Addition for concealed profit not possible on mere surmises

DCIT Vs Agya Ram Manohar Lal (ITAT Chandigarh)

Facts- The brief facts of the case for AY 2016- 17 are that the assessee firm derives income from business and income from other sources. The assessee firm belongs to M/s Roop Square Group of companies where a search and seizure operation u/s 132(1) was conducted on 01.11.2017 at various business and residential premises of the group. Subsequently, in response to notice issued u/s 153A of the Act, the return for AY 2016-17 was filed declaring an income of Rs. 7,67,200/-. Thereafter, the assessment was completed in terms of provisions of section 153A r.w.s. 143(3) of the Act at an income of Rs. 1,43,00850/- after making various additions alleging unexplained expenditure, undisclosed investment, concealed net profit and unexplained investment.

CIT(A) partly allowed the appeal and accordingly the appellant approached the Tribunal.

Conclusion- Therefore, it is our considered view that even if there had to be an addition on account of some concealed profit, the AO would have to lead evidence to establish earning of such concealed profit and this kind of addition cannot be made on mere surmises. In our view, the AO has not adopted a correct approach in tabulating such alleged concealed profit and such approach cannot be approved by us.

Further held that the impugned investment had been made by different co-owners in their individual names, beyond the block period and there was no link or connection with the investment made by the partnership concern i.e. the assessee”. It is noted that “there is no dispute about the fact that the impugned investment related to the property purchased by individuals acting in their individual capacity and that the assessee firm had no connection with the same. Therefore, we find ourselves in agreement with the findings of the Ld. CIT (A) as reproduced above, that no addition could be made in the hands of the assessee firm u/s 69 of the Act as unaccounted investment during assessment year under consideration”.

FULL TEXT OF THE ORDER OF ITAT CHANDIGARH

The captioned appeals have been preferred by the Revenue/Assessee against the separate orders of Ld. Commissioner of Income Tax (Appeals)-5, Ludhiana [CIT (A)] as per the details given below:-

2.0 Since common issues were involved in this batch of appeals, they were heard together and are being disposed off through this common order for the sake of convenience.

3.0 The brief facts of the case for Assessment Year (AY) 2016- 17 (ITA 217/Chd/2021) are that the assessee firm derives income from business and income from other sources. The assessee firm belongs to M/s Roop Square Group of companies where a search and seizure operation u/s 132(1) of the Income Tax Act, 1961 (hereinafter called ‘the Act’) was conducted on 01.11.2017 at various business and residential premises of the group. Subsequently, in response to notice issued u/s 153A of the Act, the return for AY 2016-17 was filed declaring an income of Rs. 7,67,200/-. Thereafter, the assessment was completed in terms of provisions of section 153A r.w.s. 143(3) of the Act at an income of Rs. 1,43,00850/- after making the following additions:

(i) Rs. 39,88,288/- on account of alleged unexplained expenditure on salary u/s 69C of the Act

(ii) Rs. 82,93,216/- on account of alleged concealed net profit

(iii) Rs. 8,29,321/- on account of alleged undisclosed investment for earning the alleged concealed net profit

(iv) Rs. 4,22,825/- on account of alleged unexplained investment u/s 69 in construction of property Kothi Tehal Singh.

3.1 Aggrieved, the assessee carried the matter before the Ld. First Appellate Authority. The assessee challenged the legality of the assessment proceedings u/s 153A and also challenged the additions on merits. The Ld. CIT (A) partly allowed the assessee’s appeal as under:

(i) The Ld. CIT (A) dismissed the assessee’s challenge to assessment being framed u/s 153A of the Act.

(ii) The addition of Rs. 4,22,825/- on account of alleged investment in construction of property Kothi Tehal Singh was deleted.

(iii) The addition of Rs. 39,88,288/- on account of alleged out of books payment of salaries was restricted to Rs. 23,37,618/-.

(iv) The addition of Rs. 82,93,216/- on account of alleged concealed net profit was restricted to Rs. 19,61,029/-.

(v) The addition of Rs. 8,29,321/- on account of alleged undisclosed investment for earning the alleged concealed net profit was deleted.

3.2 Now, the assessee has approached this Tribunal challenging the order of the Ld. CIT (A) by raising the following grounds of appeal:

1. That the Ld. CIT(A) has erred in confirming the action of the Assessing Officer in issuing notice u/s 153A and passing the order u/s 153A/143(3), since there was no search on the partnership concern and neither any Panchnama has been drawn and it was only a survey and, therefore, the assessment as framed by the Assessing Officer and confirmed by the CIT(A) deserves to be quashed as per the judgment of the Mumbai Tribunal in the case of Regency Mahavir Property in ITA No. 682 & 683/Mum/2016.

2. Notwithstanding, the above said ground of appeal, the assessment as framed by the Assessing Officer after obtaining the mandatory approval u/s 153D from the ‘Addl. Commissioner of Income Tax’, is void-ab-initio, since the Ld. Addl. Commissioner has only accorded ‘mechanical approval’ of the draft assessment order sent by AO, without any application of mind and which issues is covered by the judgment of the Jurisdictional bench of the ITAT Chandigarh in the case of M/s. Inder International, Ludhiana in ITA No. 1573/Chd/2018 and many other cases of different Benches of the Hon’ble ITAT.

3. (a) That the Ld. CIT(A) has erred in confirming the addition of Rs. 23,37,618/- against the addition of Rs. 39,88,288/- on account of unrecorded payments to the employees which is against the facts & circumstances of the case.

(a) That the Ld. CIT(A) has failed to give the credit of the salary paid as per the books of accounts of two sister concerns of the assessee group namely M/s. Shergill Foods & Beverages to the tune of Rs. 7,63,200/- and M/s. M. S. Corp. to the tune of Rs. 3,25,000/- and has failed to appreciate that the said concerns were being controlled from the office of the assessee only by the family, since there are common partners having substantial shareholding in the above two concerns. Hence on account of common management of all the concerns, details were being maintained in a consolidated manner.

(b) Notwithstanding, the above said grounds of appeal, no addition on account of the above issue of unrecorded payments to employees could be made, since sufficient funds were available out of the sale of the accounted for stocks,, outside the books of accounts as per submissions made before the CIT(A), which have been ignored without assigning into any proper reason.

4. (a) The Ld. CIT(A) has erred in confirming the addition of Rs. 19,61,029/- against the total addition of Rs. 82,93,216/- on account of alleged concealed profit.

