TaxTMI 
TaxTMI 
2025 (6) TMI 800
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....satisfaction has been recorded as required under the provision of I T. Act. 2. For that additions made by the A.O. and upheld by the CIT (A) are bad in law as no incriminating materials has been found. 3. For that the learned A.O. is not justified in making addition of Rs. 4,30,00,000/- us 68 of I T. Act. 4. For that the learned A.O. is not justified in disallowing interest of Rs. 47,10,000/- on unsecured loan. 5. The Appellant craves the leave to lake Additional Grounds and/ or amend the above grounds of appeal at the time of hearing of Appeal." ii. ITA No. 111/GTY/2024: A.Y. 2016-17: "1 For that assessment order passed u/s 153C/143(3) is bad in law and liable to be quashed as no proper satisfaction has been recorded as required under the provision of I.T. Act. 2. For that additions made by the A.O. and upheld by the CIT (A) are bad in law as no incriminating materials has been found. 3. For that the learned A.O. is not justified in making addition of Rs. 30,00,000/- u/s 68 of I.T. Act. 4. For that the learned A.O. is not justified in disallowing interest of Rs. 44,22,465/- on unsecured 4 loan. ....
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.... the time of hearing of Appeal." vi. ITA No. 115/GTY/2024: A.Y. 2018-19: 1 For that assessment order passed u/s 153C/143(3) is bad in law and liable to be quashed as no proper satisfaction has been recorded as required under the provision of I T Act. 2 For that additions made by the A.O. and upheld by the CIT (A) are bad in law as no incriminating materials has been found 3 For that the learned A.O. is not justified in disallowing interest of Rs. 22,95,000/- on unsecured loan. 4 For that the learned A.O. is not justified in making addition of Rs. 1,01,25,690/- on account of suppression of sales. 5 The Appellant craves the leave to take Additional Grounds and or amend the above grounds of appeal at the time of hearing of Appeal." vii. ITA No. 116/GTY/2024: A.Y. 2019-20: "1 For that assessment order passed u/s 153C/143(3) is bad in law and liable to be quashed as no proper satisfaction has been recorded as required under the provision of I.T. Act. 2 For that additions made by the A.O. and upheld by the CIT (A) are bad in law as no incriminating materials has been found. 3 For that the learned A.....
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....he other AYs as well except for the fact that in A.Y. 2016-17, the loan of Rs. 30,00,000/- from M/s. Orchid Finnlease Pvt. Ltd. has been added under section 68 of the Act and interests of Rs. 44,22,465/- was disallowed in the order. Similar additions were made in the other assessment orders. 3. Brief facts of the case are that the assessee is stated to be a domestic company, engaged in the business of hotel and hospitality services etc. and had filed the return of income showing total income of Rs. NIL on 30/11/2014. There was a survey operation under section 133A of the Act on 22/12/2020 wherein books of accounts and other documents were impounded. A search and seizure action under section 132(1) of the Act was conducted on 22.12.2020 at the residential and business premises of the assessees belonging to the Contractors' Group/ Bhagya Kalita group. Warrant of authorization u/s 132 of the Act was issued in the name of the assessee and panchnama was drawn in consequence thereof as mentioned in the assessment order but it transpired during the course of the appeal before us that no such warrant was issued in the name of the assessee and only a survey u/s 133A of the Act was ca....
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....chased on 17.11.2015 and section 56(2)(x) of the Act was not on the statute as the same was brought on the statute only with effect from 01.04.2017. It was further contended that the dates are mentioned for AY 2016-17 but satisfaction is recorded for 10 years. It was further submitted that no incriminating material for other 10 years was found and the Ld. AO while making the assessment has not made any addition in respect of the difference in the value of the property. Major property was purchased in AY 2013-14 and regular assessment was made, a copy of which has been enclosed in the paper book. It was stated that no satisfaction was recorded and whatever is the finding of the survey team must be excluded in the order u/s 153C of the Act and the property purchases also have to be excluded in the order u/s 153C of the Act. The Ld. AO has made addition on unsecured loans which the company had taken from three entities amounting to Rs. 4.30 Crore out of which major amount was received in FY 2013-14 for which the assessment was done and the loan was accepted. The order u/s 143(3) of the Act was passed with limited scrutiny and the loan was not verified by the Ld. AO. It was contended t....
