TaxTMI 
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2025 (7) TMI 1285
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....& CO No. -11/Del/2025 (AY 2013-14) M/s Filatax India Ltd 2. We first take the appeal filed by the Revenue in the case of Filatex India Ltd. in ITA No. 4635/Del/2024 and the corresponding C.O. No. 11/Del/2025 filed by the assessee for AY 2013-14. 3. Brief facts of the case are that the assessee is a company engaged in the business of manufacturing Polyester Chips, Polyester/Nylon/Polypropylene Multi & Mono Filament Yarn and Narrow Fabrics. The return of income was originally filed electronically on 08.09.2013, declaring the net loss of INR 49,70,14,441/-. The return of income was processed u/s 143(1) of the Act. A search and seizure action was carried out by the Department u/s 132 of the Act in the case of Filatex India Ltd. group on 01.09.2021. Consequent upon the search and after obtaining the necessary approval from the Competent Authority, the cases from various AYs were re-opened and notices u/s 148 of the Act were issued which inter-alia includes AY 2013-14 for which the notice u/s 148 of the Act was issued on 20.03.2023. In response to said notice, return of income was filed on 30.03.2023, declaring same income i.e. INR 49,70,14,441/- as was declared in the ....
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....s 115BB of the Act. The interest paid of INR 1,00,53,494/- on the loans taken from four companies was disallowed by invoking the provisions of section u/s 37(1) of the Act and added back to the total income of the assessee. The AO further made an addition of INR 7,87,500/- by holding the same as unexplained expenditure u/s 69C of the Act by alleging that the same was paid as commission @ 0.25% to obtain the bogus accommodation entries of INR 24.25 crores and further on the repayment of the loans of INR 7.25 crores though the addition of alleged unexplained credits was made for INR. 5.90 crores only. 6. Aggrieved by the said order, the assessee preferred the appeal before Ld. CIT (A) who vide impugned order dated 22.08.2024 in Appeal No. CIT(A), Delhi/23/10125/2012-13 passed u/s 250 of the Act has partly allowed the appeal of the assessee wherein the additions made towards unsecured loans by treating them as bogus, disallowance of interest and further addition u/s 69C of the Act towards alleged payment of commission to obtain accommodation entries were deleted by observing that the assessee has proved the identity and the creditworthiness of the parties and therefore, no addit....
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....e Act the entry operators are not expected to accept that the loan transactions are not genuine. 10. The Ld. CIT (A) erred in deleting the addition of Rs. 1,00,53,494/- without appreciating the fact that interest paid on account of bogus unsecured loan is also bogus in nature, therefore, the interest paid by the assessee to the tune of Rs. 1,00,53,494/- is not genuine expense. 11. The Ld. CIT (A) erred in deleting the addition of Rs. 7,87,500/- without appreciating the fact that the accommodation entries to the tune of Rs. 5,90,00,000/- were taken during the year under consideration and commission must have paid to accommodate such entries. 12. The appellant craves to add or amend any/all the grounds of appeal before or during the hearing of the appeal." 8. The assessee also filed C.O. wherein the following objections are taken by the assessee:- 1. "On the facts and in the circumstances of the case and in law, the learned CIT (A) should have quashed the assessment order as illegal, not tenable, void and without jurisdiction. 2. On the facts and in the circumstances of the case and in law, the learned CIT (A) ought to have deleted the addition by ....
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....companies belonged to Shri Bhageria were used as conduit to provide accommodation entries to assessee group. Ld. Sr. DR further submits that the AO has referred certain WhatsApp chats and messages which clearly indicate that these loans are not genuine and therefore, requested for the restoration of the additions made by the AO in this regard. 11. Before us, Ld.AR supported the order of Ld.CIT (A) and submits that during the course of search, no incriminating material whatsoever was found pertaining to the transactions carried out by the assessee for the year under appeal, based on which, it could be said that the assessee has obtained accommodation entries. Solely on suspicion, the AO has concluded that the loans taken were not genuine. The assessee discharged the onus lies upon it by filing all the relevant details as required to establish the genuineness of the loans u/s 68 of the Act. He further submits that the notice u/s 133(6) were issued to the lender companies and the same were duly complied with by them and no discrepancies whatsoever was pointed out in the details filed by these companies and the AO made general observations with respect to the capacity of the lender co....
