TaxTMI 
TaxTMI 
2025 (11) TMI 1597
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.... rate of 2%, whereas the assessee by way of Cross Objection has challenged the legality of the order passed u/s 147/143(3) of the Act vide ground no.1 to 4, whereas from ground no.5 to 7 the assessee has supported the order of learned CIT (A) deleting the addition on merit. 03. First, we will take the Revenue's appeal, challenging the deletion of addition on merits as well as the ground no.5 and 6 raised by the assessee supporting the deletion of addition by the learned CIT (A). 04. At the outset, we observe that there is a delay in filing the appeal by 46 days by the Revenue, for which condonation petition was filed. After perusing the contents of the condonation petition, we are of the view that the delay is for bonafide and genuine reasons and therefore condoned by admitting the appeal for adjudication. 05. The facts in brief are that the assessee filed the return of income on 26.07.2016, declaring total income at Rs. 9,78,820/-, which was processed u/s 143(1) of the Act on 30.08.2016 accepting the returned of income. Subsequently, the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148A(b) of the Act, by passing the order u/s 148A(d) of the A....
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....o.15,16,17 and 18 of the assessment order. The learned AO in Para no.6.3 of the assessment order noted that the documents recovered from Uma Shankar Kasera Contained the name of the Rajesh Kumar Kedia in many places and also name of East India then concluded that both the entities were involved in advancing cash loans. Thereafter, the learned AO after extracting the materials seized on page no.21,22,23, noted that the assessee has advanced money to the tune of Rs. 8,80,00,000/-, which is unexplained within the meaning of section 69A of the Income-tax Act, 1961 (the Act) and after adding interest at the rate of 7%, which comes to Rs. 61,60,000/- a total addition of Rs. 9,41,60,000/- was made. At the same time, the learned AO also added brokerage at the rate of 2% which comes to Rs. 17,60,000/- as unexplained expenditure in the assessment framed u/s 147/143(3) of the Act dated 06.09.2023. 07. In the appellate proceedings, the learned CIT (A) deleted the addition after taking into consideration their replies, contentions and arguments of the assessee by observing and holding as under: - "I find that the grounds for making additions u/s 69A is the statement of Umashankar Ka....
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....y the assessee that addition cannot be made on the basis of dumb documents. Reference can be made to the following few judgements: - The case of Common Cause Vs. Union of India - 30 ITJ 197 (SC) may be citedwherein it was held as under:- ...................... In the case of V.C. Shukla (SC) it was held as under:- ..................... In the case of Commissioner of Income Tax (Central-II) Vs. D.K. Gupta [2008] 174 TAXMAN 476 (DELHI) ....... In the case of Ashwani Kumar Vs. ITO - 1999 (39) ITD 183 Delhi - ITAT ............ In CIT Vs. S M Agarwal (2007) 293 ITR 43 (Del) it was held that......... In the case of Ushakant N Patel vs CIT (2006) 6 ITJ 312 (Gujrat HC) ............................... In the case of ACIT Vs. Satyapal Wassan (2007) 295 ITR (AT) 352 (Jabalpur).......................... On going through the copy of report sent to the assessee I find that similar assertions are also made in the report relating to assessee. Therefore, the issue is covered bythe judgement of the High Court which is binding. The addition thus made on the basis of dumb papers seized from Sanwaria and ....
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....es or thing are found during the search. It is to be noted that evidentiary value could have been provided to the dumb papers, the statement of the finance brokers should have been recorded relating to the transactions with the assessee and such statements should have been confronted to the assessee to give sanctity that these transactions had actually being taken place. It is evident that no such exercise has been carried out by the AO before making additions u/s. 69A of the Act. It was necessary when the assessee has denied that there are any transactions outside the books of account. In this regard, the decision of Hon'ble Allahabad High Court in CIT vs Shadi Ram Ganga Prasad, SP Kanodia and Smt. Premlatha Kanodia [2011] 9 Taxmann.com 193 (Allahabad) can be referred where it has been held that the loose papers found from the possession of a person during the search can be used to raise a presumption against the said person only. The Hon'ble High Court also held that, contents of the said loose sheets cannot be held against the parties whose names appear therein, unless the person from whose possession it was recovered admits in his statement that the entries in the loos....
