TaxTMI 
TaxTMI 
2026 (1) TMI 247
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....d the consequent order passed u/s 147 and such action of the Ld. CIT(A) is no in accordance with the law and facts on record and in view of the facts and in the circumstances it may be held accordingly. 2. Without prejudice to Ground No. 1 above, the impugned notice u/s 148 dt. 6.9.2022 is vague and it does not confirm to the requirement of sec. 147 and 148 and in view of the facts and in the circumstances it may be held accordingly. 3. Without prejudice to Grounds No. 1 & 2 above, Ld. CIT(A) erred in not appreciating the fact that the impugned notice u/s 148 dt. 6.9.2022 was not on the basis of any incriminating material and evidence during search u/s 132)(1) on 17.9.2021 at "Agarwal Group' and as such the action of AO in such respect in issuing of such notice is bad in law and it may be held accordingly. 4. Without prejudice to Grounds No. 1 to 3 above, such notice u/s 148 was on the basis of searches conducted u/s 132(1) on 'Kasera' & 'Majee Group' on 30.11.2018 & 5.11.2020 respectively (searches were prior to 1.4.2021) and as such the amended law u/s 147 and sec. 148 with effect from 1.4.2021 could not have been applied for issue o....
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....ice to Grounds No. 6 to 10 above, the entire addition made by AO in such respect is without allowing cross examination of the third party so involved and such action of AO & CIT(A) is bad in law and it may be held accordingly. 12. Without prejudice to Grounds No. 6 to 11 above, the rate of gross profit so considered by CIT(A) has no legal basis and such action of CIT(A) is bad in law and it may be held accordingly 13. For that in view of the facts and in the circumstances, the Ld. CIT(A) erred in not appreciating that alleged sum of Rs. 8,52,00,000/- was not at all related to / pertain to appellant and such addition was wrongly made by AO without any independent. examination of material or such 3rd party and Ld. CIT(A) was unjustified in treating such sum as part of alleged undisclosed purchase although there was no such purchases as contended in Grounds No. 6 to 11 above and it may be held accordingly. 14. For that in view of the facts and in the circumstances, the Ld. AO was wholly unjustified in making addition of Rs., 1,20,95,958/- [treating the purchases made from Reeja Trading Private Ltd. as bogus purchase) merely based on the report of CGST Depart....
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.... members of the above group, the assessee was also covered in search by executing a warrant. Pursuant to the search & seizure operation, the case of the assessee was re-opened u/s 147of the Act after taking approval from the competent authority and notice u/s 148 of the Act was issued and served upon the assessee on 06.09.2022 asking the assessee to file return of income within 30 days from the receipt of the notice. On 13.10.2022 the assessee has filed return u/s 148 of the Act declaring total income same as originally filed u/s 139(1) of the Act dated 31.10.2019. Thereafter, statutory notices u/s 143(2) of the Act dated 11.11.2022 and notice u/s 142(1) of the Act dated 12/01/2023alongwith a set of questionnaire were issued and duly served upon the assessee. Finally, the assessment was completed vide order dated 28.07.2023 u/s.143(3)/147 of the Act by making various additions. 5. In first appeal, the ld. CIT(A) upheld the notice issued u/s.148 of the Act and the consequent proceedings and the assessment framed by the AO on the ground that notice was validly issued and there is no infirmity in the same. 6. Aggrieved with both the orders of the authorities below, the assessee ....
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....ng Officer to demonstrate that the information unearthed during search leads to escapement of income in the specific assessment year. The mere fact of search, in itself, is not sufficient reason to issue a notice. Failure to establish this connection would render the issuance of notice without proper approval u/s 151 as bad in law and unsustainable." [Copy of such order is enclosed at Annexure-1] iv) The AO at best could have initiated the proceedings w/s 153C for the alleged searches and alleged material evidences/ documents pertaining/relating to conducted on "Kesara Group"[on 30.11.2018) and on Anup Majee Group[on 5.11.2020] which the AO failed to issue and such addition cannot be made u/s 148 pursuant to search u/s 132(1). v) AO could not have travelled to other issues when the AO did not have any material on the basis of which the impugned 148 was initiated. vi) Deemed escapement of income without enquiry u/s 148A applied only for preceding 3 years and for travelling beyond 3 years, AO must issue notice u/s 148A which AO failed to do in this case and hence consequential proceedings and order so passed u/s 147 has become bad in law ....
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....e has been put in place which required the AO to re-open certain numbers of assessment years. The ld DR submitted the provisions of Section 148 of the Act after search are analogous to the provisions to the provision of Section 153A of the Act which was prevalent and applicable till now where the AO was required to issue notice u/s 153A of the Act for preceding six assessment years preceding the date of search irrespective of any incriminating materials. Therefore, the issue raised by the assessee has no merit and may kindly be dismissed. The written submissions filed by the learned DR Are extracted as under: In the instant case, Ld. assessee has raised two technical issues, which are discussed below: A) Challenged of re-opening of assessment: Explanation 2 to Sec148 is reproduced below: Explanation 2.-For the purpose of this section, where,- (0) "a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the 1" day of April, 2021, in the case of the assessee, or (ii) (iv) The Assessing Officer shall be deemed to have information ....
