AXTRON TEX-CHEM (INDIA) PRIVTAE LIMITED,MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-6(1), MUMBAI

ITA 4791/MUM/2024

AI Insights

The case involves Axtron Tex-Chem (India) Pvt. Ltd., which appealed against the orders of the Commissioner of Income-tax (Appeals) for the assessment years 2012-13, 2013-14, and 2014-15. The appeals were consolidated due to identical grounds raised. The primary contention was the validity of the proceedings under section 153C of the Income Tax Act, 1961, following a search operation at the premises of the SVP Group, which allegedly had connections with the assessee. The Tribunal examined whether any incriminating material was found that could justify the additions made to the assessee's income for the specified assessment years. The Tribunal's decision was based on the absence of such material and the legal precedents that unsupported additions in completed assessments are not permissible.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 38065 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Other Referred Cases: Continental Warehousing Corporation (Nhava Sheva) Ltd vs. Abhisar Buildwell Pvt. Ltd.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM KRISHN KEDIA
• Assessee Lawyers: SURESH OTWANI; SUNIL TALREJA; INVOKING; INVOKING; INVOKING
• Keywords: Reassessment proceedings; Bogus
• Section: 143(1); 132; 153A; 153C; 133A; 145(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAHUL CHAUDHARY (JUDICIAL MEMBER) ITA Nos. 4792, 4791 & 4790/MUM/2024 Assessment Years: 2012-13, 2013-14 & 2014-15 Axtron Tex-Chem (India) Pvt. Ltd., Bldg. No. 17/19, 2nd floor, Champa Galli, Zaveri Bazar, Mumbai-400002. Vs. Dy. CIT Central Circle-6(1), Aayakar Bhavan, Mumbai-400020. PAN NO. AAFCA 4592 H Appellant Respondent Assessee by : Mr. Suresh Otwani & Mr. Sunil Talreja Revenue by : Mr. Ram Krishn Kedia, Sr. DR Date of Hearing : 21/01/2025 Date of pronouncement : 30/01/2025 ORDER PER BENCH The captioned appeals by the assessee are directed against orders, all dated 22.07.2024, passed by the Ld. Commissioner of Income-tax (Appeals) – 54, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2012-13, 2013-14 and 2014-15 respectively. 2. As identical grounds have been raised in these appeals therefore, same were heard together consolidated order for the sake of convenience. The grounds raised in assessment year 2012 1. The FAA i.e, CIT(A) additional ground filed before CIT(A) claimed that From AY 2012 153C(1)(b) was not applicable abinitio. reproduced hereunder : 4th Additional Ground Grounds of Appeal we would l conclusion that Appellant is connected with SVP Group on whose premises Search took place on 22.08.2017 as far as this financial year is concerned. A.O erred in adopting the percentage of estimation on turnover of sal in this year. 2. The FAA i.e, CIT(A) restricting the estimation @ 1% on bogus trading of sales and purchase as against pleaded @ only. 3. The Appeal is in time and order. 4. The Appellant craves leave to add, alter or amend any of the grounds on or before the final date of hearing. 3. Briefly stated facts of the case are that the assessee filed its regular return of income on 29.09.2012 declaring Rs.2,69,239/-.The return of income filed by the assessee processed u/s 143(1) of the Income Act’). Subsequently, a search action out in the case of ‘Shreevallabh Pittie’( Consequently, a survey action u/s 133A of the Act was also carried out in the case of the assessee. During the course of the search Axtron Tex ITA Nos. 4792, 4791 & As identical grounds have been raised in these appeals therefore, same were heard together and disposed off by way of this consolidated order for the sake of convenience. The grounds raised in assessment year 2012-13 are reproduced as under: The FAA i.e, CIT(A) - 54 Mumbai erred in not accepting the additional ground filed before CIT(A) -54 Mumbai wherein it was claimed that From AY 2012-13 to AY 2014-15 proceedings U/s 153C(1)(b) was not applicable abinitio. Additional Ground is reproduced hereunder :- Additional Ground- In view of Ground No 5 in the Original Grounds of Appeal we would like to add that A.O erred in coming to conclusion that Appellant is connected with SVP Group on whose premises Search took place on 22.08.2017 as far as this financial year is concerned. A.O erred in adopting the percentage of estimation on turnover of sales and purchase which is not the case The FAA i.e, CIT(A)-54 Mumbai erred in directing the A.O in restricting the estimation @ 1% on bogus trading of sales and purchase as against pleaded @ 0.05% on SVP Group of Companies al is in time and order. The Appellant craves leave to add, alter or amend any of the grounds on or before the final date of hearing. Briefly stated facts of the case are that the assessee filed its regular return of income on 29.09.2012 declaring The return of income filed by the assessee u/s 143(1) of the Income-tax Act, 1961 Act’). Subsequently, a search action u/s 132 of the Act ‘Shreevallabh Pittie’(SVP) Group on 22.08.2017. Consequently, a survey action u/s 133A of the Act was also carried out in the case of the assessee. During the course of the search Axtron Tex-Chem (India) Pvt. Ltd. 2 ITA Nos. 4792, 4791 & 4790/MUM/2024 As identical grounds have been raised in these appeals, and disposed off by way of this consolidated order for the sake of