Income Tax Appellate Tribunal - Jodhpur
Surbhi Anjana, Neemuch vs Assistant Commissioner Of Income-Tax, ... on 9 April, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL
JODHPUR BENCH, JODHPUR.
BEFORE: DR. S. SEETHALAKSHMI, JJUDICIAL MEMBER &
SHRI RATHOD KAMLESH JAYANTBHAI, ACCOUNTANT MEMBER
I.T.A. Nos. 304 to 309/Jodh/2023
Assessment Years: 2012-13 to 2017-18
Bharat Kumar Anjana Vs. ACIT,
S/o Shri Ram Lal Anjana, Nr Central Circle-01,
Govt. School, Kesunda, Udaipur
Chhotisadri, Pratapgarh,
Rajasthan (Respondent)
[PAN: ABWPA 2125 M]
(Appellant)
ITA No. 310 to 314/Jodh/2023
Assessment Year: 2013-14 to 2017-18
Surbhi Anjana Vs. ACIT,
1 Aanjana Complex, Tagore Udaipur
Marg Tehsil- Neemuch (Respondent)
[PAN: AWFPA 6702 J]
(Appellant)
Appellant by Sh. Sakar Sharma, CA
Respondent by Smt. Alka Rajvanshi Jain, CIT DR
Date of Hearing 30.01.2024
Date of Pronouncement 09.04.2024
ORDER
PER BENCH All these bunch of eleven appeals comprising of six appeals filed by Shri Bharat Kumar Anjana and five appeals in the case of assessee Miss. Surbhi Anjana directed against the respective orders of the ld. CIT I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 2 (A) arise from the assessment framed in pursuant to the search and seizure action under section 132 of the IT Act. The details of the order under challenge and details of the respective order of the ld. AO are tabulated herein below:
Sr. ITA No. Name of Assessment Date of Section of Date of order No assessee Year assessment assessment of . order order CIT(A)/NFAC 1 304/Jodh/2023 Bharat Kumar 2013-14 17/12/2018 153A r.w.s 28/06/2023 Anjana 143(3) 2 305/Jodh/2023 Bharat Kumar 2014-15 17/12/2018 153A r.w.s 28/06/2023 Anjana 143(3) 3 306/Jodh/2023 Bharat Kumar 2015-16 17/12/2018 153A r.w.s 29/06/2023 Anjana 143(3) 4 307/Jodh/2023 Bharat Kumar 2016-17 17/12/2018 153A r.w.s 28/06/2023 Anjana 143(3) 5 308/Jodh/2023 Bharat Kumar 2017-18 17/12/2018 143(3) of the 28/06/2023 Anjana Act 6 309/Jodh/2023 Bharat Kumar 2012-13 17/12/2018 u/s 153A r.w.s 28/06/2023 Anjana 143(3) of Act, 7 310/Jodh/2023 Surbhi Anjana 2013-14 10/12/2018 u/s 153A r.w.s 29/06/2023 143(3) of Act, 8 311/Jodh/2023 Surbhi Anjana 2014-15 10/12/2018 u/s 153A r.w.s 29/06/2023 143(3) of Act, 9 312/Jodh/2023 Surbhi Anjana 2015-16 10/12/2018 u/s 153A r.w.s 29/06/2023 143(3) of Act, 10 313/Jodh/2023 Surbhi Anjana 2016-17 10/12/2018 u/s 153A r.w.s 29/06/2023 143(3) of Act, 11 314/Jodh/2023 Surbhi Anjana 2017-18 10/12/2018 143(3) of Act, 29/06/2023
2. Out of these 11 appeals 6 pertain to Shri Bharat Anjana and five appeals related to her daughter Miss Surbhi Anjana. We note from the respective appeal folders that the grounds raised qua additions made in assessment in the case of Miss Surbhi Anjana have direct bearing in the I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 3 case of Shri Bharat Kumar Anjana on account of additions made in case of Miss Surbhi Anjana wherein part of income is assessed substantively and part of income protectively. Similarly, is the case of Shri Bharat Kumar Anjana addition were made on substantive basis including the incomes which have been substantively assessed in the hands of Miss Surbhi Anjana. Considering that peculiar aspect of the matter we feel that since issues arising in the case of both the assessee's are interlinked interwoven and has bearing of our finding in the respective order under appeal. We also take note that some of the grounds in the case of Shri Bharat Kumar Anjana are common in all the assessment years except change amount disputed. Considering these aspects of the matter and since we have heard these appeals together same are being disposed by a consolidated order as a matter of convenience.
3. We first take up appeals preferred in by assessee in the case of Bharat Kumar Anjana for AY 2012-13 in ITA No. 309/Jodh/2023 wherein the assessee has raised the following grounds: -
1. The Ld. CIT(A) erred on facts and in law in upholding assessment order passed u/s 153A r.w.s. 143(3) of the Act making addition to the returned income without appreciating that assessment under reference was a completed assessment and there was no incriminating material found in the course of search qua assessment year under reference. No addition ought to have made in absence of any incriminating material as held and affirmed by Hon'ble Supreme Court in PCIT vs Abhisar Buildwell P Ltd (2023) 454 ITR 212 (SC) I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 4
2. The Ld. CIT(A) erred on facts and in law in confirming advance given by appellant to M/s U B Investment Prop Shri Vikram Anjana based on third party statements without appreciating that statements per se are not incriminating unless corroborated with documentary evidence.
3. The Ld. CIT (A) erred on facts and in law in not appreciating the notarized affidavit of Shri Gyanchand Jain alias Chordia submitted in the course of remand/ appellate proceedings.
4. The Ld. CIT(A) erred on facts and in law in not issuing summons to Shri Gyanchand Jain alias Chordia in relation to financial transactions with M/s U B Investment as well as to the persons connected with the property in respect of which addition of Rs. 15,00,000/- has been confirmed for cross examination.
5. The Ld. CIT (A) erred on facts and in law in confirming addition of Rs.
3,05,00,000/- out of Rs. 3,07,40,000/- made in the assessment order being loans and advances given to M/s U B Investment Prop Shri Vikram Anjana from regular bank accounts and from the explained sources by treating the same to be unexplained based on irrelevant material/ considerations having no nexus with the appellant and on suspicion alone without specifying the provision under which addition was made.
6. The Ld. CIT(A) erred on facts and in law in confirming addition of Rs. 15,00,000/- on account of alleged undisclosed investment in property but without evidence of any investment being made by the appellant or brining any evidence on record that the subject property belonged to the appellant.
4. The brief fact of the case is that the assessee is an individual regularly assessed to tax and filling his return of income. For the year under consideration i.e. for the assessment year 2012-13 the assessee filed his return of income on 26-09-2012. Search and seizure proceedings were carried out at the premises of the assessee on 16.09.2016 as per warrant of authorization issued by Director General of Income-tax (Inv.), Jaipur. On receiving the intimation about the search Jt. DIT (Inv.), Udaipur, notice U/s 153A was issued in this case on I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 5 15.03.2017and served upon the assessee requiring the assessee to prepare a true and correct return of total income including undisclosed income in respect of which he is assessable for A.Y. 2012-13in the prescribed form and deliver it in the office of the DCIT/ACIT, Central Circle-1, Udaipur within 15 days of service of this notice duly verified and signed in accordance with provisions of section 140 of I.T.Act, 1961. In response to notice U/s 153A, return declaring total income of Rs. 5570520/-was filed on 26.04.2017. Original return was filed u/s 139 of the Income tax Act, 1961 declaring total income of Rs. 2799169/-on 26.09.2012. During the course of assessment proceedings, notices u/s u/s.142(1) of the Act were also issued to the assessee on 23.07.2018, 03.08.2018 & 13.09.2018, requiring him to produce/explain/furnish various information as specified therein. Subsequently, due to change of incumbent notice u / s 143(2) and 142(1) were also issued on 18.10.2018. It is submitted by the assessee that he has earned profit on Shares in partnership firm, interest income and income from other sources. During the course of assessment proceedings, the relevant details for the issues involved have been called for and after verification, the relevant details as submitted by the assessee are placed on record. In the return of income filed u/s. 153A of Sh. Bharat Anjana, assessee has disclosed additional income amounting to Rs. 27,71,355/- which was I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 6 not disclosed in the original return filed u / s 139 of the Act. The AR of the assessee explained that this additional income of Rs. 27,71,355/- includes undisclosed income of Rs. 6,25,000/- on account of purchase of property out of undisclosed sources, construction of house of Rs. 15,00,000/- out of undisclosed sources and interest accrued on FDRs of Rs. 45,402/- on the FDRs in the name of family members. Also Rs. 6,00,000/- related to expenses incurred out of unaccounted sources on the marriage of his daughter. In the return of income filed u/s. 153A, the assessee has disclosed additional income amounting to Rs. 27,71,355/- as income from other sources which was not disclosed in the original return filed u/s. 139.
4.1 During the course of assessment proceedings, it is noticed that as per 26AS assessee has received amount of Rs. 49,62,580/- from Sh. Manohar Lal Anjana on which TDS of Rs. 4,96,258/- was deducted. As per return of income filed by the assessee out of the TDS of Rs. 4,96,258/- assessee has claimed TDS of Rs. 4,44,088/- which shows TDS amounting to Rs. 52,170/- was not claimed by the assessee which indicates that corresponding receipt of Rs.5,21,700/- is also not accounted by the assessee. During the assessment proceedings, assessee was asked to submit explanation and reconciliation alongwith I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 7 26AS but inspite of opportunities given he has not submitted the same. Therefore this is clear that receipt of Rs. 5,21,700/- has not been accounted by the assessee. Therefore, unaccounted receipt of Rs. 5,21,700/- is hereby added to the total income of the assessee. 4.2 During the course of Search and Seizure proceedings, and in the post search investigations, it was noticed that M/s U.B. Investment, a proprietorship concern of Sh. Vikram Anjana is receiving from and has also given huge loans to various persons and business entities related to Chetak Group. M/s U.B. Investment has received loan from the flagship concern of Chetak Group namely M/s Chetak Enterprises Ltd., M/s U.B. Investment has also shown to have received loan from various family members of Sh. Udai Lal Anjana key person of the Chetak Group and also from outside parties. During the course of search, it was also noticed that M/s U.B. Investment has received huge bogus loans from various persons of the group as well as from persons outside of the group. The total Unsecured Loans of Rs.147,75,06,426/- are shown to have been provided by the family member(s)/related concern(s) of the Chetak Group to M/s U B Investment. Out of this, amount of Rs. 16,89,48,426/-has been provided as loans by various Anjana family members but the loans advanced by them are not commensurate with I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 8 their incomes as declared in the returns of income filed by them. As against huge loans shown to have been advanced by above-referred persons, the income returned by them is not found to be adequate to advance such huge loans. Moreover, on perusal of the Bank statements of Shri Bharat Anjana, it is observed that there is Cash deposit immediately followed by Cheque/Transfer/RTGS to M/s UB Investment. For these cash deposits, no explanation was provided. On analysis statement of account it is clear that on 19-11-2015, cash deposit of Rs. 25,00,000/- (in the form of three entries of Rs. 9,00,000/-, Rs.9,00,000/- and Rs.7,00,000/- ) was made. Immediately, the following day, Rs.25,00,000/- is transferred to M/s U B Investment. It is clear that this is group's unaccounted money being channelized in the form of Accommodation entry as unsecured loan. It is noticed that during the year assessee has provided loan/advance to U B Investment amounting to Rs. 3,07,40,000/-, Since, assessee has not provided any detail, irrespective of treatment of the said income in the hands of M/s U.B. Investment or any other Chetak Group entity as the case may, the same is treated as undisclosed income of the assessee as the assessee has failed to substantiate the source of Rs. 3,07,40,000/ advanced to M/s U.B. Investment. Accordingly, an addition of Rs 3,07,40,000/ is being made to the total income of the assessee.
I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 9 4.3 During the course of search proceedings u/s. 132 on the residential premise of assessee, situated at Near Government School, Vill- kesunda certain incriminating documents were found and seized as per seized by punchnama, Annexure-A, Exhibit -1 to 7. Some of the documents from Exhibit 1 of Annexure A are sale deeds and sale agreements pertain to the assessee. Further, page No. 39 is a sale agreement dt. 15.11.2011 for Rs. 15,00,000/-. On the perusal of balance sheet of the assessee, it is also noticed that this transaction is not- reflected. The assessee was asked to explain the seized materials and a specific query was asked vide notice u/s. 142(1) dated 23.07.2018 as query No. 18 to explain the same. But assessee failed to submit any satisfactory reply. Vide order-sheet entry dated 15.11.2018, the AR stated that he has nothing further to say except reply already submitted. Hence, the property purchase remains to be from unexplained sources by the assessee in the name of a third party and purchase consideration of Rs. 15,00,000/- is hereby added back to the total income of the assessee.
5. Feeling dissatisfied from the finding recorded in the assessment order the assessee has carried the matter before the ld. CIT(A), Udaipur-2. Apropos to the various grounds, where the assessee did not I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 10 receive any favour the relevant finding of the ld. CIT(A) on those issue is reiterated here in below :
Finding of ld. CIT(A) on validity of assessment 4.3 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:-
I have perused and carefully considered the order of the Assessing Officer and also the submission made by the appellant supported by various judgments. It is a case where a search u/s 132 was conducted at the business/residential premises of the appellant on 16.09.2016. It is incorrect on the part of the appellant that no incriminating material was found / seized relating to the year under consideration. The AO noted in the assessment order that in the return filed on 26-04-2017 in response to notice u/s 153A the total income declared was Rs. 55,70,520/-. Original return was filed u/s 139 of the Income Tax Act declaring total income of Rs. 27,99,169/- on 26-09-2012. The appellant has disclosed additional income of Rs. 6,25,000/- on account of purchase of property out of undisclosed sources. The appellant also included undisclosed income of Rs. 15,00,000/- in construction of house. The appellant also included Rs. 45,402/- of interest income which was accrued on FD in the name of family members. The appellant also included Rs. 6,00,000/- in the return of income filed u/s 153A related to expense incurred out of unaccounted sources on marriage of his daughter. The appellant accordingly disclosed additional income of Rs. 27,71,355/- which was not disclosed in the original return of income filed u/s 139 of the I. T. Act. The fact that undisclosed income of Rs. 27,71,355/- is unearthed during the course of search is in itself an incriminating material. There are other incriminating material also found during the search which is noted by the AO in paragraph no. 7 of the assessment order where unexplained property transactions have been discussed in the form of seized documents. Further, the addition made in para
6 of the assessment order wherein the ground no. 4 of the appeal is discussed is based on the findings of the search where addition is based on the incriminating findings of modus operandi used by the group for introducing the cash by layering. Therefore, the argument of the appellant that there was no incriminating material found during the search is not found to be acceptable.
In this regard Hon'ble SUPREME COURT OF INDIA held in the Civil Appeal No. 6580 OF 2021 in the case of Principal Commissioner of Income Tax, Central-3 Versus Abhisar Buildwell P. Ltd as under-
"14. In view of the above and for the reasons stated above, it is concluded as under:
i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A;
ii) all pending assessments/reassessments shall stand abated, I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 11
iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and
iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961.
However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved.
The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs."
In the present case also incriminating material is found/unearthed, therefore even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns. As held by Hon'ble Supreme Court, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns. Therefore, following the judgement of the Hon'ble Supreme Court it is held that the AO was justified in making addition on the other material available with the AO including the income declared in the returns in addition to the incriminating material unearthed during the search. The appellant has himself disclosed some of the amounts unearthed during the search in the return filed u/s 153A. Therefore, the AO was justified in making addition with respect to other material available with him including the income declared in the returns.
Since, there is incriminating material found during search, the decisions relied upon by the appellant are not found to be applicable on the facts of the case.
The appellant also raised the issue of not following principal of natural justice and failure to provide adequate opportunity of being heard. I found that the AO has noted that the appellant was provided opportunity of being heard. Nevertheless, the appellant got sufficient opportunity to explain his case before the AO during the remand proceedings. Therefore, the issue of opportunity of being heard is treated as addressed. INCOM issueRTMENT The appellant has also raised the cross examination of persons whose statement recorded during the search on the issue of loan transactions with U. I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 12 B. Investment. It is seen that the AO has not used statement of the persons mentioned by the appellant directly against the appellant. The statements were however, used by the AO to establish the modus operandi used by the group. Therefore, no prejudice is caused to the appellant if cross examination is not provided because these persons have not directly alleged the appellant. In the case of Principal Commissioner of Income-tax Vs. Swati Bajaj [2022] 139 taxmann.com 352 (Calcutta) Hon'ble High Court Of Calcutta held as under -
"58. Therefore, the assessees have to specifically point out as to how they were prejudiced on account of non-furnishing of the investigation report in its entirety, failure to produce the persons from whom the statements were recorded for being cross examined would cause prejudice to the assessee as nowhere in the report the names of the assessees feature. The investigation report states that the investigation has not commenced from the individuals but it has commenced who had dealt with the penny stocks, concept of working backwards. This is a very significant factor to be remembered. Therefore, there has been absolute anonymity of the assessee in the process of investigation. The endeavour of the department is to examine the "modus operandi" adopted and in that process now seek to identify the assessees who have benefited on account of such "modus operandi". Therefore, considering the factual scenario no prejudice has been established to the assessee by not furnishing the investigation report in its entirety nor making the persons available for cross examination as admitted by the department in substantial number of cases the assessees have not been specifically indicted by those persons from whom statements have been recorded.
59. We are conscious of the fact that there may be exceptions however nothing has been brought before us to show that there was an exception in any of these appeals heard by us. In a few cases the assessee has been made known of the statement of the Director of the penny stock company or the stock broker, entry operator despite which those assessees could not make any headway. While on this issue, we need to consider as to whether and under what circumstances the right of cross examination can be demanded as a vested right. In Kishanlal Agarwalla, the Hon'ble Division ITAT NO. 06 OF 2022 AND ETC. BATCH Bench of this Court pointed out that no natural justice requires that there should be a kind of formal cross examination as it is a procedural justice, governed by the rules and regulations. Further it was held that so long as the party charged has a fair and reasonable opportunity would receive, comment and criticize the evidence, statements or records on which the charges is being against him, the demand and tests of natural justice are satisfied.
60. In Bakshi Ghulam Mohammad 89 the Hon'ble Supreme Court held that the right of hearing cannot include the right of cross examination and the right must depend upon the circumstances of each case and must also depend on the statute under which the allegations are being enquired into.
61. Having noted the above legal position, it goes without saying there is no vested right for the assessee to cross examine the persons who have not deposed anything against the assessee. The investigation report proceeds on a different perspective commencing from a different point and this has led to I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 13 the enquiry being conducted by the assessing officer calling upon the assessee to prove the genuineness of the claim of LTCG."
The AO has reported in the remand report for AY 2013-14 that Mr. Gyan Chand Chordiya has stated that he do not directly know the appellant. It is seen that with the help of statement of Mr. Chordiya, the AO has only established the modus operandi being followed by the group and the statement of Mr. Chordiya is not used directly against the appellant. Therefore, no prejudice is caused to the appellant if opportunity of cross examination is not provided.
In view of the modus operandi detected by the department there is heavy onus casted upon the appellant to discharge the onus the appellant has to furnish credible evidences but as noted by the AO the appellant has failed to discharge the onus casted upon him. Therefore, the issue raised by the appellant is not found to be acceptable.
This ground of appeal is treated as dismissed."
Finding of ld. CIT(A) on loan given to M/s. U. B. Investment .6 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:-
The AO noted that during the course of Search and Seizure proceedings, and in the post search investigations, it was noticed that M/s U.B. Investment, a proprietorship concern of Sh. Vikram Anjana is receiving from and has also given huge loans to various persons and business entities related to Chetak Group. M/s U.B. Investment has received loan from the flagship concern of Chetak Group namely M/s Chetak Enterprises Ltd... M/s U.B. Investment has also shown to have received loan from various family members of Sh. Udai Lal Anjana key person of the Chetak Group and also from outside parties. During the course of search, it was also noticed that M/s U.B. Investment has received huge bogus loans from various persons of the group as well as from persons outside of the group. Total Unsecured Loans of Rs. 1,47,75,06,426/- are shown to have been provided by the family member(s)/related concern(s) of the Chetak Group to M/s U B Investment, Out of this amount of Rs. 16,89,48,426/- has been provided as loans by various Anjana family members but the loans advanced by them are not commensurate with their incomes as declared in the returns of income filed by them. As against huge loans shown to have been advanced by above- referred persons, the income returned by them is not found to be adequate to advance such huge loans. Moreover, on perusal of the Bank statement of Shri Bharat Anjana, it is observed that there is Cash Deposit immediately followed by Cheque/Transfer/RTGS to M/s U B Investment for these cash deposit, no explanation was provided. The AO accordingly concluded that this is group's unaccounted money being channelized in the form of Accommodation entry as unsecured loan.
It is noted by the AO that during the year the appellant has provided loan/advance to U B Investment amounting to Rs. 3,07,40,000/-. The I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 14 appellant has not provided any detail the same is treated as undisclosed income of the assessee as the appellant has failed to substantiate the source of Rs 3,07,40,000/ advanced to M/s U.B. Investment.
The AO has based his conclusions on the findings of Search and Seizure operation where modus operandi of taking and giving bogus loans by M/s U.B. Investment is unearthed with the help of evidences and statements recorded during the search. M/s U.B. Investment has also shown to have received loan from various family members of Sh. Udai Lal Anjana key person of the Chetak Group and also from outside parties. Total Unsecured Loans of Rs. 1,47,75,06,426/- are shown to have been provided by the family member(s)/related concern(s) of the Chetak Group to M/s U B Investment, Out of this amount of Rs. 16,89,48,426/- has been provided as loans by various Anjana family members but the loans advanced by them are not commensurate with their incomes as declared in the returns of income filed by them.
In case of the appellant, the AO noted that there is Cash Deposit immediately followed by Cheque/Transfer/RTGS to M/s U B Investment for these cash deposit, no explanation was provided for other years. The AO accordingly concluded that this is group's unaccounted money being channelized in the form of Accommodation entry as unsecured loan.
Per contra the appellant stated that assessee has paid Rs. 240000/- on 11.08.2011 and immediate source of same was income tax refund of Rs.
238430/-. Payment of Rs. 500000/- on 21.03.2012 was received from Shri Chandresh Anjana (PAN: AIHPA7495E) vide Cheque No. 856460. This was against repayment of Loan, which was given by assessee to Shri Chandresh Anjana in earlier years and interest on same was duly shown as interest income in current year as well as earlier years. Regarding payment of Rs. 3,00,00,000/- on 27.03.2012 it was stated that it was received from Udai Lal Bheru Lal Anjana, Proprietor Shri Manohar Lal Anjana (PAN: ABWPA2124L) through 5 Cheques of Rs. 60 Lakhs each. This was against repayment of Loan, which was given by assessee to Shri Manohar Lal Anjana in earlier years and interest on same was duly shown as interest income in current year as well as earlier years.
The appellant argued that modus operandi of above transaction was to earn interest income, assessee was earning interest income from Shri Chandresh Anjana and Shri Manohar Lal Anjana and when they repaid some part of their loans, the same amount was given to M/s. U.B. Investment to earn interest on those funds.
The appellant discussed contents of the Statement of Shri Gyan Chand Chordiya S/o Shri Punam Chand Chordiya u/s 132(4) dated 17.09.2016 to 20.09.2016. In answer to Question No. 25, Shri Gyan Chand Chordiya stated that in lieu of cash third party Cheques amounting to Rs.1.50 Crore approx. were given and cash was received through so called employee of M/s. U. B. Investment - Shri Jagdish Agrawal, then residing at HUDCO Colony, Neemuch (M.P.). The appellant argued that Shri Jagdish Agrawal is not proved to be employee of M/s U. B. Investment.
The appellant argued that Statement of Shri Ravi Mittal and Shri Atul Jain is also not applicable on him as neither the name of appellant is stated by I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 15 them during the course of question- answer while recording statement u/s 132(4) by the Search Party nor Parchi in the name of appellant was issued in token of receipt of cash found.
In the rejoinder to the remand report the appellant argued that income is not relevant but cash flow of assessee is relevant. There was actual money advancing without cash deposit in Bank either by party or through banking channel.
I have considered the facts of the case, I find that the AO has established the simple modus operandi used by the group. The group used various bank accounts to deposit cash. Then this deposit is transferred from one account to another. By this layering of various accounts the amount is finally deposited in the account of various beneficiaries. These beneficiaries also act as layering of entry provider. The layering is done to hide detection of direct cash deposit in the bank account upto certain level. The transactions undertaken by the appellant needs to be seen in the light of this modus / operandi which is unearthed during the search.
Hon'ble Supreme Court Of India in case of Sadiq Sheikh v. Commissioner of Income Tax, Bangalore [2021] 124 taxmann.com 202 (SC)/[2021] 277 Taxman 594 (SC) [15-12-2020] held as under -
"Section 68 of the Income-tax Act, 1961 Cash credit (Burden of proof) - Assessing Officer made certain addition owing to unaccounted cash receipts on ground that assessee failed to establish identity and creditworthiness of creditors from whom he had received a huge amount of Rs. 8.49 crores On appeal, Tribunal accepted assessee's explanation that said amount was transferred into its bank account from out of bank accounts of his brother-in- law and a close friend and, further, that said creditors confirmed to have made payment to assessee On basis of above, Tribunal held that identity of source was thus established and requirement of section 68 was proved beyond any doubt by assessee and, therefore, addition made by Assessing Officer was not sustainable High Court by impugned order held that since Tribunal ignored vital facts emanating from record that said creditors had not produced evidence to establish their capacity to raise such a huge amount and also that they were not clear about their precise role in transaction involving said amount, its order was to be set aside - It further held that creditors admitting that they had made payments to assessee was not sufficient to discharge burden placed on assessee by section 68 Whether special leave petition filed against impugned order was to be dismissed - Held, yes [Para 1] [In favour of revenue]"
As held by the Hon'ble Supreme Court of India, in this case also the persons have not produced evidence to establish their capacity to raise such a huge amount to make payment to the appellant. The persons admitting that they had made payments to the appellant was not sufficient to discharge burden placed on him by section 68. The appellant has provided copy of bank statement of Sh. Manoharlal Anjana and Sh. Chandresh Anjana (page 2-4 of the rejoinder reply). It is to be noted that this is primary evidence to prove genuineness of transaction which was not furnished by the appellant before the AO during assessment proceedings and also during remand proceedings. This is furnished in the rejoinder reply to the remand report. The purpose of I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 16 not submitting during the assessment proceedings and remand proceedings is evident. The appellant wanted to hide the detection of layering of cash deposits. On analyzing the bank statement of provided by the appellant in the rejoinder reply, it is seen that the fund is not available in the bank account of these persons (Udailal Bherulal Anjana Prop. Sh. Manoharlal Anjana and Sh. Chandresh Anjana). The fund is actually received by transfer from some other accounts in the account of these persons. The modus operandi as discussed above and as unearthed during the search is proved to be correct on verification of these accounts. In case of Udailal Bherulal Anjana Prop. Sh. Manoharlal Anjana the balance of Rs. 8,746/- was there before the transfer entries and after completion of the transaction of Rs. 3,00,00,000/- the balance of Rs. 8,746/- remains. Similarly in case of Chandresh Anjana the balance of Rs. 1880/- was there before the transfer entries and after completion of the transaction of Rs. 5,00,000/- the balance of Rs. 1880/- remains. It is also noticed that there is huge cash deposits in the bank account of Mr. Chandresh Anjana and the same is transferred to U. B. Investment almost immediately. This finding supports the modus operandi as unearthed by the Department that various accounts have been used to deposit cash which was later on transferred to beneficiaries of the group by layering. The analysis of the bank account entries of Udailal Bherulal Anjana Prop. Sh. Manoharlal Anjana and Sh. Chandresh Anjana clearly proves following-
1. The creditworthiness of these persons is not proved as these persons failed to establish that they were having capacity to make payment to the appellant in such a huge amount. Without establishing creditworthiness the credit entry in the accounts of the appellant remain unexplained.
2. The transfer entry in the bank account of these persons immediately before the payment made to the appellant is not disclosed. If the ultimate source of this money is disclosed by the appellant then it will be cash deposited in some account as per the modus operandi used by the group which is unearthed during search and after search and seizure action.
3. The facts of the case are in accordance with the modus operandi used by the group to introduce cash into bank accounts by layering in one account to another account to hide cash deposit.
The claim of the appellant that the source advance made to UB investment are repayment of outstanding loan from Chandrash Anjana and Manohar Lal Anjana is not found acceptable because the appellant was not having capacity to advance such a huge money to these persons. The appellant has not proved the ultimate source of money advanced by him because the disclosed income in his return of Income was not sufficient to advance such huge money. The AO has correctly noted that the appellant has not established source of such loan advanced by him, purpose of loan, rate at which loan was advanced. Therefore, the claim of the appellant that this money was in fact repayment of earlier loan is found to be not acceptable.
Without prejudice to the above, it is of no consequence that the money received was repayment of earlier loan or fresh loan taken by the appellant. The appellant has to establish creditworthiness of these persons. The I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 17 appellant has failed to establish their capacity to provide such an huge amount to the appellant. Since, the appellant has not submitted evidence to prove their creditworthiness, the addition made by the AO is found to be justified.
In the light of above discussion when the statement of Shri Gyan Chand Chordiya S/o Shri Punam Chand Chordiya recorded u/s 132(4) dated 17.09.2016 to 20.09.2016 is analysed. In answer to Question No. 25, Shri Gyan Chand Chordiya stated that in lieu of cash third party Cheques amounting to Rs.1.50 Crore approx. were given and cash was received through employee of M/s. U. B. Investment - Shri Jagdish Agrawal, then residing at HUDCO Colony, Neemuch (M.P.). The statement supports the modus operandi unearthed by the department. It is of no consequence that Shri Jagdish Agrawal is employee of M/s U. B. Investment or not. What is proved by the statement that he in lieu of cash third party Cheques amounting to Rs. 1.50 Crore approx. were given and cash was received by him.
The argument of the appellant that Statement of Shri Ravi Mittal and Shri Atul Jain is also not applicable on him as neither the name of appellant is stated by them nor Parchi in the name of appellant was issued in token of receipt of cash found is not found acceptable. The statement of these persons supports the modus operandi unearthed by the department. The AO has not alleged that these persons have alleged the appellant. When modus operandi is discovered by the department, heavy burden is casted upon the appellant to prove that the transactions undertaken by him are not in accordance with the modus operandi unearthed by the department. The appellant, however, has miserably failed to discharge the burden. The facts of this case are in accordance with the modus operandi unearthed by the department and the appellant.
The appellant's argument that income is not relevant but cash flow of assessee is relevant is not found to be acceptable as this only establishes that the transaction is done through banking channel. As held by the Hon'ble Supreme Court of India, in this case of Sadiq Sheikh v. Commissioner of Income Tax, Bangalore supra the persons have not produced evidence to establish their capacity to raise such a huge amount to make payment to the appellant. The persons admitting that they had made payments to the appellant was not sufficient to discharge burden placed on him by section 68.
In view of the above discussion, it is held that the appellant failed to prove creditworthiness of these two persons from whom an amount of Rs. 3,05,00,000/- was received by him. Therefore, this amount of addition made by the AO is confirmed u/s 68 of the Income Tax Act. For the remaining amount of Rs. 2,40,000/- the appellant has provided explanation that this amount id advanced out of Income Tax refund received. No adverse findings given by the AO with regard to this claim. Hence, the addition made by the AO is restricted to Rs. 3,05,00,000/- in place of Rs. 3,07,40,000/-.
This ground of appeal is treated as partly allowed." Finding of ld. CIT(A) on investment done in property I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 18 7.6 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:-
The AO noted in the assessment order that there is seized document in the form of sale agreement dated 15.11.2011 for Rs. 15,00,000/-. On the perusal of balance sheet of the appellant, it is also noticed that this transaction is not reflected. The appellant was asked to explain the seized materials and a specific query was asked vide notice u/s. 142(1) dated 23.07.2013 as query No. 18 to explain the same. But the appellant failed to submit any satisfactory reply.
Per contra the appellant stated that the A.O. failed to take into consideration the para 4 of written submission of August 2018 wherein fact has been brought to the notice that no such agreement was executed at all.
From the reply of the appellant it is evident that the appellant has not explained reason of the possession of this document by him. The AO has correctly noted that onus is on the appellant to prove with supporting evidence that something does not belongs to him The AO referred section 132(4A) of the IT Act, 1961 wherein to it is stated that "where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person"
According to AO, the appellant has failed to substantiate with documentary evidence that the impugned loose paper at S.No.39 of Exhibit-1 of Annexure-A not does belongs to him.
The AO also stated that vide letter dated 04.01.2023, the appellant was given an opportunity to produce the person involved in the property transaction before the AO but the appellant failed to do so.
I find that the appellant has not disclosed reason of possession of this document with him. In the absence of this explanation, the AO was correct in assuming that there is investment by the appellant in this property.
The section 42 of the Rajasthan Tenancy Act, 1955 reads as under - "General restrictions on sale, gift and bequest - The sale, gift or bequest by a Khatedar tenants of his interest in the whole or part of his holding shall be void, if such sale, gift or bequest is by a number of Scheduled Caste in favour of a person who is not a member of the Scheduled Caste, or by a member of a Scheduled Tribe in favour of a person who in not a member of the Scheduled Tribe."
To overcome this difficulty, instances have been noticed where the land is acquired by people who are not scheduled tribe in the name of their confide who is belonging to scheduled tribe. It is seen in the document also both parties involved are belonging to scheduled tribe. When the AO asked the appellant to produce the person involved in the property transaction the appellant failed to do so. If the appellant would have produced the persons involved in the transaction, the investment would have been proved to be of I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 19 the appellant. Therefore, the appellant did not produce these persons before the AO. Not producing these persons before the AO and not explaining the reason of possession of these documents by the AO raises a strong presumption against the appellant. The appellant was found with possession of the document, therefore, onus was on the appellant to explain this paper and produce the person named in the document before the AO for examination. The appellant failed to discharge the onus casted upon him.
The appellant relied upon some decisions to state that on the basis of dumb documents no addition is called for. The decisions are not applicable on the facts of the case because the document is proved to be sale agreement where transaction of Rs. 15 lakhs is recorded. It cannot be treated as dumb document. The Appellant has not discharged the initial onus of proving that the document and the investment mentioned in the document belongs to others, therefore, the AO was correct in holding that section 132(4A) empower an Assessing Officer to presume that anything that is found in searched premises belongs to the occupant of such premises.
The appellant argued that this power to presume is not absolute in hands of the Assessing Officer, in that the presumption is rebuttable. It is seen that the appellant is not successful in rebutting the presumption.
The appellant has relied upon the decision dated 15.11.2006 of Supreme Court in the matter of P. R. Metrani Vs. CIT in Appeal (Civil) No. 5673-5675 of 2002. In this order Hon'ble Apex Court held that it may be clarified that though presumption under Section 132(4A) is not available to authorities while framing the regular assessment but the material seized can be used as a piece of evidence in any other proceedings under the Act, all contentions are left open. In view of the findings of the Apex Court the seized document can be used as piece of evidence found during search which is not explained by the appellant.
The appellant argued that provisions of Clause (ii) of Sub-section (1) of Section 292C are applicable on the assessee and accordingly purchase/sale of impugned property mentioned in above Loose Papers was not belonging to appellant. There is no dispute over the fact that the contents of such books of account and other documents are presumed to be true. However, in such cases surrounding circumstances and human probabilities also need to be seen. When the document is analysed in the surrounding circumstances and human probabilities, the real facts can be inferred. The appellant is found with possession of a document of transaction of property. The name of the appellant is not there on the document. But in such circumstances, the reason of possession of this document needs to be analysed. If the appellant has nothing to do with the property mentioned in the document, there was no reason of having possession of this document by the appellant. Further, as discussed in the foregoing paragraphs, the failure on the part of the appellant to produce the persons named in the document before the AO supports the view of the AO that the investment in the property is made by the appellant.
It is well settled principle of law as declared by the Hon'ble Supreme Court in the case of Sumati Dayal Vs. CIT (214 ITR 801) (SC) that the true nature of transaction have to be ascertained in the light of surrounding circumstances. It needs to be emphasized that standard of proof beyond I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 20 reasonable doubt has no applicability in determination of matters under taxing statutes. In the present case, it is clear that apparent is not the real as evidenced from the conclusions drawn by the AO. Further, the Hon'ble Supreme Court, in the case of Chuhar Mal Vs CIT (1988) 172 ITR 250, highlighted the fact that the principle of evidence law are not to be ignored by the authorities, but at the same time, human probability has to be the guiding principle, since the AO is not fettered, by technical rules evidence, as held by the Hon'ble Supreme Court in the case of Dhakeshwari Cotton Mills v CIT (1954) 261 TR 775. The Hon'ble Supreme Court, in the case of Chuhar Mel VC (supra) held that what was meant by saying that evidence Act did not apply to the proceedings under Income-tax Act, 1961, was that the rigors of Rules of evidence, contained in the Evidence Act was not applicable; but that did not mean that when the taxing authorities were desirous of invoking the principles of Evidence Act, in proceedings before them, they were prevented from doing so. It was further held by the Hon'ble Apex Court that all that Section 110 of the Evidence Act, 1872 did, was 'to embody a salutary principle of common law, jurisprudence viz, where a person was found in possessing of anything, the onus of proving that he was not its owner, was on that person. Thus, this principle could be attracted to a set of circumstances that satisfies its conditions and was applicable to taxing proceedings.
Therefore, following the above judicial principles, the addition made by the AO is found to be justified and upheld.
This ground of appeal is treated as dismissed."
6. Since, the assessee aggrieved from the finding of the ld. CIT(A) on the grounds as reiterated here in above in para 3. Apropos to the various grounds so raised by the assessee, the assessee has filed the written submissions in support of the various grounds so raised by the assessee and the same is reproduced here in below :
I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 21 I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 22 In addition, the ld. AR of the assessee submitted that in the original return of income filed by the assessee, No notice u/s 143(2) or u/s 148 was issued on the said return. Therefore, the assessment on the original return of income filed under section 139(1) was not pending as on the date of search under section 132 conducted on 16-09-2016. As per the provisions of section 153A of the Act, the AO is empowered to assess or reassess the total income of all the six years which means that there can be only one assessment order in respect of each of the six assessment years in which both disclosed and undisclosed income would be brought to tax. If there is no undisclosed income for any of the assessment year out of the six assessment years in question, then the AO has to complete the assessment or reassessment on the total income as assessed under section 143(1) or 143(3) of the IT Act or as returned by I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 23 the assessee u/s 153A. In support of this view he has relied upon the decision of the Supreme Court's judgment in the case of Pr.CIT (Central-3) v/s Abhisar Buildwell Pvt. Ltd. Without prejudice the ld. AR of the assessee submitted that the addition made are of the transaction already reflected in the books of account. As regards the loan transaction the assessee has given the details of the source of the source and therefore, the addition based without any corroborative evidence cannot be made in the hands of the assessee. The nature of addition made by the ld. AO is summarised as under :
Asstt Nature of addition/ Amount of addition Decision of the ld. CIT(A) Order disallowance Para No 5 Unaccounted receipt 521700 Deleted by the ld. CIT(A) 6 Amount advanced to M/s U B 30740000 Sustained by the ld. CIT(A) Investment 7 Unexplained property 1500000 Sustained by the ld. CIT(A) transaction Total 32761700 6.1 As regards merits and the addition made in the assessment order for which the addition sustained and the addition of Rs. 3,07,40,000/-
was made for the funds advanced to M/s U B Investment Prop Sh. Vikram Anjana for the reason that the assessee made cash deposit in the bank account just prior to remitting funds through Cheque/ RTGS/normal banking channels etc. on this the ld. AR of the assessee relied upon the para 5.3, 5.3.1 of the order of settlement interim board board for settlement - VII, Chennai ;
I.T.A. Nos. 304 to 309/Jodh/2023
Assessment Year: 2012-13 to 2017-18 24
5.3 The applicant, Shri Vikram Anjana, stated that aforesaid assertion of
PCIT is devoid of any merit and is not supported by any evidence. The applicant has placed financial analysis from the books of M/s Chetak Enterprises Ltd which indicate that neither the share capital of M/s Chetak Enterprises Ltd. nor M/s Chetak Enterprises Ltd. received unsecured loans from directors or other shareholders or their family members of magnitude for which addition is proposed. Issued share capital remained at Rs 16.50 Crores in all assessment years and unsecured loans never crossed the amount of Rs.3,46,73,800/- thereafter. income reported by the Directors of M/s Chetak Enterprises Ltd is sufficient to explain funds lent by them to M/s. Chetak Enterprises Ltd. No unaccounted assets/ investments were found in the course of search and, therefore, there is no seizure of assets, cash etc. in the case of M/s. Chetak Enterprises Ltd. Total turnover/ receipts of the applicant translates to Rs.34,87,97,45,426/-. Against this, M/s. Chetak Enterprises Ltd. offered additional income of Rs.13,59,55,453/-.
5.3.1 As regards the PCIT's contention regarding alleged introduction of unaccounted money in the books of M/s U B Investment, if the assertions of PCIT in Rule 9 report are accepted then also no income is liable to be taxed in the hands of Shri Vikram Anjana, Prop. M/s U.B. Investment because by referring to the statements of Shri Gyan Chand Chordia, Shri Atul Jain, Shri Lalit Kumar Garg, Shri Dinesh Kumar Kumani and bank statement of Shri Kamal Anjana, it is alleged that the applicant has obtained accommodation entry and at the same time given accommodation entry to Shri Damberlal and Shri Habib Khan Mansoori to whom advances have been given. Therefore, irrespective of whether applicant receives or makes payment, such transactions have been deemed to be accommodative in nature then only margin retained by the applicant i.e. interest incomes disclosed alone is assessable and no other amounts could be assessed in his hands including u/s 68. In the case of applicant, except making allegations based on unsubstantiated statements of third parties, nothing adverse against the applicants has been brought on record. As per case laws, no addition u/s 68 is permissible on suspicion.
Thus, based on these finding of the revenue there is no point in making the addition of the transaction which are already recorded in the books of account. Merely the cash deposit cannot be a sole reason to add the unsecured loans duly reflected in the books of account. The ld. AR of the assessee also relied upon the rule 9 report of the revenue before the Interim Board for settlement wherein also the income is proposed in the I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 25 hands of the Shri Vikram Anjana. Without prejudice the assessee has submitted all the transaction are duly reflected in the books of accounts and there is no incriminating material on this aspect of the matter and therefore, addition made is required to be deleted even on merits. As regards the addition of Rs. 15,00,000/- on account of unexplained property transaction on the basis of sale agreement dt. 15-11-2011 seized by Panchnama, Annexure- A in Exhibit-1 at page 39 which do not bear the name of the assessee. The document found is on account of the fact that the broker comes to the assessee for proposal for selling the property and ultimately the assessee has not purchased the said property and on this aspect of the matter there is no incriminating material found. There is no enquiry made by the ld. AO on factual aspect of the property transaction, there is no name of assessee, and therefore, the addition cannot be made in the hands of the assessee.
7. Per contra the ld. DR representing the revenue relied upon the finding recorded in the orders of the ld. AO as well as of the ld. CIT(A). As regards the property transaction the addition made because the loose paper found in possession of the assessee. The ld. CIT(A) has given the detailed finding on this issue at para 7.6 of his order. In respect of the addition made on account of loan transaction he has I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 26 supported the finding of the ld. CIT(A) that income is not relevant but cash flow of the assessee is relevant is not found be acceptable as this is only establishes that the transaction is done through banking channel but so far as the credit worthiness of the advancing the loan is not proved.
8. We have heard both the parties and perused the materials available on record and also gone through the judicial precedent cited by both the parties to drive home to their respective contentions. The assessee vide ground no. 1 to 3 challenged the validity of the assessment and thereby the addition made based on the fact that the re-assessment of income of the assessee under section 153A by placing reliance on third party statements, without any incriminating material found in the course of search action on the assessee and on account of denial of cross examination. The bench noted that in compliance to notice under section 153A of the IT Act, the assessee submitted e-return of income on 26-04-2017 declaring total income of Rs. 55,70,519/- against income returned u/s 139 on 26-09-2012 of Rs. 27,99,169/-. As regards the additional income of Rs. 27,71,355/- disclosed by the assessee the ld. AR of the assessee vehemently argued that the same is not on account of any incriminating material qua assessee found in I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 27 the course of search but solely on the basis the of admission made in statement recorded u/s 132(4) of the Act. Therefore, disclosure of additional income is voluntary and is without any support of the material in the nature of incriminating. Breakup of additional income disclosed in return furnished u/s 153A is as under :
Investment in property 625953
Interest income on FDRs found during search held 45402
by family members
Construction of house 1500000
Marriage of daughter 600000
Total in rupees 2771355
8.1 We note from the statement of assessee recorded u/s 132(4) [Pages 162-163 of assessee's paper book herein after APB] wherein assessee admitted investment in construction of house of Rs. 25,00,000/- in reply to Q. No. 9 and marriage expenses of Rs. 6,00,000/- in reply to Q. No. 10. The said admission was made without any incriminating material noticed or seized during search. Assessee also stated in reply to Q. No. 5 that family members except him have held fixed deposits with Bundi Chittorgarh Kshtriya Gramin Bank at Kesunda but at no stage stated that such investments were made by the assessee warranting taxation of interest income on the said FDRs in the hands of assessee or income corresponding to such FDRs was to be I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 28 taxed in his hands. Assessee offered interest income on such FDRs voluntarily. Neither admission of any unaccounted investment in property was admitted nor were any property documents corresponding to such additional income found and seized in the course of search. Therefore, disclosure of additional income in return u/s 153A was voluntary and without any incriminating material. It was contended that statement recorded u/s 132(4) per se is not incriminating unless supported with independent corroborative evidence noticed in the course of search to support such statement ld. AR of the assessee submitted that vide Para 5.6 at page 29 of the order of the ld. CIT(A) whereby ld. CIT(A) deleted the addition of Rs. 5,21,700/- made by the ld. AO for alleged unaccounted income after appreciating that said income was duly recorded in the books. Similarly, the addition of Rs. 3,07,40,000/- made by the ld. AO which is not based on any incriminating material noticed in search but is merely based on the adverse inference drawn by the search party qua activities of M/s U B Investment Prop Shri Vikram Anjana to whom assessee advanced funds during the year. The ld. AR drew our attention to Para 6 of the assessment order wherein there is no reference of any incriminating material based on which said addition has been made by the ld. AO. It is contented that all the transactions entered with M/s U B Investment are I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 29 duly recorded in the books of accounts which are audited u/s 44AB of the Act. Reference was made to Page 26 of PB wherein closing balance as on 31-03-2012 is appearing in Schedule 09 at Rs. 1,90,22,122/-. It was further contended that transactions recorded in the books per se are not incriminating or could not be suspected as held by Hon'ble Delhi High Court in PCIT vs Param Dairy Ltd in ITA No. 37/2021 dated 15-02- 2021 [reported at 439 ITR 0089 (Del)], copy placed at pages 400-401 of CPB [ case law compilation "CPB"] and the relevant part relied is Para 5 of the judgment which is reproduced herein below:
"5. We have considered the aforesaid contentions and are of the view that no substantial question of law arises, as the matter is squarely covered by Kabul Chawla supra, which has been correctly applied to the facts of the case by the ITAT. The ITAT, in the impugned order has held that in the audited report filed by the assessee along with the report, cash book, ledger, bank book etc. were mentioned; that the respondent assessee was maintaining books on TALLY Accounting Software which was seized during the search and was being treated as incriminating material; however, regular books of account of the assessee, by no stretch of imagination, could be treated as incriminating material to form basis of framing assessment under Section 153A read with Section 143(3) of the Act. It was further held that assessment for the assessment years 2008-2009 and 2009-2010 were completed under Section 143(3) vide orders dated 28th July, 2010 and 31-5- 2011 respectively and audited books of account were thoroughly examined and details of purchase of milk must have been scrutinized as it was part of audited financial statement of accounts; as per Kabul Chawla supra, completed assessments can be interfered only on the basis of some incriminating material unearth during the search. With respect to the assessment years 2010-2011 to 2012-2013, the ITAT held that though no assessment was framed under Section 143(3) but it could safely be concluded that the period of limitation for issuing a notice under Section 143(2) expired much before the date of the search; reliance was placed on Chintels India Ltd. v. Deputy Commissioner of Income-Tax (2017) 397 ITR 416 (Delhi) : 2017 TaxPub(DT) 1916 (Del-HC) holding that once an assessee does not receive a notice under Section 143(2) of the Act within the stipulated period, such an assessee can take it that the return filed by him has become I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 30 final and no scrutiny proceeding are to be undertaken with respect to that return."
8.2 Similar view is taken by Co-ordinate Mumbai Bench in the case of Micro Ankur Developers in ITA No. 1046-1050/Mum/2019 dtd 02-09- 2022 and Jaipur bench in the case of M/s Kota Dall Mill in ITA No. 997 to 1002/JP/2018 vide order dated 31-12-2018. As argued by the ld. AR of the assessee that the ld. AO made addition without referring any provisions of the Act and under which circumstance addition of Rs. 3,07,40,000/- could be made. Considering the provision of section 69, 69A or 69B of the Act no addition in the case of assessee is permissible of the advances which are duly reflected in the books of account and the source of which is not doubted. The addition in the case of assessee is made without any adverse evidence unearthed during the course of search or during post search investigations against the assessee. Even bank statements referred to in the assessment do not pertain to the year under consideration. No questions of any nature were put to the assessee at the time of recording of statement u/s 132(4) qua additions made in the assessment order which is evident from the copy of statement placed in the paper book. To support this view that ld. AR relied upon the judgement of Hon'ble Andhra Pradesh High Court in the case of CIT vs Naresh Kumar Agarwal 369 ITR 171 (AP) [copy of placed I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 31 at CPB page 146-151 ] wherein it has been held that the recording of statement even during the search is not a matter of course. It is only when the material such as, books of account, document, buillion, jewellery, and the like are found or discovered during the search, that the statement can be recorded. If the search did not lead to the discovery of any material, referred to above, there would not be any occasion to record the statement at all. The relevant finding of High court is reproduced for the sake of brevity :
24. This Court in CIT v. Ramdas Motor Transport [1999] 238 ITR 177/102 Taxman 300 (AP) dealt with the question and held as under: A plain reading of sub-section (4) shows that the authorised officer during the course of raid is empowered to examine any person if he is found to be in possession or control of any undisclosed books of account, documents, money or other valuable articles or things, elicit information from such person with regard to such account books or money which are in his possession and can record a statement to that effect. Under this provision, such statements can be used in evidence in any subsequent proceeding initiated against such person under the Act. Thus, the question of examining any person by the authorised officer arises only when he found such person to be in possession of any undisclosed money or books of account. But, in this case, it is admitted by the Revenue that on the dates of search, the Department was not able to find any unaccounted money, unaccounted bullion nor any other valuable articles or things, nor any unaccounted documents nor any other valuable articles or things, nor any unaccounted documents nor any such incriminating material either from the premises of the company or from the residential houses of the managing director and other directors. In such a case, when the managing director or any other persons were found to be not in possession of any incriminating material, the question of examining them by the authorised officer during the course of search and recording any statement from them by invoking the powers under section132(4) of the Act, does not arise. Therefore, the statement of the managing director of the assessee, recorded patently under Section 132(4) of the Act, does not have any evidentiary value. This provision embedded in sub-section (4) is obviously based on the well established rule of evidence that mere confessional statement without there being any documentary proof shall not be used in evidence against the person who made such statement. The finding of the Tribunal was based on the above well settled principle.
I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 32
25. Learned counsel for the appellant is not able to point out any differentiating factors. The precedent covers the facts of the present case.
26. Viewed from any angle, we do not find any basis to interfere with the order under appeal. Hence, the appeal is dismissed. There shall be no order as to costs.
Thus, it is only when the material such as, books of account, documents, money, bullion, jewellery, and the like are found or discovered during search, that the statement can be recorded. If the search did not lead to the discovery of any matters, referred to above, there would not be any occasion to record the statement at all. Further reliance has also been placed on Hon'ble Delhi High Court judgment in the case of CIT vs Harjeev Aggarwal [2016] 70 taxmann.com 95 (Delhi) and PCIT vs Best Infrastructure (India) (P) Ltd [2017] 397 ITR 82 (Delhi) wherein it has been held that statements recorded u/s 132(4) of the Act do not by themselves constitute incriminating material.
8.3 As regards the addition of Rs. 15,00,000/- made by the ld. AO u/s 69, the ld. AR of the assessee contended that this addition is made by the Assessing Officer without satisfying the conditions specified in section 69 of the Act. The impugned seized document do not relate to the assessee in any manner. He referred to the seized sale agreement appearing at Pages 236-237 of APB to indicate that sale agreement has been entered by Shri Dalu with Shri Mithilesh. Both the parties to the I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 33 agreement have no relationship with the assessee in any manner. Parties to the agreement are neither the family members nor the employees of the assessee. The Ld. AR of the assessee explained the circumstances in which said document was found in possession of the assessee during search. It has been contended that searched group makes regular investment in properties. Therefore, various persons and brokers approach assessee with property documents in respect of properties which are available for sale. Therefore, mere possession of unrelated document cannot make the assessee owner of the property or can be considered as investment in the property.
8.4 The assessee even sought cross examination of persons on the basis of which opinion was formed that M/s U B Investment is channelizing group's unaccounted money in the books through accommodation entry as unsecured loan. Similarly cross examination was sought of the persons referred in the sale agreement which do not relate to the assessee for the alleged addition of Rs. 15 lacs made by the ld, AO in the assessment order. Thus, the nature of addition made are not in the nature of having any incriminating nature found while search and seizure action evidencing undisclosed income of assessee qua assessment year under reference. As decided by various courts that I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 34 the ld. AO is not empowered to make any addition in the total income of the assessee with any reference of any incriminating material. It is a settled position of law that there cannot be a review under the garb of reassessment proceeding under section 153A of the Act. The provisions of section 153A cannot be applied in respect of assessment which has already been completed unless some incriminating material/information comes into the possession/knowledge of the ld. AO during search proceedings. Since the assessment was not pending for AY 2012-13 on the date of search and there being no incriminating material found or seized during the course of search, then the ld. AO was expected to re- assess the total income as returned by the assessee in the original return or such income as returned by the assessee in response to notice u/s 153A which includes additional income offered voluntarily but without any incriminating material. Though the ld. AO is legally bound to assess or reassess the total income of six years immediately preceding to the year of search, however, the assessments which are pending on the date of search gets abated and the assessments which were not pending on the date of search had attained the finality. Therefore, the addition over and above the assessed income cannot be made de hors the incriminating material found at the time of search while completing the assessment under section 153A of the Act. If there is no I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 35 incriminating material, then the original assessment made can be reiterated or assessment can be completed on a returned income u/s 153A and no further addition is called for otherwise addition can only be made on the basis of undisclosed income derived from material/documents seized as a result of search. In this case the nature of addition made is not based on any incriminating material found or seized during the course of search and seizure proceedings, thus, the additions made by the ld. AO during the course of reassessment under section 153A of the Act are without jurisdiction and liable to be deleted. In support of this contention, the ld. AR of the assessee has relied upon large number of decisions referred to at Page 4-19 of appellate order and also placed in Case Law compilation submitted in the course of hearing. He further submitted that the issue is finally settled in favour of the assessee by the judgment of Hon'ble Supreme Court in the case of PCIT vs Abhisar Buildwell (P) Ltd reported at 454 ITR 212 (SC) holding that-
"14 (iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved."