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..... CIT (A) and requested for confirmation of the orders of Ld. CIT(A). He also filed a written submission and reliance is placed on various judicial pronouncements. The written submission as filed by the ld. AR of the assessee is reproduced as under:- "The assessee has raised the following arguments before the AO and CIT (A) in response to the allegations made: 1. Regarding the addition being made on suspicion Though such evidences found during the course of search does give rise to suspicion but such suspicion alone cannot be the basis to reject all the documentary evidences filed by appellant in support of loans taken by it. It is also the presumption of law that the nature of the evidence or information gathered during the search should be of such nature that it instead of only raising doubt, the evidence establishes some wrong doing. No material pertaining to appellant is found. There is no scope of extrapolation and addition should be based on material pertains to appellant. Additions made based on presumptions that all loans are bogus without concrete evidence relating to any specific loan transactions, leading to an incorrect conclusion. Decisions relied: ....
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.... accepted the transaction with assessee complying with notice u/s 133(6). Assessment order of AY 2016-17 and 2018-19 of Satsai passed after the date of search in which it was not considered as shell entity. Decisions relied: Hon'ble Supreme Court of India in case of Commissioner of Income-tax v. Lovely Exports (P.) Ltd. [2008] 216 CTR 195 (SC) held: ".. 2. Can the amount of share money be regarded as undisclosed income under section 68 of IT Act, 1961?. We find no merit in this Special Leave Petition for the simple reason that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law. Hence, we find no infirmity with the impugned judgment." Hon'ble Supreme Court of India in the case of CIT v. Kamdhenu Steel & Alloys Ltd., SLP (CC) no. 15640 of 2012 (SLP Dismissed against Decision of Delhi HC): "... assessee discharged the burden in proving the identity of shareholders, genuineness of the transaction and creditworthiness of the shareholders, thereafter, in case such evidence is to be ....
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....ries blockage on 28th August 2021 and coronary angioplasty was scheduled on 2nd September 2021. -He was forced to reschedule the appointment and give the statement, the angioplasty was finally conducted on 18th September 2021. - He was pressurized to sign the statement (Page 222-223 in his Affidavit of general Paper book 1) - He stated that there is no relation between unsecured loan and cash transactions in his Affidavit. (Page 225 of General PB 1) - Such statement is general in nature and admission is not with reference to any specific transaction of loan by the appellant -Such statements are substantively clarified by duly notarized affidavit. Ankit Bhageria - Ankit's role was limited before passing away of his father, Vimal Bhageria in the month of April, 2021 (Q. 12). Therefore, loan taken in the year under consideration would not have any impact of his statement. - Statement was recorded in English. Ankit Bhageria could not understand the questions On 7th August 2021, doctor suggested him to go for Angiography to diagnose for any heart disease - he was pressurized and threatened to accept the allegation made by the AO to sign the statement - He could n....
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....orated by incriminating evidence] * Sambhav Buildwell (P) Ltd vs. ACIT vide ITA No. 1938/Del/2022 (Del ITAT)[Unsecured loan cannot be termed bogus only on the basis of statement without corroborative material] * Decision of Delhi High Court in the case of PCIT V. Pavitra Realcon Pvt. Ltd. (ITA 579/2018) * Ajay Gupta Vs. DCIT 81 Taxmann.com 462 (Del-ITAT) [Incriminating material must have been found to correlate the undisclosed income with such statement.] 6. The AO could not find any corroborative evidence to prove that the contents of the Whatsapp Messages were true and linked with the unsecured loan taken by the assessee. 7. Further, no cash trail was established by the AO to prove that unsecured loans were taken in exchange of Cash Payments. 8. During the course of recording of statement of Shri Purshottam Bhageria, no independent witnesses remained present during the recording of the statement of Shri Purshottam Bhageria. The 2 witnesses required by Rule 112 were the drivers of the car in which the Search party came at the place of search. They were neither independent nor literate enough to understand the language in which the statements were recorded. ....
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....n record, it is observed as under: (i) The appellant has proved identity of the creditor which is not disputed by Assessing Officer in assessment order. (ii) The appellant has also proved creditworthiness of the creditor by submitting its audited annual account along with relevant bank statement of depositors. The Assessing Officer has not proved that any cash has been deposited prior to giving cheque to appellant even though appellant was not required to prove sources of source, the bank statement submitted by appellant clearly reflects such sources which is not doubted by A.O. nor any inquiry has been made by A.O. for concluding that loan received by appellant is accommodative loan from shell companies. As discussed herein above, when appellant was asked to further explain sources of source, the appellant has provided such details, availability of funds with depositors who have transferred funds to ANM, RMP, Bhageria Finance and RKG who have in turn transferred funds to appellant and their sources are mainly from sale of shares, fixed assets, redemption of mutual fund or unsecured loan taken from group entities or third parties. The appellant had also submitted relevant ret....
