RELCON INFRAPROJECTS LIMITED, MUMBAI V. DCIT , CC- 5 (1), MUMBAI

ITA 2276/MUM/2022

AI Insights

The case involves a series of appeals by Relcon Infraprojects Limited against the additions made by the Assessing Officer (AO) under sections 68 and 69C of the Income Tax Act, which pertained to alleged bogus purchases and unexplained cash credits for several assessment years. The AO had disallowed certain purchases and added amounts as unexplained cash credits based on the findings from a search operation under section 132 of the Income Tax Act. The Commissioner of Income Tax (Appeals) later deleted these additions, citing lack of incriminating material and reliance on conjectural evidence. The Tribunal upheld the CIT(A)'s decision, emphasizing the need for concrete evidence in tax assessments and the improper use of the search findings by the AO.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 125910 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: D
• Next Hearing Date: 27-02-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 08-09-2022
• Other Referred Cases: M/s NK proteins Ltd versus DCIT SLAC C number 769/2017, CIT versus continental warehousing Corporation (2015) 58 taxmann.com 78 (Bombay), Principal Commissioner Of Income Tax versus Abhisar Buildwell Pvt Ltd [2023] 149 taxmann.com 399 (SC)[24-04-2023]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRODUCING LEDGER ACCOUNT
• Keywords: Bogus purchase; Unexplained cash credit; Opportunity of cross examination; Maximum Marginal Rate; Accommodation entries; Bogus
• Section: 131; 68; 132; 69C; 153A; 13; 22; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND MS. KAVITHA RAJAGOPAL, JM ITA No. 2275/Mum/2022 (Assessment Year: 2014-15) ITA No. 2276/Mum/2022 (Assessment Year: 2015-16) ITA No. 2277/Mum/2022 (Assessment Year: 2016-17) ITA No. 2278/Mum/2022 (Assessment Year: 2017-18) ITA No. 2279/Mum/2022 (Assessment Year: 2018-19) ITA No. 2280/Mum/2022 (Assessment Year: 2019-20) ITA No. 2281/Mum/2022 (Assessment Year: 2020-21) Relcon Infraprojects Limited 4 th Floor, Relcon House Premises CSL, 15/A, Mahatma Gandhi Road, Vile Parle (East), Mumbai-400 057 Vs. DCIT Central Circle 5(1), Room No.1928, 19 th Floor, Air India Building, Nariman Point, Mumbai-400 021 (Appellant) (Respondent) PAN No. AADCR4459E ITA No. 2626/Mum/2022 (Assessment Year: 2014-15) ITA No. 2627/Mum/2022 (Assessment Year: 2015-16) ITA No. 2628/Mum/2022 (Assessment Year: 2016-17) ITA No. 2629/Mum/2022 (Assessment Year: 2017-18) ITA No. 2630/Mum/2022 (Assessment Year: 2018-19) Page | 2 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. ITA No. 2631/Mum/2022 (Assessment Year: 2019-20) ITA No. 2632/Mum/2022 (Assessment Year: 2020-21) DCIT Central Circle 5(1), Room No.1928, 19 th Floor, Air India Building, Nariman Point, Mumbai-400 021 Vs. Relcon Infraprojects Limited 4 th Floor, Relcon House Premises CSL, 15/A, Mahatma Gandhi Road, Vile Parle (East), Mumbai-400 057 (Appellant) (Respondent) ITA No. 2692/Mum/2022 (Assessment Year: 2015-16) DCIT Central Circle 5(1), Room No.1928, 19 th Floor, Air India Building, Nariman Point, Mumbai-400 021 Vs. M/s Relcon Realty Private Limited A-01-01-101, Krishna Apartment, Juhu Lane, Andheri (W) Mumbai-400 058 (Appellant) (Respondent) PAN No. AAECR0377C CO No. 5/Mum/2023 (Arising in ITA No. 2692/Mum/2022 for A.Y. 2015-16) DCIT Central Circle 5(1), Room No.1928, 19 th Floor, Air India Building, Nariman Point, Mumbai-400 021 Vs. M/s Relcon Realty Private LImited A-01-01-101, Krishna Apartment, Juhu Lane, Andheri (W) Mumbai-400 058 (Appellant) (Respondent) PAN No. AAECR0377C Assessee by : Shri Jitendra Jain, AR Revenue by : Shri Manish Sareen, CIT DR Date of hearing: 28.02.2023 Date of pronouncement : 26.05.2023 Page | 3 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. O R D E R PER BENCH 1) This is the bunch of 14 cross appeals in case of Relcon infra projects Limited for assessment year 2014 – 15 to assessment year 2020 – 21 and two appeals in case of Relcon Realty Ltd for assessment year 2015 – 16 involving similar grounds, therefore all these appeals are disposed of by this common order. Relcon Infra projects Limited 2) First we take up the appeals of a Relcon infra projects private limited for assessment year 2014 – 15 wherein a consolidated Appellate order of the learned CIT – A is under challenge for assessment year 2014 – 15 to 2020 – 21 where the appeals of the assessee are partly allowed. We first take up the appeal of assessment year 2014 – 15 which is the lead appeal stated by both the parties. Decision arrived at for that assessment year will apply with its reasoning given therein for all the subsequent years. AY 2014-15 3) ITA number 2626/M/2022 is filed by The Deputy Commissioner Of Income Tax, Central Circle – 5 (1), Mumbai (The Ld. AO) for assessment year 2014 – 15 against the appellate order passed by The Commissioner Of Income Tax, Appeals – 53, Mumbai (The Ld. CIT – A) dated 15/7/2022 wherein by passing a consolidated Appellate order for assessment year 2014 – 15 to 2020 – 21, he allowed the appeal of the assessee for all those years partly. The LD CIT [A] has deleted the disallowance of purchase expenses partly, confirmed addition u/s 69C and deleted addition u/s 68 of the Act. 4) For AY 2014-14 learned assessing officer is in appeal raising following grounds:- i. whether on the facts and circumstances of the case and in law, the learned CIT (A) erred in deleting the addition of ₹ 130,068,426/– on account of bogus purchase expenses ignoring the fact that the assessee failed to prove the genuineness of purchases, and any expenditure in respect of which payment by account page is not Page | 4 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. enough evidence to prove the existence of the parties and also the genuineness of the transactions ii. whether on the facts and circumstances of the case and in law, the learned CIT (A) is justified in restricting the addition on account of bogus purchases at the rate of 2% at ₹ 518,153/– of the purchases of ₹ 25,907,668/– from certain bogus parties when the incriminating evidences were found during the course of search thereby ignoring the judgment of the honourable Supreme Court in case of M/s NK proteins Ltd versus DCIT SLAC C number 769/2017 dated 16/1/2017 iii. whether on the facts and circumstances of the case and in law, the learned CIT (A) erred in deleting the addition of ₹ 20,616,167/– under section 68 of the act in respect of unsecured loans and interest thereon on such loans ignoring the fact that the assessee has not proved the genuineness of the transactions, the identity of the creditors, and creditworthiness of the parties to the satisfaction of the AO, so as to discharge the primary onus. 5) Assessee is also aggrieved with the appellate order and therefore is in appeal before us by ITA number 2275/M/2022 raising following grounds of appeal for assessment year 2014 – 15 I. the Commissioner of income tax (appeals) – 53, Mumbai hereinafter referred as CIT (A) erred in confirming the action of the AO in issuing the notice under section 153A of the income tax act, 1961 without mentioning therein as to what incriminating material is have been found during the course of search action taken under section 132 of the act II. the CIT (A) erred in confirming the action of the AO in issuing the notice under section 153A of the act and passing the order under section 143 (3 read with section 153A of the act without there being any incriminating material found during the course of search action taken place under section 132 of the act considering that the subject year is an unabated year III. the CIT (A) erred in confirming the addition of ₹ 518,153/– being 2% of the total purchases made from following parties:- serial number Name of the party Addition Amount Page | 5 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. 1 Aditya transport 11,457 2 Dahisar service station 3,19,194 3 Giriraj Sand suppliers 35,125 4 Madhani Infraprojects 1,27,531 5 Omkar Transport 24,846 Total 5,18,153 6) Brief facts of the case shows that Relcon group is a civil contractor who takes contracts from government authorities such as MMRDA, and Bombay Municipal Corporation. It has two Flagship companies namely, Relcon infra projects private limited and Relcon Realty private limited. Assessee is engaged in the business of civil contractor for construction of roads and buildings through government contract. 7) An action under section 132 of The Income Tax Act was carried out on 6/11/2019 on Relcon infra projects private limited, Saket Infra Projects Limited and Shanti infra engineering private limited and related entities in financial year 2019 – 20. 8) The investigation Wing report shows that assessee and the group companies have been involved in systematic over invoicing, bogus billing and accommodation entry. 9) For the impugned assessment year i.e. assessment year 2014 – 15 assessee filed its return of income on 19/11/2014 declaring a total income of ₹ 434,906,998. The return of the assessee was selected for scrutiny and notice under section 153A of the act was issued on 7/11/2020. In response, assessee filed return of income at the same income. 10) During assessment proceedings, the ld AO noted that purchase expenses have been claimed by the assessee amounting to ₹ 293,88,92,897/–. With regard to the claim of the purchases made between assessment year 2014 – 15 and 2020 – 21, the enquiries made by the revenue revealed that the certain entities are bogus and the claim of purchases made is with an intention to inflate the expenses and to minimize the taxable income. Enquiries conducted also showed that some entities have dubious financial and some are even non-existent. The learned assessing officer prepared a table showing the name of 63 parties stating permanent account number and Page | 6 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. amount of purchases from these parties from financial year 2013 – 14 to financial year 2018 – 19. Out of these 63 parties the AO listed out 42 parties for this year showing total purchases of ₹ 255,216,114 noting that these entities have weak or dubious financials and some are not even existing. After submission of preliminary details by assessee, assessee was asked to furnish list of purchase parties along with complete address and permanent account number from whom the assessee has been procuring materials along with documentary evidences such as purchase order, Ledger, invoices, eway bills , delivery challans, Lorry receipts, consumption register, purchase and consumption reconciliation statement and bank statements to substantiate the genuineness of the purchase expenses claimed during the various years. The assessee produced list of purchase parties along with their permanent account number, Ledger account, invoices etc, however assessee did not produce purchase order, complete set of invoices, e way bills, delivery challans, Lorry receipts, consumption register etc. Out of the list of 42 parties, whose details furnished by the assessee, the learned AO found lapses in case of 22 parties. The AO found that with respect to these 22 parties the purchase bills have been prepared in same style, format and font thereby raising suspicion on genuineness. The bills do not contain type and number of lorry used for transportation delivery etc, the invoices used by the parties do not contain permanent account number and delivery challans on stock registers are not produced. Shri Jainendra P Shah, Key person of Assessee was examined; his statement was recorded during the course of search on 11/11/2019 wherein he was questioned about the genuineness of the purchases. In answer to question number 19, he stated that these are genuine expenses and assessee has made the payment through banking channels and have proper bills. When he was confronted in question number 20 where income tax inspector deputed to verify the addresses of some of the parties, the parties were not found at the given address, He answered in the same manner stating that purchases are genuine. When he was questioned about certain purchases, he also confirmed that those purchases are genuine. In some of the answers to the question, he also submitted that there are invoices, delivery challans, and mode of delivery, which proves that the purchases are genuine. However when certain lose papers were shown to him he denied any knowledge of the same. During the course of assessment proceedings inspectors were deputed to the various addresses wherein the Page | 7 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. report of inspector showed that parties did not exist. In case of one supplier Nidhi enterprises summons were issued for spot verification, the proprietor of the supplier revealed that it did not carry out any real business. Statement on 9/11/2019 was recorded of the supplier wherein she denied having any business activity. Based on this finding a show cause notice on 9/9/2021 was issued to produce the various parties to substantiate the claim of the purchases. Assessee submitted six replies stating name of the supplier, permanent account number, address, contact number, email ID, year wise copies of signed confirmation of the supplier and other related details to substantiate the purchases. The learned AO rejected the explanation, details of the assessee stating that assessee did not produce the parties, and therefore the onus is not discharged. The learned assessing officer was of the view that a. primary onus is on the assessee to establish the genuineness of the purchases claimed by it, b. primary facts are in the knowledge of the assessee as it is his duty to provide the correct address or contact modes of the alleged supplier, c. if the investigation done by the Department leads to doubt regarding the genuineness of the purchases, it is incumbent on the assessee to produce the parties along with the necessary documents to establish the genuineness of the transaction, d. payment by account payee cheque is not sacrosanct, e. proof by way of the learned, documentary evidences for payment of VAT is filed, f. Though it is true that sales cannot be affected without corresponding purchases, in the absence of stock register, books of account it is not possible to verify which goods were sold to the parties with sales confirmation submitted by the assessee, assessee is also unable to correlate the same. 11) Accordingly, the learned assessing officer found that the bogus purchase expenses of ₹ 130,068,426/- claimed by the assessee as purchases from these bogus parties are required to be disallowed, hence disallowance was made. 12) The AO also found that for assessment year 2013 – 14 to assessment year 2019 – 20 assessee has obtained unsecured loans amounting to ₹ 141,375,127/–. For assessment year 2014 – 15, the unsecured loan of ₹ 58,084,871 included Page | 8 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. therein. The assessee was asked to produce the complete address and permanent account number of the parties, bank statements and documentary evidences of the transaction. The assessee submitted the details of loan parties along with address, permanent account number, repayment of the principal and interest thereon in a tabular format for all the six assessment years along with the confirmation reflecting the transactions. The AO found certain lapses, issued show cause notice to the assessee. After considering the explanation of the assessee, the learned AO found that during the year the assessee has brought in its books of accounts as unsecured loan from the parties stated in the assessment order amounting to ₹ 20,616,114/– and treated the same as unexplained credit within the meaning of section 68 of the act. Consequently, addition was made. 13) Accordingly an assessment order under section 153A read with section 143 (3) of the act was passed determining the total income of the assessee at ₹ 481,660,720 against the returned income of ₹ 430,976,130 wherein two additions/disallowances were made, (1) disallowance of bogus purchases of ₹ 130,068,426/– and (2) addition under section 68 on account of unexplained cash credit of ₹ 20,616,167/–. 14) In similar manner, following additions or disallowances were made for other assessment years:- serial number Assessment year Addition on account of alleged bogus purchases Addition on account of alleged cash credit under section 68 of the act 1 2015 – 16 20,17,69,283 33,33,334 2 2016 – 17 15,80,15,644 6,10,000 3 2017 – 18 7,30,88,524 6,08,334 4 2018 – 19 8,85,94,455 5,20,833 5 2019 – 20 12,52,40,878 17,80,590 under section 69C of the act Page | 9 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. being alleged unexplained expenditure 6 2020 – 21 11,58,20,929 Nil 15) Assessee preferred appeal before the learned CIT – A. The learned CIT – A passed a consolidated order for assessment year 2014 – 15 to 2020 – 21. 