THE DCIT, (CENTRAL)-1, Indore V. M/s. MCS Trading Company Pvt. Ltd., Indore

ITSSA 141/IND/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8668 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 04-01-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 14-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA GUPTA
• Keywords: Gross profit estimation; Rejection of books of accounts; Business income; Search and seizure; Document seized; Validity of assessment; Block assessment; Documents seized; Set aside
• Section: 143(3); 142(1); 153A; 143(1); 68; 145; 132; 15; 139

Judgement Text

MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HON'BLE KUL BHARAT, JUDICIAL MEMBER AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER IT(SS)A NO.141/IND/2016 ASSESSMENT YEAR: 2009-10 DCIT(CENTRAL) - 1 INDORE / VS. M/S MCS TRADING COMPANY PVT. LTD. 61/1, PUJA VILA LAL BAG, KESHAR BAG ROAD,11, BUNGLOW NO.9, NEAR NAI DUNIYA PRESS, INDORE ( REVENUE ) ( APPELLANT ) PAN: AADCM9997N CO NO.38/IND/2016 (ARISING OUT OF IT(SS)ANO.141/IND/2016) ASSESSMENT YEAR: 2009-10 M/S MCS TRADING COMPANY PVT. LTD. 61/1, PUJA VILA LAL BAG, KESHAR BAG ROAD,11, BUNGLOW NO.9, NEAR NAI DUNIYA PRESS,INDORE / VS. ITO 3(3) INDORE (APPELLANT) (REVENUE) PAN: AADCM9997N ITA NO.353/IND/2017 ASSESSMENT YEAR: 2012-13 DCIT(CENTRAL) - 1 INDORE / VS. M/S MCS TRADING COMPANY PVT. LTD. 61/1, PUJA VILA LAL BAG, KESHAR BAG ROAD,11, BUNGLOW NO.9, NEAR NAI DUNIYA PRESS,INDORE ( REVENUE ) ( APPELLANT ) PAN: AADCM9997N MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 2 REVENUE BY SHRI ASHIMA GUPTA, CIT RESPONDENT BY SHRI ANIL KAMAL GARG & ARPIT GA U R , CA S DATE OF HEARING: 0 6 . 03 .2019 DATE OF PRONOUNCEMENT: 09 . 0 4 .201 9 O R D E R PER MANISH BORAD. THE ABOVE CAPTIONED TWO APPEALS FILED BY THE REVENU E AND C.O. FILED BY THE ASSESSEE PERTAINING TO ASSESSMENT YEA RS 2009-10 & 2012-13 ARE DIRECTED AGAINST THE ORDERS OF LD. COMM ISSIONER OF INCOME TAX (APPEALS) (IN SHORT LD.CIT(A)], INDORE DATED 29.03.2016 & 28.02.2017 WHICH ARE ARISING OUT OF THE ORDERS U/ S 143(3) DATED 28.03.2013 & 25.03.2015 FRAMED BY ACIT, INDORE. 2. AS THE ISSUES RAISED IN THESE APPEALS ARE COMMON, THEREFORE THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF F BY THIS COMMON ORDER FOR SAKE OF CONVENIENCE AND BREVITY. 3 . WE WILL FIRST TAKE UP THE REVENUES APPEAL AND ASSE SSEES CROSS OBJECTION FOR ASSESSMENT YEAR 2009-10. 4. BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE REC ORDS PLACED BEFORE US ARE THAT THE ASSESSEE IS A PRIVATE LIMITE D COMPANY ENGAGED IN COMMODITY TRADING, CURRENCY FUTURE TRADING AND B ULLION TRADING. SEARCH U/S 132 OF THE ACT WAS CONDUCTED ON 25.11.10 AT THE MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 3 ASSESSEES PREMISES AT INDORE. THE ASSESSEE COMPAN Y BELONGS TO CHITRESH MEHTA GROUP. CONSEQUENTLY NOTICES U/S 153 A OF THE ACT ALONG WITH 143(2) AND 142(1) OF THE ACT DULY ISSUED AND SERVED UPON THE ASSESSEE. IN COMPLIANCE TO THE NOTICE ASSESSEE E-FILED THE INCOME TAX RETURN ON 1.2.2012 DECLARING INCOME OF RS.29,29 ,070/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS VARIOUS INFORM ATION WERE CALLED RELATING TO THE TRANSACTIONS ENTERED IN THE BOOKS OF ACCOUNTS. SUBMISSIONS WERE FILED. LD. A.O CONCLUDED THE ASSE SSMENT AFTER MAKING VARIOUS ADDITIONS AMOUNTING TO RS.97,54,952/ -. 5. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A) AND ALONG WITH CHALLENGING THE VARIOUS ADDITIONS MADE BY THE A.O ON MERITS AS WELL AS LEGAL GROUND THAT NO INCRIMINATING MATERIA L WAS FOUND DURING THE COURSE OF SEARCH PERTAINING TO THE ASSESSMENT Y EAR UNDER CONSIDERATION AND THEREFORE IN VIEW OF THE JUDICIAL PRECEDENCE NO ADDITION COULD HAVE BEEN MADE FOR ASSESSMENT YEAR 2 009-10 WITHOUT MAKING ANY NEXUS WITH THE SEIZED MATERIAL AS THE AS SESSMENT YEAR 2009-10 FALLS UNDER THE CATEGORY OF COMPLETED AND N ON ABATED ASSESSMENTS. LD. CIT(A) AFTER CONSIDERING THIS FAC T THAT THE ADDITIONS MADE BY THE LD. A.O WERE NOT ON THE BASIS OF ANY IN CRIMINATING MATERIAL DURING THE COURSE OF SEARCH ALLOWED THE LE GAL GROUND RAISED MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 4 BY THE ASSESSEE FOLLOWING THE DECISION OF THE JURIS DICTIONAL ITAT, INDORE BENCH IN THE CASE OF KALANI BROS & ORS ITA(S S) NO.71/INDORE/2014 ORDER DATED 6.11.15 AND DECISION IN THE CASE OF ANANT STEELS LTD VS. ACIT ITA(SS) NO.133/IND/2013 O RDER DATED 30.11.2015 AND HELD THE IMPUGNED ASSESSMENTS U/S 15 3A OF THE ACT AS INVALID. 6. NOW THE REVENUE IS IN APPEAL AGAINST THE FINDING O F LD. CIT(A) AND THE ASSESSEE HAS FILED CROSS OBJECTIONS ON THE FOLLOWING GROUNDS; REVENUE APPEAL NO. IT(SS)ANO.141/IND/2016, ASSESSME NT YEAR 2009-10 : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED BY HOLDING THE PROCEEDINGS U/S 153A AS IN VALID IN ABSENCE OF INCRIMINATING DOCUMENTS WHEREAS, AS PER THE INCOME TAX ACT AND IN THE LIGHT OF VARIOUS CASE LAWS THE A SSESSMENT PROCEEDING CANNOT BE INVALID WHEN A SEARCH ACTION U /S 132 OF THE ACT WAS CARRIED OUT AND WARRANT OF AUTHORIZATION WA S ISSUED AND EXECUTED AGAINST THE ASSESSEE. ASSESSEES C.O. NO. 38/IND/2016, ASSESSMENT YEAR 20 09- 10: MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 5 1. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LEARNED CIT(A) GROSSLY ERRED IN LAW IN NOT ADMITTING THE AD DITIONAL GROUND OF APPEAL RAISED BY THE RESPONDENT BEFORE THE LD. CIT(A) INAS MUCH THAT THE IMPUGNED ASSESSMENT ORDER PASSED BY THE LEARNED AO WAS BARRE D BY THE TIME LIMIT PRESCRIBED UNDER S.L53B(I)(A) OF THE INCOME-TAX ACT , 1961 INASMUCH IN THE INSTANT CASE, LAST OF THE AUTHORISATIONS FOR SEARCH UNDER S.132 OF THE ACT WAS EXECUTED DURING THE FINANCIAL YEAR ENDED ON 31- 03-2011 AND CONSEQUENTLY, THE ASSESSMENT ORDER WAS STATUTORILY REQUIRED TO BE PASSED UPTILL 31-03-2013 WHEREAS SUCH ASSESSMENT ORDER WAS ACTUALLY PASSED AFTER 31-03-2013 AND SERVED UPON THE RESPONDENT ON 02-04-2013, THEREFORE, THE IMPUGNED ASSESSMENT ORDER DESERVES T O BE QUASHED ON THIS LEGAL GROUND ALONE. 