M/S SKYWAY INFRA PROJECTS PRIVATE LIMITED, MUMBAI V. THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-5(1), MUMBAI

CO 146/MUM/2022

AI Insights

The case involves multiple appeals and cross-objections by the Revenue and the assessee, M/s Skyway Infra Projects Pvt. Ltd., against the order of the Commissioner of Income-tax (Appeals) for various assessment years from 2013-14 to 2020-21. The primary issues revolved around the additions made by the Assessing Officer on account of bogus purchases and unexplained cash credits under section 68 of the Income Tax Act. The Tribunal examined the legal and factual basis of these additions, considering the evidences, statements of key persons, and the procedural adherence during the search and seizure operations.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123554 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-02-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 13-02-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 08-12-2022
• Other Referred Cases: Continental Warehousing Corporation vs. CIT, NK Proteins Ltd vs. DCIT, CIT vs. Harjeev Aggarwal, CIT vs. Kamal Trading Company, CIT vs. Raja Ginning Udyog
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained cash credit; Business income; Principle of natural justice; Opportunity of cross examination; Source of fund; Additional evidence; Question of law; Validity of assessment; Accommodation entries; Assessment record; TDS; Set aside
• Section: 131; 132; 143(3); 142(1); 153A; 260A; 133(6); 195; 274; 139(1); 158B(b); 48; 72; 13; 153; 22; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G” MUMBAI BEFORE SHRI ABY T VARKEY (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) ITA No. 2665/MUM/2022 Assessment Year: 2013-14 & ITA No. 2669/MUM/2022 Assessment Year: 2014-15 & ITA No. 2676/MUM/2022 Assessment Year: 2015-16 & ITA No. 2670/MUM/2022 Assessment Year: 2016-17 & ITA No. 2677/MUM/2022 Assessment Year: 2017-18 & ITA No. 2681/MUM/2022 Assessment Year: 2018-19 & ITA No. 2671/MUM/2022 Assessment Year: 2019-20 & ITA No. 2682/MUM/2022 Assessment Year: 2020-21 The DCIT, Central Circle-5(1), Room No. 1928, 19 th floor, Air India Building, Nariman Point, Mumbai-400021. Vs. M/s Skyway Infra Projects Pvt. Ltd., 301, Gitanjali Arcade, Nehru Road, Vile Parle (E), Mumbai-400057. PAN No. AAMCS 3356 G Appellant Respondent CO No. 146/MUM/2022 (Arising out of Assessment Year: CO No. 148/MUM/2022 (Arising out of Assessment Year: CO No. 145/MUM/2022 (Arising out of Assessment Year: CO No. 144/MUM/2022 (Arising out of Assessment Year: CO No. 147/MUM/2022 (Arising out of Assessment Year: CO No. (Arising out of ITA Assessment Year: CO No. (Arising out of Assessment Year: CO No. 150/MUM/2022 (Arising out of Assessment Year: M/s Skyway Infra Projects Pvt. Ltd., 301, Gitanjali Arcade, Nehru Road, Vile Parle (E), Mumbai-400057. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors CO No. 146/MUM/2022 (Arising out of ITA No. 2665/MUM/2022) Assessment Year: 2013-14 & CO No. 148/MUM/2022 (Arising out of ITA No. 2669/MUM/2022) Assessment Year: 2014-15 & CO No. 145/MUM/2022 (Arising out of TA No. 2676/MUM/2022) Assessment Year: 2015-16 & CO No. 144/MUM/2022 (Arising out of ITA No. 2670/MUM/2022) Assessment Year: 2016-17 & CO No. 147/MUM/2022 (Arising out of ITA No. 2677/MUM/2022) Assessment Year: 2017-18 & CO No. 143/MUM/2022 (Arising out of ITA No. 2681/MUM/2022) Assessment Year: 2018-19 & CO No. 149/MUM/2022 (Arising out of ITA No. 2671/MUM/2022) Assessment Year: 2019-20 & CO No. 150/MUM/2022 (Arising out of ITA No. 2682/MUM/2022) Assessment Year: 2020-21 Skyway Infra Projects Pvt. 301, Gitanjali Arcade, Nehru Vs. The DCIT, Central Circle Room No. 1928, 19 th India Building, Nariman Point, Mumbai-400021. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 2 The DCIT, Central Circle-5(1), floor, Air PAN No. AAMCS 3356 G Appellant Revenue by Assessee by Date of Hearing Date of pronouncement PER BENCH: These appeals by the Revenue and cross assessee are directed against passed by the Ld. Commissioner of Income Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2013 2020-21 respectively. The facts and the issue appeal being common in all these appeals and cross objections,therefore, same were heard together and disposed off by way of this consolidated order for convenience and of facts. 2. The Ld. CIT(A) has adjudicated the appeal for assessment year 2013-14 and result of the same has been followed in other assessment years being common facts and circumstances. Accordingly, we also take up the appeal of the Revenue for AY 2013 Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors AAMCS 3356 G Respondent : Dr. Kishor Dhule, CIT-DR : Mr. Bhupendra Shah, AR Date of Hearing : 14/02/2023 Date of pronouncement : 28/02/2023 ORDER These appeals by the Revenue and cross-objections by the assessee are directed against a common order dated 27.07.2022 passed by the Ld. Commissioner of Income-tax (Appeals) Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2013 ectively. The facts and the issues raised in grounds of appeal being common in all these appeals and cross same were heard together and disposed off by way of this consolidated order for convenience and avoid The Ld. CIT(A) has adjudicated the appeal for assessment year 14 and result of the same has been followed in other assessment years being common facts and circumstances. Accordingly, we also take up the appeal of the Revenue for AY 2013 Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 3 objections by the common order dated 27.07.2022 tax (Appeals)-53, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2013-14 to raised in grounds of appeal being common in all these appeals and cross- same were heard together and disposed off by avoid repetition The Ld. CIT(A) has adjudicated the appeal for assessment year 14 and result of the same has been followed in other assessment years being common facts and circumstances. Accordingly, we also take up the appeal of the Revenue for AY 2013- 14 and cross-objection of the assessee for AY 2013 raised by the Revenue in its appeal for AY 2013 as under: 1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the additionof Rs. 48,04,750/ account of bogus purchase ignoring the fact that the assessee failed to prove the genuineness of purchases, andany expenditure in respect of which payments by account payee cheques is not enough evidence to prove the genuineness of the transaction?" 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in deleting the addition of 2,86,53,687 ws. 68 of the Act in respect of unsecured loans and ignoring the facts that the identity of the parties, the genuineness of the transaction, and the credit been proved to the satisfaction of the 40, so as to discharge the primary onus?" 3. *Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowan expenses of Rs. 1,42, 15,496/ said unsecured loans were found to be non assessee has not proved the genuineness of the transaction, the identity of the creditors, and credit 2.1 The ground raised by the assessee in its cross reproduced as under: 1. On the facts and circumstances of the case and in law, the search was conducted on November 6, 2019 and notice us 153 A can be issued for six years preceding six years certain conditions has to be satisfied which is not being satisfied and hence the proceedings u/s 153 A is void and bad in law. 2. On the facts and circumstances of the case and in law, the order passed by the AO under the provisions of section 153A r.w.s. 143(3) of the Act dated September 30, 2021 is time barred and thus, bad in-law. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors bjection of the assessee for AY 2013-14. The grounds raised by the Revenue in its appeal for AY 2013-14 are Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the additionof Rs. 48,04,750/ account of bogus purchase ignoring the fact that the assessee failed to prove the genuineness of purchases, andany expenditure in respect of which payments by account payee cheques is not enough evidence to prove the genuineness of the ther on the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in deleting the addition of 2,86,53,687 ws. 68 of the Act in respect of unsecured loans and ignoring the facts that the identity of the parties, the genuineness of the transaction, and the credit-worthiness of the parties have not been proved to the satisfaction of the 40, so as to discharge the *Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of interest expenses of Rs. 1,42, 15,496/- on the unsecured loans when the said unsecured loans were found to be non-genuine as the assessee has not proved the genuineness of the transaction, the identity of the creditors, and credit-worthiness of the parties?" The ground raised by the assessee in its cross-objection are On the facts and circumstances of the case and in law, the search was conducted on November 6, 2019 and notice us 153 A can be issued for six years preceding the year of search, for notice beyond six years certain conditions has to be satisfied which is not being satisfied and hence the proceedings u/s 153 A is void and bad in 2. On the facts and circumstances of the case and in law, the order e AO under the provisions of section 153A r.w.s. 143(3) of the Act dated September 30, 2021 is time barred and thus, bad Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 4 14. The grounds reproduced Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the additionof Rs. 48,04,750/- on account of bogus purchase ignoring the fact that the assessee failed to prove the genuineness of purchases, andany expenditure in respect of which payments by account payee cheques is not enough evidence to prove the genuineness of the ther on the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in deleting the addition of 2,86,53,687- ws. 68 of the Act in respect of unsecured loans and ignoring the facts that the identity of the parties, the genuineness of the worthiness of the parties have not been proved to the satisfaction of the 40, so as to discharge the *Whether on the facts and circumstances of the case and in law, ce of interest on the unsecured loans when the genuine as the assessee has not proved the genuineness of the transaction, the arties?" objection are On the facts and circumstances of the case and in law, the search was conducted on November 6, 2019 and notice us 153 A can be the year of search, for notice beyond six years certain conditions has to be satisfied which is not being satisfied and hence the proceedings u/s 153 A is void and bad in 2. On the facts and circumstances of the case and in law, the order e AO under the provisions of section 153A r.w.s. 143(3) of the Act dated September 30, 2021 is time barred and thus, bad- 3. On the facts and circumstances of the case and in law, the AO erred in initiating proceedings and passing an order under sec 153A of the Act without appreciating the fact that neither there was any incriminating material found during search nor was there any reference to any incriminating material by the AO in his order and thus, addition and/or disallowance cannot be made proceedings us 153A of the Act in absence of any incriminating material being found during search. 4. On the facts and circumstances of the case and in law, the Id AO erred in filing second appeal evenafter no adverse comment was found in the remand 5. On the facts and circumstances of the case and in law, the CIT (A) rightly deleted the addition made on the point of purchases... 6. On the facts and circumstances of the case and in law, the CIT (A) rightly deleted the addi which was repaid and therefore cannot be added u/s 68 of the act. 7. On the facts and circumstances of the case and in law, the CIT' (A) rightly deleted the addition made on the point of interest on unsecured loan, which is only consequential. 8. On the facts and circumstances of the case and in law, the CIT' (A) rightly allowed the credit for TDS. 3. Briefly stated, facts of the case are that consideration, the assessee including civil contracts for Municipal Corporation (BMC), Mumbai ( MCGM) etc. income declaring total income at Rs.7 Income-tax Act, 1961 (in short ‘the Act’). Subsequently, and seizure action u/s 132 of the Act was carried out in the cases of the assessee Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 3. On the facts and circumstances of the case and in law, the AO erred in initiating proceedings and passing an order under sec 153A of the Act without appreciating the fact that neither there was any incriminating material found during search nor was there any reference to any incriminating material by the AO in his order and thus, addition and/or disallowance cannot be made proceedings us 153A of the Act in absence of any incriminating material being found during search. 4. On the facts and circumstances of the case and in law, the Id AO erred in filing second appeal evenafter no adverse comment was report u/s 46 A of the act. 5. On the facts and circumstances of the case and in law, the CIT (A) rightly deleted the addition made on the point of purchases... On the facts and circumstances of the case and in law, the CIT (A) rightly deleted the addition made on the point of unsecured loan, which was repaid and therefore cannot be added u/s 68 of the act. 7. On the facts and circumstances of the case and in law, the CIT' (A) rightly deleted the addition made on the point of interest on which is only consequential. 8. On the facts and circumstances of the case and in law, the CIT' (A) rightly allowed the credit for TDS. Briefly stated, facts of the case are that for the year under the assessee company executed works civil contracts for Local Authorities like Bombay Municipal Corporation (BMC), and Municipal Corporation of Greater Mumbai ( MCGM) etc. The assessee filed its original return of income declaring total income at Rs.7,79,23,750/- u/s 139(1) tax Act, 1961 (in short ‘the Act’). Subsequently, and seizure action u/s 132 of the Act was carried out in the assessee Group on 06.11.2019. Consequent to the Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 5 3. On the facts and circumstances of the case and in law, the AO erred in initiating proceedings and passing an order under section 153A of the Act without appreciating the fact that neither there was any incriminating material found during search nor was there any reference to any incriminating material by the AO in his order and thus, addition and/or disallowance cannot be made in the proceedings us 153A of the Act in absence of any incriminating 4. On the facts and circumstances of the case and in law, the Id AO erred in filing second appeal evenafter no adverse comment was 5. On the facts and circumstances of the case and in law, the CIT (A) rightly deleted the addition made on the point of purchases... On the facts and circumstances of the case and in law, the CIT (A) tion made on the point of unsecured loan, which was repaid and therefore cannot be added u/s 68 of the act. 7. On the facts and circumstances of the case and in law, the CIT' (A) rightly deleted the addition made on the point of interest on 8. On the facts and circumstances of the case and in law, the CIT' or the year under works contracts s like Bombay and Municipal Corporation of Greater The assessee filed its original return of u/s 139(1) of the tax Act, 1961 (in short ‘the Act’). Subsequently, a search and seizure action u/s 132 of the Act was carried out in the Consequent to the search, assessment proceedings by way of issue of notice 2020-21. In response, the assessee filed return of income declaring total income of Rs.7,79,23,750/ filed return of income for other assessment years. u/s 153A r.w.s. 143(3) of the Act 30.09.2021 assessing addition/disallowances made by the Assessing Officer included disallowance of bogus p cash credit u/s 68 of Rs.2,86,53,687/ CIT(A) allowed part relief to the assessee. 3.1 The addition for bogus purchases was made by the Assessing officer in from 13 parties. Though, the Ld. CIT(A) rejected the contention of the assessee that there was no incriminating material vis addition of bogus purchases, four purchase parties and in re addition @ 5% of the purchase unexplained cash credit u/s 68 of the Act, made addition in respect of 29 parties for various assessment years. The Ld. CIT(A) held that the addition, same can’t be sustained Hon’ble Bombay High Court in the case of warehousing corporation reported in Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors proceedings u/s 153A of the Act were initiated notice(s) dated 02.01.2021 for AY 2013 In response, the assessee filed return of income declaring total income of Rs.7,79,23,750/- for AY 2013-14.The assessee also e for other assessment years. The assessment u/s 153A r.w.s. 143(3) of the Act for AY 2013-14 was completed on total income at Rs.11,13,82,190/ addition/disallowances made by the Assessing Officer included disallowance of bogus purchase of Rs.48,04,750/- and unexplained cash credit u/s 68 of Rs.2,86,53,687/-. On further appeal, the Ld. CIT(A) allowed part relief to the assessee. bogus purchases in various assessment years was made by the Assessing officer in respect of purchases made Though, the Ld. CIT(A) rejected the contention of the assessee that there was no incriminating material vis purchases, but deleted the addition in respect of purchase parties and in respect of balance 9 parties sustained addition @ 5% of the purchase amount. In respect of issue of unexplained cash credit u/s 68 of the Act, the Assessing Officer made addition in respect of 29 parties for various assessment years. he Ld. CIT(A) held that in view of no incriminating material the addition, same can’t be sustained, following the decision of Hon’ble Bombay High Court in the case of Continental corporation reported in 58 taxmann.com 78 Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 6 u/s 153A of the Act were initiated for AY 2013-14 to In response, the assessee filed return of income declaring 14.The assessee also The assessment was completed on total income at Rs.11,13,82,190/-. The addition/disallowances made by the Assessing Officer included and unexplained . On further appeal, the Ld. in various assessment years respect of purchases made Though, the Ld. CIT(A) rejected the contention of the assessee that there was no incriminating material vis-à-vis deleted the addition in respect of parties sustained . In respect of issue of the Assessing Officer made addition in respect of 29 parties for various assessment years. no incriminating material qua following the decision of Continental 58 taxmann.com 78 On merit, the Ld. CIT(A) the books of accounts of the assessee addition was not sustainable of remaining 18 parties, the Ld. CIT(A) held that discharged its onus u/s could have been made Officer has also made addition of bogus sub contract by the ld CIT(A). The Ld CIT(A) also rejected the grounds raised by the assessee challenging the validity of assessment on the ground that same were barred by limitation and assessment year 2013 being beyond period of six financial years excluding the financial year in which the search was carried out. 4. Aggrieved with the finding of the Ld. CIT(A), the Revenue is in appeal whereas the assessee is by way of cross reproduced above. 5. In ground No. one of the cross raised an issue that notice under section 153A of the Act could be issued for a period of six assessment years preceding the assessment year corresponding to financial year in which search was conducted, and the assessment year under consideration being beyond said period of six assessment assessment made u/s 153A of the Act is void Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors he Ld. CIT(A) held that no loan entries were appearing in the books of accounts of the assessee in respect of 11 parties not sustainable in respect of those parties of remaining 18 parties, the Ld. CIT(A) held that the assessee had onus u/s 68 of the Act and therefore, in respect of those 18 parties. The Assessing addition in few assessments years in respect of bogus sub contract expenses incurred, which has been deleted . The Ld CIT(A) also rejected the grounds raised by the assessee challenging the validity of assessment on the ground that same were barred by limitation and assessment year 2013 beyond period of six financial years excluding the financial which the search was carried out. the finding of the Ld. CIT(A), the Revenue is in appeal whereas the assessee is by way of cross-objection as ground No. one of the cross objections, the assessee has issue that notice under section 153A of the Act could be issued for a period of six assessment years preceding the assessment year corresponding to financial year in which search was conducted, and the assessment year under consideration being period of six assessment years, therefore assessment made u/s 153A of the Act is void-ab-initio. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 7 entries were appearing in parties, hence in respect of those parties. In respect assessee had 68 of the Act and therefore, no addition The Assessing years in respect , which has been deleted . The Ld CIT(A) also rejected the grounds raised by the assessee challenging the validity of assessment on the ground that same were barred by limitation and assessment year 2013-14 beyond period of six financial years excluding the financial the finding of the Ld. CIT(A), the Revenue is in objection as the assessee has issue that notice under section 153A of the Act could be issued for a period of six assessment years preceding the assessment year corresponding to financial year in which search was conducted, and the assessment year under consideration being years, therefore, the 5.1 The learned couns the Assessing Officer was not justified in completing the assessment for the year under consideration under the provisions of the section 153A of the Act being beyond six the section 153A of the 5.2 We have heard rival submission of the parties on the issue in dispute and perused the relevant material on r under the provisions of the section 153 1/04/2017 assessment could have been made assessment years but with effect from 01/04/2017, the Finance 2017 has amended the provisions to include furthe assessment year or years assessment years subject to ceiling of undisclosed income word ‘relevant assessment year proviso and Explanation ready reference, is reproduced as under: “Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless (a) the Assessing Officer has in his possession books of account or otherdocuments or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in th relevant assessment assessment years; (b) the income referred to in clause (a) or part thereof has escaped assessassessment for such year or years; and Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors nsel supported the ground and submitted that the Assessing Officer was not justified in completing the assessment onsideration under the provisions of the section ct being beyond six assessment years provided under the section 153A of the Act. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. We find that under the provisions of the section 153A of the Act, assessment could have been made only with effect from 01/04/2017, the Finance amended the provisions to include furthe assessment year or years, which could be extended up to 10 assessment years subject to ceiling of undisclosed income relevant assessment year’(s) has been defined xplanation-1 to section 153A of the Act, which is reproduced as under: that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless- (a) the Assessing Officer has in his possession books of account or otherdocuments or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in th assessment year or in aggregate in the relevant (b) the income referred to in clause (a) or part thereof has escaped assessassessment for such year or years; and Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 8 l supported the ground and submitted that the Assessing Officer was not justified in completing the assessment onsideration under the provisions of the section years provided under We have heard rival submission of the parties on the issue in ecord. We find that ct, prior to only for the six with effect from 01/04/2017, the Finance Act amended the provisions to include further relevant , which could be extended up to 10 assessment years subject to ceiling of undisclosed income. The defined by way of , which, for that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant (a) the Assessing Officer has in his possession books of account or otherdocuments or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the year or in aggregate in the relevant (b) the income referred to in clause (a) or part thereof has escaped (c) the search under section 132 is initiated or requisition und section 132A is made on or after the 1st day of April, 2017. Explanation 1 -For the purposes of this sub "relevant assessment year" shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. 5.3 In view of the above provisions 132 of the Act is initiated or requisition under section 132 Act is made after the 01/04/2017 and the escape to be ₹ 50 lakh or more be issued up to 10 assessment years from the end of the assessment year relevant to the previous year in conducted or requisition is made. We find that in the search was conducted on 06/11/2019 and income assessed instant assessment year therefore notice under section 153A of the issued up to the 10 assessment year year 20-21. Therefore, the Assessing Officer has validly issued notice u/s 153A of the 2013-14. Thus, the ground assessee is accordingly dismissed. 6. In the ground no assailed the assessment or 153A of the Act is barred by limitation. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors (c) the search under section 132 is initiated or requisition und section 132A is made on or after the 1st day of April, 2017. For the purposes of this sub-section, the expression "relevant assessment year" shall mean an assessment year preceding the assessment year relevant to the previous year in h search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made.” of the above provisions, wherever search under section ct is initiated or requisition under section 132 after the 01/04/2017 and the escaped income is likely 50 lakh or more, notice under section 153A of the be issued up to 10 assessment years from the end of the assessment year relevant to the previous year in which conducted or requisition is made. We find that in the instant conducted on 06/11/2019 and income assessed instant assessment year i.e. AY 2013-14 is more than 50 lakhs, therefore notice under section 153A of the Act could have been issued up to the 10 assessment years preceding the assessment 21. Therefore, the Assessing Officer has validly issued u/s 153A of the Act in respect of the instant assessment year he ground No. one of the cross objections of the assessee is accordingly dismissed. he ground no 2 of the cross objections, the assessee has assailed the assessment order on the ground that order passed u/s 153A of the Act is barred by limitation. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 9 (c) the search under section 132 is initiated or requisition under section, the expression "relevant assessment year" shall mean an assessment year preceding the assessment year relevant to the previous year in h search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous wherever search under section ct is initiated or requisition under section 132A of the income is likely , notice under section 153A of the Act could be issued up to 10 assessment years from the end of the which search is instant case conducted on 06/11/2019 and income assessed for is more than 50 lakhs, ct could have been preceding the assessment 21. Therefore, the Assessing Officer has validly issued in respect of the instant assessment year one of the cross objections of the the assessee has der on the ground that order passed u/s 6.1 The Ld. Counsel of the assessee submitted that powers conferred by subsection 1 of section 3 of laws (relaxation of certain notification issued, the time limit was extended up to 30/09/2021. He submitted that though the assessment order is dated 30/09/2021, however the assessee gathered from the Income order was passed or issued on 30/09/2021 till 12:13 AM in the night. The assessee claim portal to its submission filed before us has been found. 6.2 The learned D epartmental the case of the assessee was centralized with Central are not on the faceless mode and Assessing Officer in physical mode order might have been portal after some gap of time and same could not have reflect after midnight of 30/09/2021. He submitted that that assessment order has been passed after limitation of expiry period are bald allegation evidence and therefore same Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors Counsel of the assessee submitted that powers conferred by subsection 1 of section 3 of Taxation and other laws (relaxation of certain provisions) ordinance, 2020, by the time limit for passing the assessment order 30/09/2021. He submitted that though the s dated 30/09/2021, however the assessee ncome-tax Departmental portal (website) order was passed or issued on 30/09/2021 till 12:13 AM in the night. The assessee claimed to have enclosed a screenshot of the to its submission filed before us, however no such screenshot epartmental Representative (DR) submitted that case of the assessee was centralized with Central Circle, which are not on the faceless mode and orders have been passed by the in physical mode. Thereafter, the assessment ave been uploaded on the Income-tax after some gap of time and it might have been possible that reflected on the Income-tax portal immediately after midnight of 30/09/2021. He submitted that the that assessment order has been passed after limitation of expiry period are bald allegation of the assessee without any evidence and therefore same are liable to be rejected. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 10 Counsel of the assessee submitted that in view of axation and other ordinance, 2020, by way of passing the assessment order 30/09/2021. He submitted that though the s dated 30/09/2021, however the assessee (website) that no order was passed or issued on 30/09/2021 till 12:13 AM in the to have enclosed a screenshot of the , however no such screenshot submitted that Circle, which orders have been passed by the . Thereafter, the assessment tax department it might have been possible that immediately the allegation that assessment order has been passed after limitation of expiry any substantive 6.3 We have heard rival our opinion, the requirement of the law is that assessment order should be passed prior to expiry of limitation period limitation period is concerned, there is no dispute and admitted as on 30/9/20201. The contention of the assessee is that impugned assessment order was not uploaded on income immediately after expiry of In our opinion, merely on the income tax portal by 12.13 AM on 1/10/2021, it cann established that assessment order was not passed within the period of limitation. If the assessment order is served within a reasonable period from the expiry of the limitation of passing the assessment order, it is presumed that same limitation. The assessee has not brought on record any evidence that said assessment order was received beyond period from the expiry of the limitation. In absence of any such documentary evidences, the allegations of the The ground No. 2 (two accordingly dismissed. 