TMI Blog2023 (5) TMI 1050X X X X Extracts X X X X X X X X Extracts X X X X ..... ant Shah, Shri Parveen Kumar Jain and Shri Partik R Shah and the premises of Shri Ashit Vohra and office of Shri Anil Hiralal Shah others B-406, Wall Street-II Ellisbridge Ahmedabad. Therefore materials could only have been made basis for making addition after following the procedure laid down under the provisions of section 153C which has not been followed. Thus, we do not find any infirmity in the finding of the learned CIT (A). Grounds of appeals raised by the Revenue are hereby dismissed. Addition u/s 68 - bogus credit of loan - expenses incurred for taking such bogus entry - AO doubted the creditworthiness merely on the basis that the loan party was showing meagre income in income tax return - HELD THAT:- As far as creditworthiness of the loan party is concerned, the same can be viewed from a different angle i.e. there may be funds in the form of capitals, reserve surplus and loans. Undoubtedly, the learned CIT-A has given finding that huge additions were made in the assessment framed with respect to the loan party under the provisions of section 68 - If these additions are deleted by the higher forum, then it becomes evident that there was sufficient fund availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act ) relevant to the Assessment Years 2009-2010 to 2014-15. Since, the issues involved in all these appeals are identical, we proceed to dispose of all the appeals by way of this common order for the sake of convenience and brevity. First, we take up IT(SS)A No. 128/AHD/2021, an appeal by the Revenue for AY 2009-10 as lead year, in the case of Real Marketing Pvt. Ltd. 2. The Revenue has raised following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the additions made by the AO in the order u/s 143(3) r.w.s 153A on legal grounds that the additions should have been made u/s 153C, without appreciating the fact that provisions of section 153C empowers the Assessing Officer to assess or re-assess the income of the person other than searched person, but the assessee being searched person was squarely covered under section 153A. 2. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in accepting the contention of the assessee that the assessment u/s 153A is to be made solely on the incriminating material found during the search carried out in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seizure may arise in any of the said six assessment years after the search u/s. 132 is conducted in the case of the assessee, and that if the interpretation of the Id- CIT(A) were to hold it will not be possible to assess such income in the 153A proceedings, while no other parallel proceedings to assess such other income can be initiated, leading to no possibility of assessing such other income, which could not have been the intention of the legislature. Further, the AO is duty bound to assess correct income of assessee as held by the Hon'ble Apex Court in the case of Mahalaxmi Sugar Mills, 160 ITR 920(SC). 2.6. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that in all the assessments framed u/s 153A, authorization u/s 132 was issued and incriminating material was found during the course of search in the premises controlled by the searched group which directly belong to the concerned assessee. 3. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has misinterpreted and extrapolated the judgment of Hon'ble Delhi High Court in the case of CIT Vs. Kabul Chawla, 380 ITR 573 (Del) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of the share application money including share premium, cash credits (loans) u/s.68, disallowance of the expenditure being commission paid on the share application money and unsecured loans u/s.69C of IT Act on legal grounds. 7. On the facts and circumstances of the case and in law, the Ld. CIT{A) has in deleting the addition of Rs.10,42,49,000/- made u/s 68 on account of unexplained credits in the form of Share Application Money, on legal grounds, without going into the merits of the issue. 8. On the facts and circumstances of the case and in law, the Ld. CIT(A) has in deleting the addition of Rs.20,84,980/- made u/s 69C on account of unaccounted expenses on accommodation entry of Share Application Money, on legal grounds, without going into the merits of the issue. 9. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.10,01,98,618/- made u/s 68 on account of unexplained credits in the form of unsecured loans on legal grounds, without going into the merits of the issue. 10. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.20,03,972/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ium and unsecured loan received during the year under consideration for Rs. 10,42,49,000/- and Rs. 10,01,98,618/- respectively as unexplained cash credit under section 68 of the Act and added to the total income of the assessee. The AO also worked out expenses incurred for taking such accommodation entries of shares capital and loan @ 2% i.e. Rs. 20,84,980/- and Rs. 20,03,972/- and added to the total income of the assessee under section 69C of the Act. 6. The aggrieved assessee preferred an appeal before the learned CIT(A). 