficient. The valuation shouldbe supported by actual ional is not sufficient. The valuation shouldbe supported by actual ional is not sufficient. The valuation shouldbe supported by actual figures. Moreover, no assets have been considered in thevaluation report. figures. Moreover, no assets have been considered in thevaluation report. figures. Moreover, no assets have been considered in thevaluation report. Therefore, Therefore, Therefore, an an an amount amount amount of of of amortized amortized amortized goodwill goodwill goodwill amounting amounting amounting to to to Rs. Rs. Rs. 16,16,00,000/- -is added back to the Income of the assessee. see.” 16.2 However, while final computation of the income However, while final computation of the income However, while final computation of the income to the assessment order, the Assessing Officer only computed total income , the Assessing Officer only computed total income , the Assessing Officer only computed total income under the regular provisions of the Act and no computation for under the regular provisions of the Act and no computation for under the regular provisions of the Act and no computation for book profit was made by the Assessing Officer. The relevant book profit was made by the Assessing Officer. The relevant book profit was made by the Assessing Officer. The relevant computation made in assessment order made in assessment order is reproduced as under: is reproduced as under:

“6. In view of the 6. In view of the above, the total income of the assessee is recomputed above, the total income of the assessee is recomputed as under: Particulars Amount (Rs.) Amount (Rs.) Total income Assessed u/s 143 r.w.s. 153A Total income Assessed u/s 143 r.w.s. 153A 28097990 28097990 vide order dated 29.12.2017 vide order dated 29.12.2017 16,16,00,000 Add: Disallowance of expenses related to Add: Disallowance of expenses related to 16,16,00,000 amortization of Goodwill (as discussed amortization of Goodwill (as discussed above) Add: Disallowance of exemption claimed u/s Add: Disallowance of exemption claimed u/s 17,68,37,923 17,68,37,923 10AA of the (as discussed above) 10AA of the (as discussed above) 59,27,16,162 Add: Undisclosed expenditure u/s 69C (as Add: Undisclosed expenditure u/s 69C (as 59,27,16,162 discussed above) discussed above) Assessed Total Income Assessed Total Income 95,92,52,075 95,92,52,075

M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 23 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023

“8.10. I find that the appellant has made an alternative claim that 8.10. I find that the appellant has made an alternative claim that 8.10. I find that the appellant has made an alternative claim that amortization on goodwill was not claimed as per normal provisions of the amortization on goodwill was not claimed as per normal provisions of the amortization on goodwill was not claimed as per normal provisions of the Act. I have perused the computation of income filed by the appellant in its Act. I have perused the computation of income filed by the appellant in its Act. I have perused the computation of income filed by the appellant in its paper book. This claim of the paper book. This claim of the appellant has been verified by the appellant has been verified by the undersigned and is found to be correct. undersigned and is found to be correct. AY Disallowance made by AO on Disallowance made by AO on Depreciation Depreciation claimed claimed by by the the account of depreciation of account of depreciation of appellant in respect of all assets appellant in respect of all assets goodwill goodwill in the computation of income in the computation of income 2014-15 16,16,00,000 16,16,00,000 7,50,677 2015-16 16,16,00,000 16,16,00,000 4,58,851 2016-17 16,16,00,000 16,16,00,000 15,80,249 2017-18 16,16,00,000 16,16,00,000 8,57,369 Thus, in my view, there is no need to adjudicate the issue on merit. Since, Thus, in my view, there is no need to adjudicate the issue on merit. Since, Thus, in my view, there is no need to adjudicate the issue on merit. Since, it stands established that the very basis of disallowance does not exist, it stands established that the very basis of disallowance does not exist, it stands established that the very basis of disallowance does not exist, the ground is treated as allowed. the ground is treated as allowed.”

M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 24 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023

19.1 Briefly stated facts qua the issue in Briefly stated facts qua the issue in dispute are that in view of dispute are that in view of the statement of Shri Gajanan Thakarey (Office Assistant of M/s the statement of Shri Gajanan Thakarey (Office Assistant of M/s the statement of Shri Gajanan Thakarey (Office Assistant of M/s Hazel Mercantile Ltd.) during the course of survey at Nagpur SEZ, Hazel Mercantile Ltd.) during the course of survey at Nagpur SEZ Hazel Mercantile Ltd.) during the course of survey at Nagpur SEZ wherein he stated th wherein he stated that software CDs were only copied at software CDs were only copied, packed and dispatched from Nagpur office and ed from Nagpur office and verification in assessment verification in assessment proceedings, the Ld. Assessing Officer concluded Ld. Assessing Officer concluded that exemption Ld. Assessing Officer concluded claimed u/s 10AA was not genuine. The CIT(A) has summarised the claimed u/s 10AA was not genuine. The CIT(A) has summarised the claimed u/s 10AA was not genuine. The CIT(A) has summarised the finding of the AO as under: as under:

“9.3. Survey action concluded with following findings: 9.3. Survey action concluded with following findings: (a) Software was (a) Software was sold (exported) to merely one or two parties in entire year. sold (exported) to merely one or two parties in entire year. (b) Software was sold (exported) only on 3 to 5 days in the month of March Software was sold (exported) only on 3 to 5 days in the month of March Software was sold (exported) only on 3 to 5 days in the month of March in the entire year. in the entire year. (c) No evidence or documents were available related to marketing or (c) No evidence or documents were available related to marketing or (c) No evidence or documents were available related to marketing or communications with the buyers. communications with the buyers. (d) Software was sold (exported) in very high quantum to one party in a year Software was sold (exported) in very high quantum to one party in a year Software was sold (exported) in very high quantum to one party in a year was abruptly stopped. So, assessee was asked whether he has followed up was abruptly stopped. So, assessee was asked whether he has followed up was abruptly stopped. So, assessee was asked whether he has followed up with these buyers as to why they have stopped buying software suddenly. with these buyers as to why they have stopped buying software suddenly. with these buyers as to why they have stopped buying software suddenly. That too when exports were so high. That too when exports were so high. Assessee could not explain the same. Assessee could not explain the same. (e) Software was exported to those parties from whom chemicals were Software was exported to those parties from whom chemicals were Software was exported to those parties from whom chemicals were imported, which was very unusual. imported, which was very unusual. (f) No evidence was found related to after sale services regarding the No evidence was found related to after sale services regarding the No evidence was found related to after sale services regarding the software exported to the customers. software exported to the customers. (g) There was no major intangible asset in the books of assessee and was no major intangible asset in the books of assessee and was no major intangible asset in the books of assessee and further, the cost incurred for development of software was not available. further, the cost incurred for development of software was not available. further, the cost incurred for development of software was not available.

M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 26 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023