(b) That the Ld. CIT(A) has failed to appreciate that the assessee is engaged in the business of trading in retail trade of readymade garments and, as such, the ‘net concealed profit’ as calculated to the tune of Rs. 19,61,029/- is against the facts & circumstances of the case.

5. That the Ld. CIT(A) has erred in confirming the additions which have been made on conjectures, surmises and suspicion and such type of addition cannot be made as per binding judgment of Hon’ble Supreme Court in the case of Omar Salay Mohamed SaitVs CIT 37 ITR 151.

That the appellant craves leave to add or amend the grounds of appeal is finally heard or disposed-off.

4.0 In AY 2017-18 (ITA No. 218/Chd/2021 filed by the assessee and ITA No.248/Chd/2021 filed by the department), the return of income in response to notice issued u/s 153A consequent to the search was filed declaring an income of Rs. 7,80,640/- and the assessment was completed at an income of Rs. 1,98,50,680/-, inter alia, after making the following additions/disallowances:

(i) Rs. 42,04,640/- on account of alleged unexplained expenditure on salary u/s 69C of the Act

(ii) Rs. 1,24,68,780/- on account of alleged concealed net profit

(iii) Rs. 12,46,878/- on account of alleged undisclosed investment for earning the alleged concealed net profit

(iv) Rs. 2,82,190/- on account of alleged unexplained investment u/s 69 in construction of property Kothi Tehal Singh.

(v) Rs. 8,67,550/- on account of purchases outside the books of account.

4.1 Aggrieved, the assessee carried the issues before the Ld First Authority challenging the assumption of jurisdiction u/s 153A of the Act on legal ground and also challenged the various additions and disallowances on merits. The Ld.CIT (A) dismissed the assessee’s challenge to the validity of assumption of jurisdiction u/s 153A of the Act. Apart from this, the Ld.CIT(A) also deleted the addition with respect to alleged investment in property ‘Kothi Tehal Singh’ amounting to Rs.2,82,190/-. With respect to the addition pertaining to alleged unrecorded payments to the employees to the tune of Rs.42,04,640/-, the Ld. CIT(A) restricted the addition to Rs.28,37,506/-. Similarly, the addition of alleged concealed net profit to the tune of Rs.66,91,933/- was restricted by the Ld.CIT (A) to Rs.25,03,905/-. The addition of Rs.12,46,878/- on account of alleged capital investment was deleted by the Ld.CIT(A). With respect to the addition of Rs.8,67,550/- on account of alleged unaccounted purchases, the Ld.CIT (A) allowed only part relief and upheld the addition to the extent of Rs.7,94,550/-.

4.2 Aggrieved with this order of the Ld First Appellate Authority, both the assessee as well as the Department have now approached this Tribunal and the following grounds have been raised by them in this regard:

Assessee’s Appeal in ITA 218/Chd/2021:

That the Ld. CIT(A) has erred in confirming the action of the Assessing Officer in issuing notice u/s 153A and passing the order u/s 153A/143(3) since there was no search on the partnership concern and neither any Panchnama has been drawn and it was only a survey and, therefore, the assessment as framed by the Assessing Officer and confirmed by the CIT(A) deserves to be quashed as per the judgment of the Mumbai Tribunal in the case of Regency Mahavir Property in ITA No. 682 & 683/Mum/2 016.

2. Notwithstanding, the above said ground of appeal, the assessment as framed by the Assessing Officer after obtaining the mandatory approval u/s 153D from the ‘Addl. Commissioner of Income Tax’, is void-ab-initio, since the Ld. Addl. Commissioner has only accorded ‘mechanical approval’ of the draft assessment order sent by AO, without any application of mind and which issues is covered by the judgment of the Jurisdictional bench of the ITAT Chandigarh in the case of M/s. Inder International, Ludhiana in ITA No. 1573/Chd/2018 and many other cases of different Benches of the Hon’ble ITAT.

3. (a) That the Ld. CIT(A) has erred in confirming the addition of Rs. 28,37,506/- against the addition of Rs. 42,40,640/- on account of unrecorded payments to the employees which is against the facts & circumstances of the case.

(b) That the Ld. CIT(A) has failed to give the credit of the salary paid as per the books of accounts of two sister concerns of the assessee group namely M/s. Shergill Foods & Beverages to the tune of Rs. 9,86,400/- and M/s. M. S. Corp. to the tune of Rs. 7,44,000/- and has failed to appreciate that the said concerns were being controlled from the office of the assessee only by the family, since there are common partners having substantial shareholding in the above two concerns. Hence on account of common management of all the concerns, details were being maintained in a consolidated manner.

(c) Notwithstanding, the above said grounds of appeal, no addition on account of the above issue of unrecorded payments to employees could be made, since sufficient funds were available out of the sale of the accounted for stocks,, outside the books of accounts as per submissions made before the CIT(A), which have been ignored without assigning into any proper reason.

4. (a) The Ld. CIT(A) has erred in confirming the addition of Rs. 25,03,905/- against the total addition of Rs. 1,24,68,780/- on account of alleged concealed profit.

(b) That the Ld. CIT(A) has failed to appreciate that the assessee is engaged in the business of trading in retail trade of readymade garments and, as such, the ‘net concealed profit’ as calculated to the tune of Rs. 25,03,905/- is against the facts & circumstances of the case.

5. That the Ld. CIT(A) has erred in confirming the addition of Rs. 7,94,550/- against the addition of Rs. 8,67,550/- on account of alleged unaccounted purchases.

6. That the Ld. CIT(A) has erred in confirming the additions which have been made on conjectures, surmises and suspicion and such type of addition cannot be made as per binding judgment of Hon’ble Supreme Court in the case of Omar Salay Mohamed Sait Vs CIT 37 ITR 151.

7. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard and disposed off.

Department’s Appeal in ITA No. 248/Chd/2021:

1. Whether upon facts and circumstances of the case, the Ld. CIT (A) was justified in restricting the addition to the extent of Rs. 28,37,506/- as against Rs. 42,04,640/- made by the AO on account of unexplained expenditure u/s 69C of the l.T. Act, 1961?

2. Whether upon facts and circumstances of the case, the Ld. CIT (A) was justified in restricting the addition to the extent of Rs. 23,03,905/- as against Rs. 1,24,68,780/- made by the AO on account of concealed net profit?

3. Whether upon facts and circumstances of the case, the Ld. CIT (A) was justified in deleting the addition of Rs. 12,46,878/- made by the AO on account of undisclosed investment u/s 69 of the I. T. Act, 1961?