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.... case, the sole dispute is with respect to the unsecured loans taken by the assessee from four companies which were alleged as bogus accommodation entities. The assessee received total amount of loans of INR 24.25 crores from four companies however, the AO though had observed that these four companies are Shell companies which are managed and controlled by Shri Ankit Bhageria (alleged as entry operator) however, only loans of INR 5.90 crores were considered as accommodation entries and accepted the balance amount of loans of INR 18.35 crores received from the same lender companies as genuine loans. It is surprising that when the creditworthiness of lender companies is doubted and allegation has been made with respect to the lender companies as Shell companies as to what prevent the AO to hold that the entire loans taken were accommodation entries. Moreso, while making the additions for alleged payment of commission for obtaining such entries, the AO not only taken the entire loan amount received at INR 24.25 crores but also taken into consideration the repayment made at Rs. 7.25 crores during the year. This at first hand raised doubts about the conclusion drawn by the AO in ho....
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....clause (23FB) of section 10." 17. That a bare reading of Section 68 suggests that there has to be credit of amounts in the books maintained by an assessee; such credit has to be of a sum during the previous year; and the assessee offer no explanation about the nature and source of such credit found in the books; or the explanation offered by the assessee in the opinion of the Assessing Officer is not satisfactory, it is only then the sum so credited may be charged to income-tax as the income of the assessee of that previous year. The expression "the assessee offer no explanation" means where the assessee offer no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessee. It is true that the opinion of the Assessing Officer for not accepting the explanation offered by the assessee as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on record. The opinion of the Assessing Officer is required to be formed objectively with reference to the material available on record. Application of mind is the sine qua non for forming the opinion. 18. Coming to the ....
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....ld that amendment made in section 68 of the Act w.e.f. 01.04.2013 empowers the A.O. to examine source of source in case of share application money / share capital / share premium from 01.04.2013 and this amendment does not give power to the A.O. to examine source of source of non-share capital cases. 22. It is clear that the assessee has furnished source of source and if the AO has any doubts with respect to the source of source in the hands of the loan creditor, it could have made further enquiries from all such parties even after receiving their replies in response to the notices issued u/s 133(6) of the Act. 23. The Hon'ble Supreme Court in the case of Orissa Corporation reported in [1986] 159 ITR 78 (SC) has held 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 non-compliance 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 asse....
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....ecause they have shown meager income or no sufficient sources as presumed by Assessing Officer, loan taken by appellant from them cannot be held to be accommodation entries. It is well-settled position of law that no matter how strong suspicion is, it cannot take place of the evidence. Therefore, in the absence of any evidence showing that in fact, appellant has given cash in lieu of unsecured loan taken, merely on the basis of suspicion, no addition can be made for which reliance is placed on decision of Hon'ble Supreme court in the case of Daulatram Rawatmull, (1964) 53 ITR 574. 28. The Hon'ble Allahabad High Court in the case of Principal Commissioner of Income-tax v. Anshika Consultants (P.) Ltd. reported in [2024] 162 taxmann.com 792 (Allahabad) held as under:- INCOME TAX: Where assessee had received unsecured interest bearing loans from three corporate entities and had furnished necessary acknowledgement of return, balance sheet, profit and loss account, etc., to prove identity, creditworthiness and genuineness of transaction of unsecured loan taken by it, addition under section 68 was not warranted. 29. Similarly in the case of Deputy Commissioner of Income-tax v. P....
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....rthiness of the party. During the course of appellate proceedings, appellant filed an application under Rule 46A and filed following documents to prove identity, genuineness and creditworthiness of the party: (i) Copy of Acknowledgement of IT. Paper Book page no. 48. (ii) Copy of Audited Financial Statements along with all the annexures. Paper Book page no. 49-60. (iii) Copy of Confirmed ledger account. Paper Book page no. 61. (iv) Copy of Bank Statements reflecting the amount given to the assessee company. Paper Book page no. 62-63. (v) Copy of confirmation. Paper Book page no. 64. These documents were forwarded to the A for carrying out necessary enquiry with reference to the lender party. The Assessing Officer after conducting enquiries with reference to the lender party has submitted remand report vide his letter dated 2.03.2016 which was forwarded by the Addl. CIT, Range 2 vide his letter dated 08.03.2016. The relevant part of the remand report is submitted as under: "4. As per directions received, the submissions made by the assessee before your good self as well as additional evidence submitted by it for admission at the appellate stage have been careful....
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....Loans & Advances in their books. However, this company has not furnished copy of its latest IT filed as well as copy of Audit Report, Balance Sheet and P & L Account despite being specifically called for in the letter issued us 133(6) to it. 8. It is also submitted here that as per the Balance Sheet of the appellant company for the AY 2011-12, it has shown a sum of Rs. 3.60 crores as "Loans from Body Corporate", as per Schedule 3 annexed to the Balance Sheet and not as Share Application Money. Also, as per details filed by the appellant vide its letter dated 03.02.2014 during the course of the assessment proceedings in its case for AY 2011-12, it has furnished the name of Ms Fennie Commercial Private Limited, PAN AAACF9549A, from whom it had allegedly received unsecured loan of Rs. 3.60 crores whereas the said party is showing this Loan & Advance as "Share Application Money". It is seen from the remand report that Assessing Officer has carried out enquiry with the lender party us 133(6) of the I.T. Act. The said party furnished the detailed reply vide its letter dated 08.01.2016. It has been reported by the AO that Ms Fennie Commercial Pvt. Ltd. has confirmed that i....
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....ed income us 68 of the I.T. Act. In support of my above decision, reliance is placed on following judicial pronouncements: a. CIT Vs. Fair finvest Ltd. [ 2014 ] 44 taxmann.com 356 (Delhi) HIGH COURT OF DELHI "Section 68 of the Income-tax Act, 1961 - Cash credit - Assessment year 2002-03 - Where assessee had filed documents including certified copies issued by Registrar of Companies in relation to share application and affidavits of directors, Assessing Officer could not make addition on account of share application money solely on basis of investigation report [In favour of assessee. Where assessee adduces evidence in support of share application monies, it is open to Assessing Officer to examine it and reject it on tenable grounds. In case he wishes to rely on report of investigation authorities, some meaningful enquiry ought to be conducted by him to establish a link between assessee and alleged hawala operators. Where assessee had filed documents including certified copies issued by Registrar of Companies in relation to share application, affidavits of directors, Form 2 filed with Registrar of Companies by such applicants, confirmations by applicants for company's shar....
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....nsaction, the assessee has also relied upon the judgment of Nemi Chand Kothari v. CIT [2003] 264 IT 254/[2004] 136 Taxman 213 (Gau.) wherein it has been held that it is a certain law that the assessee is to prove the genuineness of transaction as well as the creditworthiness of the creditor must remain confined to the transactions which have taken place between the assessee and the creditor. It is not the business of the assessee to find out the source of money of creditors. Similar observation has also been given in the case of S. Hastimal v. CIT [1963] 49 ITR 273 (Mad.) and CIT v. Daulat Ram Rawatmull [1973] 87 IT 349 (SC). The learned first appellate authority has cited various decisions rendered by the hon'ble Supreme Court of India as well as the hon'ble jurisdictional High Court in the impugned order and finally has held that the assessee has substantiated the transaction regarding share application money received by it was genuine transaction and the same were not accommodation entries. He did not find any evidence collected by the Assessing Officer which could prove otherwise and deleted the additions in dispute. As regard the addition of Rs. 12,500 made on acc....
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....dertaken any investigation of the veracity of the above documents submitted to him. It has been righty commented by the ITAT that without doubting the documents, the AO completed the assessment only on the presumption that low return of income was sufficient to doubt the credit worthiness of the share holders. 4. The Court is of the view that the Assessee by produced sufficient documentation discharged its initial onus of showing the genuineness and creditworthiness of the share applicants. It was incumbent to the AO to have undertaken some inquiry and investigation before coming to a conclusion on the issue of creditworthiness. In para 39 of the decision in Nova Promoters (supra), the Court has taken note of a situation where the complete particulars of the share applicants are furnished to the AO and the AO fails to conduct an inquiry. The Court has observed that in that event no addition can be made in the hands of the Assessee under Section 68 of the Act and it will be open to the Revenue to move against the share applicants in accordance with law. 5. In the facts and circumstances of the present appeals, the Court is satisfied that no substantial question of law arises. ....
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....nd proof in order to bring home this allegation. The ITAT, in our view, without adverting to the aforementioned principle laid stress on the fact that despite opportunities, the Assessee and/or the creditors had not proved the genuineness of the transaction. Based on this the ITAT construed the intentions of the Assessee as being mala Ride. In our view the ITAT ought to have analyzed the material rather than be burdened by the fact that some of the creditors had chosen not to make a personal appearance before the A.O. If the A.O. had any doubt about the material placed on record, which was largely bank statements or the creditors and their income tax returns, it could gather the necessary information from the sources to which the said information was attributable to. No such exercise had been conducted by the A.O. In any event what both the A.O. and the ITAT lost track of was that it was dealing with the assessment of the company, i.e., the recipient of the loan and not that its directors and shareholders or that of the sub-creditors. If it had any doubts with regard to their credit worthiness, the revenue could always bring it to tax in the hands of the creditors and/or sub-credit....