7. The ground 1 of the appeal of the Revenue relates to addition of Rs.48,04,750/- which account of bogus purchases. objections, the assessee has raised the issue that without aid of any incriminating material no addition could have been made in case of Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors rival submissions on the issue in dispute. In opinion, the requirement of the law is that assessment order should be passed prior to expiry of limitation period limitation period is concerned, there is no dispute and 30/9/20201. The contention of the assessee is that impugned assessment order was not uploaded on income immediately after expiry of limitation i.e. midnight of 30/09/2021. In our opinion, merely not uploading the instant assessment order on the income tax portal by 12.13 AM on 1/10/2021, it cann assessment order was not passed within the period f limitation. If the assessment order is served within a reasonable period from the expiry of the limitation of passing the assessment order, it is presumed that same was passed within the period limitation. The assessee has not brought on record any evidence that said assessment order was received beyond a period from the expiry of the limitation. In absence of any such documentary evidences, the allegations of the assessee are rejected. two) of the cross objections of the assessee is accordingly dismissed. The ground 1 of the appeal of the Revenue relates to addition which was made by the Assessing Officer on account of bogus purchases. In the ground No. 3 (three) objections, the assessee has raised the issue that without aid of any incriminating material no addition could have been made in case of Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 11 on the issue in dispute. In opinion, the requirement of the law is that assessment order should be passed prior to expiry of limitation period. As far as limitation period is concerned, there is no dispute and that is 30/9/20201. The contention of the assessee is that impugned assessment order was not uploaded on income-tax portal midnight of 30/09/2021. not uploading the instant assessment order on the income tax portal by 12.13 AM on 1/10/2021, it cannot be assessment order was not passed within the period f limitation. If the assessment order is served within a reasonable period from the expiry of the limitation of passing the assessment in the period of the limitation. The assessee has not brought on record any evidence a reasonable period from the expiry of the limitation. In absence of any such assessee are rejected. of the assessee is The ground 1 of the appeal of the Revenue relates to addition made by the Assessing Officer on of the cross objections, the assessee has raised the issue that without aid of any incriminating material no addition could have been made in case of completed assessment. This ground has been raised by the assessee with reference to the addition of bogus purchases 7.1. The facts qua the issue shown purchase expenses of Rs.18,12,07,840/ under consideration. D the search team thoroughly examined the purchases of the assessee and key persons of the assessee substantiate those purchases by way of filing complete address supplier, PAN of supplier, supplier, invoice/bills, delivery challans consumption register, purchase and consumption reconciliation statement and bank statement etc. team, from examination of the do assessee, noted certain laps search team identified having deficiencies viz. same style format / font, (ii) bills were not cont vehicle of the lorry use for transportation, delivery address, signature of employee or delivery (iii) invoices issued were not containing mandatory PAN (iv) no e For the period of assessment year 2013 parties were identified Corporation, Navkar Corporation, Mahavir Enterprises, Bhavya Enterprises, Rushabh Corporation, Rushabh Trading Co. Bharti Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors ment. This ground has been raised by the assessee with reference to the addition of bogus purchases The facts qua the issue-in-dispute are that the assessee has shown purchase expenses of Rs.18,12,07,840/- during the year under consideration. During the course of the search proceedings, the search team thoroughly examined the purchases of the assessee rsons of the assessee company were asked to purchases by way of filing complete address of supplier, purchase order, ledger bills, delivery challans, lorry receipts consumption register, purchase and consumption reconciliation statement and bank statement etc. The Authorised officer rom examination of the documentary evidences shown by the certain lapses in claim of purchases expenses identified and short listed 13 parties,which viz. (i) the purchase bills were prepared using font, (ii) bills were not containting type and vehicle of the lorry use for transportation, delivery address, signature employee or delivery (iii) invoices issued were not containing mandatory PAN (iv) no e-way bill, delivery challan, stock register et assessment year 2013-14 to 2020- identified namely: V.H Enterprises, Vimalnath Corporation, Navkar Corporation, Mahavir Enterprises, Bhavya Enterprises, Rushabh Corporation, Rushabh Trading Co. Bharti Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 12 ment. This ground has been raised by the assessee with reference to the addition of bogus purchases also. dispute are that the assessee has during the year uring the course of the search proceedings, the search team thoroughly examined the purchases of the assessee company were asked to purchases by way of filing complete address pf account of lorry receipts, consumption register, purchase and consumption reconciliation officer of search shown by the in claim of purchases expenses. The ,which were (i) the purchase bills were prepared using nting type and vehicle of the lorry use for transportation, delivery address, signature employee or delivery (iii) invoices issued were not containing way bill, delivery challan, stock register etc. -21, the 13 V.H Enterprises, Vimalnath Corporation, Navkar Corporation, Mahavir Enterprises, Bhavya Enterprises, Rushabh Corporation, Rushabh Trading Co. Bharti Enterprises, Hitesh K. Shah (HUF), Maharashtra Pile Foundation, Jay Khodiyar Enterprises, Vimalnath Associates and Diyan Corporation. recorded in books of account is reproduced as under: Name of Sellers FY 2012-13 FY2013-14 VH Enterprises 20,49,491 Vimalnath Corporation 10,07,776 Navkar Corporation Mahavir Enterprises Bhavya Enterprises Rishabh Corporation 9,89,718 19,17,347 Rushabh Trading Co. 5,52,061 15,78,169 Bharti Enterprises 1,61,14,589 Hitesh K 32,62,971 32,84,910 Maharashtra Pile Foundation 21,88,490 Jay Khodiyar Enterprises Vimalnath Associates Divya Corporation Total 48,04,750 2,81,40,783 Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors , Hitesh K. Shah (HUF), Maharashtra Pile Foundation, Jay Khodiyar Enterprises, Vimalnath Associates and Diyan Corporation.A chart of purchases from above parties recorded in books of account is reproduced as under: FY 2014-15 FY 2015-16 FY 2016-17 FY 2017-18 FY 2018 30,32,100 16,26,193 18,30,019 15,68,280 65,56,050 32,25,653 16,57,681 22,65,013 22,09,095 64,33,341 39,94,616 43,29,180 25,59,607 34,52,173 36,49,805 25,67,970 38,37,494 82,83,929 1,03,74,183 42,68,362 14,10,472 39,29,810 91,53,471 1,00,15,119 2,41,60,848 1,11,90,753 3,55,02,056 7,00,04,319 5,23,62,604 31,88,0983 13,27,273 31,38,601 73,28,364 1,03,97,840 64,68,451 64,86,857 1,33,78,824 35,24,070 36,10,050 17,62,298 19,40,968 14,13,598 58,81,762 31,01,660 23,04,423 22,59,068 16,87,727 65,10,522 6,34,33,887 3,64,33,887 6,20,57,929 10,15,48,783 11,80,27,822 Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 13 , Hitesh K. Shah (HUF), Maharashtra Pile Foundation, Jay Khodiyar Enterprises, Vimalnath Associates A chart of purchases from above parties FY 2018-19 FY 2019-20 65,56,050 80,09,332 64,33,341 31,00,940 39,94,616 23,87,388 25,59,607 18,88,312 34,52,173 22,06,521 1,03,74,183 47,15,958 1,00,15,119 46,79,707 5,23,62,604 2,07,29,385 1,03,97,840 44,57,489 58,81,762 35,81,809 65,10,522 30,24,057 11,80,27,822 5,41,81,058 7.2 During the course of search proceedings, proceeding were carried out at the premises parties and statement of proprietor entities were recorded on oath Karta of Vimalnath HUF Proprietor (ii) Smt Khushboo Shah ( Proprietor of M/s VH Enterprises (iii) Sh Nishil Madhani , key person of Vimalnath Associates and Diyan Corporation and ( iv) sh Kantilal D jain , proprietor of M/s navkar Corporation and key person of Ma Enterprises. During survey at the premises of M/s Navkar Corporation, the survey team found exchanged between the key persons of the assessee and sh Kantilal D jain. The individuals they had issued bogus bills to the assessee company delivery of goods or material. The Assessing Officer has reproduced statement of the relevant persons 7 to 20 of the assessment order Assessing Officer has noted that places of their business mentioned in bills. The inspectors of the income-tax department, who were deputed for verifying their place of business submitted that bus Corporation, Rushabh Trading Company and M/s Hitesh K shah were found closed and persons in neighborhood denied of a Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors During the course of search proceedings, simultaneous survey proceeding were carried out at the premises of above supplier statement of proprietor /partner/director of th entities were recorded on oath, which included (i) sh Vinod H Shah ( Karta of Vimalnath HUF Proprietor of M/s Vimalnath Corporation (ii) Smt Khushboo Shah ( Proprietor of M/s VH Enterprises (iii) Sh Nishil Madhani , key person of Vimalnath Associates and Diyan Corporation and ( iv) sh Kantilal D jain , proprietor of M/s navkar Corporation and key person of Mahavir Enterprises and Bhavya During survey at the premises of M/s Navkar Corporation, the survey team found ‘WhatsApp messages exchanged between the key persons of the assessee and sh Kantilal s whose statement were recorded issued bogus bills to the assessee company without actual material. The Assessing Officer has reproduced statement of the relevant persons of supplier companies 7 to 20 of the assessment order. In the assessment order Assessing Officer has noted that three parties were not found at the places of their business mentioned in bills. The inspectors of the tax department, who were deputed for verifying their place of business submitted that business premises of M/s Rushabh Rushabh Trading Company and M/s Hitesh K shah were found closed and persons in neighborhood denied of a Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 14 simultaneous survey of above supplier director of those , which included (i) sh Vinod H Shah ( M/s Vimalnath Corporation (ii) Smt Khushboo Shah ( Proprietor of M/s VH Enterprises (iii) Sh Nishil Madhani , key person of Vimalnath Associates and Diyan Corporation and ( iv) sh Kantilal D jain , proprietor of M/s navkar havir Enterprises and Bhavya During survey at the premises of M/s Navkar WhatsApp messages’ exchanged between the key persons of the assessee and sh Kantilal rded stated that without actual material. The Assessing Officer has reproduced of supplier companies from page e assessment order, the were not found at the places of their business mentioned in bills. The inspectors of the tax department, who were deputed for verifying their place iness premises of M/s Rushabh Rushabh Trading Company and M/s Hitesh K shah were found closed and persons in neighborhood denied of any business activity carried ‘Kohudiyar Enterprises business was found to be running from the address of that party and nearby people denied of having any knowledge of said entity. The office of ‘M/s Maharashtra pile foundation closed for a very longtime. 7.3 The statements of persons and evidences gathered by the departments were duly confronted to the representative of the assessee-company i.e. Director S (i.e. during the course of search proceedings 7.4 In view of observation search proceedings, the Assessing Officer proceedings on 15/09/2021, asked purchase parties for verificatio that it had already supplied PAN of the supplier and sample invoice copies. In absence of documentary evidence of goods and observations recorded during search proceedings, the Assessing Officer held that the purchases 5,41,81,050/- in respect of th 2013-14 to 2020-21 as unexplained bogus purchases. under consideration addition of Rs. 48, 04,750/ Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors business activity carried out from those places. In case of Kohudiyar Enterprises’ also the Inspector reported that no entity or as found to be running from the address of that party denied of having any knowledge of said entity. Maharashtra pile foundation’ was found to be closed for a very longtime. of persons recorded during survey proceedings gathered by the Inspectors of the income were duly confronted to the representative of the i.e. Director Sh. Nirmal Madhani on 10/11/2019 he course of search proceedings). In view of observations made and material gathered search proceedings, the Assessing Officer during assessment proceedings on 15/09/2021, asked the assessee to produce those purchase parties for verification. The assessee, however, already supplied PAN of the supplier and sample invoice n absence of documentary evidences in support of goods and observations recorded during search proceedings, the ld that the purchases amounting to Rs. in respect of those 13 parties for assessment year 21 as unexplained bogus purchases. under consideration addition of Rs. 48, 04,750/- was made by the Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 15 from those places. In case of that no entity or as found to be running from the address of that party denied of having any knowledge of said entity. was found to be recorded during survey proceedings nspectors of the income-tax were duly confronted to the representative of the Nirmal Madhani on 10/11/2019 and material gathered during the during assessment the assessee to produce those assessee, however,submitted already supplied PAN of the supplier and sample invoice support of delivery of goods and observations recorded during search proceedings, the amounting to Rs. se 13 parties for assessment year 21 as unexplained bogus purchases. In the year was made by the Assessing officer against bogus purchases. the year under consideration is reproduced as under: “7.9 In the instant case, there is specific information as well as independent enquiries. To summarize the above arguments, the assessee fails on the following a) The assessee did not produce the parties which was asked specifically vide show cause dated 15.09.2021 The primary onus is on the assessee to establish the genuineness of the purchases claimed by it. As per section 10 the onus lies upon the assessee to prove all the claims including purchases to the satisfaction of the AO, which was not discharged by the assessee as it failed to produce the parties from whom purchases were made. Since knowledge of the assessee, it is its duty to provide the correct address or contact modes of the alleged suppliers. This view is supported by the decision of Hon 178 CTR (Raj) 420 MP High Cou Indore (2004) 186 CTR 218(MP) b) Mere filing of copies of purchase bills without any documentary evidences in support of purchases and payment through account payee cheque cannot be conclusive in a case where genuineness transaction is in question. c) In the case of bogus purchase cases, the ratio laid down by the Apex Court, Jurisdictional High Court and Gujarat High Court in the following cases, need special mention considering the facts of the case. i ) M/s. NK Protein Limited (reported at 84 taxmann.com 195 CTR 354 (SC) ii) NikunjEximp Enterprises (in writ petition no 2860, order dt. 18.6.2014) (Bombay High Court.) iii) CIT V/S N K Industries (in Tax Appeal No.240 of 2009 vide order dated 26.2.201 the case of CIT V/S Simit P. Seth356JTR 451 (Guj. H.C). Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors Assessing officer against bogus purchases. The relevant finding for the year under consideration is reproduced as under: 7.9 In the instant case, there is specific information as well as independent enquiries. To summarize the above arguments, the ee fails on the following grounds: a) The assessee did not produce the parties which was asked specifically vide show cause dated 15.09.2021 The primary onus is on the assessee to establish the genuineness of the purchases claimed by it. As per section 101, 102 and 106 of the Evidence Act, the onus lies upon the assessee to prove all the claims including purchases to the satisfaction of the AO, which was not discharged by the assessee as it failed to produce the parties from whom purchases were made. Since the primary facts are in the knowledge of the assessee, it is its duty to provide the correct address or contact modes of the alleged suppliers. This view is supported by the decision of Hon’ble Raj High Court of India (2002) 178 CTR (Raj) 420 MP High Court in the case of VISP(P) vs.CIT Indore (2004) 186 CTR 218(MP). b) Mere filing of copies of purchase bills without any documentary evidences in support of purchases and payment through account payee cheque cannot be conclusive in a case where genuineness transaction is in question. c) In the case of bogus purchase cases, the ratio laid down by the Apex Court, Jurisdictional High Court and Gujarat High Court in the following cases, need special mention considering the facts of ) M/s. NK Protein Limited (reported at 84 taxmann.com 195 ) NikunjEximp Enterprises (in writ petition no 2860, order dt. 18.6.2014) (Bombay High Court.) iii) CIT V/S N K Industries (in Tax Appeal No.240 of 2009 vide order dated 26.2.2016 (Gujarat High Court) subsequent decision in the case of CIT V/S Simit P. Seth356JTR 451 (Guj. H.C). Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 16 The relevant finding for 7.9 In the instant case, there is specific information as well as independent enquiries. To summarize the above arguments, the a) The assessee did not produce the parties which was asked specifically vide show cause dated 15.09.2021 The primary onus is on the assessee to establish the genuineness of the purchases 1, 102 and 106 of the Evidence Act, the onus lies upon the assessee to prove all the claims including purchases to the satisfaction of the AO, which was not discharged by the assessee as it failed to produce the parties from whom the primary facts are in the knowledge of the assessee, it is its duty to provide the correct address or contact modes of the alleged suppliers. This view is ble Raj High Court of India (2002) rt in the case of VISP(P) vs.CIT b) Mere filing of copies of purchase bills without any documentary evidences in support of purchases and payment through account payee cheque cannot be conclusive in a case where genuineness of c) In the case of bogus purchase cases, the ratio laid down by the Apex Court, Jurisdictional High Court and Gujarat High Court in the following cases, need special mention considering the facts of ) M/s. NK Protein Limited (reported at 84 taxmann.com 195 &292 ) NikunjEximp Enterprises (in writ petition no 2860, order dt. iii) CIT V/S N K Industries (in Tax Appeal No.240 of 2009 vide 6 (Gujarat High Court) subsequent decision in Thus, undisputed fact is that the purchases claimed to have been made from theseparties remained unverified. 7.10 After carefully going through the legal this issue the onus lay upon the assessee to prove the genuineness of the transaction when it claimed that the purchases are genuine. From the above case laws and the discussion on investigation, it is crystal clear that – (1) The pr imary onus is on the assessee to establish the genuineness of the purchasesclaimed by it; ii) Since the primary facts are in the knowledge of the assessee it is his duty toprovide the correct address or contact modes of the alleged suppliers; iii) If the investigation done by the Department leads to doubt regarding the genuineness of the purchases it is incumbent on the assessee to produce the parties along with necessary documents to establish the genuineness of the transaction (iv) Payment by account pa (v) No proof by way of challaa/documentary evidence for payment of VAT is filed. (vi) Though it is true that sales cannot be affected without corresponding purchases, in the absence of stock register, books of accounts it is not possible to verify which goods were sold to the parties whose sales confirmation was submitted by the assessee. Assessee is also unable to co 7.11 In view of the above discussion, it is clearly explained that the assessee has claimed bogus purchase to inflate the expenses and to reduce the taxable income. Thus, bogus purchase expenses of Rs 48,04,750/-, claimed as purchases from the bogus parties, as discussed above in FY 2012 disallowed and is added to the total income of the assessee in AY 2013-14 as bogus expense Penalty U/S 271(1) Act, is initiate for concealment of Income 7.5 On further appeal before the Ld. CIT(A), the assessee submitted that it had filed copy of income Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors Thus, undisputed fact is that the purchases claimed to have been made from theseparties remained unverified. 10 After carefully going through the legal instances available on this issue the onus lay upon the assessee to prove the genuineness of the transaction when it claimed that the purchases are genuine. From the above case laws and the discussion on investigation, it is imary onus is on the assessee to establish the genuineness of the purchasesclaimed by it; ) Since the primary facts are in the knowledge of the assessee it is his duty toprovide the correct address or contact modes of the investigation done by the Department leads to doubt regarding the genuineness of the purchases it is incumbent on the assessee to produce the parties along with necessary documents to establish the genuineness of the transaction. (iv) Payment by account payee cheque is not sacrosanct. (v) No proof by way of challaa/documentary evidence for payment it is true that sales cannot be affected without corresponding purchases, in the absence of stock register, books of accounts it is not possible to verify which goods were sold to the parties whose sales confirmation was submitted by the assessee. e is also unable to co-relate the same. 7.11 In view of the above discussion, it is clearly explained that the assessee has claimed bogus purchase to inflate the expenses and to reduce the taxable income. Thus, bogus purchase expenses of Rs aimed as purchases from the bogus parties, as discussed above in FY 2012-13 relevant to AY 2013-14 is hereby disallowed and is added to the total income of the assessee in AY 14 as bogus expense Penalty U/S 271(1) © rws 274 of the concealment of Income.” On further appeal before the Ld. CIT(A), the assessee filed copy of income-tax return, invoices along Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 17 Thus, undisputed fact is that the purchases claimed to have been instances available on this issue the onus lay upon the assessee to prove the genuineness of the transaction when it claimed that the purchases are genuine. From the above case laws and the discussion on investigation, it is imary onus is on the assessee to establish the ) Since the primary facts are in the knowledge of the assessee it is his duty toprovide the correct address or contact modes of the investigation done by the Department leads to doubt regarding the genuineness of the purchases it is incumbent on the assessee to produce the parties along with necessary documents to (v) No proof by way of challaa/documentary evidence for payment it is true that sales cannot be affected without corresponding purchases, in the absence of stock register, books of accounts it is not possible to verify which goods were sold to the parties whose sales confirmation was submitted by the assessee. 7.11 In view of the above discussion, it is clearly explained that the assessee has claimed bogus purchase to inflate the expenses and to reduce the taxable income. Thus, bogus purchase expenses of Rs aimed as purchases from the bogus parties, as 14 is hereby disallowed and is added to the total income of the assessee in AY rws 274 of the On further appeal before the Ld. CIT(A), the assessee invoices along with delivery challan and ledger account the Assessing officer. It was submi CIT(A) that all those supplier parties had copy of Income-tax return ledger account, sample statement, VAT registrati officer on 22.09.2021. 7.6 During the appellate proceedings, the assessee filed various documents as additional evidence which were sent by the Ld. CIT(A) to the Assessing Officer calling for remand report. The Ld. the impugned order has reproduced summary of the remand report during assessment proceedings reproduced as under: Sr. No. Name 1 Rushabh Trading Co. (Proprietor Hitesh Kantilal Shah) Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors with delivery challan and ledger account, bank statement etc . It was submitted by the assessee before the Ld supplier parties had also separately tax return, invoice along with delivery challan sample copy along with transport bills VAT registration certificate etc before the Assessing During the appellate proceedings, the assessee filed various documents as additional evidence which were sent by the Ld. CIT(A) to the Assessing Officer calling for remand report. The Ld. as reproduced summary of the remand report proceedings, which for ready reference, Remarks Rushabh Trading Co. (Proprietor Hitesh Kantilal 1. Party appeared before this office a was recorded, 2. The assessee has not submitted stock book and purchase order, and ME TAX replied in his statement that he received order from client through telephonic conversation and place order with the vendors of material and supply the goods to client directly at their sites. As the stock si not stored at any place by the assessee and hence, not maintained any stock. 3. Party provided its contact number & address in statement, which was verified independently by the Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 18 bank statement etc before by the assessee before the Ld also separately filed their invoice along with delivery challan, transport bills, bank before the Assessing During the appellate proceedings, the assessee filed various documents as additional evidence which were sent by the Ld. CIT(A) to the Assessing Officer calling for remand report. The Ld. CIT(A) in as reproduced summary of the remand report for ready reference, is and statement 2. The assessee has not submitted stock book and purchase order, and ME TAX replied in his statement that he received order from client through telephonic conversation and place order with the ial and supply the goods to client directly at their sites. As the stock si not stored at any place by the assessee and hence, not 3. Party provided its contact number & address in statement, which was verified independently by the 2 Rushabh Corporation (Proprietor Reema Hitesh Shah 3. Hitesh Kantilal Shah (HUF) Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors inspectors and submitted report. As per the inspector report, party was found at the premise. 4. Copy of the statement enclosed. The Ld. CIT(A) may decide the case on merits based on the above facts. (Proprietor Reema 1. Party appeared before this office hand statement was recorded 2. The assessee has not submitted stock book and purchase order, and replied in his statement that he received order from client through telephonic conversation and place order with the vendors material and supply the goods to client directly at their sites. As the stock si not stored at any place by the assessee and hence, not maintained any stock. 3. Party provided its contact number & address in statement, which was verified independently b inspectors and submitted report. As per the inspector report, party was found at the premise. 4. Copy of the statement enclosed. The Ld.CIT(A) may decide the case on merits based on the above facts. Hitesh Kantilal 1. Party appeared before this office and statement was recorded 2. The assessee has not submitted stock book and purchase order, and replied in his statement that he received order from client through telephonic conversation and place order with the vendors of material and supply the goods to client directly at their sites. As the stock si not stored at any place by the assesse and hence, not maintained any stock. 3. Party provided its contact number & address in statement, which was verified independently by the Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 19 spectors and submitted report. As per the inspector report, party was found at the premise. 4. Copy of the statement enclosed. The Ld. CIT(A) may decide the case on merits based on the above Party appeared before this office hand statement 2. The assessee has not submitted stock book and purchase order, and replied in his statement that he received order from client through telephonic conversation and place order with the vendors of material and supply the goods to client directly at their sites. As the stock si not stored at any place by the assessee and hence, not maintained any 3. Party provided its contact number & address in statement, which was verified independently by the inspectors and submitted report. As per the inspector report, party was found at the premise. The Ld.CIT(A) may decide the case on merits based fore this office and statement 2. The assessee has not submitted stock book and purchase order, and replied in his statement that he received order from client through telephonic conversation and place order with the vendors of pply the goods to client directly at their sites. As the stock si not stored at any place maintained any 3. Party provided its contact number & address in statement, which was verified independently by the 4 Vimalnath Corporation 5. Maharashtra Pile Foundation Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors inspectors and submitted report. As per the inspector report, party was found at the premise. 4. Copy of the statement enclosed. The Ld.CIT(A) may decide the case on merits based on the above facts. 1. Party has not attended the office. 2. The assessee has not submitted stock book. 3. Party provided its contact number & address in statement, which was verified independently by the inspectors and submitted report. As per the inspector report, party was found at the premise. 4. The statement of th was recorded during the search action, the same may be considered for the present proceeding enclosed. The Ld.CIT(A) may decide the case on merits based on the above facts. Maharashtra Pile 1. Party has not attended the office. 2. The assessee has not submitted stock book and purchase order. 3. Party provided its contact number & address in statement, which was verified independently by the inspectors and submitted report. As per the inspector report, party was found at the premise. 4. The statement of the party was recorded during the search action, the same may be considered for the present proceeding enclosed. The Ld.CIT(A) may decide the case on merits based Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 20 and submitted report. As per the inspector report, party was found at the premise. The Ld.CIT(A) may decide the case on merits based e assessee has not submitted stock book. 3. Party provided its contact number & address in statement, which was verified independently by the inspectors and submitted report. As per the inspector report, party was found at the premise. The statement of the party was recorded during the search action, the same may be considered for the present proceeding The Ld.CIT(A) may decide the case on merits based The assessee has not submitted stock book and 3. Party provided its contact number & address in statement, which was verified independently by the inspectors and submitted report. As per the inspector report, party was found at the premise. 4. The statement of the party was recorded during the search action, the same may be considered for The Ld.CIT(A) may decide the case on merits based 6. V. H. Enterprises 7. Jay Khodiyar Enterprises 8. Vimalnath Associates Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors on the above facts. 1. The assessee failed to produce the party. 2. The party has not submitted stock book, purchase order and purchase bills. 3. Party provided its contact number & address in statement, which was verified independently by the inspectors and submitted report. As per the inspector report, party was found at the premise. The Ld.CIT(A) may decide the case on merits based on the above facts. Jay Khodiyar 1. Party appeared before this office and statement was recorded. 2. The assessee has not stock book and purchase order and replied in his statement that he received order from client through telephonic conversation and place order with the vendors of material and supply the goods to client directly at their sites. As the stock is not stored at any place by the assessee and hence not maintained any stock book. 5. Party provided its contact number & address in statement, the copy of the statement enclosed. The Ld.CIT(A) may decide the case on merits based on the above facts. 1. Party has not attended the office. 2. The assessee has not submitted stock book. 3. Party provided its contact number & address in statement, which was verified independently by the inspectors and submitted report. As per the inspector report, party was found at the premise. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 21 uce the party. 2. The party has not submitted stock book, 3. Party provided its contact number & address in statement, which was verified independently by the inspectors and submitted report. As per the party was found at the premise. The Ld.CIT(A) may decide the case on merits based 1. Party appeared before this office and statement 2. The assessee has not stock book and purchase plied in his statement that he received order from client through telephonic conversation and place order with the vendors of material and supply the goods to client directly at their sites. As the stock is not stored at any place by the assessee not maintained any stock book. Party provided its contact number & address in statement, the copy of the statement enclosed. on merits based office. 2. The assessee has not submitted stock book. 3. Party provided its contact number & address in statement, which was verified independently by the inspectors and submitted report. As per the inspector report, party was found at the premise. 9. Diyan Corporation 10. Mahavir Enterprise Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 4. The statement of the party was recorded during the search action, the same may be considered for the present proceeding enclosed. The Ld.CIT(A) may decide the case on merits based on the above facts. 1. Party has not attended the office. 2. The assessee has not submittedstock book. 3. Party provided its contact number & address in statement, which was verified independently by the inspectors and submitted report. As per the inspector report, party was found at the premise. 4. The statement of the party was recorded during the search action, the same may be considered for the present proceeding. The Ld.CIT(A) may decide the case on merits based on the above facts. 1. The assessee failed to produce the party. 2. The party has not submitted stock book. 3. Party provided its contact number & address in statement, which was verified independently by the inspectors and submitted report. As per the inspector report, party was found at the premise. 6. The statement of the par wasrecorded during the search action, the same may be considered for the present proceeding. The Ld.CIT(A) may decide the caseon merits based on the above facts. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 22 statement of the party was recorded during the search action, the same may be considered for The Ld.CIT(A) may decide the case on merits based 2. The assessee has not submittedstock book. 3. Party provided its contact number & address in statement, which was verified independently by the inspectors and submitted report. As per the inspector report, party was found at the premise. of the party was recorded during the search action, the same may be considered for The Ld.CIT(A) may decide the case on merits based 1. The assessee failed to produce the party. party has not submitted stock book. 3. Party provided its contact number & address in statement, which was verified independently by the inspectors and submitted report. As per the inspector report, party was found at the premise. The statement of the party wasrecorded during the search action, the same may be considered for the present proceeding. The Ld.CIT(A) may decide the caseon merits based 11 Navkar Enterprises 12. Bhavya Enterprises 7.7 The CIT(A) has noted that out of Rushabh Corporation, Rushabh Trading Co. Bhar Hitesh K. Shah (HUF), Jay Khodiyar Enterprises before the Assessing Officer and their statement were recorded no adverse comment has been given by the Assessing Officer. respect of Vimalnath Corporation, V.H. Enterpris Enterprises, though they did not attend Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 1. Party has not attended the office. 2. The assessee has not submitted and purchase order. 3. Party provided its contact number & address in statement which was verified independently by the inspectors and submitted report. As per the inspector report, party was found at the premise. 4. The statement of the party was re during the search action, the same may be considered for the present proceeding. The Ld. CIT(A) may decide the case on merits based on the above facts. 1. Party has not attended the office. 2. The assessee has not submitted stock book. 3. Party provided its contact number & address in statement, which was verified independently by theinspectors and submitted report. As per the inspector report, party was found at the premise. 4. The statement of the party was recorded during the search action, the same may be considered for the present proceeding. The Ld.CIT(A) may decide the case on merits based on the above facts. The CIT(A) has noted that out of 13 parties, 4 parties namely Rushabh Corporation, Rushabh Trading Co. Bharti Enterprises, Hitesh K. Shah (HUF), Jay Khodiyar Enterprises had before the Assessing Officer and their statement were recorded no adverse comment has been given by the Assessing Officer. Vimalnath Corporation, V.H. Enterprises and Mahavir though they did not attend before the Assessing Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 23 Party has not attended the office. The assessee has not submitted stock book Party provided its contact number & address in statement which was verified independently by the inspectors and submitted report. As per the inspector report, party was found at the premise. The statement of the party was recorded during the search action, the same may be considered for the present proceeding. The Ld. CIT(A) may decide the case on merits stock book. 3. Party provided its contact number & address in statement, which was verified independently by inspectors and submitted report. As per the inspector report, party was found at the premise. 