TaxTMI 
TaxTMI 
2025 (8) TMI 874
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....tion 132 was carried out in the case of Bafna Panchal Groups on 07-01-2014 wherein the assessee also was covered. Pursuant to the search and in response to notice issued u/s. 153C of the Act, the assessee filed its Returns of Income for all the assessment years. Assessment under section 153C r.w.s. 143(3) were framed after making addition on account unsecured loan treated as unexplained cash credit under section 68 of the Act and unaccounted sales. The additions made by Assessing Officer are summarized as under: Particulars Asst. Yr. 2013-14 Asst. Yr. 2014-15 Returned Income u/s 153C of the Act 13,030 2,31,810 Addition Unexplained Cash Credit u/s 68 (protective basis) 3,57,00,000 1,38,00,000 Disallowance of Interest Income 33,86,650 63,61,427 Undisclosed sales receipt 2,31,01,139 2,43,67,849 Total Assessed Income 6,22,00,819 4,45,48,724 2.1. The l d AO in the assessment orders made additions u/s.68 of the Act on Protective basis subject to the finalization of the addition on account of unrecorded sales receipts to the extent of unsecured loans. 3. Aggrieved against the assessment orders the assessee ....
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....ier Assessment Years while estimating on-money in the case of the Appellant. Considering these facts, on money estimation made by the AO in both the Assessment Years is correct subject to following observations in view of order passed by the Hon'ble Settlement Commission in Group cases. 4.21 It is observed that various group companies of the appellant has preferred an application wherein they have made disclosure considering average Net Profit @ 16% for projects and while applying such net profit, they have considered both disclosed sales and undisclosed sale found during the course of search. It is observed that disclosure is arrived at after reducing net profit before interest & remuneration has shown in audited annual accounts. The above method is also accepted by Hon'ble Settlement Commission in its order referred supra wherein in majority cases, it is held that average net profit is 17.5% as against 16% considered by the applicants. It is observed that order under Section 245D (4) was passed in four group cases being M/s Param Enterprisies, M/s Autocare Services, M/s Sumangal Enterprise and M/s Dharnidhar Realty on 5th September, 2017 wherein on consistent bas....
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....n the case of CIT vs. G.K. Contractor (2009) 19 DTR 305 (Raj.). 4.23 It is also observed that as I have estimated net profit in both the assessment years, separate addition of interest expenditure as confirmed in A.Y.2013-14 and 2014-15 for unsecured loan taken from M/s Samkit Finance Pvt. Limited cannot be made. In the nutshell, entire addition made by the AO for estimating undisclosed income, addition u/s 68 of the Act made on protective basis and interest paid on unsecured loans made in both the assessment years are deleted. The AO is directed to make addition on account of low net profit for Rs. 46,26,426/- in A.Y. 2013-14 and Rs. 53,60,894/- in A.Y. 2014-15. Thus, related grounds of appeal are partly allowed. ... ... ... 4.19 Considering the facts discussed herein above and relying upon the decisions referred supra, it is held that the AO was not justified in making addition u/s 68 of the Act and interest thereupon (except interest of Rs. 3,01,065 in A.Y. 2013-14 and Rs. 3,33,580 in A.Y. 2014-15 being payment made to M/s Samkit Finance Pvt. Ltd), as discussed herein above. 3.1. Thus the Ld CIT[A] directed the AO make addition on account of low net....
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....before the Hon'ble ITAT. This is a legal ground and therefore as per the decision of Hon'ble Supreme Court in the case of National Thermal Power (229 ITR 383) it can be raised before the Hon'ble ITAT. 1. Both the lower authorities erred in law and on facts in framing assessment under section 153C r.w.s. 143(3) of the Act ignoring fact that there is no material belonging to assessee was found at the premises of the searched person and accordingly jurisdiction under Section 153C has been wrongly assumed by Assessing Officer. 2. Both the lower authorities erred in law and on facts in framing assessment under section 153C r.w.s. 143(3) of the Act without recording proper satisfaction and accordingly assessment is required to be quashed. It be so held now. 4.2. The Grounds of Appeal raised by the Revenue in IT(SS)A No. 87/Ahd/2018 for Asst. Year 2013-14 reads as under: "(1) On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in law and on facts in deleting the protective addition of Rs. 3,57,00,000/- made on account of unexplained cash credits. (2) On the facts and circumstances of the case and in law, the Ld.....
