TaxTMI 
TaxTMI 
2025 (2) TMI 1703
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....of Rs. 2,12,50,000/- made u/s. 68. 3. The Id. CIT(Appeal) erred in holding that there is no incriminating material in the assessee's case for initiation of proceedings u/s. 153C. 4. The ld. CIT(Appeal) erred in applying the ratio in case of M/s. Sinhagad Educational Society though the same is not applicable to the facts of the present case. 5. The ld. CIT(Appeal) erred in holding that the details found in the incriminating material are only the proposed investment as against the conclusion of assessing officer that the material seized is a valid evidence of investments made. 6. The ld. CIT(Appeal) erred in ignoring the law that to initiate 153C proceedings there should be prima facie satisfaction and the assessing officer need not conclusively prove the facts at the time of initiation of the proceedings. 7. The Id. CIT(Appeal) erred in holding that it is enough if the transactions are made through banking channels of M/s. Falcon Jersey Pvt. Ltd. as against the legal requirement of proving the credit worthiness and genuineness of transactions. 8. The ld. CIT(Appeal) erred in ignoring the search and post search investigations ....
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..../s Aijaz Investments & Estates Pvt.Ltd. and has a bearing on the total income for the year under consideration and therefore, the Assessing Officer of the searched person has recorded satisfaction u/s 153A of the Income Tax Act, 1961 ("the Act") and forwarded the same to the Assessing Officer of the assessee along with the copy of the seized material on 14.02.2019. After receiving and further verification of the satisfaction note and copies of seized material, the Assessing Officer recorded satisfaction as required u/s 153C, with reference to seized material and found that the assessee company has received advances / investments from M/s Falcon Jersey Pvt.Ltd., Delhi and accordingly, issued notice u/s 153C of the Act on 27.02.2019 and called upon the assessee to file return of income. In response to the notice issued u/s 153C of the Act, the assessee filed its return of income on 09.05.2019 by admitting total income of Rs. 2,34,267/- 4. During the course of assessment proceedings, the Assessing Officer noticed that Shri Ajaz Farooqi and his associated companies has received loans / advances / investments to the tune of Rs. 65,57,75,000/- from various Delhi based companies during....
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....A), the assessee challenged the assessment order passed by the Assessing Officer u/s 153C of the Act, in light of satisfaction note u/s 153A/ 153C by the Assessing Officer of the searched person and the Assessing Officer of the assessee and submitted that the Assessing Officer has assumed jurisdiction by issue of notice u/s 153C on the basis of incorrect satisfaction, which is not supported by incriminating material found as a result of search. The assessee also challenged the additions made by the Assessing Officer towards investment received from Falcon Falcon Jersey Pvt.Ltd u/s 68 of the Act by filing necessary evidences. 6. The Ld.CIT(A), after considering the relevant submissions of the assessee and also taking note of satisfaction note recorded by the Assessing Officer, for initiating proceedings u/s 153C of the Act, held that, upon careful examination of the satisfaction note, it is seen that the Assessing Officer relied upon the material found during the course of search from the residence of Mr. Ajaz Farooqi and from the residence of Jayanta Kumar Dutta, however, the said incriminating material pertains to copy of MOU dated 10.02.2010 at page 104 to 106 and the same doe....
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....of the above companies denied having any knowledge of investment in the assessee company. Therefore, merely for the reason of furnishing confirmation letter, along with financial statement, genuineness of transactions cannot be proved. The Ld.CIT(A), without considering the relevant facts, simply deleted the additions made by the Assessing Officer. Therefore, he submitted that the order of the Ld.CIT(A) should be set aside and additions made by the AO should be upheld. 10. The learned counsel for the assessee, supporting the order of the Ld. CIT(A) submitted that the Ld.CIT(A) has come to right conclusion, based on appraisal of relevant satisfaction note recorded by the Assessing Officer as required u/s 153C of the Act, where, the Assessing Officer referred to incriminating material, but the said material is nothing, but MOU and bank account particulars, which are already disclosed in the return of income filed u/s 139 of the Act. Further, the assessee had also filed relevant evidences, including name and address along with PAN of the investor company, confirmation letter and financial statements and also filed bank statements of investor company to prove that the amount has bee....
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....le Supreme Court in the case of Sinhgad Technical Educational Society Vs. CIT (supra). 12. Having said so, let us come back to whether the additions made the Assessing Officer towards / investment in the absence of incriminating material is sustainable under law. It is well settled principle of law by the decision of Hon'ble Supreme Court in the case of Principal Commissioner of Income-Tax Vs.Abhisar Buildwell (P.) Ltd., where it has been clearly held that in the absence of incriminating material, no additions can be made, in respect of completed assessment. In the present case, assessment for the year under consideration was completed / unabated as on the date of search, which is evident from the date of search in the present case, i.e. 04.12.2017 and by that time, the time limit u/s 143(2) of the Act was expired. Therefore, once assessment is unabated / concluded as on date of search, then there cannot be any additions in the assessment framed u/s 153A / 153C, in the absence of any incriminating material. Since the Assessing Officer has not considered any incriminating material for making additions towards advances received from M/s Falcon Jersey Pvt.Ltd., as unexplained c....
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....efore, for the sake of brevity, grounds of appeal filed for the A.Y.2013-14 are extracted as under : 1. The Id.CIT(Appeal) erred both in law and on facts of the case in allowing relief to the assessee. 2. The Id. CIT(Appeal) erred in deleting the addition of Rs. 5,40,00,000/- made u/s. 68, without giving any credence to the material seized, post search enquiries made and the enquiries made during the assessment by the assessing officer. 3. The ld. CIT(Appeal) erred in concluding that the investment made by M/s. Surbhi Mercantile Pvt. Ltd. is genuine, as against the overwhelming evidence that the transaction is neither genuine nor the investor had credit worthiness. 4. The ld. CIT(Appeal) erred in holding that mere routing of transaction through banking channel is sufficient to prove the genuineness of the transaction as against the established law that the assessee needs to prove the credit worthiness of the investor and genuineness of the transaction, 5. The Id. CIT(Appeal) erred in ignoring the search and post search investigations which conclusively prove that M/s. Surbhi Mercantile Pvt. Ltd. neither existed at the address given nor i....
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.... After receiving and further verification of the satisfaction note and copies of seized material, the Assessing Officer recorded satisfaction as required u/s 153C, with reference to seized material and found that the assessee company has received advances / investments from M/s Surbhi Mercantile Pvt. Ltd. and accordingly, issued notice u/s 153C of the Act on 27.02.2019 and called upon the assessee to file return of income. In response to the notice issued u/s 153C of the Act, the assessee filed its return of income on 26.03.2019 by admitting total income of Rs. 2,07,050/-. 17. During the course of assessment proceedings, the Assessing Officer noticed that Shri Ajaz Farooqi and his associated companies has received loans / advances / investments to the tune of Rs. 65,57,75,000/- from various Delhi based companies, out of which Rs. 20,27,50,000/- was received from M/s Surbhi Mercantile Pvt. Ltd. during the F.Y.2010-11 to 2016-17. During the financial year, relevant to the assessment year 2011-12, the assessee company has received investment / advance of Rs. 5,40,00,000/- into its Axis bank account from M/s Surbhi Mercantile Pvt. Ltd. based in Delhi. In order to verify the amount o....
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....ficer erred in making additions towards amount received from Delhi based companies, only on the basis of enquiries conducted during post search investigation on investor companies, including various evidences filed by the assessee to prove the creditworthiness. The Ld.CIT(A), after considering the submissions of the assessee and taking note of certain judicial precedents, deleted the additions made by the Assessing Officer towards investment as unexplained cash credit u/s 68 of the Act. Relevant findings of the Ld.CIT(A) are as under : 6.2.1 I have considered the assessment order, submissions of the appellant and the material placed before me. The material seized from the Residence of Mr. Jayanth Kumar Dutta was examined by the AO. The contention of AO is that the amounts were sent in cash to M/s. Surabhi Mercantile Ltd and they have provided accommodation entries to the group companies of Mr. Ajaz Farooqi. The additions are made invoking sec.68 of I. T Act, where the remittances were received. The AO made addition mainly on account of the finding that the appellant has not proved the credit worthiness and genuineness of the transactions. The AO relied on the seized materi....