16) Appellate proceedings before the learned CIT – A resulted into the appellate order wherein:- i. The assessee challenged the initiation of action under section 153A of the act contending that the disallowance of alleged bogus purchases and addition of alleged cash credits are made without there being any incriminating material found during the course of search. The learned CIT – A dismissed the same holding that there was a statement recorded of the assessee at the time of the search and it was coupled by the loose sheets at page number 4 of seized material found. Therefore, there is incriminating material coupled with the statement of the assessee. He noted that during the course of search proceedings statement of the director of the appellant company was recorded. The director was confronted about the cash transaction explained by Mr. Jainendra P Shah. Mr. Shah was also shown seized material found from the residence of the director. Therefore he held that incriminating material/evidences based on which the AO has initiated and completed the assessment proceedings under section 153A the act is valid. ii. With respect to the disallowance of bogus purchase of ₹ 136,800,426/–, assessee claimed that the disallowance has been made with respect to purchases from 21 parties. a) It was submitted that addition with respect to parties listed at serial number 1 to 11 is for the reason that these parties have not been found at the addresses and were not accompanied with delivery challans. Parties at Page | 10 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. serial number 12 to 15 were disallowed stating that suppliers have weak financials. b) With respect to one party M/s Nidhi Enterprises, the learned AO made the addition for the reason that the proprietor of the firm does not know anything about the business and she has given her permanent account number to someone at a monthly compensation of ₹ 10,000. c) With respect to parties stated at serial number 17 to 21, the disallowance is made based on statement of Mr. J P Shah. d) The assessee submitted that it has given complete address to the learned assessing officer as per letter dated 21/9/2021 and 27/9/2021 these are the new addresses of the parties from where they are operating their businesses currently. The learned AO did not verify the new address and simply disallowed the same. The inspectors were sent to the old address and the new addresses were not at all verified. Assessee gave a list of such 11 parties which is placed at page number 17 of the order of the learned CIT – A. The claim of the assessee is that these parties are operating its business from the same premises as of today also. Assessee also submitted that it also furnished before the AO detailed note on business activities of the parties from whom it has purchased, assessee's own business activity and how the material sold by the respective parties have been used by the assessee in regular business activities. The grievance of the assessee is that the learned AO ignored all these details and documents and simply made the addition. With respect to the purchases assessee submitted that it has filed delivery challans along with the copies of the bills wherever applicable. It submitted that in case of transportation charges, purchase of petrol and fuel the delivery challans are not available. The assessee cannot be asked to produce what is not Page | 11 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. available in general trade practices. Instead, overwhelming evidences produced by the assessee in the form of invoices showing the vehicle number of vehicle used for transportation, delivery challans of delivery of goods, wherever possible, weighing receipts, Ledger account from the books of the assessee, Ledger account of assessee in the books of purchase parties, return of income filed by the suppliers and bank account of the assessee wherefrom the payments are reflected to these parties. Therefore, assessee has substantiated purchases with complete documentary evidences. With respect to the allegation of the AO that certain parties have a vehicle financials, it was stated that parties might have sold goods at thin margins or might have earned smaller profits, which cannot be a reason to disallow the purchases made by the assessee. e) With respect to the disallowance of purchases made from one party i.e. Nidhi enterprises it was submitted that the learned that AO has altogether enquired with different entity. The permanent account number given by the assessee and the enquiry made by the AO is altogether with respect to a different proprietor by similar name. The complete differences between them are demonstrated at page number 20 of appellate order. It was submitted that complete details in the form of invoices, confirmation, ledger, bank statements are furnished. f) With respect to the other parties where the statement of directors was recorded, it was submitted that the transaction stated by the director happened only in year 2018 and not in the current year. Therefore, it has no relevance during other Assessment years other than AY 2019-20. It was submitted that the statement of Mr. Shah was accepted partly for making addition and rejected partly wherein he stated that the relevant Page | 12 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. transaction pertaining to only one year. Therefore, the addition requires to be deleted. g) The learned CIT – A divided the transaction of disallowance in three parts (1) the parties for which some incriminating evidences were found during search, (2) this 11 is with respect to purchases from Nidhi enterprises, (3) other parties. h) With respect to the parties for which some incriminating evidences found during the course of search, the learned CIT – A found that statement of director was recorded under section 132 (4) of the act and also a document was found and seized from the residence of the director. The amount mentioned in the loose seat was cash received from the vendors to whom assessee paid through cheques. The difference because of over booking of expenses was returned in cash to the cashier at different site. The statement of the director proved that the cash was received back from the vendors for booking of inflated expenses. The names of certain parties were also mentioned in those loose seats. The learned CIT – A also rejected the argument of the assessee that though the period mentioned therein was 11/11/2018 to 21/11/2018 but the fact remains that the purchases were made by the appellant also during assessment year 2014 – 15 from the five parties. Therefore, the purchases made from these parties were not considered as genuine to the extent of inflated expenses and action of the learned assessing officer was upheld. i) With respect to the above parties, the learned CIT – A noted that when there are non genuine purchases, only to the extent of cash received back the purchases could be treated as non genuine. With respect to the balance parties, there has been no evidence about the extent of inflated purchases. It was also not on record that the above parties have not supplied the goods. Therefore, Page | 13 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. purchases are made but bills are inflated to the extent cash is received back by the cashier. The assessee has made a total purchase of Rs 2 59,07,668/– from the above five parties therefore, the disallowance of purchase amounting to 2% of ₹ 25,907,668/– in respect of purchases made from them was upheld and balance disallowance was deleted. j) With respect to purchases from Nidhi enterprises amounting to ₹ 16,261,239/–, the learned CIT (A) noted that summons issued under section 131 of the act to the proprietor was examined by the name of Mrs. Nidhi Sagar Sharma, permanent account number is CGSPS0652N . She confirmed that she does not do any business. However, the confirmation provided by the assessee is also of Nidhi enterprises but its permanent account number is AAAPT2992C and proprietor is Rajesh P Trivedi. Therefore, it is evident that the learned assessing officer has made the whole process of enquiry on wrong facts and on wrong person and the disallowance made based on wrong facts cannot be sustained. Therefore, the purchases disallowed of ₹ 16,261,239/– from that entity was deleted. k) With respect to the purchases from 11 parties on the ground that these parties were not produced before the learned assessing officer for verification and the parties were not found at the given address or having weak financials, the learned CIT – A categorically noted that during the course of assessment proceedings the assessee provided the complete note on party wise transaction wherein correct address of these parties were mentioned. Each of the purchases from these parties was also supported by the necessary evidence. However, despite having the new address, the learned assessing officer did not make any further enquiry at the new address of the party. The disallowance made by the learned assessing officer is based on general Page | 14 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. observation without bringing on record