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2023 (8) TMI 1631
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.... 0/0 CIT (A) on 18.09.2020. The CIT (A) has not discussed the issues raised in remand report in his order. 2. Whether on the facts and in the circumstances of the case and in law, Ld. CIT (A) has erred in accepting additional evidence u/s 46A even through conditions mentioned in clauses (a)-(d) of 46ACD were not satisfieds. 3. Whether on the facts and in the circumstances of the case and in law, Ld. CIT (A) has erred in accepting retraction made by the assessee made after more than a year as genuine even though there was strong evidence on record about accommodation entries provided by companies controlled by Sharad Darak, a known entry provider; and whether CIT (A) has erred in accepting the retraction of assessee as genuine ignoring the decision of Hon'ble SC in the case of Bannalal Jat constructions Pvt Ltd Vs ACIT [2019] 106 Taxmann.com 128(SC). 4. Whether on the facts and in the circumstances of the case and In law, the Ld. CIT (A) was justified in deleting the addition after finding it non-abated assessment year, while the addition was made on the basis of incriminating documents found during the search and seizure proceedings. 5. Wheth....
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.... and in response the assessee filed submissions vide letter dated 16.11.2018. The AO was not satisfied with the reply and explanation filed by the assessee as well as retraction of Shri Naveen Jain vide letter dated 29.08.2017 as it was not a valid retraction not explaining the mistake in the statement recorded u/s 132(4). Therefore, a mere retraction after gap of more than one year cannot be accepted. Thus, Ld. DR has submitted that the AO has made the addition on the basis of the incriminating material and the ld. CIT (A) has deleted the same by accepting additional evidence filed by the assessee and without considering objections raised by the AO in the remand report. Therefore, there is clear violation of principles of natural justice as well as Rule 46A of the Income Tax Rules. The AO has made his own inquiry and not simply relied upon the inquiry conducted by the investigation wing of the department in other cases. Merely because these transactions are through banking channel would not epso facto proves that the transactions are genuine when it was found during the investigation that the alleged loan creditor companies are dummy and paper companies controlled by Shri Sharad D....
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....liable to be deleted. 2.2 He has pointed out that all the transactions are duly recorded in the books of account of the assessee and therefore, nothing was found during the search which is not disclosed by the assessee in the return of income filed under section 139 or not recorded in the books of account of the assesse. Even the statement of Shri Naveen Jain recorded u/s 132(4) cannot be held as incriminating material in absence any iota of material or evidence found during the search. The assessment order is silent about any incriminating material except referring to the statement of Shri Naveen Jain and some earlier investigation carried out by the department in the year 2014 in the third party case. Earlier investigation was only a survey u/s 133A and what was impounded the books of account of the lender companies cannot be considered as incriminating material as all these transactions are already part of the books of account of the assessee as well as the lender company. Rather the said impounded material supports the case of the assesse. The ld. Learned counsel for the assessee has submitted that the assessee relied upon various judgments before the Ld. CIT (A) which inclu....
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....y the assessee along with interest then the books found at the time of search established the fact of genuineness of transaction taking loan and repayment of the same. Copy of the ledger account showing the transactions of loan are repaid of the same along with interest after deducting TDS has been duly signed and certified by the authorized signatory of M/s. M/s. Jay Jyoti India Pvt. Ltd. Therefore, the confirmation of loan transaction and repayment of the same was also produced by the assessee before the authorities below. Even in the books of M/s. Jay Jyoti Indi Pvt. Ltd. these transactions are reflected which confirmed the claim of the assessee of taking this loan and repayment of the same. Both taking loans as well as repayment of the same are through banking channel. He has referred to the bank account statement of M/s. Jay Jyoti India Pvt. Ltd. showing grant of loan to the assessee on various dates through cheques and also showing the repayments by the assessee with interest. He has referred to the acknowledgement of the return of income of M/s. Jay Jyoti India Pvt. Ltd. along with computation of income for A.Y.2012-13 shown the complete address, PAN details of the ledger co....
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....Zyka Merchandise Pvt. Ltd. as on 31.03.2012 placed at page no. 725 to 730 of the paper book showing that the company has net worth about Rs. 7 cr. which is also multiple times of the sum advance to the assesse. 2.4 Ld. AR has submitted that the Ld. AO has made reference to the statement of Shri Naveen Jain who was only a non-executive director of the assessee and did not look after day to day activities of the assessee company. Further while recording his statement on 14.07.2016 Shri Naveen Jain was under severe pressure and stress as the search was going on since last three days and therefore, the alleged confession extracted from him cannot be used for making additions without any corroborative evidence. Once the assessee furnished all the relevant documentary evidences comprising of confirmation, income tax returns, other supporting documents then the assessee discharged its onus to prove the identity, creditworthiness of the creditor and genuineness of the transactions and the assessing officer has not brought any material on record to prove the contrary or to show that evidence produced by the assessee is bogus. The assessee has produced the retraction letter dated 29.....
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....ng bank account statement, financial statement, confirmation of account, Pan details etc. which are placed on record and sufficient to prove the creditworthiness. He has then referred to the decision of this tribunal in case of M/s Radhishwari Developers Pvt. Ltd. vs. PCIT dated 27the July 2021 in ITANo.493/Ind/2018 as well as in case of Globe Realcom Pvt. Ltd. vs. ACIT dated 26.04.2022 in IT(SS)ANo.170 to 174/Ind/2020 and submitted that in all these cases this tribunal has dealt with the issue of loan given by M/s. Jayant Securities & finance Ltd. as well as M/s Jay Jyoti India Pvt. Ltd. which are the companies allegedly controlled by Sharad Darak and finally the addition made by the AO was deleted. 2.8 Thus, Ld. Counsel has submitted that on identical grounds the AO made addition in those cases based on the same report of the investigation wing regarding the involvement of Shri Sharad Darak in providing accommodation entries through these companies controlled by him. He has also relied upon the decisions of Indore Bench of this Tribunal in case of Shri Sanjay Shukla vs. ACIT dated 15.03.2022 in ITANo.333/Ind/2020 & M/s Tirupati Construction vs. Dy. CIT dated 14.07.2016 in ITAN....
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....d & M/s Purvi Finvest Ltd, Copy of termination letter for MOU dated 01.04.2019 & 08.04.2019, Copy of letter dated 23.04.2019 & 09.05.2019 for appointing Hon'ble Justice RS Garg and copy of arbitration order. It was submitted by the appellant that the additional evidences further proves genuineness of the transactions and were collected after the assessment proceedings. The additional evidences have been forwarded to the AO for his comments. The AO submitted the remand report dated 14.09.2020 which is placed on record and have been perused. The Ld. AO raised objection to admission of additional evidences, but did not submitted anything on veracity of additional evidences filed by the appellant. Since, the additional evidences had been obtained after the completion of assessment proceedings, there was no occasion to file such evidences in the course of assessment proceedings. Therefore, there was sufficient cause for not producing the evidences during assessment proceedings. Therefore, the appellant's case is falling under rule 46A(1)(b) of Income Tax Rules. Therefore, additional evidences produced during the course of appellate proceedings have been admitted for the sake of ....
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....er found or seized during the course of search and seizure action carried out on 12th July 2016 which could disclose any fact to indicate that the unsecured loan shown by the assessee in the books of account are bogus. Therefore, once the transactions of the loan are duly recorded in the books of account of the assessee as well as in the books of account of the lender companies then the addition made by the AO treating these transactions as bogus entry provided by the lender companies cannot be said to be based on any incriminating material found or seized during the course of search and seizure proceedings carried out on 12th July 2016 in case of the assesse. The assessing officer has referred to the investigation report of the department u/s 133A on 22.01.2014 along with statement of Shri Dinesh Agrawal dated 22.01.2014 and statement of Shri Sharad Darak dated 21.02.2014. All these statements were recorded in the survey proceedings carried out in the month of January 2014 or February 2014 and therefore, have no connection with search and seizure proceedings in the case of the assessee carried out on 12th July 2016. Further the AO has made only reference to these survey and statem....
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....eizure operations would not empower the AO to make a block assessment merely because any admission was made by the Assessee during search operation. 21. A plain reading of Section 132 (4) of the Act indicates that the authorized officer is empowered to examine on oath any person who is found in possession or control of any books of accounts, documents, money, bullion, jewellery or any other valuable article or thing. The explanation to Section 132 (4), which was inserted by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1st April, 1989, further clarifies that a person may be examined not only in respect of the books of accounts or other documents found as a result of search but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Act. However, as stated earlier, a statement on oath can only be recorded of a person who is found in possession of books of accounts, documents, assets, etc. Plainly, the intention of the Parliament is to permit such examination only where the books of accounts, documents and assets possessed by a person are relevant for the purposes of the investigation being undertaken. Now, if ....
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.... nor any other valuable articles or things, nor any unaccounted documents nor any such incriminating material either from the premises of the company or from the residential houses of the managing director and other directors. In such a case, when the managing director or any other persons were found to be not in possession of any incriminating material, the question of examining them by the authorised officer during the course of search and recording any statement from them by invoking the powers under section 132(4) of the Act, does not arise. Therefore, the statement of the managing director of the assessee, recorded patently under section 132(4) of the Act, does not have any evidentiary value. This provision embedded in sub- section (4) is obviously based on the well established rule of evidence that mere confessional statement without there being any documentary proof shall not be used in evidence against the person who made such statement. The finding of the Tribunal was based on the above well settled principle." 23. It is also necessary to mention that the aforesaid interpretation of Section 132(4) of the Act must be read with the explanation to Section 132(4) of t....
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....igating officer under section 94 of the Code of Criminal Procedure by operation of sub-section (13) of section 132 of the Act. The objective may be genuine, and the exercise may be legal. However, the freedom of a citizen that transcends, even the Constitution cannot be treated as non- existent." "18. It is not without reason that Parliament insisted that the recording of statement must be in relation to the seized and recovered material, which is in the form of documents, cash, gold, etc. It is, obviously to know the source thereof, on the spot. Beyond that, it is not a limited licence, to an authority, to script the financial obituary of an assessee." "19. At the cost of repetition, we observe that if the statement made during the course of search remains the same, it can constitute the basis for proceeding further under the Act even if there is no other material. If, on the other hand, the statement is retracted, the Assessing Officer has to establish his own case. The statement that too, which is retracted from the assessee cannot constitute the basis for an order under section 158BC of the Act." 3.6 Thus, the Hon'ble High Court was of the view that the statement re....
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....nating material as has been explained by this Court in Harjeev Aggarwal,,[3]" 9. In Commissioner of Income Tax v. Harjeev Aggarwal,4 this Court had held as follows: "23. In view of the settled legal position, the first and foremost issue to be addressed is whether a statement recorded under Section 132(4) of the Act would by itself be sufficient to assess the income, as disclosed by the Assessee in its statement, under the Provisions of Chapter XIV-B of the Act. 24. In our view, a plain reading of Section 15888(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 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 standalone basis without reference to an....
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....ver, in the context of Section 158BB(1) of the Act which expressly restricts the computation of undisclosed income to the evidence found during search, the statement recorded under Section 132(4) of the Act can form a basis for a block assessment only if such statement relates to any incriminating evidence of undisclosed income unearthed during search and cannot be the sole basis for making a block assessment. 28. If the Revenue's contention that the block assessment can be framed only on the basis of a statement recorded under Section 132(4) is accepted, it would result in ignoring an important check on the power of the AO and would expose assessees to arbitrary assessments based only on the statements, which we are conscious are sometimes extracted by exerting undue influence or by coercion. Sometimes statements are recorded by officers in circumstances which can most charitably be described as oppressive and in most such cases, are subsequently retracted. Therefore, it is necessary to ensure that such statements, which are retracted subsequently, do not form the sole basis for computing undisclosed income of an assessee. 29. In Commissioner of Income Tax v.....
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....rial revealing any undisclosed income not already recorded in the books of account then the possibility on extracting the statement at the time of search proceedings by exerting undue influence cannot be ruled out and therefore, the retraction made subsequently cannot be said to be without basis. Once it is found that the additions were made by the AO based on the transactions recorded in the books of account and not on the basis of any incriminating material found or seized during the course of search proceedings then the addition so made in the proceedings u/s 153A for assessment years which are not abated due to search and seizure action is not sustainable as held in a series of the decisions of Hon'ble High Courts including the decision of Hon'ble Delhi High Court in case of CIT vs. Kabul Chawla (supra) in para 37 & 38 as under: "37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the perso....
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....peals concern AYs, 2002-03, 2005-06 and 200607.On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. 3.8 This view has been reiterated by the subsequent judgment of Hon'ble Delhi High Court as well as other High Courts including the Hon'ble jurisdictional High Court dated 02.02.2023 in case of Pr. CIT vs. M/s Great Galleon Ventures ltd. Income Tax Appeal No. 222 of 2022 wherein it has been held as under: This appeal u/S 260A of the Income Tax Act 1961(for short, the Act of 1961 hereinafter) is directed against the order dated 23.12.2021 passed by the Income Tax Appellate Tribunal, Bench Indore in ITA No. 67/Ind/2021(Revenue's Appeal) for the Assessment Year 201516. The substantial question of law which has been raised by the appellant in this appeal is "whether in absence of any incriminating documents seized during the course of search, the Assessing Officer is justified in making the addition in non-abated assessment orders u/S 153-A r/W Sec 143(3) of the Act of 1961." The assessment is u/S 153....
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....tion 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall - (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. Provided further that assessment or reassessment, ....
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....he AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. 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 can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those....
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....tatute. Under Section 153A regime, the intention of the legislation was to do away with the scheme of two parallel assessments and tax the 'undisclosed' income too at the normal rate of tax as against any special rate. Thus, after introduction of Section 153A and in case of search, there shall be block assessment for six years. Search assessments/block assessments under Section 153A are triggered by conducting of a valid search under Section 132 of the Act, 1961. The very purpose of search, which is a prerequisite/trigger for invoking the provisions of sections 153A/153C is detection of undisclosed income by undertaking extraordinary power of search and seizure, i.e., the income which cannot be detected in ordinary course of regular assessment. Thus, the foundation for making search assessments under Sections 153A/153C can be said to be the existence of incriminating material showing undisclosed income detected as a result of search. 10. On a plain reading of Section 153A of the Act, 1961, it is evident that once search or requisition is made, a mandate is cast upon the AO to issue notice under Section 153 of the Act to the person, requiring him to furnish the return of in....
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....r of annulment is set aside Explanation.-For the removal of doubts, it is hereby declared that,- (i) save as otherwise provided in this section, Section 153- B and Section 153-C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year." 11. As per the provisions of Section 153A, in case of a search under Section 132 or requisition under Section 132A, the AO gets the jurisdiction to assess or reassess the 'total income' in respect of each assessment year falling within six assessment years. However, it is required to be noted that as per the second proviso to Section 153A, the assessment or re-assessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under Section 132 or making of requisition under Section 132A, as the case may be, shall abate. As per sub-section (2) of Section 153A, if any proceeding initiated or any order of assessment or reassessment made under sub-sect....
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....ion the other material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under Section 153A of the Act is linked with the search and requisition under Sections 132 and 132A of the Act. The object of Section 153A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material, the AO would assume the jurisdiction to assess or reassess the total income for the entire six years block assessment period even in case of completed/unabated assessment. As per the second proviso to Section 153A, only pending assessment/reassessment shall stand abated and the AO would assume the jurisdiction with respect to such abated assessments. It does not provide that all completed/unabated assessments shall abate. If the submission on behalf of the Revenue is accepted, in that case, second proviso to section 153A and subsection (2) of Section 153A would be redundant and/or rewriting the said provisions, which is not perm....
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....nder: "3.2.2 I have considered the facts of the case, plea raised by the appellant and findings of the ld AO. On perusal of the assessment order, it has been found that the AO has not made reference of any incriminating document except the ledger account furnished by Shri Naveen Jain during statement recorded on oath. The impunged ledger account furnished by Shri Naveen Jain has also been reproduced by the ld AO on page no 10 of the assessment order. The transactions mentioned in the said ledger accounts of M/s East West Finvest India Limited, M/s Purvi Finvest Ltd, M/s Jay Jyoti India Pvt. Ltd., M/s Jayant Security and Finance Ltd. (Mumbai & Indore) are fully recorded in books of the appellant. These are the part of books of account of the appellant. Such document cannot be termed as incriminating document. Thus, the statement of Shri Navin Jain recorded u/s. 132(4) of the Act cannot be treated as recorded on the basis of incriminating document seized as a result of search and seizure proceedings. Such statement forming basis of addition that too in absence of supporting incriminating document, cannot be constitute information found as a result of search and seizure proce....
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....e Hon'ble Delhi High Court has considered the scope of section 132 of the Act and 153A(1) observed as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYS immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AY's will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the total income of the aforementioned six years in separate assessment orders for each of the six years. 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 searc....
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.... was right in holding that there had to be incriminating material recovered during the course of search qua the assessee in each year for the purpose of framing an assessment u/s 153A of the Act. 18. From the above all the decisions, it is very clear that the A.O. to make an addition u/s 153A of the Act and there must be incriminating material available to the A.O. during the course of the search. incriminating material, the Unless there is an concluded/non abated assessments cannot be disturbed again u/s 153A of the Act. ............ 22. In the interest of justice, the decision of the Hon'ble Supreme Court in the case of Vegetable Products (supra) has to be followed. Therefore, we respectively following the decision of Hon'ble Delhi High Court in the case of Kabul Chawla (supra), Hon'ble Bombay High Court in the case Corporation (supra) of Continental Warehousing and also Hon'ble Gujarat High Court in the case of PCIT Vs. Meeta Gutgutia (supra), we hold that no addition can be made in respect of concluded assessments u/s 153A of the Act unless there is any incriminating material found during the course of search. We would like to make it ....
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....d such assessment unabated. Bombay in the case of Continental Hon'ble High Court of Warehousing Corporation and All Cargo Global Logistics Ltd (Supra) confirmed the view taken by the Special Bench of IT.A.T. Mumbai Bench decided in favour of assessee dismissing the revenue's appeal holding that there was no incriminating material found during the course of search, the Tribunal was right in holding the power conferred u/s 153A being not expected to be exercised routinely, should be exercised if the search revealed any incriminating material. If that was not found then in relation to the second phase of three years, there was no warrant for making an order within the meaning of this provision". 10. Similar view was also taken by the Hon'ble High Court of Delhi in the case of Kabul Chawla (2015) 61 taxmann 412. 11. We therefore in the given facts and circumstances of the case and respectfully following the judgments referred and relied by the Ld. Counsel for the assessee are of the considered view that no addition/disallowance was called for Assessment Year 2008-09 to 2010-11 as no incriminating material was found during the course of search at the premis....
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....'ble Delhi High Court in case of Kabul Chawla (supra) as well as this Tribunal in case of Omprakash Gupta(supra) has not been confirmed by the Hon'ble Supreme Court in case of Pr. CIT vs. Abhisar Buildwell Pvt. Ltd. (supra), therefore, we do not find any error or illegality in the impugned order of the Ld. CIT (A) qua this issue. 4. Ground no. 5 regarding the merits of the addition made by the AO on account of unexplained unsecure loan u/s 68 of the Act. The assessing officer has given the finding in para 8.9 to 8.10 as under: "8.9 The contentions of the assessee are perused. From the detailed discussion in the preceding paragraphs it has been vehemently brought out that these companies from which unsecured loan entries are seen in the books of the assessee are controlled by the entry provider Sharad Darak. These companies have been proven beyond doubt to be bogus/shell companies with no business activity/staff or even books of accounts. The assessee has only managed such entries in the guise of unsecured loans. These companies also find place in the bogus LTCG scam report sent by the department to SEBI. Hence the question of providing further evidences to the assessee ....
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....een Jain director of the assessee company recorded u/s 132(4) of the Act in support of his decision to make the addition on account of unsecured loans. The Assessing officer has not even considered and examined the documentary evidence filed by the assessee consisting of financial statements of lender company, confirmation of the lender companies, return of income filed by the lender companies and then the assessment orders framed u/s 143(3) in some of the lender companies. The assessing officer has even not pointed out any flaw or defect or abnormality in the financial statements of the lender companies produced by the assesse. The statement of Shri Naveen Jain recorded u/s 132(4) does not disclose any new fact or leading to any material not already recorded in the books of account and therefore, the addition cannot be made solely on the basis of the statement which was subsequently retracted by giving reasons therein. Though the AO has made wague reference to the investigation report DIT, Kolkata as well as survey conducted in the other cases however, except the personal knowledge of the AO, there is nothing on record as what actually the outcome of this investigation referred by....
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....urities & finance ltd.) and page no.564 to 581 (Jay Jyoti India Pvt. Ltd.) The Annual report as well as tax audit report of the lender companies were also produced before the AO. The assessee also produced the certificate of registration as nonbanking financial institutions of the lender companies. i. Similarly in case of M/s Rajwadi (Rajyeshwar) Retail Traders Systems Pvt. Ltd. the assessee has produced copy of ledger account in the books of the lender company, copy of the ledger account in the books of the assessee, copy of bank statement of the lender company, copy of acknowledgement of return along with computation of income, copy of annual report. All these documents are available at page no.648 to 679 of the paper book. The assessee officer has not taken any step to verify the correctness of the documentary evidences filed by the assessee but proceeded on the assumption that these transactions are accommodation entries. ii. In case of M/s East West Finvest India Ltd. the assessee has produced a copy of ledger account in the books of the lender company, copy of bank statement of the assessee for relevant year, copy of certificate of registration of the lender....
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....owing documents to Ld. AO during assessmentproceeding: i. Share Application Forms ii. Copy of Bank accounts iii. Affidavit of Shareholder company iv. Form No. 32 filed by share Applicant Co. v. Certificate of Incorporation of Business vi. ITR acknowledgments for A.Y. 2009-10 vil. Relevant portion of audited Balance Sheet viii. Ledger account of shareholder in the books of Appellant Co. ix. IT assessment order of the shareholder companies u/s 143(3) for AY 2009-10 We find that the revenue has not raised any ground to negate or contradict this fact claimed by assessee and also accepted by Ld. CIT(A). On a careful reading of assessment-order, we find that the AO has also talked at least about these documents having been filed by assessee, namely (i) affidavits of the directors of investor-companies; (ii) bank statements of the investor-companies; (iii) share application forms, etc. In fact, at one place the AO has made a heighted remark also "The type of documents furnished by assessee are self-serving and can be made by anyone". This shows that the assessee has filed document to AO. Being s....
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.... proves the fact of allotment of shares. The assessee has filed the Assessment order of all the three share applicant companies for the A.Y. 2009-10 completed u/s 143(3) of the Act and there is no addition in regard to share application. (Para 9.9 of CIT(A)'s order). (iv) Ld. CIT (A) has finally observed that the burden which lay on the assessee u/s 68 has been duly discharged by it and nothing further remains to be proved by it on the issue. There is no evidence on record to show that the identities of the share applicants are not proved and / or that the introduction of share capitals are not proved and /or that the introduction of share capital by them was not genuine and/or the source of investment was not fully explained to the satisfaction of the AO. (Para 9.10 of CIT(A)'s order). 11. Clearly, therefore, it is discernible that the Ld. CIT (A) has dealt with each and every aspect of the issue and concluded that the assessee has discharged the burden cast upon it u/s 68. The Ld. DR could not show us any reason to interfere with these findings. Therefore, we are inclined to hold that in such a situation, the Ld. CIT (A) has rightly reversed the action of AO and....
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....iness. The alleged unsecured loan of Rs. 1,02,00,000/- and Rs. 1,25,00,000/- were accepted during the year and were repaid also during the year which supports the contention of the assessee that the alleged loans were taken for business needs and were repaid back when the funds were available. 17. We therefore in the given facts and circumstances of the case and respectfully following the decision of Hon'ble Tribunal in the case of ACIT V/S Girish Kumar Sharda (supra) as well as detailed finding of fact by Ld.CIT (A) which is unconverted by the Ld. Departmental Representative as no material evidence has been placed to prove anything contrary. Therefore we find no infirmity in the finding of Ld.CIT (A) deleting the addition of Rs. 1,02,00,000/- and Rs. 1,25,00,000/- for alleged unsecured loans and also deletion of disallowance of interest on such loans at Rs. 6,14,855/- andRs.5,55,815/- and also deleting the addition for undisclosed expenditure of Rs. 5,25,000/- and Rs. 6,25,000/-. We accordingly dismiss Revenue's Ground No. 1, 2 &3 for Assessment Year 2006-07 and 2007-08 respectively. 4.4 Thus, the tribunal has taken as co....
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....wadi Retails Trade Systems Pvt. Ltd., M/s. Ranjit Securities Ltd. and M/s. Suzlon Securities Pvt. Ltd. respectively of a sum of Rs. 50,00,000/- Rs. 50,00,000/- Rs. 35,00,000/- and Rs. 50,00,000/- during the A.Y. 2014-15 and interest payments of Rs. 1,12,500/- Rs. 1,12,500/- Rs. 1,44,375/- and Rs. 1,12,500/- respectively to such companies during A.Y. 201415, the AO has made additions of Rs. 1,50,00,000/- for A.Y. 2012-13 and Rs. 1,85,00,000/- for A.Y. 2014-15 u/s. 68 of the Act and has also made additions amounting to Rs. 54,863/- and Rs. 4,81,875/- respectively for A.Y. 2012-13 and A.Y. 2014-15 on account of unexplained interest payment u/s. 69C of the Act to such loan creditors. Although, in respect of such additions, on the legal ground as discussed in para (11.3) supra, that the assessment years 201213& A.Y. 2014-15 were complete assessment years and therefore, for such assessment years, no addition could have been made without having recourse to any incriminating material found during the course of the search. But, even on merits, we find no substance in the additions so made by the AO in respect of all the above named....
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....urity and Finance Ltd. in ITANo.753/Ahd/2012. We also find that the loan taken from alleged company has been treated as genuine and the additions made in the hands of other loan receivers have been deleted by this Tribunal in the case of M/s Tirupati Construction ITANo.533/Ind/2014 and M/s K.K. Patel Finance Ltd. ITANo.440/Ind/2010. We, therefore, find no reason to doubt the genuineness and creditworthiness of Jayant Security and Finance Ltd. and identity is well proved which has been rightly appreciated by Ld. CIT (A) in order to delete the addition made u/s 68 of the Act at Rs. 1.25 cr and interest disallowance at Rs. 8,79,041/-. 12.6. As regards the cash creditor namely M/s Jay Jyoti India Pvt. Ltd. Mumbai we find that this company was incorporated in 1999. As on 31.03.2013 it had share capital of Rs. 6,33,50,500/- and net reserves and surplus of Rs. 1,08,62,25,646/-. Bank statement, confirmation of account, ledger statement, audited financial statement, Memorandum of Association and tax deducted at source certificate are placed on record which in totality are sufficient to prove identity of this company, genuineness of the transaction and creditwort....
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.... cogent enquiry. 9 ShalimarHousing &Finance Ltd. 16. The documents mentioned above with regard to all the lenders are also submitted before us, by way of paper book. We note that the identity of the lenders is duly proved. They have duly responded to assessing officers notice issued u/s 133(6) and have made due compliances. It is not even the case of the assessing officer that these parties are non-existent. The lending companies are also active companies as evident from the documents furnished from the website of Ministry of Corporate Affairs. The bank statement of the lending companies have also been furnished. Loan is granted through bank. No adverse inference has been noted by the assessing officer from the bank statement. 17. The grievance of the assessing officer is that these companies do not have substantial income and hence are not capable of giving loans. He has also expressed doubt about the position of reserves and fund position without brining on record any cogent material from any further enquiry made by bench. We find that the funds position of the companies as noted by the ld.CIT(A) is quite capable of granting loans. The adverse inference....
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....n, the addition was made by the AO by holding that since the loan have been held by him to be unexplained the interest, thereon cannot be said to be for business purpose. Since, we have already held that addition of loan as unexplained credit is not sustainable, the disallowances of interest thereon, on the same reasoning is liable to be deleted. Hence, we uphold the order of the Ld.CIT (A) on the issue also." 4.8 As it is manifest from the series of decisions referred above that this tribunal has examined the issue of genuineness of transactions between the assessee and these lender companies and found that when the assessee has produced relevant evidence to prove the identity of the lender companies, the capacity of the lender companies and genuineness of the transactions that in absence of any contrary material to disprove the claim of the assessee or to show that the evidence produced by the assessee is not reflecting true fact, the addition made by the AO is not sustainable. The ld. CIT (A) has also considered this issue in para 3.3.2 to 3.3.4 as under: "3.3.2 I have duly considered the above and found that the Ld. AO has concluded that the above unsecured loans ha....
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....31ST March Reserve and surplus/Share application money pending for allotment as on 31ST March Cash and cash equivalent/Bank as on 31ST March Jayant Security And Finance Ltd. 2010-11 2,84,18,000/- 86,83,63,460/- 73,73,454/- Jayant Security And Finance Ltd. 2013-14 2,84,18,000/- 218,46,08,700/- 44,90,256/- M/s. Jay Jyoti India Pvt. Ltd. 2011-12 6,25,95,500/- 109,80,86,962/- 92,49,886/- M/s. Jay Jyoti India Pvt. Ltd. 2013-14 6,33,50,500/- 83,62,86,980/- 23,84,013/- M/s Rajwadi Retail Trade Systems Pvt Ltd 2013-14 29,27,000/- 1,95,28,995/- 7,07,085/- M/s East West Finvest India Ltd 2012-13 8,08,39,500/- 33,35,07,347/- 66,81,404/- M/s Zyka Merchandise Pvt Ltd 2011-12 29,10,000/- 6,68,07,972/- 14,91,320/- Puvi Finvest Ltd. 2013-14 15,84,66,500/- 186,24,03,524/- 7,25,386/- Puvi Finvest Ltd. 2015-16 15,84,66,500/- 179,31,56,944/- 11,01,361/- On perusal of the above, it is evident that the lender company had substantial funds available with it to advance money to the appellant. The appellant has also filed necessa....
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....the AO and he cannot go into the realm of suspicion." Considering the above decision, the appellant had discharged its onus by producing ample evidences. Without any investigation and cogent material, ld. AO treated the same as unexplained which is not sustainable in view of following judgments: (i). Divine Leasing & Finane Ltd. (2008) 299 ITR 268(Delhi). wherein it was held that : "16. In this analysis, a distillation of the precedents yields the following propositions of law in the context of s. 68 of the IT Act. The assessee has to prima facie prove (1) the identity of the creditor/subscriber; (2) the genuineness of the transaction, namely, whether it has been transmitted through banking or other indisputable channels; (3) the creditworthiness or financial strength of the creditor/subscriber; (4) if relevant details of the address or PAN identity of the creditor/subscriber are furnished to the Department along with copies of the shareholders register, share application forms, share transfer register, etc. it would constitute acceptable proof or acceptable explanation by the assessee; (5) the Department would not be justified in drawing an adverse infer....
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....he transaction, the identity of the creditors, and credit-worthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the AO, so as to discharge the primary onus. ii. The Assessing Officer is duty bound to investigate the credit-worthiness of the creditor/ subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of name-lenders. iii. If the enquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit-worthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by Section 68 of the Act. 12. In the present case, the A.O. had conducted detailed enquiry which revealed that : i. There was no material on record to prove, or even remotely suggest, that the share application money was received from independent legal entities. The survey revealed that some of the investor companies were non-existent, and had no office at the address mentioned by the assessee......
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.... as well as having considered the documentary evidence produced by the assessee and analyzing the transactions recorded in the documentary evidences we find that the assessee has duly discharged its onus to prove the identity of the loan creditors, the capacity of the loan creditors and the genuineness of the transactions. So far as the identity of the loan creditors is concerned the department has not disputed the same and the capacity of the loan creditor has been duly established by producing audited financial statements, tax audit report, bank account statements, return of income of the lender companies and no defect was pointed out by the AO in the documentary evidence produced by the assesse. The transactions are through banking channel and the assessee produced the bank account statement of the assessee as well as the loan creditor companies to show that there is nothing in the bank account statement as well as ledger account to reflect that assesse's own money has routed back through these lender companies. Rather the assessee has repaid part of the loans prior to the search and seizure action in this case. Therefore, all these facts and record go to prove that the transact....
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....r on the facts and in the circumstances of the case and in law, Ld. CIT (A) has erred in accepting additional evidence u/s 46A in complete disregard to the remand report submitted by AO which was received in the 0/0 CIT (A) on 18.09.2020. The CIT (A) has not discussed the issues raised in remand report in his order. 2. Whether on the facts and in the circumstances of the case and in law, Ld. CIT (A) has erred in accepting additional evidence u/s 46A even through conditions mentioned in clauses (a)-(d) of 46ACD were not satisfied. 3. Whether on the facts and in the circumstances of the case and in law, Ld. CIT (A) has erred in accepting retraction made by the assessee made after more than a year as genuine even though there was strong evidence on record about accommodation entries provided by companies controlled by Sharad Darak, a known entry provider, and whether CIT (A) has erred in accepting the retraction of assessee as genuine ignoring the decision of Hon'ble SC in the case of Bannalal Jat constructions Pvt Ltd Vs ACIT [2019] 106 Taxmann.com 128(SC). 4. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erre....
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....ct of these four lender companies namely Jayant Securities and Finance Ltd, M/s Jay Jyoti India Pvt. Ltd., M/s Rajwadi (Rajyeshwar) Retail Traders Systems Pvt. and M/s Purvi Finvest Ltd. while deciding the issue for the assessment year 2012-13. Even Jayant Securities and Finance Ltd & M/s Jay Jyoti India Pvt. Ltd. are common lender companies as for A.Y.2012-13. While considering the addition on merits for A.Y.2012-13 we have discussed the documentary evidences filed by the assessee in respect of all these companies. The ld. CIT (A) has also passed a composite order in respect of all the unsecured loans transactions for A.Y.2010-11 to 2016-17. 9.2. At the cost of repetition it is pertinent to note that Coordinate Bench of this Tribunal has considered the transactions with these lending companies in a series of decisions and found that these companies are active and do exist and also doing business as evident from their financial statement, return of income and assessment orders. In the case in hand the assessee has produced all the relevant evidence to show that the interest on the loan amount was paid to the lender companies regularly on quarterly basis after deduction of tax at....
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.... Rs. 1,99,95,000/-made by the AO under section 69 r.w.s 115BBE of Income Tax Act on account of unexplained investment. 6. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition of Rs. 71,68,750/- made under section 69C r.w.s. 115BBE of Income Tax Act, on account of interest expenses on bogus unsecured loans." 12. Ground no.1 to 3 are regarding non-consideration of remand report and accepting retraction of statement made by Shri Naveen Jain. These are common and identical grounds as raised for A.Y.2012-13. We have already considered and decided the issue involved in ground nos.1 to 3 for A.Y.2012-13. Accordingly in view of our finding on ground no. 1 to 3 for A.Y.2012-13 these grounds stand dismissed. 13. Ground No. 4 is regarding the addition made by the AO on account of unsecured loan by treating the same bogus accommodation entries which was deleted by the Ld. CIT(A). For the year under consideration the assessee has shown unsecured loan from M/s Purvi Finvest Ltd. of Rs. 4,90,00,000/-. The assessing officer in the composite order has made the addition for the year under considera....
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.... Shelters for the period of 01.04.2015 to 31.03.2016. He has referred to page nos.362 & 363 of the paper book and submitted that the assessee produced all relevant documents and supporting evidence including copy of ledger account of M/s Purvi Finvest Ltd., copy of bank account of M/s A & A Shelters showing receipt of loan from M/s Purvi Finvest Ltd. He has also referred to the bank statement of M/s Purvi Finvest Ltd. at page no.741 of paper book showing loan transaction to M/s A & A Shelters on 26.11.2015 through proper banking channel. He has also referred a copy of the affidavit from Shri Sharad Darak confirming the existence of the said company, registered address UIL, PAN details at page no.824 to 826 of the paper book. He has then referred to certificate of registration issued by RBI as NBFC w.e.f. 21.03.2005 and therefore, M/s Purvi Finvest Ltd was regularly engaged in the business of money lending. A copy of acknowledgment of return of income of M/s Purvi Finvest Ltd along with computation of income for A.Y.2016-17 is placed at page no.747 to 751 of the paper book. Ld. Counsel for the assessee submitted that these details show the lender company is engaged in the genuine bu....
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....te source of this loan is the unaccounted income of the assessee solely on the basis of the statement of Shri Naveen Jain. The ld. CIT (A) has deleted the said addition in para 3.8.1 as under: "3.8.1 I have considered the facts mentioned in the assessment order and submissions of the appellant. It is undoubted fact that the above loan has been taken by M/s A & A Shelters from M/s Purvi Finvest Limited in the assessment year 2016-17 and therefore, if any addition is proposed to be made that should be made in the hands of M/s A & A Shelters not in the hands of appellant. The ld AO is not justified in this regard. Further, as held in para 3.2 & 3.3 of this order, M/s Purvi Finvest Limited is a genuine company and had sufficient financial capacity to advance the loan, this addition is not sustainable. Hence, the addition of Rs. 1,99,95,000/- is hereby deleted. Therefore, appeal on this ground is allowed. " 14.6 Thus, the Ld. CIT (A) has given the finding that when the AO found that this loan has been taken by M/s A & A Shelters from M/s Purvi Finvest Limited then addition if any should have been made in the hand of M/s A & A Shelters not in the hands of the assesse. We....
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....AO in making addition of Rs. 63,45,500/- u/s 68 r.w.s. 115BBE on account of alleged undisclosed income, more so when no incriminating material was found as a result of search and impugned addition has been made by recording incorrect facts and findings and without observing the principles of natural justice. 4. That in any case and in any view of the matter, action of Ld. CIT (A) in confirming the action of Ld. AO in making addition of Rs. 63,45,500/- u/s 68 r.w.s. 115BBE on account of alleged undisclosed income, is bad in law and against the facts and circumstances of the case 5. That having regard to the facts and circumstances of the case, Ld. CIT (A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs. 2,77,350/- u/s 68 r.w.s. 115BBE on account of alleged unaccounted income, more so when no incriminating material was found as a result of search and impugned addition has been made by recording incorrect facts and findings and without observing the principles of natural justice. 6. That having regard to the facts and circumstances of the case, Ld. CIT (A) has erred in law and on facts in confirming th....