convenience. The grounds raised 13 are reproduced as under: 54 Mumbai erred in not accepting the Mumbai wherein it was 15 proceedings U/s Additional Ground is In view of Ground No 5 in the Original ike to add that A.O erred in coming to conclusion that Appellant is connected with SVP Group on whose premises Search took place on 22.08.2017 as far as this financial year is concerned. A.O erred in adopting the percentage of es and purchase which is not the case 54 Mumbai erred in directing the A.O in restricting the estimation @ 1% on bogus trading of sales and 0.05% on SVP Group of Companies The Appellant craves leave to add, alter or amend any of the Briefly stated facts of the case are that the assessee filed its total income at The return of income filed by the assessee was 1961 (in short ‘the u/s 132 of the Act was carried up on 22.08.2017. Consequently, a survey action u/s 133A of the Act was also carried out in the case of the assessee. During the course of the search action at the premises of the SVP Group it was found that SVP group had made various payments to other ent purchases as well as bogus expenditure on capital goods. The Assessing Officer noted that payments made against both expenditure were received back by the group either unsecured loan, share premium etc. The Assessing Officer h recorded that during the course of the search u/s 132 a premises of the SVP group at 97 & 99, 9 Cuffe Parade, Mumbai certain incriminating documents/computer data back up in annexure A related to the assessee i.e. Axtron Tex of incriminating material related to the assessee of the Act was issued in the case of the assessee and assessment was completed on 20.12.2019 wherein 2% of the total purchase transactions amounting to Rs.31,83,73,353/-, which was worked out to Rs.66,67,471/ been brought to tax in the hands of the assessee by invoking section 145(3) of the Act. 4. On further appeal challenged validity of the reassessment proceedings u/s 153C of the Act as well as the addition on merit. The Ld. CIT(A) though upheld the addition on merit but did not give any finding on the ground challenging validity of se way of additional ground before the Ld. CIT(A). Axtron Tex ITA Nos. 4792, 4791 & action at the premises of the SVP Group it was found that SVP group had made various payments to other entities against bogus purchases as well as bogus expenditure on capital goods. The Assessing Officer noted that payments made against both expenditure were received back by the group either unsecured loan, share premium etc. The Assessing Officer h recorded that during the course of the search u/s 132 a premises of the SVP group at 97 & 99, 9th floor, Maker Tower “F” Cuffe Parade, Mumbai certain incriminating documents/computer data back up in annexure A-6, A-9, A-12 were seized which were lated to the assessee i.e. Axtron Tex-Chem India Pvt. Ltd. In view of incriminating material related to the assessee, a notice u/s 153C issued in the case of the assessee and assessment on 20.12.2019 u/s 153A r.w.s.153C of the wherein 2% of the total purchase transactions amounting to which was worked out to Rs.66,67,471/ been brought to tax in the hands of the assessee by invoking section 145(3) of the Act. On further appeal before the Ld. CIT(A), the assessee challenged validity of the reassessment proceedings u/s 153C of the Act as well as the addition on merit. The Ld. CIT(A) though upheld the addition on merit but did not give any finding on the ground challenging validity of section 153C of the Act which was raised by way of additional ground before the Ld. CIT(A). Axtron Tex-Chem (India) Pvt. Ltd. 3 ITA Nos. 4792, 4791 & 4790/MUM/2024 action at the premises of the SVP Group it was found that SVP ities against bogus purchases as well as bogus expenditure on capital goods. The Assessing Officer noted that payments made against both expenditure were received back by the group either by way of unsecured loan, share premium etc. The Assessing Officer has recorded that during the course of the search u/s 132 at the floor, Maker Tower “F” Cuffe Parade, Mumbai certain incriminating documents/computer 12 were seized which were Chem India Pvt. Ltd. In view notice u/s 153C issued in the case of the assessee and assessment u/s 153A r.w.s.153C of the Act, wherein 2% of the total purchase transactions amounting to which was worked out to Rs.66,67,471/-, has been brought to tax in the hands of the assessee by invoking the Ld. CIT(A), the assessee challenged validity of the reassessment proceedings u/s 153C of the Act as well as the addition on merit. The Ld. CIT(A) though upheld the addition on merit but did not give any finding on the ground ction 153C of the Act which was raised by 5. Aggrieved, the assessee is in appeal before the Tribunal by way of grounds raised as reproduced above. 