as to how the party was identified as having weak financials. The AO has mentioned the necessary documentary evidences of each of the parties submitted by the assessee during the assessment proceedings and assessee has supported the transaction of purchase by filing various evidences. However the finding of the AO that, in absence of stock register, it would not be possible to verify which stock was sold to which party, however this finding of the AO is of no relevance as the assessee has carried out project work at various civil construction sites and the assessee was not engaged in the business of trading of goods. It is also recorded that without the consumption of those materials purchased from the parties the project could not have been undertaken at all by the assessee. The assessing officer did not have any evidence to classify the purchases from these parties as bogus and contrary to that assessee has furnished necessary documentary evidences with regard to purchases from the above parties that are not false. The AO did not carry out any independent investigation or enquiry with respect to those purchases with an intention to test the evidences submitted by the assessee. He also rejected that assessee could not produce the parties from whom assessee has purchased goods. He held that instead of issuing summons under section 131 or notice under section 133 (6) the AO asked the assessee to produce those parties. The assessee has no power to force the parties to appear before the AO but the assessing officer has all the statutory authority available under those sections. Therefore, if the assessee could not produce the parties the AO should have exercised his authority under the law. Thus the learned CIT – A noted that assessee has brought sufficient evidences to prove the genuineness of the purchases and the learned assessing officer has Page | 15 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. not conducted further enquiry to disprove the evidences produced by the assessee. Therefore, the disallowance of ₹ 87,899,219/– made by the AO in respect of bogus purchases from 11 parties was deleted. l) Thus, in the result the learned CIT – A upheld the addition to the extent of ₹ 518,153/– and deleted the balance disallowance. iii. With regard to the addition of ₹ 20,616,167/– under section 68 of the act in respect of unsecured loans and interest disallowance of ₹ 616,167/– under section 68 in respect of the interest paid on such loans, the assessee contended that assessee has submitted during the course of assessment proceedings vide letter dated 16/2/2021 and 17/9/2021, loan confirmation, income tax return of the parties, new addresses of the lenders, bank statement of the assessee, information downloaded from the website of Ministry of corporate affairs with respect to the lenders, audited financial statement of the lenders, certificate of change of name of the parties. It was contended that the AO without confronting the assessee with respect to any of the enquiry made on the evidence submitted by the assessee made the addition merely for the reason financial of the lenders are weak and the loans are mere accommodation entries. Assessee claimed that before the AO, nature of receipts, source of receipt was also explained in the hands of each of the lender. With respect to weak financials, assessee submitted that in case of most of the lenders their profit is more than 4 to 6 times of the amount of loan. They also have reserve. The amounts of loan have already been repaid. Assessee relied upon several judicial precedents and submitted that the AO did not make any enquiry on the information submitted by the assessee. iv. The learned CIT – A noted that in case of all seven parties the assessee has submitted various documents such as loan confirmation, income tax return of the parties, new address of the lenders, bank statement of the assessee, master list downloaded from Ministry of corporate affairs, audited financial statements of the lenders as well as the certificate of incorporation on change of name of the lenders. The total addition has been made by the learned AO based on general Page | 16 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. findings given by the Department based on the profiling of seven parties and the inspectors report. He further noted that during the course of appellate proceedings the assessee has submitted that how these lenders have received the money, which was in turn lent to the assessee. Therefore, the 'source of source' of the credit was also shown. Further he also countered the finding of the AO that assessee could not produce those parties for verification but the assessing officer himself not initiated proceedings under section 131 or 133 (6) of the act. Before CIT – A several judicial precedents were relied upon. The learned CIT – A further noted that though the learned AO has stated that these are the accommodation entries, however, no statements were provided to the assessee, even the details of the person who provided the accommodation entry was also not mentioned. Further opportunity of cross examination of the evidence used by the AO against the assessee was also not confronted. It is also not clear whether the LD AO has any material in its possession or not. He further noted that during the assessment year 2014 – 15 the assessee has received fresh unsecured loan of only ₹ 2 crores from six parties, where the assessee has proved the onus and the learned assessing officer has not disproved the information furnished by the assessee by making an independent enquiry and therefore, the addition made under section 68 was deleted. 17) As already stated, learned CIT – A passed a consolidated order for assessment year 2014 – 15 to assessment year 2020 – 21. The effect of the above order is as under:- assessment year addition made by the AO on account of bogus purchases addition confirmed by the learned CIT – A 2014 – 15 13,00,68,426 5,18,153 2015 – 16 20,17,69,283 6,81,939 2016 – 17 15,80,15,644 9,40,590 2017 – 18 7,30,88,524 7,76,720 2018 – 19 8,85,94,455 5,91,572 Page | 17 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. 2019 – 20 12,52,40,878 5,89,107 2020 – 21 11,58,20,929 6,95,649 18) With respect to the addition under section 68 or under section 69C of the learned CIT [A] by this consolidated order deleted the addition/confirmed the addition as under:- Assessment year Addition made by the AO on account cash credit/unexplained expenditure Addition confirmed by the learned cit – a 2014 – 15 2,06,16,167 Nil 2015 – 16 33,33,334 (loan of ₹ 25 lakhs and interest of ₹ 1 lakh thereon along with another interest of ₹ 633,334) Nil 2016 – 17 6,10,000 (only interest portion) Nil 2017 – 18 6,08,003 and 34 (interest only) Nil 2018 – 19 520,833 (interest only Nil 2019 – 20 17,80,590/– expenditure under section 69C ₹ 7,080,590 2020 – 21 Nil Nil 19) Thus the learned assessing officer is aggrieved by the addition deleted by the learned CIT – A with respect to bogus purchases and assessee is aggrieved by the amount of addition confirmed by the learned CIT – A and therefore both the parties are in appeal before us. Page | 18 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. 20) The learned departmental representative vehemently supported the order of the learned assessing officer. With respect to the addition of purchases, it was submitted that the AO has asked the assessee to produce the parties; the assessee has failed to produce them. It was further stated that the statement of the director of the company has categorically been confronted with the loose paper found during the course of search wherein there is a specific instance of receiving cash back from the suppliers by the assessee in some of the cases for some period in F Y 2018-19. It was submitted that identical issue is in the case of the appeal of the AO for all these years. With respect to purchases from parties, it was submitted that merely producing the invoices, payment by cheque, confirmation by the parties does not satisfy the criteria of genuineness of the purchases. It was further stated that the learned CIT – A has deleted the addition in absence of any enquiry by the AO. It was submitted that the AO made enquiry at the address of suppliers given by the assessee. Thereafter, the assessee has given different addresses. At the old address the inspectors report shows that the parties were not conducting any business from that places. It was further submitted that the production of the parties by the assessee before the learned assessing officer is fatal to the deduction of purchase expenditure. The learned departmental representative vehemently referred to paragraph number 6.4 of the order of the assessing officer. It was further stated that the director of the company was evasive in giving answers with respect to the loose paper found from his residence, that clearly prove that the assessee has booked the bogus purchases. The order of the learned CIT – A is not sustainable on the facts of the case in deleting the addition on account of unaccounted purchases. 