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....re relatable to other group concerns being M/s.Shalibhadra Developers, M/s.Dharnindhar Reality, M/s. Sumangal Enterprise, etc hence such loose papers and modus operandi cannot have any locus standi in present case. Similarly, while making addition u/s.68 of the Act, the Ld AO has referred to loose papers pertaining to other concerns to prove that loan taken by assessee is bogus but such loose papers nowhere prove that similar cash payments are made by assessee against loan obtained by it. It is settled legal law that loose papers found during the course of search pertains to entities to whom it relates and anything emanating from such loose paper cannot have impact on other transactions carried out by other entities. 7.1. The Ld AO has referred to statement of Shri Sanjay Doshi and scanned loose papers at page 14 to 15 of assessment order but said statement was with reference to loan taken from M/s. Sampda Chemical Limited and such statement has no reference with parties from whom assessee has taken loan. The AO himself has stated that these entries are pertaining to M/s Shalibhadra Developers. Similarly statement of Shri Mahendra Kankaria is with reference to transactions carri....
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....red to any specific statement of such party which would prove that the assessee has obtained accommodative entries, whereas the assessee has discharged its onus by submitting evidences as envisaged under Section 68 of the Act. 7.4. Co-ordinate Bench of this Tribunal in the case of M/s. Heaven Associates [cited supra] deleted the additions made u/s.68 by observing as follows: "... ... 38. We have heard both the parties. We have noted that the Id.CIT(A) while deleting the addition on account of unsecured loans, has recorded a finding of the fact that no incriminating material relating to the unsecured loans was found during the course of search. The entire addition was based on investigation made by the AO, in which the concerned parties had not responded or were not found to have existed, As noted above by us also, as per the Revenue's inquiry and investigation, it was unaccounted sale receipts/on money on sale of flats which was routed back into the group-companies including the assessee by way of accommodation entries of unsecured loans from sham entities. The issue of unaccounted sales has been adjudicated first by us and we have held no merit in the addi....
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....d by the assessee in his books of accounts, based on net profit rate disclosed by other entities by observing as follows: "... 43. We are not agreement with the Ld.CIT(A) for estimating the net profit of the assessee by application of net profit rate of 17.5% to the turnover disclosed by the assessee in his books of accounts, based on net profit rate disclosed by other entities in the group to the Settlement Commission. An estimated net profit rate was applicable only in the circumstances where books of accounts of the assessee were found to be not reliable and rejected by the Department. In the present case, both the Ld.CIT(A) and even ITAT have found no infirmity in the books of accounts of the assessee. All additions made by the AO on account of unsecured loans or unaccounted sale consideration have been deleted both by the CIT(A), and his order has been upheld by us above in the earlier part of this order. Therefore, no infirmity found in the books of accounts of the assessee. In the absence of any infirmity there is no reason to reject book results and estimate net profit rate. Accordingly, net profit applied at the rate of 17.5% of the turnover disclosed in the books....
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.... having taken the extreme action of invading the privacy of the assessee, searched its premises and found nothing, there remains no scope thereafter of presumption of any sort. 30. As for the document found during search, we find merit in the finding of the Ld.CIT(A) that the assesses explanation that it related to quotation of lifts proposed to be purchased by it appears more plausible. As noted above by us, this finding of the Ld.CIT(A) in the preceding year was not challenged by the Revenue before us. Even otherwise, as rightly pointed out by the Ld.CIT(A), the documents mentioned '0.7 m/'s, 1 m/s' as also original offer, 1st, 2nd and final revised offers, which lend more credence to the assesses explanation that 0.7 m/s and 1m/s' represented speed of lifts and different revised offers related to different quotations for the lifts, as opposed to the AO who ignored these details and read the document in part only and found it as relating to the sale price of the units sold by the assessee. The assessee's explanation, we agree with the Ld.CIT(A), is more plausible than that the AO, and for the said reasons, we agree with the Ld.CIT(A) that the document....