DEPUTY COMMISSIONER OF INCOME TAX, AURANGABAD V. METAROLLS ISPAT PVT. LTD., JALNA

ITA 932/PUN/2024

AI Insights

The case involves appeals by the Revenue against Metarolls Ispat Pvt. Ltd. concerning additions made by the Assessing Officer on grounds of bogus purchases and unexplained money for the assessment years 2020-21 and 2021-22. The Assessing Officer had made substantial additions based on the non-compliance of suppliers to notices and the alleged involvement in providing accommodation entries. The Ld. CIT(A) deleted some of these additions, which led to the Revenue's appeal. The Tribunal examined the evidence, including the documents seized during the search and the statements recorded under section 132(4) of the Income Tax Act, 1961, and decided to modify the additions by applying a profit rate of 5% on the disputed transactions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471206 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2025
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2020-2021
• Other Referred Cases: NK Proteins Ltd vs DCIT, NR Paper and Boards Ltd vs DCIT, CIT vs Nikunj Eximp Enterprises (P.) Ltd
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S AMOL KHAIRNAR; RAMNATH P MURKUNDE
• Assessee Lawyers: S RAHUL KAUL; ANAND
• Keywords: Set aside; Retrospective amendment; Corroborative evidences; Document seized; Documents seized; Bogus purchase; Retraction; Search and seizure; Accommodation entries; Loose papers; Bogus
• Section: 147; 143(3); 142(1); 143(2); 119; 143(1); 132; 131; 133(6); 69C; 69A; 274; 28

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER ITA No.932/PUN/2024 Assessment year : 2020-21 DCIT, Aurangabad Vs. Metarolls Ispat Pvt. Ltd. Gut No.48, Adjacent to MIDC, Phase II, Daregaon, Jalna - 431213 PAN: AADCM3474C (Appellant) (Respondent) ITA No.933/PUN/2024 Assessment year : 2021-22 DCIT, Aurangabad Vs. Metarolls Ispat Pvt. Ltd. Gut No.48, Adjacent to MIDC, Phase II, Daregaon, Jalna - 431213 PAN: AADCM3474C (Appellant) (Respondent) Assessee by : S/Shri Adv Rahul Kaul, CA Anand Partani & Darshan Gattani Department by : S/Shri Amol Khairnar CIT-DR & Ramnath P Murkunde Date of hearing : 10-12-2024 Date of pronouncement : 20-02-2025 O R D E R PER R. K. PANDA, VP : The above two appeals filed by the Revenue are directed against the separate orders dated 11.03.2024 of the Ld. CIT(A), Pune-12 relating to assessment years 2020-21 and 2021-22, respectively. Since identical grounds have been raised by 2 ITA Nos.932 & 933/PUN/2024 the Revenue in both these appeals, therefore, for the sake of convenience, these were heard together and are being disposed of by this common order. 2. First we take up ITA No.932/PUN/2024 for assessment year 2020-21 as the lead case. 3. The first issue raised by the Revenue in the grounds of appeal relates to the order of the Ld. CIT(A) in deleting the addition of Rs.11,70,03,386/- made by the Assessing Officer on account of bogus purchases. 4. Facts of the case, in brief, are that the assessee is a company engaged in business of manufacturing of steel products such as MS Billets & TMT Bars. It filed its return of income on 26.12.2020 declaring total income of Rs.19,48,06,480/-. The return was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟) on 24.12.2021 determining the total income of the assessee at Rs.39,48,76,390/-. Subsequently, the case was selected for complete scrutiny and notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee, in response to which the AR of the assessee appeared before the Assessing Officer from time to time and filed the requisite details. In the meantime, a search and seizure action u/s 132 of the Act was carried out by the DDIT (Inv), Aurangabad on 23.09.2021 and the assessee was also covered in the search action. 3 ITA Nos.932 & 933/PUN/2024 5. During the course of assessment proceedings, the Assessing Officer noted that the DDIT (Inv) in his report has stated that as per information received from the DGGI, Zonal Unit, Pune about a person named Shri Sagar Suraj Agarwal who was proved to be a fraudster was providing accommodation entries for bogus purchases. It was observed that during the year under consideration the assessee company had made purchases from Shri Sagar Suraj Agarwal, Proprietor of M/s. Divya Enterprises amounting to Rs.3,27,76,681/-. Similarly, the assessee has also made purchases from two other entities i.e. M/s. Shri Waheguru Global Mines Pvt. Ltd. amounting to Rs.6,45,31,682/- and M/s. Kushi Traders, Prop. Babusha Sharnappa Kasbe amounting to Rs.4,67,39,981/-. During the course of search action at the factory premises of the assessee, the search team gathered that the GST department had conducted an action recently and they were verifying transactions related to more such suspicious entities involved in providing fraudulent ITC without supply of goods. The Assessing Officer therefore, issued a notice u/s 133(6) of the Act to the three alleged suppliers of raw materials. However, no response was received from the following three parties: S.N. Name of Party Transaction Amount 1 M/s. Divya Enterprises Prop. Shri Sagar Suraj Agrawal Rs.3,27,76,681/- 2 Shri Waheguru Global Mines Private Limited Rs.6,45,31,682/- 3 M/s Kushi Traders Prop. Babusha Sharnappa Kasbe Rs.4,67,39,981/- Total Rs.14,40,48,344/- 4 ITA Nos.932 & 933/PUN/2024 6. He, therefore, asked the assessee to explain as to why the transactions made with the above parties amounting to Rs.14,40,48,344/- should not be disallowed in absence of non-compliance to the notices issued to them u/s 133(6) of the Act. The assessee in response to the same furnished the following details: 1. Copy of Tax Invoice as prescribed under GST Act, 2. Copy of Transportation receipts with declaration of transporter, vehicle registration details i.e. RTO registration certificate, 3. Copy of e-way bill, 4. Weighment slip 5. Photo of vehicle at the factory gate and at weighment bridge 7. Relying on various decisions, it was submitted that no disallowance of purchases can be made merely on account of non-compliance to the notice u/s 133(6) of the Act by the suppliers. 8. However, the Assessing Officer was not satisfied with the arguments advanced by the assessee. Rejecting the various explanations given by the assessee and relying on various decisions, the Assessing Officer made addition of Rs.11,70,03,386/- after excluding the GST amount of Rs.2,10,60,608/- from the total purchases of Rs.13,80,63,994/-. 9. In appeal, the Ld. CIT(A) deleted the addition by observing as under: “7.2 I have gone through the submission of the appellant along with supporting documents submitted during the appellate proceedings as well as during the assessment proceedings before the Ld. AO. While disallowing the non genuine 5 ITA Nos.932 & 933/PUN/2024 purchases, the Ld. AO has heavily relied on the report of GST department. DGGI had identified and declared some parties as Bogus Parties Based on the same, the DDIT (Inv) has reported that purchases made from M/s. Divya Enterprises, M/s. Khushi Traders and M/s Shri. Waheguru Global Mines Private Limited, etc amounting to Rs.11,70,03,386/- are bogus purchases. The appellant has submitted relevant documents to substantiate that purchases made by the appellant from these parties are genuine. In support of the same, the appellant has submitted few bills, sample copies of Invoices prescribed under GST Act, lorry receipts along with RTO registration, copy of e-way bill, weighment slips, photographs of the vehicles arrived at factory gate and at weighment bridge etc. Apart from this, the appellant has also submitted the copies of various forms like GSTR 2A, form 3B, GSTR1 etc and proof of payment made though banking channel as also the replies from most of the suppliers in response to the notices issued u/s 133(6). 