21) The learned departmental representative with respect to the addition under section 68 deleted by the learned CIT – A, submitted that assessee has failed to produce the parties before the learned assessing officer and therefore merely filing the confirmation letter and general details does not help the case of the assessee. It was stated that the assessee is duty-bound to prove the identity and creditworthiness of the parties as well as the genuineness of the transaction. Merely repayment made by the assessee of the cash credit does not absolve assessee from proving the above three ingredients at the time of receipt of the money. It was further stated that the persons who have deposited money with the assessee have weak financial and the lower profit as stated by the learned assessing officer. The learned CIT – A has wrongly Page | 19 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. stated that in fact the AO should have exercised its power under section 131 or 133 (6) of the act, where the assessee has failed to even give the correct address initially. It was further submitted that when the loan itself is not proved to be genuine, disallowance of expenditure of interest incurred by the assessee is also found to be bogus and therefore disallowance of that extent should also have been upheld by the learned CIT – A. 22) The learned authorized representative vehemently referred to the order of the learned assessing officer and submitted that originally, the learned AO referred to several parties however, he restricted himself after verification of the details submitted by the assessee to the extent of 22 parties only. With respect to purchases from Nidhi enterprises, the learned authorized representative submitted that the permanent account number, address and the proprietor of the above form stated by the assessing officer is altogether different from the permanent account number, address, nature of business etc. carried out by the supplier of the assessee. Based on the wrong information on profiling by the learned assessing officer the different person was examined, who is a lady, stated that she is not doing any business. It was stated that the party with whom the assessee has dealt with is a different assessee, email, different permanent account number, different address. The assessee has submitted the confirmation, invoices, account of assessee from the books of supplier, details of payment by cheque shown from the bank statement of the assessee. Therefore, the addition deleted by the learned CIT – A respect to purchases from media enterprises is correct. With respect to the other purchases, it was submitted that looking into the nature of the business of the assessee it is not possible to correlate the amount of purchases by assessee from these parties and corresponding sales in the books of the assessee. It was stated that assessee is a contractor material purchased from these parties have been used by the assessee in execution of the contract. Assessee is dealing with the public sector and government organizations such as Bombay principal Corporation and MMRDA, and therefore the work is executive by the assessee is proved. Without the purchases, no sales/ works could have been carried out. With respect to the enquiries made by the inspector by the learned assessing officer, it was stated that the assessee has given the correct addresses to the learned assessing officer during the course of assessment proceedings, however despite the above fact the learned assessing officer disregarding the above Page | 20 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. information sent to the inspectors for the verification at the old address. Even the parties are working at these addresses given by the assessee until today it. Further, the enquiry made by the learned assessing officer by sending the inspector was also during the COVID 19 when the offices were mostly closed. The learned authorized representative further stated that the assessee has submitted the details to the learned assessing officer long back however the learned AO did not make any enquiry and at the fag and of the assessment proceedings started making the enquiry and asked assessee to produce the parties. Even at that stage, also the learned AO did not look at the revised information of the address submitted by the assessee. It was stated that the assessee has made a purchase of ₹ 300 crores whereas the learned assessing officer doubts the purchases of only ₹ 11 crores during the year. He referred to the paper book where the details of the purchases from the parties are submitted. He referred that the assessee has submitted copies of the invoices, copies of the bank statement where the payments have been made through account payee cheque by the assessee, Ledger account of the parties from the books of accounts of the assessee, Ledger account of the assessee from the books of accounts of the supplier, details of vehicles through which the goods have been purchased, weighment slips of the goods purchased, delivery challans, wherever possible. Therefore, he submitted that in such an overwhelming evidences submitted by the assessee, the learned AO has not made any enquiry and merely based on suspicion and conjectures, addition has been made. He further referred to the paper book and referred to the index submitted where the details with respect to each of the supplier is provided in completeness. It was further stated that the learned assessing officer has neither issued notices under section 133 (6) of the act not issued any summons to those parties. It was not possible for the assessee to produce these parties because of Covid 19. He further referred to the order of the learned CIT – A wherein he has considered each of the addition and thereafter deleted the addition partly. In view of this, he submitted that the order of the learned CIT (A) is correct so far as the deletion of the addition. 23) With respect to the appeal of the assessee wherein the identical ground where the addition has been sustained by the learned CIT – A, he vehemently stated that the learned CIT – A should not have upheld the addition of 2% of the purchases where complete details of the parties is available. He further Page | 21 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. stated that the information is with respect to assessment year 2018 – 19 and why the addition has been confirmed by the learned CIT – A for assessment year 2014 – 15 is not comprehensible. It was further stated that reasoning given by the learned CIT – A for the addition/disallowance of purchase expenses equally applies to the sum. 24) With respect to addition under section 68 of the income tax act deleted by the learned CIT – A, the learned authorized representative referred that assessee has discharged its initial onus by producing the relevant details before the learned assessing officer in the form of the confirmation of the lenders, their income tax return, their bank statement and balance sheet etc. The learned assessing officer has not made any enquiry and merely based on the financial statements stated that these parties have weak financials. The learned authorized representative referred to the order of the learned CIT – A wherein he has considered the financial Ability of the various parties. He therefore submitted that the learned CIT – A has correctly deleted the addition whereas the learned assessing officer has made addition under section 68 of the income tax act merely on the conjectures and surmises. 25) The learned authorized representative further stated that when the addition under section 68 is not proper, the relevant addition/disallowance of interest expenses deleted by the learned CIT – A is also proper. 26) The learned authorized representative did not press ground number 1 – 2 of the appeal. 27) We have carefully considered the rival contention and perused the orders of the lower authorities. We have also considered the three-paper books submitted by the assessee containing 945 pages. In all these appeals, there are two kinds of additions made by the learned assessing officer. (1) Disallowance of purchase, (2) and under section 68 of the act with respect to the loans in the first 2 years i.e. assessment year 2014 – 15 and assessment year 2015 – 16 and subsequent payment of interest in the respective years to the lenders. 