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.... the search and seizure u/s 132 of the Income Tax Act, 1961 conducted in the office premise of BK Sons Infrastructure Private Limited, B. K Sons Resorts Private Limited, HKS Publications Limited, Himanshu Printers And Publishers Private Limited. HKS Publications Limited, Himatsingka Resorts Private Limited, Bhagya Kalita, Geetika Kalita, Keshab Kalita, Kaushik Kalita, Binanda Kalita at Beekay Towers, Ganeshguri, Guwahati-781005 on 23/12/2020, in the bunch of loose sheets marked as BKS-11, page no as mentioned below, purchase of Greenwood Resorts Put. Ltd. From Asha Borah has taken place at Rs. 1,90,14,300/- in total, however the total consideration amount of the property is Rs. 9,22,50,000/- Therefore you are show caused why the difference amount of Rs. 7,32,35,700/- should not be taxed in your hand under section 56(2)(X) of IT Act. Ans: That the property purchased by Greenwood Resorts Pvt Ltd on the value mentioned in sale deeds. The reason for purchase of property at value lesser that stamp value is that the resort was under heavy financial crunch and the properties were attached by NEDFI. Due to loss, the book value of the resorts was estimated at lower than th....
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....in the definition of incriminating material and has no effect on determination of our taxable income. 8. That Sir, it can be looked also from another angle i.e. after initiating the proceeding what has happed in assessment proceeding. The AO has not made any addition in respect of said property so it can be conclusively said that initiation of proceeding itself is bad in law. What actual assessment has been made by AO in different years are as under a) The AO has made addition of Rs. 4,30,00,000/- in the AY 2014-15 and of Rs. 30,00,000/- in the AY 2016-17 u/s 68 of I.T. Act. 1961. Basis of Addition Survey at the premises of lender on same day when Survey was carried out at our premises and in which lender could not give satisfactory reply. b) The AO has disallowed interest on loan as under: Assessment Year Interest Exp. Disallowance 2014-15 47,10,000/- 2015-16 47,09,992/- 2016-17 44,22,465/- 2017-18 43,45,000/- 2018-19 22,95,000/- 2019-20 40,27,500/- 2020-21 36,17,000/- Basis of Addition Survey at the premises of lender on same day when Survey was carried out at our premis....
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....Sir jurisdictional Gauhati High Court in the case of Principal Commissioner of Income Tax Vs. Shyama Power India Ltd. 294 Taxman 652(Gauhati) has upheld the action of ITAT where it has been held that disallowance u/s 40(a)(ia) of I.T Act cannot be made in case of concluded/unabated assessment in respect of disclosed transaction unless incrimating materials are found during the course of search. 13. In our case property papers has been found which are duly disclosed in the financial statements hence only for the purpose of Sec 50C these cannot be treated as incriminating. Further our assessment has been framed u/s 143(3) for the A.Y 14-15 in which one of the major property has been purchased & AO in the assessment order has recorded finding also. Thereafter for the A.Y 2017-18 also scrutiny assessment has been made. ON MERIT OF THE CASE 14. That Sir as aforestated, A.O while framing assessment u/s 153C has made addition u/s 68 of I.T Act of Rs. 4,30,00,000/- and Rs. 30,00,000/- for A.Y 14-15 & A.Y 16-17 respectively on account of loan accepted from M/s Akruti Securities Put. Ltd. Rs. 2,25,00,000/- (A.Y 14-15) M/s Arbitrage Securities Put. Ltd. Rs. 2,05,00,....