(h) The profit derived from the software export was 92% to 97 %, which is The profit derived from the software export was 92% to 97 %, which is The profit derived from the software export was 92% to 97 %, which is very unusual. (i) There were only 9 to 12 employ There were only 9 to 12 employees employed at SEZ Units including office ees employed at SEZ Units including office boys and support staff. This is highly unusual that with such low employee boys and support staff. This is highly unusual that with such low employee boys and support staff. This is highly unusual that with such low employee strength, the assessee exported software to the tune of around Rs strength, the assessee exported software to the tune of around Rs strength, the assessee exported software to the tune of around Rs 18.41crores in the relevant year. 18.41crores in the relevant year. (j) Shri Gajanan Thakare, an Employee Shri Gajanan Thakare, an Employee at Nagpur SEZ also stated in his at Nagpur SEZ also stated in his statement dated 24.03.2021 that original software CDs were brought from statement dated 24.03.2021 that original software CDs were brought from statement dated 24.03.2021 that original software CDs were brought from Mumbai Office and, merely copy and packaging were done at Nagpur Office. Mumbai Office and, merely copy and packaging were done at Nagpur Office. Mumbai Office and, merely copy and packaging were done at Nagpur Office. (k) It is also seen that the sale price of software is USD 1000 to USD 1400 It is also seen that the sale price of software is USD 1000 to USD 1400 It is also seen that the sale price of software is USD 1000 to USD 1400 per unit which also appears very unusual, when the product is new and has r unit which also appears very unusual, when the product is new and has r unit which also appears very unusual, when the product is new and has not been proven in the market of UAE. not been proven in the market of UAE.” 19.1.1 According to the Assessing Officer, the quantum of profit According to the Assessing Officer, the quantum of profit According to the Assessing Officer, the quantum of profit earned in software development was unrealistic in view of few earned in software development was unrealistic in view of few earned in software development was unrealistic in view of few numbers of employe numbers of employees employed by the assessee. The Assessing es employed by the assessee. The Assessing Officer also rejected the argument of the assessee that once the Officer also rejected the argument of the assessee that once the Officer also rejected the argument of the assessee that once the eligibility of deduction u/s 10A or 10B or 10AA has been accepted eligibility of deduction u/s 10A or 10B or 10AA has been accepted eligibility of deduction u/s 10A or 10B or 10AA has been accepted in the initial assessment year, then in the initial assessment year, then, it cannot be withdrawn it cannot be withdrawn in subsequent assessm subsequent assessment years. In this regard the Ld. Assessing ent years. In this regard the Ld. Assessing Officer relied on the decision of the Hon’ble Supreme Court in the Officer relied on the decision of the Hon’ble Supreme Court in the Officer relied on the decision of the Hon’ble Supreme Court in the case of DCIT v. ACE Multi Axis Systems Ltd. reported in (2017) 88 case of DCIT v. ACE Multi Axis Systems Ltd. reported in (2017) 88 case of DCIT v. ACE Multi Axis Systems Ltd. reported in (2017) 88 Taxmann.com 69. The Ld. Assessing Officer also rejected other Taxmann.com 69. The Ld. Assessing Officer also rejected other Taxmann.com 69. The Ld. Assessing Officer also rejected other documentary evidence submitted by the assessee supporting the nce submitted by the assessee supporting the nce submitted by the assessee supporting the export of software including customs documentations, letter from export of software including customs documentation export of software including customs documentation the specified officer of the SEZ etc. On further appeal, the Ld. CIT(A) the specified officer of the SEZ etc. On further appeal, the Ld. CIT(A) the specified officer of the SEZ etc. On further appeal, the Ld. CIT(A) deleted the addition observing as under: deleted the addition observing as under:

“Decision:

M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 27 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023

11. I have considered I have considered the facts of the case and submission of the appellant. the facts of the case and submission of the appellant. Sh. Mayank Hasmukh Rai Parekh, the person who looks after the IT Mayank Hasmukh Rai Parekh, the person who looks after the IT Mayank Hasmukh Rai Parekh, the person who looks after the IT infrastructure of the company has stated as under in response to question infrastructure of the company has stated as under in response to question infrastructure of the company has stated as under in response to question No. 60:- "Q.60 Please provide the details of software product "Q.60 Please provide the details of software product "Q.60 Please provide the details of software product developed and exported from M/s Sanman Trade Impex Pvt Ltd Surat, SEZ in brief. exported from M/s Sanman Trade Impex Pvt Ltd Surat, SEZ in brief. exported from M/s Sanman Trade Impex Pvt Ltd Surat, SEZ in brief. Please Please Please provide provide provide the the the details details details of of of product product product name name name and and and distributors/purchasers name. distributors/purchasers name. Ans: Sir, the product name exported from Sanman Trade Impex Pvt Ans: Sir, the product name exported from Sanman Trade Impex Pvt Ans: Sir, the product name exported from Sanman Trade Impex Pvt Ltd, Surat SEZ are "ACTIVCRM" and " Ltd, Surat SEZ are "ACTIVCRM" and "MP CRM WHITE LABEL MP CRM WHITE LABEL (Computer Softwares). The distributors/purchases name are M/s (Computer Softwares). The distributors/purchases name are M/s (Computer Softwares). The distributors/purchases name are M/s Aureole Trading LLC from FY 13 Aureole Trading LLC from FY 13-14 to FY 16-17. M/s Dinowic Pte 17. M/s Dinowic Pte Ltd for FY 18 Ltd for FY 18-19 and M/s Mckenzie Inter Trade Pte Ltd for 19 and M/s Mckenzie Inter Trade Pte Ltd for FY 18-19, FY 19-20 and M/s Merit Union Ltd for FY 1920 20 and M/s Merit Union Ltd for FY 1920." 11.1. He has justified the pricing in reply to question No. 65. As regards cost 11.1. He has justified the pricing in reply to question No. 65. As regards cost 11.1. He has justified the pricing in reply to question No. 65. As regards cost of development, sales, etc. he has stated that he was not aware as it was of development, sales, etc. he has stated that he was not aware as it was of development, sales, etc. he has stated that he was not aware as it was handled by different people. handled by different people. 11.2. The AO has referred to the statement of Sh. Gajanan Thakare, 11.2. The AO has referred to the statement of Sh. Gajanan Thakare, 11.2. The AO has referred to the statement of Sh. Gajanan Thakare, employee of Nagpur SEZ to buttress his stand that only copy and packaging loyee of Nagpur SEZ to buttress his stand that only copy and packaging loyee of Nagpur SEZ to buttress his stand that only copy and packaging was done at Nagpur office. However, I find that Sh. Gajanan Thakare is an was done at Nagpur office. However, I find that Sh. Gajanan Thakare is an was done at Nagpur office. However, I find that Sh. Gajanan Thakare is an employee of M/s Hazel Mercantile Ltd. and not that of the appellant. More employee of M/s Hazel Mercantile Ltd. and not that of the appellant. More employee of M/s Hazel Mercantile Ltd. and not that of the appellant. More importantly, the appellant's unit is importantly, the appellant's unit is located in Surat SEZ (AY 2014 located in Surat SEZ (AY 2014-15 to 2017-18) and not in Nagpur SEZ. The Form No. 18) and not in Nagpur SEZ. The Form No. 56F issued by the Chartered 56F issued by the Chartered Accountant confirms this. Thus, in my view, the statement of Sh. Gajanan Accountant confirms this. Thus, in my view, the statement of Sh. Gajanan Accountant confirms this. Thus, in my view, the statement of Sh. Gajanan Thakare recorded at Nagpur is not relevant for the issue at hand. The Thakare recorded at Nagpur is not relevant for the issue at hand. The Thakare recorded at Nagpur is not relevant for the issue at hand. The statement of Sh. Mayank Hasmukh Rai Parekh is more relevant to the facts statement of Sh. Mayank Hasmukh Rai Parekh is more relevant to the facts statement of Sh. Mayank Hasmukh Rai Parekh is more relevant to the facts of the case. 11.3. The AO has stated that the appellant has not produced details in its 11.3. The AO has stated that the appellant has not produced details in its 11.3. The AO has stated that the appellant has not produced details in its own possession and that the letter from the specified officer of the SEZ own possession and that the letter from the specified officer of the SEZ own possession and that the letter from the specified officer of the SEZ cannot be the conclusi cannot be the conclusive evidence. In this regard, I find that the appellant ve evidence. In this regard, I find that the appellant has produced the copy of export invoices, bill of lading, shipping bill and has produced the copy of export invoices, bill of lading, shipping bill and has produced the copy of export invoices, bill of lading, shipping bill and bank realisation certificate. As regards after sale support service, Sh. bank realisation certificate. As regards after sale support service, Sh. bank realisation certificate. As regards after sale support service, Sh. Mayank Hasmukh Rai Parekh has stated that the suppor Mayank Hasmukh Rai Parekh has stated that the support to end customer t to end customer is provided by the distributor. Thus, it cannot be stated that the appellant is provided by the distributor. Thus, it cannot be stated that the appellant is provided by the distributor. Thus, it cannot be stated that the appellant has not furnished any evidences. No adverse finding has been recorded in has not furnished any evidences. No adverse finding has been recorded in has not furnished any evidences. No adverse finding has been recorded in respect of actual exports or its realisation. No adverse finding of customs or respect of actual exports or its realisation. No adverse finding of customs or respect of actual exports or its realisation. No adverse finding of customs or SEZ authorities has been brought out. rities has been brought out. 11.4. As regards the high profitability of the appellant, in the case of CIT vs 11.4. As regards the high profitability of the appellant, in the case of CIT vs 11.4. As regards the high profitability of the appellant, in the case of CIT vs Vesesh Infotechnics Ltd, 210 Taxman 522, (DoJ: 01.08.2012), the Hon'ble Vesesh Infotechnics Ltd, 210 Taxman 522, (DoJ: 01.08.2012), the Hon'ble Vesesh Infotechnics Ltd, 210 Taxman 522, (DoJ: 01.08.2012), the Hon'ble Karnataka HC has held that it is perfectly possible for a software enterpri Karnataka HC has held that it is perfectly possible for a software enterpri Karnataka HC has held that it is perfectly possible for a software enterprise to establish a new unit at an investment of Rs.2.06 lakhs, make a sale of to establish a new unit at an investment of Rs.2.06 lakhs, make a sale of to establish a new unit at an investment of Rs.2.06 lakhs, make a sale of M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 28 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023

Rs.72.32 lakhs in 18 days and have profitability of 94.8%. The Hon'ble HC Rs.72.32 lakhs in 18 days and have profitability of 94.8%. The Hon'ble HC Rs.72.32 lakhs in 18 days and have profitability of 94.8%. The Hon'ble HC has held that Revenue could not doubt the claim of the assessee. has held that Revenue could not doubt the claim of the assessee. has held that Revenue could not doubt the claim of the assessee. 11.5. In the case of ACIT vs Grasim Indu 11.5. In the case of ACIT vs Grasim Industries Ltd in Ltd in ITA No. 1519/Mum/2002 1519/Mum/2002 for for AY AY 1992-93 93 dated dated 17.11.2006, 17.11.2006, (https://indiankanoon.org/doc/8742421), the Hon'ble ITAT held as follows: (https://indiankanoon.org/doc/8742421), the Hon'ble ITAT held as follows: (https://indiankanoon.org/doc/8742421), the Hon'ble ITAT held as follows: "The task of the Tribunal would, therefore, be to analyse the materials relied "The task of the Tribunal would, therefore, be to analyse the materials relied "The task of the Tribunal would, therefore, be to analyse the materials relied on by both the sides and evaluate on by both the sides and evaluate the relative merits and reliability. It is the relative merits and reliability. It is sometimes in the nature of a comparative exercise to measure the degree of sometimes in the nature of a comparative exercise to measure the degree of sometimes in the nature of a comparative exercise to measure the degree of reliability between the materials relied on by the revenue and the materials reliability between the materials relied on by the revenue and the materials reliability between the materials relied on by the revenue and the materials relied on by the assessee. This degree of reliability seems t relied on by the assessee. This degree of reliability seems t relied on by the assessee. This degree of reliability seems to be the crucial test in the present case in applying the principles of preponderance of test in the present case in applying the principles of preponderance of test in the present case in applying the principles of preponderance of probability. We think that this is the way to proceed to find a balance of probability. We think that this is the way to proceed to find a balance of probability. We think that this is the way to proceed to find a balance of convenience on which alone it might be possible for us to come to a fair convenience on which alone it might be possible for us to come to a fair convenience on which alone it might be possible for us to come to a fair decision". Eventual decision". Eventually, the Hon'ble Tribunal held that balance of convenience ly, the Hon'ble Tribunal held that balance of convenience was apparently tilting in favour of the assessee and ruled as such. was apparently tilting in favour of the assessee and ruled as such. was apparently tilting in favour of the assessee and ruled as such. 11.6. Applying the above ratio, given the set of facts before me, I am of the 11.6. Applying the above ratio, given the set of facts before me, I am of the 11.6. Applying the above ratio, given the set of facts before me, I am of the view that balance of convenience lies in favour of t view that balance of convenience lies in favour of the appellant. Accordingly, he appellant. Accordingly, the AO is directed to grant deduction u/s 10AA to the appellant. However, the AO is directed to grant deduction u/s 10AA to the appellant. However, the AO is directed to grant deduction u/s 10AA to the appellant. However, the Form No. 56F for AY the Form No. 56F for AY 2016-17, shows the qualification by the auditor 17, shows the qualification by the auditor that the deduction is subject to realisation of export sales of undertaking that the deduction is subject to realisation of export sales of undertaking that the deduction is subject to realisation of export sales of undertaking during the prescribed time limit. The AO is directed to examine this factual the prescribed time limit. The AO is directed to examine this factual the prescribed time limit. The AO is directed to examine this factual aspect wherever the Form 56F has similar qualifications and allow the aspect wherever the Form 56F has similar qualifications and allow the aspect wherever the Form 56F has similar qualifications and allow the deduction u/s 10AA in respect of export proceeds realised within the deduction u/s 10AA in respect of export proceeds realised within the deduction u/s 10AA in respect of export proceeds realised within the prescribed time limit. prescribed time limit.” 19.2 Before us, the Ld. Before us, the Ld. DR relied on the order of the Assessing DR relied on the order of the Assessing Officer and submitted that assessee failed to justify development of Officer and submitted that assessee failed to justify development of Officer and submitted that assessee failed to justify development of software in its SEZ unit. He further submitted that the parties to software in its SEZ unit. He further submitted that the parties to software in its SEZ unit. He further submitted that the parties to whom software has been exported software has been exported were engaged in the business of engaged in the business of chemicals and infrastructure project and nfrastructure project and those were its those were its regular customer of the chemicals. The purchase parties have got changed customer of the chemicals. The purchase parties have got changed customer of the chemicals. The purchase parties have got changed from year to year and the assessee has not filed any evidence to from year to year and the assessee has not filed any evidence to from year to year and the assessee has not filed any evidence to support that the software developed support that the software developed was patented. According to patented. According to him, onus was on the assessee to justify its export of software and the assessee to justify its export of software and the assessee to justify its export of software and M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 29 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 in view of failure on the part of the assessee, the Assessing Officer is in view of failure on the part of the assessee, the Assessing Officer is in view of failure on the part of the assessee, the Assessing Officer is justified in disallowing the claim of exemption u/s 10AA of the Act. justified in disallowing the claim of exemption u/s 10AA of the Act. justified in disallowing the claim of exemption u/s 10AA of the Act.

19.3 We have heard rival submission of the parties and perus We have heard rival submission of the parties and perus We have heard rival submission of the parties and perused the relevant material on record. We find that identical issue of relevant material on record. We find that identical issue of relevant material on record. We find that identical issue of disallowance of exemption u/s 10AA of the Act has been made by disallowance of exemption u/s 10AA of the Act has been made by disallowance of exemption u/s 10AA of the Act has been made by the Assessing Officer in another related concern of the assessee in the Assessing Officer in another related concern of the assessee the Assessing Officer in another related concern of the assessee in the case of M/s Veritas (India) Ltd. for ITA No. 3478/M/2023 in the case of M/s Veritas (India) Lt ITA No. 3478/M/2023 in the case of M/s Veritas (India) Lt assessment year 2021 assessment year 2021-22, on the basis of the very same survey on the basis of the very same survey finding at Nagpur SEZ finding at Nagpur SEZ. The relevant finding of Tribunal (supra) is . The relevant finding of Tribunal (supra) is reproduced as under: as under:

“10. With regard to the deduction allowed u/s 10AA of the Act by Ld CIT(A), 10. With regard to the deduction allowed u/s 10AA of the Act by Ld CIT(A), 10. With regard to the deduction allowed u/s 10AA of the Act by Ld CIT(A), we notice that the asse we notice that the assessing officer has denied the claim only on the ssing officer has denied the claim only on the reasoning given by survey officials, which can, at the most, be termed as reasoning given by survey officials, which can, at the most, be termed as reasoning given by survey officials, which can, at the most, be termed as suspicions and surmises. We notice that the assessee has furnished all the suspicions and surmises. We notice that the assessee has furnished all the suspicions and surmises. We notice that the assessee has furnished all the relevant documents in support of export of software. relevant documents in support of export of software. As obse As observed by Ld CIT(A), either customs or SEZ did not suspect the documents furnished by CIT(A), either customs or SEZ did not suspect the documents furnished by CIT(A), either customs or SEZ did not suspect the documents furnished by the assessee. We also notice that the AO did not bring any material on the assessee. We also notice that the AO did not bring any material on the assessee. We also notice that the AO did not bring any material on record to disprove the documents furnished by the assessee in support of record to disprove the documents furnished by the assessee in support of record to disprove the documents furnished by the assessee in support of export of software. We notic export of software. We notice that the assessee has exported two standard e that the assessee has exported two standard softwares and hence declared high profits. The Ld CIT(A) has taken support softwares and hence declared high profits. The Ld CIT(A) has taken support softwares and hence declared high profits. The Ld CIT(A) has taken support of the decision rendered by Hon'ble Karnatka High Court and held that the of the decision rendered by Hon'ble Karnatka High Court and held that the of the decision rendered by Hon'ble Karnatka High Court and held that the high profit declared by the assessee is justified. high profit declared by the assessee is justified. There is n There is no material available with the AO to suspect the sales price mentioned in the sales bills. available with the AO to suspect the sales price mentioned in the sales bills. available with the AO to suspect the sales price mentioned in the sales bills.