28) Now, we deal with firstly the disallowance of purchase expenditure. Fact show that search under section 132 of the income taxes was carried out in the premises of the assessee on 6/11/2019. Consequent to that the assessment proceedings under section 153A of the act were carried out in all these years. During the course of assessment proceedings the learned assessing officer observed that during the search action in case of the Page | 22 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. assessee the key person is of the company were asked to furnish the list of purchase parties along with the permanent account number and complete address along with the several relevant details of those purchases. Assessee produced the list of purchase parties stating that permanent account number and Ledger and some of the invoices. The learned AO on perusal of the details notice that during this year assessee ha has made purchases of Rs 116,98,43,715/– from 63 different parties. According to the information of the AO out of the 63 parties, 42 parties were found to be bogus as they have weak financial and were found do not exist at the address. For these assessment years, the purchases of ₹ 25.52 crores from these 42 parties were made. Out of the purchases from these 42 parties, the learned assessing officer accepted the purchases from 20 parties as assessee produced the relevant details and the assessing officer was satisfied with those purchase. With respect to the further 22 parties on verification of details, learned assessing officer found some discrepancies. Therefore, the further information was asked from the assessee. Further, the statement of Mr. JP Shah was recorded during the course of search on 11/11/2019, which was heavily relied upon by the AO. The learned AO also deputed inspector for verification of the parties. Most of the parties were not found existing or the premises were closed. In case of purchases from Nidhi enterprises, the learned assessing officer issued summons under section 131 of the income tax act. In response to that summons one woman appeared before him and stated that she is not carrying on any business. Based on this the learned assessing officer made the addition of 13,00,68,426/– as bogus purchases. The learned CIT – A partly deleted the addition. The learned CIT – A upheld the addition to the extent of 2% of the purchases where the evidences and the statement of the directors were relating to assessment year 2018 – 19, not for other years, for the reason that assessee must be engaged in the same activity/practice in this year too. 29) Firstly, we look at the purchases disallowed by the learned assessing officer with respect to transaction with one proprietary concern Nidhi Enterprises. The learned assessing officer noted that the proprietor of this firm does not know anything about the business, she has given her permanent account number and AADHAR card to the someone for monthly commission of ₹ 10,000/. However, the fact shows that the woman who was interrogated by the assessing officer was Mrs. Nidhi sagar Sharma having PAN CGSPS0652N Page | 23 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. residing at Thane, Mumbai. However assessee gave permanent account number AAAPT2992C pertaining to Mr. Rajesh Trivedi residing at Ghatkopar west Mumbai. Therefore the learned assessing officer despite having the complete information about the permanent account number and address of the party, investigated somebody else and thereafter based on that disallowed a sum of ₹ 16,261,239/– for this year held to be bogus purchase. There are no other evidences against the assessee. The learned CIT – A deleted the addition holding that when the learned assessing officer has incorrectly carried out the investigation, the disallowance cannot be made. The learned DR also could not point out any infirmity in the order of the learned CIT – A in deleting this addition. Naturally, we also do not find any reason to deviate from the decision of the learned CIT – A for the reason that the assessee has given complete details about the purchases, which were not investigated properly by the learned assessing officer, disallowance cannot be made in the hands of the assessee wherein the learned AO carried out investigation on altogether different facts which were not there. Accordingly the learned CIT – A is correctly deleted the addition of ₹ 16,261,239/– on account of purchases from Nidhi enterprises. 30) Now we come to the issue of the purchases from the parties that were neither found mention in statement of the director and no other material is available before the learned assessing officer for disallowance of the same. Such purchases amounting to ₹ 87,899,519/–. The only reason being that the addresses mentioned by the assessee earlier were not the correct address and parties could not be found at those addresses carrying on any businesses. The learned authorized representative has categorically explained that the details of the change in the address of those parties, new addresses, were given to the learned assessing officer much before the inquiries were made by inspectors of the assessee. Despite that information available with the assessing officer, he proceeded to enquire the whereabouts of the parties at the old address given by the assessee. The complete details of such addresses are available at page number 28 – 30 of the order of the learned CIT – A. With respect to these parties assessee has submitted sample invoices showing the vehicle number of vehicle used for transportation, delivery challan for delivery of goods, Weighing Receipts, Ledger account of respective parties in the books of account of the assessee, Ledger account of the assessee in the books of respective parties, acknowledgement of return filed of respective Page | 24 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. suppliers, bank account of the assessee showing the amount of payment made for such supplies through banking channel. When these evidences are available before the learned assessing officer, the learned assessing officer did not carry out any enquiry by issuing summons under section 131 or asking for information under section 133 (6) of the act. Assessee was directed to produce the parties and failure on part of the assessee to produce those parties, the learned assessing officer took a position to disallow the whole of the purchases. Assessee explained that these were COVID 19 period. Therefore, the assessee could not contact all those parties. However, if the evidences are available before the assessing officer, and if he wishes to investigate the same, he is empowered under the income tax act by either issuing summons to those parties or seek information under section 133 (6) of the act. Ld AO did not do that. Further, the fact shows that the appellant company is engaged in the business of infrastructure development, the project could not have been executed if no material is consumed. The assessee has purchases worth ₹ 300 crores and out of which only a small amount of purchases doubted. When the assessee has submitted the complete details, the disallowance of purchase expenses have been made without any reason. It is not the case that any information is available with respect to these parties before the assessing officer during the course of assessment proceedings, during the course of search or in the statement of the director of the company. On careful perusal of the paper book, we find that assessee has given complete details of the parties from whom the assessee has purchased goods. It is also a fact that in case of fuel and transportation expenses, there cannot be any movement of goods or weighment slips, or delivery challan. Therefore, for this reasons disallowance cannot be made. The learned DR was only of the view that the assessee has failed to produce the parties. We do not find that reason good enough to make the disallowance of the purchases because it was a Covid 2019 time and further the AO would have issued summons under section 131 and 133 (6) of the act and the new addresses given by the assessee. No other infirmity could be shown by the learned DR, it was also not denied that the turnover of the assessee is ₹ 300 crores and the purchases involved with these 11 parties is merely 8,78,99,519. Further, it is evident that on the net turnover of Rs. 563 crores the assessee has disclosed the net profits of Rs. 45 crores, which is a reasonable profit in the business of the assessee. Accounts of the assessee are Page | 25 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. audited. There is no qualification with respect to the purchases of material in the audit report. The accounts of the assessee are also audited under section 44AB of the act, the gross profit earned by the assessee for this year is 16.38% compared to 16.59% in previous year. The ratio of material consumed is also 95.94% compared to 96.25%. No further defects in the books of accounts were pointed out. In view of this, we do not find any infirmity in the order of the learned CIT – A in deleting the disallowance of purchases from various parties amounting to ₹ 87,899,519/–. 