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TMI Blog2024 (10) TMI 923X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. ITA No.3332/Del/2023 -do- 2015-16 -do- -do- 5. ITA No.3333/Del/2023 -do- 2016-17 -do- -do- 6. ITA No.3334/Del/2023 -do- 2017-18 -do- -do- 7. ITA No.3335/Del/2023 -do- 2018-19 -do- -do- 8. ITA No.3358/Del/2023 Nakshatra Business Pvt. Ltd. 2018-19 CIT(A)-29, New Delhi order dated 26.09.2023 u/s 250 of the Act Assessment order dated 31.12.2019 under section 143(3) of the Income Tax Act, 1961. 9. ITA No.3359/Del/2023 -do- 2017-18 -do- -do- 10. ITA No.3360/Del/2023 -do- 2016-17 -do- -do- 11. ITA No.3361/Del/2023 -do- 2015-16 -do- -do- ITA No.3310/Del/2023 for A.Y. 2012-13 Olive Overseas Pvt. Ltd. vs. DCIT ITA No.3330/Del/2023 for A.Y. 2013-14 ITA No.3331/Del/2023 for A.Y. 2014-15 ITA No.3332/Del/2023 for A.Y. 2015-16 2. The captioned appeals relates to assessment years 2012-13, 2013-14 & 2014-15 and 2015-16 where the original assessment stood completed or concluded at the time of search and assessment for these years thus stood unabated at the time of search. Facts in all these years are similar. For the sake of convenience, the facts concerning A.Y. 2012-13 is noted hereunder: 3. Briefly stated, the assessee company is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the effect that assessee company was engaged in providing accommodation entries as alleged. The impugned additions are merely based on statement of third party Shri Praveen Kumar Jain who was also searched in Oct, 2013. 7.1. In elaboration, the learned Counsel submitted that a search action under section 132 of the Act was initially conducted at the residence of Shri Praveen Kumar Jain, the director of the assessee company on 01.10.2013. In the course of that search, a statement of Shri Praveen Kumar Jain was recorded under section 132(4) of the Act. In such statement, Shri Praveen Kumar Jain made averments towards a modus operandi for providing accommodation entries through the companies where he is a director and charges a one time commission ranging between 1.25% to 2% on total transaction value of the accommodation entries. Shri Praveen Kumar Jain provided a list of 13 companies where he is a director. The assessee company herein namely; 'Olive Overseas Pvt. Ltd.' was also a part of list of companies provided by the Shri Praveen Kumar Jain. 7.2 Based on the statement of Shri Praveen Kumar Jain (which was subsequently retracted by him), the AO invoked the provisions of Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e form of books of accounts or documents were seized in the case of the assessee. What was seized was only a hard disk containing data in HP Laptop of one Shri Manish Jain, the erstwhile accountant of the assessee company. The statement on oath of Shri Manish Jain was recorded during the course of search, wherein the questions put in statement of Shri Praveen Kumar Jain recorded in the earlier search on him on 01.10.2013 was broadly reiterated to him by the Authorized Officer which was endorsed by the deponent Shri Manish Jain. In this regard, the learned Counsel referred to para 5.3 of the assessment order showing statement of Shri Manish Jain (the accountant of Shri Praveen Kumar Jain) under section 132(4) of the Act. The AO in para 5.3 referred to the relevant extract of the statement recorded under section 132(4) of the Act of Shri Manish Jain which is the sole basis for alleging engagement of assessee in providing accommodation entries. The learned Counsel adverted to the extract of the statement from where it is ostensible that the additions were made towards estimated commission on accommodation entries solely on the basis of outcome of previous search in 2013 in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jain (HUF) and others in ITA No.23/2021 judgment dated 12.02.2021 and PCIT vs. Pavitra Realcon Pvt. Ltd. ITA No. 579/2018 judgment dated 29.05.2024. The learned Counsel pointed out that these judgments delivered by the Jurisdictional High Court has clearly held that existence of incriminating material found during the course of search is a sine qua non for making addition pursuant to search and seizure operation. The additions which is based on statement of the person found in search on standalone basis, without reference to any other material discovered during the search operation, cannot be regarded as incriminating material and thus do not empower the AO to make additions under section 153A of the Act. The learned Counsel thus submitted that the action of the AO and that of CIT(A) is outside the sanction of law and hence cannot be allowed to hold the field. 7.7 On similar lines, the learned Counsel pointed out that notwithstanding the fact that captioned appeals in relation to A.Ys. 2016-17, 2017-18 & 2018-19 stood abated at the time of search, in the absence of any substantive material on record, the additions in these years are also not permissible solely based on some uncon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the case of the assessee in the proceedings initiated under section 153C of the Act. 9.3 As pointed out on behalf of the assessee, we observe that admittedly, no demonstrable incriminating material has been found in the course of search in the case of the assessee carried out in June, 2017. The statement of Shri Praveen Kumar Jain given in the previous search in the search case of Shri Praveen Kumar Jain on 01.10.2013 was confronted to the accountant of the assessee in the present search and certain confessions were obtained. The statement of Shri Praveen Kumar Jain was thus adopted for the purposes of additions under section 153A of the Act proceedings in the case of the assessee. The same statement was the basis for assessment under section 153C of the Act previously carried out in the case of the assessee. The issue already stood resolved in favour of the assessee by the ITAT in the earlier proceedings under section 153C of the Act. 9.4 In view of the judgment delivered in the case of Pr. CIT vs. Abhisar Builwell Pvt. Ltd. (supra) and plethora of judgments by the Hon'ble High Courts of different jurisdiction and applied by the Co-ordinate Benches of the Tribunal, it is tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the subsequent years. Besides, in the wake of the judgment rendered by the Hon'ble Delhi High Court in the case of Pavitra Realcon Pvt. Ltd. and Anand Kumar Jain (HUF)(supra) noted earlier, a bare statement of a person in the course of search without corroboration cannot be regarded as incriminating material per se. When the impugned additions are viewed without the help of the statement, there appears to be no material to justify the rejection of books and estimation of income. The action of the AO is not supported by the independent enquiry in the course of assessment either. Thus, action of the AO giving rise to additions/disallowances is wholly outside the sanction of law. 14. In the result, appeals of the assessee for A.Y. 2016-17; A.Y. 2017-18 and A.Y. 2018-19 deserves to be allowed. ITA No.3358/Del/2023 for A.Y. 2018-19 Nakshatra Business Pvt. Ltd. vs. DCIT ITA No.3359/Del/2023 for A.Y. 2017-18 ITA No.3360/Del/2023 for A.Y. 2016-17 ITA No.3361/Del/2023 for A.Y. 2015-16 15. Similar allegation of the assessee company operating as entry provider on commission basis was made by the AO in the case of the group company namely Nakshatra Business Pvt. Ltd. also. Other fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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