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....ct that they were involved in arranging the cash loans between the borrowers and lenders by charging commission for which Rukas were entered into and handed over to the lenders which are a conformations qua the loans given and a guarantee for repayment of the said loans. The learned DR therefore prayed that the order passed by the learned CIT (A) giving the observations that the brokers having not named the assessee anywhere as lender or borrower and that there being no mention of period of the transactions, the observations were completely wrong and against the facts on record. Therefore, the order of learned CIT (A) may be reversed and order of the learned AO may be restored. 09. On the other hand, the learned Authorised Representative submitted that there are no evidences to show that assessee had ever made any investments by way of cash loans. The learned Authorised Representative submitted that it was the dissemination report of the investigation wing alone on the basis of which the department has concluded that the assessee had lent money to number of parties. The learned Authorised Representative stated that it is tried law that assessee cannot ask to prove the negative. ....
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....he assessee as lender of cash. We also note that no rukas were ever found and seized which corroborate the money lending by the assessee to various borrowers. Therefore, in absence of any corroborating evidences, the addition cannot be made on the basis of surmises and conjunctures. The case of the assessee is squarely covered by the decision ACIT Vs. Subhas Kumar Kedia in ITA No.of 1677/KOL/2024 vide order dated 17.04.2025, wherein similar issue has been decided in favour of the assessee by observing and holding as under:- "10. So far as merits of the case are concerned, we note that the assessee was stated to be the borrower of the money from various parties/entities aggregating to Rs. 75.60 crores. We note that the AO has invoked the provisions of Section 69A of the Act while making the addition which is applicable to the assessee which is found to be the owner of money, bullion, jewellery or other valuable article and the assessee could not offer any explanation about the sources thereof. In the present case, the assessee is stated to be a borrower of cash loans from various parties and therefore, could not be said to be owner of money, bullion, jewellery or other valu....
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.... "This report may please be treated as indicative and not exhaustive. If any further clarification or documents, in this regard are required, it is requested to contact the Olo the ADIT(Inv) Unit 2-(4) Kolkata at e-mail id. Kolkata. [email protected]. 7. This information requires further verification at your end. Thereafter necessary action, as applicable may be taken as per Income tax Act." 012. Therefore, we find that the learned CIT (A) has rightly deleted the addition on the ground that there was no material before the learned AO to make the addition and addition was made only on the basis of surmises and junctures. Accordingly, the appeal of the revenue is dismissed and the ground no.6 and 7 of the Cross Objections are allowed. CO No. 25/KOL/2025 013. The issue raised in ground no.1 to 4 is a legal issue and is against the invalid reopening of assessment by the learned AO u/s 147 of the Act. 014. The facts were already discussed and narrated in detail while disposing the Revenue's appeal and ground no.6 and 7 of the Cross Objection of the assessee which are on merit. 015. After hearing the rival contentions and perusing the materials available on ....
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....ting to A.Y. 2015-16. The case of the assessee is squarely covered by the decision of Calcutta High Court in case of Girdhar Gopal Dalmia, wherein Hon'ble Court had held as under: - "8. From the above information, it is not clear as to how reopening of the assessment could have been resorted to. The report is as vague as possible as it states that possible financial transactions could be deduced and decoded from hard copies obtained from DDIT. Further. it says there is potential cash borrowed from various lenders and the probable names of the group have been mentioned and set out without any particulars. Assuming that material was available as annexures to the said report of the DDIT, such documents should have been made known to the assessee so as to enable them to give an effective reply. 9. As could be seen from the communication dated 21st January, 2022 referred theve ord more than one place the authority least oned the word "potential" and also the Mrk "probable". The Hon'ble Supreme Court in Lucknow Development Authority Versus Mika Gupta A.I.R. 1994 SC 787 considered the meaning of the word "potential". It was pointed out that the word "pot....
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.... "If such was the explanation given by the assessee, it was the duty of the Assessing Officer to consider the explanation and give reasons as to why it is not acceptable. However, the Assessing Officer only states that the assessee has failed to substantiate the alleged amount of escaped income of Rs. 25,00,000/- is a genuine transaction. The order passed under Section 148A(d) is a nonspeaking order, outcome of total non-application of mind and it also reveals that the Assessing Officer had no material to controvert the explanation offered by the assessee that Brightmoon Supply Pvt. Ltd. is a NBFC and loan was taken during the assessment year 2019-20 and repaid along with interest in the same year and this was substantiated by the assessee by producing the ledger copy of a loan account. Thus, we find it is not a case where the power under Section 148 of the Act could have been invoked by the assessing officer. Accordingly, the appeal is allowed." 017. The case of the assessee also find support from the decision of Bomay High Courtin case of Mohanlal Champalal Jain vs. ITO reported in [2019] 102 taxmann.com 293 (Bombay) under similar circumstances has h....