4. The statement of the party was recorded during the search action, the same may be considered for The Ld.CIT(A) may decide the case on merits based parties namely ti Enterprises, had appeared before the Assessing Officer and their statement were recorded, and no adverse comment has been given by the Assessing Officer. In es and Mahavir the Assessing Officer however they had submitted all the details Maharashtra Pile Foundation, Vimalnath Associates Diyan Corporation Navkar Corporation parties submitted name and address which were verified by the Inspector of the Department. Enterprises, no comments are available in remand report. 7.8 Before the Ld. CIT(A), the assessee submitted that during the period the assessee Government Agencies including MCGM. The project was duly monitored and checked by MCGM and only after satisfaction the MCGM payment was made submitted that withou labour contractor, the project could not have been completed. 7.9 It was further submitted that purchases were maintained and purchases were duly recorded in books of account and paymen by account payee cheque. 7.10 The assessee further submitted that during the course of search no incriminating material disallowance of purchase and therefore in absence of any incriminating material disallowance Assessing Officer is not justified. The assessee further submitted that disallowance was made on the basis of the Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors Officer however they had submitted all the details. In respect of Maharashtra Pile Foundation, Vimalnath Associates Diyan Corporation Navkar Corporation, the ld CIT(A) noted that parties submitted name and address which were verified by the Inspector of the Department. Regarding one party namely Bharti Enterprises, no comments are available in remand report. Before the Ld. CIT(A), the assessee submitted that during the iod the assessee executed project work on behalf of the Government Agencies including MCGM. The project was duly checked by MCGM and only after satisfaction the was made to the assessee. The assessee without purchase material and payment to the labour contractor, the project could not have been completed. It was further submitted that all necessary records regarding purchases were maintained and purchases were duly recorded in payment for the purchase material was made by account payee cheque. The assessee further submitted that during the course of search no incriminating material was found with respect to disallowance of purchase and therefore in absence of any aterial disallowance of purchases made by the Assessing Officer is not justified. The assessee further submitted that disallowance was made on the basis of the Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 24 n respect of Maharashtra Pile Foundation, Vimalnath Associates Diyan , the ld CIT(A) noted that the parties submitted name and address which were verified by the Regarding one party namely Bharti Enterprises, no comments are available in remand report. Before the Ld. CIT(A), the assessee submitted that during the project work on behalf of the Government Agencies including MCGM. The project was duly checked by MCGM and only after satisfaction the to the assessee. The assessee further t purchase material and payment to the labour contractor, the project could not have been completed. all necessary records regarding purchases were maintained and purchases were duly recorded in t for the purchase material was made The assessee further submitted that during the course of with respect to disallowance of purchase and therefore in absence of any purchases made by the Assessing Officer is not justified. The assessee further submitted that disallowance was made on the basis of the third-party information without any further scrutiny by the Assessing Officer and therefore, same was not justified. submitted that no cross to the assessee and therefore, addition should be deleted on that ground also. 7.11 The Ld CIT(A) adjudicated the legal issue challenging the addition as well as on merit. On the legal issue that addition could not have been made without the aid of incriminating material in completed assessment, the Ld CIT(A) rejected the contention of the assessee, and thus assessee is by way of ground No. 3 raised i Cross objections. 8.0 The Ld. CIT(A) rejected the contention of the assessee that there was no incriminating material found vis the bogus purchases. The relevant finding of the Ld. CIT(A) is reproduced as under: “7.3.4 The appellant has submitted that no incriminating material with respect to bogus purchases was found during search proceedings, therefore, disallowances of purchases could not be made in the unabated assessment year. The facts of the case are that during the search proceedings, statement of Shri Shri Vinod H. Shah (Proprietor of Vimalnath Corporation), Smt. Khushboo V.Shah (Proprietor of V.H. Enterprises), Kantilal D. Jain (Proprietor of M/s. Navkar Corporation and Bhavya Enterprises) and Shri Nishil Madhani (key person of Vimalnath Associates & Divya Corporation), were recorded and they had admitted that they had provided bogus bills of purchases to the appellant company. These statements were confronted to Shri Nirmal Madhani, Director, who could controvert the facts narrated in those statements. Thus, there was Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors information without any further scrutiny by the Assessing Officer e was not justified. The assessee further submitted that no cross-examination of those parties was to the assessee and therefore, addition should be deleted on that The Ld CIT(A) adjudicated the legal issue challenging the on as well as on merit. On the legal issue that addition could not have been made without the aid of incriminating material in completed assessment, the Ld CIT(A) rejected the contention of the assessee, and thus assessee is by way of ground No. 3 raised i The Ld. CIT(A) rejected the contention of the assessee that there was no incriminating material found vis-à-vis the addition of the bogus purchases. The relevant finding of the Ld. CIT(A) is 7.3.4 The appellant has submitted that no incriminating material with respect to bogus purchases was found during search proceedings, therefore, disallowances of purchases could not be made in the unabated assessment year. The facts of the case are ring the search proceedings, statement of Shri Shri Vinod H. Shah (Proprietor of Vimalnath Corporation), Smt. Khushboo V.Shah (Proprietor of V.H. Enterprises), Kantilal D. Jain (Proprietor of M/s. Navkar Corporation and Bhavya Enterprises) and Shri Nishil Madhani (key person of Vimalnath Associates & Divya Corporation), were recorded and they had admitted that they had provided bogus bills of purchases to the appellant company. These statements were confronted to Shri Nirmal Madhani, Director, who could controvert the facts narrated in those statements. Thus, there was Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 25 information without any further scrutiny by the Assessing Officer he assessee further was provided to the assessee and therefore, addition should be deleted on that The Ld CIT(A) adjudicated the legal issue challenging the on as well as on merit. On the legal issue that addition could not have been made without the aid of incriminating material in completed assessment, the Ld CIT(A) rejected the contention of the assessee, and thus assessee is by way of ground No. 3 raised in The Ld. CIT(A) rejected the contention of the assessee that vis the addition of the bogus purchases. The relevant finding of the Ld. CIT(A) is 7.3.4 The appellant has submitted that no incriminating material with respect to bogus purchases was found during search proceedings, therefore, disallowances of purchases could not be made in the unabated assessment year. The facts of the case are ring the search proceedings, statement of Shri Shri Vinod H. Shah (Proprietor of Vimalnath Corporation), Smt. Khushboo V.Shah (Proprietor of V.H. Enterprises), Kantilal D. Jain (Proprietor of M/s. Navkar Corporation and Bhavya Enterprises) and Shri Nishil M. Madhani (key person of Vimalnath Associates & Divya Corporation), were recorded and they had admitted that they had provided bogus bills of purchases to the appellant company. These statements were confronted to Shri Nirmal Madhani, Director, who could not controvert the facts narrated in those statements. Thus, there was incriminating material found during the search and the AO has disallowed purchase based on such statements. Therefore, this argument of the assessee is rejected. 8.1 As far as the issu Ld. DR before us, submitted that during the course of search proceedings statement and other material of the supplier Inspector report regarding their non obtained and which were duly confronted to the assessee. In view of those information gathered, the were having false claim of purchase expenditure and therefore seizure of regular books of accounts indicating falsity of the transaction made, constitute CIT(A) also upheld existence of incriminating material in view of information gathered regarding purchase during the course of search proceedings. The contention of the assessee, however is that no incriminating material was found from the premises of the assessee vis-à-vis the purchases from those 13 parties. 8.2 We have heard rival submission of the parties on the issue dispute and perused the relevant material on record. Continental warehousing corporation (supra), Bombay High Court held that if the assessments year are pending as on the date of to search action and the assessing officer can make any addition those assessment year( the case, not necessarily only based on incriminating material Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors incriminating material found during the search and the AO has disallowed purchase based on such statements. Therefore, this argument of the assessee is rejected.” As far as the issue of incriminating material is concerned the Ld. DR before us, submitted that during the course of search proceedings statement and other material of the supplier report regarding their non-existent at address etc. were h were duly confronted to the assessee. In view of gathered, the books of accounts of the assessee were having false claim of purchase expenditure and therefore seizure of regular books of accounts indicating falsity of the constitute incriminating material found CIT(A) also upheld existence of incriminating material in view of information gathered regarding purchase during the course of search proceedings. The contention of the assessee, however is that minating material was found from the premises of the vis the purchases from those 13 parties. We have heard rival submission of the parties on the issue dispute and perused the relevant material on record. In the case of warehousing corporation (supra), the Hon’ble Bombay High Court held that if the assessments of any assessment pending as on the date of search,same will get the assessing officer can make any addition sment year(s) based on the facts and circumstances of the case, not necessarily only based on incriminating material Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 26 incriminating material found during the search and the AO has disallowed purchase based on such statements. Therefore, this e of incriminating material is concerned the Ld. DR before us, submitted that during the course of search proceedings statement and other material of the supplier parties, existent at address etc. were h were duly confronted to the assessee. In view of books of accounts of the assessee were having false claim of purchase expenditure and therefore seizure of regular books of accounts indicating falsity of the found. The Ld. CIT(A) also upheld existence of incriminating material in view of information gathered regarding purchase during the course of search proceedings. The contention of the assessee, however is that minating material was found from the premises of the We have heard rival submission of the parties on the issue-in- In the case of the Hon’ble of any assessment same will get abated due the assessing officer can make any addition in on the facts and circumstances of the case, not necessarily only based on incriminating material. But, assessment years in relation to already completed as on the date of assessmentsand, in those cases, except based on incriminating material found during the course of search. In the case of the are two abated assessments and for the remaining assessment years, no addition could have been made without the aid of incriminating material. us is whether there was any incriminating material qua the addition of bogus purchase in the year under 8.3 The word ‘ Incr the Act but in context of the provisions of the Act incriminating material can be in the form of evidences which were not explained for the purpose of filing return of income like loose paper document containing transaction of income which were not reported for tax purpose or transaction of expense of excessive claim,the assets like cash, jewellary etc unaccounted sources of income, false entries in books of account, absence of regular book admitted undisclosed income etc. In other whether oral or documentary taxable income, can be termed as necessary that all the seized material may be incriminating. In the case of Param Dairy Ltd in ITA 37/2021 & ITA 41/ Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors But, assessment years in relation to which, the assessments already completed as on the date of search, those are unabated and, in those cases, no addition could have except based on incriminating material found during the course of In the case of the assessee, the AY 2020-21 and AY 2019 are two abated assessments and for the remaining assessment no addition could have been made without the aid of incriminating material.Thus, the issue now for examination us is whether there was any incriminating material qua the addition purchase in the year under consideration? The word ‘ Incriminating Material’ has not been defined in the Act but in context of the provisions of the Act incriminating material can be in the form of evidences which were not explained for the purpose of filing return of income like loose paper aining transaction of income which were not reported for tax purpose or transaction of expense of excessive claim,the assets like cash, jewellary etc. acquired though unaccounted sources of income, false entries in books of account, absence of regular books of accounts and other records, statements admitted undisclosed income etc. In other words, any evidence whether oral or documentary found, which indicate evasion of can be termed as ‘incriminating material’. It is not necessary that all the seized material may be incriminating. In the Param Dairy Ltd in ITA 37/2021 & ITA 41/ Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 27 assessments are those are unabated have been made except based on incriminating material found during the course of 21 and AY 2019-20 are two abated assessments and for the remaining assessment no addition could have been made without the aid of examination before us is whether there was any incriminating material qua the addition iminating Material’ has not been defined in the Act but in context of the provisions of the Act incriminating material can be in the form of evidences which were not explained for the purpose of filing return of income like loose paper(s) or aining transaction of income which were not reported for tax purpose or transaction of expense of excessive acquired though unaccounted sources of income, false entries in books of account, s of accounts and other records, statements any evidence found, which indicate evasion of material’. It is not necessary that all the seized material may be incriminating. In the Param Dairy Ltd in ITA 37/2021 & ITA 41/2021, the Hon’ble High Court of Delhi has held that regular books of account of the assessee by no stretch of imaginat incriminating material to form the basis of 153A of the Act. In case of B Kishore Kumar Vs DCIT (2014) 52 taxmann.com 449 (Madras), that when there is a clear and categoric, undisclosed income by the assessee scrutinize the documents and that would evidence. A SLP filed against the said decision of the Madras High Court has been dis Court as reported in (2015) 62 taxmann.com 215 CIT vs Harjeev Aggarwal High Court following questions of law were consideration: "1. Whether the Income Tax the addition of Rs.74 lacs paid by the Assessee in cash for the purchase of property bearing No.C 2. Whether the Income Tax Appellate Tribunal was correct in law in holding that the provisions of Section applicable to the facts of the case? 3. Whether the Income Tax Appellate Tribunal was correct in law in holding that the genuineness of the investment made for the purchase of property bearing No.C-104, Naraina Vihar, Delhi was to be considered in the hands of the Assessee, Smt. Anita Aggarwal and Harjeev Aggarwal and Sons, HUF?" 8.4 The Hon’ble high court though answered the questions of law in favour of revenue but gave observation on th Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors Hon’ble High Court of Delhi has held that regular books of account of the assessee by no stretch of imagination could be treated as incriminating material to form the basis of framing assessment u/s In case of B Kishore Kumar Vs DCIT (2014) 52 taxmann.com 449 (Madras), the Hon’ble Madras High Court held that when there is a clear and categoric, voluntary admission of the undisclosed income by the assessee himself, there is no necessity to scrutinize the documents and that would constitute a good piece of evidence. A SLP filed against the said decision of the gh Court has been dismissed by the Hon’ble (2015) 62 taxmann.com 215. In the case of CIT vs Harjeev Aggarwal in ITA 8/2004 before the Hon’ble High Court following questions of law were framed for "1. Whether the Income Tax Appellate Tribunal was correct in law in deleting the addition of Rs.74 lacs paid by the Assessee in cash for the purchase of property bearing No.C-104, Naraina Vihar, Delhi? 2. Whether the Income Tax Appellate Tribunal was correct in law in holding he provisions of Section 158 BB of the Income Tax Act, 1961 were not applicable to the facts of the case? 3. Whether the Income Tax Appellate Tribunal was correct in law in holding that the genuineness of the investment made for the purchase of property 104, Naraina Vihar, Delhi was to be considered in the hands of the Assessee, Smt. Anita Aggarwal and Harjeev Aggarwal and Sons, HUF?" The Hon’ble high court though answered the questions of law in favour of revenue but gave observation on the issue whether Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 28 Hon’ble High Court of Delhi has held that regular books of account ion could be treated as assessment u/s In case of B Kishore Kumar Vs DCIT (2014) 52 the Hon’ble Madras High Court held voluntary admission of the there is no necessity to a good piece of evidence. A SLP filed against the said decision of the Hon’ble missed by the Hon’ble Supreme In the case of before the Hon’ble Delhi framed for Appellate Tribunal was correct in law in deleting the addition of Rs.74 lacs paid by the Assessee in cash for the purchase of 2. Whether the Income Tax Appellate Tribunal was correct in law in holding 158 BB of the Income Tax Act, 1961 were not 3. Whether the Income Tax Appellate Tribunal was correct in law in holding that the genuineness of the investment made for the purchase of property 104, Naraina Vihar, Delhi was to be considered in the hands of the Assessee, Smt. Anita Aggarwal and Harjeev Aggarwal and Sons, HUF?" The Hon’ble high court though answered the questions of law e issue whether statement on stand alone basis can be an incriminating material. The relevant observation 19. In view of the settled legal position, the first and foremost issue to be addressed is whether a statement recorded unde would by itself be sufficient to assess the income, as disclosed by the in its statement, under the Provisions of Chapter XIV 20. In our view, a plain contemplate computing of undisclosed income solely on the basis of a statement recorded during the search. The words "evidence found as a result of search" would not take within its sweep statements recorded during search and seizure operations. However, the statements recorded would certainly constitute information and if such information is relatable to the evidence or material found during search, the same any proceedings under the Act as expressly mandated by virtue of the explanation to Section 132(4) standalone basis without search and seizure operations would not empower the AO to make a block assessment merely because any admission was made by the Assessee during search operation. 21. A plain reading of officer is empowered to examine on oath any person who is found in possession or control of any books of accounts, documents, money, bullion, jewellery or any other val 132 (4), which was inserted by the Direct Tax w.e.f. 1st April, 1989, furth in respect of the books of accounts or other documents found as a result of search but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the earlier, a statement on oath can only be recorded of a person who is found in possession of books of accounts, documents, assets, etc. Plainly, the intention of the Parliament is to permit such examination only where the books of accounts, documents and assets possessed by a person are relevant for the purposes of the investigation being undertaken. Now, if the provisions of Section 132(4) with Section 158B(b) under Section 132(4) assessment only if the said statement is made in the context of other evidence Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors alone basis can be an incriminating material. The relevant observations are reproduced as under: 19. In view of the settled legal position, the first and foremost issue to be addressed is whether a statement recorded under Section 132 would by itself be sufficient to assess the income, as disclosed by the in its statement, under the Provisions of Chapter XIV-B of the Act. 20. In our view, a plain reading of Section 158BB(1) of the Act does not contemplate computing of undisclosed income solely on the basis of a statement recorded during the search. The words "evidence found as a result ould not take within its sweep statements recorded during search and seizure operations. However, the statements recorded would certainly constitute information and if such information is relatable to the evidence or material found during search, the same could certainly be used in evidence in any proceedings under the Act as expressly mandated by virtue of the Section 132(4) of the Act. However, such statements on a standalone basis without reference to any other material discovered during search and seizure operations would not empower the AO to make a block assessment merely because any admission was made by the Assessee during search operation. 21. A plain reading of Section 132 (4) of the Act indicates that the authorized officer is empowered to examine on oath any person who is found in possession or control of any books of accounts, documents, money, bullion, jewellery or any other valuable article or thing. The explanation to (4), which was inserted by the Direct Tax Laws (Amendment) Act w.e.f. 1st April, 1989, further clarifies that a person may be examined not only in respect of the books of accounts or other documents found as a result of search but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Act. However, as stated earlier, a statement on oath can only be recorded of a person who is found in possession of books of accounts, documents, assets, etc. Plainly, the intention of the Parliament is to permit such examination only where the books of ccounts, documents and assets possessed by a person are relevant for the purposes of the investigation being undertaken. Now, if the provisions Section 132(4) of the Act are read in the context of Section 158BB(1) Section 158B(b) of the Act, it is at once clear that a statement recorded Section 132(4) of the Act can be used in evidence for making a block assessment only if the said statement is made in the context of other evidence Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 29 alone basis can be an incriminating material. 19. In view of the settled legal position, the first and foremost issue to be Section 132 (4) of the Act would by itself be sufficient to assess the income, as disclosed by the Assessee B of the Act. of the Act does not contemplate computing of undisclosed income solely on the basis of a statement recorded during the search. The words "evidence found as a result ould not take within its sweep statements recorded during search and seizure operations. However, the statements recorded would certainly constitute information and if such information is relatable to the evidence or could certainly be used in evidence in any proceedings under the Act as expressly mandated by virtue of the of the Act. However, such statements on a reference to any other material discovered during search and seizure operations would not empower the AO to make a block assessment merely because any admission was made by the Assessee during (4) of the Act indicates that the authorized officer is empowered to examine on oath any person who is found in possession or control of any books of accounts, documents, money, bullion, uable article or thing. The explanation to Section Laws (Amendment) Act, 1987 er clarifies that a person may be examined not only in respect of the books of accounts or other documents found as a result of search but also in respect of all matters relevant for the purposes of any Act. However, as stated earlier, a statement on oath can only be recorded of a person who is found in possession of books of accounts, documents, assets, etc. Plainly, the intention of the Parliament is to permit such examination only where the books of ccounts, documents and assets possessed by a person are relevant for the purposes of the investigation being undertaken. Now, if the provisions Section 158BB(1) read of the Act, it is at once clear that a statement recorded of the Act can be used in evidence for making a block assessment only if the said statement is made in the context of other evidence or material discovered during the search. A statement of a person, which is not relatable to any incriminati and seizure operation cannot, by itself, trigger a block assessment. The undisclosed income of an Assessee has to be computed on the basis of evidence and material found during search. The statement recorded under Section 132(4) but only to the extent it is relatable to the unearthed or found during search. In other words, there between the statement recorded and the evidence/material found during search in order to for an assessment to be based on the statement recorded. 8.5 Similarly, in the decision dated PCIT(Central) Vs Anand Kunar Jain following question of law have been raised High Court: 7. The Revenue is aggrieved with the aforesaid impugned order and has filed the present appeal under Section 260A of the Act, proposing the following questions a. Whether the ITAT is justified in deleting the additions made on account of bogus long term capital gain on the ground that the evidences found during search at the premises of entry provider cannot be the basis for making additions in assessment complet in the case of beneficiary ignoring the vital fact that there was a common search u/s 132 conducted on the same day in both the cases of Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors or material discovered during the search. A statement of a person, which is not relatable to any incriminating document or material found during search and seizure operation cannot, by itself, trigger a block assessment. The undisclosed income of an Assessee has to be computed on the basis of evidence and material found during search. The statement recorded Section 132(4) of the Act may also be used for making the assessment, but only to the extent it is relatable to the incriminating evidence/material unearthed or found during search. In other words, there must be a nexus between the statement recorded and the evidence/material found during search in order to for an assessment to be based on the statement recorded. Similarly, in the decision dated 12/02/2021 in PCIT(Central) Vs Anand Kunar Jain (HUF) in ITA 23/2021 following question of law have been raised before Hon’ble Delhi The Revenue is aggrieved with the aforesaid impugned order and has filed the present appeal under Section 260A of the Act, proposing the following questions a. Whether the ITAT is justified in deleting the additions made on account of bogus long term capital gain on the ground that the evidences found during search at the premises of entry provider cannot be the basis for making additions in assessment completed u/S. 153A in the case of beneficiary ignoring the vital fact that there was a common search u/s 132 conducted on the same day in both the cases of Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 30 or material discovered during the search. A statement of a person, which is ng document or material found during search and seizure operation cannot, by itself, trigger a block assessment. The undisclosed income of an Assessee has to be computed on the basis of evidence and material found during search. The statement recorded of the Act may also be used for making the assessment, incriminating evidence/material must be a nexus between the statement recorded and the evidence/material found during search in order to for an assessment to be based on the statement recorded. 12/02/2021 in case of ITA 23/2021, before Hon’ble Delhi The Revenue is aggrieved with the aforesaid impugned order and has filed the present appeal under Section 260A of the Act, proposing of law: a. Whether the ITAT is justified in deleting the additions made on account of bogus long term capital gain on the ground that the evidences found during search at the premises of entry provider cannot be the basis for making ed u/S. 153A in the case of beneficiary ignoring the vital fact that there was a common search u/s 132 conducted on the same day in both the cases of the entry provider and the beneficiary? b. Whether ITAT was justified in holding that mere failure of cros operator is fatal when copy of statement was provided to the Assessee and Assessee failed to discharge the onus of providing the genuineness of LTCG especially in view of the apex court decision in the case of State of UP vs. Sudhir 8.6 The Hon’ble High Court answered that no substantial question arise for consideration and hence dismissed the appeal. The relevant observation of the Hon’ble High Court are reproduced as under: 10. Now, coming to the as 153A on the basis of the statement recorded in search action against a third person. We ITA 23/2021 and connected matters Page 11 of 11 may note that the AO has used this statement on oath recorded in the course of search third party (i.e., search of Pradeep Kumar Jindal) for making the additions in the hands of the assessee. As per the mandate of Section 153C, if this statement was to be construed as an incriminating material belonging to or Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors the entry provider and the beneficiary? b. Whether ITAT was justified in holding that mere failure of cross examination of entry operator is fatal when copy of statement was provided to the Assessee and Assessee failed to discharge the onus of providing the genuineness of LTCG especially in view of the apex court decision in the case of State of UP vs. Sudhir Kumar Singh [AIR 2020 SC 5215]? The Hon’ble High Court answered that no substantial question arise for consideration and hence dismissed the appeal. The relevant observation of the Hon’ble High Court are reproduced as under: 10. Now, coming to the aspect viz the invocation of section 153A on the basis of the statement recorded in search action against a third person. We ITA 23/2021 and connected matters Page 11 of 11 may note that the AO has used this statement on oath recorded in the course of search conducted in the case of a third party (i.e., search of Pradeep Kumar Jindal) for making the additions in the hands of the assessee. As per the mandate of Section 153C, if this statement was to be construed as an incriminating material belonging to or Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 31 the entry provider and the beneficiary? b. Whether ITAT was justified in holding that s examination of entry operator is fatal when copy of statement was provided to the Assessee and Assessee failed to discharge the onus of providing the genuineness of LTCG especially in view of the apex court decision in the case of State of UP vs. Kumar Singh [AIR 2020 SC 5215]? The Hon’ble High Court answered that no substantial question arise for consideration and hence dismissed the appeal. The relevant observation of the Hon’ble High Court are pect viz the invocation of section 153A on the basis of the statement recorded in search action against a third person. We ITA 23/2021 and connected matters Page 11 of 11 may note that the AO has used this statement on oath conducted in the case of a third party (i.e., search of Pradeep Kumar Jindal) for making the additions in the hands of the assessee. As per the mandate of Section 153C, if this statement was to be construed as an incriminating material belonging to or pertaining to a person other than person searched (as referred to in Section 153A), then the only legal recourse available to the department was to proceed in terms of Section 153C of the Act by handing over the same to the AO who has jurisdiction over such p assessment has been framed under section 153A on the basis of alleged incriminating material (being the statement recorded under 132(4) of the Act). As noted above, the Assessee had no opportunity to cross the said witness, but tha under section 153C has not been followed. On this count alone, we find no perversity in the view taken by the ITAT. Therefore, we do not find any substantial question of law that requires our consideration. 11. Accordingly, pending applications, are dismissed. 8.7 In the light of above position of law, when we examine the facts of the instant case , we find that statement of the supplier parties, of transport/delivery of material etc course of search proceeding, supplier parties by the Inspector during verification etc. when seen in totality constitute material which is incriminating in nature. The entries in books of account regarding purchase are Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors taining to a person other than person searched (as referred to in Section 153A), then the only legal recourse available to the department was to proceed in terms of Section 153C of the Act by handing over the same to the AO who has jurisdiction over such person. Here, the assessment has been framed under section 153A on the basis of alleged incriminating material (being the statement recorded under 132(4) of the Act). As noted above, the Assessee had no opportunity to cross the said witness, but that apart, the mandatory procedure under section 153C has not been followed. On this count alone, we find no perversity in the view taken by the ITAT. Therefore, we do not find any substantial question of law that requires our consideration. 