Aakaf Steel Private Limited, Ahmedabad V. The ACIT, Circle-1(1)(1), Ahmedabad

ITSSA 9/AHD/2022

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 3226 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-03-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 17-01-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 07-08-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIKAMLESHMAKWANA; FORTHEASSESSEE.THELD.DRVEHEMENTLY; FORTHEASSESSEE.HENCE; THEADDITIONALGROUNDOF
• Assessee Lawyers: SHRITEJSHAH

Judgement Text

आयकरअपीलीयअधिकरण , अहमदाबादनयायपीी INTHEINCOMETAXAPPELLATETRIBUNAL, ‘’C’’BENCH,AHMEDABAD BEFORESHRIWASEEMAHMED,ACCOUNTANTMEMBER And SHRITRSENTHILKUMAR,JUDICIALMEMBER आयकरअपीलसं./IT(SS)ANos.09-10/AHD/2022 धििाधरणवरध / Asstt.Years:2014-15&2015-16 AakafSteelPrivateLimited, B-105,NirmanComplex, Opp.HavmorRestaurant, Navrangpura, Ahmedabad PAN:AADCA0419K Vs. A.C.I.T, Circle-1(1)(1), Ahmedabad. (Applicant)(Respondent) Assesseeby:ShriTejShah,AR Revenueby:ShriKamleshMakwana,CIT.DR सुिवाईकीतारीख /DateofHearing:18/01/2024 घोरणाकीतारीख/DateofPronouncement:28/03/2024 आदेश/ORDER PERWASEEMAHMED,ACCOUNTANTMEMBER: ThecaptionedtwoappealshavebeenfiledattheinstanceoftheAssessee againsttheseparateordersoftheLearnedCommissionerofIncomeTax (Appeals)-12,Ahmedabad,arisinginthematterofassessmentorderpassedunder s.143(3)r.w.s.153CoftheIncomeTaxAct,1961(here-in-afterreferredtoas "theAct")relevanttotheAssessmentYear2014-15&2015-16. 2.Theassesseehasraisedthefollowinggroundsofappeal: IT(SS)Ano.09-10/AHD/2022 A.Y.2014-15&2015-16 2 1.TheCIT(A)erredinlawandinthefactsofthecaseinconfirmingtheorderoftheAOin exercisingjurisdictionu/s.153Coftheact. 2.TheCIT(A)erredinlawandinthefactsofthecaseinsustainingtheorderoftheAOto theextentofRs.3,36,137/-u/s.68oftheAct. 3.Theassesseevideletterdated14September2023hasalsofiledthe additionalgroundsofappealwhicharereproducedasunder: 1.Thattheld.CIT(A)erredinlawandinthefactsofthecaseinexercisingpowers u/s.251oftheActbychangingthesourceofincomeasdeterminedbytheAOu/s.68of theacttoenhancingG.Pasbusinessincome. 2.WithoutprejudicetoGround3,theLd.CIT(A)erredinlawandinthefactsofthe caseinenhancingtheG.Pwithoutissuingpriornoticetotheappellantasrequiredu/s.251 oftheAct. 3.1Attheoutset,wenotethattheadditionalgroundraisedbytheassesseeis legalinnatureandtherefore,weadmitthesameinpursuancetothejudgmentof theHon’bleSCinthecaseofNTPCLtd.reportedin229ITR383whereinitwas heldasunder: TheviewthattheTribunalisconfinedonlytoissuesarisingoutoftheappealbeforethe Commissioner(Appeals)takestoonarrowaviewofthepowersoftheTribunal. Undoubtedly,theTribunalwillhavethediscretiontoallowornotallowanewgroundtobe raised.ButwheretheTribunalisonlyrequiredtoconsideraquestionoflawarisingfrom thefactswhichareonrecordintheassessmentproceedingsthereisnoreasonwhysuch aquestionshouldnotbeallowedtoberaisedwhenitisnecessarytoconsiderthat questioninordertocorrectlyassessthetaxliabilityofanassessee. 3.2Inviewoftheaboveandafterconsideringthefactsintotalitydiscussed above,weadmittheadditionalgroundofappealraisedbytheassesseeand proceedtoadjudicatethesame. 