M/s Top-N-Town, Bhopal V. ACIT Central -2, Bhopal

ITSSA 23/Ind/2022

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 6012 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 04-10-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 08-05-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Document seized; Period of limitation; Documents seized
• Section: 234B

Judgement Text

Page 1 of 7 आयकर अपील य अ धकरण, इंदौर यायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER IT(SS)A No.20/Ind/2022 (Assessment Years:2016-17 ) ACIT, Central-2 Bhopal Vs. M/s. Top-N-Town 61-B, Kasturba Nagar, Bhopal (Appellant / Revenue) (Assessee) PAN: AACFT 1651 N IT(SS)A No.23/Ind/2022 (Assessment Years:2017-18 ) M/s. Top-N-Town 61-B, Kasturba Nagar, Bhopal Vs. ACIT, Central-2 Bhopal (Appellant / Assessee) (Revenue) PAN: AACFT 1651 N Revenue by Ms. Simran Bhullar, CIT- DR Assessee by Ms. Nisha Lahoti, AR Date of Hearing 05.10.2023 Date of Pronouncement 30.10.2023 O R D E R Per Vijay Pal Rao, JM: These two appeals, one by Revenue for A.Y. 2016-17 and other by the assesse for A.Y.2017-18, are directed against the composite orders of Commissioner of Income Tax(Appeal), dated 25.02.2022. 2.There is a delay of one day in filing the appeal by the department and delay of 7 days in filing the appeal by the assesse. At the outset, we note IT(SS)A No.20 & 23/Ind/2022 Top-N-Town Page 2 of 7 Page 2 of 7 that the appeal of the revenue was filed on 4 th May 2022 whereas the assesse has filed on 9 th May 2022. Both these appeals were filed within the period as allowed by the Hon’ble Supreme court while extending the period of limitation in case of Suo Motu Cognizance of Extending of Limitation reported in 441 ITR 722 (SC). Accordingly both the appeals are treated as within the period of limitation. The Revenue for A.Y.2016-17 as raised following grounds of appeal: “1.Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.1,75,39,598/- made by the AO on account of concealment of purchase during A.Y. 2016-17 without appreciating the findings of AO in the assessment order. 2.Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 46.62,173/- made by the AO on account of suppression of sales during A.Y. 2016-17 without appreciating the findings of AO in the assessment order. 3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that no addition could have been made for AY 2016-17 in absence of any incriminating documents, ignoring that in the present case, the factum of the assessee making sales & purchase outside the books. of account stands established on the basis of the material found during the search.” The assesse for A.Y.2017-18 has raised following grounds of appeal: 1.That on the facts and in the circumstances of the case and in law, in the course of search, no material/evidence have been found which proved conclusively/positively that in the relevant year, the assessee concealed its purchases by Rs. 21973291, hence the addition made on presumptions, assumptions, suspicion, conjectures and surmises as sustained by the CIT (A) is wholly unlawful and unjustified hence, the said addition of Rs. 21973291 be kindly deleted. IT(SS)A No.20 & 23/Ind/2022 Top-N-Town Page 3 of 7 Page 3 of 7 2.That on the facts and in the circumstances of the case and in law, the findings of the learned A.O and upheld by CIT(A) that the assessee has concealed its sales at Rs. 26424508 are wholly unlawful, injudicious and opposed to facts, hence such findings be quashed and it be held that there are no concealed sales of the assessee as alleged and the addition made on that basis at Rs. 6341882 be kindly deleted. 3. That on the facts and in the circumstances of the case and in law, the addition made for the gross profit at Rs. 6341882 and sustained by the Learned CIT(A) is unlawful and unjustified and, therefore, the same be kindly deleted. 4. That on the facts and in the circumstances of the case and in law, the additions made for the concealed sales and also the concealed purchases as sustained by the CIT(A) are wholly unlawful in absence of any concrete material/evidence and, therefore, both the additions be kindly deleted. 5.That on the facts and in the circumstances of the case and in law, that without prejudice to foregoing grounds and without any acceptance on the part of the assessee, the application of gross profit rate is wholly unjustified, the net profit rate should have been applied. 6. That on the facts and in the circumstances of the case and in law, it be held that the addition made on the basis of retracted surrender of Rs. 1 crore is wholly unlawful and unjustified and, therefore, be deleted. 7.That on the facts and in the circumstances of the case and in law, the addition of Rs. 1 crore has been made contrary to the CBDT Instructions F.No. 286/137/2003 - IT (Inv-II) dated 11.03.2003 and another instruction F.No. 286/98/2014 IT (Inv-II) dated 18.12.2014 and, therefore, the addition of Rs. 1 crore be kindly deleted. 8.That on the facts and in the circumstances of the case and in law, as no materials/evidence corroborative have been found in the course of search suggesting that the assessee has earned income during the year at Rs. 1 crore and, therefore, in absence of any corroborative material/evidence, the addition solely on the basis of retracted statement is bad in law and, therefore, be deleted. 9.That on the facts and in the circumstances of the case and in law, the levy of interest u/s. 234A, 234B and 234C are unlawful and hence be cancelled.” 3. The assesse is a partnership firm and deriving income from retail sale of ice-cream of brand name Top –N- Town. This brand of ice-cream is IT(SS)A No.20 & 23/Ind/2022 Top-N-Town Page 4 of 7 Page 4 of 7 produced by Ramani Ice-cream Company Limited (RICL) which is a group concern of the assessee firm. There was a search and seizure action u/s 132 carried out at the business and residential premises of the Ramani Group on 30.08.2016. Based on the seized material the AO has made addition inter alia on account of concealment of purchase as well as suppression of sales for A.Y.2016-17 & 2017-18. On further appeals the Ld. CIT(A) has deleted the addition for A.Y.2-16-17 however confirmed the addition made on this account for A.Y.2017-18. Therefore, the revenue has filed the appeal for A.Y.2016-17 and the assessee has filed for A.Y.2017-18. 