TaxTMI 
TaxTMI 
2025 (9) TMI 1769
X X X X Extracts X X X X
X X X X Extracts X X X X
....sale & Others group of cases on 01.08.2017. During the search operation residential premises of Shri Sachin Madanlal Nahar, Flat No.7, Awiskar Apartment, Sr. No. 568/19, Bibwewadi, Kondhwa Road, Pune was also covered. Shri Sachin Nahar is engaged in the business of commission and financial broker between the borrower and lenders wherein, he provides a platform for lenders having surplus funds, to invest the same with the borrowers, who are in the need of funds. During the search operation at the residential premise of Shri Sachin Nahar, various incriminating documents were found and seized indicating that besides the accounted business carried out through banking channels, Shri Nahar was involved in unaccounted business through cash transactions as well, which were not recorded in the books of accounts. Various incriminating documents were seized showing that many lenders gave cash loans through Shri Nahar to various borrowers and interest was earned on such cash loans. These documents contained information that the assessee gave cash loans to various persons through Shri Sachin Nahar which was not recorded in the regular books of accounts. 3. As during the search operation on S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es and re-invested of Rs. 22,00,000/- during assessment year 2017-18 and not Rs. 4,63,00,000/- as alleged in the notice. Further the assessee has not received any interest of Rs. 49,22,070/- as stated in the notice but based on seized material provided it was worked out to Rs. 22,40,780/- which has been re-invested for giving advances and therefore, there is no question of separately treating interest as income in addition to advances. Relying on various decisions it was argued that in absence of corroborative evidence or independent enquiry to justify that a sum of Rs.4.63 crores has been advanced by the assessee through Shri Sachin Nahar, there is no justification for making addition of Rs. 1,73,00,000/- (i.e. Rs. 4,63,00,000 - Rs. 2,90,00,000) on account of amounts lent and Rs. 49,22,070/- on account of interest earned. 6. However, the Assessing Officer was not satisfied with the arguments advanced by the assessee and made addition of Rs. 1,73,00,000/- to the total income of the assessee on account of amount lent by the assessee through Shri Sachin Nahar and Rs. 49,22,070/- towards interest earned thereon by recording as under: "5.8 The submissions made by assessee h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct. 5.8.2 Regarding copy of statement recorded of Sachin Nahar in cross examination conducted on 20.12.2021 the copy has been provided on 24.12.2021 on receipt of application on the same day. The submissions made in para 5 to 7 are based on cross examination of Sachin Nahar on 20.12.2021. Regarding amount received back on respective due dates and conclusion of the assessee that subsequent advances given could be given out of original advances received back, it is to state that Shri Sachin Nahar has submitted the amount of total loans of Rs.4.53 or after considering all such effects and transactions. Assessee in his support has not given any evidence in this regard and with regard to same code for other persons referred from his own records and is merely depending on facts, figures, notings and statements of Shri Sachin Nahar only. Assessee has submitted that, at the end of the cross-examination Shri Sachin Nahar was asked that based on his answers in cross examination one can conclude that figure of Rs.4.83 cr. worked out is erroneous to which he said he cannot comment on this. In this regard, assessee has put the question asking can we conclude that the said computation o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bundle no. 11 are repeated in bundle no. 9 but not all entries of bundle 11 are reflected in bundle 9. Repeated entries are considered only once, Similarly, the entries in bundle 6.8 & 10 not reflected in bundle 9 are considered accordingly. 5.8.4 In para 9.1, the submission made by assessee that in statement recorded during cross examination on 20/12/2021 Shri Sachin Nahar had disowned the figure of Rs. 4.63 crore stated by him in the annexure to the statements recorded on 17/11/2017 in case of Mr. Ramesh Patel by stating that he cannot comment on authenticity of said figure is also misplaced and out of context. At the cost of repetition it is reiterated that, in this regard, assessee has put the question asking "can we conclude that the said computation of Rs.463,00,000/- is erroneous and amount disclosed in the course of statement recorded u/s 131 of the Act of Rs. 2.90,00,000/- is final?" To this answer, Shri Sachin Nahar has answered "I cannot comment on this." The conclusion drawn by the assessee that he has disowned the figure of Rs. 4.63 crore is not with proper reference to the context. Shri Sachin Nahar was not the party to the disclosure of amount of Rs.2,90,00,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ition of Rs. 1,53,00,000/- without appreciating that certain amounts considered in the computation of Rs. 4,63,00,000/- were due and payable before the end of the financial year. The seized material and the cross-examination of Mr. Sachin Nahar indicate that these amounts should have been received on the respective due dates and re-advanced, leading to double counting in the computation of Rs. 4,63,00,000/-. b. The statements made by Mr. Sachin Nahar during the cross-examination on 20.12.2021 ambiguous and lack evidentiary value. The addition made on this basis is unjustified. c. The appellant has already accepted Rs. 2,90,00,000/- as undisclosed income. The further addition of Rs. 1,53,00,000/- is excessive and arbitrary. d. The Ld. AO deprived the appellant of the right to examine material witnesses by neither summoning certain borrowers nor providing their addresses despite the appellant's request. This denial of natural justice invalidates the addition made by the Ld. AO. 3. Addition of interest income without proper justification a. The Ld. AO as well as the Ld. CIT(A) erred in confirming the addition with respect to the interes....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n Of India Ltd vs Commissioner Of Income Tax And Anr (supra), the additional ground raised by the assessee is admitted for adjudication. 14. The Ld. Counsel for the assessee referring to pages 64 to 67 of the paper book drew the attention of the Bench to the proforma for recording satisfaction u/s 153C and submitted that at column No.8 the Assessing Officer has mentioned the assessment years involved as assessment years 2012-13 to 2018-19. Referring to pages 68 and 69 of the paper book he drew the attention of the Bench to the satisfaction recorded by the Assessing Officer which states as assessment years 2012-13 to 2018-19. Thus, it is a combined satisfaction issued for assessment years 2012-13 to 2018-19. 15. Referring to the following decisions the Ld. Counsel for the assessee submitted that the assessment order is bad in law if consolidated satisfaction note is recorded u/s 153C of the Act for all assessment years: i) CIT vs. Sunil Kumar Sharma (2024) 165 taxmann.com 846 (SC) ii) DCIT vs. Sunil Kumar Sharma (2024) 469 ITR 197 (Karnataka) iii) Shri Rajendra Rameshlal Gugale vs. PCIT vide ITA Nos.1676/PUN/2024 order dated 30.12.2024 for assessment....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ell as replies given by Shri Sachin Nahar during the course of cross-examination he submitted that the disclosure of Rs. 2,90,00,000/- made by the assessee on account of advances and interest is legally correct and based on notings at Bundle No.9. Therefore, in absence of any corroborative evidence in support of the contention of the Assessing Officer while making addition of Rs. 1,73,00,000/- on account of amounts lent and Rs.49,22,070/- towards interest, the same should have been deleted by the Ld. CIT(A). He accordingly submitted that the addition made by the Assessing Officer and sustained by the Ld. CIT(A) should be deleted. 22. The Ld. DR on the other hand strongly relied on the order of the Ld. CIT(A). He submitted that the Assessing Officer has worked out an amount of Rs.4,63,00,000/- as the amount lent by the assessee through Shri Sachin Nahar on which he has earned interest of Rs.49,22,070/-. Since the assessee has declared only an amount of Rs.2,90,00,000/- as undisclosed income over and above the regular income for the assessment year 2017-18, the Assessing Officer made addition of Rs.1,73,00,000/- on account of the amount lent and Rs.49,22,070/- on account of intere....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t by lenders & borrowed by borrowers, names of lenders & borrowers, interest component etc. Also containing name of depositors, due date of interest and amount of cash loan. (b) Description of the seized material Bundle No. 1 to 11, out of which Bundle No. 9 is the most important, seized from the residential premise of Shri Sachin Nahar at Flat No. 07, Awiskar Apartment, Sr. No. 568/19, Bibwewadi Kondhwa Road, Pune 411037. Bundle No. 9 is final register, which is basically the ledgers of borrowers wherein each ledger of the depositors along with amounts are also mentioned. (c) Address of premise/place from where such material was seized Residence premise of Shri Sachin Nahar at Flat No. 07, Awiskar Apartment, Sr. No. 568/19, Bibwewadi Kondhwa Road, Pune 411037 (d) Date of seizure of such material 04/08/2017 (e) Particulars of the relevant Panchnama Panchnama dt. 05/08/2017 prepared at the residence premise mentioned above in 5(c). (f) Annexure/S. No./Page number etc. (particulars to be specified) Annexure- B, C and Bundle No. 1 to 11. 6. Relationship of the person referred in S. No. 4 with the person referred to in S. No. 2 The person at Sr. N....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g the F.Y. 2016-17. 