Income Tax Appellate Tribunal - Rajkot
M/S. Tiles Art, Morbi vs The Acit/Dcit Cen. Cir.-2, Rajkot on 20 August, 2024
1
IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT
BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER
AND
SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER
(Physical Hearing)
Sr. ITA No. A.Y. APPELLANT RESPONDENT
No.
1 213/Rjt/2023 2019-20 Tiles Art, The Assistant/Deputy CIT,
Moon Nagar Chowk, Panchasar Circle-2, Rajkot
Road, Morbi-363641
PAN: AAHFT9262E
2 215/Rjt/2023 2019-20 Aston Ceramic, The Assistant/Deputy CIT,
Survey No. 294/P-2, Circle-2, Rajkot
Jetapar Pipali Road,
Jivapar, Rajkot-363630
PAN: AAZFA6408K
3 218/Rjt/2023 2019-20 Lovin Tiles LLP, The DCIT,
Survey No. 27SP2, At Jivapur, Central Circle-2,
Near Lamstone Ceremics, Rajkot
Jetpar-Papli Road, Morbi-363642
PAN: AAGFL9646R
4 222/Rjt/2023 2019-20 Bluezone Vitrified Pvt. Ltd., The ACIT/DCIT,
Survey No. 545, Nr. Kajaria Central-2,
Sanitaryware, Jetpar Road, Rajkot
At: Pavadiyari-363642
PAN: AAGCB3008G
5 223/Rjt/2023 2019-20 Levita Granito LLP, Survey No. The DCIT,
267/P3, 268 & 269, Central Circle-2,
Jetpar-Pipli Road, Rajkot
Nr. Rangpar,
Vill: Jivapar, Morbi-363660
PAN: AAGFL1887Q
6 224/Rjt/2023 2019-20 Lenova Vetrified LLP, The DCIT,
Survey No.425, Rangpur Central Circle-2,
Jetpur Road, Morbi, Rajkot
Gujarat -363641
PAN: AAGFL4184J
7 225/Rjt/2023 2019-20 Kera Vitrified LLP, The DCIT,
At: Sr. No. 54/1 & 2, 55/1P-1, Central Circle-2,
55/2P1, 55/3P2, 56/P, Rajkot
Vill. Nichi Mandal,
Morbi-Halvad Road,
Morbi, Gujarat-363642
PAN: AAQFK3636A
8 226/Rjt/2023 2019-20 Alive Tiles Pvt. Ltd. The DCIT,
Survey No. 604/P7, Central Circle-2,
Orsun Ceramic Zone, Rajkot
ITA No.213/Rjt/2023 & 46 Others
Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
Lakhdirpur Road,
Morbi, Gujarat-363642
PAN: AAICA7125P
9 240/Rjt/2023 2019-20 Okaka Sanitary, The DCIT,
Survey No.93/P-6, At & Post: Central Circle-2,
Lakaddhar, Dist - Rajkot, Rajkot
Wankaner - 363622
PAN: AACFO8317L
10 246/Rjt/2023 2019-20 Flora Ceramic Pvt. Ltd., The DCIT,
Lakhdipur Road, 8A National Central Circle-2,
Highway, Morbi - 363642 Rajkot
PAN: AABFF6275F
11 251/Rjt/2023 2019-20 Salient Ceramic, The DCIT,
Survey No.206, Metal, 8A Central Circle-2,
National Highway, Rajkot
Wankaner -363622
PAN: ACJFS0312E
12 262/Rjt/2023 2019-20 Vaibhav Jayshukhbhai Saradva, The DCIT,
2, Bhakti Naga Society, Sanala Central Circle-2,
Road, Nr. Sardar Baud, Rajkot
Morbi - 363641
PAN: EJKPS2085E
13 274/Rjt/2023 2019-20 Pintukumar Narbherambhai The DCIT,
Baraiya, Central Circle-2,
At & Post: Nanakhijadiya, Rajkot
Tankara, Gujarat - 363642
PAN: APPPB4789M
14. 288/Rjt/2023 2019-20 Umesh Narbherambhai Kalariya, The DCIT,
At - Chakampar, Taluka - Morbi, Central Circle-2,
Gujarat - 363630. Rajkot
PAN: BINPK1320D
15. 289/Rjt/2023 2019-20 Croma Ceramic Pvt. Ltd., The DCIT,
Lakhdhirpur Road, Central Circle-2,
8/A National Highway, Rajkot
Morbi -363642
PAN: AACCC0906A
16. 290/Rjt/2023 2019-20 Tulip Cera Décor, The DCIT,
Plot No. 36, GIDC, Rafaleshwar, Central Circle-2,
Morbi - 363642 Rajkot
PAN: AAGFT4070R
Sl. IT(SS)A A.Y. Appellant Respondent
No.
17 44/Rjt/2023 2018-19 Tiles Art, The ACIT/DCIT,
Moon Nagar Chowk, Panchasar Central-2,
Road, Morbi-363641 Rajkot
PAN: AAHFT9262E
18 45/Rjt/2023 2018-19 Aston Ceramic, The ACIT/DCIT,
Survey No. 294/P-2, Central-2,
2
ITA No.213/Rjt/2023 & 46 Others
Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
Jetapar Pipali Road, Jivapar, Rajkot
Rajkot-363630
PAN: AAZFA6408K
19 46/Rjt/2023 2018-19 Admin Vitrified Pvt. Ltd. The ACIT/DCIT,
Survey No. 506, Opp. Flavour, Central-2,
Granito, Khokhara Road, Rajkot
At Bela, Morbi-363642
PAN: AAPCA4252N
20 47/Rjt/2023 2018-19 Success Ceramic Pvt. Ltd., The ACIT/DCIT,
Survey No. 136/P, Central-2,
Opp. Ganga Ceramic, Rajkot
8-A, National Highway,
Wankaner-363622
PAN: AAPCS9226E
21 48/Rjt/2023 2018-19 Lovin Tiles LLP, The DCIT,
Survey No. 27SP2, At Jivapur, Central Circle-2,
Near Lamstone Ceramics, Rajkot
Jetpar-Papli Road, Morbi-363642
PAN: AAGFL9646R
22 49/Rjt/2023 2018-19 Alfa Vitrified Pvt. Ltd., The ACIT/DCIT,
Survey No. 943/P-1, Near Lexus Central-2,
Granito, Lakhdhirpur Road, Rajkot
Morbi-363642
PAN: AAJCA1071F
23 50/Rjt/2023 2018-19 Bluezone Vitrified Pvt. Ltd., The ACIT/DCIT,
Survey No. 545, Nr. Kajaria Central-2,
Sanitaryware, Jetpar Road, Rajkot
At: Pavadiyari-363642
PAN: AAGCB3008G
24 51/Rjt/2023 2017-18 Levita Granito LLP, The DCIT,
Survey No. 267/P3, 268 & 269, Central Circle-2,
Jetpar-Pipali Road, Nr. Rangpar, Rajkot
Vill: Jivapar, Morbi-363630
PAN: AAGFL1887Q
25 52/Rjt/2023 2018-19 Levita Granito LLP, The DCIT,
Survey No. 267/P3, 268 & 269, Central Circle-2,
Jetpar-Pipali Road, Nr. Rangpar, Rajkot
Vill: Jivapar, Morbi-363630
PAN: AAGFL1887Q
26 53/Rjt/2023 2017-18 Lenova Vetrified LLP, The DCIT,
Survey No.425, Rangpur Central Circle-2,
Jetpur Road, Morbi, Rajkot
Gujarat -363641
PAN: AAGFL4184J
27 54/Rjt/2023 2018-19 Lenova Vetrified LLP, The DCIT,
Survey No.425, Rangpur Central Circle-2,
Jetpur Road, Morbi, Rajkot
Gujarat -363641
3
ITA No.213/Rjt/2023 & 46 Others
Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
PAN: AAGFL4184J
28 55/Rjt/2023 2017-18 Kera Vitrified LLP, The DCIT,
At: Sr. No. 54/1 & 2, 55/1P-1, Central Circle-2,
55/2P1, 55/3P2, 56/P, Rajkot
Vill. Nichi Mandal,
Morbi-Halvad Road,
Morbi, Guarat-363642
PAN: AAQFK3636A
29 56/Rjt/2023 2018-19 Kera Vitrified LLP, The DCIT,
At: Sr. No. 54/1 & 2, 55/1P-1, Central Circle-2,
55/2P1, 55/3P2, 56/P, Rajkot
Vill. Nichi Mandal,
Morbi-Halvad Road,
Morbi, Guarat-363642
PAN: AAQFK3636A
30 57/Rjt/2023 2018-19 Alive Tiles Pvt. Ltd. The DCIT,
Survey No. 604/P7, Central Circle-2,
Orsun Ceramic Zone, Rajkot
Lakhdirpur Road,
Morbi, Gujarat-363642
PAN: AAICA7125P
31 68/Rjt/2023 2018-19 Ronald Ceramic, The DCIT,
Survey No. 264, Central Circle-2,
At Rangpar, Rajkot
Jetpar Road,
Morbi-363642
PAN: AAPFR4777A
32 69/Rjt/2023 2018-19 Legend Ceramic Pvt. Ltd., The DCIT,
Survey No. 250/P/3, Central Circle-2,
B/h. Topland Ceramic, Rajkot
Jetpar Road, Vill: Beta-Rangpar,
Morbi-363642
PAN: AACCL0599E
33 70/Rjt/2023 2018-19 Lorians Ceramic LLP, The DCIT,
Shop No. 12 & 13, Central Circle-2,
Second Floor, Rajkot
Laxmi Plaza,
Sanala Road,
Morbi-363641
PAN: AAHFL1151A
34 71/Rjt/2023 2017-18 Livanto Ceramic Pvt. Ltd. The DCIT,
Survey No. 940 b/H, Lexus Central Circle-2,
Vitrified, Lakhdhirpur Road, Rajkot
Ghuntu, Morbi-363642
PAN: AABCL9543K
35 72/Rjt/2023 2018-19 Livanto Ceramic Pvt. Ltd. The DCIT,
Survey No. 940 b/H, Lexus Central Circle-2,
Vitrified, Lakhdhirpur Road, Rajkot
4
ITA No.213/Rjt/2023 & 46 Others
Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
Ghuntu, Morbi-363642
PAN: AABCL9543K
36 73/Rjt/2023 2018-19 Saleo Ceramic Pvt. Ltd. The DCIT,
At: Rangpar, Tal: Morbi Central Circle-2,
Dist: Rajkot, Morbi-363642 Rajkot
PAN: AASCS8650F
37 74/Rjt/2023 2018-19 Okaka Sanitary, The DCIT,
Survey No.93/P-6, Central Circle-2,
At & Post: Lakaddhar, Rajkot
Dist - Rajkot,
Wankaner - 363622
PAN: AACFO8317L
38 75/Rjt/2023 2018-19 Flora Ceramic Pvt. Ltd., The DCIT,
Lakhdipur Road, 8A National Central Circle-2,
Highway, Morbi - 363642 Rajkot
PAN: AABFF6275F
39 76/Rjt/2023 2017-18 Salient Ceramic, The DCIT,
Survey No.206, Metal, 8A Central Circle-2,
National Highway, Rajkot
Wankaner -363622
PAN: ACJFS0312E
40 77/Rjt/2023 2018-19 Salient Ceramic, The DCIT,
Survey No.206, Metal, 8A Central Circle-2,
National Highway, Rajkot
Wankaner -363622
PAN: ACJFS0312E
41 82/Rjt/2023 2018-19 Pintukumar Narbherambhai The ACIT/DCIT,
Baraiya, At and Post- Central-2,
Nanakhijadiya, Tankara, Rajkot
Gujarat-363642
PAN: APPPB4789M
42 83/Rjt/2023 2018-19 Umesh Narbherambhai Kalariya, The ACIT/DCIT,
At: Chakampar, Central-2,
Taluka-Morbi-363642 Rajkot
PAN: BINPK1320D
43 84/Rjt/2023 2018-19 Croma Ceramic Pvt. Ltd. The ACIT/DCIT,
Lakhdhirpur Road, Central-2,
8A National Highway, Rajkot
Morbi-363642
PAN: AACCC0906A
44 85/Rjt/2023 2018-19 Tulip Cera Décor, The ACIT/DCIT,
Plot No. 36, GIDC, Central-2,
Rafaleshwar, Morbi - 363642 Rajkot
PAN: AAGFT4070R
45 92/Rjt/2023 2017-18 Lucaso Ceramic Pvt. Ltd., The ACIT,
Survey No. 323, P1 & P2, Central Circle-2,
At-Rangpar, Taluka-Morbi, Rajkot
Rangpur, Gujarat-363642
5
ITA No.213/Rjt/2023 & 46 Others
Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
PAN: AACCL6627R
46 93/Rjt/2023 2018-19 Lucaso Ceramic Pvt. Ltd., The ACIT,
Survey No. 323, P1 & P2, Central Circle-2,
At-Rangpar, Taluka-Morbi, Rajkot
Rangpur, Gujarat-363642
PAN: AACCL6627R
47 97/Rjt/2023 2018-19 Admark Ceramic Industries, The DCIT,
Survey No. 330/P & 331, Central Circle-2,
Jetpar Road, Nr. Bela Village, Rajkot
Morbi-363642,
PAN: AAXFA6653N
Appellant by: Shri Mehul Ranpura, AR/Shri Vimal Desai, AR
Respondent by: Shri Shramdeep Sinha, CIT-DR
Date of hearing: 25.07.2024
Date of pronouncement: 20.08.2024
आदेश / ORDER
PER BENCH:
This is the bunch of 47 appeals filed by different assessees, pertaining to different assessment years, are directed against the separate orders passed by the Commissioner of Income Tax (Appeals) [in brief 'CIT(A) ], which in turn arise, out of separate assessment orders passed by the assessing officer u/s 143(3)/153C of the Income Tax Act, 1961.(here in after referred to as the 'Act') .