2. THAT, WITHOUT PREJUDICE TO THE ABOVE, ON THE FAC TS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) GROSS LY ERRED IN NOT DECIDING THE ISSUE ON MERITS WITH RESPECT TO THE ACTION OF T HE AO FOR REJECTION OF THE BOOKS OF ACCOUNT OF THE RESPONDENT BY INVOKING PROV ISIONS OF SUB-SECTION (3) OF SECTION 145 OF THE INCOME TAX ACT, 1961. 3. THAT, WITHOUT PREJUDICE TO THE ABOVE, THE LEARNE D CIT (A) GROSSLY ERRED, BOTH ON FACTS AND IN LAW, IN NOT DECIDING THE ISSUE ON MERITS WITH RESPECT TO THE ADDITION OF RS.50,00,000/- MADE BY THE AO IN TH E RESPONDENT'S INCOME ON ACCOUNT OF UNSECURED LOAN CLAIMED TO HAVE BEEN R ECEIVED BY THE RESPONDENT FROM SHRI BALKISHAN, BY INVOKING PROVISI ONS OF SECTION 68 OF THE INCOME-TAX ACT, 1961. 4. A. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LEARNED CIT(A) GROSSLY ERRED, BOTH ON FACTS AND IN LAW, IN NOT DECIDING THE ISSUE ON MERITS WITH RESPECT TO THE AD-HOC ADDITION OF RS.2, 66,835/- MADE BY THE AO IN THE RESPONDENT'S INCOME BY ARBITRARILY ESTIMATIN G GROSS PROFIT ON SALE OF GOLD BULLION MERELY ON CONJECTURES, SURMISES, GUESS -WORK AND WHIMS AND WITHOUT CONFRONTING THE RESPONDENT WITH THE SO-CALL ED MARKET ENQUIRIES CONDUCTED BY HIM AND FURTHER WITHOUT CONSIDERING TH E MATERIAL FACT THAT THE RESPONDENT HAD MAINTAINED REGULAR FINANCIAL BOOKS O F ACCOUNT AND QUANTITATIVE RECORDS IN ITS ORDINARY COURSE OF BUSI NESS. B. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LEARNED CIT(A) GROSSLY ERRED, BOTH ON FACTS AND IN LAW, IN NOT DEC IDING THE ISSUE ON MERITS WITH RESPECT TO THE AD-HOC ADDITION OFRS.11,79,082/ - MADE BY THE AO IN THE RESPONDENT'S INCOME BY ARBITRARILY ESTIMATING GROSS PROFIT ON SALE OF SILVER BULLION MERELY ON CONJECTURES, SURMISES, GUESS-WORK AND WHIMS AND WITHOUT CONFRONTING THE RESPONDENT WITH THE SO-CALL ED MARKET ENQUIRIES CONDUCTED BY HIM AND FURTHER WITHOUT CONSIDERING TH E MATERIAL FACT THAT THE RESPONDENT HAD MAINTAINED REGULAR FINANCIAL BOOKS O F ACCOUNT AND QUANTITATIVE RECORDS IN ITS ORDINARY COURSE OF BUSI NESS. MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 6 5. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LEARNED CIT(A) GROSSLY ERRED, BOTH ON FACTS AND IN LAW, IN NOT DEC IDING THE ISSUE ON MERITS WITH RESPECT TO THE AD-HOC ADDITION OF RS.30,00,000 /- MADE BY THE AO IN THE RESPONDENT'S INCOME BY MAKING DISALLOWANCE OUT OF S ALARY EXPENSES AMOUNTING TO RS.35,06,000/- ACTUALLY INCURRED AND C LAIMED BY THE RESPONDENT COMPANY MERELY ON CONJECTURES, SURMISES, GUESS-WORK AND WHIMS. 6. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LEARNED CIT(A) GROSSLY ERRED, BOTH ON FACTS AND IN LAW, IN NOT DEC IDING THE ISSUE ON MERITS WITH RESPECT TO THE AD-HOC ADDITION OF RS.3,09,035/ - MADE BY THE AO IN THE RESPONDENT'S INCOME BY RESTRICTING THE GENUINE CLAI M OF THE RESPONDENT IN RESPECT OF THE COMPUTER SYSTEM CHARGES AND COMPUTER EXPENSES TO 50% ONLY. 7. WE WILL FIRST TAKE UP REVENUES APPEAL RAISING SOL E ISSUE CHALLENGING THE FINDING OF LD. CIT(A) HOLDING THE PROCEEDINGS U/S 153A OF THE ACT AS INVALID BECAUSE NO INCRIMINATING MATERIAL/DOCUMENT WAS FOUND DURING THE COURSE OF SE ARCH PERTAINING TO ASSESSMENT YEAR 2009-10. 8. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUED SUPPORTING THE ORDER OF LD. A.O. 9. PER CONTRA LD. COUNSEL FOR THE ASSESSEE RELIED ON THE FINDING OF LD. CIT(A) AND ALSO PLACED RELIANCE ON THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF OMPRAKASH GUPTA IT(SS) NO.277 TO 281/IND/2017 ORDER DATED 28.02.2019. 10. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RE CORDS PLACED BEFORE US. REVENUES SOLE GRIEVANCE IS THAT LD. CIT (A) ERRED IN HOLDING MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 7 THE PROCEEDINGS U/S 153A OF THE ACT AS INVALID MERE LY BY OBSERVING THAT THERE IS NO INCRIMINATING MATERIAL PERTAINING TO ASSESSMENT YEAR 2009-10 WAS FOUND DURING THE COURSE OF SEARCH. 11. WE OBSERVE THAT A SEARCH U/S 132 OF THE ACT WAS CO NDUCTED AT ASSESSEES PREMISES ON 25.11.10. SUBSEQUENTLY ASSE SSMENT PROCEEDINGS U/S 153A R.W.S. 143(3) OF THE ACT WERE FINALIZED FOR ASSESSMENT YEAR 2009-10. IT IS NOT DISPUTED THAT N O INCRIMINATING MATERIAL WAS SEIZED DURING THE COURSE OF SEARCH PER TAINING TO ASSESSMENT YEAR 2009-10. ADDITIONS MADE BY THE LD. A.O FOR ASSESSMENT YEAR 2009-10 ARE BASED ON THE INFORMATIO N CALLED DURING THE COURSE OF ASSESSMENT. LD. CIT(A) ON OBSERVING THAT THE ADDITIONS MADE BY THE LD. A.O ARE NOT HAVING ANY NEXUS WITH A NY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH DECIDED TO DELETE THE ADDITION AND HELD THE PROCEEDINGS U/S 15 3A R.WS. 143(3) OF THE ACT AS INVALID OBSERVING AS FOLLOWS; 5. GROUND NO.1,2 & 4: BY THESE GROUNDS THE APPELLA NT HAS CHALLENGED THE VALIDITY OF THE ASSESSMENT MADE U/S 153A OF THE ACT BY CONTENDING THAT NO INCRIMINATING MATERIAL/DETAILS OF UNDISCLOSED INCOM E WERE FOUND AND HENCE THE ASSESSMENT WAS BAD IN LAW. DETAILED SUBMISSIONS OF THE APPELLANT ON THE ISSUE ARE REPRODUCED AT PARA NO.3 ABOVE. 5.1 THE THRUST OF THE APPELLANTS CONTENTION IS THAT FOR THE ASSESSMENT YEAR 2009-10 THE RETURN OF INCOME WAS ORIGINALLY FILED O N 27.08.2009. NO NOTICE MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 8 U/S 143(2) OF THE ACT WAS ISSUED IN THE CASE UPTO 3 0.09.2010. IN VIEW OF THE ABOVE THE ASSESSMENT STOOD CONCLUDED AS ON 30.09.20 10. THE ADDITIONS MADE IN THE ORDER U/S 153A R.W.S. 143(3) DATED 28.0 3.2013 ARE NOT BASED ON ANY INCRIMINATING MATERIAL/DOCUMENTS/EVIDENCES F OUND AS A RESULT OF ACTION U/S 132. THE ADDITIONS ALREADY REFLECTED IN THE ORIGINAL RETURN OF INCOME FILED AND NO INCRIMINATING MATERIAL WAS FOUN D RELATED TO THE ABOVE TRANSACTIONS WARRANTING ADDITION TO THE TOTAL INCOM E U/S 153A OF THE INCOME TAX ACT, 1961. 