31) The last leg of the purchase is with respect to the purchases made from five parties by the assessee wherein the learned assessing officer has disallowed the purchases completely. The claim of the assessee is that the disallowance was made on the basis of the statement of Mr. JP Shah who did not state that the payments made towards purchases were received back by the assessee. It is lose sheets, which suggests so for F Y 2018-19. However, the learned assessing officer has ignored the statement that the transaction of receiving the cash happened once only and that too in assessment year 2018 – 19. For this proposition assessee relied upon the decision of the honourable Gujarat High Court in 252 ITR 417, 270 TTJ 70 65 TTJ 327 and 56 TTJ 460. The learned CIT – A with respect to these parties where statement of the director of the assessee recorded under section 132 (4) during the search proceedings in which he has stated that loose sheet seized from his resident by assessee from vendors of the assessee, remain unchallenged. The amount mentioned in the loose sheet was cash received from the vendor to whom assessee has paid through cheques. The difference on account of over booking of expenses was returned in cash to the cashier at different sites. The cashier in turn handed over the cash to the director. Therefore, the statement of Shri J P Shah proves that the cash was received back from the vendor for booking of inflated expenses. The assessee has reflected the relevant transactions for the period 11/11/18 221/11/2018. The learned lower authorities have stated that though these transactions does not pertain the assessment year 2014-15 to 2017 – 18, but held that these activities of inflation of the expenses must be continuing in other period also i.e. in the current assessment year. The statement of the director was with respect to the amount of cash received, which are the inflated expenses. Therefore, the fact shows that the amount of inflation in the expenses is not the total expenses but some percentage of such expenses. As there is no information available and no evidence is Page | 26 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. available about the extent of inflated purchases, the learned CIT – A confirmed 2% of the total purchases from the above-mentioned parties as non genuine. The claim of the assessee before us is that in absence of any evidence for this assessment year, no disallowance can be made. The learned authorized representative could not show us any reason that why the same system should not be presumed to have been carried on in this year also which were found in assessment year 2019 – 20. The claim of the assessee is that it cannot prove negative. The learned departmental representative also stated that there is a presumption available against the assessee that assessee is booking inflated expenses with respect to these parties. On the facts and circumstances of the case and in the interest of justice, we do not find any infirmity in the order of the learned CIT – A in upholding the disallowance of 2% of such purchases, because it is beyond the human probabilities that the assessee has carried out inflation of expenditure with respect to this parties only for the period of assessment year 2019 – 20. Accordingly, the order of the learned CIT – A is upheld. Ground number 1 and 2 of the appeal of the AO and ground number 3 of the appeal of the assessee is dismissed. 32) Coming to the ground number 3 of the appeal of LD AO, where the learned CIT – A has deleted the addition of ₹ 20,616,167/– made by the learned AO under section 68 of the act in respect of unsecured loans and interest thereon. During the course of assessment proceedings, the AO observed that the assessee company was having an amount of ₹ 14.13 crores as outstanding unsecured loans from financial year 2013 – 14 until 2019 – 20. The assessee company during the year-received ₹ 2 crores as loan. During search, key persons of the company were asked to produce details with respect to unsecured loans such as complete address, permanent account number, bank statements and other documentary evidences along with confirmations, Ledger, details of repayment of loan and details of tax deduction at source on interest payment. Assessee provided the details of unsecured loan for the last six assessment years. The AO on examination of the details held that assessee could not provide the complete details. From financial year 2012 – 13 until financial year 2018 – 19 the assessee, company had received loan from seven parties. The profiling of seven parties was carried out in ITBA and it was found that some of the entities were not filing return of income or they have high turnover and low net profit along with high outstanding credits. The AO Page | 27 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. also referred to the report of Inspector that 6 out of 7 parties did not exist at the given address. Therefore, the assessing officer issued the show cause notice, which was replied by the assessee by producing Ledger account, income tax return, repayment of loan etc. The assessee also stated that it has discharged the onus of proving the identity, creditworthiness of the parties and the genuineness of the transaction. It was further stated that these loans were also repaid subsequently. The learned assessing officer did not accept the explanation of the assessee. He was of the view that assessee has not produced material evidence to prove the genuineness of the learned transactions and back-to-back credit and debit entries in the bank statement of the parties. When the matter reached before the learned CIT – A, assessee reiterated that it has provided the loan confirmation, income tax return of the parties, address of the lenders, bank statement of the appellant, audited financial statement of the parties and certificate of incorporation on change of name wherever applicable. The learned assessing officer did not carry out any enquiry and made the addition. The learned CIT – A deleted the addition. Before us, the assessee has produced in the form of paper book the evidences with respect to all the six parties starting from page number 69 – 236 where the above details were furnished. On perusal of the above detail it is evident that assessee has established the identity of the parties. With respect to the creditworthiness of the parties, the table at paragraph number 4.3.1 of the order of the learned CIT – A shows that one party has given loan of ₹ 25 lakhs however it has a profit of ₹ 1.28 crores, the second party has also given a loan of 25 lakhs has a profit of ₹ 96.40 lakhs, the third-party has given a loan of ₹ 15 lakhs but has net profit of ₹ 68.33 lakhs. All these three parties have high reserve. Further, the other loan given by three parties, though the profit of these parties was less however the assessee has also given wherefrom these parties have received funds in their bank account to give the loan. Therefore, the assessee has also shown source of source of these credits. The details of the fund flow received by the lender for the investment in the company are also given at page number 52 – 56 of the appellate order. Moreover, it is also relevant that assessee has produced all the details before the learned assessing officer; however, the learned assessing officer did not carry out any enquiry. Without conducting the enquiry, the assessee was asked to produce the creditors/lenders. Assessee submitted that it is COVID 19 therefore; it is not possible for assessee to produce them. The learned Page | 28 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. assessing officer did not issue them any summons under section 131 or conducted any enquiry under section 133 (6) of the act. It is also pertinent to note that the learned assessing officer has relied upon the statement of several of accommodation entry provider, however assessee was never confronted with the statement of those parties, there is no evidence that any of the accommodation entry provider is involved in obtaining the loans from these companies/lenders and such loans are not genuine. In any case, no cross-examination was also provided to the assessee of those parties. In view of this, we find that the assessee has proved the identity and creditworthiness of those parties and genuineness of the transaction by bringing the necessary material on record that is not challenged by the assessing officer or The LD DR. Therefore, assessee has discharged initial onus cast upon it proving the identity, creditworthiness and genuineness of the transaction. By not making any enquiry, the assessing officer has not once again thrown back onus on the assessee. There is no material available with the assessing officer to show that the amount of loan of ₹ 2 crores obtained by the assessee, who is also subsequently repaid along with interest is not genuine. Subsequent repayment neither improves case of assessee and nor of the AO. It is not shown before us by the learned DR that how the order of the learned CIT – A is not sustainable. We do not find any infirmity in the order of the learned CIT – A In deleting the addition of ₹ 2 crores made by the learned assessing officer under section 68 of the income tax act. Accordingly, ground number 3 of the appeal of the AO is dismissed. 