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..... Rajiv Agrawal and Sanjay Agrawal alone is not justified. The statements relied on by AO only create suspicion but can not be basis for drawing definite conclusions as has been done by the AO. The appellant filed affidavit of Mr. Sanjay Agrawal retracting the statement given has not been taken congnizance of or acted upon by the AO. 6.2.5 Mr. Asma Farooqui is a Director in M/s. Surabhi Mercantile P Ltd from 2012 onwards. She was searched u/s.132 and no statement was recorded from her about affairs of the company. Mr. Ajaz Farooqui is Director of the above company from 2018 and was not examined by AO during the assessment proceedings. Incidentally Mr. Asma Farooqui and Mr. Ajaz Farooqui are assessed with same AO and proceedings u/s. 153A were simultaneously going on at the same time as the proceedings in this case. The AO's contention that the appellant did not produce the Director for examination do not hold water. 19. Being aggrieved by the order of the Ld.CIT(A), the Revenue is in appeal before the Tribunal. 20. The Ld.Sr.AR, Shri Srinath Sadanala, submitted that the Ld.CIT(A) erred in deleting the addition of Rs. 5,40,00,000/- u/s 68 of the Act, without givin....
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....e development. Although the assessee has filed all these evidences, but the Assessing Officer ignored the evidences filed by the assessee and simply made additions towards advances u/s 68 of the Act. The Ld.CIT(A), after considering the relevant facts, has rightly deleted the additions made by the Assessing Officer. In this regard he relied upon the decision of Hon'ble Supreme Court in the case of CIT Vs.Lovely Exports 216 CTR 195 (SC) (supra). The assessee had also relied upon the decision of Hon'ble Supreme Court in the case of Commissioner of Income-Tax, Orissa vs Orissa Corporation (P) Ltd. (1986) 159 ITR 78 (SC). 22. We have heard both the parties, perused the material on record and gone through the orders of the authorities below. We have also carefully considered the relevant case laws referred to by both the parties, in support of their arguments. There is no dispute with regard to fact that the assessee has received investment from M/s Surbhi Mercantile Pvt. Ltd., a Delhi based company and to prove the credit, has filed various evidences, including, copy of MOU between the parties, name and address and PAN of the investor company, financial statements and bank a....
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..... Further, the investor companies have filed their financial statements and also established sources for investment made in the assessee company. Although the Assessing Officer refers to post search enquiry conducted on investor company at Delhi, to draw adverse inference against the investment, but on perusal of affidavit filed by the Directors, Mr. Rajiv Aggarwal and Mr. Sanjay Aggarwal, it is abundantly clear that they confirmed the investment in the assessee company and their statements were not conclusive proof of the adverse comments made by the Assessing Officer. Further, it is also noted that Mr. Ajaz Farooqi and Mrs. Asma Farooqi, both were directors of M/s Surbhi Mercantile Pvt. Ltd. from 2012 onwards and at the time of Assessing Officer passed the assessment order, both were directors in the investor company, however, the Assessing Officer failed to examine the directors and simply made a statement that the assessee failed to produce directors of investor company. We, further, noted that the assessee has filed status of M/s Surbhi Mercantile Pvt. Ltd. as per the ROC records and the company is in active status at the time of passing the assessment order. From the above, i....
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.... present case and also by following the ratios of Hon'ble Supreme Court in the cases discussed herein above, we are of the considered view, that the Assessing Officer is erred in making additions towards advances / investment received from M/s Surbhi Mercantile Pvt. Ltd. u/s 68 of the Act as unexplained cash credit. The Ld.CIT(A), after considering relevant facts has rightly deleted the additions made by the Assessing Officer. Therefore, we are inclined to uphold the order of the Ld.CIT(A) and dismiss the appeal filed by the Revenue. 25. In the result, appeal filed by the Revenue is dismissed. ITA No.80/Hyd/2021, A.Y. 2014-15 26. The Revenue has raised more or less common grounds of appeal for the assessment year 2014-15. The facts and issues involved in this appeal are identical to the facts and issue, which, we had considered in ITA No.79/Hyd/2021 for the A.Y.2013-14. But for figures, the facts and issues are identical. The reasons given by us in the preceding paragraph No.22 to 24 shall mutatis mutandis apply to these appeals, as well. Therefore, for similar reasons, we are inclined to uphold the order of the Ld.CIT(A) and dismiss the appeals filed by the Revenue. ....