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....on of the Ld. CIT (A) deleting the additions made is based on the appreciation of fact that all the relevant documentary evidences were produced by the Assessee to establish the identity and creditworthiness of the lender companies and genuineness of the transactions. Further based on the legal precedents and the fact that the loans were received and repaid through banking channel had deleted the additions under consideration. We further observed that that Hon'ble Jurisdictional High Court in various cases has dealt with the fact that where assessee has discharged its burden by filing all the necessary evidences to prove the loans, provisions of section 68 cannot be invoked. Further Hon'ble Gujarat High Court in the case of PCIT Vs. Ojas Tarmake Pvt. Ltd. (supra) has held that where major portion of the credit has been repaid and also looking to the facts that in the instant case the AO had accepted the debit entries as genuine, the Hon'ble Court on the said facts ultimately affirmed the decision of the Tribunal in deleting the addition. Further the Hon'ble Gujarat High Court reaffirmed this view in the case of PCIT Vs. Merrygold Gems Pvt. Ltd. Similar view is also expresse....
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....uing cheques/RTGS in favour of the Assessee. Therefore, Appellant has duly discharged the burden casted upon it u/s 68 of the Act. 40. It is trite law that suspicion, howsoever strong, cannot take the place of proof as held in Umacharan Shaw & Bros. vs. CIT (1959) 37 ITR 271 (SC). The Hon'ble Supreme Court in the case of Dhakeswari Cotton Mills Ltd v. Commissioner of Income Tax (1954) 26 ITR 775 (SC) has observed that powers given to the Revenue authority, howsoever, wide, do not entitle him to make the assessment on pure guess without reference to any evidence or material. The assessment cannot be framed only on bare suspicion. The assessment should rest on principles of law and one should avoid presumption of evasion in every matter. The assessee, in the instant case, has sufficiently demonstrated the genuineness of transaction and creditworthiness of the loan creditors. On a broader reckoning, the apprehension raised by the Revenue authorities militates against the tangible material and is thus extraneous. Accordingly, we find no infirmity in the order of ld. CIT (A) in deleting the additions made u/s 68 towards the unsecured loans of Rs. 5.90 crores by holding the sam....
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....ismissing the appeal of the Revenue in ITA No. 4635/Del/2024, the Revenue's appeal for AY 2015-16 in ITA No. 5000/Del/2024 is also dismissed. 46. Since we have already dismissed the grounds of appeal taken by the revenue, the objections raised in the C.O. of the assessee become academic and thus not adjudicated and is dismissed. 47. In the result, appeal of the Revenue in ITA No. 5000/Del/2024 and C.O.No.32/Del/2025 of the assessee are dismissed. ITA No. 2060/Del/2024 & C.O.No.89/Del/2024 (AY-2016-17) 48. In the cross objections filed by the assessee, cross-objections No. 1.1 & 1.2 are taken wherein assessee has challenged the action of the AO in making additions on the issues for which no reasons were recorded and on issue for which reason was recorded, no addition is made. The cross objections taken by the assessee are as under: 1.1 On the facts and in the circumstances of the case and in law, the learned CIT (A) should have quashed the assessment order as illegal, not tenable, void and without jurisdiction. 1.2 On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in ignoring that no independent reason for reope....
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.... 31.3.2021. Ld. AR submits that in response to said notice, return of income was filed on 14.07.2021. Thereafter, due enquiries were made by the AO and no addition was made on account of the reasons recorded and therefore, AO has no jurisdiction to make any other addition. For this, he placed reliance on the judgement of Hon'ble Jurisdictional High Court in the case of Ranbaxy Laboratories Ltd. vs CIT [2011] reported in 336 ITR 136 (Delhi) and in the case of CIT-II vs Jet Airways (I) Ltd. reported in [2011] 331 ITR 236 (Bom.). Ld. AR thus requested that the re-assessment order making additions of INR 100,11,32,484/- on the issues which are not the subject matter of reopening and without making additions on the issue for which reasons for reopening the assessment were recorded, is without jurisdiction and, therefore, the reassessment order deserves to be quashed. 51. On the other hand, Ld. Sr. DR for the Revenue supported the order of the lower authorities and stated that once the case is reopened, the AO has jurisdiction to consider and decide all the issues which have come to his knowledge. He thus, requested for the confirmation of the initiation of the proceedings and consequen....