8. Assessment Years involved A Ys 2012-13 to 2018-19 25. Similarly, the satisfaction note by the Assessing Officer of the assessee, copy of which is placed at pages 68 to 69 of the paper book reads as under: Shri Ramesh Harilal Patel SATISFACTION NOTE (AO of "Other Person") A search action u/s 132 of the Income Tax Act, 1961 was conducted Ashok Bhosale & Others Group on 01-08-2017. Shri Sachin Nahar is one of the party of searched group and the residence premise at Flat No. 07, Awisk Apartment, Sr. No. 568/19, Bibwewadi Kondhwa Road, Pune 411037, of Sh Sachin Nahar was covered under section 132 of the Act. Shri Sachin Nahar is financial consultant cum broker. He is a middleman between the borrower an lenders. He provides platform for investors having surplus fund and borrower who are in need of funds. For this work, he gets brokerage on the interest paid b the borrower on loan taken. During the course of search proceedings, it was see that the following documents/Bundles belongs to Shri Ramesh H. Patel, which are having substantial financial implications :- Sr. No. Description Bundle No. 1 to 11 Bundle Bundle No. 1 to 11, o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t he has given cash to Sachin Nahar which was further advanced by him to different parties. The Bundle No. 9 seized from residence of Sachin Nahar was shown and confronted to him in his statement wherein he admitted that entries of code work "Raju Patel" & "R Patel" pertain to him. He admitted that cash loan was given by him to Sachin Nahar during the F.Y. 2016-17. During the course of assessment proceedings before the AO of the searched person, the said AO has satisfied that the documents mentioned in the table above belong to Shri Ramesh H. Patel, a person other than the person referred to in Section 153A and will have a bearing on the determination of the total income of such other person. Accordingly he has recorded his satisfaction u/s 153C of the Act. I have received the said satisfaction drawn in the case of Shri Ramesh H. Patel along with the seized material mentioned in table above. I am also the jurisdictional Assessing Officer of Shri Ramesh H. Patel as the case has been centralized to this charge by the Pr. CIT-3, Pune's order u/s 127(2) No. PN/Pr.CIT-3/Order/127(2)/2018-19/61 dt. 04/04/2018. On perusal of seized material under re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the Act on the basis of satisfaction note dated 11.11.2020 and 21.04.2021. We find the Assessing Officer completed the assessment making addition of Rs. 25 lakh as on-money paid for purchase of flat No.B-1004 for assessment year 2016-17 and Rs.20 lakh for assessment year 2017-18. We find the Ld. CIT(A) upheld the action of the Assessing Officer in making the addition, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that 153C proceedings are not valid on account of (a) combined satisfaction note issued for different assessment years; (b) mechanical approval u/s 153D; (c) the jurisdiction does not lie with the Assessing Officer to issue notice u/s 153C in view of the admission of the settlement application filed by Dhamale group of cases by the Settlement Commission and (d) non handing over of the seized material by the Assessing Officer of the searched party, who was waiting for jurisdiction to be transferred to him in the case of the assessee. Even on merit also, his submission is that the addition is not required since the Assessing Officer has held the cheque payments as on-money paid in ca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....awali (one of Director in the company M/s Wellbuild Merchants Pvt Ltd) at 35/10, Shivajirao Kadam Nagar, Ambegaon Pathar Near Raje Chowk, Pune. During the search proceedings, several incriminating materials and documents were seized. While examining the documents and seized material at the time of finalizing the assessment in case of Shri Yuvraj Sitaram Dhamale and M/s Wellbuild Merchants Pvt Ltd, it was noted that the certain documents/lose papers pertain to or the information contained in papers/documents pertains to Assessee i.e. Smt. Chitra Narendra Parmar. B. A satisfaction note was drawn by the AO during the proceedings u/s 153A in case of Shri Yuvraj Sitaram Dhamale and M/s Wellbuild Merchants Pvt. Ltd that documents/papers/materials pertain to or information contained therein relates to Smt. Chitra Narendra Parmar. The details of seized documents are as below: (i) An Excel Sheet has been seized as per Bundle no 55 from the residence premise of Shri Pravin Gawali, mainly containing the details of flat holder, flat area, cheque and cash amount paid for booking of flat in the project Rajgruhi Residency (proejct developed by company M/s Wellbuild Merchants Pvt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Tribunal in the case of Shri Rajendra Rameshlal Gugale vs. PCIT vide ITA No.1676/PUN/2024 for assessment year 2017-18, order dated 30.12.2024 has quashed the assessment proceedings by observing as under: "8.7. Since in the instant case a consolidated satisfaction note has been prepared for assessment years 2012-2013 to 2018-2019, therefore, the consolidation satisfaction note being not in accordance with law, therefore, the entire assessment proceedings is liable to be quashed. We hold accordingly and quash the assessment." 62. So far as the decision of the Hon'ble Delhi High Court in the case of Indian National Congress vs. DCIT (supra) relied on by Ld. DR is concerned, we find no doubt there is a favourable decision in favour of the Revenue on the issue of combined satisfaction. However, it has been held in various decisions that when there are two views possible on an issue and there is no decision of the jurisdictional High Court on that issue, then the view which is favourable to the assessee has to be adopted. Even the Ld. DR in his written submissions has cited the decision of the Hon'ble Supreme Court in the case of CIT vs. Naga Hills Tea Co. Ltd. (....