33) Accordingly, appeals of the assessee as well as the learned assessing officer for AY 2014-15 are dismissed. 34) As the facts for assessment year 2015 – 16 to 2020 – 21 are similar, the grounds of appeal of the parties are also similar, the arguments of the parties are also the same, and therefore, we do not incline to change our reasons also. In view of our finding for assessment year 2014 – 15, we uphold the order of the learned CIT – A in deleting the disallowance of purchase expenses to the extent deleted by him, deleting the disallowance of interest expenditure paid on loans added under section 68 of the income tax act. In the result, for all these years appeals filed by the AO as well as the assessee are dismissed. Page | 29 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. 35) In the result all 14 appeals filed in case of Relcon Infra projects Limited by the assessee and the learned assessing officer for assessment year 2014 – 15 to 2020 – 21 are dismissed. Relcon Realty Pvt Ltd AY 2015-16 ITA no 2692/ M/ 2022 & co no 5 / M/2022 36) These are the cross appeals filed by the assessee and the AO against the appellate order passed by the Commissioner of income tax (Appeals) – 53, Mumbai (the learned CIT – A) for assessment year 2015 – 16 on 13/7/2022 wherein the learned CIT – A has deleted the addition of disallowance of bogus purchases amounting to ₹ 1,430,507/– made by the learned assessing officer per assessment order passed under section 153A read with section 143 (3) of the act dated 30/09/2021. Deletion of addition is because of the reason that there is no incriminating material found during the course of search. 37) Therefore, the learned assessing officer is aggrieved and has preferred ITA number 2692/M/2022 challenging the deletion of the above addition. The assessee has also filed cross objection, which is on the merits of the addition. not decided by the ld CIT [A]. 38) Briefly stated the fact shows that assessee is a private limited company engaged in the business of real estate development. Assessee filed its return of income on 29/9/2015 at a total loss of ₹ 6,121,301/–. Return was selected for scrutiny and assessment was completed under section 143 (3) of the act as per order dated 22/9/2017 assessing the total loss at the returned loss. 39) Subsequently search under section 132 of the act took place at the premises of the appellant on 6/11/2019. Notice under section 153A of the act was issued. The assessee filed return of income on 16/1/2021 wherein the loss was declared at ₹ 1,779,937/–. 40) During the course of assessment proceedings, AO noted that assessee has debited the purchase expenditure of ₹ 27,707,416/–. The detail of supplier was called for and assessee was asked to justify the correctness of the claim. The assessee submitted purchase orders, invoices, Ledger's, delivery challenges, transport receipt, confirmation of the supplier, bank statement to show that the payments have been made by account payee Check. The AO Page | 30 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. accepted all the purchases however in case of one party namely Sandeep steels from whom the assessee has purchased goods of ₹ 1,430,507/– was doubted stating that party does not exist at the address and despite making request to the party, no details are produced. This resulted into a show cause notice. The assessee submitted the relevant details however, as the party did not furnish the information, the addition was made by the assessing officer. The AO was of the view that this supplier has declared lower net profit despite having higher turnover. Therefore, the supplier has weak financials. Accordingly, the addition of ₹ 1,430,507 was made. The income of the assessee was determined at a loss of ₹ 349,430 by passing an assessment order. 41) Aggrieved assessee challenged the same before the learned CIT – A. The assessee challenged that no addition could have been made in view of the assessment already passed and a concluded assessment could not have been disturbed in absence of any incriminating material found during the course of search. With respect to the merits of the addition, the assessee submitted that it has submitted all the relevant details available with the assessee. Merely because on the basis of the details furnished by the assessee, if the AO reaches at a conclusion that the financial of the supplier is weak, disallowance of the purchase expenses cannot be made in the hands of the assessee. The learned CIT – A considered the argument of the assessee held that the disallowance in respect of bogus purchases made by the assessing officer was without any incriminating material related to bogus purchases found during search action. Therefore following the decision of the honourable Bombay High Court in case of CIT versus continental warehousing Corporation (2015) 58 taxmann.com 78 (Bombay) held that the assessment is bad in law and the addition has been made without any incriminating material found during the course of search. The learned CIT – A did not adjudicate on the merits of the addition. 42) Therefore aggrieved with Appellate order, learned AO is in appeal on the issue of incriminating material and the assessee is in appeal on the merits of the addition. 43) The learned departmental representative submitted that there is no requirement of any incriminating material for making an addition even in concluded assessment. The learned authorized representative supported the order of the learned CIT – A. Page | 31 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. 44) We have carefully considered the rival contention and perused the orders of the lower authorities. In the present case, the search took place on 6/11/2019. Prior to that, assessment under section 143 (3) of the act was already passed for this assessment year on 22/9/2070. Therefore as on the date of search, the impugned assessment year was a concluded assessment. This concluded assessment could have been disturbed only based on incriminating material found during the course of search. In this case, no incriminating material was found with respect to the addition of disallowance of purchase expenses. In view of this, the learned AO could not have made the impugned assessment by incorporating the above addition. We find that this issue is squarely concluded in favour of the assessee by the decision of the honourable Supreme Court in case of Principal Commissioner Of Income Tax versus Abhisar Buildwell Pvt Ltd [2023] 149 taxmann.com 399 (SC)[24-04- 2023]. Therefore, we do not find any infirmity in the order of the learned CIT – A. Accordingly, ground number 1 – 4 appeal of the AO are dismissed. 45) In the result ITA number 2692/M/2022 filed by the learned assessing officer is dismissed. 46) As we have dismissed the appeal of the learned assessing officer, the appeal of the assessee also become infructuous, which is now not required to be decided on the merits of the case, therefore same is dismissed. 47) In the result appeal of the AO and the cross objection of the assessee for assessment year 2015 – 16 are dismissed. Order pronounced in the open court on 26.05.2023. Sd/- Sd/- (KAVITHA RAJAGOPAL) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated: 26.05.2023 Sudip Sarkar, Sr.PS/ Dragon Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, Page | 32 A.Ys. 2014-15 to 20-21 Relcon Infraprojects Limited & Relcon Relaty Pvt. Ltd. True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai