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TMI Blog2021 (8) TMI 897X X X X Extracts X X X X X X X X Extracts X X X X ..... and the grounds taken by the appellant are extracted below; "1. On facts and circumstances of the case and law on the subject the learned Assessing Officer erred in making addition of Rs. 2,12,87,885/- treating the unsecured loan as unexplained cash credit under section 68 of the Income Tax Act, 1961 and the learned Commissioner of Income Tax (Appeals) erred in upholding addition of unsecured loan under section 68. 2. On the facts and circumstances of the case and law on the subject, the addition made be deleted." The assessee has also raised some additional ground vide letter dated 30th March,2021 which are also extracted below: "1. The Ld. CIT(A) erred in confirming the addition under section 68 of the Act, ignoring that the original proceedings were complete, therefore in absence of any incriminating evidence, the proceedings under section 153A of the Act stands abated. 2. The Ld. CIT(A) erred in confirming the addition under section 68 of the Act, ignoring that the proceedings were complete under section 143(3) of the Act on 29.02.2016, therefore in absence of any incriminating evidence during the search operation carried out on August 30, 2016 the proceedings under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had received loan of Rs. 3,20,00,000 from M/s. Anchita Properties Pvt. Ltd. (hereinafter referred to as APPL) and discussed the credentials of the said company in para 9.7(i) of the assessment order. The statement of the director of APPL, Mr. Devendra M Rajput was recorded under section 132(4) of the Act on 1.9.2016 who is also account manager in J. Kumar Infraprojects Ltd for more then 18 years. The said statement of the director was retracted vide letter and affidavit dated 25.10.2016. The Ld. AO issued a Notice under section 133(6) of the Act dated 21.3.2018 to APPL. A response to the said notice under section 133(6) of the Act, was received from APPL on 7.5.2018. In compliance to the said notice APPL submitted ledger statement, copy of bank statement, Balance, sheet, Profit & Loss account and details of source of payment for unsecured loan along with bank statement. In response to the show-cause dated 2.4. 2018, the assessee furnished details/evidences to establish the identity, creditworthiness of the creditor and genuineness of the transaction. The Ld. AO observed that, during the relevant year, out of total unsecured loan of Rs. 3,20,00,000/- from APPL, Rs. 1,02,12,115/- wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the assessment under section 153A r.w.s. 143(3). The contentions made regarding validity of assessments and legality of additions made are therefore dismissed. " 6. The learned AR vehemently argued that addition as made by the AO in the assessment framed under section 143(3) r.w.s 153A of the Act dated nil was without jurisdiction as the assessment has not abated on the date of search. The learned AR submitted that in case of unabated assessment on the date of search, the addition has to be made with reference to incriminating material seized during the course of search and if no such material is seized, the addition to the income of the assessee in unabated assessment is beyond the authority and jurisdiction of the AO. The learned AR while drawing our attention to provisions of section 153A of the Act submitted that there where search is conducted under section 132 of the Act, the notice under section 153A of the Act is to be issued in respect of six assessment years falling prior to the date of search. The learned AR submitted that so far as the unabated assessment years are concerned, the AO has very limited jurisdiction so far as the scope of the assessment of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort P. Ltd. [2020] 424 ITR 195 (Bom)(HC) The ld AR submitted that the addition made under section 68 of the Act has been made without jurisdiction and deserved to be deleted. 7. Without prejudice to above even the alleged statement referred in the assessment order of the assessee or statement Shri Devendra Rajput Sigh dated 01.09.2016 does not refer any alleged cash transactions or alleged loan entries hence the statement of third party cannot be considered as incriminating documents. Without prejudice to above statement of the third party cannot be considered as incriminating and the ld AR relied on the decision of PCIT v. Sunshine Import & Export P. Ltd. [2020] 424 ITR 195 (Bom)(HC). 8. The ld AR finally submitted before the us that the order of ld CIT(A) affirming the order of AO may be set aside and the addition made may kindly be deleted for the want of proper and valid jurisdiction. 9. The ld DR on the other hand relied heavily on the order of ld. CIT(A) and submitted that the purpose of the search to cover six assessment year would be rendered otiose if the pleas of the assessee are accepted. The ld DR argued that if the AO comes across anything incriminating even during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vendra Rajput Sigh dated September 01, 2016 does not refer any alleged cash transactions or alleged loan entries hence the statement of third party cannot be considered as incriminating documents. There is merit in the another without prejudice argument of the AR that statement of the third party cannot be considered as incriminating material. The case of the assessee finds support from the decision of the Hon'ble Bombay High Court in the case of PCIT v. Sunshine Import & Export P. Ltd. [2020] 424 ITR 195 (Bom)(HC). In this case the Assessing Officer made additions to income of assessee on account of bogus purchase and sale transactions merely on basis of statement of a director of assessee that assessee had provided only bill entries and there was no such actual transaction, since assessee discharged onus of proving its transactions of sale and purchase as genuine by furnishing relevant documents and revenue had not found any incriminating evidence that could establish stand of Assessing Officer, impugned addition was unjustified. Without prejudice to the above 11. Since, there is no incriminating material found during the course of search, we therefore respectfully following the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation money. The assessee was not required to prove source of the source. Nonetheless, the inquiries through the investigation wing of the department at Kolkata proved source of the source The Hon'ble High Court has distinguished the decisions in the case of PCIT v NRA Iron & Steel (2019) 412 ITR 161 (SC).Further, this decision of the apex court is not applicable to the facts of the present case, on the following points: a. In the case before the Supreme Court, some of the investor companies were nonexistent. Whereas in the facts of the present case the company has replied to the notices under section 133(6) of the Act. b. In the case before the Supreme Court, some of the investor companies did not file their bank statements to prove the source of funds. Whereas in the facts of the present case the lender has filed their bank statements and nothing adverse has been found by the AO. c. Thus, in the facts of the present case, as observed by the Supreme Court, assessee has discharged its onus under section 68 of the Act by providing identity of the lenders, genuineness of the transaction and creditworthiness of the lenders whereas AO has not brought on record any evidence on re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (P.) Ltd. v. Dy. CIT (2015) 373 ITR 661 (SC) where it was held that there being no assessment under section 143(1)(a), question of change of opinion, does not arise and, reassessment can be made. Thus the same pertains to reassessment and not search cases. Besides , the issue debated is on "reasons to believe"., Therefore, the case is not applicable. Similar is the position with regards to ACIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. 161 Taxman 316 (SC) followed in Zuari Estate Development and Investment Co. (P.) Ltd. (Supra). 16. In view of the facts and decisions cited above, we hold that the addition has to be deleted even on merits. 17. The appeal of the assessee is allowed. ITA No.3459/M/2019 A.Y 2014-15, ITA No.3455/M/2019 A.Y 2012-13, ITA No.3456/M/2019 AY 2013-14, ITA No.3457/M/2019 AY 2013-14, ITA No.3465/M/2019 AY 2014-15 & ITA No.3463/M/2019 A.Y 2017- 18. Since the issues involved in all the above appeals ,except ITA No.3463/M/2019 A.Y. 2017-18 which is on merits only, are identical to the ones as decided above by us in ITA No.3458/M/2019 A.Y. 2013-14. Therefore our findings in ITA No.3458/M/2019 A.Y. 2013-14, would, mutatis mutandis, apply to these appeals as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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