11. Accordingly, the present appeals, along with all pending applications, are dismissed. In the light of above position of law, when we examine the facts case , we find that the (a) information in the form of statement of the supplier parties, (b) absence of evidence in support of transport/delivery of material etc. from the assessee during the proceeding,(c) none found at the premises of the supplier parties by the Inspector during verification etc. when seen in totality constitute material which is incriminating in The entries in books of account regarding purchase are Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 32 taining to a person other than person searched (as referred to in Section 153A), then the only legal recourse available to the department was to proceed in terms of Section 153C of the Act by handing over the same to the erson. Here, the assessment has been framed under section 153A on the basis of alleged incriminating material (being the statement recorded under 132(4) of the Act). As noted above, the Assessee had no opportunity to cross-examine t apart, the mandatory procedure under section 153C has not been followed. On this count alone, we find no perversity in the view taken by the ITAT. Therefore, we do not find any substantial question of law that requires our consideration. the present appeals, along with all In the light of above position of law, when we examine the facts information in the form of nce of evidence in support from the assessee during the none found at the premises of the supplier parties by the Inspector during verification etc. evidences, when seen in totality constitute material which is incriminating in The entries in books of account regarding purchase are false, which also becomes an incriminating material for the purpose of invoking provisions of section 153A of the Act. 8.8 Therefore, we uphold the finding of the Ld. CIT(A) that qua the addition of bogus purchase their existed incriminating material. The cross-objection No. 3 of the assessee with respect to qua the bogus purchases is accordingly disallowed. 9.0 On the merit of addition for bogus purchase, t after considering submission of the assessee held that 4 parties which were duly produced before the Assessing Officer could have been sustained. The relevant finding of the Ld. CIT(A) is reproduced as under: “7.3.6 In the case of Rushabh Trading Co.,Rushabh Corporation and Hitesh Kantilal Shah HUF and Jay Kodivar Enterprise, during the assessment proceedings, the appellant as well as the purchase parties had submitted necessary supporting document purchases before the AO. Further, during the remand report proceedings also, the parties attended before the AO and provided necessary documents with respect to the purchases made by the appellant from them. The statement of keypersons were re the remand report, the AO has not made any adverse remark with respect to these 3 parties. Therefore, the disallowance of purchases made by the AO in respect of these 4 parties i.e. Rushabh Corporation, Rushabh Trading Co, Hitesh Kantilal Shah H Jay Kodiyar Enterprise cannot be sustained. 9.1 In respect of other parties the Assessing Officer verified existence of the compan that those parties admitted Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors false, which also becomes an incriminating material for the purpose of invoking provisions of section 153A of the Act. Therefore, we uphold the finding of the Ld. CIT(A) that qua the addition of bogus purchase their existed incriminating material. The of the assessee with respect to qua the bogus accordingly disallowed. of addition for bogus purchase, the Ld. CIT(A) after considering submission of the assessee held that 4 parties which were duly produced before the Assessing Officer, could have been sustained. The relevant finding of the Ld. CIT(A) is 7.3.6 In the case of Rushabh Trading Co.,Rushabh Corporation and Hitesh Kantilal Shah HUF and Jay Kodivar Enterprise, during the assessment proceedings, the appellant as well as the purchase parties had submitted necessary supporting documents related to purchases before the AO. Further, during the remand report proceedings also, the parties attended before the AO and provided necessary documents with respect to the purchases made by the appellant from them. The statement of keypersons were recorded. In the remand report, the AO has not made any adverse remark with respect to these 3 parties. Therefore, the disallowance of purchases made by the AO in respect of these 4 parties i.e. Rushabh Corporation, Rushabh Trading Co, Hitesh Kantilal Shah H Jay Kodiyar Enterprise cannot be sustained.” In respect of other parties the Assessing Officer verified existence of the companies during remand proceeding and observed admitted the fact of accommodation entries Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 33 false, which also becomes an incriminating material for the purpose Therefore, we uphold the finding of the Ld. CIT(A) that qua the addition of bogus purchase their existed incriminating material. The of the assessee with respect to qua the bogus he Ld. CIT(A) after considering submission of the assessee held that 4 parties no addition could have been sustained. The relevant finding of the Ld. CIT(A) is 7.3.6 In the case of Rushabh Trading Co.,Rushabh Corporation and Hitesh Kantilal Shah HUF and Jay Kodivar Enterprise, during the assessment proceedings, the appellant as well as the purchase s related to purchases before the AO. Further, during the remand report proceedings also, the parties attended before the AO and provided necessary documents with respect to the purchases made by the corded. In the remand report, the AO has not made any adverse remark with respect to these 3 parties. Therefore, the disallowance of purchases made by the AO in respect of these 4 parties i.e. Rushabh Corporation, Rushabh Trading Co, Hitesh Kantilal Shah HUF and In respect of other parties the Assessing Officer verified proceeding and observed accommodation entries issued by them to the assessee. The relevant finding of the CIT(A) is reproduced as under: “7.3.7 In the case of Vimalnath Associates, Vimanath Corporation, Mahavir Enterprises, Bhavya Enterprises, Diyan Enterprises, Maharashtra Pile Foundation, V. H. Ente Corporation, the Inspector deputed by the AO had visited the premises and the parties were found existing at the given addresses. Therefore, the identity of the parties was established by the appellant. The statements of Vinod Shah (Prop Corporation), Smt. Khushboo V.Shah (Proprietor of V.H.Enterprises). Kantilal D. Jain (Proprietor of M/s.Navkar Corporation and Bhavya Enterprises) and Shri Nishil M. Madhani (kep person of Vimalnath Associates & Divya Corporation) were they had admitted that they had provided accommodation entries of purchases to the appellant firm. These persons have not retracted from their statements. Therefore, the averment made by them in their statements cannot simply 9.2 However, the Ld. CIT(A) has executed work for the government agencies and therefore entire amount of bogus purchases cannot be disallowed observation of the Ld. CIT(A) “However, it is a fact that the appellant company was engaged in the business of execution of project work on behalf of government agency as well as MCGM and the project has been completed by the appellant firm. The appellant firm has received government agency on execution of project work assigned to it. The sale proceeds have been realised by the appellant firm from the government agencies. The AO has not doubted and disturbed the sales shown by the appellant as bogus or infl principle of law that the AO cannot disallow 100% of purchases when the sales are not disturbed by the AO. Even the statements of Vinod Shah (Proprietor of Vimalnath Corporation), Smt. KhushbooV.Shah (Proprietor of V.H.Enterprises), K (Proprietor of M/s.Navkar Corporation and Bhavya Enterprises) and Shri Nishil M. Madhani (key person of Vimalnath Associates & Divya Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors to the assessee. The relevant finding of the CIT(A) is 7.3.7 In the case of Vimalnath Associates, Vimanath Corporation, Mahavir Enterprises, Bhavya Enterprises, Diyan Enterprises, Maharashtra Pile Foundation, V. H. Enterprises and Navkar Corporation, the Inspector deputed by the AO had visited the premises and the parties were found existing at the given addresses. Therefore, the identity of the parties was established by the appellant. The statements of Vinod Shah (Proprietor of Vimalnath Corporation), Smt. Khushboo V.Shah (Proprietor of V.H.Enterprises). Kantilal D. Jain (Proprietor of M/s.Navkar Corporation and Bhavya Enterprises) and Shri Nishil M. Madhani (kep person of Vimalnath Associates & Divya Corporation) were recorded. In their statements, they had admitted that they had provided accommodation entries of purchases to the appellant firm. These persons have not retracted from their statements. Therefore, the averment made by them in their statements cannot simply be brushed aside.” Ld. CIT(A) is of the view that since the assessee has executed work for the government agencies and therefore entire amount of bogus purchases cannot be disallowed. The relevant Ld. CIT(A) is reproduced as under: However, it is a fact that the appellant company was engaged in the business of execution of project work on behalf of government agency as well as MCGM and the project has been completed by the appellant firm. The appellant firm has received payment from the government agency on execution of project work assigned to it. The sale proceeds have been realised by the appellant firm from the government agencies. The AO has not doubted and disturbed the sales shown by the appellant as bogus or inflated. It is a settled principle of law that the AO cannot disallow 100% of purchases when the sales are not disturbed by the AO. Even the statements of Vinod Shah (Proprietor of Vimalnath Corporation), Smt. KhushbooV.Shah (Proprietor of V.H.Enterprises), Kantilal D. Jain (Proprietor of M/s.Navkar Corporation and Bhavya Enterprises) and Shri Nishil M. Madhani (key person of Vimalnath Associates & Divya Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 34 to the assessee. The relevant finding of the CIT(A) is 7.3.7 In the case of Vimalnath Associates, Vimanath Corporation, Mahavir Enterprises, Bhavya Enterprises, Diyan Enterprises, rprises and Navkar Corporation, the Inspector deputed by the AO had visited the premises and the parties were found existing at the given addresses. Therefore, the identity of the parties was established by rietor of Vimalnath Corporation), Smt. Khushboo V.Shah (Proprietor of V.H.Enterprises). Kantilal D. Jain (Proprietor of M/s.Navkar Corporation and Bhavya Enterprises) and Shri Nishil M. Madhani (kep person of Vimalnath recorded. In their statements, they had admitted that they had provided accommodation entries of purchases to the appellant firm. These persons have not retracted from their statements. Therefore, the averment made by them in since the assessee has executed work for the government agencies and therefore entire . The relevant However, it is a fact that the appellant company was engaged in the business of execution of project work on behalf of government agency as well as MCGM and the project has been completed by the payment from the government agency on execution of project work assigned to it. The sale proceeds have been realised by the appellant firm from the government agencies. The AO has not doubted and disturbed the ated. It is a settled principle of law that the AO cannot disallow 100% of purchases when the sales are not disturbed by the AO. Even the statements of Vinod Shah (Proprietor of Vimalnath Corporation), Smt. antilal D. Jain (Proprietor of M/s.Navkar Corporation and Bhavya Enterprises) and Shri Nishil M. Madhani (key person of Vimalnath Associates & Divya Corporation) are taken into consideration, wherein they have admitted of having provided bogus accommodatio no evidence that the cash was received back by these parties from the appellant. Thus, the 100% disallowance of purchases made by the AO in respect of these 13 parties cannot be sustained and only profit element embedded in such purchas be disallowed. In this regard, the decisions in the following case are relevant In the case of CIT v.Bholanath Poly Fab (P.) Ltd. 20131 355 ITR 290 (Gujarat), the Hon'ble High Court of Gujarat has held that where assessee did purchase cloth and sell finished goods, but purchasers were not traceable, profit element embedded in purchases would be subjected to tax and not entire amount. In this case, the Hon'ble High Court of Gujarat has held as under: ..The Tribunal committed no erro themselves were bogus or whether the parties from whom such purchases were allegedly made were bogus is essentially a question of fact. The Tribunal having examined the evidence on record came to the conclusion that the assessee di the finished goods, as natural corollary, not the entire amount covered under such purchase, but the profit element embedded therein would be subject to tax. In the result, tax appeal is dismissed. [Para 6].. In the case of Pr. CIT v. RishabhdevTechnocable Ltd. 424 IT 338 (Bom),the Hon'ble High Court of Bombay has held that where assessee had declared certain purchases to be made during year and Assessing Officer added entire quantum of purchases to income of assessee on plea t Tribunal held that only reasonable profit at rate of 5 per cent on purchases should be added back to income of assessee, Tribunal was justified in its view. The relevant paras of the decision of the Hon'ble High Court Bombayare reproduced as under: 19. On thorough consideration of the matter, we do not find any error or infirmity in the view taken by the Tribunal. The lower appellate authorities had enhanced the quantum of purchases much beyond that of the Assessing Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors Corporation) are taken into consideration, wherein they have admitted of having provided bogus accommodation entries, there is no evidence that the cash was received back by these parties from the appellant. Thus, the 100% disallowance of purchases made by the AO in respect of these 13 parties cannot be sustained and only profit element embedded in such purchase transaction only has to be disallowed. In this regard, the decisions in the following case are In the case of CIT v.Bholanath Poly Fab (P.) Ltd. 20131 355 ITR 290 (Gujarat), the Hon'ble High Court of Gujarat has held that where hase cloth and sell finished goods, but purchasers were not traceable, profit element embedded in purchases would be subjected to tax and not entire amount. In this case, the Hon'ble High Court of Gujarat has held as under: ..The Tribunal committed no error. Whether the purchases themselves were bogus or whether the parties from whom such purchases were allegedly made were bogus is essentially a question of fact. The Tribunal having examined the evidence on record came to the conclusion that the assessee did purchase the cloth and sell the finished goods, as natural corollary, not the entire amount covered under such purchase, but the profit element embedded therein would be subject to tax. In the result, tax appeal is . CIT v. RishabhdevTechnocable Ltd. 424 IT 338 (Bom),the Hon'ble High Court of Bombay has held that where assessee had declared certain purchases to be made during year and Assessing Officer added entire quantum of purchases to income of assessee on plea that purchases were bogus purchases and Tribunal held that only reasonable profit at rate of 5 per cent on purchases should be added back to income of assessee, Tribunal was justified in its view. The relevant paras of the decision of the Hon'ble High Court Bombayare reproduced as under: 19. On thorough consideration of the matter, we do not find any error or infirmity in the view taken by the Tribunal. The lower appellate authorities had enhanced the quantum of purchases much beyond that of the Assessing Officer ie., from Rs. 24.18,06,385.00 to Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 35 Corporation) are taken into consideration, wherein they have n entries, there is no evidence that the cash was received back by these parties from the appellant. Thus, the 100% disallowance of purchases made by the AO in respect of these 13 parties cannot be sustained and only e transaction only has to be disallowed. In this regard, the decisions in the following case are In the case of CIT v.Bholanath Poly Fab (P.) Ltd. 20131 355 ITR 290 (Gujarat), the Hon'ble High Court of Gujarat has held that where hase cloth and sell finished goods, but purchasers were not traceable, profit element embedded in purchases would be In this case, the Hon'ble High Court of Gujarat has held as under: r. Whether the purchases themselves were bogus or whether the parties from whom such purchases were allegedly made were bogus is essentially a question of fact. The Tribunal having examined the evidence on record came d purchase the cloth and sell the finished goods, as natural corollary, not the entire amount covered under such purchase, but the profit element embedded therein would be subject to tax. In the result, tax appeal is . CIT v. RishabhdevTechnocable Ltd. 424 IT 338 (Bom),the Hon'ble High Court of Bombay has held that where assessee had declared certain purchases to be made during year and Assessing Officer added entire quantum of purchases to income hat purchases were bogus purchases and Tribunal held that only reasonable profit at rate of 5 per cent on purchases should be added back to income of assessee, Tribunal The relevant paras of the decision of the Hon'ble High Court of 19. On thorough consideration of the matter, we do not find any error or infirmity in the view taken by the Tribunal. The lower appellate authorities had enhanced the quantum of purchases much Officer ie., from Rs. 24.18,06,385.00 to Rs. 65,65,30,470.00 but having found that the purchases corresponded to sales which were reflected in the retums of the assessee in sales tax proceedings and in addition, were also recorded in the books of accounts account payee cheques, the purchases were accepted by the two appellate authorities and following judicial dictum decided to add the profit percentage on such purchases to the income of the assessee. While the CIT (A) hadassesse added to the income of the assessee, Tribunal made further addition of 3% profit, thereby protecting the interest of the Revenue. We have also considered the two decisions relied upon by leamed standing counsel and we find that fac distinguishable from the facts of those two cases to warrant application of the legal principles enunciated in the two cited decisions. 20. In BholanathPolyfeb (P.) Ltd. (supra), Gujarat High Court was also confronted with a similar issue. In that case Tribunal was of the opinion that the purchases might have been made from bogus parties but the purchases themselves were not bogus.Considering the fact situation, Tribunal was of the opinion that not the entire amount of purchases but the profit margin embedded in such amount would be subjected to tax. Gujarat High Court upheld the finding of the Tribunal. It was held that whether the purchases wer bogus or whether the parties from whom such purchases were allegedly made were bogus was essentially a question of fact. When the Tribunal had concluded that the assessee did make the purchase, as a natural corollary not the entire amount covered by such purchase but the profit element embedded therein would be subject to tax. 21. We are in respectful agreement with the view expressed by the Gujarat High Court. 22. Thus, we do not find any merit in this appeal. No substantial question of law arises from the order passed by the Tribunal. Consequently, the appeal is dismissed However, there shall be no order as to cost. In the case of Pr. CIT V. Jakharia Fabric (P. (Bom),the Hon'ble High Court of Bombay has also held that where information was received by Assessing Officer to effect that eight parties from whom purchases were made by assessee engaged in Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors Rs. 65,65,30,470.00 but having found that the purchases corresponded to sales which were reflected in the retums of the assessee in sales tax proceedings and in addition, were also recorded in the books of accounts with payments made through account payee cheques, the purchases were accepted by the two appellate authorities and following judicial dictum decided to add the profit percentage on such purchases to the income of the assessee. While the CIT (A) hadassessed profit at 2% which was added to the income of the assessee, Tribunal made further addition of 3% profit, thereby protecting the interest of the Revenue. We have also considered the two decisions relied upon by leamed standing counsel and we find that facts of the present case are clearly distinguishable from the facts of those two cases to warrant application of the legal principles enunciated in the two cited BholanathPolyfeb (P.) Ltd. (supra), Gujarat High Court was also confronted with a similar issue. In that case Tribunal was of the opinion that the purchases might have been made from bogus parties but the purchases themselves were not bogus.Considering e fact situation, Tribunal was of the opinion that not the entire amount of purchases but the profit margin embedded in such amount would be subjected to tax. Gujarat High Court upheld the finding of the Tribunal. It was held that whether the purchases wer bogus or whether the parties from whom such purchases were allegedly made were bogus was essentially a question of fact. When the Tribunal had concluded that the assessee did make the purchase, as a natural corollary not the entire amount covered by purchase but the profit element embedded therein would be 21. We are in respectful agreement with the view expressed by the 22. Thus, we do not find any merit in this appeal. No substantial question of law arises from the order passed by the Tribunal. Consequently, the appeal is dismissed However, there shall be no In the case of Pr. CIT V. Jakharia Fabric (P.) Ltd. 429 IT 332 (Bom),the Hon'ble High Court of Bombay has also held that where information was received by Assessing Officer to effect that eight parties from whom purchases were made by assessee engaged in Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 36 Rs. 65,65,30,470.00 but having found that the purchases corresponded to sales which were reflected in the retums of the assessee in sales tax proceedings and in addition, were also with payments made through account payee cheques, the purchases were accepted by the two appellate authorities and following judicial dictum decided to add the profit percentage on such purchases to the income of the d profit at 2% which was added to the income of the assessee, Tribunal made further addition of 3% profit, thereby protecting the interest of the Revenue. We have also considered the two decisions relied upon by leamed standing ts of the present case are clearly distinguishable from the facts of those two cases to warrant application of the legal principles enunciated in the two cited BholanathPolyfeb (P.) Ltd. (supra), Gujarat High Court was also confronted with a similar issue. In that case Tribunal was of the opinion that the purchases might have been made from bogus parties but the purchases themselves were not bogus.Considering e fact situation, Tribunal was of the opinion that not the entire amount of purchases but the profit margin embedded in such amount would be subjected to tax. Gujarat High Court upheld the finding of the Tribunal. It was held that whether the purchases were bogus or whether the parties from whom such purchases were allegedly made were bogus was essentially a question of fact. When the Tribunal had concluded that the assessee did make the purchase, as a natural corollary not the entire amount covered by purchase but the profit element embedded therein would be 21. We are in respectful agreement with the view expressed by the 22. Thus, we do not find any merit in this appeal. No substantial question of law arises from the order passed by the Tribunal. Consequently, the appeal is dismissed However, there shall be no ) Ltd. 429 IT 332 (Bom),the Hon'ble High Court of Bombay has also held that where information was received by Assessing Officer to effect that eight parties from whom purchases were made by assessee engaged in job work of dying of fabrics were hawala deale bogus bills and he treated aforesaid purchases as bogus purchases, since without purchase of materials, it was not possible for assessee to complete job work of dying and entire purchases could not be added as bogus. profit element embedd be added to total income of assessee. 9.3 The Ld. CIT(A) referred to the decision of the Poly Fab (P.) Ltd. [2013] 355 ITR 290 (Gujarat), Hon’ble Bombay High Court in the case of Technocable Ltd. 424 ITR 338 (Bom) of Pr. CIT v. Jakharia Fabric (P.) Ltd. 429 ITR 332 (Bom), Following the above decision disallowance of purchases to 5% in respect of 9 parties observing under: “In the case of the appellant, the AO has accepted the sales recorded in the books of accounts, therefore, only profit element embedded into purchases could be disallowed. Accordingly, the disallowance of purchases is restricted to 5% of purchas Vimalnath Associates, Vimalnath Corporation Mahavir Enterprises, Bhavya Enterprises, Diyan Enterprises, Maharashtra Pile Foundation, V. H. Enterprises and Navkar Corporation & Bharti Enterprises. 7.3.8 During the A.Y.2013 from Hitesh Kantilal Shah HUF (i) Rushabh Corporation (il) Rushabh Trading Co. As discussed in para 7.3.6, purchases made from Rushabh Corporation, Rushabh Trading Co, and HiteshKantilal Shah HUF have been justified by the app assessment as well as remand proceedings. Therefore, purchases of Rs.48,04,750/- made from Rushabh Corporation Rushabh Trading Co. and Hitesh Kantilal Shah HUF is deleted. 9.4 We have heard rival submission of the parties on the merit of the addition of bogus purchases. R Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors job work of dying of fabrics were hawala dealers who had issued bogus bills and he treated aforesaid purchases as bogus purchases, since without purchase of materials, it was not possible for assessee to complete job work of dying and entire purchases could not be added as bogus. profit element embedded in such transaction had to be added to total income of assessee. The Ld. CIT(A) referred to the decision of the CIT v. Bholanath Poly Fab (P.) Ltd. [2013] 355 ITR 290 (Gujarat), decision of the Hon’ble Bombay High Court in the case of Pr. CIT v. Ris Technocable Ltd. 424 ITR 338 (Bom) and decision of in the case Pr. CIT v. Jakharia Fabric (P.) Ltd. 429 ITR 332 (Bom), ollowing the above decisions, the Ld. CIT(A) restricted the disallowance of purchases to 5% in respect of 9 parties observing In the case of the appellant, the AO has accepted the sales recorded in the books of accounts, therefore, only profit element embedded into purchases could be disallowed. Accordingly, the disallowance of purchases is restricted to 5% of purchases made from 09 parties ie Vimalnath Associates, Vimalnath Corporation Mahavir Enterprises, Bhavya Enterprises, Diyan Enterprises, Maharashtra Pile Foundation, V. H. Enterprises and Navkar Corporation & Bharti 7.3.8 During the A.Y.2013-14, the appellant has made purchases from Hitesh Kantilal Shah HUF (i) Rushabh Corporation (il) Rushabh Trading Co. As discussed in para 7.3.6, purchases made from Rushabh Corporation, Rushabh Trading Co, and HiteshKantilal Shah HUF have been justified by the appellant during the assessment as well as remand proceedings. Therefore, purchases of made from Rushabh Corporation Rushabh Trading Co. and Hitesh Kantilal Shah HUF is deleted.” We have heard rival submission of the parties on the merit of the addition of bogus purchases. Regarding the addition of bogus Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 37 rs who had issued bogus bills and he treated aforesaid purchases as bogus purchases, since without purchase of materials, it was not possible for assessee to complete job work of dying and entire purchases could not be ed in such transaction had to CIT v. Bholanath decision of the Pr. CIT v. Rishabhdev and decision of in the case Pr. CIT v. Jakharia Fabric (P.) Ltd. 429 ITR 332 (Bom), , the Ld. CIT(A) restricted the disallowance of purchases to 5% in respect of 9 parties observing as In the case of the appellant, the AO has accepted the sales recorded in the books of accounts, therefore, only profit element embedded into purchases could be disallowed. Accordingly, the disallowance of es made from 09 parties ie Vimalnath Associates, Vimalnath Corporation Mahavir Enterprises, Bhavya Enterprises, Diyan Enterprises, Maharashtra Pile Foundation, V. H. Enterprises and Navkar Corporation & Bharti appellant has made purchases from Hitesh Kantilal Shah HUF (i) Rushabh Corporation (il) Rushabh Trading Co. As discussed in para 7.3.6, purchases made from Rushabh Corporation, Rushabh Trading Co, and HiteshKantilal ellant during the assessment as well as remand proceedings. Therefore, purchases of made from Rushabh Corporation Rushabh Trading We have heard rival submission of the parties on the merit of egarding the addition of bogus purchases, deleted by the Ld. CIT(A), we find that the Assessing Officer in the assessment proceedings made addition mainly for the reason that those parties w assessment proceedings delivery of goods. The finding of ld CIT(A) are not acceptable due various reasons. Firstly proceedings out of those 13 parties, 4 parties were no proof of delivery of goods to the assessee has been produced by those parties.Secondly controlled by the same person had provided annual payment like Vimalanath Corpoation, VH bank accounts of their firms Relevant part of statement of sh Vinod H shah reproduced by the Assessing Officer is extracted as under: “Q.10. Please explain proprietor, partner or Director. Ans. Sir, as stated above, I am basically not working. However, my distant relative, Hitesh Shah (Contact No.9930195780) is managing and operating a HUF concern ie M/s Vimalnath Corporation, wherein I am karta. Other than this, I am not a partner or Director in any business entity. I am just a signatory in the HUF concern i.e. M/s Vimalnath Corporation, which is managed and operated by my distant relative, Hitesh Shah. I am no carred out by Shri Hitesh Shah in M/s Vimalnath Corporation. You are requested to ask, Shri Hitesh Shah about the business activity of M/s Vimalnath Corporation. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors purchases, deleted by the Ld. CIT(A), we find that the Assessing Officer in the assessment proceedings made addition mainly for the reason that those parties were not produced before him assessment proceedings and parties failed to provide proof of . The finding of ld CIT(A) are not acceptable due Firstly, we find that during the remand proceedings out of those 13 parties, 4 parties were produced, b no proof of delivery of goods to the assessee has been produced by Secondly, out of those four parties, three parties controlled by the same person i.e. sh Hitesh Kantilal Shah , who had provided annual payment of Rs. 40,000/- to the other suppliers like Vimalanath Corpoation, VH Enterprises for making available s of their firms for providing accommodation entry Relevant part of statement of sh Vinod H shah reproduced by the Assessing Officer is extracted as under: Please explain in how many entities you are proprietor, partner or Director. as stated above, I am basically not working. However, my distant relative, Hitesh Shah (Contact No.9930195780) is managing and operating a HUF concern ie Corporation, wherein I am karta. Other than this, I am not a partner or Director in any business entity. I am just a signatory in the HUF concern i.e. M/s Vimalnath Corporation, which is managed and operated by my distant relative, Hitesh Shah. I am not aware of the business actlivities carred out by Shri Hitesh Shah in M/s Vimalnath Corporation. You are requested to ask, Shri Hitesh Shah about the business activity of M/s Vimalnath Corporation. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 38 purchases, deleted by the Ld. CIT(A), we find that the Assessing Officer in the assessment proceedings made addition mainly for the ere not produced before him during and parties failed to provide proof of . The finding of ld CIT(A) are not acceptable due e find that during the remand produced, but no proof of delivery of goods to the assessee has been produced by three parties were Hitesh Kantilal Shah , who other suppliers making available accommodation entry. Relevant part of statement of sh Vinod H shah reproduced by the in how many entities you are as stated above, I am basically not working. However, my distant relative, Hitesh Shah (Contact No.9930195780) is managing and operating a HUF concern ie Corporation, wherein I am karta. Other than this, I am not a partner or Director in any business entity. I am just a signatory in the HUF concern i.e. M/s Vimalnath Corporation, which is managed and operated by my distant t aware of the business actlivities carred out by Shri Hitesh Shah in M/s Vimalnath Corporation. You are requested to ask, Shri Hitesh Shah about the business Q.11 Please explain how many entities are being operated from this premises at Flat No. 1 Apartment, 60 feet Road, Devchand Nagar, Bhayander West, Mumbai-401 101? Ans. Sir, the following entities are being operated from this premises. Sr.No . Name of the entity 1 M/s V.H. Enterprises 2 M/s Vimalnath Corporation All the above entities are controlled and managed by my distant relative, Shri Hitesh Shah. Me and my daughter are just proprietor / karta for documentation purpose and not aware of the business activity. Q.12 Please give the office and residential address of Shri Hitesh Shah. Please also explain how you got convinc as a signatory in M/s Vimalnath Corporation? Ans. Sir, I am not aware of the exact address of Shri Hitesh Shah. However, he operates from Haridas Nagar in Borivali West. Sir, Shri Hitesh Shah is my distint relative and he offered me commission of Rs.40,000/ issue of bogus bills. He would manage the whole affairs of M/s Vimalnath Corporation and I am not aware about business transactions carried out in the said entity. The commission of Rs.40,000/- was paid to m 2017-18. The commission for him. The commission was sent to us through his person and Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors Please explain how many entities are being operated from this premises at Flat No. 1 st floor, Neminath Apartment, 60 feet Road, Devchand Nagar, Bhayander West, Sir, the following entities are being operated from this Name of the Proprietor Nature of business M/s V.H. Enterprises Proprietor (Khushboo Vinod Shah) Not aware of the nature of business M/s Vimalnath Corporation HUF concern (Karta Vinod Himmeth Shah Not ware of the nature of business All the above entities are controlled and managed by my distant relative, Shri Hitesh Shah. Me and my daughter are just proprietor / karta for documentation purpose and not aware of the business activity. Please give the office and residential address of Shri Hitesh Shah. Please also explain how you got convinced to act as a signatory in M/s Vimalnath Corporation? Sir, I am not aware of the exact address of Shri Hitesh Shah. However, he operates from Haridas Nagar in Borivali West. Sir, Shri Hitesh Shah is my distint relative and he offered of Rs.40,000/- annually for using our name for issue of bogus bills. He would manage the whole affairs of M/s Vimalnath Corporation and I am not aware about business transactions carried out in the said entity. The commission of was paid to me in cash for F.Y. 2015-16 to 18. The commission for F.Y. 2018-19 is still not paid by him. The commission was sent to us through his person and Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 39 Please explain how many entities are being operated floor, Neminath Apartment, 60 feet Road, Devchand Nagar, Bhayander West, Sir, the following entities are being operated from this Nature of business Not aware of the nature of business Not ware of the nature of business All the above entities are controlled and managed by my distant relative, Shri Hitesh Shah. Me and my daughter are just proprietor / karta for documentation purpose and not aware of Please give the office and residential address of Shri ed to act Sir, I am not aware of the exact address of Shri Hitesh Shah. However, he operates from Haridas Nagar in Borivali West. Sir, Shri Hitesh Shah is my distint relative and he offered annually for using our name for issue of bogus bills. He would manage the whole affairs of M/s Vimalnath Corporation and I am not aware about business transactions carried out in the said entity. The commission of 16 to F.Y. 19 is still not paid by him. The commission was sent to us through his person and we would collect the same from a decided spot in Bhayander or outside our Society Building. Same to us for signature through his person. One of his persons is Shri Knatilal (Contact No.9769722713) who would handover the cash to me or bring documents for signature purpose. Q.13 How much money do you receive for acting as a sig in M/s Vimalnath Corporation Ans. As stated above I have received an amount of Rs.40,000 annually as commission for acting as a signatory in M/s Vimalnath Corporation. Q.14 Please produce the books of accounts, Cheque books, bills and Vouchers etc Ans. All the books of account, cheque book, bank book etc. are in the possession of Shri Hitesh Shah. No documents of M/s Vimalnath Corporation are lying with me. Q.15 Pl explain who operates the Bank account of M/s Vimalnath Corporation Ans. The bank account is handled by Shri Hitesh Shah and I use to only sign the cheques, whenever he would send it across through his person. Q.16 Pl.explain since when have you been acting as a signatory in M/s Vimalnath Corporation? Ans Sir, I have been acting as a signatory of M/s Vimalnath Corporation from F.Y. 2015 9.5 Thirdly, The important established consumption stock or consumption register. It is the assessee who to establish the factum of consumption of the material with its documentary evidences Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors we would collect the same from a decided spot in Bhayander or outside our Society Building. Same way, documents were sent to us for signature through his person. One of his persons is Shri Knatilal (Contact No.9769722713) who would handover the cash to me or bring documents for signature purpose. How much money do you receive for acting as a sig in M/s Vimalnath Corporation? As stated above I have received an amount of Rs.40,000 annually as commission for acting as a signatory in M/s Vimalnath Corporation. Please produce the books of accounts, Cheque books, bills and Vouchers etc of M/s Vimalnath Corporation All the books of account, cheque book, bank book etc. are in the possession of Shri Hitesh Shah. No documents of M/s Vimalnath Corporation are lying with me. Pl explain who operates the Bank account of M/s Corporation The bank account is handled by Shri Hitesh Shah and I use to only sign the cheques, whenever he would send it across Pl.explain since when have you been acting as a M/s Vimalnath Corporation? I have been acting as a signatory of M/s Vimalnath Corporation from F.Y. 2015-16.” important issue is that whether the assessee has established consumption of those corresponding purchase with its stock or consumption register. It is the assessee who was required establish the factum of consumption of the material with its documentary evidences but the assessee has neither shown any Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 40 we would collect the same from a decided spot in Bhayander or way, documents were sent to us for signature through his person. One of his persons is Shri Knatilal (Contact No.9769722713) who would handover the How much money do you receive for acting as a signatory As stated above I have received an amount of Rs.40,000 annually as commission for acting as a signatory in M/s Please produce the books of accounts, Cheque books, of M/s Vimalnath Corporation. All the books of account, cheque book, bank book etc. are in the possession of Shri Hitesh Shah. No documents of Pl explain who operates the Bank account of M/s The bank account is handled by Shri Hitesh Shah and I use to only sign the cheques, whenever he would send it across Pl.explain since when have you been acting as a I have been acting as a signatory of M/s Vimalnath issue is that whether the assessee has of those corresponding purchase with its was required establish the factum of consumption of the material with its neither shown any such evidence before the lower authorities nor before us, the deletion of disallowance of purchase corresponding to parties by the Ld CIT(A) is not justified. 9.6 Fourthly, regarding, the other parties, proceedings remained firm on their earl they were engaged in providing accommodation entries, ld CIT(A) has held them as bogus concerns but according to the ld CIT(A) only addition to the extent of profit element ( i.e. 5 % ) on those bogus purchases could bogus purchase. In our opinion the Ld CIT(A) has not issue of bogus purchases in right perspective. The Hon’ble High Court in case of Mohamad haji Adam & Co. dated 11/02/2019 has he addition should be restricted to the extent of extra but that case is of trader where sales are not held doubtful by the Assessing Officer. 9.7We are of the view that bogus, then disallowance in such cases will depend on the facts and circumstances of the case and no uniform formula can be applied across the cases. 9.7.1 For example, possible. Firstly, where of stock inventory from which it can be seen that when the Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors he lower authorities nor before us, the deletion of disallowance of purchase corresponding to by the Ld CIT(A) is not justified. egarding, the other parties, who during remand proceedings remained firm on their earlier statements they were engaged in providing accommodation entries, ld CIT(A) has held them as bogus concerns but according to the ld CIT(A) only addition to the extent of profit element ( i.e. 5 % ) on those could be disallowed and not 100 % amount of In our opinion the Ld CIT(A) has not analyzed issue of bogus purchases in right perspective. The Hon’ble case of Mohamad haji Adam & Co.ITA 1004 of 2016 has held that in case of bogus purchases addition should be restricted to the extent of extra profit element trader where sales are not held doubtful by the are of the view that when the purchases are admittedly s, then disallowance in such cases will depend on the facts and circumstances of the case and no uniform formula can be applied For example, in case of a trader, two situation , where, the trader is maintaining perfect record from which it can be seen that when the Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 41 he lower authorities nor before us, therefore, the deletion of disallowance of purchase corresponding to those during remand ier statements made that they were engaged in providing accommodation entries, ld CIT(A) has held them as bogus concerns but according to the ld CIT(A) only addition to the extent of profit element ( i.e. 5 % ) on those be disallowed and not 100 % amount of analyzed the issue of bogus purchases in right perspective. The Hon’ble Bombay ITA 1004 of 2016 in case of bogus purchases profit element trader where sales are not held doubtful by the when the purchases are admittedly s, then disallowance in such cases will depend on the facts and circumstances of the case and no uniform formula can be applied situations may be trader is maintaining perfect record from which it can be seen that when the particular item of purchase has been received by the assessee and when the same has been delivered to the buyer on sale. In such circumstances, each purchase ca Now if (a) the sales are either exports or to the government organisation, then sales not being doubtful, the only presumption those goods from grey market and obtained bills from the bogus accommodation entry provider and money paid though cheques back to the assessee in cash. Hon’ble Courts have held that the assessee must have only benefitted by way less purchase market and corresponding profit by benefitted in entire transaction should Though, the source of goods from grey market need to be examined in such cases. The Tribunal Mumbai Bench in Vs Rajeev G Kalathi (2014) 51 taxmann.com 514 estimated 3 % of profit on bogus purchases. In the case of Kiran Navin Doshi Vs Income 2601/Mum/2017) rate of 12.5 % of the bogus purchases. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors particular item of purchase has been received by the assessee and when the same has been delivered to the buyer on sale. In such circumstances, each purchase can be linked to respective sales. the sales are either exports or to the government organisation, then sales not being doubtful, the only presumption would be that the assessee has purchased those goods from grey market and obtained bills from the ogus accommodation entry provider and money paid though cheques by the assessee must have been routed back to the assessee in cash. In such circumstances Hon’ble Courts have held that the assessee must have only benefitted by way less purchase price p market and corresponding profit by which the assessee benefitted in entire transaction should only the source of investments in purchase of goods from grey market need to be examined in such The Tribunal Mumbai Bench in the case of Vs Rajeev G Kalathi (2014) 51 taxmann.com 514 estimated 3 % of profit on bogus purchases. In the case of Kiran Navin Doshi Vs Income-tax officer (ITA No. 2601/Mum/2017) the Tribunal estimated profit at the rate of 12.5 % of the bogus purchases. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 42 particular item of purchase has been received by the assessee and when the same has been delivered to the buyer on sale. In such n be linked to respective sales. the sales are either exports or to the government organisation, then sales not being doubtful, the only assessee has purchased those goods from grey market and obtained bills from the ogus accommodation entry provider and money paid must have been routed circumstances, the Hon’ble Courts have held that the assessee must have paid in grey the assessee only be added. in purchase of goods from grey market need to be examined in such the case of DCIT Vs Rajeev G Kalathi (2014) 51 taxmann.com 514 estimated 3 % of profit on bogus purchases. In the case of tax officer (ITA No. the Tribunal estimated profit at the (b) When the sales are doubtful accommodation only addition which could be made assessee is commiss accommodation entry bills. 9.7.2 Secondly, situation maintained by the trader with corresponding sale, has been booked for reducing the profit and in such the entire amount of bogus purchase is liable to be disallowed. 9.7.3 Similar, is the situation in case of Contractor or manufactures who consume the bogus purchases in th If the contractor is able to establish consumption of those bogus purchased goods in his business by way of evidence, it is presumed that assessee has procured goods from grey market and therefore difference of profit on such purchase from grey added. But where, an assessee is unable to establish consumption of the bogus purchased goods into its of bogus purchases are liable to disallowed. 9.8 The Hon’ble Gujrat High Court in the case of vs DCIT (2017) 84 taxmann.com 195 the Tribunal for restricting the disallowance purchases and held that in such cases where an assessee is Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors When the sales are doubtful or those sales are also accommodation entry bills, in such circumstances, the only addition which could be made in the hands of an is commission income for accommodation entry bills. situation where no stock inventory is by the trader and the bogus purchases can’t be linked with corresponding sale, then, it is obvious that the bogus purchase for reducing the profit and in such circumstances, the entire amount of bogus purchase is liable to be disallowed. is the situation in case of Contractor or manufactures who consume the bogus purchases in their If the contractor is able to establish consumption of those bogus goods in his business by way of evidence, it is presumed that assessee has procured goods from grey market and therefore difference of profit on such purchase from grey market can added. But where, an assessee is unable to establish consumption of the bogus purchased goods into its business, then entire amount of bogus purchases are liable to disallowed. The Hon’ble Gujrat High Court in the case of NK Protein vs DCIT (2017) 84 taxmann.com 195 has reversed the finding of restricting the disallowance at 25% of the and held that in such cases where an assessee is Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 43 those sales are also bills, in such circumstances, the in the hands of an income for issuing no stock inventory is the bogus purchases can’t be linked it is obvious that the bogus purchase circumstances, the entire amount of bogus purchase is liable to be disallowed. is the situation in case of Contractor or eir business. If the contractor is able to establish consumption of those bogus goods in his business by way of evidence, it is presumed that assessee has procured goods from grey market and therefore market can only be added. But where, an assessee is unable to establish consumption then entire amount Proteins Ltd has reversed the finding of 25% of the and held that in such cases where an assessee is unable to establish consumption This decision of Hon’ble Gujrat High Court has been upheld by the Hon’ble Supreme Court Pune Bench in the case of No.183/PUN/2020 for Assessment Year : that in case of contractor where he is unable to establish consumption of such bogus purchases in his business, entire bogus purchases are liable to be disallowed. The Tribunal is reproduced as under: “6. We have heard the rival contentions of both the parties; and subject to the provisions of rule 18 of “ITAT Rules”, perused the material placed on record, case laws relied upon by the appellant as well the respondent and duly considered the facts of the the light of settled legal position forewarned to parties present. 7. On perusal of records, we find that, upon the receipt of information from DGIT(INV), the Ld. AO after identifying the list of entry operators with whom the assessee had alleged transactions and quantification of amount of bogus purchases involved, has put the respondent assessee to notice calling evidential documents to prove the existence of parties and genuineness of transactions, and in the event of failure to showcase physical movement of goods & consumption thereof, disallowed the entire amount of bogus. Whereas, the Ld. FAA reverberating the findings of lower authority, restricted the disallowance to the GP ratio in the light of Hon’ble Jurisdictional High Court of Bombay in “Mohammad Haji Adam & Co.” (Supra) for the reason of acceptance of sales/revenue without dispute. Insofar as the bogus purchases are concerned, the ratio laid in “Mohammad Haji Adam & Co.” (Supra) cannot squarely be applied to the present case for before us is neither a trader nor a dealer but a Govt Civil Contractor and secondly there was complete absentia with regards to quantitative details or consumption of material purchased, and finally the sales or revenue were not exclusively with reference to Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors to establish consumption, 100 % disallowance should be made. This decision of Hon’ble Gujrat High Court has been upheld by the Hon’ble Supreme Court vide SLP© No. 769 of 2017. The Tribunal Pune Bench in the case of ACIT Vs Pritam S Mahale in No.183/PUN/2020 for Assessment Year : 2009-2010 that in case of contractor where he is unable to establish of such bogus purchases in his business, entire bogus purchases are liable to be disallowed. The relevant finding Tribunal is reproduced as under: 6. We have heard the rival contentions of both the parties; and subject to the provisions of rule 18 of “ITAT Rules”, perused the material placed on record, case laws relied upon by the appellant as well the respondent and duly considered the facts of the case in the light of settled legal position forewarned to parties present. 7. On perusal of records, we find that, upon the receipt of information from DGIT(INV), the Ld. AO after identifying the list of entry operators with whom the assessee had alleged hawala transactions and quantification of amount of bogus purchases involved, has put the respondent assessee to notice calling evidential documents to prove the existence of parties and genuineness of transactions, and in the event of failure to physical movement of goods & consumption thereof, disallowed the entire amount of bogus. Whereas, the Ld. FAA reverberating the findings of lower authority, restricted the disallowance to the GP ratio in the light of Hon’ble Jurisdictional mbay in “Mohammad Haji Adam & Co.” (Supra) for the reason of acceptance of sales/revenue without dispute. Insofar as the bogus purchases are concerned, the ratio laid in “Mohammad Haji Adam & Co.” (Supra) cannot squarely be applied to the present case for three factual variations, firstly the assessee before us is neither a trader nor a dealer but a Govt Civil Contractor and secondly there was complete absentia with regards to quantitative details or consumption of material purchased, and or revenue were not exclusively with reference to Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 44 should be made. This decision of Hon’ble Gujrat High Court has been upheld by the The Tribunal ACIT Vs Pritam S Mahale in ITA 0 hasupheld that in case of contractor where he is unable to establish of such bogus purchases in his business, entire bogus finding of the 6. We have heard the rival contentions of both the parties; and subject to the provisions of rule 18 of “ITAT Rules”, perused the material placed on record, case laws relied upon by the appellant case in the light of settled legal position forewarned to parties present. 7. On perusal of records, we find that, upon the receipt of information from DGIT(INV), the Ld. AO after identifying the list of hawala transactions and quantification of amount of bogus purchases involved, has put the respondent assessee to notice calling evidential documents to prove the existence of parties and genuineness of transactions, and in the event of failure to physical movement of goods & consumption thereof, disallowed the entire amount of bogus. Whereas, the Ld. FAA reverberating the findings of lower authority, restricted the disallowance to the GP ratio in the light of Hon’ble Jurisdictional mbay in “Mohammad Haji Adam & Co.” (Supra) for the reason of acceptance of sales/revenue without dispute. Insofar as the bogus purchases are concerned, the ratio laid in “Mohammad Haji Adam & Co.” (Supra) cannot squarely be applied three factual variations, firstly the assessee before us is neither a trader nor a dealer but a Govt Civil Contractor and secondly there was complete absentia with regards to quantitative details or consumption of material purchased, and or revenue were not exclusively with reference to goods purchases/consumed but inclusive of work contract services. However, the Hon’ble Lordship had occasioned to considered similar facts and circumstance in the case of “PCIT Vs Pinaki D Pinani” (Bombay ITA/1543 of 2017), wherein the assessee being civil contractor, with evidential stock records and sales, was able to demonstrate the quantity of material consumed in execution of work contract undertaken and thereby established the nexus. 8. In the light of aforesaid discussion, we are of the considered view that, the ratio laid down by the Hon’ble Supreme Court in the case of “NK Proteins Ltd vs DCIT” (Supra) is squarely applicable to the facts of assessee case, where the Hon’ble Supreme C dismissed appeal of assessee and confirmed the findings of Hon’ble Gujarat High Court in respect of bogus or sham purchases, wherein the Hon’ble Lordships, after analyzing necessary facts, by para 6 of the order have held that; “6. The Tribunal in th observed that it would be just and proper to direct the Assessing Officer to restrict the addition in respect of the undisclosed income relating to the purchases to 25% of the total purchases. The said decision was Court as well. On consideration of the matter, we find that the facts of the present case are identical to those of M/s. Indian Woollen Carpet Factory (supra) or Vijay Proteins Ltd. (supra) In the present case the Tribunal has categorica observed that the assessee had shown bogus purchases amounting to Rs.2,92,93,2887 bogus claim goes against the principles of Sections 68 and 69C of the Income Tax Act. The entire purchases shown on the basis of fictitious trading account since the transaction has been found to be bogus. The Tribunal having once come to a categorical finding that the amount of Rs.2,92,93,2887 alleged purchases from bogus suppliers it was not inc on it to restrict the disallowance to only Rs. 73,23,3227 9. In the present case too, when it has been categorically established that, the amount of bogus purchases debited to P&L by fictitious tax invoices and the respondent assessee failed to establish the consumption of such goods in the execution of civil contract by adducing suc records to the satisfaction of Ld. AO., then taxing such bogus Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors goods purchases/consumed but inclusive of work contract services. However, the Hon’ble Lordship had occasioned to considered similar facts and circumstance in the case of “PCIT Vs Pinaki D TA/1543 of 2017), wherein the assessee being civil contractor, with evidential stock records and sales, was able to demonstrate the quantity of material consumed in execution of work contract undertaken and thereby established the nexus. 8. In the light of aforesaid discussion, we are of the considered view that, the ratio laid down by the Hon’ble Supreme Court in the case of “NK Proteins Ltd vs DCIT” (Supra) is squarely applicable to the facts of assessee case, where the Hon’ble Supreme C dismissed appeal of assessee and confirmed the findings of Hon’ble Gujarat High Court in respect of bogus or sham purchases, wherein the Hon’ble Lordships, after analyzing necessary facts, by para 6 of the order have held that; “6. The Tribunal in the case of Vijay Proteins Ltd. (supra) has observed that it would be just and proper to direct the Assessing Officer to restrict the addition in respect of the undisclosed income relating to the purchases to 25% of the total purchases. The said decision was confirmed by this Court as well. On consideration of the matter, we find that the facts of the present case are identical to those of M/s. Indian Woollen Carpet Factory (supra) or Vijay Proteins Ltd. (supra) In the present case the Tribunal has categorica observed that the assessee had shown bogus purchases amounting to Rs.2,92,93,2887- and taxing only 25% of these bogus claim goes against the principles of Sections 68 and 69C of the Income Tax Act. The entire purchases shown on the basis of fictitious invoices have been debited in the trading account since the transaction has been found to be bogus. The Tribunal having once come to a categorical finding that the amount of Rs.2,92,93,2887- represented alleged purchases from bogus suppliers it was not incumbent on it to restrict the disallowance to only Rs. 73,23,3227 9. In the present case too, when it has been categorically established that, the amount of bogus purchases ₹64,33,495/ debited to P&L by fictitious tax invoices and the respondent essee failed to establish the consumption of such goods in the execution of civil contract by adducing such stock movement satisfaction of Ld. AO., then taxing such bogus Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 45 goods purchases/consumed but inclusive of work contract services. However, the Hon’ble Lordship had occasioned to considered similar facts and circumstance in the case of “PCIT Vs Pinaki D TA/1543 of 2017), wherein the assessee being civil contractor, with evidential stock records and sales, was able to demonstrate the quantity of material consumed in execution of work contract undertaken and thereby established the nexus. 8. In the light of aforesaid discussion, we are of the considered view that, the ratio laid down by the Hon’ble Supreme Court in the case of “NK Proteins Ltd vs DCIT” (Supra) is squarely applicable to the facts of assessee case, where the Hon’ble Supreme Court dismissed appeal of assessee and confirmed the findings of Hon’ble Gujarat High Court in respect of bogus or sham purchases, wherein the Hon’ble Lordships, after analyzing necessary facts, by e case of Vijay Proteins Ltd. (supra) has observed that it would be just and proper to direct the Assessing Officer to restrict the addition in respect of the undisclosed income relating to the purchases to 25% of the confirmed by this Court as well. On consideration of the matter, we find that the facts of the present case are identical to those of M/s. Indian Woollen Carpet Factory (supra) or Vijay Proteins Ltd. (supra) In the present case the Tribunal has categorically observed that the assessee had shown bogus purchases and taxing only 25% of these bogus claim goes against the principles of Sections 68 and 69C of the Income Tax Act. The entire purchases shown on invoices have been debited in the trading account since the transaction has been found to be bogus. The Tribunal having once come to a categorical represented umbent on it to restrict the disallowance to only Rs. 73,23,3227-.” 9. In the present case too, when it has been categorically 64,33,495/- is debited to P&L by fictitious tax invoices and the respondent essee failed to establish the consumption of such goods in the h stock movement satisfaction of Ld. AO., then taxing such bogus purchases GP rate of goes against the principles of taxation embedded in chapter VI of the Act and against the ratio laid down in “N K Proteins Ltd” and “PCIT Vs Pinaki D Pinani” (Supra), for the reason, we are of the considered view that, the Ld. AO was right in making 100% disallowance towards bogus / hawala purchases, and thus we are inclined to uphold the order of assessment and reverse the order the Ld. FAA. 9.9 In view of above discussion the case of Prtiam S mahale (supra) the case of Mohamad Haji Adam and Co. (sup Proteins Ltd (supra) have been analysed, CIT(A) on the issue of bogus purchases addition made by the Assessing officer is restored. The ground No. 1 of the appeal of the Revenue is accordingly allowed. The ground no. 3 of the cross objection of the assessee is dismissed. 10. The ground No. 2 of the appeal of the Revenue relates to addition of Rs.2,86,53,687/ ground No. 3 relates to disallowance of interest expenses of Rs.1,42,15,496/- in respect of those unsecured loan parties which have been held as unexplained by the Assessing Officer. 10.1 During the course of search proceedings total unsecured loans of Rs.1,26,67,16,092/ assessee for assessment year 2013 2020. During the course of premises of the assessee company Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors purchases GP rate of goes against the principles of taxation in chapter VI of the Act and against the ratio laid down in “N K Proteins Ltd” and “PCIT Vs Pinaki D Pinani” (Supra), for the reason, we are of the considered view that, the Ld. AO was right in making 100% disallowance towards bogus / hawala purchases, thus we are inclined to uphold the order of assessment and reverse the order the Ld. FAA.” In view of above discussion and following the Tribunal in Prtiam S mahale (supra) , where the decision in the case of Mohamad Haji Adam and Co. (supra) and N K Proteins Ltd (supra) have been analysed, the findings CIT(A) on the issue of bogus purchases are set aside and the addition made by the Assessing officer is restored. The ground No. 1 of the appeal of the Revenue is accordingly he ground no. 3 of the cross objection of the The ground No. 2 of the appeal of the Revenue relates to addition of Rs.2,86,53,687/- in respect of unsecured loans. The ground No. 3 relates to disallowance of interest expenses of in respect of those unsecured loan parties which have been held as unexplained by the Assessing Officer. During the course of search proceedings total unsecured loans of Rs.1,26,67,16,092/- were found recorded in the case of the assessee for assessment year 2013-14 to assessment year 2019 2020. During the course of search and survey proceedings premises of the assessee company, the key persons of the assessee Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 46 purchases GP rate of goes against the principles of taxation in chapter VI of the Act and against the ratio laid down in “N K Proteins Ltd” and “PCIT Vs Pinaki D Pinani” (Supra), for the reason, we are of the considered view that, the Ld. AO was right in making 100% disallowance towards bogus / hawala purchases, thus we are inclined to uphold the order of assessment and and following the Tribunal in , where the decision in ra) and N K of ld aside and the addition made by the Assessing officer is restored. The ground No. 1 of the appeal of the Revenue is accordingly he ground no. 3 of the cross objection of the The ground No. 2 of the appeal of the Revenue relates to in respect of unsecured loans. The ground No. 3 relates to disallowance of interest expenses of in respect of those unsecured loan parties which have been held as unexplained by the Assessing Officer. During the course of search proceedings total unsecured loans in the case of the 14 to assessment year 2019- survey proceedings on the , the key persons of the assessee company were asked to furnish complete address of the loan giver documentary evidences along with confirmations account, details of repayment of loan, details of TD course of examination of documentary identified by authorised officer following 29 parties, the assessee produced only ledger copies and payment proof and no other evidence like PAN, address, confirmation letter, bank statement a No. Entity PAN FY 2012 1 Aadishwar Diamonds AAICA1905B 3,03,253 2 Aditi Gems Pvt. Ltd. AAICA6634L 2,19,000 3 Anshul Gems Pvt. Ltd. AAHCA6495 4 Antique Pvt. Ltd. AAJCA9015B 11,53,200 5 Arjay Gems Pvt. Ltd. AAPCA6887A 11,53,200 6 Bahubali Diamond Pvt. Ltd. AADCB9109R 13,35,250 7 Boetal Trading Pvt. Ltd. AACCB8137A 9,71,198 8 Burlington Mercantiles Pvt. Ltd. AABCB4362Q 8,21,250 9 Chaitanya Gems Pvt. Ltd. AADCC9257F 8,32,200 Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors asked to furnish details regarding said loan of the loan giver, PAN, bank statements and other documentary evidences along with confirmations letter of repayment of loan, details of TDS etc. During the course of examination of documentary evidence certain lapses by authorised officer and it was noted that in case of the assessee produced only ledger copies and payment proof and no other evidence like PAN, address, confirmation letter, bank statement and TDS etc. were produced FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 3,03,253 30,00,000 2,19,000 2,19,000 1,55,400 65,00,000 7,21,750 9,46,465 11,53,200 2,28,50,000 23,63,425 24,94,710 11,53,200 2,28,50,000 28,63,425 24,94,710 13,35,250 78,19,000 9,71,198 3,00,00,000 3,78,000 3,20,160 8,21,250 4,80,000 8,32,200 Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 47 said loans such as , PAN, bank statements and other letter, ledger etc. During the lapses--were and it was noted that in case of the assessee produced only ledger copies and payment proof and no other evidence like PAN, address, nd TDS etc. were produced: FY 2016-17 FY 2017-18 83,22,020 1,72,020 3,18,000 10 Crescent Diamond Exim Pvt. Ltd. AABCC4886B 5,80,350 11 Divyanshi Gems Pvt. Ltd. AADCD8741R 12 Dojahan Trading Pvt. Ltd AACCD3340F 13 Ensure Insure Brokers Pvt. Ltd. AACCB1526E 13,39,572, 14 HPL Multi Trade Pvt. Ltd. AABCH6652D 15 Karnawat Impex Pvt. Ltd. AADCK1927A 2,19,000 16 Kriya Impex Pvt. Ltd. AADCK1928B 8,32,200 17 Manohar Impex Pvt. Ltd. AAFCM9840G 18 Param Gems Pvt. Ltd. AAFCP4945C 19 Piyush Gems Pvt. Ltd. AAFCP9545H 20 Saffron Gems Pvt. Ltd. AANCS2828J 3,77,775 21 Samkit Diamond Mfg. Co. Pvt. Ltd. AADCS9472L 22 Samkit Gems Pvt. Ltd. AAQCS8731D 23 Snowdrop Vincom Pvt. Ltd. AAMCS8992E 24 Surya Diamond Pvt. Ltd. AANCS7279E 11,40,750 25 Takshila Exim AADCT9006B Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 5,80,350 45,00,000 9,34,920 64,26,000 68,14,700 75,00,000 6,41,085 2,08,200 13,39,572, 41,00,000 7,88,400 12,50,000 40,16,975 5,21,550 2,19,000 8,32,200 30,00,000 44,44,564 29,27,960 1,13,00,000 92,37,350 22,19,140 3,77,775 39,20,175 5,21,550 3,04,34,400 3,36,850 2,00,00,000 21,96,000 11,40,750 2,27,460 76,50,000 10,00,720 Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 48 3,14,700 7,88,400 2,12,627 15,65,850 Pvt. Ltd. 26 Badam Trading Pvt. Ltd. AAFCB0891H 10,90,890 27 Lalita Gems Pvt. Ltd. AABCL7179H 3,29,500 28 Moxa Diamond Pvt. Ltd. AACCM1959H 1,69,200 29 Shikha Diamond Pvt. Ltd. AAJCS5918B 17,48,818 Total 1,44,38,191 10.2 Based on the information, profile creditors was prepared about their turnover & net reserve and surplus, whether prepared, which is reproduced by the Assessing Officer on page 37 to 41 of the assessment order. parties that firstly, no balance sheet, secondly turnover butlow net profit their return regularly, fourthly outstanding creditors in their books of accounts. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 10,90,890 3,01,050 3,29,500 2,27,700 1,69,200 15,02,000 51,64,250 1,30,88,000 17,48,818 25,00,000 51,64,250 51,64,250 1,44,38,191 10,50,69,000 9,17,46,572 9,03,45,979 information, profile of those unsecured loan prepared (using database of income-tax department & net profit, taxable business income surplus, whether return of income filed etc. was , which is reproduced by the Assessing Officer on page 37 to 41 of the assessment order. It was observed that in respect of 29 , no sufficient reserve and surplus in their secondly parties were every year having high butlow net profit ratio, thirdly, some entities didn’t file fourthly, the parties themselves were having outstanding creditors in their books of accounts. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 49 1,80,88,000 1,16,53,010 6,62,810 of those unsecured loan tax department) income and return of income filed etc. was , which is reproduced by the Assessing Officer on page 37 It was observed that in respect of 29 sufficient reserve and surplus in their having high , some entities didn’t file parties themselves were having 10.2.1 The search/survey teams during the course of search analyzed the income-tax assessment records (i.e. assessment orders passed by DCIT Central circle, creditors namelyM/s Impex Pvt. Ltd. and found that those provider, which were managed an 10.2.2 Further, during deputed various inspectors for unsecured loan creditors. The reports submitted by the Inspectors have been reproduced by the Assessing officer on page 48 to 86 of the assessment order. T parties were not found in existence Assessing Officer has reproduced photos of the places and inquiry report of the Inspector of the Department assessment order. All the material search was confronted assessee company Shri any satisfactory reply in respect of th current address. 10.2.3 Further, during the course of search proceedings on 11.11.2019, statement of Shri Deepak Jain was recorded, he stated he was managing few dummy companies for providing accommodation entry bills/ credits. He admitted that he had provided accommodation loan entry to the assessee though Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors search/survey teams during the course of search tax assessment records (i.e. assessment orders passed by DCIT Central circle, Surat) of two unsecured loan namelyM/s Kriya Impex Pvt. Ltd. and M/s and found that those were accommodation entry managed and handled by Shri Rajendra Jain. uring search proceedings, the search team deputed various inspectors for verification of existence of the unsecured loan creditors. The reports submitted by the Inspectors have been reproduced by the Assessing officer on page 48 to 86 of the assessment order. The Inspector(s) have mainly reported that parties were not found in existence at their addresses. Assessing Officer has reproduced photos of the places and inquiry report of the Inspector of the Department in the impugned All the material gathered during the course of confronted by the search team to the Director of the assessee company Shri Nirmal Madhani. However, he failed to give any satisfactory reply in respect of those 29 parties including their urther, during the course of search proceedings on , statement of Shri Deepak Jain was recorded, he stated he was managing few dummy companies which were used for providing accommodation entry bills/ credits. He admitted that ded accommodation loan entry to the assessee though Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 50 search/survey teams during the course of search tax assessment records (i.e. assessment orders Surat) of two unsecured loan M/s Karnavati were accommodation entry d handled by Shri Rajendra Jain. the search team of existence of the unsecured loan creditors. The reports submitted by the Inspectors have been reproduced by the Assessing officer on page 48 to 86 of have mainly reported that es. The Ld. Assessing Officer has reproduced photos of the places and inquiry in the impugned gathered during the course of the Director of the dhani. However, he failed to give including their urther, during the course of search proceedings on , statement of Shri Deepak Jain was recorded, wherein which were used for providing accommodation entry bills/ credits. He admitted that ded accommodation loan entry to the assessee though five of his dummy entities. The statement of sh Deepak jain was also confronted to the Director of the assessee company. 10.3 Based on inquiries and finding of the Department, the Assessing Officer issue explain the unsecured loan parties before him. It was contended by the assessee that loans were received through banking channels and ledger accounts, income-tax returns and rep already been submitted before the Assessing Officer. The Assessing Officer however was not satisfied by the reply given by the assessee. According to him the key persons of the assessee company had admitted in statement accommodation entries unsecured loans of the opinion that cas handed over to unsecured loan of the view that the assessee failed support of genuineness of the loan transaction and accordingly, assessee failed to discharge its onus u/s 68 of the Act to establish identity, genuineness of the transaction and creditworthiness of the parties. The Ld. Assessing Officer relying on the decision of Roshan Di Hatti v. CIT [1977] 107 ITR 937 (SC) Khan Mohammad Hanif v. CIT [1963] 50 ITR 1 (SC) the 29 parties as unexplained cash credit 31,47,15,562/- for AY 2013 Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors five of his dummy entities. The statement of sh Deepak jain was Director of the assessee company. Based on inquiries and finding of the Department, the Assessing Officer issued show cause notice asking the assessee to explain the unsecured loan creditors and also produce those 29 . It was contended by the assessee that loans were received through banking channels and ledger accounts, tax returns and repayment of the loan to said already been submitted before the Assessing Officer. The Assessing not satisfied by the reply given by the assessee. According to him the key persons of the assessee company had admitted in statement on oath that they have taken accommodation entries unsecured loans. The Assessing Officer cash generated while bogus purchases secured loan creditors. The Assessing Officer was that the assessee failed to produce material evidences in of genuineness of the loan transaction and accordingly, ed to discharge its onus u/s 68 of the Act to establish identity, genuineness of the transaction and creditworthiness of the parties. The Ld. Assessing Officer relying on the decision Roshan Di Hatti v. CIT [1977] 107 ITR 937 (SC) han Mohammad Hanif v. CIT [1963] 50 ITR 1 (SC) the 29 parties as unexplained cash credit making addition of Rs. for AY 2013-14 to AY 2018-19. The Assessing Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 51 five of his dummy entities. The statement of sh Deepak jain was Director of the assessee company. Based on inquiries and finding of the Department, the d show cause notice asking the assessee to also produce those 29 . It was contended by the assessee that loans were received through banking channels and ledger accounts, parties had already been submitted before the Assessing Officer. The Assessing not satisfied by the reply given by the assessee. According to him the key persons of the assessee company had oath that they have taken bogus he Assessing Officer was while bogus purchases was The Assessing Officer was material evidences in of genuineness of the loan transaction and accordingly, the ed to discharge its onus u/s 68 of the Act to establish identity, genuineness of the transaction and creditworthiness of the parties. The Ld. Assessing Officer relying on the decision in the case Roshan Di Hatti v. CIT [1977] 107 ITR 937 (SC) and Kale han Mohammad Hanif v. CIT [1963] 50 ITR 1 (SC) etc. held all making addition of Rs. The Assessing Officer also made addition u/s 68 in respect of the interest those unsecured loan creditors during the period from AY 2013 to 2018-19. The addition for loan and interest made for various years has been summarized A.Y. Bogus unsecured loan receipts (Rs.) 2013-14 1,44,38,191 2014-15 10,58,69,000 2015-16 9,17,46,572 2016-17 9,03,45,979 2017-18 1,16,53,010 2018-19 6,62,810 Total 31,47,15,562 10.4 In respect of year under consideration unsecured loan creditor is of Rs.1,42,15,496/-. The relevant finding of the Assessing Officer while making addition are reproduced as under: 8.4 in response to the show cause notice assessee has submitted the documents which include ledger confirmation and ITR of the above parties. it was also submitte returned back loans in various parties in full. Thus, mere submission of bank statement and ledger confirmation of the parties is not sufficient to prove the genuineness and creditworthiness of the loan parties. Also, the director a persons of company has clearly stated in their statements recorded Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors Officer also made addition u/s 68 in respect of the interest ose unsecured loan creditors during the period from AY 2013 19. The addition for loan and interest made for various summarized by the Assessing officer as under: Bogus unsecured loan receipts (Rs.) Bogus interests paid thereon (Rs.) Total amount (Rs.) 1,44,38,191 1,42,15,496 2,86,53,687 10,58,69,000 1,12,40,415 11,71,09,415 9,17,46,572 1,66,58,522 10,84,05,094 9,03,45,979 2,62,59,244 11,66,05,223 1,16,53,010 68,61,233 1,85,14,243 6,62,810 7,36,547 13,99,267 31,47,15,562 7,59,71,367 39,06,86,929 n respect of year under consideration, the addition for unsecured loan creditor is of Rs.1,44,38,191/- and for interest The relevant finding of the Assessing Officer while making addition are reproduced as under: 8.4 in response to the show cause notice assessee has submitted the documents which include ledger confirmation and ITR of the above parties. it was also submitted that the assessee has returned back loans in various parties in full. Thus, mere submission of bank statement and ledger confirmation of the parties is not sufficient to prove the genuineness and creditworthiness of the loan parties. Also, the director and the key persons of company has clearly stated in their statements recorded Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 52 Officer also made addition u/s 68 in respect of the interest paid to ose unsecured loan creditors during the period from AY 2013-14 19. The addition for loan and interest made for various by the Assessing officer as under: Total amount (Rs.) 2,86,53,687 11,71,09,415 10,84,05,094 11,66,05,223 1,85,14,243 13,99,267 39,06,86,929 , the addition for for interest is of The relevant finding of the Assessing Officer 8.4 in response to the show cause notice assessee has submitted the documents which include ledger confirmation and ITR of the d that the assessee has returned back loans in various parties in full. Thus, mere submission of bank statement and ledger confirmation of the parties is not sufficient to prove the genuineness and nd the key persons of company has clearly stated in their statements recorded during the course of Search & Seizure proceedings that they have taken accommodation entries of unsecured loans. The modus operandt are that for these transactions the beneficiar them cash and the same will be returned to the beneficiary by issue of cheques after charging their commission on such transactions. 8.5 The assessee further relied on the fact that, the parties are identifiable and amounts were received throug These parties are credit worthy to make such investments in the assessee company and submitted that the transactions are genuine. The assessee failed to prove genuineness of these transactions. 8. 6 The assessee in response to specific s made any submissions to disprove the departments above findings. The assessee except for pointing out that its name is not mentioned in the statements given, has not commented on the entire modus operandi admitted by the parties co controlling persons of unsecured loan parties have categorically admitted that they are involved in providing only bogas and accommodation entries for commission. The statements were given under oath in the Income Tax Act. The evidences gather proved that these parties have only provided accommodation entries for consideration parties receive cash from the clients than through layering transfer the funds in the form loans. The assessee mainly through bogus expenses and this cash hand over to the entry operators. In present case also, assessee has generated cash through bogus purchase and taken unsecured loan entry by handing over cash to the entry operators. Hence the assessee's arguments on this lack any meri 8.7 Further, the entry providers in their statements have categorically stated that, the cheques and bills/documents were issued. There are no book entries to the real transactions either in the books of the assessee or in the books of these entry providers. Therefore, the statements on oath, solemn affirmation and the admission of the parties when confronted with the evidences found in the course of search are sufficient evidences under taxation provisions to conclude that, both the parties entered into such arrangements with connivance with each other. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors during the course of Search & Seizure proceedings that they have taken accommodation entries of unsecured loans. The modus operandt are that for these transactions the beneficiary will give them cash and the same will be returned to the beneficiary by issue of cheques after charging their commission on such 5 The assessee further relied on the fact that, the parties are identifiable and amounts were received through banking channels. These parties are credit worthy to make such investments in the assessee company and submitted that the transactions are genuine. The assessee failed to prove genuineness of these 6 The assessee in response to specific show cause notice has not made any submissions to disprove the departments above findings. The assessee except for pointing out that its name is not mentioned in the statements given, has not commented on the entire modus operandi admitted by the parties concerned. The controlling persons of unsecured loan parties have categorically admitted that they are involved in providing only bogas and accommodation entries for commission. The statements were given under oath in the Income Tax Act. The evidences gathered clearly proved that these parties have only provided accommodation entries for consideration /commission to the willing parties. These parties receive cash from the clients than through layering transfer the funds in the form loans. The assessee mainly generate cash through bogus expenses and this cash hand over to the entry operators. In present case also, assessee has generated cash through bogus purchase and taken unsecured loan entry by handing over cash to the entry operators. Hence the assessee's rguments on this lack any merit and deserve to be rejected. 8.7 Further, the entry providers in their statements have categorically stated that, the cheques and bills/documents were issued. There are no book entries to the real transactions either in books of the assessee or in the books of these entry providers. Therefore, the statements on oath, solemn affirmation and the admission of the parties when confronted with the evidences found in the course of search are sufficient evidences under taxation provisions to conclude that, both the parties entered into such arrangements with connivance with each other. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 53 during the course of Search & Seizure proceedings that they have taken accommodation entries of unsecured loans. The modus y will give them cash and the same will be returned to the beneficiary by issue of cheques after charging their commission on such 5 The assessee further relied on the fact that, the parties are h banking channels. These parties are credit worthy to make such investments in the assessee company and submitted that the transactions are genuine. The assessee failed to prove genuineness of these how cause notice has not made any submissions to disprove the departments above findings. The assessee except for pointing out that its name is not mentioned in the statements given, has not commented on the ncerned. The controlling persons of unsecured loan parties have categorically admitted that they are involved in providing only bogas and accommodation entries for commission. The statements were given ed clearly proved that these parties have only provided accommodation /commission to the willing parties. These parties receive cash from the clients than through layering transfer generate cash through bogus expenses and this cash hand over to the entry operators. In present case also, assessee has generated cash through bogus purchase and taken unsecured loan entry by handing over cash to the entry operators. Hence the assessee's t and deserve to be rejected. 8.7 Further, the entry providers in their statements have categorically stated that, the cheques and bills/documents were issued. There are no book entries to the real transactions either in books of the assessee or in the books of these entry providers. Therefore, the statements on oath, solemn affirmation and the admission of the parties when confronted with the evidences found in the course of search are sufficient evidences under taxation provisions to conclude that, both the parties entered into such 8.8 As per the provisions of section 68 of the IT. Act, the assessee is required to explain the identity, genuineness and creditworthiness of the identity of unsecured loan parties, but failed to provide the nature and source of the credit appearing in its books. The explanation offered by assessee found to be unsatisfactory. The Hon'ble Supreme Court has h [49 ITR 112(SC)) that addition for unexplained cash credit is justified simply if the assessee fails to offer an explanation or the explanation offered by the assessee is found to be not satisfactory by the Assessing Officer. 10.5 In respect of addition by the Assessing Officer u/s 68 of the Act, before the Ld. CIT(A) the assessee provided evidence those 29 parties including ledger copy details, ITR copy etc. which were fo Assessing Officer calling for Officer submitted that assessee did not produce those before him for recording their statement possible to verify their submitted that those loans were taken long back and were repaid in financial year 2017-18 thus, cannot be produce whereas the evidence such as loan confirmation balance sheet, bank statement in respect of those parties already submitted during the remand proceedings. During appellate proceedings, the Ld. CIT(A) reconciled the ledger balances of 29 parties at the end of each assessment year 2020 Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 8.8 As per the provisions of section 68 of the IT. Act, the assessee is required to explain the identity, genuineness and creditworthiness of the party. In present case assessee has proved identity of unsecured loan parties, but failed to provide the nature and source of the credit appearing in its books. The explanation offered by assessee found to be unsatisfactory. The Hon'ble Supreme Court has held in the case of Shreelekha Banerjee Vs CIT [49 ITR 112(SC)) that addition for unexplained cash credit is justified simply if the assessee fails to offer an explanation or the explanation offered by the assessee is found to be not satisfactory essing Officer. addition by the Assessing Officer u/s 68 of the before the Ld. CIT(A) the assessee provided evidence se 29 parties including ledger copy, confirmation, bank ITR copy etc. which were forwarded by the Ld. CIT(A) to the calling for the remand report. The Ld. Assessing Officer submitted that assessee did not produce those for recording their statement on oath, hence their credentials. In rejoinder, the assessee se loans were taken long back and were repaid in 18, therefore, those parties were not in contact be produced before the Assessing Officer. However, ence such as loan confirmation, ITR bank statement in respect of those parties during the remand proceedings. During appellate proceedings, the Ld. CIT(A) reconciled the ledger balances of 29 each year from assessment year 2013 assessment year 2020-21 and found that out of 29 Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 54 8.8 As per the provisions of section 68 of the IT. Act, the assessee is required to explain the identity, genuineness and party. In present case assessee has proved identity of unsecured loan parties, but failed to provide the nature and source of the credit appearing in its books. The explanation offered by assessee found to be unsatisfactory. The Hon'ble eld in the case of Shreelekha Banerjee Vs CIT [49 ITR 112(SC)) that addition for unexplained cash credit is justified simply if the assessee fails to offer an explanation or the explanation offered by the assessee is found to be not satisfactory addition by the Assessing Officer u/s 68 of the before the Ld. CIT(A) the assessee provided evidences related to bank account rwarded by the Ld. CIT(A) to the the remand report. The Ld. Assessing Officer submitted that assessee did not produce those creditors hence it was not n rejoinder, the assessee se loans were taken long back and were repaid in those parties were not in contact before the Assessing Officer. However, ITR ,copy of bank statement in respect of those parties were during the remand proceedings. During appellate proceedings, the Ld. CIT(A) reconciled the ledger balances of 29 year from assessment year 2013-14 to parties, in respect of 9 parties no credit transactions were appear the period from AY 2013 deleted the addition u/s 68 of the Act in respect of th observing as under: “8.3.6 The AO has made reference to statement of Shri Rajendra Jain regarding providing accommodation entries of unsecured loans to various parties. The list of 29 parties include i.e Karnawat Impex Pvt. Ltd and Kriya Impex. As discussed above, the appellant has not received any unsecured loan during F.Y. 2012 13 to F.Y. 2017-18 from Karnawat Impex Pvt. Ltd and Kriya Impex. Therefore, reliance of AO on the state making addition u/s.68 inrespect of unsecured loan from Karnawat Impex Pvt. Ltd and Kriya Impex has no relevance to the facts of the case of the appellant. The AO has also referred to Five companies managed & controlled by Shri Dipak Jain which had provided accommodation entries. AO has not mentioned names of Five companies controlled by Dipak Jain, however, it is gathered that only two companies i.e Sanmati Gems Pvt. Ltd. and Surya Diamond Pvt. Ltd. are mentioned in list of 29 parties. In the case of Sanmati Gems Pvt. Ltd, the AO has also accepted that no unsecured loan was received fr appellant company.” 10.5.1 Further in para 8.3.6, the Ld. CIT(A) has mentioned that the parties ‘Karnawat Impex Pvt. Ltd’ respect of which made relying on the statement of Shri Rajendra Jain and since there was parties during the period from AY 2013 addition could have been made. 10.5.2 The Ld. CIT(A) has further mentioned that two parties namely ‘M/s Surya Diamond Pvt. Ltd Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors respect of 9 parties no credit transactions were appear the period from AY 2013-14 to 2020-21. The Ld. CIT(A) accordingly tion u/s 68 of the Act in respect of tho 8.3.6 The AO has made reference to statement of Shri Rajendra Jain regarding providing accommodation entries of unsecured loans to various parties. The list of 29 parties include name of two parties i.e Karnawat Impex Pvt. Ltd and Kriya Impex. As discussed above, the appellant has not received any unsecured loan during F.Y. 2012 18 from Karnawat Impex Pvt. Ltd and Kriya Impex. Therefore, reliance of AO on the statement of Shri Rajendra Jain for making addition u/s.68 inrespect of unsecured loan from Karnawat Impex Pvt. Ltd and Kriya Impex has no relevance to the facts of the case of the appellant. The AO has also referred to Five companies managed & controlled ri Dipak Jain which had provided accommodation entries. AO has not mentioned names of Five companies controlled by Dipak Jain, however, it is gathered that only two companies i.e Sanmati Gems Pvt. Ltd. and Surya Diamond Pvt. Ltd. are mentioned in list of 9 parties. In the case of Sanmati Gems Pvt. Ltd, the AO has also accepted that no unsecured loan was received from it by the Further in para 8.3.6, the Ld. CIT(A) has mentioned that ‘Karnawat Impex Pvt. Ltd’ and ‘Kriya Impex’ respect of which made relying on the statement of Shri Rajendra was no loan or credit in respect of th parties during the period from AY 2013-14 to 2020-21, therefore addition could have been made. The Ld. CIT(A) has further mentioned that two parties Surya Diamond Pvt. Ltd’ and ‘M/s Sanmati Gems Pvt. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 55 respect of 9 parties no credit transactions were appearing during 21. The Ld. CIT(A) accordingly ose 9 parties 8.3.6 The AO has made reference to statement of Shri Rajendra Jain regarding providing accommodation entries of unsecured loans name of two parties i.e Karnawat Impex Pvt. Ltd and Kriya Impex. As discussed above, the appellant has not received any unsecured loan during F.Y. 2012- 18 from Karnawat Impex Pvt. Ltd and Kriya Impex. ment of Shri Rajendra Jain for making addition u/s.68 inrespect of unsecured loan from Karnawat Impex Pvt. Ltd and Kriya Impex has no relevance to the facts of the The AO has also referred to Five companies managed & controlled ri Dipak Jain which had provided accommodation entries. AO has not mentioned names of Five companies controlled by Dipak Jain, however, it is gathered that only two companies i.e Sanmati Gems Pvt. Ltd. and Surya Diamond Pvt. Ltd. are mentioned in list of 9 parties. In the case of Sanmati Gems Pvt. Ltd, the AO has also om it by the Further in para 8.3.6, the Ld. CIT(A) has mentioned that ’ addition in respect of which made relying on the statement of Shri Rajendra no loan or credit in respect of those two therefore, no The Ld. CIT(A) has further mentioned that two parties Sanmati Gems Pvt. Ltd’ were stated by the lower authorities as Jain, but, those two part with the assessee during the period form AY 2013 hence no addition could have been made in respect of those two parties also. This exclusion left 18 parties for examining on the test laid down u/s 68 of the Act. 10.5.3 In respect of held that those parties assessee discharged its relevant finding of the Ld. CIT(A) is reproduced as under: “8.3.10The AO has ignored a by theappellant company to the A during the course of assessment proceedings. The onus cast upon the assessee regarding proving identity and creditworthiness of the lender companies and the genuineness of the loan tra discharged by the appellant company. The AO has simply relied upon profiling done by the Department based on the details available in the ITBA System. The AO has not made any further enquiries to disprove the evide during the assessment proceedings. In this regard, the decision in the case of Additional CIT v. Hanuman Agarwal [1984] 151 IT 150 (Pat.), wherein it is held that ... As the confirmatory letter was issued by the creditor sub to the so-called confession, the department to summon the creditor in order to verify the statements made in the confirmatory letter. done. The so-called confession was not made available and was not quoted in any of the orders. The so third party"s case and, hence, it was no pointer to the fact that it also related to the amount in question. The assessee having been called upon to explain the nature and source of the dep Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors were stated by the lower authorities as controlled by parties were also having no credit transactio with the assessee during the period form AY 2013-14 to 2020 could have been made in respect of those two This exclusion left 18 parties for examining on the test laid down u/s 68 of the Act. In respect of those remaining 18 parties, the Ld. CIT(A) held that those parties had filed the available evidence assessee discharged its onus provided u/s 68 of the Act relevant finding of the Ld. CIT(A) is reproduced as under: 8.3.10The AO has ignored all these evidences which were provided by theappellant company to the A during the course of assessment proceedings. The onus cast upon the assessee regarding proving identity and creditworthiness of the lender companies and the genuineness of the loan transactions, as provided in Section 68, was discharged by the appellant company. The AO has simply relied upon profiling done by the Department based on the details available in the ITBA System. The AO has not made any further enquiries to disprove the evidences submitted by the appellant during the assessment proceedings. In this regard, the decision in the case of Additional CIT v. Hanuman Agarwal [1984] 151 IT 150 (Pat.), wherein it is held that ... As the confirmatory letter was issued by the creditor sub called confession, it was much more incumbent upon the department to summon the creditor in order to verify the statements made in the confirmatory letter. This was never called confession was not made available and was not uoted in any of the orders. The so-called confession was made in a third party"s case and, hence, it was no pointer to the fact that it also related to the amount in question. The assessee having been called upon to explain the nature and source of the dep Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 56 controlled by Sh Deepak transactions 14 to 2020-21, could have been made in respect of those two This exclusion left 18 parties for examining on the test 18 parties, the Ld. CIT(A) filed the available evidences and the provided u/s 68 of the Act. The relevant finding of the Ld. CIT(A) is reproduced as under: ll these evidences which were provided by theappellant company to the A during the course of assessment proceedings. The onus cast upon the assessee regarding proving identity and creditworthiness of the lender companies and the nsactions, as provided in Section 68, was discharged by the appellant company. The AO has simply relied upon profiling done by the Department based on the details available in the ITBA System. The AO has not made any further nces submitted by the appellant In this regard, the decision in the case of Additional CIT v. Hanuman ... As the confirmatory letter was issued by the creditor subsequent it was much more incumbent upon the department to summon the creditor in order to verify the This was never called confession was not made available and was not called confession was made in a third party"s case and, hence, it was no pointer to the fact that it also related to the amount in question. The assessee having been called upon to explain the nature and source of the deposit, immediately filed the confirmatory letter from the creditor. The confirmatory letter contained the address of the party. It also contained the GIR number. The assessee having fumished all this, did all that it could do and these materials showed prim only the identity of the creditor but also the genuineness of the transaction and also the capacity of the creditor and, as such, the assessee completely discharged its initial onus under section 68. The revenue did not summon the creditor unde no steps to verify the statement of the assessee. assessee filed the confirmatory letter with the correct name and address of the creditor and the GIR number as well, the onus immediately shifted on the department whi discharged by the department. of the deposit to the assessee's income and the consequential disallowance of interest could not be sustained. The assessee is not supposed to know the capacity of the money lender or the cash creditor. It is within the exclusive domain or the dark trusses of the minds of the creditors to know as to whether and how their sources of income are arrived. purpose that section 131 has been introduced so that in case of any suspicion, the ITO or the authorities concerned may exercise the powers of a civil court under section 131 and call upon the creditor concerned to prove his capacity to pay and the genuineness of his transaction. authority concerned is satisfied that the creditor is not telling the truth, it has been left open to the assessee to discharge his subsequent onus of proving the genuineness of the transaction and the capacity of the creditor to pay by cross therefore, as in the instantcase, an assessee gives the correct name, address and GIR number of the creditor, he has discharged his onus and unless a notice in due form under section 131 is issued by the revenue to test the veracity of the genuineness of the tran the capacity of the creditor to pay, the assessee has to succeed. Therefore, the impugned addition was not justified. 8.3.11 During the remand proceedings, the AO has asked the assessee to produce those parties to verify the identity, creditworthiness and genuineness of transactions of unsecured loans. The parties were not produced before the AO. However, the appellant had submitted necessary documentary evidence in support of identity and Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors immediately filed the confirmatory letter from the creditor. The confirmatory letter contained the address of the party. It also contained the GIR number. The assessee having fumished all this, did all that it could do and these materials showed prima facie not only the identity of the creditor but also the genuineness of the transaction and also the capacity of the creditor and, as such, the assessee completely discharged its initial onus under section 68. The revenue did not summon the creditor under section 131. It took no steps to verify the statement of the assessee. Thus, after the assessee filed the confirmatory letter with the correct name and address of the creditor and the GIR number as well, the onus immediately shifted on the department which was not discharged by the department. Therefore, the impugned addition of the deposit to the assessee's income and the consequential disallowance of interest could not be sustained. The assessee is not supposed to know the capacity of the money r the cash creditor. It is within the exclusive domain or the dark trusses of the minds of the creditors to know as to whether and how their sources of income are arrived. It is for that specific purpose that section 131 has been introduced so that in case of any suspicion, the ITO or the authorities concerned may exercise the powers of a civil court under section 131 and call upon the creditor concerned to prove his capacity to pay and the genuineness of his transaction.Once the ITO or the ned is satisfied that the creditor is not telling the truth, it has been left open to the assessee to discharge his subsequent onus of proving the genuineness of the transaction and the capacity of the creditor to pay by cross-examining him. Where, re, as in the instantcase, an assessee gives the correct name, address and GIR number of the creditor, he has discharged his onus and unless a notice in due form under section 131 is issued by the revenue to test the veracity of the genuineness of the transaction or the capacity of the creditor to pay, the assessee has to succeed. ned addition was not justified. During the remand proceedings, the AO has asked the assessee to produce those parties to verify the identity, hiness and genuineness of transactions of unsecured loans. The parties were not produced before the AO. However, the appellant had submitted necessary documentary evidence in support of identity and Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 57 immediately filed the confirmatory letter from the creditor. The confirmatory letter contained the address of the party. It also contained the GIR number. The assessee having fumished all this, a facie not only the identity of the creditor but also the genuineness of the transaction and also the capacity of the creditor and, as such, the assessee completely discharged its initial onus under section 68. r section 131. It took Thus, after the assessee filed the confirmatory letter with the correct name and address of the creditor and the GIR number as well, the ch was not Therefore, the impugned addition of the deposit to the assessee's income and the consequential The assessee is not supposed to know the capacity of the money- r the cash creditor. It is within the exclusive domain or the dark trusses of the minds of the creditors to know as to whether and It is for that specific purpose that section 131 has been introduced so that in case of any suspicion, the ITO or the authorities concerned may exercise the powers of a civil court under section 131 and call upon the creditor concerned to prove his capacity to pay Once the ITO or the ned is satisfied that the creditor is not telling the truth, it has been left open to the assessee to discharge his subsequent onus of proving the genuineness of the transaction and examining him. Where, re, as in the instantcase, an assessee gives the correct name, address and GIR number of the creditor, he has discharged his onus and unless a notice in due form under section 131 is issued by the saction or the capacity of the creditor to pay, the assessee has to succeed. During the remand proceedings, the AO has asked the assessee to produce those parties to verify the identity, hiness and genuineness of transactions of unsecured loans. The parties were not produced before the AO. However, the appellant had submitted necessary documentary evidence in support of identity and creditworthiness of lenders and genuineness of the transactions. Instead of issuing summons us. 131 or notice us. 133(6). the AO asked the assessee to produce those parties. The assessee has no power to force the parties to appear before the AO. Further, mere non parties before the AO could us. 68 of the Act. In number of the judgments the courts have held that merely because summons issued to some of creditors could not be served or they failed to appear before Assessing Officer, could not be ground to treat those credits as non In the case of Commissioner of Income Ltd.[1986] 159 ITR 78 (SC), the Hon'ble Supreme Court of India has held as under: In this case the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the revenue that the said creditors were the income was in the file of the revenue. notices under section 131 at the instance of the assessee, did not pursue the matter further.The revenue did not examine the source of income of the said alleged creditors to find out whether they were credit advance the alleged loans. There was no effort made to pursue the so- circumstances, the assessee could not do any further premises, if the Tribunal came to the conclusion that the assessee had discharged the burden that lay on him, then it could not be said that such a conclusion was unreasonable o evidence. If the conclusion was based on some evidence on which a conclusion could be arrived at, no question of law as such could arise. The High Court was, therefore, right in refusing to refer the questions sought for. The head- note of the judgment of the Hon'ble High Court of Gujaratin the case of Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors creditworthiness of lenders and genuineness of the ctions. Instead of issuing summons us. 131 or notice us. 133(6). the AO asked the assessee to produce those parties. The assessee has no power to force the parties to appear before the AO. Further, mere non-attendance of lender parties before the AO could not be a ground to make addition In number of the judgments the courts have held that merely because summons issued to some of creditors could not be served or they failed to appear before Assessing Officer, could not be ground those credits as non-genuine. Commissioner of Income-taxv.Orissa Corpn, (P.) Ltd.[1986] 159 ITR 78 (SC), the Hon'ble Supreme Court of India has held as under: In this case the assessee had given the names and addresses of the creditors. It was in the knowledge of the revenue that the said creditors were the income-lax assessees. Their index number was in the file of the revenue.The revenue, apart from issuing notices under section 131 at the instance of the assessee, did rsue the matter further.The revenue did not examine the source of income of the said alleged creditors to find out whether they were credit-worthy or were such who could advance the alleged loans. There was no effort made to -called alleged creditors. In those circumstances, the assessee could not do any further premises, if the Tribunal came to the conclusion that the assessee had discharged the burden that lay on him, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion was based on some evidence on which a conclusion could be arrived at, no question of law as such could The High Court was, therefore, right in refusing to refer the questions note of the judgment of the Hon'ble High Court of Gujaratin Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 58 creditworthiness of lenders and genuineness of the ctions. Instead of issuing summons us. 131 or notice us. 133(6). the AO asked the assessee to produce those parties. The assessee has no power to force the parties to attendance of lender not be a ground to make addition In number of the judgments the courts have held that merely because summons issued to some of creditors could not be served or they failed to appear before Assessing Officer, could not be ground taxv.Orissa Corpn, (P.) In this case the assessee had given the names and addresses of the creditors. It was in the knowledge of the revenue that the lax assessees. Their index number The revenue, apart from issuing notices under section 131 at the instance of the assessee, did rsue the matter further.The revenue did not examine the source of income of the said alleged creditors to find out worthy or were such who could advance the alleged loans. There was no effort made to editors. In those circumstances, the assessee could not do any further. In the premises, if the Tribunal came to the conclusion that the assessee had discharged the burden that lay on him, then it could not be said r perverse or based on no evidence. If the conclusion was based on some evidence on which a conclusion could be arrived at, no question of law as such could The High Court was, therefore, right in refusing to refer the questions note of the judgment of the Hon'ble High Court of Gujaratin Deputy Commissioner of Income Taxman 523 (Gujarat). Section 68 of the Income Officer made addition of Rs. 12,8 in respect of loans taken by assessee from 21 parties had discharged initial onus by providing identity of all creditors by giving their complete addresses, GIR numbers/permanent account numbers and copies of as available - Assessee had also proved capacity of creditors by showing that amounts were received by account payee cheques drawn from bank accounts of creditors interest thereon was also made by acco assessee and tax also had been deducted at source on interest payments and remitted prove genuineness of cash deposited in bank accounts of creditors, because under law, assessee can be asked to p credits in its books of account but not source of source Whether merely because summons issued to some of creditors could not be served or they failed to appear before Assessing Officer, could not be ground to treat those credi genuine • Held, yes circumstances of case, especially not disallowed interest claimed/paid in relation to those credits in assessment year under consideration or even in subsequent assessment years, and tax at source had been deducted out of interest paid/credited to creditors, Tribunal was justified in deleting addition made there was no substance in appeal and no substantial question of law arose, appeal was liable to be dismissed In the case of Deputy Commissioner of Income Exports Trade (P.)Ltd. 20191 111 taxmann.com 51 (Mumbai the ITAT Mumbai has held that where assessee company issued shares on premium and had filed complete details to prove identity and creditworthiness of parties, and genuineness of transactions, Assessing Officer was unjustified in making additions in respect of such share capital/premium received by assessee under section 68. In this case, the ITAT has held as under: The provision of section 68 deals with a cases, where any sum found credited in the books of accounts of an assessee, in any Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors Deputy Commissioner of Income-taxv.Rohini Builders [2003] 127 Taxman 523 (Gujarat). Section 68 of the Income-tax Act, 1961 - Cash Credits - Assessing Officer made addition of Rs. 12,85,000 as unexplained cash credits in respect of loans taken by assessee from 21 parties - Assessee had discharged initial onus by providing identity of all creditors by giving their complete addresses, GIR numbers/permanent account numbers and copies of assessment orders wherever readily Assessee had also proved capacity of creditors by showing that amounts were received by account payee cheques drawn from bank accounts of creditors - Repayment of loans and interest thereon was also made by account payee cheques by assessee and tax also had been deducted at source on interest payments and remitted - Whether assessee was not expected to prove genuineness of cash deposited in bank accounts of creditors, because under law, assessee can be asked to prove source of credits in its books of account but not source of source - Held, yes Whether merely because summons issued to some of creditors could not be served or they failed to appear before Assessing Officer, could not be ground to treat those credits as non genuine • Held, yes - Whether considering totality of facts and circumstances of case, especially fact that Assessing Officer had not disallowed interest claimed/paid in relation to those credits in assessment year under consideration or even in subsequent assessment years, and tax at source had been deducted out of interest paid/credited to creditors, Tribunal was justified in deleting addition made - Held, yes - Whether as there was no substance in appeal and no substantial question of , appeal was liable to be dismissed - Held, yes" In the case of Deputy Commissioner of Income-tax, Mumbaiv.Acro Exports Trade (P.)Ltd. 20191 111 taxmann.com 51 (Mumbai the ITAT Mumbai has held that where assessee company issued and had filed complete details to prove identity and creditworthiness of parties, and genuineness of transactions, Assessing Officer was unjustified in making additions in respect of such share capital/premium received by assessee under section 68. case, the ITAT has held as under: The provision of section 68 deals with a cases, where any sum found credited in the books of accounts of an assessee, in any Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 59 taxv.Rohini Builders [2003] 127 Assessing 5,000 as unexplained cash credits Assessee had discharged initial onus by providing identity of all creditors by giving their complete addresses, GIR numbers/permanent account sessment orders wherever readily Assessee had also proved capacity of creditors by showing that amounts were received by account payee cheques Repayment of loans and unt payee cheques by assessee and tax also had been deducted at source on interest Whether assessee was not expected to prove genuineness of cash deposited in bank accounts of creditors, rove source of Held, yes - Whether merely because summons issued to some of creditors could not be served or they failed to appear before Assessing ts as non- Whether considering totality of facts and fact that Assessing Officer had not disallowed interest claimed/paid in relation to those credits in assessment year under consideration or even in subsequent assessment years, and tax at source had been deducted out of interest paid/credited to creditors, Tribunal Whether as there was no substance in appeal and no substantial question of tax, Mumbaiv.Acro Exports Trade (P.)Ltd. 20191 111 taxmann.com 51 (Mumbai - Trib.), the ITAT Mumbai has held that where assessee company issued and had filed complete details to prove identity and creditworthiness of parties, and genuineness of transactions, Assessing Officer was unjustified in making additions in respect of such share capital/premium received by assessee under section 68. The provision of section 68 deals with a cases, where any sum found credited in the books of accounts of an assessee, in any previous year, for which the assessee offered no explanation about the nature and source, thereo assessee, in the opinion of the Assessing Officer is not satisfactory, then sum so found credited may be charged to income tax, as income of the assessee of that previous year. In order to fix any credit within the ambi examine three ingredients i.e., identity, genuineness of transactions and creditworthiness of the parties. In this factual and legal background, if you examine, the present case in the light of various evidences filed by the assessee, in order to prove credit found in the form of share capital and share premium, one has to see. whether the assessee has discharged its initial onus cast upon under section 68 or not. In this case, the assessee has filed various deta including share application form, copy of declaration, board resolution, bank statement of investor company, PAN card, acknowledgment of return of income, financial statement of investor company, form no. 2 for allotment of equity shares and bank statement reflecting, the amount received through banking channels. Once, the assessee has discharged its initial onus by filing various details, then the onus shift to the Assessing Officer to carry out further verification, in the light of evidences filed by ascertain true nature of transactions between the parties before, he come to the conclusion that the transactions between the parties are genuine or not. In this case although, the Assessing Officer has issued section 133(6) notices to the been conducted, including issue of summons under section 131. No doubt, none of the investors companies have responded to section 133(6) notices issued by the Assessing Officer, but fact of the matter is when, the assessee name and address of the parties, it is for the Assessing Officer to carry out further investigation by exercising all possible options available to him, but non 133(6) cannot be attributed to the assessee, because due to time lag certain persons might have left the place and for this no responsibility can be fastened upon the assessee. In this case, the assessee done what best it could do and filed, whatever information available with it, in order to satisfy the Assessing Officer. In case, the Assessing Officer is not satisfied with documents furnished by the assessee, then he is free to carry out his own investigations by exercising powers conferred under section 131 or under section 133(6). Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors previous year, for which the assessee offered no explanation about the nature and source, thereof or the explanations offered by the assessee, in the opinion of the Assessing Officer is not satisfactory, then sum so found credited may be charged to income tax, as income of the assessee of that previous year. In order to fix any credit within the ambit of section68, the Assessing Officer has to examine three ingredients i.e., identity, genuineness of transactions and creditworthiness of the parties. In this factual and legal background, if you examine, the present case in the light of various filed by the assessee, in order to prove credit found in the form of share capital and share premium, one has to see. whether the assessee has discharged its initial onus cast upon under section 68 or not. In this case, the assessee has filed various deta including share application form, copy of declaration, board resolution, bank statement of investor company, PAN card, acknowledgment of return of income, financial statement of investor company, form no. 2 for allotment of equity shares and bank ement reflecting, the amount received through banking channels. Once, the assessee has discharged its initial onus by filing various details, then the onus shift to the Assessing Officer to carry out further verification, in the light of evidences filed by the assessee to ascertain true nature of transactions between the parties before, he come to the conclusion that the transactions between the parties are genuine or not. In this case although, the Assessing Officer has issued section 133(6) notices to the parties, no further enquiry has been conducted, including issue of summons under section 131. No doubt, none of the investors companies have responded to section 133(6) notices issued by the Assessing Officer, but fact of the matter is when, the assessee has filed complete set of documents, including name and address of the parties, it is for the Assessing Officer to carry out further investigation by exercising all possible options available to him, but non-attendance of parties in response to section (6) cannot be attributed to the assessee, because due to time lag certain persons might have left the place and for this no responsibility can be fastened upon the assessee. In this case, the assessee done what best it could do and filed, ion available with it, in order to satisfy the Assessing Officer. In case, the Assessing Officer is not satisfied with documents furnished by the assessee, then he is free to carry out his own investigations by exercising powers conferred under section or under section 133(6). Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 60 previous year, for which the assessee offered no explanation about f or the explanations offered by the assessee, in the opinion of the Assessing Officer is not satisfactory, then sum so found credited may be charged to income tax, as income of the assessee of that previous year. In order to fix any t of section68, the Assessing Officer has to examine three ingredients i.e., identity, genuineness of transactions and creditworthiness of the parties. In this factual and legal background, if you examine, the present case in the light of various filed by the assessee, in order to prove credit found in the form of share capital and share premium, one has to see. whether the assessee has discharged its initial onus cast upon under section 68 or not. In this case, the assessee has filed various details. including share application form, copy of declaration, board resolution, bank statement of investor company, PAN card, acknowledgment of return of income, financial statement of investor company, form no. 2 for allotment of equity shares and bank ement reflecting, the amount received through banking channels. Once, the assessee has discharged its initial onus by filing various details, then the onus shift to the Assessing Officer to carry out the assessee to ascertain true nature of transactions between the parties before, he come to the conclusion that the transactions between the parties are genuine or not. In this case although, the Assessing Officer has parties, no further enquiry has been conducted, including issue of summons under section 131. No doubt, none of the investors companies have responded to section 133(6) notices issued by the Assessing Officer, but fact of the matter has filed complete set of documents, including name and address of the parties, it is for the Assessing Officer to carry out further investigation by exercising all possible options attendance of parties in response to section (6) cannot be attributed to the assessee, because due to time lag certain persons might have left the place and for this no In this case, the assessee done what best it could do and filed, ion available with it, in order to satisfy the Assessing Officer. In case, the Assessing Officer is not satisfied with documents furnished by the assessee, then he is free to carry out his own investigations by exercising powers conferred under section The Assessing Officer, except issue of section 133(6) notices nothing has been done to find out, the nature of transactions between the parties. Therefore, when, the assessee has filed complete details to prove identity, genuinene the parties, then there is no reason for the Assessing Officer to came to the conclusion that share capital and share premium is unexplained only forthe reason that during the survey proceedings, the director of the company had admitted that those five companies are shell companies ignoring the fact that such admission has been retracted by filing affidavit along with letter explaining reasons for such admission during survey proceedings. Further, additions made by the Assessing Officer cannot be sustained even on basis of statement of VS because the Assessing Officer has relied upon statement of VS, the erstwhile director of those five companies to make additions towards share capital, but when KK, the present director of the assessee VS and also opportunity for cross examination of VS, the Assessing Officer has denied, the opportunity of cross examination and also not furnished copies of statement recorded from VS. It is a s position of law that once, any third party information/statements is relied upon to make additions, it is the obligation of the Assessing Officer to provide copies of such statements/information and also to provide an opportunity of cross examinatio the statement, when such opportunity has been availed by the person against whom, such statements are used. When, third party information is relied upon to draw an adverse inference against the assessee, the same needs to be provi cross examination shall be given, if such opportunity is av the assessee. (Para 15] 10.4 The Ld. CIT(A) further relied on other decisions to substantiate that the assessee discharged evidences on record, concluding para the Ld. CIT(A) deleted the addition observing as under: “8.3.14In view of the above facts and discussion made as above and alsorespectively fo Mumbai in the case ofACIT Vs. Dhanpal B. Shah, ITO Vs Bala Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors The Assessing Officer, except issue of section 133(6) notices nothing has been done to find out, the nature of transactions between the parties. Therefore, when, the assessee has filed complete details to prove identity, genuineness of transactions and creditworthiness of the parties, then there is no reason for the Assessing Officer to came to the conclusion that share capital and share premium is unexplained only forthe reason that during the survey proceedings, he company had admitted that those five companies are shell companies ignoring the fact that such admission has been retracted by filing affidavit along with letter explaining reasons for such admission during survey proceedings. Further, additions made the Assessing Officer cannot be sustained even on basis of statement of VS because the Assessing Officer has relied upon statement of VS, the erstwhile director of those five companies to make additions towards share capital, but when KK, the present ctor of the assessee-company asked for copies of statement of VS and also opportunity for cross examination of VS, the Assessing Officer has denied, the opportunity of cross examination and also not furnished copies of statement recorded from VS. It is a s position of law that once, any third party information/statements is relied upon to make additions, it is the obligation of the Assessing Officer to provide copies of such statements/information and also to provide an opportunity of cross examination of the person, who gave the statement, when such opportunity has been availed by the person against whom, such statements are used. When, third party information is relied upon to draw an adverse inference against the assessee, the same needs to be provided and also opportunity of cross examination shall be given, if such opportunity is availed by the assessee. (Para 15]” (emphasis supplied externally) The Ld. CIT(A) further relied on other decisions to substantiate that the assessee discharged its onus by bringing all documentary hence addition is not justified. In the para the Ld. CIT(A) deleted the addition observing as 8.3.14In view of the above facts and discussion made as above and alsorespectively following decisions of jurisdictional ITAT, Mumbai in the case ofACIT Vs. Dhanpal B. Shah, ITO Vs Bala Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 61 The Assessing Officer, except issue of section 133(6) notices nothing has been done to find out, the nature of transactions between the parties. Therefore, when, the assessee has filed complete details to ss of transactions and creditworthiness of the parties, then there is no reason for the Assessing Officer to came to the conclusion that share capital and share premium is unexplained only forthe reason that during the survey proceedings, he company had admitted that those five companies are shell companies ignoring the fact that such admission has been retracted by filing affidavit along with letter explaining reasons for such admission during survey proceedings. Further, additions made the Assessing Officer cannot be sustained even on basis of statement of VS because the Assessing Officer has relied upon statement of VS, the erstwhile director of those five companies to make additions towards share capital, but when KK, the present company asked for copies of statement of VS and also opportunity for cross examination of VS, the Assessing Officer has denied, the opportunity of cross examination and also not furnished copies of statement recorded from VS. It is a settled position of law that once, any third party information/statements is relied upon to make additions, it is the obligation of the Assessing Officer to provide copies of such statements/information and also to n of the person, who gave the statement, when such opportunity has been availed by the person against whom, such statements are used. When, third party information is relied upon to draw an adverse inference against the ded and also opportunity of ailed by The Ld. CIT(A) further relied on other decisions to substantiate by bringing all documentary justified. In the para the Ld. CIT(A) deleted the addition observing as 8.3.14In view of the above facts and discussion made as above llowing decisions of jurisdictional ITAT, Mumbai in the case ofACIT Vs. Dhanpal B. Shah, ITO Vs Bala Suresh Agarwal and ACIT Vs. Abani Sarbeshwar Das, the addition us. 68 in respect of unsecured loans taken from 18 parties i.e Aadishwar Diamonds, Ansh Arjay Gems Pvt. Ltd, Bahubali Diamonds Pvt. Ltd, Beetal Trading Pvt. Ltd, Crescent Diamonds Exim Pvt. Ltd, Divyanshi Gems Pvt. Ltd, Dojahan Trading Pvt. Ltd, Ensure Insure Brokers Pvt. Ltd, HPL Multi Trade Pvt. Ltd, Manhar Gems Pvt. Ltd, Samkit Diamond Mfg Co. Pvt Ltd, Takshla Exim Pvt. Ltd, Moxa Diamond Pvt. Ltd and Shikha Diamond Pvt. Ltd, cannot be sustained. 8.3.15During theA.Y. 2013 unsecuredloan of Rs.1.44.38.191/ Gems Pvt. Ltd. Antique Exim Pvt. Ltd, Arjay Gems Pvt. Ltd, Bahubali Diamonds Pvt. Ltd, Beetal Trading Pvt.Ltd, Burlington Mercantiles Pvt. Ltd., Chaitanya Gems Pvt. Ltd, Crescent Diamonds Exim Pvt. Ltd, Ensure Insure Brokers Pvt. Ltd, Karnavat Impex Pvt. Ltd, Kriya Impex Pvt. Ltd, Saffron Gems Pvt. Ltd, Surya Diamond Pvt. Ltd, Badam Trading, Lalita Gems Pvt. Ltd, Moxa Diamond Pvt. Ltd and Shikha Diamond Pvt. Ltd. However, from verification of records, i 2013-14, theappellant has not received fresh loans from Aadishwar Diamonds, Aditi Gems Pvt.Ltd, Antique Exim Pvt. Ltd, Arjay Gems Pvt. Ltd, Bahubali Diamonds Pvt. Ltd, Beetal Trading Pvt. Ltd, Burlington Mercantiles Put. Ltd., Diamonds Exim Pvt. Ltd, Karnavat Impex Pvt Ltd, Kriya Impex Pt Ltd, Saffron Gems Put. Ltd, Surya Diamond Pvt. Ltd, Badam Trading Pvt. Ltd, Lalita Gems Put. Ltd, Moxa Diamond Pvt. Ltd, Shikha Diamond Pvt. Ltd. Therefore, a party is not justified and it is deleted. The appellant has received unsecured loan of Rs.8,00,000/ EnsureInsure Brokers Pvt. Ltd. As discussed in para 8.3.3 to 8.3.12 of this appellate order, the addition made by unsecured loan received from Ensure Insure Brokers Pvt. Ltd is also not sustainable. Therefore, addition of Rs.1,44,38,191/ respect of unsecured loans is deleted. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors Suresh Agarwal and ACIT Vs. Abani Sarbeshwar Das, the addition us. 68 in respect of unsecured loans taken from 18 parties i.e Aadishwar Diamonds, Anshul Gems Pvt Ltd, Antique Exim Pv Arjay Gems Pvt. Ltd, Bahubali Diamonds Pvt. Ltd, Beetal Trading Pvt. Ltd, Crescent Diamonds Exim Pvt. Ltd, Divyanshi Gems Pvt. Ltd, Dojahan Trading Pvt. Ltd, Ensure Insure Brokers Pvt. Ltd, HPL Multi Trade Pvt. Ltd, Manhar Impex Pvt. Ltd, Param Gems Pvt. Ltd, Saffron Gems Pvt. Ltd, Samkit Diamond Mfg Co. Pvt Ltd, Takshla Exim Pvt. Ltd, Moxa Diamond Pvt. Ltd and Shikha Diamond Pvt. Ltd, cannot be 8.3.15During theA.Y. 2013-14, the AO has made addition of oan of Rs.1.44.38.191/- from Aadishwar Diamonds, Aditi Gems Pvt. Ltd. Antique Exim Pvt. Ltd, Arjay Gems Pvt. Ltd, Bahubali Diamonds Pvt. Ltd, Beetal Trading Pvt.Ltd, Burlington Mercantiles Pvt. Ltd., Chaitanya Gems Pvt. Ltd, Crescent Diamonds Exim Pvt. , Ensure Insure Brokers Pvt. Ltd, Karnavat Impex Pvt. Ltd, Kriya Impex Pvt. Ltd, Saffron Gems Pvt. Ltd, Surya Diamond Pvt. Ltd, Badam Trading, Lalita Gems Pvt. Ltd, Moxa Diamond Pvt. Ltd and Shikha Diamond Pvt. Ltd. However, from verification of records, it is noticed that during A.Y. 14, theappellant has not received fresh loans from Aadishwar Diamonds, Aditi Gems Pvt.Ltd, Antique Exim Pvt. Ltd, Arjay Gems Pvt. Ltd, Bahubali Diamonds Pvt. Ltd, Beetal Trading Pvt. Ltd, Burlington Mercantiles Put. Ltd., Chaitanya Gems Pvt. Ltd, Crescent Diamonds Exim Pvt. Ltd, Karnavat Impex Pvt Ltd, Kriya Impex Pt Ltd, Saffron Gems Put. Ltd, Surya Diamond Pvt. Ltd, Badam Trading Pvt. Ltd, Lalita Gems Put. Ltd, Moxa Diamond Pvt. Ltd, Shikha Diamond Pvt. Ltd. Therefore, addition of unsecured loan from these party is not justified and it is deleted. The appellant has received unsecured loan of Rs.8,00,000/ EnsureInsure Brokers Pvt. Ltd. As discussed in para 8.3.3 to 8.3.12 of this appellate order, the addition made by A u/s.68 in respect of unsecured loan received from Ensure Insure Brokers Pvt. Ltd is also Therefore, addition of Rs.1,44,38,191/- made by AO u/s.68 in respect of unsecured loans is deleted.” Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 62 Suresh Agarwal and ACIT Vs. Abani Sarbeshwar Das, the addition us. 68 in respect of unsecured loans taken from 18 parties i.e ms Pvt Ltd, Antique Exim Pvt.Ltd, Arjay Gems Pvt. Ltd, Bahubali Diamonds Pvt. Ltd, Beetal Trading Pvt. Ltd, Crescent Diamonds Exim Pvt. Ltd, Divyanshi Gems Pvt. Ltd, Dojahan Trading Pvt. Ltd, Ensure Insure Brokers Pvt. Ltd, HPL Multi Impex Pvt. Ltd, Param Gems Pvt. Ltd, Saffron Gems Pvt. Ltd, Samkit Diamond Mfg Co. Pvt Ltd, Takshla Exim Pvt. Ltd, Moxa Diamond Pvt. Ltd and Shikha Diamond Pvt. Ltd, cannot be 14, the AO has made addition of from Aadishwar Diamonds, Aditi Gems Pvt. Ltd. Antique Exim Pvt. Ltd, Arjay Gems Pvt. Ltd, Bahubali Diamonds Pvt. Ltd, Beetal Trading Pvt.Ltd, Burlington Mercantiles Pvt. Ltd., Chaitanya Gems Pvt. Ltd, Crescent Diamonds Exim Pvt. , Ensure Insure Brokers Pvt. Ltd, Karnavat Impex Pvt. Ltd, Kriya Impex Pvt. Ltd, Saffron Gems Pvt. Ltd, Surya Diamond Pvt. Ltd, Badam Trading, Lalita Gems Pvt. Ltd, Moxa Diamond Pvt. Ltd and t is noticed that during A.Y. 14, theappellant has not received fresh loans from Aadishwar Diamonds, Aditi Gems Pvt.Ltd, Antique Exim Pvt. Ltd, Arjay Gems Pvt. Ltd, Bahubali Diamonds Pvt. Ltd, Beetal Trading Pvt. Ltd, Chaitanya Gems Pvt. Ltd, Crescent Diamonds Exim Pvt. Ltd, Karnavat Impex Pvt Ltd, Kriya Impex Pt Ltd, Saffron Gems Put. Ltd, Surya Diamond Pvt. Ltd, Badam Trading Pvt. Ltd, Lalita Gems Put. Ltd, Moxa Diamond Pvt. Ltd, Shikha ddition of unsecured loan from these The appellant has received unsecured loan of Rs.8,00,000/- from EnsureInsure Brokers Pvt. Ltd. As discussed in para 8.3.3 to 8.3.12 A u/s.68 in respect of unsecured loan received from Ensure Insure Brokers Pvt. Ltd is also made by AO u/s.68 in 10.5 Regarding the issue of no addition could have been made without aid of the incriminating material in completed the Ld. CIT(A) held in favor “8.3.9From the assessment order, it is seen that there is no reference in the assessment order about any incriminating document found/seized during the course of search proceedings relevant to the and unsecured loans. The appellant has also provided a copy of statement of Shri Moolsingh Deora, Shri Nirmal Madhani whose statement was recorded us 132(4) on 08.11.2019 during the search proceedings.Even in their statement recorded us. 132(4), there is no mention about any incriminating evidences/material found or seized related to unsecured loans. Thus, it can be safely inferr during the course of search proceedings, no incriminating material/evidences in relation to the unsecured loans were found/seized. It is a well settled law that in the unabated assessment order, no addition u/s 153A can be made unless there is some material with respect to the The Hon'ble ITAT, Special Bench, Mumbai has in the case of All Cargo Global Logistics Ltd. v. DCIT 137 ITD 287 (Mum) (SB) held that in respect of non assessments, the assessment will be made on the basis o account or other documents not produced in the course of original assessment but found in the course of search and undisclosed income or undisclosed property discovered in the course of search. It has thus been held that in case of completed ass assessment u/s.153A has to be made on the basis of incriminating material only, i.e., undisclosed income/property/books of accounts/documents. In other words, where nothing incriminating is found in the course of search relating to any of the years covered u/s.153A of the Act, the assessment for such A.Ys. cannot be disturbed. It has also been held that in the absence of any incriminating materials, the completed assessment has only to be reiterated. Similar view has been taken in t [2014] 49taxmann.com 172 (Bom). The Hon'ble jurisdictional High Court in the case of Commissioner of Income-tax-ll, Thane v.Continental Warehousing Corporation (Nhava Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors Regarding the issue of no addition could have been made without aid of the incriminating material in completed assessments, favor of the assessee observing as under: 8.3.9From the assessment order, it is seen that there is no nce in the assessment order about any incriminating document found/seized during the course of search proceedings relevant to the and unsecured loans. The appellant has also provided a copy of statement of Shri Moolsingh Deora, Shri Nirmal Madhani whose atement was recorded us 132(4) on 08.11.2019 during the search proceedings.Even in their statement recorded us. 132(4), there is no mention about any incriminating evidences/material found or seized related to unsecured loans. Thus, it can be safely inferr during the course of search proceedings, no incriminating material/evidences in relation to the unsecured loans were It is a well settled law that in the unabated assessment order, no addition u/s 153A can be made unless there is some incriminating material with respect to the The Hon'ble ITAT, Special Bench, Mumbai has in the case of All Cargo Global Logistics Ltd. v. DCIT 137 ITD 287 (Mum) (SB) held that in respect of non assessments, the assessment will be made on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search and undisclosed income or undisclosed property discovered in the course of search. It has thus been held that in case of completed assessments, the assessment u/s.153A has to be made on the basis of incriminating material only, i.e., undisclosed income/property/books of accounts/documents. In other words, where nothing incriminating is found in the course of search relating to any of the assessment years covered u/s.153A of the Act, the assessment for such A.Ys. cannot be disturbed. It has also been held that in the absence of any incriminating materials, the completed assessment has only to be Similar view has been taken in the case of Murli Agro Products Ltd. [2014] 49taxmann.com 172 (Bom). The Hon'ble jurisdictional High Court in the case of Commissioner of ll, Thane v.Continental Warehousing Corporation (Nhava Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 63 Regarding the issue of no addition could have been made assessments, of the assessee observing as under: 8.3.9From the assessment order, it is seen that there is no nce in the assessment order about any incriminating document found/seized during the course of search proceedings relevant to the and unsecured loans. The appellant has also provided a copy of statement of Shri Moolsingh Deora, Shri Nirmal Madhani whose atement was recorded us 132(4) on 08.11.2019 during the search proceedings.Even in their statement recorded us. 132(4), there is no mention about any incriminating evidences/material found or seized related to unsecured loans. Thus, it can be safely inferred that during the course of search proceedings, no incriminating material/evidences in relation to the unsecured loans were It is a well settled law that in the unabated assessment order, no incriminating material with respect to the The Hon'ble ITAT, Special Bench, Mumbai has in the case of All Cargo Global Logistics Ltd. v. DCIT 137 ITD 287 (Mum) (SB) held that in respect of non-abated f books of account or other documents not produced in the course of original assessment but found in the course of search and undisclosed income or undisclosed property discovered in the course of search. It essments, the assessment u/s.153A has to be made on the basis of incriminating material only, i.e., undisclosed income/property/books of accounts/documents. In other words, where nothing incriminating is assessment years covered u/s.153A of the Act, the assessment for such A.Ys. cannot be disturbed. It has also been held that in the absence of any incriminating materials, the completed assessment has only to be he case of Murli Agro Products Ltd. The Hon'ble jurisdictional High Court in the case of Commissioner of ll, Thane v.Continental Warehousing Corporation (Nhava Sheva) Ltd.