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TMI Blog2020 (7) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee was received. The Assessing Officer thereafter observed that from the details furnished and on going through the Balance Sheet of the assessee, it was seen that during the years under consideration, the assessee had inter alia received following unsecured loans from financial year 2005-06 to financial year 2011-12 tabulated as below:- Unsecured loans introduced in A.Y. 2006-07 to 2012-13 S.No. Name 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 1 Rajesh Poddar HUF 103892792 73234516 145195000 3100000 650000 74169250 2 Dhanidevi Processors Pvt. Ltd. 851597 3 Indian Tube Traders 3650000 4 Shree Ram International 808036 5 Ganayaka Steels Pvt. Ltd. 20320000 900000 10000 6 S.B. Metal 3600000 7 Varun Sales Pvt. Ltd. 8 Ajaydev Steels 2742411 9 Bhavna Ispaat Pvt. Ltd. 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of assessment the assessee has submitted that these are loans taken by the assessee from various companies which are not having any source of their own. The Assessing Officer referred to the relevant extract from the reply of the as under :- "In respect of loan received from following parties; 1. Rajesh Poddar HUF 2. Dhanidevi Processor Pvt. Ltd 3. Indian Tube Traders 4. Shree Ram International 5. Ganayaka Steel Pvt. Ltd. 6. S.B. Metal 7. Varun Sales Pvt. Ltd. 8. Ajaydev Steels 9. Bhavna Ispaat Pvt. Ltd. 10. Shivam Ispaat 11. V.K. Shah Steels Pvt. Ltd. 12. Pawanjyoti Steels Pvt .Ltd. 13. Bride Steels It is sub mitted that unsecured loan received from the above mentioned parties during the period from 2005-06 to 2011-12 is as a result of accommodation stock/accommodation debtors in the books of Loha Ispaat limited leading no evasion of tax. All the money received through chain of person related to the transaction within Loha Ispaat limited. And the transaction remains unsettled both in the hand of Mr. Rajesh Poddar, in the hand of above mentioned parties & Loha Ispaat Limited, Hence it is dear that such a loan provider did not have their own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance sheet of the assessee and these loans are actually the money of Loha Ispaat Ltd. The Assessing Officer further noted that Loha Ispaat Ltd. is not a company in which public are substantially interested. He noted that the assessee is holding beneficial ownership of shares in the company. He noted that for the concerned assessment year there were sufficient accumulated profits. Thereafter the Assessing Officer observed that the loans have been taken by the assessee through the conduit of the dummy companies. He referred to the decision of Hon'ble Supreme Court in the case of CIT, Kolkata Vs. Mukandray Shah (209 ITR 433). That in such circumstances provisions of section 2(22)(e) of the Act shall apply. Hence, he held that the amount is to be added in the total income of the assessee on this account. He held that this is only an alternative argument to the argument made in earlier paragraphs. However, he noted that since the same addition u/s. 68 has already been made no separate addition has been made. 7. Against this order, the assessee is in appeal before learned CIT(A). 8. Learned CIT(A) in his appellate order referred to the Assessing Officer's discussion regarding ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on substantive basis in this year in the hands of Loha Ispaat Ltd. and taxed again on the assessee on substantive basis. Hence, he submitted that same amount cannot be again added. He submitted that in the statement submitted by the assessee, the assessee has himself stated that this amount has been sourced from Loha Ispaat Ltd. and has been further introduced in Loha Ispaat itself. Learned counsel submitted that the authorities below are relying upon the assessee's statement that the source of this loan cannot be proved in as much as it was sourced from Loha Ispat Ltd. However, they are rejecting the statement given by the assessee in the same breath that this amount has come from Loha Ispaat Ltd. and have gone back to Loha Ispaat Ltd. He submitted that it is not justified on the part of the authorities below to accept a part of the statement and reject the same without any enquiry whatsoever. Furthermore, learned counsel sought to submit certain papers in support of his contention that these amounts have came from Loha Ispaat Ltd. and they have been routed back to the same company. Hence, learned Counsel of the assessee pleaded that no addition in the hands of the assessee is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he genuineness of the loan transaction on the basis of aforesaid documentary evidence. Keeping this in view, we are inclined to restore the matter back to the file of the Assessing Officer for deciding afresh." 13. Referring to the above learned Departmental Representative submitted that the assessment made in the case of M/s Loha Ispat Ltd., Shri Rajesh Poddar (HUF) and M/s Dhanidevi Processors Pvt. Ltd. for the respective assessment years have an important bearing on the genuineness of the unsecured loans in the case of the assessee too, since the assessee has received loans from the aforesaid parties as well. He pointed out that these appeals are pending adjudication. As regards the issue that when the addition is only based upon the statement of assessee which stated that the parties giving loans had no source of their own but the sums are sourced from Loha and the issue of applicability of the doctrine of "Approbate and Reprobate" he submitted that it is settled that law does not permit a person to approbate and reprobate, i.e., no party can accept and reject the same instrument to suit its interest. That however, it is only a species of estoppel; it applies only to the condu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved from the assessee alone. That even the entire unaccounted cash sales cannot cover unsecured loan of the assessee. Thereafter learned Departmental Representative referred to the decision of Hon'ble Delhi High Court in the case of CIT Vs. Harjeev Aggarwal (70 taxmann.com 95) for the proposition that the statement recorded on oath u/s. 132(4) of the Act has evidentiary value. Finally learned Departmental Representative submitted that in the present case addition made by the Assessing Officer to the income of the assessee was exclusively and solely on the basis of the disclosure made by the assessee himself and M/s. Loha Ispaat Ltd. where he is managing director. Thereafter, he referred to certain additional documents being submitted by learned Counsel of the assessee. He prayed for the rejection of these documents. In this regard he submitted as under :- "During the hearing before the Hon'ble Bench, the assessee has placed certain documents in the form of Paper Book-2 dated 20.01.2020 before the Hon'ble Tribunal and claimed that the paper furnished in the paper book are not fresh evidence but forming part of document seized by department reviewed during assessment pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egard to the issue of unsecured loans he has mentioned that it was from the details furnished and going through the balance sheet of the assessee he has found that assessee has received unsecured loans from financial year 2005-06 to financial year 2011- 12. Thereafter the assessing officer has referred that during search carried out in Loha Ispat group it was found that the company is also carrying on various transactions of purchases/sales/loans etcetera with the parties from whom assessee has obtained unsecured loan that the company on being confronted with huge evidence in the shape of seized papers, computer backup and the statement of assessee who is CMD of Loha Ispat has admitted that the concerns have provided only accommodation entries by receiving cash from the company itself thereafter the assessing officer has observed that this has been admitted by the by the company during the course of assessment proceedings thereafter the assessee officer has referred to the statement of the assessee as reproduced above. 17. From the above is evidently clear there is no reference whatsoever to the incriminating material found during the course of search upon the assessee on the basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled law that there is no estoppel as to law. If an amount is not exigible to tax as per the provisions of law the same cannot be brought to tax on the ground of concession or otherwise. Moreover as noted above this issue was very made before the learned CIT(A). 19. From the discussion above and observation of learned CIT(A) in this regard it is manifestly clear that the assessment years for assessment year 10- 11 and years preceding to this were not pending at the time of search. Hence assessment for these assessment years did not abate. Hence no addition in these assessment years under section 153A is permissible without incriminating material found during search. This proposition duly find support from honourable Bombay High Court decision in the case of CIT Vs. Continental warehousing Corporation (Nhava Sheva) (IT Appeal 523 of 2013 and the Supreme Court decision in the case of CIT Vs. Sinhgad Technical Education Society (Civil Appeal No. 11080 OF 2017). In the present case assessing officer is referring that material were found in search of loha Group and Loha Ispat ltd without referring to the nature or any other detail thereof. If the assessing officer is referring to sear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his regard there is no material on record as to on what basis the assessing officer is coming to the conclusion that these parties do not have source of their own other than the statement attributed to the assessee that these are accommodation entries originating from Loha Ispat. The Assessing Officer in his order stated that the assessee as MD of Loha Ispat in his stated during search has admitted that these concerns have provided loan by receiving cash from the company itself. 23. It is settled law that when a person is relying upon a statement he cannot accept a part of it and disbelieve the other part. This has been enshrined in the maxim of a probate and reprobate. It denotes that a party cannot be permitted to approbate and reprobate on same facts and take shifting stands. Here we note that assessing officer is accepting the assessee's statement that these parties do not have source of their own, but the assessing officer is rejecting the other part of the assessee which is a statement that these amounts are sourced from Loha Ispat ltd and routed through other concerns to the assessee and which went back to Loha Ispat Ltd. This principal was further reiterated by honourable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessing officer's reliance upon the said decision of the Supreme Court is not applicable on the facts of the present case. In the said case investment by the assessee were discovered in search. Honourable Supreme Court has noted that the company had granted funds to the partnership firms where the concerned assessee was a partner and from current account of partner the assessee had received funds for these investments and the same were held to be taxable under section (2)(22)(e) of the Act. 29. In the present case we note that there is no finding as to if and how the firms and parties who have received the sums from Loha Ispat were under the control of the assessee. In absence of such a finding the reliance of the assessing officer on the above said case law is not sustainable. It may also be noted that in the said case law Hon'ble Supreme Court had also upheld the addition as undisclosed income u/s 158BC as having resulted lawfully from search and seizure action. In the present case we have already given a finding that the addition is not based upon any incrimination material found upon search in the case of the assessee. Moreover this aspect is only of academic interest ..... X X X X Extracts X X X X X X X X Extracts X X X X
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