TaxTMI 
TaxTMI 
2023 (4) TMI 1402
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.... the facts and circumstances of the case and in law, the Ld. CIT(A)-48, Mumbai is right in holding that no incriminating material was found to sustain addition. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A)-48, Mumbai is right in deleting the entire additions of Rs. 1,90,20,630/- made in the assessment order only on the ground that no incriminating material was found to sustain the addition without appreciating the facts that the assessment order was passed after carefully analyzing the seized material and evidences found during the course of search and survey proceedings and seized. 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A)-48, Mumbai is right in deleting the entire additions of Rs. 1,90,20,630/- made in the assessment order without appreciating the facts that the identity, genuineness and creditworthiness of the lenders were not established after giving ample opportunity to the assessee. 4. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A)-48, Mumbai is right in allowing the appeal filed by the assessee relying on the decision of the Hon'ble B....
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....accommodation entries of unsecured loan for the amount of Rs. 14,45,620/- and also, he made addition for the commission for arranging those accommodation entries amounting to Rs. 75,000/-. 4. Aggrieved with the finding of the Assessing officer, the assessee filed appeal before the ld CIT (A) and challenged the legality of the assessment proceedings as well as merit of the addition. The Ld. CIT (A) in combined appellate order for assessment year 2014-15 to 2018-19 held that there was no incriminating material found during the course of the search action at the premises of the assessee and those assessment being unabated, no addition could have been made without aid of incriminating material found during the course of search, following the finding of the Hon'ble Bombay High Court in the case of Continental Warehousing Corporation 374 ITR 645 (Bom). 5. Aggrieved with the finding of the Ld. CIT(A), the Revenue is before the Tribunal by way of challenging the finding of the Ld. CIT(A). In ground No. 1 to 3, the Revenue has challenged deletion of all the three additions of unexplained cash credit u/s 68 of the Act, and interest and commission corresponding to unsecur....
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....action, the contents of such disclosure are found to be incorrect or false, the discovery of such a document indicating disclosed transactions would form the incriminating material. According to the Ld. DR in the light of the facts observed during the course of survey proceedings, including non-existence of the unsecured loan parties, the claim of the loans recorded in the books of accounts was false and therefore seizure of regular books of accounts indicating the falsity of transaction made the regular books of accounts as incriminating material. In support of his contention, he relied of the decision of the Hon'ble Gujarat High in the case of N.K. Industries Ltd. 72 taxmann.com 289. 6.2 According to him, the incriminating material did not always have to be tangible material or document indicating name of the assessee but gathering of information or finding of the investigation disclosing that assessee has not shown its income correctly in the return of income filed, also constitute incriminating material. The Ld. DR also relied on the decision in the case of JCIT (OSD) Nitin Kumar Didwania in ITA No. 2092/M/2019 dated 23.01.2023. The Ld. DR summarized that the finding of....
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....he search proceedings carried out at the premises of the assessee and therefore for utilizing the such information found during the course of survey proceedings, the AO may invoke provisions other than section 153A of the Act for assessing income on the basis of those observations, but certainly cannot invoke provisions of section 153A of the Act. Further, regarding admission u/s 132(4) of the Act, the Ld. Counsel submitted that Hon'ble Delhi High Court in the case of Best Infrastructure(India) Pvt. Ltd (2017) 8 TMI 250 (Delhi High Court), has held that statement/confession u/s 132(4) of the Act is not an incriminating material found during the course of search unless corroborated with seized documents. In view of the arguments, the Ld. Counsel supported the order of the Ld. CIT (A) and submitted that order of the Ld. CIT (A) on the issue-in-dispute should be upheld. 8. We have heard rival submission of the parties on the issue-in-dispute and perused the relevant material on record. We find that the Hon'ble Bombay High Court in the case of Continental Warehousing Corporation (supra), held that in case of non-abated assessment i.e. where no assessment proceedings are pending, no ....
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....CIT (supra) where the admission by the Assessees themselves on critical aspects, of failure to maintain accounts and admission that the seized documents reflected transactions of unaccounted sales and purchases, is non-existent in the present case. In the said case, there was a factual finding to the effect that the Assessees were habitual offenders, indulging in clandestine operations whereas there is nothing in the present case, whatsoever, to suggest that any statement made by Mr. Anu Aggarwal or Mr. Harjeet Singh contained any such admission." 8.1.1 In the case of B Kishore Kumar (supra), the statement/confession of assessee was duly corroborated with incriminating material/documents found during the course of search and therefore, such statement was accepted by the Hon'ble High Court as basis for confirming the addition. The relevant finding of the Hon'ble High Court is reproduced as under: "5. We have perused the orders passed by the Tribunal and the authorities below. Though the assessee was at pains to make out an issue that he has made certain submissions and those submissions were not considered by the Assessing Officer and therefore, the Assessing Officer has....
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....s, in the sworn statement dated 29.8.2006, the assessee says that he had separate business income which was not included in his income tax returns. Therefore, admission of undisclosed income of Rs. 52,73,920/- is categoric and undisputed. The assessee in the sworn statement made on 10.10.2006, stated that outstanding loans to the tune of Rs. 25 Lakhs to 30 Lakhs are to be recovered with interest at the rate of 18%. This is a clear admission. This amount has also been calculated and added as undisclosed income. When there is a clear and categoric admission of the undisclosed income by the assessee himself, in our considered opinion, there is no necessity to scrutinize the documents. The document can be of some relevance, if the undisclosed income is determined higher than what is now determined by the department. Moreover, it is not the case of the assessee that the admission made by him was incorrect or there is mistake. In fact, when there is a clear admission, voluntarily made, by the assessee, that would constitute a good piece of evidence for the Revenue. 7. The learned counsel for the assessee relied upon a decision of the Delhi High Court in Commissioner of....
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....Sir, M/s. G.M Modular Put. Ltd. has taken loans from various parties in different financial years and the same have been settled later. However I can recollect the following names of parties from which the unsecured loan is taken and they are not genuine:- 1. M/s. Essar india Ltd. 2. M/s. Matarani Commodities Pvt. Ltd. 3. M/s. Morya Industries Ltd. 4. M/s. NCL Research Financial Service Ltd. 5. M/s. Shivam Investment & Consultancy Ltd. 6. M/s. Ojas Assets Reconstruction Company Ltd. Q. 31 On what basis you are saying that the loans from the abovementioned parties is not genuine. Ans. Sir, I confirm that the above mentioned parties from which the unsecured loan has been taken by M/s. G.M Modular Pvt. Ltd are not genuine as they are settled in cash during repayment to these parties. Please offer your comments. Ans: Sir, at present I am not able to comment as I have check it." 8.3 He was further asked to provide contact details of the parties from whom unsecured loans were taken by the assessee company and other entities of the group, in response to which also he replied that at the t....
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.... credence to the belief that the company has merely provided book entries in books of assessee. 1. Nirmal Kumar Manna 2. Sandip Kumar Jain NCL Research and Financial Services Pvt. Ltd. PAN : AAACN5752D 3rd floor, Bhagyodaya Building, 79, Nagindas Master Road, Fort, Mumbai-400023 The said company is involved in arranging LTCG from Penny stock as per the Kolkata Investigation directorate report (Ref: F.No 75A/2015-16/257-273 dated 27.04.2015 of Pr. DIT (Inv.), (Kolkata). The statement of Goutam Bose, one of the directors of the company wherein he admitted on oath that he is a dummy director in the said company. Thus it clearly shows that the conduct of directors are dubious and doubtful in nature with regard to financial transactions undertaken. 1. Vijay Poddar 2. Gautam Bose Tanaya Vincom Pvt. Ltd. PAN : AADCT8361K Room No. 310, 3rd floor, 7A Bentinck Street, Dalhousie, Kolkata, West Bengal-700001. Directors are Non * filer of ITR. Negligible profits shown. AY 2015-16 shows a low PBT of Rs 5.90 lacs which does not justify the huge loan of Rs 1.40 crores. Even the interest on Rs 1.40 crore is not offered to tax. This is eet, a normal practice in accommoda....
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....y director in the company and has no knowledge about the business of the company. A statement of Mr. Vijay Poddar, the director of M/s NCL Research and Financial Services Ltd was also recorded us 131 of the Income-tax Act, 1961 on 27.05.2015 during the process of Survey u/s 133A of the Income-tax Act, 1961 at the registered premises of the company. In reply to Q.56 Mr. Vijay Poddar had accepted that the company is a penny stock company and is in the business of providing accommodation entries. A survey action u/s 133A of the Income-tax Act, 1961 was carried out at the registered address of the company on 13.11.2019. Statement of Mr. Mayank Singh, the CFO of the company was recorded us 131 of the Income-tax Act, 1961 on 15.11.2019. Mr. Mayank Singh in his statement has accepted that Mr. Goutam Bose is now the Managing Director of the company. Statement of Mr. Goutam Bose was recorded by DDIT(In) Kolkata on 27.05.2015. Mr. Goutam Bose in his statement has accepted that he is a dummy director in the company and has no idea about the affairs of the company. An opportunity was given to the assessee i.e. Mr. Jayantilal Jain, Promoter of GM Group on 12.01.2020, to produce the party to ver....
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....d', the assessee was intimated regarding negligible profit of said company and directors of the said company being non-filer of ITR. Further it was intimated that the area in which said unsecured loan party located was a well-known hub of shell companies. In our opinion, certain information regarding the unsecured loan party gathered by the investigation wing pre search period and thereafter confronted the same to the key person of the assessee company during the course of search, cannot be said that incriminating material was found during the course of the search qua the addition. Similar observations have been made in respect of the other unsecured loan parties. Further, independent survey was carried out in the case of 'Ella Fintex Co Pvt Ltd' and 'KathakaliVincom P Ltd' on 13/11/2019 and those parties were not found at the registered address, however this fact of nonavailability of those parties at the registered address was only communicated to Sh Jayantilal Jain in post-search proceeding on 12/01/2020 and therefore also it cannot be said that said information was confronted to the assessee during the course of search proceeding. Regarding, the unsecured loan party namely 'NCL....
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....learly laid down the following principles - (i) the assessments which have been concluded us 143(3) of the Act and not pending at the time of search proceedings, do not abate. (ii) for this purpose, intimation u/ 143(1) would constitute an assessment, relying on the decision of Hon'ble Bombay High Court in CIT V/s Gurinder Singh Bawa (79 taxmann.com 398) (iii) the proceedings us 153A of the Act do not empower the Assessing officer to re-adjudicate the settled issues again, unless fresh incriminating material for the relevant year is found during the course of search proceedings. (iv) the Assessing officer does not have jurisdiction to make additions/disallowances which are not based on relevant incriminating material found during the course of search proceedings. (v) in the case of completed/un-abetted assessments, where no incriminating material is found during the course of search, the assessment u/s 153A of the Act is to be made on originally assessed/returned income and no addition or disallowance can be made de hors the incriminating evidences for the relevant year are recovered during the course of search. (vi) Any adm....
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....in the absence of any incriminating material, the additions made i.e., (i)) Addition on account of accommodation entry of unsecured loan u/s 68 of Rs. 1,75,00,000/-, (i) Addition on account of unexplained expenditure us 69C on account of interest on accommodation entry of unsecured loan of Rs. 14,45,626/- and (ji)Addition on account of unexplained expenditure us 69C on account of commission for arranging accommodation entry of unsecured loan of Rs. 75,000 /-. for A.Y. 2015-16 deserved to be deleted." 8.10 In view of the above discussion, the Ld. DR has failed to substantiate any incriminating material found during the course of search which could establish non-genuineness of the unsecured loan. As far as his arguments of falsity of the books of accounts is concerned, we are of the opinion that any entry in the books of accounts could be false as a result of any incriminating material discovered during the search. So, falsity of books of account in recording the entries of unsecured loan may be as a result of any incriminating material found and but those entries are not incriminating material in itself unless established to be false by way of other incriminating m....