7.3 The appellant has submitted the status report of the suppliers which is also available on the website of the GST department. The status report denotes the filing status of various forms which are mandatorily to be filed by the GST registered suppliers. I have gone through the status reports and it is observed that the alleged bogus suppliers have filed the requisite forms which are for reporting of sales, filing of monthly and annually GST returns, etc. This shows that there is proper compliance from the alleged bogus suppliers and the same is available in the public domain as facilitated by the GST department. The appellant has also submitted that it had replied to the GST department vide its letter dated 2nd September 2021 and contended that based on the documentary proofs and available documents with the GST department, the purchases from these alleged parties are genuine. The appellant has also relied upon few judgments of the jurisdictional High Court and ITAT to demonstrate that the allegations/ findings of the GST department are not final and are challengeable. Further the appellant has submitted that the GST department has not provided the opportunity of cross examination in respect of the disallowance of ITC claimed. The appellant has further argued that the entire purchases disallowed by the Ld. AO are based on the information forwarded by the DDIT (Inv.) which in turn was received from GST Department. The Ld. AO in the assessment order has held that it is mandatory to collect the TCS on purchase of scrap, however, the sellers of scrap have not claimed TCS in the ROI filed Hence, in absence of TCS details the AO held the purchases as bogus. The appellant has submitted that the applicability of TCS on scrap comes into picture only when the trade of scrap is between traders and not between manufacturer and traders The Ld AO has held that the GST registration was cancelled with retrospective effect. However, various judgments of the High Court on cancellation of GST registration by the GST department have held that the department's action to cancel registration with retrospective effect without following proper procedure of law is not justifiable. 7.4 The Ld. AO has also held that the alleged parties are not identified and are not found on given address and mere possession of purchase bills and other documents cannot be the basis for holding the purchases as genuine. In this regard, the appellant has contended that the appellant has submitted all relevant documents and supporting evidence in support of its claim that the purchases are genuine. The Ld. AO has not discussed as to what further documents and evidence 6 ITA Nos.932 & 933/PUN/2024 are required to justify the genuineness of purchases. The AO has not been able to prove that the documents are fake or incorrect. The Ld. AO has verified the books of accounts and stock records and accepted the books of accounts and did not find any mistake or formed adverse opinion. Thus the contention of the Ld. AO is not correct. The appellant has countered all of the arguments/contentions raised by the Ld. AO with supporting documents and supporting case laws, thus the argument of the appellant is found to be correct and legally valid. 7.5 The Ld. AO has relied on the Hon'ble Supreme court's decision in the case of NK Proteins Ltd vs DCIT (2017) 292 CTR 354 SC and NR Paper and Boards Ltd. The facts of these cases are different than the appellant's case. In these cases, the bogus purchases were proved with thorough investigation and parties were found fictitious and some material was found during the course of search action which proved that the impugned purchases were bogus. The said ratio cannot be applied in the case of the appellant. The appellant has provided sufficient documents and evidence to prove the genuineness of purchases and filed various documents before the AO such as the address of all the parties and has also furnished details of payment through bank account in to the bank account of such suppliers, copies of Tax invoices for purchases along with supporting documentary evidence such as transportation receipts, E-way Bills, weighment slips, photo of the vehicles at the factory gate and at the weighment bridge. It is pertinent to note that no infirmity has been pointed out in the documents submitted by the appellant. Further the appellant has made purchases from these suppliers who were registered under GST and has claimed input tax credit of the GST on the purchases made from them as per statement GSTR 2A reflected on GST portal. The appellant has provided the reconciliation of stocks giving complete details regarding opening stock, purchases, sales and closing stock. Similarly, the sales have not been doubted by the AO. It is further observed that the appellant has produced the proof of such payments through banking channel but the AO has failed to substantiate that the appellant received it back in cash. As held in the case of CIT v. Nikunj Eximp Enterprises (P.) Ltd. (2013) 216 Taxman 171 (High Court of Bombay) books of Accounts of the appellant have not been rejected. There were confirmation letters filed by the suppliers, copies of invoices for purchases as well as copies of bank statement all of which would indicate that the purchases were made. If sales are not doubted, merely because suppliers had not appeared before the Assessing Officer purchases cannot be disallowed. 7.6 Considering the fact of the case and submission made by the appellant the disallowance made by the AO is deleted. Ground no. 2 of the appeal is, therefore, allowed.” 10. Aggrieved with such order of the Ld. CIT(A), the Revenue is in appeal before the Tribunal. 7 ITA Nos.932 & 933/PUN/2024 11. The Ld. DR strongly challenged the order of the Ld. CIT(A) in deleting the entire addition. He submitted that when the GST department has found the parties to be fraudsters and the above three parties neither responded to the notices issued by the Assessing Officer u/s 133(6) of the Act nor responded to the Summons issued u/s 131 of the Act, therefore, the Ld. CIT(A) was not justified in deleting the addition made by the Assessing Officer. He submitted that the Ld. CIT(A) did not take cognizance that the CGST department has conducted search and identified the suppliers as entry providers without actual supply of material. He submitted that the suppliers of material i.e. M/s. Khusi Traders to the assessee company is a non-filer of income tax return and M/s. Shri Waheguru Global Mines Pvt. Ltd. filed its return of income only for assessment year 2020-21 and the identity of the suppliers remained to be proved beyond doubt. He accordingly submitted that the order of the Ld. CIT(A) be set aside and that of the Assessing Officer be restored. 12. The Ld. Counsel for the assessee on the other hand submitted that when the GST department has conducted search on the above three alleged suppliers it is proved that their identity is not in doubt. He submitted that it is not a finding of the search that any cash has been returned to the assessee. Further, it is only a mere suspicion by the GST department that why input credit be not withdrawn. However, no such action has been taken and the input credit still stands. He submitted that the assessee has provided all the requisite details such as lorry bills, invoices, e-way bills, etc. He submitted that e-way bills contain compulsory lorry number, RIFT, toll tax and photographs of the truck / driver, etc. Further, the 8 ITA Nos.932 & 933/PUN/2024 turnover of the assessee also almost remains the same. He submitted that when the assessee has submitted all the possible evidences therefore, merely because the parties did not respond to the notices issued u/s 133(6) of the Act or did not respond to the Summons issued u/s 131, the same cannot be a ground to make the huge additions. 13. He submitted that the decisions relied on by the Assessing Officer in the case of NK Proteins Ltd. vs. DCIT (2017) 292 CTR 354 (SC) and NR Paper & Boards Ltd. (supra) are not applicable to the facts of the present case and the decision of the Hon‟ble Bombay High Court in the case of CIT vs. Nikunj Eximp Enterprises (P.) Ltd. (2013) 216 Taxman 171 (Bom) is clearly applicable to the facts of the present case since the books of account of the assessee were never rejected and the confirmation letters filed by the suppliers, copies of purchase invoices as well as copies of bank statements filed by the assessee substantiated beyond doubt that the purchases are genuine. Further, when sales are not doubted, therefore, merely because the suppliers have not appeared before the Assessing Officer or not responded to the notices issued u/s 133(6) of the Act, cannot be a ground to disallow the purchases. 14. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) and the paper book filed by both sides. We have also considered the various decisions cited before us by both sides. We find the Assessing Officer in the instant case made addition of 9 ITA Nos.932 & 933/PUN/2024 Rs.11,70,03,386/- after excluding the GST amount of Rs.2,10,60,608/- from the total purchases of Rs.13,80,63,994/- from the three parties, the details of which have already been reproduced in para 5 of this order. While doing so, the Assessing Officer, apart from relying on various decisions, relied on the decision of the Hon'ble Supreme Court in the case of NK Proteins Ltd. vs. DCIT (supra) and the decision in the case of NR Paper & Boards Ltd. (supra). We find the Ld. CIT(A) deleted the addition, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. DR that when the above three parties were held to be non-genuine parties and since none of them responded to the notices issued u/s 133(6) of the Act nor appeared before the Assessing Officer in response to the Summons issued u/s 131, therefore, the purchases from the said parties remained unverified and therefore, the Ld. CIT(A) should not have deleted the entire addition. It is the submission of the Ld. Counsel for the assessee that when the sales are accepted, books of account are not rejected and the assessee has filed all the possible evidences such as lorry bills, invoices, e-way bills, etc., the Ld. CIT(A) was fully justified in deleting the addition made by the Assessing Officer. 15. On a pointed query raised by the Bench at the time of hearing as to what has happened in the preceding assessment years, the Ld. DR filed the assessment orders for assessment years 2016-17 to 2019-20 where the assessment proceedings have been completed u/s 147 r.w.s. 143(3) of the Act after completion of the assessment for impugned year. We find in all these four years the cases were 10 ITA Nos.932 & 933/PUN/2024 reopened on account of bogus purchases from various parties on the basis of search action as well as post-search enquiries conducted by the DDIT(Inv), Aurangabad and information obtained from the DGGI, Zonal Unit, Pune. We find for the assessment year 2016-17 the Assessing Officer has adopted 5% profit on account of bogus purchases and untested purchases and thereby made addition of Rs.1,19,674/- being the profit @ 5% on the bogus and untested purchases of Rs.23,93,474/-. 16. Similarly, for assessment year 2017-18 the Assessing Officer, in the order passed u/s 147 r.w.s. 143(3) of the Act has made addition of Rs.8,13,480/- being the profit @ 5% on account of untested / bogus purchases of Rs.1,62,69,613/-. 17. We find for assessment year 2018-19 the Assessing Officer has made addition of Rs.44,13,558/- being the profit @ 5% on account of bogus / untested purchases of Rs.8,82,71,173/- wherein M/s Divya Enterprises Prop. Sagar Suraj Agrawal is a party and the details of which are as under: Sr. No. Particulars Taxable Value (Rs.) Excise Duty GST Input (Rs.) Freight Invoice Value (Rs.) 1 M/s. Shri Shyam Steels, Prop. Deepak Kumar Agrawal 2,44,14,490 6,07,100 35,06,280 1,66,000 2,86,93,870 2 M/s. Laxmi Enterprises, Prop. Rekha Deepak Agarwal 52,35,621 - 9,42,410 - 61,78,031 3 M/s. Pawan Enterprises Prop. Ramswaroop Agarwal 2,60,43,770 - 46,87,880 - 3,07,31,650 4 M/s. Divya Enterprises Prop. Sagar Suraj Agrawal 74,10,261 - 13,33,848 - 87,44,109 5 M/s. Indian Steel Traders Prop. Imran Khan 5,60,430 - 1,00,877 - 6,61,306 6 M/s. Rehan Enterprises 2,46,06,601 - 44,29,185 - 2,90,35,786 Total 8,82,71,173 6,07,100 1,50,00,480 1,66,000 10,40,44,752 11 ITA Nos.932 & 933/PUN/2024 18. Similarly, for assessment year 2019-20 the Assessing Officer in the order passed u/s 147 r.w.s. 143(3) dated 28.03.2024 has adopted the profit @ 5% on the bogus / untested purchases of Rs.17,49,83,488/- wherein M/s. Divya Enterprises Prop. Sagar Suraj Agrawal and M/s. Khushi Traders Prop. Babusha Kasbe are appearing. The relevant details of the same are as under: Sr. No. Particulars Taxable Value (Rs.) GST Input (Rs.) Invoice Value (Rs.) 1 M/s. Shri Shyam Steels, Prop. Deepak Kumar Agrawal 19,34,625 3,48,234 22,82,859 2 M/s. Laxmi Enterprises, Prop. Rekha Deepak Agarwal 1,16,71,205 21,00,817 1,37,72,022 3 M/s. Pawan Enterprises Prop. Ramswaroop Agarwal 1,82,51,360 32,85,245 2,15,36,605 4 M/s. Divya Enterprises Prop. Sagar Suraj Agrawal 9,79,32,384 1,76,27,829 11,55,60,213 5 M/s. Khushi Traders Prop. Babusha Kasbe 2,52,47,771 45,44,599 2,97,92,370 6 Raja Cement House 1,99,46,143 35,90,308 2,35,36,451 Total 17,49,83,488 3,14,97,032 20,64,80,520 19. However, we find the Assessing Officer in the impugned assessment order, has made the entire addition of bogus / untested purchases and these orders of the Assessing Officer passed u/s 143(3) / 147 were passed after the order of the Ld. CIT(A). Although the assessee in the instant case has filed various details such as lorry bills, invoices, e-way bills, etc. the fact remains that such parties neither responded to notices issued u/s 133(6) nor appeared before the Assessing Officer in response to the Summons issued u/s 131 of the Act. At the same time, it is also an admitted fact that the sales of the assessee have not been disputed and the books of account have also not been rejected. Considering the totality of the facts of the case and considering the fact that the Assessing Officer in assessee‟s own case for the four preceding assessment years has adopted the profit rate of 5% on account 12 ITA Nos.932 & 933/PUN/2024 of bogus / untested purchases, therefore, we are of the considered opinion that adoption of the same profit rate of 5% on account of untested / bogus purchases of Rs.13,80,63,994/- will meet the ends of justice. We, therefore, set aside the order of the Ld. CIT(A) and direct the Assessing Officer to adopt the profit rate of 5% on the total purchases of Rs.13,80,63,994/- and restrict the addition to Rs.69,03,200/-. The order of the Ld. CIT(A) is accordingly modified. We hold and direct accordingly. The grounds raised by the Revenue are accordingly partly allowed. 20. The second issue raised by the Revenue in the grounds of appeal relates to the order of the Ld. CIT(A) in deleting the addition of Rs.14 lakh made by the Assessing Officer on account of unexplained money. 21. Facts of the case, in brief, are that during the course of search action at the residential premises of Shri Ashish Bhala, Director of the assessee, the search team had found and seized documents which were inventorized as Annexure-A. Item No.2 of Annexure-A was a loose paper bundle containing total pages from 1 to 29 which were the Xerox copies / original cheques and promissory notes. The details pertaining to the year under consideration are as under: S.N. Page No. Date Name of the Bank Cheque No. Name of the entity who issued the cheque Cheque in favour of Amount (in Rs.) 1 2 3 4 5 6 7 8 1 10 28.12.2019 State Bank of India, Partur 031731 Akshay Cotex Metarolls Ispat Private Limited Rs.50,00,000/- 13 ITA Nos.932 & 933/PUN/2024 2 13 19.05.2019 Omprakash Deora People’s Co- op Bank Ltd., Hingoli 081769 Ujjwal Refinery Pvt. Ltd. Metarolls Ispat Private Limited Rs.11,00,000/- 3 19 04.01.2020 State Bank of India, Partur 031734 Akshay Cotex Metarolls Ispat Private Limited Rs.50,00,000/- 4 20 02.01.2020 State Bank of India, Partur 031733 Akshay Cotex Metarolls Ispat Private Limited Rs.50,00,000/- 5 21 11.05.2019 HDFC Bank, Aurangabad 001775 Soham Motors Pvt. Ltd. Metarolls Ispat Private Limited Rs.50,00,000/- 22. The Assessing Officer noted from the above that the entities mentioned in Column No.7 had given hand loans/loans in cash / RTGS to the entities mentioned in Column No.6 and for security purpose the entities mentioned in Column No.6 had issued cheque in favour of entities mentioned in Column No.7. During the course of search action statement of Shri Ashish J Bhala was recorded u/s 132(4) on 24.09.2021. In his statement he had accepted that the above transactions pertain to him and his family members. He had further admitted that they had provided unsecured loans to third parties and third parties had issued postdated cheques for repayment of loan. The Assessing Officer therefore asked the assessee vide notice u/s 142(1) dated 17.09.2022 to explain as to whether the above mentioned transactions were recorded in the books of account or not and also to furnish the ledger account of the parties mentioned in Column No.6. After considering the submissions made by the assessee from time to time the Assessing Officer made addition of Rs.14 lakh to the total income of the assessee by recording as under: 14 ITA Nos.932 & 933/PUN/2024 “7.4. The assessee along with its submission furnished the copies of affidavits & agreements in respect of M/s Akshay Cotex & M/s Soham Motors Private Limited regarding cheques seized during the search action and stated that these chques were received as guarantee against agreement of land purchase, which were not finalized subsequently. Further, in respect of M/s Ujjawal Refinery Private Limited it has been stated that Mr. Ashish Bhala had given unsecured loan to Ujjawal Refinery Private Limited from his own books of accounts in individual capacity. Though, by mistake the cheque is issued on the name of Metarolls Ispat Private Limited. However, the above contention of Assessee Company is not acceptable. The cheque is a negotiable instrument and it was required to be issued in the name of specific beneficiary. Further, the assessee could not substantiate its claim that the transaction was done in the individual capacity of Ashish Bhala in absence of any documentary evidence. During the search action two cheques were seized which were issued by M/s Ujjawal Refinery Private Limited, i) Cheque No. 000493 of HDFC Bank dated 28.03.2019 amounting to Rs.14,00,000/- in favour of M/s Metarolls Ispat Private Limited & ii) Cheque No. 081769 of Omprakash Deora People's Co-Op Bank Limited, Hingoli dated NIL amounting to Rs.11,00,000/- in favour of M/s Metarolls Ispat Private Limited. Also on perusal of the seized cheque of HDFC Bank, it is observed that on the back side of cheque following entries were made: Previous - 14,00,000 - 3,00,000/ paid on 19/05/19- 11,00,000/- Remains. Interest Hisab - pending The details mentioned above clearly established that amount of Rs.14,00,000/- was provided as cash loan to M/s Ujjawal Refinery Private Limited which were not recorded in the books of accounts as no documentary evidence has been submitted by assessee. As per section 69A \"Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year. Accordingly, the amount of Rs.14,00,000/- is added to the income of assessee u/s 69A of the Act. Penalty proceedings u/s 274 RWS 271AAC (1) of the Act are initiated for addition of Rs.14,00,000/-.” 23. In appeal, the Ld. CIT(A) deleted the addition by observing as under: “8.2 On perusal of the submission and relevant documents produced before me, it is seen that the AO has made addition by invoking the provisions of section 69A of the Income Tax Act. 8.3 The additions made by the Ld. AO are based on the noting made by Shri Ashish Bhala on back side of the undated cheque and Ld. AO has assumed that the said cheque belongs to the appellant since the name of the appellant was written 15 ITA Nos.932 & 933/PUN/2024 on the cheque. In the statement recorded on oath of Shri Ashish Bhala he had stated that the impugned transaction belongs to him in his personal capacity and the cheque was wrongly issued by the party in the name of the appellant. Thus, the impugned addition is deleted. This Ground of appeal raised by the appellant is hereby allowed.” 24. Aggrieved with such order of the Ld. CIT(A), the Revenue is in appeal before the Tribunal. 