TaxTMI 
TaxTMI 
2025 (2) TMI 1752
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....minating material for the A.Y.2011-12 for initiation of proceedings u/s. 153C. 3. The Id. 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. 4. The Id. CIT(Appeal) erred in holding that the MOU dated 10.02.2010 with the alleged investor company M/s. Falcon Jersey Pvt. Ltd. is not incriminating material as details found therein are only proposed investments as against the conclusion of assessing officer that the material seized is a valid evidence of investments made. 5. 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. 6. The Id. CIT(Appeal) failed to appreciate that there is no sanctity to the MOU which is not a registered document and the original was never produced for verification. 7. The Id.CIT(Appeal) erred in ignoring the search and post search investigations which conclusive....
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....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 received 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. 2,16,176/-. 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....
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.... 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 does not contain details of investment as mentioned by the Assessing Officer. Further, incri....
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....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 been received through banking channel. The Ld.CIT(A) after considering relevant facts has rig....
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....ving 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 can not 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 c....
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....nder : 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. 2,50,00,000/- 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 Id. 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 Id. CIT(Appeal) erred in holding that the MOU dated 20.07.2012 purportedly entered into with M/s.Surbhi Mercantile Pvt. Ltd. for the investments was not registered and the original was not produced for verification, hence its genuineness is not established. 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 I....
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....stments 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. 2,93,990/- 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, out of which investments to the tune of Rs. 20,27,50,000/- was received from M/s Surbhi Mercantile Pvt.Ltd. During the financial year, relevant to the assessment year 2013-14, the assessee company has received investment / advance of Rs. 2,50,00,000/- into its Axis bank account from M/s Surbhi Mercantile Pvt. Ltd. based in Delhi. In order to verify the amount of advance / investment received from Delhi based company, the Assessing Officer called upon the assessee to file relevant evidences and also prove identity, credit worthiness and genuineness of the transaction. In response, the assessee c....
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....editworthiness. 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 material, the post Search enquiries conducted at Delhi, the statements of Mr. Raji Agarwal and Sanjay Agarwal recorded at Delhi, the clauses of MoU which allegedly are unreal and not business like and non-production of Directors of M/s.Surabhi Chemical....
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.... 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. 6.2.6 The AO himself has brought out the current status of the company in the order as per RoC records. He can not doubt the identity of the investor company just on the basis of spot enquiry conducted without making further enquiries and taking it to logical conclusion. The material seized from the residence of Mr. Jayanth Kumar Dutta, allegedly contain of cash transactions of the appellant group. No responsible person has been examined on the issue. The AO drew conclusions on his own wit....
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....e Assessing Officer has brought out clear facts, but, the Ld.CIT(A) simply deleted the additions made by the Assessing Officer only on the basis of paper evidence filed by the assessee contrary to the fact brought on record by the Assessing Officer. Therefore, he submitted that the order of the Ld.CIT(A) should be reversed and additions made by the Assessing Officer should be upheld. 21. The learned counsel for the assessee, Shri P.Murali Mohan Rao, CA, on the other hand, supporting the order of the Ld.CIT(A) submitted that the assessing company has placed all possible evidence, including address and PAN of the creditor, their financial statement along with bank account copy and also filed confirmation letter to prove identity, genuineness of transactions and credit worthiness of the parties. Further investment has come from bank account, for which relevant evidences have been filed. Further, the Assessing Officer solely relied upon the enquiries conducted on investor company at Delhi and the statement recorded from few individuals, ignoring the fact that the Directors of the investor company have filed affidavit and confirmed investment made in the assessee company. Further, th....
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....e name of Kapil and Mr. Rajiv Agarwal and observed that the assessee has routed its unaccounted money, by way of advances / investments from Delhi based companies and returned cash. Therefore, the Assessing Officer came to the conclusion that the assessee could not prove identity, genuineness of the transaction and credit worthiness of the investment from M/s Surbhi Mercantile Pvt. Ltd. 23. We have given our careful consideration to the reasons given by the Assessing Officer to make additions towards advances / investment from M/s Surbhi Mercantile Pvt. Ltd. as unexplained cash credit u/s 68 of the Act, in light of various averments made by the Learned counsel for the assessee and we ourselves do not subscribe to the reasons given by the Assessing Officer for the simple reason that, the assessee had filed complete details of investor company and their identify, including name and address, PAN, financial statements, bank statements and also confirmation letter and proved identity of the investor company, 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 ....
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....le S Supreme Court in the case of Commissioner of Income-Tax, Orissa vs Orissa Corporation (P) Ltd. (supra) has considered similar issue and held that once, genuineness and creditworthiness and identity of investors are established, no additions can be made as cash credit, on the ground that investor company and directors have not responded to the notices issued by the Assessing Officer. Similar view has been taken by the Hon'ble Gujarat High Court in the case of DCIT Vs. Rohini Builders (2002) 256 ITR 360 (Guj). The sum and substance of the ratios laid down by the Hon'ble Supreme Court and other High Courts is that once, identity, genuineness of transactions and creditworthiness of the creditor is proved, then the sum received from the creditor cannot be treated as income of the assessee u/s 68 of the Act. Although the Assessing Officer referred to number of judicial precedents, including the decision of Hon'ble Supreme Court in the case of PCIT Vs. NRA Iron and Steel Private Ltd. (2019) 412 ITR 161, but facts remain that the facts of the present case are entirely different from various case laws referred by the Assessing Officer and therefore, in our considered view, ....