2. Since, the issues involved in all the appeals are common and identical; therefore, these appeals have been heard together and are being disposed of by this consolidated order. For the sake of convenience, the grounds as well as the facts narrated in ITA No.213/Rjt/2023, for assessment year 2019-20 6 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
in the case of "Tiles Art", have been taken into consideration for deciding the above appeals en masse.
3.The grounds of appeal raised by the assessee in 'lead case' in ITA No. 213/Rjt/2023 (Tiles Art) are as follows:
"1. The assessment order u/s. 143(3) of the Act is bad in law.
2. The learned Assessing Officer has erred in law as well as on facts in making the addition of Rs. 4,17,347/- based on the materials found from and statements recorded of Shri Hiren Khimjibhai Kalariya and the learned CIT(A) has also erred in law as well as on facts in confirming the same to the extent of Rs. 3,33,878/-.
3. The learned Assessing Officer has erred in law as well as on facts in rejecting the books of accounts u/s 145(3) of the Act and estimating the alleged profit from alleged unaccounted sales at the rate of 25% amounting to Rs. 4,17,347/- and the learned CIT(A) has also erred in law as well as on facts in confirming the profit at the rate of 20% amounting to Rs. 3,33,878/-."
4. The facts of the case which can be stated quite shortly are as follows: The assessee, before us, is a partnership- firm, and had filed his return of income for the year under consideration on 28.09.2019, declaring total income at Rs. 38,630/-. The Assessee is engaged in the business of manufacturing and supply of tiles. A search action u/s 132 was carried out and warrant u/s 132(1) of the Act, was executed in the case of Shri Hiren Khimjibhai Kalariya. This search was conducted along with the group cases of "Coral Group of Morbi, which was commenced on 03.01.2019 and was finally concluded on 02.03.2019, in all the group cases. From the premises of Shri Hiren Khimjibhai Kalariya, certain incriminating documents/assets were found and seized and statement on oath was also recorded during the of search and post search enquiries. During the course of search proceedings, 7 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
certain incrementing documents were found and seized. On analysis of these documents, it has been established that the assessee has executed certain transaction with Hiren Khimjibhai Kalariya.
5. During the course of search at the residential premises of Shri Hiren Kalariya, various dairies and loose paper sheets containing details of various cash transactions, pertaining to group companies and with other entities were found and seized. Further in his statement recorded u/s 132(4) of the Income-tax Act. He has explained in detailed modus operandi adopted by him to assist the group companies and other persons in collection of proceeds of unaccounted sales. He stated that initially the money is deposited by the customers of group companies and the persons in various designated bank accounts at multiple locations as per the business practice adopted by the group companies and these accounts are being maintained by him or his accomplice and later on, the money so deposited by customers of group companies, are drawn and handed to the concerned persons of the group companies and other persons. He also stated that if the cash received is of any other company/concern, he calls the concerned person of the company/concern and hands over the cash to him. He also keeps day to day record of such transactions in manual form (dairies and loose paper file) at his business residential premise which were found and seized as annexure A- 1 to A-7. Shri Hiren Khimjibhai Kalaiya has categorically stated in his statement that he has made dealings of cash with different ceramic personal entities of Morbi and also stated the manner in which he recorded these transactions in the dairies/loose papers maintained by him which has been seized by the department. The details/data mentioned in these seized 8 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
materials (Annexure A-1 to A-7) were decoded, and on analysis of the seized data it was found that assessee is also one of the beneficiaries of such transaction adopting such modus operandi. As per amended section 153C(1)(b), where the Assessing Officer is satisfied that any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein relates to a person other than the person referred to in section 153A, then the proceedings u/s 153C shall be initiated.
6. The assessing officer noted that in the assessee`s case under consideration, the incriminating digital data, documents/books of accounts found & seized from the residential premise of Shri Hiren Khimjibhai Kalariya (covered u/s 153A of the IT Act), contained information pertaining (relating to assessee and the same is having bearing on determination of total income relevant to the period AY 2013-14 to AY 2018-19 and 2019-20. Therefore, the provisions of section 153C are clearly applicable in the case of assessee. During the course of assessment proceeding u/s 153A in the case of Hiren Khimjibhai Kalriya, 'satisfaction note' of the assessee was recorded considering all the facts of the case. Again, a satisfaction also recorded in accordance with the provision of the Income Tax Act 1961 and notice u/s 153C r.ws. 143(2) was issued to the assessee on 08.02.2021 and assessee was requested to collect copy of the satisfaction note and seized documents through ITBA. Subsequently, Notice u/s 142(1) dated 16.12.2021 of the Act along with a questionnaire requesting to furnish the compliances in the matter as required was issued electronically through e-proceeding facility of ITBA portal. The Assessee has complied with the notices/questionnaire on e-proceedings on time to time on ITBA portal. The submission made by the 9 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
assessee has been duly examined by the assessing officer. From the data collected during search proceedings, and on analysis of the searched data it was noticed that assessee has executed transaction worth of Rs. 16,69,390/- in cash by adopting the modus operandi as discussed above with Shri Hiren Kalariya. In this regard the assessee vide this office notices/questionnaire, was specially asked to furnish his comments/explanation on details along with supporting evidence and was also asked to state whether the said receipts have been offered for taxation or not?
7.In this regard, the assessee has not submitted any cogent reply. Instead of submitting explanation, the assessee has simply denied the above facts and stated that he had never made any transaction with Hiren Khimjibhai Kalariya. Further a show cause notice was also issued to the assessee informing the above facts and seeking explanation, as to why the amount of unaccounted sales of Rs.16,69,390/- on account of unexplained money u/s 69A should not be added to his total income for the year under consideration.
8. In response to the show cause notice of the assessing officer dated 30th Jan, 2022, the assessee submitted its reply before the assessing officer which is reproduced, by the assessing officer, in assessment order, page number 4 to 6.
9.However, the assessing officer having gone through the reply of the assessee rejected the plea of the assessee about cross examination. The assessing officer observed that the primary evidence on which the adverse inference is being contemplated is the seized document and not only the 10 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
statement. Furthermore, the submission of the assessee was found not to be accepted, for the following reasons:
(i) As assessee has simply denying that he has not done any transactions with Hiren Khimjibhai Kalariya and that the assessee has miserably failed to submit any documentary evidence like affidavit of Hiren Kalariya.
(ii) Credibility of the data and statement given by Hiren Khimjibhai Kalariya cannot be ignored/questioned as the same was unearthed during the search action. During the course of search at the residential promises of Shri Khimjibhai Kalariya (Stroff), his statement was recorded under section 132 (4) the Income-tax Act. In his statement, he has stated that he regularly deals with Coral Group, one of the beneficiates of such data, through Bhalodiya and hands over the cash to the person as told by Ketan Bhalodiya, and the same was cross examined with the Ketan Bhalodiya. On being confronted with the statement of Shri Hiren Khimjibha Kalariya, Shri Ketan Bhalodiya agreed with the contents of his statement. Hiren Khimjibhai also admitted that if the cash received was of any other company concern, he used to call the concerned person of the company/concern and handed over the cash to him and that he also kept record of such transactions in manual form at his business/residential premise. Copies of some of the seized paper indicating such transactions and statement recorded on oath of Shri Hiren Kalariya were pasted by the assessing officer, in the assessment order.
(iii) Further some other beneficiaries reflecting in above data/incriminating documents/seized materials were also agreed with/confirmed with the statement of Hiren Kalariya by admitting that the transactions recorded by 11 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
the Hiren Kalariya are their unaccounted business receipt and also agreed to pay tax thereon.
(iv) Though the assessee has cited certain case laws in support of its claim, the facts of such cases are different from the instant case and hence, the reliance on the same is misplaced.
10.Hence, the claim of assessee was rejected by the assessing officer, in view of the facts that the assessee has been engaged in unaccounted sales and received payments through such shroffs. The facts of case are similar to case of CIT vs President Industries (2002) 258 ITR 654 (Gujarat) wherein the Hon'ble Court has held that the profit element embedded in the sales ought to be taxed. In a number of more cases, the Hon'ble jurisdictional Court has decided similarly.The assessing officer noted that the assessee could not even reconcile the production sales and the closing stock although the specific opportunity was provided by the AO. Accordingly, addition to the assessee's income ought to be made on account of suppression of profits earned out of unaccounted sales. It is also worthwhile to mention here that assessee has indulged in the business of unaccounted sale of tiles/ceramic material. The seized materials indicate about the prevalence of such unaccounted sales. The sum and substance of the above is that these transactions are not complete data of the assessee's business and cannot be considered to be a record of complete transactions of assessee's business for the given assessment year. The assessee might have incurred the expenses related to purchases and other expenses from the unaccounted sales and unaccounted cash receipts but in absence of complete data submitted by assessee in-spite of repeated opportunities, the AO has no alternative but to 12 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
estimate the unaccounted profits to best of his judgement. Considering the above facts and transaction with Sh. Hiren Kalariya on account of Sales receipts which is not recorded in assesses books of account, i.e. certain sales proceeds are altogether omitted from books of accounts, the AO of the opinion that the assessee's books of accounts are not showing correct statement of affairs or not showing true and fair view of the profit. Therefore, the AO has not satisfied about the correctness of the accounts. As the books of accounts are not showing correct view, the AO has no other option but to reject the books of accounts of the assessee by way of invoking the provision of section 145(3) of the Act and make the assessment in manner provided in section 144 of the Act. It is already established that the assessee is engaged in the business of indulging cash transactions which is not recorded in its regular books of accounts is highly probable that the assessee is resorting to unaccounted sales as the margin and profits of such unaccounted sales are usually higher. Moreover, there must be an element of unaccounted capital of the assessee being deployed in such unaccounted sale/purchase transactions. Hence, the profit element of such unaccounted sales is bound to be much higher and is definitely an incentive to the assessee to resort to such out-of-books transactions. In view of above facts and considering the natural justice, and relying on the decision of the jurisdictional high court in the case of CIT vs President Industries (2002) 256 ITR 654 (Gujarat) wherein the Hon'ble Court has held that the profit element embedded in the sales ought to be taxed. As the assessee has done unaccounted sales as discussed above therefore the books of accounts are not showing true and fair results, therefore the books of the assessee were rejected and the profits of the stated unaccounted transactions are estimated 13 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
@ 25% of such unaccounted transactions. Thus, estimated profit element of Rs.4,17,347/- (16,69,390 * 25%) was treated as unaccounted income of the assessee and added to the total income of the assessee.
11. Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before the CIT(A) who has rejected technical grounds raised by the assessee challenging the 'satisfaction note' u/s. 153C of the Act observing as follows:
"5. The grounds of appeal nos. 1 & 2 relate to assessment proceeding- initiated u/s 153C of the Act being void ab initio and bad in law.
5.1 I have perused the assessment order and the written submission filed by the appellant. The brief fact of the case is that the appellant is engaged in the business of manufacturing of ceramic tiles. Search and seizure action was carried out in the case of one Shri Hiren Khimjibhai Kalanya and during the course of search in his case, various incriminating documents were seized containing noting of fund deposited in various bank accounts operated by him and withdrawal of such funds in cash for disbursing the same to the actual beneficiaries. Shri Hiren Khimjibhai Kalariya in his statement recorded u/s.132(4) and 131 has described the modus operandi of his Angadiya/Shroff business activities and also given name of the beneficiaries of unaccounted cash transactions. The AO of searched person in his satisfaction recorded has identified the appellant being one of the beneficiaries of unaccounted cash transactions and accordingly, the AD of the appellant recorded his satisfaction for initiating assessment proceeding and notice issued to the appellant u/s 153C.
5.2 During the appellate proceeding, the appellant contended that primary condition for initiation of assessment proceeding u/s 153C of the Act is that during the course of search in the case of any person, money, bullion, jewellery or other valuable article or thing seized and the AO of searched persons is satisfied that such assets belongs/pertains to other person. The mechanism provided in the Act is in such manner that the AO of searched person after recording his satisfaction should handover the relevant seized assets or books of account or documents or information to the AO of other person and then, the AO of other person should record his satisfaction before initiating assessment proceeding in the case of other person u/s 153C of the Act. Therefore, two times satisfaction has to be recorded e first satisfaction to be recorded by the AO of searched person and second satisfaction to be recorded by the AO of other person The appellant submission is that the satisfaction note of both the AOs are same and verbatim.14 ITA No.213/Rjt/2023 & 46 Others
Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
Therefore, it clearly establishes that the satisfaction recorded is completely in mechanical manner and without carrying out independent verification.
5.2.1 This objection of the appellant is ill founded because, from the assessment order it is seen that the AO had asked the appellant to avail copies of satisfaction notes along with all the copies of seized incriminating materials. The appellant has reproduced satisfaction note of both the Assessing Officers in written submission wherein it is categorically mentioned that the proceedings are initiated on the basis of the incriminating materials seized during the course of search in the casa of Hiren Kalariya. Since the subject matter is one and the same in both the satisfaction notes, there is no point in disputing proceedings on the ground of language/layout used by both the AO. The moot point here is that the incriminating materials was there and unaccounted cash receipts are mentioned therein. Thus, the contention raised by the appellant hereinabove is without any basis.
