Suraj Rolling Pvt. Ltd. Vs ACIT (ITAT Raipur)
The ITAT Raipur partly allowed the assessee’s appeal arising from the assessment completed under Sections 143(3) read with 153A for AY 2019-20. The assessee, engaged in manufacturing steel products, was subjected to a search under Section 132 on 22.11.2018. In its return, it declared income of ₹1,21,56,460, including ₹45,00,000 surrendered during the search. The Assessing Officer completed the assessment by making additions of ₹8,28,344 as commission income on alleged bogus sales and ₹3,00,000 as cash received through hawala transactions, and applied Section 115BBE to ₹56,28,344 comprising the surrendered income and both additions.
The assessee did not press the ground challenging limitation. It also challenged the validity of approval under Section 153D, alleging mechanical approval without application of mind. The Tribunal distinguished between “approval” and “sanction”, referred to Section 292BC, and observed that the assessee had not produced corroborative material demonstrating non-application of mind. It held that the approval under Section 153D was valid and dismissed this ground.
On the addition of ₹8,28,344, the assessee contended that the commission income formed part of the ₹45,00,000 already surrendered on account of unexplained stock. The Revenue argued that the commission income arose from impounded material recovered during a survey at Jhanjharia Nirman Limited, whereas the surrendered amount related only to excess stock found during the search. The Tribunal noted that the commission income had been earned before the search and observed that, where unaccounted income is not found as cash or revenue expenditure during the search, its manifestation in the form of assets cannot be ruled out. Since unexplained stock-in-trade had been found during the search, the Tribunal held that the commission income could not be ruled out as having been invested in that stock and concluded that the surrendered income of ₹45,00,000 included the commission income. Accordingly, the addition of ₹8,28,344 was deleted.
