TMI Blog2018 (5) TMI 1744X X X X Extracts X X X X X X X X Extracts X X X X ..... RDER PER R.S. SYAL, VP: These three appeals by the assessee relate to assessment years 2008- 09, 2009-10 and 2014-15. Since some of the issues raised in these appeals are common, we are, therefore, proceeding to dispose them off by this consolidated order for the sake of convenience. 2. Following four grounds have been raised in this appeal :- 1. That under the facts and circumstances, the impugned Asstt. Year being abated one as per 2nd proviso to section 153A(1), hence, Ld. AO exceeded his jurisdiction in examining the issue for addition of ₹ 19,35,720/- as the same is not emanating from any material found/seized of incriminating nature or even otherwise. 2. That without prejudice, in the absence of finding of incriminating material etc. belonging to the assessee in the search of a 3rd party, the assumption of jurisdiction u/s 153C is unwarranted. 3. That without prejudice, in the absence of recording any satisfaction by the AO of the assessee, the whole proceedings are illegal and without jurisdiction. 4. That under the facts and circumstance, addition of ₹ 19,35,720/- u/s 68 for receipts from 7 persons as mentioned in Para-4 of the Asstt. Ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seizure action u/s 132(1) of the Act was carried out on 19.10.2011. Original assessment for the year under consideration was completed u/s 143(3) on 06.05.2010.A copy ofthe assessment order is placed on record, as per which the declared income of ₹ 11,86,960/- was accepted. This shows that at the time of search, no proceedings in relation to the assessment year under consideration were pending. 6. At this juncture, it is significant to note that when a search is conducted, there can be possibly two types of assessment years, namely, completed assessments and non-completed or pending assessments. Assessment years having completed assessments mean the years for which either the assessments stood completed by the AO u/s 143(3) or section 144 before the date of search or the years for which the regular assessments were not taken up after the filing of the returns by the assessee and further that the time limit for issuing notice u/s 143(2) got lapsed on the date of search. On the other hand, the assessment years having non-completed or pending assessments mean the years for which the assessments are pending on the date of search which are abated in terms of the express provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w taken by the Tribunal. It summarized the legal position in para 37 of its judgment as under: - `On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of ₹ 19,35,720/- u/s 68 of the Act on this score, which includes an amount of ₹ 3,75,000/- appearing in the name of Sh. Matwar Prasad. The said person was working as an employee with M/s Jainco. Pvt. Ltd., being, a company in which the assessee is a related party. His statement was recorded u/s 132 of the Act during the course of search, in which he deposed not to have deposited any money with any person or any company. Such a statement has been reproduced on pages 6 and 7 of the impugned order. In response to question no. 2, he stated that he was working with M/s Jainco Pvt. Ltd. for the last 7-8 years. In response to question no. 8, he submitted that his monthly salary was ₹ 8,000/-. Answering question no. 9, he stated that his monthly family expenditure was ₹ 5,000/- to ₹ 6,000/-. Replying to question no. 11 specifically on the point as to whether he had invested his savings anywhere, he replied in negative by deposing that he had neither made any investment nor givenany amount to others. It is evident from the statement of Shri Matwar Prasad recorded during the course of search u/s 132 that he admitted not to have given any loan or advance to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tune of ₹ 3,75,000/- in terms of his statement recorded u/s 132, we hold that in the absence of any incriminating material concerning the other six parties, no addition, except ₹ 3,75,000/-, could have been made or sustained as the same is not backed by any incriminating material and relates to a completed assessment year as on the date of search. These grounds are, therefore, partly allowed. 14. The ld. AR did not press ground nos. 2 and 3. These grounds are, thus, dismissed as not pressed. 15. In the result, the appeal is partly allowed. Assessment Year 2009-10 16. For this year, again, four grounds have been raised which are mutatis mutandis similar to those recorded above for the immediately preceding assessment year. Ground nos. 2 and 3 were not pressed by the ld. AR, which are, ergo, dismissed. 17. The sole issue raised through ground nos. 1 and 4 is against the confirmation of addition of ₹ 16,70,000/- made by the AO u/s 68 of the Act. 18. Assessment for this year also stood completed as on the date of search. The Assessing Officer, in the instant proceedings, made an addition of ₹ 16,70,000/- representing sundry creditors/unsecu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on account of loan shown to have been received by the assessee from PTU, Kolkata, is sustainable. This section provides that where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. It is trite law that an assessee can escape clutches of section 68 if he successfully proves three things to the satisfaction of the AO, viz., identity of the payer, capacity of the payer and genuineness of transaction. Genuineness of a loan transaction primarily depends upon the genuineness of the payer. If the alleged payer itself is not genuine, then the entire edifice of the genuineness of the transaction, created through a web of paper trail, falls flat. In concluding as to the genuineness of a transaction, the Hon ble Courts have held that apparent must be considered real until there are reasons to believe that the apparent is not real. The facts and circumstances of the instant case, as wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which Shri Dipak Singh is a director.We find force in the contention of the ld. DR. It is so for the fact that although the name of PTU does not figure in the list of 16 companies given in the assessment order in which Sh. Dipak Singh is a director, but, it is Sh. Dipak Singh who has signed the return of income of this company for the year under consideration. A copy of such a return has been placed on page 3 of the paper book, which manifests that Shri Dipak Singh signed the return of PTU in the capacity of its director. Similarly, return of income of PTU for the succeeding assessment year, namely, 2015- 16 has also been signed by Shri Dipak Singh in the capacity of its director. This indicates that the list of companies given by the Assessing Officer in his order is only inclusive and not exhaustive and it is further established that Sh. Dipak Singh is director in several companies operating in similar manner. The fact that Sh. Dipak Singh is not a real person managing the affairs of PTU but only a name-lender is also borne out from the statement of Shri Rajendra Bubna, discussed in a later para of this order. 25. It is further pertinent to note that the Assessing Officer ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and its associated companies and the cheques are issued to the intermediary paper companies. This unaccounted funds/cash/money is routed through a complex web of paper companies and finally reaches the beneficiary company through cheques from whom cash was received. He reiterated his stand in answering question no. 5 by asserting that: these companies are basically paper/shell companies having no genuine business activities. These companies are used for doing multiple layering of funds in the process of providing accommodation entries. All the accommodation entries done from these companies are wholly controlled by me from time to time as per the requirements of my clients . The above disposition by Shri Rajendra Bubna, who was actually controlling PTU, leaves nothing to doubt that PTU is one of the paper/shell companies, having no other substantive business activity except providing accommodation entries to its clients. 27. The matter does not stop here. Having so much material to implicate the assessee for having obtained an accommodation entry of ₹ 1.00 crore from PTU, the AO carried out further investigation by issuing summons u/s 131 of the Act to the directors of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the paper book. It is seen that the assessee allegedly received loan of ₹ 1 crore and, after one year of usage, shown to have repaid it without any interest. On a further query to the ld. AR as to how the assessee came into contact with a Kolkata based company for obtaining a loan of ₹ 1 crore and that too without any interest, when the she had not business or personal relations with it, he had no answer. The foregoing discussion ably shows that despite paper work done by the assessee for showing the receipt/repayment of loan through account payee cheques etc., there is predominant evidence which proves without an iota of doubt that the assessee received an accommodation entry of loan of ₹ 1.00 crore from PTU. 30. At this juncture, it will not be out of place to refer to the judgment of the Hon'ble Supreme Court in CIT vs. Durga Prasad More (1971) 82 ITR 540 (SC), in which the assessee claimed before the ITO that income of certain property should not be taxed in his hands as it was a trust property. The ITO rejected the claim and included the income in the hands of the assessee. The Tribunal affirmed the decision of the ITO, which wasreversed by the Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X
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