5.3 Again, what is important is, whether any incriminating materials are found or not and the proceedings are initiated on the basis of such incriminating materials? The reply is in the affirmative i.e. during the course of search in the case of Hiren Khimjibhai Kalariya, clinching evidences in form of unaccounted cash collection/sales proceeds were found, which demonstrate cash disbursement to beneficiaries. The satisfaction note is based upon actual facts emanating from seized diaries/note book. The satisfaction notes of both the ADs clearly proved that the Hiren Khimjibhai Kalariya is in the business of cash disbursement and the person to whom cash was given were the beneficiaries. Therefore, in view of clear observation that the proceedings were initiated on the basis of incriminating materials, the argument of appellant is rejected. The conditions of section 1530 are satisfied and the proceedings u/s. 153C was rightly initiated. Thus, in light of the above, the action of the AO in initiating proceedings u/s 153C is justified.
5.4 The appellant also contended that on perusal of the satisfaction notes recorded by the AO of the person searched and the appellant that both the AO did not carry out any independent verification or enquiry, but blindly relied upon the statement that has been recorded in the case of Hiren Kalariya in post-search investigation. In a way the appellant emphasized that the proceedings was initiated on the basis of statements recorded only, which cannot be termed as incriminating materials. In this connection appellant relied upon various judicial pronouncements.
5.4.1 The above stated claim of the appellant is incorrect because the satisfaction notes was not recorded on the basis of the statements recorded but on the basis of the diaries/notebook seized and marked as Annexure A-1 to A-7 containing unaccounted cash collections of various ceramic companies or beneficiaries. Therefore, the proceedings were initiated on the basis of the incriminating materials and not on the basis of merely statement. Thus, this argument of the appellant is incorrect and therefore rejected.15 ITA No.213/Rjt/2023 & 46 Others
Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
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5.5 The appellant took another plea that to label the material seized from party as incriminating, it must represent undisclosed income which the appellant has no intention of disclosing. In the case of the appellant, this is absolutely absent. The appellant has already explained and established that the so-called unrecorded sales has never been occurred. Thus, the receipt of unaccounted sales assumed by the AO on suspicion and mechanical and the belief as to incriminating material is based on improper verification of facts and based on suspicion.
5.5.1 It is observed that above stated plea of the appellant is not acceptable in view of the facts that materials seized from Hiren Khimjibhal Kalariya is undisputedly in respect of unaccounted sales and collection of cash of companies/persons. Further, the name "Tail Art, Tiles" in the seized documents represents the name of the appellant firm which has been finalized on the basis of the post search enquires and on the basis of the statement given by Shri Hiren Kalariya and supported by the seized documents and therefore it clearly establishes the link between the seized documents and the appellant. Therefore, initiation of proceedings u/s. 153C of the Act is not on mere surmises or conjectures and on the case of the incriminating materials seized during search in case of Hiren Khimjibhai Kalariya. Therefore, this argument of the appellant is not acceptable and therefore rejected. Thus, the grounds of appeal nos. 1 & 2 are dismissed."
12.The ld. CIT(A) has also adjudicated the issue on merit. The findings of the ld. CIT(A), on merit are reproduced below:
"6. The grounds of appeal nos. 3 & 4 are interlinked, hence dealt together are against the action of the AO in making addition of Rs 13,250/- unaccounted profit earned by the appellant from the unaccounted sales of Rs 53,000/-.
6.1 I have carefully considered the assessment order and submission of the appellant. The facts of the case are that during the course of search action in the case of Shri Hiren Khimjibhai Kalariya, various diaries and loose papers sheets containing details of cash transactions were seized in Annexure A-1 to 4-7. During the course of recording statement u/s 132(4), Shri Hiren Kalariya explained in detail the modus operandi adopted by him to assist various beneficiaries for collection of sale proceeds of unaccounted sales. The AO stated that on analysis of the data seized from Shri Hiran Kalariya is found that the appellant is one of the beneficiaries of unaccounted cash transactions recipient worth of Rs 53,000/-. The AO rejected book results of the appellant by invoking provision of Section 145(3) and by relying on the decision of Hon'ble High Court of Gujarat in the case of CIT vs. President Industries (2002) 258 (ITR 654 (Gujarat) and estimated unaccounted profit of the rate of 25% of the unaccounted gross receipts of Rs. 53,000/-. The AO has stated the assessment order that it is established that appellant is engaged in the business of indulging cash transactions which are not recorded in its regular books of accounts. It is 16 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
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established fact that in unaccounted sales, such margin and profit would be higher. Moreover there is an element of unaccounted capital deployed in such unaccounted sale/purchase transactions.
6.2 The appellant in its written submission contended that during the assessment proceeding, the AO had not provided any specific document seized from the premises of Shri Hiren Kalariya, but the AO provided entire set of documents seized which contains noting related to other parties also. However at the same time, the appellant also furnished sample copies of seized documents, wherein, name/alphabet "Tail Art, Tiles" is mentioned against venous cash transactions. The appellant stated that unaccounted transactions of Rs 53,000/- in the seized documents are in the name of "Tal Art, Tiles and therefore, the AO's action in considering the said transactions in its cases unjustified. It is contended that the AO failed to bring any correlation or corroborative evidences that name "Tall Art, Tiles in the seized documents of Shri Hiren Kalariya represents the appellant company. Therefore, this plea of the appellant that there is no correlation of the assesses with name "Tal Art Tiles is rejected.
6.3 The appellant further contended that merely because some entries or reference related to its name are found in the documents seized from third party it is not sufficient to prove that the appellant has indulged in the unaccounted transactions. The appellant relied on various case laws having different facts & circumstances. In the case under appeal, it is seen that Shri Hiren Kalariya in his statement recorded on oath demonstrated the modus operandi of handing unaccounted cash transactions and identified the appellant firm as one of the beneficiaries of unaccounted transactions. Therefore, credibility of the seized documents and statement of Shri Hiren Kalaiya cannot be ignored Also, the AO in the assessment order stated that the appellant, except denying his connection with said seized data did not submit any documentary evidence like affidavit of Shri Hiren Kalariya. Therefore, this plea of the appellant also does not have any substance and hence, rejected.
6.4 The appellant also submitted that during the course of assessment proceeding, he has requested AO to provide an opportunity of cross-examination of Shri Hiren Kalariya, however, the AO did not provide the same, in this context, the appellant relied on various case laws and argued that principle of natural justice has not been followed. The appellant further contended that the presumption u/s 132(4A) and 2920 applies only to a person from whose possession the material was seized and not to a third party. On careful consideration, I am not inclined to accept the contentions of the appellant it is undisputed that Shri Hiren Kalariya was a commission agent and he was acting as a mediator for the collection of sale proceeds of unaccounted sales in lieu of commission. During the course of search and in post-search investigation, Shri Hiren Kalariya has admitted the modus operandi of his business activities, which also found recorded in various diaries and loose papers seized from his premises. The AO has also noted in the assessment order that some of the beneficiaries whose names are mentioned in the 17 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
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seized diaries admitted that they had received cash from Shri Hiren Kalariya. Thus, the sanctity of the dairies seized from Shri Hiren Kalariya is established on records.
6.5 It is pertinent to note that Shri Hiren Kalariya recorded the names of the parties in his diaries as he knew the beneficiaries Even in respect of representatives coming to collect cash on behalf of beneficiaries, Shri Hiren Kalariya clearly linked the names of such representatives with the respective beneficiaries in his statements recorded. Thus, Shri Hiren Kalariya had full knowledge of the persons with whom he was dealing as a commission agent and whose representatives' names are mentioned in the seized diaries. Further, in respect of such transactions of undisclosed sales and receipts thereof, all the links in the chain remain well connected and therefore, the remittance of cash always reaches the intended recipients and not to anyone else. Therefore, mere denial on the part of the appellant stating that they have not carried out any transactions with Shri Hiren Kalariya is not sufficient in any manner Since the seized material is clear in its contents and the appellant is not able to rebut such content by any contradicting evidence, the legal arguments of the appellant fail and they cannot be accepted de hors of the undeniable picture emerging from the seized material the sanctity of which is already established. Seized material (The diaries) was systematically maintained by Shri Hiren Kalariya and it is not just loose papers or dumb documents which is not capable of any meaning I therefore hold that where the seized material contains the name of any beneficiary or the name of any representative of such beneficiary and such representative and the beneficiary are subsequently linked by Shri Hiren Kalariya, the beneficiary cannot escape consequential tax liability. I therefore reject the submissions of the appellant which are merely based on audacious denial. I have also considered the various judicial pronouncements relied upon by the appellant and found that they are different in terms of the factual matrix The appellant has not produced any confirmation of Shri Hiren Khimjibhai Kalariya stating that notings in such seized material does not pertain to the appellant.
6.5.1 Reliance is placed on decision of the Hon'ble Delhi High Court in the case of Smt. Urmila Gambhir Vs CIT 325 ITR 171 wherein it is held as under
"12. To summarize, the contention of learned counsel for the appellant is that annexure A-6 which is a loose sheet of paper is a dumb document with no evidential value and, therefore, could not have been relied upon by the authorities below for arriving at any conclusion much less for the authorities on making additions in the income of the assessee, there was no causal connection between that paper and purchase of agricultural land at village Bhigan, Tehsil Gannaur, District Sonepat there was no basis for arriving at the figure of Rs. 51,76,200 even on the basis of the said document in any case the deed regarding that land was in the name of the company and addition could not have been made at the hands of the assessee the said document was not made available to the Income-tax Appellate Tribunal by the Revenue and, therefore, reliance thereupon amounted to violation of the principles of natural justice the burden was on the Revenue to 18 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
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prove any undisclosed income at the hands of the assessee, which was not discharged by the Revenue. 13. It is not in dispute that these very arguments were raised by the assessee before the Assessing Officer, in the appeal before the Commissioner of Income-tax (Appeals) and thereafter before the Income- tax Appellate Tribunal as well. The Income-tax Appellate Tribunal has discussed the order of the Assessing Officer in detail, on the basis of which the Assessing Officer made the additions. What is not in dispute is that a document including annexure A-6 were found and seized from the premises of the assessee during the search. The assessee did not disown this document or state that it did not belong to him. His explanation was that this document had no connection with the purchase of the land by M/s. D. D. Industrial Corporation Limited at village Bhigan, Tehsil Gannaur, District Sonepat it is only a rough estimate of the cost of setting up of a new project in and around Gurgaon and that this paper did not have any description of khasra number of any land and it also did not contain the address of any person. In this backdrop, the Assessing Officer dealt with the aforesaid contention to find out as to whether the document has any connection with purchase of the land by Mis D. D Industrial Corporation Limited at village Bhigan, Tehsil Gannaur District Sonepat or it related to setting up of a hew project in and around Gurgaon only. Since there was no denial that the said paper was related to the purchase of the property, it was for the assessee to demonstrate how it was related to the proposed purchase of land in and around Gurgaon. The Assessing Officer found that the assessee had failed to furnish any details of land which he proposed to purchase in and around Gurgaon. No project details, which he was planning to have at the said land, had been furnished by the assessee. He had also failed to produce Mr. K. Lal (M. M. Suri) against whom 50.00 is mentioned in the said sheet of paper. He also observed that nature of the figures in the paper clearly suggested that they were not appropriate expenses to be paid but expenses actually incurred on various accounts mentioned in the said paper. Commenting upon the figures mentioned, which could only be in hundreds, the Assessing Officer opined that it was highly improbable that the architect fee would be only Rs. 140, mutation charges would be only Rs. 150 and the brokerage would be only Rs 650. Therefore, he concluded that the figures were in hundreds. Proceeding further on that basis, according to him, the cost of land was Rs. 50,50,000 and other expenses Rs. 16,08,500 and in this manner the total cost of the land came to Rs. 66,58,500 if the brokerage of Rs 65,000 is to be taken into consideration, it comes within the range of 0.75 to 1 per cent of the cost of land which was keeping in view of the prevalent brokerage. Further significant finding arrived at by the Assessing Officer and noted by the Tribunal are as under:
12.The Assessing Officer further observed that the assessee in the statement recorded on October 19, 1996, admitted having met and discussed regarding project with Shri K. Lal from the office of Shri MM Suri consultant for the projects. However, the assessee and any of his company had not shown any expenses on account consultancy charges paid to Shin K. Lal. No consultant would provide consultancy without charging the foes. The payment of Rs. 5,000 shown at page 34 of annexure 19 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
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A-6 to Shri K. Lal would show the relationship between the assessee, the paper and Shri K. Lal This would further prove that this paper relates to the land purchased for DD Industrial Corpn., which had started its activities subsequent to the search. The assessee itself had admitted having discussed regarding negotiation with foreign company and its components for project at Gannaur with Shit K. Lal in the month of May and June 1996 in his reply to question 7 and 8 of the statement recorded on November 19, 1996. Thus, the Assessing Officer observed that this proved the dose nexus between Shri K. Lal, the page and the land at village Bhigan.
13. The Assessing Officer also observed that page 36 of annexure AA-140 was the site plan for the said land and no expenses of this account had been shown to have incurred in the books. The expenses payment to architect and Shr K. Lal as reflected in page 34 of annexure A-5 would further substantiate that this paper related to the unaccounted expenditure of the assessee on account of purchase of land at village Bhigan for DD Indi. Corpn. The assessee failed to furnish the details of the persons who had made this site plan. When specifically confronted in question No. 14, the assessee replied that one Shri S. K. Arora had made this plan...