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.... provide copy of the reasons recorded in the proceedings u/s.148 of the Act and also the addition made by the AO are not arising out of the search conducted u/s.132 of the Act on the assessee, Rather the additions made were on the basis of material gathered during the course of searches on Kesara Group on 30.11.2018 and Anup Majee Group on 05.11.2020 and consequently the notice u/s.148 of the Act was itself invalid and may be quashed. We have perused the provisions under old scheme vis a vis under new scheme and find that under the new scheme of search, the AO has to issue notice u/s 148 of the Act for the number of assessment years as provided in the Act. In other words there need not be any incriminating materials and whether there is any materials warranting additions that has to be examined by the AO during proceedings u/s 147 of the Act. Therefore we do not find any merit in the contentions of the assessee that the provisions of Section 148 of the Act for search conducted on or after 1.4.2021 cannot be considered in total oblivion of the fact that no incriminating material was found with the assessee during the course of search u/s.132 of the Act and the impugned assessment wa....
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....ound to have purchased 13919.25 Metric Ton of coal from Majee Group during the financial year 2018-19 relevant to assessment year 2019-20 and, therefore, the Assessing Officer applied market rate of coal @Rs.4000/- per MT thereby calculated the unexplained expenses at Rs.5,56,77,000/-. The Assessing Officer also noted from the said documents that loan repayments in cash was Rs.3,50,00,000/-. The Assessing Officer aggregated these amounts to Rs.9,06,77,000/- as undisclosed transactions. The also noted that the amount of cash payments to the said party as per the documents seized were Rs.29,93,22,967/-, which according to the Assessing Officer was not recorded in the books of accounts and attributable to out of books purchases of coal as the assessee company has not shown any transaction with Majee Group in its books of accounts. The Assessing Officer also mentioned that the details of transportation as found from the seized books may not be complete for the entire year whereas as evident from above the assessee had made cash payments of Rs.29,93,22,967/- to the Majee Group and accordingly the said amount of payments being higher of the above two amounts, the Assessing Officer added ....
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....y him, which inter alia implicated the appellant as well. It, therefore, cannot be possible that the AO provides the complete back up of the electronic evidence to the appellant, Rather, only the relevant data concerning the appellant is required to be provided to it, as the allegation also relates to the limited amount of data. The appellant rather than availing the opportunity to inspect the seized material and the statements from the office of the AO in the course ofremand proceedings, has deliberately avoided the same and is again in a complete denial mode. Such action of the appellant is deprecated and is held to be unjustified From the material available on record, it is observed that the appellant is a manufacturer of steel products in which coal was one of the major raw materials. It is also observed that the appellant had been regularly procuring coal for its production. Accordingly, the purchase of coal by the appellant cannot be ruled out. Further, the specific details contained in the seized material is noted to clearly suggest that the Anup Majee Group, who was found to be involved in illegal coal mining, was supplying coal to the appellant. The detailed notin....
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....e been recorded during the course of investigation has not been furnished to the assessee's and the request made by some of them for cross examining of those persons was not considered. The question would be as to whether the non-compliance of the above would render the assessments bad in law. The argument of the revenue is that the assessments cannot be held to be illegal merely on the grounds that the copy of the report was not fumished as the respective assessing officers have clearly mentioned as to the nature of investigation done by the department and as the report itself states that the Investigation commenced not from the assessee's end but the individuals who dealt with these penny stocks who were targeted it is equally true invariably in all cases, the statement of the stock brokers, the entry operators or the Directors of the various penny stock companies does not directly implicate the assessee. If such being the situation, the assessee cannot be heard to say that the copy of the entire report should have been furnished to him, the person from whom the statements were recorded should have been produced for cross examination as admittedly there is nothing to implicate th....
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....lteram partem rule cannot by itself, without more lead to the conclusion that prejudice is thereby caused. Where procedural and/or substantive provisions of law embodied the principles of natural justice, their infraction per-se does not lead to invalidity of the order passed. The prejudice must be caused to the litigant, except in the case of amandatory provision of law which is conceived not only in individual interest but also in public interest. Further by referring to the decision in State of Uttar Pradesh v. Sudhir Kumar Singh [2020] SCC Online SC 847, it was held that the "prejudice" exception must be more than a mere apprehension or even a reasonable suspicion of a litigant, it should exist as a matter of fact or to be cast upon a definite inference of likelihood of prejudice flowing from the non-observance of natural justice. 58. Therefore, the assessee's have to specifically point out as to how they were prejudiced on account of non-furnishing of the investigation report in its entirety failure to produce the persons from whom the statements were recorded for being cross examined would cause prejudice to the assessee as nowhere in the report the names of the asse....
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.... appellant. On appeal, Hon'ble Tribunal observed that the entire quantity of excess stock discovered in the course of survey operation could not beregarded as unexplained income of the appellant and relying on the decision of the Hon'ble Gujrat High Court in the case of Vijay Trading Co. vs ITO (2016) 388 ITR 377 (Gujarat), it was held that only where any undisclosed purchases or undisclosed stock is discovered then it is only the profit element embedded in the transaction which can be added to the total income of the appellant. Having regard to the past history of G.P. Margin, the Hon'ble Tribunal accordingly held 10% could utmost be assessed by way of unexplained income out of the excess stock found in the course of survey. On appeal the Hon'ble Calcutta High Court upheld the order of the Hon'ble Tribunal by observing as follows: "The assessee's appeal before the Commissioner (Appeals) failed and by an order of August 25, 2014, the assessment order of March 28, 2013 was upheld. The Commissioner looked into the facts, the statements made by or on behalf of the assessee and the books of the assessee that had been looked into at the time of survey wh....
