TaxTMI 
TaxTMI 
2025 (2) TMI 1716
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 153C were not validly initiated as there was no incriminating seized material without considering the fact that the Assessing Officer had 3. The Id. CIT(Appeal) erred in deleting the addition of Rs. 2,34,37,500/- made u/s. 68, on account of unproved cash credit from M/s. Falcon Jersey Pvt. Ltd., without giving any credence to the material seized, post search enquiries made and the enquiries made during the assessment by the assessing officer. 4. The ld. CIT(Appeal) erred in not appreciating that the assessing officer correctly initiated the proceedings u/s. 153C based on incriminating material. 5. The Ld. CIT(A) erred in holding that the MoU dated 10.02.2010 depicting the investments made by M/s. Falcon Jersey Pvt. Ltd. does not contain details of investments, as mentioned by the A.O. and only contain the details of proposed investments and hence, cannot be construed as incriminating material ignoring the fact that such proposed investments have finally materialized. 6. The Ld. CIT(A) erred in holding that the investments from M/s. Falcon Jersey Pvt. Ltd. are genuine ignoring the fact that no Audit Report was filed in 2011 along-with original Ro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessee 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 11.03.2019 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 14.05.2019 by admitting total income of Rs. 1,35,469/-. 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 the F.Y.2010-11 to 2016-17, out of which investments to the tune of Rs. 12,06,25,000/- was received from Falcon Jersey Pvt.Ltd. During the financial year, relevant to the assessment year 2011-12, the assessee company has received investment / advance of Rs. 2,34,37,000/- into its Axis bank account f....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 does not contain details of investment as mentioned by the Assessing Officer. Further, incriminating material referred to Annexure A/JKD/RES/04 and 05 contains working copies of back up of 4 pen drives, which contains relevant cheque books and bank account details, however, the same cannot be considered ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 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 been received through banking channel. The Ld.CIT(A) after considering relevant facts has rightly deleted the additions made by the Assessing Officer. In this regard, relied on the decision of Hon'ble Supreme Court in the case of Principal Commissioner of Income-Tax Vs.Abhisar Buildwell (P.) Ltd. (2023....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 credit u/s 68 of the Act, in our considered view, the additions made by the Assessing Officer cannot be sustained on this count also. Therefore, we direct the Assessing Officer to delete the additions made towards amount received from M/s Falcon Jersey Pvt. Ltd u/s 68 of the Act. 13. Coming bac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d Securities Pvt. Ltd. Rs. 1,52,00,000/- from M/s. Efficient Industries Finance Ltd. Rs. 30,00,000/- from M/s. Kapro Builders Pvt. Ltd., 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 the above concerns are genuine, as against the overwhelming evidence that the transactions are neither genuine nor the investor had credit worthiness. 4. The ld. CIT(Appeal) failed to appreciate the fact that no details of collaborated real estate projects undertaken by the assessee and investor could be proved even after four years of investment. Thus, the genuineness of the transaction cannot be proved. 5. The Id. 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. 6. The Id. CIT(Appeal) erred in ignoring the search and post search investigations which conclusively pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... accordingly, issued notice u/s 153C of the Act on 11.03.2019 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 23.05.2019 by admitting total income of Rs. 1,71,872/- 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 during the F.Y.2010-11 to 2016-17. During the financial year, relevant to the assessment year 2016- 17, the assessee company has received investment / advance of Rs. 5,40,00,000/- from M/s Goose Shares and Securities Pvt. Ltd. Rs. 1,20,00,000/- from M/s Minimum Shares and Securities Pvt. Ltd. Rs. 1,52,00,000/- from M/s Efficient Industries Finance Ltd Rs. 30,00,000/- from M/s Kapro Builders Pvt. Ltd. into its Axis bank account and Rs. 90,00,000/- has been received on behalf of M/s SV Multi Logitech Pvt. Ltd. In order to verify the amount of advance / investment received from Delhi based companies, the Assessing Officer called upon the assessee to file relevant evidences and a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 I have considered the assessment order, submissions of the appellant and the material placed before me. During the year, the appellant received Rs. 9,32,00,000/- from various companies. This is reflected in the books of account of the appellant. 