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2019 (7) TMI 792 - ITAT DELHIValidity of Proceedings u/s 158BD/158BC - unexplained deposits in bank accounts - no search u/s 132(1) but a requisition was made u/s 132A - cheque books seized by the Enforcement directorate in a search and seizure operation u/s 37 of the Foreign Exchange Regulation Act - HELD THAT:- It was highlighted in CIT v. Ravi Kant Jain [2001 (3) TMI 52 - DELHI HIGH COURT] how the procedure of Chapter - XIV-B is intended to provide a mode of assessment of undisclosed income, which has been detected as a result of search. The scope and ambit of a block assessment is limited to materials unearthed during search and the assessment for the block period can only be done on the basis of evidence found as a result of search or requisition of books of account or documents and such other materials or information as are available with the AO. After looking to the facts and circumstances of the case, documents and material placed before us, we are of the opinion that there is no material which suggest that the cheque books belong to the M/s Mittal Consul & Co, as appellant has established that such cheque books belong to the clients of M/s Mittal Consul & Co. In such circumstances, action of the revenue to bring to tax the deposits made in such accounts in the hands of the appellant is devoid of any merit. Hence, addition made in respect of the deposits in such bank accounts and sustained by the CIT(A) are deleted. In fact, the revenue had not filed any appeal against the order of CIT(A) deleting the additions. The details of such additions have already been tabulated in foregoing para 13 above. In the result, we hold that the additions sustained by CIT(A) of ₹ 1,06,23,044/- in the case of M/s Mittal Consul & Co. on substantive basis is deleted. - We further hold that the additions sustained on protective basis in the assessments made in the cases of M/s Tushar Stock & Share Brokers Pvt. Ltd. and that of Shri R. K. Mittal are also unsustainable, hence are deleted. Addition in respect of the receipt of the share capital - HELD THAT:- Once the assessee has furnished the adequate evidence/material, the burden of the assessee is discharged in proving identity of shareholders, genuineness of transaction and creditworthiness of shareholder, and hence addition made by the AO and sustained by the CIT(A) without rebutting such material or without bringing any adverse material is unsustainable in law. It is not a case, wherein the shareholders have denied the investment made in the assessee company nor any enquiry has been made from such shareholders to prove that share capital received by the assessee is not genuine. Therefore, addition made in respect of the receipt of the share capital is deleted. In our opinion further as stated above, such an addition was otherwise unsustainable as it did not represent any undisclosed income within the meaning of section 158B(b). Disallowance of 1/10th of the expenses - on account of the purported personal user of Telephone & Cars - personal use in case of the corporate entity - HELD THAT:- The issue is covered by the judgment of the High Court of the Gujarat in the case of Sayali Iron & Engineering Co. Vs. CIT. [2001 (7) TMI 70 - GUJARAT HIGH COURT] wherein it has been held that in the case of a company, which is a corporate entity there cannot be any personal element involved no disallowance of any expenditure can be made for possible personal use. Further as has been observed by us as aforesaid, otherwise too the aforesaid disallowance made was outside the pale of Chapter XIVB of the Act. In such circumstances, aforesaid disallowance made is deleted. - Decided in favour of assessee.
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