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....asis of the certificate issued by the concerned FC! official, such order is unacceptable and is set aside. The order of the Commissioner (Appeals) in such regard is restored. The additional quantum as discovered during the course of the survey operation win fasten to the assessee. However, the other aspect of the matter was dealt with by the Appellate Tribunal on a point of principle and such matter does not call for any interference. According to the Appellate Tribunal the value of the entire quantity of additional stocks that were discovered in course of the survey operation could not be regarded as the additional income of the assessee and amenable to tax. There was a specific ground taken before the Appellate Tribunal which was a legal question, as to whether the undisclosed purchase could be taken as the additional income without reference to the possible sale of the paddy when converted. The assessee refers to a judgment of the Gujarat High Court reported at 388 ITR 377. The principle enunciated in such judgment is that when undisclosed purchases of such nature are discovered, it is only the profit embedded in the transaction which can be added to the total ....
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....erusal of the sized documents it was seen that "Shakambari" and "SIPL Dipak" was written on those documents which indicates that Shakambari Group had made cash transactions with Majee Group. The assessment in this case of the assessee was done on the basis of seized documents on record. The addition on this issue was done on the basis of entries recorded on seized documents found and seized from the premises of Majee Group. (iii) As regards enquiry done by the AO, notice was issued to M/s Shakambari Ispat& Power Ltd. to submit the details of transactions with Anup Majee Group. The assessee company denied the same but could not submit any corroborative documents. I. Issue No.2-Addition towards alleged undisclosed purchases: A. It was submitted before the AO repeatedly that appellant did not have any transaction with said "Anup Majee Group" and it had no idea about the alleged documents so alleged to have been found with connected persons of "Anup Majee Group and appellant also requested to provide such alleged statement/document/evidence which AO failed to provide. B. From a perusal of the relevant part of the AO's observation and unsubstantia....
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.... that the appellant denied of such transaction and indeed requested the AO to provide the relevant material and the alleged statements of said persons including said "Anup Majee" (so relied upon by the AO) which the AO failed to provide to the appellant. Indeed even during search u/s 132(1) on appellant not a single question regarding "Anup Majee" was ever raised nor did Ld. AO attempt any examination of "Anup Majee" or his connected persons after specific denial of any knowledge of such person by appellant during such 147 proceedings. (b) Without prejudice, it can be seen that the addition so made by AO in such respect is full of infirmity and indeed the addition is merely on surmises and conjectures without any examination and/or independent verification by the AO himself and/or providing the alleged material and statement upon which the appellant had placed its reliance and AO has derived it's own biased conclusion which is mainly on conjecture and surmises. Hence, it is submitted that - (i) The AO has merely relied upon the alleged statement made by some employees and allegedly connected persons of the Majee Group which the AO himself did not examine nor c....
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.... AO to appellant and which is gross violation of principle of natural justice. Hence it can be seen that entire addition is merely on assumption, conjecture and surmises and hence liable to be deleted. (iv) AO has also referredto some alleged documents ((Mark Id: SMVD-K-6 etc.) with "Iniraj NS-LAPTOP-1\Disk Space-175 GB Tally 7.2 Data"] which the AO stated that such data was found at one "Neeraj Singh" of "Anup Majee Group" and also reference to some alleged statement of persons/employees of "Anup Majee Group" was mentioned in notices sent to appellant and consequent impugned order to derive a self-serving conclusion that appellanthas made cash transaction with "Anup Majee Group" aggregating to Rs.29,93,22,967/-. Such assumption and conclusion of Ld AO is full of flaws and such allegation and conclusion is self-serving and is illegal. It is submitted that- aa) Appellant denied of any knowledge of "Anup Majee" and hence even toproceed in the matter without corroborating the same with "Anup Majee" and his "connected person" has made entire exercise void ab-initio. ab) Without prejudice, L.d. AO merely referred to such alleged documents and/or data ....
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.... alleged documents of Neeraj Singh) and such comparison itself shows that AO has made such addition on conjecture and surmises. Apart from the aforementioned grave anomalies the addition also suffers followinggrave infirmities and hence liable to be deleted:- i) For example say for A.Y 2019-20, AO has alleged that the impugned transportation documents [so referred as SMVD-06 at page 8/67 of the said order] during F.Y 2018-19 (A.Y 2019-20) to the tune of 13,919.25 MT and translated such value to Rs.5,56,77,000/- (by applying arbitrary rate of 4000/MT] Such value derived by AO himself is on an arbitrary basis for which an arbitrary rate i.e. 4000/ MT has been taken by AO without even appreciating that rate of coal varies from 2500/MT to 17000/MT depending upon the Carbon Content, Ash Content and various other factors [indeed the average rate of appellant's purchase is 6000/MT] which AO failed to consider in any manner and such action of AO in such respect is arbitrary. This allegation and conclusion has been repeated in every year and similar manner. ii) As mentioned earlier for A.Y 2019-20, AO merely considered the alleged quantity of coal at Rs.13,919.25 MT on bas....
