TaxTMI 
TaxTMI 
2025 (4) TMI 845
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....on, it will be necessary to take notice of the facts of one appeal in which the issue is involved. We would, accordingly, narrating the facts as they appear in the appeal for the relevant assessment year. The findings of the grounds of appeal raised by the assessee would mutatis mutandis apply to the other appeals as well. ITA no.54/Nag./2022 Assessee's Appeal - A.Y - 2011-12 2. In this appeal, the assessee has raised following grounds of appeal:- "(1) That the order of the learned Assessing Officer u/s. 143(3) r.w.s. 153A is bad in law and wrong on facts. (2) That no incriminating document was found as a result of search and therefore the additions made in the proceedings u/s 153A are void and bad in law. (3) That the learned AO erred in law and on facts in making addition of Rs.72,68,000/-holding that the assessee has earned commission. On the facts and circumstances of the case the action of the AO is without any sound basis and therefore highly unjustified. (4) That the learned Assessing Officer erred in law and on facts in charging interest u/s. 234A and 234B of the Income Tax Act. The interest charged is improper. (5) That....
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....r held that there was no mention of name of Base Corporation Ltd. while the name of Shri Sanjay Jain, is mentioned in the impounded Excel Sheet and further the assessee could not file any appointment letter / offer letter to substantiate that the assessee was Internal Auditor of the company. The Assessing Officer held that the claim of the assessee that the turnover mentioned in the Excel Sheet belongs to M/s. Base Corporation Ltd., is not acceptable. She further held that the words"@.25%" mentioned in the Excel Sheet is the commission earned by the assessee which has not been shown as income and consequently made addition to the income of the assessee. 6. On appeal before the learned CIT(A), the assessee raised various grounds of appeal being legal as well as on merits of the addition made in the assessment framed under section 143(3) r/w 153A of the Act. The learned CIT(A) held that the impounded Excel Sheet contains the name of assessee and the assessee was unable to prove on the basis of any confirmation that the turnover belongs to any party. The assessee did not claim that the transactions mentioned in the Excel Sheet are fictitious or rough entries. Further, it is apparen....
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....ng the assessment order u/s.143(3) r.w.s. 1534. The notice and proceedings u/s. 153A are bad in law and wrong on facts. That no incriminating document was found as a result of si arch and the notice u/s. 153A was objected in the computation of income furnished vide letter dated 28-09-2018. (1) A search and seizure operation was conducted in the premises of the assessee on 26-7-2016. As per the learned AO, in connection with the search, a survey action u/s 133A was also carried out at the official premises of assessee M/s. SNJ & Associates at 1st Floor, Mangalam Icon, Ramnagar Square, Nagpur. During the course of survey, an Excel Sheet Annexure B-2 at Page no. 4 is found and impounded. The addition is made by AO based on such impounded document treating it as incriminating one. We object to the action of learned AO as impugned document is not incriminating in nature and the document and transactions mentioned therein are explained during post survey and post search proceedings. No evidence apart from the single excel sheet was brought on record by the learned AO either during the assessment proceedings or in the assessment order to corroborate the claim made in the order by....
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....the transactions mentioned therein. No discrepancies have been brought on records by the learned AO in respect of above explanations and documentary evidences what-so-ever. The documents and details as well as books of accounts have been accepted by her. (5) We draw your kind attention to the additions made in the Assessment order. Your goodself will find that the transaction in the excel sheet is explained with the help of documentary evidences such as ledger account of parties and bank account statement showing the entries of fund transfer. There is no allegation that the transaction of sale and purchase in impugned document is unaccounted/undisclosed. Thus the same cannot be construed as incriminating in absence of any corroborative evidence found to prove that such commission income is earned by assessee. Thus, the additions are based on whims and fancies of AO and not on the basis of any incriminating document found during the course of search. It has been held by the Hon'ble Jurisdictional and other High Courts that when assessment is made as a result of search action and order is passed u/s. 143(3) ทพ.ร. 153A, additions can be made only on the ....
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....unaccounted income was found during the course of search in the case of assessee. We would be submitting further while discussing the individual unds for addition made in the Assessment order. GROUND NO. 2; That the learned AO erred in law and on facts in making addition of Rs.72,68,000/-holding that the assessee has earned commission. On the facts and circumstances of the case, the action of the AO is without any sound basis and therefore highly unjustified. We object to the addition made and have to submit as under for the favour of your kind consideration:- (1) That the various allegations made by the assessing officer are without considering the facts available and brought on record during the course of search as well as in the assessment proceedings. We draw your kind attention to the assessment order wherein the AO has held that the explanation that the turnover mentioned in the seized document page 4 of Annexure B-2belongs to Base Corporation Ltd. (BCL) is not acceptable. It is further mentioned in the assessment order that no documents relating to BCL were found at the premises of SNJ & Associates and the assessee could not produce docume....
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.... for the period 2006 to 2013 and credit rating report from Brick Work Ratings was submitted. The Investigation Team had also made enquiries from the Officer/ Director of BCL reference which can be found in letter dated 26-11-2018. (3) It is informed that M/s. SNJ & Associates, Chartered Accountants, a partnership firm in which CA Sanjay Jain, CA Nirmal Agrawal and CA Jitendra Jain were partners, were conducting the internal audit of BCL. The working paper file regarding Internal Audit was found at the business premises which was enquired into by the Authorised Officer of Investigation Wing. It is undisputed that the impugned document was found in the aforementioned working file. Apart from the Internal Audit function, the assessee was also helping BCL for arrangement of finance. The impugned document contains the transaction of turnover of BCL as well as the loan transaction of Mr. Sanjay Jain. There were differences in the transaction of turnover of Base Corporation Ltd with various parties. BCL was finding it difficult to reconcile the transaction as well as to make proper recoveries. In the impugned document, on the top of it, the name of Mr. Sanjay Jain A/c. is mention....
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....njay Jain is also mentioned in which the entries of payment received of Rs. 65 lacs and amount to be paid to Navdurga Advisory Pvt. Ltd. is mentioned thereby the adjustment of amount receivable is reconciled. Thus your goodself will appreciate that the assessee has substantiated the explanation that the transaction in the impugned document belongs to BCL with the evidences like bank accounts of parties, their ledger accounts and balance sheet. These submissions of the assessee are uncontroverted. (5) There were differences in the transaction of BCL with the various parties. At the time of reconciliation, there was a difference in the amount of recoverable as per the company and as per working of assessee. The impugned document is the record and reconciliation of such transaction prepared by Shri Sanjay Jain to help them in reconciliation during Internal Audit. The document was found in the Internal Audit File of BCL which shows that it belongs to the company which is prepared during Internal Audit Function performed by the assessee. (6) The allegation on Page No. 8 of the Assessment Order that the assessee did not provide the address of BCL and Balance Sheets of v....
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....ere explained entry-by-entry. In the ledgers, it could be categorically found that the transactions in crores are through banking channel. Thus, the allegation of the AO that the transactions in the seized document does not belong to BCL and the assessee did not furnish any evidence to explain the same is devoid of any merit. (8) The Assessing Officer has raised doubt about the providing of Internal Audit services to BCL by M/s SNJ & Associates and thereby holding the transaction in impugned seized document as belonging to the assessee and not to BCL. In this regard, we have already submitted before the AO that the impugned document was found in the Internal Audit working paper file and also produced the file. Please refer to our letter dated 26-11-2018 in the assessment proceeding. The same shall be again produced before your goodself for your kind perusal. We further draw your kind attention on Page 9 of the Assessment Order wherein the AO observed that no books of accounts or other documents relating to BCL were found at the business premises of M/s. SNJ & Associates thereby doubting the role as an Internal Auditor. Your goodself will appreciate that the books ....
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....r. Full recovery of loan was made. However, neither the interest could be recovered nor the Internal Audit Fess was recovered. Reference of the same could be found in the impugned seized document itself. Therefore, the assessee could not show any receipts accruing or arising to him from BCL for the services provided as Internal Auditor. (10)The Audited Financial Statements of Base Corporation Ltd. from F.Y.2009-10 to F.Y.2012-13 were submitted to AO. The audited accounts of Base Corporation Pvt Ltd for the period 2006 to 2013 were duly submitted to the Authorized Officer in the post search enquiry. The Xerox copy of the letter dated 16-11-2016 filed before ADIT was furnished to AO. Thus the observation of the AO in para 7 that no such information was given by the assessee is contrary to the facts available on record. (11)The turnover of Rs.611.63 Cr of the Base Corporation Ltd as verified by the AO from ITD and mentioned in the assessment order is as per Audited Financial Statements of the company whereas the turnover of Rs.290.75 Cr as mentioned in the excel sheet is from the turnover business carried out by company considered for reconciliation purposes as expla....
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....eal may be allowed. In view of the submissions made above and the facts and circumstances of the case it is submitted that the appeal of the assessee may kindly be allowed." 8. The learned Counsel for the assessee relying upon the submissions as made above, further submitted that the learned CIT(A) did not consider the explanation and the evidence brought on record by the assessee. The learned counsel vehemently contended that no document was found during the search in the premises of the assessee and the impugned document was found from the premises of Partnership Firm M/s. SNJ & Associates, and was taken out from the Internal Audit file of M/s. Base Corporation Ltd. He thus emphasised that the Excel Sheet is the working paper of the Firm and does not pertain to the assessee. There was no evidence found regarding earning of neither commission income nor any cash transactions relating thereto where found. The assessee had explained to the Department before the Investigation Wing and the Assessing Officer that he was working with M/s. Base Corporation Ltd. in the capacity of Internal Auditor and in this regard proof that M/s. SNJ & Associates is associated as Internal Au....
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.... on the doubt in mind of the authorities and more so when there is no falsity found in the documents submitted in support of the explanation of impounded document. 9. Per-Contra, the learned Departmental Representative ("the learned D.R.") strongly relying upon the order passed by the Assessing Officer and the learned CIT(A), submitted that the dismissal of the assessee's appeal by the learned CIT(A) was after indicating detailed reasons, which do not call for any interference and in this view of the matter, the appeal filed by the assessee be dismissed. 10. We have given a thoughtful consideration to the arguments made by the rival parties and perused the material available on record. As already mentioned elsewhere in this order that the assessee is a Chartered Accountant and is a partner in M/s. SNJ & Associates. It is noted from the assessment order and is undisputed that the document Annexure B-2, Page-4 was impounded during the survey proceedings at M/s. SNJ & Associates, situated at 1st Floor, Mangalam Icon, Ramnagar Square, Nagpur, by the Jt. Director of Income Tax (Inv.), Nagpur, on 26/07/2016, which is also found mentioned in the summons under section 131 of the Act ....
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....ch the assessee is Partner has conducted the Internal Audit in the absence of appointment letter. However, we find that the assessee categorically mentioned before the Investigation Wing about the documents and files relating to Internal Audit and we also find the name of the firm as "Internal Auditor" mentioned in the Audited Financial Statements. It is in this capacity of Partner who was looking after the assignment of Internal Audit of BCL that the name of assessee is appearing on impugned Excel Sheet. Thus, we find that the explanation by the assessee that they were conducting the Internal Audit of BCL and that the impugned Excel Sheet which was taken out from the Internal Audit file is prepared during the discharge of function as an Internal Auditor is established. 11. We have also carefully examined the impounded Excel Sheet in order to verify the veracity of explanation offered by the assessee to explain the entries/noting in the impounded documents. The Assessing Officer observed in Para-8 of the assessment order that the name of BCL is not appearing in the impounded document and also did not accept the claim of the assessee that Sales/Purchase turnover mentioned therein....
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....conciliation and was found in the Internal Audit file. The recovery plan was also mentioned in the impugned document and in that recovery plan the assessee also made his claim of recovery which is mentioned therein for e.g. your goodself will find mentioned on Rs. 75 lakhs received in July and August in the impugned document. We are enclosing herewith the copy of Bank Account of Base Corporation Ltd. for the period April, 2011 to March, 2012 wherein your goodself will find deposit of Rs. 50 lakhs in July, 2011 and deposit of Rs.25 lakhs on 14 August, 2011. Similarly your goodself will find that from the recoverable amount of Rs. 4.43 Crore by the Company, Rs 1 Cr. was marked for payment to Navdurga Advisory Put. Ltd. We are enclosing herewith the ledger account of Base Corporation Ltd. in the books of Navdurga Advisory Put. Ltd in which your goodself will find that there was outstanding recoverable of Rs. 1 Cr. before 31st May, 2012. The same was recovered in the month of June, 2012. Similarly it is mentioned in the impugned document that Rs 25 lakhs is received on 19th & 20th which can be seen in the Bank Account of Omega Industries which paid by RTGS to Base Corporation Rs. 15 la....
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....15. The assessee has raised following grounds :- "(1) That the order of the learned Dy./Asst. Commissioner of Income Tax, Central Circle-1(3), Nagpur passed u/s. 143(3) r.w.s. 153A is bad in law and wrong on facts and the learned CIT(A) erred in confirming the same. (2) That the learned CIT(A) erred in law and on facts in confirming the addition made by AO in the proceedings u/s 153A of the Income Tax Act, 1961 in absence of incriminating document found as a result of search. The additions made are void and bad in law. (3) That the learned CIT(A) erred in law and on facts in confirming the addition made by the AO of Rs. 1,18,00,000/- holding that the assessee has provided services of arranging parties and earned commission therefrom. On the facts and circumstances of the case, learned CIT(A) erred in holding that the assessee is engaged in the business of providing accommodation entries as the same is without any sound basis and therefore highly unjustified. (4) That the learned CIT(A) erred in law and on facts in confirming the addition made by the AO of Rs. 12,657/- holding that the assessee has arranged accommodation entries and earned commiss....
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....llow the grounds no.2 & 3 raised by the assessee. 18. In ground no.4, the issue raised by the assessee relates to the addition on account of commission on loan transaction. 19. The facts in brief, as emerges from the assessment order are that, in survey action in the office premises of the assessee, documents mentioned in Annexure B-1 containing 29 loose sheet and Annexure B-3 containing 31 loose sheet were impounded and it is noted that these documents are confirmation letters of parties who were advanced loans or taken loan. Similar transactions were found in the print outs of whatsapp and text messages taken from the phone of assessee and are inventorised in Annexure B-2 and Annexure B-3. The seized documents were confronted to the assessee and his statement was recorded on 26/07/2016, wherein the assessee accepted of having arranged loan funds for various parties by charging commission @ 0.1% to 0.25% and in case of arranging of institutional finance or Bank finance it is @1.8%. The Assessing Officer, on such basis, applied the rate of 0.25% as commission earned on the transactions noted in the seized document. Accordingly, addition of Rs. 12,657, was made in the total in....