4.Theeffectiveissueraisedbytheassesseeinitsgroundsofappealisthat thelearnedCIT-AerredinconfirmingtheadditionmadebytheAOtotheextent ofRs.3,36,137insteadofdeletingthesameinentirety. 5.Thefactsinbriefarethattheassesseeintheyearunderconsiderationhas madeasaletoacompanynamelyBenefitTradeLinksLtd,belongingtothe BenefitGroup,amountingto₹36,61,368only.However,theAOduringthe IT(SS)Ano.09-10/AHD/2022 A.Y.2014-15&2015-16 3 assessmentproceedingsfoundthatbenefitgroupalongwithothergroupnamely MahenderShantilalPatelisengagedinprovidingtheaccommodationentries whichwasestablishedduringthecourseofsearchproceedingscarriedoutunder section132oftheActattherespectiveplaces.Astheassesseehasmadethesale tothecompanybelongingtothebenefitgroupfor₹36,61,368only,thereforethe AOtreatedthesameasunexplainedcashcreditundersection68oftheActand addedtothetotalincomeoftheassessee. 6.AggrievedassesseepreferredanappealtothelearnedCIT-Awhereinit wascontendedthatthesalesmadebyittothebenefittradelinkLtd.hasbeen dulyrecordedanddisclosedinthebooksofaccounts.Therefore,thesamecannot betreatedasunexplainedcashcreditsundersection68oftheAct. 7.However,theld.CIT-Aallowedtherelieftotheassesseeinpartby observingasunder: 7.9Inviewofthevariousdiscrepanciesnoted,therearesufficientreasonsforrejecting thegrossprofitshownbytheappellantinitsreturnofincomefortherelevantAY.TheAO hasheldthattheentiresalestotheshellconcernM/sBenefitTradelinksarecashcredit whichisnotjustifiedonthebasisofthefactsofthecase.However,onaccountof unreliabilityofbookresultsarisingoutoftheunimpeachableanduncontrovertedevidence ofappellantseekingbogussalebills,Iaminclinedtoenhancethetotalprofitsshownby theappellant.Thequantumofsuchenhancementisdecidedas10%ofthetotalpurported salemadetoM/sBenefitTradelinkduringtheFY,i.e.10%ofRs36,61,368/-orRs 3,66,137/-.Suchenhancementtoincomeshallincludeanycommissionpaidbythe appellanttothebogusentryprovider.HencetheAOisdirectedtodeleteRs32,95,231/- outofthetotaladditionmadebyitduringassessmentproceedings.BalanceamountofRs 3,66,137/-issustainedforthereasonsstatedabove.Groundofappeal4ispartlyallowed. 8.Beingaggrievedbytheorderoftheld.CIT-A,theassesseeisinappeal beforeus. 9.ThelearnedARbeforeuscontendedthattherevenuehasnotbrought anythingonrecordevidencingthattheassesseehasmadebogussalestothe benefittradelink.Thesolebasisoftreatingthesaleasboguswasdiscoveryofthe informationduringthesearchproceedingsatthepremisesofbenefitgroupand MahenderShantilalPatelthatthetransactionsbetweenthemarenothingbut IT(SS)Ano.09-10/AHD/2022 A.Y.2014-15&2015-16 4 accommodationentries.Assuch,therewasnoinformationthatthetransaction betweentheassesseeandthebenefittradelinkisbogusinnature.Therefore,no additioniswarranted. 10.Ontheotherhand,thelearnedDRvehementlysupportedtheorderofthe authoritiesbelow. 11.