M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 30 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 years when it was a SSI unit.Thus, there is violation years when it was a SSI unit.Thus, there is violation of one of the conditions of one of the conditions prescribed for av prescribed for availing deduction u/s 80IB of the Act, which is not the case ailing deduction u/s 80IB of the Act, which is not the case here.

12. In view of foregoing discussions, we are of the view that the Ld CIT(A) 12. In view of foregoing discussions, we are of the view that the Ld CIT(A) 12. In view of foregoing discussions, we are of the view that the Ld CIT(A) was justified in allowing the claim for deduction u/s 10AA of the Act. was justified in allowing the claim for deduction u/s 10AA of the Act. was justified in allowing the claim for deduction u/s 10AA of the Act.” 19.3.1 Since, the issue in dispute in the Since, the issue in dispute in the instant case is identical instant case is identical to the issue of export of software products from SEZ in the case of to the issue of export of software products from SEZ in the case of to the issue of export of software products from SEZ in the case of M/s Veritas (India) Ltd. M/s Veritas (India) Ltd. (supra), therefore, following the finding of therefore, following the finding of the Tribunal (supra), w (supra), we do not find any infirmity in the order of the e do not find any infirmity in the order of the Ld. CIT(A) on the iss Ld. CIT(A) on the issue in dispute and accordingly, , we uphold the same. The ground No. 2 of the appeal of the Revenue is accordingly same. The ground No. 2 of the appeal of the Revenue is accordingly same. The ground No. 2 of the appeal of the Revenue is accordingly dismissed.

M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 31 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 20.1 On further appeal, the Ld. CIT(A) after considering submission On further appeal, the Ld. CIT(A) after considering submission On further appeal, the Ld. CIT(A) after considering submission of the assessee restricted the disallowance of the assessee restricted the disallowance of commission charges to of commission charges to 0.5% of trading turnover of trading turnover which was worked out to Rs.29,63,580/ which was worked out to Rs.29,63,580/- for the year under co for the year under consideration.

20.2 Before us, the Ld. counsel for the assessee submitte Before us, the Ld. counsel for the assessee submitte Before us, the Ld. counsel for the assessee submitted that issue in dispute of the c issue in dispute of the circular trading in the case of the group ircular trading in the case of the group company has been decided in favour of the assessee wherein company has been decided in favour of the assessee wherein company has been decided in favour of the assessee wherein commission amount has been upheld commission amount has been upheld at 0.25% of circula of circular trading turnover.

20.3 We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the relevant material on r relevant material on record. The lower authorities have ecord. The lower authorities have observed that the assessee failed to substantiate delivery of the goods or that the assessee failed to substantiate delivery of the goods or that the assessee failed to substantiate delivery of the goods or transportation etc. in respect of pur transportation etc. in respect of purchase and sale with concern chase and sale with concern namely M/s Shatranj Trading Pvt. namely M/s Shatranj Trading Pvt. Ltd. The relevant finding of the The relevant finding of the Ld. CIT(A) is reproduced as under: Ld. CIT(A) is reproduced as under:

“Decision: 14. I have considered the facts of the case and submission of the 14. I have considered the facts of the case and submission of the 14. I have considered the facts of the case and submission of the appellant. The appellant has not been able to appellant. The appellant has not been able to effectively rebut the claims of effectively rebut the claims of circular transactions or that of they being paper in nature. No evidence of circular transactions or that of they being paper in nature. No evidence of circular transactions or that of they being paper in nature. No evidence of delivery has been produced before the AO or before me. The AO has also delivery has been produced before the AO or before me. The AO has also delivery has been produced before the AO or before me. The AO has also tried to obtain such evidence from M/s Shatranj Trading Pvt. Ltd. u/s tried to obtain such evidence from M/s Shatranj Trading Pvt. Ltd. u/s tried to obtain such evidence from M/s Shatranj Trading Pvt. Ltd. u/s 133(6) but has not been successful. The transaction shown in the but has not been successful. The transaction shown in the but has not been successful. The transaction shown in the statement and the chart of purchases and sales produced by the AO in statement and the chart of purchases and sales produced by the AO in statement and the chart of purchases and sales produced by the AO in pages 32 & 33 of the assessment order do indicate that there is no pages 32 & 33 of the assessment order do indicate that there is no pages 32 & 33 of the assessment order do indicate that there is no material substance to these transactions. material substance to these transactions. 14.1. One of the con 14.1. One of the contentions of the appellant is statement recorded under tentions of the appellant is statement recorded under survey does not have evidentiary value. survey does not have evidentiary value. Towards this purpose the Towards this purpose the M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 32 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 appellant has relied on the appellant has relied on the judgment of Hon'ble Supreme Court in the case judgment of Hon'ble Supreme Court in the case of CIT vs. S. Khader Khan Son, 352 ITR 480 and judgment of Hon' of CIT vs. S. Khader Khan Son, 352 ITR 480 and judgment of Hon' of CIT vs. S. Khader Khan Son, 352 ITR 480 and judgment of Hon'ble Madras High Court in the case of CIT vs. S. Khader Khan Son, 300 ITR Madras High Court in the case of CIT vs. S. Khader Khan Son, 300 ITR Madras High Court in the case of CIT vs. S. Khader Khan Son, 300 ITR 157. The only finding given therein is that the statement obtained u/s.