5.2 THE TRANSACTIONS WERE PROPERLY RECORDED IN THE ACCOUNTS/RETURN MAINTAINED/FILED PRIOR TO THE DATE OF SEARCH. APPEL LANT PLACED RELIANCE ON VARIOUS JUDICIAL PRONOUNCEMENTS IN SUPPORT OF THE A BOVE LEGAL CONTENTION INCLUDING THE DECISION OF THE JURISDICTIONAL I.T.A. T. IN THE CASE OF ANANT STEELS LTD. VS. ACIT (INCOME-TAX ACT, 1961. NO.133/IND/201 3 DATED 30.11.2015) AND IN THE CASE OF KALANI BROS. & ORS. ITA(SS) NO.7 1/IND/2014 DATED 06.11.2015 AND THE DECISION OF THE SPECIAL BENCH OF I.T.A.T., MUMBAI IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT (2 0 ITJ 45) (TRIB. MUMBAI)(SB). 5.3 THE MATERIAL PLACED ON RECORD HAS BEEN CONSIDER ED. IN THE CASE OF KALANI BROS. THE JURISDICTIONAL I.T.A.T. HAS OBSERVED AS U NDER: WE HAVE HEARD BOTH THE SIDES. WE HAVE ALSO GONE TH ROUGH THE CASE LAWS RELIED UPON BY BOTH THE SIDES. WE HAVE ALSO CONSIDE RED VARIOUS RELEVANT FACTS OF THE CASE. IT IS A SETTLED LEGAL POSITION T HAT ONCE A SEARCH AND SEIZURE ACTION HAS TAKEN PLACE U/S 132 OF THE ACT OR A REQU ISITION HAS BEEN MADE U/S 132A, THE PROVISIONS OF SECTION 153A TRIGGED AN D ASSESSING OFFICER IS BOUND TO ISSUE NOTICE U/S 153A OF THE ACT. ONCE NOT ICES ARE ISSUED U/S 153A OF THE ACT THEN ASSESSEE IS LEGALLY OBLIGED TO FILE RETURN OF INCOME FOR SIX YEARS. THE ASSESSMENT AND REASSESSMENT FOR SIX YEAR S SHALL BE FINALISED BY THE ASSESSING OFFICER. IT IS ALSO HELD BY VARIOUS C OURTS THAT ONCE NOTICE U/S 153A OF THE ACT ISSUED, THEN ASSESSMENT FOR SIX YEA RS SHALL BE AT LARGE BOTH FOR ASSESSING OFFICER AND ASSESSEE HAVE NO WARRANT OF LAW. IT HAS BEEN ALSO HELD THAT IN THE ASSESSMENT YEARS WHERE ASSESSMENTS HAVE BEEN ABATED IN MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 9 TERMS OF SECOND PROVISO TO SECTION 153A THEN ASSESS ING OFFICER ACTS UNDER ORIGINAL JURISDICTION AND ONE ASSESSMENT IS MADE FO R TOTAL INCOME INCLUDING THE ADDITION MADE ON THE BASIS OF SEIZED MATERIAL. BUT WHERE THERE IS NO ABATEMENT OF ASSESSMENTS AND ASSESSMENTS WERE COMPL ETED ON THE DATE OF SEARCH THEN ADDITION CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING DOCUMENTS OR UNDISCLOSED ASSETS, ETC. IN THESE CASE S THERE WAS NO INCRIMINATING DOCUMENT FOUND AND SEIZED. NO ASSESSM ENT PROCEEDINGS WERE ABATED IN THESE ASSESSEES. THUS ASSESSMENTS FOR THE SE ASSESSMENT YEARS WERE COMPLETED ON THE DATE OF SEARCH. THE MCS TRADI NG IT(SS)A NO.257 OF 2015 AND OTHERS 27 ASSESSMENTS WERE COMPLETED U/S 1 43(3) OF THE ACT READ WITH SECTION 153A/153C OF THE ACT AFTER THE SEARCH. THERE WAS NO ABATEMENT OF ANY PROCEEDINGS IN THESE CASES FOR THE SE ASSESSMENT YEARS IN TERMS OF SECOND PROVISO TO SECTION 153A OF THE ACT. THERE IS NO SEIZED MATERIAL BELONGING TO THE ASSESSEE WHICH WAS FOUND AND SEIZED IN RELATION TO ADDITIONS MADE. IN A RECENT DECISION, HON'BLE DE LHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA (SUPRA) HAS HELD THAT COMPL ETED ASSESSMENTS CAN BE INTERFERED WITH BY THE ASSESSING OFFICER WHILE M AKING ASSESSMENT U/S 153A OF THE ACT, ONLY ON THE BASIS OF SOME INCRIMIN ATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUM ENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEAR CH WHICH WAS NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. IN ALL THESE CASES NO ASSESSMENTS WERE PENDING ON THE DATE OF SEARCH FOR THESE ASSESSMENT YEARS. NO ASSESSMENTS W ERE ABATED IN TERMS OF SECOND PROVISO TO SECTION 153A OF THE ACT. HON'B LE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA (SUPRA) HAS CONSIDERED VARIOUS HIGH COURT DECISIONS RELIED UPON BY THE LEARNED DR. THE HON'BL E DELHI HIGH COURT HAS CONSIDERED THE CASES OF CANARA HOUSING DEVELOPMENT CO. VS. DCIT; MADUGULA VS. DCIT; CIT VS. CHETANDAS LAXMANDAS AND CIT VS. ANIL KUMAR BHATIA (SUPRA). THE ONLY DECISION OF THE HON'BLE AL LAHABAD HIGH COURT IN THE CASE OF CIT VS. RAJ KUMAR ARORA; 367 ITR 517 RELIED ON BY THE LEARNED DR WAS NOT CONSIDERED BY HON'BLE DELHI HIGH COURT WHIL E DECIDING THE ISSUE IN MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 10 THE CASE OF KABUL CHAWLA. THE HON'BLE ALLAHABAD HIG H COURT HAS REVERSED THE ORDER OF THE TRIBUNAL AND REMANDED THE ISSUE TO THE TRIBUNAL TO CONSIDER THE APPEAL OF THE DEPARTMENT ON MERITS. IT IS A SET TLED LEGAL POSITION THAT WHEN TWO VIEWS ARE POSSIBLE ON A PARTICULAR ISSUE T HEN THE VIEW FAVOURABLE TO THE ASSESSEE SHOULD BE FOLLOWED AS HELD BY THE H ON'BLE APEX COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS; 88 ITR 192. RES PECTFULLY FOLLOWING THE DECISION OF THE HON'BLE APEX COURT, WE DISMISS THE GROUND OF APPEALS OF THE REVENUE. DEPARTMENTAL APPEALS ARE DISPOSED ACCORDIN GLY. THE HON'BLE I.T.A.T., INDORE BENCH, INDORE WHILE AR RIVING AT THE ABOVE DECISION HAS TAKEN NOTE OF ALL THE RECENT DECISIONS ON THE ISSUE OF VALIDITY OF ASSESSMENT PROCEEDINGS U/S 153A OF THE INCOME TAX A CT, 1961 WHEREIN ASSESSMENTS WERE MADE WITHOUT REFERENCE TO ANY INCR IMINATING DOCUMENTS/MATERIAL/EVIDENCES FOUND DURING THE COURS E OF SEARCH AND HELD THAT IT IS A SETTLED LEGAL POSITION THAT WHEN TWO V IEWS ARE POSSIBLE ON A PARTICULAR ISSUE THEN THE VIEW FAVOURABLE TO THE AS SESSEE SHOULD BE FOLLOWED AS HELD BY THE HON'BLE APEX COURT IN THE CASE OF CI T VS. VEGETABLE PRODUCTS, 88 ITR 192. ON PERUSAL OF THE ASSESSMENT ORDER IN THE CASE IT I S SEEN THAT THE ADDITIONS MADE BY THE AO HAVE BEEN MADE WITHOUT ANY REFERENCE TO ANY EVIDENCES/DOCUMENTS /MATERIAL FOUND AS A RESULT OF SEARCH ACTION. THE APPELLANT HAS ALSO STATED THAT NO INCRIMINATING MAT ERIAL WAS FOUND DURING THE COURSE OF SEARCH TO JUSTIFY ANY INQUIRY ON THE ABOVE ISSUES. IN VIEW OF THE FACTS THAT NO INCRIMINATING DOCUMENTS/MATERIAL/EVID ENCES WERE FOUND RELATED TO THE ISSUES CONSIDERED IN THE ASSESSMENT ORDER DURING THE SEARCH AND KEEPING IN VIEW THE DECISIONS OF THE JURISDICTI ONAL I.T.A.T. CITED ABOVE THE VALIDITY OF THE ASSESSMENT U/S 153A OF THE INCO ME TAX ACT, 1961 CANNOT BE UPHELD. THESE GROUNDS OF THE APPELLANT ARE THERE FORE ALLOWED. MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 11 12. WE FURTHER OBSERVE THAT SIMILAR ISSUE RELATING TO THE ADDITIONS MADE SUBSEQUENT TO SEARCH FOR THE ASSESSMENT YEARS FOR WHICH NO INCRIMINATING MATERIAL WAS FOUND AND THE ADDITIONS WERE MADE MERELY ON THE BASIS OF INFORMATION CALLED DURING TH E COURSE OF BLOCK ASSESSMENT CAME UP BEFORE THE CO-ORDINATE BENCH AN D WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL OBSERVING THAT IF RETURN OF INCOME IS FILED U/S 139 OF THE ACT BEFORE THE DATE OF SEARCH AND TIME LIMIT FOR ISSUANCE OF NOTICE U/S 143(2) OF THE ACT FOR SELECTING THE CASE FOR SCRUTINY ASSESSMENT EXPIRES BEFORE THE DATE OF SEARCH THEN ADDITION FOR BLOCK ASSESSMENT CAN BE MADE ONLY ON T HE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH. THE RELEVANT PORTION OF THE DECISION OF CO-ORDINATE BEN CH IN THE CASE OF OMPRAKASH GUPTA (SUPRA) IS EXTRACTED HEREUNDER; 11. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED T HE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ASSESSEE IS AN INDIVIDUAL FILED RETURNS OF INCOME F OR ALL THE ASSESSMENT YEARS I.E. ASSESSMENT YEARS 2008-09 TO 2012-13 AND ASSESSMENTS ARE COMPLETED U/S 143(1) OF THE ACT. SUBSEQUENTLY, A S EARCH ACTION WAS CONDUCTED U/S 132 OF THE ACT IN THE BUSINESS GROUP OF THE ASSESSEE AND A.O. HAS ASKED THE ASSESSEE TO FILE RETURNS OF INCOME FO R ALL THE ASSESSMENT YEARS BY ISSUE OF NOTICE U/S 153A OF THE ACT ON 12. 9.2014. IN RESPONSE TO THAT, ASSESSEE HAS FILED RETURNS OF INCOME FOR A.YR S. 2008-09 TO 2013-14 ON 7.11.2014. THE CASE OF THE ASSESSEE IS THAT THE RE TURN FOR A.Y. 2012-13 WAS MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 12 FILED ON 7.11.2012. AS PER SECTION 143(2) OF THE A CT, THE LAST DATE ON WHICH NOTICE FOR ASSESSMENT WOULD HAVE BEEN ISSUED WAS 30 .9.2013. ALL THE OTHER RETURNS ARE FILED ON EARLIEST DATE AND THE TIME LIM IT FOR ISSUE OF NOTICE U/S 143(2) OF THE ACT IN ALL THOSE CASES HAS EXPIRED. T HE SEARCH WAS INITIATED IN THE BUSINESS PREMISES OF THE ASSESSEE ON 29.1.2014 AND THEREFORE THE TIME LIMIT FOR ISSUE OF NOTICE U/S 143(2) OF THE ACT IS LAPSED. ALL THE ASSESSMENT YEARS FROM 2008-09 TO 2012-13 ARE CONCLUDED AND NON ABATED ASSESSMENTS. THE A.O. CANNOT REOPEN THE ASSESSMENT S U/S 153A OF THE ACT. IN SO FAR AS THE ABOVE SUBMISSION IS CONCERNED FROM THE ASSESSMENT ORDER AND EVEN FROM THE LD. CIT(A)S ORDER, THERE IS NOTH ING ON THE RECORD WHICH SAYS THAT THE ADDITIONS MADE BY THE A.O. ARE BASED ON ANY INCRIMINATING MATERIAL. EVEN WHEN THE SAME WAS POINTED OUT TO LD . D.R., SHE IS NOT ABLE TO ESTABLISH THE FACT THAT ADDITIONS ARE BASED ON A NY INCRIMINATING MATERIAL, THEREFORE WE FIND THAT THE ADDITIONS MADE BY THE A. O. FOR ALL THE YEARS ARE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURIN G THE COURSE OF SEARCH. IT IS ONLY BASED ON SUBSEQUENT SEARCH BY ISSUE OF N OTICE U/S 153A OF THE ACT CALLING FOR THE VARIOUS DOCUMENTS FROM THE ASSESSEE ADDITIONS ARE MADE. IN SO FAR AS THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE IN RESPECT OF CONCLUDED ASSESSMENTS CANNOT BE REOPENED, WE FIND T HAT IN ALL THE ASSESSMENT YEARS FROM 2008-09 TO 2012-13, THERE IS NO SCOPE FOR THE A.O TO ISSUE A NOTICE U/S 143(2) OF THE ACT FOR THE REASON THAT THE TIME LIMIT IS ALREADY OVER BEFORE THE DATE OF SEARCH ITSELF I.E. ON 29.1.2014. THEREFORE, IN OUR OPINION, ALL THE ASSESSMENT YEARS FROM 2008-09 TO 2012-13 ARE CONCLUDED ASSESSMENTS AND NON ABATED ASSESSMENTS AN D ANY ADDITION HAS TO BE MADE IN RESPECT OF THOSE ASSESSMENT YEARS, TH ERE MUST BE AN INCRIMINATING MATERIAL. IN THE PRESENT CASE, THERE IS NO INCRIMINATING MATERIAL AND THEREFORE, THE ADDITIONS MADE BY THE A .O. CANNOT SURVIVE. 12. THIS VERY ISSUE HAS BEEN CONSIDERED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. CONTINENTAL WAREHOUSING CORPORATION (2015) 120 DTR (BOM) 89 AND HAS OBSERVED THAT U/S 153A OF THE ACT WHICH ENABLES CARRYING OUT A SEARCH OR EXERCISE OF A POWER OF REQUISITION, MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 13 ASSESSMENT IN FURTHERANCE THEREOF IS CONTEMPLATED. THERE IS A MANDATORY ISSUE OF NOTICE U/S 153(1A) OF THE ACT AND ASSESS A ND REASSESS THE TOTAL INCOME OF 6 ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE. THAT THE CRUCIAL WORD SEARCH AND REQUISITION APPEAR FOR THE SUBSTANTIVE PROVISION ON THE PROVISOS. THAT WOULD THROW THE LIGHT ON THE ISSUE OF APPLICABILITY OF THE PROVISION. TRUE IT IS THAT THE ASSESSMENT, WHICH HAS TO BE MADE IN PURSUANCE OF THE NOTICE IS IN RELATION TO THE 6 YEARS. AN ORDER WILL HAVE TO BE MADE IN THAT RECORD WHILE MAKING THE ORDER, THE INCOME OR THE RETURN OF INCOME FILED FOR ALL THOSE ASSESSMENT YEARS IS TO BE TAKEN INTO ACCOUNT. A REFERENCE WILL HAVE TO BE MA DE TO THE INCOME DISCLOSED THEREIN. HOWEVER, THE SCOPE OF ENQUIRY THERE OF NO T CONFINED ESSENTIALLY REVOLVES AROUND THE SEARCH OR THE REQUISITION U/S 1 32A OF THE ACT AS THE CASE MAY BE. THE PROVISO DEALS WITH THE CASES WHER E THE ASSESSMENT OR REASSESSMENT, IF ANY RELATING TO ASSESSMENT YEARS F ALLING WITHIN THE PERIOD OF 6 ASSESSMENT YEARS REFER TO IN SUB SECTION 1 OF SECTION 153A OF THE ACT WERE PENDING. IF THEY WERE PENDING ON THE DATE OF INITIATION OF SEARCH U/S 132 OF THE ACT OR MAKING REQUISITION U/S 132A OF TH E ACT AS THE CASE MAY BE, THEY ABATE. IT IS ONLY BINDING PRECEDENCE THAT WOU LD ABATE AND NOT WHERE THERE ARE ORDERS MADE ON ASSESSMENT OR REASSESSMENT AND WHICH ARE IN FORCE ON THE DATE OF INITIATION OF THE SEARCH OR MA KING THE REQUISITION. 13. IN THE CASE OF COMMISSIONER OF INCOME TAX (CENTRAL)-3 KABUL CHAWLA (2015) 61 TAXMAN.COM 412 (DEL.), THE HONBLE DELHI HIGH COURT HAS CONSIDERED THE SCOPE OF SECTION 132 OF THE ACT AND 153A(1) OBSERVED AS MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 14 UNDER: 14. FROM THE ABOVE DECISION, IT IS VERY CLEAR THAT IN RESPECT OF CONCLUDED ASSESSMENTS ADDITIONS CANNOT BE MADE WITHOUT INCRIM INATING MATERIAL. 15.THE HONBLE DELHI HIGH COURT IN THE CASE OF PCIT VS. MEETA GUTGUTIA 395 ITR 296 (DELHI) HAS HELD THAT IT WAS ONLY IF DURING THE COURSE OF T HE SEARCH U/S 132 OF THE ACT INCRIMINATING MATERIAL JU STIFYING THE REOPENING OF MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 15 THE ASSESSMENT YEARS FOR 6 PREVIOUS YEARS WAS FOUND THAT INVOCATION OF SECTION 153A OF THE ACT QUA EACH OF THE ASSESSMENT YEAR WOULD JUSTIFY. 