I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 36 8.5 The bench also noted from the submission of the ld. AR of the assessee that in the settlement order passed in the case of Shri Vikram Anjana prop of M/s U B Investment, copy of which has been placed with written submissions/ synopsis to demonstrate that no adverse inference has been drawn by ld. Interim Board for Settlement [ here in after IBS ] in his case while settling his settlement application u/s 245D(4) for AYs 2011-12 to 2017-18. In absence of acceptance of modus operandi referred to in the assessment order and the Ld. CIT(A) by Hon'ble IBS while settling the case of Shri Vikram Anjana Prop M/s U B Investment u/s 245D(4) and in absence of any evidence having surfaced during search and post search investigations, judgment of Hon'ble Calcutta High Court in the case of PCIT vs Swati Bajaj [2022] 139 taxmann.com 352 (Cal) also has no application as modus operandi claimed to have surfaced during search is not established by the AO and the Ld. CIT(A). Therefore, allegations levelled against the assessee and the searched group based on the third party statements has also not been found correct or adverse to the assessee and the searched group by the ld. IBS. Whereas on the other side the ld. DR vehemently argued that since assessee himself has disclosed additional income in the return of income based on statement u/s 132(4), there is no infirmity in the conclusions drawn by the ld. AO in the assessment order as well as by I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 37 ld. CIT(A) in the appellate order. The ld. DR requested to uphold the findings of the ld. CIT(A) and to dismiss the grounds of appeal taken by the assessee qua validity of additions made in assessment u/s 153A. 8.6 We have considered the rival submissions as well as the relevant material on record. Undisputedly, the assessment for the assessment years 2012-13 was not pending on the date of search i.e. on 16th September, 2016. Thus, the assessment for the assessment years 2012-13 was not got abated by virtue of search under section 132 on 16th September, 2016. It has been decided by various high court and now the apex court that the assessment or reassessment under section 153A in respect of the assessment years which have already been completed, the addition to the income can be made only on the basis of incriminating material. Additional income offered in return u/s 153A is without any incriminating material noticed or found in the course of search. This additional income has been disclosed on the basis of statement recorded u/s 132(4) recorded during search. In the case of M/s Kamla Landmarc Enterprises Vs DCIT & Others in ITA Nos. 1365 to 1371/Mum/2019 dated 24.03.2022, it has been held by the co-ordinate bench of Mumbai that the statement recorded u/s 132(4) of the Act alone did not constitute incriminating evidence to justify the additions I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 38 made in the unabated AYs, particularly when the statement was not recorded on the basis of any incriminating material found in the course of search. In the case of assessee, income of Rs. 5,21,700/- was already recorded in the books which has also been deleted by the ld. CIT(A). Similarly, advances of Rs. 3,07,40,000/- to M/s U B Investment were also duly recorded in the books of account and reported in tax audit report which was available with the AO. Further, during the course of search under section 132 of the Act on 16th September, 2016 no material much less incriminating material was either found or seized evidencing any undisclosed income on account of advances given by assessee to M/s U B Investment. The AO has made addition based on third party statements but without any corroboration with any adverse material against the assessee in as much as there is no cash deposit prior to giving advance to M/s U B Investment qua assessment year under reference. Reasons as to why statements of finance brokers have no bearing in the case of the assessee have been taken cognisance by the ld. IBS at Para 5.3.2 to 5.3.6 on Pages 36-39 of settlement order passed u/s 245D(4) and, thereafter, no adverse inference has been drawn in the case of Shri Vikram Anjana Prop M/s U B Investment at para 6.1 on page 6.8. Therefore, the addition made is not on the basis of any incriminating material noticed in the course of search action but I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 39 solely on the basis of unsubstantiated third-party statements leading to incorrect formation of belief that transactions of M/s U B Investment were in the nature of accommodation entries. There is no dispute that transactions entered by assessee with M/s U B Investment are duly recorded in the books of accounts and disclosed in the return of income originally furnished with reference to which assessment had already been completed and was not pending on the date of search. Therefore, it is obvious from the record that during the course of search and seizure under section 132 of the Act in the case of the assessee no material much less the incriminating material was unearthed or any undisclosed income was noticed which was not disclosed in the books of accounts or in the return of income. The only seized document which has been referred by the AO is page no. 39 of Exhibit-1 of Annexure-A which is a sale agreement dated 15-11-2011 which is also between unrelated parties having no nexus with the assessee. Name of the assessee is not appearing in the sale agreement. Assessee is neither a signatory to the agreement nor has witnessed the agreement. The AO has also not brought any material on record to demonstrate that assessee has any interest on the said property in any manner or that the consideration appearing therein was paid by the assessee. No inquiries of whatsoever nature were conducted by the AO either with the parties referred to in I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 40 the sale agreement or with the sub-registrar to verify as to whether the assessee acquired the property on a later date. Presumption u/s 132(4A) is against the assessee but is a rebuttable presumption. Even if such presumption is drawn against searched person, such presumption is rebuttable presumption as explained by the Hon'ble Supreme Court in P.R. Metrani vs CIT 287 ITR 209 (SC), wherein it was held that the presumption under section 132(4A) that the books of account, documents, money etc., found in the possession of any person subjected to search belonged to him is rebuttable. Such assets, etc., can be retained for the purpose of summary assessment to meet tax and penalty. The presumption does not extend to regular assessment. Section 132(4A) uses the words 'may be presumed' and it makes the presumption rebuttable. In holding so, the Supreme Court approved the decisions in Pushkar Narain Sarang v. CIT [1990] 183 ITR 388 (All.) and Daya Chand v. CIT [2001] 250 ITR 327 (Delhi). In CIT v. Ashok Kumar [2006] 286 ITR 541, it was presumed that the books of account seized during the search belonged to the assessee subjected to search. This presumption was rebutted by cogent evidence produced by the assessee. Thus, we note that once the assessee denies ownership of property or any interest in the seized sale agreement which do not bear the name of the assessee, it is the I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 41 obligation of the AO to bring contrary material on record to rebut the denial of the assessee. Hon'ble Punjab & Haryana High Court in the case of CIT vs. Jawaharlal Oswal (2016) 382 ITR 453 (P & H) has explained as to how the Assessing Officer should move on the basis of loose papers/documents found in the course of search or when the Assessing Officer suspects that based on seized documents there exists possibility of unaccounted or suppressed income which the assessee has failed to disclosed and is liable to be taxed. Hon'ble Court held as under:
"20. Before answering the questions posed, it would be appropriate to record that suspicion and doubt may be the starting point of an investigation but cannot, at the final stage of assessment, take the place of relevant facts, particularly where a deeming provision is sought to be invoked. The principle that governs a deeming provision is that the initial onus lies upon the revenue to raise a prima facie doubt on the basis of credible material. The onus, thereafter, shifts to the assessee to prove that the gift is genuine and if the assessee is unable to proffer a credible explanation, the Assessing Officer may legitimately raise an inference against the assessee. If, however, the assessee furnishes all relevant facts within his knowledge and offers a credible explanation, the onus reverts to the revenue to prove that these facts are not correct. The revenue cannot draw an inference based upon suspicion or doubt or perceptions of culpability or on the quantum of the amount, involved. Any ambiguity or any ifs and buts in the material collected by the Assessing Officer must necessarily be read in favour of the assessee, particularly when the question is one of taxation, under a deeming provision. Thus, neither suspicion/doubt, nor the quantum shall determine the exercise of jurisdiction by the Assessing Officer. The above exposition shall not be misconstrued to restrict the power of the revenue to raise an inference as to the efficacy of material produced by or before the Assessing Officer.
25. A question may, however, legitimately arise that such a large amount could not be given as a gift on the marriage of the assessee's daughter, but this question is speculative and cannot form the basis for raising an inference against an assessee. The Assessing Officer was apparently over-awed by the I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 42 amount of the gift and, therefore, proceeded to base his opinion on his perception that no one would gift such a large amount. A deeming provision requires the Assessing Officer to collect relevant facts and then confront the assessee, who is, thereafter, required to explain incriminating facts and in case he fails to proffer a credible information, the Assessing Officer may validly raise an inference of deemed income under section 69-A of the Act. As already held, If the assessee proffers an explanation and discloses all relevant facts within his knowledge, the onus reverts to the revenue to adduce evidence and only thereafter, may an inference be raised, based upon relevant facts, by invoking the deeming provisions of Section 69-A of the Act. It is true that inferences and presumptions are integral to an adjudicatory process but cannot by themselves be raised to the status of substantial evidence or evidence sufficient to raise an inference. A deeming provision, thus, enables the revenue to raise an inference against an assessee on the basis of tangible material and not on mere suspicion, conjectures or perceptions. It would also be necessary to reiterate that it is not perceptions but concrete facts that underline quasi-judicial determinations and where concrete facts are not available, relevant facts, as would raise a credible inference of culpability requiring an assessee to rebut the inference so raised. More often than not, revenue authorities, for want of relevant material, institute "inquisitions", as opposed to inquiries and by addressing questions that the more inculpatory in nature, seek to build their case, from answers proffered by an assessee. The findings of fact recorded by the CIT (A) and the Tribunal regarding the gift made by Dr. O.S. Gill are plausible, though debatable, do not call for interference. The first question of law is, thus, answered against the revenue as regards the gift made by Dr. O.S. Gill.
32. As regards the second question, the question having been answered while answering the first question, it is held that the Tribunal has rightly opined that the gift could not be treated as a deemed income of the assessee. Consequently, the substantial questions of law are answered against the revenue and the appeals are disposed of accordingly."
8.7 We also take note of the decision of the Hon'ble Karnataka High Court in the case of CIT vs Blue Lines reported at [2014] 50 taxmann.com 425 (Kar) wherein it has been held that in a case where seized material did not reflect name of assessee, revenue was not justified in drawing presumption under section 132(4A). Based on that I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 43 discussion we are of the considered view that merely that agreement on the face of it where the assessee is neither party or witness cannot be considered as incriminating in nature. We also find that on the facts and circumstances of the assessee's case qua assessment year under reference, request of the assessee to seek cross examination was justified. With reference to addition of Rs. 3,07,40,000/-, the ld. AO did not bring any material against the assessee and solely rested on the report of the search party who banked upon the third party statements which were without any corroborative material and behind the back of the assessee. Under such circumstances it was necessary for the assessee to demand cross examination to demonstrate that such statements were without any corroboration and that the assessee had no transactions either with such third parties or through them i.e. finance brokers. In fact, assessee in remand proceedings furnished affidavit of Shri Gyanchand Chordia affirming that assessee had no financial transactions with him or routed through him yet AO chose not to examine Shri Gyanchand Chordia and more particularly when no incriminating material qua assessee was found either in the course of search action on the assessee or Shri Vikram Anjana Prop of M/s U B Investment or Shri Gyan Chand Chordia. Further, cross examination of parties referred to in sale agreement was necessary to bring on record I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 44 that assessee had no dealings with them and also that the subject property was not acquired by the assessee. Shri Vikram Anjana had also not stated adversely in his statement recorded u/s 132(4) in the course of search. Thus, the assessee was deprived of cross examination and on the cross examination the land mark judgment of the apex court in the case of Andman Timber Industries v. CCE 2015 (3) STD 805 (SC) it has been held by Hon'ble Supreme Court that not allowing the assessee to cross examine the witness is a serious flaw, which makes the order nullity in as much as it violates the principle of natural justice. In the case of CIT v. Rajesh Kumar [2008] 306 ITR 27 (Delhi), it has been held by Hon'ble Delhi High Court that no addition could be made based on statements recorded behind back of the assessee, without providing any opportunity for cross-examination. Hon'ble Supreme Court in the case of C Vasantlal & Co vs CIT (1962) 45 ITR 206 (SC) held that-
" The Income-tax Officer is not bound by any technical rules of the law of evidence. It is open to him to collect materials to facilitate assessee even by private enquiry. But if he desires to use the material so collected, the assessee must be informed of the material and must be given an adequate opportunity of explaining it. Accordingly, denial of opportunity to cross- examine has been held to be clearly illegal and unsustainable apart from being violation of natural justice."
8.8 Further, Hon'ble Supreme Court in the case of CIT vs Sunita Dhadda [2018] 100 taxmann.com 526 (SC) dismissed SLP of Revenue I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 45 against the judgement of Hon'ble Rajasthan High Court in the case of CIT vs Smt Sunita Dhadda (2018) 100 taxmann.com 525 (Raj) wherein Hon'ble High Court upheld finding of the Tribunal that where Assessing Officer, while making addition on account of 'on money' claimed to be received by assessee on sale of land to a builder group, relied upon of statement of director of builder and did not allow assessee to cross examine said director, there being violation of principles of natural justice, impugned addition was to be deleted. Thus, when the assessee has specifically asked for cross examination of the witnesses whose statements were relied upon by the AO/Ld. CIT(A), then the denial of the opportunity to cross examine would certainly be in violation of principles of natural justice and consequently renders the assessment order based on such statement as not sustainable in law. 8.9 Thus, based on the discussion so recorded herein above, we are of the considered view that neither the ld. AO nor the ld. CIT (A) brought any material on record or referred any incriminating material evidencing any undisclosed income or undisclosed investments of assessee which can justify action of making addition u/s 153A on and above the income returned by the assessee. Thus, considering that non disputed factual aspect of the matter and respectfully following the judgement of the apex I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 46 court in the case of M/s. Ahishar Buildwell P. Ltd. (Supra), we are of the considered view that the assessment made u/s 153A for AY 2012-13 is not sustainable and is accordingly, quashed. Based on these observation ground no. 1 to 3 raised by the assessee is allowed.
9. Since we have considered the appeal of the assessee on technical ground, the other ground no. 4, 5 & 6 raised by the assessee which are on merits of the case becomes educative in nature and therefore, the same is not required to be adjudicated.
10. Based on these observations the appeal of the assessee in ITA no. 309/Jodh/2023 stands allowed.
11. Now we take up the appeal of the assessee in ITA No. 304/Jodh/2023 for A. Y. 2013-14. In this appeal the assessee has raised the following grounds :
1. The Ld. CIT(A) erred on facts and in law in upholding assessment order passed u/s 153A r.w.s. 143(3) of the Act making addition to the returned income without appreciating that assessment under reference was a completed assessment and there was no incriminating material found in the course of search qua assessment year under reference.
No addition ought to have made in absence of any incriminating material as held and affirmed by Hon'ble Supreme Court in PCIT vs Abhisar Buildwell P Ltd (2023) 454 ITR 212 (SC).
2. The Ld. CIT(A) erred on facts and in law in confirming advance given by appellant to M/s U B Investment Prop Shri Vikram Anjana based on third party statements without appreciating that statements per se are I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 47 not incriminating unless corroborated with documentary evidence.
3. The Ld. CIT (A) erred on facts and in law in not appreciating the notarized affidavit of Shri Gyanchand Jain alias Chordia submitted in the course of remand/ appellate proceedings.
4. The Ld. CIT(A) erred on facts and in law in not issuing summons to Shri Gyanchand Jain alias Chordia in relation to financial transactions with M/s U B Investment as well as to Shri Kanhaiya Lal S/o Bherulal with reference to the property in respect of which addition of Rs. 24,00,000/- has been confirmed, for cross examination.
5. The Ld. CIT(A) erred on facts and in law in making addition of Rs.
24,00,000/- in assessment u/s 153A without appreciating that the unsigned seized document was not seized from the appellant and therefore, no addition u/s 153A was permissible.
6. The Ld. CIT (A) erred on facts and in law in confirming addition of Rs.
50,00,000/- out of Rs. 54,55,000/- made in the assessment order being loans and advances given to M/s U B Investment Prop Shri Vikram Anjana from regular bank accounts and from the explained sources by treating the same to be unexplained based on irrelevant material/ considerations having no nexus with the appellant and on suspicion alone and without specifying the provision under which addition was made.
7. The Ld. CIT (A) erred on facts and in law in confirming addition of 10,78,277/- u/s 69 being turnover disclosed u/s 44AD in return of income furnished by appellant's daughter Kumari Surbhi Anjana without appreciating that neither the said amount is liable to taxed as income of the appellant nor the turnover is assessable as income but only the income component embodied in the turnover which has already been taxed in her hands substantively.
8. The Ld. CIT(A) erred on facts and in law in confirming addition of Rs.
1,00,000/- being additional income disclosed by appellant's daughter Kumari Surbhi Anjana to be as undisclosed income of the appellant.
9. The Ld. CIT(A) erred on facts and in law in confirming addition of Rs.
24,00,000/- on account of alleged undisclosed investment in property but without evidence of any investment made by the appellant or brining any evidence on record that the subject property belonged to the appellant.
12. In this appeal the bench noted that the assessee has filed his return of income for the assessment year 2013-14 on 29-09-2013. No notice u/s 143(2) or u/s 148 was issued on the said return. Therefore, the assessment on the original return of income filed under section I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 48 139(1) was not pending on the date of search under section 132 conducted on 16-09-2016. As per provisions of section 153A of the Act, the AO is empowered to assess or reassess the total income of all the six years which means that there can be only one assessment order in respect of each of the six assessment years in which both disclosed and undisclosed income would be brought to tax. If there is no undisclosed income for any of the assessment year out of the six assessment years in question, then the AO has to complete the assessment or reassessment on the total income as assessed under section 143(1) or 143(3) of the IT Act or as returned u/s 153A. While completing assessment u/s 153A, the AO made following additions and disallowances:
Asstt Nature of addition/ disallowance Amount
Order of
Para addition
No
4 Amount advanced to M/s U B Investment 5455000
5 Bogus turnover and receipt u/s 44AD disclosed 1078277
by daughter Miss Surbhi Anjana in her return
6 Additional income disclosed by Miss Surbhi 100000
Anjana in return u/s 153A
7 Unexplained money in property transaction 2400000
Total 9033277
13. In this appeal the bench noted that the facts, grievance, submission and arguments were similar to the case of the assessee in I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 49 ITA no. 309/Jodh/2023 in ground no. 1 to 3 and in that case we have decided the case of the assessee considering the decision of the apex court in the case of PCIT Vs. Abhisar Buildwell P. Ltd. [ 454 ITR 212]. In the light of these fact, it is not imperative to repeat the facts and various grounds raised by both the parties. Hence, the bench feels that the decision taken by us in ITA No. 309/Jodh/2023 for the Assessment Year 2012-13 shall apply mutatis mutandis in the case of the assessee in ITA No. 304/Jodh/2023 for the Assessment Year 2013-14 so far as the ground no. 1 to 3 raised by the assessee is concerned. Since, we have considered the appeal of the assessee on technical grounds the other ground no. 4 to 9 which are on merits become educative in nature and the same is not decided. Based on these observation the appeal of the assessee in ITA no. 304/Jodh/2023 for Assessment Year 2013-14 stands allowed.
14. Now we take up the appeal of the assessee in ITA No. 305/Jodh/2023 for A. Y. 2014-15. In this appeal the assessee has raised the following grounds:
1. The Ld. CIT(A) erred on facts and in law in upholding assessment order passed u/s 153A r.w.s. 143(3) of the Act making addition to the returned income without appreciating that assessment under reference was a completed assessment and there was no incriminating material found in the course of search qua assessment year under reference.
No addition ought to have made in absence of any incriminating I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 50 material as held and affirmed by Hon'ble Supreme Court in PCIT vs Abhisar Buildwell P Ltd (2023) 454 ITR 212 (SC).
2. The Ld. CIT(A) erred on facts and in law in confirming advance given by appellant to M/s U B Investment Prop Shri Vikram Anjana based on third party statements without appreciating that statements per se are not incriminating unless corroborated with documentary evidence.
3. The Ld. CIT (A) erred on facts and in law in not appreciating the notarized affidavit of Shri Gyanchand Jain alias Chordia submitted in the course of remand/ appellate proceedings.
4. The Ld. CIT(A) erred on facts and in law in not issuing summons to Shri Gyanchand Jain alias Chordia in relation to financial transactions with M/s U B Investment for cross examination.
5. The Ld. CIT (A) erred on facts and in law in confirming addition of Rs.
50,00,000/- being amount repaid by the appellant to M/s U B Investment Prop Shri Vikram Anjana against loan of Rs. 1,95,19,000/- obtained during the year based on unsubstantiated statements and irrelevant materials and without specifying the provision under which addition is made.
6. The Ld. CIT(A) erred on facts and in law in confirming addition of Rs.
1,95,50,000/- [including non existing receipt of Rs. 31,000/-] taken as loan from M/s U B Investment Prop Shri Vikram Anjana during the year based on unsubstantiated statements and irrelevant materials.
7. The Ld. CIT(A) erred on facts and in law in confirming disallowance of interest of Rs. 2,75,689/- paid to M/s U B Investment Prop. Shri Vikram Anjana during the year.
8. The Ld. CIT (A) erred on facts and in law in confirming addition of 15,67,344/- u/s 69 being turnover disclosed u/s 44AD in return of income furnished by appellant's daughter Kumari Surbhi Anjana without appreciating that neither the said amount is liable to taxed as income of the appellant nor the turnover is assessable as income but only the income component embodied in the turnover which has already been taxed in her hands substantively.
9. The Ld. CIT(A) erred on facts and in law in confirming addition of Rs.
65,000/- being additional income disclosed by appellant's daughter Kumari Surbhi Anjana to be as undisclosed income of the appellant.
15. In this appeal the bench noted that the assessee has filed his return of income for the assessment year 2014-15 on 15-11-2014. No notice u/s 143(2) or u/s 148 was issued on the said return. Therefore, the assessment on the original return of income filed under section 139(1) was not pending on the date of search under section 132 I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 51 conducted on 16-09-2016. As per provisions of section 153A of the Act, the AO is empowered to assess or reassess the total income of all the six years which means that there can be only one assessment order in respect of each of the six assessment years in which both disclosed and undisclosed income would be brought to tax. If there is no undisclosed income for any of the assessment year out of the six assessment years in question, then the AO has to complete the assessment or reassessment on the total income as assessed under section 143(1) or 143(3) of the IT Act. Year under consideration is an unabated assessment. While completing assessment u/s 153A, the AO made following additions and disallowances:
Asstt Nature of addition/ disallowance Amount
Order of
Para addition
No
4 Gift received on marriage of son 11000
6 Amount advanced/repaid to M/s U B Investment 5000000
7 Bogus turnover and receipt u/s 44AD disclosed by 1567344
daughter Miss Surbhi Anjana in her return
8 Unsecured loan received from M/s U B Investment 19550000
9 Disallowance of interest paid to M/s U B Investment 275689
10 Additional income disclosed by Miss Surbhi Anjana in 65000
return u/s 153A
11 Unexplained cash deposit 500000
Total 26969033
16. In this appeal the bench noted that the facts, grievance, submission and arguments were similar to the case of the assessee in I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 52 ITA no. 309/Jodh/2023 in ground no. 1 to 3 and in that case we have decided the case of the assessee considering the decision of the apex court in the case of PCIT Vs. Abhisar Buildwell P. Ltd. [ 454 ITR 212]. In the light of these fact, it is not imperative to repeat the facts and various grounds raised by both the parties. Hence, the bench feels that the decision taken by us in ITA No. 309/Jodh/2023 for the Assessment Year 2012-13 shall apply mutatis mutandis in the case of the assessee in ITA No. 305/Jodh/2023 for the Assessment Year 2014-15 so far as the ground no. 1 to 3 raised by the assessee is concerned. Since, we have considered the appeal of the assessee on technical grounds the other ground no. 4 to 9 which are on merits become educative in nature and the same is not decided. Based on this observation the appeal of the assessee in ITA no. 305/Jodh/2023 for Assessment Year 2014-15 stands allowed.
17. Now we take up the appeal of the assessee in ITA no. 306/Jodh/2023 for Assessment Year 2015-16. In this appeal the assessee has taken the following grounds of appeal:
1. The Ld. CIT(A) erred on facts and in law in upholding assessment order passed u/s 153A r.w.s. 143(3) of the Act making addition to the returned income without appreciating that assessment under reference was a completed assessment and there was no incriminating material found in the course of search qua assessment year under reference.
No addition ought to have made in absence of any incriminating I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 53 material as held and affirmed by Hon'ble Supreme Court in PCIT vs Abhisar Buildwell P Ltd (2023) 454 ITR 212 (SC).
2. The Ld. CIT(A) erred on facts and in law in confirming advance given by appellant to M/s U B Investment Prop Shri Vikram Anjana based on third party statements without appreciating that statements per se are not incriminating unless corroborated with documentary evidence.
3. The Ld. CIT (A) erred on facts and in law in not appreciating the notarized affidavit of Shri Gyanchand Jain alias Chordia submitted in the course of remand/ appellate proceedings.
4. The Ld. CIT(A) erred on facts and in law in not issuing summons to Shri Gyanchand Jain alias Chordia in relation to financial transactions with M/s U B Investment for cross examination.
5. The Ld. CIT(A) erred on facts and in law in confirming addition of Rs.
3,58,57,000/- taken as loan from M/s U B Investment Prop Shri Vikram Anjana during the year based on unsubstantiated statements and irrelevant materials.
6. The Ld. CIT(A) erred on facts and in law in confirming disallowance of interest of Rs. 44,40,803/- paid to M/s U B Investment Prop. Shri Vikram Anjana during the year.
7. The Ld. CIT (A) erred on facts and in law in confirming addition of 14,82,365/- u/s 69 being turnover disclosed u/s 44AD in return of income furnished by appellant's daughter Kumari Surbhi Anjana without appreciating that neither the said amount is liable to taxed as income of the appellant nor the turnover is assessable as income but only the income component embodied in the turnover which has already been taxed in her hands substantively.
8. The Ld. CIT(A) erred on facts and in law in confirming addition of Rs.
80,90,275/- on account of alleged bogus long term capital gain earned by appellant's daughter Kumari Surbhi Anjana without appreciating that the said capital gain has already been taxed substantively in her hands.
9. The Ld. CIT(A) erred on facts and in law in confirming addition of Rs.
2,59,466/- being interest income earned by appellant's daughter Kumari Surbhi Anjana without appreciating that the said interest income has already been taxed substantively in her hands.
18. The brief facts of the case is that the assessee has filed his return of income for the assessment year 2015-16 on 29-09-2015. No notice u/s 143(2) was issued on the said return. However, time to issue notice u/s 143(2) was not expired on the date of search action u/s 132 on 16- 09-2016. As per provisions of section 153A of the Act, the AO is I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 54 empowered to assess or reassess the total income of all the six years which means that there can be only one assessment order in respect of each of the six assessment years in which both disclosed and undisclosed income would be brought to tax. If there is no undisclosed income for any of the assessment year out of the six assessment years in question, then the AO has to complete the assessment or reassessment on the total income as assessed under section 143(1) or 143(3) of the I.T. Act. Since, time period to issue notice u/s 143(2) had not expired on the date of search it is a case of abated assessment. While completing assessment u/s 153A, the AO made following additions and disallowances:
Asstt Nature of addition/ disallowance Amount of Order addition Para No 5 Bogus turnover and receipt u/s 44AD disclosed by 1482365 daughter Miss Surbhi Anjana in her return 6 Amount advanced to M/s U B Investment by daughter 2250000 Ms Surbhi Anjana 7 Amount advanced to M/s U B Investment 5750000 8 Unsecured loan received from M/s U B Investment 35857000 9 Disallowance of interest paid to M/s U B Investment 4440803 10 Bogus long term capital gain earned by Ms Surbhi 8090275 Anjana 11 Interest income disclosed by daughter Ms Surbhi 259466 Anjana Total 58129909
19. Apropos to the ground no. 5 raised by the assessee the relevant facts emerges from the assessment order is that the assessee has I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 55 shown credit entries of unsecured loan amounting to Rs. 3,58,57,000/-. In the assessment proceeding the assessee has submitted unsigned ledger / confirmation of the party. Since, it is unsigned, the ld. AO noted that the assessee had not discharged his liability to prove genuineness of the transaction and creditworthiness of the person who had provided the loan. Therefore, the credit entry in the form of unsecured loans remains unexplained and the unsecured loan is treated as unexplained and was added back in the income of the assessee for an amount of 3,58,57,000/-.
20. In the first appeal the ld. CIT(A) has sustained the addition vide para 8.6 the relevant part of the order is reiterated herein below:
I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:-
The AO noted that during the course of Search and Seizure proceedings, and in the post search investigations, it was noticed that M/s U.B. Investment, a proprietorship concern of Sh. Vikram Anjana is receiving from and has also given huge loans to various persons and business entities related to Chetak Group. M/s U.B. Investment has received loan from the flagship concern of Chetak Group namely M/s Chetak Enterprises Ltd. M/s U.B. Investment has also shown to have received loan from various family members of Sh. Udai Lal Anjana key person of the Chetak Group and also from outside parties. During the course of search, it was also noticed that M/s U.B. Investment has received huge bogus loans from various persons of the group as well as from persons outside of the group. Total Unsecured Loans of Rs. 147,75,06,426/- are shown to have been provided by the family member(s)/related concern(s) of the Chetak Group to M/s U B Investment, Out of this amount of Rs. 16,89,48,426/- has been provided as loans by various Anjana family members but the loans advanced by them are not commensurate with their incomes as declared in the returns of income filed by them. As against huge loans shown to have been advanced I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 56 by above-referred persons, the income returned by them is not found to be adequate to advance such huge loans. Moreover, on perusal of the Bank statement of Shri Bharat Anjana, it is observed that there is Cash Deposit immediately followed by Cheque/Transfer/RTGS to M/s U B Investment for these cash deposit, no explanation was provided.
It is noted by the AO that during the year the appellant has shown credit entry amounting to Rs. 3,58,57,000/-. The appellant has not provided evidences to prove genuineness of transaction and creditworthiness of creditor. Also unsigned ledger were furnished by the appellant before the AO.
Therefore, the same is treated as undisclosed income of the assessee as the appellant has failed to substantiate the credit entry Rs 3,58,57,000/.
The AO has based his conclusions on the findings of Search and Seizure operation where modus operandi of taking and giving bogus loans by M/s U.B. Investment is unearthed with the help of evidences and statements recorded during the search. M/s U.B. Investment has also shown to have received loan from various family members of Sh. Udai Lal Anjana key person of the Chetak Group and also from outside parties. Total Unsecured Loans of Rs. 147,75,06,426/- are shown to have been provided by the family member(s)/related concern(s) of the Chetak Group to M/s U B Investment, Out of this. amount of Rs. 16,89,48,426/- has been provided as loans by various Anjana family members but the loans advanced by them are not commensurate with their incomes as declared in the returns of income filed by them.
Per contra the appellant stated that assessee has taken unsecured loan of Rs. 3,58,57,000/- on various dates from U. B. Investment. It was also stated that immediate source of money advanced was loan taken by U. B. Investment from various business concerns, repayment of loan or cash deposit in the bank account of U. B. Investment.
In the remand report the AO stated that the appellant has submitted that he has taken unsecured loans of Rs. 3,58,57,000/- from M/s U.B. Investment and on the other hand he has submitted in his reply that the modus operandi of advancing unsecured loan to M/s U.B. Investment was to earn interest income. The assessee has not submitted clear purpose of loan taken from M/s U.B. Investment. The AO considered the submission of the appellant as self contradictory. It is stated that it is established during the search proceedings and assessment proceedings that this group's unaccounted money was being channelised in the form of accommodation entry as unsecured loan.
The appellant stated that during remand proceedings copy acknowledgement of Return of Income of U. B. Investment is also filed. On perusal of acknowledgement of Return on page 224 of the rejoinder it is seen that the returned income of Sh. Vikram Anjana, Prop. Of U. B. Investment has shown total income of Rs. 15.50 Lakhs only. Therefore, the return of income furnished also do not establish creditworthiness of U. B. Investment. No evidence, therefore, furnished to establish creditworthiness of M/s U. B. Investment. Further, ultimate source of the money I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 57 received as credit entry is not provided. The appellant has only provided immediate source in the hands of U. B. Investment. From analysis of the immediate source it emerges that M/s U. B. Investment has either taken loan or repayment of loan or it was out of cash deposited in the bank accounts. All these transactions are in accordance of modus operandi unearthed by the department during the search operation conducted on the group.
I have considered the facts of the case, I find that the AO has established the simple modus operandi used by the group. The group used various bank accounts to deposit cash. Then this deposit is transferred from one account to another. By this layering of various accounts the amount is finally deposited in the account of various beneficiaries. These beneficiaries also act as layering of entry provider. The layering is done to hide detection of direct cash deposit in the bank account upto certain level. The transactions undertaken by the appellant needs to be seen in the light of this modus operandi which is unearthed during the search.
Hon'ble Supreme Court Of India in case of Sadiq Sheikh v. Commissioner of Income Tax, Bangalore [2021] 124 taxmann.com 202 (SC)/[2021] 277 Taxman 594 (SC)[15-12-2020] held as under -
"Section 68 of the Income-tax Act, 1961 - Cash credit (Burden of proof) - Assessing Officer made certain addition owing to unaccounted cash receipts on ground that assessee failed to establish identity and creditworthiness of creditors from whom he had received a huge amount of Rs. 8.49 crores - On appeal, Tribunal accepted assessee's explanation that said amount was transferred into its bank account from out of bank accounts of his brother-in-law and a close friend and, further, that said creditors confirmed to have made payment to assessee - On basis of above, Tribunal held that identity of source was thus established and requirement of section 68 was proved beyond any doubt by assessee and, therefore, addition made by Assessing Officer was not sustainable - High Court by impugned order held that since Tribunal ignored vital facts emanating from record that said creditors had not produced evidence to establish their capacity to raise such a huge amount and also that they were not clear about their precise role in transaction involving said amount, its order was to be set aside - It further held that creditors admitting that they had made payments to assessee was not sufficient to discharge burden placed on assessee by section 68
- Whether special leave petition filed against impugned order was to be dismissed - Held, yes [Para 1] [In favour of revenue]"
As held by the Hon'ble Supreme Court of India, in this case also the persons have not produced evidence to establish their capacity to raise such a huge amount to make payment to the appellant. The persons admitting that they had made payments to the appellant was not sufficient to discharge burden placed on him by section 68. The appellant has provided copy of bank statement of U. B. Investment ( page 272 to 277 of the rejoinder reply). On analyzing the bank statement of provided by the appellant in the rejoinder reply, it is seen that the fund is not available in the bank account of U. B. Investment. The fund is actually received by transfer from some I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 58 other accounts in the account of U. B. Investment. From analysis of the immediate source as submitted by the appellant it emerges that M/s U. B. Investment has either taken loan or repayment of loan or it was out of cash deposited in the bank accounts. The modus operandi as discussed above and as unearthed during the search is proved to be correct on verification of these accounts. This finding supports the modus operandi as unearthed by the Department that various accounts have been used to deposit cash which was later on transferred to beneficiaries of the group by layering. The analysis of the bank account entries of U. B. Investment clearly proves following-
1. The creditworthiness of U. B. Investment is not proved as U. B. Investment failed to establish that it was having capacity to make payment to the appellant in such a huge amount. Without establishing creditworthiness the credit entry in the accounts of the appellant remain unexplained.
2. The ultimate source of transfer entry in the bank account of U. B. Investment immediately before the payment made to the appellant is not disclosed. If the ultimate source of this money is disclosed by the appellant by removing all layerings then it will be cash deposited in some account as per the modus operandi used by the group which is unearthed during search and after search and seizure action.
3. The facts of the case are in accordance with the modus operandi used by the group to introduce cash into bank accounts by layering in one account to another account to hide cash deposit.
In the light of above discussion the statement of Shri Gyan Chand Chordiya S/o Shri Punam Chand Chordiya recorded u/s 132(4) dated 17.09.2016 to 20.09.2016 is analysed. In answer to Question No. 25, Shri Gyan Chand Chordiya stated that in lieu of cash third party Cheques amounting to Rs.1.50 Crore approx. were given and cash was received through employee of M/s. U. B. Investment - Shri Jagdish Agrawal, then residing at HUDCO Colony, Neemuch (M.P.). The statement supports the modus operandi unearthed by the department. It is of no consequence that Shri Jagdish Agrawal is employee of M/s U. B. Investment or not. What is proved by the statement that he in lieu of cash third party Cheques amounting to Rs.1.50 Crore approx. were given and cash was received by him. The affidavit furnished by the appellant from Shri Gyan Chand Chordiya stating that he never acted broker between appellant and U. B. Investment does not help the appellant as the AO never alleged that Shri Gyan Chand Chordiya acted as broker. The statement recorded during search only establishes that the modus operandi adopted by the group. In such a situation heavy burden lies on the appellant to prove genuineness of transaction and creditworthiness of persons from whom he has taken loans.
The appellant's argument that bank statement is provided to prove creditworthiness as this only establishes that the transaction is done through banking channel. As held by the hon'ble Supreme Court of India, in this case of Sadiq Sheikh v. Commissioner of Income Tax, Bangalore supra the persons have not produced evidence to establish their capacity to raise such a huge amount to make payment to I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 59 the appellant. The persons admitting that they had made payments to the appellant was not sufficient to discharge burden placed on him by section 68.
In view of the above discussion, it is held that the appellant failed to prove creditworthiness of M/s U. B. Investment from whom an amount of Rs. 3,58,57,000/- was received by him. Therefore, this amount of addition made by the AO is confirmed u/s 68 of the Income Tax Act.
This ground of appeal is treated as dismissed.
21. In support of the ground no. 5 raised by the assessee the ld. AR of the assessee submitted that the addition made by the Assessing Officer is impermissible under the provisions of the Act. Entire amount of advance given by M/s U B Investment is duly recorded in the books of accounts and disclosed in the audit report as well as return furnished u/s 139 of the Act. Case of the assessee does not fall in any of the provisions of section 68, 69, 69A and 69B of the Act. The ld. AR of the assessee further invited our attention to para 8.2 page 58 of the order of the ld. CIT(A) wherein entire source from which assessee advanced funds to M/s U B Investment was explained. Neither the ld. AO in remand proceedings nor the ld. CIT (A) disputed the source from which the funds were received by the assessee. It is further contended that the only reason for rejecting explanation and submissions of the assessee is report of search party wherein alleged modus operandi of obtaining and giving of accommodation entry in the case of M/s U B Investment was stated but which neither the search party nor the ld. AO during I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 60 assessment proceedings could establish and bring anything on record. The proprietor of M/s U B Investment i.e. Shri Vikram Anjana had approached Interim Board for settlement- VII, Chennai [ IBS ] for settlement of his case for AY 2011-12 to 2017-18 and ld. IBS vide order dated 30-11-2023 has settled the case of Shri Vikram Anjana Prop. M/s U B Investment without any addition or accepting the alleged modus operandi qua transactions entered by M/s U B Investment. Contentions put forth by the ld. PCIT as well as Shri Vikram Anjana in settlement proceedings as referred to in the settlement order passed u/s 245D(4) are reproduced herein below [extracted from Page 35-39 of order passed u/s 245D(4)] for the sake convenience to decide the issue on hand:
"5.3 The applicant, Sri Vikram Anjana, stated that aforesaid assertion of PCIT is devoid of any merit and is not supported by any evidence. The applicant has placed financial analysis from the books of M/s Chetak Enterprises Ltd which indicate that neither the share capital of M/s Chetak Enterprises Ltd. nor M/s Chetak Enterprises Ltd. received unsecured loans from directors or other shareholders or their family members of magnitude for which addition is proposed. Issued share capital remained at Rs 16.50 Crores in all assessment years and unsecured loans never crossed the amount of Rs.3,46,73,800/- thereafter, income reported by the Directors of M/s Chetak Enterprises Ltd is sufficient to explain funds lent by them to M/s. Chetak Enterprises Ltd. No unaccounted assets/ investments were found in the course of search and, therefore, there is no seizure of assets, cash etc. in the case of M/s. Chetak Enterprises Ltd. Total turnover/ receipts of the applicant translates to Rs.34,87,97,45,426/-. Against this, M/s Chetak Enterprises Ltd. offered additional income of Rs.13,59,55,453/-.
5.3.1 As regards the PCIT's contention regarding alleged introduction of unaccounted money in the books of M/s U B Investment, if the assertions of PCIT in Rule 9 report are accepted then also no income is liable to be taxed in the hands of Shri Vikram Anjana, Prop. M/s U B Investment because by I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 61 referring to the statements of Shri Gyan Chand Chordia, Shri Atul Jain, Shri Lalit Kumar Garg, Shri Dinesh Kumar Kumani and bank statements of Shri Kamal Anjana, it is alleged that the applicant has obtained accommodation entry and at the same time given accommodation entry to Shri Damberlal and Shri Habib Khan Mansoori to whom advances have been given. Therefore, irrespective of whether applicant receives or makes payment, such transactions have been deemed to be accommodative in nature then only margin retained by the applicant i.e. interest income disclosed alone is assessable and no other amounts could be assessed in his hands including u/s 68. In the case of applicant, except making allegations based on unsubstantiated statements of third parties, nothing adverse against the applicants has been brought on record. As per case laws, no addition u/s 68 is permissible on suspicion.
5.3.2 The applicant by referring statement of Shri Ghyanchand Chordia has demonstrated that the statement given by Shri Gyanchand Chordia cannot be used against the applicant in as much as he was unable to given any credible evidence against the applicant in the course of search. Oral statement given by him is not corroborated with any evidence implicating applicant in any manner. The statement given by Shri Gyanchand Chordia was patently incorrect and inconsistent. He claimed indulgence of Shri Jagdish Agarwal in providing accommodation entries to the extent of Rs. 1.50 Crores during A.Ys 2014-15 and 2015-16. At the end of the search, Shri Gyan Chand Chordia himself surrendered Rs. 1.50 Crore as his undisclosed income indicating that transactions entered by him with M/s U B Investment in the name of various lenders were his own transactions albeit in the name of third parties and he used bank accounts of several individuals for his own individual benefit. Amount received by the applicant from Shri Gyan Chand Chordia has to be held as genuine. Careful study of statement of Shri Lalit Kumar Garg referred to in Rule 9 report also indicates that he was conduit of Shri Gyan Chand Chordia who controlled his bank account and even kept his bank pass book with him. For the wrong doings of Shri Gyanchand Chordia, applicant cannot be implicated merely because he deposed against the applicant without any substantiation. It is submitted that third party statement without any corroborative evidence cannot be used against the applicant as pr law. During search also, the applicant stated that at no point of time, any cash was given by him to Shri Gyan Chand Chordia. All the deposits received in financial year 2013-14 got matured in financial year 2014-15. No deposit was received through him in F.Y. 2014-15 yet he claimed placement of deposits with M/s U B Investment during this period. Bank accounts and cheques of depositors were controlled by Shri Gyan Chand Chordia and not by the applicant. Had it been an accommodation entries, evidence for the movement of cash i.e. payment to obtain cheques and receipt on maturity of deposits would have certainly surfaced in the course of search considering the sizable number of depositors on the books of appellant. However, no such evidence was found despite search action not only took place at the business premises and residential premises of the applicant but also at the premises of finance brokers who were also subjected to simultaneous search u/s 132. It is I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 62 surprising that through at no place anything incriminating against the applicant was found yet it s alleged that applicant obtained accommodation entries from the unaccounted incomes of M/s Chetak Enterprises Ltd even though no such evidence has been found in search action in as much as there is NIL seizure of assets in the hands of M/c Chetak Enterprises Ltd and also in the case of applicant, Shri Vikram Anjana. In the case of applicant, applicant has not admitted he statements of finance brokers referred to in Rule-9 report right from the date of search till date. It is submitted that transactions recorded in the books are not incriminating. Therefore, presumption u/s 132(4A) and Section 292C needs to be held in favour of the applicant as to the correctness of books of accounts and transactions recorded therein on the date of search in absence of any incriminating material having been found in possession of applicant. ON the date of search, since all the deposits had already been repaid and since repayment has not been disputed which the applicant has made through account payee cheques/bank transfer or RTGS ad which were verified in proceedings u/s 245D(3).
5.3.3 As regards statement of Shri Atul Jain, he has not placed any material before the Authorised Officer to distinguish deposits routed through him to be genuine and non genuine. No markings were found in Sauda Bahi maintained by him. He claimed certain deposits to be genuine and certain to be non genuine based on information appearing in pen drive found with him. The PCIT failed to appreciate that majority of the parties referred to in the statement of Shri Atul Jain had already been examined in scrutiny assessments u/s 143(3) upto AY 2013-14 right from AY 2006-07 and in such proceedings additions with reference to some of the parties were made u/s
68. Therefore, no reliance on the statement of Shri Atul Jain could be placed to proceed against the applicant. M/s Chetak Enterprises Ltd has admitted transactions referred to in the statement of Shri Atul Jain independently to which applicant is not concerned in any manner. The PCIT has also not objected to the offer of income by M/s Chetak Enterprises Ltd. Therefore, no adverse inference is to be drawn in the case of applicant.
5.3.4 Regarding PCIT's reliance on the bank account statements of Shri Damberlal, Shri Kamal Anjana and Shri Habib Khan Mansuri, it is submitted that mere deposit of cash in the bank accounts by the parties referred to in Rule 9 report cannot be a sole ground to hold that the deposits appearing in the books of applicant to be accommodative in nature. Each deposit has to be examined and looked into independently. Extrapolation theory cannot be applied for invoking provisions of section 68. Suspicion has no place to invoke provisions of section 68. Applicant submitted that he had advanced funds to Shri Damberlal during financial year 2006-07. Interest income on such advance has been consistently offered and taxed by the Assessing Officer. Further, applicant has not entered into any transactions with Shri Damberlal in any of the assessment years referred to in settlement applicant. Therefore, reference to such statement is otherwise also irrelevant and is of no consequence. Applicant received deposits from Shri Kamal Anjana form AY I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 63 2010-11 to 2014-15. Deposits received upto AY 2012-13 were paid back in AY 2012-13. Repayments made to him in AYs 2011-12, 2012-13, 2015-16, 2016-17 and 2017-18 have not been disputed or doubted in proceedings u/s 245D(3) of the Act Therefore, source of deposits made is very much identifiable and creditworthiness is also established. Deposit from Shri Kamal Anjana is not through finance brokers Shri Gyanchand Chordia and Shri Atul Jain and there is no confessional statement of Shri Kamal Anjana claiming the transactions with the applicant to be accommodative in nature. No reasons have been given as to why recovery of Rs. 16,00,000/- in AY 2014- 15 is liable to be taxed as unexamined receipt u/s 68 in the hands of applicant Shri Vikram Anjana out of similar other transactions which have been accepted. In view of this, no adverse inference could be drawn against the applicant Shri Vikram Anjana with reference to deposits received from other parties.
5.3.5 Regarding addition proposed by the PCIT u/s 68 with reference to deposits received during AYs 2011-12 to 2013-14, no incriminating material qua these assessment years is found in the course of search. In view of judgment of the Hon'ble Supreme Court in PCIT vs Abhisar Buildwell P. Ltd & Ors, no adverse inference is required. With reference to deposits received during AY 2014-15 onwards, no addition u/s 68 is permissible, as majority of deposits have been repaid and repayment so made has not been disputed even in scrutiny assessment. No adverse report u/s 245D(3) has been made on verification of liabilities appearing in the books of M/s U B Investment. Yet, addition is continued to be proposed based on the statements and bank statements. No disallowance of interest on the deposits has also been made in assessment made. In support of his claim, the applicant relied case laws. There was no issue or verification of unsecured loans received during AYs 2016-17 and 2017-18. Issue was with reference to squared up loans. Even otherwise also deposits received in AYs 2015-16 and 2016-17 have been repaid. In 245D(3), no negative report has been furnished except in relation to non filers qua three parties, namely, M/s Max Touch Securities P Ltd, Nosir S Jal and M/s Twin overseas Pvt. Ltd. M/s Max Touch Securities P Ltd become non file because its name was strike off in the books of ROC and M/s Twin Overseas Pvt Ltd. got converted into LLP. The PCIT has proposed to add credits appearing against these two parties aggregating to Rs. 9,79,769/- [i.e. Rs. 9,50,419/- + Rs. 29,350/-] u/s 41(1). The applicant submitted that even if this amount is brought to tax u/s 41(1) as admitted by the applicant in the course of hearing, still no addition is required to be made as applicant has offered disallowance of brokerage of Rs. 11,58,330/- debited in the books against which no asset/ investment is claimed. Therefore, this amount is liable to be telescoped with the amounts to be added u/s 41(1) of the Act u/s 245D(4). As regards addition u/s 41(1) of Rs. 42,95,690/- in the name of Nosir S Jal is concerned, the applicant has furnished detailed explanation at Pages 3317-3318 in PB VII as to why no addition is warranted u/s 245D(4). The accounts appear in the books of account, Shri Vikram Anjana as well as Shri Manoharlal Anjana due to non passing of journal entry in the books leading to I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 64 hypothetical offer of interest income by Shri Manoharlal Anjan and claim of interest expenses by Shri Manoharlal Anjana.
5.3.6 It is submitted that no unaccounted cash or jewellery or other assets have been found in the case of applicant Shri Vikram Anjana in the course of search which indicates that Shri Vikram Anjana is not engaged in any out of books transactions or earning income outside books. He has been found lending funds for a petty amount of Rs. 2,40,000/- out of books and the same is not significant warranting and assuming earning of undisclosed income, claimed to be brought in the books in the form of deposits. Applicant Shri Vikram Anjana is carrying on business of financing in a systematic manner. No incriminating material qua activities of M/s U B Investment or otherwise has been found in the course of search action in relation to Shri Vikram Anjana. In fact, no evidence of cash deposit in the bank accounts of each of the depositors is brought on record. During 245D(3) proceedings, the Assessing Officer verified the records of depositors and only in three cases, depositors were not found. In the case of applicant, no incriminating material qua applicant was found in possession of finance brokers in the course of search nor the depositors referred to in Rule 9 report were examined yet deposit received from them is suspected to be in the nature of accommodation. Statements given by finance brokers are without any corroboration and cannot be used as evidence against the applicant. Reliance is also placed on Supreme Court ruling in the case of M/s Star Paper Mills Ltd vs M/s Beharilal Madanlal Jaipuria Ltd and holding that onus is on the party who claim transaction to be fictitious. In the case of applicant except making allegations based on unsubstantiated statements of third parties nothing adverse against the applicants has been brought on record till date despite substantial time has been lapsed since the date of search action on 16-09- 2016. It is also gathered that, on appeal, additions, so made have also been deleted by the CIT(A) in majority of cases of depositors. It is, therefore, submitted that addition as proposed is not required to be made in the case of applicant.
Introduction of loans by family members in the books of M/s U B Investment- Addition proposed-Rs. 16,89,48,426/- [Shri Vikram Anjana] PCIT's comments 5.6 The PCIT stated that the applicant vide pages 660 to 675 submitted that no adverse inference is to be drawn on this issue as M/s U B Investment has deducted TDS on interest payment and assessment proceedings in their individual cases have been completed. As discussed in Rule 9 report, it is the unaccounted money of M/s U B Investment which needs to be taxed in its hands. Submission made in Rule 9 report is reiterated.
Applicant's reply
I.T.A. Nos. 304 to 309/Jodh/2023
Assessment Year: 2012-13 to 2017-18 65
5.6.1 The applicant submitted that no incriminating material evidencing accommodation of unsecured loans by family members has been noticed in the course of search and, therefore, loans received by the applicant from the family members and relative cannot be considered as unexplained income of applicant. Lower reporting of income by lenders is no ground to make addition u/s 68. In view of ruling of Hon'ble Supreme Court in the case of PCIT vs Abhisar Buildwell P Ltd & Ors, no addition is warranted upto A.Y. 2013-14. In view of this factual position and legal position, no addition u/s 245D(4) is required.
22. As regards creditworthiness / capacity to give advance to earn interest income, the ld. AR of the assessee referred the decision of the coordinate bench of Chandigarh in the case of Rohit Kumar Jindal (HUF) vs ITO in ITA No. 1344/Chd/2018 dated 06-07-2020 [copy placed at pages 152-180 of case law compilation] wherein at Para 10, bench held that low income reported by the assessee is not a ground to reject the creditworthiness of the lender. It has been further held that an assessee may or may not earn considerable income during an assessment year but that fact itself is not determinative of the creditworthiness/ financial capability of such an assessee. Reliance has also been placed on the judgement of Delhi High Court in the case of CIT vs Vrindavan Farms (P) Ltd reported at 2015 Tax Pub (DT) 4373 (Delhi) [copy placed at case law compilation (CPB) pages 181-182] wherein addition was deleted by the Tribunal in a case where Revenue had doubted the creditworthiness on account of low income reflected in the returns of income has been upheld. Reliance has also been placed on record the decision of Hyderabad bench in the case of Giri Roadlines I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 66 and Commercial Trading (P) Ltd vs ITO reported at 2017 Tax Pub(DT) 0262 (Hyd-Trib) [copy placed at pages 185-192 of CPB] wherein additions made on account of low income of investors were deleted. The relevant observation in that case is recorded at Para 10-11 the same is reproduced for the sake of brevity :
"10. The assessee has furnished letters of confirmations from the investors, their full address, income tax Permanent Account numbers, copies of investors bank statements, acknowledgments of these companies of filing returns of income, balance sheets, P & L A/c etc., which does demonstrate the identity of the investing companies. The creditworthiness is proved by the substantial funds that these companies have.
11. A perusal of the report of the Inspector of Income Tax shows that, nothing adverse has been recorded consequent to inspection and investigation. Each of the investment has not been individually examined by the A.O. It is well settled that for making an addition under section 68 of the Act each credit has to be separately investigated and conclusions arrived at. In this case a general view has been taken by the revenue authorities. Each investment has not been examined separately. No material has been gathered by the A.O. to contradict the evidence filed by the assessee. The A.O. merely rejected the evidences without proper reason. Under these circumstances, we are of the considered opinion that the addition made under section 68 of the Income Tax Act cannot be sustained."
"
23. The ld. AR of the assessee also invited our attention to Page 6 and 7 of written submissions to indicate that assessee had financial transactions with M/s U B Investment Prop Shri Vikram Anjana [Cousin Brother of assessee] in earlier years as well in the assessment covered u/s 153A i.e. for AY 2011-12 in which transactions entered with M/s U B Investment have been accepted by ld. AO and said assessment order has not been revised by the ld. PCIT u/s 263. The ld. AR of the I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 67 assessee submitted that; the assessee received Rs. 84,85,000/- during that year from M/s U B investment which has been accepted by the ld. AO without any dispute apart from accepting interest income of Rs. 5,27,935/- earned on the advance given by the assessee to M/s U B Investment and disclosed in the return of income. Once interest income earned on the advances given by assessee is accepted, there is no locus standi in making addition for the amount of advance received by holding the same to be none genuine. The ld. AR further stated that source from which assessee advanced funds to M/s U B Investment which is duly recorded in the books has also not been disputed by the AO and also by the Ld. CIT (A). The assessee furnished source of source even though the same was not required to be given as held by Hon'ble Supreme Court in the case of CIT vs Daulat Ram Rawatmull reported at 87 ITR 349 (SC). The source of funds from where M/s U B Investment extended unsecured loan of Rs. 3,58,57,000/- vide written synopsis Page 10-11 in the form of table and the same is reproduced here in below :
AY 15-16 [Ground No. 5]: AO-Para 8 at Page 11; CIT(A)-Para 8.6 Page 69 PB Pg No. Date of Receipt Amount Immediate source of fund PB Pg Date of Amount from which M/s U B No. Payment Investment paid amount to receipt by the appellant M/s U B Invest 60-64 10-04-2014 1500000 Amount received from M/s U 65, 314 10-04-2014 3500000 B Roadlines 60-64 08-05-2014 1100000 Amount received from M/s 65, 314 08-05-2014 3300000 Sarvodaya Mining Services I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 68 60-64 24-05-2014 1100000 Amount received from 71. 314 24-05-2014 4000000 Jagdish Chand S/o Mannalal 60-64 26-05-2014 4000000 Amount received from 70, 314 26-05-2014 4000000 Jagdish Chand S/o Mannalal 60-64 28-05-2014 2276000 Amount received from 70, 314 28-05-2014 1500000 Jagdish Chand S/o Mannalal Amount received from Habib 70, 314 28-05-2014 1500000 Mansoori S/o Vali Mohammed 60-64 30-05-2014 3500000 Amount received from Kamal 72, 314 30-05-2014 3700000 Asharam Jat 60-64 03-06-2014 7900000 Amount received from 72, 314- 03-06-2014 1500000 Bhanwarlal Jat 315 Amount received from 72, 315 03-06-2014 1500000 Puranmal S/o Rodji Amount received from Habib 72, 315 03-06-2014 1500000 Mansoori S/o Vali Mohammed Amount received from 72, 315 03-06-2014 2500000 Dashrath Anjana Cash deposited out of 72, 315 03-06-2014 854000 available cash funds Out of available funds in bank 72 03-06-2014 95940 account 60-64 03-06-2014 7081000 Amount received from 72, 315 03-06-2014 3781000 Bhanwarlal Jat Amount received from Bharat 72, 315 03-06-2014 3251000 Anjana, Baseda Out of available funds in bank 72 03-06-2014 49940 account 60-64 04-06-2014 3000000 Amount received from Habib 73, 315 04-06-2014 1500000 Mansoori S/o Vali Mohammed Amount received from 73, 315 04-06-2014 1500000 Bhanwarlal Jat 60-64 26-06-2014 2000000 Amount received from 74 26-06-2014 3500000 Puranmal S/o Rodji 60-64 27-06-2014 2000000 Amount received from 74 27-06-2014 2000000 Puranmal S/o Rodji 60-64 27-03-2015 400000 Amount received from 67 27-03-2015 400000 Puranmal Anjana [Brother of appellant] Total 35857000 Total 45431880
24. Thus, when the source of the source is submitted then no addition is permissible on suspicion and suspicion alone as held in CIT vs Shri Ram Narain 224 ITR 180 (P & H); PCIT vs N C Cables Ltd (2017) 391 ITR 11 (Delhi); PCIT vs Smt, Krishna Devi (2021) 431 ITR 361 (Delhi); CIT vs Jai Kumar Bakliwal (2014) 366 ITR 217 (Raj); CIT v Landmark Innovation (P) Ltd (2013) 38 taxmann.com 217 (All); S P Goyal vs DCIT I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 69 (2002) 82 ITD 85 (Mum) (TM); Adhoi Vyapar (P) Ltd vs ITO (2021) 91 ITR (T) 582 (Mum); Darshan V Vakharia vs ITO In ITA No. 1540/Mum/2023 dtd 28-07-2023 among others. The ld. AR also submitted that an analysis of judgments in the case of Dhakeshwari Cotton Mills Ltd vs CIT 26 ITR 775 (SC), Lalchand Bhagat Ambica Ram vs CIT 37 ITR 288 (SC), CIT vs Daulatram Rawatmull, 53 ITR 574 (SC), CIT vs Orissa Corporation (P) Ltd 1986 taxmann.com 1163 (SC), CIT vs East Coast Commercial Co Ltd 63 ITR 449 (SC), Umacharan Shaw & Bros vs CIT 37 ITR 271 (SC), Chiranji Lal Steel Rolling Mills vs CIT 84 ITR 222 (P & H) and PCIT vs Ajay Surendrabhai Patel (2016 69 taxmann.com 309 (Guj) indicates that law is very much clear that suspicion alone without there being evidence specific to a transaction cannot become the basis for creating charge for levying tax as each transaction has to be independently inquired into. Suspicion howsoever strong cannot take the character/ place of evidence. The Pune Bench of ITAT (Third Member) in the case of Samrat Beer Bar vs ACIT (2000) 75 ITD 19 (Pune)(TM) held that the "Assessing Officer cannot presume that there must be some other material or evidence which is not found during the search and the assessee must have derived undisclosed income therefrom". It is submitted that transactions recorded in the books per se are not incriminating or could be suspected as held by Hon'ble Delhi I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 70 High Court in PCIT vs Param Dairy Ltd in ITA No. 37/2021 dated 15-02- 2021 and Mumbai Tribunal in Micro Ankur Developers in ITA No. 1046- 1050/ Mum/2019. Therefore, presumption under section 132(4A) and Section 292C needs to be held in favour of the assessee as to the correctness of books of accounts and transactions recorded therein on the date of search in absence of any incriminating material having been found in possession of assessee as well as Shri Vikram Anjana prop of M/s U B Investment. The bench also noted that corresponding to the proceeding in the case of IBS the revenue has submitted the rule 9 report and based on that report the ld. IBS on this issue given their finding which is reproduced here in below :
6.1 The PCIT observed that unsecured loans of Rs.48,51,93,564/- was received by M/s.U.B.Investment, proprietary concern of Shri Vikram Anjana, through brokers. It was submitted that Shri Vikram Anjana was used as conduit for introduction of unaccounted money of the group into the books of the flagship company, M/s.Chetak Enterprises Ltd. and it was proposed that the said sum should be added in the hands of Shri Vikram Anjana. We are unable to find merit in the arguments of the department on this issue.
M/s.Chetak Enterprises Ltd. has admitted and offered income in relation to transaction entered into through finance broker Shri Atul Jain on peak investment basis at Rs.4,18,99,518/- in the SOF. The case of M/s.Chetak Enterprises Ltd. was rejected by this Board vide order u/s.245D(4) dated 08.06.2023. The Rule 9 report also points out that the said sums represented unaccounted money of the group ultimately introduced into the books of M/s.Chetak Enterprises Ltd. Hence, taking into account the material placed before us, we are of the considered view that any addition of this nature as proposed by the department cannot be made in the hands of Shri Vikram Anjana, but may be considered in the hands of M/s. Chetak Enterprises Ltd. if necessary during the course of proceedings in the case of the company as the case may be. This also holds good in respect of introduction of loans by family members in the books of M/s. U.B. Investment amounting to Rs. 16,89,48,426/- to the extent that the additions are not to be considered in the hands of Shri Vikram Anjana.
I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 71
25. The ld. DR did not placed on record the fact that the order of the IBS is not accepted by the revenue further and therefore, the finding of the IBS on the issue of acceptance of loan or advancement of loan is considered as genuine and therefore, once the loan received and given is duly considered as genuine in the case of Shri Vikram Anjana the prop. Of M/s U. B. Investment, the separate addition in the case of on acceptance or advancement of loan cannot be considered as non- genuine. The ld. CIT(A) has confirmed the addition vide order dated 29.06.2023 whereas the order of IBS is dated 30.11.2023 and therefore, the finding of the ld. IBS may not be placed before the ld. CIT(A). The ld. CIT-DR reiterated the same arguments as has been recorded in the orders of the lower authority. But at the same time She, however, has pin pointed any deficiency in the documents placed in the paper book; judicial precedents relied upon and referred to by the Ld. AR and even not updated as to the fact that the order of IBS is not accepted by the revenue and the same is challenged in the High Court. Whereas the claim of the assessee in support of the genuineness of loan is supported by the following evidence / records:
Nature of document PB Page
No.
Tax audit report of assessee with enclosures and groupings of 4-59
M/s Bharat Trading Co. Closing credit balance is appearing at Page 33, 58 at Rs. 4,67,65,905/-
Confirmation and ledger accounts reflecting transactions between 60-64
I.T.A. Nos. 304 to 309/Jodh/2023
Assessment Year: 2012-13 to 2017-18 72
U/s U B Investment prop Shri Vikram Anjana and assessee Bank Account statements of M/s U B Investment reflecting 65-74 amounts advanced to the assessee Bank account statements of assessee reflecting receipts from 75-80 M/s U B Investment Cash book extract of M/s U B Investment reflecting availability of 81 cash balance prior to the date of cash deposit in the bank account ITR acknowledgment and statement of total income of Shri 87-89 Vikram Anjana prop M/s U B Investment for AY 2015-16 Tax audit report of M/s U B Investment prop Vikram Anjana for 90-114 AY 2015-16 Statement of assesses recorded u/s 132(4) in the course of 114-148 search Statement of Shri Vikram Anjana prop of M/s U B Investment 149-165 recorded u/s 132(4) in the course of search Statement of Shri Gyanchand Chorida recorded u/s 132(4) in 166-197 independent search action u/s 132 on him Death certificate of Shri Jagdish Agarwal 262 Remand report of AO 290-295 Submissions made by assessee during remand proceedings. 265-289 Rejoinder on remand report of AO to the Ld. CIT(A) 296-323 Submissions made in asstt proceedings 324-341 Written submissions/ synopsis along with IBS order dated 30-11- 1-101 2023 [furnished separately]
26. In respect of all the evidence being placed on record before the lower authority and before us also revenue could not controvert these evidence of any accommodation qua assessee in relation to financial transactions between the assessee and M/s U B Investment was found in the course search or whether any inconsistency was also not noticed in the documents and evidences furnished by the assessee before the AO as well as before the ld. CIT(A). The ld. CIT-D/R was not able to point out any deficiency in documents brought on record and the arguments and evidence furnished and referred to by the ld. AR of the I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 73 assessee in the course of hearing. She has also not controverted the finding of the IBS in the case of Shri Vikram Anjana Prop. Of U. B. Investment and has also not placed on record that the order of IBS has not accepted by the revenue and is under challenged before the Hon'ble High Court. Thus, we are of the considered view that the entire amount of receipt of loan as well as repayment to M/s U B Investment is duly recorded in the books of the assessee which were also audited and disclosed to the department at the time of filing of original return of income. This fact is not in dispute. Once the transaction is recorded in the books and source of which has also been explained by the assessee with supporting evidences, in our opinion, no addition is permissible under any provisions of the Act when identity, creditworthiness and genuineness of transaction is not in dispute. Identity of parties from whom Shri Vikram Anjana prop of M/s U B Investment received funds, their creditworthiness and genuineness is not in dispute as such receipts have been accepted by ld. IBS in settlement proceedings for the year under consideration in order passed u/s 245D(4) in the case of Shri Vikram Anjana and other three individuals. Capacity of Shri Vikram Anjana to lend funds to the extent of Rs. 3,58,57,000/- to the assessee cannot be doubted in view of significant borrowings made by him reflected in tax audit report at page 106 of APB. As per tax audit report I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 74 maximum outstanding balance of borrowings made by him during the year stood at Rs. 63,97,46,906/- which speaks of his capacity to raise funds. Since Shri Vikram Anjana is engaged in the business of financing he makes borrowings and gives advances on regular basis and this activity has not been disputed by Revenue Authorities at any time prior to search or subsequent to search. Therefore, capacity to raise funds of Shri Vikram Anjana Prop of M/s U B Investment to give advance to the assessee cannot be doubted. Modus operandi stated in the assessment order is not established. The ld. IBS has also not drawn any adverse inference in the case of Shri Vikram Anjana Prop M/s U B Investment while settling the case for AY 2011-12 to 2017-18 in order passed u/s 245D(4). The ld. IBS has analysed the statements of various finance brokers as referred while adjudicating the case. We also take note of the fact that books of accounts of M/s U B Investment were seized in the course of search and jurisdiction to assess the income of Shri Vikram Anjana prop of M/s U B Investment was also with the AO of the assessee. We also find that assessee was entering into financial transactions with M/s U B Investment in years prior to the search also and at no point of time transactions entered were disputed by the Assessing Officer. Assessments of M/s U B Investment were also completed u/s 143(3) upto AY 2013-14 and reached upto Tribunal and I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 75 no adversity in the activities of M/s U B Investment were found by the Department prior to search. Thus, considering the discussion so recorded herein above and circumstances coupled with the documentary evidence brought on record, we hold that addition made of Rs. 3,58,57,000/- by ld. AO and sustained by the ld. CIT(A) is not justified and is liable to be deleted. We order accordingly. Based on these observations ground no. 5 raised by the assessee is allowed.
27. Ground No. 6 raised by the assessee is related to disallowance of interest expenses of Rs. 44,40,803/- paid to M/s U B Investment on the borrowings of Rs. 3,58,57,000/- for which addition u/s 68 was made. Apropos to this ground the relevant finding of the ld. CIT(A) is recorded at para 9.3 page 74 and the same is reiterated here in below :
"I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:-
The AO stated that since unsecured loan received during the year remains unexplained. Therefore, interest expenses claimed on account of the same of Rs. 44,40,803/- is also disallowed.
The appellant argued that Assessing Officer considering it genuine for taxing interest income on loans and advances given by the assessee but, denied for deduction on incurring interest expenses incurred on sources of loans and advances given to U. B. Investment.
I find that the AO was justified in disallowing the interest expenditure when the loan itself is treated as non genuine and added u/s 68 of the Income Tax Act. Such expenditure is not allowable as the amount of loan itself is treated as income of the appellant. The argument of the appellant is not found I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 76 acceptable as the income offered by the appellant is charged to tax as per provisions of Income Tax Act. The appellant has not explained under which provisions of the Income Tax Act, the Income can be disallowed. The addition made by the AO is therefore, upheld.
This ground of appeal is treated as dismissed."
28. In support of the ground for allowance of interest expenses the ld. AR of the assessee vehemently argued that disallowance of interest expenses of Rs. 44,40,803/- by AO and sustained by the Ld. CIT(A) is highly unjustified. It is neither a case of the AO nor of the Ld. CIT (A) that funds borrowed were not applied for business purposes or for earning interest income and therefore, disallowance of interest is not warranted.
29. On the other hand the ld. DR representing the revenue submitted that disallowance of interest is consequential to the addition of Rs. 3,58,57,000/- made by AO u/s 68.
30. We have considered the rival submissions as well as the relevant material on record. Since, we have while considering the ground no. 5 of the assessee hold a view that the loan availed by the assessee is genuine and is duly recorded in the books of account we see no reason to sustain this addition and more particularly when there is no averment of lower authorities that funds borrowed were not applied for business I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 77 purposes or for earning of income on the said borrowing made by the assessee. Therefore, based on the reasoning recorded while deciding ground no. 5 we hold that the deduction claimed by the assessee for interest cannot be disallowed and the same is therefore, directed to be deleted. Based on these observations ground no. 6 raised by the assessee is allowed. Ergo, we direct to delete the addition of Rs. 44,40,803/- being the amount of interest paid by the assessee.
31. Ground no. 7 raised by the assessee relates to addition of Rs. 14,82,365/- u/s 69 by holding sales turnover disclosed u/s 44AD in the return of income by assessee's daughter Ms. Surbhi Anjana in her return as belonging to the assessee and liable to be assessed in his hands. Based on the statement of his daughter wherein she stated that she is not doing any business activity or having any source of income the ld. AO taken a view that turnover shown by Kumari Surbhi Anjana is actually bogus turnover and it is related to her father i.e. Shri Bharat Anjana(assessee) and therefore, the total turnover disclosed by her is added as income of the assessee for an amount of Rs. 14,82,365/-.
32. Apropos to this addition the matter was carried to ld. CIT(A) who has confirmed the addition by recording the following finding:
I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 78 6.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/ submissions of the appellant are being discussed and decided as under:-
The AO held that bogus turnover is unaccounted money of the Directors of M/S Chetak Enterprises Limited and other members of the Chetak Group which they have taken entries in the name of their family members in order to avoid tax. The AO based his conclusion on the statement recorded of Sh. Niranjan Patidar, CA of the family who filed return of Income of Ms. Surabhi Anjana and also statement of Ms. Surabhi Anjana.
Ms. Surbhi Anjana is the daughter of Sh. Bharat Kumar Anjana, therefore, turnover shown by Ms. Surbhi Anjana is treated by AO as bogus turnover in the hands of Sh. Bharat Kumar Anjana.
During the assessment proceedings Ms. Surbhi Anjana was asked to submit details of closing stock, debtors etc. but, no such details were ever furnished by the her which again clarity that all these are bogus entries shown. The AO accordingly treated total turnover during the year of Rs. 14,82,365/- in the case of Ms. Surbhi Anjana, as income of appellant on substantive basis and in the hands of Ms. Surabhi Anjana on protective basis. The AO treated it as unexplained investment as per the provisions of section 69 of the IT. Act and tax is calculated as per the provisions of section 115BBE of the I.T. Act.
Per contra the appellant stated that Surbhi Anjana is separately assessed u/s 153A by Dy. Commissioner of Income Tax, Central Circle-1, Udaipur for A.Y. 2014-15 to 2017-18 and appeal u/s 246A duly filed.
2. Without prejudice to above factual position, if Learned A.O. wants to make addition then 8% of the Turnover can only be added u/s. 44AD. Rest 92% of the income is deemed expenditure incurred in earning 8% of Income u/s. 28 to 43C From the reply of the appellant two things become evident. The CA of Ms. Surabhi Anjana is filing return of Income without verification of documents properly. This fact is also confirmed during the search wherein the CA admitted that the return of Income was filed without there being any business of Ms. Surabhi Anjana. Ms. Surabhi Anjana also confirmed in her statement that there is no business activity being undertaken by her. When there is no business activity undertaken by Ms. Surabhi Anjana to be eligible for section 44AD, the section is not applicable. Therefore, the benefit of that section allowing 92% as expenditure is also not applicable. Accordingly, total receipts shown by Ms. Surabhi Anjana are to be treated as income of the appellant.
The appellant argued that 8% of the Turnover can only be added u/s. 44AD. Rest 92% of the income is deemed expenditure incurred in earning 8% of Income u/s. 28 to 43C. The appellant relied upon following case law - Balaji Construction vs. ACIT 72 ITD 559 (Pune) : 66 TTJ (Pune)718.
I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 79 In this decision it was held that assessee cannot be asked to explain the entries of expenditure to the extent of 92% of contract receipts minus the amount of statutory allowances. The AO has nowhere asked the appellant to explain the entries of expenditure. The case of the AO is that there is no business activity; hence the total turnover is treated as income of the appellant. Therefore, this decision is not found to be applicable on the facts of the case.
In this regard decision of Hon'ble High Court Of Madras in the case of Smt. S. Sakunthala Sivam v. Income-tax Officer [2022] 142 taxmann.com 148 (Madras)[28-03-2022] held as under -
"Section 69, read with section 44AD, of the Income-tax Act, 1961 - Unexplained investments (Question of law) - Assessment year 2011-12 - Assessee claimed to derive income on commission basis from real estate business - She admitted income under section 44AD with regard to sources of cash deposits made in bank account - Assessing Officer treated cash deposit of Rs. 25 lakhs in bank account as unexplained investment under section 69 on premise that such cash deposits in saving bank account did not represent business receipts as admitted under section 44AD, for which assessee was required to prove sources of cash deposits but she failed to do so - Appellate Authorities affirmed order of Assessing Officer observing that assessee had not let any evidence to establish that nature of her activities were falling within realm of business and impugned transactions were part and parcel of her turnover - Whether as it was evident from record that assessee did not prove her nature of business and source of cash deposits and she put forth different stand before lower authorities, there was no question of law much less substantial question of law arisen for consideration herein - Held, yes - Whether appeal filed by assessee deserved to be dismissed - Held, yes [Paras 9 and 10] [In favour of revenue]"
In this case also, appellant or his CA filed return of income in the name of Ms. Surabhi Anjana wherein it was claimed to derive income under section 44AD - Assessing Officer treated entire turnover as bogus as the CA of Ms. Surabhi Anjana accepted during the search that there was no basis for return of income filed in case of Ms. Surabhi Anjana. Ms. Surabhi Anjana also accepted during search that no business activity was undertaken by her. The conclusion of the AO was correct that the turnover shown by Ms. Surabhi Anjana did not represent business receipts as admitted under section 44AD, for which assessee was required to prove nature of business and sources but she failed to do so. The appellant or Ms. Surabhi Anjana had not let any evidence to establish that nature of her activities were falling within realm of business and impugned transactions were part and parcel of her turnover. It was evident from record that appellant or Ms. Surabhi Anjana did not prove her nature of business and source of turnover. When AO asked about details of closing stock, debtors etc., no such details were ever furnished by the I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 80 appellant or Ms. Surabhi Anjana. The decision is found to be applicable on the facts of the case.
In view of the above discussion, addition made by the AO u/s 69 in the hands of the appellant is confirmed in the hands of the appellant.
This ground of appeal is treated as dismissed."
33. Before us, the ld. AR of the assessee submitted that both AO and the Ld. CIT(A) have proceeded to tax the entire turnover declared u/s 44AD by the daughter of assessee in her return to be as income of the assessee without appreciating the facts and circumstances in right perspective. The ld. AR of the assessee also submitted that the entire addition made is solely based on the statement of CA Niranjan Patidar recorded u/s 131 of the Act in the course of search action but without satisfying the conditions specified in section 69 of the Act. The ld. AR of the assessee relying on the Page 83 of Paper Book being statement of total income of assessee's daughter indicating disclosure of income u/s 44AD at Rs. 1,42,656/- on a sales turnover of Rs. 14,82,656/-. Thereafter, he referred page 216 of APB wherein income of Rs. 4,04,806/- has been stated which include interest income earned from bank and loans & advances given and the same has been credited in the capital account appearing at page 84. Closing capital as on 31-03- 2014 was at Rs. 9,63,872/- which increased to Rs. 11,21,552/- [ APB- 84] as on 31-03-2015 and net accretion to the capital is much less than I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 81 the income disclosed in the return of income. The ld. AR of the assessee also submitted that current liabilities of Rs. 80,20,522/- [ APB-84] appearing in the balance sheet is long term capital gain earned by the assessee's daughter Ms Surbhi Anjana on sale of shares acquired in financial year 2008-09 of PsIT Infra which she surrendered in return of income furnished u/s 153A on 21-06-2017 at Rs. 80,50,522/- which is evident from Para 5 of assessment order passed u/s 153A r.w.s. 143(3) appearing at Page 123 of APB. Ms Surbhi Anjana sold the shares through stockbroker M/s Arihant Capital Markets Ltd. Therefore, current liability is reflecting its name at Page 84 of APB as said receipt was not credited to the capital account. This amount of capital gain ought to have been credited by the Ms Surbhi Anjana in the capital account but due to mistake of the CA preparing the return of income i.e. the same was disclosed as liability in the balance sheet. The amount of capital as well as long term capital gain of Rs. 80,20,522/- was invested in closing stock of Rs. 2,35,630/-, sundry debtors of Rs. 6,25,631/-, cash and bank balance of Rs. 71,347/- and balance as loans and advances given of Rs. 82,09,466/- together with income u/s 44AD and opening capital. Therefore, investments made during the year by Ms Surbhi Anjana in the year under consideration have not exceeded the income disclosed by her in return u/s 153A at Rs. 84,50,630/- which includes income I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 82 disclosed u/s 44AD of Rs. 1,42,656/-. The ld. AR of the assessee referred to the assessment order passed u/s 153A r.w.s. 143(3) in the case of Ms Surbhi Anjana which has been placed at Page 122-137 of APB. He invited our attention to page 136 of APB wherein income disclosed u/s 44AD of Rs. 1,42,656/- has been assessed substantively in her hands. The ld. AR of the assessee argued that the reliance placed by Ld. CIT (A) on the judgment of Hon'ble Madras High Court in the case of Smt. S Sakunthala Sivam vs ITO [2022] 142 taxmann.com 148 (Mad) has no application in the case of the assessee as investments made by Ms Surbhi Anjana have not exceeded the income disclosed by her in the return of income. Even if income disclosed u/s 44AD is held to be without any evidence of purchase and sale of agricultural commodities yet income under no circumstances could exceed the amount of investment made by her in the year under consideration. Further, the ld. AR of the assessee submitted that both Ms Surbhi Anjana and the assessee were subjected to search and seizure action u/s 132 and no incriminating material evidencing earning of any undisclosed income either by Ms Surbhi Anjana or the assessee was found. The ld. AR invited our attention to the statement of CA Niranjan Patidar placed at Page 261 of APB to point out that except making blade allegations against the searched group no contrary evidence was I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 83 brought on record by him in support of his statement. The ld. AR thereafter, referred to reply to Q. No. 48 of statement of Shri Udailal Anjana placed at Page 243 of APB wherein Shri Udailal Anjana requested Authorised Officer to call Shri Patidarji as he shown his absolute disagreement with the statement of Shri Patidar and stated that their entire family is engaged in agricultural operations and offered physical spot verification of agricultural fields but Authorised Officer chose neither to present Shri Patidarji in front of Shri Udailal Anjana nor opted spot verification of agricultural fields. The ld. AR also referred to Para 16-21 of judgment of Hon'ble Telangana and Andhra Pradesh High Court in the case of CIT vs Naresh Kumar Agarwal (2014) 369 ITR 171 (T & AP) to explain the circumstances in which statements of searched persons are recorded during search. The ld. AR of the assessee also submitted that statement of Ms Surbhi Anjna need not be considered adverse to the assessee as she stated what she was doing on the date of search. The ld. AR also submitted that identical additions were proposed in the entire group in the hands of male members wherein the ld. IBS while passing settlement order u/s 245D(4) of the Act has not made any addition after appreciating the facts, applicable law and case laws relied upon. Reference in this regard is made to pages 44 and 45 of the order of IBS passed u/s 245D(4) appearing at pages 67-68 of I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 84 written synopsis wherein ld. IBS has referred contentions of Ld. PCIT as well as of the settlement applicant's, which is reproduced here in below for the sake of brevity on the issue:
"Income reported by female family members in returns u/s 44AD by disclosing Bogus turnover-Rs. 3,51,67,805 (All four applicants) PCIT's comments 5.8 The PCIT submitted that as stated in Rue 9 report, family members do not have regular source of income. Unaccounted income of the applicants had been routed through family members in the form of turnover assigned to the family members and by declaring nominal income of the family member's u/s 44AD. The bogus nature of income was detected during search only and not that income of the family members have already been assessed on substantive basis and has not relevance, as stated by the applicant. The submissions that the turnover show by family members in fact represent their agricultural income is not believable as agricultural income is exempt from there was no reason for the applicants or family members to pay on the exempt income by showing it as business receipt. The submission made in this regard in Rule 9 repot and u/s 245D(2B) is reiterated.
Applicant's reply 5.8.1 The applicant stated that Shri Udailal Anjana stated that the family has agricultural income and female family members also have right to do trading. Shri Udailal Anjana also offered spot verification of agricultural fields in the course of search itself to substantiate earning of agricultural incomes by the female family members which was also not availed by the Authorised Officer.
5.8.1.1 All the female family members are assessed to tax regularly and their assessments have not been reopened post search except in the case of Smt. Priyanka Anjana, Miss Surbhi Anjana and Puranmal Anjana HUF. NO cash corresponding to the turnover or purchases disclosed has been deposited or withdrawn from the bank accounts. Investments of female family members do not exceed the amount of income disclosed in the returns. The turnover cannot be taxed as income of female family members or for that matter in the hands of applicants or anyone else. In assessments in the cases of Smt. Priyanka Anjana and Ms. Surbhi Anjana, income offered u/s 44AD has been assessed substantively in their hands and difference between the turnover and income offered u/s 44AD has been taxed protectively. In the case of Puranmal Anjana HUF, no addition is made by the Assessing Officer for A.Y. 2011-12. No reopening for the remaining assessment years has been made as well as in the cases of remaining female family members. Exempt agricultural income would not become taxable merely because it was reported I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 85 in different fashion. Applicants also placed on record the loan granted by HDFC bank for agricultural activities to one of the female family member and the same is verifiable from the sanction letter. Earning of agricultural income by female family members also gets confirmed due to seizure of their land holding. In the case of Smt. Priyanka Anjana, opening and closing inventory of agricultural produce, realisation from the debaters etc. has not been disturbed in assessments made u/s 153A. Therefore, trading results declared by female family members need not be disturbed and the same are not required to be considered in the hands of applicants in absence of any evidence that money equivalent to the income disclosed as income u/s 44AD in the hands of female family members. No such evidence has been noticed in the seized documents. The income which female family members disclosed u/s 44AD was agricultural income of the applicants and which applicants did not disclose in their returns, under no circumstances, could be considered to be undisclosed income of the applicants. In support of their claim, the applicants relied on various court decisions in this regard. The allegation made in Rule 9 report remains unsubstantiated. Ms. Surbhi Anjana is daughter of Shri Bharat Anjana who is not before the IBS. Therefore, no explanation is required to be offered with reference to the turnover and income u/s 44AD referred to in Rule 9 report in her name. In view of this, no addition u/s 245D(4) is required in the case of applicants."
34. The ld. AR of the assessee invited our attention to the computation of total income appearing at Pages 2 & 3 of APB, wherein agricultural income earned is disclosed, stated that there is no dispute that assessee is engaged in agricultural activities. The ld. DR did not controvert the finding of the ld. IBS and there is no otherwise that of what has been disclosed is proved by placing any evidence. The ld. AR of the assessee also submitted that investments, assets and bank accounts of Ms Surbhi Anjana have not been held to be benami investments of assessee and that Ms Surbhi Anjana has not been held to be benamidar of assessee in her assessment. Since Ms Surbhi Anjana was not maintaining day to day books of accounts, details of I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 86 closing stock and debtors etc could not be furnished and more particularly when on the date of search nothing was pending for realisation. This was the precise reason she disclosed income u/s 44AD of the Act which do not require day to day maintenance of books of accounts. The AO has neither rejected trading results u/s 145(3) of the Act with reference to income disclosed u/s 44AD of the Act nor has brought any evidence in the assessment order which could indicate that the investments of Ms Surbhi Anjana were equivalent to the sales turnover which has been brought to tax. Thus, the ld. AR placed reliance upon Para 13.7 of the decision of Delhi Bench in the case of Bhartiya International Ltd vs DCIT in ITA No. 2109Del/2022 dated 02-01-2024, copy placed at Pages 90-107 of case law compilation, in that case the tribunal hold that either all the items of trading activity need to be accepted or all the items of trading activity need to be discarded for the purpose of assessment but exclusion of all items except sales turnover is not permissible. The ld. AR of the assessee also contended that the AO has only taxed the sales turnover without appreciating that firstly, turnover itself is not income but only income embodied therein alone could be taxed under the provisions of the Act and secondly, even if it is held that trading activities disclosed in the guise of Sec 44AD were bogus based on deposition given in statement recorded u/s 132(4) by I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 87 Ms Surbhi Anjana then neither the turnover nor the purchases or closing stock could be considered genuine and in such a scenario, the only option left with the AO is to tax income equivalent to the investments made by invoking provisions of section 69/69A of the Act and that is what exactly has been done by the AO by taxing income disclosed u/s 44AD substantively in the hands of Ms Surbhi Anjana as declared in the return of income as investments made by Ms Surbhi Anjana under no circumstances exceeded the income so declared/disclosed by her together with opening capital. Protective addition of Rs. 13,39,709/- in the case of Ms Surbhi Anjana does not represent any investments or assets of Ms Surbhi Anjana. Therefore, said amount otherwise also cannot be taxed. Once income is substantially assessed in her hands and is not challenged by her, protective addition cannot be converted into substantive addition and more particularly when no evidence of any undisclosed income earned by assessee and invested in the name of Ms Surbhi Anjana is found. Substantive income assessed in the hands of Ms Surbhi Anjana also cannot be taxed substantively in the hands of assessee as it will amount of taxation of same income twice albeit in the hands of two assessees but from the same source which is impermissible in law. The ld. AR of the assessee referring to the statement of assessee appearing at Page 144-148 of APB submitted I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 88 that assessee at no point of time was confronted in relation to the issues relating to income disclosed by Ms Surbhi Anjana or in relation of statement given by her u/s 132(4) of the Act. He accordingly, submitted that addition of Rs. 14,82,365/- made in the hands of the assessee on substantive basis is highly unjustified and is liable to be deleted.
35. On the other hand, the ld. DR representing the revenue relied upon the order of the ld. CIT(A) wherein the ld. CIT(A) has explained the circumstances in which addition is made in the hands of assessee by the AO. She submitted that once Ms Surbhi Anjana in her statement deposed that she was not earning any income, as a natural corollary said income needs to be considered as income of the assessee irrespective of whether any evidence to support such fact is noticed during search or not.
36. We have heard the rival contentions and perused the material placed on record. The bench noted that income corresponding to the investments of Ms Surbhi Anjana has been taxed substantively in her hands. The AO in the case of Ms Surbhi Anjana has taxed only sales turnover ignoring other components of trading activities which is not correct when there is no evidence in the course of search was found to I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 89 suggest that no trading activity was carried on by the female family members except the statement of CA Niranjan Patidar which was also without any corroboration or supporting evidence made that statement and his cross examination was asked but was not granted. On this issue the decision of the Hon'ble Telangana and Andhra Pradesh High Court in the case of CIT vs Naresh Kumar Agarwal [2014] 369 ITR 171 (AP) has held that cognisance of circumstances under which statements of witnesses are recorded in the course of search. Therefore, no addition solely based on such statements is permissible. Hon'ble Pune Bench [Third Member] in the case of Samrat Beer Bar vs ACIT (2000] 75 ITD 19 (Pune)(TM) has held that AO cannot presume existence of any undisclosed income other than what was noticed during search. Return of income was filed well prior to the date of search in the case of Ms Surbhi Anjana and the same was also taken up for scrutiny. We also find that Ms Surbhi Anjana has not been held to be benamidar of the assessee in her assessment. On carefully going through the statement of assessee placed at Pages 144-148 of APB we find that assessee at no stage of search proceedings was confronted with the statement of Ms Surbhi Anjana or the income returned by her in her return of income which was available on the date of search. The Ahmedabad co-ordinate bench in the case of Shri Sanjay R Choksi in IT(SS)A No. 147/Ahd/2005 I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 90 vide order dated 21-10-2022 in Para 25 has held that the statement, that too not of the assessee but his father, is not incriminating material in the absence of any supporting material. Facts in the case of assessee are identical to the case of Shri Sanjay R Choksi (Supra). We also find that no evidence of earning of any undisclosed income corresponding to the income disclosed by Ms Surbhi Anjana was noticed during search action on the assessee. Protective addition of Rs. 13,39,709/- made in the hands of Ms Surbhi Anjana is not supported with any investment which could be brought to tax u/s 69 of the Act. We also find support from the judgment of Hon'ble Calcutta High Court in the case of SAIL DSP Employees Association 1998 [2003] 262 ITR 638 (Cal) wherein at Para 17 Hon'ble Court has observed that what is not otherwise taxable cannot become taxable because of admission of the assessee. Nor there can be any waiver of the right otherwise admissible to the assessee in law. The chargeability is not dependent on the admission or waiver by the assessee. Chargeability is dependent on the charging section, which need to be strictly construed. We also find that on identical facts ld. IBS in other cases of the same group [ where the deemed income is offered ] has not made any addition in the case of settlement applicants which is evident from the discussion made in the settlement order passed u/s 245D(4) of the Act, copy of which has been placed on record as part of I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 91 written synopsis. Taking totality of the facts and discuss so recorded herein above, we hold that addition of Rs. 14,67,344/- made in the case of assessee is not sustainable and is liable to be deleted. In terms of these observation ground no. 7 raised by the assessee is allowed.
37. Ground No. 8 relates to addition of Rs. 80,90,275/- on account of long-term capital gain earned by daughter of assessee Ms Surbhi Anjana in the hands of assessee because Ms Surbhi Anjana denied any investment in shares in statement recorded u/s 132(4). The fact that emerges from the assessment order is that during the course of search statement of Shri Niranjan Patidar, CA of Shri Udai Lal Anjana and Chetak Group was recorded. In that statement he confirmed that on his advice Shri Udai Lal Anjana has shown to have invested in his and his family members money into penny stock companies for conversion of their un accounted Income in the form of exempt income he also explained how Shri Udai Lal Anjanan claimed exempt income through artificial process of sale of penny stock company shares during the assessment year 15-16. Even the assessee's daughter Ms. Surbhi Anjana was also confronted about the investment in shares wherein she has stated that she has not done any share trading and are not even aware of it. Thus based on these statement the learned assessing I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 92 officer has treated the income of the assessee which is already offered in the hands of Ms. Surbhi Anjana.
38. In the first appeal filed by the assessee the ld. CIT (A) has confirmed the addition of Rs. 80,90,275/- vide Para 10.3 of the appellate order and the relevant finding of the ld. CIT(A) is reiterated herein below:
10.3. I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:-
The AO held that bogus capital is unaccounted money of the Directors of M/s Chetak Enterprises Limited and other members of the Chetak Group which they have taken entries in the name of their family members in order to avoid tax. The AO based his conclusion on the statement recorded of Sh. Niranjan Patidar, CA of the family who filed return of Income of Ms. Surabhi Anjana and also statement of Ms. Surabhi Anjana. In the statement Sh. Niranjan Patidar stated that bogus long term capital gain is claimed to convert unaccounted income of the family. The key person of the group, Mr. Udai Lal Anjana also confirmed this in the statement recorded u/s 132(4) of the I. T. Act. Ms. Surabhi Anjana stated in her statement during search that she has not done any share trading. From the statement it is evident that the bogus entry of Capital Gain is arranged by the appellant in the name of his daughter. Therefore, bogus LTCG surrendered by Ms. Surbhi Anjana is treated by AO as bogus LTCG in the hands of Sh. Bharat Kumar Anjana.
The AO accordingly treated total receipts from sale of shares of Rs.80,90,275/- in the case of Ms. Surbhi Anjana, as income of appellant on substantive basis. The AO treated it as unexplained as per the provisions of section 69 of the IT. Act and tax is calculated as per the provisions of section 115BBE of the I.T. Act.
Per contra the appellant stated that Ms. Surbhi Anjana has already added the Long Term Capital gains of Rs. 80,50,522, in her return of income filed u/s. 153A and hence same cannot be added back in the appellant's case. The appellant also stated that without providing an opportunity of being heard this addition is made.
From the reply of the appellant two things become evident. There is bogus LTCG arranged in this case which is declared as income in the Return I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 93 of Income. Ms. Surabhi Anjana confirmed in her statement that she is not involved in this activity of share trading.
During search operation it became evident that the bogus LTCG is actually arranged accommodation entry taken by the appellant in the name of his daughter. The income needs to be taxed in the hands of person who has earned it. Therefore, the addition made by the AO in the hands of the appellant is found to be justified and confirmed.
In view of the above discussion, addition made by the AO u/s 69 in the hands of the appellant is confirmed in the hands of the appellant.
This ground of appeal is treated as dismissed.
39. In support of the ground so raised the ld. AR of the assessee submitted that the addition sustained by the ld. CIT(A) is without any justification in as much as said capital gain was surrendered by Ms Surbhi Anjana in return furnished u/s 153A on 21-06-2017. The same has been assessed substantively in her hands. The ld. AR of the assessee in support, thereof, referred para 5 and Para 5.3 appearing at Page 123 & 130 of assessment order wherein income of Rs. 80,50,522/- has been assessed substantively and only 39,753/- have been assessed protectively. The ld. AR of the assessee further referring to Page 299 of APB being rejoinder to the remand report made by assessee before the Ld. CIT(A) submitted that sale consideration received on sale of shares of PsIT Infra itself was only Rs. 80,20,522/- against which Ms Surbhi Anjana surrendered LTCG in return furnished u/s 153A on 21-06-2017 at Rs. 80,50,522/- which was disclosed in balance sheet as current liability in the name of M/s Arihant Capital Markets Ltd i.e. the I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 94 stockbroker through whom shares were sold and who remitted the funds to Ms Surbhi Anjana as sale consideration. Thus, the ld. AR of the assessee submitted that reliance placed by the ld. AO and ld. CIT(A) merely on the statement of Ms Surbhi Anjana is highly unjustified and untenable when the income has already taxed in the hands of the Ms. Surbhi Anjana how the same can be sustained in the hands of the assessee. Referring to the statement recorded u/s 132(4) of Ms Surbhi Anjana, copy placed at Page 250-255 of APB, the ld. AR of the assessee submitted that in reply to Q. No. 6 she stated that she had not purchased the shares but shares were purchased in her name. As stated in submissions appearing at Page 299 of APB, the shares were purchased in financial year 2008-09, a year in which Ms Surbhi Anjana was minor and therefore, she was right in stating that she had not purchased the shares on her own. In reply to Q. No. 9 & 19 she stated that amount came in her bank account when she was studying BBA and she had shared her internet banking password for transfer of funds credited to her account. This indicates that her bank account was operated and controlled by her except for one isolated transaction. In reply to Q. No. 14, she was able to explain as to what is called long term capital gain. In reply to Q. No. 16 she stated that she received significant amount in her bank account once but nature of such receipt was not I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 95 known to her. In reply to Q. No. 20, she stated that she does not earn income from any sources. This statement of hers cannot be considered incriminating as she stated the position on the date of search only. In reply to Q. No. 24, she stated that she has no interest and knowledge in share trading and do not want to state further in that regard. The ld. AR of the assessee submitted that long term investment and share trading are not at par, both have different dimensions and statement given by Ms Surbhi Anjana need to be looked in that background. The Ld. AR of the assessee submitted that the ld. AO in the case of Ms Surbhi Anjana taxed LTCG earned on sale of shares on the basis of Q. No. 24 of statement recorded u/s 132(4) wherein she was asked to respond as to why LTCG of Rs. 80,90,275/- should not be treated as bogus LTCG in her hands. The ld. AR of the assessee submitted that no incriminating material was noticed in the course of search in as much as correct amount of sale consideration received by Ms Surbhi Anjana was also not stated. Correct amount of sale consideration was Rs. 80,20,522/- against which Authorised Officer considered the said amount at Rs. 80,90,275/- which is certainly based on borrowed satisfaction and nothing else. The ld. AR of the assessee further submitted that merely because Ms Surbhi Anjana surrendered the capital gain for taxation, the legitimate capital gain earned by her need not be termed as bogus and I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 96 that too in the hands of the assessee. The ld. AR of the assessee by referring to the decisions of Tribunal in the case of M/s Kota Dall Mill vs DCIT dtd 31-12-2018, copy placed at Pages 229-264; Abhishek Doshi in ITA No. 3122/Mum/2022 dated 31-05-2023, copy placed at Pages 365- 371; Jitendra Udaylal Jain in ITA No. 2042/Mum/2023 dated 24-11/2023, copy placed at pages 372-395 and Hon'ble Allahabad High Court in PCIT vs Smt. Renu Agarwal [2023] 153 taxmann.com 578 (All), copy placed at Pages 402-403 of case law compilation, submitted that if capital gain been not surrendered by Ms Surbhi Anjana, no addition was otherwise also permissible in her hands. The ld. AR thus concluded that once income is substantially assessed in the hands of Ms Surbhi Anjana and has not been disputed by her, the same cannot be assessed substantively in the hands of assessee again and more particularly, when no evidence of any undisclosed income earned by assessee and converted into LTCG through shares of PsIT Infra was noticed in the course of search or brought on record by the lower authorities. The ld. AR of the assessee also submitted that protective income of Rs. 39,753/- assessed in the hands of Ms Surbhi Anjana by the ld. AO is hypothetical and not supported by any such receipt. Actual amount of capital gain remains at Rs. 79,20,522/- [i.e. Rs. 80,20,522/- being sale consideration less Rs. 1,00,000/- being investment and cost of shares I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 97 sold] against which income has been assessed substantively at Rs. 80,50,522/- i.e. higher by Rs. 1,30,000/-. Taxation of same income in the hands of assesse again amounts to double taxation which is impermissible in law. Accordingly, submitted that the addition sustained by Ld. CIT(A) in the case of assessee is highly unjustified.
40. On the other hand, the ld. DR representing the revenue relying on the statement of Ms Surbhi Anjana vehemently argued that the findings of the ld. AO and ld. CIT(A) should be confirmed as there is no error in the appellate order and findings of ld. CIT (A) needs to be confirmed.
41. We have heard the rival contentions and perused the material placed on record. The bench noted that the so far as the contention of the capital gain as to undisclosed income we note from the orders of the lower authority that no evidence of any incriminating material related to the sale of shares of PsIT Infra was found in the course of search. Further, Ms Surbhi Anjana surrendered the capital gain for taxation in return furnished u/s 153A which the ld. AO assessed substantively in her hands at Rs. 80,50,522/- against capital gain of Rs. 79,20,522/- and gross realised sale consideration of Rs. 80,20,522/-. The same amount is again taxed in the hands of assessee substantively at Rs. 80,50,522/-.
I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 98 We are of the considered view that same income cannot be taxed twice substantively in the hands of two assessee. We also find that assessee was not confronted with the statement of Ms Surbhi Anjana in the course of search at the time of recording of statement u/s 132(4). We also find that lower authorities have not brought any material on record to indicate that assessee converted his undisclosed income in the guise of LTCG in the name of Ms Surbhi Anjana. Investment in shares of PsIT infra was kept for more than 4 years and thereafter said shares were sold. Under these circumstances it cannot be held that the investment in shares of PsIT Infra in financial year 2008-09 was made in order to convert undisclosed income in the year under consideration. We also find that Ms Surbhi Anjana has not been held to be benamidar of the assessee. Thus, taking into account the overall aspect of the matter and circumstances explained with the records brought on record by the Ld. AR of the assessee which has not been controverted by the ld. DR. There is no fact on record that the matter of charge of capital gain in the case of Ms. Surbhi Anjana is under disputed at any forum. Thus, when that original income has been taxed in the hands of the Ms. Subhi Anjana we hold that long term capital gain earned by Ms. Surbhi Anjana of Rs. 80,90, 275/- is not liable to be assessed in the hands of assessee i.e. Rs. 80,50,522/- being assessed substantively in the hands of Ms I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 99 Surbhi Anjana which is evident from Para 5.3 of assessment order appearing at Page 130 of PB and Rs. 39,753/- being non existing capital gain as total sale receipts itself were Rs. 80,20,522/- only. Thus, we are of the considered view that same income cannot be taxed twice substantively in two hands. Accordingly, addition confirmed by the Ld. CIT (A) of Rs. 80,90,275/- is not sustainable and is liable to be deleted. Based on these observations and discussion so recorded herein above the ground no. 8 raised by the assessee is allowed.
42. Ground No. 9 relates to addition of Rs. 2,59,466/- being interest income earned by Ms Surbhi Anjana held to be assessable in the hands of assessee. In the return of income file by Miss Surbhi Anjana daughter of the assessee has disclosed income amounting to Rs 2,62,150 as income from other sources which includes interest income of Rs. 2,59,466 related to the interest other than bank. From the details filed by the assessee it is noticed that the interest of Rs. 1,82,411 was received from the assessee Shri Bharat Kumar Anjana on unsecured loan of Rs. 57,00,000 and Rs. 77,055 received from M/s. U. B. investment on unsecured loan of Rs. 22,50,000. The unsecured loan claimed to have been given are nothing but amount of bogus long term capital gain belong to Shri Bharat Kumar Anjana hence interest income thereon of I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 100 Rs 2,59,466 should also be taxed in the hands of the assessee. Accordingly, addition of Rs. 2,59,466 made in the hands of the assessee.
43. In the second the ld. CIT(A) has confirmed the addition of Rs. 2,59,466/- vide para 11.3 of the appellate order the relevant finding of the ld. CIT(A) is reproduced here in below :
I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:-
As per AO the unsecured loan claimed to have been given are nothing but amount of bogus LTCG as discussed above. Since, bogus LTCG belongs to Sh. Bharat Kumar Anjana, hence, interest income thereon of Rs 2,59,466/- should also belongs to appellant Sh. Bharat Kumar Anjana. Accordingly addition of Rs 2,59,466 was made to the income of the appellant.
Per contra the appellant stated that as explained above, Ms. Surbhi Anjana has already declared in her return the long term capital gains as her income and interest earned on advancing those funds have also been shown as her income. That Surbhi Anjana is separately assessed u/s 153A by Dy. Commissioner of Income Tax, Central Circle-1, Udaipur for A.Y. 2014-15 to 2017-18. Further, based on the decision of the Supreme Court in CIT v. Manilal Dhanji [1962] 44 ITR 876 (SC), on the attainment of majority by the minor, the accumulated fund cannot be included in the income of the parent, since on the date of receipt, the recipient is no longer a minor. The income relating to minor will be added with parent till the date of minority and the income from the date of attaining majority will be taxed in the hands of child.
The AO has based the addition on the findings of search operation where the CA of the family admitted that bogus LTCG is offered in the return of Income. Ms. Surabhi Anjana was not aware about the share trading. The appellant stated that Ms. Surabhi Anjana attained majority and therefore, her income cannot be clubbed with his income. The claim of the appellant is not found to be correct that the income has been clubbed as per section 64 (1A). The AO has made addition because the I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 101 income shown in the name of Ms. Surabhi Anjana is proved to be bogus. Further, the appellant's reliance on the decision of Hon'ble Supreme Court is found to be not applicable on the facts of the case. Issue before the Hon'ble court in that case was of trust deed where the income from the trust funds was to be accumulated and added to the trust funds and after the assessee's daughter attained majority she was to get only the income from the enlarged trust funds. The facts of this case are entirely different. Here the AO made addition because the return of Income filed by Ms. Surabhi Anjana are found to be without there being any activity by her and it is actually income of father i.e. appellant which is being shown as income of Ms. Surabhi Anjana. Therefore, the addition made by the AO is found to be justified on the facts of the case. This ground of appeal is treated as dismissed.
44. In support of the ground so raised by the assessee in this appeal the ld. AR of the assessee invited our attention to the assessment order passed u/s 153A in the case of Ms Surbhi Anjana placed at Pages 122- 131 of PB wherein source from which loans and advances were given on which she earned interest income as well as interest income of Rs. 2,59,466/- both have been taxed substantively in her hands which is evident from para 7 of the assessment order. While holding that this income liable to be taxed in the hands of assessee has also not been excluded in the hands of Ms Surbhi Anjana which is evident from para 8 of the assessment order passed in the case of Ms Surbhi Anjana. The ld. AR of the assessee referring to para 17 of judgment of Hon'ble Supreme Court in the case of SAIL DSP Employees Association 1998 [2003] 262 ITR 638 (Cal), copy placed at Page 216-223 of case law compilation, for the proposition that what is not otherwise taxable cannot I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 102 become taxable because of admission of the assessee. Nor there can be any waiver of the right otherwise admissible to the assessee in law. The chargeability is not dependent on the admission or waiver by the assessee. Chargeability is dependent on the charging section, which need to be strictly construed. The ld. AR of the assessee also placed reliance on the judgment of Hon'ble Supreme Court in the case of CIT vs V. Mr. P. Firm, Muar reported at [1965] 56 ITR 67 (SC), copy placed at Pages 208-215 of case law compilation, wherein it has been held that if a particular income is not taxable under the Income-tax Act, it cannot be taxed on the basis of estoppel or any other equitable doctrine. Equity is out of place in tax law, a particular income is either exigible to tax under the taxing statute or it is not. If it is not, the ITO has no power to impose tax on the said income. Reliance was also placed on Hon'ble Bombay High Court judgment in the case of Nirmala L Mehta vs CIT [2004] 269 ITR 1 (Bom), copy placed at Pages 224-228 of case law compilation, for the proposition that there cannot be any estoppel against the statute. Article 265 in unmistakable terms provides that no tax shall be levied or collected except by authority of law. Acquiescence cannot take away from a party the relief that he is entitled, to where the tax is levied or collected without authority. Ld. A/R accordingly submitted that addition made of Rs. 2,59,466/- being interest income earned by Ms I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 103 Surbhi Anjana and assessed in the hands of assessee is highly unjustified.
45. Per contra, the ld. DR placed reliance on the statement of Ms Surbhi Anjana recorded u/s 132(4) and also the exhaustive findings and conclusions drawn by the ld. AO as well as ld. CIT(A) and submitted that ground raised by the assessee is not maintainable and deserves to be dismissed.
46. We have heard the rival contentions and perused the material placed on record. The bench noted that the only reasons advanced by the ld. AO while making the addition that the principle amount upon which the assessee received interest is out of the capital gain which the ld. AO added in the hands of the assessee. While dealing with the ground no. 8 we have decided that the said income is of Ms. Surbhi Anjanan and not of the assessee. we have held that such incomes are not liable to be assessed in the hands of assessee as such incomes have been assessed substantively in the hands of Ms Surbhi Anjana and not disputed by her by way of further appeal. We also find that source of loans and advances on which she earned income have already been taxed substantively in her hands. Therefore, said loans I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 104 and advances cannot be held to be belonging to the assessee. To our mind same income cannot be taxed twice substantively in two hands. Accordingly, addition confirmed by the Ld. CIT (A) of Rs. 2,59,466/- is not sustainable and is liable to be deleted. In the light of this observation the ground no. 9 raised by the assessee is allowed.
47. Ground no. 1 to 4 are on technical ground challenging the validity of the assessment. Since we have allowed the appeal of the assessee on merits in ground no. 5 to 9 the ground no 1 to 4 becomes educative and are thus not adjudicated. In the result the appeal in ITA No. 306/Jodh/2023 stands allowed.
48. Now we take the appeal of the assessee in ITA no. 307/Jodh/2023 for assessment year 2016-17. In this appeal the assessee has raised the following grounds:-
1. The Ld. CIT(A) erred on facts and in law in upholding assessment order passed u/s 153A r.w.s. 143(3) of the Act making addition to the returned income without appreciating that assessment under reference was a completed assessment and there was no incriminating material found in the course of search qua assessment year under reference. No addition ought to have made in absence of any incriminating material as held and affirmed by Hon'ble Supreme Court in PCIT vs Abhisar Buildwell P Ltd (2023) 454 ITR 212 (SC).
2. The Ld. CIT(A) erred on facts and in law in confirming advance given by appellant to M/s U B Investment Prop Shri Vikram Anjana based on third party statements without appreciating that statements per se are not incriminating unless corroborated with documentary evidence.
I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 105
3. The Ld. CIT (A) erred on facts and in law in not appreciating the notarized affidavit of Shri Gyanchand Jain alias Chordia submitted in the course of remand/ appellate proceedings.
4. The Ld. CIT(A) erred on facts and in law in not issuing summons to Shri Gyanchand Jain alias Chordia in relation to financial transactions with M/s U B Investment for cross examination.
5. The Ld. CIT(A) erred on facts and in law in confirming addition u/s 69A amounting to Rs. 2,75,000/- being additional income declared by appellant's daughter Kumari Surbhi Anjana in her hands and assessed substantively in her hands.
6. The Ld. CIT(A) erred on facts and in law in confirming addition of Rs. 8,18,352/- being interest income earned by appellant's daughter Kumari Surbhi Anjana without appreciating that the said interest income has already been taxed substantively in her hands.
7. The Ld. CIT(A) erred on facts and in law in confirming addition of Rs. 5,70,79,371/- loan advanced to M/s U B Investment prop Shri Vikram Anjana during the year based on unsubstantiated statements and irrelevant material without specifying the provision under which this amount is brought to tax.
8. The Ld. CIT(A) erred on facts and in law in confirming addition of Rs. 51,00,000/- u/s 68 being amount received from M/s U B Investment prop Shri Vikram Anjana
9. The Ld. CIT(A) erred on facts and in law in confirming disallowance of interest of Rs. 57,92,440/- paid to M/s U B Investment prop Shri Vikram Anjana during the year.
10. The Ld. CIT(A) erred on facts and in law in confirming addition of Rs. 15,00,000/- on account of cash deposited in the bank accounts by treating the same to be unexplained without pointing out any defect in the audited books of accounts and the nature of business carried on by the appellant.
11. The Ld. CIT(A) erred on facts and in law in confirming addition of Rs. 1,50,000/- on account of alleged unexplained investment in purchase of property without appreciating that such investment is duly recorded in the books.
49. The fact of the case in ground Nos. 5 & 6 raised by the assessee in ITA Nos. 307/Jodh/2023 is similar to the ground Nos. 8 & 9 of the assessee raised in ITA No. 306/Jodh/2023 and therefore, it is not imperative to repeat the fact arguments and finding. Thus, so far as ground Nos. 5 & 6 in this appeal is concerned the decision taken by the Bench in ground Nos. 8 & 9 in ITA No. 306/Jodh/2023 shall apply I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 106 mutatis mutandis in ground Nos. 5 & 6 of the assessee. Based on this observation the ground Nos. 5 & 6 raised by the assessee are allowed.
50. Ground no. 7, raised by the assessee relates to the protective addition of Rs. 5,70,79,371/- sustained by the ld. CIT(A) with reference to advances given by assessee to M/s U B Investment Prop Shri Vikram Anjana. The AO made addition by observing that "During the course of assessment proceeding it came to notice that the assessee Shri Bharat Kumar Anjana have also advanced Rs. 5,70,79,371/- to M/s. U. B. Investment. During the search and assessment proceedings it is understood that it is also unaccounted money of M/s. U. V. Investment. However to protect the interest of revenue same is added to the income of the assessee on protective basis."
51. The ld. CIT(A) confirmed the protective addition vide order dated 28.06.2023. Whereas the bench noted Shri Vikram Anjana Prop., of M/s. U. B. Investment approached the interim Board for settlement- VII, Chennai and the said order was made on 30.11.2023. Thus, the finding of that order is considered to decide the protective addition made in the hands of the assessee. We note that corresponding to the proceeding in the case of IBS the revenue has submitted the rule 9 report and based I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 107 on that report the ld. IBS on the issue of loan accepted and given has recorded their finding and the same is reiterated here in below:
6.1 The PCIT observed that unsecured loans of Rs.48,51,93,564/- was received by M/s.U.B.Investment, proprietary concern of Shri Vikram Anjana, through brokers. It was submitted that Shri Vikram Anjana was used as conduit for introduction of unaccounted money of the group into the books of the flagship company, M/s.Chetak Enterprises Ltd. and it was proposed that the said sum should be added in the hands of Shri Vikram Anjana. We are unable to find merit in the arguments of the department on this issue.
M/s.Chetak Enterprises Ltd. has admitted and offered income in relation to transaction entered into through finance broker Shri Atul Jain on peak investment basis at Rs.4,18,99,518/- in the SOF. The case of M/s.Chetak Enterprises Ltd. was rejected by this Board vide order u/s.245D(4) dated 08.06.2023. The Rule 9 report also points out that the said sums represented unaccounted money of the group ultimately introduced into the books of M/s.Chetak Enterprises Ltd. Hence, taking into account the material placed before us, we are of the considered view that any addition of this nature as proposed by the department cannot be made in the hands of Shri Vikram Anjana, but may be considered in the hands of M/s. Chetak Enterprises Ltd. if necessary during the course of proceedings in the case of the company as the case may be. This also holds good in respect of introduction of loans by family members in the books of M/s. U.B. Investment amounting to Rs. 16,89,48,426/- to the extent that the additions are not to be considered in the hands of Shri Vikram Anjana.
52. The ld. DR did not place on record the fact that the order of the IBS is not accepted by the revenue further challenging the finding of the IBS. Therefore, the finding of the IBS on the issue of acceptance of loan or advancement of loan is considered as genuine and therefore, once the loan received and given is duly considered as genuine in the case of Shri Vikram Anjana the prop. Of M/s U. B. Investment, the separate addition in the case of on acceptance or advancement of loan cannot be considered as non-genuine and that too on protective basis. The ld.
I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 108 CIT(A) has confirmed the addition vide order dated 29.06.2023 whereas the order of IBS is dated 30.11.2023 and therefore, the finding of the ld. IBS may not be placed before the ld. CIT(A). The ld. CIT-DR reiterated the same arguments as has been recorded in the orders of the lower authority. But at the same time, the ld. DR however, has not pin pointed any deficiency in the documents placed in the paper book; judicial precedents relied upon and referred to by the Ld. AR and even not updated as to the fact that the order of IBS is not accepted by the revenue and the same is challenged in the High Court or not. Therefore, we have considered the finding of the ld. IBS and direct to delete the addition of Rs. 5,70,79,371/- made on protective basis. Based on this discussion ground no. 7 raised by the assessee is allowed.
53. Ground no. 8 relates to addition of Rs. 51,00,000/- made u/s 68 on account of receipt of unsecured loan by assessee from M/s U B Investment. This addition is made by AO vide Para 8 of the assessment order and the same is sustained by the ld. CIT(A). After the receipt of the order the we have been appraised by the assessee that Shri Vikram Anjana Prop. of M/s. U. B. Investment has approached the IBS and the order of the IBS has not been challenged further by the revenue as detailed observed by us while deciding ground no. 7 of the assessee.
I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 109 Since, the ld. IBS has accepted all the loan received and given as genuine the same cannot be added in the hands of the assessee. Based on this factual aspect of the matter ground no. 8 raised by the assessee is allowed.
54. The ground no. 9 raised by the assessee is similar to ground no. 6 raised by the assessee in ITA No. 306/Jodh/2023 and therefore, the finding recorded by the bench in ground Nos. 6 in ITA No. 306/Jodh/2023 shall apply mutatis mutandis in ground Nos. 9 raised by the assessee in this appeal. In terms of these observations, Ground No. 9 raised by the assessee is allowed.
55. Ground no. 10 relates to addition of Rs. 15,00,000/- on account of cash deposited in bank account. While making this addition the ld. AO noted that "During the course of assessment proceedings it is notitced that the assessee has deposited cash amounting to Rs. 15 lakh on 31/03/2016 in his bank accounts. Explanation of the assessee that it was out of opening cash balance and other payments received / earlier withdrawal is not satisfactory. AR has not submitted the cash book to justify the claim and the same is treated out of the unexplained sources and added to the total income of the assessee."
I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 110
56. In the first appeal the ld. CIT(A) has confirmed the addition by observing that ;
"I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:-
The AO noted that the appellant has deposited cash amounting to Rs. 15 lakhs on 31.03.2016 in his bank account. Explanation of the AR that it was out of opening cash balance and other payments received/ earlier withdrawal is not found satisfactory.
Per contra the appellant stated that appellant was having sufficient cash balance as explained in Para 1. Copy of cash book also furnished.
After careful perusal of the facts of the case, it is noted that the appellant was not in a position to establish availability of cash as discussed in para 7 of this order while deciding ground no. 4 of this appeal. Therefore, on the basis of reasoning given in para, the explanation of the appellant is not found to be acceptable and the addition made by the AO is upheld.
This ground of appeal is treated as dismissed."
57. In support of the ground no. 10 raised by the assessee the ld. AR of the assessee submitted that addition sustained by Ld. CIT is without any justification and is highly untenable. The ld. AR of the assessee also submitted that assessee deposited cash of Rs. 15,00,000/-on 07-12- 2015 in State Bank of Bikaner and Jaipur out of the closing cash balance of 06-12-2015 of Rs. 15,63,139/-. The ld. AR of the assessee in support of the claim submitted that books of accounts of the assessee which are audited u/s 44AB of the Act and Tax Auditor has not placed any qualification. The ld. AR of the assessee further submitted that ld.
I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 111 AO also has not drawn any adverse inference with reference to opening cash balance as well cash receipts reflected in the cash book appearing at Page 157-160 of APB.
58. The ld. DR against this addition disputed by the assessee supported the findings recorded in the order of the assessment as well as findings of the Ld. CIT(A).
59. We have heard the rival contention and perused the material placed on record. The bench noted while making the submission on merits for an addition of Rs. 5,70,79,371/- vide ground No. 7, the assessee in detailed explained the source of cash deposited in the bank account. The ld. DR did not controvert this factual aspect of the matter already filed in the paper book by the assessee and therefore, we have no hesitation in deleting addition of Rs. 15,00,000/- made in relation of cash deposited in the bank account. Based on this observation ground no. 10 raised by the assessee is allowed.
60. Ground no. 11 raised by the assessee relates to addition of Rs. 1,50,000/- on account of unexplained investment in purchase of property. While making this addition the ld. AO noted that in the search proceeding u/s. 132 on the residential premises of the assessee, certain incriminating documents were found and seized as per seized document I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 112 panchnama, Annexure A, Exhibit 1 to 7. Some of the documents from Exhibit 1 of Annexure A are sale deeds and sale agreements pertain to the assessee. Further page no. 30 & 31 is sale agreement dated 12.02.2016 for Rs. 11,50,000/- out of which as per assessee Rs. 1,50,000/- were paid during the year for property transaction. The ld. AR of the assessee submitted that it is out of regular transaction recorded in the books. But since no cash book submitted ld. AO treated it as unexplained and added to the income of the assessee.
61. Before the ld. CIT(A) against the ground for this addition the ld. CIT(A) has confirmed the addition by observing as under :
"I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:-
The AO made addition of unexplained cash payment in property transaction because the appellant failed to explain this transaction from books of accounts. In the balance sheet of the assessee this transaction is not reflected. Before, the AO, the appellant submitted that it was out of regular books of assessee. But, no cash book or any other document submitted or produced for verification.
In the appellate proceedings the appellant has changed his stand. No such plea was taken before the AO. The appellant has not explained why different explanation was furnished before AO. Further, the appellant has not furnished any independent evidence about date of actual transaction except ledger which is prepared by him. No evidence is furnished to explain why the date was mentioned as 12.02.2016 and later on corrected as 12.05.2016. In the absence of these, the explanation of the appellant is not found acceptable. Therefore, the addition made by the AO is not found to be justified as the appellant has not explained all the relevant facts of the transaction with independent evidences.
This ground of appeal is treated as dismissed."
I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 113
62. In support of the ground no. 11 raised by the assessee the ld. AR of the assessee referred to the seized document appearing at Pages 161-165 of PB to contend that though date of agreement is stated to be 12-02-2016 in the seized agreement which appears to be a typographic error as stamp paper itself was purchased on 07-09-2016 which is evident from page 164 of PB. He, therefore, submitted that as per the records of the assessee correct date of investment is 12-05-2016 as recorded in the books and in support thereof he referred to ledger account appearing at Page 161 of APB where in the narration it has been categorically stated that there was a typographic error at the time of execution of agreement. The ld. AR of the assessee submitted that search in the case of the assessee took place on 16-09-2016 and audit of the books for the year under consideration got completed on 28-09- 2016 i.e. after the date of search and in such event assessee could have corrected the date of investment recorded in the books on 12-05-2016 to 12-02-2016 but opted not to do so as actual payment of date was on 12- 05-2016 only. Without prejudice to this, it is further submitted by Ld. AR that even if date of payment is taken to be as stated in the agreement still no addition is warranted because as on 12-02-2016, assessee had cash balance of Rs. 15,23,889/- and at the end of the year at Rs. 1,53,483/- which is sufficient to cover investment of Rs. 1,50,000/-
I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 114 because in such an event closing cash balance would have got reduced to Rs. 3,483/- against Rs. 1,53,483/- appearing in the cash book. The ld. AR of the assessee further referred to Page 89-91 of written synopsis being capitalization chart appearing in settlement order passed u/s 245D(4) in the case of Shri Puranmal Anjana [brother of appellant], Shri Manoharlal Anjana and Shri Udailal Anjana [both maternal uncles of assessee] to indicate that assessee was given cash gifts of Rs. 16,50,000/- [Rs. 11,50,000/- + Rs. 5,00,000/-] by Shri Puranmal Anjana, Rs. 67,52,000/- by Shri Manoharlal Anjana and Rs. 1,50,000/- by Shri Udailal Anjana which the assessee had not recorded in the books. If these gifts are taken into consideration for which capitalization is allowed, then also no addition is warranted in the case of the assessee.
63. Per contra the ld. DR by referring to the cash book appearing at Pages 157-159 of PB argued that investment made of Rs. 1,50,000/- is not recorded in the books of the assessee but noticed in the course of search action and, therefore, addition has been rightly made by the ld. AO and sustained by the Ld. CIT (A).
64. We have heard the rival contention and perused the material placed on record. The bench noted that in seized document date of I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 115 payment is stated to be as 12-02-2016 but stamp paper for executing agreement itself was purchased on 17-09-2016, therefore, execution of agreement in the year under consideration was not possible. The contention put forth by the Ld. A/R appears plausible. However, date of payment being specifically stated to be as 12-02-2016, the same cannot be questioned as assessee has not brought any material contrary to that or affidavit of the recipient in this regard. As per the provisions of section 132(4A) and section 292C presumption is against the assessee. Therefore, date of payment of Rs. 1,50,000/- needs to be read as 12-02- 2016 and not 12-05-2016 as contended by the assessee. However, we find substantial force in the alternate contentions of the Ld. A/R that even if the date of payment appearing in the books of the assessee to be as 12-05-2016 is substituted to be as 12-02-2016 as appearing the agreement, still no addition is warranted as investment made by the assessee is covered by the available cash funds with the assessee which at no stage got exhausted till the end of the year. Further, as per settlement order passed u/s 245D(4) of the Act, gifts of Rs. 16,50,000/- [Rs. 11,50,000/- + Rs. 5,00,000/-] by Shri Puranmal Anjana [brother of assessee], Rs. 67,52,000/- by Shri Manoharlal Anjana [maternal uncle of assessee] and Rs. 1,50,000/- by Shri Udailal Anjana [maternal uncle of assessee] were given to the assessee which were not recorded in the I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 116 books. If these gifts are taken into consideration then assessee had sufficient cash balance as on 12-02-2016 to make investment of Rs. 1,50,000/- Under these circumstances, we accept alternate contention of the assessee and direct to delete the addition of Rs. 1,50,000/-. Based on this observation ground no. 11 raised by the assessee is allowed.
65. Ground no. 1 to 4 are on technical ground challenging the validity of the assessment. Since we have allowed the appeal of the assessee on merits in ground no. 5 to 11 the ground no 1 to 4 becomes educative and are thus not decided. In the result the appeal in ITA No. 307/Jodh/2023 stands allowed.
66. Now we take up the appeal of the assessee in ITA No. 308/Jodh/2023 for assessment year 2017-18. In this appeal the assessee has raised the following grounds of appeal:
1. The Ld. CIT(A) erred on facts and in law in upholding assessment order passed u/s 153A r.w.s. 143(3) of the Act making addition to the returned income without appreciating that assessment under reference was a completed assessment and there was no incriminating material found in the course of search qua assessment year under reference. No addition ought to have made in absence of any incriminating material as held and affirmed by Hon'ble Supreme Court in PCIT vs Abhisar Buildwell P Ltd (2023) 454 ITR 212 (SC).
2. The Ld. CIT(A) erred on facts and in law in confirming advance given by appellant to M/s U B Investment Prop Shri Vikram Anjana based on third party statements without appreciating that statements per se are not incriminating unless corroborated with documentary evidence.
I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 117
3. The Ld. CIT (A) erred on facts and in law in not appreciating the notarized affidavit of Shri Gyanchand Jain alias Chordia submitted in the course of remand/ appellate proceedings.
4. The Ld. CIT(A) erred on facts and in law in not issuing summons to Shri Gyanchand Jain alias Chordia in relation to financial transactions with M/s U B Investment for cross examination.
5. The Ld. CIT(A) erred on facts and in law in confirming addition u/s 69A r.w.s. 115BBE of the Act amounting to Rs. 32,100/- being additional income declared by appellant's daughter Kumari Surbhi Anjana in her hands and assessed substantively in her hands.
6. The Ld. CIT(A) erred on facts and in law in confirming addition of Rs. 8,91,560/- being interest income earned by appellant's daughter Kumari Surbhi Anjana without appreciating that the said interest income has already been taxed substantively in her hands.
7. The Ld. CIT(A) erred on facts and in law in confirming addition of Rs. 7,74,000/- u/s 68 r.w.s. 115BBE of the Act being loan received from M/s U B Investment prop Shri Vikram Anjana during the year based on unsubstantiated statements and irrelevant materials.
8. The Ld. CIT(A) erred on facts and in law in confirming disallowance of interest of Rs. 36,252/- paid to M/s U B Investment prop Shri Vikram Anjana during the year.
9. The Ld. CIT(A) erred on facts and in law in confirming addition of Rs. 3,59,130/- u/s 69A r.w.s. 115BBE of the Act by treating the cash found in the course of search to be unexplained without pointing out any defect in the cash books and without rejecting books of accounts audited u/s 44AB of the Act.
10. The Ld. CIT (A) erred on facts and in law in confirming addition of Rs. 21,60,000/- u/s 69 r.w.s. 115BBE of the Act on account of alleged unexplained investment in purchase of property without appreciating that such investment was not made by the appellant but his brother who offered the income in his hands.
11. The Ld. CIT (A) erred on facts and in law in confirming addition of Rs. 22,537/- being interest on income-tax refund.
12. The Ld. CIT(A) erred on facts ad in law in upholding the action of the Assessing Officer invoking deeming provisions u/s 69, 69A etc and applying higher rate of taxation thereon u/s 115BBE without appreciating that appellant was subjected to search and seizure action much before the introduction of Taxation Laws (Second Amendment) Act, 2016 w.e.f. 15-12-2016 and therefore, higher rate of taxation was not applicable in the case of the appellant as held by Hon'ble Indore Bench of the Tribunal.
67. The fact of the ground No. 5 to 8 raised by the assessee in ITA No. 308/Jodh/2023 are similar to the ground Nos. 5 to 8 raised by the assessee in ITA No. 307/Jodh/2023 and therefore, the finding recorded I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 118 by the bench in ITA No. 307/Jodh/2023 while deciding the ground No. 5 to 8 shall apply mutatis mutandis to ground No. 5 to 8 raised by the assessee in ITA No. 308/Jodh/2023. In terms of these observations, ground No 5 to 8 raised by the assessee are allowed.
68. Ground No. 9 raised by the assessee relates to addition of Rs. 3,59,130/- on account of cash found during search and treated as unexplained u/s 69A r.w.s. 115BBE. The brief fact as emerges from the assessment order is that during search operation total cash of Rs. 3,59,130/- was found from the residence of Shri Bharat Kumar Anjana and his son Shri Vipin Anjana. When Shri Bharat Anjana was confronted in his statement recorded on oath under section 132(4) of the Act on 16/9/2016 he failed to explain source of cash of Rs. 3,59,130 thus the case of Rs. 2,79,130/- was seized. During the search proceeding as well as post search enquiry the assessee was provided opportunity to explain the above cash source with documentary evidence / books of account but the assessee failed to explain the same. Therefore, cash found of Rs. 3,59,130 treated as unexplained money under section 69A of the Act.
I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 119
69. In the first appeal the ld. CIT(A) has sustained the addition. The relevant finding of the ld. CIT(A) is reproduced herein below:
"I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:-
The AO made addition of unexplained cash because during the course of the search total cash of Rs.3,59,130/- was found. Shri Bharat Anjana was confronted in his statement recorded on oath u/s 132(4) of the Act on 16.09.2016 and he has failed to explain the source of cash of Rs. 3,59,130/-
during the search proceedings.
The appellant explained that this cash was out of cash book of the appellant. To explain the unexplained cash the appellant has furnished cash book of Sh. Bharat Kumar Anjana of Rs.1,25,063/- and in the cash book of M/s Bharat Trading Company of Rs.13,40,971.81/-. However, there is no entry of cash transfer from shop (M/s Bharat Trading Company) to residence. Hence, the cash found at residence was more than the cash as per cash book. The AO was asked to verify from the findings of search whether cash of Rs.13,40,971.81/- was found at the shop on the date of search. The AO reported that during the survey action, total cash of Rs.14,020/- was found from this premises of M/s Bharat Trading Company. On verification of reply of the appellant and report of the AO it is noticed that the cash found during search was not tallying with cash book furnished by the appellant. Therefore, it is evident that the cash book prepared by the appellant is not reliable. The cash books do not show real cash available with the appellant and entries made in the cash book cannot be relied. Therefore, the explanation of the appellant that cash found during search is as per cash book is not found acceptable. In his further reply the appellant stated that in order to avert legal course for the petty sum and to buy peace to this extent Ground No. 6 deemed to be modified at place of addition of Rs. 3,59,130/- to be substituted to Rs. 1,20,230/-. According to Rs.1,20,230/- be allowed and remaining amounting to Rs. 2,38,900/- be disallowed. However, since the findings of search and survey has proved that the cash book prepared by the appellant are not reliable, this reply of the appellant is not found acceptable. The addition made by the AO about unexplained cash of Rs. 3,59,130/- is accordingly upheld.
This ground of appeal is treated as dismissed.
I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 120
70. Before us in support of the ground so raised the ld. AR of the assessee submitted that addition of Rs. 3,59,130/- sustained by Ld. CIT is without any justification. The ld. AR of the assessee referring to the Panchnama of cash found appearing at Pages 228, 230 and 384, cash book appearing at Page 225 of APB and also settlement order passed in other individuals of same group who claimed cash gifts to the assessee. This receipt of the gift is accepted by ld. IBS in order passed u/s 245D(4). The ld. AR of the assessee referred to the working placed at Page 20 of written synopsis wherein assessee has offered explanation in following terms:
Addition is made based on following panchnama made in relation to cash found during search:
Paper Location at which cash Claimed to be Amount Amount Book was found belonging to as per of cash Page Panchnama Found No 228 Bed room of appellant Puranmal Anjana, 177900 Bharatkumar Anjana (i.e. appellant) and Surbhi Anjana 230 Bad room of married son Puranmal Anjana, 181230 of appellant i.e. Shri Bharatkumar Anjana Vipin Anjana assessed (i.e. appellant) and separately Surbhi Anjana 384 Office premises of Bharat Trading Co 14020 Bharat Trading Co Prop Shri Bharat Kumar Anjana i.e. appellant Total 373150 373150 225 Less: Amount recorded in the books as per 125063 I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 121 personal cash book on the date of search 230 Less: Cash of appellant's married son who is 181230 306293 assessed to tax separately cannot be held to be cash belonging to the appellant and which was also not considered unexplained and seized by the search party Balance for which source was required to be 66857 explained by the appellant The ld. AR of the assessee based on the above chart submitted that the ld. IBS has accepted in settlement order dated 30-11-2023 that the additional income disclosed by assessee's brother Shri Puranmal Anjana was applied in making land payments aggregating to Rs.
11,50,000/- for and on behalf of the assessee and gift of Rs. 5,00,000/- to given to the assessee by him. Similarly, additional income disclosed by assessee's maternal uncle Shri Manoharlal Anjana was applied in making gifts to assessee at Rs. 67,52,000/- and by Shri Udailal Anjana to the extent of Rs. 1,50,000/- which the assessee has not recorded in the books up to the date of search. Copy of Settlement Order is placed on record as Annexure-A at Pages 24-100. Under these circumstances, cash found in possession of assessee cannot be considered to be unexplained. Since, the order of the settlement board received later and the decision of the ld. CIT(A) rendered before that and the Settlement matters being looked after by the different chartered accountant, neither the assessee nor the assessee's authorised representative who appeared before the ld. AO as well as the ld. CIT(A) had no knowledge I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 122 of aforesaid transactions / gifts. If all these aspects are taken consideration, there is no unexplained cash in the hands of assessee. The ld. AR of the assessee invited our attention to investment in property amounting to Rs. 11,50,000/- recorded in the cash book of the assessee appearing at Pages 223-226 of APB being payments of Rs. 3,10,000/- made to Shri Vardichand on 30-05-2016 (Rs. 2,00,000/-), on 31-05-2016 (Rs. 10,000/-), on Rs. 02-06-2016 (Rs. 50,000/-), on 11-06- 2016 (Rs. 50,000/-) which his brother Shri Puranmal Anjana admitted having paid in his statement recorded u/s 132(4) appearing at Page 350- 378 of PB in reply to Q. No. 31 at Page 358. Similarly, payment of Rs. 1,50,000/- to Shri Badrilal at Page 223 of PB, payment of Rs. 5,00,000/- to Shri Madanlal on 22-06-2016, Rs. 2,00,000/- to Shri Rameshwarlal on 16-06-2016 at Page 224 of PB was also admitted by his brother Shri Puranmal Anjana having been paid by him in reply to Q. No. 31 at Page
358. Ld. A/R submitted that brother of assessee Shri Puranmal Anjana claimed payment of this amount for and on behalf of the assessee. Though assessee recorded investment in his cash book but did not record the amount gifted by his brother of Rs. 11,50,000/- with reference to which capitalisation of gift to assessee is allowed by IBS at Para 5.22 on Page 67 of settlement order passed u/s 245D(4) of the Act. Ld. AR further submitted that cash found from the bed room of married son of I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 123 assessee who is assessed separately cannot be taxed in the hands of assessee. He also submitted that there is no finding of lower authorities that cash found in possession of married son of assessee is also unexplained investment/ income of the assessee. The ld. AR also referred to the remand report of AO appearing at Page 383-384 of APB wherein cash balance of M/s Bharat Trading Co Prop concern of assessee on the date of search was Rs. 13,40,971.81 but only cash of Rs. 14,020/- alone was found physically. Closing cash balance of business balance sheet appearing at Page 98 of PB of Rs.9,14,680/- [i.e. Rs. 7,94,450/-+ Rs. 1,20,230/- has also not been disputed by AO and the ld. CIT (A). Ld. A/R submitted that no adverse inference of statement of assessee's recorded u/s 132(4) during search is required to be taken. The ld. AR of the assessee by referring to the judgment of Hon'ble Telangana and Andhra Pradesh High Court in the case of CIT vs Naresh Kumar Agarwal (2014) 369 ITR 171 (AP) submitted that Courts have taken cognisance of circumstances in which statements of searched persons are recorded. Accordingly, the ld. AR of the assessee submitted that effectively there is no unexplained cash found in possession of the assessee on the date of search and submitted that addition made by AO and sustained by the Ld. CIT(A) needs to be allowed by holding the cash found on the date of search to be explained.
I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 124
71. Per contra, the ld. DR representing the revenue heavily relied upon the finding recorded in the order of the ld. CIT(A) and that of the ld. AO.
72. We have heard the rival contention and perused the material placed on record. The bench noted that explanation offered by the ld. AR of the assessee has not been controverted by the ld. DR. The finding of the ld. IBS also not challenged by the revenue further. Thus, we find that addition of Rs. 3,59,130/- comprising of Rs. 1,77,900/- found from the bed room of the assessee and Rs. 1,81,230/- from the bed room of married son of assessee is sufficiently explained by the assessee in para 70 . We also find that there is no finding of lower authorities that cash found in possession of married son of assessee also belongs to the assessee. In absence of any such finding, cash found of Rs. 1,81,230/- form the bed room of married son of assessee cannot be assessed in the hands of assessee as his unexplained investment. On going through the reconciliation statement made by assessee in written synopsis as well as remand report and also the amount of gift of Rs. 11,50,000/- made by assessee's brother Shri Puranmal Anjana by making payments of land investments in his name which assessee recorded in his cash book but without recording gifts received from his I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 125 brother which have also been accepted in settlement order passed u/s 245D(4) in the case of brother of assessee i.e. Shri Puranmal Anjana we find that effectively there was no unexplained cash in possession of assessee on the date of search warranting addition of Rs. 3,59,130/-. Under these circumstances, we have no hesitation in deleting addition of Rs. 3,59,130/- made in relation to cash found on the date of search. In terms of these observations the ground no. 9 raised by the assessee is allowed.
73. Ground no. 10 raised by the assessee relates to addition of Rs. 21,60,000/- on account of unexplained investment in purchase of property u/s 69 r.w.s. 115BBE of the Act. The relevant facts as it emerges from the assessment order is that during the course of search proceedings u/s. 132 on the residential premise of assessee, situated at Near Government School, Vill- kesunda certain incriminating documents were found and seized as per seized by punchnama, Annexure-A, Exhibit -1 to 7. Some of the documents from Exhibit 1 of Annexure A are sale deeds and sale agreements pertain to the assessee. Page No. 13 to 16, is a sale deed for agriculture land dt. 30.05.2016 where assessee has purchased a plot for a consideration of Rs. 3,60,000/-. Out of which consideration of Rs. 3,10,000/- was paid in cash during the year under I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 126 consideration. Further. page No. 24 to 27 of Exhibit 1 is sale deed for agriculture land dated 22.06.2016 in which cash of Rs. 5.00,000/- was paid by the assessee during the year. Further, page No, 28 to 29 is a sale agreement of Rs. 6,00,000/-, out of which Rs. 2,00,000/- were paid in cash during the year. Further, page No. 32 to 34 is a sale agreement of Rs. 21,51,000/-, in which Rs. 10,00,000/- were paid in cash during the year. Further, page No. 30 and 31 is a sale agreement dt. 12.02.2016 for Rs. 11,50,000/-, out of which as per assesseeRs. 1,50,000/- were paid during the year under consideration. Thus, assessee had paid total cash of Rs. 21,60,000/- for property transaction during the year, dully accepted by AR in his reply submitted during the assessment proceedings. The assessee was asked to explain the source of these cash payments. In reply, the AR submitted that it was out of regular books of assessee and submitted copy of relevant ledger account only. But, no cash book or any other document submitted or produced by AR for verification. Vide order sheet entry dated 15.11.2018, the AR stated that he has nothing further to say except reply already submitted. Hence, cash payment for property purchase remains to be unexplained and hereby added back to the total income of the assessee.
I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 127
74. The assessee has challenged the addition in first appeal before the ld. CIT(A). Apropos to the ground raised by the assessee the relevant finding of the ld. CIT(A) is reiterated herein below :
I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:-
The AO noted that from the seized documents it is seen that Rs. 21,60,000/- was advanced by the appellant for certain property transactions. The assessee was asked to explain the source of these cash payments. In reply, the appellant stated that it was out of regular books of assessee and submitted copy of relevant ledger account only. But, no cash book or any other document submitted or produced by AR for verification.
In reply the appellant stated that the cash invested was out of cash available with the appellant.
The Appellant further submitted that then consultant Shri Dinesh Shrimali (C.A.) who was looking after income tax matter in case of Anjana Group and who resigned in the month of August, 2022 from the post of in house Income Tax Consultant. While preparing above reply undersigned came to know that inadvertently while uploading above return of Income, figures of Balance Sheet as at 31st March, 2017 of only Bharat Trading Company were fed in place of Consolidated Balance Sheet Bharat Kumar Anjana (Proprietor of Bharat Trading Company).
On verification of the reply of the appellant it become evident the cash balance shown in cash book is not according to the cash balance shown in the return of income. The explanation of the appellant is not supported by any independent evidence.
The non-reliability of cash book furnished by the appellant is further strengthened from the fact that the cash found during search was not tallying with cash book which is furnished by the appellant during appellate proceedings. Therefore, it is evident that the cash book prepared by the appellant is not reliable. The cash book does not show real cash available with the appellant and entries made in the cash book cannot be relied. Since the findings of search and survey have proved that the cash book prepared by the appellant is not reliable, this reply of the appellant is not found acceptable.
Therefore, the addition made by the AO of Rs. 21,60,000/- is found to be justified as the appellant has failed to explain the source of cash invested in various properties.
I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 128 This ground of appeal is treated as dismissed.
75. Since the ld. CIT(A) has not considered the arguments of the assessee the assessee has carried the grievance in ground no. 10 in this appeal. In support of the contention for the Investments made the ld. AR of the assessee submitted that the impugned investment is duly recorded in the books and is from the explained sources of the assessee. In support of these contention he submitted that the entry of this investment remained to have been recorded by mistakes crept in feeding of data of balance sheet items in return of income by the Chartered Accountant of assessee Shri Dinesh Shrimali. The ld. AR of the assessee also referred to ITR for A. Y. 2016-17 appearing at Pages 50-82 of APB wherein also identical error of feeding crept by the same Chartered Accountant which has also not been objected by the ld. AO while making assessment for AY 2016-17. The ld. AR of the assessee also submitted that during the course of assessment proceedings tax audit report appearing at Pages 84-125 of APB has not been disputed by the AO. The ld. AR of the assessee submitted that income disclosed in the return of income has been accepted by the ld. AO which has been computed from the business balance sheet of the assessee i.e. Bharat Trading Co which is evident from Statement of total income appearing at Page 2 of APB wherein profit and loss of Bharat Trading Co at Rs.
I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 129 13,87,088/- has been considered which is the same amount which is appearing in the profit and loss account of Bharat Trading Co appearing at Page 94 of APB. Further, income from business is computed at Rs. 7,80,462/- at Page 2 of PB which is appearing in ITR at 16. The ld. AR of the assessee submitted that total income computed in STI at Page 3 of Rs 12,00,628/- is matches with the income reported in ITR at Page
17. Turnover appearing in ITR at Page 8 of APB is same as appearing in the profit and loss account at Page 94 of APB. The ld. AR of the assessee further referring to Page 91 of APB being tax audit report uploaded by the tax auditor at income-tax portal wherein turnover, income and other particulars submitted are matching with the tax audit report of assessee wherein all investments are duly reflected. The Ld. AR of the assessee thus, submitted that neither that genuineness of tax audit report was disputed in the course of assessment proceeding nor any adverse inference has been drawn by the ld. AO. The ld. CIT(A) who has power to enhance the assessment has also not enhanced the income and likewise, PCIT has also not made any revision u/s 263 of the Act. Therefore, Ld. A/R submitted that contentions put forth by the lower authority have no force or sustainability when the source is clear to tax the investment. The ld. AR of the assessee referring to the chart placed at Pages 16-19 of written synopsis to indicate that all the I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 130 investments with reference to which addition has been made by ld. AO and sustained by the Ld. CIT(A) are duly recorded in the books. Chart placed in written synopsis is reproduced here in below which pertains to the year under reference:
Asstt Ground Amount Nature of document Paper Reason why addition Year No. of seized Book made and sustained addition Page No by the CIT(A) is not justified 16-17 11 150000 Agreement dtd 07-09- 161-166 The addition is not 2016 between justified for two Badrilal S/o Rodji reasons. Firstly, Anjana and appellant amount of Rs.
1,50,000/- is duly
AO-Para 12 at Page recorded in the books
5 and CIT(A)-Para of the appellant for the
12.3 at Page 63 year ended 31-03-
2017. Ledger account
is appearing at Page
161 of PB. Secondly,
the amount of
investment relates to
AY 2017-18 and
amount paid is duly
reflected in the audited
accounts appearing at
Page 102 of PB for AY
2017-18 under the
head 'loans and
advances' in Schedule-
09 and cash book
appearing at Page 223.
The Assessing Officer
has made separate
addition in A.Y. 2017-
18 also and the same
has also been
confirmed by the
CIT(A).
17-18 10 1000000 Agreement dtd 13-04- 163-167 The addition is not
2016 between Shri justified as investment
Devilal S/o Dungaji is duly recorded in the
and appellant books. Ledger account
is appearing at Page
AO Para 9 at Page 4; 189 of PB and the
CIT(A) Para 10.3 same is also cross
I.T.A. Nos. 304 to 309/Jodh/2023
Assessment Year: 2012-13 to 2017-18 131
Page 47 verifiable from the
audited accounts
appearing at Page 102
of PB for AY 2017-18
under the head 'loans
and advances' in
Schedule-09 and cash
book appearing at
Page 225.
17-18 10 150000 Agreement dtd 07-09- 168-171 This amount has also
2016 between been added in AY
Badrilal S/o Rodji 2016-17. The
Anjana and appellant investment is duly
recorded in the books.
AO Para 9 at Page 4; Ledger account is
CIT(A) Para 10.3 appearing at Page 190
Page 47 of PB and the same is
also cross verifiable
from the audited
accounts appearing at
Page 102 of PB for AY
2017-18 under the
head 'loans and
advances' in Schedule-
09 and cash book
appearing at Page 225.
17-18 10 200000 Agreement dtd 24-05- 172-173 The investment is duly
2016 between Shri recorded in the books.
Rameshwarlal S/o Ledger account is
Shankarlal ji Anjana appearing at Page 191
and appellant of PB and the same is
also cross verifiable
AO Para 9 at Page 4; from the audited
CIT(A) Para 10.3 accounts appearing at
Page 47 Page 102 of PB for AY
2017-18 under the
head 'loans and
advances' in Schedule-
09 and cash book
appearing at Page 224.
17-18 10 500000 Agreement dtd 22-06- 174-185 The investment is duly
2016 between Shri recorded in the books.
Madanlal, Shri Ledger account is
Ramesh Chandra & appearing at Page 192
Shri Raju s/o Bherulal of PB and the same is
and appellant also cross verifiable
from the audited
AO Para 9 at Page 4; accounts appearing at
CIT(A) Para 10.3 Page 102 of PB for AY
Page 47 2017-18 under the
head 'loans and
advances' in Schedule-
I.T.A. Nos. 304 to 309/Jodh/2023
Assessment Year: 2012-13 to 2017-18 132
09 and cash book
appearing at Page 224.
17-18 10 360000 Agreement dtd 31-05- 186-188 The investment of Rs.
2016 between Shri 3,10,000/- being
Vardichand and payment made is duly
Mukesh s/o Modaji recorded in the books.
and appellant Ledger account is
appearing at Page 193
AO Para 9 at Page 4; of PB and the same is
CIT(A) Para 10.3 also cross verifiable
Page 47 from the audited
accounts appearing at
Page 102 of PB for AY
2017-18 under the
head 'loans and
advances' in Schedule-
09 and cash book
appearing at Page 223-
224. Balance of Rs.
50,000/- is remained to
be paid which is
evident from the seized
document itself.
Based on these submission the ld. AR of the assessee submitted that no questions were put to the assessee in the course of search action u/s 132(4) qua transactions with reference to investment in immovable properties made by the assessee. Copy of statement of assessee is appearing at Page 232-236 of APB. Such questions were put to assessee's brother Shri Puranmal Anjana and who responded the same and offered additional income in his settlement application qua investments of assessee for Rs. 11,50,000/-. Copy of statement of assessee's brother Shri Puranmal Anjana is appearing at Page 350-378 of APB. Without prejudice to these contention the ld. AR of the assessee submitted that no addition is required in view of gifts received by I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 133 assessee from his brother Shri Puranmal Anjana and maternal uncles Shri Manoharlal Anjana and Shri Udailal Anjana and admitted by them in settlement proceedings. Settlement order is appearing at Pages 24-100 and capitalization allowed to them qua gift to the assessee is appearing at Pages 89-91 of written synopsis. The ld. AR of the assessee also submitted that addition of Rs. 1,50,000/- with reference to payment of Rs. 1,50,000/- made to Shri Badrilal S/o Rodji Anjana in agreement dated 07-09-2016 appearing at Page 168-1171 of APB has also been made in AY 2016-17 ledger account of which is appearing at Page 190 of PB. Ld. AR accordingly, submitted that addition of Rs. 21,60,000/- is liable to be deleted.
76. Per contra, the ld. DR representing the revenue referred to the relevant finding recorded in the order of the ld. CIT(A) and submitted that the addition sustained is based on the exhaustive findings of ld.
CIT(A) and the addition made by the ld. AO is based on incriminating documents which were not recorded in the books and submitted that additions have been rightly made by the AO and sustained by the Ld. CIT (A).
I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 134
77. We have heard the rival contention and perused the material placed on record. We note that that sole reason for upholding the disallowance is that cash book furnished by the assessee has been held non-reliable but without finding any defect in the tax audit report which was uploaded by the tax auditor at income-tax portal on 29-10-2017 which is evident from audit information appearing in ITR furnished by assessee at Page 5 of APB. Merely because there was data feeding error in the return furnished by the assessee, information already in possession of the AO which was independently furnished by the tax auditor cannot be discarded or ignored. We also find that all investments for which addition has been made by ld. AO are recorded in the books of the assessee which were before the ld. AO at the time of making the assessment. The ld. AR of the assessee explained the same by a chart referred above. He alternatively, submitted that in view of gifts received by assessee from Brother Shri Puranmal Anjana and maternal uncles Shri Manoharlal Anjana and Shri Udailal Anjana referred to in settlement order appearing at Pages 24-100 and capitalization of which has been allowed to respective parties qua gifts to the assessee at Pages 89-91 of written synopsis which is far in excess of the amount of addition towards investment in properties, no addition is warranted in the hands of the assessee. Considering these aspect of the matter we hold that that I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 135 addition of Rs. 21,60,000/- made on account of unexplained investment in properties is liable to be deleted. Based on these observations the ground no. 10 raised by the assessee stands allowed.
78. Ground no. 11 relates to addition of Rs. 22,537/- being interest received on income-tax refund. The fact as noted in the assessment order is that as per the Individual Transaction Sheet, assessee was granted interest u/s 244A on Income-tax refund at Rs 22,537/- during the F.Y. 2016-17. However, assessee has neither shown it as receipt in the P&L account nor in the computation of income under the head "Income from other sources". Therefore, the amount of interest granted on its Income-tax refund is required to be taxed being income of the assessee during the year. Accordingly, the amount of Rs 22,537/- is added to assessee's total income under the head "Income from Other Sources".
79. The assessee has challenged this addition before the ld. CIT(A) who has confirmed the addition of Rs. 22,537/- and the relevant finding of the ld. CIT(A) is reproduced here in below :
The AO noted that as per the Individual Transaction Sheet, the appellant was granted interest u/s 244A on Income-tax refund at Rs 22,537/- during the F.Y. 2016-17. However, the appellant has neither shown it as receipt in the P&L account nor in the computation of income under the head "Income from other I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 136 sources". Therefore, the amount of interest granted on its Income- tax refund of Rs. 22,537/- was added in the income of the appellant.
Per contra the appellant stated that interest on above Refunds of Rs. 14,752/- & Rs. 7,785/- respectively and total aggregating to Rs. 22,537/- has duly been offered as Income. (Refer Page No-227) The appellant also enclosed relevant pages of Audited Balance Sheet of the appellant and stated that in Schedule- 12 "Other Income" includes Interest on Refund of Rs. 22,537/- . (Refer Page No-228).
On perusal of schedule 12, as explained by the appellant it is seen that there is no amount mentioned against the Interest on Income Tax Refund, though the heading is given two times. In Other Income only interest on FDR of Rs. 36,767/ is offered for taxation. There is no correlation of the income shown in the schedule 12 and Ledger furnished on page 227. Therefore, the explanation of the appellant is not found to be acceptable. The AO's observations are found to be correct that the appellant has neither shown it as receipt in the P&L account nor in the computation of income under the head "Income from other sources. The addition made by the AO is found to be justified and upheld accordingly.
This ground of appeal is treated as dismissed.
80. In support of the ground so raised by the assessee the ld. AR of the assessee submitted that inference drawn by ld. AO as well as by the ld. CIT(A) is patently incorrect. The ld. AR of the assessee referring to the income as part audited profit and loss account appearing at Page 94 of APB wherein other income appearing at Page 99 of APB has already been considered and income as per audited profit and loss account was considered for computing income which is evident from Page 2 of APB wherein computation of income has been placed. The ld. AR of the assessee submitted that interest on income-tax refund is duly recorded in the books in the classification of 'other income' at Page 99 of APB wherein said amount is appearing as balance written off at Rs. 22,537/-
I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 137 which is an exact amount of interest on income-tax refund which the AO has taxed in the hands of assessee leading to double taxation and which has also been sustained by the ld. CIT(A).
81. Per contra, the ld. DR representing the revenue supported the orders of lower authorities.
82. We have heard the rival contention and perused the material placed on record. The bench noted that the assessee has balance written off for an amount of Rs. 22,537/- which is duly appearing in schedule of 'income income' at page 99 and income appearing in profit and loss account at Page 94 of APB has been derived after taking into account the other income. Therefore, Rs. 22,537/- credit under the classification 'balance written off' is duly taxed. However, to ensure as to whether contentions put forth by the assessee before the ld. CIT(A) were correct, the ld. AR of the assessee was directed to furnish affidavit of the assessee in support of the plea advanced before us. The contention of the affidavit filed by the assessee dated 02-02-2024 is reproduced here in below:
"AFFIDAVIT IN SUPPORT OF ARGUMENTS I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 138 I Bharat Kumar Anjana [PAN: ABWPA2125M], S/o Shri Ram Lal Anjana, Near Government School, Kesunda, Chhotisadri, Pratapgarh-31604, Rajasthan solemnly affirm as under:
1. That appeal for AY 2017-18 in ITA No. 308/Jodh/2023 was heard by the Hon'ble Bench on 29-01-2024 and 30-01-2024. In the said appeal, vide Ground No. 11, addition of Rs. 22,537/- being interest on income-tax refund sustained by the ld. CIT (A) has been disputed.
2. That during the course of hearing my counsel CA Shri Sakar Sharma by referring Schedule 12 of tax audit report argued that interest on income-tax refund of Rs. 22,537/- is not only duly recorded in the books under the classification 'Balance Write Off' but has already been offered for taxation at the time of filing of return of income as profit of M/s Bharat Trading Co reported at Page 94 of PB at Rs. 13,87,088/- is considered in computation of business income which is evident from the STI appearing at Page 2 of PB.
Therefore, addition sustained by the Ld. CIT(A) is not justified and is liable to be deleted.
3. That during the course of hearing my counsel was directed to furnish affidavit in support of this contention that amount of Rs. 22,537- appearing in the tax audit report under the head 'balance write off' represents interest on income tax refund only.
4. That by this affidavit I confirm and state that amount of Rs. 22,537/- appearing under the head 'Balance Write Off' in schedule 12 of audit report is representing interest on income-tax refund only and in support thereof respective ledger accounts are annexed with this affidavit as Annexure-A and B. The contention putforth by my counsel in the course of hearing is correct and that the addition so made and confirmed by the ld. CIT(A) is unjustified and is liable to be deleted.
I confirm that what has been stated above is true and correct as per the information and other details available with me.
Place: Kesunda
_______________________
Date: 02-02-2024 [Bharat Kumar Anjana]
Deponent/ Appellant
On going through the content of the affidavit and the records filed before the lower authority in the form of ledger account, tax audit report with the profit and loss account and its schedule we find that assessee has disclosed interest of income-tax refund of Rs. 22,537/- under the classification 'balance written off' in the audited accounts and the same I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 139 has been taxed by the AO. Accordingly, we hold that addition made of Rs. 22,537/- is not justified and is liable to be deleted. Based on this observation the ground no. 11 raised by the assessee is allowed.
83. As regards the ground related to charge of tax u/s. 115BBE of the Act since we have considered the addition on merits and there is no addition which is subjected to charge as per provision of section 115BBE as emanate from the assessment order, the ground raised by the assessee becomes educative in nature.
84. Ground no. 1 to 4 are on technical ground challenging the validity of the assessment. Since we have allowed the appeal of the assessee on merits in ground no. 5 to 11 the ground no 1 to 4 becomes educative and are thus not decided. In the result the appeal in ITA No. 308/Jodh/2023 stands allowed.
85. Now we take up the appeals preferred by Ms. Surbhi Anjana in ITA No 310 to 314/Jodh/2023 for AYs 2013-14, 14-15, 15-16, 16-17 & 17-18. The assessee has taken following common grounds in all appeals:
1. The Ld. CIT(A) erred on facts and in law in holding that the additions made in the case of appellant by the Assessing Officer were based on incriminating material seized in the course of search without appreciating that records of appellant with income-tax department and I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 140 statements recorded u/s 132(4) either of the appellant or any other third person per se are not incriminating unless corroborated with any other independent evidence found and seized in the course of search.
2. The Ld. CIT(A) erred on facts and in law in holding that the turnover and incomes of the appellant though substantively assessed in the hands of appellant are liable to be assessed as income of the appellant's father while adjudicating appeal.
86. The assessee has preferred all these appeals against the order of Ld. CIT(A) who by placing reliance on the statement of assessee recorded u/s 132(4) and also on the statement of CA Shri Niranjan Patidar has upheld the assessment order passed by AO holding that incomes disclosed by the assessee do not belong to the assessee but belong to the assessee's father Shri Bharat Kumar Anjana.
87. While arguing these appeals the ld. AR of the assessee submitted that, during the arguments of the appeal filed by Shri Bharat Kumar Anjana it has been demonstrated that all incomes earned by assessee have been assessed substantively both in the hand of assessee as well as in the case of Shri Bharat Kumar Anjana. As regards protective addition made in the case of assessee, ld. AR submitted that additions protectively made in the hands of assessee by ld. AO do not represent any income or undisclosed investments of the assessee and also any asset held by the assessee and therefore, said additions have been rightly deleted by the ld. CIT(A) and are also liable to be deleted in the I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 141 case of Shri Bharat Kumar Anjana. The ld. AR, therefore, submitted that though incomes belonging to the assessee have been substantively assessed in the hands of assessee by ld. AO himself but conclusions drawn by AO as well as Ld. CIT(A) are perverse. The ld. AR of the assessee submitted that CA Niranjan Patidar while making statement recorded u/s 131 was not able to bring any adverse material on record except claiming returns furnished by the assessee based on unsubstantiated workings. Statement of CA Niranjan Patidar was not accepted by the Group head Shri Udailal Anjana and who asked the Authorised Officer to call in front of him and also to verify agricultural fields by spot visit to verify activity of agriculture carried on by the female family members. The ld. AR of the assessee thus submitted that there was no admission of Ms Surbhi Anjana in her statement that incomes disclosed by her were earned by her father Shri Bharat Kumar Anjana. Similarly, no question was put to Shri Bharat Kumar Anjana while recording his statement. The ld. AR also submitted that turnover disclosed in return u/s 44AD per se is not income but only income embodied therein alone is liable to tax and once it has been held by the ld. AO that no business activities were carried only then only recourse to determine income is based on investments of assessee and to see as to whether such investments are covered by the income returned in the I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 142 returns of income. In this regard the ld. AO has not brought any material in the assessment order which could suggest that investments of assessee were equivalent to the turnover. Moreover, the AO has not brought any material on record which could suggest that additional income offered by the assessee was not covered by the incomes disclosed in returns of income filed by her. Thus, it is quite common in India to receive gifts from relatives etc and this fact has been accepted by legislature which has provided exemption of Rs. 50,000/- in each assessment year. The ld. AR of the assessee also submitted that no evidence was found which could suggest that LTCG earned on sale of shares of PsIT Infra was bogus or represented any undisclosed income earned by the assessee or for that matter by her father Shri Bharat Kumar Anjana. Moreover, capital gain was surrendered and offered for taxation which has also been taxed substantively in the hands of assessee. Therefore, he submitted that incomes earned and disclosed by assessee have been rightly assessed and protective additions have been rightly deleted but with perverse finding that such incomes are liable to be assessed in the hands of assessee's father Shri Bharat Kumar Anjana who has disputed such additions by preferring further appeal before the Tribunal.
I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 143
88. On the other hand, the ld. DR representing the revenue referred the modus operandi identified during search, conclusions drawn by the ld. AO and the Ld. CIT(A) contended that grounds raised by the assessee needs to be dismissed.
89. We have heard the rival contention and perused the material placed on record. We have examined the taxability of incomes offered by the assessee while adjudicating appeals in the case of assessee's father Shri Bharat Kumar Anjana wherein we have held that no income of the assessee is liable to be assessed in the hand of Shri Bharat Kumar Anjana. We also held that income taxed protectively is not supported with any investments / assets held by the assessee. In the absence of any incriminating material noticed in the course of search or brought on records supporting findings and conclusions of lower authorities we are of the considered opinion that grounds raised by the assessee needs to be allowed. Based on this observation the appeal of the assessee in ITA No 310 to 314/Jodh/2023 for AYs 2013-14, 14-15, 15-16, 16-17 & 17-18 stands allowed.
In the result, all these bunch of eleven appeals of the assessees are allowed.
I.T.A. Nos. 304 to 309/Jodh/2023 Assessment Year: 2012-13 to 2017-18 144 Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board.
Sd/- Sd/-
(Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai)
Judicial Member Accountant Member
Ganesh Kumar, PS
Copy of the order forwarded to:
(1)The Appellant
(2) The Respondent
(3) The CIT
(4) The CIT (Appeals)
(5) The DR, I.T.A.T.
True Copy
By order
Date Initial
1. Draft dictated on Sr.PS/PS
2. Draft placed before author Sr.PS/PS
3. Draft proposed & placed JM/AM
before the Second Member
4. Draft discussed/approved by JM/AM
Second Member
5. Approved Draft comes to Sr.PS/PS
the Sr. P.S./P.S.
6. Kept for pronouncement on Sr.PS/PS
7. File sent to the Bench Clerk Sr.PS/PS
8. Date on which file goes to
the Head Clerk
9. Date on which file goes to
the AR
10. Date of dispatch of Order