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....es the Assessing Officer adopted the rate of 0.25% for determination of income. Thus, according to us, the average of both the rates would meet the end of justice. Consequently, we direct the Assessing Officer to adopt rate of 0.15% for determining the income earned on account of commission. Thus, in view thereof, the commission income earned applying the rate of 0.15% would be restricted to Rs. 7,595, and the addition to that extent is confirmed. Thus, ground no.4, raised by the assessee is partly allowed. 24. The issue raised by the assessee in grounds no.5 and 6, relates to the addition of Rs. 15 lakh on account of unsecured loan under section 68. 25. The brief facts, as brought out by the Assessing Officer in the assessment order are that the assessee obtained loan of Rs. 15 lakh from M/s. Sakambhari Vanijya Pvt. Ltd. The assessee filed explanation and documents like confirmation, Bank Account, Balance Sheet, Ledger Account, ITR Acknowledgement and status of company on MCA portal during the course of assessment proceeding. The Assessing Officer discussed the reasons for addition in Para-11.1 and 11.2 of the assessment order. She held that the loan was arranged by the asse....
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....ount received of Rs. 15,00,000/- during the year. The same is also repaid in subsequent years. Remaining unsecured loans are accepted and no doubt is raised on them. The AO has alleged that the assessee has arranged accommodation entries to various entities at Nagpur. We have to submit that the above observation is not relevant and the addition made with respect to unsecured loan obtained from Sakambhari Vanijya Pvt Ltd (SVPL) is not based on it. The AO has also alleged that the assessee has not been able to prove the creditworthiness of loan creditor and the genuineness of the transaction in view of the provisions of section 68 of the Income Tax Act, 1961. Further, the AO did not find the explanation offered by the assessee satisfactory and stated that the assessee has failed to discharge its onus towards explaining the credit of Rs. 15,00,000/ -. We respectfully object to the above observations and allegations made by the AO as the same are based on conjectures and surmises of AO without providing opportunity of being heard to assessee and also without properly verifying the facts of the case. (2) The AO has stated that the onus of proving the source of a sum received is....
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.... is without any sound basis. In view of above, the assessee has duly discharged his onus and the source of the sum received is duly explained and thus in such circumstances, action of AO in making addition of amount as unexplained cash credit is unjustified and illegal. (4) We would like to submit that the said amount of Rs. 15,00,000/- received by assessee is duly shown as Unsecured Loan in the Balance Sheet. The copy of Balance Sheet and Income & Expenditure A/c was furnished in assessment proceedings which is also attached herewith highlighting the unsecured loan of Rs. 15,00,000/ -. There is no any document found in the search action u/s 132 which can be termed as incriminating in nature. The addition is not made referring to any kind of incriminating document found during the course of search. The addition made merely on the basis of entries made in the regular books of accounts of the assessee duly reflected in the assessee's financial accounts without reference to any search material is not sustainable u/s 153A. We rely on the judgement of ITAT Mumbai in the case of Dinesh Salecha Vs. DCIT in ITA No. 5165, 5166, 5167/Mum./2018 dated 1-1-2021 (5....
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.... belongs to the assessee, the action of AO in treating entire unsecured loan as cash credit is unjustified and illegal. It is humbly submitted that the assessee being individual, the proviso to section 68 is not applicable. The AO has mentioned in para 13, two case laws and observed that the assessee is required to explain source of source and that the proviso introduced in Section 68 is applicable retrospectively. The AO failed to realize that proviso is applicable to the company assesses and not to individual assessee and that too in case amount is received on account of issue of shares. Thus, the case laws quoted in the assessment order are not applicable to the assessee being individual and are therefore distinguished. (7) It is respectfully submitted that the AO during search assessment proceedings neither confronted assessee with the doubt on the unsecured loan nor asked for any further details with respect to the same. The assessee has discharged onus cast on him by establishing the identity and creditworthiness of the parties and genuineness of the transaction with the help of legal and cogent evidences. The AO has not brought on record any evidence to pro....
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....orded in respect of D.P. Jain Group, transaction undertaken and funds transferred to them and not with respect to the transactions undertaken by assessee. However, as informed, the assessee has not entered into any transaction in the year under consideration with D P Jain Group and there is no connection whatsoever as such and no funds are transferred by assessee to D P Jain Group. Further, the assessee and Shri Nirmal Agrawal who is also partner in M/s SNJ & Associates have denied all the averments made by Shri. Praveen Agrawal vide statement dated 26-7-2016 and 30-7-2016. Thus the reliance on the statement of Shri Praveen Agrawal is misplaced and the addition on the basis of such statement is devoid of merit. We have to further submit that Shri. Praveen Agrawal is not director in the above-mentioned company and does not exercise any control whatsoever. There is no enquiry of the impugned transactions from Shri. Praveen Agrawal or other directors of the company SVPL. Thus it is submitted that no adverse inference can be drawn on the basis of statements of the persons who have no legal control over the assessee or the company. (9) The Directorate of Investigation ....
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....yond the scope of making addition relying on such statements. It is thus submitted that either there is no discussion whatsoever of the company in the statement of Shri. Paveen Agrawal or if it is there, no discussion is found about that company in the statement of so called directors of the impugned company recorded by Investigation Wing. Thus, it is submitted that no adverse inference can be drawn on the basis of statements of the persons who have no legal control over the above mentioned company. In view of above, the statements as referred in the assessment order cannot be made basis for making addition and thus there is no unexplained cash credit within the meaning of section 68 of the Income Tax Act. In view of above submission and facts of the case, the satisfactory explanation was furnished to AO with respect to the genuineness and creditworthiness of the unsecured loan and thus the addition made treating the same as unexplained cash credit may kindly be deleted. The ground of appeal may be allowed." 28. The learned Counsel for the assessee further submitted that the learned CIT(A) did not consider the evidence brought on record to justify the ....
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....ties and perused the material available on record. It is noted from the Para-11 of the assessment order that the enquiry of loan of Rs. 15 Lakh from M/s. Sakambhari Vanijya Pvt. Ltd. (lender) was made on the basis of documents submitted by assessee vide letter dated 06/12/2018. There was no document found during search in relation to the lender. The assessee furnished confirmation of account, ITR Acknowledgement, Audited Financial Statement, Bank Account of the lender in the assessment proceedings. Bank Statements highlighting receipts and payment of loan were also placed on record. Ledger account evidencing repayment of loan is placed on record at Paper Book Page-134, wherein the details of repayment of loan by cheque details are mentioned. We find that the name of the assessee with Rs. 15 lakh loan is appearing in the Audited Financial Statement of lender company under the list of Short Term Loans and Advances which is placed on record at Paper Book Page-132. The business turnover of the lender company is found in the Profit & Loss Account which is placed on record vide Paper Book Page-126 and the networth of the company is Rs.3 crore. Similarly, the Company Master data as taken ....
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....ining the source of source is not accordance with law. Here, the Assessing Officer grossly erred and failed to realize that such an onus to explain the source of credits is upon the "company" assessee and not on "Individual" assessee which is the case before us. We find support from the decision of Hon'ble Jurisdictional High Court in Gaurav Triyugi Singh v/s ITO, [2020] 121 taxmann.com 86 (Bom.) wherein it was held as under :- "13. Section 68 of the Act has received considerable attention of the courts. It has been held that it is necessary for an assessee to prove prima facie the transaction which results in a cash credit in his books of account. Such proof would include proof of identity of the creditor, capacity of such creditor to advance the money and lastly, genuineness of the transaction. Thus, in order to establish receipt of credit in cash, as per requirement of section 68, the assessee has to explain or satisfy three conditions, namely : (i) identity of the creditor; (ii) genuineness of the transaction; and (iii) credit-worthiness of the creditor. 14. In Pr. CIT v. Veedhata Towers (P.) Ltd. [2018] 403 ITR 415 (Bom), this court has held that assessee....
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....ver, in a case where the entry stands in the name of the third party, the assessee satisfies the ITO as to the identity of the third party and also supplies such other evidence which will show, prima facie, that the entry is not fictitious, the initial burden which lies on him can be said to have been discharged by him. It will not, thereafter, be for the assessee to explain further how or in what circumstances the third party obtained money and how or why he came to make a deposit of the same with the assessee. The burden will then shift on to the department to show why the assessee's case cannot be accepted and why it must be held that the entry, though purporting to be in the name of a third party, still represents the income of the assessee from a suppressed source. In order to arrive at such a conclusion, however, the department has to be in possession of sufficient and adequate material". The above judgement was followed by Hon'ble Punjab and Haryana High Court in the case of CIT vs Varinder Rawlley reported at 366 ITR 232(P&H)." 33. The ratio laid down by Hon'ble Bombay High Court in decisions mentioned above is binding precedent. In view of law laid down by t....
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....ection 68 of the Income-tax Act and consequently deleted the disallowance of Rs. 3,10,478/-, which was made with respect to interest and when the same has been confirmed by the ITAT, it cannot be said that ITAT has committed any error and/or illegality, which calls for the interference of this Court. In paragraph 11, ITAT has observed and held as under: "We have heard the rival submissions and perused the material on record. It is an undisputed fact that during the year the assessee had received loan from 17 parties aggregating to Rs.33,35,011/ -. The details of which are listed at page 2 of Assessing Officer order. CIT (A) while deleting the addition has given a finding that the assessee had filed before Assessing Officer the confirmations with name, address, PAN Number, copy of ledger account, copy of balance sheet and profit and loss account, copy of Income-tax returns and computation of total income in respect of all the parties except two depositors. With respect to the two depositors, the assessee had filed confirmation, address and PAN Numbers and hence the assessee had also discharged the initial onus cast upon the assessee with respect to the two creditor....