4. Whether upon facts and circumstances of the case, the Ld. CIT (A) was justified in deleting the addition of Rs. 2,82,190/- made by the AO on account of undisclosed investment?

5. The appellant craves leave to add, amend, modify, `vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal.

5.0 In assessment year 2018-19 pertaining to ITA No.219/Chd/2021 filed by the assessee, the return of income was filed declaring an income of Rs.13,22,780/- and the assessment was completed at an income of Rs.1,32,88,840/- after making the following additions and disallowances:

1) Rs. 29,66,795/- in respect of unexplained expenditure on salary paid to employees.

2) Rs. 74,70,037/- in respect of alleged concealed net profit.

3) Rs. 7,47,003/- being alleged investment in capital for earning the alleged concealed net profit.

4) Rs. 7,82,230/- being gross profit earned on alleged unaccounted sales.

5.1 Aggrieved, the assessee carried the matter before the Ld. First Appellate Authority challenging the additions and disallowances made by the AO on merits. The Ld. CIT (A) gave part relief to the assessee by restricting the addition on account of unrecorded salary to Rs.22,47,034/- as against Rs.29,66,795/- made by the AO. Similarly, the addition of Rs.74,70,037/- on account of alleged concealed net profit was restricted to Rs.22,26,999/-. The Ld. CIT (A) deleted the addition of Rs.7,47,003/- made on account of undisclosed investment for earning concealed profit. The Ld. CIT (A) upheld the addition of Rs.7,82,320/- made on account of gross profit earned on unaccounted sales.

5.2 Aggrieved, the assessee has now approached this Tribunal challenging the action of the Ld. CIT (A) and following grounds have been raised in this regard:

(a) That the Ld. C!T(A) has erred in confirming the addition of Rs. 22,47,034/- against the addition of Rs. 29,66,795/- which is against the facts a circumstances of the case.

(b) That the Ld. CIT(A) has failed to give the credit of the salary paid as per the books of accounts two sister concerns of the assessee group namely M/s. Shergill Foods & Beverages to the tune of Rs. 5,36,885/- and M/s. M S. Corp. to the tune of a Rs. 7,84,760/- and has failed to appreciate that the said concerns were being controlled from the office of the assessee only by the family, since there were common partners having substantial shareholding in the above two concerns.

(c) Notwithstanding the above said grounds of appeal, no addition on account of the above could be made, since sufficient funds were available out of the sale of the accounted for stock outside the books of accounts as per submissions made before the CIT(A) which have been ignored without assigning into any proper reason.

(d) That the Ld. CIT(A) has erred in confirming the invoking the provision of section 115BBE on the addition of Rs. 22,47,034/- as confirmed above which is also against the facts a circumstances of the case.

2. (a) The Ld. CIT(A) has erred in confirming the addition of Rs. 22,26,999/- against the total addition of Rs. 74,70,037/- on account of alleged concealed profit.

(b) That the Ld. CIT(A) has failed to appreciate that the assessee is engaged in the business of trading in retail trade of readymade garments and, as such, the ‘net concealed profit’ as calculated to the tune of Rs. 22,26,999/- is against the facts a circumstances of the case.

3. (a) That the Ld. CIT(A) has erred in confirming the addition of Rs. 7,82,230/- on account of the shortage in stock.

(b) Notwithstanding the above said ground of appeal, it is prayed that if this addition of gross profit on account of sales outside the books of accounts is confirmed then the benefit of the funds available on the account of shortage in stock to the tune of Rs. 65,62,914/- was liable to be set-off against the other additions as made in this year and the additions made in the earlier years.

4. Notwithstanding, the above said ground of appeal, the assessment as framed by the Assessing Officer after obtaining the mandatory approval u/s 153D from the ‘Addl. Commissioner of Income Tax’, is void-ab-initio, since the Ld. Addl. Commissioner has only accorded ‘mechanical approval’ of the draft assessment order sent by AO without any application of mind and which issues is covered by the judgment of the Jurisdictional bench of the ITAT Chandigarh in the case of M/s. Inder International, Ludhiana in ITA No. 1573/Chd/2018 and many other cases of different Benches of the Hon’ble ITAT.

5. That the Ld. CIT(A) has erred in confirming the additions which have been made on conjectures, surmises and suspicion and such type of addition cannot be made as per binding judgment of Hon’ble Supreme Court in the case of Omar Salay Mohamed Sait Vs CIT 37 ITR 151.

6. That the appellant craves leave to add or amend the grounds of appeal is finally heard or disposed-off.

6.0 The Ld. AR submitted that the assessee was challenging the validity of assessment proceedings u/s 153A of the Act and the mechanical approval accorded u/s 153D of the Act in Assessment Years 2016-17 and 2017-18. It was submitted that though the Assessing Officer (AO) had framed the assessment u/s 153A/143(3) of the Act, there was no search at the business premises of the assessee and only survey u/s 133A of the Act was carried out. He supported his contention by relying upon the impounding order u/s 133A of the Act as passed during survey, the statements recorded during such survey and the various other questionnaires issued during post survey and during assessment proceedings, to substantiate that no search was carried out at the business premises of the assessee. He invited the attention of the Bench to the provisions of section 153A of the Act and argued that it is only on the basis of search u/s 132(1) of the Act that the Assessing Officer gets the jurisdiction to issue the notice u/s 153A. It was vehemently argued by the Ld. AR that the assessment, as framed by the Assessing Officer u/s 153A /143(3) of the Act, was bad in law and being a jurisdictional defect, it could not be cured. The Ld. Counsel placed reliance upon the case of ITAT Mumbai Bench in the case of ‘Regency Mahavir Property’ reported in 89 taxman.com 444, in which, it has been held that if no Panchanama was drawn in the name of assessee, the condition as stipulated for assumption of jurisdiction u/s 153A cannot be held to be satisfied. He also relied upon some more legal precedents for the same preposition copies of which have been filed in the paper book. It was reiterated by the Ld. Counsel for the assessee that since there was no search at the premises of the assessee, the assumption of jurisdiction by the Assessing Officer u/s 153A was to be held void ab initio in view of the various judgments being relied upon as above. The Ld. Counsel for the assessee also drew our attention to the order of the ‘Indore Bench’ of the ITAT in the case of ‘Rajat Tradecom India Pvt. Ltd. Vs DCIT’ reported in 120 ITD 301. The Ld. AR further argued that the Assessing Officer, while passing the assessment orders for Assessment Years (AY) 2016-17 to 2018-19, has stated that survey u/s 133A has been carried out at the premises of assessee, as is borne out from the orders of the AO and is referred to in Para 3.9 of the order for A.Y, 2016-17, 2017-18 and 2018-19.