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....ourse of these proceedings the Assessing Officer comes to conclusion that some items have escaped assessment, then notwithstanding that those items were not included in the reasons to believe as recorded for initiation of the proceedings and the notice, he would be competent to make assessment of those items. However, the legislature could not be presumed to have intended to give blanket powers to the Assessing Officer that on assuming jurisdiction under section 147 regarding assessment or reassessment of escaped income, he would keep on making roving inquiry and thereby including different items of income not connected or related with the reasons to believe, on the basis of which he assumed jurisdiction. For every new issue coming before Assessing Officer during the course of proceedings of assessment or reassessment of escaped income, and which he intends to take into account, he would be required to issue a fresh notice under section 148." 54. The Hon'ble jurisdictional High Court in the case of CIT vs Adhunik Niryat Ispat Ltd. reported in [2011] 63 DTR 212 (Delhi) has held as under: "Reassessment - Scope - Additional reason - Notice issued by AO on the ground that the asses....
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....nt action itself having been validly initiated. 32. Explanation 3, cannot consequently be read as enabling the AO to attempt to either deviate from the reasons originally recorded for initiating action under Section 147/148 of the Act nor can those Explanations be read as empowering the AO to improve upon, supplement or supplant the reasons which formed the bedrock for initiation of action under the aforenoted provisions. 56. Similarly, the Hon'ble Bombay High Court in the case of CIT vs Jet Airways (I) Ltd. (supra) has held that "it is not open to AO to independently assess some income other than the income referred in section 148 for which reason was recorded". The relevant head note of the judgement reads as under:- "Section 147 of the Income-tax Act, 1961 Income escaping assessment - Nondisclosure of primary facts Assessment years 1994-95 and 1995-96 Whether an Explanation to a statutory provision is intended to explain its content and cannot be construed to override it or to render substance and core nugatory Held, yes Whether after insertion of Explanation 3 to section 147 by Finance (No. 2) Act, 2009, with effect from 1-4-1989, section 147 has an effect that Assessing....
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.... eleven companies tabulated at page 110 of the assessment order. The AO further observed that the assessee had paid interest of INR 2,75,49,085/- on the said loans which was also disallowed. Besides this, an addition of INR 26,77,500/- was made on account of alleged commission @ 0.25% on the loans received of INR 39,90,00,000/-, repayment of 38,85,00,000/- and share capital and premium of Rs. 28,35,000/- received during the year by holding the same as unexplained payment made. 61. The facts and circumstances existed in the year under appeal and the observations and allegations made by the AO while making the additions/disallowance are the same, as were made in the assessment order passed for AY 2013-14. Further, Ld. CIT (A) also made similar observation as were made in AY 2013-14 while deleting the additions/disallowances. 62. As there is no change in the circumstances, which fact is admitted by both the parties during the course of hearing therefore, by following the observations made by us while dismissing the appeal of the Revenue in ITA No. 4635/Del/2024, the Revenue's appeal for AY 201718 in ITA No. 4999/Del/2024 is also dismissed. 63. Since we have already d....
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....f appeal in the present appeal: 1. On the facts and in the circumstances and in law, the learned CIT(Appeals) has erred in enhancing the income of Appellant by Rs. 9,65,00,000 on account of unexplained money by invoking the provisions of ser on 69A of the Act. 2. On the facts and in the circumstances and in law, the learned CIT (A) has erred in invoking provisions of Section 115BBE of the Act with regard to above enhancement and charging tax and surcharges at higher rates. When the addition on which such tax and surcharge were charged itself is unsustainable, the CIT (A) may be directed to delete the same. 3. On the facts and in the circumstances and in law, the learned CIT (A) has erred in levying consequent interest u/s 234A, 234B, 234 of the Act. The appellant denies its liability to pay such interest. 4. On the facts and in the circumstances and in law, the learned CIT (A) has erred in initiating penalty proceedings u/s 274 r.w.s 271AAC(1) of the Act in respect of enhancement of Rs. 9,65,00,000/- u/s 69A of the Act. The AO may be directed to not to initiate any such penalty proceedings. 5. The appellant craves leave to add, alter, amend and/or withdraw a....
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....a and no assessee company has failed to furnish any evidence that these transactions were recorded in its books of account, made the additions by holding the same as unexplained money of the assessee company u/s 69A of the Act. 74. Before us, Ld.AR of the assessee submits that Ld.CIT (A) has made the addition solely based on WhatsApp messages and further relying statement of Shri Purshottam Bhageria which were retracted by him by filing duly sworn in affidavit before the lower authorities explaining the circumstances under which the statements were recorded and also explaining the true nature of these chats. Ld. AR submits that such WhatsApp messages do not clearly indicate whether the said transactions were pertaining to the assessee company as neither the name of assessee is appearing nor any co-relation of these chats with the unsecured loans taken was established. It is further argued that despite the search carried out, no trail of huge cash was found by the Department based on which it could be said that such alleged cash transactions were taken place. Ld. AR further contended that the statements of third party were used against the assessee without providing an opportunity ....