6. The ground No. 1 of the appeal before us is related to challenging the validity of the proceedings u/s 153C of the Act. The Ld. counsel for the assessee submitted that there is no material related qua the year which has been found in the course of the search of the SVP group and therefore, in absence of any incriminating material Act for the year under consideration counsel further submitted that there is no material except statement during the course of the survey which being not the search proceedings, t case of the assessee is liable to 6.1 On the other hand, the Ld. Departmental Representative (DR) submitted that though there group qua the year un at the premises of the assessee it was explained that assessee was engaged in providing bogus accommodation entry bills. Thus statement is having parties other than the SVP group during the year under consideration and thus 153C proceedings have been initiated in the case of the assessee. Axtron Tex ITA Nos. 4792, 4791 & Aggrieved, the assessee is in appeal before the Tribunal by way of grounds raised as reproduced above. The ground No. 1 of the appeal before us is related to challenging the validity of the proceedings u/s 153C of the Act. The Ld. counsel for the assessee submitted that there is no material related qua the year which has been found in the course of the search of the SVP group and therefore, in absence of any material qua the year, proceedings u/s 153C of the the year under consideration is void-ab counsel further submitted that there is no material except statement during the course of the survey which being not search proceedings, the proceedings u/s 153C invoked in the case of the assessee is liable to be quashed. On the other hand, the Ld. Departmental Representative (DR) submitted that though there is no purchase or sale from the SVP under consideration but in the survey statement at the premises of the assessee it was explained that assessee was engaged in providing bogus accommodation entry bills. Thus statement is having bearing on the purchase and sales made to n the SVP group during the year under consideration and thus 153C proceedings have been initiated in the case of the assessee. Axtron Tex-Chem (India) Pvt. Ltd. 4 ITA Nos. 4792, 4791 & 4790/MUM/2024 Aggrieved, the assessee is in appeal before the Tribunal by way The ground No. 1 of the appeal before us is related to challenging the validity of the proceedings u/s 153C of the Act. The Ld. counsel for the assessee submitted that there is no material related qua the year which has been found in the course of the search of the SVP group and therefore, in absence of any u/s 153C of the ab-initio. The Ld. counsel further submitted that there is no material except statement during the course of the survey which being not part of he proceedings u/s 153C invoked in the On the other hand, the Ld. Departmental Representative (DR) or sale from the SVP but in the survey statement at the premises of the assessee it was explained that assessee was engaged in providing bogus accommodation entry bills. Thus, the bearing on the purchase and sales made to n the SVP group during the year under consideration and thus 153C proceedings have been correctly 7. We have heard rival submissions of the parties and perused the relevant materials on record the assessee is whether any incriminating material was found qua the year under consideration. We find that the Ld. CIT(A) called for a remand report from the Assessing Officer regarding the contention of the assessee that there was no transa sale of SVP Group during the year under consideration. Said remand report has been reproduced by the Ld. CIT(A) in the impugned order. On perusal of the relevant part of the remand report, we find that there are no purchase and sa group entities during the assessment year 2012 year 2014-15. Thus incriminating material found from the search of the SVP group qua the assessment years the statement of Shri Rathod recorded during the course of the survey proceedings u/s 133A of the Act at the premises of the assessee and submitted that he had arranged cash parties from the market and got commission @ 0.05% for arran the said cash. The Ld. DR accordingly submitted that his statement having bearing on the purchase and sales with the parties other than the SVP group, therefore proceedings u/s 153C of the Act was justified statement is recorded in the course of the survey u/s 133A of the Act and not under the search proceedings u/s therefore it is irrelevant Axtron Tex ITA Nos. 4792, 4791 & We have heard rival submissions of the parties and perused the relevant materials on record. The issue in dispute i the assessee is whether any incriminating material was found qua the year under consideration. We find that the Ld. CIT(A) called for a remand report from the Assessing Officer regarding the contention of the assessee that there was no transaction of the purchase and sale of SVP Group during the year under consideration. Said remand report has been reproduced by the Ld. CIT(A) in the impugned order. On perusal of the relevant part of the remand report, we find that there are no purchase and sales from the SVP group entities during the assessment year 2012-13 to assessment 15. Thus, it is undisputed that there was no incriminating material found from the search of the SVP group qua s 2012-13 to 2014-15. The Ld. DR re the statement of Shri Rathod recorded during the course of the survey proceedings u/s 133A of the Act at the premises of the assessee and submitted that he had arranged cash the market and got commission @ 0.05% for arran the said cash. The Ld. DR accordingly submitted that his statement having bearing on the purchase and sales with the parties other than the SVP group, therefore proceedings u/s 153C of the Act was justified. However, we are of the opinion statement is recorded in the course of the survey u/s 