15. The Assessing Officer further noted that pages 4 and 5 of annexure A- 6 which were the sketches of the land in village Bhigan showed the land rate was thus ranging from Rs. 17 lakhs to 20 lakhs per acre. Thus the Assessing Officer observed that this also proved that the consideration of Rs. 16,00,000 for 4 acres of land shown by the assessee in its books of account was understated value of land. The unexplained investment had been shown in page 34 of annexure A-6"
14. On that basis he arrived at a finding that the said sheet of paper was connected with purchase of land at village Shigan, Tehsil Gannaur District Sonepat in the name of Ms. D. D. Industrial Corporation Limited Since the company was incorporated in January, 1996 only and it had not started its functions, there was no occasion for generation of unaccounted or accounted income for the company. For this reason he made actual additions in the income of the assessee who was the promoter of the said company and protective assessment was made in the name of the company.
15. The Commissioner of Income-tax as well as Income-tax Appellate Tribunal have confirmed the aforesaid findings. The Income-tax Appellate Tribunal observed that once it is found that slips were found from the possession and control of the assessee, then the onus was upon the assessee prove the contents of the slips, since the contents of the slip were within the knowledge of the assessee and he fails to discharge this onus.
16. The discussion in this behalf is summed up in the following manner:
20 ITA No.213/Rjt/2023 & 46 OthersTiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
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"22 On consideration of the matter we are of the view that these papers pertain to the land in the village Bhigan and the rates shown were ranging between Rs. 17 lakhs and Rs. 20 lakhs per acre and not as claimed by the assessee. The finding given by the Assessing Officer on examination of the matter that figure shown at pages 3 and 4 of annexure A-6 is hundred appears to be correct. We find in agreement with the reasoning assigned by the Assessing Officer in arriving at the said conclusion We, therefore, uphold the order of the Assessing Officer passed in this regard. Since the addition made substantively in the hands of the late Subhash Gambhir is upheld, we direct to delete the addition made protectively in the company (M/s D. D. Ind. Corpn)"
17. It is clear from the above that after analyzing facts/material, findings of facts are arrived at to the effect that the said sheet of paper relates to actual transactions and did not depict or reflect rough estimate of the cost of setting up of a new project in and around Gurgaon, explanation sought to be given by the assessee, which he failed to establish in the facts and circumstances of the case, we, therefore, cannot treat it to be a dumb paper and are unable to accept this contention of the learned counsel for the assessee, Concurrent findings are arrived at by ask the three authorities below and it is not a case where these findings can be treated as perverse. In view thereof, reliance placed upon the judgment of this court in Girish Chaudhary [2008] 296 ITR 619 (Delhi) or the judgment of the Supreme Court in V.C. Shukla [1998] 3 SCC 410 (SC) and Lalchand Bhagat Ambica Ram[1959] 37 ITR 288 (SC) would not be of any assistance. This question is thus answered in the affirmative, re, in favour of the Revenue and against the assessee."
6.5.2 Reliance is placed on decision of the Hon'ble Ahmedabad ITAT in the case of Pravinbhai Patel 45 taxmann.com 533 wherein it is held as under
"Section 153C of the Income-tax Act, 1961 Search & Seizure Assessment of income of any other person (Dumb documents) A search was carried out in case of V a builder and in course of said proceedings a MOU' executed by assessee was seized As per terms of MOU' assessee had to receive certain amount from V on transfer of plot Assessing Officer taking a view that said document (MOU) belonged to assessee, initiated proceedings under section 1530 and made certain addition to assessee's income Whether since MOU was duly signed by assessee in presence of five witnesses, it could not be regarded as a dumb or irrelevant document Held, yes Whether therefore, impugned addition made by Assessing Officer was to be confirmed Held, yes [Paras 8 and 10] [In favour of revenue) Section 132 of the Income-tax Act, 1961 Search and seizure General (Sub-section 4A) Whether sub-section (4A) of section 132 is a deeming provision and therefore scope of said sub-section cannot be extended to any other section of Act. Held, yes."
In above case, the Hon'ble Ahmedabad ITAT has held as under:-
21 ITA No.213/Rjt/2023 & 46 OthersTiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
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11.As far as the decisions relied upon by the assessee are concerned those are distinctly distinguishable on facts as well as on law. In the case of Prarthana construction (supra), the document in question has not established the involvement of the said assessee and in the absence of the nexus it was held that the impugned document did not belong to the assessee. Likewise, in the case of Unique Organizer & Developers (supra) the question of "on money" transaction was not proved by the Revenue Department. Thes was a finding on facts that the said addition was based on suspicion and surmises. We have also perused the decision of Maulik Kumar K. Shah (supra) and noted that the decision of the AD was devoid of evidence in support of his allegation. We, therefore, conclude that the decision cited by the assessee were primarily on their own facts, hence not matched with the facts of the appeal in hand We also conclude that in a situation when any books of account or documents, etc. have been delivered to the requisitioning officer having jurisdiction over "such other person" i.e. other than the person who has been searched, then those documents, etc., delivered or requisitioned shall be dealt with as if they have been found in the possession or control of "such other person" against whom the proceedings have been initiated u/s. 153C of IT Act Such books of account or documents shall be deemed to have been found in the possession or control of such other person as if recovered in the course of search u/s 132 of IT Act. Moreover, in this case the assessee being one of the signatory of the contents recording the transactions hence the documents was belonging to the assessee. Therefore, the amount in question was rightly assessed in his hand We find no force in this ground of the assessee, hence, dismissed.
6.5.3 The Hon'ble Delhi High Court in the case of Mahavar Woolen Mills Vs CIT 111 Taxman 568 has held as under:
"Section 260A of the Income-tax Act, 1961 Appeal to High Court- Assessment year 1996-97 Tribunal had come to factual conclusion that documents seized during search contained certain materials which w sufficient to come to conclusion about cash payments having been made in addition to those made by cheques and drafts and held that said payments would be liable to be assessed under section 69-On appeal under section 260A according to assessee, question whether seized papers could be construed as books of account or document for purpose of section 1588(b) which defines undisclosed income was required to be adjudicated Whether issue raised by assessee in appeal could be said to involve any question of law, or a substantial question of law Held, no Whether it is possible to tum a mere question of fact into a question of law by seeking whether as a matter of low authority came to a correct conclusion upon a matter of fact- Held, no."
6.5.4 Further, reliance is placed on ratio of decision of the Hon'ble Ahmedabad ITAT in the case of Shailesh S Patel 97 taxman.com 570 wherein it is held as under:-
22 ITA No.213/Rjt/2023 & 46 OthersTiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
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"1. Section 68, read with section 148, of the Income-tax Act, 1951-Cash credits (Immovable property) - Assessment year 2012-13-in course of search conducted upon premises of one "SBA' group, a Banakhat (agreement to sale) was found and seized which revealed that assessee agreed to purchase a land and also paid consideration for same - But this transaction was not incorporated by assessee in its return of income. Further, assessee also failed to explain source of amount of consideration paid to purchase said land Accordingly, Assessing Officer reopened assessment and further passed reassessment order making additions in respect of amount of sale consideration under section 68. Assessee contended that he entered into a Banakhat as a middleman and land was first acquired for sale consideration and thereafter arranged to be sold directly from owner to actual buyer to gain differential proceeds/commission - It was noted that assessee was in audacious denial even on face of tangible documentary evidence towards payment of sale consideration in cash as mentioned in Banakhat. Assessee had also not declared any commission income flowing from such banakhat, if any, as propounded-Banakhat executed was not shown to be eventually cancelled Whether, on facts, impugned additions made under section 68 was justified-Held, yes [Paras 13.1 and 15] [in favour of revenue]"
6.6 With regard to contention of the appellant that the AO has not provided cross- examination, it is observed that entire addition has been made based upon investigation report/search report in case of search carried out in the case of Shi Hiren Khimjibhai Kalariya and also with the group cases of "Coral Group of Morbi from which it is revealed that said person along with his entire group including the appellant are engaged in the unaccounted transactions. Reliance is also placed on decision of the Hon'ble Jurisdictional High Court of Gujarat in the case of Amrapali Fincap Ltd. Vs. Income Tax Settlement Commission [2016] 73 taxmann.com 97 wherein it is held that "Where Settlement Commission denied assessee for cross-examination of different witnesses, whose statements were recorded behind its back, and relying upon statements of these witnesses to some extent rejected application for settlement, since Settlement Commission had also taken into consideration other facts available on record, there was no scope for interference." It is pertinent to note that even jurisdictional ITAT and High court on identical facts have decided similar issue in favour of department in this case, the assessee had requested the Settlement Commission for cross-examination of one Shirish C Shah (S), accommodation entry provider, whose statements had been relied upon by the Department The Hon'ble Settlement Commission had rejected application of assessee who filed a writ against order of Settlement Commission raising denial of cross-examination as one of the contentions The Hon'ble Jurisdictional High Court held that since Settlement Commission, besides relying upon statements of 'S' and other witnesses, had also taken into consideration other facts available on record, there was no scope for interference in order of Settlement Commission." In this case, issue was also before Hon'ble High court that Hon'ble Settlement Petition has rejected contention of assessee 23 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
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for Cross examining Mr. Shirish Shah and such order was upheld by Hon'ble High court.
6.6.1 In the case of Smt. Kusum Lata Thakral v CIT 150 ITR 714 Punjab & Haryana High Court has held that "It was clear from the findings recorded by the Tribunal that there was no relationship between the donors and the assessee and there was no natural love and affection. The Tribunal had followed the judgment of the jurisdictional High Court in Shri Tirath Ram Gupta v CIT (2008) 304 ITR 145 [2009] 177 Taxman 294 (Punj. &Har.), laying down that in the absence of natural love and affection, the gift could not be accepted as genuine. The question whether denial of opportunity of cross-examination results in violation of natural justice depends upon facts of each case. The object of cross-examination is to test the veracity of the version given in examination in chief. In the instant case. even if cross-examination was allowed and the donors who had disowned the making of gifts, were confronted and shown to be factually wrong, the same would have made no difference, as there was no natural love and affection and, in its absence, the gifts were not genuine.
6.6.2 The Hon'ble Allahabad High Court in the case of Motilal Padampat Udyog Ltd. Vs. CIT 293 ITR 565 after considering the judgment of the Hon'ble Supreme Court in the case of Krishna Chand Chela Ram v CIT has held that right of cross examination from whom the AO has collected the evidence is not required under the income tax law and such assessment was valid under the Act. In the instant case, the copies of the rough cash books and the statements of the partners assessee and, of 'V' which were recorded, had been provided to the assessee and, in fact the assessee had also submitted its reply. In the letter an opportunity to cross-examine was asked for only in case the statements had not been recorded As, in the instant case, the assessee had proper opportunity to controvert the material gathered by the assessing authority and used against it there had been compliance of the principle of natural justice.