25. The Ld. DR strongly challenged the order of the Ld. CIT(A) in deleting the addition made by the Assessing Officer and drew the attention of the Bench to the following written submission: “3.2.1.The decision of the Hon'ble CIT(A) is not acceptable for the following reasons: (i). The assessee along with its submission furnished the copies of affidavits & agreements in respect of M/s Akshay Cotex & M/s Soham Motors Private Limited regarding cheques seized during the search action and stated that these chques were received as guarantee against agreement of land purchase, which were not finalized subsequently. Further, in respect of M/s Ujjawal Refinery Private Limited it had been stated that Mr. Ashish Bhala had given unsecured loan to Ujjawal Refinery Private Limited from his own books of accounts in individual capacity. Though, by mistake the cheque is issued on the name of Metarolls Ispat Private Limited. However, the above contention of Assessee Company is not acceptable. The cheque is a negotiable instrument and it was required to be issued in the name of specific beneficiary. Further, the assessee could not substantiate its claim that the transaction was done in the individual capacity of Ashish Bhala in absence of any documentary evidence. During the search action two cheques were seized which were issued by M/s Ujjawal Refinery Private Limited, i) Cheque No. 000493 of HDFC Bank dated 28.03.2019 amounting to Rs.14,00,000/- in favour of M/s Metarolls Ispat Private Limited & ii) Cheque No. 081769 of Omprakash Deora People's Co-Op Bank Limited, Hingoli dated NIL amounting to Rs.11,00,000/- in favour of M/s Metarolls Ispat Private Limited. Also on perusal of the seized cheque of HDFC Bank, it was observed that on the back side of cheque some entries with regard to transaction of amount Rs.14,00,000/- were made. From this it is clearly established that amount of Rs.14,00,000/- was provided as cash loan to M/s Ujjawal Refinery Private Limited which were not recorded in the books of accounts as no documentary evidence has been submitted by assessee. Accordingly, addition of Rs.14,00,000/- u/s 69A of the Act was correctly made added to the income of assessee by AO. Therefore, on consideration of the above facts, the decision of Ld. CIT(A) for deleting the total addition of Rs.14,00,000/- is not acceptable.” 16 ITA Nos.932 & 933/PUN/2024 26. The Ld. Counsel for the assessee on the other hand drew the attention of the Bench to the reply given at the time of appeal proceedings which has been reproduced by the Ld. CIT(A) at page 32 of his order and which reads as under: “Appellant's Reply: The AO is erred in making an addition u/s 69A of the Act of Rs.14,00,000/- on the assumption basis that appellant company has provided a cash loan based on the cheque seized during the search operation from the residential premises of one of the Director Mr. Ashish Bhala. During the course of search action at the residential premises of Shri Ashish Bhala, a director of MIPL the search teams has found and seized certain loose papers, documents and some unrealized cheque which were inventoried as Annexure-A. Item No. 2 of Annexure-A is a loose paper bundle containing total Pages from 1 to 29, these xerox copies/originals cheques and promissory notes. We hereby attaching the seized papers as \"Annexure 7A\" The appellant company has explained that said transaction belongs in the individual capacity of the director of the company Mr. Ashish Bhala. Also the cheque found during the search is undated cheque and used as rough paper. It is just paper jottings which is assumed by AO as cash loan provided by the appellant company to M/s Ujjwala Refinery Private Limited. Also it can be observed from the scribbling made on the back of the cheque that the amount of Rs. 14,00,000/- mentioned cannot be linked to the period under consideration. Further in the oath statement of Ashish Bhala taken under section 132(4) of the Income Tax Act he has stated in the answer to Q. No. 29 as under: \"These are not cash transactions. Each and every cheque is against token or sale of property. These transactions have not been taken in the books of accounts as the property deal was not concluded\". 27. He accordingly submitted that the same being self explanatory the Assessing Officer should not have made any addition especially when Shri Ashish Bhala had in his statement recorded u/s 132(4) has stated that the impugned transaction belongs to him in his personal capacity and the cheque was wrongly issued by the party in the name of the assessee. 28. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) and the paper book filed on behalf 17 ITA Nos.932 & 933/PUN/2024 of both sides. We find the Assessing Officer in the instant case made addition of Rs.14 lakh to the total income of the assessee on the basis of seized documents found, according to which, an amount of Rs.14 lakh was provided as cash loan to M/s. Ujjwal Refinery Private Limited which was not recorded in the books of account. We find the Ld. CIT(A) deleted the addition, the reasons of which have already been reproduced in the preceding paragraphs. 29. We do not find any infirmity in the order of the Ld. CIT(A) on this issue. Admittedly, the documents were found from the premises of Shri Ashish Bhala, Director of the assessee company during the course of search action at his residential premises. In his statement recorded u/s 132(4) of the Act, he has owned up the transactions as belonging to him in his personal capacity and the cheque was wrongly issued by the party in the name of Metarolls Ispat Pvt. Ltd. Therefore, once the person from whose residence the documents were seized and in his statement recorded u/s 132(4) of the Act he has owned up the transactions, therefore, the Assessing Officer in our opinion was not justified in making the addition in the hands of the assessee company. In this view of the matter and in view of the reasoning given by the Ld. CIT(A) on this issue, we do not find any infirmity in his order. Accordingly, the same is upheld and the grounds raised by the Revenue are dismissed. 30. In the result, the appeal filed by the Revenue is partly allowed. 18 ITA Nos.932 & 933/PUN/2024 ITA No.933/PUN/2024 (A.Y.2021-22) 31. The grounds raised by the Revenue are as under: 1. Whether on the facts and in the circumstances of the case and in law, the Ld CIT (A) has erred in deleting the addition of Rs.1,46,46,419/- and Rs.3,26,945/- made on account of bogus purchase, ignoring the facts that the supplier of goods has not confirmed the sale and movement of goods delivered to assessee company in response to notice issued u/s 133(6) to these suppliers. 2. Whether on the facts and in the circumstances of the case and in law, the Ld CIT (A) has erred in not taking cognizance that CGST department had conducted search and identified the suppliers as entry providers without actual supply of material. 3. Whether on the facts and in the circumstances of the case and in law, the Ld CIT (A) while deleting the addition of Rs.1,46,46,419/- and Rs.3,26,945/ has erred in ignoring the fact that the DDIT (Inv.), Unit-IV(1), Thane in response to commission issued u/s 131(d) of the IT Act has conducted enquiry and reported that the suppliers of material i.e. M/s Om Traders an M/s Sunny Traders to the assessee company are non-filer of return of income and found to be non-existent, thereby the identity of the suppliers is no proved beyond doubt. 4. Whether on the facts and in the circumstances of the case and in law the CIT(A) has erred in deleting the addition of Rs.17,42,770/-…able to prove the nexus between the loose paper and the unrecorded by the assessee. 5. Whether on the facts and in the circumstances of the case and in law, the CIT(A) has erred in deleting the addition of Rs.13,00,000/- made on account of unexplained money, ignoring the facts that the assessee has made payment of Rs.13,00,000/- through hawala as verified from the mobile of Shri Ashish Bhala, one of the directors of the assessee company. 