TaxTMI 
TaxTMI 
2025 (7) TMI 1355
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....ief are that the assessee filed its return of income on 19.08.2013 declaring total income at nil. A search action u/s. 132 of the Act was conducted in the case of Primarc Group of Companies and other associate entities on 05.01.2021 and assessee was also covered in the said search as being a related entity of Primarc Group. A notice u/s. 153A of the Act was issued on 25.03.2022 to which no compliance was made by the assessee. Thereafter, notice u/s. 142(1) along with questionnaire was issued to the assessee which was replied by the assessee by filing evidences/information as called for by the Assessing Officer. During the proceedings u/s. 153A, the Assessing Officer noted that the assessee has received unsecured loans in the books of account of the assessee which could not be explained and accordingly, treated the said loans as unexplained cash credit u/s. 68 of the Act and added the same to the income of the assessee. Similarly, the Assessing Officer also made addition @ 0.5% of the total amount of unsecured loans towards commission for arranging the said loans and added the same in the income of the assessee. The Assessing Officer also calculated the interest @ 9% on the said loa....
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..... Completed assessment can be only interfered with by the AO while making the assessment u/s. 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in course of search which were not produced or not already disclosed or made known in the course of original assessment. While delivering the judgment; the Hon'ble Delhi High Court followed the judgment of the Bombay High Court in CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015) 374 ITR 645. These two judgments have been followed by various High Courts and Tribunals on this issue. The position as on today is that in respect of completed assessment any addition can be made under proceedings u/s. 153A only if any incriminating documents are found. 5.2 Issue relating to additions being based on incriminating evidences found during search, has been examined by the Hon'ble Supreme Court. Several SLPs pending in the Hon'ble Supreme Court were heard together with the lead case in Pr. CIT, Central-3 vs. Abhisar Buildwell Pvt. Ltd., Civil Appeal No.6580 of 2021, order dated 24-04-2023. While deciding thi....
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....Audit Report/Return of Income or on the basis of information gathered during post search enquiries. Hence, respectfully following the judgments/decisions of various High Courts and the Tribunals, including those of the jurisdictional High Court and ITAT and the judgement of the Hon'ble Supreme Court in PCIT, Central-3 vs. Abhisar Buildwell Pvt. Ltd., Civil Appeal No.6580 of 2021, order dated 24-04-2023, it is held that the disallowances/additions made are not sustainable. 5.4 The appellant has further stated that the A.O. has unlawfully invoked jurisdiction for the AY 2013- 14 u/s. 153A of the IT Act, 1961. The additional power given to the Assessing Officer to re-open beyond six assessment years upto ten assessment years (7th to 10th AY's) were conferred by the Finance Act, 2017 w.e.f. 01.04.2017. However, this power can be exercised only on satisfaction of the essential condition precedent as specified in the fourth proviso to section 153A of the Act. Therefore, the invocation of jurisdiction under section 153A of the Act in respect of seventh to tenth assessment years were not automatic as is in the case of six assessment years preceding the year of search. If the AO wa....
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....unlawfully made addition on account of loan/advance which is infact in the nature of liability. 5.8 The Parliament by specifying the jurisdictional fact as undisclosed asset valued Rs. 50 Lakhs or more, has impliedly excluded other items of income viz., liabilities/credit, unexplained expenditure etc. A reading of the fourth proviso to section 153A of the Act and Explanation (2) to fourth proviso to section 153A of the Act which defines 'Asset' for the purpose of fourth proviso to section 153A of the Act, clarify the intention of the Parliament to permit the AO to enlarge the assessment u/s. 153A after search u/s. 132 of the Act beyond six assessment years to ten assessment years preceding the searched assessment year, provided the AO has in his possession the essential jurisdictional fact i.e. "undisclosed/unaccounted asset" valued Rs 50 lakhs or more of the assessee discovered during search pertaining to 7th to 10th Assessment Year preceding the searched assessment year. Since the Parliament has used the expression 'income in the form of asset' and the definition of asset has been spelled out in the fourth proviso, this itself necessarily implies that the liability/items....