6.6.3 In the case of GTC Industries Ltd. v ACIT 65 ITD 380, the Hon'ble ITAT Bombay Bench has relied upon the judgment of the Hon'ble Calcutta High Court in the case of Kisanlal Agarwalila v. Collector of Land Customs AIR 1967 & Cat 80 and quoted this judgment in para 90 which throws light on the right of cross examination-
"90. There is a good deal of misconception on this question of the right of cross-examination as part of natural justice. Natural justice is fast becoming the most unnatural and artificial justice and for that confusion the Courts are no less responsible than the litigants. Ordinarily the principle of natural justice is that no man shall be a judge in his own cause and that no man should be condemned unheard. This latter doctrine is known as 'audi alteram partem. It is on this principle that natural justice ensures that both sides should be heard fairly and reasonably. A part of this principle is that if any reliance is plated on evidence or record 24 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
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against a person then that evidence or record must be placed before him for his information, comment and criticism. That is all that is meant by the doctrine of audi alteram partem, that no party should be condemned unheard. No natural justice requires that there should be a kind of a formal cross- examination. Formal cross-examination is procedural justice. It is governed by rules of evidence. It is the creation of Courts and not a part of natural justice but of legal and statutory justice. Natural justice certainly includes that any statement of a person before it is accepted against somebody else, that somebody else should have an opportunity of meeting it whether it (sic), by way of interrogation or by way of comment does not matter So long as the party charged has a fair and reasonable opportunity to see, comment and criticise the evidence statement or record on which the charge is being made against him the demands and the test of natural justice are satisfied. Cross-examination in that sense is not the technical cross- examination in a Court of law in the witness-box"
The Hon'ble ITAT has further held that, "As regards the dictum audi alteram partem' the assessee's basic contention was that the statements of witnesses and materials which were relied upon by the Assessing Officer in the assessment order to reach the conclusions and findings which were adverse to the assessee should have been disclosed to the assessee and the witnesses should have been offered for cross-examination. The night to cross-examine the witness who made adverse report is not an invariable attribute of the requirement of the said dictum The principles of natural justice do not require formal cross- examination. Formal cross-examination is a part of procedural justice. It is governed by the rules of evidence, and is the creation of Courtis part of legal and statutory justice and not a part of natural justice, therefore of law that the revenue could not rely on any evidence which had not been subjected to cross examination. However, if a witness has given directly incriminating statement and the addition in the assessment is based solely of mainly on such statement, in that eventuality it is incumbent on the Assessing Officer to allow cross-examination. Adverse evidence and material, relied upon in the order, to reach the finality, should be disclosed to the assessee. But this rule is not applicable where the material or evidence used is of collateral nature"
6.6.4 It is pertinent to note that the Hon'ble Delhi High Court in the case of CIT Vs Kuber Fibers Pvt Limited 77 taxman.com 345 has held that "Where statements recorded were corroborated by materials, there was no justification to reject statements, which merely explain documents seized The Hon'ble High court has observed as under:
"16. This court notices, at the outset that Mr. Agarwal was no doubt a family member and a relative of the assessee's directors. At the same time, is undeniable that he too was a director of the assessee company at the relevant time. The documents seized (A-5, A-6 and A-7) detailed elaborate 25 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
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workings of accounts and what is more, quantities of raw materials and profits. The documents were prepared at the time a family settlement was arrived at sometime in 1990-91 The statements-recorded on 20-3-1996 were corroborated by the materials. As far as the question relating to cross examination is concerned, the court notices that though the documents were furnished to the assessee it had not sought opportunity of cross examination, this was made at the fag end, in March, 1997. This court finds no justification to reject the statements, which merely explain the documents seized, the assessee could well have given a full explanation instead of seeking rejection of the documents on the ground that they were prepared in the context of a family dispute leading to a settlement. This question of law too, is answered against the assessee and the revenue"
6.6.5 Further, the Hon'ble Supreme Court has held in the case of State of J&K Vs Bakshi Gulam Mohd. AIR 1967 (SC) 122 and in the case of Nath International Sales Vs. UOI AIR 1992 Del 295 that the right of hearing does not include a right to cross-examine. The right to cross examine must depend upon the circumstances of each case and also on the statue concerned. Similarly, in the case of T Devasahaya Nadar V CIT (1964) 51 ITR 20 (Mad), the Hon High Court of Madras held that we are of opinion that it cannot be said as a general proposition of law that any evidence upon which the department might rely should have been subjected to cross-examination. The procedure for assessment is indicated in section 23(3) of the Act. The Income-tax Officer is not a court. Having regard to the nature of the proceedings, he occupies the position of a quasi- judicial tribunal. He is not bound by the rules of evidence in the Indian Evidence Act. The limit of the enquiry and the kind of materials or evidence which he can act upon cannot be specified and the statute has not attempted it. Wide though his powers be, he must act in consonance with rules of natural justice. One such rule is that he shall not use any material against the assessee without giving him an opportunity to meet it. The source of information for the material against the assessee need not be divulged. In fairness to the assessee, he should be told what is against him, so that he may, if he can, displace it, it is no denial of natural justice if the Income-tax Officer refuses to produce an informant for being cross- examined by the assessee. The range of natural justice is wide and whether or not there has been violation of natural justice would depend on the facts and circumstances of the case.
6.6.6 It is important to read the genesis of right to cross-examination. The issues of examination and cross-examination have root in Section 138 of Evidence Act 1872. As per the same, the order of examinations is witnesses shall be first examined-in-chief, then (if the adverse party so desires) cross-examined, then (if the party calling him so desires) re-examined. Section 60 of the Indian Evidence Act, 1872 prescribes the provision of recording oral evidence. All those statements which the court permits or expects the witnesses to make in its presence regarding the truth of the facts are called Oral Evidence. Thus, the 26 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
witnesses' fall into the category of oral evidence'. The issue arises that in Income Tax Proceedings, when Department has not relied upon any oral evidences (or statements of witnesses) and have independently correlated the seized material with books and/or bank accounts of the searched person and/or of the third party, then can the affected party demand it as right that even those persons whose statements have not been used against it be called/summoned and assessee be given right to cross-examination.
6.6.7 Reliance is also placed on ratio of decision of Kanungo and Co. v. Collector of Customs [1983] ELT1486 (SC) wherein, the Hon'ble Supreme Court again held as under:
"We may first deal with the question of breach of natural justice. On the material on record, in our opinion, there has been no such breach in the show-cause notice issued on August 21, 1951, all the materials on which the Customs Authorities have relied was set out and was then for the appellant to give a suitable explanation. The complaint of the appellant now is that all the persons from whom enquiries were alleged to have been made by the authorities should have been produced to enable it to cross- examine them. In our opinion, the principles of natural justice do not require that in matters like this the persons who have given information should be examined in the presence of the appellant or should be allowed to be cross examined by them on the statements made before the Customs Authorities"
6.7 In view of the above, I uphold the action of the AO of treating the appellant as one of the beneficiaries who had received cash of unaccounted sales through Shri Hiren Kalariya.
6.8 The appellant has raised an alternative plea that the estimation of rate of profit at 25% on undisclosed sales by the AO is arbitrary and exaggerated in support of this, the appellant furnished its audited financial statements and, on that basis, it is argued that rate of profit estimated by the AO is on the higher side of declared GP/NP Appellant mainly contended that if profit is estimated that should be net profit only as per the audited accounts or trend in the industry, whereas the AO has estimated the profit 25% which is very high and impracticable.
6.9 It is an undisputed fact that transactions recorded in the documents seized from Shri Hiren Kalariya are related to unaccounted sales and therefore, the AD has correctly applied the profit rate relying on the decision of territorial high court as well as well-accepted precedents. Here, the appellant's contention that rate of net profit as declared in the audited financial statements should be taxed is not acceptable in view of the fact that the profit in case of unaccounted sales is always higher than the accounted sales. This is so because fixed expenses are always borne and absorbed by the quantum of accounted sales. Therefore, I am of 27 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
the view that the margin in the case of unaccounted sales remains high as compared to accounted sales and that commercial temptation prompts the assesses to indulge in unaccounted sales Therefore, the contention of the appellant to estimate the profit on unaccounted sales as per books of accounts is not acceptable. On the other hand, though the AO has been reasonable in his approach by estimating profit on the unaccounted sales, I am of the view that the rate of profit at 25% estimated by AO is on a little higher side compared to the Gross Profit declared in the audited financial statement Therefore, the AO is directed to take the unaccounted profit at the rate of 20% on the unaccounted cash receipts, which will meet the justice.
6.10 In view of the above factual discussion and legal matrix of the case addition made by the AO towards unaccounted business income to the extent of Rs. 10,600/- (Rs 53,000/-x 20%) is confirmed and balance addition of Rs 2,650/- is directed to be deleted. Thus, the grounds of appeal no. 3 & 4 are partly allowed.
7. In the result, the appeal is partly allowed.
CIT(A), Ahmedabad-11/11028/2017-18 for A.Y 2018-19
1. The assessment order w/s. 153C of the Act is bad in love.
2. The learned Assessing Officer hos erred in low as well as on facts in initiating the proceedings u/s 153C of the Act
3. The learned Assessing Officer hos erred in law as well as on facts in making the addition of Rs. 66,475/- based on the materials found from and statements recorded of Shri Hiren Khimjibhai Kalariya.
4. The learned Assessing Officer has erred in low as well as on forts in rejection of books of accounts w/s 145(3) of the Act and estimating the alleged profit from alleged unaccounted sales at the rate of 25 percent amounting to Rs.66,475/
9. The grounds of appeal nos. 1 & 2 relate to assessment proceeding initiated u/s 153C of the Act being void ab initio and bad in law.
9.1 In this regard, it is stated that while adjudicating the similar grounds of appeal nos. 1 for AY 2017-18 at para no. 5 the ground of appeal was dismissed after a detailed discussion. In view of the discussions held in Para 5 herein above, grounds of appeal no 1 & 2 for this year i.e. A.Y. 2018-19 is also dismissed.
10. The grounds of appeal nos. 3 & 4 are against the action of the AO in making addition of Rs. 66,475/- towards profit on account of unaccounted sales of Rs. 2,65,900/-.
28 ITA No.213/Rjt/2023 & 46 OthersTiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
10.1 In this regard, it is stated that while adjudicating the similar ground of appeal no 3 & 4 for AY 2017-18 at para no 6 addition on account of 25% of the unaccounted sales is restricted to 20% of the unaccounted sales by the undersigned. Therefore, in view of the detailed finding given in para 6, the AO is directed to confirm Rs 53,180/- (2,65,900 x 20%) and balance addition of Rs.13,295/- is directed to be deleted Accordingly the ground of appeal no. 3 & 4 for this year i.e. A.Y.2018-19 is also partly allowed.
11. In the result, the appeal is partly allowed.
CIT (A), Ahmedabad- 11/10708/2018-19 for A.Y.2019-20
1. The assessment order u/s. 143(3) of the Act is bad in law.
2. The learned Assessing Officer has erred in low as well as on facts in making the addition of Rs.4,17,347/- based on the materials found from and statements recorded of Shri Hiren Khimjibhai Kalariya.
3. The learned Assessing Officer has erred in low as well as on facts in rejection of books of accounts u/s 145(3) of the Act and estimating the alleged profit from alleged unaccounted sales at the rate of 25% amounting to Rs. 4,17,347/-
13. The ground of appeal no. 1 is general in nature and the appellant has not filed any specific submission during the course of appellate proceedings hence this ground is not adjudicated and is dismissed.
14. The grounds of appeal nos. 2 & 3 are against the action of the AO in making addition of Rs 4,17,347/- made towards unaccounted profit earned by the appellant from the unaccounted sales of Rs 16,69,390/-
14.1. In this regard, it is stated that while adjudicating the similar ground of appeal no. 3 & 4 for AY 2017-18 at para no 6, addition on account of 25% of the unaccounted sales is restricted to 20% of the unaccounted sales by the undersigned. Therefore, in view of the detailed finding given in para 6, the AO is directed to confirm Rs. 3,33,878/- (16,69,390 x 20%) and balance addition of Rs.83,469/- is directed to be deleted Accordingly, the grounds of appeal no. 2 & 3 for this year i.e. A.Y.2019-20 is also partly allowed."
13. Aggrieved by the order of the ld. CIT(A), the assessee(s) are in further appeal(s) before us.
14. Based on the above facts, narrated and the findings of the ld CIT(A), noted above, we find that all these appeals are squarely covered by the order 29 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
of the Coordinate Bench of ITAT Rajkot, in the case of Range Ceramic Pvt.Ltd. & Ors. in ITA Nos.66/RJT/2023 & 26 Others, vide order dated 19/08/2024, on the very identical and similar facts. The arguments advanced by learned Counsel for the assessee and DR for the Revenue were also mentioned in that order, which would be similar in these 47 appeals also, therefore we do not repeat the same. The findings of the Coordinate Bench, in the above group cases in ITA Nos.66/RJT/2023 & 26 Others, are reproduced below:
"Analysis and conclusion
31. We have heard the rival parties and have gone through the material placed on record. First, we shall deal with "satisfaction note", whether it is defective or not. For the sake of clarity and also being pertinent, we reproduce the provisions of section 153C of the Act, ( to the extent useful for our analysis), as follows:
"153C Assessment of income of any other person.
(1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that--
(a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or
(b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then,the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of section 153A:
Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to [sub-section (1) of section 153A] shall be construed as 30 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person:
Provided further that the Central Government may by rules made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made except in cases where any assessment or reassessment has abated......"
From the provisions of section 153C of the Act, as referred above, it is vivid that the primary condition for initiation of assessment proceeding u/s 153C of the Act, is that during the course of search in the case of any person, money, bullion, jewellery or other valuable article or thing is seized and the assessing officer of 'searched persons' satisfies, that such asset belongs to other person. Alternatively, during the course of search, any books of account or documents are seized or requisitioned, and the assessing officer of 'searched person' satisfies that such books or document pertains to or any information contained therein relates to other person. The mechanism provided in the Act is that in such manner that the assessing officer of 'searched person' after recording his satisfaction should handover the relevant seized assets or books of account or documents or information to the assessing officer of 'other person' and then,the assessing officer of 'other person' should record his satisfaction before initiating assessment proceeding in the case of 'other person' u/s 153C of the Act that the books of account / documents / assets seized from "searched person" is bearing on the determination of total income of "other person".
32. In the context of the above provisions of section 153C of the Act, we should examine the 'satisfaction note' recorded by the assessing officer, of the assessee under consideration. In the assessee`s case under consideration, the satisfaction note, recorded by the assessing officer, under section 153C of the Act, is reproduced below:
"1. Search action named "Operation White Flower" U/S. 132 was conducted on 03-01-2019 on the 'Coral Group of Companies' and its various associated concerns and persons along with at the premises of Shri Hiren Khimjibhai Kalariya.
2. During the course of search at the residential premises of Shri Hiren Khimjibhai Kalariya (Shroff), his statement was recorded u/s. 132(4) of the Income-tax Act. In his statement, he has explained the detailed modus operandi adopted by him to assist the various companies in collection of proceeds of 31 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
unaccounted sales. He has stated that initially the money is deposited by the customers of concerned companies in various designated bank accounts, at multiple locations as per the business practice adopted by the group companies, these accounts are being maintained by him or his accomplice and later on, the money so deposited by customers of various companies are withdrawn and handed over to the key person of the concerned companies.
3. He has further stated that he regularly deals with Coral Group through Sh. Ketan Bhalodia and hands over the cash to the person as told by Ketan Bhalodia. He also stated that if the cash received is of any other company / concern, he calls the concerned person of the company / concern and hands over the cash to him. He also keeps record of such transactions in manual form at his business/ residential premise.
4. On being confronted with the statement of Shri Hiren Khimjibhai Kalariya, Shri Ketan Vaghji Bhalodiya agreed with the contents of his statement. Shri Hiren Khimjibhai Kalariya has also admitted in this statement (reply to Q. No. 8 & 9) that he does the same type of transactions/ business with other ceramic entities also and receives commission income on such transactions.