157. The only finding given therein is that the statement obtained u/s. 133A could not automatically bind the assessee. Thus, what is required for 133A could not automatically bind the assessee. Thus, what is required for 133A could not automatically bind the assessee. Thus, what is required for implicating someone is that there ha implicating someone is that there has to be independent material and not s to be independent material and not merely the statement. In this regard, I find that the AO has not based this merely the statement. In this regard, I find that the AO has not based this merely the statement. In this regard, I find that the AO has not based this case merely on the statement of ShriNitin Didwania. It is based on several case merely on the statement of ShriNitin Didwania. It is based on several case merely on the statement of ShriNitin Didwania. It is based on several other evidences including: other evidences including:- i. Inability of the appellant to produce ev Inability of the appellant to produce evidences relating to delivery idences relating to delivery of goods. of goods. ii. Non submission of evidences relating to delivery of goods by the Non submission of evidences relating to delivery of goods by the Non submission of evidences relating to delivery of goods by the other parties involved in the deal other parties involved in the deal iii. Statement of multiple and independent persons belonging to Statement of multiple and independent persons belonging to Statement of multiple and independent persons belonging to different companies. different companies. iv. Failure by M/s. Shatranj Trading P L Failure by M/s. Shatranj Trading P Ltd to provide the td to provide the transportation bill, e transportation bill, e-way bills and weighment slips etc in response way bills and weighment slips etc in response to independent enquiry u/s. 133(6) to independent enquiry u/s. 133(6) v. Evidence of close nexus and almost all transactions of M/s. Evidence of close nexus and almost all transactions of M/s. Evidence of close nexus and almost all transactions of M/s. Shatranj Trading P Ltd with Veritas group. Shatranj Trading P Ltd with Veritas group. 14.2. A careful and cohesive re 14.2. A careful and cohesive reading of the order shows that the statement ading of the order shows that the statement of one singular person is not the sole or primary basis for addition. It may of one singular person is not the sole or primary basis for addition. It may of one singular person is not the sole or primary basis for addition. It may have been among the starting point but definitely not the basis of addition. have been among the starting point but definitely not the basis of addition. have been among the starting point but definitely not the basis of addition. It is the appellant's inability to demonstrate that the go It is the appellant's inability to demonstrate that the goods have actually ods have actually been delivered which is the crux of the case. The appellant's contention in been delivered which is the crux of the case. The appellant's contention in been delivered which is the crux of the case. The appellant's contention in this regard is rejected. this regard is rejected. 14.3. The appellant has contended that the transactions have taken place 14.3. The appellant has contended that the transactions have taken place 14.3. The appellant has contended that the transactions have taken place through bank account and hence should be allowed. I do not agree through bank account and hence should be allowed. I do not agree through bank account and hence should be allowed. I do not agree with this contention of the appellant that merely because the payment is made this contention of the appellant that merely because the payment is made this contention of the appellant that merely because the payment is made by cheque, it is a genuine transaction. Several judicial precedents support by cheque, it is a genuine transaction. Several judicial precedents support by cheque, it is a genuine transaction. Several judicial precedents support this proposition: this proposition:- 14.3.1. In the case of CIT vs Saravana Constructions P Ltd, 208 Taxman 14.3.1. In the case of CIT vs Saravana Constructions P Ltd, 208 Taxman 14.3.1. In the case of CIT vs Saravana Constructions P Ltd, 208 Taxman 188(Mag.) (DoJ: 14.03.2012), (cross DoJ: 14.03.2012), (cross-appeal of both Assessee and Revenue) appeal of both Assessee and Revenue) the Karnataka HC has held as under: the Karnataka HC has held as under: "10. The grievance is that the benefit can be given only for those cheque "10. The grievance is that the benefit can be given only for those cheque "10. The grievance is that the benefit can be given only for those cheque transactions, which are found to be genuine. Merely because the transactions, which are found to be genuine. Merely because the transactions, which are found to be genuine. Merely because the transactions are thr transactions are through bank channels, the assessee would not be ough bank channels, the assessee would not be entitled to the benefit. It is true that when a cheque is issued it has to be entitled to the benefit. It is true that when a cheque is issued it has to be entitled to the benefit. It is true that when a cheque is issued it has to be encashed through bank only. There is no presumption that merely because encashed through bank only. There is no presumption that merely because encashed through bank only. There is no presumption that merely because the payment is made by cheque, it is a genuine transaction. the payment is made by cheque, it is a genuine transaction. the payment is made by cheque, it is a genuine transaction. First it has to be found out whether the transaction in question is genuine and only be found out whether the transaction in question is genuine and only be found out whether the transaction in question is genuine and only thereafter, the assessee would be entitled to the benefit of disallowance. thereafter, the assessee would be entitled to the benefit of disallowance. thereafter, the assessee would be entitled to the benefit of disallowance. Probably, the Tribunal while issuing direction did not notice its reasoning Probably, the Tribunal while issuing direction did not notice its reasoning Probably, the Tribunal while issuing direction did not notice its reasoning

M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 33 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 in the earlier part in the earlier part of its very same order. That is how a direction in the of its very same order. That is how a direction in the aforesaid manner is issued, which is not correct. Therefore, in addition to aforesaid manner is issued, which is not correct. Therefore, in addition to aforesaid manner is issued, which is not correct. Therefore, in addition to what has been stated by the Tribunal, the assessing authority shall first what has been stated by the Tribunal, the assessing authority shall first what has been stated by the Tribunal, the assessing authority shall first find out, whether the cash credit claimed represent find out, whether the cash credit claimed represents a true and genuine s a true and genuine transaction. If the answer is "Yes" then accept the credit otherwise not." transaction. If the answer is "Yes" then accept the credit otherwise not." transaction. If the answer is "Yes" then accept the credit otherwise not." 14.3.2. In the case of CIT vs Mohanakala, 161 Taxman 169, 291 ITR 278, 14.3.2. In the case of CIT vs Mohanakala, 161 Taxman 169, 291 ITR 278, 14.3.2. In the case of CIT vs Mohanakala, 161 Taxman 169, 291 ITR 278, the Hon'ble Apex Court held as under: the Hon'ble Apex Court held as under: "May be the money came by way of bank cheques and p "May be the money came by way of bank cheques and paid through the aid through the process of banking transaction but that itself is of no consequence" process of banking transaction but that itself is of no consequence" process of banking transaction but that itself is of no consequence" 14.3.3. In the case of 208 ITR 465, CIT vs Precision Finance P Ltd, the 14.3.3. In the case of 208 ITR 465, CIT vs Precision Finance P Ltd, the 14.3.3. In the case of 208 ITR 465, CIT vs Precision Finance P Ltd, the Hon'ble Calcutta HC held as under: Hon'ble Calcutta HC held as under: "6. .....The Tribunal did not apply its mind to the facts of thi .....The Tribunal did not apply its mind to the facts of thi .....The Tribunal did not apply its mind to the facts of this particular case and proceeded on the footing that since the transactions were case and proceeded on the footing that since the transactions were case and proceeded on the footing that since the transactions were through the bank account, accordingly, it is to be presumed that the through the bank account, accordingly, it is to be presumed that the through the bank account, accordingly, it is to be presumed that the transactions were genuine. It was not for the ITO to find out by making transactions were genuine. It was not for the ITO to find out by making transactions were genuine. It was not for the ITO to find out by making investigation from the bank account investigation from the bank accounts unless the assessee proved the s unless the assessee proved the identity of the creditors and their creditworthiness. Mere payment by identity of the creditors and their creditworthiness. Mere payment by identity of the creditors and their creditworthiness. Mere payment by account payee cheque is not sacrosanct nor can it make a non account payee cheque is not sacrosanct nor can it make a non account payee cheque is not sacrosanct nor can it make a non-genuine transaction genuine." transaction genuine." 14.3.4 In view of the above, the appellant's contention in th In view of the above, the appellant's contention in th In view of the above, the appellant's contention in this regard is rejected.” 20.4 According to the Ld. CIT(A) According to the Ld. CIT(A), however, the commission however, the commission expenses for arranging such circular trading was found to be expenses for arranging such circular trading was expenses for arranging such circular trading was reasonable to the extent of reasonable to the extent of 0.5%. The relevant finding of the Ld. 0.5%. The relevant finding of the Ld. CIT(A) is reproduced as under: CIT(A) is reproduced as under:

“14.9. In the case before us, the appellant has not admitted to any circular case before us, the appellant has not admitted to any circular case before us, the appellant has not admitted to any circular trade. Rather multiple entities have been used to camouflage the entire trade. Rather multiple entities have been used to camouflage the entire trade. Rather multiple entities have been used to camouflage the entire affairs so as to portray an artificial picture of genuineness. Thus, the cost affairs so as to portray an artificial picture of genuineness. Thus, the cost affairs so as to portray an artificial picture of genuineness. Thus, the cost incurred in this case has to be higher. In incurred in this case has to be higher. In my view, unexplained my view, unexplained expenditure @ 0.5% would be reasonable given the facts of the case. expenditure @ 0.5% would be reasonable given the facts of the case. expenditure @ 0.5% would be reasonable given the facts of the case. 14.10. The above findings apply equally in respect of the appellant's 14.10. The above findings apply equally in respect of the appellant's 14.10. The above findings apply equally in respect of the appellant's transaction with Yatee Traders Pvt. Ltd. to the extent transactions are transaction with Yatee Traders Pvt. Ltd. to the extent transactions are transaction with Yatee Traders Pvt. Ltd. to the extent transactions are made with such party in o made with such party in other years. Accordingly, the disallowance u/s ther years. Accordingly, the disallowance u/s 69C for each of the years is restricted as follows: 69C for each of the years is restricted as follows:-

M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 34 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 AY Purchases/Sales Disallowance Disallowance Remark (if any) Remark (if any) made byAO@1% confirmed @ 0.5% 2014-15 59,27,16,162 59,27,16,162 29,63,580 Although Although the AO has stated that 1% is being stated that 1% is being disallowed, it appears disallowed, it appears that 100% stands that 100% stands disallowed by the AO. disallowed by the AO. The may verify this The may verify this aspect for this year aspect for this year notwithstanding the notwithstanding the quantification made quantification made alongside. alongside. 2015-16 285,28,95,733 2,85,28,957 1,42,64,478 - 2016-17 224,62,67,407 2,24,62,674 1,12,31,337 - 2017-18 542,59,10,240 5,42,59,102 2,71,29,551 - 2020-21 572,46,48,056 5,72,46,480 2,86,23,240 - 2021-22 323,64,65,009 3,23,64,650 1,61,82,325 -