6.1 It was further submitted by the Ld. AR that the Ld. Addl. CIT had accorded mechanical approval to the assessment proceedings/order and, therefore, the same deserved to be quashed in view of the order of the Chandigarh Bench of the ITAT in the case of M/s Inder International in ITA No. 1573/Chd/2018. Our attention was drawn to the copy of the said approval placed in the Paper Book and it was contended that the assessment records were sent on 21.12.2019 and on next day itself, the approval was accorded by the Ld. Addl.CIT in a ‘mechanical manner’ without any application of mind. It was further argued that 56 assessment files were sent for approval on 21.12.2019 and the same were approved by the Ld. Addl.CIT u/s 153D of the Act and, therefore, in view of the various judicial precedents on the issue, it was argued that the assessment as framed by Assessing Officer u/s 153A/143(3) deserved to be quashed.

7.0 On merits, the Ld. Authorized Representative submitted that the additions made in respect of unrecorded payments to the employees were common in all the three years under appeal. Referring to the assessment order and the order of the Ld. First Appellate Authority for the assessment year 2016-17, the Ld. AR submitted that during the course of search, on the basis of certain seized documents, as per Table-A drawn by the AO, the AO tabulated unrecorded payments made to the employees of the assessee which amounted to Rs.39,88,288/- in assessment year 2016-17, Rs.42,04,640/- in assessment year 2017-18 and Rs.29,66,795/- in assessment year 2018­19. It was submitted that this addition had been made in terms of section 69C of the Act for all the three assessment years. It was submitted that besides the assessee firm, the group also has two other family concerns, namely M/s M.S. Corp. and M/s Shergil Food & Beverage and the assessee had contended before the Ld. First Appellate Authority that the addition on account of unrecorded payments to employees was not proper because the assessee had to be given the benefit of salary pertaining to M/s M.S.Corp. and M/s Shergil Food & Beverage for the reason that all the three concerns were being looked after by the Head of the Family Shri Satpal Sachdeva who had been maintaining consolidated account for all the concerns. He drew our attention to the submissions of the assessee before the Ld.CIT(A) as had been reproduced by him at page 9 of his order wherein it has been submitted that the salary which remained unexplained after accounting for salary paid in the other two concerns amounted only to Rs.11,82,418/-. Our attention was drawn to the chart submitted before the Ld. CIT (A) in this regard. The said chart is being reproduced herein under for a ready reference:

7.1 The Ld. AR also referred to the Paper Book filed by the assessee wherein the copy of the assessment order for assessment year 2018-19 in the case of M/s M.S. Corp. framed u/s 143(3) of the Act had been placed and also wherein the details of salary as per the books of account for all the three assessment years had been filed. It was argued by the Ld. AR that the difference in salary to the tune of Rs.11,82,418/-, as submitted before the Ld.CIT(A), had been made by the assessee out of funds which were available with the assessee out of shortage in stock. The Ld. AR also drew our attention to the written submissions made by the assessee before the Ld. CIT (A) and the same are being reproduced herein under for a ready reference:

“xi).Though, the assessee had stated that these are only rough memoranda of the record and not the exact payment of salary, however, it is submitted for the sake of argument that if, at all, the addition was liable to be made that could be only of the amount of Rs. 11,82,418/-and not the total addition of Rs. 39,88,288/-. Therefore, the A. O. has grossly erred in making the addition of Rs. 39,88,288/-.

xii). Even, it is submitted, this addition of Rs. 11,82,418/- is not liable to be made, since, the assessee had sufficient funds, out of shortage in stock. It is being submitted that on the date of survey 01.11.2017, there were shortage of stock to the tune of Rs. 65,62,914/-which have been determined by the department and this shortage in stock, though, arrived on 01.11.2017, but this had been existing from the earlier years as well i.e. for the past few years, because this much of shortage in stock to the tune of Rs. 65,62,914/- cannot be there in seven months, out of stock of Rs. 3.5 crores to Rs. 4.5 crores on an average, which is always available as per books and verifiable from the trading a/c of each year. Out of such amount realized over the years out of the sales of accounted for stocks not recorded in books, such payment of salary, if any, was being paid and, therefore, no such addition of salary paid outside the books of Rs. 11,82,418/- is liable to be made. Even otherwise, during the course of search proceedings, search team didn’t find any unexplained cash, jewellery, immovable property or any other property or investment.”

7.2 It was reiterated by the Ld. AR that the Ld.CIT (A), while allowing relief to the assessee on this issue, had allowed the benefit of salary only as per the books of account of the assessee firm and not in respect of the other two family concerns. The Ld. AR also drew our attention to the statement of Shri Manak Sachdeva S/o Satpal Sachdeva, which had been recorded during the search and wherein he had stated, when the diary was confronted to him, that notings in the diary were only known to his father Shri Satpal Sachdeva as it was only he who had been looking after financial matter of the group as a whole. It was further argued by the Ld. AR that when Shri Satpal Sachdeva was confronted with notings in the diary, Shri Satpal Sachdeva had stated that he was under stress and exhausted. He also brought to our notice a crucial fact that no further enquiries had been made from Shri Satpal Sachdeva during the course of assessment proceedings. The Ld. AR reiterated that the Ld. CIT (A) had failed to appreciate the fact that the funds were available with the assessee on account of shortage in his stock and the benefit of the same should have been given to the assessee. It was also argued that the sole reliance on the statement of Shri Manak Sachdeva by the Department was not proper. The Ld. AR submitted that the arguments in respect of this issue would be identical in all the three years under consideration and the same were not being repeated for the sake of brevity.