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.... cash transactions even after such detailed search and taking statements of so many people, including Shri Sudhir Bhimrajaka and Shri Prabhakaran Pillar (the parties with whom Shri Purushottam Bhageria has done the chats). 8. Further, the CIT (A) has also failed to ascertain against which transactions such cash alleged cash payments/receipts made. And therefore the addition merely on the basis presumptions, without any corroborative evidence and without any link with the actual transaction. 9. Further, the AO has made addition of both receipts and payments. 10. Even after the detailed search, the AO could not find any cash trail which could justify that the alleged cash transactions actually took place. 11. Most Importantly, the CIT (A) has made enhancement merely based on the statement of sender/receiver by the third party without any corroborative evidence. Further, though the statements of the third parties were recorded at the back of assessee, investigation wing officers failed to bring anything on record regarding the actual nature of transaction for which such cash receipt/payment transactions were carried out. Further, addition made by the CIT (A) is merely base....
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....p chats were found according to which movement of cash was taken place which was recorded in coded forms. In his statement, Shri Purshottam Bhageria stated that the figure given are in Lakhs and accordingly, the ld. CIT (A) worked out the total value of transactions stated at INR 9.65 crores. 78. It is further seen that no corroborative evidence or material was brought on record with respect to such alleged cash transactions either found as a result of search or collected during the post search investigation. Further, nowhere it is stated that these amounts were received by the assessee company as it is not clear that this pertains to the receipt of cash or payment of cash. It is a matter of fact that despite requests, the assessee was not provided with any opportunity of cross-examination of the persons whose statements were recorded in relation to these chats. It is a settled proposition of law that in case any statement of third party were used against the assessee for making addition, an opportunity to cross-examination should be provided to the assessee which has not been given in the instant case. Moreover, merely on the basis of WhatsApp chat in the absence of any corrobora....
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....seizure operation. We are unable to see any distinction between the cases of Shri Dhananjay Singh & Ms. Yamini Singh with the cases of Mr. Aman Sheghal & Ms. Seema Dutta. The whatsapp chats standalone basis is not having valid evidence to support the action of the Assessing Officer making addition u/s. 69C of the Act on account of alleged part payment of salary in cash to said two persons. Therefore, sole grievance of assessee is allowed and Assessing Officer is directed to delete the addition. 8. In the result, the appeal of the assessee is allowed. 80. Similar view is taken by the Co-ordinate Bench of ITAT, Jaipur in the case of Virender Singh Ratnawat in ITA No. 179-181/JP/2022. 81. It is further seen that the assessee before Ld. CIT(A), has categorically contended that the evidences so collected are without following the procedure laid down in section 65 of the Indian Evidence Act. The assessee also placed reliance on the judgment of Hon'ble Supreme Court in the case of Anvar P.V vs P.K. Basheer & Ors (2014) 10 SSC 473 wherein the Hon'ble Supreme Court has held that "where addition is made on the basis of electronic record like Excel Sheet, WhatsApp chat etc, conditi....
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....d the following conditions are satisfied: (i) There must be a certificate which identifies the electronic record containing the statement (ii) The certificate must describe the manner in which the electronic record was produced (iii) The certificate must furnish the particulars of the device involved in the production of that record; (iv) The certificate must deal with the applicable conditions mentioned under section 65B(2) of the Evidence Act (v) The certificate must be signed by a person occupying a responsible official position in relation to the operation of the relevant device 16. It is further clarified that the person need only to state in the certificate that the same is to the best of his knowledge and belief. Most Importantly, such a certificate must accompany the electronic record like computer printout, Compact Disc (CD), Video Compact Disc (VCD), pen drive, etc., pertaining to which a statement is sought to be given in evidence, when the same is produced in evidence. All these safeguards are taken to ensure the source and authenticity, which are the two hallmarks pertaining to electronic record sought to be used as evidence. Electronic records being ....