In view of the In view of the above, the disallowance for the year under reference is above, the disallowance for the year under reference is restricted to Rs. 29,63,5807 restricted to Rs. 29,63,5807- (subject to remark above).” 20.5 But we find that M/s Aspen International Pv But we find that M/s Aspen International Pvt. Ltd. is also one t. Ltd. is also one of the entities of group, of the entities of group, who has been held to be engaged in circular who has been held to be engaged in circular trading with M/s Shatranj Trading Pvt. Ltd. The relevant finding of ing with M/s Shatranj Trading Pvt. Ltd. The relevant finding of ing with M/s Shatranj Trading Pvt. Ltd. The relevant finding of the Tribunal in the case of M/s Aspen International Pvt. Ltd. in ITA the Tribunal in the case of M/s Aspen International Pvt. Ltd. in ITA the Tribunal in the case of M/s Aspen International Pvt. Ltd. in for assessment year 2021 No. 3465/Mum/2023 for assessment year 2021-22 is reproduced 22 is reproduced as under:

“8. After hearing both the parties and on perusal of 8. After hearing both the parties and on perusal of the impugned orders, the impugned orders, we find that on one hand assessee had submitted purchase and sale we find that on one hand assessee had submitted purchase and sale we find that on one hand assessee had submitted purchase and sale invoices, purchase and sale registers, bank statements and has disclosed invoices, purchase and sale registers, bank statements and has disclosed invoices, purchase and sale registers, bank statements and has disclosed all the transactions in the books of accounts and also forming part of the all the transactions in the books of accounts and also forming part of the all the transactions in the books of accounts and also forming part of the trading account. On t trading account. On the other hand, Id. AO's case hinges upon survey he other hand, Id. AO's case hinges upon survey conducted in the case of M/s. Veritas group, wherein few of the parties conducted in the case of M/s. Veritas group, wherein few of the parties conducted in the case of M/s. Veritas group, wherein few of the parties were involved for purchase and sale transactions without delivery and were involved for purchase and sale transactions without delivery and were involved for purchase and sale transactions without delivery and admitted that they were also doing circular trading. If that was t admitted that they were also doing circular trading. If that was t admitted that they were also doing circular trading. If that was the case, then onus was on the assessee to show that, for entire purchase made then onus was on the assessee to show that, for entire purchase made then onus was on the assessee to show that, for entire purchase made

M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 35 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 from M/s. Shatranj Trading Pvt. Ltd. there were actual delivery of goods from M/s. Shatranj Trading Pvt. Ltd. there were actual delivery of goods from M/s. Shatranj Trading Pvt. Ltd. there were actual delivery of goods and actual outward of sales of the same stock. Assessee might have done and actual outward of sales of the same stock. Assessee might have done and actual outward of sales of the same stock. Assessee might have done genuine purchase and sale transac genuine purchase and sale transaction with many parties, but qua this tion with many parties, but qua this party, assessee should have substantiated the same when these party, assessee should have substantiated the same when these party, assessee should have substantiated the same when these statements were confronted to the assessee and the parties had admitted statements were confronted to the assessee and the parties had admitted statements were confronted to the assessee and the parties had admitted that they have done circular trading and assessee was one of the co that they have done circular trading and assessee was one of the co that they have done circular trading and assessee was one of the co- parties. Thus, we parties. Thus, we do not find any reason to deviate from such observation do not find any reason to deviate from such observation and finding of the ld. AO and Id. CIT (A). and finding of the ld. AO and Id. CIT (A).” 20.6 As the issue in dispute is squarely covered by the above As the issue in dispute is squarely covered by the above As the issue in dispute is squarely covered by the above decision of the Tribunal decision of the Tribunal (supra), therefore, respectfully following the respectfully following the same, the commission expenses for circular trading in the case of the commission expenses for circular trading in the case of the commission expenses for circular trading in the case of the assessee are restricted to 0.25% restricted to 0.25% of circular trading turnover of circular trading turnover. The ground of appeal of the assessee is accordingly allowed partly, The ground of appeal of the assessee is accordingly allowed The ground of appeal of the assessee is accordingly allowed whereas the ground of the appeal of the Revenue is dismissed the ground of the appeal of the Revenue is dismissed the ground of the appeal of the Revenue is dismissed.

21. Identical grounds grounds have been raised by the assessee in raised by the assessee in assessment years 2014 essment years 2014-15 to 2017-18 and 2020- -21 to 2021-22 except amount involve except amount involved therefore, following our finding in therefore, following our finding in assessment year 2014 assessment year 2014-15, the grounds raised in appeals for raised in appeals for assessment years 2015 015-16 to 2017-18 and 2020-21 to 21 to 2021-22 are decided mutatis mutandis mutatis mutandis. Similarly, Revenue has also raised Similarly, Revenue has also raised identical grounds in appeals for AY 2014 identical grounds in appeals for AY 2014-15 to AY 2017 AY 2017-18 and AY 2020-21 to AY 2021 AY 2021-22 except ground raised in AY 2018 22 except ground raised in AY 2018-19, therefore, following our fi therefore, following our finding in AY 2014-15, the grounds raised 15, the grounds raised by the Revenue from AY 2015 by the Revenue from AY 2015-16 to AY 2017-18 and AYs 18 and AYs 2020-21 to 2021-22 are decided 22 are decided mutatis mutandis.

M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 36 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023

the Revenue has challenged

19. In the ground raised the Revenue has challenged

19. In the ground raised the Revenue has challenged disallowance of excessive logistic expenses in terms of section disallowance of excessive logistic expenses in terms of section disallowance of excessive logistic expenses in terms of section 40A(2)(b) of the Act which has been deleted by the Ld. CIT(A). 40A(2)(b) of the Act which has been deleted by the Ld. CIT(A). 40A(2)(b) of the Act which has been deleted by the Ld. CIT(A).

22.1 Brief facts qua the issue in dispute are that the Assessing Brief facts qua the issue in dispute are that the Assessing Brief facts qua the issue in dispute are that the Assessing Officer observed erved erved expenditure expenditure expenditure of of of logistic logistic logistic expenses expenses expenses of of of Rs.3,48,37,713/- payment for which was made to one of the related payment for which was made to one of the related payment for which was made to one of the related concern namely M/s concern namely M/s Hazel Logistics Pvt. Ltd. According to the Logistics Pvt. Ltd. According to the Assessing Officer said payment was excessive and therefore, he Assessing Officer said payment was excessive and therefore, he Assessing Officer said payment was excessive and therefore, he called for copy of the called for copy of the contract agreement between the parties and contract agreement between the parties and supporting documents/evidence. According to the Ld. Assessing supporting documents/evidence. According to the Ld. Assessing supporting documents/evidence. According to the Ld. Assessing Officer only copy of the agreement was filed and subsequently after Officer only copy of the agreement was filed and subsequently after Officer only copy of the agreement was filed and subsequently after 2 to 3 reminders, bills in respect of Rs.29,39,444/ bills in respect of Rs.29,39,444/- - were only filed before him. He further observed that summon u/s 131 of the Act further observed that summon u/s 131 of the Act further observed that summon u/s 131 of the Act was issued to Hazel Logistic Pvt. Ltd. but same was not complied was not complied and therefore, he was of the view that the balance expenses of and therefore, he was of the view that the balance expenses of and therefore, he was of the view that the balance expenses of Rs.3,18,98,269/- was in the nature of excessive or unreasonable was in the nature of excessive or unreasonable was in the nature of excessive or unreasonable expense payment made to the related party made to the related party . Hence ence, he disallowed amount of Rs.3,18,98,269/ amount of Rs.3,18,98,269/- in terms of section 40A(2)(b) of the Act. in terms of section 40A(2)(b) of the Act.