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....unjustified and unsustainable.In this case, Principal Commissioner of Income-tax v/s Merrygold Gems (P.) Ltd. [2024] 164 taxmann.com 764 (Gujarat). their Lordships have held as follows :- "9. Having considered the submissions advanced by learned advocates for the respective parties and the orders impugned in this appeal, what is evident is that the amount of loan received by the assessee was returned within the same financial year and in most of the cases within 30 days. The said repayment was also verified from the Ledger Account and the Bank Statement. 10. In view of aforesaid undisputed fact with regard to repayment of loan, at this juncture, it would be pertinent to take note of decision of this Court in case of Dy CIT v. Rohini Builders [2003] 127 Taxman 523/256 ITR 360 (Gujarat)/12[2003] 127 Taxman 523/256 ITR 360 (Gujarat), wherein it is held as under: "We have considered the rival submissions and have also gone through the order passed by the Assessing Officer. the relevant portion of which we have also extracted in para. 2 above. The Commissioner of Income- tax (Appeals) more or less confirmed the addition on the reasoning given by the Assessing ....
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....neness of the transaction is proved by the fact that the payment to the assessee as well as repayment of the loan by the assessee to the depositors is made by account payee cheques and the interest is also paid by the assessee to the creditors by account payee cheques. Merely because summons issued to some of the creditors could not be served or they failed to attend before the Assessing Officer, cannot be a ground to treat the loans taken by the assessee -from those creditors as non-genuine in view of the principles laid down by the Supreme Court in the case of Orissa Corporation [1986] 159 [TR 78. In the said decision the Supreme Court has observed that when the assessee furnishes names and addresses of the alleged creditors and the GIR numbers, the burden shifts to the Department to establish the Revenue's case and in order to sustain the addition the Revenue has to pursue the enquiry and to establish the lack of creditworthiness and mere noncompliance of summons issued by the Assessing Officer under section 131, by the alleged creditors will not be sufficient to draw an adverse inference against the assessee. In the case of six creditors who appeared before the Assessing Of....
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....on under section 68 of the Act. Consequently, respectfully following the decision in Vibrant Global Capital Ltd. (supra) and detailed legal position discussed therein, we are of the considered opinion that the addition made in assessee's case under section 68 of the Act is unjustified and unsustainable on facts and in law. In assessee's case the confirmation, financial statement, Bank Statement, Master Data from MCA Portal and ITR of the lender have been placed on record. The assessee has discharged his onus to explain the credit by adducing legal evidence on record. Accordingly, we set aside the impugned order passed by the learned CIT(A) on this issue and the addition made under section 68 of the Act at Rs. 15 lakh is hereby directed to be deleted. Thus, the grounds no.5 and 6 raised by the assessee are allowed. 37. In ground no.7, the assessee has challenged the charging of interest under section 234A and 234B of the Act on the basis that interest charged is improper. However, nothing was specifically contended before us. Therefore, the ground no.7, is dismissed. 38. In the result, assessee's appeal for A.Y. 2012-13 is partly allowed. ITA no. 56/Nag./2022 ....
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....in assessee's appeal cited supra and following the findings given therein, we reverse the order passed by the learned CIT(A) and allow the grounds no.2 & 3 raised by the assessee. 43. The issue arose out of ground no.4, relates to the impugned addition on account of commission on loan transaction. 44. After hearing both the parties and on a perusal of the material available on record, we find that identical issue has been raised by the assessee in its appeal being ITA no.55/Nag./2022, for the assessment year 2012-13, wherein, vide ground no.4, we have decided this issue partly in favour of the assessee in Para-23 of this order. Since the issue for our adjudication being identical, except variation in figures, consistent with the view taken therein in assessee's appeal cited supra and following the findings given therein, we reverse the order passed by the learned CIT(A) and partly allow the ground no.4, raised by the assessee. 45. Insofar as ground no.5 is concerned, the issue relates to charging of interests under section 234A and 234B of the Act on the basis that interests charged is improper. However, nothing was specifically contended before us. Therefore, grou....
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....ven therein, we reverse the order passed by the learned CIT(A) and partly allow the ground no.3, raised by the assessee. 53. In the result, assessee's appeal for the assessment year 2014-15 stands partly allowed ITA no. 58/Nag./2022 Assessee's Appeal - A.Y - 2015-16 54. The assessee has raised following ground :- "(1) That the order of the learned Dy./Asst. Commissioner of Income Tax, Central Circle-1(3), Nagpur passed u/s. 143(3) r.w.s. 153A is bad in law and wrong on facts and the learned CIT(A) erred in confirming the same. (2) That the learned CIT(A) erred in law and on facts in confirming the addition made by AO in the proceedings u/s 153A of the Income Tax Act, 1961 in absence of incriminating document found as a result of search. The additions made are void and bad in law. (3) That the learned CIT(A) erred in law and on facts in confirming the addition made by the AO of Rs.80,000/- holding that the assessee has arranged accommodation entries and earned commission therefrom. On the facts and circumstances of the case, the action of both the authorities is without any sound basis and therefore highly unjustified. (4) That....