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.... which corroborates the fact that no such coal was even purchased / delivered to appellant. Indeed the act of AO clearly implies that AO didn't reject books of account in any manner. (vii) AO vide notice u/s 142(1) had enquired about details of coal purchased, Raw material consumed, Finished goods produced, Electricity consumed etc. Appellant duly provided all such details. On a perusal of such details AO accepted such purchase of coal, production of finished goods and consumption of electricity which reflects that there is no doubt about all such data by AO and hence AO cannot allege any coal has been purchased out of books by appellant and hence additions is bad in law. (viii) It has to be appreciated that presumption u/s 292C applies to person on whom action u/s 132 or 133A has taken place. In such a case the presumption of such alleged material/statement can be considered and invoked as per provisions of sec. 292C only upon "Anup Majee Group" and not to any other. It may be treated as "information" for purpose of reopening u/s 148 but the AO needs to bring corroborative incriminating evidence on record which AO failed to and hence reliance on such alleged mate....
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....9,93,22,967/- was rightly added towards unrecorded coal purchases from Majee Group. Ld.CIT-DR therefore prayed that the order of the ld.CIT(A) may kindly be reversed as the same is contrary to the facts on records and the conclusion is not based upon the documents seized during the course of search on the third party though the Assessing Officer has not carried out any further enquiry nor any opportunity of cross examination was allowed to the assessee on this issue. 15. After hearing the rival contentions of the parties and perusing the material available on record, we find that the basis of the addition made by the Assessing Officer was the documents seized as SMVD-01 to SMVD-18 from the Majee Group during the course of search on the Majee Group on 05.11.2020 which revealed the cash payments made by the assessee to Majee Group. The Assessing Officer calculated the quantity of coal purchases at 13919.25 MT from Majee Group and after applying estimated rate of coal @Rs. 4000/- per MT computed the unexplained purchases at Rs.5,56,77,000/-. The Assessing Officer also noted that the assessee has repaid certain cash loans amounting to Rs.3,50,00,000/-. The AO aggregated both these a....
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....t have used for manufacturing plant but no evidence to that effect was brought on records. We note that as the accounts of the assessee have not been disturbed and the manufacturing calculation of the assessee as disclosed in the audit report had not been disturbed and doubted by the ld. AO. Obviously, it cannot be assumed that the assessee has made any unaccounted purchases from the Majee Group. Further, for the purposes of making any addition u/s 69C of the Act something should have been found to show that the assessee had incurred unaccounted expenditure by way of purchase of coal from Majee group. In the present case, what has been found is certain bills/ receipts in the search of the Majee Group. The assessee has categorically denied such coal purchases from the Majee group. The concerned person of Majhi Group was not examined by the AO nor the assessee was given cross-examination of the said person. We also note that the AO has also not conducted any enquiry on the basis of bills and documents found during searh on Majee group. The so-called bills and documents found in the course of search on Majee group are not supported with other corroborating evidences These documents wh....
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.... u/s 144 of the Act, the assessee has to be given an opportunity of hearing in respect of any material gathered on the basis of enquiry u/s 142(2) of the Act or any audit under sub section 2A of the Act, which are proposed to be relied for the purpose of assessment. However, in the present case, we note that the material gathered by the ld. AO during the course of enquiry were never confronted to the assessee thereby violating the mandate of provisions of Section 142(2) and 142(3) of the Act as the information gathered at the back of the assessee was used in framing the assessment against the assessee without providing any opportunity to the assessee. The case of the assessee find support from the decision of the co-ordinate Bench in case of M/s SPML Infra Ltd. Vs DCIT ITA No. 1228/KOL/2018, vide order dated 17.01.2020, wherein it has been held as under:- ""14. To conclude: We note that none of the statements were recorded by the assessing officer of the assessee company, and no opportunity for cross examination has been provided to the assessee company. The mandate of law to conduct enquiry by the Assessing Officer on due information coming to him to verify authenticity o....
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....and others. It was held that statement recorded u/s 132(4) of the Act do not by these constitute incriminating material and copy of the statement together that opportunity to cross-examine the deponent has to be provided to the assessee. The Hon'ble court held that if the statement is retracted or if cross examination is not provided the statement has to be discarded, wherein it is held as under:- "Statements recorded u/s 132 (4) do not by themselves constitute incriminating material. A copy of the statement together with the opportunity to cross-examine the deponent has to provided to the assessee. If the statement is retracted and/or if cross-examination is not provided, the statement has to be discarded. The onus of ensuring the presence of the deponent cannot be shifted to the assesses The onus is on the Revenue to ensure his presence" 18. Therefore, the addition made on the said materials/statement and without cross-examination is not sustainable in the eyes of law. Consequently, we set aside the order of ld. CIT(A) on this issue and direct the AO to delete the addition. The ground no. 6 to 12 are allowed. 19. The issue raised in Ground No.13 is against the ....
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....unt of Rs.15,10,10,712/- and estimated the income at Rs.1,20,95,958/- and added the same to the total income of the assessee. 23. In appeal, the ld. CIT(A) affirmed the order of the Assessing Officer on this issue by observing and holding as under :- Ground No.7 & Additional Ground Nos.9 to 11 These grounds are in relation to the disallowance of purchases made from Mis Reeja Trading Pvt Ltd of Rs.1,20,95,958/-, The facts as noted are that, the AO was in receipt of information from the GST Department that M/s Reeja Trading Pvt Ltd had provided bogus purchases bills to the appellant during FY 2018-19. The relevant report of the GST Department, which was confronted to the appellant, as well, is noted to be as under- "An investigation has been Initiated from the Hoors. Anti Evasion Unit, Howrah CGST &C.Ex Commissionerate in respect of of M/s Reeja Trading Pvt.Ltd( located at 10/1, Dr. Abani Dutta Road Salkia, Howrah-711108. However no company in the name and style of Ms. Reeja Trading Pvt. Ltd could be found to be existing at the registered place of business In view of the above, it seems that Mis. Reeja Trading Pvt. Ltd is a fake company having no physica....
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....s involved. In that case also, it is noted that the Hon'ble Tribunal was of the opinion that the purchases might have been made from bogus parties but the purchases themselves were not bogus. Considering such a situation, this Tribunal was of the opinion that not the entire amount of purchases but the profit margin embedded in such amount would be subjected to tax. On appeal by the Revenue, the Hon'ble High Court is noted to have upheld this finding of the Tribunal Similarly, I find that the Hon'ble Bombay High Court has also held that, only the profit element embedded in the purchases made from parties found to be bogus by Sales Tax GST Department has to be brought to tax and that the entire value of purchases cannot be disallowed, In the case of PCIT vs Mohommad Haji Adam & Co (103 taxmann.com 459). the Hon'ble High Court has held as under- "8. In the present case, as noted above, the assessee was a trader of fabrics. The A. O found three entities who were indulging in bogus billing activities. A.O. found that the purchases made by the assessee from these entities were bogus. This being a finding of fact, we have proceeded on such basis. Despite ....
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....n such transaction. The AO noted the gross profit of the assessee to be 8.01% and estimated the profit accordingly. In my considered view, the AO's action of estimating the profit at 8.01% met the ends of justice and does not call for any interference. For these reasons, these grounds stands dismissed. 24. Ld.CIT-DR, on the other hand, submitted that the addition was made on the basis of credible information in the form of report of the GST Commissioner wherein it was stated that M/s Reeja Trading Pvt. Ltd. is not existing on the address given and is also not filing return of GSTR-3B. Therefore, the assessee has obtained bogus bills from the said party without actually purchasing the goods physically. Ld. CIT-DR also stated that the ld.CIT(A) has rightly upheld the order of the Assessing Officer. Thus, it was prayed by the ld. CIT-DR that the ground raised by the assessee may be dismissed.The written submission filed by the learned. DR are extracted as under:- A. Addition as per information received from CGST (AY-2019-20): In this case, assessment was completed u/s.147 for AYs 2016-17, 2017-18, 2018-19, 2019-20 and 2020-21. Assessment for 2021-22 was comple....
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.... by us in ITA No.931/Kol/2025 shall apply mutatis mutandis to the other appeals also. 27. Now, we shall take into consideration the appeals of the revenue, wherein similar issues have been raised by the revenue in the respective appeals for the respective assessment years under consideration. However, except ITA No.1541/Kol/2025 (AY:2018-2019), all the other appeals of the revenue have been filed belatedly by the following days :- ITA No. Assessment Year No. of Delay 1436/Kol/25 2016-2017 02 days 1515/Kol/25 2017-2018 14 days 1560/Kol/25 2019-2020 47 days 1561/Kol/25 2020-2021 17 days 1591/Kol/25 2021-2022 18 days 28. Considering the submissions of the ld.CIT-DR and the facts and circumstances of the case, we condone the respective delays in filing the appeals by the revenue for respective assessment years under consideration and the appeals of the revenue are admitted for hearing along with other appeals. 29. First we shall decide appeal of the revenue in ITA No.1560/Kol/2025 for A.Y.2019-2020 and findings of the same shall be applied to the other appeals. The grounds raised by the revenue in the said appeal for A.Y.20....
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....rectly implicating the assessee, as upheld in ACIT vs. Paramshakti Distributors (ITAT Kolkata). 7. Whether the Ld. CIT(A) violated the preponderance of probability principle (CIT vs. Durga Prasad More) by demanding "strict proof" instead of relying on Seized documents, Circumstantial evidence and the assessee's failure to rebut allegations. 8. The tax effect in this case (68,23,04,597/- including EC) is above the threshold prescribed in CBDT Circular No. 9/2024 dated 17/09/2024, justifying the filing of this appeal. 9. The department craves the right to add, alter, amend OR withdraw any ground of appeal before OR at the time of hearing. 30. Ground No.1 is against the order of the ld.CIT(A) restricting the addition to the profit margin of 8.01% on undisclosed purchases from Majee Group as against the addition of entire purchases by the AO. 31. We have already decided the issue in favour of the assessee while deciding the appeal of the assessee in the ground Nos.6 to 12 in ITA No.931/Kol/2025 (supra), wherein we have held that the addition made by the Assessing Officer is not sustainable in the eyes of law. Therefore, this ground of revenue stands....
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....essing Officer also charged interest on the said amount at the rate of 7% on the loans and added Rs.3,41,95,000/- to the income of the assessee under the provisions of Section 69C of the Act. 35. In appeal, the ld.CIT(A) deleted the additions after taking into account the contentions and submissions of the assessee by observing and holding as under :- Ground No. 7 & Additional Ground No. 12 to 24 These grounds relate to the addition of Rs.48,85,00,000/- made under section 69D of the Act and further addition of unexplained interest expenditure of Rs.3,41,95,000/-. The AO is noted to have observed that, there was a search action conducted upon one Mr. Uma Shankar Kasera and Mr. Praveen Kasera, whose statement was recorded on oath under section 132(4) of the Act dated 02.12.2018, wherein they had admitted that they were arranging cash loans in lieu of commission. It was observed that one promissory note on the letterhead of the assessee was also seized, which stated that, the appellant was in receipt of Rs.50,000/-from one Mr. Amit Agarwal. According to the AO, there was a two digit suppression and that the amount was Rs.50,00,000/- The AO further reproduced an im....
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....ence drawn by the AO was solely based on the statement of Mr. Praveen Kasera, wherein, according to AO, he had explained the contents of these seized diaries. Since on stand-alone basis, these notings are found to be incomprehensible, I deem it fit to first examine the statement of Mr. Praveen Kasera. Reading of the statement of Praveen Kasera dated 30.11.2018 which was supplied in the remand proceedings, shows that the said statement lacks any evidence or material against or in relation to the appellant. I have carefully gone through the entire statement and it is gathered that there is no averment made against the assessee in which Mr. Praveen Kumar Kasera has either stated or admitted to have transacted cash loans with the appellant. My analysis of the statement of Mr. Praveen Kumar Kasera is as under Q.No. Content in brief Entities/Persons referred to Remarks Whether relates or pertains to the assessee 6 Praveen Kumar Kasera's source of income NA He states that he earned commission income for the loans he arranged for various parties, both in cash and through banking transactions No, there is no mention or reference of the assessee in the ....
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....question and answer pertains to different persons/entities viz., purportedly entities under the control of the Kasera family. There is no mention of the name of the assessee in the said question and therefore this particular statement is irrelevant No, there is no mention or reference of the assessee in the question or the answer. 28 Certain loan transactions found in seized documents marked with ID:USK/23 (Pg.1to16 thereof) (i) Raj Kumar Bamalwa-Sarswati Devi (ii) C Jhunjhunwala-HM Singhania (iii) MKGoyal-SM Singhania (iv) GGDalmia-H M Singhania (v) Sunil Bansal-Saraswati Devi (vi) Jalan-Saraswati devi (vii) Kisna Modi-Saraswati Devi (viii) Jayant Kumar Agarwal-Kishan Jalan (ix) CS Textiles Pvt. Ltd.-saraswati Devi (x) SRMB Srijan Pvt. Ltd.-HMSinghania (xi) Pawan Kumar Gupta-Saraswati Devi (xii) Sree Bishandas iron Works-HM Singhania (xiii) GPT Group-Manoj Dalmia The question and answer pertains to different persons/entities. There is no mention of the name of the assessee in the said question and therefore this particular statement is irrelevant No, there is no mention or reference of the assessee in the question or the answer....
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....uld have featured in the answers given by Mr. Kasera in his statement, which I find to be absent. I am, therefore, in agreement with the appellant that there was no rationale basis for the Ld. AO to hold that the appellant had entered into cash based transactions through Mr. Praveen Kumar Kasera I, therefore, find that his statement does not contain anything remotely adverse or incriminating in relation to the appellant Apart from the above it is imperative to also take note of the lact that, pursuant to the directions issued by this office, the AO had made enquiries from Mr. Kasera in the remand proceedings and be is noted to have clearly denied Having any transactions with the appellant. Accordingly the above analysis of his statement coupled with the fact that Mr. Kasera had also specifically denied having transactions with the appellant, in my considered view, supports the appellant's case that his statement was not of any consequence in their case and that no adverse view could have been taken on the basis of the same. Now I come to the notings found in the seized diaries and one loose paper found on the letter-head of the appellant. It is noted that the ....
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....name Shakhambani, and thus when there can be several persons whose names can start with or contain the words "Shakhambar the appellant cannot be singled out and said to be the sole person to have undertaken cash loan transactions appearing in these pages with the name "Shakhamban being mentioned T'also find force in his alternate argument that, it may also be a case that all these notings in the words Shakhambari may pertain to someone else, being a codename used by the finance broker to note transactions of someone else in the hopes of not leading the authorities to the concerned actual person to whom such entries pertain, and even possibly mislead the relevant statutory authonties. The appellant has rightly explained that, if the AO's assumption that the notings found in the seized material pertains to them, is taken at its face value, particularly when the searched pension (Mr. Kasera) in his statement under section 132(4) of the Act has not incriminated the appellant, then any person for that matter can mention anyone's name in any loose paper/diary at their sweet will and that can be used to implicate such other person for no fault of the latter. All these contenti....
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.... that meaning of account book would be spiral note bookipad but not loose sheets The following extract being relevant is quoted herein below: (SCC pp.42327, paras 14 and 20) "14. In setting aside the order of the trial court the High Court accepted the contention of the respondents that the documents were not admissible in evidence under Section 34 with the following words 70... an account presupposes the existence or persons such as a seller and a purchaser, creditor and debtor, Admittedly, the alleged diaries in the present case are not records of the entries arising out of a contract. They do not contain the debts and credits. They can at the most be described as a memorandum kept by a person for his own benefit which will enable him to look into the same whenever the need arised to do for his future purpose. Admittedly the said diaries were not being maintained on day-to day basis in he course of business. There is no mention of the dates on which the alleged payment were made. In fact the entries there in are on monthly basis. Even the names of the persons whom the alleged payments were made do not find a mention in full, they have been shown in abreviated form. Only ....
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....ies upon such entries to support his claim against another In Hira Lalv, Ram Rakia (AIR 1953 Pepsu 113) the High Court while negativing a confention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been prove, said that the rule as laid down in Section 34 of the Act that lentives in the books of account regularly kept in the course of business re relevant whenever they refer to a matter in which the court has to enquire was subject to the salient proviso that such entries shall not alone be sufficient evidence to charge any person with liability. It is not. therefore, enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that the were in accordance with facts. 282. It is apparent from the aforesaid discussion that loose sheets of papers are wholly irrelevant as evidence being not admissible under Section 34 so as to constitute evidence with respect to the transactions mentioned ther....
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....09.2021, the Investigation team could have very well enquired from the appellant regarding the contents of the same, which we find has not been done. Even when in assessment, the appellant denied its contents, the AO is found to have not made any further enquines but simply rejected the same. Likewise, the AO did not make any enquiries from Mr. Amit Agarwal mentioned in this document. It is also not clear as to why was this document in possession of Mr. Kasera, and not the appellant or Mr. Amit Agarwal, who by AO's logic ought to have been in possession of this supposed promissory note, it is indeed true that this document raises a suspicion against the appellant, but the AO in the original as well as remand proceedings did not take the matters to any logical conclusion. Rather than gathering evidence against the appellant, the AD acted only on surmises. Hence, for these reasons, even this document is found to be unreliable. For the above reasons, I, therefore, hold that the documents seized from the premises of Mr. Kasera in the form of loose papers etc, are inadmissible evidence in as much as the same does not contain anything whatsoever to suggest that the appellant....
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....ers Kasera. The seized documents inter alia include cash loan transactions. During the course of search, statement of Shri Praveen Kumar Kasera son of Shri Uma Shankar Kasera was recorded in oath u/s 132(4) on 2.12.2018, in the said statement, he has stated that he along with his father Sri Uma Shankar Kasera and his brothers used to arrange cash loans in lieu of commission. (ii) One Rukka issued by M/s Shakambari Ispat& Power Ltd. was seized vide USK 20 Page No. 24 from the premises of Kasera Group. There are several other entries recorded on seized documents found and seized from the premises of Kasera Group. The addition on this issue was done on the basis of entries recorded on seized documents found and seized from the premises of Kasera Group. (iii) Copy of statement of Praveen Kumar Kasera is enclosed. B. As directed notice/letters for personal appearance have been issued in this remand proceeding to Anup Majee, Ratnesh Verma, Niraj Singh and Praveen Kumar Kasera for granting an opportunity of cross-examination and to affirm the statements made by them u/s 132(4) in respective search which has been utilized to make such addition in appellant's ....
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....is seized documents from such persons i.e., Uma Shankar Kasera, Anil Kumar Kasera, Praveen Kumar Kasera (referred to as USK, AKK and PKK respectively) it has been alleged that appellant had taken loan from different parties as mentioned in impugned order against which "rukkas" was issued to such lenders. It may be noted that the alleged documents (being USK or AKK so mentioned in impugned order) has not provided to appellant. Moreover, the alleged "rukkas" allegedly issued by appellant in favour of such alleged lender to substantiate your such allegation is also missing and a lone document alleged to be "rukka" (which is again "san" any examination by AO or cross-examination has denied to appellant) has been relied unjustifiably and hence entire biased conclusion is mere unsubstantiated allegation only. The photocopy of h sample Rukka provided to us nowhere mentions whether it is apart of the seized documents and if so, the relevant Identification Mark of the seized documents with actual page number The photocopy, which is claimed by vou as a document acceptable/admissible as an evidence under The Indian Evidence Act, 1872, show cash receipt of Rs.50,000/- only mentioned i....
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....onsider submission of appellant ad hence also addition is liable to be deleted. 3. Moreover, the alleged extract of statement of Shri Anil Kumar Kasera and Mr. Praveen Kumar Kasera nowhere mentions appellant's name and hence it is wholly wrong and unlawful to assume that appellant had availed cash loan from the parties mentioned in your impugned order. 4. Even otherwise the said data in the alleged documents (as reproduced in notices and impugned order) allegedly reflects some names which may suggest appellant's name but do no conductively lead anywhere and hence it is submitted that "i. The data refers the group to be 'potential' lender, the word 'potential' itself suggests possibility of becoming something or something happening therefore, the impugned notices issued during the proceedings and impugned order itself states that such data reflecting therein is not final; The data states 'possible financial transactions' to be 'potential cash lent to various borrowers' the words possible and potential only suggest of a possibility or a capability, therefore the words themselves putting a question mark on the....
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....rsh Polyfabric (P) Ltd.: Appellant doesn't have any transaction with such person/ company. F.Y S.N Annexure No. PDF Pg Different former of Lender Name Lender Group Different former of borrower Name Equivalent cash (incl.rukkas) Dte Narration 2018-19 111 USK-7 84 Pramod Pramod Kumar Agarwal/Harsh Polyfabric (P) Ltd Shakambari Steel 50,00,000 1.8.2017 New Loan Indeed when name of lender was available with AO, AO still did not issue any notice u/s 133(6) /131 or conduct any enquiry on such alleged lender. B. Similarly, Heera Ch. Jain/Heera Panna Collections (P) Ltd: Appellant does not have any transaction with such person/ company. From the said details if the lendesdetils were available with AO which is 'Company' and hence it is out of one's understanding as to reason for AO not calling for details u/s 133(6) o 131 from such alleged lenders: F.Y S.N Annexure No. PDF Pg Different former of Lender Name Lender Group Different former of borrower Name Equivalent cash (incl.rukkas) Dte Narration 2018-19 90 USK-7 47 Heera Ch Jain (Panna Herach) Hira p....
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....f place and based on surmises and conjectures. (d) On going through the relevant part of impugned order, it is observed that the AO has narrated the process of taking unaccounted cash loan in general or prevalent in market. Further, it is explained that there exist some double digit suppression of loan amount in Rukka transactions. In this regard it is stated that appellant doesn't have knowledge about the Rukka transactions. Appellant also have no idea wherefrom the above stated processes of Rukka transactions have been identified or traced. As stated during the course of reassessment proceedings, it is to state herein that I have not entered into any 'Rukka' transactions with any of the party/finance broker. It is to be noted herein that no additional or incriminating evidence have been brought on record during the course of reassessment proceedings that reveals or reflects my involvement in the alleged rukka transactions. However, under the instant case, the AO has taken a blanket approach by defining the general Rukka transactions in market. In the light of absence of any additional or specific incriminating evidence that relates to the assessee, any advers....
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....culars like addresses, PAN etc. of such lenders and borrowers is provided to establish the occurrence of any Rukka transactions. In the absence of such information identification of such lender and borrower is not possible. The AO had attempted to provide the details of premises inthe table but no address of any lender or borrower is provided in any column of such table. It seems incompleteness in such respect. Non availability of basic information like address, PAN etc. about the lenders or borrowers seems the information in the above referred table to be irrational and incomplete and any averse inference on the basis of such information any addition on such ground does not stand valid in the eye of law. (g) Further, multiple names are shown in the above referred table against the names of lender /borrower. This indicate that the AO had no compact information in relation to Rukka transactions. The above referred table | at pg 49 to 63 of assessment order | can at best be regarded as analysis only but not to draw an adverse inference in the instant case. Thus, no concrete evidentiary documents in relation to tabulated information is placed on record. Merely stating the nam....
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....account payee cheque drawn on a bank, the amount so borrowed or repaid shall be deemed to be the income of the person borrowing or repaying the amount aforesaid for the previous year in which the amount was borrowed or repaid, as the case may be: Provided that, if in any case any amount borrowed on a hundi has been deemed under the provisions of this section to be the income of any person, such person shall not be liable to be assessed again in respect of such amount under the provisions of this section on repayment of such amount. Explanation. For the purposes of this section, the amount repaid shall include the amount of interest paid on the amount borrowed.] (ii) Reference is also drawn to CBDT Circular No. 208 dt. 15.11.1976 in such respect. The term "hundi" has not been defined in the 1961 Act. In common commercial parlance, it denotes an indigenous instrument in vernacular language which can be used by the holder thereof to collect money due thereon without using the medium of currency. It may also be regarded as an indigenous form of bill of exchange expressed in vernacular language which has been in use in the mercantile community in Indi....
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....) 3 SCC 410 and held that under similar circumstances Hon'ble Supreme Court held such alleged seized documents/diaries s bogus. 5. It was also held by CIT(A) that diary seized from 3rd party premises without any corroborative evidence hs o relevance. (Pg. 157-para 2) 6. As regards USK-20-Pg 24, entire analysis by AO was merely on presumption. AO didn't make any enquiry from any of the alleged lenders and without such corroboration entire action of AO is without any logic. (Pg. 157-para 2) Hence Ld. CIT(A) rightly deleted the addition u/s 69C and also the interest so computed notionally by AO. 40. After hearing the rival contentions and perusing the material available on record, we find that during the course of search in the case of Finance Brokers Kasera certain incriminating materials/documents were found on the basis of which the Assessing Officer reached a conclusion that the assessee had taken cash loans for aggregating to a sum of Rs.48,85,00,000/- during the impugned financial year from Finance Broker on which interest @7% was also paid amounting to Rs.3,41,95,000/-. We note that ld. CIT(A) allowed the appeal of the assessee holding that....