23. On further appeal before the Ld. CIT(A), the assessee On further appeal before the Ld. CIT(A), the assessee On further appeal before the Ld. CIT(A), the assessee submitted that it has submitted copy of the contract agreement and submitted that it has submitted copy of the contract agreement and submitted that it has submitted copy of the contract agreement and entire details in support of expenses incurred and copy of the bills ils in support of expenses incurred and copy of the bills ils in support of expenses incurred and copy of the bills

M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 37 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 were provided on sample basis. Further, expenses incurred by M/s on sample basis. Further, expenses incurred by M/s on sample basis. Further, expenses incurred by M/s Hazel Logistic Pvt. Ltd. Logistic Pvt. Ltd. having value more than Rs.1,00,000/ Rs.1,00,000/- were also submitted. It was submitted . It was submitted that M/s Hazel Logistics Pvt. Lt Logistics Pvt. Ltd. also filed return of income and audited statement in compliance to also filed return of income and audited statement in compliance to also filed return of income and audited statement in compliance to notice u/s 131 of the Act. However, the notice u/s 131 of the Act. However, the observations have been observations have been recorded wrongly by the recorded wrongly by the Assessing Officer. The assessee also Assessing Officer. The assessee also rejected the observation of the Assessing Officer that said expenses rejected the observation of the Assessing Officer that said ex rejected the observation of the Assessing Officer that said ex were debited for the pur were debited for the purpose of the evasion of the tax a pose of the evasion of the tax as according to the Assessing Officer M/s Haze to the Assessing Officer M/s Hazel Logistic Pvt. Ltd. was l Logistic Pvt. Ltd. was a loss making company and said expenses have been debited in the hands making company and said expenses have been debited in the making company and said expenses have been debited in the of the assessee for reducing the profit of the assessee for reducing the profit of assessee. The Ld. counsel The Ld. counsel for the assessee submitted that the logistic expenses were being for the assessee submitted that the logistic expenses were being for the assessee submitted that the logistic expenses were being incurred for last many years from assessment year 2014-15 to incurred for last many years from assessment year 2014 incurred for last many years from assessment year 2014 2017-18. In the circumstances and after consideration, the Ld.

18. In the circumstances and after consideration, the Ld.

18. In the circumstances and after consideration, the Ld. CIT(A) held that Assessing Officer has nowhere determined that CIT(A) held that Assessing Officer has nowhere det CIT(A) held that Assessing Officer has nowhere det logistic logistic expenses expenses incurred incurred by by the the assessee assessee excessive excessive or or unreasonable having regard to the specified criteria mentioned in unreasonable having regard to the specified criteria unreasonable having regard to the specified criteria provisions of section 40A(2)(b) of the Act of section 40A(2)(b) of the Act, hence, no disallowance no disallowance was called for. The relevant finding of the Ld. CIT(A) called for. The relevant finding of the Ld. CIT(A) called for. The relevant finding of the Ld. CIT(A) is reproduced as under:

“16. I have considered the facts of the case and the submission of the 16. I have considered the facts of the case and the submission of the 16. I have considered the facts of the case and the submission of the appellant. The AO has stated that M/s Hazel Logistics Pvt. Ltd. to appellant. The AO has stated that M/s Hazel Logistics Pvt. Ltd. to appellant. The AO has stated that M/s Hazel Logistics Pvt. Ltd. to whom the alleged payments were made did not comply with the whom the alleged payments were made did not comply with the whom the alleged payments were made did not comply with the summons us 131 of the Act and instead filed copy of agreeme summons us 131 of the Act and instead filed copy of agreeme summons us 131 of the Act and instead filed copy of agreement along with a covering letter. According to the appellant, this is factually with a covering letter. According to the appellant, this is factually with a covering letter. According to the appellant, this is factually

M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 38 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 incorrect in as much as Hazel Logistics Pvt. Ltd. had in response to incorrect in as much as Hazel Logistics Pvt. Ltd. had in response to incorrect in as much as Hazel Logistics Pvt. Ltd. had in response to summons u/s 131 dt. 09.03.2021 filed its ITR acknowledgment, summons u/s 131 dt. 09.03.2021 filed its ITR acknowledgment, summons u/s 131 dt. 09.03.2021 filed its ITR acknowledgment, financial statements, bank statement & logistic financial statements, bank statement & logistic service agreement. service agreement. Besides, it is a claim of the appellant that a consolidated chart of the Besides, it is a claim of the appellant that a consolidated chart of the Besides, it is a claim of the appellant that a consolidated chart of the service rendered under various heads, business support services, service rendered under various heads, business support services, service rendered under various heads, business support services, logistic support services, storage and warehousing services, etc. has logistic support services, storage and warehousing services, etc. has logistic support services, storage and warehousing services, etc. has been furnished by the said e been furnished by the said entity. This chart shows the breakup of ntity. This chart shows the breakup of entire sum of Rs. 3,48,37,713/ entire sum of Rs. 3,48,37,713/-, the payments received through bank , the payments received through bank accounts and TDS on such receipts amounting to Rs. 6,96,756/ accounts and TDS on such receipts amounting to Rs. 6,96,756/ accounts and TDS on such receipts amounting to Rs. 6,96,756/-. It is also claimed that another reply was filed on 03.04.2021 wherein all also claimed that another reply was filed on 03.04.2021 wherein all also claimed that another reply was filed on 03.04.2021 wherein all these details have been submitted again. Besides, the invoices raised s have been submitted again. Besides, the invoices raised s have been submitted again. Besides, the invoices raised by M/s Hazel Logistics Pvt. Ltd. for the services rendered to the by M/s Hazel Logistics Pvt. Ltd. for the services rendered to the by M/s Hazel Logistics Pvt. Ltd. for the services rendered to the appellant aggregating to Rs. 1.94 crores (approx.) have been furnished appellant aggregating to Rs. 1.94 crores (approx.) have been furnished appellant aggregating to Rs. 1.94 crores (approx.) have been furnished with the said submission. It is also the claim of the appella with the said submission. It is also the claim of the appella with the said submission. It is also the claim of the appellant that M/s Hazel Logistics Pvt. Ltd. had made a third submission to the AO by e Hazel Logistics Pvt. Ltd. had made a third submission to the AO by e Hazel Logistics Pvt. Ltd. had made a third submission to the AO by e- mail on 07.06.2021, whereby charts of mail on 07.06.2021, whereby charts of services obtained by M/s Hazel services obtained by M/s Hazel Logistics Pvt. Ltd. from other independent market entities for the Logistics Pvt. Ltd. from other independent market entities for the Logistics Pvt. Ltd. from other independent market entities for the purpose of running of its business has purpose of running of its business has been furnished. Thus, according been furnished. Thus, according to the appellant, it is incorrect to say that M/s Hazel Logistics Pvt. Ltd. to the appellant, it is incorrect to say that M/s Hazel Logistics Pvt. Ltd. to the appellant, it is incorrect to say that M/s Hazel Logistics Pvt. Ltd. had submitted only the copy of agreement. had submitted only the copy of agreement. 16.1. As regards, invoices of Rs. 29,39,444/ 16.1. As regards, invoices of Rs. 29,39,444/-, these are the invoices , these are the invoices raised on M/S Hazel Logistics Pvt. L raised on M/S Hazel Logistics Pvt. Ltd. by third party entities for the td. by third party entities for the expenses incurred by M/s Hazel Logistics Pvt. Ltd. These are stated to expenses incurred by M/s Hazel Logistics Pvt. Ltd. These are stated to expenses incurred by M/s Hazel Logistics Pvt. Ltd. These are stated to be submitted on sample basis. be submitted on sample basis. 16.2. The appellant has also pointed out in its online submission dt. 16.2. The appellant has also pointed out in its online submission dt. 16.2. The appellant has also pointed out in its online submission dt. 27.07.2023 that similar logistic expenses have be 27.07.2023 that similar logistic expenses have been incurred in various en incurred in various AYs in the past which was as high as Rs. 12.18 crores in AY 2014 AYs in the past which was as high as Rs. 12.18 crores in AY 2014 AYs in the past which was as high as Rs. 12.18 crores in AY 2014-15. The appellant has further pointed out that such expenses had been The appellant has further pointed out that such expenses had been The appellant has further pointed out that such expenses had been higher in the preceding years. higher in the preceding years. 16.3. The provision of S. 40A(2)(a), read as follows: 16.3. The provision of S. 40A(2)(a), read as follows:- "(2)(a) Wher "(2)(a) Where the assessee incurs any expenditure in respect of e the assessee incurs any expenditure in respect of which payment has been or is to be made to any person referred which payment has been or is to be made to any person referred which payment has been or is to be made to any person referred to in clause (b) of this sub to in clause (b) of this sub-section, and the Assessing Officer is section, and the Assessing Officer is of opinion that such expenditure is excessive or unreasonable of opinion that such expenditure is excessive or unreasonable of opinion that such expenditure is excessive or unreasonable having regar having regard to the fair market value of the goods, services or d to the fair market value of the goods, services or facilities for which the payment is made or the legitimate needs facilities for which the payment is made or the legitimate needs facilities for which the payment is made or the legitimate needs of the business or profession of the assessee or the benefit of the business or profession of the assessee or the benefit of the business or profession of the assessee or the benefit derived by or accruing to him therefrom, so much of the derived by or accruing to him therefrom, so much of the derived by or accruing to him therefrom, so much of the expenditure as is so expenditure as is so considered by him to be excessive or considered by him to be excessive or unreasonable shall not be allowed as a deduction." unreasonable shall not be allowed as a deduction." 16.4. Thus, in my view, unless the expenditure is excessive or 16.4. Thus, in my view, unless the expenditure is excessive or 16.4. Thus, in my view, unless the expenditure is excessive or reasonable having regard to the specified criteria in the above reasonable having regard to the specified criteria in the above reasonable having regard to the specified criteria in the above mentioned provision, no disallowance is c mentioned provision, no disallowance is called-for. Under these facts for. Under these facts