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....to 4th proviso to Section 153A of the Act, if any, found during the course of search with the assessee/group concern is absent, nor there is any reference to any incriminating material referring to ownership of such undisclosed assets by assessee and only there is a reference of the credits received by the assessee/s which are duly disclosed in the regular books of accounts are part of the audited financial statements, issuing of notice u/s 153A of the Act then invoking the 4th proviso to Section 153A of the Act, is invalid and bad in law and beyond jurisdiction and thus on this ground itself, the assessment order passed u/s 153A of the Act, which is the subject matter of the instant appeals before us has rightly been quashed by the ld. CIT(A) and which thus does not call for any interference." 5.10 Therefore in view of the above facts and discussion made herein above and relying on the Judicial decisions of Hon'ble ITAT, Guwahati in the case of Goldstone Cements (supra) and the decision of Hon'ble ITAT, Kolkata in the case of M/s. Followel Engineering Ltd. (supra), I am of the opinion that no jurisdictional fact was not in the possession of A.O. when he assumed jurisdicti....
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....s initiated u/s. 153A for the instant year i.e. AY 2013-14 on the ground that this being the 8th assessment year from the searched assessment year and the reopening has not been made in terms of explanation (1) of section 153A beyond six years but upto 10th assessment year. The Assessing Officer has jurisdiction to issue such notice if he has in his possession the books of accounts or other documents/evidences which revealed that the income represented in the form of asset which has escaped assessment amount to or is likely to the amount to Rs. 50 lakh or more in the relevant assessment year or in aggregate in the relevant assessment years. The ld. AR also submitted that the addition could be made on the basis of incriminating searched material found during the course of search and not otherwise as the year under consideration is an unabated assessment year and has already attained finality. The Ld. AR further submitted that assessee was not provided any opportunity to cross examine Mr. Mantosh Kumar Yadav and Mr. Pritam Ghosh whose statements were primarily relied on for making the additions against the assessee. The Ld. AR while submitting that the assessee raised Rs. 30.00,000/-....
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....y be upheld by dismissing the appeal of the revenue. 5. The Ld. DR vehemently submitted that the addition made by the Assessing Officer on account of unsecured loans taken, bogus commission given for arranging unsecured loans and cash interest paid by the assessee were made on the basis of information gathered during the course of search on the assessee. The Ld. DR referred to the statement recorded of Mr. Mantosh Kumar Yadav and Mr. Pritam Ghosh, which were recorded on 03.02.2015 and both the persons admitted the fact that assessee had availed bogus unsecured loans from the two entities which was further corroborated during search action on the assessee though the Assessing Officer has not referred to any specific incriminating material found and seized during the course of search. The Ld. DR pointed out to the very widespread racket unearthed whereby the money is routed through shell companies into the books of account of various beneficiaries. The Ld. DR submitted that assessee is one of the beneficiaries of unsecured loans by routing its own money, therefore, the order passed by the Ld. CIT(A) is bad in law and may be reversed. 6. After hearing the rival submissions and p....
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....handrashekhar Narsangji (supra), wherein the Hon'ble High Court has held that where the Assessing Officer has duly accepted the repayment of loan to be genuine no addition can be made in the year in which the said money was raised by the assessee. Therefore, on this count also the order framed by the Assessing Officer is incorrect and cannot be sustained. 7. Further, the impugned assessment year being the 8th assessment year from the searched year and, therefore, the same falls beyond the 6th assessment year but before the 10th assessment year from the searched year and, therefore, the provisions of section 153A can only be invoked subject to fulfillment of certain conditions as envisaged in 4th proviso to section 153A and are extracted below: a) the AO has in his possession books of accounts or other documents or evidence which reveal that the income, represented in the form of asset has escaped assessment and which amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years; b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; ....