2023 (2) TMI 119

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....rial found during the course of search. Thus, the impugned assessment order is bad in law ab initio and must be so declared. 2. The learned CIT(A) erred in law and on facts in confirming the addition made by the Assessing Officer in respect of increase in share capital of the assessee to Rs. 2,00,00,000/- u/s 68 of the Act by ignoring that the said shareholder a group company has also been assessed by the same AO at the same time accepting sources of the said investment in its hands. Thus, the addition made on surmises and conjectures must be deleted. 3. The learned CIT(A) erred in law and on facts in confirming the addition made by the Assessing Officer in respect of unsecured loan of Rs. 10,00,000/- u/s 68 of the Act by ignoring that the said lender a group company has also been assessed by the same AO at the same time accepting sources of the said investment in its hands. Thus, the addition made on surmises and conjectures must be deleted. 4. The learned CIT(A) erred in law and on facts in confirming the addition made by the Assessing Officer in respect of unexplained expenditure of Rs. 2,10,000/- u/s 69C of the Act by ignoring that no evidence of such....

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.... director of the assessee company was also recorded during the course of search and seizure operation and afterwards. 9. Statutory notices were issued and served u/s 153A of the Act, pursuant to which, the assessee filed its return of income declaring total income of Rs. 16,760/-. During the course of scrutiny assessment proceedings, the Assessing Officer sought clarification from the assessee in respect of share capital of Rs. 2 crores received from another group company TMR Projects [P] Ltd. 10. The statement of the director of the assessee company Shri Maninder Singh Sahni was recorded u/s 132(4) of the Act in which the director accepted that during the relevant previous year, TMR Projects Pvt Ltd was not doing any business and colourable transactions were effected through account of TMR Projects Pvt Ltd showing purchase and sales without any actual business using the services of entry providers Shri Mukesh Kumar and Shri Deepak Agarwal. 11. Drawing support from the statement of Shri Maninder Singh Sahni, the Assessing Officer concluded that the assessee could neither explain successfully the credit entry of Rs. 2 crores being share application money received from TMR P....

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....uch entities. These entities have been found to be non existing and without any actual business activities of any sort, except for maintaining the j j bank accounts for layering accommodation entries. Answer A chart showing details of purchase and sale transactions carried out in M/s ! TMR Projects Pvt. Ltd. during the F.Y. 2012-13, 2013- 14 and 2014-15 is being submitted for your kind perusal. At the very outset, it is clarified that all such sale and purchase transactions are carried out with the aid of Mr. Mukesh kumar and not only the purchase transactions as mentioned by our goodself in the question. It is clarified that Mr. Mukesh Kumar through Mr. Deepak Agarwal approached us and offered his services to undertake trading activities under the banner of our company. It was also offered that he will utilize his expertise to carry out trading transactions of various commodities which will result in income to the extent of 0.5% to 1% of the value of transactions as gross margin. In fact, the. entire activity of trading transactions was carried out by him j wherein the assessee company derived gross margin and after meeting the indirect expenses, the same was off....

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....ervices of Mr. Mukesh Kumar are restricted to the extent of trading and generation of invoices as mentioned above in reply to Q. . It is further clarified that I as well as my company is not associated with Mr. Mukesh Kumar and Mr. Deepak Agarwal in any manner. Even the sale and purchase transactions have been performed and payments were receipt and made at one level only and there is no involvement of any third party at any level." 14. A careful reading of the statement shows that there is nothing incriminating found or said by Shri Maninder Singh Sahni nor any adverse inference has been drawn by him in his statement. As mentioned elsewhere, the assessee had filed its return of income on 30.09.2013 accompanied by statement of account, which means that transaction of share application money of Rs. 2 crores and loan of Rs. 10 lakhs from TMR Projects Pvt Ltd must have been reflected in the return of income so filed. Therefore, it cannot be said that only after search and seizure operation filed, the Revenue came to know about share application money received by the assessee as there is no such mention in the body of the assessment order or in the body of the order of the first app....

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....ining to same search. The lead appeal determined by the IT AT is in the case of Shri Gopal Agarwal, however, no challenge to the said appeal is pending before this Court. It is stated by the learned counsel that the appeal may be in the process of filing or listing before the Registry...... 8. We have perused the statement dated 3ld August, 2015 and the contents of the letter dated 31st July, 2015, both authored by Sh. Madho Gopal Agarwal. There is no reference to M/s KGN Industries Limited in either of the said documents. No other material found during search pertaining to M/s KGN Industries Ltd. has been placed on record. The Revenue has not placed on record any incriminating material which was found as a result of the search conducted on the assessee herein. It is also the contention of the assessee that there was no surrender by her unlike Sh. Madho Gopal Agarwal and she, therefore, specifically disputed that any notice under section 153A of the Act could have been initiated against her. The said facts are not disputed by the counsel for the Revenue. 9. On the date of search, admittedly, the assessment with respect to the AY under consideration 2011-12 admitte....