8.0 With respect to the next ground of appeal pertaining to the confirmation of addition of Rs.19,61,029/- as against total addition of Rs.82,93,216/- on alleged concealed profit in assessment year 2016­17, the Ld. AR submitted that the AO had made the addition by mentioning that the assessee was having a parallel turnover for which he maintained a separate work force. It was submitted that the AO had estimated the alleged concealed net profit on the basis of actual salary debited in the books of account of the assessee vis-à-vis in the salary payments recorded in the seized documents. Our attention was drawn to the computation of such alleged concealed profits by the AO which is depicted in the following table (page 11 of the Assessment Order):

8.1 The Ld. AR submitted that the entire basis for making this addition by the AO and its part confirmation by the Ld. First Appellate Authority was not in order because the assessee is a trading concern and not a manufacturing concern wherein all the sales and purchases have been fully recorded and vouched and there is no evidence of purchases or sales having been made outside the books of account. It was submitted that it is also a case in point that no incriminating material had been found on which this kind of addition could be based. The Ld. AR argued that this addition is entirely based on conjectures and surmises and was directly contrary to the binding judgment of the Hon’ble Apex Court in the case of Omar Salay Mohamed Sait Vs. CIT, reported in 37 ITR 157 (SC). The Ld. AR also challenged the working of the AO in this regard as the AO had considered the net profit as per the Profit & Loss Account without considering the partners’ salary and interest. The Ld. AR also drew our attention to the chart submitted before the Ld. CIT (A) in this regard which was accepted by the Ld. CIT (A) [page 30 of the order of the Ld. CIT (A)]. The same is being reproduced here-in-under for ready reference:

8.2 The Ld. AR further submitted that in absence of any incriminating material found during the course of search with respect to concealed profit, such addition could not have been made. The Ld. AR further submitted that the issue was also common in all the three years under appeal and that his arguments would also be on the same grounds and that the same were not being repeated for the sake of brevity.

9.0 The Ld. AR further submitted that in assessment year 2017-18 there was another addition of Rs.8,67,550/- made by the AO in respect of alleged unaccounted purchases and the Ld.CIT(A) had restricted this addition of Rs.7,94,550/-. It was submitted that again this addition was based on mere estimate and no such material, as alleged by the lower authorities, had been purchased. Referring to the document at page 29, it was argued that this was only a rough estimate which was evident from the notings of the said document itself. He also drew our attention to the said document wherein it has been mentioned that certain goods had been sent on approval basis. The Ld. AR further submitted that since the assessee firm is in the business of retail sale of ladies dress material, certain goods are regularly sent on approval and are also received on approval without actual sale or purchase transactions having taken place and, therefore, addition based on a document which itself specifies that it was an estimate, could not have been made. It was submitted that there was no evidence of delivery of any goods and neither was any enquiry conducted before making the said addition.

10.0 Coming to the assessee’s appeal for assessment year 2018-19, the Ld. AR submitted that ground No.1 challenges the action of the Ld.CIT(A) in confirming the addition of Rs.22,47,034/- as against the addition of Rs.29,66,795/- made by the AO with respect to unrecorded payment of salaries. It was submitted that the argument on this account was identical to the arguments made by him for assessment year 2016-17.

10.0.1 It was further submitted that apart from that, the assessee was also challenging the action of the Ld. CIT (A) in confirming the invocation of provisions of section 115BBE of the Act. It was argued that the assessee was carrying on retail business of ladies and gents dress material and suiting which was found as a matter of fact at the time of survey and no other business was found to be carried out, and even if certain additions had to be confirmed, provisions of section 115BBE of the Act were not applicable as the source was attributable to the same business.

10.1 With respect to ground No.2 challenging the confirmation of addition of Rs.22,26,999/- as against the total addition of Rs.74,70,037/- on account of alleged concealed profit, it was submitted that the arguments were the same as were made for identical ground in assessment year 2016-17.

10.2 With respect to the assessee’s challenge to the action of the Ld. CIT (A) in confirming the addition of Rs.7,82,230/- on account of shortage of stock (ground No.3) of the appeal for assessment year 2018-19), it was submitted that the same was not being pressed.

10.3 It was also submitted by the Ld. AR that the ground No.4 challenges the mechanical approval accorded u/s 153D of the Act and the arguments were also identical to the arguments made in this regard in assessment year 2016-17.

11.0 In response to the arguments made by the Ld. AR, , it was submitted by the Ld. Departmental Representative (DR) that the assessee’s challenge to assessments being framed u/s 153A had been dealt in detail by Ld. CIT (A) and reliance was placed on the observations and findings in this regard.

11.1 With respect to the assessee’s contention that the approval u/s 153D of the Act was mechanical, the Ld. DR submitted that there is no fixed format for according approval and that this contention of the assessee was just an attempt to grab at straws having no substance as the assessee had a very poor case on merits.

12.0 On merits of the case, the Ld. DR submitted that as far as the appeal of the assessee was concerned, reliance was being placed heavily on the findings recorded by the AO as well as the Ld. CIT (A).The Ld. AR submitted that the assessments had been correctly framed based on loose sheets found at the premises of the assessee and the assessee had not submitted any documentary evidences before the AO and, therefore, the onus on the assessee had not been discharged. The Ld. DR submitted that Annexure A-3, A-4 and A-5 had been seized from House No.362, Bank Colony, Khanna which contained employee-wise cash payments made during various financial years and the same had been reproduced by the AO in the assessment order. Our attention was drawn to the table drawn by the AO in this regard wherein he had tabulated the unrecorded salary for the three years under appeal which were computed from the seized annexures. It was submitted that before the AO, the assessee did not give any proper response to refute the contents of the seized annexures and, therefore, what was now been argued was more of an after-thought and the same deserved to be dismissed.

12.1 Similarly, with respect to additions made on account of concealed net profit, the Ld. DR submitted that since the assessee had been paying salary outside the regular books of account, it was apparent that the assessee had a parallel turnover which he managed through a separate work force to who these unrecorded salaries had been made. It was submitted that on this issue also, no explanation had been forthcoming from the assessee when the AO had required the assessee to explain the same and, therefore, the AO had rightly made an analysis on the basis of actual salary paid, salary as per seized documents and the net profit. Our attention was drawn to Table-F drawn by the AO in the assessment order for assessment year 2016-17 and it was argued that it was beyond doubt that the assessee had earned concealed profit and, therefore, the said addition had rightly been made.

13.0 Arguing for the appeal filed by the Department, the Ld. DR submitted that all the grounds were against the relief provided by the Ld. CIT (A) to the assessee on the issue of allowing relief in respect of unrecorded payments to employees in all the three assessment years. The Ld. DR submitted that the AO had worked out the quantum of unrecorded payments to employees on the basis of seized Annexure-3, A-4 and A-5 and the assessee had failed to reconcile the transactions entered in this annexures with the regular books of account and had also failed to give any explanation regarding these annexures and, therefore, the addition had rightly been made and the Ld. CIT (A) was not correct in restricting these additions.

