TaxTMI 
TaxTMI 
2015 (1) TMI 97
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....n of Rs. 97,00,000/- made by the learned A.O. on account of loan. 4. On the facts and in the circumstances of the case and in law, the Ld. C.I.T.(A) erred in confirming the addition of Rs. 65,0001- made by the learned A.O on account of foreign travelling and Rs. 50,0001- made by the learned A.O on account of credit card expenses. 3. Rival contentions have been heard, record perused. Facts in brief are that a search and seizure operation was initiated u/s.132 on 12-9-2007 in case of M/s K Sera Sera Productions Ltd. The husband of the assessee Mr. Parag Sanghavi was director of this company and therefore his residence was also covered in the search operation. During the course of the search at the resident of the assessee no incriminating documents, jewellery, cash, unaccounted bank accounts, undisclosed property, etc. were found and hence there was no seizure except some loose papers numbered pg. 1 to 32. Consequent to search, assessment was framed by AO u/s.153A r.w.s.143(3), wherein following conditions were made :- "a) Rs. 97,00,000/- on account of loan received from NRI Mr. Vijay B. Bhansali (no documents or any papers were found during the course of search) b) Rs. 65,000/- ....
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...., there was no assessment pending in this case and in such a case there was no question of abatement. Therefore, addition could be made only on the basis of incriminating material found during search. For this proposition, further reliance was placed on the decisions of :- a) ITAT Mumbai Bench in the case of Shri Gurinder Singh Bawa vis. DCIT - 28 taxmann.com 328. b) ITAT Mumbai Bench in the case of Anil P. Khimani vs. DCIT (ITA No.2855 to 2860/Mum/2008, dated 23-2-2010. c) ITAT Vishakkapatnam in the case of KGR Exports vs. JCIT (ITA No.494/V/2007, dated 11-9-2008). d) ITAT Jodhpur Bench in the case of Vishal Dembla vs. DCIT - 157 TTJ 189. e) ITAT Mumbai Bench in the case of DCIT V. Pratibha Industries Limited - 141 ITD 151. f) High Court of Bombay in the case of CIT Vs. Murli Agro Products Ltd. (2011)15 taxmann.com 183(Bom); g) ITAT Mumbai Bench in the case of ACIT Vs. Jayendra P. Jhaveri, (2014) 45 taxmann.com 204(All.); and h) ITAT Delhi Bench in the case of ACIT Vs. Jackson Engineer ltd. 2014-TIOL-494-ITAT-DEL. 5.1 On merits, learned AR contended that assessee had taken loan of Rs. 97 lakhs from his close family friends Mr. Vijay B. Bhansali, who is NRI, residing at Sha....
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.... justified in making addition u/s.153A. As per learned DR it was only case of search operation. The case was subsequently taken up for scrutiny and the AO has found that it was bogus gift. He further contended that u/s.153A, the AO can assessee or reassess the total income for the six assessment years immediately preceding assessment years in which search was conducted. 6.1 With respect to the loan of Rs. 97 lakhs, the contention of learned DR was that this amount was shown as gift in the return of income filed and only during the course of scrutiny assessment proceeding that the assessee has changed his version and stated that it was a loan transaction. As per the learned DR, the assessee has not proved identity, creditworthiness and genuineness of the transaction. Accordingly, the AO was justified in making addition u/s.68 of the Act. 7. We have considered rival contentions, carefully gone through the orders of the authorities below and also deliberated on the judicial pronouncements referred by lower authorities in their respective orders as well as cited by learned AR and DR during the course of hearing before us. From the record we found that the search action was carried on....
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....expired on 31st March, 2007 i..e 12 months from the end of the month in which return was furnished. In the relevant assessment year under consideration i.e. A.Y.2005-06, the return of income was furnished on 29-3-2006. As per proviso to Section 143(2) notice under clause (ii) shall not be served on the assessee after the expiry of 12 months from the end of the month, in which return is furnished. Thus, the time limit for issue of notice u/s.143(2) has already expired on 31-3-2007, which is much prior to the date of search i.e. 12-9-2007. It is also not in dispute that no incriminating material with regard to alleged gift/loan was found during the course of search so as to empower the AO to make addition u/s.153A with regard to such gift/loan. The ITAT Mumbai Bench in the case of Shri Gurinder Singh Bawa, 28 taxmann.com 328, has held as under :- "6. We have perused the records and considered the rival contentions carefully. The dispute raised is regarding legal validity of addition made by AO under section 153A of the Act. Under the provisions of section 153A, in all cases, where search is conducted under section 132 of the Act, AO is empowered to assess or reassess total income of....
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....leted under summary scheme under section 143(1) and time limit for issue of notice under section 143(2) had expired on the date of search. Therefore, there was no assessment pending in this case and in such a case there was no question of abatement. Therefore, addition could be made only on the basis of incriminating material found during search. 6.2 In this case, the AO had made assessment on the information/material available in the return of income. The information regarding the gift was available in the return of income as capital account had been credited by the assessee by the amount of gift. Similar was the position in relation to addition under section 2(22)(e). The AO had not referred to any incriminating material found during the search based on which addition had been made. Therefore following the decision of the Special Bench (supra), we hold that the AO had no jurisdiction to make addition under section 153A. The addition made is therefore deleted on this legal ground. On merit also we do not find any case to sustain the addition. The addition made is on account of gift which is nothing but loan taken by the assessee which was converted into gift during the year. Thus....
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.... loan is received, copy of passport, letter from the Abu Dhabi Commercial Bank through which the cheque is received and therefore the assessee has produced all the evidence to prove the credit worthiness of the loan creditor. However, CIT(A) rejected assessee's contentions and has given his finding at para 4.4. The ld. CIT (A) has relied on the decision of the Hon. Supreme Court in the case of Durgaprasad More 82 ITR 540 and Sumati Dayal v. CIT 214 ITR 801 and also the decision of Delhi ITAT in the case of DCIT v. Smt. Phoolwatidevi 314 ITR (AT) 1 and held that by applying the test of human probability and surrounding circumstances, documentary evidence cannot be accepted and the addition is justified. By observing that assessee was unable to discharge its burden of proof u/s.68 of the Act, the CIT(A) confirmed the addition. From the record, we found that the assessee had taken loan of Rs. 97 lakhs from Mr. Vijay Babulal Bhansali who is an NRI residing at Sharjah, UAE form his non-resident account with the Abu Dhabi Commercial Bank as under: Cheque date Cheque no. Amount (Rs.) 17.01.2005 227626 25,00,000 17.01.2005 227627 22,00,000 23.02.2005 227628 25,00,000 14.03.200....
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.... placed on the decision of Hon'ble Patna High Court in the case of Sarogi Credit Corporation Vs. CIT, 103 ITR 344 and Hon'ble Gujarat High Court in the case of DCIT Vs. Rohini Builders, 256 ITR 360. Decisions relied by CIT(A) are not applicable to the facts of the instant case. In view of the above documentary evidences and facts and circumstances of the case, we do not find any merit in the action of lower authorities in making said addition. 13. The AO also made addition of Rs. 65,000/- on account of foreign travelling expenses. We have considered rival contentions and found that the AO has dealt with the addition in para 9 of his assessment order, wherein he has incorporated the assessee's contention that the total withdrawal made by the assessee, her husband and her mother-in-law, amounting to Rs. 16,08,971/- included the expenses incurred for foreign travelling. It was also submitted before the AO that assessee has made a trip to Malaysia, wherein she stayed with her friends and relatives, therefore, no expenses were incurred for boarding and lodging. The only expenses so incurred on account of air tickets. However, the AO has not agreed to the contention of the assessee and ....