16. IN THE CASE OF PRINCIPAL CIT VS. SOUMYA CONSTRUCTIONS 387 ITR 529 (GUJ.) THE HONBLE GUJARAT HIGH COURT HAS OBSERVED THAT THE ADDITION WAS BASED ON STATEMENT OF THE THIRD PERSON AND NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH, THEREFORE THE ADDITION DELETED BY THE TRIBUNAL WAS UPHELD. 17.IN THE CASE OF PCIT VS. LATA JAIN 384 ITR 543 (DEL) (SUPRA), THE HONBLE DELHI HIGH COURT HAS HELD THAT THE TRIBUNAL WAS RIGHT IN HOLDING THAT THERE HAD TO BE INCRIMINATING MATERIAL RECOVER ED DURING THE COURSE OF SEARCH QUA THE ASSESSEE IN EACH YEAR FOR THE PURPOS E OF FRAMING AN ASSESSMENT U/S 153A OF THE ACT. 18.FROM THE ABOVE ALL THE DECISIONS, IT IS VERY CLE AR THAT THE A.O. TO MAKE AN ADDITION U/S 153A OF THE ACT AND THERE MUST BE INCR IMINATING MATERIAL AVAILABLE TO THE A.O. DURING THE COURSE OF THE SEAR CH. UNLESS THERE IS AN INCRIMINATING MATERIAL, THE CONCLUDED/NON ABATED AS SESSMENTS CANNOT BE DISTURBED AGAIN U/S 153A OF THE ACT. 19. IN SO FAR AS KERALA HIGH COURT DECISION IN THE CASE OF E.N. GOPAKUMAR (SUPRA) THE HONBLE KERALA HIGH COURT HAS HELD THAT EVEN WITHOUT THERE BEING ANY INCRIMINATING MATERIAL, THE A.O. IS EMPOWERED TO MAKE AN ADDITION U/S 153A OF THE ACT. THE SAME VIE W HAS BEEN EXPRESSED BY THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CANARA HOUSING DEVELOPMENT COMPANY (SUPRA). 20. IN THE ABOVE CIRCUMSTANCES, WHETHER THE DECISIO N OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PROD UCTS (SUPRA) HAS TO BE APPLIED OR NOT. THE LD. D.R. HAS SUBMITTED T HAT THE DECISION HELD IN CIT VS. VEGETABLE PRODUCTS (SUPRA) CANNOT BE APPLIE D IN EACH AND EVERY CASE IN THE LIGHT OF THE DECISION OF CCV DILIP KUMAR (SUPRA). IN THE PRESENT CASE, THE ASSESSEE HAS FILED ALL THE RETURNS BEFORE CONDU CTING THE SEARCH AND THE TIME LIMIT TO ISSUE NOTICE U/S 143(2) OF THE ACT AL READY LAPSED AND A SEARCH MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 16 IS CONDUCTED AND NO INCRIMINATING MATERIAL IS FOUND . THE A.O. CALLED FOR BOOKS OF ACCOUNTS AND OTHER RELEVANT DOCUMENTS AND ASSESSMENT IS COMPLETED U/S 153A R.W.S. 143(3) OF THE ACT. 21. THERE ARE MANY DECISIONS IN FAVOUR OF THE ASSES SEE, WHICH SAYS THAT ONCE ASSESSMENTS ARE CONCLUDED WITHOUT INCRIMINATI NG MATERIAL, ADDITIONS CANNOT BE MADE BY REOPENING U/S 153A OF THE ACT. T HERE ARE TWO DECISIONS, ONE IS OF HON'BLE KERALA HIGH COURT IN THE CASE OF E.N. GOPAKUMAR (SUPRA) AND THE SECOND ONE IS OF HON'BLE KARNATAKA HIGH COU RT IN THE CASE OF CANARA HOUSING DEVELOPMENT COMPANY VS. DCIT CENTRAL CIRCLE-1, BANGALORE (SUPRA) IN FAVOUR OF THE REVENUE IN WHICH IT WAS HELD THAT NO INCRIMINATING MATERIAL IS NECESSARY TO REOPEN THE A SSESSMENTS AND TO MAKE AN ADDITION. IN THE PRESENT CASE, DECISIONS OF HON BLE DELHI, GUJARAT AND BOMBAY HIGH COURTS ARE IN FAVOUR OF THE ASSESSEE. THE DECISIONS OF HON'BLE KERALA HIGH COURT AND KARNATAKA HIGH COURT ARE AGAI NST THE ASSESSEE. WE FIND THAT AFTER EXAMINING THE FACTS AND CIRCUMSTANC ES OF THE CASE, THE JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF VEGETABLE PRODUCTS (SUPRA) HAS TO BE FOLLOWED. THE HON'BLE SUPREME COURT IN T HE ABOVE CASE HAS HELD THAT IF TWO REASONABLE CONSTRU CTIONS OF A TAXING PROVISIONS ARE POSSIBLE, THEN THAT CONSTRUCTION, WH ICH FAVOURS THE ASSESSEE MUST BE ADOPTED. 13. WE THEREFORE RESPECTFULLY FOLLOWING THE ABOVE DECI SION AND EXAMINING THE FACTS OF THE INSTANT APPEAL, FIND TH AT THE ASSESSEE E- FILED ITS REGULAR RETURN OF INCOME U/S 139(1) ON 27 .8.2009 DECLARING INCOME OF RS.29,39,060/-. THE CASE OF THE ASSESSEE COULD HAVE BEEN PICKED UP FOR SCRUTINY ASSESSMENT BY ISSUANCE OF N OTICE U/S 143(2) OF THE ACT LATEST BY 30.9.2010. NO SUCH NOTICES U/ S 143(2) OF THE ACT MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 17 WAS ISSUED TO THE ASSESSEE. SEARCH U/S 132 OF THE ACT CONDUCTED ON 25.11.10 I.E. AFTER THE EXPIRY OF THE TIME LIMIT FO R ISSUANCE OF NOTICE U/S 143(2) OF THE ACT FOR ASSESSMENT YEAR 2009-10. NO INCRIMINATING MATERIAL PERTAINING TO ASSESSMENT YEAR 2009-10 WAS FOUND DURING THE COURSE OF SEARCH. IN THESE GIVEN FACTS THE ASS ESSMENT YEAR 2009- 10 WILL COME UNDER THE CATEGORY OF COMPLETED AND N ON ABATED ASSESSMENT AND THE LD. A.O CAN MAKE ADDITIONS IN SU CH ASSESSMENTS ONLY ON THE BASIS OF INCRIMINATING MATE RIAL FOUND DURING THE COURSE OF SEARCH. IN THE CASE OF THE ASSESSEE AS THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH LD. A.O COULD NOT MAKE ANY ADDITION ON THE BASIS OF INFORMA TION CALLED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE REFORE LD. CIT(A) HAS RIGHTLY HELD THE IMPUGNED PROCEEDINGS U/S 153A R.WS. 143(3) OF THE ACT AS INVALID. WE UPHOLD THE SAME AND DISMISS REVENUES SOLE GROUND NO.1. APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2009-10 STANDS DISMISSED. 14. APROPOS THE CROSS OBJECTIONS RAISED BY THE ASSESSE E AGAINST THE REVENUES APPEAL, WE FIND THAT AS THE PROCEEDINGS U /S 153A R.W.S. 143(3) OF THE ACT HAS ALREADY BEEN HELD AS INVALID BY US IN THE PRECEDING PARAS, DEALING WITH THE GROUNDS RAISED BY ASSESSEE IN THE MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 18 CROSS OBJECTIONS WILL BE MERELY ACADEMIC IN NATURE AND THUS WE ARE INCLINED NOT TO ADJUDICATE AT THIS STAGE. THEREFORE GROUNDS RAISED IN CROSS OBJECTION BY THE ASSESSEE WE DISMISSED AS INF RUCTUOUS. 15. IN THE RESULT BOTH REVENUES APPEAL AND ASSESSEES CROSS OBJECTIONS STANDS DISMISSED. 16. NOW WE TAKE UP REVENUES APPEAL FOR ASSESSMENT YEA R 2012-13 WHERE FOLLOWING GROUNDS OF APPEAL ARE RAISED; 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) ERRED IN ALLOWING THE APPEAL OF ASSESSEE ON ACCOUNT OF REJEC TION OF BOOKS OF ACCOUNTS U/S 145(3) OF THE INCOME TAX ACT, 1961 WITHOUT APPR ECIATING THE FACTS AND EVIDENCES BROUGHT INTO LIGHT BY THE AO DURING ASSES SMENT PROCEEDINGS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY AO OF RS.21,56,32,991 /- AND RS.5,41,62,993/- ON ACCOUNT OF ESTIMATION OF GROSS PROFIT ON SALE OF GOLD BULLION RESPECTIVELY, WITHOUT APPRECIATING THE FACT S AND EVIDENCES BROUGHT INTO LIGHT BY THE AO DURING ASSESSMENT PROCEEDINGS. 17. BRIEF FACTS RELATING TO THE REVENUES APPEAL FOR ASSESSMENT YEAR 2012-13 ARE THAT THE ASSESSEE FILED E-RETURN OF INC OME FILED ON 21.09.2012 DECLARING INCOME OF RS.1,20,80,430/-. C ASE SELECTED FOR SCRUTINY THROUGH CASS FOLLOWED BY ISSUANCE OF NOTIC E U/S 143(2) AND 142(1) OF THE ACT. LD. A.O EXAMINED THE AUDITED FI NANCIAL STATEMENTS ALONG WITH THE TAX AUDIT REPORT. HE FURTHER REFERR ING TO THE RECORDS MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 19 PERTAINING TO ASSESSMENT COMPLETED U/S 153A R.W.S. 143(3) OF THE ACT FOR THE ASSESSMENT YEAR 2010-11 AND 2011-12 ON 28.3.2013, MADE AN OPINION THAT AS FOR THESE TWO ASSESSMENT YE ARS BOOKS OF ACCOUNTS WERE FOUND DEFECTIVE AND NOT RELIABLE, SAM E METHODOLOGY SHOULD BE ADOPTED FOR ASSESSMENT YEAR 2012-13. LD . A.O ACCORDINGLY REJECTED THE BOOK RESULTS AND ESTIMAT ED THE INCOME BY MAKING ADDITIONS FOR LOW GROSS PROFIT ON SALE OF GO LD BAR AND LOW GROSS PROFIT ON SALE OF SILVER AND ASSESSED THE INC OME AT RS.28,18,76,414/-. AGGRIEVED ASSESSEE PREFERRED AP PEAL BEFORE LD. CIT(A) AND SUCCEEDED ON THE GROUNDS CHALLENGING THE ADDITION MADE BY THE LD. A.O BY WAY OF ESTIMATING THE GROSS PROFI T ON SALE OF GOLD AND SILVER BULLION. LD. CIT(A) FOLLOWED THE DECISI ON OF THE CO-ORDINATE BENCH IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEA R 2010-11 AND 2011-12 AND ALSO FOLLOWED THE DECISION OF THE INDOR E TRIBUNAL IN THE CASE OF OMPRAKASH DHANWANI IT (SS) NO.256/IND/2015 DATED 17.05.2016 WHEREIN SIMILAR FACTS WERE ADJUDICATED A ND FINDING OF LD. A.O REJECTING THE BOOKS OF ACCOUNTS AND APPLYING TH E PROVISION OF SECTION 145(3) OF THE ACT WAS SET ASIDE. MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 20 18. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUED SUPPORTING THE ORDERS OF LD. A.O BUT COULD NOT CONTROVERT THE FACT THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2010-11 VID E ITA NO.257&258/IND/2015. 19. PER CONTRA LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF ASSESSEE FOR ASSESSMENT YEAR 2010-11 AND ALSO ON THE DETAILED FINDING BY LD. CIT (A) AND FURTHER SUBMITTED THAT THE ASSESSEE IS REGULARLY MAINTAININ G THE BOOKS OF ACCOUNTS IN THE ORDINARY COURSE OF BUSINESS OF BULL ION TRADING. DAY TO DAY STOCK ENTRY IN RESPECT OF EACH AND EVERY ITE M OF PURCHASES AS WELL AS SALES ARE MAINTAINED. AUDIT UNDER THE PROV ISIONS OF COMPANIES ACT 1956 U/S 44AB OF THE INCOME TAX ACT H AVE BEEN CONDUCTED AND NO FAULT HAVE BEEN FOUND BY THE AUDIT ORS IN THE MAINTENANCE OF SUCH BOOKS OF ACCOUNTS. FURTHERMORE , THE LD. A.O HAS ALSO NOT FOUND ANY SIGNIFICANT DEFECT OR DEFICI ENCY IN SUCH BOOKS OF ACCOUNTS AND HE HAS MERELY ADOPTED THE REASONING FOR ASSESSMENT YEAR 2009-10 AND 2010-11 TAKEN BY HIS PREDECESSOR F OR FINALIZING THE ASSESSMENT, WHICH IS UNCALLED FOR. HE ALSO CON TENDED THAT THE LD. A.O HAS NOT RAISED ANY DOUBT ABOUT THE CORRECTN ESS OF THE SALES, MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 21 PURCHASES AND DAY TO DAY QUANTITATIVE AS WELL AS VA LUATION OF OPENING AND CLOSING STOCK. MERELY APPLYING GROSS P ROFIT RATES ADOPTED BY THE PREDECESSOR IS MOST ARBITRATORY AND THE FINDING OF LD. A.O IS RIGHTLY REJECTED BY LD. CIT(A). 20. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RE CORDS PLACED BEFORE US. REVENUE HAS CHALLENGED THE FINDING OF L D. CIT(A) HOLDING THAT THE LD. A.O ERRED IN REJECTING THE BOOKS OF AC COUNTS OF THE ASSESSEE U/S 145(3) OF THE ACT AND HAS ALSO CHALLEN GED THE FINDING OF LD. CIT(A) DELETING THE ADDITION MADE BY LD. A.O ON ACCOUNT OF ESTIMATION OF GROSS PROFIT ON SALE OF GOLD AND SILV ER BULLION. 21. WE OBSERVE THAT SEARCH IN THE CASE OF THE ASSESSEE WAS CONDUCTED U/S 132 OF THE ACT ON 25.11.10. CERTAIN A DDITIONS WERE MADE BY THE LD. A.O FOR ASSESSMENT YEAR 2009-10, 20 10-11 AND 2011-12. THE MATTERS RELATING TO ASSESSMENT YEAR 2 010-11 AND 2011-12 TRAVELLED UP TO THE TRIBUNAL. INCRIMINATIN G MATERIAL WAS FOUND ONLY FOR ASSESSMENT YEAR 2011-12. ASSESSEE I S IN THE SAME TYPE OF BUSINESS OF TRADING OF GOLD AND SILVER BULL ION AND CONSISTENTLY MAINTAINING THE BOOKS OF ACCOUNTS AND QUANTITATIVE DETAILS. FROM PERUSAL OF THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007-08, 2010-11 AND 2011-12 DATED 8.12.2014 MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 22 (PLACED AT PAPER BOOK PAGE 113 TO 198), WE FIND THA T FOR ASSESSMENT YEAR 2011-12 TRIBUNAL UPHELD THE REJECTION OF BOOKS OF ACCOUNTS ONLY FOR THE REASON THAT EXCESS STOCK DURING THE SEARCH WAS FOUND AND ACCORDINGLY ESTIMATED THE GROSS PROFIT RATE OF THE APPELLANT. HOWEVER FOR ASSESSMENT YEAR 2010-11 AS PER THE ORDER OF TRI BUNAL VIDE IT (SS)A NO.257,258,568/IND/2015 DATED 08.02.2016 BOOK S OF ACCOUNTS WERE HELD NOT TO BE REJECTED AND TRIBUNAL ALSO HELD THAT NO ESTIMATION OF GROSS PROFIT CAN BE MADE FOR THE ASSE SSMENT YEAR 2010-11 AND BOOKS RESULTS SHOULD BE ACCEPTED. RELEV ANT EXTRACT FROM THE AFORESAID ORDER (PARA 29) IS BEING REPRODUCED B ELOW; 'WE, RESPECTFULLY, FOLLOWING THE SAME, HOLD THAT IN ABSENCE O] ANY INCRIMINATING DOCUMENTS, THERE IS ABSOLUTELY NO JUSTIFICATION FOR MAKING ANY ESTIMATION OF G.P. IN RESPECT O] ASSESSMENT YEAR 2010-11, FOR WHICH, REJECTION OF BOOKS OF ACCOUNTS HAS NOT BEEN UPHELD BY US. ACCORDINGLY, WE HOLD THAT THERE WAS NO JUSTIFICATION IN THE ASSESSING OFFICERS ACTION AS WELL AS IN THE LEARNED CIT(A)S ACTION IN ESTIMATING G.P. ON SALES FOR THE ASSESSMENT YEAR 20 10-11. HOWEVER, FOR ASSESSMENT YEAR 2011-12, WE HAVE UPHELD THE REJECTION OF BOOKS OF ACCOUNTS AND THEREFORE, WE HOLD THAT CONSIDERING THE FACTS A ND CIRCUMSTANCES OF THE ASSESSEE'S CASE, IT WOULD BE J UST AND FAIR TO ESTIMATE G.P. ON SALE OF GOLD BULLION AND SILVER BULLION @0.30% AS A GAINST 0.29% SHOWN BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS. TH US, THE GROUND NOS 7(A) AND 7(B) OF THE APPEAL OF THE ASSESSEE FOR ASSESSME NT YEAR 2010-11 ARE ALLOWED AND GROUND NOS. 6(A) & 6(B) OF THE APPEAL O F THE ASSESSEE FOR THE MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 23 ASSESSMENT YEAR 2011-12 ARE PARTLY ALLOWED. DEPART MENTAL GROUNDS FOR BOTH THE YEARS ON THIS ISSUE ARE DISMISSED. 