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.... of Gold ornaments and jewellary, Silver articles and cash found during the course of search even though all the afore-mentioned items were found by him as duly explained. (4) That the learned CIT(A) erred in law and on facts in not allowing the telescoping of other addition made from the amount remaining out of surrender after the adjustment of unexplained cash, ornaments & jewellery, if any. (5) That for any other grounds with kind permission of your honour at the time of hearing of appeal." 62. Ground no.1, being general in nature, hence no separate adjudication is required. 63. Ground no.2, relates to the addition on account of commission on loan transaction. 64. After hearing both the parties and on a perusal of the material available on record, we find that identical issue has been raised by the assessee in its appeal being ITA no.55/Nag./2022, for the assessment year 2012-13, wherein, vide ground no.4, we have decided this issue partly in favour of the assessee in Para-23 of this order. Since the issue for our adjudication being identical, except variation in figures, consistent with the view taken therein in assessee's appeal cited supra and f....
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.... assessee drew our attention to the submission made by the assessee during the first appellate proceedings, which were reproduced in Page-9 to 23 of the impugned order passed y the learned CIT(A) and submitted that the Assessing Officer did not consider the explanation and evidence brought on record in proper perspective. He further referred to the statement dated 26/07/2016, which is placed on record in the Paper Book Page-53 to 55 and vehemently contented that the assessee explained the source of cash, jewellery and silver items and produced some of the bills of jewellery and also informed that the Jewellery belongs to various family members. He further drew our attention to Paper Book Page-20 to 23 which is the explanation filed in the assessment proceeding and contented that detailed explanation was filed with regard to the circumstances under which the gold Jewellery and silver articles came into his possession . He also drew our attention to various bills and ledgers which were furnished during assessment proceedings. He further contented that the additional offer of Rs. 75 lakh is not with reference to any specific asset, but it was clearly explained that in order to cover u....
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....ns of the assessee and has held that the explanation of learned A.R. regarding gold jewellery is satisfactory. The learned CIT(A) accepted the jewellery inherited by the assessee after the demise of his family members and also the explanation with regard to jewellery purchased for which bills and voucher, ledger and cashbook were submitted. In Page-29 of the impugned order passed by the learned CIT(A), addition of Rs. 75 lakh has been already deleted. As regards the additional income of Rs. 75 lakh offered by the assessee in his return of income, the learned CIT(A) at Page-30 of the impugned order held that the surrendered income covers any unexplained portion of gold jewellery and silver articles or cash found during the search operation. Thus, we find that the learned CIT(A) has already allowed the telescoping of other addition from the amount remaining out of surrendered income. We have also examined the issue of chargeability of income under section 115BBE and found that a separate ground has been raised before the learned CIT(A) on which there is no specific findings given in the learned CIT(A) CIT(A) order. Considering the application of the assessee and after examining the i....
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.... the assessment order are that, the return of income under section 139(1) of the Act was filed on 23/03/2011, disclosing income of Rs. 5,53,190. A survey action in the case of M/s. SNJ & Associates, was conducted at its office premises at Mangalam Icon, 1st Floor, Ram Nagar Square, Nagpur, on 26/07/2016, during which an Excel Sheet was found and impounded which is placed on record at Page-4 of Annexure B-2, which, according to the Assessing Officer, contained details of turnover and commission earned by the assessee which was not shown in his return of income. A search action under section 132 was also conducted on 26/07/2016' in the residential premises of the assessee. Notice under section 131 was issued by the Investigation Wing in the name of Shri Sanjay Jain, Director, M/s. Navdurga Advisory Services Pvt. Ltd., and as Partner, M/s. SNJ & Associates, in response to which the assessee furnished reply before the Investigation Wing, vide letter dated 06/11/2016. The case of the assessee for the assessment year 2010-11 was reopened and the reasons recorded is placed on record at Paper book Page-6 & 7 by the Assessing Officer are as under :- "Reasons for reopening the a....
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....ses on 26.07.2016. During the course of survey operation in the case of S N J CA Associates at Manglam Icon, 1^st floor Ramnagar square, Nagpur an excel sheet bearing annexure no.B2 at Pg no.4, was impounded. It is seen from the excel sheet that it is year wise record of turnover made and commission by Shri Sanjay Jain. The details for F.Y. 2009-10 are as under :- S. No. F.Y. Turnover Commission @ 0.25% 1. 2009-10 Rs.220.39 crores Rs. 55.09 lacs It is seen from the aove that the assessee has worked out commission @ 0.25% on the turnover. The table further shows the amount received by him and also the outstanding receivable by the assessee. Summons u/s 131 was issued to the assessee to explain the nature of the aove transactions. The assessee submitted that this amount pertains to one company M/s. Base Corporation of Bangalore of which the assessee was internal auditor. When asked to produce the same, the assessee till date could not produce any evidence Further on verification of details from ITD application the turnover of M/s Base Corporation for the above F.Y is Rs 522 11 crores Therefore the claim of the assessee that the above turnover belongs ....