M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 39 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 and circumstances, the disallowance of Rs. 3,18,98,269/ and circumstances, the disallowance of Rs. 3,18,98,269/- made by the made by the AO u/s 40(2)(b) is deleted. Hence, this ground stands ALLOWED. AO u/s 40(2)(b) is deleted. Hence, this ground stands ALLOWED. AO u/s 40(2)(b) is deleted. Hence, this ground stands ALLOWED.”

“40A(2)(b) The persons referred to in clause (a) are the following, namely: The persons referred to in clause (a) are the following, namely:- The persons referred to in clause (a) are the following, namely: (i) where the assessee is an where the assessee is an any relative of the assessee; any relative of the assessee; individual (ii) where the assessee is a where the assessee is a any director of the company any director of the company company, firm, association company, firm, association partner of the firm, or member of partner of the firm, or member of of of persons persons or or Hindu Hindu the association or family, or any the association or family, or any undivided family undivided family relative of such director, partner relative of such director, partner or member; (iii)any individual who has a substantial any individual who has a substantial interest in the business or profession of interest in the business or profession of the assessee, or any relative of such individual; the assessee, or any relative of such individual; (iv)a company, firm, association of persons or Hindu undivided family having a a company, firm, association of persons or Hindu undivided family having a a company, firm, association of persons or Hindu undivided family having a substantial interest in the busin substantial interest in the business or profession of the assessee or any director, ess or profession of the assessee or any director, partner or member of such company, firm, association or family, or any relative partner or member of such company, firm, association or family, or any relative partner or member of such company, firm, association or family, or any relative of such director, partner or member; of such director, partner or member; (v)a company, firm, association of a company, firm, association of persons or Hindu undivided family of which a persons or Hindu undivided family of which a director, partner or member, as the case may be, has a substantial interest in the director, partner or member, as the case may be, has a substantial interest in the director, partner or member, as the case may be, has a substantial interest in the business or profession of the assessee; or any director, partner or member of business or profession of the assessee; or any director, partner or member of business or profession of the assessee; or any director, partner or member of such company, firm, association or family or any such company, firm, association or family or any relative of such director, relative of such director, partner or member; (vi)any person who carries on a business or profession, any person who carries on a business or profession,- (A)where the assessee being an individual, or where the assessee being an individual, or any relative of such assessee, has any relative of such assessee, has a substantial interest in the business or profession of that person; or a substantial interest in the business or profession of that person; or a substantial interest in the business or profession of that person; or (B)where the assessee being a company, firm, association of persons or Hindu where the assessee being a company, firm, association of persons or Hindu where the assessee being a company, firm, association of persons or Hindu undivided family, or any director of such company, partner of such firm or r any director of such company, partner of such firm or r any director of such company, partner of such firm or M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 40 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 member of the association or family, or any relative of such director, partner or member of the association or family, or any relative of such director, partner or member of the association or family, or any relative of such director, partner or member, has a substantial interest in the business or profession of that person member, has a substantial interest in the business or profession of that person member, has a substantial interest in the business or profession of that person Explanation. - For the purposes of thi For the purposes of this sub-section, a person shall be deemed to section, a person shall be deemed to have a substantial interest in a business or profession, if, have a substantial interest in a business or profession, if,- (a)in a case where the business or profession is carried on by a company, such (a)in a case where the business or profession is carried on by a company, such (a)in a case where the business or profession is carried on by a company, such person is, at any time during the previous year, the beneficial owner of shares person is, at any time during the previous year, the beneficial owner of person is, at any time during the previous year, the beneficial owner of (not being shares entitled to a fixed rate of dividend whether with or without a (not being shares entitled to a fixed rate of dividend whether with or without a (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) carrying not less than twenty per cent. of the voting right to participate in profits) carrying not less than twenty per cent. of the voting right to participate in profits) carrying not less than twenty per cent. of the voting power; and (b)in any other case, such person is, at any time during the previous year, (b)in any other case, such person is, at any time during the previous (b)in any other case, such person is, at any time during the previous beneficially entitled to not less than twenty per cent. of the profits of such beneficially entitled to not less than twenty per cent. of the profits of such beneficially entitled to not less than twenty per cent. of the profits of such business or profession.]” business or profession.]” 24.1 Thus according to the provisions of the law for making Thus according to the provisions of the law for making Thus according to the provisions of the law for making disallowance under this section, the Assessing Officer is required to disallowance under this section, the Assessing Officer is required to disallowance under this section, the Assessing Officer is required to demonstrate whether the expenditure incurred is excessive and ether the expenditure incurred is excessive and ether the expenditure incurred is excessive and unreasonable having regard to the unreasonable having regard to the fair market value of the goods, fair market value of the goods, services or facilities for which the payment is made. s for which the payment is made. But, we find s for which the payment is made. that the Assessing Officer has only disallowed the expenses for that the Assessing Officer has only disallowed the expenses for that the Assessing Officer has only disallowed the expenses for which bills were stated to be not produced. However, before the Ld. were stated to be not produced. However, before the Ld. were stated to be not produced. However, before the Ld. CIT(A) the assessee has filed detail of the expenses incurred by M/s CIT(A) the assessee has filed detail of the expenses incurred by M/s CIT(A) the assessee has filed detail of the expenses incurred by M/s Hazel Logistic Pvt. Ltd. Before us, also filed detail of expenses in Hazel Logistic Pvt. Ltd. Before us, also filed detail of expenses in Hazel Logistic Pvt. Ltd. Before us, also filed detail of expenses in excess of Rs.1,00,000/ excess of Rs.1,00,000/-, which is available on paper book pag which is available on paper book pages 71 to 73. In view of the above, we are of the opinion that the Assessing to 73. In view of the above, we are of the opinion that the Assessing to 73. In view of the above, we are of the opinion that the Assessing Officer squarely failed in demonstrating squarely failed in demonstrating any excessiveness or any excessiveness or unreasonableness of the expenses for logistic paid to sister concern. unreasonableness of the expenses for logistic paid to sister concern. unreasonableness of the expenses for logistic paid to sister concern. Accordingly, we do not find any infirmity in Accordingly, we do not find any infirmity in the order of the Ld. order of the Ld. CIT(A) on issue in dispute and accordingly issue in dispute and accordingly, we uphold the same. we uphold the same.

M/s Sanman Trade Impex Ltd. M/s Sanman Trade Impex Ltd. 41 3474, 3473, 3472 & ITA Nos. 3491, 3474, 3473, 3472 3471, 3470/MUM/2023 3471, 3470/MUM/2023 3606, 3605, 3603, 3602, 3614 & 3610, 3606, 3605, 3603, 3602, 3614 & 3610, 3601/MUM/2023 The ground No. 1 of the appeal of the Revenue is accordingly The ground No. 1 of the appeal of the Revenue is accordingly The ground No. 1 of the appeal of the Revenue is accordingly dismissed.

Order pronounced in the open Court on nounced in the open Court on 24/0 /07/2024.