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecords.Inthepresentcase,thesalesmadebythe assesseetothebenefittradelinkhasbeentreatedasbogusbytheAOand thereforetheamountofsalesofRs.36,61,368.00hasbeenviewedas unexplainedcashcreditundersection68oftheAct.However,theld.CIT-Ahas deletedtheadditionmadeundersection68oftheActbuttreatedtheamountof₹ 3,66,137.00being10%ofthesalesasincomeoutofsuchbogussales.Nowthe controversybeforeusislimitedtotheextentwhethertheadditionmadebyld. CIT-Aattherateof10%ofsuchallegedbogussalesissustainableinthegiven factsandcircumstances.Admittedly,theassesseehasshownsaleinitsaccounts whichisindisputebutthesamehasbeenallegedbogusbytherevenue.Since,it istheallegationoftherevenuethattheimpugnedamountofsaleisbogusin nature,thustheonusliesupontherevenuetoestablishthesamebasedonthe documentaryevidence.However,fromtheprecedingdiscussion,wefoundthat therewasnowheresuppliedthematerialstotheassesseebasedonwhichthe allegationwasframedbytheRevenue.Likewise,nothingisforthcomingwhether theopportunityofcross-examinationwasaffordedtotheassessee.Furthermore, whatistranspiredafterreadingtheorderoftheauthoritiesbelowisthatthereare certaintransactionsbetweenbenefitgroupandMahenderShantilalPatelwhich werebogusinnature.Buttherewasnoevidencebroughtonrecordbythe revenuesuggestingthetransactionsbetweentheassesseeandthebenefittrade linkarealsobogusinnature.Insuchasituation,tothebestofourmind,itisnot advisabletodrawanyadverseinferenceagainsttheassesseebasedonthe IT(SS)Ano.09-10/AHD/2022 A.Y.2014-15&2015-16 5 proceedingsatthethird-partypremises.Thus,wearenotinclinedtoupholdthe findingofthelearnedCIT-Ainthegivenfactsandcircumstances.Hence,the groundofappealoftheassesseeisallowed. 12.Comingtotheadditionalgroundsofappealraisedbytheassessee,wenote thatthegrievanceoftheassesseeisthattheAOhastreatedtheentireamountof saleasunexplainedcashcreditundersection68oftheActwhereastheld.CIT-A hastreatedsuchtransactionassalesonlybutbogusinnature.Therefore,theld. CIT-Adeterminedtheincomefromsuchbogustransactionbasedon10%ofthe valueofthesales.Aspertheassesseetheld.CIT-Ahasmadetheadditionon sourceofincomewhichisnotpermissibleundertheprovisionsofsection251of theAct.Aspertheassessee,theissuewaslimitedbeforetheld.CIT-Awhether thesalesindisputerepresentstheunexplainedcashcreditundersection68ofthe Actnot.Ifsuchsaledoesnotrepresenttheunexplainedcashcreditundersection 68oftheAct,thesamewasliabletobedeletedbytheld.CIT-Ainsteadoftaxing thesametransactionfromadifferentperspectiveforwhichtheld.CIT-Ahadno powerundertheprovisionsofsection251oftheAct.Theld.ARinsupportofhis contentionshasreliedonthejudgementofHon’bleDelhiHighCourtinthecaseof CITversusSardariLal&companyreportedin120Taxman.595 13.Onthecontrary,theld.DRcontendedthattheld.CIT-Ahaspowertotax newsourceofincomeandreliedonthejudgementofHon’bleAllahabadHigh CourtinthecaseofSmt.SnehLataVs.CITreportedin61ITR139.Theld.DR furthersubmittedthatinthepresentcasetheissuewasinvolvingthesalesmade tothebenefittradelinkwhichhasbeentaxedbythelearnedCIT-Afroma differentperspective.Butsuchaperspectivedoesnotgiverisetothenewsource ofincomeasallegedbytheld.counselfortheassessee.Theld.DRvehemently supportedtheorderoftheauthoritiesbelow. IT(SS)Ano.09-10/AHD/2022 