22. IT IS ALSO PERTINENT TO NOTE THAT LD. CIT(A) FOLLO WED THE DECISION OF THE TRIBUNAL FOR ASSESSMENT YEAR 2010-11 AND DEL ETED THE ADDITIONS MADE BY THE LD. A.O FOR THE YEAR UNDER AP PEAL AND ALSO HELD THAT THE ACTION OF THE LD. A.O REJECTING THE B OOKS OF ACCOUNTS CANNOT BE ACCEPTED OBSERVING AS FOLLOWS; 5.1 SEARCH AND SEIZURE ACTION U/S 132 WAS CONDUCTE D AT THE BUSINESS PREMISES OF THE APPELLANT ON 25.11.2010. IN RESPECT OF A.Y. 2011-12 EXCESS STOCK AMOUNTING TO RS. 1,73,81,169/- WAS FOUND DURING THE SEARCH AND THE APPELLANT SURRENDERED RS. 5 CRORES AS ADDITIONAL INCOME. THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS FOR A.YS 2010-11 AND 2011-12 AND MADE ADDI TION ON ACCOUNT OF G.P. 5.2 THE APPELLANT HAS PLACED RELIANCE ON THE ORDERS OF THE HONBLE ITAT, INDORE IN THE APPELLANTS OWN CASE FOR A.YS 2 010-11 AND 2011- 12 AND IN THE CASE OF SHRI OMPRAKASH DHANWANI FOR A .YS 2009-10 TO 2011-12. 5.3 HONBLE ITAT, INDORE IN ITS ORDER IN IT(SS)A NO S 241 TO 243/IND/2015 AND IT(SS) A NOS 254 TO 256/IND/2015 D ATED 17.05.2016 IN THE CASE OF SHRI OMPRAKASH DHANWANI H ELD IN PARAGRAPH 15 AS UNDER:- 15. WE ALSO FIND THAT THE ASSESSEE IS DEALING IN P RECIOUS METAL LIKE GOLD AND SILVER AND THE RATES ARE VERIFIABLE A ND AVAILABLE IN MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 24 OPEN TO EVERY CUSTOMER FROM MCX GOLD REPORTS OR SAR AFA PUBLICATIONS. THUS, THE CUSTOMERS WHO PURCHASE GOOD S FROM THE ASSESSEE WERE WELL AWARE ABOUT THE PREVAILING MARKE T PRICE OF THESE METALS AT THE RELEVANT TIME. MOST OF THE PUR CHASES ARE FROM REPUTED DEALERS. VERY FEW DOCUMENTS PERTAININ G TO THE ASSESSMENT YEAR 2011-12WERE SEIZED WHICH SUGGEST TH AT THE ASSESSEE INDULGED IN TRADING WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS. FOR RECORDED PURCHASES, THE ASS ESSEE WAS MAINTAINING DAY TO DAY STOCK REGISTER WITH QUANTITI ES AND PURCHASE VOUCHERS. THE PAYMENTS WERE ALSO M ADE THROUGH BANKING CHANNELS. THEREFORE, THE LEARNED CIT(A)'S ACTION IN ENHANCING THE TURNOVER BY 17.5% FOR ALL THE YEAR S IS UNJUSTIFIED. THERE WAS SEIZURE OF DOCUMENTS WHICH SUGGEST UNACCOUNTED SALES F OR THE ASSESSMENT YEAR 2011-12 AND WITH A VIEW TO PLUG THE LOOPHOLES, WE ARE OF THE VIEW TH AT THE ENHANCEMENT IN TURNOVER BY 5% ON THE SALES RECORDED IN THE BOOKS OF ACCOUNTS SHALL BE REASONABLE FOR THE ASSES SMENT YEAR 2011-12. WE ACCORDINGLY DIRECT THE ASSESSING OFFICE R TO ENHANCE THE TURNOVER BY 5%. FURTHER, ON ACCOUNT OF SHARP FALL IN GP RATE AS DISCLOSED BY THE ASSESSEE AS COMPARED TO ASSESSMENT YEAR 2009-10, WE ALSO FIND IT APPROPRIAT E TO ENHANCE THE TURNOVER BY 5% FOR THE ASSESSMENT YEAR 2010-11. WE DIRECT ACCORDINGLY. SINCE WE ARE ACCEPTING THE GP RATE DECLARED FOR THE ASSESSMENT YEAR 2009-10 IN THE ABS ENCE OF ANY INCRIMINATING DOCUMENTS FOR THE RELEVANT PERIOD AND BETTER BOOK RESULTS IIN COMPARISON TO SUCCEEDING YEARS AND NO DEFECT IN BOOKS OF ACCOUNTS WAS FOUND BY THE AUTHORITIES B ELOW FOR ASSESSMENT YEAR 2009-10, THEREFORE, WE DIRECT TO AC CEPT THE BOOK RESULTS FOR THE ASSESSMENT YEAR 2009-10. THE GOLD PRICES WERE ALSO INCREASED DURING THE RELEVANT PERIOD. TH E AVERAGE GOLD PRICE FOR THE PERIOD RELEVANT TO THE ASSESSMEN T YEAR 2007- MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 25 08 WAS RS.8.36 LACS PER KG WHICH INCREASED TO RS.16 .32 LACS PER KG FOR THE PERIOD RELEVANT TO THE ASSESSMENT YE AR 2010- 11AND RS.20,72,000/- FOR THE PERIOD RELEVANT TO ASS ESSMENT YEAR 2011-12. WE ALSO OBSERVE THAT WHENEVER THERE IS TREMENDOUS INCREASE IN THE PRICE OF GOLD, THE MARGI N OF PROFIT SHRINKS. GOLD MARKET IS WELL INFORMED MARKED AND G UIDED BY INTERNATIONAL PRICE. THERE WAS VAT OF 1% ON THE RE CORDED TRADING OF GOLD. THUS, THE GROSS PROFIT ESTIMATED ON UNRECORDED SALES CANNOT BE APPLIED TO THE RECORDED SALES AS TH E MARGIN OF TAX ALSO ARE INCREASED BY VAT WHICH REDUCES THE MAR GIN OF PROFIT BY THE SIMILAR AMOUNT. THE CUMULATIVE EFFEC T OF INCREASE IN TURNOVER AND INCREASE IN GOLD PRICE MUST HAVE RE DUCED THE GROSS PROFIT FOR THE ASSESSMENT YEARS 2010-11 AND 2 011-12. WE ALSO FIND THAT THE ADDITIONAL COMMISSIONER OF TH E SAME RANGE IN THE CASE OF SHRI NITESH KUMAR DOSHI FOR TH E A.Y. 2010- 11 HAS ACCEPTED THE G.P RATE AT 0.14% ON THE RECORD ED SALES AND SHRI DOSHI WAS ALSO ENGAGED IN SIMILAR BUSINESS . IN THE CASE OF BALDEV KRISHNA THE GP WAS ESTIMATED AT RS.4 00/- PER 120 GMS WHICH COMES TO AROUND 0.2% OF THE SALES REC ORDED. SIMILARLY IN THE CASE OF VONAMALA JAGDISHWARAIAH; ( 2015) 44 CCH 005 GP AT 0.1% HAS BEEN ACCEPTED BY HYDERABAD B ENCH OF ITAT AND IN THE CASE OF MAHANDRA KUMAR AGRAWAL ( 2015) TAX PUBLICATION (DT) 2124 THE JAIPUR BENCH OF THE T RIBUNAL ACCEPTED THE GP OF 0.1%. FURTHER, WE ARE OF THE VI EW THAT ON UNRECORDED SALES ESTIMATED, THE PROFIT HAS TO BE WO RKED OUT AT THE RATE OF 1.25%. CONSIDERING ALL THESE ASPECTS W E SUSTAIN THE GROSS PROFIT RATE OF 1.25% ON THE ENHANCED TURNOVER OF GOLD BULLION FOR THE ASSESSMENT YEARS 2010-11 AND 2011-1 2 AND ON THE RECORDED TURNOVER DISCLOSED IN THE BOOKS OF ACC OUNTS, WE DIRECT TO APPLY GROSS PROFIT RATE OF 0.25%. MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 26 5.3.1 IN THE CASE OF SHRI OMPRAKASH DHAMVANI THE HO NBLE ITAT HAS ACCEPTED THE GP RATE DECLARED FOR AY. 2009 -10 IN THE ABSENCE OF ANY INCRIMINATING DOCUMENT FOR THE RELEV ANT PERIOD, BETTER BOOK RESULTS IN COMPARISON TO SUCCEE DING YEARS AND THE FACT THAT NO DEFECT IN THE BOOKS OF ACCOUNT S WAS FOUND BY THE ASSESSING OFFICER AND CIT(A). THE HONBLE ITAT DID NOT ACCEPT THE BOOK RESULTS FOR A.Y. 2010-11 ON ACCOUNT OF SHA RP FALL IN G.P. RATE AS COMPARED TO A. Y. 2009-10 AND FOR A.Y. 2011-12 DUE TO I NCRIMINATING DOCUMENTS SEIZED DURING THE SEARCH. THE HON'BLE IT AT, INDORE FOUND IT APPROPRIATE TO ENHANCE THE TURNOVER BY 5 FOR AY S 2010-11 AND 2011-12 AND FURTHER SUSTAINED THE ADDITION OF G.P @0.25% ON THE RECORDED TURNOVER AND @1.25% ON THE ENHANCED TURN OVER FOR A .YS 2010-11 AND 2011-12. 