TaxTMI 
TaxTMI 
TaxTMI 
2025 (3) TMI 82
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....e parties/entities from whom the loans were availed. 2. On the facts and in the circumstances of the case, Ld. CIT(A) erred in deleting the addition made by the AO of Rs. 24,25,431/- u/s 37 of the Income Tax Act, 1961, on account of disallowance of interest expenses, without appreciating the fact that the assessee has failed to prove the genuineness and creditworthiness of the lender parties/entities to whom interest was paid." 3. While the assessee has raised the following grounds in its cross-objection: - "1. The learned CIT(A) has erred in not holding that the additions made by the Assessing Officer are invalid and bad in law since the same are not based on any incriminating material found during the course of search. 2. The learned CIT(A) ought to have held that the assessment order is bad in law as there is no valid approval of Addl. CIT as required u/s. 153D of the Act." 4. In its appeal, the Revenue has raised the grounds challenging the relief granted by the learned CIT(A) on merits. On the other hand, the assessee has filed the cross-objection challenging the additions made under section 153A of the Act in the absence of any incriminating material found during the ....
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....ition, Anantnag v/s MST Katiji and others: 1987 SCR (2) 387. It is well established that rules of procedure are handmaid of justice. When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred. In the present case, the assessee did not stand to benefit from the late filing of the cross-objection. In view of the above and having perused the affidavit, we are of the considered view that there exists sufficient cause for not filing the present cross-objection within the limitation period and therefore, we condone the delay in filing the cross-objection by the assessee and we proceed to decide the same on merits. 7. The issue arising in Ground No.1, raised in assessee's cross-objection, pertains to the validity of additions made under section 153A of the Act in the absence of incriminating material found during the search. 8. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is a partnership firm, and is engaged in the business of dealing and investing in movable and immovable properties, financials. For the year under consideration, the assessee file....
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....as per the second proviso to section 153A of the Act. From the perusal of the order passed under section 153A of the Act, we find that the AO made the following additions/disallowances: - (i) Addition under section 68 of the Act on the basis that the assessee has failed to establish the genuineness of the transaction and source and creditworthiness of the following loan-lenders for the amount of loan received by the assessee during the year: - Name of the lender Loan amount M/s Sigma Commodities Private Limited 1,00,00,000/- M/s Penguin Trading & Agencies Ltd 5,00,00,000 M/s Uttam Galva Metallics Limited. 4,13,50,000 Total addition u/s 68 10,13,50,000 (ii) Considering the non-genuineness of the loan transactions, the following interest expenditure on the loan, taken during the year and in the earlier year, was held to be non-genuine and was disallowed under section 37(1) of the Act: - Name of the lender Interest amount M/s Sigma Commodities Private Limited 4,51,234 M/s Penguin Trading & Agencies Ltd 4,27,397 M/s Dhankuber Exports Private Limited 9,48,000 M/s Transgate Investment & Developers Pvt Ltd 3,58,800 M/s Paanash Trading Private Limited 2....
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....conducted under section 132 of the Act, the AO has no jurisdiction to make an assessment in respect of completed/unabated assessments. The relevant observations of the Hon'ble Supreme Court, in the aforesaid decision, are reproduced as follows: - "14. In view of the above and for the reasons stated above, it is concluded as under: i) to iii) ........ iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved." 15. As regards the addition made under section 68 of the Act in respect of the loan received from M/s Uttam Galva Metallics Ltd and disall....
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....rch which would corroborate the statement of Shri Darshan Doshi recorded under section 132(4) of the Act. 17. We find that the Hon'ble Delhi High Court in PCIT v/s Pavitra Realcon (P) Ltd., reported in (2024) 340 CTR 225 (Del.), held that statement under section 132(4) of the Act alone, without any other material discovered during the search which would corroborate search statement, do not grant the AO authority to make an assessment. The relevant findings of the Hon'ble Delhi High Court, in the aforesaid decision, are reproduced as follows: - "18. The primary grievance which arises in the present appeals pertains to whether the ITAT was right in deleting additions made under Section 68 of the Act by holding that no assessment could have been made on mere presumption of existence of incriminating material. 19. Undisputedly, during the period of search, no incriminating material appears to have been found. However, the Revenue proceeded to issue notice under Section 143(2) of the Act on the pretext of the statements of the Directors of the respondent-assessee companies recorded under Section 132(4) of the Act and material seized from the search conducted on Jain group of compan....
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....ld that merely because an admission has been made by the assessee during the search operation, the same could not be used to make additions in the absence of any evidence to corroborate the same. The relevant paragraph of the said decision is extracted herein below:- "20. In our view, a plain reading of section 158BB(1) of the Act does not contemplate computing of undisclosed income solely on the basis of a statement recorded during the search. The words "evidence found as a result of search" would not take within its sweep statements recorded during search and seizure operations. However, the Signature 2 Not Verified 2016 SCC OnLine Del 1512 Digitally Signed By:MAANAS JAJORIA Signing Date:29.05.2024 16:29:11 B statements recorded would certainly constitute information and if such information is relatable to the evidence or material found during search, the same could certainly be used in evidence in any proceedings under the Act as expressly mandated by virtue of the Explanation to section 132(4) of the Act. However, such statements on a stand alone basis without reference to any other material discovered during search and seizure operations would not empower the Assessing Offic....