6. Whether on the facts and in the circumstances of the case and in law, the CIT (A) has erred in not taking cognizance that during the search action and some loose papers pertaining to screenshot of mobile chat of Shri As Bhala had been seized and also the statement of Shri Ashish Bhala recorded u/s 132(4) in which he had admitted the transaction carried out. 7. The appellant craves leave to add, alter, modify, delete and amend any the grounds, as per the circumstances of the case. 19 ITA Nos.932 & 933/PUN/2024 32. The grounds of appeal No.1 to 3 raised by the Revenue relate to the order of the Ld. CIT(A) in deleting the addition of Rs.1,46,46,419/- and Rs.3,26,945/- made by the Assessing Officer on account of bogus purchases. 33. After hearing both the sides, we find the above grounds raised by the Revenue are identical to the grounds raised by the Revenue in ITA No.932/PUN/2024. We have already decided the issue and directed the Assessing Officer to adopt the profit rate at 5% on account of such bogus / untested purchases. Following similar reasonings, we set aside the order of the Ld. CIT(A) on this issue and direct the Assessing Officer to adopt the profit rate at 5% on such bogus / untested purchases. The grounds raised by the Revenue are accordingly partly allowed. 34. The ground of appeal No.4 by the Revenue relates to the order of the Ld. CIT(A) in deleting the addition of Rs.17,42,770/-. 35. Facts of the case in brief are that during the course of assessment proceedings the Assessing Officer asked the assessee to explain as to why the amount received as distribution of amounts received in the form of flat against the unaccounted transaction amounting to Rs.17,42,770/- should not be added to the total income of the assessee. The relevant para of the show cause notice reads as under: 20 ITA Nos.932 & 933/PUN/2024 “7. Vide para No 4 of the show cause notice dated 24.12.2022 the assessee was requested that why the amount received as distribution of amounts received in the form of flat against the unaccounted transaction amounting to Rs.17,42,770/- should not be added to the total income. The relevant para of the show cause notice is reproduced as under: Vide notice u/s 142(1) dated 21.10.2022, vide question no 35 it was asked to explain the contents of loose paper bundle no.1 seized from the premises of Shri Ramesh Gopikishan Mundra. In the reply dated 21.11.2022 it was requested to provide relevant seized documents. The relevant seized documents are already handed over to your authorized representative. For the conveyance again the copy of these paper is enclosed herewith. From this transaction it is seen that the account of Shri Gautam munots is settled for Rs.61,00,000/-. In this paper amount of Rs.61,00,000/- is distributed to Rajuri Group 19.1662, Icon Group 17.4277, Meta Group, 17.4277, SSM 5.5754 & SNL 1.3908 totalling to Rs.60.9878 i.e. Rs.60,98,780/-. Similar transaction was also noticed in the premises of Shri D. B Soni. It is seen that this paper pertains to distribution of amounts received in the form of flat against the unaccounted transaction why an amount of Rs.17,42,770/- should not be added to the total income.” 36. Rejecting the explanation given by the assessee the Assessing Officer made addition of Rs.17,42,770/- by recording as under : “The reply furnished by the assessee is not found to be acceptable due to following reasons: On perusal of the seized material, it is clearly seen that the account of \"Gautam Munot's account settled @61\" which shows that there was a settlement between Kuber Laxmi Properties and (Gautam Munot) one of the partner in Kuber Laxmi Properties and Metarolls Ispat Pvt. Ltd and assessee of other group companies. Further papers related to similar transaction was found on the residential premises of DB Soni. While recording his statement Shri D B. Soni recorded u/s 132(4) of the Act he has stated in his answer to q.no.10 Rajuri steel pvt. Ltd had supplied steel to M/s Kuber Laxmi Properties at there Ambad Cahufuli site Kuber Laxmi Properties is partnership firm of Gautam Munot and others Because of some financial constrains, instead of money, they have offered various flats/properties against the outstanding amount payable to Rajun Steel P L Sr. No 3 on page no. 3 of this bundle is one such property they have offered in lieu of money. It is confirmed that there was distribution of flat and cash mentioned in the seized documents. From the seized document titled as \"Gautam Munot's account settled @61\" and the statement of Shri D.B. Soni, it is clear that there is distribution of Flats/Cash in the group companies mentioned therein against the supply of steel material to Kuber Laxmi. Therefore it is clearly established that again the supply of steel to the Kuber Laxmi has given flat and cash to the group company. It is seen that the statement of Shri Ramesh Mundara and Shri D.B. Soni was recorded during the search proceedings. The reply of Shri D B. Soni, one of 21 ITA Nos.932 & 933/PUN/2024 the directors of the assessee company, during the post search enquiries is totally different. The seized paper is not a dumb paper and clearly shows the amount receivable against outstanding debtors. It is seen that Shri Gautam Munot was debtor of companies and individuals mentioned on the paper. It is seen that instead of paying money against steel supplier the flats and some money is being received by the persons. It is seen that the unaccounted sale is made by Metaroll Ispat Pvt. Ltd also therefore the amount is receivable to it. It is also mentioned in the seized paper that the flats are to be registered in the name of companies so as to save stamp duty. The distribution of date receivable is mentioned in detail and meticulously. Percentage of distribution is also mentioned. The claim that the amount of Rs.17,42,770/- is being received against the capital of Rs.61 Lakhs invested by Shri D.B. Soni in the Kuber Laxmi Properties is an after thought. No person will relinquish the share capital of 61 Lakhs against the sum of Rs.17.42 Lakhs. Moreover it is seen that the firm has huge land having substantial value. Thus the claim that paper relates to the relinquishment of share of firm is not backed by any evidence and will be rejected herewith. Moreover the account of Gautam Munot is settled also. Thus it is seen that the assessee has supplied steel of Rs.17.42 Lakhs. During the assessment year under consideration the amount of Rs.17.42 lakhs is receivable against the sale. Even though the money against the sale is not yet to be received and as the debt is not shown in the accounts and sales of Rs.17,42,770/- is not accounted in the books of accounts maintained by the assessee. Therefore the amount of Rs.17,42,770/- is added to total income of the assessee as unaccounted sales u/s 28 of the Act. As the addition is made on the basis of seized papers found during the course of search, penalty proceedings under clause b of subsection 1A of section 271AAB of the IT Act, 1961 are initiated herewith.” 