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....ocuments :- Ans: That Sir, with a view to buy peace with the department and avoid prolonged litigations we offer to disclose the difference of turnover of Rs. 13.60 crores for the period from A.Y 2014-15 to 2020-21. The disclosure is made on account shortcomings, inability to reconcile the documents seized and taking into consideration various disallowances which the assessing officer may take while framing the assessment order u/s 153A/153C and other anomalies found in the records seized by you. The difference amount of Rs. 15,92,03,491/- calculated by you might be due to the GST amount included in the total sales." 26. That Sir thereafter while filing returns u/s 153C we have disclosed income @ 8% of such undisclosed sales as details. 27. That Sir A.O has assessed the gross figures of sales as undisclosed sales. 28. That Sir it is settled principle of Income Tax that only the net profit is liable for taxation & includable in taxable income and as we have instead of going into the litigation have declared net profit @ 8% the action of A. O in including the total sales figures is wrong & liable to be deleted. 29. That Sir if the appeal i....
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....Court have provided a window of opportunity to the Income Tax Department for bringing to tax any income which could be based on material made available otherwise through any, action u/s 132 or even 132A of the Act. The relevant portion in this regard from the case of Abhisar Buildwell (P.) Ltd. (supra) deserves to be extracted as under: "(i) in case of search under section 132 or requisition under section 132A, the Assessing Officer assumes the jurisdiction for block assessment under section 153A; (ii) all pending assessments/reassessments shall stand abated; (iii) in case any incriminating material is found/ unearthed, even, in case of unabated/ completed assessments, the Assessing Officer would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the Assessing Officer including the income declared in the returns; and (iv) in case no incriminating material is unearthed during the search, the Assessing Officer cannot assess or reassess taking into consideration the other material in respect of completed assess....
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....r Buildwell (P.) Ltd. (supra). Needless to say, directions u/s 150(1) of the Act would need to be followed strictly and will need to be read in conjunction with the appropriate provisions contained u/s 147/148/149 of the Act. 2. Further as per the records of Greenwood Resort Private limited, it is noted that Mr. Bhagya Kalita who is the key person of "Bhagya Kalita" group, has himself brought of Greenwood Resort Private limited on 17/11/2015 from Ash Borah. So the contention that it's a case in consequence to the search and seizure on "bhagya kalita" group is factually wrong, as a separate warrant of authorization for Greenwood Resort private limited was drawn on 22/12/2020 for the survey u/s.133A along with the warrant of authorization of other parties of "Bhagya Kalita" group. Further, since the ownership of Greenwood Resort Private limited now lies with Mr. Bhagya Kalita, hence Greenwood Resort Private limited, is any way a key part of the Bhagya Kalita Group. Hence based upon the above discussion, the contention of the assesse is not acceptable. b) The decision made by the AO which was upheld by the Ld. CIT(A) are bad in law since no incriminating....
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....s only and the finding of the survey can be utilized in an assessment to be made u/s 143(3)/144/147 of the Act while the finding of the search alone can be utilized in the consequential assessment to be framed u/s 153A/153C of the Act. We have further noted that in view of the fact that no incriminating material was found in the course of the search carried out in the case of Bhagya Kalita and Group, in the case of Bhagya Kalita the additions made in the assessment orders u/s 153A/143(3) of the Act have been deleted vide order in ITA No. 120 to 124/GTY/2024 for AYs 2016-17 to 2019-20 order dated 27.09.2024 by the Hon'ble Tribunal. It is noted that the document relied upon being GWR/HD-01 was impounded during the course of survey carried out u/s 133A in the case of Bhagya Kalita Group on 22.12.2020 and was not found in the course of a search. Page 2 of the satisfaction note for the reasons recorded for the proceeding u/s 153C by the ACIT, Circle-1, Guwahati as conveyed to the assessee vide letter dated 21.07.2022 mentions so. The difference in sales was also noted on account of the register found during the course of survey conducted in Greenwood Resorts Pvt. Ltd. and the Tally ....
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.... We have considered the submission made. Apparently, no incriminating material was found during the course of search. The Hon'ble Supreme Court in the case of Principal Commissioner of Income-tax, Central-3 vs. Abhisar Buildwell (P.) Ltd. [2023] 454 ITR 212 (SC)[24-04-2023] held as under: • " The question which is posed for consideration in the instant set of appeals is, as to whether in respect of completed assessments/unabated assessments, whether the jurisdiction of Assessing Officer to make assessment is confined to incriminating material found during the course of search under section 132 or requisition under section 132A or not, i.e., whether any addition can be made by the Assessing Officer in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A or not. [Para 5] • At the outset, it is required to be noted that as such various High Courts have taken the view that no addition can be made in respect of completed/ unabated assessments in absence of any incriminating material. [Para 7] • No addition can be made in respect of completed assessment in absence of any incr....
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....t years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and assess or reassess the same. [Para 10] • As per the provisions of section 153A, in case of a search under section 132 or requisition under section 132A, the Assessing Officer 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 reassessment, 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-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso ....
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.... is linked with the search and requisition under sections 132 and 132A. 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 Assessing Officer 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 Assessing Officer 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 sub-section (2) of section 153A would be redundant and/ or rewriting the said provisions, which is not permissible under the law. [Para 12] • For the reasons stated hereinabove, no addition can be made in respect of the completed assessments in absence of any incriminating material. [Para 13] ....
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....ew of the decision of the Hon'ble Supreme Court in the case of Abhisar Buildwell (P.) Ltd. (supra) and other judicial pronouncements relied upon in the course of the appeal before us, the finding of the survey could not have been used in the order u/s 153C of the Act made and the additions made are hereby deleted for AY 2014- 15 and the appeal of the assessee is allowed. Further, as regards the difference in sales noted in various other years, as the documents were found in the course of the survey, the same could not have been utilized in the assessment u/s 153C of the Act and the additions made on account of difference in sales, unexplained cash credits and the interest on such bogus loans are deleted as the additions, if any, could have been made only in the assessment u/s 143(3)/144/147 of the Act. 9. A prayer was made by the Ld. DR to issue directions for taking action u/s 147/148 of the Act by relying on paras 4, 4.1 and 4.2 of the order in the case of Bhagya Kalita mentioned in the report of the Ld. Sr. DR by relying upon the findings of the Hon'ble Supreme Court in the case of Abhisar Buildwell (P.) Ltd. (supra). As regards the issue in relation to section 150 of....
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....accordingly and the assessee has been asked to furnish copy of municipality tax paid challan along with explanation. In response to the above the assessee furnished submission as reproduced under: Quote: GMC Tax of Rs. 17,49,055/- was paid on account construction of new building and same was added to the building under fixed assets since it is capital expenditure, same was not claimed as direct/ indirect expenses in the profit and loss account Unquote: Submission of the assessee carefully verified. On verification of receipt issued by the Guwahati Municipal Corporation dated 10/06/2016, it appears that Rs. 17,42,086/- received by Guwahati Municipal Corporation on 10/06/2016 from M/s. Greenwood Resort Put. Ltd., "as penalty for RCC Building". Scan copy of GMC Receipt is attached herewith as proof. Penalty paid for RCC Building is neither directly relatable to newly constructed RCC Building neither regularization fees paid by the assessee towards violation of certain regulation in construction of building and accordingly did not form part of the actual cost of the building. Therefore, claim of the assessee for capitalization of GMC tax under the fi....
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.... As per details cash payment 86,450/- 2. 19/11/2016 As per details cash payment 91,600/- 3. 20/11/2016 As per details cash payment 26,750/- 4. 20/11/2016 As per details cash payment 1,05,000/- 5. 20/11/2016 As per details cash payment 23,400/- 6. 29/11/2016 As per details cash payment 22,000/- 7. 01/02/2017 As per details cash payment 69,300/- 8. 28/02/2017 As per details cash payment 1,08,100/- 9. 20/03/2017 As per details cash payment 22,500/- Total cash payment 5,55,109/- The assessee could not furnish any satisfactory reply for payment in cash above Rs. 20,000/- or more. Hence, Total payment of Rs. 5,85,109/- under the head "Repairs & Maintenance is disallowed and added back to total income of the assessee. (Addition Rs. 5,55,109/-)" 11. The additions were confirmed by the Ld. CIT(A) vide para 6.2, 6.3 and 6.4 which are extracted as under: "6.2. Decision on Ground(s) of Appeal No(s). 1 & 2: The Appellant contended that AO was not justified in treating GMC tax paid as revenue expenditure instead of capital expenditur....
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....s a revenue expenditure. A query was made as to why the same should not be added to the actual cost of the asset as even though it was a penalty but it was incurred for the purpose of bringing an asset, to which the Ld. AR submitted that the Ld. AO disallowed the depreciation of Rs. 1,74,905/- after rejecting the capital expenditure. Since, the matter requires verification, hence, for the issues raised in ground nos. 1 and 2, the order of the Ld. CIT(A) is hereby set aside and both the issues are remanded to the Ld. AO who shall verify whether any claim for the expenditure was made so as to call for any disallowance and if the penalty was not paid for any infraction of law, the same should be added to the cost of the asset and depreciation as per law should be allowed and both these grounds are allowed for statistical purposes. 14. As regards ground no. 3, since the required documents were not filed before the Ld. AO the order of the Ld. CIT(A) in this regard is also hereby set aside and the matter is remanded to the Ld. AO. The assessee shall produce the required evidence/bills and vouchers in support of the claim that the disallowance u/s 40A(3) of the Act was not warranted. ....
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....AT/Ghy/2024-25/ 319 Dated 05.02.2025 To The Hon'ble Members, ITAT, Gauhati Bench, Guwahati Respected Hon'ble Members, Sub : Submission w.r.t. query raised during hearing- Matter regarding - Kindly refer to the above. With reference to above, the undersigned is submitting that on 09.12.2024 following case(s) was/were fixed for hearing and discussed partly - Document 2 During hearing before the Hon'ble Bench, the A/R of the appellant raised the legal issues as well as merit of the case in respect of the assessments of the A.Y.s as mentioned in the chart above. He also pointed out the PAPER Book filed in this respect. Further, after discussion, the Ld. Members has asked for further clarification / submission w.r.t. the following issues - It is not search & seizure case but in consequence a search & seizure action carried out in the case of 'Bhaigya Kalita Group'. Without proper satisfaction note, the proceedings was initiated and assessments were made. [ii] The decision made by the AO which was upheld by the Ld. CIT(A) are bad in law since no incriminating materials has been found. ... Contd .... .Page-2 .... [iii] The AO is not justified in making....
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....) To impound books of accounts. er things checked by them a To record the statement of any proceedings under the Act --- ngot the official, for one more or all of the abo the indian Penal Code necessary lacaces, for the purpose of function Place: Gumaheti Date: - 22/12/2020 ABB. Duecier of income Tax(le ) R Document 4 FORM NO.AS [ See Rule 112] WARRANT OF AUTHORISATION UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 AND RULE 112(1) OF THE INCOME TAX RULES.1962 To The Additional Director Dolly , Rajan Agarwal The Deputy Director Jita . The Deputy Commissioner Sharma, Tapan Jaka The Assistant Director Priyanka The Assistant Commissioner The Income-tax Officer WHE 0202/11/28 W2 : Bhushan 10mg Whereas information has been lald before me and on the consideration thereof I have reason to believe that - A summons under sub-section (1) of section 37 of the indian Income Tax Act. 1922, of under sub-section (1) of section 131 of the Income Tax Act, 1961, or a notice under sub section(4) of section 22 of the Indian Income Tax Act, 1922, or under sub-section (1) of section 142 g/-the Income Tax Act, 1961, was issued by the Deputy C....
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....jewellery or other valuable article or thing have been kept and are to be found in House Number 76, Pizali Phahan Road, Rahbari, Guwahati-781008 [specify particulars of the building/place/vessel/vehicle/aircraft]; this is to authorize and require you As mentioned Overleaf [name of the Deputy Director of of the Deputy Commissioner or of the Assistant Director or of the Assistant Commissioner or the Income Tax Officer) (a) to enter and search the said building/place/vessel/vehicle/aircraft; (0) to search any person who has got out of, or is about to get into, or is in the building/place/vessel//vehicle/aircraft If you have reason to suspect that such person has secreted about his person any such books of account, other documents, money, bullion, Jewellery or other valuable article or thing: 2 to place Identification marks on such books of account and documents as may be found in the course of search and as you may consider relevant to or useful for the proceedings aforesald and to make a list thereof together with particulars of the identification marks; to examine such books of accounts and documents and make, or cause to be made, copies of extracts from such books of ac....