TaxTMI 
TaxTMI 
2017 (8) TMI 1055
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....der framed in consequence thereof is bad in law. The additional grounds further raised is in absence of any incriminating material found during the course of search no addition can be made u/s 153A of the Income Tax Act, 1961. 2. The ground of appeal raised by the revenue are as under:- "1. That the Commissioner of Income tax (appeals) erred in law and on facts of the case in deleting the addition of Rs. 106800000/- made by the AO on account of unexplained cash credit. 2. That the commissioner of income tax (appeals) erred in law and on facts of the case in deleting the addition of Rs. 15000000/- made by AO on account of unsecured loan from M/s Index Securities & Research Pvt. Ltd. 3. (a) The order of the CIT(A) is erroneous and not tenable in law and on facts. (b) The appellant craves leave to add, alter or amend any/ all of the grounds of appeal before or during the course of the hearing of the appeal." 3. The ground of cross objection are as under:- "1. That it be held that the ld Commissioner of Income Tax (appeals) is justified in deleting the addition of Rs. 106800000/- made by the ITO on account of un explained cash deposits....
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....r section 153A of the Act." 5. The ld AR submitted that as the ground of cross objection are legal in nature and does not require any further investigation of facts, therefore same may be adjudicated. The ld DR objected that the assessee has failed to justify the reason that for which these were not raised earlier. 6. We have carefully considered the rival contention for admission of additional ground of cross objection. The additional grounds of cross objection is legal in nature and does not require any further facts to be brought on record, we admit the additional grounds in the interest of justice. 7. Now we first come to additional ground raised by the assessee wherein it is submitted that no assessment u/s 153A of the Act can be made on the assessee as there is no search and further no incriminating material was found with respect to addition made by the AO. 8. The briefly stated the facts of the case is that the assessee company is engaged in the business of real estate and filed its return of income on 30th September 2008 declared total income of Rs. 233330/-. On 14.09.2010 search and seizure operation was taken in case of the assessee and group concerns and not....
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....ed 19.03.2008 with the AO about the companies being bogus in nature who advanced unsecured loan to the appellant. 10. We have carefully considered the rival contentions. We have also perused the decision of the Hon'ble Delhi High Court in case of CIT Vs. Kabul Chawla 388 ITR 573 wherein in para No. 37 it is held as under:- "37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reasses....
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....ement of disclosure made on unaccounted income itself is an incriminating material which supports revenue from making further enquiry into the affairs of the person searched. In the present case the statement of the director of the company Mr. Jagmohan Gupta was recorded on oath and question were asked to him about unsecured loans. The bank account of Axis bank was also shown to him where the several credits of the investor companies where found. the Director of the company could not give proper replies to these questions about the nature of the funds received. When the specific questions were asked about the credits the assessee submitted that adequate disclosure was made during the course of search by the director which covers all the infirmities and assessee requested to not to make further addition on account of these loans. Therefore it is apparent from the statement of the director and from the submission of the assessee during assessment proceedings, it is apparent that disclosure was also made on account of these loans. In the present case t firstly there was difference in the balance sheet filed by the assessee with The Registrar of Companies and filed with the return of i....
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....g unexplained in the Axis bank 's bank statement coupled with the statement of the director of the company offering disclosure which is further being confirmed during the course of assessment proceedings. Therefore we are not in agreement with the assessee that no incriminating material was found by revenue during the course of search. Therefore in this case the statement of the director of the company was further corroborated by wrong return to the income tax department and Ministry of Corporate Affairs and unexplained entries in the bank account for which assessee's director could not explain coupled with the report of the investigation wing with respect to investor companies. In view of the above facts we are of the view that once the assessee itself has accepted that there are unaccounted income which covers any specified entries which may open up Pandora's box and then it cannot be contended that no incriminating material was found during the course of search. Further the order u/s 153A has also been correctly made by ld AO in view of finding of CIT (A) that search was conducted on premises of the assessee. In views of this we dismiss the cross objection of the assessee. 13....
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....In the course of the assessment proceedings, the Assessing Officer observed that the appellant company obtained certain amounts as unsecured loans from Kolkata based companies from the following body corporates which are extracted below: 1. M/s AKP Tieup P. Ltd. 50,00,000/- 2. M/s Chandimata Management P. Ltd. 15000000/- 3. M/s Columbia Granites P. Ltd. 2500000/- 4. M/s Drossier Commodities P. Ltd. 5500000/- 5. M/s Galaxy Tieup P. Ltd. 16000000/- 6. M/s Isko n Imp ex P. L td. 1500000/- 7. M/s.Jagran Merchant P. Ltd. 3500000/- 8. M/s. Kanupriya Commercial P. Ltd. 12500000 9. M/s Khushboo Bearing P. Ltd. 2000000/- 10. M/s Paridhi Finvest P. Ltd. 7500000/- 11. M/s Three C Universal Developers P. Ltd. 20000000/- 12. M/s Rasika Garments P. Ltd. 6000000/- 13. M/s Taral Vincom P. Ltd. 9800000/- 106800000/- 13.1 The above amounts were found credited in the Axis Bank, Daryaganj, Delhi in the account no. 279010200005890 pertaining to the appellant during the period 14.11.2007 to 31,03.2008. A statement on oath was recorded on 19.3.2013 of ....
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....ing Officer did not mention a word with regard to the enquiry made u/s 133(6) of the I T Act 1961 in his order. On the basis of the information furnished by the AR of the appellant, no further enquiry or investigation was undertaken by the Assessing Officer bringing evidence on record contrary to that which was furnished by the appellant. In the submissions, made u/s 133(6) the above parties stated that the amount was given to M/s. Tirupati Infra-Projects Pvt. Ltd. i.e. the appellant through M/s Bharat Buildwell Pvt. Ltd. On perusal of the assessment record it is seen that in the course of the assessment proceedings vide letter dated 22.03.2013 the appellant stated as under: "We are submitting herewith the confirmations from M/s. Bharat Buildwell Pvt. Ltd. for the amount advanced for allotment of shares. The said amount has been paid by the company from the amount received from various companies as asked by you. M/s Bharat Buildwell Pvt Ltd. is a regular income tax assessee and duly filed its income tax return. The copy of the ledger account and copy of balance sheet for assessment year 2008-09 is enclosed." However on perusal of the bank statements, of the above ....
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....appellant. Even though substantial information was provided by the appellant, there was no effort on the Assessing Officer to conduct further enquiries like the directors of these companies, nature of business activities, details of share holders, purpose of the appellant seeking these unsecured loans, relation between the appellant company based in Delhi and those which are based in Kolkata, where utilized, whether the same returned or not, etc. Without bringing any material on record to substantiate his findings, the Assessing Officer simply made an addition of Rs. 10.80 cr on the ground that these companies were Kolkata based. 13.1.7 In the assessment order dated 28.3.2013, the Assessing Officer stated that the existence of the above mentioned parties (Kolkata based) were in question. This inference was drawn by him in the appellant's case based on the enquiries conducted by the DDIT (Inv) Unit-Ill (4) Kolkata in the case of the another company namely M/s. Divine Infra Con Pvt. Ltd. It was observed by the Assessing Officer that the names of the companies mentioned in the enquiry report of M/s Divine Infracon are common with that of the ones in the appellant's ca....
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....the hands of the appellant. Even without bringing any evidence on record for making such addition- 1) There is no report pertaining to M/s. Divine Infracon on record on the basis of which the Assessing Officer inferred a warranty for addition. 2) The AO did not bring on record the names of those companies which were found by him to be common in the case of the appellant as well as in the case of M/s Divine Infracon. 3) Other than the names of the companies being common, no specific findings were given by the AO pertaining to these companies which led him make an addition, despite of sufficient material on record. 4) The AO did not bring on record as to which company's existence was in question as few companies which are based in Kolkata responded to his summons issued u/s 133(6) and furnished details as called for by the AO. In such cases, It was the duty of the AO to conduct further enquiries and bring on record proper evidence independently to prove his suspicion or doubt pertaining to these amounts, which is not the case here. 5) Such report, which was used against the appellant was not confronted, and no opportunity was given to ....
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.... accounts maintained in Axis Bank and Bank of Rajasthan, Kolkata. The Assessing Officer did not make an effort to trace the source and genesis from where the money was generated and transmitted to the appellant's bank account in Delhi, who showed the same as "unsecured loan". It is well known that Kolkata is a hub of accommodation entry providers, where unaccounted money transactions are a menace. Knowing the potentiality for detection of such unaccounted transactions, the Assessing Officer in this case was fervourly duty bound to conduct an elaborate, detailed and meaningful independent enquiries rather than making the addition of Rs. 10.80 cr. on the basis of incomplete investigations/enquiry and contents of a report pertaining to another case M/s. Divine Infracon assessed in the same charge. Utilization of information is no bar while framing the assessment order if it is based on the accurate and correct information. In the present case, the Assessing Officer did not bring on record as to which company was found to be common with the name contained in the report of M/s. Divine Infracon. There is no clear finding by the Assessing officer even with regard to the name being com....
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....companies based in Kolkata. In the absence of any fruitful and meanfull enquiry, and without bringing any material on record, the addition made by the Assessing Officer for the sake of addition on the ground that these entities are based in Kolkata is not correct and in a way detrimental to the revenue. 13.1.11 Post search investigation/enquiry was partly done by the Assessing Officer by issuing summons u/s 133(6) to few companies based in Kolkata, and without bringing on record the outcome of such an exercise. The Assessing officer relied on the contents of a report made in another case with a belief that the names of the companies are common in both the cases i.e. the appellant and M/s Divine Infracon Ltd. with this doubt, attempt should have been made to verify the transactions involved between those Kolkata based companies and the appellant and bring on record an evidence to substantiate and support his addition. 13.1.12 In view of the above detailed discussion, the addition of Rs. 10.80 cr. by the Assessing Officer cannot be sustained due to fact that- a) Post search investigation/enquiry was done by the Assessing Officer by issuing 133(6) to some co....
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....nding of the ld CIT(A) in deleting the above addition. In the result ground No. 1 of the appeal of the revenue is dismissed. 18. Ground No. 2 of the appeal of the revenue is against the deletion of addition of Rs. 150000,000/- as unsecured loan from Index Securities and Research Pvt. Ltd. During the course of search it was found that this company is managed by the entry operators and the amount of Rs. 1,50,00,000/- is received from that company. ld Assessing Officer doubted genuineness and made the above addition. ld CIT(A) deleted the above addition in view of the confirmation, copies of income tax return and bank statement of the creditors. 19. The ld DR relied upon the order of the ld Assessing Officer and ld AR relied upon the order of the ld CIT(A). 20. We have carefully considered the rival contentions and also noted that vide para 17 of the order of the ld CIT(A) the issue has been extensively dealt with and the addition has been dealt with holding as under:- "17. I have considered the written submissions and also case laws relied upon the appellant. I have also gone through the assessment order dated 28.03.2014 and perused the assessment record for the yea....