133A of the Act and not under the search proceedings u/s 132 herefore it is irrelevant whether the statement was Axtron Tex-Chem (India) Pvt. Ltd. 5 ITA Nos. 4792, 4791 & 4790/MUM/2024 We have heard rival submissions of the parties and perused . The issue in dispute in the case of the assessee is whether any incriminating material was found qua the year under consideration. We find that the Ld. CIT(A) called for a remand report from the Assessing Officer regarding the contention ction of the purchase and sale of SVP Group during the year under consideration. Said remand report has been reproduced by the Ld. CIT(A) in the impugned order. On perusal of the relevant part of the remand les from the SVP 13 to assessment it is undisputed that there was no incriminating material found from the search of the SVP group qua 15. The Ld. DR referred to the statement of Shri Rathod recorded during the course of the survey proceedings u/s 133A of the Act at the premises of the assessee and submitted that he had arranged cash for several the market and got commission @ 0.05% for arranging the said cash. The Ld. DR accordingly submitted that this part of his statement having bearing on the purchase and sales with the parties other than the SVP group, therefore proceedings u/s 153C we are of the opinion that this statement is recorded in the course of the survey u/s 133A of the 132 of the Act, was incriminating material or not unless it absence of any incriminating material found during the course of the search qua the issues case of completed assessment as held by the Hon’ble Bombay High Court in the case of Continental Sheva) Ltd [58 taxmann.com have been upheld by the Abhisar Buildwell Pvt. Ltd. search in the case of SVP gr assessment year under consideration was not pending and therefore falling in the unabated assessments. Accordingly, following the ratio of the Hon’ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd. (supra) have been made otherwise than incriminating material. The addition made in respect of commission from transaction with the parties other than the SVP group is accordingly deleted. The grounds of appeal are accordingly allowed. 8. The ground raise are identical to the legal ground raised in assessment year 2012 Therefore, following our find legal ground is allowed in favour of the assessee. The grounds raised on the merit of the appeal not required upon at this stage and Axtron Tex ITA Nos. 4792, 4791 & unless it found during the course of the search. In absence of any incriminating material found during the course of the search qua the issues, no addition could have been made in case of completed assessment as held by the Hon’ble Bombay High Court in the case of Continental Warehousing Corporation taxmann.com 78] (Bombay HC) and the ratio which have been upheld by the Hon’ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd. in Civil Appeal No. 6580 of 2021. A search in the case of SVP group was conducted on 26.08.2017, t assessment year under consideration was not pending and therefore falling in the unabated assessments. Accordingly, following the ratio of the Hon’ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd. (supra), we hold that no additi have been made otherwise than incriminating material. The addition made in respect of commission from transaction with the parties other than the SVP group is accordingly deleted. The grounds of appeal are accordingly allowed. The ground raised in assessment years 2014-15 and 2015 are identical to the legal ground raised in assessment year 2012 Therefore, following our finding in assessment year 2012 legal ground is allowed in favour of the assessee. The grounds it of the appeal not required to be adjudicated and are left open. Axtron Tex-Chem (India) Pvt. Ltd. 6 ITA Nos. 4792, 4791 & 4790/MUM/2024 of the search. In absence of any incriminating material found during the course of no addition could have been made in case of completed assessment as held by the Hon’ble Bombay High orporation (Nhava and the ratio which Hon’ble Supreme Court in the case of in Civil Appeal No. 6580 of 2021. As 26.08.2017, the assessment year under consideration was not pending and therefore falling in the unabated assessments. Accordingly, following the ratio of the Hon’ble Supreme Court in the case of we hold that no addition could have been made otherwise than incriminating material. The addition made in respect of commission from transaction with the parties other than the SVP group is accordingly deleted. The 15 and 2015-16 are identical to the legal ground raised in assessment year 2012-13. ing in assessment year 2012-13, the legal ground is allowed in favour of the assessee. The grounds to be adjudicated 9. In the result, all the three appeals of the assessee are allowed. Order pronounced in the open Court on Sd/- (RAHUL CHAUDHARY JUDICIAL MEMBER Mumbai; Dated: 30/01/2025 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Axtron Tex ITA Nos. 4792, 4791 & In the result, all the three appeals of the assessee are allowed. nounced in the open Court on 30/01/2025. - RAHUL CHAUDHARY) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Axtron Tex-Chem (India) Pvt. Ltd. 7 ITA Nos. 4792, 4791 & 4790/MUM/2024 In the result, all the three appeals of the assessee are allowed. /01/2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai "