TMI Blog2024 (3) TMI 765X X X X Extracts X X X X X X X X Extracts X X X X ..... urther, as correctly contended on behalf of the Assessee, Ashisar Buildwell has been followed in the case of Pr. CIT v Sandeep Aggarwal (HUF) [ 2023 (10) TMI 569 - BOMBAY HIGH COURT] wherein, it has been held that the clarification issued by the Hon'ble supreme Court in the case of Abhisar Buildwell and U.K. Paints , has been issued in the context of re-assessment proceedings u/s 147 and 148 of the Act as well. The additions for the year under consideration have been made by the Assessing Officer only on the directions of the third party, without having in his possession any incriminating material unearthed during the search proceedings, for the year under consideration, which is indirect contravention of the afore discussed case laws. Moreover, the additions wrongly made represented all the credit entries in the bank account of the Assessee company. Regarding these credit entries, sufficient credible documentary information had been furnished by the Assessee, by way of evidence, during the assessment proceedings, including the source thereof, which cogent voluminous documentary evidence the Department was been not able to rebut. The Assessing Officer, rather, having not been s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unds which had not been explained by the assessee - HELD THAT:- Addition has been so confirmed without taking into consideration the documentary evidence filed by the assessee. It remains undisputed that these were squared up loans and advances, the company having given advance of Rs. 4 lacs to Shri Rakesh Kumar on 28.10.2013 and the same having been received back through banking channel, on 09.11.2013, in respect of which, the assessee has placed on record before the authorities below, the copy of account of Shri Rakesh Kumar in the books of the assessee company. Neither the AO nor the CIT(A) extended any such notice to the lender for additional inquiries. Instead, an addition was made based on the directive of a third party. Neither enquiry was made by CIT(A) / AO before confirming the addition nor any documentary evidence were sought from the assessee company, therefore the assessee company has now submitted copy of computation, ITR-V and bank account statement of Sh. Rakesh Kumar as additional evidence along with confirmation which was submitted before CIT(A) and AO. The submission of said documents are neither challenged nor disputed in the appeal by the department. Addition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her under Section 133(6), or Section 131 of the Act, were taken out, for making any further investigation into the matter. Addition on account of income deposited in cash - addition included cash deposit by the assessee company in its bank account, holding that the purpose and utilization of such funds had also not been explained by the assessee -HELD THAT:- Despite the assessee having discharged its burden of furnishing documentary evidence in support of the amount deposited, neither the AO, nor the CIT(A) on receipt of the documentary evidence put any question to the assessee, or initiated any enquiry, either u/s 133(6) of the Act, or u/s 131 thereof. It stands made out that the assessee had earned the income of Rs. 7 lacs from leasing out of vehicle of the company. The copy of account of hire charges, which had been furnished before both the taxing authorities, stands filed before us also. It formed part of the books of account submitted by the assessee company during the assessment proceedings, shown as income in the Profit Loss Account. Neither of the authorities below have rebutted this documentary evidence, rendering their respective orders to be orders passed as a result of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merit therein, all the grounds raised by the Department are rejected and the appeal filed by the Department is dismissed. - SHRI A.D.JAIN, VICE PRESIDENT AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER For the Appellant : Shri Rohit Goyal, CA Shri T.N. Singla, C.A. For the Respondent : Smt. Kusum, CIT DR ORDER PER A.D.JAIN, VICE PRESIDENT ITA No.3/CHD/2023 and ITA No.144/CHD/2023 are cross appeals filed by the assessee and the Revenue, respectively, against the order dated 15.12.2022 passed by the ld. CIT(A)-3, Gurgaon pertaining to Assessment Year 2014-15. ITA 3/CHD/2023 2. In ITA No. 3/CHD/2023, the assessee has raised the following Grounds of appeal : 1. That the order of Learned C.I.T. (Appeals) is bad and against the facts and Law. 2. That the assessment completed u/s 153A of the Income Tax Act, 1961 is against the provisions of the law as neither any search was conducted on the company nor any Panchnama was prepared in the name of the company. 3. That on the facts and in the circumstances of the case, the Order of assessment passed under Section 153A of the Act is wholly illegal and without jurisdiction as no search had been conducted under Section 132 of the Act in any of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds. 2. That no search was conducted on the appellant company and otherwise also the alleged search, if any, conducted was in violation of provisions of section 132(1) of the Income tax Act, 1961. 3. At the outset, the ld. Counsel for the Assessee has stated at the bar that he does not wish to press the additional grounds. Rejected as not pressed. 4. Ground Nos.1 and 15 are general in nature. 5. As per Ground No.2, since neither any search was conducted on the Assessee company, nor any Panchnama was prepared in its name, the provisions of section 153A of the Income Tax Act, 1961 (in short 'the Act') are not applicable and so, the assessment completed u/s 153A of the Act is against the provisions of law. This Ground corresponds to Ground No. (b) raised by the Assessee before the ld. CIT(A). The Assessing Officer passed the assessment order dated 30.12.2019 u/s 153A(1)(b) read with section143(3) of the I.T. Act, making various additions. Before the ld. CIT(A), the Assessee raised this issue by way of Ground No. (b). 6. The ld. CIT(A), in para 10 of the impugned order, has observed, inter alia, that a letter dated 7.9.2022 had been sent to the A.O., requiring him to furnish det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Gupta in their individual capacity; that simultaneously, search was also conducted in the business premises at M/s Kansal Singla and Associates, Chandigarh, at SCO 80-81, 4th Floor, Sector 17-C, Chandigarh, which is also the registered address of the Assessee company; that during the search of M/s Kansal Singla and Associates, regular books of account along with bank details of the company were found; that one of the directors of the company, Shri T.N. Singla, who is also a partner in M/s Kansal Singla and Associates, was present at the time of search, but his signatures were not taken on the Panchnama prepared in the name of M/s Kansal Singla and Associates; that on the request of the Assessee company, the ld. CIT(A), vide letter dated 7.9.2022, directed the A.O. to furnish a copy of the search warrant / Panchnama prepared, on the basis of which, the assessment u/s 153A had been completed in the case of the Assessee company; that the ld CIT(A), in the impugned order, has similarly mentioned that the Assessing Officer furnished the copy of the warrant which was duly executed in the name of the appellant on 16.2.2018 in respect of the premises situated at SCO 80-81, 4th Floor, Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the 22 parties whose names were not mentioned, did not object to the order u/s 153A in the petition u/s 264 pursuant to the assessment order, such objection was not justified in the writ petition filed; that the assessment order under section 153A cannot and should not be permitted to become a matter of writ petition as the First Appellate Forum; and that the First Appellate Statutory Authority could deal statutorily with the questions and issues raised in the writ petition the jurisdiction of the First Appellate Authority having not been invoked with the appeals preferred by the writ petitioners. 11. Concerning the issue of absence of signatures of the main person on the search warrant, the ld. CIT (DR) has contended that there is no reequipment of service of warrant on the main person, who is usually occupied at other premises, that the search warrant is required to be served on the witnesses. 12. As observed, the name of the Assessee company has been mentioned in the search warrant, which was produced in the original by the Department before us. Therefore, this puts this entire controversy at rest and the Assessee s objection in this regard is found to be unjustified and it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 116 taxmann.com 389/184 ITD 847 (Delhi - Trib.) decided the issue that if no incriminating material is found in the search, no addition can be made u/s 153A. During the course of hearing in this case the assessee relied on the decision of Hon'ble Delhi High Court in CIT v. Kabul Chawla [2015] 61 taxmann.com 412/234 Taxman 300/[2016] 380 ITR 573 (Delhi) and Pr. CIT v. Meeta Gutgutia [2017] 82 taxmann.com 287/248 Taxman 384/395 ITR 526 (Delhi). On the basis of arguments of the par ties the Tribunal noted that SLP filed by the Department in the case of Kabul Chawla (Supra) was dismissed by Hon'ble Apex Cour t f or low tax effect and SLP filed before Supreme Court in the case of Meeta Gutgutia (supra) was dismissed by Hon'ble Supreme Court in Pr. CIT v. Meeta Gutgutia [2018] 96 taxmann.com 468/257 Taxman 441 (SC) by observing that We do not find any merit in this petition . The Department submitted that SLP on the similar issue has been admitted by Hon'ble Apex Court in M/s Apar industries (Citation not provided). The Tribunal however held that once the SLP is not admitted, the decisions given by the High Court in the case of Kabul Chawla and Meeta Gutgutia became final ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible information including the source by way of evidence had been submitted during the assessment proceeding for discharging its burden and which additions, are not sustainable in law, as no inquiry has been undertaken by the Assessing Officer and/or any material brought on record establishing the amount of bank entries as unexplained, thereby inviting the application of provisions of the Section 68 of the Act. 20. It has been submitted that the ld. CIT(A,) in his order, on Page 126, has observed that a letter dated 07.09.2022 was sent to the A.O., requiring him to produce a copy of the search warrant executed / Panchnama prepared on the basis of which proceedings u/s 153A were initiated on the company. The CIT(A) observed that the AO was justified in initiating proceedings u/s 153A of the Act, as warrant of authorization u/s 132(1) was executed in the name of the company on 16.02.2018 at SCO 80-81, 4th Floor, Chandigarh. 21. It has been submitted that the CIT(A), on pages 127 128 of his order, has observed that the Assessee has stated that the additions made in the order u/s 153A of the Act cannot be sustained in the absence of any incriminating material found during the search pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly noted by the ld. CIT(A) in terms of the provisions of section 153A (1)(b) of the Act, the Assessing Officer was required to assess / re-assess the total income of the Assessee for the year under consideration; that as held by the Hon'ble Kerela High Court in the case of CIT vs. KP Ummer (supra), when a notice u/s 153A of the Act is issued, it enables the Department to carry out assessment / re- assessment with respect to the six immediate prior years and this does not require any incriminating material recovered during the search relating to those prior years, in which, there was no time left on the date of search for an assessment u/s 143(3) of the Act; that the same view has been taken by the Hon'ble Allahabad High Court in the case of Rajkumar Arora , (supra), the Hon'ble Kerela High Court in the case of EN Gopakumar vs. CIT , (supra) and the Hon'ble Allahabad High Court in the case of CIT vs. Keserwani Zarda Bhandar , (supra); that the ld. CIT(A) has correctly held that in view of the provisions of the Act and the ratios of these decisions, the Assessing Officer was indeed having jurisdiction to assess the income of the Assessee on the basis of the material a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23, that under similar facts and circumstances, we have held that the Assessing Officer was initially of the view that no addition was required to be made and had sent a deviation note, but had made the additions only on the diktat of a third party, i.e., the ADIT. Similar is the position here. The additions for the year under consideration have been made by the Assessing Officer only on the directions of the third party, without having in his possession any incriminating material unearthed during the search proceedings, for the year under consideration, which is indirect contravention of the afore discussed case laws. Moreover, the additions wrongly made represented all the credit entries in the bank account of the Assessee company. Regarding these credit entries, sufficient credible documentary information had been furnished by the Assessee, by way of evidence, during the assessment proceedings, including the source thereof, which cogent voluminous documentary evidence the Department was been not able to rebut. The Assessing Officer, rather, having not been satisfied therewith, had not deemed it necessary to undertaken any inquiry in this regard. Also, no material was brought on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee's bank account and the details of the loans received from Shri S.K. Arora. It has been contended that in addition to the documents submitted by the assessee before the AO, the AR also furnished a copy of the assessment order dated 24.12.2019, in the case of Shri S.K. Arora for assessment year 2014-15, passed u/s 153A(1)(b) read with Section 143(3) of the Act, passed by the same AO who assessed the case of the company, by making addition of all the credits in the bank account of the assessee for the same assessment year. It was contended that the AO accepted the creditworthiness of Sh. S.K. Arora in his assessment proceedings while made addition of the same in the case of the assessee company. How can same transaction be unexplained u/s 68 of the Act in one Assessment proceedings and be genuine and credible in the other Assessment proceedings for the same year. This clearly shows that the Learned Assessing officer was not using his wits, common sense and there was no application of mind by him whatsoever. Further, the following documents, as also submitted before the ld. CIT(A), have been filed before us : 1. ITR-V of Sh. Surinder Kumar Arora for A.Y. 2014-15. (Paperbook page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bank statement but on the other hand the CIT(A) himself is mentioning the list of documents submitted by the assessee in point 1, page 104 of his order, thereby contradicting his own statement. The CIT(A) ought to have raised any query or issued any notice asking the assessee to submit the same. But no such query was raised nor any notice was issued to the assessee in this regard. Additionally, the CIT(A) confirmed the addition of Rs. 10,00,000/- made by the AO for an absurd reason without giving any findings on the documents which was already submitted by the assessee company during the assessment proceeding and remand proceeding. 31.4 The AO found the documentary evidence furnished by the assessee company to be unsatisfactory while the CIT(A) observed that the assessee company failed to submit any documentary evidence other than bank statement, they could have initiated proceedings under Sections 133(6) or 131 of the Act for further investigation. However, it is noteworthy that neither the AO nor the CIT(A) extended any such notice to the lender for additional inquiries. Instead, an addition of Rs. 10,00,000/- was made based on the directive of a third party. 32. On the contrar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk account statement of the lender which has been filed in singularity. Rather, the bank account statement is accompanied by the ITR of the lender, his affidavit, and the assessment order in the case of the lender for the year under consideration by the same AO as that of the assessee. 33.3 It is seen that as rightly contended on behalf of the assessee, the AO made the addition just on the dictat of a third party, whereas initially, he had not proposed any addition at all. The company has filed written submission before CIT(A) in 2020, the CIT(A) had more than 2 years to examine the documents submitted by the assessee company and ask the assessee to submit any other document, if required. The assessee company had clearly mentioned in its written submission the list of documents attached as annexure to substantiate its claim, if somehow, only the bank statement was available with the CIT(A) then the CIT(A) could have asked the assessee to furnish all other documents as mentioned in the written submission. No such inquiry was made by the CIT(A). Neither the CIT(A) nor AO asked the appellant submit any other documentary evidence with regard to the amount received or given back to Sh. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 58). 38. The ld. CIT(A) confirmed the addition, observing that in the absence of any documentary evidence, the same remained unexplained. 39.1 Before us, ld. Counsel for the assessee has contended that the following documents copies whereof have also been filed before us, were furnished before authorities below : 1. Confirmation of Sh. Rakesh Kumar Garg (Paperbook page 58) 2. ITR-V of Sh. Rakesh Kumar Garg for A.Y. 2014-15 (Paperbook page 59) 3. Computation of Sh. Rakesh Kumar Garg for A.Y. 2014-15 (Paperbook page 60-63) 4. Bank Account statements of Sh. Rakesh Kumar Garg for A.Y 2014-15 (Paperbook page 64-70) 39.2 It has been contended that the assessee company contends that the company gave advance of Rs. 4,00,000/- to Sh. Rakesh Kumar on 28.10.2013 and the same were received back by the company in the next month only on 09.11.2013. Since, the advance given was received back by the company within the same year, hence, these were squared up loans and advances and in support of such squared up loans and advances the company submitted the copy of account of the party in the books of the company. No other document was either asked by the AO or by CIT(A) in their respective proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. 39.6 The AO found the documentary evidence furnished by the assessee company to be unsatisfactory while the CIT(A) observed that the creditworthiness cannot be established due to non-submission of documents, they could have initiated proceedings under Sections 133(6) or 131 of the Act for further investigation. However, it is noteworthy that neither the AO nor the CIT(A) extended any such notice to the lender for additional inquiries. Instead, an addition of Rs. 4,00,000/- was made based on the directive of a third party. Neither enquiry was made by CIT(A) / AO before confirming the addition of Rs. 4,00,000/- nor any documentary evidence were sought from the assessee company, therefore the assessee company has now submitted copy of computation, ITR-V and bank account statement of Sh. Rakesh Kumar (Paperbook page 59-70) as additional evidence along with confirmation which was submitted before CIT(A) and AO. The submission of said documents are neither challenged nor disputed in the appeal by the department. 39.7 The ld. DR has, again, placed strong reliance on the impugned order. 40.1 We find that here also, the addition has been so confirmed without taking into consideration the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plea that no documentary evidence was submitted by the company to establish the creditworthiness of Sh. Rakesh Kumar. 40.4 The AO found the documentary evidence furnished by the assessee company to be unsatisfactory while the CIT(A) observed that the creditworthiness cannot be established due to non-submission of documents, they could have initiated proceedings under Sections 133(6) or 131 of the Act for further investigation. However, it is noteworthy that neither the AO nor the CIT(A) extended any such notice to the lender for additional inquiries. Instead, an addition of Rs. 4,00,000/- was made based on the directive of a third party. Neither enquiry was made by CIT(A) / AO before confirming the addition of Rs. 4,00,000/- nor any documentary evidence were sought from the assessee company, therefore the assessee company has now submitted copy of computation, ITR-V and bank account statement of Sh. Rakesh Kumar (Paperbook page 59-70) as additional evidence along with confirmation which was submitted before CIT(A) and AO. The submission of said documents are neither challenged nor disputed in the appeal by the department. 41. In view of the above, the addition of Rs. 4 lacs is del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en submission before CIT(A) in 2020, the CIT(A) had more than 2 years to examine the documents submitted by the assessee company and ask the assessee to submit any other document, if required. But neither the CIT(A) nor AO asked the appellant submit any other documentary evidence in this regard. The CIT(A) has reproduced the entire written submission of the assessee company in its order, and on page 77 and 80 of the CIT(A) order, the following facts were mentioned by the assessee in its submission which were reproduced by CIT(A):- Page 77 of CIT order DATE RECEIPT INWARD (CR) REMARKS PROOF OF IDENTITY, GENUINES AND CREDIT WORTHINESS OF THE PARTY AMOUNT (IN RS) PARTY NAME/ ACCOUNT NO. 22/03/2014 20,00,000/- AJIT INDIA ADVANCE OF RS 20,00,000 GIVEN ON 25/07/2013 AND RECEIVED BACK ON 22/03/2014 LEDGER ACCOUNT Page 80 of CIT order DATE RECEIPT INWARD (CR) REMARKS PROOF OF IDENTITY, GENUINES AND CREDIT WORTHINESS OF THE PARTY AMOUNT (IN RS) PARTY NAME/ ACCOUNT NO. 22/03/2014 20,00,000/- AJIT INDIA ADVANCE OF RS 20,00,000 GIVEN ON 25/07/2013 AND RECEIVED BACK ON 22/03/2014 LEDGER ACCOUNT 45.4 The CIT(A) in his order has himself acknowledged the submission of copy of account by the compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see in this regard is that it had given advance of Rs. 20 lacs to M/s Ajit India through RTGS on 25.07.2013 and that this amount was received back by the assessee on 22.03.2014, vide cheque, in the same year; that therefore, these were squared up loans and advances, which were duly supported by the copy of account of the lender in the books of the assessee company; that the pay-in-slip also proved the stand of the assessee; that no other document was asked for by either of the taxing authorities. This has not been disputed. The loan was a squared up loan. No evidence to the contrary has been brought on record by either the taxing authorities or the ld. DR before us. There is not even an iota of evidence on record to show that either of the taxing authorities had even as much as put any question to the assessee in this regard. 48. The factum of the ledger account having been filed by the assessee before the ld. CIT(A) is also evident from pages 77 and 78 of the order under appeal, where the ld. CIT(A) has taken note of the submission made by the assessee in this regard. Moreover, there is no rebuttal by the ld. CIT(A) to the copy of account filed by the assessee. Therefore, the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Singla in the books of M/s TJR Properties Private Limited for A.Y.2014-15 (Paperbook page 80) 4. Bank Account statements of Sh. Sahil Singla and Smt. Kiran Singla for A.Y. 2014-15 (Paperbook Page 81) 5. Copy of Assessment order dated 26.12.2019 passed u/s 153A(1)(b) r.w.s 143(3) of Smt. Kiran Singla for A.Y. 2014-15. (Paperbook Page 329-320) 50.4 It has been contended that the assessee company received unsecured loan of Rs. 1 lakh from Shri Sahil Singla and Smt. Kiran Singla on 31.08.2013 and they were returned on 11.04.2017; that although documentary evidences were filed before both the taxing authorities, neither of them raised any objection regarding any of these documents; that ignoring all the documentary evidences, the AO, though he was initially of the opinion that no addition be made, later on went on to make the additions following dictat of a third party; that the ld. CIT(A) also illegally confirmed the addition, overlooking the fact that in the cases of both, Shri Sahil Singla and Smt. Kiran Singla, these cash deposits stood accepted by that very AO himself; that the ld. CIT(A) has erred in observing that the assessee company had failed to submit any documentary eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made despite the fact that the AO, in his Note, had not evinced any inclination to make any addition whatsoever. However, as correctly contended and as also stands available from the record, it was on the dictat of a third party, that the addition was made by the AO, when such addition is not sustainable in the eye of law. The ld. CIT(A) wrongly confirmed the addition made on a specious observation that there was an immediate cash deposit of Rs. 1 lac in the bank account, the source whereof had not been explained, this, despite the fact that the alleged immediate cash deposits were accepted by the same AO in the assessment proceedings of Shri Sahil Singla and Smt. Kiran Singla. While doing so, the ld. CIT(A) neither rebutted the documentary evidence brought on record by the assessee, nor did he ask the assessee the submit any other documentary evidence concerning the amount received and given back by the assessee to Shri Sahil Singla and Smt. Kiran Singla. In fact, documents furnished by the assessee in the evidence were not even commented upon adversely by the ld. CIT(A). Rather, they were not at all commented upon, leading to the conclusion that these documents were not at all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s such, addition of Rs. 3 lacs was confirmed by the ld. CIT(A), holding that the immediate cash deposit of Rs. 3 lacs in the bank account of Smt. Kiran Singla and the source thereof had not been explained. 53.3 Before us, in the Paper Book, at pages 54 to 57 thereof, the assessee has furnished copies of the documents furnished before the ld. CIT(A), copy of the assessment order dated 26.12.2019 passed u/s 153A(1)(b) read with Section 143(3) of the Income Tax Act, in the case of Smt. Kiran Singla for assessment year 2014-15. It has been contended that it is evident from the copy of cash book of Shri Triloki Nath Singla, HUF, that the HUF deposited cash of Rs. 3 lacs on 20.08.2013 and the same was withdrawn on 06.08.2013, as is available from the bank statement. It has been submitted that all the documentary evidences were filed before the AO as well as the ld. CIT(A); that however, neither authority raised any objection against the documents so filed; that the AO ignored all the documentary proofs and followed the dictat of the third party and made addition of Rs. 3 lacs and the ld. CIT(A) wrongly confirmed such addition, holding that there was immediate cash deposit of Rs. 3 lacs i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r u/s 133(6) or 131 of the Act, for further investigation into the matter, if any such investigation was required. As such, both the authorities were, in fact, satisfied with the explanation of the assessee and as such, there was no reason for making the addition or for confirming the same at the hands of the ld. CIT(A). 55. In view of the above, Ground No. 10 is accepted and the addition of Rs. 3 lacs is deleted. 56. Concerning Ground No. 11, this issue pertains to addition of Rs. 7 lacs on account of income deposited in cash. The addition of Rs. 3,22,01,650/- of all the credit entries in the bank, as made by the AO included cash deposit of Rs. 7 lacs by the assessee company in its bank account, holding that the purpose and utilization of such funds had also not been explained by the assessee. 57.1 The ld. CIT(A) confirmed the addition, holding that no evidence/details giving the particulars of the person from whom such cash was received, or the nature of the transaction with them, had been furnished by the assessee, due to which, the cash deposit of Rs. 7 lacs had remained unexplained. 57.2 The ld. Counsel for the assessee has submitted that the assessee had filed copy of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, ITRs, balance sheets and copies of accounts, etc. However, the AO did not consider each credit entry separately, as was required to be done under the law. He made additions of all the credit entries in the bank account of the assessee company without considering the nature, source, credibility and genuineness of each credit transaction received in the assessee's bank account during the year under consideration. Rather, the AO, to start with, was completely satisfied with the genuineness of the company and the sources of the credit entries in the bank account. In pursuance thereof, the AO had sent a detailed note on the comparison of the assessee company with shell companies and the explanation of the credit entries. This was done by way of Deviation Note, addressed to the Deputy Director of Investigation, Mohali, on 26.12.2019, in the letter No. 1733, dated 24.12.2019, passed on his satisfaction, which had been arrived at with regard to the source of the transactions as per the evidence filed on behalf of the assessee and its regular books of account, which stood duly explained. However, the ADIT (Investigation) Mohali, though she was not authorized to do so and though she ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ish Rai Gupta are the directors/shareholders of the appellant company. Sh. Sahil Singla is the son, Smt. Kiran Singla is the wife and Smt. Sakshi Singla is Daughter in Law of Sh. TN Singla .After taking into consideration the above facts, it is observed that the AO has held in his order the appellant company to be a shell company as merely existing on papers and not carrying out any business activities. After perusing the findings of the AO recorded in the assessment order and the material available on record, it is noted that M/s TJR Properties was having land which was purchased during F.Y. 2007-18 for Rs. l,73,00,000/- and sold during A.Y. 2012-13 for Rs. 5,00,05,000/-by executing registered sale deed on 30.11.2011 and paying stamp duty. The same AO has assessed Long Term Capital Gain in the hands of M/s TJR from the said transaction. It is not the case of the AO that the said land was a Benami asset held in the name of M/s TJR. Further, M/s TJR paid earnest money of Rs. 1,50,00,000/- during F.Y. 2016-17 for purchase of a plot to build flat/apartment and paid TDS of Rs. 1,50,000/- @1%. Thus, on facts, it is observed that M/s TJR was having income generating apparatus in past and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ., M/s Evershine Recreation Pvt Ltd was a shell company from whom the appellant has received credits. However, the AO did not make any further enquiry in respect of credits in the bank account during the remand proceedings and relied upon the facts as discussed in the assessment order. The appellant has discharged its onus as required u/s 68 of the Act. All the above mentioned documents were also furnished before the AO during the assessment proceedings. Although the AO has admitted to have received 'the said documents during the assessment proceedings yet the same were not taken into account by the AO while making addition. The AO has recorded in his order that the appellant could not explain the purpose and utilisation of such credits. However, the AO failed to take cognisance of the fact that addition u/s 68 of the Act is to be made if the appellant doesn't offer any explanation regarding the source and nature of credits received in the bank account or if the explanation offered is not found satisfactory by the AO. Whereas in this case the appellant has duly furnished its explanation in respect of bank credits received during the year under consideration alongwith necess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s Kansal Singla Associates, Chandigarh. The books of account were also examined by the AO before forwarding his Deviation Note to the Investigation Wing, even as per the contents of the AO s letter dated 24.12.2019, addressed to the ADIT (Investigation) Mohali. The books of account were also submitted by the assessee before the AO during the remand proceedings, on 16.02.2022, as is evident from APB 84. The AO made the additions merely on the dictat of a third party i.e., the ADIT (Investigation) Mohali, without going into the merits, all the documentary evidence submitted. The ld. CIT(A) relied on the very same documentary evidence and gave relief of an amount of Rs. 2,77,01,650/-. Curiously, though the addition of Rs. 45 lacs was illegally confirmed by the ld. CIT(A), without considering that since the assessee had discharged its onus of proving the identity and credit worthiness of its lenders and the genuineness of the transaction, it was the AO who had failed to discharge the onus which had thereafter shifted on to him, and who had also failed to rebut the evidence filed by the assessee. 59.4 Reliance has rightly been placed by the ld. Counsel for the assessee on the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted, and not disputed by the Department, that the search had been conducted on the business premises of M/s Kansal Singla Associates, Chandigarh, wherein, regular books of account alongwith bank statements of the assessee company, were found and copies thereof were taken on CD by the Department, which fact is also evident from the Panchnama of M/s Kansal Singla Associates. This being so, obviously, the AO was incorrect in holding that the assessee had not produced its books of account, bills and vouchers for the assessment proceedings. Since the Department had taken the same on CD, the books of account, also comprised of the bills and vouchers were already in the possession of the Department. 62.3 Further, the assessee is also correct when it contends that the books of account were examined by the AO at the time of sending his Deviation Note to the Investigation Wing. Further still, even during the remand proceedings, the assessee had submitted the books of account before the AO, on 16.02.2022. 63. On the basis of the above, we find the addition of Rs. 2,97,834/- to be unsustainable and the same is, accordingly, deleted, while accepting Ground No.13. 64.1 According to Ground No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal of the assessee on the issue of credit entries even when all three limbs of Sec 68 was not proved/ established by the assessee? 67. The single issue raised by the Department in its appeal is the action of the ld. CIT(A) in deleting the addition of Rs. 2,77,01,650/- credited in the bank account of the assessee company during the year under consideration. According to the Department, the ld. CIT(A) erred in not appreciating the fact that the amount of Rs. 2,77,01,650/- was to be considered as unexplained cash credit u/s 68 of the Act, since the assessee did not establish its genuineness during the assessment proceedings. The Department has contended that the ld. CIT(A) erred in holding that the identity and credit worthiness of the persons from whom the credits comprising the amount of Rs. 2,77,01,650/- were received, stood proved, whereas the genuineness of the transactions had not been established by the assessee, since the purpose of the credits had not been explained and thereby all the three limbs of the provisions of Section 68 of the Act did not stand proved by the assessee. 68. The ld. CIT(A), it is seen, in the impugned order, has observed inter-alia that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the peculiar facts and circumstances to draw such inference and consequences out of the same as per the provisions of Income Tax Act; that in order to decide the merit of addition made by the AO on account of unexplained bank credits u/s 68 of the Act, it was required to examine the source and nature of credits received by the appellant terms of conditions laid down in the provisions of section 68 of the Act. Thus, it was required to examine the identity and creditworthiness of the persons from who's amounts have been received and genuineness of the transactions on merit considering each credit separately. The ld. CIT(A) held that the AO had not discussed each and cred separately on merits in the assessment order before drawing the inference that the credits were unexplained; that during the assessment proceedings, it was observed by AO after going through the reply of the appellant dated 19.12.2019 in respect of particular of such persons from whom such credits were received that the appellant had cred amounting to Rs 3,22,01,650/- in its bank account and the appellant could not explain purpose of such credits. Thus, the addition of Rs. 3,22,01,650/- was made by the AO on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f source and nature of credits received, he should have recorded such dissatisfaction in the assessment order. However, no adverse finding has been recorded in the assessment order in respect of the documentary evidence furnished by the appellant in support of bank credits. The submissions and documents furnished by the assessee during the appellate proceedings were also forwarded to the AO for remand report. In the remand report also, the AO did not even discussed the documentary evidence furnished by the appellant in support of bank credits let alone pointing out any defect in the same. In view of the above discussion and after making independent perusal of documents furnished by the appellant, it was noted that the assessment order is non speaking, mechanical in nature and has been passed without discussing merits of the documents. The ld. CIT(A) held that there was no direct or indirect evidence pointed out by the AO before making such additions. Therefore, after considering the merits of the case, analysis of credits as per the above table and strength of documentary evidence, it was observed that there was no justification in such addition made in the hands of the appellant u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n; that the AO failed to consider that addition u/s 68 of the Act is to be made only if the assessee does not offer any explanation regarding the source and nature of the credits received or if the explanation offered is not found to be satisfactory by the AO; that on the other hand, the assessee, in its case, had furnished its explanation in respect of the bank credits received during the year, along with necessary documentary evidence; that if the AO was not satisfied with the explanation of the AO in respect of the source and nature of the credits received, he should have recorded such dissatisfaction in the assessment order; that however, the AO had not recorded any adverse finding in the assessment order in respect of the documentary evidence furnished by the assessee in respect of the bank credits; that the submissions and documents furnished by the assessee during the appellate proceedings had also been forwarded to the AO for a remand report; that in the remand report also, the AO had not even discussed the documentary evidence furnished by the assessee, let alone pointing out any defect therein; that as such, the assessment order was non- speaking and mechanical in nature ..... 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