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....able in this case or not. It is further mentioned in Box no.9 - "If the answer to Item no.8 is negative, please state (a) the income originally assessed". It was noted against this that the originally assessed income is "Rs. 5,53,190 under section 143(1)". Thus, on one hand, it is categorically accepted that the assessment order is to be made for the first time, while the aforementioned note, the intimation under section 143(1) as originally assessed income. Here, we place reliance on the judgment of the Hon'ble Jurisdictional High court in Dr. Amin's Pathology Laboratory v/s Jt. CIT, [2001] 252 ITR 683 (Bom.) wherein it has been held as under :- "In the present case, returns have been accepted under section 143(I)(a). Thereafter, the Assessing Officer found that unpaid expenses which ought to have been disallowed were not disallowed. This aspect was overlooked when the returns were accepted under section 143(l)(a). Therefore, there is no question of change of opinion as alleged. Therefore, the first argument is rejected. On the second argument, it may be noted that the proviso to section 147 applies only to cases where reopening is sought of assessments under sect....
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.... read and applied his mind to what is stated in box 9, i.e., the time limit for current proceedings covered under is stated to be under section 149(1)(b), or he would have sent it back to respondent no. 1 refusing to grant approval. It also goes to say that even respondent no. 1, who has sought approval, has not applied his mind. We are of the opinion that if only respondent no. 2 had read the report carefully, he would have never come to the conclusion that there is any material before him to treat it as a fit case to issue notice under section 148 of the Act or pass order under section 148A(d) of the Act. The safeguards provided in sections 148 and 151 were lightly treated by respondent nos. 1 and respondent no. 2. Both of them appear to have taken the duty imposed on them under these provisions as of little importance." 77. We also place reliance on the judgment of the Hon'ble Delhi High Court in United Electrical Company (P) Ltd. v/s CIT & Ors., 258 ITR 317 (Del.) where approval by the Addl. CIT under section 151, was given in the following terms :- "Yes, I am satisfied that it is a fit case for issue of notice u/s. 148 of the Income Tax Act". Analyzing, the abo....
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.... [1971] 79 ITR 603 (SC) has held that where the Commissioner had mechanically recorded permission and the important safeguards provided in sections 147 and 151, were lightly treated by the Officer and the Commissioner, the notice issued u/s 148 was held as invalid. 82. Hon'ble Delhi Court, while following Chhugamal Rajpal in the case of Ess Adv. (Mauritius) S.N.C. Et Compagnie v/s ACIT, [2021] 437 ITR 001, wherein, while granting the approval, the ACIT mentioned - "This is fit case for issue of notice under section 148 - has written the Income- tax Act, 1961. Approved", had held that the said approval would only amount to endorsement of language used in section 151 of the Act and would not reflect any independent application of mind. Thus, the same was considered to be flawed in law. 83. Hon'ble Delhi High Court in Capital Broadways (P.) Ltd. v/s ITO, [2024] 167 taxmann.com 533 (Del.) held as under :- "13. The satisfaction arrived at by the concerned Officer should be discernible from the sanction order passed under Section 151 of the Act. However, as may be seen, the approval order is bereft of any reason. There is no whisper of any material that may have we....
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....low the ground no.2, raised by the assessee. 87. Ground no.3, raised by the assessee relates to the addition on account of amount received in Bank. 88. Brief facts as emerging from the assessment order and other records are that in the assessment proceedings the assessee furnished Bank Account and ledger account of Bank in which there were certain deposits in the Bank Account by cheques amounting to Rs. 78,80,999. The assessee furnished explanation that it relates to sale of shares inherited from his father after his death. In support thereof he furnished the death certificate, Balance sheet, capital account, copy of journal entry and ledger account of shareholding. The receipt on account of sale of shares through banking channel was explained with evidence. Rejecting the explanation of the assessee, the Assessing Officer observed that the assessee could not produce the return of income of his father, share certificate and documents evidencing sale of shares and therefore made addition to the income of the assessee. 89. The assessee challenged the addition before the learned CIT(A) who dismissed the ground by holding that there are wide gaps in the explanation of the asses....
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....ow cause was with respect to the impounded document Annexure-B-2 / Page 4. vide Para-4, the Assessing Officer, on referring to ledger extracts of Bank Account, asked for the explanation for deposit in detailed along with documentary evidence. The assessee furnished detailed letter dated 05/12/2017, which is placed on record vide Paper Book Page-15 to 18 and vide Para-3 of the aforesaid letter, the assessee explained how he inherited shares from his father and furnished death certificate, copy of capital account of Sanjay Jain, copy of journal entry passed and copy of ledger account of "Based Shares received from father" account. It was also stated therein the name of the Group to whom the shares were sold and that sale proceeds received were deposited in the Bank Account. On a perusal of the Balance Sheet as on 31/03/2008, of the assessee, a copy of which is placed on record vide Paper Book Page-82, we find that under the head "Assets received from father" the details of various assets of father including the "Shares-Based Shares received from father Rs. 78,80,990" have been separately disclosed. Further, the assessee also furnished Ledger Account of "Based Shares received from fat....