6.1 The assessee before the learned CIT(A) submitted that no material of incriminating nature was found from its premises. There were only two premises being A-301, Wall Street II, Ellisbridge and 24, Jogeshwari Park against which panchanama was drawn in its name but no document of incriminating nature was found from the said premises neither the reference was made by the AO of such premises while making addition to the total income. Therefore, no addition can be made in the proceedings under section 153A of the Act in the absence of incriminating documents found from its premises. The materials referred and relied by the AO for making addition were fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.3 about the evidences of accommodation entries received during the period 01.01.2012 to 14 in the form of unaccounted cash book seized as per Annexure A/5, A/6 and A/4 from the premises of Shri Ashit Vora. The material on which the AO has relied upon has been seized from the premises of Shri Ashit Vora from B-5 Vasupujya Society, Paldi, Ahmedabad wherein also in the panchnama nowhere the name of the appellant company has been found mentioned. Further, the loose pages seized from the premises are related to the F.Y. 2011-12 to F.Y. 2014-15 i.e. A.Y. 2012-13 to A.Y. 2015-16 and also are not related to the appellant company. Hence, making addition relying upon the material or information gathered during the search and survey carried out on third persons cannot be used for the purpose of section 153A. In case, he decided to use the material seized from third parties in the assessments of the assessee, the only course open to him is invoking provisions of section 153C of the Act which was not done by the AO. Thus the appellant has contended that the addition made for A.Y. 2009-10 to A.Y. 2015-16 is baseless as no incriminating material/ no material has been found and seized from the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant made huge addition in the assessment of the appellant on the basis of material seized from 'third parties' i.e' searched person'. - The AO of the 'searched person' and the AO of the appellant did not follow any of the mandatory requirements prescribed in law and judicial pronouncements in a catena of reported decisions rendered by higher judiciary. - AO of the appellant usurped and executed all the powers conferred u/s 153C of the Act in total violation of law without even issuing notice u/s.153C to the appellant. 11.7 Section 153C(1) of the Act, as it stood on the date of search i.e 04.12.2014, reads as under: Assessment of income of any other person. {1} Notwithstanding anything contained in section 139, section 147, section 148, n 149 section 151 and section 153, where the Assessing Officer is satisfied that, any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his income. 11.9 It is worth to mention that the provisions of section 158BD are perimetria to the provisions of section 153C of IT Act. In this regard the first authority on the issue is the decision of the Hon'ble Supreme Court in the case of Manish Maheswari vs. ACIT (2007) 289 ITR 341 (SC) albeit u/s 158BO of the Act. The decision of Hon'ble Gujarat High Court in the case of CIT vs. Lalit Kumar Patel [2013] 36 taxmann.com 554 (Gujarat) The decision of Hon'ble Gujarat High Court in the case of CIT v. Champakbhai Mohanbhai Patel [2015] 60 taxmann.com 128 (Gujarat)/370 ITR 700 (Gujarat) In the above decisions of the Hon'ble Courts have held that if the Assessing Officer has not recorded its satisfaction, which is mandatory; no addition could be made under the said provisions. 11.10 There were a number of cases in which higher judicial authorities has been annulling orders of the AOs for not following the mandatory conditions of sections 158B0 and 153C of the Act by the AOs. In order to guide the AOs and to reduce litigation in this regard CBDT issued Circular No. 24/2015 dated 31.12.2015 further emphasising, mandating recording of sat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1588D/153C should be withdrawn/not pressed if it does not meet the guidelines laid down by the Apex Court . 11.11 A combined reading of section 153C of the Act, CBDT circular and the decision of the Hon'ble Supreme Court clearly bring out the mandatory requirements to be fulfilled by both the AOs i.e the one having jurisdiction over the 'searched person' and the other having jurisdiction over the 'other person' as under: The AO having jurisdiction over the 'searched person' has to record his satisfaction in writing that the seized assets belong to the 'other person'. The AO of the 'searched person' shall hand over the seized books documents and assets to the AO having jurisdiction over the 'other person'. The AO having jurisdiction over the 'other person' shall proceed against the person' by issuing notice u/s 153C of the Act. The AO of the 'other person' shall assess or reassess his total income in nee with the provisions of section 153A of the Act. 11.12 While holding that recording of proper satisfaction, giving a finding that the seized material belonged to the 'ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to such and such other person. 11.13 It is also submitted that U/s 132(4A)(i), there is a presumption that the documents seized from a person belonged to such person. There is also presumption u/s 292C(l)(i) that a document which is found from a person who was searched, would be belonging to that person. The Hon'ble High Court has held that the A.O. must at the first instance rebut such a presumption provided in the Act itself and only thereafter he should come to the conclusion or satisfaction that the seized document belonged to someone else. There must be some cogent material available with the A.O. before he arrives at a satisfaction that the seized document did not belong to the searched person but to somebody else and that surmises and conjectures can not take the place of satisfaction. Pepsico India Holding (P.) Ltd. v. ACIT [2014] 50 taxmann.com 299/(2015] 228 Taxman 116 (Mag.) (Delhi) 11.14 The facts of the case mentioned as above, clearly show that the AO of three parties mentioned above did not record any satisfaction whatsoever regarding the material seized in his case. In such a case, the question that the material was incriminating and it belonge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not done by the AO in the case of appellant. Thus there is non compliance of provisions of section 153C of IT Act and the additions have been made u/s.153A of IT Act which is not in accordance with the judicial pronouncements made by the Hon'ble Courts as discussed in the preceding paras of this order. 11.22 The issue related to addition u/s 153A in the cases in which the proceedings are not abated has been decided in favour of the assessee by the Jurisdictional High Court and Jurisdictional Tribunal as relied upon by the ant. Legal position on the issue has been discussed comprehensively in the case CIT vs. Kabul Chawla (2016) 380 ITR 573 (Del-HC) dated 28/08/2015. 11.23 It is a settled position of law at present that the completed assessments can be interfered with by the Assessing Officer while making assessment under section 153A only on the basis of some incriminating material unearthed during the course of search at the place of assessee, which was not produced or not already disclosed or made known in the course of the original assessment proceedings. 11.24 Further, the appellant had filed the original return on 30.09.2009 and the regular assessment u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of this special and very important factual matrix of this case, the provisions of section 153A are not applicable. To strengthen the aforesaid contention, it is submitted that it is very settled position of law as evident from various decisions of Tribunal as well as High court that Assessing Officer has no jurisdiction to make additions in the order passed u/s 153A of the Act which are not pertaining to any undisclosed income or seized material when proceedings are closed and attained finality. In support of its contention the appellant strongly relies on the decision of Hon'ble Gujarat High Court in case of CIT Vs. Saumya Construction Pvt Ltd (Tax appeal No. 24 of 2016) dated 14th March 2016. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 11.27 It is an undisputed fact that on the date of initiation of the search no assessment proceedings were pending in this assessment year. Therefore, the proceedings were not abated in the case as mentioned in the second proviso to section 153A (1) of the Act. It seems that the AO lost sight of the fact that he was not making an assessment under section 153A (1) of the Act read with its second proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. 10. On the contrary, the learned AR before us submitted that the year being unabated assessment year, the same cannot be disturbed in the search proceedings under section 153A of the Act in the absence of incriminating material. As per the ld. AR, the assessment under search proceedings is limited to the extent of the incriminating documents found on the premises of the search person. As such, there was no document found from the premises of the search person, therefore, no addition can be made. Likewise, as per the ld. AR, the documents found on the premises of the third parties cannot be used while framing the assessment under section 153A read with section 143(3) of the Act without complying the provisions of section 153C of the Act. 10.1 Both the ld. DR and the AR before us vehemently supported the order of the authorities below as favourable to them. 11. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, there was search proceeding under section 132 of the Act dated 4th December 2014 (i.e. during the financial year 2014-15 corresponding to A.Y. 2015-16) carried out in the case of Barter/Accommodation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / information which were collected during the search proceedings and not produced in the original assessment proceeding. Simultaneously, these documents had bearing on the total income of the assessee. Now coming to the case on hand, we note that there was no incriminating document of whatsoever found from the premises A-301, Wall Street II, Ellisbridge and 24, Jogeshwari Park against which panchanama was drawn in the name of respondent assessee. The AO in the assessment order while making the addition in the hands of assessee nowhere referred any material of incriminating nature found from the above 2 premises of assessee regarding credit of share capital along with premium and unsecured loan with reference to the year under consideration which would have made basis for the addition in the assessment. The AO for making the addition referred the material found from the premises of the third parties Shri Shrish Chandrakant Shah, Shri Parveen Kumar Jain and Shri Partik R Shah. We find that these parties are unconnected to the assessee and search carried on their premises were an independent search. Likewise, the AO also referred the materials found from the premises of Shri Ashit Voh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... handrakant Shah, Shri Parveen Kumar Jain and Shri Partik R Shah or the material found from the premises of Shri Asit Vohra and from the office of Shri Anil Hiralal Shah situated at B-406, Wall Street-II Ellisbridge which do not belong to the assessee as the name of assessee was not found in the panchanama drawn on theses premises. The law is fairly settled that the proceedings under section 153C of the Act can be initiated in a situation where the documents/materials belonging/pertaining to the assessee were recovered from the premises of the 3rd party during search proceedings under section 132 of the Act. Then, the AO of the search party has to record the satisfaction by observing that the documents found in the course of search from the premises of the 3rd party belongs/ pertains to the person other than the searched person and he will hand over such satisfaction along with the necessary documents to the AO of such other person who was not subject to search. The AO of the other person has again will record his satisfaction that the documents found from the premises of the 3rd party during search has bearing on the income of the assessee. The question arises what the fate of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of accounts etc found at the time of search in the premises of a person is always presumed to be belonging to him / them unless proved otherwise. This goes to prove that the presumption derived is a rebuttable presumption. Then in such a scenario, the person on whom presumption is drawn , has got every right to state that the said documents does not belong to him / them . The ld AO if he is satisfied with such explanation , has got recourse to proceed on such other person (i.e the person to whom the said documents actually belong to) in terms of section 153C of the Act by recording satisfaction to that effect by way of transfer of those materials to the AO assessing the such other person. This is the mandate provided in section 153C of the Act. In the instant case, if at all, the seized documents referred to in CG/1 to 11 and CG/HD/1 is stated to be belonging to assessee herein, then the only legal recourse available to the department is to proceed on the assessee herein in terms of section 153C of the Act. In this regard, we would like to place reliance on the recent decision of the Hon'ble Delhi High Court in the case of CIT v. Pinaki Misra Sangeeta Misra [2017] 392 ITR 34 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: 10.2 We find that the Co-ordinate Bench of this tribunal in the case of ACIT v. Kanchan Oil Industries Ltd in ITA No. 725/Kol/2011 dated 9.12.2015 reported in 2016- TIOL-167-ITAT-KOL had explained the aforesaid provisions as below: 6.4 In our opinion, the scheme of assessment proceedings should be understood in the following manner pursuant to the search conducted u/s. 132 of the Act : (a) Notice u/s. 153A of the Act would be issued on the person on whom the warrant of authorization u/s. 132 of the Act was issued for the six assessment years preceding the year of search and assessments thereon would be completed u/s. 153A of the Act for those six ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch takes place under section 132 of the Act, notice under section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. (ii) Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the LD AOs as a fresh exercise. (iii) The LD AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The LD AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs in which both the disclosed and the undisclosed income would be brought to tax . (iv) Although Section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the LD AO which can be related to the evidence found, it do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Kabul Chawla (supra) had duly considered the decisions of Anil Kumar Bhatia case (supra) CIT v. Chetan Das Lachman Das [2012] 211 Taxman 61/26 taxmann.com 175 (Delhi); Madugula Venu v. DIT[2013] 215 Taxman 298/29 taxmann.com 200 (Delhi); Canara Housing Development Co. v. Dy. CIT[2014] 49 taxmann.com 98 (Kar.); Filatex India Ltd. v. CIT[2014] 229 Taxman 555/[2014] 49 taxmann.com 465 (Delhi); Jai Steel (India) v. Asstt. CIT[2013] 219 Taxman 223/36 taxmann.com 523 (Raj.); CIT v. Murli Agro Products Ltd.[2014] 49 taxmann.com 172 (Bom.); CIT v. Continental Warehousing Corpn. (Nhava Sheva) Ltd.[2015] 374 ITR 645/232 Taxman 270/58 taxmann.com 78 (Bom.) and All Cargo Global Logistics Ltd. v. Dy. CIT[2012] 37 ITD 287/23 taxmann.com 103 (Mum. Trib.) (SB). We also find that against the decision of the Hon'ble Delhi High Court in Kabul Chawla case (supra) (Delhi), the revenue preferred Special Leave Petition before the Hon'ble Supreme Court and the same was dismissed by the Hon'ble Apex Court which is reported in 380 ITR (St.) 4 (SC). Hence it could be safely concluded that the decision of Hon'ble Delhi HC in the case of Kabul Chawla (supra) would have to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsence of any incriminating material found in the course of search and accordingly no fresh addition could be made thereon without the existence of any incriminating materials found in the course of search from the premises of the assessee. Since the issue is addressed on preliminary ground of absence of incriminating materials, we refrain to give our findings on the merits of the additions for the Asst Year 2009-10 in the case of Krishna Kumar Singhania. Accordingly the preliminary ground raised by the assessee in this regard is allowed. 11.6 Based on the above, we hold that the revenue has to follow the procedures laid down under the provisions of section 153C of the Act in a situation where the documents were found from the premises of the 3rd party irrespective of the fact that the other party was also subject to the search. In other words, the process as provided under section 153C of the Act has to be followed by the revenue for the purpose of making the addition based on the documents found in the course of search from the premises of the 3rd party. 11.7 Coming to the facts of the case on hand, we note that the AO while making the addition in the hands of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of unsecured loans received from associated entities as unexplained cash credit, despite the assessee failed to prove the creditworthiness of creditor and genuineness of transaction as required u/s 68 and also without appreciating the fact that the Barter Group was engaged in providing accommodation entries. 2 On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.11,20,000/- made u/s 69C being consequential in nature, despite the assessee failed to prove the creditworthiness of creditor and genuineness of transaction as required u/s 68 in respect of such unsecured loans on which expenses was claimed and also without appreciating the fact that the Barter Group was engaged in providing accommodation entries. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 4. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O- be restored to the above extent. 15. The only issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition made by the AO under section 68 of the Act on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depositor are proved by the assessee and hence the primary onus cast upon the assessee is discharged and the onus now shifted to the AO to show why the assessee's case could not be accepted and why it must be held that deposits though purporting to be in the name of third party still represents the income of the assessee from a suppressed source. In order to arrive at such a conclusion, the AO has to be in possession of sufficient and adequate material- Further the assessee cannot be presumed to have special notice about the source of source or origin of origin. Once the assessee has explained the source of the funds having come from the depositors as an explanation to support the deposits received, it is not expected from the assessee to explain the source of the source. Even if it is assumed that the depositor was unable to explain the nature and source of the funds received by them which were placed as deposits with the assessee than its unexplained amount could be treated as unexplained investment in the hands of the depositors u/s 69 or other section but could not be taxed in the hands of the assessee in absence of any evidence leading to the fact that the undisclosed inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blished. In any case, the assessee would not know source of the source and origin of the origin as to from where the creditor got the funds. The Hon'ble Supreme Court in the Case of Lovely Exports has held that if confirmations with PAN have been submitted by the assessee and the AO has any doubt, the AO may proceed against those shareholders but income cannot be added in assessee's hands. Further, the Hon'ble Gujarat High Court in the case of CJT Vs. Ranchhod Jivabhai Nakhava in tax appeal No.50 of 2011 -208 Taxman 35 (Guj.) has held that once the assessee submits creditors confirmation with PAN the onus shift to the AO. 9.14 With regard to the reliance of the AO on papers found and seized from the premises of third parties it is noticed that his statements on the documents has not been brought on record by the AO and the assessee has not been provided the opportunity of cross-examination from the third parties and have not been provided the copy of their statements before making the addition in the case of the assessee. It is the legal requirement that no addition can be made without granting opportunity of cross-examination and providing copy of statement and f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inabove and hence this addition being consequential in nature is also hereby deleted. 18. Being aggrieved by the order of the learned CIT(A) the Revenue is in appeal before us. 19. The learned DR before us submitted that the assessee failed to discharge the onus imposed under section 68 of the Act by furnishing the necessary details. 20. On the contrary, the learned AR submitted that the assessee has discharged the onus imposed under section 68 of the Act. Thus, no addition is called for. 20.1 Both the ld. DR and the AR before us vehemently supported the order of the authorities below as favourable to them. 21. We have heard the rival contentions of both the parties and perused the materials available on record. The provisions of section 68 of the Act fastens the liability on the assessee to provide the identity of the lenders, establish the genuineness of the transactions and creditworthiness of the parties. These liabilities on the assessee were imposed to justify the cash credit entries under section 68 of the Act by the Hon ble Calcutta High Court in the case of CIT Vs. Precision Finance (P) Ltd. reported in 208 ITR 465 wherein it was held as under: It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordance with materials available on record but not in arbitrary and mechanical manner. 21.6 In the light of the above discussion, we proceed to adjudicate the issue on hand. We find that during the assessment proceedings under section 153A of the Act, the details such as copy of PAN, ITR, ledger account, bank statement and confirmations from the loan creditors were filed by the assessee. Furthermore, the AO of the loan creditor namely M/s Deesha Tie Up Pvt. Ltd and the assessee was the same and all the necessary details were already available with him about the loan creditor. However, the AO without pointing out any deficiency in the above primary documents held that the assessee failed to explain the genuineness of the unsecured loan and creditworthiness of the creditor. The view of the AO was based on the fact that during the search proceedings, certain incriminating materials found from the premises of other person who were part of the group search were suggesting that the assessee group was engaged in unaccounted business activity wherein unaccounted cash was generated which have been utilized for making deposits in the bank of individuals and other entities controlled by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditor end and not from the assessee. 