5. Further appraisal report and the details of investigation done in the matter and statement recorded by the Investigation wing is examined and it is found that RANGE CERAMIC PRIVATE LIMITED (AAGCR6625M) has also been received amount of Rs. 2,59,22,887/- in cash by adopting the modus operandi as discussed above.
6. In view of above, I am satisfied that the above discrepancy found from party named Shri Hiren Khimjibhai Kalariya covered u/s 153A of the I. T. Act belongs to and information in this regard and is relates RANGE CERAMIC PRIVATE LIMITED (AAGCR6625M) i.e. assessee being other than the person 153A of the Act,
7. As per amended section 153C(1)(b), where the Assessing Officer is satisfied that any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to a person other than the person referred to in section 153A, then the proceedings u/s 153C shall be initiated.
8. Therefore, I have satisfaction to proceed against the assessee RANGE CERAMIC PRIVATE LIMITE(AAGCR6625M) as per the provision of section 153C of the Income-tax Act, 1961. Hence, it is a fit case for initiation of proceedings u/s. 153C of the Act. The provisions of section 153C(1) has to be invoked for AY 2013-14 to AY 2018-19 and for u/s 143 (3) for AY 2019-20."
33. We have gone through the above 'satisfaction note', recorded by the assessing officer, in the assessee`s case under consideration, and noted that there is no 32 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
infirmity, in the 'satisfaction note' recorded under section 153C of the Act. As, we have already noted that a search and seizure action was carried out in the case of one Shri Hiren Khimjibhai Kalariya and during the course of search in his case, various incriminating documents were seized containing noting of fund deposited in various bank accounts operated by him and withdrawal of such funds in cash for disbursing the same to the actual beneficiaries. Shri Hiren Khimjibhai Kalariya in his statement recorded u/s 132(4) and 131 of the Act, has described the modus operandi of his Angadiya/Shroff business activities and also given name of the beneficiaries of unaccounted cash transactions. The assessing officer of searched person in his satisfaction recorded has identified the assessee, being one of the beneficiaries, of unaccounted cash transactions and accordingly, the assessing officer of the assessee recorded his satisfaction for initiating assessment proceeding and notice issued to the assessee u/s 153C of the Act. The materials seized from Hiren Khimjibhai Kalariya is undisputedly in respect of unaccounted sales and collection of cash of companies/persons. The satisfaction note has been recorded, by the assessing officer, on the basis of the statement given by Shri Hiren Kalariya and supported by the seized documents and therefore it clearly establishes the link between the seized documents and the assessee. Therefore, initiation of proceedings u/s 153C of the Act is not on mere surmises or conjectures and on the basis of the incriminating materials seized during search in case of Hiren Khimjibhai Kalariya. Therefore, this argument of ld.Counsel for the assessee, is not acceptable and therefore, rejected. Thus, the ground of appeal No. 2 is dismissed.
34. Since we have adjudicated the issue pertaining to 'satisfaction note', under section 153C of the Act, by taking the lead case in IT (SS)A No.66/RJT/2023, for assessment year 2017-18, in the case of Range Ceramic Private Limited. In other assessees` case, the satisfaction note, are recorded by the assessing officer, in the same manner, as that of the assessee under consideration. Therefore, our instant adjudication shall applymutatis mutandis to the aforesaid other appeals of various assessees. Hence, we dismiss the ground raised by all other assessees, pertaining to 'satisfaction note', under section 153C of the Act.
35. In the result, grounds relating to 'satisfaction note', mentioned in IT(ss) Nos. 94/Rjt/2023, 95/Rjt/2023, 66/Rjt/2023,67/Rjt/2023, 41/Rjt/2023, 42/Rjt/2023, and 43/Rjt/2023, are dismissed.
36. So far merit, is concerned, we find that during the course of search action in the case of Shri Hiren Khimjibhai Kalariya, various diaries and loose papers sheets containing details of cash transactions were seized in Annexure No. A-1 to A-7. During the course of recording statement u/s 132(4), Shri Hiren Kalariya explained in detail, the modus operandi, adopted by him, to assist various beneficiaries for collection of sale proceeds of unaccounted sales. The assessing 33 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
officer stated that on analysis of the data seized from Shri Hiren Kalariya, it is found that the assessee is one of the beneficiaries of unaccounted cash transactions (recipient) worth of Rs.1,64,000/-. The assessing officer rejected book results of the assessee by invoking provision of Section 145(3) of the Act, and by relying on the decision of Hon'ble High Court of Gujarat in the case of CIT vs. President Industries (2002) 258 ITR 654 (Gujarat), estimated unaccounted profit at the rate of 25% of the unaccounted gross receipts of Rs.1,64,000/-. The assessing officer stated that on perusal of past records of the assessee, it is noticed that the assessee has been showing gross profit (GP) in the range of 19.52% to 18.66% in accounted sales, but it is established fact that in unaccounted sales, such margin and profit would be higher. Thus, assessing officer, estimated profit element of Rs.41,000/- (1,64,000 * 25%), which was treated as unaccounted income of the assessee and added to the total income of the assessee. On appeal by the assessee, the learned CIT(A), restricted the estimated addition @ 22% on unaccounted gross receipts of Rs.1,64,000/-. Therefore, addition made by the assessing officer towards unaccounted business income to the extent of Rs.36,080/- (1,64,000 x 22%) was confirmed by ld CIT(A) and balance addition of Rs.4,920/- ( Rs.41,000- Rs.36,080) was deleted by ld CIT(A). Now, the assessee is in appeal before us, and contended that balance addition of Rs.36,080/- may be entirely deleted or percentage of estimated addition @ 22% adopted by ld CIT(A) may be reduced at a reasonable rate.
37. We find that during the course of assessment proceeding, assessee has requested the assessing officer, to provide an opportunity of cross-examination of Shri Hiren Kalariya, however, the assessing officer did not provide the same. In this context, the ld Counsel relied on various case laws and argued that principle of natural justice has not been followed. The ld Counsel also contended that the presumption u/s 132(4A) and 292C of the Act, applies only to a person from whose possession the material was seized and not to a third party. We note that it is an undisputed that Shri Hiren Kalariya was a commission agent and he was acting as a mediator for the collection of sale proceeds of unaccounted sales in lieu of commission. During the course of search and in post-search investigation, Shri Hiren Kalariya has admitted the modus operandi of his business activities, which also found recorded in various diaries and loose papers seized from his premises. The assessing officer has also noted in the assessment order that some of the beneficiaries whose names are mentioned in the seized diaries admitted that they had received cash from Shri Hiren Kalariya. Thus, where the addition is made by the assessing officer, based on the documentary evidences, and these documentary evidences, speak clearly, then there is no need to provide opportunity for cross- examination. It is pertinent to note that Shri Hiren Kalariya recorded the names of the parties in his diaries as he knew the beneficiaries. Even in respect of representatives coming to collect cash on behalf of beneficiaries, Shri Hiren Kalariya clearly linked the names of such representatives with the respective 34 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
beneficiaries in his statements recorded. Thus, Shri Hiren Kalariya had full knowledge of the persons with whom he was dealing as a commission agent and whose representatives' names are mentioned in the seized diaries. Further, in respect of such transactions of undisclosed sales and receipts thereof, all the links in the chain remain well connected and therefore, the remittance of cash always reaches the intended recipients and not to anyone else. Therefore, mere denial on the part of the assessee stating that they have not carried out any transactions with Shri Hiren Kalariya is not sufficient in any manner. Since the seized material is clear in its contents and the assessee is not able to rebut such content by any contradicting evidence, the legal arguments of the assessee fail and they cannot be accepted de hors of the undeniable picture emerging from the seized material the sanctity of which is already established. Seized material (The diaries) was systematically maintained by Shri Hiren Kalariya and it is not just loose papers or dumb documents which is not capable of any meaning. Therefore, where the seized material contains the name of any beneficiary or the name of any representative of such beneficiary and such representative and the beneficiary are subsequently linked by Shri Hiren Kalariya, the beneficiary cannot escape consequential tax liability. The assessee has not produced any confirmation of Shri Hiren Khimjibhai Kalariya stating that notings in such seized material does not pertain to the assessee.
38. We find that about issue of cross examination, no natural justice requires that there should be a kind of a formal cross- examination. Formal cross-examination is procedural justice. It is governed by rules of evidence. It is the creation of Courts and not a part of natural justice but of legal and statutory justice. Natural justice certainly includes that any statement of a person, before it is accepted against somebody else, that somebody else should have an opportunity of meeting it whether it, by way of interrogation or by way of comment, does not matter, so long as, the party charged has a fair and reasonable opportunity to see, comment and criticise the evidences, statement or record on which the charge is being made against him the demands and therefore the test of natural justice are satisfied. The question whether denial of opportunity of cross-examination results in violation of natural justice depends upon facts of each case. The object of cross-examination is to test the veracity of the version given in examination in chief. As, in the assassee`s case, under consideration, the assessee had proper opportunity to controvert the material gathered by the search team and assessing authority and used against it, then there had been compliance of the principle of natural justice. Having gone through the above findings of the ld. CIT(A), we observed that there was no need to provide opportunity of cross- examination, as the addition was made by the assessing officer, based on the documents and evidences seized during the search. Considering the above factual position, we reject the plea raised by the ld. Counsel for the assessee, in respect of cross examination. Hence, grounds raised by the assessees, relating to cross examination, are dismissed.
35 ITA No.213/Rjt/2023 & 46 OthersTiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
39. So far, merit of the case is concerned, we note that ld CIT(A) sustained the additions in the hands of various assessees at the rate of 20%, 22% and 25%. However, in most of the cases, the ld CIT(A) sustained the estimated addition at the rate of 20%, as against the addition made by the assessing officer at the rate of 25%. Both the ld Counsels, argued before us that documents and data were seized from the possession of third-party and these documents are dumb documents and moreover, these documents found in the search are not sufficient to prove that the various assessees are indulged in the transactions mentioned in the dump documents, therefore entire additions made in the hands of the respective assessees may be deleted.
40. We do not find merit in the above submissions of ld Counsels. We find that seized documents are incriminating documents, moreover, the statement of Shri Hiran Kalaria, is clearly corroborated with seized documents, therefore entire addition made by the assessing officer cannot be deleted, except in case of those assessees, whose name do not appear in seized documents, directly or indirectly.
41. However, we find that estimated additions, in the hands of various assessees, sustained by ld CIT(A), at the rate of 20%, 22% and 25% are at higher side. Both the ld Counsels for the assessees, have raised an alternative plea, before the Bench, that the estimation of rate of profit at 22% on undisclosed sales by the ld CIT(A), is arbitrary and exaggerated. In support of this, the ld Counsel furnished its audited financial statements of the assessees, before the Bench, (which were submitted by the assessees, before the lower authorities also), and, on that basis, it is argued that rate of profit estimated by the ld CIT(A), is on the higher side of declared gross profit and net profit(GP/NP). The ld Counsel, mainly contended that if profit is estimated then it should be net profit only as per the audited accounts or trend in the industry, whereas the ld CIT(A) sustained the estimated the profit @ 20%, in most of the cases, which is very high and impracticable.
42. We find merit in the submissions of ld. Counsel to the effect that profit rate sustained by the ld CIT(A), is at very higher side. Therefore, considering the nature of business, we proceed to work out the estimation of profit keeping in mind the following facts:
(i)The estimate is not opened up to be framed in an arbitrary manner.
(ii)The estimate by rule of thumb is absolutely infirm.
(iii)The estimation of rate of profit return must necessarily vary with the nature of the business.
(iv)There cannot be any uniform yardstick.
(vi)An assessment to be best of judgement can only be based on the material available on record and past records and considering the totality of the facts.36 ITA No.213/Rjt/2023 & 46 Others
Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
(v) Only real income and neither notional income nor astronomical income, can be taxed under the Income Tax Act, 1961.
Accordingly, we hereby estimate the net profit (NP) at 13%, keeping in mind that the method to be adopted for estimation, must be, which is approximately nearer to the truth. In view of the above factual discussion, the addition made by the assessing officer ( in the lead case) towards unaccounted business income to the extent of Rs.21,320/- (1,64,000 x 13%) should confirmed and balance addition should be deleted. Our above findings, are applicable to the following assessees:
Sr. Name of AY Asst. IT(SS)A/ ITA Name in Date of Category Seized material, facts and No. Assessee Order No. seized Hearing as per Hiren Kalaria's Section material statement 1 Roland 2019-20 143(3) 232/Rjt/2023 Dipesh/ 18.07.2024 B Mr Hiren Kalaria stated Ceramic Lanbagh/ in statement that Dipesh, Pvt. Ltd. Rohan Lanbagh and Rohan represents the company represents Roland Ceramic Pvt Ltd..
However, Lanbagh and Rohan are not directors.
2 Range 2019-20 143(3) 231/Rjt/2023 Harshad 18.07.2024 B Mr Hiren Kalaria stated
Ceramic that the Harshad
Pvt. Ltd. represent Range Ceramic
Pvt. Ltd.
3 Winsun 2019-20 143(3) 233/Rjt/2023 Nirav 18.07.2024 B Mr Hiren Kalaria stated
Ceramic that the Nirav represent
Pvt. Ltd. Range Ceramic Pvt. Ltd.
4 Lorians 2019-20 143(3) 235/Rjt/2023 Hiren/ 18.07.2024 B Mr Hiren Kalaria stated
Ceramic Hirmolo Hiren and Hirmolo
LLP represents Lorians
Ceramic LLP.