37. In appeal, the Ld. CIT(A) deleted the addition by observing as under: “7.2 On perusal of the records and facts of the case it is seen that the AO has made the addition of Rs.17,42,770/- on the basis of documents seized from the premises of Shri Ramesh Mundada. The AO held that the appellant has supplied steel to the M/s Kuberlaxmi Properties. However, on the basis of material on record the AO has not brought on record any corroborative evidence in this regard other than the loose paper and the various statements recorded u/s 132(4) of the Act. The AO has not been able to substantiate the nexus between the loose paper and the unrecorded sales by the appellant It is submitted by the Appellant that the transaction never materialized hence, never recorded in the books Hence, due to lack of evidence and absence of any corroborative evidence on record, the addition made by the AO is not sustainable Hence the Addition made by the AO is deleted. In the result, this ground of appeal raised by the appellant is hereby allowed.” 38. Aggrieved with such order of the Ld. CIT(A), the Revenue is in appeal before the Tribunal. 22 ITA Nos.932 & 933/PUN/2024 39. The Ld. DR strongly challenged the order of the Ld. CIT(A) in deleting the addition made by the Assessing Officer. He submitted that when the documents so seized clearly indicate the receipt of amount in the form of flat against unaccounted transactions amounting to Rs.17,42,770/- was found, the Ld. CIT(A) was not justified in deleting the addition. He submitted that the documents so seized clearly indicate the receipt of flat by the assessee on account of unaccounted transactions. Therefore, the Ld. CIT(A) was not justified in deleting the addition. 40. The Ld. Counsel for the assessee on the other hand drew the attention of the Bench to the following written submissions which were filed before the Ld. CIT(A): “Appellant’s Reply: a. The aforesaid addition of Rs.17,42,770/- has been made by the Learned AO on the basis of presumption and surmises. During the search action, no corroborative or incriminating documents were found which conclusively proves that the appellant has supplied the steel of Rs. 61 Lakhs (from which Rs.17,42,770/- is the share of the appellant) which is not accounted for in the books of accounts. b. It is pertinent to mention here that no details of flat which has been alleged to be received by the appellant has been found during the course of search proceedings such as the flat number, the address of the flat, copy of the registered deed/agreement or the date on which deed/agreement is registered. c. The AO contended that the steel has been supplied to the Kuberlaxmi properties and same has not been recorded in the books of accounts of the appellant. It is pertinent to mention that no evidence has been found during the search action regarding the sale of steel by appellant. Hence this contention of AO is baseless. d. The Ld. AO relied on the reply to Q.10 of the oath statement of Mr. Dwarkaprasad Soni given under section 132(4) of the Act it is to be specifically submit here that during the post search investigation Mr. 23 ITA Nos.932 & 933/PUN/2024 Dwarkaprasad Soni vide his reply letter dated 11.11.2022 after due verification of the facts submitted that \"The total capital investment in the M/s. Kuberlaxmi Properties by me is Rs.61,00,000/- (approx). Due to some financial need I had proposed to group person to purchase 3 1 BHK flats and Rs.9.98 lakhs in lieu of capital amount receivable from the firm. Accordingly I had communicated to group members and Mr. SS Mundada. Whereas the said transaction was not materialised. Thus, the said deal was cancelled\". e. As the transaction was never materialised then question of recording it in books of accounts does not arise. It may be specifically stated that no iota of evidences in the form of any sale bill or sale particulars were found in the seized material. f. We hereby attaching the seized material annexure B page 12, Statement given by Ramesh Mundada under section 132(4) of the Act, Statement given by Mr. Dwarkaprasad Soni under section 132(4) of the Act and the current and fixed account of Dwarkaprasad Soni in the books of Mis Kuberlaxmi Properties as \"Annexure 6A\", \"Annexure 6B\", \"Annexure 6C\" and \"Annexure 6D\" respectively. In view of this position, the addition made is not on the basis of sound footings, seized documents and the same is based on the presumptions or surmises which deserves to be deleted alongwith cancellation of penal proceedings initiated on this count. We hope the above details will suffice your purpose, in case any further details are required we will submit the same.\" 41. He accordingly submitted that the order of Ld. CIT(A) be upheld and the grounds raised by the Revenue be dismissed. 42. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) and the paper book filed on behalf of both sides. We find the Assessing Officer in the instant case made addition of Rs.17,42,000/- on the ground that the assessee has supplied steel of Rs.17,42,000/- which is receivable and which has not been accounted in the books of account maintained by the assessee. It is an admitted fact that the assessee was indulging 24 ITA Nos.932 & 933/PUN/2024 in bogus / untested purchases. While dealing with the issue we have already directed the Assessing Officer to adopt the profit rate of 5% on account of such bogus / untested purchases on the basis of the order for the preceding four years which were reopened u/s 147 of the Act on the very same issue. Since it is held that the entire purchases cannot be added to the total income of the assessee and only a percentage of such purchases being the profit element embedded in it should be added, therefore, following the similar corollary, the entire amount of Rs.17,42,000/- in our opinion cannot be added and only the profit element embedded in such sale should be added to the total income of the assessee. Since we have directed the Assessing Officer to adopt the profit rate of 5% on account of such bogus / untested purchases, therefore, we are of the considered opinion that adoption of the same percentage of profit i.e. 5% on such unaccounted sale of Rs.17,42,000/- should be added to the total income of the assessee which in the instant case comes to Rs.87,100/-. When the documents found containing certain transactions, the Ld. CIT(A) was not justified in deleting the addition stating that due to lack of evidence and in absence of any corroborative evidence addition is not sustainable. In this view of the matter, we set aside the order of the Ld. CIT(A) and direct the Assessing Officer to adopt the profit rate of 5% on the unaccounted turnover of Rs.17,42,000/- which comes to Rs.87,100/-. The order of the Ld. CIT(A) is accordingly modified and the ground raised on this issue by the Revenue is partly allowed. 25 ITA Nos.932 & 933/PUN/2024 43. The ground of appeal No.5 raised by the Revenue relates to the order of the Ld. CIT(A) in deleting Rs.13 lakh made by the Assessing Officer on account of unexplained money. 44. Facts of the case in brief are that the Assessing Officer during the course of assessment proceedings asked the assessee to explain as to why an amount of Rs.13 lakh made by cash to Vikash Industries should not be added u/s 69A of the Act. The assessee submitted that Shri Ashish Bhala in his statement recorded u/s 132(4) of the Act has retracted his statement and the retraction affidavit was submitted to the office of the DDIT(Inv), Aurangabad. It was submitted that in the said retraction affidavit it was stated by Shri Ashish Bhala that the cash transaction is of Rs.6000 and Rs.7000 only and not of Rs.6,00,000 and Rs.7,00,000 as alleged by the Assessing Officer. It was submitted that in the seized data annexed as loose paper bundle number 1 pg no.119 it is mentioned “6kg” and “7kg”. Since the Assessing Officer has interpreted the same as lakhs it was submitted that the same is in thousands and not in lakhs. However, the Assessing Officer was not satisfied with the arguments advanced by the assessee and made addition of Rs.13 lakh to the total income of the assessee on the ground that there was clarity in the seized material, admission during the course of search proceedings and non recording of the amount in the books of account. 45. We find in appeal, the Ld. CIT(A) deleted the addition by observing as under: 26 ITA Nos.932 & 933/PUN/2024 “6.2 On perusal of the submission and relevant documents produced before me, it is seen that the AO has made addition by invoking the provisions of section 69A of the Income Tax Act. The AO has made the addition only on the basis of message in the mobile of Shri Ashish Bhala and the statement recorded u/s 132(4) of Shri Ashish Bhala. Merely on the basis of statement recorded u/s 132(4), addition cannot be made by the AO, unless and until some corroborative evidence is found in support of such addition. As the AO has not brought on record any corroborative evidence, the addition made by the AO is not sustainable. In the considered view the addition cannot be sustained as it is based on the messages without any corroborative evidences and underlined transactions related to the appellant. Considering the facts of the case, the addition made by the AO is deleted in the absence of any evidence Grounds no. 3 of the appeal is, therefore, allowed.” 46. Aggrieved with such order of the Ld. CIT(A), the Revenue is in appeal before the Tribunal. 47. The Ld. DR strongly challenged the order of the Ld. CIT(A) in deleting the addition. He submitted that the seized data contains two entries i.e. 6kg and 7kg being cash paid to one Vikas Industries. The Assessing Officer while making the addition has given justifiable reasons for making such addition, therefore, the Ld. CIT(A) was not justified in deleting the addition. 48. The Ld. Counsel for the assessee on the other hand drew the attention of the Bench to the assessee‟s reply which reads as under: “Appellants Reply: During the course of search proceedings statement of one of the Directors of the Company Shri Ashish Bhala was recorded under section 132(4) of the Income-tax Act, 1961 on dated 24th and 25th of September, 2021 which was retracted on 1st December, 2021. In the retraction affidavit it was affirmed by Shri Ashish Bhala that the cash transaction is of Rs.6,000/- and Rs.7,000/- only and not Rs.6,00,000/- and Rs.7,00,000/- as alleged by the AO. However, this factual aspect of the transaction has never been considered by the Learned AO in right prospective and made an addition of Rs. 13,00,000/- by invoking various provisions of section 69, 27 ITA Nos.932 & 933/PUN/2024 69A and 69C of the Income-tax Act, 1961 on the presumption, surmises and the WhatsApp messages as messages are not confirmatory or the conclusive proof of having been given the monies. Further, the said addition is not under any specific provisions of sections of the Act and the Learned AO is not sure and clear about the addition made. We hereby attaching the retraction affidavit of Shri Ashish Bhala, Seized document pg no. 119 and the statement given by Ashish Bhala u/s 132(4) of the Act as \"Annexure 5A\", \"Annexure 5B\" and \"Annexure 5C\" respectively. It appears that the said addition is made under confused state of inference and by wrongly invoking the relevant provisions of the Act including absence of any clinching evidences which is incorrect in the eyes of the Law and deserves to be deleted at its face value by cancelling the penal proceedings initiated.\" 49. He accordingly submitted that the order of the Ld. CIT(A) is in accordance with law and the grounds raised by the Revenue should be dismissed. 50. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) and the paper book filed on behalf of both sides. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case made addition of Rs.13 lakh on the ground that two entries containing 6kg and 7kg were found in the seized data annexed to the loose paper bundle – 1 at page 119. Since initially Shri Ashish Bhala had admitted in his statement recorded u/s 132(4) of the Act regarding the above transactions being 6 lakhs and 7 lakhs therefore, the Assessing Officer had made the addition. We find the Ld. CIT(A) deleted the addition on the ground that Shri Ashish Bhala has subsequently retracted from his statement mentioning that the code words 6kg and 7kg are Rs.6,000/- and Rs.7,000/- and not Rs.6 lakh and Rs.7 lakh. Further, he had also submitted that the transactions never materialized and no corroborative material was brought on record. It is the submission of the 28 ITA Nos.932 & 933/PUN/2024 Ld. DR that when Shri Ashish Bhala in his initial statement recorded u/s 132(4) of the Act has categorically admitted the payment of cash of Rs.6 lakh and Rs.7 lakh both totaling to Rs.13 lakh, the Ld. CIT(A) is not justified in deleting the addition merely on the basis of subsequent retraction and in absence of any corroborative material. It is the submission of the Ld. Counsel for the assessee that since the transactions never materialized, the Ld. CIT(A) was justified in deleting the addition in absence of corroborative material and the subsequent retraction of Shri Ashish Bhala by filing the affidavit before the DDIT(Inv) immediately after the search. 51. A perusal of the seized documents shows that two entries were found where it is mentioned as 6kg and 7kg. Although the Assessing Officer has taken such entries as Rs.6 lakh and Rs.7 lakh, the assessee in its clarification has mentioned the same to be of Rs.6,000/- and Rs.7,000/- respectively. It is also not understood as to why the same should not be read as Rs.60,000/- and Rs.70,000/- or Rs.6 lakh and Rs.7 lakh. Since the seized documents contain the entries of 6kg and 7kg and it is not sure as to whether it is Rs.60,000/- and Rs.70,000/- or Rs.6 lakh and Rs.7 lakh and since Shri Ashish Bhala subsequently retracted from his statement by filing an affidavit before the DDIT(Inv) and since no other corroborative material was found, therefore, considering the totality of the facts of the case, addition of Rs.60,000/- and Rs.70,000/- both totaling to Rs.1,30,000/- under the facts and circumstances of the case will meet the ends of justice. The order of the Ld. 29 ITA Nos.932 & 933/PUN/2024 CIT(A) on this issue is accordingly modified and the ground raised by the Revenue on this issue is partly allowed. 52. The appeal filed by the Revenue for assessment year 2021-22 is partly allowed. 53. In the result, both the appeals filed by the Revenue are partly allowed. Order pronounced in the open Court on 20th February, 2025. Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 20th February, 2025 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, „A‟ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune 30 ITA Nos.932 & 933/PUN/2024 S.No. Details Date Initials Designation 1 Draft dictated on 03.01.2025 Sr. PS/PS 2 Draft placed before author 03.01.2025 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order "