5.4 THE HONBLE ITAT, INDORE IN THE APPELLANTS OWN CASE IN ITA NO.257 AND 258/ 2015 AFTER TAKING INTO CONSIDER ATION THE ORDER PASSED IN THE CASE OF SHRI OMPRAKASH DHAN WANI HAS UPHELD THE ADDITION OF G.P @ 0.01% IN A.Y. 2011 -12 WHERE THE BOOK RESULTS HAVE BEEN REJECTED DUE TO INCRIMINATING DOCUMENTS. THE HONBLE ITAT HELD THA T IN ABSENCE OF ANY INCRIMINATING DOCUMENTS THERE IS NO JUSTIFICATION FOR MAKING ANY ESTIMATION OF G.P IN R ESPECT OF A.Y. 2010-11 FOR WHICH THE REJECTION OF BOOKS OF AC COUNTS HAS ALSO NOT BEEN UPHELD. 5.5 IN APPELLANTS CASE THE CIT(A) HAD REJECTED TH E BOOKS OF ACCOUNTS OF THE ASSESSEE FOR A.Y. 2010-11 BY INVOKI NG THE PROVISIONS OF SECTION 145(3) BY USING HIS CO-TERMIN US POWERS. THE AO HAD ALSO REJECTED THE BOOKS OF ACCOUNTS BUT NOT MADE ANY REFERENCE TO SECTION 145(3). THE CIT(A) HELD TH AT THE CASH MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 27 SALES ARE MORE THAN 90 OR TOTAL SALES AND AS THE CA SH BILLS REMAIN WITH THE ASSESSEE IT GIVES LOT OF SCOPE FOR MANIPULATION OF RATES, QUANTITY AND AMOUNT OF THE BILLS. THE HONBL E ITAT HELD THE VIEW THAT D URING THE COURSE OF THE SEARCH PROCEEDINGS, NOT A SINGLE INCRIMINATING DOCUMENT OR LOOSE PAPER WAS FOUND FROM WHICH THE UNACCOUNTED TRADING OF BULLION BY THE ASSESSEE COULD GET ESTABLISHED. THE HONBLE I TAT ALSO OBSERVED THAT THE ASSESSEE HAD MAINTAINED STOCK REGISTER AND SUCH STOCK REGISTER WAS DULY PRODUCED BEFORE TH E ASSESSING OFFICER AND THE REVENUE AUTHORITIES HAVE NOT BROUGHT ON RECORD ANY SINGLE INSTANCE OF ANY SALES HAVING BEEN MADE AT A RATE LOWER THAN THE THEN PREVAILING MARKET RATE. IF THE SALE IS NOT FOUND TO HAVE BEEN MADE AT THE RATE BELOW THAN TEE MARKET RATE, ANY ALLEGATION REGARDIN G MANIPULATION IN THE CASH MEMOS WITHOUT ANY BASIS HAS NO LEGS TO STAND . THE HON'BLE ITAT DELETED THE ACTION OF THE CLT(A) IN ENHANCING THE SALES ON ADHOC BASIS BY 20% OF THE SALES SHOWN IN THE AUDITED ACCOUNTS FOR A.Y.S 2010- 11 AND 2011-12. 5.6 THE ASSESSING OFFICER HAS PRIMARILY REJECTED T HE BOOKS OF ACCOUNTS HOLDING THAT THE HUGE CASH SALES MADE ARE UNVERIFIABLE IN THE ABSENCE OF COMPLETED ADDRESS ON THE SALE BILLS. THE HON'BLE LTAT HAS CLEARLY HELD IN THE APP ELLANT'S CASE THAT IF THE SALE IS NOT FOUND TO HAVE BEEN MADE AT THE RATE BELOW THAN THE MARKET RATE, ANY ALLEGATION REGARDIN G MANIPULATION IN THE CASH MEMOS CANNOT BE ACCEPTED. THE HONBLE ITAT HAS ALSO NOT UPHELD THE REJECTION OF B OOKS OF ACCOUNTS FOR A.Y. 2010-11 IN THE ABSENCE OF ANY INC RIMINATING MATERIAL. MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 28 5.7 IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE ITAT , INDORE IN APPELLANT'S OWN CASE IT IS HELD THAT THE REJECTION OF BOOKS OF ACCOUNTS CANNOT BE ACCEPTED IN THE ABSENCE OF ANY INCRIMINATING EVIDENCE AND MERELY ON THE OBSERVATIO N THAT HUGE NUMBER OF CASH SALES ARE UNVERIFIABLE, GROUND NO.2 IS THEREFORE ALLOWED. 5.8 AS THE REJECTION OF BOOKS OF ACCOUNT HAS NOT BE EN UPHELD THE ADDITION OF RS.21,56,32,991/- MADE ON ACCOUNT O F ESTIMATION OF GROSS PROFIT ON SALE OF GOLD BULLION AND RS. 5,41,62,993/- ON ACCOUNT OF ESTIMATION OF GROSS PRO FIT ON SALE OF SILVER BULLION IS DELETED. GROUND NOS. 3(A) AND 3(B)ARE ALLOWED. 23. WE THEREFORE IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE DECISION OF THE CO-O RDINATE BENCH IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2010-11 FIN D THAT THE FACTS OF THE CASE ARE SIMILAR. BOOKS OF ACCOUNTS AND STO CK RECORDS ARE CONSISTENTLY BEEN MAINTAINED BY THE ASSESSEE IN THE SIMILAR FASHION. AUDITED REPORTS BY THE AUDITOR UNDER THE COMPANIES ACTS AND INCOME TAX ACT ARE PLACED ON RECORDS. NO ERROR IS POINTED OUT BY THE AUDITORS. LD. A.O HAS MADE A GENERAL OBSERVATION T HAT THE ASSESSEE IS HAVING HUGE AMOUNT OF CASH PURCHASES AND CASH SA LES BUT HAS NOT PLACED OR REFERRED TO ANY EVIDENCE ON RECORD TO PRO VE THAT THE MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 29 ASSESSEE IS INDULGED INTO UNACCOUNTED SALES AND PUR CHASES. ALL THE EXPENSE ARE VOUCHED. LD. A.O HAS MERELY FOLLOWED T HE ORDER OF HIS PREDECESSOR OF PREVIOUS YEARS FOR MAKING THE IMPUGN ED ADDITION. IT IS WELL SETTLED PRINCIPAL THAT BEFORE REJECTING THE BOOK RESULTS, DISCREPANCIES SHOULD BE POINTED OUT IN THE REGULAR BOOKS OF ACCOUNTS BY THE ASSESSING OFFICER. 24. THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF T HE CO-ORDINATE BENCH REFERRED ABOVE AND IN THE GIVEN FACTS AND CI RCUMSTANCES IN THE INSTANT APPEAL, WE ARE OF THE CONSIDERED VIEW T HAT LD. CIT(A) HAS CORRECTLY ALLOWED THE ASSESSEES APPEAL BY HOLDING THAT THE BOOK RESULTS SHOULD BE ACCEPTED AND THAT THE ACTION OF T HE LD. A.O REJECTING BOOKS OF ACCOUNTS AND MAKING THE ADDITION FOR LOW GROSS PROFIT ON SALE OF GOLD BAR AND SALE OF SILVER BAR I S DEVOID OF ANY MERIT AND UNCALLED FOR. WE THEREFORE FIND NO INCONSISTEN CY IN THE FINDING OF LD. CIT(A) AND THE SAME DESERVES TO BE CONFIRMED. ACCORDINGLY GROUNDS 1 & 2 OF THE REVENUES APPEAL FOR ASSESSMEN T YEAR 2012-13 STANDS DISMISSED. 25. IN THE RESULT THE APPEALS OF THE REVENUE FOR ASSES SMENT YEAR 2009-10 AND 2012-13 VIDE ITA(SS) NO.141/IND/2016, I TA MCS TRADING COMPANY PVT LTD IT(SS) NO.141,C.O.NO.38/IND/2016 & ITANO.353/IND/20 17 30 NO.353/IND/2016 ARE DISMISSED AND CROSS OBJECTION OF THE ASSESSEE C.O.NO.38/IND/2016 FOR ASSESSMENT YEAR 2009-10 IS D ISMISSED AS INFRUCTUOUS. THE ORDER PRONOUNCED IN THE OPEN COURT ON 09.04. 2019. SD/- SD/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 09 APRIL, 2019 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE