TaxTMI 
TaxTMI 
2025 (3) TMI 2072
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.... "1. On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of the Learned Assessing Officer in passing the Assessment Order u/s.143(3) r.w.s 153A of the Income Tax Act, 1961, which is bad in law and null and void as the same is passed in violation of the provisions of the Income Tax Act, 1961. 2. That order passed by Ld. AO dated 29/12/2019 and further order passed by Ld. CIT(A) dated 18/10/2014 are bad in law in as much as while passing the impugned orders material/statement found/taken from/during search at Sunshine Group are applied against the assessee u/s 153A whereas admittedly from assessee's own search u/s 132 no document much less any incriminating document was found where law does not allow use of such document/statement etc. not found from assessee's search u/s 153A, thereby vitiating the entire exercise being against the mandate of law. 3. On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of the Learned Assessing Officer in making an addition in the Assessment Order passed u/s. 143(3) r.w.s 153A of the Income Tax Act,....
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.... recorded u/s 132(4) of the Act it was found that assessee Shri Bipin D Savla had lent cash loans to Nilesh Bharani. Thereafter, a notice u/s 153A of the Act has been issued on 03.12.2018 to the assessee after another search action carried on 18.12.2017 in the case of Shri Bipin D. Savla. In response to the notice, the assessee filed return of income on 05.01.2019 declaring total income at Rs. 5,11,870/-. 4. During the course of assessment proceedings u/s 143(3) r.w.s. 153A of the Act, the assessing officer stated that from the search action carried out u/s 132 of the Act in the case of Mr. Nilesh Bharani and M/s. Evergreen Enterprises at Sharda Sadan, Dadar (East), Mumbai on 06.10.2017, incriminating evidences relating to undisclosed money lending activity carried out by Mr. Nilesh Shamji Bharani were found and seized. The AO further stated that the ledger of the lender seized contained the information relating to code of the lender, name of the lender, cash amount lent by the lender and interest calculation etc. The AO has also mentioned the statement of various employees who were working and assisting Shri Nilesh Bharani in the business of unaccounted borrowing and lending ac....
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....Bharani for A.Y. 2012-13 to A.Y. 2018-19 as unexplained cash loan given outside the books of account and added to the total income of the assessee u/s 69 of the Act as under: Assessment Year Opening Balance Cash loan given during the year Cash loan received back during the year Balance outstanding cash loan Amt in 000 Amt in 000 Amt in 000 Amt in 000 2012-13 0 10300 10300 2013-14 10300 38200 48500 2014-15 48500 18400 66900 2015-16 66900 10700 77600 2016-17 77600 77600 2017-18 77600 58300* 135900 2018-19 135900 135900 Total 135900 0 6. The AO has also determined the interest amount earned/receivable on cash loan lent by the assessee amounting to Rs. 6,97,32,530/- for A.Y. 2012-13 to 2018-19 as under: Assessment Year Interest of current year loans Interest of earlier year loans Total interest for the year Amt in 000 Amt in 000 Amt in 000 A B C 2012-13 9,67,617 0 9,67,617 2013-14 29,80....
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.... (2019) 106 taxmann.com 128 and the case of PCIT, New Delhi vs Avinash Kumar Setia (2017) 81 taxmann.com 476, the High Court of Delhi. 10. Heard both the sides and perused the material on record in respect of the ground no. 1 to 4 on the validity of the assessment proceedings made u/s 143(3) r.w.s. 153A of the Act. It is undisputed fact that incriminating material in the form of ledger of lenders account was found and seized from the search action carried out in the case of Sunshine Group. The seized cash loan lenders ledger showed that assessee, Shri Bipin D. Savla had lent money to the amount of Rs. 13,59,00,000/- to Shri Nilesh Bharani who was operating from the premises of Evergreen Enterprises. During the course of search action in the case of M/s. Evergreen Enterprises on 07.10.2017 Shri Nilesh Bharani has admitted that he was involved in the business of unaccounted borrowing and lending. He has also used the employee's of firm M/s. Evergreen Enterprises for the purpose of carrying out the money lending activity. Subsequently on 18.12.2017 search action was also carried out in the case of the assessee wherein in his statement was recorded u/s 132(4) of the Act and assessee....
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.... Anand Kumar Jain (HUF) & Ors., Rajeshkumar Rameshchandra Shah vs DCIT, Mayur Kanjibhai Shah vs ITO, Parag Motilal Savla vs ITO, DCIT CC vs Vipul Dilipbhai Shah, Nilesh Shamji Bharani vs DCIT and PCIT vs Abhisar Buildwell (P) Ltd. as referred in the paper book filed by the ld. Counsel. The ITAT Mumbai in the case of DCIT vs Bharat Girdharlal Rughani vide ITA No. 1511/M/2023 dated 31.10.2023 on the similar issue of seized material found/seized from search action carried out in the case of Nilesh Bharani held that addition made u/s 153A of the Act was unsustainable since incriminating material was found and seized from the search action of the third party and not from the premises of the assessee in that case. The relevant extract of the decision of the ITAT is reproduced as under: "12. First of all we have noticed that there is no incriminating material in order to fasten the liability of the assessee. The AO has proceeded against the assessee under section 153A of the Act. When there is no incriminating material then how the assessee can be proceeded against under section 153A of the Act. For argument sake even if it is assumed that there is incriminating material against ....
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....sion of Mr. Dipak Padia and his statement who has referred to the transaction as discussed by the Ld. CIT(A) by thrashing the facts which further support the case of the assessee that these transactions referred to by the assessee belong to Mr. Nilesh Bharani and not the assessee. Moreover, Mr. Dipak Padia whose statement has been referred in para 5.19 of the assessment order has named one Mr. Rashmin Rughani and has not named assessee as his boss. Moreover, liability of addition cannot be fasten on the basis of statement only without any corroborative evidence. 18. Furthermore, when the AO has provided an opportunity of cross examination of one Mr. Nilesh Bharani to the assessee it has proved on record in the cross examination that the transactions between them (Mr. Nilesh Bharani and the assessee) were through banking channel and TDS and brokerage were deducted as is evident from question No.6 of the statement of Mr. Nilesh Bharani recorded by the AO. Moreover, during the recording of statement and cross examination of Mr. Nilesh Bharani parties have confirmed that they had transactions with banking channel only. 19. In view of what has been discussed above ther....
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.... mind to initiate proceedings u/s 153C of the Act as the seized material was found and seized from the premises of the third party as discussed. It is settled law that the recording of satisfaction by the assessing officer of the searched person is sine qua non to initiate proceedings u/s 153C of the Act even in case where the assessing officer of the searched person and the other person is the same. The CBDT vide Circular No. 7/2003 dated 05.09.2003 had also explained the procedure for making assessment u/s 153A and 153C of the Act. It is also clear from the provision of section 153C and section 153A of the Act that these are the separate independent provisions because of non-obstante clause begins with the said sections. In the case of the assessee, the AO incorrectly without application of mind has not issued notice u/s 153C of the Act and instead of complying with the provisions of section 153C of the Act, proceeded with assessment u/s 153A of the Act. The AO has initiated assessment u/s 153A of the Act merely on the basis of statement recorded u/s 132(4) at the premises of the assessee in a separate search action where no incriminating material was found and the incriminating ....
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....see is allowed. ITA No. 6494/M/2024 (A.Y. 2013-14) 14. Since the similar issue on identical fact, we have allowed the legal ground of appeal of the assessee that assessment made u/s 153A on the basis of incriminating document found and seized from the search action carried out at the premises of third party was not valid, therefore, applying the finding of ITA No. 6493/M/2024 mutatis mutandis the ground no. 1 to 4 of the appeal of the assessee are allowed. The other ground of appeal of the assessee 5 to 7 become infructuous and left open as discussed. ITA No. 6495/M/2024 (A.Y. 2014-15) 15. Since the similar issue on identical fact, we have allowed the legal ground of appeal of the assessee that assessment made u/s 153A on the basis of incriminating document found and seized from the search action carried out at the premises of third party was not valid, therefore, applying the finding of ITA No. 6493/M/2024 mutatis mutandis the ground no. 1 to 4 of the appeal of the assessee are allowed. The other ground of appeal of the assessee 5 to 7 become infructuous and left open as discussed. ITA No. 6496/M/2024 (A.Y. 2015-16) 16. Since the similar issue on identical fact, we ....