TaxTMI 
TaxTMI 
2025 (5) TMI 2124
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....er passed on 28/12/2019 and for AY 2018-19 order passed U/s 143(3) of the Act. 2. All the appeals carry common issue and identical facts, therefore, all the appeals were heard together and are disposed of by this common order. ITA No.367/Mum/2025 for A.Y. 2012-13 is taken as lead case, where the assessee has raised the following grounds of appeal:- "1. The CIT(A) erred in law and on facts in upholding the action of the AO making the addition of Rs 90,00,000/- in the completed assessment, on account of the alleged cash loan advanced by the appellant to Mr. Nilesh Bharani / Evergreen Enterprises as an unexplained investment u/s 69 of the Act where admittedly during the search on the assessee no incriminating material evidence showing the alleged undisclosed income was found and following the judgment dated 24/04/2023 of the Hon'ble Apex Court in PCTT v Abhisar Buildwell Pvt Ltd (2023) 149 taxmann.com 399 (SC), the addition must be deleted. 2. The CIT (A) erred in law and on facts in confirming the estimated addition of Rs 6,82,333/- made u/s 56 of the Act in the completed assessment presuming interest earned on the alleged cash loans given by assessee and ass....
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....lesh Bharani and other persons and personal ledgers (unsubstantiated & uncorroborated) which suffered from following infirmities: a. that during the cross examination of Mr Nilesh Bharani, the person searched and creator of alleged incriminating material seized categorically denied to have taken any cash loan from appellant and also denied to have paid any interest to the appellant, b. Mr. Nilesh Bharani & other persons had also retracted the statements given by them during the search during the investigation proceedings, c. Mr. Nilesh Bharani had filed an affidavit to the extent before the assessing officer denying all the allegations of the revenue and owned up all transactions in personal capacity recording all in genuine compiled contacts and maintained ledgers written by pencil. d. By not granting an inspection of the alleged original material seized from the premises of Evergreen Enterprises/Mr Nilesh Bharani though specifically demanded to ascertain veracity of photocopy of ledger sheet extracts. Thus, violating all the principles of the law and justice, particularly when the appellant specifically denied his liability to income-tax on the....
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..... Nilesh Bharani and his alleged companies. Finally, the additions were made under section 69 of the Act for alleged cash loan advanced by the assessee, notional interest U/s 56 of the Act in all the alleged years and for AY 2018-19 addition is confirmed U/s 69A related the unexplained investment injewellery, which are described in the following tabulated form:- Assessment Year (Unabated Assessments) Addition u/s 69 for alleged cash loan advanced in Rs. Addition u/s 56 for notional interest earned on cash loan advanced in Rs. 2012-13 90,00,000/- 6,82,333/- 2013-14 2,35,00,000/- 24,99,833/- 2014-15 4,54,00,000/- 83,03,350/- 2015-16 2,73,00,000/- 1,32,68,100/- 2016-17 1,88,00,000/- 1,64,52,325/- (Abated Assessments) 2017-18 15,28,50,000/- 3,69,60,515/- 2018-19 0 3,54,73,133/- 10,42,059/- u/s 69A forUnexplained money(Jewellery) The aggrieved assessee filed an appeal before the Ld. CIT(A). The Ld.CIT(A) upheld the impugned assessment order. The aggrieved assessee filed appeal before us. 4. In argument, the Ld.AR stated that the assessment years 2012-13 to 2016-17 are unabated assessm....
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....re the date of search and were, thus, completed assessments, as mentioned in the respective assessment orders dated 29.12.2019 passed u/s 153A of the Act. Thus, the additions made in the said five assessment years (AY 2012-13 to AY 2016-17) must be deleted by following the said dictate of the Hon'ble Apex Court. 5. Further, the Ld.AR argued that for the AYs 2017-18 and 2018-19 for which the assessments were pending and time to issue a notice u/s 143(2) of the Act was also pending for the A.Y 2017-18 and the return of income for the A.Y 2018-19 was not due as the date of search was 18/12/2017, it is stated that the additions have been made in the AY 2017-18 merely on an estimated basis, based on some unverified material seized in the premises of Mr. Nilesh Bharani and interest thereon, though no such material at all, otherwise, was found during the search in the premises of the assessee to estimate any such interest income earned. Thus, as per the settled legal proposition, no addition could be made even for an estimated interest unless some evidence showing receipt of any such payment/consideration was found either from the premises of the assessee or from the premises of th....
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.... assessee (which assessee denied at the threshold) but there is no reference to any incriminating information found during the search on the assessee in his premises as per the copies of the attached panchnamas. The Ld.AR further invited our attention to the statement of the assessee recorded on 18/12/2017, during the course of search. The relevant statement of the assessee is extracted as below: - "Q.17. Do you know Mr. Nilesh Shamji Bharani. Ans. Yes I Know him. Q. 18. Do you have any business relation with Mr. Nilesh Bharani. Ans. Yes I have business relation with Mr. Nilesh Bharani. Q.19. Have you made any transaction with Mr Nilesh Bharani Ans. I and my family members have given unsecured loan of Approx. 35 Lakhs to his clients through Cheques over a period of time for which I got interest from his clients to whom he has given those cheques. Q.20. I am showing you the statement of Mr Nilesh S Bharani recorded on oath during the search proceeding u/s 132(4) of the Income Tax Act,1961 on 11.10.2017 in the case of M/s Evergreen Enterprises at 12, Sharda Sadan, 7 S.G. Marg, Dadar (E), Mumbai -400014. Please go throu....
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....ectfully relied on the order of the Hon'ble High Court of Karnataka in PCIT vs VSL Mining Company Pvt Ltd [2024] 167 taxmann.com 373 and relevant observation of the Hon'ble Court is reproduced as below:- "15. In view of the settled position of law as noticed above, once material pursuant to a search is relied upon, the AO is required to follow the procedure as contemplated under Section 153A, 153B and 153C of the IT Act and it is impermissible for the AO to continue the regular assessment." 8. The above judgments support the contention of the assessee that even otherwise cognizance of any amount considered as undisclosed income in a search in the hand of assessee in pursuance to the search warrant on Mr. Nilesh Bharani/Evergreen Enterprises could only be considered u/s 153C of the Act. It is also important to appreciate that in Abhisar Buildwell (supra) the Hon'ble Supreme Court has not overruled the mandatory non-obstante provisions u/s 153C of the Act after an income tax search where the revenue failed to find anything incriminating even in respect of the pending assessment because as per the law, the said special machinery provision u/s 153C of the Act. 9. It ....
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.... 13. When the assessee as well as Shri Nilesh Shamji Bharani and other individuals have denied of alleged cash transaction in subsequent events, the duty of the A.O. was to gather more corroborative evidence to establish on record that the entries appearing in the seized material actually represent cash loan transaction of the assessee. However, except the seized material and the statements recorded u/s. 132(4) of the Act from some third-party individuals, the A.O. has absolutely no other evidence on record to corroborate the alleged cash loan transaction of the assessee. Pertinently, though, during the time search and seizure operation was carried out in case of M/s. Evergreen Enterprises and Shri Nilesh Shamji Bharani, a search and seizure operation was also carried out in case of the assessee, however, not a single piece of incriminating material was recovered from the assessee indicating involvement of assessee in the alleged cash loan transaction or any other illegal activity. In fact, it is relevant to observe, in the statement recorded u/s. 132(4) of the Act, Shri Jagdish T Ramani, who allegedly was assisting Shri Nilesh Shamji Bharani in his work, had stated that S....
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.... the case of Mr. Nilesh Bharani and M/s. Evergreen Enterprises, at 5, Sharda Sadan, 7 S.G. Marg, Dadar (East), Mumbai-400014, on 06.10.2017, incriminating evidences related to undisclosed money lending activity carried out by Mr. Nilesh Shamji Bharani were found and seized vide Annexure A-1 to A-117. Shri. Nilesh Bharani deposed that he is engaged in the business of finance and involved in cash lending. borrowing business and cash income. He also stated that he used the employees of firm M/s. Evergreen Enterprises for this purpose although the firm had no link to money lending activity carried out by him. 8.2. The books of account related to undisclosed money lending activity /business which were found and seized at the above-mentioned premises are as follows:- i. Ledgers of lenders ii. Ledgers of borrowers iii. Interest calculation pads iv. Promissory Notes v. Telephone diary vi. Confirmation note/s from the borrower vii. Undated cheques bearing amount and sign of the borrower as security. 8.3. The AO has elaborately described the content of each of the above item. According to the AO, the codes to th....
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....lakhs to Mr. Nilesh Bharani through banking channels. The assessee was also subjected to a search under section 132 of the Act on 18/12/2017, but no incriminating documents or material were found at the premises of the assessee. The entire addition in the present case is based solely on presumptions and pertains to third parties involved in the same search proceedings. Factually, the same issue has already been adjudicated in favour of the assessee. We respectfully rely on the decisions of the Coordinate Bench of the ITAT-Mumbai in the cases of Rajeshkumar Rameshchandra Shah vs. DCIT(supra) and Rupal Kashyap Mehta (supra), and observe that the Hon'ble Supreme Court's ruling in Abhisar Buildwell (P.) Ltd. is squarely applicable to the facts of the present case. Accordingly, as there is no incriminating material found in the possession of the assessee during the search, the additions made for AYs. 2012-13 to 2016-17 are beyond the jurisdiction of the Ld. AO under section 153A of the Act. Consequently, Ground Nos. 1 to 3 raised by the assessee are allowed. Since the legal grounds raised by the assessee have been allowed, the remaining grounds are left open and require no adjudi....