TaxTMI 
TaxTMI 
2025 (12) TMI 1763
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....mmon issue raised by the assessee in its appeals in ITA Nos.2250 to 2253/Del/2017 for the assessment years 2008-09 to 2011-12 is as regards the incriminating material being not the basis of assessment and, assessments are unabated and hence, the assessment consequent to search under Section 153A is bad in law. 3. Brief facts are that a search and seizure action under Section 132 of the Act was conducted on U.K. Paints/Dhingra Group, Vatika Group, Shahi Group and Span Group on 16th January, 2013. The main subject matter of assessment orders in the case of the present assessee i.e., Orris Infrastructure Pvt.Ltd. is the issue of unaccounted interest expenditure on loans given by various lenders such as U.K. Paints, Dhingra Group, Span Group to the assessee company, business receipts and unaccounted cash expenditure (only for assessment year 2010-11). Consequent to search on Orris Infrastructure on 16th January, 2013 under Section 132 of the Act, notice under Section 153A was issued by the Assessing Officer for these six relevant assessment years from assessment year 2008-09 to 2013-14. The assessee filed returns of income in response to notices under Section 153A read with Section ....
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....unt but treated by the Assessing Officer as unaccounted, which reads as under :- Particulars of Addition made by AO AY 2008-09 AY 2009-10 AY 2010-11 AY 2011-12 Unaccounted interest expenditure 6,48,83,421 11,67,26,593 11,67,26,593 2,46,81,704 Business receipt -- 25,00,00,000 -- Unaccounted cash expenditure -- 29,59,82,000 -- Grand Total 6,48,83,421 11,67,26,593 66,27,08,593 2,46,81,704 7. The learned Counsel also drew our attention to a chart where he has tabulated the additions made by the Assessing Officer and deleted and sustained by the learned CIT(A) and the period involved, which reads as under :- Particulars Period Involved (AY) A.O. Addition (Rs. ) CIT(A) Deletion (Rs. ) CIT(A) Sustained (Rs. ) Unaccounted interest expenditure 2008-09 to 2013-14 43,28,88,657 37,37,80,797 5,91,07,860 Unaccounted cash expenditure 2008-09 to 2013-14 29,59,82,000 22,09,82,000 7,50,00,000 Forfeited advance (business receipt) 2010-11 25,00,00,000 25,00,00,000 97,88,70,657 84,47,62,797 13,41,07,860 8. Learned ....
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....05.2010) showing that the same Rs. 25 crore was later adjusted against sale of Hayatpur land. Holds that AO's treatment would result in double taxation; deletes the addition in full. Pages 37-39 Excel "DLF" worksheet (A-30) Notes that AO treated "ca" entries as cash. Assessee explained "ca" current account, and demonstrated reconciliation with ICICI current a/cs (nos. ending 5303 & 2926). CIT(A) finds this explanation plausible; accepts reconciliation for most entries (Rs. 14.60 cr). However, entries aggregating Rs. 6.90 Cr remained unmatched, which he sustains as unexplained expenditure. Pages 43-44 Excel "Deepak Gupta- 2" worksheet (A-30) CIT(A) records that the worksheet emanated from Orris's hard disk but was authored by a broker/ex-employee. Most entries are marked "cheque" and tally with ledgers. Only one entry of Rs. 60 lakh marked 'cash' could not be reconciled. CIT(A) nevertheless notes it pertains to AY 2009-10 (buy-back of 15,000 sq.ft.). THIRD PARTY MATERIAL Pages 7-8 Diaries AA-1 and AA-2 (U.K. Paints search 16.09.2011) Acknowledges that these diaries were seized from U.K. Paints, not Orris. Nonetheless,....
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....terial for the reason that all the emails relied on by the Revenue authorities were sent by lender-side persons and not authored by the assessee. They do not constitute admission by the assessee, particularly when these were not confronted to the assessee either during assessment stage or during the first appellate stage. He explained that the attached excel files are nothing more than the computation prepared by the lenders themselves and they are unsigned and unauthenticated and not part of either assessee's or the third party's statutory records. He argued that these evidences do not constitute actual payment of cash interest. The learned Counsel submitted that the Courts have consistently held that such loose papers or third-party documents are dumb documents unless independently corroborated. He relied on the decision of Hon'ble Delhi High Court in the case of CIT Vs. D.K. Gupta - (2013) 352 ITR 313 (Del), wherein it is held that loose papers/printouts not forming part of assessee's regular books and lacking independent corroboration are merely dumb documents and cannot by themselves justify additions. Learned Counsel also relied on the decision of Hon'ble ....
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....of recording a satisfaction note under Section 153C, as per the mandate of the Hon'ble Supreme Court in CIT Vs. Calcutta Knitwears - (2014) 43 taxmann.com 446 (SC) and CBDT Circular No.24/2015 dated 31st December, 2015. The Tribunal noted that in the absence of such a satisfaction note, the entire assumption of jurisdiction under Section 153C would fail. 11. In view of the above, we are of the view that additions based purely on material i.e., excel sheets, emails and statements seized from third parties i.e., U.K. Paints Group entities and not from the premises of the assessee and particularly when no incriminating material relatable to the assessee was found during the course of search under Section 132 of the Act, the jurisdiction assumed under Section 153A of the Act in these four assessment years, where assessments were completed under Section 143(3) or Section 153 of the Act, as the case may be, and there is no abated assessment, the assessment framed under Section 153A is invalid following the settled law laid down by the Hon'ble Supreme Court in the case of Abhisar Buildwell Pvt.Ltd. (supra). In terms of the above, we quash the assessments under Section 153A in t....
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....CDs have been given. Accordingly, the Assessing Officer made addition by observing as under :- "1. The assessee, M/s Orris Investment Pvt.Ltd. took ICDs from Span Group, U.K. Paints Group and Shahi Group and others during the various AYs. 2. Interest is paid at two rates of interest by the borrower, one through cheque at different and the other in material/cash. However, aggregate rate of interest charged by the assessee is found to be 36%. Further, the interest expenditure in cash/material has not been accounted in the books of accounts. Hence, it is the unaccounted expenditure of the assessee which have been met out of unexplained source of income of the assessee. It is also established that the assessee has paid delayed interest @ 36% on the interest due. In view of the discussion in the preceding paras the unaccounted interest expenditure including delayed interest/penalty earned from borrower on different ICD alongwith cash ICDs which remain totally out of books for various years is as under: Name of borrower Unaccounted interest for the AY 2008-09 Unaccounted interest for the AY 2009-10 Unaccounted interest for the AY 2010-11 Unaccoun....
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....a payment of unaccounted interest over a sustained period of time :- (i) the A.O. should compute undisclosed interest @24% on Rs. 12.50 crores from 1.12.2008 to 19.8.2009 as paid by the appellant. [AA-1/10 and AA-1/81] (ii) From 20.08.2009 till 30.11.2009 the A.O. shall compute unaccounted interest paid @12% on the loan of Rs. 20.33 crores as reduced by periodic repayments, for which evidence of regular receipt of payment by U.K. Paints P. Ltd. is available [A-1/101 (back) and AA-1/53 (back)] (iii) the notings of Sh. N Choudhary at seized diary AA-2/40 show that the appellant has paid interest @33% on the loan transaction Rs. 10 crores. However, the appellant has shown interest @12% only in its books. The remaining 21% on this loan is not accounted for. Of course, the seized documents evidencing computation of undisclosed interest on the loan are pertinent only to October 2007, whereas the loan tenure was from 2.04.2007 to 22.11.2007. As discussed earlier in this Order (at para 4.3.11), following the ratio of the judgement of jurisdictional Delhi High Court in Smt. Dayawanti v CIT in ITA 357/2015 dated 27.10.2016, and the ratio laid down by the Hon'bl....