13.1 With respect to the Department’s ground challenging restricting the addition in respect of concealed net profit, it was submitted that based on the documents seized from the business and residential premises of the assessee, the AO had calculated the quantum of unrecorded payments made to the employees and based on this calculation, the AO had rightly estimated the concealed net profit in the ratio of salary debited in the Profit & Loss Account vis-à-vis salary as per the seized documents. It was argued that the method adopted by the AO was both the logical as well a reasonable and the Ld.CIT(A) had erred in law in allowing deduction of salary and interest to partners as these concealed profits were over and above the profit shown as per the books of account.

13.2 With regard to the deletion of addition in respect of undisclosed investment for earning the concealed profits, the Ld. DR submitted that it is an undisputed fact that capital is required for any business and it cannot be negated that the assessee would have employed some amount of investment for its parallel turnover from which he had earned the undisclosed profits. It was submitted that the AO had rightly applied a rate of 10% of the net profit so concealed in order to make out of book sales. The Ld. DR argued that the Ld. CIT (A) had ignored this observation of the AO and had deleted the addition on this account without any cogent reason.

13.3 With respect to the action of the Ld. CIT (A) in deleting the addition pertaining to investment in property ‘Kothi Tehal Singh’, the Ld. DR submitted that no opportunity had been given to the AO by the Ld. CIT (A) before holding that this property did not belong to the firm but to several owners in their personal names. It was submitted that the partners and firm cannot be treated as separate entities if a particular property has been acquired from the money routed through the firm. The Ld. DR prayed that the Ld.CIT (A)’s order should be set aside and that the order of the AO be restored.

14.0 We have heard rival submissions and have also perused the material available on record. We have also gone through Paper Books filed by the assessee and have also duly considered the various judicial precedents which have been cited by both the parties in their support. We now take up the various grounds on merits as raised by the respective parties one by one.

14.1.0 The first issue for our consideration is the addition made by the AO on account of undisclosed payments made to employees. The factual matrix leading this aspect is that during the course of search from the residential premises, certain manual ledgers containing names of employees and details of cash payments having been made, were found for all the years under consideration and based on this seized material, the AO determined the quantum of salary/wages paid by the assessee firm outside the books of account for the three assessment years under consideration. For assessment year 2016-17, undisclosed payments to employees was worked out at Rs.39,88,288/-/-, for assessment year 2017-18, the amount was calculated at Rs.42,04,640/- and for assessment year 2018-19, it was quantified at Rs.29,66,795/- by the AO. It is a fact on record that when during the course of search one of the partners Shri Manak Sachdeva S/o Shri Satpal Sachdeva had been confronted about these seized ledgers, he admitted having no knowledge about the details contained therein and also stated in the statement recorded that only his father Shri Satpal Sachdeva was managing the accounts and that he only could explain the entries in the ledger. Further, when Shri Satpal Sachdeva was questioned about the entries in these ledgers, the answer of Shri Satpal Sachdeva was that he was under stress and totally exhausted and that he would explain the entries in the office of the AO. However, as per records, no enquiry was further made from Shri Satpal Sachdeva and the AO proceeded to calculate the addition on this account without recording any explanation from Shri Satpal Sachdeva. During the course of proceedings before the Ld First Appellate Authority, the assessee sought to explain that the seized ledgers contained payments made in respect of three family concerns, viz. M/s Agya Ram Manohar Lal, i.e. the assessee in the present appeal, M/s M.S. Corp. and M/s Shergil Food & Beverage. It was further submitted before the Ld. CIT (A) that since all the financial matters were being looked after by Shri Satpal Sachdeva, he had made a consolidated entry of the salaries paid to the employees of all the three family concerns. The assessee sought benefit of the salaries as debited in the regular books of account of all the three concerns as per the Chart submitted by the assessee and worked out the differences in the three years at Rs.11,82,418/- for assessment year 2016-17, Rs.10,71,106/- for assessment year 2017-18 and Rs.9,73,447/- for assessment year 2018-19. It was further submitted before the Ld. CIT (A) that this undisclosed expenditure was met out from the negative stock which had been determined to be to the tune of Rs.65,62,9 14/-as on 01.11.2017. It was submitted before the Ld .CIT (A) that the negative stock of this much quantum could not have been there in a span of seven months i.e. from 01.04.2017 to 31.10.2017. Thus, the main thrust of the arguments in this regard, both before the Ld. CIT (A) and also before us, has been that the benefit of shortage of stock found should be set off against the excess salary paid to employees after giving benefit of the salaries recorded in the books of account of all the three family concerns.

14.1.1 We have carefully considered this submission of the Ld. AR. We note that it is a fact brought out from the record that the Ld. CIT (A) has only allowed the benefit of salary as debited in the books of account of the assessee firm. If the figures appearing in the seized ledger are to be taken as evidence for the purpose of making an addition on this account, the explanation of the assessee in this regard also should be accepted that the salaries debited in the ledger account were consolidated figures for all the three family concerns and did not pertain to the captioned assessee only. This contention of the assessee has weight in as much as, the person who had maintained the seized diary i.e. Shri Satpal Sachdeva was never questioned regarding the contents of the diary and, therefore, in absence of any such enquiry, the explanation offered by the assessee before the CIT (A), which is duly supported by profit/loss accounts of the other two firms gains credence. In our considered view, the explanation offered by the assessee and also submitted before the Ld. CIT (A) that the ledger entries contained consolidated amounts for all the three family concerns, seems plausible. We also note that although the assessee had submitted before the Ld. CIT (A) that the benefit should be allowed in respect of salaries paid in respect of the other two family concerns also, the Ld. CIT (A) has not given any valid reason for not accepting this contention of the assessee. Therefore, on an overall view of the facts of the case and the undisputed fact that the three family concerns were being financially managed by Shri Satpal Sachdeva, the benefit of the salaries debited in all the three family concerns’ books of account should be given to the assessee firm prior to making an addition on this account. Therefore, accepting the contention of the assessee in this regard, we modify the order of the Ld. CIT (A) to the extent that unrecorded payments to employees, as per the working submitted by the assessee are now to be calculated at Rs.11,82,418/- for assessment year 2016-17, Rs.10,71,106/- for assessment year 2017-18 and Rs.9,73,447/- for assessment year 2018­19. The total undisclosed payments to employees thus comes to Rs.32,26,971/-.

