TaxTMI 
TaxTMI 
2023 (7) TMI 1261
X X X X Extracts X X X X
X X X X Extracts X X X X
....mitted that he was not well and suffering from mental depression, anxiety and panic attacks, and he was treated for two years, since October 2016, under guidance of Dr. Manjit Singh Palaned, MD. The assessee also furnished a photocopy of the prescription issued by 'the doctor' from time to time. In view of medical reasons and evidences enclosed ,we are of the opinion that there is a sufficient and bonafide cause for delay in filing the appeal, hence the delay of 58 days is condoned and these appeals are admitted for adjudication. 3. Briefly stated, facts of the case are that the assessee was a director of 'M/s Aanjaneya Lifecare Ltd'. [now known as Dr. Datson Labs Ltd. (DDLL),] which is claimed to be currently under liquidation proceedings. Said company was engaged in the business of manufacturing of drugs and medicines. The assessee also had a proprietorship concern namely 'M/s Benzolife'. A search and seizure action u/s 132(1) of the Income-tax Act, 1961 (in short 'the Act') was carried out in the case of "Aanjaneya Group" along with other group concerns on 24.09.2013. A notice u/s 153A of the Act was issued and served upon the assessee for assessment years 2008-09 to 2014-15,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the assessments. We find that Hon'ble Bombay High Court in the case of Continental warehousing Corporation (supra) has held that in case of unabated assessments or completed assessments, no addition could have been made without the aid of incriminating material found during the course of search. Thus, it is relevant for us to analyze the assessment years, which are unabated and the which are abated, out of the assessment years involved before us. It is settled law that if in any of the assessment year, assessment proceedings see u/s 143(3) or 147 etc are pending as on the date of search, then those assessments are treated as abated in terms of second proviso to section 153A(1) of the Act. Further, if as on the date of search, the limitation for issue of notice u/s 143(2) of the for selection of case under scrutiny has not expired, then those assessments could have been validly taken for scrutiny. The CBDT Circular No. 549 dated 31st October, 1989, has clarified that when there was a failure to issue a notice to an Assessee under Section 143(2) of the Act within six months from the end of the month in which the return is furnished or during the financial year in which the return is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uced as under: 1. The learned Assessing Officer has erred in undertaking the assessment u/s 153A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'); despite the fact that no search was undertaken on the appellant. The appellant prays that the assessment us 153A is bad in law and it be quashed. 2. The learned Assessing Officer has erred in taxing the entire deposits in two Canara Bank accounts amounting to Rs. 12,16,39,728/- u/s 68 of the Act. The learned Assessing Officer has blindly taxed the entire deposits in the bank account. The learned Commissioner of Income Tax (Appeals) has erred in upholding the same on merits subject to quantum being re-verified. 3. The learned Assessing Officer erred in making addition of the cash deposits in bank account of Rs. 13,38,000/- w/s 68 of the Act. The Fearned Assessing Officer failed to appreciate that the source of cash deposits and withdrawals was submitted. The learned Commissioner of Income Tax (Appeals) has upheld the addition which is already considered and part and parcel of addition made in Ground No. 2 mentioned herein above. 4. The learned Assessing Officer has erred in mak....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hases, circular trading transactions was carried out by DDLL without delivery of any material. Bad debts were claimed by DDLL. Documents were found showing cash transactions by M/s. Sudar Industries Ltd., a group concern promoted by the appellant, whose papers and cheque books including cancelled cheques were found and seized from the residential premises of the appellant which indicated the number of instances of cash transactions related to Sh. Kashi Vishwanath and Shri Kannan Vishwanath. Evidence was found that the appellant has a proprietory concern M/s. Benzolife which was used as conduit to transfer funds to DDLL. This has been admitted by the appellant in his submission dated 26.3.2016 in the assessment proceedings. Bank account of the appellant with Axis Bank at Panel and Nariman Point Branches showed transactions with entities with whom bogus transactions were carried out. Documents showing unaccounted transactions of Sh. Kashi Vishwanath with M/s.All Ammar Developers were found suggesting out of books cash transactions. 4.5. Thus, it can by no means be said that no incriminating material was unearthed in case of the appellant during the course of search. In view ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng the course of the search. The Ld. CIT(A) formed the opinion of existence of incriminating material on many observations. Firstly, the Ld. CIT(A) has referred to facts related to the company 'DDLL'. He has referred that 'DDLL' was promoted by the assessee and irregularities were noticed in the initial public offering (IPO) raised by the said company, which led to search in the case of the company along with the assessee. Secondly, the Ld. CIT(A) has referred to claim of depreciation by the said company on bogus capex purchase, circular trading transactions etc. We are of the opinion that certainly, no incriminating material qua the assessee has been referred in these two observations. Thirdly, Ld. CIT(A) has referred to cash transactions by M/s Sunder Industries Ltd, whose cheque-book and other papers were seized from the residence of the assessee. These evidences being related to the said company, same cannot be treated as incriminating material found related to the assessee. Fourthly, the Ld. CIT(A) has referred to use of proprietary concern M/s Benzolife as conduit for transferring funds to DDLL. But, the Ld. CIT(A) himself has mentioned that this fact was admitted during the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sideration. The 44 pages of both bank accounts are annexed as annexure 'A'of this order. In light of above discussion, an aggregate addition of Rs. 12,16,39,728/- is made to the total income of the assessee. Further I am satisfied that the assessee has furnish the inaccurate particulars of income and concealed the particulars of income therefore, penalty u/s. 271(1)(c) of the I. T. Act is initiated." 4.3 The relevant finding of ld CIT(A) is reproduced as under: "5.4 I have considered the submissions carefully. It is noted that the appellant has merit in as much as the quantum of total credits in the bank a/c appears to be incorrectly computed by the assessing officer perhaps due to the fact that the bank statements annexed to the assessment order shows some pages containing repetition for same period (e.g. May 2007) and perhaps not carefully excluding the opening balance for each month. On test check basis, the appellant's contentions appears to be correct. However, the assessing officer is directed to check and verify the computation and restrict the addition to only credits received as reflected in the bank statements. However, as regards the expl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....me of the Lenders Amount of loan in earlier B/S Amount of loan in later B/S 1. Tirumala Corporation 1,14,22,000 1,14,22,000 2. Shree Ganesh Enterprises 2,05,96,059 74,85,186 Rs. 3,20,18,059/- 1,89,07,186/- 6.1 The Ld. CIT(A) has allowed part relief to the assessee on this issue. The relevant finding of the Ld. CIT(A) is reproduced as under: "7.4 I have considered the submission carefully. It is noted that the appellant did not require to have his accounts audited since the turnover of the business was below the prescribed limits and the balance sheet prepared and submitted was only in the course of assessment proceedings. It is noted that in the submission dated 23.3.2016 in the assessment proceedings, it was informed that bank statements of Dr. Datsons Labs Ltd. were not available as it was under liquidation and the earlier assessing officer had insisted to submit balance sheet and capital accounts on as is where is basis. After the subsequent assessing officer provided the bank statements, a revised balance sheet and capital accounts was submitted. The amount of Rs. 1,89,07,186 /- was supported by the confirmatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....our opinion this addition is not based on incriminating material found during the course of the search and accordingly same cannot be sustained relying on ratio in the case of Continental Warehousing Corporation (supra). Since the additions cannot be sustained on the legal ground of no incriminating material and therefore, we are not required to adjudicate upon the merit of the addition. The ground No. 4 of appeal of the assessee for assessment year 2008-09 is accordingly allowed. 7. The grounds raised for AY 2009-10 are reproduced as under: 1. The learned Assessing Officer has erred in undertaking the assessment us 153A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'); despite the fact that no search was undertaken on the appellant. The appellant prays that the assessment u/s 153A is bad in law and it be quashed. 2. The learned Assessing Officer has erred in taxing the entire deposits in two Canara Bank accounts amounting to Rs. 9,78,54,912/- u/s 68 of the Act. The learned Assessing Officer has blindly taxed the entire deposits in the bank account. The learned Commissioner of Income Tax (Appeals) has erred in upholding the addition on....
X X X X Extracts X X X X
X X X X Extracts X X X X
....earch qua the income enhanced by the Ld CIT(A), therefore, no addition could have been sustained being unabated assessment, relying on the decision of Hon'ble Bombay High Court in the case of Continental warehousing corporation (supra). The ground No. 5 of the Appeal is accordingly allowed. 9. Now, we take up the Appeal for AY 2010-11. The grounds raised by the assessee are reproduced as under: 1. The learned Assessing Officer has erred in undertaking the assessment u/s 153A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'); despite the fact that no search was undertaken on the appellant. The appellant prays that the assessment u/s 153A is bad in law and it be quashed. 2. The learned Assessing Officer has erred in taxing the entire deposits in two Canara Bank accounts amounting to Rs. 8,71,40,866/ - u/s 68 of the Act. The learned Assessing Officer failed to appreciate that the source of the deposits was explained. The learned Commissioner of Income Tax (Appeals) has erred in sustaining the addition while allowing relief subject to verification of claim of the appellant of interest income being offered to tax. 3. The learned Ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
....posits in bank account of Rs. 14,80,000/- u/s 68 of the Act. The learned Assessing Officer failed to appreciate that the source of cash deposits and withdrawals was submitted. The learned Commissioner of Income Tax (Appeals) has erred in upholding the addition which is included in the amount of addition in Ground No. 2 mentioned herein above. 5. 5. The learned Assessing Officer has erred in making addition of the unsecured loans u/s 68 of the Act of Rs. 64,31,40,977 / -. The learned 10.1 Before us the Ld. Counsel submitted that the Ground No. 3 of the appeal was not pressed by the assessee, therefore, same is dismissed as infructuous. The other ground Nos. 1 to 2 and 4 to 5 are identical to ground Nos 1 to 4 of the appeal for Ay 2008-09, therefore, same are decided mutatis mutandis. 11. As far as assessment years 2012-13 to 2014-15 are concerned, the assessments are abated and hence, the assessing Officer is authorised to make any addition even based on otherwise than incriminating material. The relevant grounds raised challenging the validity of addition are accordingly dismissed. The grounds related to circular movement of funds were not pressed, hence same are dis....