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....e assessee and the seized documents were not recovered from the possession of the assessee therefore, the same cannot be attributed to the assesse. He has further contended that in the proceedings u/s 153A a document seized from the third party cannot be considered rather the said documents can be considered only in the proceedings u/s 153C. The assessing officer has erred in assuming jurisdictional u/s 153A of the Act and no addition could be made in the hand of the assesse. 17.2 He has further submitted that during the assessment proceedings ledger of Shri Hanuman Prasad Mishra and Smt. Babita Malpani in the books of the assessee submitted along with sale deed of plot no.650 & 750 to show that these plots were sold to these persons and therefore, same were already recorded in the books of account and part of the assessee turnover. The addition in respect of undisclosed income on account of sale of these plots cannot be made. Further, plot no. 868 was booked by Shri Ankush Chourasia s/o Shru R.C. Chourasia after paying an advance of Rs. 50,000/- vide cheque no. 896962 drawn on SBI. Relevant copy of bank statement of the assessee highlight the above sum is placed as page no....
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....been explained by Shri Hemandra Singh Nabeda and decoded noting in the diary written as 'SKEN' as Shri Krishna Enclave. The addition is made on the basis of incriminating material disclosed unaccounted transactions and therefore, the ld. CIT (A) has rightly confirmed the addition made by the AO by following decision of this Tribunal in case of shri Om Prakash Patidar (HUF). 17.5 We have considered the rival submissions as well as relevant material on record. The Assessing officer has made the addition on account of unaccounted income as found recorded in the seized material which is a diary containing various entries from the possession of Shri Hemandra Singh Nabeda. These entries contain plot no. and rates as well as name of certain persons in whom name booking is shown. During the course of assessment proceeding the assessee has filed the reply to the show cause notice issued by the AO wherein the assessee has explained that the plots which are referred in the alleged diary have been sold by the assessee company to shri Hanuman P. Mishra & Smt. Babita Malpani and full payment for sale of those plots have been received from the customers. The assessee also filed the copy of led....
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....ighly arbitrary and unjustified. 17.6 Similarly when the assessee has explained that another plot was booked in the name of Ankush S/o R.C. Chourasia against booking amount of Rs. 50,000/- received through Cheque and the details of the booking and Cheque produced before the AO in the ledger account then the addition to the extent of the said plot no.868 is also not justified. The remaining plots are claimed to be part of the inventory of the assessee company which could be verified from the books of account however, neither the AO nor Ld. CIT (A) took pain to verify this fact from the books of the assesse. Accordingly in the facts and circumstances of the case, we are of the considered view that the addition made by the AO and confirmed by the Ld. CIT (A) without considering correct facts as recorded in the books of account as well as other relevant evidence produced by the assessee in the shape of sale deeds and transactions through banking channel is highly arbitrary and hence same is deleted. 17.7 Before parting with the issue it is pertinent to note that the AO has made addition u/s 68 of the Act on the ground that entries found in the seized documents from Shri Shri....
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.... account and also produced the sale deed executed in favour of the buyer which shows that there was no element of cash found in these transaction of sale. The sale consideration was received through proper banking channel and duly recorded in the books of account of the assesse. Therefore, the addition made by the AO without any corroborative evidence is not justified. 18.2 On the other hand, Ld. DR has submitted that addition made by the AO is based on the seized material. The assessee has not disputed the transactions recorded in the seized material to the extent of the amount received in Cheque and therefore, the said seized material cannot be considered as partly correct. He has relied upon the order of the authorities below. 18.3 We have considered the rival submissions as well as relevant material on record. The assessing officer has made addition based on the seized documents which is register found during the course of search from the office premises of the assessee. The details of the transactions as recorded in the said register are given by the AO in para 10.1 as under: "10.1 Accordingly, a show cause notice was issued on this count, the relevant extract o....
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....ppeal is dismissed. For Assessment Year 2017-18 19. The Revenue has raised following grounds of appeal: "1. Whether on the facts and in the circumstances of the case and in law, Ld. CIT (A) has erred in accepting additional evidence u/s 46A in complete disregard to the remand report submitted by AO which was received in the 0/0 CIT (A) on 18.09.2020. The CIT (A) has not discussed the issues raised in remand report in his order. 2. Whether on the facts and in the circumstances of the case and in law, Ld. CIT (A) has erred in accepting additional evidence u/s 46A even through conditions mentioned in clauses (a) - (d) of 46ACD were not satisfied. 3. Whether on the facts and in the circumstances of the case and in law, Ld. CIT (A) has erred in accepting retraction made by the assessee made after more than a year as genuine eventhough there was strong evidence on record about accommodation entries provided by companies controlled by Sharad Darak, a known entry provider, and whether CIT (A) has erred in accepting the retraction of assessee as genuine ignoring the decision of Hon'ble SC in the case of Bannalal Jat constructions Pvt Ltd Vs ACIT [2019] 1....
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....f the ground(s) of cross objection before or at the time of hearing." 23. Ground no.1 & 2: The AO has given the details of the plots sold by the assessee to five persons against consideration received in Cheque as well as in cash which are found recorded in the seized documents BS-2. The details of the consideration received from these five buyers are given by the AO as under: Sr. No. Name of Customer Amount receive by Cheque/draft(Rs.) Amount received in cash (Rs.) Date of payment 1. Sajid Khan 17,85,600/- 2,76,650/- 08.06.2016 2. Hemand Shukla 17,85,600/- 2,76,650/- 18.05.2016 3. Rajnish Sharma 11,16,060/- 1,74,770/- 18.05.2016 4. Siddharth Basu 17,85,600/- 2,90,635/- 18.05.2016 5. Ram Narayan Singh 5,04,432/- 84,250/- 03.06.2016 Total receipts in cash Rs. 11,02,955/- 23.1 This issue is common to the issue of cash received against sale of one plot based on the seized documents found during the course of search and seizure action at the business premises of the assessee as raised by the assessee in ground no.5 for A.Y.2016-17. 23.2 In view of o....