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TMI Blog2025 (4) TMI 845X X X X Extracts X X X X X X X X Extracts X X X X ..... ke notice of the facts of one appeal in which the issue is involved. We would, accordingly, narrating the facts as they appear in the appeal for the relevant assessment year. The findings of the grounds of appeal raised by the assessee would mutatis mutandis apply to the other appeals as well. ITA no.54/Nag./2022 Assessee's Appeal - A.Y - 2011-12 2. In this appeal, the assessee has raised following grounds of appeal:- "(1) That the order of the learned Assessing Officer u/s. 143(3) r.w.s. 153A is bad in law and wrong on facts. (2) That no incriminating document was found as a result of search and therefore the additions made in the proceedings u/s 153A are void and bad in law. (3) That the learned AO erred in law and on facts in making addition of Rs.72,68,000/-holding that the assessee has earned commission. On the facts and circumstances of the case the action of the AO is without any sound basis and therefore highly unjustified. (4) That the learned Assessing Officer erred in law and on facts in charging interest u/s. 234A and 234B of the Income Tax Act. The interest charged is improper. (5) That for any other grounds with kind permission of your honour at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the name of Shri Sanjay Jain, is mentioned in the impounded Excel Sheet and further the assessee could not file any appointment letter / offer letter to substantiate that the assessee was Internal Auditor of the company. The Assessing Officer held that the claim of the assessee that the turnover mentioned in the Excel Sheet belongs to M/s. Base Corporation Ltd., is not acceptable. She further held that the words"@.25%" mentioned in the Excel Sheet is the commission earned by the assessee which has not been shown as income and consequently made addition to the income of the assessee. 6. On appeal before the learned CIT(A), the assessee raised various grounds of appeal being legal as well as on merits of the addition made in the assessment framed under section 143(3) r/w 153A of the Act. The learned CIT(A) held that the impounded Excel Sheet contains the name of assessee and the assessee was unable to prove on the basis of any confirmation that the turnover belongs to any party. The assessee did not claim that the transactions mentioned in the Excel Sheet are fictitious or rough entries. Further, it is apparent from the impounded document that the entries in the impugned sheet are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . That no incriminating document was found as a result of si arch and the notice u/s. 153A was objected in the computation of income furnished vide letter dated 28-09-2018. (1) A search and seizure operation was conducted in the premises of the assessee on 26-7-2016. As per the learned AO, in connection with the search, a survey action u/s 133A was also carried out at the official premises of assessee M/s. SNJ & Associates at 1st Floor, Mangalam Icon, Ramnagar Square, Nagpur. During the course of survey, an Excel Sheet Annexure B-2 at Page no. 4 is found and impounded. The addition is made by AO based on such impounded document treating it as incriminating one. We object to the action of learned AO as impugned document is not incriminating in nature and the document and transactions mentioned therein are explained during post survey and post search proceedings. No evidence apart from the single excel sheet was brought on record by the learned AO either during the assessment proceedings or in the assessment order to corroborate the claim made in the order by hiri. In view of the above facts and the circumstances of the case, the order of learned AO is unjustified and liable to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entary evidences what-so-ever. The documents and details as well as books of accounts have been accepted by her. (5) We draw your kind attention to the additions made in the Assessment order. Your goodself will find that the transaction in the excel sheet is explained with the help of documentary evidences such as ledger account of parties and bank account statement showing the entries of fund transfer. There is no allegation that the transaction of sale and purchase in impugned document is unaccounted/undisclosed. Thus the same cannot be construed as incriminating in absence of any corroborative evidence found to prove that such commission income is earned by assessee. Thus, the additions are based on whims and fancies of AO and not on the basis of any incriminating document found during the course of search. It has been held by the Hon'ble Jurisdictional and other High Courts that when assessment is made as a result of search action and order is passed u/s. 143(3) ทพ.ร. 153A, additions can be made only on the basis of any incriminating documents or evidence found during the course of search. Since, no such document/evidence was found during search, no add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition of Rs.72,68,000/-holding that the assessee has earned commission. On the facts and circumstances of the case, the action of the AO is without any sound basis and therefore highly unjustified. We object to the addition made and have to submit as under for the favour of your kind consideration:- (1) That the various allegations made by the assessing officer are without considering the facts available and brought on record during the course of search as well as in the assessment proceedings. We draw your kind attention to the assessment order wherein the AO has held that the explanation that the turnover mentioned in the seized document page 4 of Annexure B-2belongs to Base Corporation Ltd. (BCL) is not acceptable. It is further mentioned in the assessment order that no documents relating to BCL were found at the premises of SNJ & Associates and the assessee could not produce documentary evidence to justify that they are the internal auditors of BCL. The allegation that the assessee has not offered any explanation and also not provided any documentary evidence is baseless in view of various documents available on record and also considered by her. The allegation that the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nership firm in which CA Sanjay Jain, CA Nirmal Agrawal and CA Jitendra Jain were partners, were conducting the internal audit of BCL. The working paper file regarding Internal Audit was found at the business premises which was enquired into by the Authorised Officer of Investigation Wing. It is undisputed that the impugned document was found in the aforementioned working file. Apart from the Internal Audit function, the assessee was also helping BCL for arrangement of finance. The impugned document contains the transaction of turnover of BCL as well as the loan transaction of Mr. Sanjay Jain. There were differences in the transaction of turnover of Base Corporation Ltd with various parties. BCL was finding it difficult to reconcile the transaction as well as to make proper recoveries. In the impugned document, on the top of it, the name of Mr. Sanjay Jain A/c. is mentioned meaning thereby that the responsibility of reconciliation in the firm was of Mr. Sanjay Jain. The reconciliation of the same was prepared by Shri. Sanjay Jain as this part of the audit which was looked after by him. (4) It was informed that the assessee has helped the company by way of finance. The company wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned document belongs to BCL with the evidences like bank accounts of parties, their ledger accounts and balance sheet. These submissions of the assessee are uncontroverted. (5) There were differences in the transaction of BCL with the various parties. At the time of reconciliation, there was a difference in the amount of recoverable as per the company and as per working of assessee. The impugned document is the record and reconciliation of such transaction prepared by Shri Sanjay Jain to help them in reconciliation during Internal Audit. The document was found in the Internal Audit File of BCL which shows that it belongs to the company which is prepared during Internal Audit Function performed by the assessee. (6) The allegation on Page No. 8 of the Assessment Order that the assessee did not provide the address of BCL and Balance Sheets of various years to the ADIT is incorrect. In this regard, we draw your kind attention to the reply dated 16-11-2016 filed before the ADIT (Duly Acknowledged) wherein the address of BCL was given in writing. Further, the Audited Financial Statements of BCL for the period 2006 to 2013 were also furnished. The copy of the above reply is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer has raised doubt about the providing of Internal Audit services to BCL by M/s SNJ & Associates and thereby holding the transaction in impugned seized document as belonging to the assessee and not to BCL. In this regard, we have already submitted before the AO that the impugned document was found in the Internal Audit working paper file and also produced the file. Please refer to our letter dated 26-11-2018 in the assessment proceeding. The same shall be again produced before your goodself for your kind perusal. We further draw your kind attention on Page 9 of the Assessment Order wherein the AO observed that no books of accounts or other documents relating to BCL were found at the business premises of M/s. SNJ & Associates thereby doubting the role as an Internal Auditor. Your goodself will appreciate that the books of accounts and documents in support thereof are maintained by such public limited companies in the electronic media in accounting software package and can be accessed from remote places without print outs being taken. Shri. Sanjay Jain had informed the authorities that he has visited many times to Bangalore for audit purposes. Working file prepared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atements of Base Corporation Ltd. from F.Y.2009-10 to F.Y.2012-13 were submitted to AO. The audited accounts of Base Corporation Pvt Ltd for the period 2006 to 2013 were duly submitted to the Authorized Officer in the post search enquiry. The Xerox copy of the letter dated 16-11-2016 filed before ADIT was furnished to AO. Thus the observation of the AO in para 7 that no such information was given by the assessee is contrary to the facts available on record. (11)The turnover of Rs.611.63 Cr of the Base Corporation Ltd as verified by the AO from ITD and mentioned in the assessment order is as per Audited Financial Statements of the company whereas the turnover of Rs.290.75 Cr as mentioned in the excel sheet is from the turnover business carried out by company considered for reconciliation purposes as explained above. Hence the difference in turnover in between such two documents cannot be the reason to hold that the contents of seized document does not relate to BCL when the assessee has substantiated the same from other records. (12) No evidence was unearthed during the course of search and survey to hold that the assessee has received such commission income. There is no evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hemently contended that no document was found during the search in the premises of the assessee and the impugned document was found from the premises of Partnership Firm M/s. SNJ & Associates, and was taken out from the Internal Audit file of M/s. Base Corporation Ltd. He thus emphasised that the Excel Sheet is the working paper of the Firm and does not pertain to the assessee. There was no evidence found regarding earning of neither commission income nor any cash transactions relating thereto where found. The assessee had explained to the Department before the Investigation Wing and the Assessing Officer that he was working with M/s. Base Corporation Ltd. in the capacity of Internal Auditor and in this regard proof that M/s. SNJ & Associates is associated as Internal Auditor can be seen from the Audited Financial Statement in which name of his Firm is appearing as "Internal Auditor". Further, the nature of transactions in the Excel Sheet were duly explained with the help of documentary evidence such as Ledger Accounts and Bank Statements of the parties. He drew our attention to the letter furnished in the post survey proceedings enquiry before the ADIT, Investigation Wing, and obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cating detailed reasons, which do not call for any interference and in this view of the matter, the appeal filed by the assessee be dismissed. 10. We have given a thoughtful consideration to the arguments made by the rival parties and perused the material available on record. As already mentioned elsewhere in this order that the assessee is a Chartered Accountant and is a partner in M/s. SNJ & Associates. It is noted from the assessment order and is undisputed that the document Annexure B-2, Page-4 was impounded during the survey proceedings at M/s. SNJ & Associates, situated at 1st Floor, Mangalam Icon, Ramnagar Square, Nagpur, by the Jt. Director of Income Tax (Inv.), Nagpur, on 26/07/2016, which is also found mentioned in the summons under section 131 of the Act dated 30/05/2016 issued by ADIT (Inv.), Unit-I, Nagpur, which is exhibited in the Paper Book Page-1. We find that the assessee has responded to the summons under section 131 and the notices issued in the assessment proceedings and explained the transaction/entries in the impounded document with the help of supporting documents. We refer to the reply dated 16/11/2016, furnished before the ADIT, Unit-I, Nagpur, (placed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Internal Audit of BCL that the name of assessee is appearing on impugned Excel Sheet. Thus, we find that the explanation by the assessee that they were conducting the Internal Audit of BCL and that the impugned Excel Sheet which was taken out from the Internal Audit file is prepared during the discharge of function as an Internal Auditor is established. 11. We have also carefully examined the impounded Excel Sheet in order to verify the veracity of explanation offered by the assessee to explain the entries/noting in the impounded documents. The Assessing Officer observed in Para-8 of the assessment order that the name of BCL is not appearing in the impounded document and also did not accept the claim of the assessee that Sales/Purchase turnover mentioned therein belongs to BCL. The assessee stated during the assessment proceedings that the impugned sheet is prepared for the purpose of reconciliation of the transaction of BCL. We find that in the impugned sheet (lower side) it is categorically mentioned "Difference between base and Sj" with the figure of Rs. 1,20,19,394=96, against it. Further, the turnover of Sales and Purchase are mentioned in the form of chart on the upper sid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o March, 2012 wherein your goodself will find deposit of Rs. 50 lakhs in July, 2011 and deposit of Rs.25 lakhs on 14 August, 2011. Similarly your goodself will find that from the recoverable amount of Rs. 4.43 Crore by the Company, Rs 1 Cr. was marked for payment to Navdurga Advisory Put. Ltd. We are enclosing herewith the ledger account of Base Corporation Ltd. in the books of Navdurga Advisory Put. Ltd in which your goodself will find that there was outstanding recoverable of Rs. 1 Cr. before 31st May, 2012. The same was recovered in the month of June, 2012. Similarly it is mentioned in the impugned document that Rs 25 lakhs is received on 19th & 20th which can be seen in the Bank Account of Omega Industries which paid by RTGS to Base Corporation Rs. 15 lakhs and Rs. 10 lakhs. Subsequently there is note that Rs. 20 lakhs received on 24. The same can be seen as payment from the account of Omega Industries on 24th. Similarly. Rs. 20 lakhs is mentioned as received in Chattisgarh. The same is duly found paid from the Bank Account of Omega Industries, Chattisgar Below these notifications is again the reconciliation as per SJ mea Sanjay Jain is also mentioned in which the entries of pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng document found as a result of search. The additions made are void and bad in law. (3) That the learned CIT(A) erred in law and on facts in confirming the addition made by the AO of Rs. 1,18,00,000/- holding that the assessee has provided services of arranging parties and earned commission therefrom. On the facts and circumstances of the case, learned CIT(A) erred in holding that the assessee is engaged in the business of providing accommodation entries as the same is without any sound basis and therefore highly unjustified. (4) That the learned CIT(A) erred in law and on facts in confirming the addition made by the AO of Rs. 12,657/- holding that the assessee has arranged accommodation entries and earned commission therefrom. On the facts and circumstances of the case, the action of both the authorities is without any sound basis and therefore highly unjustified. (5) That the learned CIT(A) erred in law and on facts in confirming the action of Assessing Officer in making addition of Rs. 15,00,000/- u/s. 68 of the Income Tax Act. On the facts and circumstances of the case, the source of amount received as unsecured loan, the identity, creditworthiness of lender and genuinen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvanced loans or taken loan. Similar transactions were found in the print outs of whatsapp and text messages taken from the phone of assessee and are inventorised in Annexure B-2 and Annexure B-3. The seized documents were confronted to the assessee and his statement was recorded on 26/07/2016, wherein the assessee accepted of having arranged loan funds for various parties by charging commission @ 0.1% to 0.25% and in case of arranging of institutional finance or Bank finance it is @1.8%. The Assessing Officer, on such basis, applied the rate of 0.25% as commission earned on the transactions noted in the seized document. Accordingly, addition of Rs. 12,657, was made in the total income of the assessee. 20. Before the Ld. CIT(A), the assessee raised ground contesting of the addition made on account of earning of commission income. The learned CIT(A) noted in Para-4.3 of the impugned order that in the instant case there are clear evidence that the appellant has earned income from commission on arranging loan transaction which assessee himself admitted in his sworn statement recorded during search proceedings. The learned CIT(A) has not accepted the ground of appeal raised by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The issue raised by the assessee in grounds no.5 and 6, relates to the addition of Rs. 15 lakh on account of unsecured loan under section 68. 25. The brief facts, as brought out by the Assessing Officer in the assessment order are that the assessee obtained loan of Rs. 15 lakh from M/s. Sakambhari Vanijya Pvt. Ltd. The assessee filed explanation and documents like confirmation, Bank Account, Balance Sheet, Ledger Account, ITR Acknowledgement and status of company on MCA portal during the course of assessment proceeding. The Assessing Officer discussed the reasons for addition in Para-11.1 and 11.2 of the assessment order. She held that the loan was arranged by the assessee through Shri Praveen Kumar Agrawal, and the Directors of the company were employees of Shri Praveen Kumar Agrawal, whose statement were also recorded by the Investigation Wing of Kolkata. The Assessing Officer held that the assessee has not been able to prove the creditworthiness of the loan creditors and genuineness of the transaction and therefore addition was made under section 68. The assessee being aggrieved carried the matter before the first appellate authority. 26. Before the learned CIT(A) the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of loan creditor and the genuineness of the transaction in view of the provisions of section 68 of the Income Tax Act, 1961. Further, the AO did not find the explanation offered by the assessee satisfactory and stated that the assessee has failed to discharge its onus towards explaining the credit of Rs. 15,00,000/ -. We respectfully object to the above observations and allegations made by the AO as the same are based on conjectures and surmises of AO without providing opportunity of being heard to assessee and also without properly verifying the facts of the case. (2) The AO has stated that the onus of proving the source of a sum received is on the assessee. It was informed that the unsecured loan of Rs. 15,00,000/- was received from SVPL and the account confirmations of the above party along with the copy of ITR Acknowledgement, Bank Account Extract and Audited Financial Statement were furnished. All the above documents are attached herewith for your kind and immediate reference (3) The AO in the assessment order has alleged that the assessee has not been able to prove the creditworthiness of the loan creditors and genuineness of the transaction. Further the explanation offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 15,00,000/ -. There is no any document found in the search action u/s 132 which can be termed as incriminating in nature. The addition is not made referring to any kind of incriminating document found during the course of search. The addition made merely on the basis of entries made in the regular books of accounts of the assessee duly reflected in the assessee's financial accounts without reference to any search material is not sustainable u/s 153A. We rely on the judgement of ITAT Mumbai in the case of Dinesh Salecha Vs. DCIT in ITA No. 5165, 5166, 5167/Mum./2018 dated 1-1-2021 (5) We have to respectfully object to the observations and would like to submit that the assessee has duly discharged his onus by establishing the identity of the unsecured loan party providing PAN and address in the account confirmation. Further, the source of receipt through banking channel and the purpose of taking the amount and utilization thereof to substantiate the genuineness of the credits reflected in books of accounts and the bank statement and audited financial statement to establish creditworthiness of the parties. We draw your kind attention to the assessment order, the AO did not at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s quoted in the assessment order are not applicable to the assessee being individual and are therefore distinguished. (7) It is respectfully submitted that the AO during search assessment proceedings neither confronted assessee with the doubt on the unsecured loan nor asked for any further details with respect to the same. The assessee has discharged onus cast on him by establishing the identity and creditworthiness of the parties and genuineness of the transaction with the help of legal and cogent evidences. The AO has not brought on record any evidence to prove that the said funds are unaccounted and the transaction is not genuine. It is respectfully submitted that the AO never informed or conveyed during assessment proceedings her dissatisfaction or disagreement with respect to the amount received as unsecured loan and documentary evidence furnished. The observation drawn by AO is thus without giving proper opportunity of being heard and thus the addition made in such circumstances is not in accordance with the principal of natural justice. The AO could have informed the assessee or could have issued summons u/s. 131 to the party in case of doubt over the transaction which in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion on the basis of such statement is devoid of merit. We have to further submit that Shri. Praveen Agrawal is not director in the above-mentioned company and does not exercise any control whatsoever. There is no enquiry of the impugned transactions from Shri. Praveen Agrawal or other directors of the company SVPL. Thus it is submitted that no adverse inference can be drawn on the basis of statements of the persons who have no legal control over the assessee or the company. (9) The Directorate of Investigation has also recorded statements of Shri. Pramod Sharma and Shri. Pulak Bagchi who are alleged to be directors of the impugned company and employees of Shri. Praveen Agrawal who is entry operator. It is submitted that the statement of Shri. Pramod Sharma is recorded on 10- 11-2012, ie, four years before the search action on the assessee. Thus it is neither recorded nor related to the search on assessee but is recorded u/s 132(4) during the occasion of Search & Seizure operation on the premises of Gateway Financial Services Pvt Ltd. There is no enquiry about the assessee and transactions with the company viz. Sakambhari Vanijya Pvt Ltd from whom funds are taken by assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax Act. In view of above submission and facts of the case, the satisfactory explanation was furnished to AO with respect to the genuineness and creditworthiness of the unsecured loan and thus the addition made treating the same as unexplained cash credit may kindly be deleted. The ground of appeal may be allowed." 28. The learned Counsel for the assessee further submitted that the learned CIT(A) did not consider the evidence brought on record to justify the genuineness and creditworthiness of the company and further objections raised with regard to the statements relied upon by the Assessing Officer while making addition. The learned counsel submitted that the confirmation indicating details of PAN and address and ITR were furnished and the onus to explain the credit was discharged. The learned counsel further submitted that the identity of the company is not in dispute as the corporate entity was assessed to tax. The documents evidencing loan transaction through proper banking channel and that the assessee repaid the loan were also furnished which were accepted by revenue. The creditworthiness was established by furnishing the Audited Financial Statements and Bank Account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are mentioned. We find that the name of the assessee with Rs. 15 lakh loan is appearing in the Audited Financial Statement of lender company under the list of Short Term Loans and Advances which is placed on record at Paper Book Page-132. The business turnover of the lender company is found in the Profit & Loss Account which is placed on record vide Paper Book Page-126 and the networth of the company is Rs.3 crore. Similarly, the Company Master data as taken from MCA Portal of Ministry of Corporate Affairs, which is placed on record at Paper Book Page-133 also mentioned that the company is an active company. No irregularity has been pointed out by the Assessing Officer in the documents furnished in the assessment proceedings. Thus, we find that the assessee has discharged his onus to explain the loan credit by adducing proper legal evidence and considering the legal evidence, the lender company cannot be termed as paper company as alleged by Assessing Officer. The genuineness of the transaction and creditworthiness of the lender thus stands established. We have carefully examined the statements of various persons mentioned by the Assessing Officer vide Para-11.1 of the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch creditor to advance the money and lastly, genuineness of the transaction. Thus, in order to establish receipt of credit in cash, as per requirement of section 68, the assessee has to explain or satisfy three conditions, namely : (i) identity of the creditor; (ii) genuineness of the transaction; and (iii) credit-worthiness of the creditor. 14. In Pr. CIT v. Veedhata Towers (P.) Ltd. [2018] 403 ITR 415 (Bom), this court has held that assessee is only required to explain the source of the credit. There is no requirement under the law to explain the source of the source. In the instant case, there is no dispute as to the identity of the creditor. There is also no dispute about the genuineness of the transaction. That apart, the creditor has explained as to how the credit was given to the assessee. Thus assessee had discharged the onus which was on him as per the requirement of section 68 of the Act. What the Assessing Officer held was that sources of the source were suspect i.e., he suspected the two sources Shri Rajendra Bahadur Singh and Smt. Sarojini Thakur of the source Smt. Savitri Thakur. 15. In view of discharge of burden by the assessee, burden shifted to the revenue; bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uppressed source. In order to arrive at such a conclusion, however, the department has to be in possession of sufficient and adequate material". The above judgement was followed by Hon'ble Punjab and Haryana High Court in the case of CIT vs Varinder Rawlley reported at 366 ITR 232(P&H)." 33. The ratio laid down by Hon'ble Bombay High Court in decisions mentioned above is binding precedent. In view of law laid down by the Hon'ble Jurisdictional High Court the addition made by Assessing Officer at the hands of assessee is clearly unjustified and unsustainable. 34. Apart from the above decision of the Hon'ble Gujarat High Court in CIT v/s Apex Therm Packaging (P) Ltd., [2014] 42 taxmann.com 473/222 Taxman 125 (Mag.) is also found to be of much relevance. In this case, during the course of proceedings under section 143(3) of the Act, the assessee had furnished complete details of loan creditors along with their PAN, financial statements, loan confirmations, bank statements etc. The Assessing Officer, however, added the entire loan received under section 68 of the Act and also disallowed the interest paid thereon. On appeal, the learned CIT(A) allowed the assessee' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Number, copy of ledger account, copy of balance sheet and profit and loss account, copy of Income-tax returns and computation of total income in respect of all the parties except two depositors. With respect to the two depositors, the assessee had filed confirmation, address and PAN Numbers and hence the assessee had also discharged the initial onus cast upon the assessee with respect to the two creditors. He has further noted that the loans were received through cheques and the loan account were duly reflected in the balance sheet of lenders. The CIT (A) has further held once the onus was fulfilled by the assessee, it was for the Assessing Officer to examine and bring any material on record which may help in rebutting the onus of assessee. The Assessing Officer has not brought any material on record in its support. The CIT (A) while deleting the addition has also relied on the decision of the Hon'ble Gujarat High Court in the case of Dy. CIT v. Rohini Builders [2002] 256 ITR 360 and the decision of Hon'ble Supreme Court, in the case of Orissa Corpn. Ltd. 153 ITR 78. Before us, nothing has been brought on record by the revenue to controvert the findings of CIT (A). Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arat)/12[2003] 127 Taxman 523/256 ITR 360 (Gujarat), wherein it is held as under: "We have considered the rival submissions and have also gone through the order passed by the Assessing Officer. the relevant portion of which we have also extracted in para. 2 above. The Commissioner of Income- tax (Appeals) more or less confirmed the addition on the reasoning given by the Assessing Officer in the assessment order. A perusal of the chart given by us in para. 3 above indicates that out of 21 creditors the Assessing Officer has recorded the statements of only six creditors, viz., creditors at serial Nos. 1. 2. 3. 4, 6. and 7. However, in respect of all the 21 creditors the assessee has furnished their complete addresses along with GIR numbers/permanent account numbers as well as confirmations along with the copies of assessment orders passed in the cases of creditors at serial Nos. 1, 2, 4, 5, 6, 7, 9, 10, 11, 12 and 16. In the remaining cases where the assessment orders passed were not readily available, the assessee has furnished the copies of returns filed by the creditors with the Department along with their statement of income. All the loans were received by the assessee by accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue's case and in order to sustain the addition the Revenue has to pursue the enquiry and to establish the lack of creditworthiness and mere noncompliance of summons issued by the Assessing Officer under section 131, by the alleged creditors will not be sufficient to draw an adverse inference against the assessee. In the case of six creditors who appeared before the Assessing Officer and whose statements were recorded by the Assessing Officer, they have admitted having advanced loans to the assessee by account payee cheques and in case the Assessing Officer was not satisfied with the cash amount deposited by those creditors in their bank accounts, the proper course would have been to make assessments in the cases of those creditors by treating the cash deposits in their bank accounts as unexplained investments of those creditors under section 69. Further, we may point out that section 68 under which the addition has been made by the Assessing Officer reads as under: "68. Where any sum is found credited in the books of an assessee maintained for any previous year. and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und no.7, the assessee has challenged the charging of interest under section 234A and 234B of the Act on the basis that interest charged is improper. However, nothing was specifically contended before us. Therefore, the ground no.7, is dismissed. 38. In the result, assessee's appeal for A.Y. 2012-13 is partly allowed. ITA no. 56/Nag./2022 Assessee's Appeal - A.Y 2013-14 39. The assessee has raised following ground :- "(1) That the order of the learned Dy./Asst. Commissioner of Income Tax, Central Circle-1(3), Nagpur passed u/s. 143(3) r.w.s. 153A is bad in law and wrong on facts and the learned CIT(A) erred in confirming the same. (2) That the learned CIT(A) erred in law and on facts in confirming the addition made by AO in the proceedings u/s 153A of the Income Tax Act, 1961 in absence of incriminating document found as a result of search. The additions made are void and bad in law. (3) That the learned CIT(A) erred in law and on facts in confirming the addition made by the AO of Rs. 14,31,000/- holding that the assessee has provided services of arranging parties and earned commission therefrom. On the facts and circumstances of the case, learned CIT(A) erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allow the ground no.4, raised by the assessee. 45. Insofar as ground no.5 is concerned, the issue relates to charging of interests under section 234A and 234B of the Act on the basis that interests charged is improper. However, nothing was specifically contended before us. Therefore, ground no.5, is dismissed. 46. In the result, assessee's appeal for A.Y. 2013-14 is partly allowed ITA no. 57/Nag./2022 Assessee's Appeal - A.Y - 2014-15 47. The assessee has raised following grounds :- "(1) That the order of the learned Dy./Asst. Commissioner of Income Tax, Central Circle-1(3), Nagpur passed u/s. 143(3) r.w.s. 153A is bad in law and wrong on facts and the learned CIT(A) erred in confirming the same. (2) That the learned CIT(A) erred in law and on facts in confirming the addition made by AO in the proceedings u/s 153A of the Income Tax Act, 1961 in absence of incriminating document found as a result of search. The additions made are void and bad in law. (3) That the learned CIT(A) erred in law and on facts in confirming the addition made by the AO of Rs. 1,12,138/- holding that the assessee has arranged accommodation entries and earned commission therefrom. On the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged accommodation entries and earned commission therefrom. On the facts and circumstances of the case, the action of both the authorities is without any sound basis and therefore highly unjustified. (4) That for any other grounds with kind permission of your honour at the time of hearing of appeal." 55. Ground no.1, being general in nature, hence no separate adjudication is required. 56. The issue arose from ground no.2 is, whether or not the learned CIT(A) was justified in confirming the addition made by the Assessing Officer in the proceedings under section 153A of the Act in absence of incriminating document found as a result of search. 57. During the course of hearing, the learned Counsel for the assessee did not wish to press this ground to which the learned Departmental Representative has not raised any objection. Accordingly, ground no.2, stands dismissed as "not pressed". 58. Ground no.3, relates to addition on account of commission on loan transaction. 59. After hearing both the parties and on a perusal of the material available on record, we find that identical issue has been raised by the assessee in its appeal being ITA no.55/Nag./2022, for the assessment year 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue for our adjudication being identical, except variation in figures, consistent with the view taken therein in assessee's appeal cited supra and following the findings given therein, we reverse the order passed by the learned CIT(A) and partly allow the ground no.2, raised by the assessee. 65. Grounds no.3 & 4, relate to the additional income offered in Return- Telescoping. 66. The brief facts of the case, as mentioned in the assessment order at Page-8 to 10 are that, during the course of search, explanation regarding cash found from the premises and jewellery found and seized was sought vide statements recorded under section 132(4) of the Act. According to the Assessing Officer, the assessee could not furnish proper reply and evidence regarding possession of cash and jewellery at the time of search and, therefore, ultimately surrendered Rs. 1.50 crore in the statement dated 30/07/2016. However, while filing the return of income, the assessee has only shown an amount of Rs. 75 lakh under the head "Income From Other Sources" mentioning therein as 'amount surrendered' in the computation of Income. During the assessment proceedings, the assessee explained the possession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the additional offer of Rs. 75 lakh is not with reference to any specific asset, but it was clearly explained that in order to cover up any infirmity, and in case of explanation, not being found to the satisfaction of the Assessing Officer, the amount was surrendered. Thus, he contended that the provisions of section 115BBE are not applicable to the amount surrendered under the head "Income From Other Sources". The learned Counsel pointed out that the surrender of income of Rs. 75 lakh is not with reference to any asset as the assessee has explained the possession of cash and jewellery found at the time of search and, therefore, a specific ground no.6 regarding non-applicability of section 115BBE was taken before the learned CIT(A), which was not adjudicated by the learned CIT(A) and hence filed an application on 10/12/2024, and requested to adjudicate the same. 69. We find force in the argument of the learned A.R. for the assessee that the surrender was not with respect to any specific item of cash and gold jewellery. In the return of income filed on 31/03/2018, the amount of Rs. 75 lakh was mentioned as "amount surrendered under the head "Income From Other Sources" whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no specific findings given in the learned CIT(A) CIT(A) order. Considering the application of the assessee and after examining the issue of surrender of income as discussed above, we find that the assessee surrendered income in the return of income without specifying any item and without taking credit of such income in the books of accounts. In such circumstances, we hold that the provisions of section 115BBE cannot be applied in the instant case and the surrendered income is chargeable to tax at normal rates. Consequently, we set aside the impugned order passed by the Assessing Officer on this issue by allowing grounds no.4 & 5 raised by the assessee. 70. In the result, assessee's appeal for the assessment year 2017-18 is stands partly allowed. ITA no. 53/Nag./2022 Assessee's Appeal - A.Y - 2010-11 71. The assessee has raised following grounds :- "(1) That the assessment order passed by the Asstt. Commissioner of Income Tax, Central Circle 2(3), Nagpur is bad in law and wrong on facts. (2) That the notice issued u/s. 148 and the proceedings thereafter u/s. 147 are bad in law and wrong on facts. (3) That the learned AO erred in law and on facts in making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 by the Assessing Officer are as under :- "Reasons for reopening the assessment u/s. 147 Search & seizure action u/s.132 & survey u/s.133A were carried out in the case of M/s. D.P.Jain & Co. Group of cases on 26-07-2016. During the course of survey operation in the case of SNG CA Associates at Mangalam Icon, 1st Floor, Ramnagar Square, Nagpur an excel sheet bearing annexure No. B2 at Page No. 4 was impounded. It is seen from the excel sheet that it is year wise record of turnover made and commission by Shri Sanjay Jain. The details for F.Y. 2009-10 are as under :- Sr. No. F.Y. Turnover Commission @ 0.25% 1 2009-10 Rs. 220.39 Crores Rs. 55.09 Crores It is seen from the above that the assessee has worked out commission @ 0.25% on the turnover. The table further shows the amount received by him and also the outstanding receivable by the assessee Summons u/s. 131 was issued to the assessee to explain the nature of the above transactions. The assessee submitted that this amount pertains to one company M/s. Base Corporation of Bangalore of which the assessee was internal auditor. When asked to produce the same, the assessee till date could not produce any evidence. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ongs to M/s Base Corporation is not supported by factual evidences Considering the fact that the assessee Mr. Sanjay Dhanraj Jain and Mr Nirmal Kumar Agarwal are in the business of providing accommodation entries to various entities, and further since the assessee has not given any evidence to show that the commission worked out in the above document has been offered to tax. I have reason to believe that income of Rs 55,09,000/- has escaped assessment in case of assessee within the meaning of First proviso to the Section 147 of the I.T. Act since the assessee failed to disclose fully & truly all material facts for its assessment for AY 2010-11. (C.S. Pojge) Dy. Commissioner of Income Tax Central Circle-1(3), Nagpur 74. Before the first appellate authority, the assessee challenged the reopening proceedings, which was rejected by the learned CIT(A). 75. We have carefully perused the reasons recorded for reopening which is placed on record at Paper Book Page-6 & 7, wherein the Form of approval under section 151 and reasons recorded were attached. Surprisingly, the date on which reasons are recorded and the date on which approval was granted is nowhere mentioned in the impugned Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the present case, there was no assessment of the petitioner under section 143(3) in respect of the assessment years 1995-96 and 1996- 97. Hence, the proviso to section 147 has no application. It is true that after the returns came to be accepted in respect of the assessment year 1995-96, four years have elapsed. However, there was no assessment under section 143(3) as in the case of the notice which is the subject-matter of Writ Petition No. 955 of 2001 (see [2001] 252 ITR 673 (Bom)). Therefore, the proviso to section 147 has no application to the facts of the present case. " 76. Thus, while granting approval, the learned Principal CIT, Central, mechanically without appraisal of material and without application of mind granted approval mentioning that "I am satisfied that it is fit case for issue of notice u/s.148 of I.T. Act". In our considered opinion, while recording the satisfaction, at least, there should be some indication that the approving authority has examined the record prior to granting of approval. In large number of decisions which are discussed herein below, it has been held that such mechanical approval vitiates the reopening proceedings. We place reliance on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been held by the Hon'ble High court that the CIT is required to apply his mind to the proposal put up to him for approval in the light of the material relied upon by the AO. The said power cannot be exercised casually and in a routine manner. It has been held by Hon'ble high Court that "We are constrained to observe that in the present case, there has been no application of mind by the Addl. CIT before granting the approval". (Para 19 is relevant in this judgment). 78. We further find that the Hon'ble Jurisdictional High Court in Svitzer Hazira v/s ACIT, 441 ITR 19 (Bom.), has held that approval/sanction granted under section 151 by writing - "Yes, I am satisfied "cannot be held to be a valid approval/sanction. 79. The Hon'ble Supreme Court in CIT v/s S. Goyanka Lime & Chemical Ltd. [2023] 150 taxmann.com 245 (SC) arising out of order of Hon'ble High Court of Madhya Pradesh in CIT vs. S. Goyanka Lime & Chemicals Ltd. [2015] 56 taxmann.com 390 (MP) confirmed the order of the Hon'ble High Court wherein Hon'ble High Court, by impugned order, held that where Joint Commissioner recorded satisfaction in mechanical manner and without application of mind to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are minimum requirement of the approving authority having to indicate what the thought process was, is missing in the aforementioned approval order. While elaborate reasons may not have been given, at least there has to be some indication that the approving authority has examined the material prior to granting approval. Mere appending the expression "Yes I am satisfied" says nothing. The entire exercise appears to have been ritualistic and formal rather than meaningful, which should be the rationale for the safeguard of an approval by a high ranking official. Reasons are the link between material placed on record and the conclusion reached by the authority in respect of an issue, since they help in discerning the manner in which the conclusion is reached by the concerned authority. 15. to 19............. 20. As explained in the above cases, mere repeating of the words of the statute, mere rubber stamping of the letter seeking sanction or using similar words like "Yes, I am satisfied" will not satisfy the requirement of law. Hence, we are of the firm view that PCIT has failed to satisfactorily record his concurrence. The mere use of expression "Yes, I am satisfied" cannot be con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received and further there is no share purchase agreement or confirmation brought on record by the assessee. Consequently, the learned CIT(A) confirmed the addition holding it to be unexplained credit. 90. Before us, the learned counsel for the assessee vehemently contended that the credits in the Bank Account were duly explained and there is no unexplained credit. He submitted that there was no evidence found as a result of search to doubt the deposit in the Bank Account and the reasons recorded before issue of notice under section 148 also does not mention any such outcome as a result of enquiry in search or survey proceedings. The Bank Accounts and the ledger account along with explanation were duly furnished and it was explained to the Assessing Officer, how the assessee inherited share from his father and which were sold and the realisation deposited in Bank Account. The books of accounts in the ledger account were found at the time of search and, therefore, are very crucial evidence which the Assessing Officer has totally disregarded. He submitted that the assessee furnished documents like Bank Account, Ledger Accounts, copy of return filed under the Companies Act etc., to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09 to 31/03/2010 in which the aforesaid amount is shown as opening balance. These documents are part of the regular books of accounts. The amount received in the year under consideration is found recorded in the regular Bank Account and the ledger account. Thus, we find that the aforesaid amount received in the realisation of assets by the assessee and certainly cannot be held as unexplained credit or income for the year under consideration when the transaction is through Banking channel. The addition on account of unexplained income, according to us, cannot be sustained. Further, the assessee has furnished documentary evidence to establish that the receipts were relating to sale of shares which were inherited from his father who expired earlier. On close examination of annual return of Base Corporation Ltd., which is part of the record of Registrar of Companies under the Companies Act, at the back Page-99, the name of father of assessee Shri Dhanraj Jain, is appearing as "transferor" and the name of Aditya Arora is appearing as "transferee", similarly, on Back Page-101, the assessee's name is found as shareholder in the annual return of company for the year 2007- 08. Thus, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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