A.Y.2014-15&2015-16 6 14.Afterhearingboththepartiesandperusingthematerialsavailableon record,wenotethattheissuewaslimitedtothesalesmadebytheassesseeto thebenefittradelinkswhichwasheldbogusbyboththeconcurrentauthorities. Whatwasthechangeisthebasisofchangefordeterminingtheincomeoutof suchbogustransactionsbetweentheconcurrentauthorities.Assuch,wefindthat theld.CIT-Adidnottravelfromthedisputeallegedbytherevenueauthorities whichcanbetermedasnewsource.Accordingly,wearenotconvincedbythe argumentoftheld.counselfortheassessee.Hence,theadditionalgroundof appealraisedbytheassesseeisdismissed. 15.Intheresult,theappealfiledbytheassesseeispartlyallowed. ComingtoIT(SS)ANo.10/Ahd/2022forAY2015-16,anappealbythe assessee. 16.Theeffectiveissueraisedbytheassesseeinitsgroundsofappealisthat thelearnedCIT-AerredinconfirmingtheadditionmadebytheAOtotheextent ofRs.8,91,455insteadofdeletingthesameinentirety. 17.Attheoutset,wenotethattheissueraisedbytheassesseeinthe captionedappealfortheAY2015-16isidenticaltotheissueraisedbytheassesee inIT(SS)ANo.09/Ahd/2022fortheassessmentyear2014-15.Therefore,the findingsgiveninIT(SS)ANo.09/Ahd/2022shallalsobeapplicableforyearunder considerationi.e.assessmentyear2015-16.Theissueraisedbytheassesseefor AY2014-15hasbeendecidedbyusvideparagraphNo.11ofthisorderinfavour oftheassessee.ThelearnedARandtheDRalsoagreedthatwhateverwillbethe findingsfortheassessmentyear2014-15shallalsobeappliedforyearunder considerationi.e.theassessmentyear2015-16.Hence,thegroundofappealfiled bytheasseseeisherebyallowed. 17.1Intheresult,theappealoftheassesseeisherebyallowed. IT(SS)Ano.09-10/AHD/2022 A.Y.2014-15&2015-16 7 Comingtothefollowingadditionalgroundofappealfiledbythe assesseevideletterdated14/09/2023. 1.Thattheld.CIT(A)erredinlawandinthefactsofthecaseinexercisingpowers u/s.251oftheActbychangingthesourceofincomeasdeterminedbytheAOu/s.68of theacttoenhancingG.Pasbusinessincome. 2.WithoutprejudicetoGround3,theLd.CIT(A)erredinlawandinthefactsofthe caseinenhancingtheG.Pwithoutissuingpriornoticetotheappellantasrequiredu/s.251 oftheAct. 18.Attheoutset,wenotethattheadditionalgroundsraisedbytheassessee inthecaptionedappealfortheAY2015-16areidenticaltotheissueraisedbythe asseseeinIT(SS)ANo.09/Ahd/2022fortheassessmentyear2014-15.Therefore, thefindingsgiveninIT(SS)ANo.09/Ahd/2022shallalsobeapplicableforyear underconsiderationi.e.assessmentyear2015-16.Theadditionalgroundraisedby theassesseeforAY2014-15hasbeendecidedbyusvideparagraphNo.14ofthis orderagainsttheassessee.ThelearnedARandtheDRalsoagreedthatwhatever willbethefindingsfortheassessmentyear2014-15shallalsobeappliedforyear underconsiderationi.e.theassessmentyear2015-16.Hence,theadditional groundofappealfiledbytheasseseeisherebydismissed. 18.1Intheresult,theappealfiledbytheassesseeispartlyallowed. 19.Inthecombinedresult,boththeappealsfiledbytheassesseearepartly allowed. OrderpronouncedintheCourton28/03/2024atAhmedabad. Sd/-Sd/- (TRSENTHILKUMAR)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad;Dated28/03/2024 Manish