5 Livanto 2019-20 143(3) 236/Rjt/2023 Jayesh 18.07.2024 B Mr Hiren Kalaria stated
Ceramic that the Jayesh represent
Pvt. Ltd. Livanto Ceramic
6 Legend 2019-20 143(3) 234/Rjt/2023 Legend / 18.07.2024 C Mr Hiren Kalaria stated
Ceramic Lejend/ that the Legend
Pvt. Ltd. Lijend represents Legend
Vitrified
7 Flecto 2019-20 143(3) 315/Rjt/2023 Sunil 18.07.2024 C Mr Hiren Kalaria stated
Ceramic that the Sunil represents
Pvt. Ltd. Flecto Ceramic Private
Limited
8 Range 2017-18 153C 66/Rjt/2023 Harshad 18.07.2024 B Mr Hiren Kalaria stated
Ceramic that the Harshad
9 Pvt. Ltd. 2018-19 153C 67/Rjt/2023 represent Range Ceramic
Pvt. Ltd.
10 Admin 2019-20 143(3) ITA 216/R/23 Chali, 18.07.2024 B No name of the appellant
Vitrified Pvt. Charlie, was in the seized material
Ltd. Savan, but Hiren Kalariya in his
Savant statement stated that the
11 Adore 2017-18 153C ITSS 41/R/23 H 18.07.2024 B same belonged to the
Ceramic Appellant.
Pvt. Ltd.
12 Adore 2018-19 153C ITSS 42/R/23 H, M, 18.07.2024 B
Ceramic Yogesh
Pvt. Ltd.
13 Adore 2019-20 143(3) ITA 211/R/23 H, M, 18.07.2024 B
Ceramic Yogesh
Pvt. Ltd.
14 Dovel 2019-20 143(3) ITA 214/R/23 Deali 18.07.2024 B
Ceramics
15 Success 2019-20 143(3) ITA 217/R/23 Sanjay 18.07.2024 B
Ceramic
37
ITA No.213/Rjt/2023 & 46 Others
Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
Pvt. Ltd.
16 Lasa Cera 2018-19 153C ITSS 43/R/23 Lasasera 18.07.2024 C Appellant's name was in
Pvt. Ltd. seized material
17 Lasa Cera 2019-20 143(3) ITA 212/R/23 Lasasera 18.07.2024 C
Pvt. Ltd.
We note that above assessees, are ultimate beneficiaries. They worked through connected persons. For example, M/s Range Ceramic Pvt. Ltd, vide ITA No. 231/Rjt/2023, Mr. Hiren Kalaria stated that Shri Harshad represents, M/s Range Ceramic Pvt Ltd, therefore, M/s Range Ceramic Pvt. Ltd, is ultimate beneficiary and it falls in B category. For example, Lasa Cera Pvt. Ltd, vide ITA 212/Rjt/23, the assessee`s name is there in the seized material, that is, there is direct evidence available in this case, and this case falls in C category. We also find that in case of B category, the name mentioned in the seized material are resembling with the beneficiaries, identified by Shri Hiren Kalariya, therefore, in case of these assessees, it cannot be said that the seized materials are dumped documents, as we have noted that they are ultimate beneficiaries and in their hands the assessing officer has estimated the income @ 25%, however, on appeal, Ld. CIT(A) reduced the estimated profit from 25% to 20% and in some cases, from 25% to 22%. Therefore, these assessees are in appeal before us and praying the Bench that estimated addition is very higher side and it should be reduced, at a reasonable level. Considering the facts and circumstances, narrated above, we find that the estimation done by the assessing officer, and re-estimated addition, sustained by the Ld. CIT(A) @ 20% is very higher side. Therefore, we are of the view that the estimated addition on their unaccounted transaction should be @ 13%, which will take care of inconsistency in the undisclosed income. Therefore, the assessing officer, is directed to make the addition in the hands of all above assessees, at the rate of 13%, hence, appeals of those assessees, falling in category B and C, are partly allowed.
43. In the result, appeal filed by the assessees in ITA Nos. 232/Rjt/2023, 231/Rjt/2023, 233/Rjt/2023, 235/Rjt/2023, 236/Rjt/2023, 234/Rjt/2023, 315/Rjt/2023, 66/Rjt/2023, 76/Rjt/2023, 216/Rjt/2023, 211/Rjt/2023, 214/Rjt/2023, 217/Rjt/2023, 212/Rjt/23, IT(SS)A Nos. 41/Rjt/2023, 42/Rjt/2023 & 43/Rjt/2023, are partly allowed in above terms.
44. We note that in the following cases, wherein assessment order was framed by the assessing officer u/s 143(3)/153C of the Act, wherein we find that neither Shri Hiren Kalaria has given any statement or clarification about these assessees nor these assessees are linked with group cases. That is, Shri Hiren Kalaria, in his statement stated that he did not know the name of the ultimate beneficiaries, hence, these assessees relate to a different segment of trade and moreover, the trading activities of these assessees, noted below, are not similar to that of the 38 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
other assessees in the group. Moreover, Shri Hiren Kalaria did not mention in his statement about these assessees that these assessees are related to the group business or they are connected with ultimate beneficiaries. Therefore, we note that the lists of assessees, given below, are not connected persons, and they are not ultimate beneficiaries. They are engaged in the different trade and business. The details of these assessees are mentioned below:
Sr. Name of AY Asst. IT(SS)A/ ITA Name in Date of Category Variation of facts and as No. Assessee Order No. seized Hearing per Hiren Kalaria's Section material statement 1 Laxmi 2019-20 143(3) 448/Rjt/2023 Jalpesh 18.07.24 A Mr Hiren Kalaria has not Plastic given mobile number of Jalpesh. In one of the statement there is other party named as Jalpesh Trading. Further, Jalpesh is not partner or employee of firm.
2 Vijay Fefar 2019-20 143(3) 449/Rjt/2023 Kishor 18.07.24 A Only Mobile No given.
Mobile no. belongs to Kishor of Om Wire Products. Further, Vijay Fefar is deriving salary income from PGVCL and not engaged in any Ceramic Business.
3 Shailesh 2019-20 143(3) 313/Rjt/2023 Shailesh 18.07.24 A Only Mobile number
Kanji given by Mr Hiren
Mendpara Kalaria. The appellant is
engaged in vehicle
reparing garage business.
Many person saves
mobile no of appellant for
repairing or servicing of
their vehicles.
4 Lucaso 2019-20 143(3) 352/Rjt/2023 Ramesh 18.07.24 A Name given by Mr Hiren
Ceramic Kalaria. However,
Pvt. Ltd. Rameshbhai resigned
from directorship of the
Company from 13-06-
2016.
5 Admark 2019-20 143(3) 455/Rjt/2023 Vikas 18.07.24 A No name of the appellant
Ceramic was in seized material
Industries and Hiren Kalariya in his
statement also stated that
he didn't know the name
of the ultimate beneficiary
6 Laxmi 2018-19 153C 94/Rjt/2023 Jalpesh 18.07.24 A Mr Hiren Kalaria has not
Plastic given mobile number of
Jalpesh. In one of the
statement there is other
party named as Jalpesh
Trading. Further, Jalpesh
is not partner or
employee of firm. [Para
(f) Page 18 of
Paperbook].
7 Vijay Fefar 2018-19 153C 95/Rjt/2023 Kishor 18.07.24 A Only Mobile No given.
Mobile no belongs to
Kishor of Om Wire
Products. Further, Vijay
Fefar is deriving salary
income from PGVCL and
not engaged in any
Ceramic Business.
39
ITA No.213/Rjt/2023 & 46 Others
Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
45. Therefore, we note that above these seven assessees are not connected with tile business and these assessees' names are not therein the seized material, therefore, these assessees have been incorrectly identified, as beneficiary, by the assessing officer. These assessees are in different line of business, such as, Kiran shop wala, Paanwala, Pancturewala, or salaried employees etc. These above persons are not connected with ceramic industry and their names do not reflect in the seized materials. Therefore, in the case of above assessees, no addition should be made in their hands and whatever documents are relied by the assessing officer, for the purpose of above assessees, are dumped documents and, therefore, we delete the complete addition in their hands.
46. In the result, appeals filed by the assessee in ITA Nos. 448/Rjt/2023, 449/Rjt/2023, 313/Rjt/2023, 352/Rjt/2023, 455/Rjt/2023, IT (SS) Nos. 94/Rjt/2023, & 95/Rjt/2023, are allowed."
15. We note that by followings the above precedent of the Co-ordinate Bench, in IT(ss)A Nos.66/RJT/2023 & 26 Others(supra), the following 37 appeals of the assessees, mentioned in the chart below, are partly allowed with the direction of the Assessing Officer (AO), to make the estimated addition @13%.
Sl. Name of A.Y. Asst.Order Appeal Name Date Cate Violation of facts and as
No. Assessee Section No. of the - per Hiren Kalaria's
seized gory statement
material
1. Pintukumar 2018- 153C ITSS Pintu B The Appellant's name
82/R/23
N. Baraiya 19 was in the seized
2. Pintukumar 2019- 143(3) ITSS Pintu B material but the name of
274/R/23 the ceramic unit which
N. Baraiya 20
3. Umesh N. 2018- 153C ITSS Umesh B was the ultimate
83/R/23 beneficiary was not
Kalariya 19
4. Umesh N. 2019- 143(3) ITA Umesh B available
288/R/23
Kalariya 20
5. Admin 2019- 153C ITSS Parayag B No name of the
46/R/23
Vitrified 20 , appellant was in the
Pvt.Ltd. Prayag, seized material but
Savan Hirenn Kalariya in his
6. Bluezone 2018- 153C ITSS Pankaj B statement stated that the
50/R/23 same belonged to the
Vitrified 19
Pvt.Ltd. Appellant
7. Bluezone 2019- 143(3) ITSS Pankaj B
222/R/23
Vitrified 20
Pvt.Ltd.
8. Success 2018- 153C ITSS Sanjay B
47/R/23
40
ITA No.213/Rjt/2023 & 46 Others
Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
Ceramic 19
Pvt.Ltd.
9. Alfa 2018- 153C ITSS Alpha C Appellant's name was in
49/R/23
Vitrified 19 seized material
Pvt.Ltd.
10. Tiles Art 2018- 153C ITSS Tiles/ C
44/R/23
19 Tiles
Art
11. Tiles Art 2019- 143(3) ITA Tiles/ C
213/R/23
20 Tiles
Art
12. Tulip Cera 2018- 153 ITA Tulip C Appellant's name was
85/R/23
Décor 19 not matched with the
13. Tulip Cera 2019- 143(3) ITA Tulip C name of the beneficiary
290/R/23 (i.e. Tulip Trading)
Decor 20
given by Hiren Kalariya
in his statement.
14 Kera 2017- 153C 55/RJT/ Ashish/ 25/07 B Mr. Hiten Kalaria stated
2023
& Vitrified 18 Cera/Ru /2024 that Rupesh and Pera
15. LLP pesh/Pe belongs to Pera Ceramic.
2018- 56/RJT/2 r Mr. Hiren Kalaria have
19 023 As per not mentioned who is
stat - Cera Ltd.
Benefici CIT(A) restricted
ary is estimated profit at @
CERA 20%
VITRIF
IED
(not
Kera)
16. Alive Tiles 2018- 153C 57/RJT/ Chetan/ 25/07 B Mr. Hiren Kalaria stated
2023
Pvt.Ltd. 19 Mahesh /2024 Chetan represents Alive
/Mosh Tiles.
Mr. Hiren Kalaria stated
in statement dated
14.03.2019 that Mahesh
is belongs to L.I.
Ce3ramic. However,
Ld.AO interpreted as
Alive Ceramic.
Ld.CIT(A) restricted
estimated profit at @
20%.
17. Roland 2018- 153C 68/RJT/ Dipesh/ 25/07 B Mr. Hiren Kalaria stated
2023
Ceramic 19 Lanbag /2024 in statement that Dipesh,
Pvt.Ltd. h/Rohan Lanbagh and Rohan
represents the company
represents Roland
Ceramic Pvt.Ltd.
18. Lorians 2018- 153C 70/RJT/2 Hiren/ 25/07 B Mr. Hiren Kalaria stated
023
Ceramic 19 Hirmolo /2024 Hiren and Hirmolo
LLP represents Lorians
Ceramic LLP. Ld.
CIT(A) restricted
estimated profit at @
41
ITA No.213/Rjt/2023 & 46 Others
Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
20%.
19 Livanto 2017- 153C 71/RJT/2 Jayesh 25/07 B Mr. Hiren Kalaria stated
023
& Ceramic 18 /2024 that the Jayesh
20. Pvt.Ltd. 72/RJT/2 represents Livanto
2018- 023 Ceramic. Ld. CIT(A)
19 restricted estimated
profit at @ 20%.
21. Seleo 2018- 153C 73/RJT/2 Tarun 25/07 B Mr. Hiren Kalaria stated
023
Ceramic 19 /2024 that the Tarun represents
Pvt.Ltd. Seleo Ceramic Pvt.Ltd.
Ld. CIT(A) restricted
estimated profit at @
20%.
22. Osaka 2018- 153C 74/RJT/2 Kaushik 25/07 B Mr. Hiren Kalaria Sated
023
Sanitary 19 /Kushik /2024 in statement Kaushik
represents Osaka
Sanitary. Ld. CIT(A)
retained estimation of
Profit at 25%.
23. Flora 2018- 153C 75/RJT/2 Hasmuk 25/07 B Mr. Hiren Kalaria stated
023
Ceramic 19 h/Jitu /2024 that the Hasmukh/Jitu
Pvt.Ltd. represent Flora Ceramic
Pvt.Ltd. Ld. CIT(A)
restricted estimated
profit at @ 20%.
24 Salient 2017- 153C 76/RJT/2 Dikesh 25/07 B Mr. Hiren Kalaria stated
023
& Ceramic 18 /2024 that the Dipkesh
25. represent Selion/Saliehnt
2018- 77/RJT/2 Ceramic. Ld. CIT(A)
19 023 restricted estimated
profit at @ 20%.
26. Legend 2018- 153C 69/RJT/2 Legend/ 25/07 C Mr. Hiren Kalaria stated
023
Ceramic 19 Lejend/ /2024 that the Legend
Pvt.Ltd. Lijend represents Legend
Vitrified . Ld. CIT(A)
restricted estimated
profit at @ 20%.
27 Levita 2017- 153C 51/RJT/2 Lavita/ 25/07 C Mr. Hiren Kalaria stated
023
& Graito LLP 18 Levevit /2024 that the
28. a/ Lavita/Lelevita/Levita/
2018- 52/RJT/2 Levita/ Vishal represent Levita
19 023 Visha Grantio LLP. Ld.
CIT(A) restricted
estimated profit at 2
20%.
29 Lenora 2017- 153C 53/RJT/2 Binara/ 25/07 C Mr.Hiren Kalaria stated
023
& Vitrified 18 Leena/L /2024 that the
30. LLP enora/Li Binara/Leena/Lenora/Li
2018- 54/RJT/2 nash/Li nash/Linora/Vimal
19 023 nora/Vi represent Lenora
mal Vitrified LLP. Ld.
CIT(A) restricted
estimated profit at
@20%.
42
ITA No.213/Rjt/2023 & 46 Others
Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
31. Osaka 2019- 143(3) 240/RJ Kaushik 25/07 B Mr.Hiren Kalaria stated
Sanitary 20 T/ /Kushik /2024 in statement Kaushik
2023 represents Osaka
Sanitary. Ld.CIT(A)
retained estimation of
Profit at 25%.
32. Kera 2019- 143(3) 225/RJ Ashish/ 25/07 B Mr. Hiren Kalaria stated
Vitrified 20 T/2023 Cera/Ru /2024 that Rupesh and Pera
LLP pesh/Pe belongs to Per ceramic.
ra As Mr. Hiren Kalaria have
per stat not mentioned who is
- cera. Ld. CIT(A)
Benefici restricted estimated
ary is profit at @ 20%.
CERAV
ITRIFI
ED (not
Kera)
33. Alive Tiles 2019- 143(3) 226/RJ Chetan/ 25/07 B Mr.Hiren Kalaria stated
Pvt.Ltd. 20 T/2023 Mahesh /2024 Chetan represents Alive
/Mosh Tiles. Mr. Hiren Kalaria
stated in statement dated
14.03.2019 that Mahesh
is belonged to L.I.
Ceramic. However,
Ld.AO interpreted as
Alive Ceramic. Ld.
CIT(A) restricted
estimated profit at @
20%.
34 Flora 2019- 143(3) 246/RJ Hasmuk 25/07 B Mr.Hiren Kalaria stated
Ceramic 20 T/2023 h/Jitu /2024 that the Hasmukh/Jitu
Pvt.Ltd. represent Flora Ceramic
Pvt.Ltd. Ld.CIT(A)
restricted estimated
profit at @ 20%.
35. Salient 2019- 143(3) 251/RJ Dikesh 25/07 B Mr.Hiren Kalaria stated
Ceramic 20 T/2023 /2024 that the Dikesh represent
Selion/Salient Ceramic.
Ld.CIT(A) restricted
estimated profit at @
20%.
36. Levita 2019- 143(3) 223/RJ Lavita/ 25/07 C Mr.Hiren Kalaria stated
43
ITA No.213/Rjt/2023 & 46 Others
Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
Granito 20 T/2023 Lelevita /2024 that the
LLP /Levita/ Lavita/Lelevita/Levita/V
Vishal ishal represent Levita
Granito LLP.
Ld.CIT(A) restricted
estimated profit at
@20%.
37. Lenora 2019- 143(3) 224/RJ Binara/ 25/07 C Mr.Hiren Kalaria sated
Vitrified 20 T/2023 Leena/L /2024 that the
LLP enora/Li Binara/Leena/Lenora/Li
nash/Li nash/Linora/Vimal
nora/Vi represent Lenora
mal Vitrified LLP.
Ld.CIT(A) restricted
estimated profit at @
20%.
16. We note that in identical group cases, in IT(ss)A Nos.66/RJT/2023 & 26 Others(supra), we sustained the addition @ 13% in case of B and C categories, therefore, our adjudication in the group cases, in IT(ss) Nos.66/RJT/2023 & 26 Others(supra), vide order dated 19/08/2024, and vide relevant Paragraph Nos.41 to 43 of the said decision, wherein the Co- ordinate Bench of ITAT, Rajkot, made the addition @ 13% in B and C categories cases. Therefore, respectfully following the above decision of the Co-ordinate Bench of ITAT, Rajkot, we direct the Assessing Officer (AO) to estimate the income @ 13%, hence, we allow the above appeals partly.
17. In the result, appeal(s) filed by the various assessees, in IT(SS)A No.82/RJT/2023, ITA 274/RJT/2023, ITA 83/RJT/2023, ITA 288/RJT/2023, ITSS 46/RJT/2023, ITSS 50/RJT/2023, ITA 222/RJT/2023, ITSS 47/RJT/2023, ITSS 49/RJT/2023, ITSS 44/RJT/2023, ITA 213/RJT/2023, ITSS 85/RJ/2023, ITA 290/RJT/2023, ITSS 55/RJT/2023, ITSS 56/RJT/2023, ITSS 57/RJT/2023, ITSS 68/RJT/2023, ITSS 70/RJT/2023, ITSS 71/RJT/2023, ITSS 72/RJT/2023, ITSS 73/RJT/2023, ITSS 44 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
74/RJT/2023, ITSS 75/RJT/2023, ITSS 76/RJT/2023, ITSS 77/RJT/2023, ITSS 69/RJT/2023, ITSS 51/RJT/2023, ITSS 52/RJT/2023, ITSS 53/RJT/2023, ITSS 54/RJT/2023, ITA 240/RJT/2023, ITA 225/RJT/2023, ITA 226/RJT/2023, ITA 246/RJT/2023, ITA 251/RJT/2023, ITA 223/RJT/2023 & ITA 224/RJT/2023 are partly allowed.
18. We also note that in the following cases, the complete addition is to be deleted, as there is no name of these assessees in the seized material, therefore, following the decision of the Co-ordinate Bench, in IT(ss)A Nos.66/RJT/2023 & 26 Others(supra), we allow the appeal(s) of the following assessees.
Sl. Name of A.Y. Asst.Order Appeal Name Date Cate Violation of facts and as
No. Assessee Section No. of the - per Hiren Kalaria's
IT(SS) seized gory statement
A/ITA material
1. Aston 2018- 153C ITSS Himans 25/07 A No name of the
Ceramic 19 45/R/2 hu /2024 appellant was in seized
3 material and Hiren
2. Aston 2019- 143(3) ITA Himans 25/07 A Kalariya in his statement
Ceramic 20 215/R/ hu /2024 also stated that he didn't
23 know the3 name of the
3. Admark 2018- 153C ITSS Vikas 25/07 A ultimate beneficiary.
Ceramic 19 97/R/2 /2024
Industries 3
4. Croma 2018- 153C ITSS Monark 25/07 A
Ceramic P 19 84/R/2 /2024
L 3
5. Croma 2019- 143(3) ITA Monark 25/07 A
Ceramic P 20 289/R/ /2024
L 23
6& Lucaso 2017 153C 92/RJT Ramesh 25/07 A Name given by Mr.
7. Ceramic & /2023 /2024 Hiren Kalaria.
Pvt.Ltd. 2018- However, Rameshbhai
19 93/RJT resigned from
/2023 directorship of the
Company from
13/06/2016. Ld. CIT(A)
restricted estimated
profit at @ 20%.
8. Lovin Tiles 2018- 153C 48/RJT Vinod 25/07 A Mr.Hiren Kalaria in one
LLP 19 /2023 /2024 statement stated Vinod
represents Lovin Tiles.
45
ITA No.213/Rjt/2023 & 46 Others
Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
However, in other
statement dated
14.03.2019 he stated that
Vinod represents Vinod
Trading. Ld. CIT(A)
restricted estimated
profit at @ 20%.
9. Vaibhav 2019- 143(3) 262/RJ Vaibhav 25/07 A Vaibhav in not engaged
Sardava 20 T/2023 /2024 in the ceramic industries
but deriving profession
income. Ld.CIT(A)
restricted estimated
profit at @ 20%.
10. Lovin Tiles 2019- 143(3) 218/RJ Vinod 25/07 A Mr.Hiren Kalaria in one
LLP 20 T/2023 /2024 statement stated Vinod
represents Lovin Tiles.
However, in other
statement dated
14.03.2019 he stated that
Vinod represents Vinod
Trading. Ld.CIT(A)
restricted estimated
profit at @ 20%.
19.In the above case(s) of ten assessees, there is no incriminating material, even their names in the seized material do not exist, and Shri Hiran Kalariya also stated in his statement that he did not know about these assessees. Therefore, the seized material for the purpose of these 10 assessees are dump documents. Therefore, these above 10 assessees are fully covered by the decision of the Co-ordinate Bench, in IT(ss)A Nos.66/RJT/2023 & 26 Others(supra), vide Paragraph Nos. 44 to 46 of the said decision, wherein we have deleted the entire addition sustained by the ld. CIT(A), hence, we delete the addition in the hands of above 10 assessees.
20. In the result, appeal(s) filed by the assessees in ITSS(A) No.45/RJT/2023, ITA No.215/RJT/2023, IT(SS)A No.97/RJT/2023, IT(SS)A No.84/RJT/2023, ITA No.289/RJT/2023, IT(SS)A 46 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors.
.
No.92/RJT/2023, IT(SS)A No.93/RJT/2023, IT(SS)A No.48/RJT/2023, IT(SS)A No.262/RJT/2023 and IT(SS)A No.218/RJT/2023 are allowed.
21. We summarize the combined result as under:
(i) Appeals in IT(SS)A No.82/RJT/2023, ITA 274/RJT/2023, ITA 83/RJT/2023, ITA 288/RJT/2023, ITSS 46/RJT/2023, ITSS 50/RJT/2023, ITA 222/RJT/2023, ITSS 47/RJT/2023, ITSS 49/RJT/2023, ITSS 44/RJT/2023, ITA 213/RJT/2023, ITSS 85/RJ/2023, ITA 290/RJT/2023, ITSS 55/RJT/2023, ITSS 56/RJT/2023, ITSS 57/RJT/2023, ITSS 68/RJT/2023, ITSS 70/RJT/2023, ITSS 71/RJT/2023, ITSS 72/RJT/2023, ITSS 73/RJT/2023, ITSS 74/RJT/2023, ITSS 75/RJT/2023, ITSS 76/RJT/2023, ITSS 77/RJT/2023, ITSS 69/RJT/2023, ITSS 51/RJT/2023, ITSS 52/RJT/2023, ITSS 53/RJT/2023, ITSS 54/RJT/2023, ITA 240/RJT/2023, ITA 225/RJT/2023, ITA 226/RJT/2023, ITA 246/RJT/2023, ITA 251/RJT/2023, ITA 223/RJT/2023 & ITA 224/RJT/2023, are partly allowed.
(ii) Appeals in IT(SS)A No.45/RJT/2023, ITA No.215/RJT/2023, IT(SS)A No.97/RJT/2023, IT(SS)A No.84/RJT/2023, ITA No.289/RJT/2023, IT(SS)A No.92/RJT/2023, IT(SS)A No.93/RJT/2023, IT(SS)A No.48/RJT/2023, IT(SS)A No.262/RJT/2023 and IT(SS)A No.218/RJT/2023, are allowed.
Order pronounced in the Open Court on 20 August 2024 at Rajkot.
Sd/- Sd/- (DINESH MOHAN SINHA) (DR. A. L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Rajkot; Dated: 20/08/2024 47 ITA No.213/Rjt/2023 & 46 Others Tiles Art vs. ACIT-DCIT & Ors. - AY 2019-20 & Ors. . आदे श क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee(s). 2. Revenue 3. Concerned CIT 4. CIT (A)-concerned.5. DR, ITAT, Rajkot 6. Guard file. By order/आदे श से, स यािपत ित //True Copy// Assistant Registrar ITAT, Rajkot
Strengthened preparation & delivery of orders in the ITAT
1) Date of dictation 25 & 26/07/2024
2) Date on which the typed draft is placed before the Dictating Member & 27/07/2024/20/08/2024 Other Member
3) Date on which the approved draft comes to the Sr. P.S./P.S.
4) Date on which the fair order is placed before the Dictating Member for pronouncement
5) Date on which the fair order comes back to the Sr. P.S./P.S.
6) Date on which the file goes to the Bench Clerk 21/08/2024
7) Date on which the file goes the Head Clerk 21/08/2024
8) Date on which the file goes to the Assistant Registrar for signature on the order
9) Date of Dispatch of the order 48