4. We have heard the Ld. DR as well as Ld. AR and considered the relevant material on record. While deleting the addition the Ld. CIT(A) has observed that the seized material pertains to A.Y.2017-18 and the AO has made addition for A.Y.2016-17 by extrapolating the details recorded in the seized material which is purely based on guess work and wholly hypothetical, suspicion, conjecture and surmises. However, the Ld. CIT(A) has confirmed the addition for A.Y.2017-18 on the ground that the evidence of actual purchase and sale found from the position of the assesse which are entries made in the regular books of account. The details of actual purchase as found recorded in the seized material conclusively established that the assesse was engaged in the unaccounted business activity. 5. Ld. DR has strongly relied upon the order of the AO and submitted that when the assessee had admitted his indulgence in undeclared purchase and sales and also surrendered undisclosed income during the course of search and seizure action then the AO has rightly adopted the ratio of concealed purchase for A.Y.2017-18 and applied for A.Y.2016-17. 6. On the other hand, Ld. AR of the assessee has submitted that the AO has made this addition based on seized material LP-1 pages 1 to 32 as well as BS-3 pages 1 to 10 on account of concealed purchase and suppression sales respectively. She has further submitted that the group IT(SS)A No.20 & 23/Ind/2022 Top-N-Town Page 5 of 7 Page 5 of 7 companies Ramani Ice Cream Co. Ltd. along with other assessees have filed an application u/s 245C of the Act before the Settlement Commission and vide order dated 24.12.2020 the Settlement Commission has accepted the application of the group concerns and settled dispute as per the declaration made in the application u/s 245C. Thus, Ld. AR has submitted that the addition made by the AO is now covered under the settlement accepted by the Settlement Commission while passing order u/s 245D(4) of the Act. She has referred to the amount declared by the group concerns under the settlement which includes the declared income against the undeclared purchase and sale by the assesse and therefore, addition made by the AO is now settled under proceeding before the Settlement Commission. Thus, Ld. AR has submitted that in view of the order of the Settlement Commission addition sustained by the CIT(A) is liable to be deleted. 7. Having considered the rival submission and carefully perusal of the order of the authorities below at the outset we note that based on the seized documents LPS-1 page no. 1 to 32 the AO has made addition on account of concealed purchase for A.Y.2016-17 and 2107-18. Similarly based on seized material BS-3 page 1 to 10 the AO also made addition on account of suppression sales. The CIT(A) has deleted the addition made by the AO for the A.Y.2016-17 but confirmed the additions for the A.Y.20167-18 on the ground that seized material pertains to A.Y.2017-18 and therefore, no addition can be made on the basis of the seized material which does not disclosed any concealed purchase or suppression sale for A.Y.2016-17. Without going into controversy of merits of the additions at the outset, it is pertinent to note that the group concerns of the assesse have approached the Settlement Commission by way of application u/s 245C and Income Tax Settlement Commission vide order dated 24.12.2020 accepted the declaration made by the group concerns of the assessee. It is also not in dispute that at the time of search the group concern surrendered income of Rs.25 cr which includes Rs.1 cr in the hands of the assesse. The said surrendered of Rs.25 cr is also declared IT(SS)A No.20 & 23/Ind/2022 Top-N-Town Page 6 of 7 Page 6 of 7 before the Income Tax Settlement Commission in the application u/s 245C of the Act. Though the order passed by the Settlement Commission dated 24.12.2020 was prior to the impugned order passed by the CIT(A) dated 25.02.2022 however, the order of the Settlement Commission was not brought to the notice of the CIT(A). Hence, it is apparent from the record that the CIT(A) was not having benefit of the order of the ettlement commission while passing the impugned order. There is no dispute on the point that if the addition made by the AO in question is also subject matter of Settlement under section 245D as per the order of the ITSC dated 24.05.2020 then it would amount to double taxation of the said income. However, this fact is required to be verified whether any income on account of suppressed purchase and sale is part of the declaration made before the Settlement Commission which was finally accepted by the Settlement Commission. The practice of out of books purchase and sale was accepted during the course of search and seizure action and consequently there was surrendered on the part of the group concern including the assesse. Once these assessment years got abated by virtue of search and seizure action and then the concept of no addition in absence of incriminating material is not applicable for these assessment years under consideration. Further this fact of concealment of purchase and suppression of sale was detected during the course of search and seizure action and therefore, it is not a case of absence of incriminating material. Since the order of the ITSC was not before authorities below, therefore, there was no occasion for AO or CIT(A) to verify whether the addition made by the AO are part of the Settlement Before Settlement Commission or not. Accordingly in the facts and circumstances of the case and in the interest of justice the impugned composite order of the Ld. CIT(A) for A.Y.2016-17 and 2017-18 is set aside and the matter is remanded to the record of the AO for reconsideration in the light of the order of the Settlement Commission ITSC dated 24.12.2020 as to whether the dispute in question is already settled in the proceeding before ITSC or not. Needless to say before passing fresh order the assessee be given an appropriate opportunity of hearing. IT(SS)A No.20 & 23/Ind/2022 Top-N-Town Page 7 of 7 Page 7 of 7 8. In the result, both appeal by the assesse and revenue are allowed for statistical purposes. Order pronounced in the open court on 30.10.2023 Sd/- sd/- (B.M. BIYANI) (VIJAY PAL RAO) Accountant Member Judicial Member Indore, 30.10.2023 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore