TMI Blog2021 (6) TMI 542X X X X Extracts X X X X X X X X Extracts X X X X ..... AO in this report has categorically stated that the first reference was made on 21.02.2012 by the Competent Authority for complete information but it was not received till the date of the assessment order i.e. 09.03.2015. Thus, the AO has made a categorical statement that information was not received till the date of passing of the order. The Id. AR is harping on the issue that it is not possible that a reply would not have been received to the reference made by the Competent Authority. AO in the remand report has made a categorical statement that till the date of the order i.e. 09.03.2015, reply was not received. The AO has made a categorical statement in the remand report, we cannot ask the AO to establish a negative evidence that no reply was received from the Swiss Competent Authority. The assessment consequent to this notice could have been completed by 31.03.2014. Since a reference was made on 21.01.2012 as per the AO, the extended period available will be as per clause (viii) of the Explanation below Section 153B. The contention of the ld. AR that the benefit of this clause will not be available in case such reference has been made before the initiation of assessment p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that the French Competent Authority has handed over the pen drive to the Indian Competent Authority and the 6 page document is a print out of the said pen drive. But the ld. CIT(A) failed to address the argument of the assessee that the information contained in pen drive, the source thereof and author thereof and the authenticity of the information contained in the pen drive has not been established with any credible evidence or linkage with any of the document. The pen drive so received was just like an anonymous letter forwarded by French Competent Authority to the Indian Competent Authority. The issue which the ld. CIT(A) has failed to appreciate is the origin of the source of information only and certainly not the passing of the information from French Competent Authority to Indian Competent Authority, till such time the origin of source of information is authenticated. As decided in ANURAG DALMIA VERSUS DCIT, CENTRAL CIRCLE-26, NEW DELHI [ 2018 (2) TMI 1363 - ITAT DELHI] AO still certain information are yet to be received and the material and information available with the department needs to be corroborated and needs to be further inquired into. Under these circums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he bank statement, we find that the explanation of the assessee with regard to ₹ 40,00,000/- is based on the withdrawals from the bank duly examined by the ld. CIT (A). Hence, we decline to interfere with the order of the ld. CIT (A) on this ground. Disallowance u/s 36(1)(iii) - interest on advances - HELD THAT:- The interest bearing funds have been utilized towards interest bearing advances. This is evident from the balance sheet whereby interest bearing loan was ₹ 3,03,50,275 against which, interest bearing advances are ₹ 3,41,00,000 i.e. more than the amount borrowed. Further, from the bank statement, it is apparent that there is a direct nexus between the amount borrowed and the amount advanced. Disallowance u/s 14A - HELD THAT:- The provisions of section 14A read with Rule 8D clearly require the AO to analyse the facts of the case so as to get to the satisfaction that certain expenditure had been incurred for earning tax exempt income and in the event of such satisfaction recourse to Rule 8D could be made. It is apparent from the perusal of the assessment order that no such exercise has been undertaken by the AO before the proceedings to resort to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned thereof has been offered to tax, no disallowance is called for on the interest debited in the P L A/c. Unexplained Cash Credit u/s 68 - CIT(A) deleted the addition on the grounds that the amounts received during the year have been indeed given by the assessee in the earlier years to the company namely, M/s Consortium Securities Pvt. Ltd - HELD THAT:- Before us, the fact of receipt of the money and the fact of payment of money in the earlier year to M/s Consortium Securities Private Limited has not been disputed. Hence, we hold that no undisclosed income could be assessed on the amounts received as refund of margin money during the year. With regard to the amount of the transaction with HDFC Bank and State Bank of Patiala, since the amount represents transfer of funds from disclosed accounts and since reconcile, we decline to interfere with the order of the ld. CIT (A). Addition on account of Profit Share - CIT (A) deleted the addition - HELD THAT:- We are of the opinion that AO was not justified in drawing adverse inference against the assessee. The figures stated in the seized document pertains to the said company i.e. Global e-Travel Solutions Pvt. Ltd. We are also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find that the assessee has got sufficient own funds to extent interest free loans - no disallowance is called for on account of interest paid especially when all the interest bearing loans were shown to have been utilized for the purpose of business. Undisclosed income - Difference in capital account as per the audited balance sheet filed by the assessee AND un-audited balance sheet wherein the capital introduced - HELD THAT:- We find that the ld. CIT (A) has deleted the addition holding that the balance in the capital account pertaining to the individual and the entity of lending business are different. On going through the record, we hold that the difference between capital account of the individual and the capital account of the business entity do not call for any determination of undisclosed income. Hence, we decline to interfere with the order of the ld. CIT (A) wherein the addition has been deleted after examining the due reconciliation of the amounts involved in the capital account. Addition u/s 68 - addition on account of the cash - HELD THAT:- Availability of the cash which has been a part of the cash found on the date of search has not been disputed by either p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dend income. It is also surprising that AO has made a disallowance as administrative expenses despite no such expenses having been incurred by the assessee. In view of these facts, we are of the view that no disallowance under section 14A is required in the present case and accordingly, we uphold the order of the CIT(A) deleting this addition and this ground of the Revenue is dismissed. Levy of penalty under section 271(1)(c) in respect of the addition on account of investment in bank account - HELD THAT:- In both these years, the penalty has been sustained by the CIT(A) on the ground that addition on account of investment in both these years have been upheld. Since we have deleted the addition in both these years, the very basis of levying penalty do not survive. Accordingly, we direct the AO to delete the penalty in both these years - ITA No. 5330/Del/2016, ITA No. 5332/Del/2016, ITA No. 5333/Del/2016, ITA No. 5334/Del/2016, ITA No. 5335/Del/2016 With CO No. 342/Del/2016, CO No. 343/Del/2016, CO No. 344/Del/2016, CO No. 345/Del/2016 - - - Dated:- 15-6-2021 - ITA No. 4575/Del/2016, ITA No. 4576/Del/2016, ITA No. 6701/Del/2017, ITA No. 6702/Del/2017 Sh. Amit Shu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment order passed without issue of statutory notice under Section 143(2) by the learned AO is bad in law and liable to quashed. 6. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the assessment order passed by the learned AO otherwise stands vitiated and is liable to be quashed as the same has been passed on direction of the higher authorities. 7. (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the learned AO has made the additions on the basis of material collected at the back of the assesse without establishing the authenticity of the document relied upon and without providing a copy of the same and an opportunity to rebut the same and without taking the investigation and the enquiry to the logical end. (ii) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in ignoring the contention of the assessee that the assessment order passed by the learned AO is bad in law and liable to be quashed as the same has been passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the assessment framed under Section 153A/143(3) are in violation of the statutory conditions of the Act and the procedure prescribed under the law and as such the same is bad in the eye of law and liable to be quashed. 3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the learned AO has no jurisdiction to frame assessment and make the impugned addition under section 153A of the Act in the absence of incriminating material being found during the course of the search. 4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the assessment order passed by the learned AO is barred by limitation having been passed beyond the statutory period prescribed in the Act. 5. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the assessment order passed without issue of statutory notice under Section 143(2) by the learned AO is bad in law and liable to quashed. 6. On the facts and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee owns an account at HSBC containing substantial credits which are not disclosed to the department. 6. Thereafter, the AO issued notice u/s 153A directing the assessee to file the return of income. In response to the notice, the assessee filed the return on 17.01.2014. During the course of the assessment, the AO raised the issue of the assessee having account with HSBC Bank. The assessee was confronted with a 6 page document containing personal and financial details of the assessee s account in HSBC. 7. In response thereto, the assessee filed detailed reply vide letter dated 27.02.2015 stating that he did not have any foreign bank account. It was also stated by the assessee that no incriminating documents relating to any foreign bank account was found and seized during the course of search. Arguments taken up by the assessee before the revenue authorities: 8. As regards, the statement of the assessee recorded on the date of the search and referred to in the show-cause notice by the AO, the assessee stated that on several occasions during the course of the search, he had stated that he never had any foreign bank account. He further stated that o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e recording the statement. The AO held that the statement made by the assessee is binding on him and the plea of the assessee regarding retraction is not acceptable. 13. On the issue, that the assessee has not been provided any evidence to show that he held any foreign bank account, the AO was of the view that the assessee s own admission in the statement is an evidence against him. The AO also held that information obtained under information exchange mechanism is credible information and the same can be used against the assessee. 14. On the above said basis, the AO held that the figures stated in the documents belong to the assessee and accordingly held that the assessee is the owner/beneficial owner of the bank account of HSBC, Switzerland and the same is not disclosed in the return of income. Accordingly, an addition of ₹ 8,46,98,290.91 being the peak amount stated therein of USD 1,90,332.38 in the month of March, 2006 @ of 44.50 per dollar was made. The AO further made an addition of peak of USD 9,272.23 in the month of November, 2005 by applying a USD rate of 44.50 equivalent to ₹ 4,12,614.23. 15. Thus, an addition totaling ₹ 8,51,10,905/- was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th etc. This information also provided month wise balance in this HSBC Account at Zurich for a certain period. It was also stated in the remand report that the assessee has given a statement on oath wherein he himself has accepted to have a foreign bank account. Thus, the identity of the assessee and genuineness of the document stands established. ii. As regards the non-issuance of notice u/s 143(2), the AO in the remand report stated that is not mandatory to issue notice u/s 143(2) for finalizing assessment u/s 153A in view of the judgment of the Hon ble Delhi High Court in the case of Ashok Chadha Vs ITO 327 ITR 399. iii. On the issue of time limit for completion of assessment, the AO stated that this contention has already been rejected during the course of assessment. The first reference for complete information by the competent authority was made on 21.02.2012 and till the date of passing the assessment order i.e. on 09.03.2015, information was not received. 21. In response to the above remand report, the assessee filed a detailed rejoinder on 05.11.2015 further raising the following issues: i. The AO has not brought any incriminating material so as to give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch was under coercion, duress and tutored. x. The AO has not rebutted the allegation that the statement was extracted from the assessee by showing a false document and hence, the same cannot be considered. xi. The AO in the remand report has stated that the deposit in the account belongs to the assessee but he has neither provided the copy of bank statement showing deposit of such alleged amount nor clarified whether these are the deposits in the bank account or are something else. xii. In the rejoinder, the assessee also pointed out that a cursory look at the documents shows that it is not a bank account or bank statement on the assumption of which the addition has been made. 22. In view of the above issues raised by the assessee, the ld. CIT (A) called for a second remand report on the following specific issues: i. The AO to confirm whether the 6 pages document referred to in the remand report was with the search party and consequently with the AO before assessment was started. ii. On the issue of assessment being barred by limitation, in view of Section 153(4), Explanation 1 Clause (viii), the AO was asked to clarify when the last reference was ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usness of the matter, the directions given by the CIT. 24. In response to the above remand report, the assessee filed second rejoinder on 07.01.2016. In this rejoinder, the assessee submitted as under: i. The assessee stated that it is apparent from the 6 page document which is being relied upon by the AO as a bank statement is not a bank statement. These pages are carrying just some balances over a certain period and are definitely not a bank statement. ii. On the issue of limitation, in the rejoinder, the assessee again raised the issue that no evidence has been submitted by the AO regarding the reference made in the reply received. iii. As regards the chain of information, it was pointed out that this was all internal correspondence within the Department. Further, this correspondence establishes that the information used by the AO to frame the alleged assessment is not authentic as the same has been just passed on by the France Government. iv. On the issue of language of the document, the assessee pointed out that this issue is with regard to the authenticity of the document and whether the document relied upon for making addition is a true copy of the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and such person is subjected to examination of the veracity of the information contained therein. In this regard, the assessee raised the following issues: a. Whether this 6 page document is a bank statement or not? b. If not, what this document is? c. How this document came into the possession of the French authorities which has been stated in the assessment order/remand report? d. Identity of the person who has authored this document and cross examination of the person who has authored such document? e. If this is not bank statement how additions have been made assuming the figures stated therein as the balances in the bank account? f. If this is not bank statement, then what is the basis for making additions have been made in the year under consideration? ii. On the issue of assessment order having been passed beyond the period of limitation, the assessee raised the following specific issues: a. The date on which the AO made reference to the Indian Competent Authority for each of the assessment year. b. Copy of such letter written by the AO to the Indian Competent Authority for each of the assessment year. c. The date when the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticle 28 of the DTAC between India and France by the French Competent Authority to the Indian Competent Authority. 28. In response thereto, the assessee filed another rejoinder dated 12.04.2016 wherein the following was submitted: i. It was pointed out that in this remand report, the AO has admitted that the 6 page document on the basis of which addition has been made presuming it to be a copy of the bank account is not a bank account. Further, the contention of the AO that this is an extract of the bank statement is also not correct as is apparent from the alleged 6 page document where certain figures mentioned are regarding investment. There is neither any credit nor debit of any money withdrawn which is in a bank statement. It was pointed out that the second question as to what this document is, the AO has simply has stated not applicable meaning thereby he doesn t want to commit anything about the nature of this document. Having replied the first question that it is not a bank statement, the answer to the second question clearly shows a confirmation by the AO that this is not a bank statement. ii. As regards the issue how this document has come to the possessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration and hence, addition u/s 69 is untenable. Excerpts from the order of the Ld. CIT(A): 31. The ld. CIT (A) vide order dated 18.07.2016 confirmed the addition of ₹ 8,51,10,905/- made by the AO u/s 69 as unexplained investment in AY 2006-07 and of ₹ 61,22,916/- in AY 2007-08. 32. On the legal issue of addition being unsustainable in absence of any incriminating material found during the course of search, the ld. CIT (A) held that a detailed statement of the assessee has been recorded during the course of search operation wherein he has admitted that he has maintained bank account with HSBC, Switzerland. This admission is on the part of the assessee given during the course of the search and accordingly, he rejected the contention of the assessee. 33. On the issue of assessment order having been passed beyond the time limit prescribed, the ld. CIT (A) held that as per the evidence submitted by the AO, the reference was made on 21.02.2012 and the AO in the remand report has clarified that no information with regard to the said reference has been received till the date of the assessment. He further held that the internal communication pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention of the assessee that impugned credit has not been made in the year is also not valid as AO has placed sufficient evidence on record to show that the peak amount had been in the assessee sbank account during the year. The evidences highlighted by the AO have to be appreciated in the light of the period of limitation of domestic tax authorities to access the information of banking authorities abroad. Thus, the onus was on the assessee which he has failed to discharge and hence, the AO was justified in making the addition. On this basis, the ld. CIT (A) upheld the order of the AO. 41. On the issue of addition of interest of ₹ 1,12,880/- in AY 2007-08, the ld. CIT (A) deleted the same. The ld. CIT (A) held that the AO has made such addition merely on the basis of presumption that assessee would have earned interest at the rate of 4% on the credit balance in its bank account on February, 2007. However, there is no evidence to support such addition. Further, the ld. CIT (A) held that it is a fact that no such information is evident from the documents received by the AO from French Government under information exchange mechanism of DTAC. 42. Aggrieved by the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or after 01.07.2012. He accordingly argued that at best, 6 months extension can be considered to be available in the case in hand in which case, the assessment order should have been passed by 30.09.2014. He argued that since the order was passed on 09.03.2015, the same is barred by limitation and liable to be quashed. 45. The ld. AR further argued in an alternate that even if it is assumed that the amended provision is applicable, then too, as per the clause (viii) of Explanation to Section 153B, the extended period is to be considered as the period of one year or the period between the date on which the first reference is made by the competent authority and the date on which information is last received, whichever is less. To compute such period, onus is on the Department to bring copies of the letter exchanged. In absence thereof, the benefit of extended period cannot be considered. He submitted that the ld. CIT(A) erred in holding that the internal communication placed on record should be sufficient to settle the issue of having made the reference for exchange of information and that the clarification from AO that no information has been received till date of assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corpn. in ITA No. 950/08 decided on 11.07.2011, the Hon ble Court has held that there is no requirement to issue notice u/s 143(2) in absence of any specific requirement for the same u/s 147 of the Act. Thereafter, the Hon ble Court has held that there is no such requirement in Section 153A as well vide para 11. Further, the Hon ble Court has held vide para 13 and 14 that the words so far as may be used in Section 153(1)(a) cannot be stretched to the extent of mandatory issue of notice u/s 143(2). 50. The ld. AR submitted that the judgment of Hon ble Delhi High Court in the case of CIT Vs Madhya Bharat Energy Corpn. ITA No. 950/08 decided on 11.07.2011on which reliance was placed in the case of Ashok Chadha (supra), for holding that no notice is required in absence of a specific requirement of issuance provided under the provisions of the Act is no longer a good law, as this decision has been reviewed by the Hon ble Delhi High Court in revenue Petition No. 441/2011 vide order dated 17.08.2011. This fact has been noted by the Hon ble High Court in the case of Pr. CIT Vs Shri Jai Shiv Shankar Traders Pvt. Ltd. (2016) 383 ITR 448 dated 14.10.2015 and it has been held that it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of the words so far as may be and the same interpretation should be given even to the provision of Section 153A. 53. The ld. AR further submitted that the ld. CIT(A) erred in distinguishing the judgment of the Hon ble Delhi High Court in the case of Pr. CIT Vs Nikki Drugs Chemicals Pvt. Ltd. (2016) 386 ITR 680. Further, the AO also placed reliance on the judgment of Hon ble Supreme Court in the case of CIT Vs Laxman Das Khandelwal in Civil Appeal No. 6261-6262 of 2019 to put forth its contention that nonissuance of notice u/s 143(2) renders the proceedings void and the same is not curable u/s 292BB of the Act. C) No incriminating material seized during search: 54. The next legal ground argued by the ld. AR was that the assessment years under consideration i.e. AY 2006-07 and AY 2007-08 were completed assessment and not abated assessment and hence, no addition can be made in absence of incriminating material found during the course of search in view of the judgment of the Hon ble Delhi High Court in the case of CIT Vs Kabul Chawla (2016) 380 ITR 573 and other such judgments on the issue. 55. The ld. AR argued that the additions were based on two premises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above, the ld. AR also placed reliance on the recent judgment of the Hon ble Delhi High Court in the case of PCIT Vs Anand Kumar Jain (HUF) in ITA No. 23/2021 dated 12.02.2021 to contest that statement recorded u/s 132(4) does not constitute incriminating material and no addition can be made on the basis of statement alone without any reference to material gathered during the course of search operations. 60. Further, the ld. AR also relied on the CBDT s Circular F.No. 286/2/2003/IT(Inv.) dated 10.03.2003 which was reiterated CBDT s Circular No. 286/98/2013-IT(Inv.) dated 18.12.2014 and submitted that the Board has emphasized upon the need to focus on gathering evidences during search/survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence. 61. The ld. AR submitted that in the case in hand, admittedly, no incriminating material whatsoever has been gathered during the course of search. On the contrary, on the basis of a note carried by the search party, the assessee was forced to give a statement on the dotted lines by the search party. It is an admitted fact that no material whatsoever was found regarding assessee having an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty on the basis of which the AO has made the addition, he submitted that there is no authenticity to this information received by way of 6 page document which was received by way of pen drive. It is not that the case this information was obtained from Bank. The source of information with French Authority, its author, basis has not been revealed despite repeated request. 67. He submitted that merely because the information is received from France under the DTAC agreement does not make the information credible. He submitted that the French Competent Authority has just worked like a courier and that too without knowing from where and from whom it received such information. He submitted that if SBI receives an anonymous letter containing certain information about various people of ICICI bank account, that information is passed on to the Income Tax Department, the mere fact that such information has been received by the Income Tax Department from the SBI will not make itself make the information as a credible evidence unless ICICI bank confirms the same as true. 68. The source of such information and the fact thereof are still to be investigated and established. He argued that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s seeking the bank statement confirms that the AO is not having bank statement and hence it is asking the bank statement from Swiss Authorities. 72. The ld. AR submitted that it is an admitted fact by the AO that he was not having the bank account. This fact has been admitted in the remand report dated 13.10.2015 where the AO has stated that information has not been received till the date of assessment order. The ld. AR pointed out that in this situation two issues arises. 73. First, in case the AO was having sufficient evidences, where was the need to obtain further information? 74. Second, in case evidences were not sufficient, whether the AO has been able to obtain any further evidence or not. 75. Obtaining information from HSBC, Switzerland by the revenue authorities itself confirms the fact that the AO was not having any credible evidence to make the addition. Accordingly, the information available with the AO was neither sufficient nor credible to make the addition. Further, it is admitted by the AO that no further information has been received. I f that be so, addition made was premature and simply at the fag end of the assessment, the AO made t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, the ld. AR submitted that it is an undisputed fact that the said statement was subsequently retracted. Once that is the case, the said statement cannot be relied upon. He submitted that it is a typical case where the statement was obtained under coercion. The ld. AR submitted that it has been explained before the AO as well as the ld. CIT(A) that on the date of search, the assessee was surrounded by search officials and was coerced upon recording his statement of their choice. The statement recorded was as per the information tutored by the search team which is factually incorrect and made under duress. The statement so given was neither voluntary nor true. 79. The ld. AR further submitted that without prejudice to the above, even going by the statement, no addition can be made during the year under consideration. The ld. AR contended that the alleged statement of the assessee also does not support the case of the AO of making addition in the year under consideration. In this regard, the ld. AR invited attention to Section 69 of the Act under which the addition has been made by the AO. As per this section, in case of any unexplained investment, the addition has to be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment order. Accordingly, the limitation period shall be extended by a period of one year. The ld. DR referred to her paper book page 8 which is letter dated 26.05.2015 from Under Secretary (FT TR Division) to Pr. CIT (Central-II ) wherein a reference was made to a letter dated 22.04.2015 received from Swiss Government where it has been stated that the correspondence with the Swiss Government is going on and the Swiss Government has informed that the basis of which information was sought do not sufficiently demonstrate that the sources/evidences are independent from the HSBC list. Further, the Swiss Government sought an explanation to substantiate the link between certain companies/entities mentioned in request letter with the Taxpayer concerned. She submitted that such letter is proof that no reply was received prior to date of passing of assessment order on 09.03.2015 and accordingly, the extended period of one year shall be available. Therefore, she submitted that the assessment order has been passed within the extended period of limitation. 84. The ld. DR further submitted the following synopsis on this issue: 2. The issue referred is with regard to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Authority vide letter F.No. 504/0070/2012-FTD-I dated 21.02.2012 [copy of letter of FT TR vide F.No. 504/70/2012-FTD-I dated 21.02.2014 to this effect is enclosed). In response to the reference made by the JS (FT TR), no information has been received till the passing of the order i.e. 09.03.2015. 6. Before proceeding further, it would be very pertinent to f irst refer to the Explanation-(ix) of Sub-Sec. 3 of Sec. 153B which governs the time limit for completion of assessment u/ s 153A of the IT Act. For ready reference, the explanation referred above is reproduced below: Explanation (ix) of Sub-Sec. 3 of Sec. 153B (ix) the period commencing from the date on which a reference or first of the. references for exchange of information is made by an authority competent under an agreement referred to in section 90 or section 90A and ending with the date on which the information requested is last received by the Principal Commissioner or Commissioner or a period of one gear, whichever is less; 6.1 From the plain reading of the explanation, it is crystal clear that the period starting from the date on which the competent authority of India, i.e. JS(FT TR-I) in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment or reassessment proceedings. 8. Thus, the assessee's ground that a reference was made before the date of issuance of notice u/s 153A is totally devoid of merits because as per the sec 153A the period of assessment or re-assessment has to be started from the date of initiation of search and from that date onwards the assessment and the re-assessment proceedings are pending and accordingly, clearly in line with the provision of sec, 153A r.w.s. 153B a reference was made by the DIT(lnv)-2, New Delhi to the JS(FT TR-II). 9. Further, as per the section 153B it is not important who makes the reference whether it Investigation authorities or the Central charge authority, but the time limit gets extended only from the day the reference was made by the competent authority i.e. JS(FT TR). In the instant case, it is established beyond doubt that the reference was made by JS(FT ,TR) on 21.02.2012 and as no information was received, accordingly, one year extension was available to the AO for completion of assessment i.e. till 31.03.2015 which is time barring/ limitation date of the assessment in the instant case. 9.1 Accordingly, the AO passed an order on 09. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion can be made. The ld. DR submitted that both the statements as well as the bank statement constitute incriminating material for the purpose of making the addition and accordingly, the ratio laid down by the Hon ble Delhi High Court in the case of Kabul Chawla (supra) shall not apply. She submitted that the assessee has admitted in the statement recorded during the course of search that he is the owner of the bank account held with HSBC Bank. She contended that statement coupled with the bank statement received from French Competent Authority constitute incriminating material for the purpose of making the addition. She argued that the incriminating material was well with the department and the same has been duly confronted to the assessee during the search which the assessee has also accepted. She further argued that the existence of incriminating material is not a prerequisite for assessment u/s 153A and relied on the various judgments of Hon ble High Court of Allahabad, Hon ble High Court of Kerala wherein it was held that the assessment need not be restricted to the seized material only. She argued that the word incriminating material has a wide connotation and cannot be int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arm can be caused to the assessee and such particulars can be helpful not only to the department but to the assessee also. The Court, therefore, could not agree that such a notice could be issued only before the initiation of proceedings under section 132. Moreover, even under the provisions of section 133, the Assessing Off icer or the off icers referred to in the said section are having power to call for information. So issuance of such a notice during or after the search could not be said to be bad in law. b) Decision of Hon ble P H High Court in the case of Bachitar Singh vs. CIT 328 ITR 400 (Punjab and Haryana) additions on the basis of statement recorded during the course of survey u/s 133(A) of IT Act was upheld even when the assessee retracted it after a couple of months. c) Decision of Hon ble Delhi High Court in the case of DayawantiVs CIT [2016] 390 ITR 496 (Delhi)where Hon ble Delhi High Court held that where inferences drawn in respect of undeclared income of assessee were premised on materials found as well as statements recorded by assessee's son in course of search operations and assessee had not been able to show as to how estimation made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in support of its finding against the complain of threat, inducement or coercion and we find no good and sufficient reason to differ from it. In our view, in the facts and circum-stances of the case, having regard to the materials on record, the appellant has failed to establish that the statements of its partner, Baban Singh, had been recorded in the course of the search by using coercion, threat or inducement. We, therefore, dismiss the contentions advanced by the learned senior Counsel for the appellant in this regard and affirm the conclusion on the learned Tribunal on this count. Landmark decision on the issue of retraction of confessional statements, Hon ble Supreme Court in the case of Surjeet Singh Chhabra Vs. Union of India 1 SCC 508, wherein the Hon'ble Supreme Court has held that confessional statements made before Customs Off icer though retracted within six days is an admission and binding since Custom Off icers are not Police Officers. g) CIT VsMukundray K. Shah [2007] 160 Taxman 276 (SC)/[2007] 290 ITR 433 (SC)/[2007] 209 CTR 97 (SC) A search conducted at assessee s premises led to seizure of a diary, which contained purchasing of nine pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditions so made after adjusting expenditure were justified (SURVEY CASE) m) PCIT Vs Avinash Kumar Setia [2017] 81 taxmann.com 476 (Delhi) where Hon ble Delhi High Court held that Where assessee surrendered certain income by way of declaration and withdraw same after two years without any satisfactory explanation, it could not be treated as bona f ide and, hence, addition would sustain (SURVEY CASE) n) Decision of Hon ble High Court of Chhattisgarh in the case of ACIT vs. Hukum Chand Jain - [2010] 191 Taxman 319 (Chhattisgarh) The search and seizure operations were conducted at the business and residential premises of the assessee. In course of search, statement of the assessee was recorded under section 132(4) wherein he surrendered ₹ 30 lakhs as undisclosed income for the block period and offered that whatever taxes would be worked out on the surrendered income, he was prepared to pay the same. However, in response to the notice issued under section 158BC, he offered only ₹ 3,52,000 in his case and the aggregate amount of ₹ 2,05,500 in the case of his 3 sons as their undisclosed income. The Assessing Officer, however, completed assessment by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coercion and the same had been further countersigned by his 3 sons. The assessee did not retract his statement immediately after the search and seizure was over and in the return also, no explanation was offered for the surrender of the undisclosed income of ₹ 30 lakhs at the time of search and seizure operations under section 132(4). The allegation of duress and coercion was made for the first time in the year 2004, i.e., after almost 2 years when the Assessing Off icer confronted them with their statements under section 132(4) and they were asked to explain as to how the said undisclosed income did not find place in their returns. The department's contention that there were no mitigating circumstances to show that the admission/surrender made by the assessee was retracted at the earliest part of time with corroborative evidence had substance. There was substance in the argument that the assessee surrendered undisclosed income only when he was not able to explain the unaccounted cash, gold jewellery, other documents and loose papers found during search and by volunteering surrender of undisclosed income, he induced the search party not to proceed with collection of other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Off icer was to be restored. [Para 31] o) Decision of Hon ble High Court of Bombay in the case of Paras Shantilal Shah vs. DCIT, Mumbai [2017] 81 taxmann.com 104 (Bombay) dated 21.08.2015 In this case the addition made on the basis of statement recorded during search, was upheld by Honb le Bombay High. In this case during search, certain jewellery was found in possession of assessees. The assessees in a statement made on oath under section 132(4), admitted that jewellery recovered from them and in their locker was part of their undisclosed income and offered same to tax. Subsequently, the assessees f iled a letter before the revenue explaining that the part of the allegedly undisclosed jewellery belonged to their father, the late mother and their minor children as shown in the valuation reports of jewellery in their possession. The Assessing Off icer did not accept assessee'sexplanation and added value of said jewellery as assessees' undisclosed income. Held that subsequent letter written to the department did not indicate that assessees were retracting the earlier statements made on oath. Further, it did not state that the earlier statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mand reports and the AO has replied to each and every issue raised by the assessee before the ld. CIT(A). The ld. CIT(A) after thoroughly examining all the facts and the evidences on record has confirmed the addition. She submitted that the AO was justified in making the addition in the year under consideration as the 6 page document clearly demonstrated that the assessee was still holding such investment in the year under consideration. As regards the contention of the ld. AR. that the addition in the year under consideration on the basis of the statement of the assessee is unsustainable, she submitted that the AO has to make assessment on human probabilities. In support of her contention, she relied upon the judgment of the Supreme Court in the case of SumatiDayalVs CIT, (1995) 80 Taxman 89 (SC). 89. As regards the authenticity of the 6 page document, she reiterated what has been contended by the AO in the remand report submitted to the CIT(A) that the 6 page document is a print out of the pen drive received from the French Competent Authority and as such, its authenticity cannot be doubted. She submitted that once information has been received from a competent authority, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent on the date of the search where the assessee has categorically stated that he does not have any bank account outside India. 92. It was only after the assessee was coerced the statement was given as is evident from the facts and the same was retracted giving the entire details and sequence and a letter was filed before the DDIT, Unit-II . 93. It was argued that the contention of the ld. DR and the case laws cited in support thereof are not applicable. It was also submitted by the Id. AR that when there are two statements and the earlier one categorically stating that there is no bank account outside India, the later on statement cannot be given a priority over the earlier statement. Further, the earlier statement supports the case of the assessee that the second statement was obtained under coercion late in the night. 94. Without prejudice to the above, the ld. AR submitted that even if the retraction is ignored, still the addition on the basis of the statement cannot be sustained in the year under consideration. He referred to the statement whereby it is discernible that investment, if any, being alleged has not been made in the year under consideration. He again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of PradipBurman reported in CC No.525792/16 whereby a similar issue has come up about the authenticity of the document and the court has held that there is grave doubt on the data received from French Competent Authority. 98. The ld. AR also filed written submission which reads as under: Undisputed Facts:- 1. CBDT receives a pen drive from French Authority on 28.06.2011. 2. Print out taken of the pen drive. 3. A 6 page document is stated to be that pertaining to the assessee and on the basis of this document, it is stated that this is bank account of the assessee with HSBC, Geneva. 4. A search is carried out on the assessee on 28.07.2011 5. No incriminating document found during the course of search. 6. A statement of the assessee is recorded where he has stated that he has opened a bank account in 2002 (answer to Q 7 at PB Volume I pg 31) and amount were deposited in Zurich on various dates in 2002-04 ranging from 2 crore to 5 crore (answer to Q18 PB Volume I pg 33). 7. The above statement was retracted by the assessee by letter dated 30.08.2011. 8. A reference is made to Swiss authorities on 21.02.2012 for obt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stment in the f inancial year 2005-06 which is relevant to asstt. year 2006-07 under consideration. The complete statement is at PB Volume I page 29-42 and also extensively quoted in assessment order at page 17- 22 of the assessment order. In this statement, the answer to Question 7 and 18 are very clear. The investment has been made in 2002-04. Thus, the AO herself has not considered statement as the basis though she is referring to in the assessment order. Thus, addition on the basis of statement in the year under consideration is unsustainable. 6. Now coming to information received from French Authority. Firstly, there is no authenticity to this information which was received by way of pen drive. It is not that this information was obtained from Bank. The source of information with French Authority, its author, basis till today has not been revealed despite repeated request. The contemporaneous media reports, on the other hand, clearly reveals that the data is erroneous, unauthentic and unreliable. 7. The 6 pg document is not a bank statement. What is the nature of this document? How it is being alleged it is HSBC bank account. Nowhere, HSBC has been stated. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court of India in the case of CIT v. Sinhgad Technical Education Society in Civil Appeal No. 11080 of 2017 dated 29th August, 2017 No incriminating material whatsoever found during the course of search 14. In the case in hand, it is an undisputed fact that no incriminating material whatsoever has been found during the course of search gua the addition made. Accordingly, in view of the aforesaid judgments, no addition can be made during the year under consideration. Reliance is placed on the following judgments wherein on similar facts, the addition has been deleted on, inter-alia, the ground that in absence of incriminating material, no addition can be made: ITAT Delhi in the case of Anurag Dalmia versus DCIT, I.T.As. No.5395 And 5396/DEL/2017 ITAT Delhi in the case of Krishan Kumar Modi versus ACIT, ITA No.2892/Del/2017 ITAT Kolkata. in the case of Shri Bishwanath Garodia versus DCIT, I.T.A. Nos. 853 854 /KOL/ 2016, I.T.A. Nos. 855 856 /KOL/ 2016 Premise for making addition in the case in hand 15. In the case in hand, there are two premises for making the addition as under: 6 page document on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kumar Kediaversus DCIT (vice-versa), ITA 124 to 126/%JP/2019 Hon ble ITAT Delhi in the case of SH. BrijBhushanSingal versus ACIT, ITA No. 1412/Del/2018 19. Further, reliance is placed on the following judgments in this regard: ITAT Delhi in the case of Krishan Kumar Modi versus ACIT, ITA No.2892/Del/2017 ITAT Delhi in the case of AnuragDalmia versus DCIT, I.T.As. No.5395 And 5396/DEL/2017 ITAT Kolkata in the case of Shri BishwanathGarodia versus DCIT, I.T.A. Nos. 853 854 /KOL/ 2016, I.T.A. Nos. 855 856 /KOL/ 2016 20. Further, reliance is placed on the recent judgment of the Hon ble Delhi High Court in the case of PCIT (Central) - versus Anand Kumar Jain (Huf ) - ITA 23/2021 wherein it has been held that no addition can be made on the basis of statement alone without anu reference to material gathered during the course of search operations. 21. Further attention is invited to the CBDT s Circular F. No.286/2/2003/IT ( Inv) dated 10.03.2003 which was reiterated CBDT s circular No. 286/98/2013IT (Inv.), dated 18th December, 2014 wherein the Board has emphasized upon the need to focus on gathering evidences during, search/pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 253 ITR 454 ITAT Jaipur in the case of Om Prakash Agarwal v. ACIT in IT A Nos. 721 to 726/JP/2015 dated 23.011.2016 ITAT Delhi in the case of Anant Raj Industries Limited vs. AO, TTJ 119, 865 27. Thus, going by the statement, the entire amount was invested prior to FY 2006. Accordingly, even if the statement could be considered as incriminating material, it does not constitute incriminating material qua the year under consideration. Consequently, addition cannot be made during the year under consideration in view of the aforesaid position of law laid down by the Apex Court in the case of Sing had and as has been echoed by the Hon ble Delhi High Court in the case of Smc Power Generation Ltd. (supra). 28. In view of the above, in absence of any incriminating material found during the course of search, no addition can be made. 6 page document is unauthentic and unreliable 29. Additionally, it is submitted that the 6 page document loose documents, which were handed over in a USB drive, on the basis of which search is carried out is unauthentic and unreliable. Merely because information is received from France under the DTAC agreement doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as to what is the constitution of the above said entities/companies mentioned in the said documents, what is the legal status of the entities, what is connection of the assessee wi th the bank account numbers mentioned against the said entities which are companies and not individuals and what is the role played by the assessee in the said entities. (x) The said document nowhere contains the name or whereabouts of the organization or person from whom the same has been received. Even name of any bank has not been mentioned in the same. 32. In CC No.525792/16, ACMM vide order dated 18.11.2020 in the case of ITO vsPradipBurman, the ACMM has considered the above said aspects and as specif ically observed that there are material inconsistencies in the content which leads to grave doubt on the authenticity of the USB drive and its contents. 33. Furthermore, in the assessment order, Id. AO has made the addition by stating that the alleged account is held in HSBC Zurich [Refer para 3 of assessment order]. However, as per the 6 page document, the alleged account of the assessee is at HSBC Geneva. In this regard, it may be relevant to mention that from the communication ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onduct the present investigation and f ile the complaint. It further indicates that the documents Ex. CW-1/5 are not trustworthy, authentic and reliable. 34. Further, it is an admitted fact that upon reference being made to Swiss Authorities under the DTAA, no reply has been received by the Revenue. This implies that no adverse inference can be drawn in the case in hand based on the above said documents. 35. In view of the above, without prejudice to the fact that the loose papers are highly unreliable, they do not have any adverse bearing on the case of the assessee. Other arguments in brief:- 36. Onus is on the department for making any addition u/s 69, Section 69B or Section 69C of the Act and to prove that there is understatement of investment or unexplained expenditure /investment. That, such onus has not been discharged. 37. It is a settled law that no addition can be made in absence of enquiry merely on the basis of suspicion. There is no evidence in the case in hand to justify the addition. 38. In the reference letter, as has been brought on record by the Id. DR, it has been stated that the account was created in 2001. It is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gislation prescribes a date of applicability of a provision to be date other than 1st April of the year, it is with reference to transaction that takes place after such date. This is normal in the case of amendment to provision of TDS, etc. Thus, the benefit of extended period of 1 year vide the amendment made vide Finance Act 2012 will only be made to references made on or after 01.07.2012. In view of the same, if 6 months extension is considered, the assessment order was required to be passed by 30.09.2014. However, the order was passed on 09.03.2015. Thus, the order is barred by limitation and liable to be quashed. 46. Without prejudice to the above, even if it is assumed that the extended period of 1 year is available, then the extended period is to be considered as the period of 1 year or the period between the date on which the first reference is made by the competent authority and the date on which information is last received, whichever is less. To compute such period, onus is on the Department to bring copies of the letter exchanged. In absence thereof , the benef it of extended period cannot be considered. 99. We have heard the rival submissions and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without giving any evidence on this aspect. iv. The fourth issue raised by the ld. AR is that reference having been made on 21.01.2012 as is being by contended by the ld. AO, even before the initiation of the proceedings under section 153A, the extension of limitation for assessment proceedings will not be available. 104. The factual matrix of the case is as under: 1. Whether a search was conducted on 28.07.2011 ? Yes No 2. Whether the documents based on which addition has been made seized during the search ? Yes No 3. Whether the documents based on which addition has been made were available with the department before the search? Yes No 4. Whether details /document of any foreign bank account found and seized during the search ? Yes No 5. Whether a statement u/s 132(4) has been recorded on the date of search ? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether the Director(Inv.) held that the documents are the account of HSBC Geneva ? Yes No 20. Whether it has been clarified the bank statement belongs to HSBC Geneva or HSBC Zurich ? Yes No 21. Whether the CBDT handed over the set of documents (Computer Printout) to the respective DGIT ? Yes No 22. Whether the CBDT information (CIT-Inv. CBDT) mentioned the documents relating to HSBC Geneva ? Yes No 23. Whether CBDT certified them as HSBC accounts ? Yes No 24. Whether CBDT held that the information/printed documents pertain to information of the bank accounts ? Yes No 25. Whether a certificate u/s 65B of Indian Evidence Act drawn by the US/ CBDT confirms receipt of USB pen drive ? Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, shall be excluded. 107. In this case, the reference as per AO's contention has been made on 21.01.2012 when the extended period was 6 months only. This period of 6 months was extended to one year w.e.f. 01.07.2012. Assessment in this case was initiated by the AO on 21.11.2012 when notice under section 153A was issued for filing return of income. Since notice under section 153A was issued on 21.11.2012 and the reference at that time was pending, we are of the view that the period as prescribed under this clause (viii), when assessment proceedings were initiated will be available. 108. The Id. AR has referred to section 153B(1) to contend that AO is bound by this time limit with reference to the date of search i.e. two years from the end of the year in which search was carried out. This period gets extended by this clause in case a reference has been made. We are not in agreement with the contention of the ld. AR that the extension has to be counted from the date of the search as provided under section 153A and thus, only period of only 6 months will be available because on the date of the search i.e. 28.07.2011, this clause provided only period of 6 months. We are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Competent Authority and the information as requested was not received till the time of passing the assessment order and hence, the extension in passing the assessment order will be of one year. As against this, the contention of the ld. AR is that it is not possible that a reply would not have been received from the Competent Authority of Sovereign Government. The ld. AR has invited attention to the repeated remand reports before CIT(A) whereby the AO has not placed any correspondence or reply which has been received in response to the alleged reference made on 21.01.2012. 110. Thus, the issue is whether in these circumstances, the extended period available to the AO will be that of one year or less. The Id. AR's contention is that the Swiss Competent Authority having refused to share the information in response to the request dated 21.01.2012, the period, if any, available will be from 21.01.2012 to the date when reply to such requisition has been received. Since AO is seeking extension on the basis of this clause, it was for the AO to place evidence in support thereof. Having failed to do so, the period of one year will not be available as the clause clearly stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 53A was issued. The assessment consequent to this notice could have been completed by 31.03.2014. Since a reference was made on 21.01.2012 as per the AO, the extended period available will be as per clause (viii) of the Explanation below Section 153B. The contention of the ld. AR that the benefit of this clause will not be available in case such reference has been made before the initiation of assessment proceedings is not correct. Section 153B provides time limit for completion of assessment. This clause (viii) of Explanation below this Section 153B is part of this Section 153B itself. Section 153B cannot be read dehors the clause (viii) of the Explanation. We are of the view that it does not matter when the reference was made whether before the assessment proceedings having been initiated or later on. The time period for completion of assessment will include the extended period in case a reference has been made. Accordingly, we reject this contention of the ld. AR. 114. In view of the above, we hold that the assessment passed by the AO is not barred by limitation. Accordingly, we dismiss this ground raised by the assessee. B) Non-issue of notice u/s 143( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearly reveal the compelling circumstances and preset mind of the then Addl. CIT / CIT and that the assessment orders and impugned additions are made on the directions of the higher authorities only, and therefore, there is no application of mind by the Ld. AO under such dictate. Similar contention was raised by the assessee before the ld. CIT(A). The ld. CIT(A) has called for a remand report on this issue and the AO in the remand report dated 28.12.2015 has clarified that CIT and Addl. CIT are supervisory authorities and they monitor the progress of sensitive cases. Thus, in the instant matter, directions were given by the Addl./Joint CIT and CIT in view of the seriousness of the matter including the unaccounted transaction of HSBC, Zurich. The ld. CIT(A) after taking into consideration the above reply from the AO has held that these directions do not in any way convey that the AO has been influenced to decide the case before her in any particular manner. CIT in has administrative powers and the Addl.CIT has statutory powers under the act. 118. As per provision of section 119(1), the CBDT has been empowered to issue instructions and directions to other income tax autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity is an authentic document and hence, the AO is justified in making the addition on the basis of this document. The contention of the ld. DR further is the fact of the bank account being held by the assessee as per this 6 page document gets corroborated from the statement of the assessee recorded on the date of the search where he has admitted of having a bank account with HSBC, Switzerland. 122. As against this, the contention of the ld. AR is that the 6 page document is not an authentic document and nor it is a bank statement considering which the AO has made the addition. As regards the statement of the assessee recorded during the course of the search, the contention of the ld. AR is that the same was obtained under coercion and stands already retracted and as such, said statement cannot be used against the assessee. The search party has gone to carry out the search with a preconceived notion and has obtained a statement as suits. 123. Without prejudice to above, the contention of ld. AR is that the addition on the basis of the alleged statement even otherwise cannot be sustained in the year under consideration as unexplained investment under section 69 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is having a bank account with HSBC, Geneva, Switzerland as per this document. This information has not come from HSBC. This information has also not come from Switzerland Competent Authority where it is being alleged that the assessee is having the bank account. How this pen drive came in possession of French Competent Authority, there is no answer from any source. 127. There are various aspects that require our consideration. 1. Whether the 6 page document is a bank statement or not. 2. Whether the said document is authentic or not and 3. Whether the amounts were deposited during the year and whether they are liable to tax u/s 69 during the year. 4. Whether any incriminating material has been found during the course of search addition can be made on the basis of said document or not. 128. As regards the issue whether the 6 page document is a bank statement or not as the basic features of a bank statement are missing, specific question raised to the ld. DR on the issue whether such 6 page document is a bank statement or not, we find that she did not controvert the fact that such document does indeed lack the basic essentials of a bank st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een handed over to the Competent Authority of India, till has reached the AO, there remains no doubt. There is no quarrel with the proposition that the French Competent Authority has handed over the pen drive to the Indian Competent Authority and the 6 page document is a print out of the said pen drive. But the ld. CIT(A) failed to address the argument of the assessee that the information contained in pen drive, the source thereof and author thereof and the authenticity of the information contained in the pen drive has not been established with any credible evidence or linkage with any of the document. The pen drive so received was just like an anonymous letter forwarded by French Competent Authority to the Indian Competent Authority. The issue which the ld. CIT(A) has failed to appreciate is the origin of the source of information only and certainly not the passing of the information from French Competent Authority to Indian Competent Authority, till such time the origin of source of information is authenticated. 133. Further, we hold that similar issue of authenticity of the documents has been examined and adjudicated in the case of AnuragDalmiaVs DCIT, Central Circle-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Here in this case as per the Assessing Off icer still certain information are yet to be received and the material and information available with the department needs to be corroborated and needs to be further inquired into. Under these circumstances also in our opinion same cannot be done within the scope of Section 153A as we have already held that nothing has been found from the assessee during the course of search, which can preempt any post search inquiry. Albeit in abated assessments AO may have power to conduct further inquiry but not in case of unabated assessments. 135. With regard to the issue of abatement of assessment, we hold that the assessment years under consideration i.e. AY 2006-07 and AY 2007-08 were completed assessments and not abated assessments and hence, no addition can be made in absence of incriminating material found during the course of search in view of the judgment of the Hon ble Delhi High Court in the case of CIT Vs Kabul Chawla (2016) 380 ITR 573 and other such judgments on the issue. The ld. AR all through argued that there is no incriminating material seized during the search and the addition made during the year is not based on any seized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of search and al though the search was conducted on the basis of the said information, no incriminating material whatsoever was found during the course of search relating to the transactions reflected in the said Bank account or income arising to the assessee relating thereto. He contended that the scope of assessment made by the Assessing Off icer under section 153A for both the years under consideration pursuant to the search, therefore, was limited to the income unearthed during the course of search on the basis of incriminating material found and in the absence of any such incriminating material found during the course of search, addition on account of HSBC Bank transactions or income relating thereto was beyond the scope of assessment made under section 153A. He contended that when this issue was specifically raised by the assessee during the course of appellate proceedings before the ld. CIT(Appeals), the concerned Assessing Off icer had appeared before the ld. CIT(Appeals) on 21.12.2015 and agreed vide order-sheet entry dated 21.12.2015 recorded by the ld. CIT(Appeals) (copy at page no. 22 of the paper book) that the information regarding the undisclosed HSBC bank account ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. We have considered the rival submissions and also perused the relevant material available on record. It is observed that the returns of income originally f iled by the assessee for both the years under consideration were duly processed by the Assessing Officer under section 143(1) well before the date of search conducted on 28.07.2011. The said search was conducted in the case of the assessee on the basis of information received by the Assessing Off icer from CBDT relating to the undisclosed account maintained by the assesese with HSBC Bank, Geneva, Switzerland. During the course of search, no incriminating material, however, was found relating to the transactions ref lected in the said Bank account of the assessee with HSBC Bank or any income relating thereto and this position was categorically admitted by the Assessing Off icer during the course of appellate proceedings before the ld. CIT(Appeals) as is evident from the relevant order-sheet entry dated 21.12.2015 recorded by the ld. CIT(Appeals) (copy at page no. 22 of the paper book). The question that arises now is whether in the absence of such incriminating material, any addition to the total income of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 143(1) or section 143(3) of the Act and such order was already in existence having been passed prior to the initiation of search/requisition. Although this question was not f inally answered by the Hon ble Delhi High Court in the case of Anil Kumar Bhatia (supra), it is quite clear from the said question raised by the Hon ble Delhi High Court that there was no distinct ion made by Their Lordships in the assessments completed under section 143(1) and section 143(3) for determining the scope of the proceedings under section 153A. However, the said question arose specif ically for the consideration of Mumbai Bench of this Tribunal in the case of ACIT vs. Pratibha Industries reported in 141 ITD 151 and af ter referring to the discussion made by the Hon ble Delhi High Court in this context in the case of Anil Kumar Bhatia (supra), the Tribunal held that the only logical conclusion which could be traced out by harmonizing the legislative intendment and the judicial decision was that where the assessments had already become f inal prior to the date of search, the total income has to be determined under section 153A by clubbing together the income already determined in the origi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that a person indulging in such activities can hardly be accepted to maintain meticulous books or records for long. These factors are absent in the present case. There was no justif ication at all for the AO to proceed on surmises and estimates wi thout there being any incriminating material qua the AY for which he sought to make additions of franchisee commission. 70. The above distinguishing factors in Dayawanti Gupta (supra), therefore, do not detract from the settled legal position in Kabul Chawla (supra) which has been followed not only by this Court in its subsequent decisions but also by several other High Courts. 71. For all of the aforementioned reasons, the Court is of the view that the ITAT was justif ied in holding that the invocation of Section 153A by the Revenue for the AYs 2000-01 to 2003-04 was wi thout any legal basis as there was no incriminating material qua each of those AYs. Conclusion 72. To conclude: (i) Question (i) is answered in the negative i.e., in favour of the Assessee and against the Revenue. It is held that in the facts and circumstances, the Revenue was not justif ied in invoking Section 153A. of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial year. 145. Now, in the light of the above provision, we may go through the statement of the assessee to find out whether the assessee has admitted to have made investment during the year under consideration. The AO has quoted the statement in the assessment order. We have gone through the entire statement. There is no admission that any investment has been made during the year under consideration. On the contrary, we find that in this statement, it is coming out that investment has been made in the year 2002. It may be relevant to quote the relevant para of the statement as referred by the AO in the assessment order: Q. 7. Can you recollect as to when was it opened? Ans. Sometime in 2002. Q. 18 What amount was given at the instruction Charlie and what amount was deposited by him in your account? Ans. Various amount were given on various dates in 2002 in Delhi ranging from ₹ 2 crore to ₹ 5 crore. 146. With the assistance of both the ld. AR and ld. DR, we have again gone through the statement of the assessee recorded during the search which has been used by the AO for making the addition. The ld. DR could not point out that any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. It is also not disputed that out of the aforesaid investment of ₹ 12,58,100/-, the total payment amounting to ₹ 6,05,100/- was made by cheque and the remaining balance of ₹ 6,53,100/ - was made by cash. It is also not disputed that the assessee had suff icient deposits in her bank account due to brought forward deposits of earlier year at the beginning of the year under consideration to explain the source of aforesaid transactions by cheque totaling ₹ 6,05,000/-. It is further not disputed that the deposits in the bank accounts of the assessee at the beginning of the year had accumulated in the past, across several years. It is also not disputed that the assessee had made signif icant amounts of withdrawals in cash, out of her bank account in an earlier year. (4.1) It will be useful to refer to Section 4 of I.T. Act, which is the charging section. For ease of reference, Section 4 is reproduced as under:- Charge of income-tax. 4. (1) Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 ITR 375 (All); M.K Muhammad Ibrahim vs. CIT 10 ITR 64 (Mad.), CIT vs. Jug Sah Muni Lai Sah 7 ITR 522 (Patna), CIT vs. Planters Co. Ltd. 123 ITR 648 (Mad.), CIT vs. Spunpipe 141 ITR 246 (Guj.), DebaprasannaMulcharjee vs. CIT 20 ITR 293 (Cal.), CIT vs. Bijli Cotton Mills Pvt. Ltd. (All.) and CIT VsPartabmullRameshwar 107 ITR 526 (Cal.) for proposition that; even if certain income has escaped tax in the relevant assessment year, because of f a device adopted by the assessee or otherwise, it does not entitle revenue to assess the same as the income of any subsequent year when the mistake becomes apparent. 148. Now, in the case in hand, as noted above, as per the statement of the assessee, the entire amount has been invested in the years prior to the assessment year under consideration i.e. prior to AY 2006-07. There was no evidence to prove either by the way of statement or by the way of documents available with the department that the amounts have been deposited during the instant assessment year. It is a settled law that a statement has to be read in entirety. The AO in case wants to rely upon the statement, he has to read the statement as a whole and cannot read it the way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... February, 2007, which has been relied upon by the assessing off icer, but it is noticed that the said balances are merely balances and not any deposits. In this context, the Ld. Senior Counsel vehemently contended that if one were to strictly construe the document as it is, then, no addition could have been made in any of the assessment years under consideration since as per the document the account was created much earlier and there is no evidence of deposition of any amount in any of the assessment yeas beginning with assessment year 2006-07. It was contended that the assessee merely offered the amount to tax in assessment year 2012-13 to avoid litigation and if at all the said amount could only been taxed in the said year, being the year of search, as per the provisions of section 69A of the Act. 5.7 On thorough and serious consideration, we f ind substantial merit in the aforesaid contention of the Ld. Sr. Counsel that if at all the amount on the basis of the papers relied upon could only be taxed in year of search, when the said papers were, for the f irst time, confronted to the assessee. This is for the reason that the paper nowhere shows any amount being deposited i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO as unexplained investment with the HSBC Bank A/c, as a consequence thereto, the addition of interest assuming such interest would have been earned on the deposit cannot be sustained. Even otherwise, this addition of interest by the AO is merely by indulging into surmises that such interest would have been earned despite there being any evidence thereof. Accordingly, we uphold the order of the ld. CIT(A) on this issue and the appeal of the revenue is dismissed. 155. In the result, the appeal of the assessee for the assessment year 2007-08 in ITA No. 4576/Del/2016 is allowed and the appeal of the revenue in ITA No. 5330/Del/2016 is dismissed. ITA No. 5332/Del/2016 A.Y. 2009-10: 156. Following grounds have been raised by the revenue: 1. On the facts and circumstances of the case, the CIT(A) has erred in deleting the addition of ₹ 40,00,000/-made by AO on account of Unexplained expenditure. 2. On the facts and circumstances of the case, the CIT(A) has erred in deleting the addition of ₹ 12,23,083/- made by AO on account of disallowance u/s 14A. 3. On the facts and circumstances of the case, the CIT(A) has erred in delet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21-11-2008 HDFC Bank HDFC Bank HDFC Bank HDFC Bank 750000 1000000 925000 4432.5 TK PSK PSK PSK Total 2679432.50 Less : received from R. S. Anand Net Amount 103845 06-11-08 HSBC 650000 2029432.5 RSA 2. Payments made Air tickets for guests Particulars Cheque Date Bank Amount Sourc Amount paid to Global E-travel Solutions Pvt. Ltd. towards cost of Air tickets for guests 475604 11-06-2008 HDFC Bank 500000 TK 3. Cash withdrawn from bank A/c for expenses Particulars Cheque Date Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue s appeal are regarding the deletion of addition of ₹ 12,23,083/- on account of disallowance of disallowance under section 14A and the deletion of addition of ₹ 11,77,070 under section 36(1)(iii). Since the issue of disallowance under section 14A is linked to the disallowance under section 36(1)(iii), we will first take up the ground no. 4 regarding disallowance of interest under section 36(1)(iii). 163. The AO has made disallowance of ₹ 11,77,070/- under section 36(1)(iii) of the Act and ₹ 12,23,083/- under section 14A. During the year, the assessee has earned interest income of ₹ 36,72,034/- and has claimed an interest expenditure of ₹ 24,00,153/- against such income. The AO was of the view that the assesse has failed to establish the nexus between the borrowed and the lent funds. He disallowed proportionate interest of ₹ 11,77,070/- under section 36(1)(iii) and the balance, he disallowed invoking section 14A. 164. The CIT(A) has deleted the addition holding that the assessee has borrowed funds on interest and the same have been advanced, during the year, on which it has earned interest. As such, there is no logical basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement (PB page no.100-102). The AO without considering the reply of the assessee from proper perspective made an addition of ₹ 11,77,070, being proportionate disallowance of interest paid on borrowing vide the assessment order alleging that the assessee has not been able to establish the nexus between the borrowed and interest earning advances. The AO alleged that the assessee s contention that all borrowed funds were utilized for earning income has not been substantiated with any credible evidence. The CIT(A) after perusing the evidences on record has rightly deleted the addition by giving a categorical funding that all interest bearing loans to the tune of ₹ 3,03,50,275 had been advanced on interest. 167. We have considered the rival submissions and perused the order passed by the authorities below and the paper book. On going through the same, we find that all the interest bearing funds have been utilized towards interest bearing advances. This is evident from the balance sheet whereby interest bearing loan was ₹ 3,03,50,275 against which, interest bearing advances are ₹ 3,41,00,000 i.e. more than the amount borrowed. Further, from the bank state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is no logical basis in the AOs action making the disallowance of ₹ 11,77,770 /-. The same is directed to be deleted. 168. The ld. DR could not point out any reason to interfere with the above findings recorded by the CIT(A). Accordingly, we uphold the order of the CIT(A) on this ground. Accordingly, ground no. 4 of the Revenue s appeal are dismissed. 169. Now, coming to ground no. 2 regarding the disallowance of ₹ 12,23,083 under section 14A. The AO has made this disallowance on the reasoning that the assessee has earned dividend income during the year which is exempt. Since assessee has incurred interest expenditure of ₹ 24,00,153/-, proportionate disallowance under Rule 8D of ₹ 21,39,724 need to be made. However, considering the fact a disallowance of ₹ 11,77,070/- has been made under section 36(1)(iii), the balance disallowance i.e. ₹ 12,23,083/- is made under this head. The CIT(A) had deleted this addition holding that the entire interest expenditure was for business purposes. 170. It was contended by the ld. DR that CIT(A) was not justified in considering that the interest expenditure was for business p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provision of Rule 8D is available to an assessing officer only if he is not satisfied with assessee s claim of expense with respect to the income which do not form part of the total income. In the present case, the AO has simply stated that the claims of the assessee are not acceptable, without making any reference to the books of accounts. The same therefore does not amount to recording of satisfaction as per the mandatory requirement of section 14A(2) r.w.r. 8D(1). In support thereof, the ld. AR placed on the decision of jurisdictional High Court in the case of CIT vs. Taikisha Engineering India Limited ITA 115/2014 119/2014 wherein it was held that unless the AO rejected the explanation or the rationale which induced the assessee to offer particular amount as expenditure with some reasoning, the mere rejection per se cannot be accepted. Ld. AR submitted that since in the instant case, the disallowance has been made by the AO, without providing any specific finding regarding dissatisfaction with the explanation given by the assessee, therefore in such a case, the disallowance of interest by invoking Rule 8D is untenable. Ld. AR also placed reliance on the following decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of interest on the said amount of loan and the same had been directly used for lending amounts on interest to dif ferent parties which had led to earning of interest of ₹ 3672034/-. This being so there is no basis for the AO to hold the view that the amounts borrowed on interest had not been for the purposes of earning taxable income. The provisions of section 14A read with Rule 8D clearly require the AO to analyse the facts of the case so as to get to the satisfaction that certain expenditure had been incurred for earning tax exempt income and in the event of such satisfaction recourse to Rule 8D could be made. It is apparent from the perusal of the assessment order that no such exercise has been undertaken by the AO before the proceedings to resort to the machinery available under Rule 8D. This fact apart, the expenditure in the form of interest debited in the P L account has already been examined to have been incurred for earning taxable income in the form of interest earned to the tune of ₹ 3672034/-. This being so it can be said that no expenditure has been debited in the P L account which could be attributed to earning of exempt income. In the circumstances the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Capital A/c Balance b/f ₹ 12,70,023 Loans advances ₹ 3,41,00,000 Add: A. Amount Introduced i. Total amount transferred from personal/other A/c ₹ 1,02,50,000 ii. Less transferred to personal/Other A/c ₹ 96,27,765 ₹ 6,22,235 ₹ 5,85,585 B. Interest Receivable ₹ 24,77,843 Add: Profit during the year ₹ 12,71,883 ₹ 37,49,725 Loans Advances Bank : SBOP OD A/c ₹ 36,00,275 Others ₹ 2,67,50,000 ₹ 3,41,00,000₹ 34100000 Vide Point No.1 of the submission dated 30.12.2014, assesee has mentioned that the earlier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the transfer of amounts in the various bank accounts which have been declared by the assessee. 178. Before us, the Counsels relied on the respective orders of the revenue. 179. The submissions of the assessee before the revenue authorities are as under: 12.1 The Assessing Off icer has stated that since the assessee has not submitted any evidence regarding the balance brought forward, details of the amount lend and borrowed and the interest receivable, the capital introduced of ₹ 24,77,843/- as shown by the assessee in his balance sheet of lending business activity is considered to be unexplained. 10.2 In this regard it is submitted that the f indings recorded by the Assessing Off icer are factually incorrect and contrary to the material and documents on record. The Assessing Off icer has not been able to appreciate or understand the facts of the case in the right perspective. The assessee is an individual. He is not carrying on any business except the activity of giving loans on interest from the overdraf t limit sanctioned by the State Bank of Patiala, loans taken on interest from friends/associates as well as from own capital funds of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest accrued but not received (receivable) from the previous year which was inadvertently not shown in the previous balance sheet/statement of affairs of lending business activity, and as such had not been added to opening capital balance carried forward. This interest receivable was duly offered for tax in the previous assessment year. iv. Thus the aggregate of these was obviously assessee's own capital, as shown as balancing f igure in the balance sheet of lending business activity. 10.3 During the course of proceedings, the assessee, in support of the Capital in the statement of affairs of lending business activity, provided bank statement of all banks, wi th description of each deposit and withdrawal. The Ld. AO being satisf ied wi th each debit and credit entry in the bank account / statement of the assessee did not raise any further query. Thus the capital balance reconciled with each debit and credit entries in lending business activity which were through bank entries, and which stand explained and accepted by the Ld. AO. 10.4 The Assessing Off icer without appreciating the above facts has made an arbitrary and casual remark with predetermined mind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded to the Capital in the year under consideration. (d) The above three f igures, i.e. (i) ₹ 12,70,023/- is the opening capital of assessee in lending business activity in the year under consideration, (ii) ₹ 6,22,235/- is contribution of difference between funds transferred from and to as per bank statement and (iii) ₹ 5,85,585/- is interest receivable, and total of the all these entries which in aggregate makes a sum of ₹ 24,77,843/- [12,70,023 + 6,22,235 +5,85,585). Thus, the assessee provided a detailed and substantiated explanation, vide letter, dated 30.12.2014 and 26.02.2015. 10.5 That the addition to the capital in statement of affairs of lending business activity is not a result of any credit entry in books or bank account that remained unexplained or unsubstantiated by the assessee. Thus, this kind of addition which related to reconciliation entries is cannot be treated as unexplained cash-credit' or unaccounted investment as contemplated under the Act. 10.6 From the assessment order is quite clear and evident that the Ld. AO has not rebutted the above explanation on merit or with some documentary evidence, and just arbitr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the absence of any factual incongruency brought to our notice by the revenue, we hereby decline to interfere with the order of the ld. CIT (A) on this issue. 182. In the result, appeal of the Revenue is dismissed. Since, the matters have been adjudicated on merits, the CO of the assessee is treated as infructuous. ITA No. 5333/Del/2016 A.Y. 2010-11: 183. Following grounds have been raised by the revenue: 1. On the facts and circumstances of the case the CIT(A) has erred in deleting the addition of ₹ 31,70,746/-made by AO on account of Unexplained cash credit u/s 68 of the I.T. Act. 2. On the facts and circumstances of the case the CIT(A) has erred in deleting the addition of ₹ 34,73,669/-made by AO on account of disallowance of interest u/s 36(1)(iii). 3. On the facts and circumstances of the case the CIT(A) has erred in deleting the addition of ₹ 15,21,850/-made by AO on account of interest on foreign deposits. Ground No. 1 Unexplained Cash Credit u/s 68: 184. The AO found that the closing balance as per the reconciled bank balance was ₹ 2,45,75,570/- whereas as per the audited balance sheet, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.09.2010 shown a balancing figure of ₹ 2,14,05,994/- which cannot be taken as the bank balance of the assessee when a single account is used for the purposes of the business and for personal transactions. The AO made addition on account of in appropriate reconciliation in the bank overdraft account and the bank statement. Hence, we decline to interfere with the order of the ld. CIT (A) on this ground. Ground No. 2 Disallowance of Interest u/s 36(1)(iii): 186. As per the Assessing Officer, the assessee has given interest free loans of ₹ 5,45,40,000/- during the year and the opening balance of the same was ₹ 20,80,000/-, totaling the amount of interest free loans to ₹ 5,66,20,000/-. Further, during the year under consideration, the assessee has borrowed funds from banks and others at the rate of 13.5% and has paid interest of ₹ 34,73,669/-. During the year, the assessee has received loans of ₹ 5,23,40,000/- and loans given of ₹ 5,45,40,000/-. 187. The ld. CIT (A) held that the assessee has borrowed amounts on interest during the assessment year under consideration and such loans have been advanced on interest to different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the profit earned thereof has been offered to tax, no disallowance is called for on the interest debited in the P L A/c. Ground No. 3 Interest on Foreign Deposits: 191. This issue stands adjudicated in the appeal of the revenue for the assessment year 2007-08 in ITA No. 5330/Del/2016 and the same ratio with regard to notional earning of interest on the presumed credit balance applies for this year too. This ground of appeal is accordingly dismissed. 192. Since, the matters have been adjudicated on merits, the CO of the assessee is treated as infructuous. ITA No. 5334/Del/2016 A.Y. 2011-12: 193. Following grounds have been raised by the revenue: 1. On the facts and circumstances of the case the CIT(A) has erred in deleting the addition of ₹ 1,43,29,815/-made by AO on account of Unexplained cash credit u/s 68 of the I.T. Act. 2. On the facts and circumstances of the case the CIT(A) has erred in deleting the addition of ₹ 2,24,00,000/- on account of prof it share. 3. On the facts and circumstances of the case the CIT(A) has erred in deleting the addition of ₹ 49,35,250/- made by AO on account of sale of unlisted s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company namely, M/s Consortium Securities Pvt. Ltd. The relevant part of the order of the ld. CIT (A) is as under: 27. I have considered the facts of the case, the basis of addition made by the AO and the arguments of the AR during assessment as well as appellate proceedings. It is seen that the AO has made an addition of ₹ 1 crore on the ground that such receivable had not been recorded in the balance sheet prepared by the assessee. The explanation of the assessee clearly shows that the amounts in question had been given as margin money for transaction of shares through its broker viz. M/s Consortium Securities Private Limited and had been received in the current year. The balance sheet prepared by the assessee was with respect to the money lending business and impugned share transactions and the related deposits of margin money was not part of the said record and accordingly had not been made part of the said balance sheet which was exclusively for the money lending business. The source of payment of said amount of ₹ 1,00,00,000/- to M/s Consortium Securities Private Limited in the earlier years and its receipt during the year under consideration has been as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsortium Securities Private Limited has not been disputed. Hence, we hold that no undisclosed income could be assessed on the amounts received as refund of margin money during the year. With regard to the amount of the transaction with HDFC Bank and State Bank of Patiala, since the amount represents transfer of funds from disclosed accounts and since reconcile, we decline to interfere with the order of the ld. CIT (A). Ground No. 2 of Revenue s appeal and Ground no.8 of Cross Objection No. 344/Del/2016 of the assessee Addition on account of Profit Share: 197. Page No. 76 of Annexure A-2 seized from the residence of the assessee represents as under: Particular P.S. Kalra Manish Mehta BadalMidha Samir Kalia Share 12,131,973 12,131,973 12,131,973 12,131,973 Less: 6,053,855 6,677,851 4,422,213 5,173,444 Balance with them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Santosh Mehta 36,250 VeenaKalia 36,250 Total 36,250 36,250 36,250 36,250 202. From the above, we find that the assessee is not a shareholder but only a Director in the said company. From the balance sheet, it is found that the net worth of the company as per the seized material was ₹ 4,85,27,890/- (page no. 78, 79 Annexure A-2). The assessee was representing Tripat Kaur, M/s Consortium Securities P. Ltd. and M/s. Omega Finhold P. Ltd. whose total shares was 36,250 whereas Manish Mehta, BadalMidha along with ArtiMidha and Samir Kalia were also holding equal share of 36,250. The value of the shares have been represented in the page no. 76 of Annexure A-2. From the concurrent reading and examination of the page 76 and page 78, 79 of the same Annexure A-2, we hold that the seized material doesn t represent the half yearly profit but represent the value of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There is no evidence on record that the assessee has received more money and returned the amount to the purchaser. No seized material has been found which directs at substantiation of such impugned transaction or presumption made by the AO. Even, the bank statements do not lead to any such transfer of money or cash withdrawals to substantiate the allegations. Hence, we decline to interfere with the order of the ld. CIT (A). Ground No. 4 Disallowance u/s 14A: 206. The Assessing Officer held that the assessee has claimed ₹ 80,49,478/- towards interest in money lending business and worked out disallowance of ₹ 42,08,366/- u/s 14A. 207. We have perused the order passed by the Authorities below. On going through the same, we note that the assessee has taken loan on interest and the same amount has been advanced on giving advances on interest. Thus, there is a direct nexus in respect of the amount of interest incurred and the interest earned. On going through the profit and loss account, we note that the total interest earned ₹ 12,39,86,77/- and the interest paid for earning such interest is ₹ 80,49,478/-. Further expenditure of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54,806 22,00,000 5 months 04.01.2010 22.06.2010 13.5% 1,35,074 27,00,000 6 months 23.06.2010 06.01.2011 13.5% 1,91,737 28,00,000 22 07.01.20 30.01.20 13.5% 22,784 31,00,000 1 day 30.01.20 31.01.20 13.5% 1,146 33,00,000 4 days 01.02.20 04.02.20 13.5% 4,883 41,00,000 25 05.02.20 30.03.20 13.5% 37,911 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee was ₹ 1,30,27,866/-. Before the AO, the assessee submitted un-audited balance sheet wherein the capital introduced was shown to be ₹ 1,49,44,281/-. The AO treated the difference of ₹ 19,16,415/- as undisclosed income. We find that the ld. CIT (A) has deleted the addition holding that the balance in the capital account pertaining to the individual and the entity of lending business are different. On going through the record, we hold that the difference between capital account of the individual and the capital account of the business entity do not call for any determination of undisclosed income. Hence, we decline to interfere with the order of the ld. CIT (A) wherein the addition has been deleted after examining the due reconciliation of the amounts involved in the capital account. 213. Since, the matters have been adjudicated on merits, the other legal grounds raised in the CO of the assessee are treated as infructuous. In the result, the appeal of the Revenue is dismissed and the CO of the assessee is partly allowed. ITA No. 5335/Del/2016 A.Y. 2012-13: 214. Following grounds have been raised by the revenue: 1. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sanjay Vats ₹ 4,700/- Consortium Securities ₹ 1,16,500/- AlokGoel ₹ 15,000/- B.S. Kalra ₹ 61,000/- Rajendra Place Office (Petty cash) ₹ 800/- MeharAnand Locker ₹ 50,000/- Global E-Solutions ₹ 1,04,300/- 218. Availability of the cash which has been a part of the cash found on the date of search has not been disputed by either parties. Hence, we decline to interfere with the order of the ld. CIT (A) in deleting the addition on account of the cash, the existence and accountability of which has been duly proved. Ground Nos. 2 Addition on account of Unexplained Investments: Paintings (₹ 1,44,00,00/-) 219. The relevant part of the Assessing Order on this issue is as under: 4. Assessee was asked to explain the source of paintings of ₹ 2.38 crores belonging to assessee as stated in the of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought thereof with regard to their accountability has been only because of these being recorded in the list of paintings as per Annexure -A-1, A-2 in the case of Smt. Tripat Kaur. The payments made by the assessee in the FY 2006-07 and 2007-08 have been accepted while making assessment for the said assessment years by the same AO. In view of these facts there is nothing available as per the records that could be made the basis of doubting the assessee s version with regard to the purchase either in terms of prices or in terms of source of payment. It is further seen that the painting at Sr. No. 12-13 have been claimed to be received as gift from the artists and relevant evidence in the form of confirmation by the assessee thereof by the said artists had also been produced before the AO. It is further seen that the assessee had made substantial purchases from the said artist Sh. K.S. Radhakrishnan and Sh. Gurdeep Singh. It is also seen that both paintings have been gifted on important social occasions and had been marked as 'not for sale' (NFS) in the inventory as per Annexure A-1, A-2 in the case of Smt. Tripat Kaur. It clearly lends credibility to the impugned claim of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tripat Kaur 25.02.2010 2009- - Rs. Bikramjit Singh Kalra 26.02.2010 2009- - Rs. Total ₹ 66,74,07 227. Further, the assessee has submitted the valuation report in respect of above family members giving the weights as on 31.03.2009. In addition, the assesee has submitted valuation report as on 31.03.2008 giving the details of jewellery as under: Name Date of A.Y./Dat Weigh Value P.S. Kalra Not filed 31.03.20 95.31 Rs. P.S. Kalra Not filed 31.03.20 247.5 Rs. 228. The total weights of the Jewellery of family members as mentioned above are summarized as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of jewellery on 13.02.2005 from Punjab Jewellers. The value as on 31.03.2001 was ₹ 1,05,000/-. Further, the seized material page no. 19 of Annexure -6 KR-1 also reflects the existence of jewellery in the hands of the HUF. Further, the bills of jewellery have been produced which are as under: 18.01.2005 ₹ 8,895.50/- 19.12.2005 ₹ 3,12,443/- 17.02.2006 ₹ 3,28,250/- 235. It is also a matter of record that from the entire jewellery found an amount of 2148 gms. has been considered as unexplained and disclosed in the Income Tax Return of Smt. Tripat Kaur. The quantity of the jewellery is less than the threshold limit of the Wealth Tax Return. Since, the evidence proved the availability of the jewellery in the hands of the HUF, the addition made is liable to be deleted. It can also be held to be reasonably valid that the assessee possesses a minimum quantity of the jewellery in his personal capacity. In the absence of any other material brought before us, we hereby decline to interfere with the order of the ld. CIT (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ters have been adjudicated on merits, the Cross Objection of the assessee is treated as infructuous. ITA Nos. 6701 6702/Del/2017: AYs. 2006-07 2007-08 241. These two appeals are filed by the assessee against the order of the CIT(A) confirming the levy of penalty under section 271(1)(c) in respect of the addition on account of investment in bank account sustained by the CIT(A). In both these years, the penalty has been sustained by the CIT(A) on the ground that addition on account of investment in both these years have been upheld. Since we have deleted the addition in both these years, the very basis of levying penalty do not survive. Accordingly, we direct the AO to delete the penalty in both these years. In the result, appeal of the assessee for AY 2006-07 in ITA No. 6701 and for AY 2007-08 in ITA No. 6702/Del/2017 are allowed. 242. In the result, The appeals in ITA Nos. 5330, 5332, 5333, 5334 5335/Del/2016 are dismissed. The appeals in ITA Nos. 4575 4576/Del/2016 are allowed. The CO Nos.342, 343, 345/Del/2016 are dismissed as infructuous. Co. No. 344 is partly allowed. The appeals in ITA Nos. 6701 6702/Del/2016 are allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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