TMI Blog2017 (8) TMI 1055X X X X Extracts X X X X X X X X Extracts X X X X ..... not be contended that no incriminating material was found during the course of search. Further the order u/s 153A has also been correctly made by ld AO in view of finding of CIT (A) that search was conducted on premises of the assessee. - Decided against assessee. Unexplained cash credit out of the above 13 parties which are located at Kolkata that enquiry letter were issued u/s 133 (6) of the Act to six person only and all of them on 11.02.2013 and 18.03.2013 submitted the information about their annual returns filed with the tax authorities, their bank statement and their annual accounts. The ld first appellate authority also noted that this information received by the AO remained uncontroverted as well as note investigated. The ld CIT(A) further correctly also noted that the flow of funds from the investor companies to the assessee. There is no report available pertaining to the other assessee on whom the Assessing Officer relied very heavily.- Decided against revenue. Unsecured loan from Index Securities without bringing an adverse material on record, the Assessing Officer's conclusion that the appellant did not discharge its onus is not borne out of the material on recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts. (b) The appellant craves leave to add, alter or amend any/ all of the grounds of appeal before or during the course of the hearing of the appeal. 3. The ground of cross objection are as under:- 1. That it be held that the ld Commissioner of Income Tax (appeals) is justified in deleting the addition of ₹ 106800000/- made by the ITO on account of un explained cash deposits. 2. That it be held that the ld Commissioner of Income Tax (appeals) is justified in deleting the addition of ₹ 15000000/- made on account of unsecured loans from M/s Index Securities Research Pvt. Ltd., 3. That it be held that the order of the ld CIT(A) is tenable in law and on facts of the case for the reasons that the respondent has furnished all basic information to prove nature of transaction, genuineness of transaction and credit worthiness of subscribers of share application and lenders. 4. Assessee has raised the following additional grounds of appeal:- 1. The appellant has filed cross objection in the appeal filed by the ACIT, Central Circle 9, New Delhi in 7/Del/ 2015 for the assessment year 2008-09. 2. In the said cross objection the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material was found with respect to addition made by the AO. 8. The briefly stated the facts of the case is that the assessee company is engaged in the business of real estate and filed its return of income on 30th September 2008 declared total income of ₹ 233330/-. On 14.09.2010 search and seizure operation was taken in case of the assessee and group concerns and notice u/s 153A was issued on 18.01.2012. In response to that notice the assessee submitted that return of income filed originally may be treated as return of income in pursuance to notice u/s 153A of the Act. During the course of assessment proceedings it was noted by the AO that statement of Shri Jagmohan was taken during the course of search. Sh. Jagmohan surrendered a sum of ₹ 15 crore out of which ₹ 1 crore was covered under the head of jewellery and ₹ 14 crores was on account of other infirmities. Pre search enquiries resulted that companies from whom the loans were taken by the assessee were Kolkata Based company and whose existence was in question, therefore, the ld AO made addition ₹ 10.68 crore as unexplained cash credit u/s 68 of the Act. Further the ground raised by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The 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 153 A 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 AO which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. v. In absence of any incriminating material, the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of these loans. Therefore it is apparent from the statement of the director and from the submission of the assessee during assessment proceedings, it is apparent that disclosure was also made on account of these loans. In the present case t firstly there was difference in the balance sheet filed by the assessee with The Registrar of Companies and filed with the return of income. Secondly sums were found credited in the bank account of assessee with Axis bank from all these investor companies, which were not explained by the assessee, and subsequently the surrender was made in assessment proceedings, which were confirmed by the assessee during the assessment proceedings. In the present case Sh. Jagmohan Gupta has made a categorical statement for surrendering a sum of ₹ 15 crores during the course of search on Jagat Group of companies where the assessee is also one of the members. Furthermore, the surrender is also corroborated by the statement of Shri Jagmohan Gupta on 19.03.2013 was confronted with itself in balance sheet of the appellant company which is submitted by the assessee along with the return of income and downloaded from the ROC site. The ld AO confronted about ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overs any specified entries which may open up Pandora s box and then it cannot be contended that no incriminating material was found during the course of search. Further the order u/s 153A has also been correctly made by ld AO in view of finding of CIT (A) that search was conducted on premises of the assessee. In views of this we dismiss the cross objection of the assessee. 13. Now we come to the appeal of the revenue in ITA No. 2472/Del/2014, wherein in the first ground addition of deletion of ₹ 10.68 crores on account of unexplained cash credit is challenged. The assessee has received the above amount from 13 companies, which was deposited in Axis Bank Account of the assessee. The ld Assessing Officer made the above addition with respect to all the companies as according to him the assessee did not disclose the above amount and according to him the above companies are based out of Kolkata and their existence are in question. He was further of the view that in case of some other concerns these companies were the investor and summons issued to them were not complied as they were not found existing at their given address. Therefore based on the report of investigation wing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ex P. L td. 1500000/- 7. M/s.Jagran Merchant P. Ltd. 3500000/- 8. M/s. Kanupriya Commercial P. Ltd. 12500000 9. M/s Khushboo Bearing P. Ltd. 2000000/- 10. M/s Paridhi Finvest P. Ltd. 7500000/- 11. M/s Three C Universal Developers P. Ltd. 20000000/- 12. M/s Rasika Garments P. Ltd. 6000000/- 13. M/s Taral Vincom P. Ltd. 9800000/- 106800000/- 13.1 The above amounts were found credited in the Axis Bank, Daryaganj, Delhi in the account no. 279010200005890 pertaining to the appellant during the period 14.11.2007 to 31,03.2008. A statement on oath was recorded on 19.3.2013 of Sh, Jagmohan Gupta. In the statement, Sh, Jagmohan Gupta admitted that the amounts were rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of the information furnished by the AR of the appellant, no further enquiry or investigation was undertaken by the Assessing Officer bringing evidence on record contrary to that which was furnished by the appellant. In the submissions, made u/s 133(6) the above parties stated that the amount was given to M/s. Tirupati Infra-Projects Pvt. Ltd. i.e. the appellant through M/s Bharat Buildwell Pvt. Ltd. On perusal of the assessment record it is seen that in the course of the assessment proceedings vide letter dated 22.03.2013 the appellant stated as under: We are submitting herewith the confirmations from M/s. Bharat Buildwell Pvt. Ltd. for the amount advanced for allotment of shares. The said amount has been paid by the company from the amount received from various companies as asked by you. M/s Bharat Buildwell Pvt Ltd. is a regular income tax assessee and duly filed its income tax return. The copy of the ledger account and copy of balance sheet for assessment year 2008-09 is enclosed. However on perusal of the bank statements, of the above 6 Kolkata parties submitted in the course of the assessment proceedings, I find that money was transferred through their r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Tirupati Infra Projects Pvt. Ltd. Delhi In view of the above finding, such an attempt by the appellant to state that share capital was subscribed by M/s Bharat Buildwell Pvt. Ltd. is misleading to portray that the appellant did not know these companies based in Kolkata but M/s. Bharat Buildwell Pvt. Ltd. knew the source from where it received such amounts. The share capital received from M/s Bharat Buildwell Pvt. Ltd. is a separate issue and is not related to the unsecured loans taken by the appellant from these companies, as there is a direct transfer of funds through the banking channels from them to the appellant. Even though substantial information was provided by the appellant, there was no effort on the Assessing Officer to conduct further enquiries like the directors of these companies, nature of business activities, details of share holders, purpose of the appellant seeking these unsecured loans, relation between the appellant company based in Delhi and those which are based in Kolkata, where utilized, whether the same returned or not, etc. Without bringing any material on record to substantiate his findings, the Assessing Officer simply made an add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drawn by him in the appellant's case based on the enquiries conducted by the DDIT (Inv) Unit-Ill (4) Kolkata in the case of the another company namely M/s. Divine Infra Con Pvt. Ltd. It was observed by the Assessing Officer that the names of the companies mentioned in the enquiry report of M/s Divine Infracon are common with that of the ones in the appellant's case. The Assessing Officer stated that summons were issued to these companies and they remained unanswered and were found to be non-existent at their given address and therefore treated the amounts received by the appellant as bogus and made an addition in the hands of the appellant. Even without bringing any evidence on record for making such addition- 1) There is no report pertaining to M/s. Divine Infracon on record on the basis of which the Assessing Officer inferred a warranty for addition. 2) The AO did not bring on record the names of those companies which were found by him to be common in the case of the appellant as well as in the case of M/s Divine Infracon. 3) Other than the names of the companies being common, no specific findings were given by the AO pertaining to these companies which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer made an addition on the ground that- i) That the above mentioned 13 companies referred in the assessment order were not found existing on the given address. If so, to whom were the summons u/s 133(6) of the I T Act were issued in Kolkata by the Assessing Officer and in response to the same submissions made by them were why not probed? ii) In case of the above 6 companies that responded to the summons issued by the Assessing Officer u/s 133(6), on perusal of the bank statements, I find that money was transferred directly from their respective bank accounts maintained in Axis Bank and Bank of Rajasthan, Kolkata. The Assessing Officer did not make an effort to trace the source and genesis from where the money was generated and transmitted to the appellant's bank account in Delhi, who showed the same as unsecured loan . It is well known that Kolkata is a hub of accommodation entry providers, where unaccounted money transactions are a menace. Knowing the potentiality for detection of such unaccounted transactions, the Assessing Officer in this case was fervourly duty bound to conduct an elaborate, detailed and meaningful independent enquiries rather tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed meager income, and genuineness of the transaction whether such company was used as a conduit to flush the unaccounted money back to the appellant. There is a merit in such enquiry initiated by the Assessing Officer post search, but it could not be elaborated to see the depth and attained a final logical conclusion. There is also nothing on record to say that the submissions made by the 6 Kolkata based companies u/s 133(6) was rejected by the AO. 13.1.10 There is no information on record as to whether the AO issued summons u/s 133(6) to the other 7 companies based in Kolkata. In the absence of any fruitful and meanfull enquiry, and without bringing any material on record, the addition made by the Assessing Officer for the sake of addition on the ground that these entities are based in Kolkata is not correct and in a way detrimental to the revenue. 13.1.11 Post search investigation/enquiry was partly done by the Assessing Officer by issuing summons u/s 133(6) to few companies based in Kolkata, and without bringing on record the outcome of such an exercise. The Assessing officer relied on the contents of a report made in another case with a belief that the names of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. N. R. Portfolios of the jurisdictional Hon'ble High Court cannot be applied here in this case due to the fact that in a) 6 companies responded to the summons issued by the AO u/s 133(6), but no material was brought on record by the AO after conducting the enquiry b) As per the record no summons u/s 133(6) were issued to the 7 other companies thereby meaning that no enquiry/investigation was even initiated by the AO. 17. The ld DR could not point out any infirmity in the order of the ld CIT(A) and therefore we confirm the finding of the ld CIT(A) in deleting the above addition. In the result ground No. 1 of the appeal of the revenue is dismissed. 18. Ground No. 2 of the appeal of the revenue is against the deletion of addition of ₹ 150000,000/- as unsecured loan from Index Securities and Research Pvt. Ltd. During the course of search it was found that this company is managed by the entry operators and the amount of ₹ 1,50,00,000/- is received from that company. ld Assessing Officer doubted genuineness and made the above addition. ld CIT(A) deleted the above addition in view of the confirmation, copies of income tax return and bank statement of the credito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s between the search conducted at Jain Brother's premises on 14.09.2010 with the appellant's transaction of taking and returning the loan amount with M/s Index Securities and Research Pvt. Ltd.. No incriminating material pertaining to the appellant was found at the premises of Jain Brothers. 17.1.2 In view of all these facts, without bringing an adverse material on record, the Assessing Officer's conclusion that the appellant did not discharge its onus is not borne out of the material on record. As per the provisions of section 68 of the IT Act, 1961, the appellant discharged its onus on the identity of the lender, genuineness of the transaction as it was through banking channels and not disputed channel and submitted ITR to show the creditworthiness. Therefore, in the absence of any such finding by the Assessing Officer to say that the loan amount taken from and given back to M/s Index Securities Research Pvt. Ltd., represented unaccounted money of the appellant, is unjustified, without bringing any adverse material on record. Therefore, such addition cannot be sustained and hence an amount of ₹ 1.5 cr. is deleted. 21. The ld DR could not point out ..... X X X X Extracts X X X X X X X X Extracts X X X X
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