Kartikeyas Manganese & Iron Ores P LTD

IN THE INCOME TAX APPELLATE TRIBUNAL
BANGALORE BENCH ‘ C ’
BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND

SHRI JASON P BOAZ, ACCOUNTANT MEMBER
I.T. A. Nos.832 to 835/Bang/2015

(Assessment Year : 2008-09 to 2011-12)
M/s. Kartikeyas Manganese & Iron Ores Pvt. Ltd.,

Kartikeya Niwas, Krutika Farm P.O.,
Sandur, Bellary-583 119 …. Appellant.
Vs.
Dy. Commissioner of Income Tax,

Central Circle 2(2), Bangalore. ….. Respondent.
Appellant By : Shri K.R. Pradeep, C.A.

Respondent By : Shri K.V.Arvind, Standing Counsel for Dept.
Date of Hearing : 01.02.2018.

Date of Pronouncement : 10.4.2018.
O R D E R
Per Bench :
These are four appeals filed by the assessee for Assessment Years
2008-09 to 2011-12 arising out of the common order of the
Commissioner of Income Tax (Appeals)-11, Bangalore dt.10.03.2015. The
grounds of appeal raised in all these appeals are mostly similar and
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ITA Nos. 832 to 835/Bang/2015
therefore these appeals were heard together and are disposed off by
way of this consolidated order for the sake of convenience.
2. Briefly stated, the facts of the case are as under :-
2.1 The assessee (hereinafter referred to as ‘KMIORE’) is a
company engaged in the business of iron ore mining. A search and
seizure action under Section 132 of the Income Tax Act, 1961 (in short
'the Act') was conducted in the case of the assessee on 28.09.2010 in
pursuance of warrant of authorization dt.27.9.2010. Notices under
Section 153A of the Act dt.23.3.2011 were issued to the assessee for
Assessment Years 2008-09 to 2011-12 and in response thereto, the
assessee filed the returns of income for these years on 2.4.2012. The
assessments were concluded under Section 143(3) r.w.s. 153A of the Act
vide order dt.14.3.2013. The details of income returned, additions made
and income assessed for Assessment Years 2008-09 to 2011-12 are as
under :
3
Asst. Year Income Total Additions Accrued

declared Unaccounted Wrong Claim Income (Rs.)
u/s.153A cash receipts of
(Rs.) (Rs.) expenditure
(Rs.)
2008-09 1,68,45,707 8,35,91,047 NIL 9,54,36,754
2009-10 15,28,58,320 17,79,43,250 1,85,00,000 34,43,01,569
2010-11 28,64,99,700 8,70,54,416 2,67,71,921 39,03,26,041
2011-12 42,16,56,730 9,58,64,287 NIL 50,75,21,020
2.2 Aggrieved by the orders of assessment for Assessment Years 2008-
09 to 2011-12 containing the above additions made by the Assessing
Officer, the assessee filed appeals before the CIT (Appeals) – 11,
Bangalore, who dismissed the assessee's appeal vide the impugned
common order dt.10.3.2015.
3.1 Aggrieved by the aforesaid orders of the CIT (Appeals) – 11,
Bangalore, dt.10.03.2015, the assessee has filed appeals before this
Tribunal. The grounds raised in the appeal for Assessment Year 2008-09
are as under :
1. “ That the order of the Authorities below in so far as it is against the

assessee is opposed to law, facts, circumstances, natural justice, equity
all other known principles of law.
2. That the total income computed and total tax computed is hereby
disputed.
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3. The proceedings of search and all other subsequent proceedings are

bad in law, without jurisdiction and invalid.
4. The notice u/s 153A and subsequent proceedings are without

jurisdiction and bad in law.
5. The order u/s 143(3) r.w.s 153A is bad in law, invalid, time barred
and infructuous.
6. That the AO erred in relying on material that did not belong to the
assessee which is contrary to the requirements of section 153C.
7. The CIT(A) failed to appreciate that sufficient and adequate

opportunity were not provided by the AO to the appellant as required
under law, thereby violating the principles of natural justice, hence the
order requires to be cancelled.
8. The CIT(A) erred in dismissing the ground on validity of search.
9. The AO erred in initiating proceedings u/s 153A and thereafter

passing an order in the absence of any abatement as is envisaged in the
law.
10. The CIT-Appeals erred in refusing to rely on the decision of the

Special Bench in All Cargo Global Logistics Limited on the issue of
abatement of assessment.
11. The authorities below erred in making additions of Rs.8,35,91,047/- as

income from sale of iron ore.
12. The AO erred in not following the procedure as envisaged u/s 145(3)
of the Act before completing the assessment.
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13. The authorities below erred in relying on material A/BSG/01 &

A/BSG/02 which was already held as belonging to Mr.Bharat S
Ghorpade against whom separate proceedings u/s 153C was initiated
and completed.
14. The authorities below erred in placing reliance on the statements

given by Mr.Kartikeya M Ghorpade and Mrs.Ambika Ghorpade at the
time of search which was explained through their subsequent
correspondence.
15. Without prejudice, the authorities below erred in relying on the

material A/BSG/01 & A/BSG/02 without clarifying the questions raised
on the said seized material.
16. The authorities below erred in relying on statements recorded from

Mr. Bharat S Ghorpade, Mr. Dinesh Kumar Singhi, Mr.Kartikeya M
Ghorpade, Mr. K.V. Balan and Mr. Antony Balraj.
17. The authorities below erred in relying on statements supra in

Ground No.16 without providing opportunity to cross examine.
18. That the approval granted u/s153D is not as per law.
19. The appellant denies the liabilities of interest u/s 234B & 234C of the
Act. Further prays that the interest if any should be levied only on
returned income.
20. No opportunity has been given before levy of interest u/s 234B and
234C of the Act. Without prejudice to the appellant’s right of seeking
waiver before appropriate authority, the appellant begs for
consequential relief in the levy of interest u/s 234B and 234C of the Act.
21. For the above and other grounds and reasons which may be
submitted during the course of hearing of the appeal, the assessee
requests that the appeal be allowed as prayed and justice be rendered.”
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3.2 Similar / almost identical grounds of appeal have been raised for
Assessment Years 2009-10 to 2011-12 as the issues are common.
However, in respect of the additions made on the issue of Bogus
expenses for Assessment Years 2009-10 and 2010-11, a new ground
faulting the addition made towards bogus expenses has been raised as
Ground No.12.
3.3 The above grounds of appeal are essentially on the following
issues :
(i) The validity of search action and
(ii) on the correctness of additions made, based on the
certain seized material.
4. Validity of Search Action.
4.1 On the issue of validity of the search, the assessee placed reliance
on the decision of the Hon'ble Karnataka High Court in the case of C.
Ramaiah Reddy (339 ITR 210) (Kar) and the decision of the Hon'ble Apex
Court in the case of Ess Dee Aluminium Ltd. Vs. DDIT wherein the Hon'ble
Court has held as under :-
“ The petitioners have approached this Court only on the

ground that under section 246A of the Income Tax Act, 1961,
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the Commissioner of Income Tax (Appeals) has no jurisdiction

to examine the validity of the search operations carried out
under Section 132 of the said Act. Learned Senior Counsel
appearing for the petitioners has further submitted that the
foundation of the assessment made hereunder in the search
operations carried out against the petitioners. We are of the
considered opinion that if the assessment order which is based
on the search operations is under challenge, the validity of the
search proceedings can also be gone into by the Commissioner
of Income Tax (Appeals).”
4.2 However, in the light of the amendment in Finance Act, 2017 to
Sec. 132 of the Act by which the Tribunal is precluded from examining
this issue, we decline to get into the issue of validity of search action.
The ITAT is a creation of statute and has to apply the law as laid down in
the Act. In this view of the matter, this issue is decided against the
assessee and the grounds raised in this regard are dismissed.
5. Addition made based on seized material.
5.1 In respect of the additions made based on seized documents, the
assessee is basically aggrieved on account of those additions made
based on seized material AIBSG/01, AIBSG/02, AIKMIORE/S (Series)
AIDKS/1 and the statements recorded from Sri Bharat S Ghorpade (in
short ‘BSG’), Kartikeya M Ghorpade (in short ‘KMG’), Ambika K Ghorpade
(in short ‘AKG’) and Dinesh Kumar Singhi (in short ‘DKS’). On an analysis
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of the above referred seized material, the Assessing Officer made the
following additions :
Asst. Year Total unaccounted Undisclosed Undisclosed

cash sales Receipts income of income of AKG
(Rs.) KMIORE (Rs.) (Rs.)
2008-09 16,71,82,094 8,35,91,047 8,35,91,047
2009-10 19,06,35,900 17,79,43,250 1,26,92,650
2010-11 15,27,27,045 8,70,54,416 6,56,72,629
2011-12 12,95,46,334 9,58,64,287 3,36,82,047
Total : 64,00,91,373 44,44,53,000 19,56,38,373
5.2 The Assessing Officer’s case, based on an appraisal of the seized
documents, is that it has transpired that the assessee along with Smt.
Ambika Ghorpade had extracted iron ore both with and without permit
and had received substantial sums both in cheque as well as in cash.
While the amounts received by cheque have been duly recorded in the
books of account, the cash components received have not been reflected
in the books of account. The addition in the table above (at para 5.1 of
this order) represents the alleged cash received outside the books from
M/s. Bharat Mines & Minerals (in short ‘BMM’) and M/s. BMM Ispat Ltd.
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(in short ‘BMMIL’). On being confronted with the seized material, the
assessee had submitted its reply, with which the Assessing Officer was
not satisfied, thereby resulting in the additions as extracted above.
While doing so, the Assessing Officer had made substantive additions in
the hands of M/s. BMM Ispat Ltd. (PAN – AACCB3556B) for the aforesaid
years of the entire amount of Rs.64,00,91,373 as unaccounted cash
payments/unexplained expenditure and also made a protective addition
in the hands of M/s. Bharat Mines & Minerals (PAN AAIFB 5946G) of the
similar amount of Rs.64,00,91,373. The learned CIT (Appeals) while
confirming the additions in the hands of the assessee also confirmed the
substantive additions in the hands of M/s. BMM Ispat Ltd., but deleted
the protective additions made in the hands of M/s. Bharat Mines &
Minerals.
5.3 While the assessee M/s. KMIORE, Ambika Ghorpade and M/s.
BMM Ispat Ltd. have filed appeals against the orders of the learned CIT
(Appeals), Revenue has filed appeals against the deletion of the
protective additions made in the hands of M/s. Bharat Mines and
Minerals praying for their confirmation as substantive. In this appeal, we

10
are only concerned with the assessee M/s. KMIORE, and findings
rendered herein will have a bearing on the appeals in the hands of
Ambika Ghorpade, M/s. Bharat Mines and Minerals and M/s. BMM Ispat
Ltd..
5.4 For the years under consideration, namely A.Ys 2008-09 to 2011-
12, the additions made are as under :
(i) Unaccounted cash sale receipts aggregating to
Rs.44,44,53,000.
(ii) Bogus expenses in two years, namely A.Ys 2009-10 and
2010-11 amounting to Rs.1,85,00,000 and Rs2,67,71,921
respectively.
5.5 Before us, elaborate and extensive arguments were advanced by
both sides over several hearings and both parties have put forth written
submissions also which are extracted hereunder :-
5.5.1 The assessee's submissions.
“ The assessee is a Private Limited Company. For the above assessment year
2008-09, the assessee filed its return of income on 28.09.2008 declaring Total
Income of Rs. 1,18,45,710/-. The search and seizure operation purportedly u/s
132 of the Income Tax Act, 1961 was carried on in pursuance of warrant of
authorization dt. 27.09.2010 in the case of M/s Kartikeyas Manganese and Iron
Ores Private Limited at Kartikeya Niwas, Krutika Farm Sandur. The premises
11
at Gaurihara, Gandhi Colony, Hospet, was also searched purportedly u/s 132
of the Act and certain materials were seized. The said premise does not belong
to the assessee but belongs to Mr. S.Y. Ghorpade. The warrant of authorization
in this search was also not shown to the assessee or its representatives. It was
shown to one Mr. S.Y.Ghorpade to whom the said premises belonged to. The
seizure of documents marked A/BSG/01 and A/BSG/02 were made in the
hands of S.Y. Ghorpade and Bharath S Ghorpade. The said material did not
belong to the assessee. During the course of search at Bangalore premises at
Mantri Elite, C-1102, Bannerghatta Road, Bangalore, a statement was recorded
from Mr. Karthikeya M Ghorpade in the wee hours of the day. The assessee
had lot of apprehensions about the legality and the manner in which
statement was recorded and immediately filed a letter before the DDIT (Inv)
seeking amendment to the statement recorded (PB page 1 to 3). Inspite of the
said request, the DDIT (Inv) refused to give a copy of statement recorded to
enable the assessee to confirm the veracity of the statements recorded.
The above search was completed vide panchanama drawn on 29.09.2010 at

8.45 am. Thereafter, a notice u/s 153A dt 22.03.2011 was served on the assessee
calling for filing return of income. The assessee filed return of income under
protest and without prejudice on 02.04.2012 by declaring additional income of
Rs. 50,00,000/- and total income of Rs. 1,68,45,710/- along with the letter dt
30.03.2012. The AO issued notices u/s 142(1) and 143(2) on 24.08.2012 calling
for various details. Subsequently, notice was issued on 16.10.2012 proposing to
make an addition of Rs. 8,35,91,047/- on the premise that the assessee had
received the said sum in cash by sale of iron ore to Mr. Dinesh Kumar Singhi
and M/s Bharath Mines and Minerals. The learned AO made the allegation of
receipt of cash on the basis of the so called statements recorded from Mr.
Bharath S Ghorpade, Mr. Dinesh Kumar Singhi, Mr. Karthikeya M Ghorpade
and Ambika Ghorpade. The AO placed reliance on seized material A/BSG/01
& A/BSG/02 seized at Gaurihara, Gandhi Colony, Hospet. The assessee had
earlier informed that the material in A/BSG/01 & A/BSG/02 does not belong to
it. Appreciating the clarification of the assessee, the AO had issued notice u/s
153A r.w.s 153C dt 05.03.2012 to Mr. Bharath S Ghorpade holding that the said
materials belong to Mr. Bharath S Ghorpade. Even after holding that the
material belonged to Mr. Bharat S Ghorpade, the AO proceeded to assess the
income based on the said seized material and uncorroborated statements of
Mr. Bharath S Ghorpade and Mr. Dinesh Kumar Singhi, without allowing Mr.
Karthikeya M Ghorpade to correct the statement. The assessment has been
12
completed assessing the income of Rs. 9,54,36,754/- by making additions of Rs.

7,85,91,047/- (after considering income declared to the extent of Rs 50,00,000/-).
The AO has erred in making the said addition by holding that the assessee had
effected certain cash sales and has received cash. There is absolutely no
evidence of what so ever nature available for the AO to make such addition.
The objections filed by the assessee have been summarily dismissed without
meaningfully going through the same. The AO has relied on ‘hear say’ and
uncorroborated evidences in preference to facts and relevant evidence. The
material in the form of A/BSG/01 and A/BSG/02 did not pertain to the assessee
and the entries are totally in variance with the books maintained. Not even the
rudimentary evidence that the assessee has received cash in excess of what is
recorded in the books has been led by the AO. The detailed explanation given
by the assessee has been ignored. Thus the addition is based on wholly
inconsistent and unsustainable conclusions. There is neither any asset
commensurate to the alleged cash receipts nor is actual cash available with the
assessee. In the absence of any such asset or valuable, it would be wholly
inconsistent to make the above additions. In this regard, the assessee relies on
the decision in Nirmal Fashions (P) Ltd vs DCIT - 123 TTJ 180 - Kolkata ITAT
(CLPB page 306/317) wherein the tribunal has held as under:
‘’… As per the presumption of the AO, the assessee is carrying on the business of
purchase and sale of saree outside the books on large scale which has resulted in
the huge income which is not recorded in the assessee’s books of account every
year. However, during the course of search of the assessee’s premises, no
unrecorded stock, cash or other assets were found. The Revenue has searched the
business premises of the firm/company as well as the residential premises of the
partners/directors. Not a single evidence of purchase or sale outside the books is
found. In our opinion, it is impossible to carry on business on a huge scale outside
the books unless there is some unrecorded stock, cash, debtors, etc. Moreover, if
the assessees had huge unrecorded income of crores of rupees in each year, it
would have reflected in the form of asset or some expenditure outside the books.
No significant asset outside the books or no evidence of ostensible expenditure
outside the books is found. In the above circumstances, we cannot uphold the
additions made by the AO in the case of both the assessees for the assessment
years under consideration on the basis of loose papers by making certain
presumptions which are found to be untenable or contrary to the other evidence
on record. In view of the above, we delete the additions made by the AO and
confirmed by the CIT(A) on the ground of alleged undisclosed net profit outside
the books.’’
The AO having held that A/BSG/01 & A/BSG/02 belongs to Mr. Bharath S
Ghorpade, should not have assessed the income in the hands of the assessee
13
which is against section 153C of the Act. Thus, the addition is unsustainable
and the assessee is aggrieved by the said addition.
The assessee has filed return of income along with the audited financials
comprising of Profit and loss account, Balance Sheet and other schedules. The
AO has adopted the income as declared by the assessee based on books of
account. The AO has not expressed any adverse view on the correctness or
completeness of the accounts of the assessee. In fact, the AO has adopted and
relied on books of account maintained. This being the case, he could not have
made the additions except in the manner provided u/s 145(3) of the Act.
Unless section 145(3) is invoked, there cannot be any addition to business
income. in this regard, the assessee relies on the decision in CIT vs Lancy
Constructions - ITA 528 to 531/2014 - KAR HC (CLPB page 3) wherein the
court has held as under:
‘’5.We agree with the opinion of the Tribunal that additions could not have been
made by the Assessing officer without rejecting the books of accounts of the
assessee, and also without there being any adverse comment made by the
Assessing officer with regard to the books of account that were maintained by the
assessee, which were duly audited.
6. In our view, if assessment is allowed to be reopened on the basis of search, in
which no incriminating material had been found, and merely on the basis of
further investigating the books of accounts which had been already submitted by
the assessee and accepted by the Assessing officer at the time of regular
assessment, the same would amount to the Revenue getting a second opportunity
to reopen the concluded assessment which is not permissible under the law.’’
Thus, non adherence to the provisions of section 145(3) of the Act, renders the
additions unsustainable.
Based solely on the seized material A/BSG/01 & A/BSG/02 the income in the
form of alleged cash sales has been calculated at page 53 of the assessment
order extracted as under:
‘’Total cash receipts as per seized materials
From the above discussion, it is clear that M/s. KMIORE and M/s. AKG have
received total cash of Rs. 64,00,91,473/- as evidenced by the seized material. The
amount received by M/s. KMIORE and M/s. AKG are purely their profits out of
which these concerns might be incurring certain expenses on payment of royalty,
administrative expenses etc. All the legal and statutory expenses are met out of
accounted cheque receipts. Infact the royalty expenses and other mining
expenses are incurred by BMM which is accounted in its books.
14
A.Y Total unaccounted Undisclosed income Undisclosed income

cash sales receipts of M/s. KMIORE of M/s. AKG
2008-09 167182094 83591047 83591047
2009-10 190635900 177943250 12692650
2010-11 152727045 87054416 65672629
2011-12 129546334 95864287 33682047
Total 640091373 444453000 195638373
‘’
The said income has been apportioned between assessee and AKG as
mentioned above and taxed on substantive basis. Based on the same material
amount of Rs.64,00,91,473/- has been taxed for the AY 2008-09 to 2011-12 in the
hands of BMM Ispat Ltd. Identical amount has also been taxed on protective
basis in the hands of Bharat Mines and Minerals (Firm) for the same
assessment years. That CIT-A who heard the assessee’s arguments has
confirmed the entire addition in the hands of the assessee as well in Ambika
Ghorpade and BMM Ispat Ltd substantively whereas deleted the protective
assessment in the hands of Bharat Mines and Minerals. Before the Hon’ble
ITAT the assessee Ambika Ghorpade and BMM Ispat Ltd have filed appeals
whereas Department has filed appeal in the case of Bharat Mines and Minerals
against the deletion. In this regard the assessee objects for the addition made
in the assessment order which is based on A/BSG/01 & A/BSG/02 and
statements of Kartikeya M Ghorpade, Ambika Ghorpade, Dinesh Kumar
Singhi and Bharat S Ghorpade.
The assessee submits that no reliance should be placed on A/BSG/01 &

A/BSG/02 for the following reasons:
Firstly it is a material not seized from the assessee and does not belong to the
assessee. When seized it was in the possession of Bharat S Ghorpade in the
residence of SY Ghorpade. When the objection was taken on this issue the AO
has already held that the said material belonged to Bharat S Ghorpade vide
issue of notice u/s 153C in his hands (PB page 206). Having held that the
material belongs to Bharat S Ghorpade, the same cannot be the basis for
addition in the hands of any other assessee other than Bharat S Ghorpade.
15
Even if the name of the assessee is found in the seized material still the same
cannot be used in the case of the assessee as held in the following caselaws:
1) Vijaybhai N. Chandrani vs. ACIT - 333 ITR 436 - Guj HC (CLPB page
430/431)
2) Hon’ble Bangalore ITAT in Senate vs. DCIT - 181 TTJ 562 (CLPB page
436/446),
3) P.Srinivas Naik vs ACIT - 114 TTJ 856 - ITAT Bangalore (CLPB page
133/136)
4) PCIT vs Vinita Chaurasia - 394 ITR 758 - DEL HC (CLPB page 80/91)
Since the department itself has held the material belongs to Bharat S Ghorpade
no addition could be made in the hands of the assessee.
Secondly the seized material A/BSG/01 & A/BSG/02 seized is mentioned in

panchanama issued to SY Ghorpade/Bharat S Ghorpade at PB page 218. The
extract of the portion of panchanama is as under :
Sl No Description Total Written pages

pages
1 Folder containing loose sheets 72 72
2 Folder containing loose sheets 150 150
When the assessee sought copies of the seized material it was provided by the
department and the same has been filed before the Hon’ble ITAT. The
assesseee immediately took objection of the contents and denied any cash
transaction contemporaneously vide letter dt. 26.10.2010 & 22.11.2010 (PB page
1 & 2) and also requested for authentication of the seized material. The
department has not authenticated the seized material till date. There are
gaping issues on the veracity of the seized material provided as the A/BSG/01
& A/BSG/02 to the assessee. While the number total number of pages and
written pages as per panchanama in A/BSG/01 were 72 the written pages
provided were far in excess of 72 and numbers 90. Similarly in A/BSG/02 total
number of pages and written pages as per panchanama were 150, the written
pages provided were far in excess of 150 and numbers 182. Thus the
additional written pages provided to the assessee are 18 pages in A/BSG/01 &
32 pages in A/BSG/02 totalling excess of 50 pages.
Thus the material provided were far in excess of written pages seized from
Bharat S Ghorpade. The department has neither authenticated the seized
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material provided to the assessee nor has come forward to explain as to how
the more written pages are in the possession of the department than what is
said to have been seized. Since the assessment mentions extensively of
A/BSG/01 & A/BSG/02 the recording of statement on oath from Kartikeya M
Ghorpade, Ambika Ghorpade, Dinesh Kumar Singhi and Bharat S Ghorpade
is based on alleged seized material. The excess written pages not mentioned in
the panchanama renders the entire statement on oath from various people as
well as the assessment as not reliable. Non authentication till date renders the
material not reliable. Thus the addition based on said material requires to be
vacated.
Thirdly, kindly refer to the Panchanama available at page 218 of the Paper
book (PB) – warrant being drawn in the case of the assessee to search the
residential premises of S.Y.Ghorpade/Bharat S Ghorpade at Gaurihara,
Gandhi Colony, Hospet. The said premises does not belong to the assessee but
to SY Ghorpade, father of Bharat S Ghorpade. The search commenced on
28.09.2010 at 9.30 am and the proceedings were closed on 29.09.2010 at 7.45
am. During the course of search proceedings a statement u/s 132(4) of the Act
was recorded of Bharat S Ghorpade commencing at 11.30pm on 28.09.2010
questioning him on the exhibit marked A/BSG/01 & A/BSG/02. The oath
statement is signed by Bharat S Ghorpade at early hours on 29.09.2010 (page
377 of PB). Page 220 PB contains the list of inventory of books of accounts,
documents etc found and seized during the search at Hospet supra. The
inventory seized marked as A/BSG/01 contains folder of loose sheets (total
pages 72 & written pages 72) & A/BSG/02 contains folder of loose sheets (total
pages 150 & written pages 150).
The search was also conducted in the case of Ambika Ghorpade at C-1102,
Mantri Elite Apartments, Bannerghatta Road, Bangalore (page 422 PB). The
search commenced on 28.09.2010 at 9.30am and the proceedings closed on
29.09.2010 at 8.45am. During the search proceedings the statement on oath of
Kartikeya M Ghorpade (husband of Ambika Ghorpade and Managing
Director of KMIORE) was recorded on oath questioning him on certain pages
of the seized material marked as A/BSG/01 & A/BSG/02 (page 408PB). The
statement u/s 132(4) was also recorded of Ambika Ghorpade at the same time
during the search proceedings questioning her on certain pages of the seized
material marked as A/BSG/02 (page 420 PB).
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In view of the above factual position, it is incorrect to say that the seized
material shown to Kartikeya M Ghorpade/Ambika Ghorpade while recording
statement is the same seized material which was seized in the case of Bharat S
Ghorpade at his father SY Ghorpade residence as the said seized material was
still in Hospet on 29.09.2010 till 7.45am.
Since the statements were taken from Kartikeya M Ghorpade and Ambika
Ghorpade in the wee hours of the day and there being no clarity on the basis
on which the statements were recorded, the assessee represented by its
Directors (Kartikeya M Ghorpade and Ambika Ghorpade) wrote to the
Investigation wing seeking copies of seized material based on which their
statements were recorded (page 1 & 2 PB). Till date the said copies have not
been made available to the assessee neither an opportunity to rectify the
statements has been given. Assessee’s submissions regarding the same before
the AO are found in page 90 to 92 relevant page 92 ;pages 115 to 122 PB,
relevant page 117 PB.
The analysis of the above facts clearly indicates that the statement of Bharat S
Ghorpade was recorded at Hospet between 11.30pm on 28.09.2010 till 7.45am
on 29.09.2010. The question no.4 & 5 in the statement u/s 132(4) recorded from
Bharat S Ghorpade and the answer is extracted as hereunder: (PB page 377 &
378)
‘’Q 04 I am showing you exhibit marked A/BSG/01 dated 28.09.2010 which
contains a bunch of loose sheets serially numbered from 01 to 72. Please
go through the exhibit, identify the handwriting and explain the contents?
Ans I have gone through the exhibit marked A/BSG/01 dated 28.09.2010 which
contains a bunch of loose sheets serially numbered from 01 to 72. These
loose sheets written by me were kept by me in my father’s residence at the
address mentioned above. The jottings pertains to the business
transactions of KIMORE Pvt., Ltd., and Karthikeyas Manganese & Iron Ore
Mine with Bharath Mines & Minerals Ltd and also other parties. It contains
details of supply of iron ore with permits and without permits to these
parties and payments received against the same by both cheque and cash.
Q 05 I am showing you exhibit marked A/BSG/02 dated 28.09.2010 which

contains a bunch of loose sheets serially numbered from 01 to 150. Please
go through the exhibit, identify the handwriting and explain the contents?
Ans I have gone through the exhibit marked A/BSG/02 dated 28.09.2010 which
contains a bunch of loose sheets serially numbered from 01 to 150. These
loose sheets written by me were kept by me in my father’s residence at the
address mentioned above. The jottings pertains to the business
transactions of KIMORE Pvt., Ltd., and Karthikeyas Manganese & Iron Ore
Mine with Bharath Mines & Minerals Ltd and also other parties. It contains
18
details of supply of iron ore with permits and without permits to these
parties and payments received against the same by both cheque and
cash.’’
The above indicates that the alleged seized material A/BSG/01 & A/BSG/02
were at Hospet which is about 500kms from Bangalore. The access to Hospet
is by rail and road and there is no airport. The statement of Kartikeya M
Ghorpade in question no. 7 & 13 (PB page 412) extracted hereunder:
‘’Q.No.7: I am showing you pages 71,72,109,115,118,125,129,135 and 147 of the
seized material marked as A/BSG/02 seized from the residence of Mr.
Bharat Ghorpade at Gandhi Colony, Hospet during the course of search u/s
132(1) on 28/9/2010. Please go through the pages and explain the
contents of the same. Also please state who has written these pages.
Q.No.13: I am showing you page No.34 of the seized material marked as

A/BSG/01 seized from the residence of Mr. Bharat Ghorpade at Gandhi
Colony, Hospet during the course of search u/s 132(1) on 28/9/2010.
Please go through the page and explain the contents of the same. Also
please state who has written these page.’’
and statement of Ambika Ghorpade in question no.3 (PB page 421) extracted
hereunder:
‘’Q.No.3: I am showing you pages 71,72,109,115,118,125,129,135 and 147 of the

seized material marked as A/BSG/02 seized from the residence of Mr.
Bharat Ghorpade at Gandhi Colony, Hospet during the course of search u/s
132(1) on 28/9/2010. Please go through the pages and explain the
contents of the same. Also please state who has written these pages.’’
seems to show that the same material which was at Hospet at the impugned
time was shown to Bharat S Ghorpade and the same was shown to Kartikeya
M Ghorpade and Ambika Ghorpade around the same time as is evident that
the statements of Kartikeya M Ghorpade and Ambika Ghorpade was taken in
the wee hours of 28 & 29.09.2010. These simultaneous presence of the seized
material in two places, one at Hospet far away from Bangalore and the same at
Bangalore at the same time casts serious issue of reliability of the statement
recorded as to whether at all the so called seized material was confronted to
the aforesaid Bharat S Ghorpade, Kartikeya M Ghorpade and Ambika
Ghorpade. Since it is not possible for the material to be in two different
locations at the same time it is clear that the statements have been recorded not
by showing the seized material. Thus the statements of the aforesaid persons
19
renders not reliable for framing the assessment and is frot with serious lacuna
and non reliability.
Adverting to the statement of Dinesh Kumar Singhi mentioned in PB page

441, perusal of the same does not indicate any confirmation of transactions as
mentioned in A/BSG/01 & A/BSG/02.
Without prejudice, even Bharat S Ghorpade in answer to question no.4

extracted supra says that the transactions in A/BSG/01 & A/BSG/02 is not only
with the assessee and Bharat Mines and Minerals but also with other parties.
Who the other parties are nor the extent of transaction with them has not been
investigated. The AO has ignored this vital aspect. All these objections have
not been considered by the AO and he has placed immense faith in the seized
material as a gospel of truth and has not conducted any investigation to bring
any corroboration. The only corroboration he mentions is in para 9.2 page 27
of the assessment order (running page 55).
The mention by the AO that the cheque transaction in seized material tallies
with the accounted transaction in the books of accounts of the assessee is again
factually incorrect. The assessee has filed the copy of the ledger extracts
indicating the bank transactions and also comparative statement between the
seized material and the books of accounts (PB page 456 to 470) clearly
indicating that the transaction through the bank accounts of the assessee does
not tally with that of the seized material, thus rendering the only argument of
the AO also incorrect.
The seized material A/BSG/01 & A/BSG/02 are a bunch of loose sheets with
semi legible scribblings is not a regular books of accounts and not even kaccha
books of accounts. It has lot of overlapping information and not continuous. It
does not even mention the individual transactions but mentions certain
aggregate of transactions in somewhat non descriptive code words. Several
conflicting interpretations are possible and no uniform conclusion can be
drawn. It is in this context that the Hon’ble Supreme Court has held in
Common Cause (A Registered Society) & Others vs. Union of India & Others -
98 CCH 28 (CLPB page 279, para 17 pg 284, para 20 &21 page 285, para 24
page 286) that no liability can be fastened on the basis of loose sheets as per
section 34 of the Evidence Act. The supreme court also refers to the view of the
Income Tax Settlement Commission and upholds the same that loose sheets
20
are not evidence because it is neither books of accounts nor it is maintained

regularly. In the absence of non adherence to the twin requirements of section
34 of the Evidence Act, the supreme court has held that no liability under law
can be brought about based on the loose sheets. Similarly Hon’ble ITAT in
Nishant Construction Pvt Ltd vs ACIT - ITA 1502/Ahd/2015 - AHD ITAT
(CLPB page 291/304) has held that loose sheets are dumb documents and
cannot be relied on for framing the assessment.
In summary it is submitted that since A/BSG/01 & A/BSG/02 does not belong
to the assessee, no undisclosed cash or asset to the extent of Rs.64 crores is
found in the search and cash found was only Rs.28,000/- (PB page 233) and
that the authenticity of the seized material A/BSG/01 & A/BSG/02 is in serious
doubt and that statements of Kartikeya M Ghorpade, Ambika Ghorpade,
Dinesh Kumar Singhi and Bharat S Ghorpade are not reliable and no cross
examination has been provided and since it is loose sheets the addition made
should be deleted especially since the sole corroboration stated by the AO that
the cheque transactions mentioned in loose sheet tallies with books of
accounts is incorrect, the entire addition needs to be deleted.
Bogus expenses –AY 2009-10 & 2010-11

The AO has made addition of Rs. Rs.1,85,00,000/- for AY 2009-10 and
Rs.2,67,71,921/- for AY 2010-11 stating that the assessee has raised certain
bogus claim for expenditure and disallowed the same. In doing so he has
relied on the statements of Mr.K.V.Balan and Mr.Antony Balaraj. It is
submitted that all the expenses are duly recorded in the books of accounts and
the payments have been made through the regular banking channels. The
seized material A/KMIORE/S/5 referred by the AO is not incriminating as the
expenses referred therein and the TDS calculation is part of the books of
accounts. No expenses can be disallowed merely on the basis of statement of
third parties. The copies of the statements were not given to the assessee. No
opportunity for cross examination has been provided to the assessee and in
the absence of the same statements cannot be relied on.
In addition to the above, the assessee relies on the following case laws:
On the issue of assessment made based on third party statements:
PCIT vs Saumya Construction P Ltd - 387 ITR 529 - GUJ HC
CIT vs SMC Share Brokers Ltd - 288 ITR 345 - Delhi HC
21
On the issue that addition cannot be made on estimate basis, guess work and
suspicion:
Dhakeswari Cotton Mills Ltd vs CIT - 26 ITR 775 – SC (CLPB page 155/156)
A.S.Sivan Pillai vs CIT - 34 ITR 328 - Madras HC(CLPB page 162/163)
On the issue that admission is not conclusive and has no evidentiary value:
Pullangode Rubber Produce Co Ltd vs. State of Kerala & Anr - 91 ITR 18 -
Supreme Court (CLPB page 189/190)
CIT vs. S.Khader Khan Son - 352 ITR 480 – SC (CLPB page 336)
CBDT Instruction No.F.No.286/2/2003/IT(Inv) - confession of additional
income during the course of search & seizure and survey operation (CLPB
page 167)
On the issue that loose sheets have no evidentiary value/no corroborative
material:
Common Cause (A Registered Society) & Others vs. Union of India & Others -
98 CCH 28 – SC
CIT vs. Shri Praveen Juneja - ITA 57/2017 - Delhi HC
Nishant Construction Pvt Ltd vs ACIT - ITA 1502/Ahd/2015 - AHD ITA
Nirmal Fashions (P) Ltd vs DCIT - 123 TTJ 180 - Kolkata ITAT.
On the issue that statement taken in the wee hours cannot be relied:
Sahil Study Circle Pvt Ltd vs DCIT - 179 TTJ 1 - Delhi ITAT
On the issue of approval granted u/s 153D, it is the contention of the assessee
that the approval has been granted without application of mind and in a
mechanical manner. In support of its contention, the following caselaws are
relied on:
1) Chhugamal Rajpal vs. S.P.Chaliha & Ors - 79 ITR 603 – SC.
2) CIT vs. Akil Gulamali Somji - 84 CCH 53 - Mum HC– CLPB page 358
3) Smt.Shreelekha Damani vs. DCIT - 173 TTJ 332 - Bombay ITAT.
4) AAA Paper Marketing Ltd vs ACIT - ITA 167/Lkw/2016 - Lucknow
ITAT.
The grounds on interest u/s 234A/B/C are consequential in nature.”

22
5.5.2 Department’s Submissions.
1. “ Search under section 132 of the Act was conducted in the case of
the assessee on 28/9/2010. Notice under section 153A of the Act
issued on 22/3/2011 and same was served.
2. During the course of search in the case of Mrs Ambika Ghorpade
and M/s. KMIORE (Kartikeya Manganese and Iron Ore Private
Limited) the following facts came to light: –
i. Mrs Ambika Ghorpade is owner of mining lease No. 2354

referred to as old mines(OM) and the company M/s.KMIORE
owns mining lease No. 2559 referred to as new mines (NM).
The mine owners have signed ore raising contracts with
Mrs.Snehalatha Singi for extraction and processing the iron
ore from these mines.
ii. As per the business arrangement Mrs.Snehalatha Singi

would undertake extraction and processing the iron ore into
lumps and fines, handover to the mine owners who in turn
supplied processed iron ore to Bharat Mines and Minerals.
iii. The mine owners are just leaseholders and entire set of
activities is carried out by Mr Dinesh, Singhi of BMM though
ore raising and processing contract is in the name of Mrs
Snehalatha Singhi. Mine owners sell the processed iron ore
only to BMM. During the course of search several
documents relating to business activities were found and
seized in the premises of Sri Bharat S Ghorpade, person in
charge of affairs of the assessee mining business) marked
as A/BSG/01 and A/BSG/02.
iv. Show cause notice was issued and served on the assessee
by making the seized documents as part of the show cause
notice. The statements relevant of Mr Bharat S Ghorpade
was also made as part of the show cause notice. The show
cause notice is extracted in the assessment order at page 3
to 16 of the assessment order. The assessee in reply dated
15/11/2012 acknowledged the receipt of seized material
marked as A/BSG/01 and A/BSG/02. All the statements
recorded and relied on also provided to the authorised
representative of the assessee.
v. One more show cause notice dated 9/1/2013 was issued

by incorporating the relevant pages of the seized material
23
and the statements of Sri Kartikeya Ghorpade Managing

Director of the assessee company (page 19 to 21 of the
assessment order). The assessee filed reply on 6/2/2013
(page 21 to 24 of assessment order).
vi. All the issues on point wise were considered and finding
was recorded by the Assessing Officer as under: –
a. with respect to objection stating statement does not
indicate any payment of cash or activity outside
books. Assessee attention was invited to statement
dated 19/7/2010 to Q.No.8 of Mr Dinesh Kumar
Singhi accepting payment of Rs.1.40 crores in cash
and the remaining amount of Rs.27,03,33,112/– in
cheque.
b. Assessee’s objection regarding not indulged in sale
outside the books of accounts and no supply has
been made to JSW and KFIL, attention of the
assessee was invited to the seized material found
and seized from the premises of Mr Bharat S
Ghorpade and confirmed by Mr Dinesh Kumar Singhi,
Mr Kartikeya Ghorpade and also Mrs Ambika
Ghorpade.
c. Assessee objection with respect to statements of Mr
Dinesh Singhi, Mr Bharat S Ghorpade and Mr Karthik
Ghorpade, the statements relied on have been
provided to the assessee and acknowledged by the
assessee. The material relied on (seized material) has
been provided to the assessee and the same is
acknowledged. The assessee has not objected to the
material facts in the statements except for procedural
issues which are incorrect. Seized material have been
provided to the assessee three times.
d. With respect to the assessee objection questioning the

veracity of the entries in the seized material, the
Assessing Officer held that the same has been
confronted to the person who has written them and
same has been confirmed.
vii. The assessee has not objected to the quantification of the

undisclosed income. However the same has been dealt for
the sake of clarity as under: –
24
a. Cash portion of sales consideration: – The profit

margin on sale of iron ore with permit and without
permit has been received by cheque as well as cash
by the assessee. This is recorded month vise by Mr
Bharat S Ghorpade and found and seized during
search. The sale consideration received by cheque
from BMM/BMM Ispat Ltd are accounted in the books
of accounts of the assessee but the cash component
is not accounted. This has been confirmed from books
of accounts and the statements recorded from Mr
Bharat S Ghorpade and Mr Kartikeya Ghorpade.
(Tabulation at page 27 and 28 of the assessment
order).
b. Mr Bharat S Ghorpade admitted that entries in the
seized material A/BSG/01 and A/BSG/02 written by
him and sales of iron ore to Sri Mr Dinesh Kumar
sINGHI of Bharat Mines and Minerals. Further
admitted the sale of iron ore with permits and also
without permits and the receipt of amounts being sale
consideration received by way of cheques and cash.
Relevant portion of the statements of Mr Bharat S
Ghorpade are extracted at page 29 to 37 of
assessment order.
c. Mrs Ambika Ghorpade was questioned and she
stated that entire business activities are undertaken
by husband and he only explain the seized materials.
d. Mr Dinesh Kumar Singhi accepted the payment of
cash of Rs.1.40 crores in respect of billing done in
April 2010 reflected in seized material.
e. Page 25 and 26 of the seized material marked as
A/KMIORE/S/06 seized from the office of
M/s.KMIORE Pvt Ltd during search and 28/9/2009
containing billing details for month of August 2009
and September 2009. As per this page, the total iron
ore sold during these months was 127006.97 MT at
the rate of Rs.750 per MT for total sale value of
Rs.9,52,55,227. Out of this, the amounts covered in
the invoice was Rs.6,64,55,424/– adjusted to the
permitted quantity of iron ore measuring 52442.780
MT. The remaining sale consideration of
Rs.2,87,99,803/– is written as cash for the month of
August and September 2009 out of which a sum of
Rs.37,99,803/– is written to have been received and
the balance of Rs.2,50,00,000/– yet to be received. A
25
sum of Rs.1,50,00,000/– being cash component for

the month of August 2009 has been considered in the
about table. The remaining amount of
Rs.1,37,99,803/– needs to be taxed as unaccounted
and undisclosed income in the hands of the assessee
and Mrs Ambika Ghorpade proportionately.
f. Similarly the cash receipts for period of April 2008 to
March 2009, cash payments are tabulated at page 39
of the assessment order. Total amount received in
cash is Rs.19,06,35,900/– for the above period and
the same has been admitted by Mr Bharat S
Ghorpade from Mr Dinesh Kumar Singhi of M/s.
Bharat Mines and Minerals. Relevant portion of
statement is extracted for ready reference at page 40
and 41 of the assessment order. The contents of the
said page was also confronted to Mr Karthikeya M
Ghorpade during course of search at his residence
and he has admitted the receipt of cash from Mr
Dinesh Kumar Singhi of Bharat Mines and Minerals
during the period from 26/4/2008 218/3/2009 from
sale of iron ore. Mr Kartikeya Ghorpade has admitted
the amount of Rs.19,06,35,900/– as undisclosed
income of M/s.KMIORE Pvt Ltd for Assessment Year
2009–10. Relevant portion of statement extracted at
page 41 and 42 of the assessment order.
g. Page number 27, 28, 29, 34, 35 and 36 of the seized
material marked as A/BSG/01 from residence of Mr
Bharat S Ghorpade contains details of certain
payments received by cash from Mr Dinesh Kumar
Singhi during the period February 2008 till March
2009. Pages 27, 28 and 29 contains details of iron
ore sold during the period from February 2008 to
June 2008 with permits and without permits. As
per the analysis of the seized material total permitted
quantity of iron ore weighing 185600 MT was sold
during the period February 2008 to June 2008. As
per page 29 the total payment received or permitted
quantity of iron ore was Rs.24,12,81,600/– which
includes cash portion sale consideration of
Rs.7,62,81,600/–. On detailed examination of the
seized material it was found that sale consideration
has been divided into two components with the
different rates towards cheque and cash.
26
h. Page 30 of the seized material A/BSG/01 reflects

aggrieved prize at Rs 1300/– per MT. This was
further divided into two parts for permitted quantity
at Rs.889/- per MT for cheque and Rs.411/– per MTS
for cash component the Page further contains details
of cash received on sale of 119926.08 MT of iron ore
without permits during the period February 2008 to
June 2008 and cash receipt for without permit
quantity was Rs.15,59,03,904/–. The total cash
sales for the period February 2008 to June 2008
works out to Rs.23,21,85,504/–. The Page further
contains cash receipts of Rs.8,86,98,500/– towards
sale of iron ore without permits during month of July
2008 and August 2008 and the quantity of iron ore is
57041 MT (50767 Mt fines and 6274 MT lumps)
hence total sale receipts for the period February 2008
to August 2008 is Rs.32,08,84,004/–.
i. Mr Bharat S Ghorpade admitted the above cash
receipts on sale of iron ore during February 2008 to
August 2008 and not being accounted in the books of
accounts of the assessee for relevant period.
(Statement extracted at page 44 to 48 of the
assessment order). The above cash receipts have
been admitted by Mr Kartikeya Ghorpade on sale of
iron ore during the period on confrontation of the
seized material, and the same has been admitted to
be undisclosed income. (Relevant Statement of Mr
Kartikeya Ghorpade extracted at page 49 to 50 of
assessment order).
j. The cheque component received on sale of iron ore by
the assessee and Shri Ambika K Ghorpade
mentioned in the seized material tallied with the
books of accounts with minor differences which
would have crept in due to rounding off of the rates or
due to carry forward of the previous month sales to
the following months or addition of arrears of royalty
etc and fits to the modus of accounting and billing as
discussed above. The month wise sale as found in
the seized material is tabulated at page 51 to 52 of
the assessment order. From the tabulation it is clear
that Bill prepared at the end of month for the cheque
portion of the consideration received, consideration
received by cheque is apportioned to the permitted
quantity of the iron ore sold. At the time of invoicing,
27
the total sale consideration is increased by Rs 100/-

per MT of permitted quantity of iron ore sold.
k. The month wise sale of iron ore for which

consideration is received by cheque tallies with the
books of accounts and tallies with the quantity of iron
ore shown to have been sold with permits in the
invoices.
l. As evidence from the seized material the total cash
receipt is Rs.64,00,91,473/–.
m. Bogus expenses:-The entire operations of the mines
owned by the assessee are being carried out by
Bharat Mines and Minerals as such the assessee has
no expenses to be incurred except administrative in
miscellaneous expenses. In the course of search at
residence of Mr Bharat Ghorpade and office premises
of the assessee setting bills pertaining to the contract
works were found and seized and the same is placed
at page 55 of the assessment order reflecting
adjustment bills in the name of the employees of the
company.
n. Similar entries were found for the Assessment Year
2010–11 in the notebook maintained by the assessee
and same is scanned at page 57 of the assessment
order reflecting generation of bills in the names of
spouses of the employees by the assessee. The
statement of employees (accountant) is extracted at
page 59 and 60 admitting the contractors are either
the employees of the company or the spouses or
relatives. Further admitted generation of bills in the
office of the assessee (relevant portion of statement at
page 61 and 62 of the assessment order). An
analysis it is found the contract work is only
accommodation entries to avoid payment of tax.
3. The same has been appreciated in proper prospective by the

Appellate Commissioner and upheld the same.
4. Reply to assessee submission.

a. The contention of the assessee that addition of Rs.7,85,91,047/–
towards cash sales and cash receipt is without evidence is
incorrect. The seized material marked as A/BSG/01 and
A/BSG/02 clearly reflected the sale of iron ore with and without
permits, cheque component and cash component. The sale of iron
28
ore with permits and the consideration received in cheque

component tallied with the books of accounts maintained by the
assessee. Invoices are tampered to match the quantity with
permits. Mr Bharat Ghorpade was looking after the affairs of the
assessee company has admitted the content’s to be correct.
Another party to the contract Mr Dinesh Kumar Singhi has further
admitted the contents to be true. Mr Kartikeya Ghorpade
Managing Director of the assessee company has accepted the
contention of the seized material to be correct and true. In such
circumstances the contention of the assessee is an afterthought
and without any basis.
b. The contention of the assessee that objection filed has been

summarily dismissed without meaningful going through the same
is incorrect on the face of it. Each and every objection has been
dealt by the Assessing Officer point wise. The Assessing Officer
has explained each and every page of the seized material and the
relevance of the same with support of the statements of the above
referred persons.
c. The further contention that the material in the form of A/BSG/01

and A/BSG/02 does not belong to the assessee is an afterthought
when the person in charge of the business of the assessee and
the Managing Director have admitted the same, the above
submission is only for the sake of argument without any
substance.
d. In view of the assessments being pending under section 153A of

the Act, the contention of the assessee that assessment under
section 153C of the Act has to be done in respect of the material
found and seized from Mr Bharat S Ghorpade is incorrect and the
Act does not provide for dual assessments one under section
153A and another under section 153C of the Act. Reliance is
placed on the judgement of the High Court in the case of Canara
Housing 274 CTR 122 wherein it is held that assessment under
section 153A of the Act is not confined only to the seized material
but also with reference to the material in possession of the
Assessing officer and some other material found in the course of
assessment proceedings.
e. The contention of the assessee with respect to section 145 (3) of
the Act is incorrect. All the additions made on the basis of the
seized material not reflected in the books of accounts and hence
question of books of accounts being rejected does not arise.
29
f. The contention raised with respect to the discrepancies in the

pagination of the seized material is hyper technical, afterthought
and baseless. It is an attempt made by the assessee to deviate
from the main issue. When the same material was provided to the
assessee the same has been admitted and this is an attempt to
overcome the admission made on oath. The entire set of seized
material has been placed before this Hon’ble Tribunal and the
authenticity can be examined. Each and every page of the
document has been authenticated by Mr Bharat S Ghorpade by
affising signature and date, from whose possession the same has
been seized. In such a situation, the assessee is not correct in
questioning the authenticity of the seized material that too in a
situation where majority of the entries tallied with the books of
accounts maintained by the assessee.
g. Another illogical contention raised by the assessee with respect to
the possibility of confronting the same seized material to Mr
Bharat Ghorpade and Mr Kartikeya Ghorpade’s immaterial and
irrelevant. What is relevant is whether the material found and
seized has been confronted and the same aspect is not under
dispute. In view of the present technology, the contention of the
assessee is illogical.
h. All other contentions which are not specifically commented are
denied as false.
The further contention of the assessee that approval granted

under section 153D of the Act is without application of mind and
in mechanical manner is incorrect. The approval has been granted
strictly in conformity with the provisions of the Act. Wherefore it is
respectfully prayed to dismiss the appeal filed by the assessee.”
6. ANALYSIS & CONCLUSIONS.
6.1.1 We have heard the rival contentions, perused and carefully
considered the submissions put forth, the orders of the authorities below
and the others material on record, including references to the relevant
seized material in AIBSG/01, AIBSG/02, A/KMIORES (Series), AIDKS-1 and

30
the statements of Bharat S Ghorpade, Kartikeya M Ghorpade,Ambika
Ghorpade and Dinesh Kumar Singhi.
6.1.2 The issues that require consideration can be summed up as
under :-
1) Whether seized material AIBSG/01 and AIBSG/02 can be relied

on for framing the assessments in the hands of the assessee M/s.
KMIORE, Ambika Ghorpade, M/s. BMM Ispat Limited and M/s.
Bharat Mines and Minerals.
2) Veracity of relying on the statements of Bharat S Ghorpade,
Kartikeya M Ghorpade, Ambika Ghorpade and Dinesh Kumar
Singhi.
3) The reliability of seized material in A/KMIORES (series)
4) Whether such addition is sustainable in the absence of
commensurate undisclosed cash or valuables or assets or
unexplained expenditure.
5) Whether there is enough corroboration in support of additions
made.
7.1.1 The first objection of the assessee is that the material AIBSG/01
and AIBSG/02 was seized from the residence of Sri S. Y. Ghorpade, father
of Bharat S Ghorpade, at Gaurihara, Gandhi Colony, Hospet and the
entire proceedings was conducted in their presence culminating into

31
seizure. The said premises did not belong to the assessee nor was the
seized material written by the assessee. These objections were raised /
taken immediately after the search on 26.10.2010 and 19.11.2010 before
the DDIT (Inv), Unit II (2) (placed at Paper Book pages 1 & 2) who
conducted the search and the assessee categorically stated that the
material was seized from the residence of Sri S.Y. Ghorpade; the
statement given on the date of search was not proper and copies of the
seized material was sought in order to offer further clarification. It was
also submitted that it was categorically mentioned that no cash sales
transactions were done. Even after issue of notice under Section 153A of
the Act, objections were raised that the said seized material did not
belong to the assessee M/s. KMIORE or Ambika Ghorpade and a reply
vide letter dt.30.3.2012 (copy placed at pages 17 & 18) was filed while
complying with the notice under Section 153A of the Act. The relevant
portion thereof is as under :-
“ It is further clarified that the premises at Gaurihara, Gandhi

Colony, Hospet does not belong to Kartikeya Manganese and
Iron Ore Pvt. Ltd. It is the residential premises of Mr. S.Y.
Ghorpade. The material seized at the premises does not belong
to the assessee.”
32
7.1.2 The Assessing Officer considered the objections of the assessee
and held that the material seized from Ambika Ghorpade and the
assessee M/s. KMIORE belongs to Bharat S. Ghorpade and thereafter also
issued a notice, under Section 153A r.w.s. 153C of the Act to ‘BSG’ for
Assessment Years 2005-06 to 2010-11. In this background, it is the
contention of the assessee that since the seized material, more
specifically AIBSG/01 and AIBSG/02 did not belong to the assessee or
Ambika Ghorpade (‘AKG’), no assessment / addition could have been
made on the basis of the said material. The learned Authorised
Representative for the assessee further submitted that even if the name
of the assessee is found in the seized material, the same cannot be used
against the assessee as has been held in the following judicial
pronouncements :-
1) Vijaybhai N. Chandrani vs. ACIT – (333 ITR 436) - Guj HC

2) Hon’ble Bangalore ITAT in Senate vs. DCIT – (181 TTJ 562)
3) P.Srinivas Naik vs ACIT - 114 TTJ 856 - ITAT Bangalore.
4) PCIT vs Vinita Chaurasia – (394 ITR 758) - DEL HC.
33
7.2 Per contra, the Ld. Standing Counsel for Revenue objected to the
assessee's submissions, as in para 4(c) and 4(d) of the written
submissions which are extracted as under :-
“ 4. (c) The further contention that the material in the form of

A/BSG/01 and A/BSG/02 does not belong to the assessee is an
afterthought when the person in charge of the business of the
assessee and the Managing Director have admitted the same, the
above submission is only for the sake of argument without any
substance.
4. (d) In view of the assessments being pending under section

153A of the Act, the contention of the assessee that assessment
under section 153C of the Act has to be done in respect of the
material found and seized from Mr Bharat S Ghorpade is incorrect
and the Act does not provide for dual assessments one under section
153A and another under section 153C of the Act. Reliance is placed
on the judgement of the High Court in the case of Canara Housing
274 CTR 122 wherein it is held that assessment under section 153A
of the Act is not confined only to the seized material but also with
reference to the material in possession of the Assessing officer and
some other material found in the course of assessment proceedings.”
7.3.1 From the above discussion, what is not in dispute is that the
impugned seized material AIBSG/01 and AIBSG/02 were found in the
premises of the BSG and not in the premises of the assessee. The
Assessing Officer himself has held that the seized material AIBSG/01 and
AIBSG/02 did not belong to the assessee but rather belongs to BSG.
Having held that the said seized material belonged to BSG, the Assessing
Officer at a later date issued the requisite notice and completed the
34
assessment in his case making substantial additions, largely relying on
the same seized material. The judicial pronouncements cited by the
assessee and extracted above spells out the legal position that unless the
material belongs to the assessee, the same cannot be used or held
against the assessee in proceedings under Section 153A or 153C of the
Act. Thus the additions made by the Assessing Officer based on seized
material AIBSG/01 is unsustainable for this reason.
8.1 The second objection of the assessee is that the seized material
AIBSG/01 as per the panchanama contained 72 total pages and 72
written pages whereas the copies supplied to the assessee contained 90
written pages. The assessee has been seeking clarification as to how
excess pages, other than that mentioned in the seized material were
made available to it. Similarly in the case of seized material in AIBSG/02
wherein as per the Panchanama the total pages were 150 and written
pages were 150, the written pages supplied to the assessee were 182.
Thus, in both the aforesaid seized material, the copies thereof given to
the assessee appears to be in excess of the seized material.

35
8.2 In response to the above objections raised by the assessee, the ld.
standing counsel has submitted as under in para 5(f) of written
submissions :-
“ 5.(f) The contention raised with respect to the discrepancies in

the pagination of the seized material is hyper technical,
afterthought and baseless. It is an attempt made by the assessee
to deviate from the main issue. When the same material was
provided to the assessee the same has been admitted and this is
an attempt to overcome the admission made on oath. The entire
set of seized material has been placed before this Hon’ble
Tribunal and the authenticity can be examined. Each and every
page of the document has been authenticated by Mr Bharat S
Ghorpade by affising signature and date, from whose
possession the same has been seized. In such a situation, the
assessee is not correct in questioning the authenticity of the
seized material that too in a situation where majority of the
entries tallied with the books of accounts maintained by the
assessee.”
8.3 The objection of the assessee is that the copies of seized
documents are in excess of the number mentioned as seized in the
Panchanama. The reply of Revenue is that all the seized material are
properly numbered, serialized, are genuine and that the objection put
forth by the assessee is hyper technical in nature. If the copies of the
seized documents supplied are in excess of the actual documents seized,
as seemed to be suggested by the assessee, the assessee could easily
point out the documents that don’t belong to it. This has not been done.
36
It could be merely a case of wrong mention of numbers in the
Panchanama. As long as the assessee has not pointed out any document
as not being genuine, this objection is technical and has no bearing on
the substantive issues raised in the appeal. We, therefore, dismiss the
objections raised in this regard.
9.1.1 The Third Objection of the assessee is regarding the statements
recorded based on the seized material AIBSG/01 and AIBSG/02 from BSG,
AKG and KMG. The details in this regard are as under :
“ Thirdly, kindly refer to the Panchanama available at page 218 of the

Paper book (PB) – warrant being drawn in the case of the assessee to
search the residential premises of S.Y.Ghorpade/Bharat S Ghorpade at
Gaurihara, Gandhi Colony, Hospet. The said premises does not belong to
the assessee but to SY Ghorpade, father of Bharat S Ghorpade. The search
commenced on 28.09.2010 at 9.30 am and the proceedings were closed on
29.09.2010 at 7.45 am. During the course of search proceedings a
statement u/s 132(4) of the Act was recorded of Bharat S Ghorpade
commencing at 11.30pm on 28.09.2010 questioning him on the exhibit
marked A/BSG/01 & A/BSG/02. The oath statement is signed by Bharat S
Ghorpade at early hours on 29.09.2010 (page 377 of PB). Page 220 PB
contains the list of inventory of books of accounts, documents etc found
and seized during the search at Hospet supra. The inventory seized marked
as A/BSG/01 contains folder of loose sheets (total pages 72 & written
pages 72) & A/BSG/02 contains folder of loose sheets (total pages 150 &
written pages 150).
The search was also conducted in the case of Ambika Ghorpade at C-1102,
Mantri Elite Apartments, Bannerghatta Road, Bangalore (page 422 PB).
The search commenced on 28.09.2010 at 9.30am and the proceedings
37
closed on 29.09.2010 at 8.45am. During the search proceedings the

statement on oath of Kartikeya M Ghorpade (husband of AmbikaGhorpade
and Managing Director of KMIORE) was recorded on oath questioning
him on certain pages of the seized material marked as A/BSG/01 &
A/BSG/02 (page 408PB). The statement u/s 132(4) was also recorded of
AmbikaGhorpade at the same time during the search proceedings
questioning her on certain pages of the seized material marked as
A/BSG/02 (page 420 PB).
In view of the above factual position, it is incorrect to say that the seized
material shown to Kartikeya M Ghorpade/Ambika Ghorpade while
recording statement is the same seized material which was seized in the
case of Bharat S Ghorpade at his father SY Ghorpade residence as the said
seized material was still in Hospet on 29.09.2010 till 7.45am.
Since the statements were taken from Kartikeya M Ghorpade and Ambika
Ghorpade in the wee hours of the day and there being no clarity on the
basis on which the statements were recorded, the assessee represented by
its Directors (Kartikeya M Ghorpade and Ambika Ghorpade) wrote to the
Investigation wing seeking copies of seized material based on which their
statements were recorded (page 1 & 2 PB). Till date the said copies have
not been made available to the assessee neither an opportunity to rectify
the statements has been given. Assessee’s submissions regarding the same
before the AO are found in page 90 to 92 relevant page 92 ;pages 115 to
122 PB, relevant page 117 PB.”
9.1.2 The essential contention of the assessee in this objection is
that the additions have been made in the assessee's hands based on
certain statements recorded from Kartikeya M Ghorpade and
Ambika Ghorpade, wherein these two persons have reportedly
admitted to earning of undisclosed income, after they were
confronted with the documents in question. It is the assessee's

38
contention that these documents were found in the premises of
Bharat S Ghorpade, which was in another town far away and hence
the claim of Revenue that these documents were shown to these
persons were wrong and further the copies of these statements
were not given to the assessee.
9.2 Per contra, Revenue contends that the objections raised by
the assessee in this regard is both immaterial and irrelevant. It was
submitted that what is relevant here is whether these two persons
were confronted with the material found and seized in the course
of search and this aspect is not disputed by the assessee. In view of
the present technology available for transmission of
correspondence and material electronically, the contentions of the
assessee are illogical and baseless.
9.3.1 We have considered the rival submissions made in this regard,
perused the statements recorded during the search action and also the
correspondence entered into by the assessee with the Department after
the search action. The undisputed facts are that Kartikeya M Ghorpade
39
and Ambika Ghorpade had admitted to earning of certain undisclosed
income during the course of search action. That the disclosure /
admissions made by them was based on certain documents purportedly
shown to them also comes out clearly from the statements. In
contentions put forth, the assessee has cast serious doubts as to
whether the disclosure was made based on documents purportedly
shown to these two persons ‘KMG’ and ‘AKG’ by elaborately citing the
time of search, the time of recording the statements and alleging the
impossibility of showing documents which were in another premises
which was far away.
9.3.2 Be that as it may, it is settled principle that the assessment of
income has to be based on evidence. The statement recorded during
search action can be relied upon provided it is supported by evidence
collected during search action, However, mere reliance on a statement
recorded during search action, that too of third persons, for making
additions in the case of the assessee is not appropriate. More
particularly so, in the circumstance of the case on hand where the
assessee has claimed that the statement was not based on any
40
documents. It is also settled principle that when documents /
statements are used against the assessee, copies of the same have to be
provided and opportunities afforded to the assessee to explain the
statements made. Mere reliance on a statement recorded in the wee
hours of the day in the course of search action without any further
efforts to bring in corroborative evidence and afford opportunities to the
assessee and to the deponents also to explain or rebut or correct the
statements is inappropriate. On an appraisal of the record before us, in
our view, the Assessing Officer has faultered in not following the rule of
law and the procedures prescribed in this regard by judicial
pronouncements. In this context, the reliance placed on the follwoing is
appropriate :-
(i) Pullangode Rubber Produce Co. Ltd. Vs. State of Kerala & Another (91
ITR 18) (SC) (Paper Book pages 189 & 190) wherein the Hon'ble Court
observed that -
“ An admission is an extremely important piece of evidence but

it cannot be said that it is conclusive. It is open to the person
who made the admission to show that it is incorrect.”
41
(ii) CBDT Instruction No.F.No.286/2/2003/IT(Inv) dt.10.3.2003 (Page

167) – on confessions of additional income during the course of search
and seizure and survey operations.
(iii) Sahil Study Circle Pvt. Ltd. Vs. DCIT (179 TTJ 1) (Delhi ITAT) (Paper
Book pages 337 & 338) wherein it was observed and held as under :-
“ ………CIT (A) erred in upholding the conclusion of the AO based only

on the admission during survey made by Shri Suri at the wee hours
(i.e. between 3.00 AM – 4.00 AM) to fasten the liability when Shri
Suri was able to explain and reconcile the receipts. The AO did not
bother to enquire into the veracity of the explanation given by the
assessee. The AO could have easily called for details from the
branches of the assessee at Janakpuri and tested the explanation
given by the assessee in respect to inter- branch transfer of cash to
the Head Office. Without doing so, the addition made solely on the
basis of admission during survey cannot be upheld as held by the
Hon’ble Supreme Court in CIT vs. S. Khader Khan Son (supra) and in a
similar case of Hon’ble jurisdictional High Court in CIT vs. Dhingra
Metal Works (supra). Therefore, the orders of the lower authorities
are bad in law and are set aside on this issue. These grounds are
allowed. CIT v. S. Khader Khan Son [2012] 254 CTR 228;…….”
In the light of the above, the objection raised by the assessee is
upheld.
10.1 The next objection of the assessee is that the material AIBSG/01
and AIBSG/02 are a bunch of loose sheets and cannot be relied upon. It
is the assessee's contention that loose sheets are not evidence because
they are neither books of account nor are they maintained regularly and
42
therefore in the absence of adherence to the twin requirements of Sec.
34 of the Evidence Act, no liability under law can be brought about
based upon the loose sheets and therefore they cannot be relied upon
for framing of assessments. In support of the above contentions, the
assessee had placed reliance on some judicial pronouncements.
10.2.1 We have considered the submissions and contentions put
forth in this regard and perused and carefully considered the material on
record. We have already held that the action of the Assessing Officer is
making additions based on seized material in AIBSG/01 & AIBSG/02 are
not appropriate as the Assessing Officer has not followed the due
process and procedure and has not brought on record any corroborative
evidence to support the statements made. Therefore, this issue and
contention raised by the assessee that the loose sheets in the two seized
bundles AIBSG/01 and AIBSG/02 does not constitute actionable evidence
has been rendered academic and we therefore refrain from making any
observation and adjudication on this issue.

43
10.3.1 Similar arguments / contentions as above have been put forth
by both parties for Assessment Years 2009-10 to 2011-12 in respect of
appeals in ITA Nos.833 to 835/Bang/2015 since the issues and facts are
similar. Both parties have basically relied on the submissions made in
Assessment Year 2008-09, for these Assessment Years 2009-10 to 2011-
12, which have been heard and considered at length by us.
10.3.2 We have considered the rival submissions and perused and
carefully considered the material on record and the judicial
pronouncements cited. We find that the facts and issues before us, in
the case on hand for Assessment Years 2009-10 to 2011-12 are similar to
those in the appeal for Assessment Year 2008-09. Since we have decided
the issue in the assessee's appeal in ITA No.832/Bang/2015 for
Assessment Year 2008-09 in favour of the assessee, the impugned issues
in the appeals in ITA Nos.833 to 835/Bang/2015 for Assessment Year
2009-10 to 2011-12 are also held and allowed in favour of the assessee
and therefore the additions of Rs.17,79,43,250 for Assessment Year
2009-10; Rs.87,50,54,416 for Assessment Year 2010-11 and
Rs.9,58,64,287 for Assessment Year 2011-12 being part of alleged cash

44
receipts of Rs.64,00,91,973 are unsustainable and are accordingly
deleted.
11. Bogus Expenses (Applicable for A.Ys 2009-10 & 2010-11)
11.1 On the issue of bogus expenses, applicable for Assessment Years
2009-10 and 2010-11, the brief facts of the matter are as under :-
The additions on this issue appears to have been done solely on the
basis of certain statements, said to have been recorded from assessee's
employees, namely, K.V. Balan, Antony Balaraj and Bharat S Ghorpade
(‘BSG’). On this issue, certain material seized from BSG’s residence is
mentioned in page 55 of the order of assessment for Assessment Year
2008-09. Another material referred to is on page 15 of the seized
material AIKMOREIS/5, both of which are mentioned at pages 55 & 57 of
the order of assessment. On this issue the addition made in the hands of
the assessee and AKG are as under :-
Asst. Year M/s. KMIORE (Rs.) AKG (Rs.)

2009-10 1,85,00,000 28,96,125
2010-11 2,67,71,921 78,57,020
45
11.2 The assessee's contentions as submitted in their written
submissions are as under :
“ The AO has made addition of Rs. Rs.1,85,00,000/- for AY 2009-10 and

Rs.2,67,71,921/- for AY 2010-11 stating that the assessee has raised certain
bogus claim for expenditure and disallowed the same. In doing so he has
relied on the statements of Mr.K.V.Balan and Mr.Antony Balaraj. It is
submitted that all the expenses are duly recorded in the books of accounts and
the payments have been made through the regular banking channels. The
seized material A/KMIORE/S/5 referred by the AO is not incriminating as the
expenses referred therein and the TDS calculation is part of the books of
accounts. No expenses can be disallowed merely on the basis of statement of
third parties. The copies of the statements were not given to the assessee. No
opportunity for cross examination has been provided to the assessee and in
the absence of the same statements cannot be relied on.
In addition to the above, the assessee relies on the following case laws:
On the issue of assessment made based on third party statements:
PCIT vs Saumya Construction P Ltd – (387 ITR 529) - GUJ HC

CIT vs SMC Share Brokers Ltd - (288 ITR 345) - Delhi HC”
11.3 On his part, the standing counsel for the Department submitted
that the Department’s case is discussed at pages 54 to 65 of the order of
assessment for Assessment Year 2008-09. Revenue has further sought to
buttress its arguments in written submissions in para 2(vii),(m) and (n)
which are as under :-
“ (a) Bogus expenses:-The entire operations of the mines owned

by the assessee are being carried out by Bharat Mines and
Minerals as such the assessee has no expenses to be incurred
except administrative in miscellaneous expenses. In the course of
46
search at residence of Mr Bharat Ghorpade and office premises of

the assessee setting bills pertaining to the contract works were
found and seized and the same is placed at page 55 of the
assessment order reflecting adjustment bills in the name of the
employees of the company.
(b) Similar entries were found for the Assessment Year 2010–11
in the notebook maintained by the assessee and same is scanned
at page 57 of the assessment order reflecting generation of bills in
the names of spouses of the employees by the assessee. The
statement of employees (accountant) is extracted at page 59 and
60 admitting the contractors are either the employees of the
company or the spouses or relatives. Further admitted generation
of bills in the office of the assessee (relevant portion of statement
at page 61 and 62 of the assessment order). An analysis it is
found the contract work is only accommodation entries to avoid
payment of tax.”
11.4.1 We have heard the rival submissions and perused and carefully
considered the material on record. According to the assessee, the
payments for the aforesaid expenses have been made through normal
banking channels by way of account payee cheques and are duly
recorded in the assessee's books of account. Department’s reliance is
on the material seized from ‘BSG’ mentioned at page 55 of the order of
assessment. A perusal of the same shows that certain sums are
mentioned against various names and when this is compared with the
seized material AIKMIOREIS/5 mentioned in page 57 of the order of
assessment, the same do not match; as the amounts mentioned and
names of parties are different. Seized material AIKMLOREIS/5 gives

47
details of gross amounts and TDS and do not match with the material
found with BSG and as mentioned earlier, a comparison of the two does
not match and therefore does not bring out any clarity or corroborate
each other or evidence any withdrawal of cash or that anything is amiss
as alleged. Further, in his statement Bharat S Ghorpade (BSG) states that
he does not know anything about this. Similarly, Sri Balan was not able
to explain on account of lack of knowledge since he was not in charge of
administration. Sri Antony Balaraj has stated that he has not carried out
any contract work on behalf of the assessee company and the assessee
has also pointed out certain discrepancies / contradictions in his
statements.
11.4.2 These could have been clarified / confronted to the assessee,
by the Assessing Officer. But it appears that neither has the assessee
been provided with copies of statements recorded from the aforesaid
persons nor been allowed cross examination. From an appreciation of
the material on record, it appears to us that the situation which emerges
is that the seized material from BSG and AIKMIOREIS/5 utilised by the
Assessing Officer to make the disallowances on account of bogus

48
expenses do not support or corroborate one another. The statements of
Sri Antony Balaraj and Sri K.V. Balan recorded by the Department have
not been supplied to the assessee for rebuttal and therefore it is trite
that the same cannot be used against the assessee by the Assessing
Officer. Further, opportunity for cross-examination of Sri K.V. Balan and
Sri Antony Balaraj has also not been provided to the assessee by the
Assessing Officer. In such cases, no addition can be made as has been
held by the Hon'ble Delhi High Court in the case of CIT Vs. SMC Share
Brokers Ltd. (288 ITR 345) as under :
“In the absence of the third party, being made available for
cross-examination despite repeated requests by the assessee,
his statement could not be relied upon to the detriment of the
assessee and the Tribunal was justified in setting aside the
block assessment.”
11.4.3 The above decision of the Hon'ble Delhi High Court has been
relied upon by the co-ordinate bench of this Tribunal in the case of M/s.
Obulapuram Mining Company Pvt. Ltd. Vs. DCIT in ITA
No.653/Bang/2015 dt.29.7.2016, wherein the co-ordinate bench has held
that disallowances made on the basis of statements of persons not being
made available for cross-examination cannot be used against the

49
assessee and hence such disallowances are not sustainable. Even
otherwise, we have already held in the pre-paragraphs of this order
(supra) that seized material found in the premises of third person cannot
be used against the assessee without any corroborative evidence that
the seized material belongs to the assessee. Therefore these additions
fail on this count as well. In view of the facts and circumstances of the
case and the judicial pronouncements referred to above, the additions of
Rs.1,85,00,000 for Assessment Year 2009-10 and Rs.2,67,71,921 for
Assessment Year 2010-11 made on account of bogus expenses are
deleted.
12. In the result, the assessee's appeals for Assessment Years 2008-09
to 2011-12 are partly allowed.
Order pronounced in the open court on the 10th day of April, 2018.
Sd/- Sd/-
(SUNIL KUMAR YADAV) (JASON P BOAZ)
Judicial Member Accountant Member
Bangalore,
Dt.10.04.2018
*Reddy gp
50
Copy to :
1 Appellant 4 CIT(A)
2 Respondent 5 DR. ITAT, Bangalore
3 CIT 6 Guard File
Senior Private Secretary

Income Tax Appellate Tribunal
Bangalore.

Kartikeyas Manganese & Iron Ores P LTD

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IN THE INCOME TAX APPELLATE TRIBUNAL

BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND

I.T. A. Nos.832 to 835/Bang/2015

M/s. Kartikeyas Manganese & Iron Ores Pvt. Ltd.,

Dy. Commissioner of Income Tax,

Appellant By : Shri K.R. Pradeep, C.A.

Date of Hearing : 01.02.2018.

2008-09 to 2011-12 arising out of the common order of the

Commissioner of Income Tax (Appeals)-11, Bangalore dt.10.03.2015. The

way of this consolidated order for the sake of convenience.

2. Briefly stated, the facts of the case are as under :-

2.1 The assessee (hereinafter referred to as ‘KMIORE’) is a

company engaged in the business of iron ore mining. A search and

'the Act') was conducted in the case of the assessee on 28.09.2010 in

pursuance of warrant of authorization dt.27.9.2010. Notices under

Assessment Years 2008-09 to 2011-12 and in response thereto, the

vide order dt.14.3.2013. The details of income returned, additions made

and income assessed for Assessment Years 2008-09 to 2011-12 are as

Asst. Year Income Total Additions Accrued

2.2 Aggrieved by the orders of assessment for Assessment Years 2008-

09 to 2011-12 containing the above additions made by the Assessing

Bangalore, who dismissed the assessee's appeal vide the impugned

common order dt.10.3.2015.

3.1 Aggrieved by the aforesaid orders of the CIT (Appeals) – 11,

Bangalore, dt.10.03.2015, the assessee has filed appeals before this

1. “ That the order of the Authorities below in so far as it is against the

3. The proceedings of search and all other subsequent proceedings are

4. The notice u/s 153A and subsequent proceedings are without

7. The CIT(A) failed to appreciate that sufficient and adequate

8. The CIT(A) erred in dismissing the ground on validity of search.

9. The AO erred in initiating proceedings u/s 153A and thereafter

10. The CIT-Appeals erred in refusing to rely on the decision of the

11. The authorities below erred in making additions of Rs.8,35,91,047/- as

13. The authorities below erred in relying on material A/BSG/01 &

14. The authorities below erred in placing reliance on the statements

15. Without prejudice, the authorities below erred in relying on the

16. The authorities below erred in relying on statements recorded from

17. The authorities below erred in relying on statements supra in

Assessment Years 2009-10 to 2011-12 as the issues are common.

However, in respect of the additions made on the issue of Bogus

expenses for Assessment Years 2009-10 and 2010-11, a new ground

3.3 The above grounds of appeal are essentially on the following

(i) The validity of search action and

(ii) on the correctness of additions made, based on the

certain seized material.

4. Validity of Search Action.

on the decision of the Hon'ble Karnataka High Court in the case of C.

Court has held as under :-

“ The petitioners have approached this Court only on the

the Commissioner of Income Tax (Appeals) has no jurisdiction

4.2 However, in the light of the amendment in Finance Act, 2017 to

assessee and the grounds raised in this regard are dismissed.

5. Addition made based on seized material.

5.1 In respect of the additions made based on seized documents, the

assessee is basically aggrieved on account of those additions made

based on seized material AIBSG/01, AIBSG/02, AIKMIORE/S (Series)

short ‘BSG’), Kartikeya M Ghorpade (in short ‘KMG’), Ambika K Ghorpade

Asst. Year Total unaccounted Undisclosed Undisclosed

5.2 The Assessing Officer’s case, based on an appraisal of the seized