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....he third party document and the statements of various persons. The legal provision relating to presumption u/s 132(4A) is applicable to the person from whose possession or control the incriminating material is found & seized. Based on the incriminating material found from third party but not belonging to the appellant, this presumption will not be applicable unless corroborated by other evidence. Presumption under section 132(4A) is only against the person in whose possession the search material is found and not against any other person. In the case of Asst. CIT v Kishore Lal Balwani Rai [2007] 17 SOT 380 (Chd.), the coordinate bench of ITAT, Chandigarh held that though the diary seized enable the revenue to presume that its contents are true, such presumptions is available only against the person to whom it belongs and this is a rebuttable Presumption. 84. It is a well settled legal position that a non-speaking document without any corroborative documentary evidence on record and findings that such document has materialized into transaction giving rise to the income of the assessee had not been disclosed to the department by such assessee has to be disregarded for the purpose of ....
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.... and CO filed by the assessee are identical as were taken in earlier assessment years thus these are taken first for consideration. 91. From the perusal of the assessment order, it is seen that an addition of INR 9,60,00,000/- was made by holding the same as accommodation entries u/s 68 of the Act received during the year from two lender companies tabulated at page 79 of the assessment order. The AO further observed that the assessee had paid interest of INR 46,20,853/- on the entire loan amount which was also disallowed. Besides this, an addition of INR 4,35,000/- was made on account of alleged commission @ 0.25% on the loans received of INR 9,60,00,000/- and repayment of INR 7,80,00,000/- made by holding the same as unexplained transactions. 92. The facts and circumstances existed in the year under appeal and the observations and allegations made by the AO while making the additions/disallowance are the same, as were made in the assessment order passed for AY 2013-14. Further, Ld. CIT (A) also made similar observation as were made in AY 2013-14 while deleting the additions/disallowances. 93. As there is no change in the circumstances, which fact is admitted by both the parties....
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....in the circumstances and in law, the learned CIT (A) has erred in initiating penalty proceedings u/s 271AAB(1A) of the Act in respect of enhancement of Rs. 35,00,000/- u/s 69A of the Act. The AO may be directed to not to initiate any such penalty proceedings. 8. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal. 97. Ground No. 1 is with respect to disallowance of claim of education cess of INR 1,98,692/- u/s 40(a)(ii) of the Act. It is seen that Ld.CIT (A) has dismissed the claim of the assessee by relying upon the judgement of Hon'ble Supreme Court in the case of Sesa Goa Ltd. vs Joint Commissioner of Income Tax reported in 155 taxmann.com 342 (SC) wherein the Hon'ble Supreme Court has held that "education and Health Cess cannot be allowed as deduction while computing the income under head business or profession". The Hon'ble apex Court further observed that the amendment made by Finance Act, 2022 is retrospective in nature. 98. In view of the above, we find no infirmity in the order of Ld.CIT (A) in confirming the disallowance of expenses claimed towards Educa....
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....he income computed after giving effect to the order of the Tribunal. This ground of appeal is partly allowed. 105. Ground of appeal No. 6 & 7 are regarding the initiation of penalty proceedings u/s 274 r.w.s. 271AAC and 271AAB(1A) of the Act which is premature at this stage and thus dismissed. 106. In the result, appeal of the assessee is partly allowed. 107. In the result, appeal of the Revenue in ITA No. 2061/Del/2024 and C.O. No. 90/Del/2025 of the assessee are dismissed and appeal of the assessee in ITA Nos. 1455/Del/2024 is partly allowed. ITA No. 2062/Del/2024 (Revenue Appeal) CO No. -91/Del/2024 and ITA No. 1456/Del/2024 (Assessee's Appeal) (AY 2021-22) 108. These are two cross appeals filed by the assessee and revenue and one cross objection filed by the assessee. Since the issues raised in revenue's appeal and CO filed by the assessee are identical as were taken in earlier assessment years thus these are taken first for consideration. 109. From the perusal of the assessment order, it is seen that an addition of INR 21,25,00,00,000/- was made by holding the same as accommodation entries u/s 68 of the Act received during the year fro....
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....nces and in law, the learned CIT (A) has erred in initiating penalty proceedings u/s 271AAB(1A) of the Act in respect of enhancement of Rs. 1,50,00,000/- u/s 69A of the Act. The AO may be directed to not to initiate any such penalty proceedings. 5. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal." 115. In Ground of appeal No. 1, assessee has challenged the enhancement of income of the assessee by Rs. 1,50,00,000/- by ld. CIT (A) based on WhatsApp chats found in the mobile phone of Shri Purushottam Bhageria, Managing Director of the company as unexplained money of the assessee company u/s 69A of the Act. 116. The facts and circumstances existed in the year under appeal and the observations and allegations made by Ld. IT(A) while enhancing the income of the assessee are the same, as were made in the appellate order for AY 2019-20 in ITA No. 3988/Del/2024. 117. As there is no change in the circumstances, which fact is admitted by both the parties during the course of hearing therefore, by following the observations made by us while deleting the additio....