TaxTMI 
TaxTMI 
2018 (5) TMI 1744
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....inding of incriminating material etc. belonging to the assessee in the search of a 3rd party, the assumption of jurisdiction u/s 153C is unwarranted. 3. That without prejudice, in the absence of recording any satisfaction by the AO of the assessee, the whole proceedings are illegal and without jurisdiction. 4. That under the facts and circumstance, addition of Rs. 19,35,720/- u/s 68 for receipts from 7 persons as mentioned in Para-4 of the Asstt. Order is absolutely unsustainable in law as well as on merits. 3. Ground nos.1 and 4 relate to the addition of Rs. 19,35,720/- made by the AO u/s 68 of the Income-tax Act, 1961 (hereinafter also called `the Act'). Briefly stated, the facts of the case are that a search and seizure operation was carried out by the Income Tax Department u/s 132 of the Act on 19.10.2011 at the premises of M/s Agarwal Associates and M/s Jainco group of cases. In this search, certain material relating to the assessee was also found and seized. Notice u/s 153C read with section 153A was issued, in response to which the assessee filed a return declaring total income of Rs. 11,86,960/-. During the course of assessment proceedings, the AO notic....
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....s mean the years for which the assessments are pending on the date of search which are abated in terms of the express provisions of the second proviso to section 153A. This will also embrace the years in respect of which the time limit for issuing notice u/s 143(2) is still available with the AO as on the date of search. 7. Adverting to the extant factual matrix, it is seen that the assessment year under consideration falls in the category of `completed assessments' and not the `pending assessments' abating on the date of search. The ld. AR relied on the judgment in the case of Kabul Chawla vs. CIT (2016) 380 ITR 573 (Delhi) to contend that the above addition could not have been made because it is a completed assessment year and further no incriminating material was found during the course of search qua the above creditors added by the AO. This was countered by the ld. DR, who claimed that such an addition was rightly made and sustained. 8. Facts in the case of Kabul Chawla (supra) are that a search was carried out u/s 132 on 15.11.2007 on BPTP Ltd., a leading real estate developer operating all over India and some of its group companies including the premises of the assessee....
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....s. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment canbe made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately f....
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....evident from the statement of Shri Matwar Prasad recorded during the course of search u/s 132 that he admitted not to have given any loan or advance to any person including the assessee. This statement of Shri Matwar Prasad, coupled with the fact that the assessee surrendered this amount during the course of assessment proceedings, in our considered opinion, constitutes incriminating material found during the course of search. The ld. AR was fair enough to concede that addition to the extent of Rs. 3,75,000/- is backed by incriminating material found during the course of search and should be confirmed. We, therefore, uphold the addition to this extent. 11. As regards other loans/creditors, we find that there is no reference to any incriminating material found during the course of search casting shadow of doubt on the genuineness of these amounts. Going by the ratio laid down in the case of Kabul Chawla (supra), it is held that the remaining amount of Rs. 15,60,720/- (Rs.19,35,720/- minus Rs. 3,75,000/-) cannot be added as the same is not represented by any incriminating material found during the course of search. 12. The ld. DR heavily relied on the fact that the assessee mad....
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....he Assessing Officer, in the instant proceedings, made an addition of Rs. 16,70,000/- representing sundry creditors/unsecured loans in respect of seven persons, which include credit balance of Rs. 4,30,000/- appearing in the name of Sh. Matwar Prasad. Both the sides are in agreement that the facts and circumstances of the instant year are similar to those of the preceding year. In fact, no separate arguments were advanced andthe parties adopted their arguments made for the preceding year. In view of our decision rendered for the immediately preceding assessment year, we confirm the addition only to the extent of Rs. 4,30,000/- and the remaining addition is directed to be deleted. 19. In the result, the appeal is partly allowed. Assessment Year 2014-15 20. The assessee is in this appeal is aggrieved against the confirmation of addition of Rs. 1 crore in respect of loan shown to have been received from M/s Pediment Tie-Up (P) Ltd., Kolkata (hereinafter referred to as 'PTU'). 21. The facts apropos this addition are that the assessee declared to have received a loan of Rs. 1 crore from PTU, which was claimed to have been extended to it in four equal installments of Rs. 25 l....
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.... believe that the apparent is not real. The facts and circumstances of the instant case, as will be seen infra, are a glaring example of apparent being not real, but just a facade of genuineness of loan transaction, which actually is not. 23. The assessee filed certain details concerning PTU including its return of income. A copy of the balance sheet of this company has been provided in the paper book from which it is palpable that it has no tangible or intangible fixed assets. The only item on the asset side of its balance sheetis 'Current assets.' On the liability side totaling Rs. 19.35 crore, this company has share capital of Rs. 48 lac and share premium of Rs. 18.45 crore. The solitary other item on the liability side is Rs. 42 lac represented by `Current liabilities'. A perusal of the income tax return of this company, whose copy has been placed in the paper book divulges that it declared total income of Rs. 10,336/- for the year under consideration. The matter does not end here only. PTU filed its return for the succeeding assessment year also declaring a meager income of Rs. 4,660/-. When the Bench required the ld. AR to show Profit & Loss Account of this company for the....
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.... It is further pertinent to note that the Assessing Officer has recorded that three companies from the list of 16 companies having Sh. Dipak Singh as a common director, have the same address, namely, 2A, Ganesh Chandra Avenue Commerce House, 7th Floor, Room No.1, Kolkata, W.B - 700013 IN. It has further been recorded that 12 more companies are registered atthis address, meaning thereby, that all such companies are allegedly operating from one room only. This factual position recorded in the assessment order has not been controverted on behalf of the assessee. 26. The Assessing Officer issued a letter to DDIT (Inv.), Unit 3(1), Directorate of Investigation, Kolkata to verify the credentials of PTU. A copy of the reply given by DDIT (Inv.), Kolkata is available on page 21 of the paper book. He intimated that the Directorate of Investigation, Kolkata has maintained a database which included the name of PTU as a paper company solely established to provide accommodation entries and is managed and controlled by an entry operator, namely, Shri Rajendra Bubna. Statement of Shri Rajendra Bubna recorded u/s 131 of the Act, copy on pages 22 and 23 of the paper book, was also sent to the AO....
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.... by issuing summons u/s 131 of the Act to the directors of PTU requiring their appearance in person. Unfortunately, no compliance was made. Thereafter, the Assessing Officer recorded statement of the assessee u/s 131 of the Act, whose relevant parts have been reproduced on pages 6 and 7 of the assessment order. In response to question no.7 about the assessee having outstanding loans from around 24 parties and requiring to give: "the exact purpose for which you have taken these loans",she simply replied that the finances were managed by her husband and she had no idea of it. On a question as to whether she operated her account or had any ATM card/debit and credit card, she answered in negative. Her statement amply shows that shehad absolutely no idea about any loan taken from PTU, which is one of the 24 parties appearing in her balance sheet. 28. When a final show cause notice was issued requiring the assessee to explain as to why a sum of Rs. 1 crore received from PTU be not added to the income as it was a bogus loan received from a paper company, the assessee required cross-examination of Shri Rajendra Bubna and stated that name of PTU was not appearing in the statement of Shri....
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....the ITO, which wasreversed by the Hon'ble High Court. Reversing the verdict of the Hon'ble High Court, their Lordships noticed that though the assessee made a claim that income of the property was not his and produced conveyance executed in his favour and the deed of settlement executed by his wife, nearly about a year after the conveyance, however, when the ITO asked the assessee about the source from which his wife got the amount, apart from saying that it was 'sthridhan' property, he failed to disclose any source from which his wife could have got the amount for purchasing the premises. In this backdrop of facts, the Hon'ble Supreme Court held that although the apparent must be considered as real, but, if there are reasons to believe that the apparent is not real, as is the case under consideration as well, then the apparent should be ignored to unearth the harsh reality. 31. Similar view has been canvassed in Sumati Dayal vs. CIT (1995) 214 ITR 801 (SC). The question for consideration in that case was whether the assessee purchased winning tickets after the event. It was observed that in all cases in which a receipt is sought to be taxed as income, the burden lies on....