TaxTMI 
TaxTMI 
2026 (3) TMI 778
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.... under section 143(3) r.w.s. 153A of the Act, date of order 29.09.2021 for A.Y. 2012-13 and 30.09.2021 for A.Y. 2015-16 to 2016-17 related to petitioner-1 and related to petitioner-2 the date of order 30.09.2021. 2. Since all the appeals pertain to the three assesses and one appeal pertain to the revenue, involving similar issues arising out of a similar factual matrix, these appeals were heard together as a matter of convenience and are being decided by way of this consolidated order. With the consent of the parties, The ITA No. 2871, 2872, 3208 & 3418/Mum/2025 are taken together and ITA No 2871/Mum/2025 for AY 2012-13 is treated as lead case, and the decision rendered therein shall apply mutatis mutandis to other appeals. ITA No.2871/Mum/2025 3. The assessee has taken the following grounds:- "1. That, the learned CIT(A)-11, Pune has grossly erred in not considering the impugned block assessment order passed is against natural justice and bad in law. The AO may please be directed to annul the impugned block assessment order. 2. That, the learned CIT(A)-11, Pune is not justified in upholding the addition of Rs. 50,00,000/- in case of Olender Manufacture &....
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....s of such finding which would also constitute incriminating material. Hence, if during the course of search action, elaborate and thorough investigations are carried out to verify/examine modus operandi of an illegal scheme orchestrated by certain persons and during such investigations, based on ascertainment of various facts, examination of seized books, recording of statements and analysis of documents of a number of entities in coordination with each other, certain information is generated that (i) the scheme violates the provisions of the Act and that (ii) such scheme has assisted various parties> who have taken benefit of such scheme in introduction of their unaccounted income in their books in the form of eligible and non-taxable income, thus affecting determination of their total income, then, this information is clearly covered by section 153A/153C of the Act." 5. The Ld. AR advanced his arguments and submitted that the same search action was conducted in the case of M/s J.S. Infrastructure, which belongs to the M/s Patel RPL Realty Group. It was contended that M/s J.S. Infrastructure had challenged the legality of the assessment on the ground that it was framed in the a....
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....regular books of account, no incriminating material was found during the search operation. From the above observation, we deem it fit to hold that the assessee has furnished complete details of the unsecured loan received and subsequently repaid through banking channels which are appearing in the books of accounts of the parties, corroborated by bank statements, financial statements, confirmation letters and details of return of income filed by the parties. We are also conscious of the fact that no incriminating material pertaining to the assessee was seized during the search in the case of M/s. Patel RPL Realty Group. 10. On the above factual matrix, we deem it fit to hold that the impugned addition made in the hands of the assessee ought to be deleted as there is no justification in making an addition on the aforementioned facts of the case. 11. Thus, the grounds of appeal raised by the assessee are hereby allowed." 6. The Ld. DR argued but was not able to produce any contrary findings against the submission of the Ld. AR. 7. We have heard the rival submissions and carefully examined the material available on record. It is an undisputed fact that the searc....
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....ed the entire amount of the so-called interest paid or received, instead of restricting the addition to the alleged differential amount. It was contended that had the assessee been confronted and called upon to reconcile the figures appearing in the seized sheet vis-à-vis the regular books of account, the assessee would have furnished a detailed reconciliation and explanation. However, no show cause notice (SCN) was issued before making the addition. The addition was made without affording an opportunity of being heard and without the knowledge of the appellant. It was argued that it is a settled principle of law, as laid down in several judicial pronouncements, that any addition made unilaterally and without issuance of a proper show cause notice is violative of the principles of natural justice and is liable to be deleted. Without prejudice to the above submissions, the Ld. AR further contended that the appellant had sufficient interest-free funds available in the form of capital account amounting to Rs. 1,70,93,564/-. Even assuming, for the sake of argument, that the so-called interest receivable computed by the learned CIT(A) at Rs. 4,66,124/- calculated at 12% per an....
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....earing in the seized document are appearing in the balance sheet of the appellant. It is further seen that income on account of interest received is being declared as business income and not as 'income from other sources'. Thus, the income accrued on account of interest receivable is required to be recognized by the appellant and cannot be deferred to subsequent years. Therefore, contention of the appellant that many of these entries were not finally included in the books of account on the ground that same were not received, cannot be accepted. 47. It is further seen that the AO has made additions for both the interest received/receivable as well as interest paid/payable separately. The interest income has been considered as unexplained money and addition has been made u/s. 69A of the Act. In my opinion, the said decision of the AO is not correct because the provisions of section 69A are applicable only when nature and source of acquisition of money, bullion, jewellery, etc. is not explained by the assessee. In the present case, the seized documents suggest that these receipts are towards interest which is received/receivable on various loans given by the appellant....
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....e basis of seized pages no. 3, 4, 5 and 6, the net undisclosed interest income is worked out at Rs. 4,37,330/- which shall be taxable as business income. The AO is directed accordingly. The ground no. 2 and 3 are disposed accordingly." 11. The Ld. DR argued and submitted the written submission before the bench. The relevant part of the submission is reproduced as below: "The above-mentioned Departmental appeal was heard before the Hon'ble ITAT E' Bench, Mumbai on 29.01.2026. The issue before Hon'ble Bench was addition of Rs. 92,63,035/- u/s.69A and Rs. 87,96,911/- u/s. 69C (Interest receipts and interest payments) It is submitted that CIT(A) erred in holding that interest receipts were identifiable and had a known source. Assessee failed to furnish any supporting documentary evidence such as loan agreements, confirmation from borrowers / lenders or bank statements to substantiate genuineness of the transactions. Findings of CIT(A) was solely based on unverified notings in seized documents which cannot be accepted without independent corroboration, The treatment of interest income as business income is also factually incorrect as as....
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....disclosed interest income of Rs. 4,37,330/- (Rs. 4,66,124/- - Rs. 28,794/-) and directed that the same be taxed as business income. We find that this conclusion is based on a reasonable appreciation of the seized documents and the entries already recorded in the books of account. The objections raised by the Ld. DR that the interest receipts were not substantiated by independent documentary evidence do not outweigh the factual findings recorded by the Ld. CIT(A), particularly when the Ld. AO himself relied upon the seized material and had not established that the transactions were fictitious or lacked identity and source. In view of the above discussion, we find no infirmity in the order of the Ld. CIT(A) restricting the addition to Rs. 4,37,330/- and taxing the same as business income. Accordingly, the grounds raised by the revenue are dismissed. In the result, the appeal of the assessee & revenue stand dismissed. ITA No. 3240/Mum/2025, AY 2019-20 13. The Ld. AR argued and contended that the addition amount to Rs. 1,87,142/- is basis of surmises & conjecture. He invited our attention in the order of the Ld. CIT(A). Relevant observation of the Ld. CIT(A) is reproduced as b....