14.1.2 Coming to the second limb of the arguments of the Ld. AR in this regard, it is again an accepted fact that the negative stocks to the tune of Rs.65,62,914/- had been found during the survey on 01.11.2017 and on which the AO had made an addition of Rs.7,82,230/-. This amount, although disputed and challenged in ground of appeal No.3 in ITA No.219/Chd/2021 for assessment year 2018-19, has not been pressed and has been dismissed as such. The negative stock of Rs.65,62,914/- would imply that the assessee had sold stock worth this amount out of the books of account and thus, there were funds available at least to the tune of this amount with the assessee. However, the plea of the Ld. AR that the assessee’s undisclosed payments to employees was met out from the proceeds from shortage of stock and that the assessee should be given the benefit of offset against such shortage, does not find favour with us for the simple reason that the shortage of stock was discovered on 01.11.2017 i.e. the date of survey and there is no evidence to establish that such shortage was being brought forward from earlier assessment years. Therefore, for Assessment Year 2016-17 and Assessment Year 2017-18, the addition on account of undisclosed payments to employees would continue to be at Rs. 11,82,418/- and Rs 10,71,106/- respectively as has been directed by us in preceding paragraph 14.1.1 of this order and we reject the arguments in this regard.

14.1.3 However, this contention of the Assessee can be accepted in assessment year 2018-19 i.e. the year in which such shortage was unearthed. We note that the assessee has also accepted the Ld. CIT (A)’s adjudication of confirming the gross profit addition on shortage of stock in assessment year 2018-19 to the tune of Rs 7,82,320/- by not pressing ground No. 5 in assessee’s appeal. The benefit of this addition can be given to the assessee and we restrict the addition to Rs. 1,91,127/- (Rs. 9,73,447-Rs. 7,82,320 = Rs. 1,91,127in Assessment Year 2018-19. Thus, the grounds are partly allowed for Assessment Year 2016-17, 2017-18 and Assessment Year 2018-19.

14.2.0 The second common issue challenged by the assessee in all the three appeals is in relation to the addition made by the AO on account of alleged concealed profits. As per the AO, the alleged concealed net profit for assessment year 2016-17 was Rs.82,93,216/-, for assessment year 2017-18, the same was computed at Rs.1,24,68,780/- and for assessment year 2018-19, the same was computed at Rs.74,70,037/-. The AO made these additions by taking the unrecorded payment to employees (as per the seized annexures) as the base and by applying salary to net profit ratio, he arrived at these figures. The logic behind this action of the AO was that since the assessee had been paying salaries outside the books of account, the assessee must have had entered into sale transactions also outside the books of account and he proceeded to determine the concealed profit from such outside the books sales and added the same to the income of the assessee as indicated above. Before the Ld. CIT (A), the assessee had submitted that the net profit was adopted by the AO as per the books of account and that the AO had ignored the figures pertaining to salary and interest to the partners. The assessee also furnished a table before the Ld. CIT (A) and submitted that if the concealed net profit is to be worked out on the basis of alleged salary-sheet, then the figures mentioned in such chart ought to have been adopted. As per the chart submitted by the assessee before the Ld. CIT (A) and duly reproduced by the Ld. CIT (A) in the impugned order indicates that the concealed net profit after adjustment of salary and interest would come to Rs.19,61,029/- for assessment year 2016­17, Rs.25,03,905/- for assessment year 2017-18 and Rs.22,26,999/-for assessment year 2018-19. The Ld. CIT (A) accepted this contention of the assessee and restricted the additions on account of concealed profits to the extent as indicated in the chart submitted by the assessee.

14.2.1 However, before us, the Ld. AR has vehemently argued that the assessee firm carries on retail business of trading in ladies and gents dress material and also that it does not carry on any manufacturing activity and, therefore, this kind of concealed net profit has been computed in a very incorrect manner because the salaries of the employees will not have a direct relation with the profit earned in a trading concern. It has also been argued that no incriminating material regarding earning of unrecorded profit was found. It has also been argued that in fact, there were no suppression of sales figures and, therefore, the question of earning any concealed profits does not arise.

14.2.2 We have given thoughtful consideration to the entire factual matrix on the issue and we agree with the contention of the Ld. AR that the quantum of salary paid to employees in a trading concern cannot be directly proportional to the profits earned. There cannot be a proportionate and direct co-relation between the salary paid and the profits earned in the case of a trading concern. We also note that during the course of survey, the Department could not unearth any incriminating material which would point out towards any out of book profits having been earned by the assessee firm. Therefore, it is our considered view that even if there had to be an addition on account of some concealed profit, the AO would have to lead evidence to establish earning of such concealed profit and this kind of addition cannot be made on mere surmises. In our view, the AO has not adopted a correct approach in tabulating such alleged concealed profit and such approach cannot be approved by us. Therefore, in our considered opinion, no case for addition on account of concealed net profit is made out and we are not inclined to agree with the findings recorded by the Ld. CIT (A) on this issue and, therefore, we set aside the order of the Ld. CIT (A) on the issue of concealed net profits and direct the AO to delete the same. The grounds of appeals on this issue under all the three captioned years are, therefore, allowed.

15.0 Coming to the appeal of the Department in assessment year 2017-18, it is seen that this appeal is a cross appeal by the Department and ground No.1 pertaining to the action of the Ld. CIT (A) in restricting the addition to the extent of Rs. 28,37,506/- on account of unrecorded payment to employees has already been dealt with in the preceding paragraphs 14.1.1, 14.1.2 and 14.1.3 of this order wherein we have allowed further relief to the assessee in respect of unrecorded payments to employees. Accordingly, in view of our adjudication as aforementioned, on the same logic and reasoning, we dismiss the ground raised by the Department.

15.1 Similarly, ground No.2 challenges the action of the Ld. CIT (A) in restricting the addition of Rs.23,03,905/- in respect of concealed net profit. This ground is related to identical grounds raised in assessee’s appeals for all the three years under appeal and we have already deleted this addition on account of alleged concealed profits in all the three years and have decided the issue in favour of the assessee in preceding paragraph 14.2.2 of this order and in view of our such adjudication in favour of the assessee, the ground raised by the Department stands dismissed.

15.2 Ground No.3 of the Department’s appeal challenges the action of the Ld. CIT (A) in deleting the addition of Rs.12,46,878/- being estimated undisclosed investment for earning the concealed net profit. This figure had been arrived at by applying a rate of 10% on the figure of alleged concealed net profit as computed by the AO. In this regard, it is seen that the Ld. CIT (A) had deleted this addition by noting that the assessee had sufficient closing stock which ran into crores of rupees and, therefore, no additional investment was required by the assessee to have been made for undertaking any concealed turnover. Anyway, since we have completely deleted the addition pertaining to alleged concealed net profit in preceding paragraph 14.2.2 of this order, therefore, this addition does not have any feet to stand on. Accordingly, while upholding the order of the Ld. CIT (A) on the issue we dismiss the ground raised by the Revenue.

15.3 The last ground raised by the Department challenges the action of the Ld. CIT (A) in deleting the addition of Rs.2,82,190/- made by the AO on account of undisclosed investment in the property ‘Kothi Tehal Singh’. The Ld. CIT (A) deleted this addition on the ground that this property was a joint property co-owned by the partners of the assessee firm and that no part of the property was purchased during assessment years 2011-12 to 2018-19. The Ld. CIT (A) has noted that the assessee firm is not the owner of the property and that there was no evidence that any investment had been made by the assessee firm for the maintenance, repair or upkeep of the said property. The Ld. DR also could not point out any perversity in this finding of the Ld. CIT (A). It would also be worth-mentioning that this issue had also arisen before us in Department’s appeal for assessment year 2012-13 and vide order dated 22.04.2022 in ITA 247/Chd/2021 this Bench had dismissed the Department’s challenge to the deletion made by the Ld.CIT(A) in respect of the property ‘Kothi Tehal Singh’ by observing that “categorical finding given by the Ld. CIT (A) on the issue make it amply clear that the impugned investment had been made by different co-owners in their individual names, beyond the block period and there was no link or connection with the investment made by the partnership concern i.e. the assessee”. This Bench also noted that “there is no dispute about the fact that the impugned investment related to the property purchased by individuals acting in their individual capacity and that the assessee firm had no connection with the same. Therefore, we find ourselves in agreement with the findings of the Ld. CIT (A) as reproduced above, that no addition could be made in the hands of the assessee firm u/s 69 of the Act as unaccounted investment during assessment year under consideration”. Therefore, on the same logic and reasoning, we deem it appropriate to dismiss this ground of appeal of the Department.

16.0 Thus, in effect, all the grounds raised by the Department stand dismissed.

17.0 Now, the only ground remaining for adjudication in assessee’s appeal is ground no. 5 in assessee’s appeal for 2017-18 wherein the assessee has challenged the action of the Ld. CIT (A) in confirming the addition of Rs. 7,94,550/- against the addition of Rs. 8,67,550/- on account of alleged unaccounted purchases. The Ld. AR has argued at length on the issue and the main thrust of his arguments have been that the alleged unrecorded purchases were recorded on a paper which carried the title “Estimate” and were, therefore, not purchases but were only goods received on approval. However, on perusal of the impugned order, it is seen that the Ld. CIT (A) has negated this contention of the assessee by noting that this contention of the assessee cannot be accepted as a perusal of the account shows that the account of the party has been credited by the bills’ amount, meaning thereby that it was the purchase by the assessee. The detailed findings of the Ld. CIT (A) on this issue (as contained in pages 32 and 33 of the impugned order) are being reproduced herein under for a ready reference:

“The facts of the case, basis of addition made by the AO and the arguments of the AR during the course of appellate proceedings have been considered. The AR has submitted that a look at the document could reveal that these are rough estimates only which has clearly been mentioned at the top of the document and at page No. 30, it is clearly mentioned as on approval samples only and argued that it is neither a purchase nor a sale bill. As per the AR, in the line of the business of the assessee, a lots of bargaining has to be made on purchases and in items are delivered on approval basis and it is only when the items are finally approved, the relevant bill is issued by the parties which is then approved by the assessee. As per the AR, the assumption by the AO that these are unaccounted purchase is contrary to the facts mentioned on the above pages. Regarding Nilanjana Fashion, it is submitted by the AR that no evidence of delivery of goods at the business premises of the assessee and the AO made addition onsurmises and conjectures, it was also alternatively argued that even if, these are considered sale then GP of 11.92% could be applied on the total amount ofRs. 8,67,550/- and addition can at the most be made at Rs. 1,03,412/-. This alternative argument of the AR is not found acceptable because a perusal of the account shows that the account of the party has been credited by the bills amount, meaning thereby that it was the purchase by the assessee and not a sale by the assessee. A perusal of the slip in respect of Nilanjana Fashion Pvt. Ltd shows that it is dated 14.02.2017 and contains the name of M/s. Roop Saree Kendra, Khanna. The number of pieces along with rate and description of item and total amount are duly reflected. It was for the assessee to show that it is accounted for in the books, but it failed to do so even during the appellate proceedings. Therefore, the same has to be considered as unaccounted purchases and the AO was right in making the addition on this account. Similarly, the perusal of the slip dated 14.02.2017, shows that it contains the name of M/s. Roop Saree Kendra, Khanna and the slip although mentioned as ROUGH ESTIMATES has a serial number “No. 095” which indicates that it was out of a regular continuously slip number and not a rough pad and the narration ROUGH ESTIMATES was printed just to mislead. The number of pieces along with rate and description of item and total amount are duly reflected along with packing charges on the above items. It was for the assessee to show that it is accounted for in the books but it failed to do so even during the appellate proceedings. Therefore, the same has to be considered as unaccounted purchases and the AO was right in making the addition on this account. On the slip for Rs. 73,000/- the date is mentioned 17.07.2017 which pertains to the assessment year 2018-19 and no addition can be made for the year under consideration. To sum-up, the addition to the extent of Rs. 7,94,550/-is upheld and appellant gets relief of the balance amount.

Accordingly, this ground of appeal is partly allowed.”

17.1 We find the above conclusion arrived at by the Ld. CIT (A) to be correct on the factual matrix of the issue. The arguments of the Ld. AR on the issue do not have feet to stand on in the face of the categorical finding recorded by the Ld. CIT (A) and we uphold the same. The ground stands dismissed.

18.0 Coming to the legal grounds raised by the assessee wherein the assessee has challenged the assumption of jurisdiction on the ground that the assessments u/s 153A of the Act were bad in law since there was no search on the partnership firm and neither any Panchnama had been drawn and only a survey had been conducted, we at this juncture, are not inclined to adjudicate this ground for the reason that we have already adjudicated the assessee’s appeals on merits. For identical reason, we also are not inclined to comment/adjudicate on the issue of alleged mechanical approval obtained u/s 153D of the Act. We dismiss these two grounds as having become only of academic importance in view of our adjudication on the merits of the appeals.

19.0 In the final result, all the three appeals of the assessee stand partly allowed, whereas the appeal of the Department stands dismissed.

Order pronounced on 19.05.2022.