21.9 In view of the above elaborate discussion and after considering facts in totality, we hereby hold that the assessee on merits discharged the onus cast under section 68 of the Act. Once the loan amount credited in the books of the assessee found to be genuine and addition under section 68 of the Act is deleted, in our considered view the corresponding estimated expenses against such loan cannot be sustained. 21.10 Moving further, the AO referred to the principles laid down by the Hon ble Calcutta High Court in the case of M/s Trinetra Commerce Trade (P.) Ltd. reported in 75 taxmann.com 70. However, in our considered opinion the principles laid down by the Hon ble Calcutta High Court in above mentioned case cannot be applied in the given facts of the case. In that case, the persons who have acquired the shares in the company were not traceable and therefore the identity of those parties were not established. Once the identity was not established, the question of placing reliance on the genuineness of the transaction and creditworthiness of the parties does not arise. However, in the case on hand, the identity of the party who have giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on facts in observing that appellant has not divulged its identity of Candour Pharma Pvt. Ltd at the time of assessment proceedings ignoring fact that appellant had submitted confirmation with PAN and address during assessment proceedings. Ld. CIT (A) ought to have deleted addition as appellant had discharged primary cast during assessment proceedings. It be so held now. 5. Ld. CIT (A) erred in law and on facts in not considering fact that appellant had satisfy primary cast on him regarding acceptance of unsecured loan and share application as laid down by jurisdictional high court. 6. Ld. CIT (A) ought to have deleted addition made by AO considering submissions / explanations submitted during assessment proceedings and appellate proceedings. It be so held now. 7. Ld. CIT (A) erred in law and on facts in observing non attendance by the appellant ignoring fact that ultimately same is attended by appellant through authorized representative and submitted all details. 8. Levy of interest u/s 234A, 234B, 234C 234D of the act is not justified. 9. Initiation of penalty proceedings u/s 271 (l)(c) is unjustified The appellant craves leave to add, amen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 133(6) of the Act issued to these parties were returned as unserved, then how these parties felt necessary to post confirmation letter. - The party namely M/s Shree Ganesh Spinners Ltd which allegedly credited share application money for Rs. 50 lakh sent confirmation letter from Mumbai whereas as per the address given by the assessee, the impugned party is based in Hyderabad. - As per form 3CD of the Tax Audit Report, a loan amount of Rs. 1.5 crore shown to have received from M/s Sagar India Pvt. Ltd but in the balance sheet loan was shown from M/s Sagar Infid Pvt Ltd whereas confirmation letter was filed in the name of M/s Sagar Infrastructure Pvt. Ltd. To verify the genuineness of loan, departmental commission was deputed at M/s Sagar Infrastructure Pvt. Ltd and as per report submitted by ITO ward 8(1) Ahmedabad, the impugned party in his books of account has shown total loans and advances of Rs. 16,02,922/- only which does not include the name of the assessee. 25.1 Thus, the AO in view of the above treated the credit of share application money of Rs. 6.30 crores and loan of Rs. 1.50 crores as unexplained credit under section 68 of the Act and added to the total incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs. Thus, it was contended by the learned AR that the assessee discharges its onus upon it by furnishing the primary documents. The learned AR further submitted that the additional documents filed during the hearing were to strengthen the case of the assessee. Furthermore, the authorities below could have obtained the copies of the income tax return from the portal of the income tax Department. As such these documents cannot be treated as additional documents to decide the issue at hand. As such, these documents should not be sent to the AO for further adjudication and consideration. 29.1 The learned AR with respect to the loan taken from the company namely Sagar Infrastructure P. Ltd contended that the report obtained from the AO of Sagar Infrastructure P. Ltd was not provided to the assessee for its rebuttal and therefore the same cannot be used to draw any inference against the assessee. 30. On the other hand, the learned DR vehemently supported the order of the authorities below. 31. We have heard the rival contentions of both the parties and perused the materials available on record. In the present case, the assessee has shown receipt of share application money amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee based on proper appreciation of material facts and circumstances available on record. Without application of mind and making proper inquiry, the primary evidence furnished by the assessee cannot be brushed aside merely on surmise and conjecture. Over the year the judicial authority has laid principle that sources of sum credited held to be explained if assessee furnishes evidence regarding identity of creditor, genuineness of transaction and creditworthiness of the creditor. 31.5 In the case on hand, the assessee regarding the credit of share application money of Rs. 6.3 crores furnished copy of share application form containing all details of the parties, confirmation letter of the parties and copy of Board resolution passed by the board of the share applicant. All these parties independently sent confirmation letters to the AO by post. The lower authorities merely on surmises and conjecture doubted the copy of board resolution and copy of confirmation sent by the parties. Further, the AO had details of PAN and was very much empowered to collect the income detail of the parties but without making inquiry rejected the primary document. 31.6 Bethat as maybe we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR. Except the bank statement, the other documents being copy of ITR and annual account of the parties, the AO may have easily obtained from the ITD portal. 31.10 Thus, considering the primary document submitted by the assessee before the lower authorities and additional evidencefurnished before us, we are of the opinion that the assessee is able to explain the sources of credit of share application money. Hence, the addition to the extent of credit of share application money needs to be deleted. 31.11 Coming to the credit of unsecured loan from M/s Sagar Infrastructure Pvt Ltd., we note that the assessee has received a sum of V1.50 crores as evident from the bank statement placed on page 53 of the paper book. However, as per the report obtained by the AO from the AO of Sagar Infrastructure P. Ltd, it was revealed that the party namely Sagar Infrastructure P. Ltd has not shown any loan to the assessee. Thus, the addition was made by the AO which was subsequently confirmed by the learned CIT-A. Thus, it is transpired that the basis adopted by the AO for the addition of unsecured loan was the report obtained from the AO of Sagar Infrastructure P. Ltd. However, we note that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal. [Para 6] 31.15 In view of the above elaborated discussion and after considering the facts in totality, we hereby hold that the assessee discharged the onus cast under section 68 of the Act. Hence, we do not find any reason to uphold the finding of the learned CIT(A). Thus, the ground of appeal of the assessee on merit is hereby allowed. 32. In the result, the appeal of the assessee is allowed. Coming to IT(SS)A No. 181/AHD/2021 an appeal by the Revenue for the A.Y. 2009-10 in case of Neminath Traders Pvt. Ltd. 33. The Revenue has raised following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the additions made by the AO in the order u/s 143(3) r.w.s 153A on legal grounds that the additions should have been made u/s 153C, without appreciating the fact that provisions of section 153C empowers the Assessing Officer to assess or re-assess the income of the person other than searched person, but the assessee being searched person was squarely covered under section 153A. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in accepting the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case and in law, the Ld. CIT(A) has erred in not appreciating that assessment in relation to certain issues not related to the search and seizure may arise in any of the said six assessment years after the search u/s. 132 is conducted in the case of the assessee, and that if the interpretation of the Id. CIT(A) were to hold it will not be possible to assess such income in the 153A proceedings, while no other parallel proceedings to assess such other income can be initiated, leading to no possibility of assessing such other income, which could not have been the intention of the legislature. Further, the AO is duty bound to assess correct income of assessee as held by the Hon'ble Apex Court in the case of Mahalaxmi Sugar Mills, 160 ITR 920(SC). 2.6. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating that in all the assessments framed u/s 153A, authorization u/s 132 was issued and incriminating material was found during the course of search in the premises controlled by the searched group which directly belong to the concerned assessee. 3. On the facts and in the circumstances of the case and in law, the Ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red u/s 132 of the IT. Act, 1961? 6. Whether the Ld. CIT(A) has erred in law and on facts while deleting the addition of Rs.2,79,50,000/- made on account of unexplained share capital/share premium, u/s 68 of the, on legal grounds, without going into the merits of the issue, despite the assessee had failed to prove the genuineness of the transaction and creditworthiness of the persons/entities from whom the funds were obtained and identity of the creditor, nor the assessee raised any such legal ground during the course of assessment proceedings before the Assessing Officer. 7. Whether the Ld, CIT(A) has erred in law and on facts while deleting the addition of Rs.5,59,000/- made u/s 69C on account of unexplained expenditure incurred on the unexplained share capital/share premium, on legal grounds, without going into the merits of the issue, despite the assessee had failed to prove the genuineness of the transaction and creditworthiness of the persons/entities from whom the funds were obtained and identity of the creditor, nor the assessee raised any such legal ground during the course of assessment proceedings before the Assessing Officer. 8. On the facts and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of the assessee. The AO also worked out expenses incurred for taking such accommodation entries of shares capital and premium @ 2% i.e. Rs. 5,59,000/- added to the total income of the assessee under section 69C of the Act. 36. On appeal by the assessee, the learned CIT(A) deleted that the addition made by the AO by holding that no material of incriminating nature was found from the premises of the assessee. The material found from the premises of third cannot be utilized against the assessee for making assessment under section 143(3) r.w.s. 153A of the Act. 37. Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us. 38. The learned DR before us submitted that once a search has been conducted under section 132 of the Act, it is mandatory for the AO to frame the assessment under section 153A of the Act for the six years preceding the year of search and the year of search. Likewise, as per the ld. DR, there is no prohibition from using the documents found on the premises of the third parties while framing the assessment. 39. On the contrary, the learned AR before us submitted that the year being unabated assessment year, the same can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... companies controlled and managed by the above-named alleged entry provider. As per the AO, there was incriminating material found from the premises Shri Shrish Chandrakant Shah corroborating with the pages bearing 224 247 of annexure A1 found from office of Anil Hiralal Shah key person of the group. 40.2 Regarding the finding of the AO, we note the AO lost the sight to the fact there was no amount of whatsoever in the form of share capital and premium received by the assessee from the concern of alleged entry provider Shri Shrish Chandrakant Shah and Parveen Kumar Jain. The amount of share capital and premium for Rs. 2,79,50,000/- which was subject to the addition was received from M/s TPL Finance Ltd which as per own finding of the AO was not connected to the alleged entry provider namely Shri Shrish Chandrakant Shah and Parveen Kumar Jain. The relevant finding of the AO reads as under: ACCOMMODATION ENTRIES RECEIVED THROUGH COMPANIES Apart from the companies managed by Shri Shirish Chandrakant Shah and Shri Praveen Kumar Jain, it is seen that share capital at high premium was received in the assessee-company of Barter Group. Share capital at high premium r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue is that the ld. CIT-A erred in deleting the addition made by the AO only by holding that the assessment under section 153A of the Act can be only based on incriminating material found during the search. 43. The necessary facts are that the AO in the assessment famed under section 143(3) r.w.s. 153A of the Act made addition to the total income of the assessee as detailed below: i) Unexplained cash credits u/s.68 (para 10) Rs.30,73,00,000/- ii) Unexplained expenditure u/s.69C (para 10) Rs.61,46,000/- iii) Unexplained investment u/s.69(para 11) Rs.1,60,00,000/- iv) Unexplained payment/expenses (para 12) Rs.20,00,00,000/- Assessed Income Rs.52,94,46,000/- 44. On appeal by the assessee the learned CIT(A) deleted that the addition made by the AO by holding that no material of incriminating nature was found from the premises of the assessee. The material found from the premises of third cannot be utilized against the assessee for making assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t an excel sheet found from the computer of Shri Shirish Chandrakant Shah contained the cash transaction in the name of Barter-group was corroborating with the page 224 and 247 of annexure A-1 which was found and seized from B-406, Wall Street-II Ellisbridge (panchnama includes name of the assessee) which contains the unaccounted transaction with Shri Shrish Chandrakant Shah and the assessee. 48.2 In this regard, we note that amount of addition under section 68 of the Act also includes credit from entities not controlled and managed by the so-called entry provider namely Shri Shrish Chandrakant Shah and Parveen Kumar Jain. However, no such bifurcation was given by the AO while treating the same as unexplained cash credit. It is undisputed fact that no material of whatsoever be it incriminating or not, was found from the premises of the assessee or other are on record in the connection with the amount of share application money credited from entities not controlled by the Shri Shrish Chandrakant Shah and Parveen Kumar Jain. Therefore, in our considered opinion no addition can be made on account of amount credited from entities which are not controlled and managed by the Shri Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee company. Therefore, the search carried at the premises of Shri Ashit Vohra is an independent search for the assessee company. Hence, the material found from the residence of Shri Ashit Vohra cannot be utilized for making addition in the hands of the assessee company in the proceeding under section 153A of the Act unless and until procedure prescribe under section 153C of the Act is followed. We have given identical finding vide paragraph no 11 to 11.7 of this order in case of group concern namely Real Marketing Pvt Ltd bearing IT(SS) A No. 128/AHD/2021. For detailed discussion, please refer the afore-said paragraph of this order. 48.7 In view of the above and after considering the facts in totality, we do not find any reason to interfere in the finding of the learned CITA(A). Hence, the grounds of appeal of the Revenue are hereby dismissed. 49. In the result, the appeal of the Revenue is hereby dismissed. 50. In the combined results of the appeals are as follows: Sr. No. IT(SS)A/ITA No. Asstt. Year Appeal by Result 1-6. IT(SS) A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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