6.2.1 During the course of Search / post search investigation enquiries were conducted with reference to the above investment. It was found that at the registered office address of the investor company large number of companies are found to be operating from, some of which also made investments in appellant's group companies. Enquiries were made with Mr. Abhay Chand Bardia, whose statement was recorded on 28.09.2017 during which he stated that he was Director of a company M/s. Tarini Enterprises Ltd operating from the same premises and is a retainer/consultant for other companies and the Directo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ake it to the logical conclusion. iii) The appellant discharged, the initial 'burden of proof by producing all the documentary evidences. The AO has not contradicted any of the evidences produced by the appellant. Unless some evidence is brought on record and appellant is confronted with such evidence, the burden does not shift back to the appellant. iv) No evidences, were found during the Search which are 'incriminating as to the transactions with various companies. The enquiries conducted were post search enquiries only. Otherwise, the transactions are duly recorded in the hands of recipient and the payer. v) The statement recorded by DDIT(Inv), Hyderabad at Delhi of Mr Bardia is perused. The statement is reproduced for ready reference. Q1. Please introduce yourself? Ans: I am Abhay Chand Bardia, So/o. Sri Dharm Chand Bardia, Aged about 64 Yrs, Resident of 20-B, Kiran Kutir, Old gupta colony, Delhi-110 009. My mobile number is 9811024165 and [email protected]. I am furnishing herewith copy of my aadhar card no.3850 8843 1656 as identity proof. Q2. Please state if you are aware of the penal consequences of giving a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of these companies are maintained at the Corporate office i.e 20-B, Old Gupta Colony, Delhi. Q.8. On verification it is found that the building at the above address is being demolished and no office was found functioning there. Please explain. Ans: Yes, the premise is under renovation. So we have shifted the relevant records temporarily to 3/14A, 1st Floor, Double Storey, Vijay nagar colony, Deihi. However, books of accounts are not readily available at this office. Back up of the accounts was taken up and kept with our auditor. I will furnish the books of accounts as and when required. Q.9. Who are the directors of the above companies? Ans: They are all my relatives and friends and will furnish list of all directors of the above companies by post. Q.10. Have the above companies made any advances/investments in the following companies/individuals? S. No Name of the company 1 Zainab Investments P Ltd 2 Zara Investments P Ltd 3 S.V Multi Logitech P Itd 4 Shoeb Estates P Ltd 5 Mrs. Laxmi Raman Ans: Yes, we have made the investments in the above companies/individual except Zara Investments P Itd as per th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... are still receivable. Ans: Yes, the above mentioned investments are still receivable by our companies. Q.16. Have you received any benefit out of the above investments made .? Ans: No, we have not yet received any benefits out of the above investments as this money has been invested for the collaboration/joint ventures of the projects. Q.17. Please furnish the details of the proposed projects. Ans: The projects at various places which are still in process. Q.18. It is seen that the amounts invested by you has been used by Sri. Ajaz Farooqi for making investments in mutual funds, fixed assets and acquisition of Immovable properties in Hyderabad. As such the money is fully invested and is being enjoyed by Sri. Ajaz Farooqi and his family members. In these circumstances do you justify the genuineness of your investments. Ans: We have made the investments under an understanding/contract with the above mentioned companies, therefore we are fully assured about the joint venture project. Q.19. How were the above investments made in the above companies. Ans: The above investments were made through banking channels, I ....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., ignoring the fact that the Directors of the investor company have filed affidavit and confirmed investment made in the assessee company. Further, the Assessing Officer rejected the evidence in the form of MOUs between the parties, even though the MOUs clearly show the investment is for the purpose of real estate 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nts, bank statements and also confirmation letters and proved identity of the investor companies, genuineness of transactions and creditworthiness of the parties. Further, as per the evidences filed by the assessee, investment is sourced from the bank account to bank account and from the bank account statement of the investor companies, there is no evidence of any cash deposited immediately before the date of transfer of the funds of the assessee company. 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 companies 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. The Assessing Officer failed to examine the directors and simply made a statement that the assessee failed to produce directors of investor companies. From the above....