[2015] 58 taxmann.com 78 (Bombay) has held addition can be made in respect of assessments which have become final, if no incriminating material is found during the search. It has been held that once the original assessment has attained finality, then the Assessing Officer while passing the assessment order us.153A r.w.s. 143(3) cannot disturb the assessment/reassessment order which has attained finality, unless the materials gathered in the course of the proceedings u/s.153A establish that the reliefs granted under the finalized assessment/reassessment were contrary to the facts unearthed during the course of 153A proceedings. 10.6 Before us, the Ld. order of Ld. CIT(A), whereas Assessing Officer. The DR concluding that assessing officer in remand proceeding has conceded the addition in respect of unsecured loan. He also submitted that unsecured loan creditors were found in existence during the course of se company was duly confronted all the facts of parties,despite, the assessee failed to produce those before the assessing officer. The confirmation letters, ITR etc had been filed on behalf of the unsecured mostly between 21/09/2021 to 23/09/2021, which coincidence but can be possible only if filed by one person on their behalf and which could be credential of those documents was required to confirmed independently by way of producing them and then confirming their creditworthiness. The Ld CIT(A) wrongly admitted the plea of the Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors Sheva) Ltd.[2015] 58 taxmann.com 78 (Bombay) has held addition can be made in respect of assessments which have become final, if no incriminating material is found during the search. It has been held that once the original assessment has attained finality, then the Assessing Officer while passing the independent assessment order us.153A r.w.s. 143(3) cannot disturb the assessment/reassessment order which has attained finality, unless the materials gathered in the course of the proceedings u/s.153A establish that the reliefs granted under the finalized assessment/reassessment were contrary to the facts unearthed during the course of 153A proceedings.” Ld. Counsel of the assessee has relied on the whereas the ld. DR has relied on the order of the The DR submitted that the Ld CIT(A) is wrong in concluding that assessing officer in remand proceeding has conceded the addition in respect of unsecured loan. He also submitted that unsecured loan creditors were found in existence search action and the director of the assessee company was duly confronted all the facts of non-existence the assessee failed to produce those before the assessing officer. The confirmation letters, ITR etc had been filed on of the unsecured loan parties before the Assessing Officer mostly between 21/09/2021 to 23/09/2021, which coincidence but can be possible only if filed by one person on their behalf and which could be none other than the assessee, so of those documents was required to confirmed independently by way of producing them and then confirming their creditworthiness. The Ld CIT(A) wrongly admitted the plea of the Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 64 that no addition can be made in respect of assessments which have become final, if no incriminating material is found during the search. It has been held that once the original assessment has attained finality, independent assessment order us.153A r.w.s. 143(3) cannot disturb the assessment/reassessment order which has attained finality, unless the materials gathered in the course of the proceedings u/s.153A establish that the reliefs granted under the finalized assessment/reassessment were contrary to the facts unearthed Counsel of the assessee has relied on the the ld. DR has relied on the order of the submitted that the Ld CIT(A) is wrong in concluding that assessing officer in remand proceeding has conceded the addition in respect of unsecured loan. He also submitted that unsecured loan creditors were found in existence action and the director of the assessee existence of those the assessee failed to produce those before the assessing officer. The confirmation letters, ITR etc had been filed on before the Assessing Officer can’t be a coincidence but can be possible only if filed by one person on their than the assessee, so of those documents was required to confirmed independently by way of producing them and then confirming their creditworthiness. The Ld CIT(A) wrongly admitted the plea of the assessee that it had been a longtime since the loans taken and same were returned conveniently ignored that the assessee had shown to have paid interest to them regularly, and thus could not be produced before the Assessing Officer. 10.7We have heard rival submission of the parties on the issue in dispute. As far as the addition of unsecured loan creditor concerned, it has been assailed on legality of addition as well as on merit. Firstly, we examine whether the addition could hav possible to make addition legally. addition on merit. 10.8 We have already held that AY 2020 were pending as on the date of search. It has been held by t (jurisdictional High Court) (supra) that in assessments other than abated assessments, no addition could be made without the aid of incriminating material. Thus, except AY 2020 existence of incriminating material qua the addition of unsecured loan creditors u/s 68 of the Act. 10.9 We find that as regards to the issue of unsecured loan creditors, during the course of search, the inspectors of the department visited the parties but hardly any of the concerned Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors assessee that it had been a longtime since the loans taken and subsequently, but the Ld CIT(A) has conveniently ignored that the assessee had shown to have paid interest to them regularly, and thus can’t say that those parties be produced before the Assessing Officer. 10.7We have heard rival submission of the parties on the issue in As far as the addition of unsecured loan creditor it has been assailed on legality of addition as well as on merit. Firstly, we examine whether the addition could hav to make addition legally. Secondly, we have to examine the We have already held that AY 2020-21 and AY 2019 were pending as on the date of search, got abated as on the date of search. It has been held by the Hon’ble Bomaby High Court Court) in the case of Continental corporation (supra) that in assessments other than abated assessments, no addition could be made without the aid of incriminating material. Thus, except AY 2020-21 and 2019-20, we have to examine the existence of incriminating material qua the addition of unsecured u/s 68 of the Act. We find that as regards to the issue of unsecured loan creditors, during the course of search, the inspectors of the tment visited the parties but hardly any of the concerned Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 65 assessee that it had been a longtime since the loans taken and subsequently, but the Ld CIT(A) has conveniently ignored that the assessee had shown to have paid say that those parties 10.7We have heard rival submission of the parties on the issue in As far as the addition of unsecured loan creditors is it has been assailed on legality of addition as well as on merit. Firstly, we examine whether the addition could have been , we have to examine the 21 and AY 2019-20, which abated as on the date of he Hon’ble Bomaby High Court in the case of Continental corporation (supra) that in assessments other than abated assessments, no addition could be made without the aid of incriminating material. we have to examine the existence of incriminating material qua the addition of unsecured We find that as regards to the issue of unsecured loan creditors, during the course of search, the inspectors of the tment visited the parties but hardly any of the concerned unsecured loan creditor was found in existence. The Inspectors collected photographs of their premises, made neighborhood etc and all those evidences were duly confronted to the director of the assessee company. These photographs and other material suggesting non falsity of books of account, when definitely constitute the incriminating material qua the addition of unsecured loan creditor. Accordingly, we set aside the finding of the Ld CIT(A) on the issue in dispute. 10.10 As far as issue on the merit is addition has been made by the Assessing Officer invoking 68 of the Act. For discha assessee is required to establish the unsecured loan creditor and loan. In the case the Ld CIT(A) has respect of 9 parties, holding that loan transactions alleged by the assessing officer were not appearing in the books of accounts of the assessee. Secondly, addition in respect of 18 parties has been deleted on the reasoning u/s 68 of the Act. 10.11 Firstly, we take up the issue of parties, which the Ld. CIT(A) in entries of ‘Piyush Gems P Ltd Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors unsecured loan creditor was found in existence. The Inspectors collected photographs of their premises, made enquiries neighborhood etc and all those evidences were duly confronted to tor of the assessee company. These photographs and other material suggesting non-existence of the parties and consequent account, when seen in totality of the facts, definitely constitute the incriminating material qua the addition of nsecured loan creditor. Accordingly, we set aside the finding of the Ld CIT(A) on the issue in dispute. As far as issue on the merit is concerned, we find has been made by the Assessing Officer invoking 68 of the Act. For discharging onus of section 68 of the required to establish ‘identity’ and ‘creditworthiness the unsecured loan creditor and ‘genuineness of the transaction loan. In the case the Ld CIT(A) has firstly, deleted the addition in respect of 9 parties, holding that loan transactions alleged by the assessing officer were not appearing in the books of accounts of the , addition in respect of 18 parties has been reasoning that the assessee has discharged its onus we take up the issue of addition in respect of 11 Ld. CIT(A) has deleted. The Ld CIT(A) noted that Piyush Gems P Ltd’ and ‘Sanmati Gems Pvt Ltd Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 66 unsecured loan creditor was found in existence. The Inspectors enquiries from neighborhood etc and all those evidences were duly confronted to tor of the assessee company. These photographs and other and consequent seen in totality of the facts, definitely constitute the incriminating material qua the addition of nsecured loan creditor. Accordingly, we set aside the finding of the we find that has been made by the Assessing Officer invoking section rging onus of section 68 of the Act, the creditworthiness’ of genuineness of the transaction’ of deleted the addition in respect of 9 parties, holding that loan transactions alleged by the assessing officer were not appearing in the books of accounts of the , addition in respect of 18 parties has been he assessee has discharged its onus addition in respect of 11 has deleted. The Ld CIT(A) noted that Sanmati Gems Pvt Ltd’ , the Assessing Officer himself has recorded that no loan was received from those parties during the period from AY 2013 21. On verification of table of addition of unsecured loan creditor by the Assessing Officer, we concur with remaining 9 parties, we find that addition on the basis of the unsecured loan entries found in the books of the assessee during the course of search action, and credits in respect of those accounts of unsecured the assessee. During assessment proceeding also no such facts was brought to the knowledge of the Assessing Officer transaction was with those 9 parties duri 2013-14 to AY 2020-21. The CIT(A) accepted the contention of the assessee without providing opportunity the evidences which were produced for the first time before him, which is evident from the following f “From the above table, it is noticed that in case of Piyush Gems Pvt. Ltd and Sanmati Gems Pvt. Ltd, no loan has been received by the appellant and it is also evident from the details provided in the assessment order. From the above table, it is observed that in the case of Aditi Gems Pvt. Ltd, Badam Trading Pvt. Ltd, Burlington Mercantiles Pvt. Ltd, Chaitanya Gems Pvt, Ltd, Karnawat Impex Pvt. Ltd, Kriya Impex, Lalita Gems Pvt. Ltd, Snowdrop Vincom Pvt. Ltd, Surya Diam Ltd, no unsecured loans were received during F.Y. 2012 2017-18 by the appellant. However, the AO has made addition in respect of these parties as bogus unsecured loans u/s.68 of the Act. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors fficer himself has recorded that no loan was received from those parties during the period from AY 2013-14 to AY 2020 21. On verification of table of addition of unsecured loan creditor by the Assessing Officer, we concur with ld. CIT(A). but re remaining 9 parties, we find that the Assessing officer has made addition on the basis of the unsecured loan entries found in the books of the assessee during the course of search action, and those parties were duly appearing in the of unsecured loan creditor confronted to the director of the assessee. During assessment proceeding also no such facts was brought to the knowledge of the Assessing Officer that no credit transaction was with those 9 parties during the period from AY 21. The CIT(A) accepted the contention of the assessee without providing opportunity to the assessing Officer the evidences which were produced for the first time before him, which is evident from the following finding of the ld. CIT(A) : From the above table, it is noticed that in case of Piyush Gems Pvt. Ltd and Sanmati Gems Pvt. Ltd, no loan has been received by the appellant and it is also evident from the details provided in the From the above table, it is observed that in the case of Aditi Gems Pvt. Ltd, Badam Trading Pvt. Ltd, Burlington Mercantiles Pvt. Ltd, Chaitanya Gems Pvt, Ltd, Karnawat Impex Pvt. Ltd, Kriya Impex, Lalita Gems Pvt. Ltd, Snowdrop Vincom Pvt. Ltd, Surya Diam Ltd, no unsecured loans were received during F.Y. 2012-13 to F.Y. 18 by the appellant. However, the AO has made addition in respect of these parties as bogus unsecured loans u/s.68 of the Act. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 67 fficer himself has recorded that no loan was received 14 to AY 2020- 21. On verification of table of addition of unsecured loan creditor by regarding the the Assessing officer has made addition on the basis of the unsecured loan entries found in the books of the assessee during the course of search action, and ing in the ledger confronted to the director of the assessee. During assessment proceeding also no such facts was that no credit ng the period from AY 21. The CIT(A) accepted the contention of the to the assessing Officer on the evidences which were produced for the first time before him, CIT(A) : From the above table, it is noticed that in case of Piyush Gems Pvt. Ltd and Sanmati Gems Pvt. Ltd, no loan has been received by the appellant and it is also evident from the details provided in the From the above table, it is observed that in the case of Aditi Gems Pvt. Ltd, Badam Trading Pvt. Ltd, Burlington Mercantiles Pvt. Ltd, Chaitanya Gems Pvt, Ltd, Karnawat Impex Pvt. Ltd, Kriya Impex, Lalita Gems Pvt. Ltd, Snowdrop Vincom Pvt. Ltd, Surya Diamond Pvt. 13 to F.Y. 18 by the appellant. However, the AO has made addition in respect of these parties as bogus unsecured loans u/s.68 of the Act. The addition made by AO in respect of those 09 pa summarized as under: N o . Name of the party FY 2012-13 1 Aditi Gems Pvt. Ltd. 2,19,000 2 Burlingtone Mercantiles Pvt. Ltd 8,21,250 3 Chaitanya Gems Pvt. Ltd. 8,32,200 4 Karnawat Impex Pvt. Ltd. 2,19,000 5 Kriya Impex Pvt. Ltd. 8,32,200 6 Surya Diamond Pvt. Ltd. 11,40,750 7 Badam Trading Pvt. Ltd. 10,90,890 8 Lalita Gems Pvt. Ltd. 3,28,500 9 Snowdrop Gems It is not a case of the AO that the appellant had received unsecured loans from such parties and such loans were not recorded in the books of accounts of the appellant. In fact, the AO has made addition of unsecured loans as these loans were received and reflected in the book of account of the appellant but such unsecured loans were not genuine and bogus. Also there is no mention in the assessment order that there was incriminating material found during the search and reflected certain unsecured loans received by the appellant and they were not reflected in the books of accounts. Thus, the addition u/s 68 made by AO in respect of unsecured loans received from above mentioned 09 parties is without any basis and factually wrong addition. Therefore, addition of unsecured made u/s.68 in respect of unsecured loans taken from 9 parties i.e. Aditi Gems Pvt. Ltd. Burlington Mercantiles Pvt. Ltd, Chaitanya Gems Pvt. Ltd, Karnawat Impex Pvt. Ltd, Kriya Impex Pvt. Ltd, Surya Di Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors The addition made by AO in respect of those 09 pa summarized as under: FY 2013- 14 FY 2014-15 FY 2015- 16 FY 2016 17 2,19,00 0 1,55,400 4,80,000 2,27,460 3,01,050 2,27,700 200,00,00 0 21,96,0 00 It is not a case of the AO that the appellant had received unsecured loans from such parties and such loans were not recorded in the books of accounts of the appellant. In fact, the AO has made addition loans as these loans were received and reflected in the book of account of the appellant but such unsecured loans were not genuine and bogus. Also there is no mention in the assessment order that there was incriminating material found during the search and reflected certain unsecured loans received by the appellant and they were not reflected in the books of accounts. Thus, the addition u/s 68 made by AO in respect of unsecured loans received from above mentioned 09 parties is without any basis and ally wrong addition. Therefore, addition of unsecured made u/s.68 in respect of unsecured loans taken from 9 parties i.e. Aditi Gems Pvt. Ltd. Burlington Mercantiles Pvt. Ltd, Chaitanya Gems Pvt. Ltd, Karnawat Impex Pvt. Ltd, Kriya Impex Pvt. Ltd, Surya Di Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 68 The addition made by AO in respect of those 09 parties are FY 2016- 17 FY 2017 -18 It is not a case of the AO that the appellant had received unsecured loans from such parties and such loans were not recorded in the books of accounts of the appellant. In fact, the AO has made addition loans as these loans were received and reflected in the book of account of the appellant but such unsecured loans were not genuine and bogus. Also there is no mention in the assessment order that there was incriminating material found during the search and it reflected certain unsecured loans received by the appellant and they Thus, the addition u/s 68 made by AO in respect of unsecured loans received from above mentioned 09 parties is without any basis and ally wrong addition. Therefore, addition of unsecured made u/s.68 in respect of unsecured loans taken from 9 parties i.e. Aditi Gems Pvt. Ltd. Burlington Mercantiles Pvt. Ltd, Chaitanya Gems Pvt. Ltd, Karnawat Impex Pvt. Ltd, Kriya Impex Pvt. Ltd, Surya Diamond Pvt. Ltd, Badam Trading Pvt. Ltd, Lalita gems Pvt. Ltd and Snowdrop Gems is deleted.” 10.12 This action of Ld CIT(A) natural justice and rule 46A of income feel appropriate to restore this issue to the file of the Ld Assessing Officer for verification of the claim of the assessee sheet of the assessee and respective parties for the period from AY 2013-14 to AY 2020-21 and respective parties to substantiate that no such loan transaction were recorded on the books of account of the assessee. u/s 68 for interest amount restored for deciding afresh after due verification of loan transaction during the period from AY 2013 10.13 Now, we take up the addition in respect of 18 unsecured loan creditors, which has been deleted by the Ld CIT(A). CIT(A) has relied,firstly Jain and Deepak Jain, whose statement were relied upon by the Assessing Officer , was not provided. The relevant finding of the Ld CIT(A) is reproduced as under: “8.3.8 During the appellate pro submitted the copies of notices u/s 142(1) and showcause notice dated 15.09.2021 issued by the AO. From the perusal of notices u/s 142(1), it is seen that the AO had raised query about the unsecured loans. In response to that, t necessary details with respect to unsecured loans on 21.07 2021 and subsequently on perusal of showcause notice dated 15.09.2021, it is seen that the AO has mentioned about the name Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors Pvt. Ltd, Badam Trading Pvt. Ltd, Lalita gems Pvt. Ltd and Snowdrop This action of Ld CIT(A) is in violation of principles of and rule 46A of income-tax rules, 1962. Thus, we feel appropriate to restore this issue to the file of the Ld Assessing Officer for verification of the claim of the assessee with, sheet of the assessee and respective parties for the period from AY 21 and bank statements of the assessee and respective parties to substantiate that no such loan transaction were recorded on the books of account of the assessee. The addition amount in respect those 11 parties is al restored for deciding afresh after due verification of loan transaction during the period from AY 2013-14 to AY 2020-21. Now, we take up the addition in respect of 18 unsecured , which has been deleted by the Ld CIT(A). firstly, that no cross examination of sh Rajendra Jain and Deepak Jain, whose statement were relied upon by the Officer , was not provided. The relevant finding of the Ld CIT(A) is reproduced as under: 8.3.8 During the appellate proceedings, the appellant has submitted the copies of notices u/s 142(1) and showcause notice dated 15.09.2021 issued by the AO. From the perusal of notices u/s 142(1), it is seen that the AO had raised query about the unsecured loans. In response to that, the appellant had provided necessary details with respect to unsecured loans on 21.07 2021 and subsequently on perusal of showcause notice dated 15.09.2021, it is seen that the AO has mentioned about the name Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 69 Pvt. Ltd, Badam Trading Pvt. Ltd, Lalita gems Pvt. Ltd and Snowdrop is in violation of principles of tax rules, 1962. Thus, we feel appropriate to restore this issue to the file of the Ld Assessing with, balance sheet of the assessee and respective parties for the period from AY bank statements of the assessee and respective parties to substantiate that no such loan transaction The addition se 11 parties is also restored for deciding afresh after due verification of loan transaction Now, we take up the addition in respect of 18 unsecured , which has been deleted by the Ld CIT(A). The Ld , that no cross examination of sh Rajendra Jain and Deepak Jain, whose statement were relied upon by the Officer , was not provided. The relevant finding of the Ld ceedings, the appellant has submitted the copies of notices u/s 142(1) and showcause notice dated 15.09.2021 issued by the AO. From the perusal of notices u/s 142(1), it is seen that the AO had raised query about the he appellant had provided necessary details with respect to unsecured loans on 21.07 2021 and subsequently on perusal of showcause notice dated 15.09.2021, it is seen that the AO has mentioned about the name and amount of 29 parties from whom the appellant unsecured loans. The AO had asked the appellant to produce those parties before him for verification. From the notices u/s 142(1) and the show cause notice issued by the AO, it is seen that the AO has not provided to the appellant the copies of Rajendra Jain and Shri Deepak Jain recorded during the search proceedings. Further, the AO has relied upon the profiling of 29 parties and the details gathered by the investigation wing and the outcome of the enquiry done by the investig the same was not provided by the AO to the appellant to rebut the finding of the investigation wing and submit the necessary evidences necessary to support the case of the appellant. During the appellate proceedings, the appellant has the appellant was not provided the copies of the statements of Shri Rajendra Jain andShn Deepak Jain which have been relied upon by the AO to make the addition in respect of unsecured loans. It is a fact that the appellant was not made aware was being used against the appellant by the AO in the assessment order and the same material was gathered by the AO behind the back of the appellant It is a settled principle of law that no addition can be made by the AO without prov material gathered by the AO behind the back of the assessee In the case of the appellant also, the AO has relied upon the statements of Shri Rajendra Jain and Shri Deepak Jain and also the report of the investigation wing The appe relevant material which has been used by the AO in the assessment order for making addition in respect of unsecured loans. Thus, there has been clear violation of principal of natural justice Had the AO provided the copies o Jain and Deepak Jain and also the evidences gathered by the investigation wing to the appellant, the appellant would had certainly provided to the AO all the necessary documents/evidences to rebut the statements or the evidences used against it. The AO has failed to provide the material gathered by him to the appellant and also has not provided the opportunity to rebut and cross examine the persons whose statements have been heavily relied upon by the AO while making addition in respect of unsecured loans In this regard, the following case laws are relevant Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors and amount of 29 parties from whom the appellant had taken unsecured loans. The AO had asked the appellant to produce those parties before him for verification. From the notices u/s 142(1) and the show cause notice issued by the AO, it is seen that the AO has not provided to the appellant the copies of statements of Shri Rajendra Jain and Shri Deepak Jain recorded during the search proceedings. Further, the AO has relied upon the profiling of 29 parties and the details gathered by the investigation wing and the outcome of the enquiry done by the investigation wing. However, the same was not provided by the AO to the appellant to rebut the finding of the investigation wing and submit the necessary evidences necessary to support the case of the appellant. During the appellate proceedings, the appellant has submitted that the appellant was not provided the copies of the statements of Shri Rajendra Jain andShn Deepak Jain which have been relied upon by the AO to make the addition in respect of unsecured loans. It is a fact that the appellant was not made aware of the material which was being used against the appellant by the AO in the assessment order and the same material was gathered by the AO behind the back of the appellant It is a settled principle of law that no addition can be made by the AO without providing and confronting the material gathered by the AO behind the back of the assessee In the case of the appellant also, the AO has relied upon the statements of Shri Rajendra Jain and Shri Deepak Jain and also the report of the investigation wing The appellant was not provided with the relevant material which has been used by the AO in the assessment order for making addition in respect of unsecured loans. Thus, there has been clear violation of principal of natural justice Had the AO provided the copies of statements of Rajendra Jain and Deepak Jain and also the evidences gathered by the investigation wing to the appellant, the appellant would had certainly provided to the AO all the necessary documents/evidences to rebut the statements or the evidences ed against it. The AO has failed to provide the material gathered by him to the appellant and also has not provided the opportunity to rebut and cross examine the persons whose statements have been heavily relied upon by the AO while making addition in pect of unsecured loans In this regard, the following case laws Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 70 had taken unsecured loans. The AO had asked the appellant to produce those parties before him for verification. From the notices u/s 142(1) and the show cause notice issued by the AO, it is seen that the AO has statements of Shri Rajendra Jain and Shri Deepak Jain recorded during the search proceedings. Further, the AO has relied upon the profiling of 29 parties and the details gathered by the investigation wing and the ation wing. However, the same was not provided by the AO to the appellant to rebut the finding of the investigation wing and submit the necessary submitted that the appellant was not provided the copies of the statements of Shri Rajendra Jain andShn Deepak Jain which have been relied upon by the AO to make the addition in respect of unsecured loans. It is of the material which was being used against the appellant by the AO in the assessment order and the same material was gathered by the AO behind the back of the appellant It is a settled principle of law that no addition iding and confronting the material gathered by the AO behind the back of the assessee In the case of the appellant also, the AO has relied upon the statements of Shri Rajendra Jain and Shri Deepak Jain and also the report of the llant was not provided with the relevant material which has been used by the AO in the assessment order for making addition in respect of unsecured loans. Thus, there has been clear violation of principal of natural f statements of Rajendra Jain and Deepak Jain and also the evidences gathered by the investigation wing to the appellant, the appellant would had certainly provided to the AO all the necessary documents/evidences to rebut the statements or the evidences ed against it. The AO has failed to provide the material gathered by him to the appellant and also has not provided the opportunity to rebut and cross examine the persons whose statements have been heavily relied upon by the AO while making addition in pect of unsecured loans In this regard, the following case laws In the case of Dhakeswari Cotton Mills Ltd v CIT [1954] 26 ITR 775(SC), theHon'ble Supreme Court of India has held as under “....As regards the second contention although ITO is no fettered by technical rules of evidence and pleadings, and that he is entitled to act on matenal which may not be accepted as evidence in a court of law but there the agreement ends, because it is equally clear that in making the assessment under section a pure guess and make an assessment without reference to any evidence or any material at all and there must be something more than bare suspicion to support the assessment under section 23(3) The rule of law on this subject has been fairly and rightly stated by the Lahore High Court in the case of Seth Gurmukh Singh v CIT [1944] 12 393. In the instant case the Tribunal violated certain fundamental rules of justice in reaching its conclusions Firstly, it did not disclose to had been supplied to it by the departmental representative. Next, it did not give any opportunity to the assessee to rebut the material furnished to it by him and lastly, it declined to take all the material that the assessee support of its case. The result was that the assessee had not had a fair hearing The estimate of the gross rate of profit on sales both by the ITO and the Tribunal was based on surmises, suspicions and conjectures. The Tribunal took fr the representative of the department a statement of gross profit rates of other cotton mills but did not show that statement to the assessee did not givehim a opportunity to show that statement had no relevancy whatsoever to the case of the mill in ques mills which had disclosed these rates were similarly situated and circumstanced. Not only did the Tribunal not show the information given by the representative of the department to the assessee, but it refused even to loo which assessee's representative produced before the Accountant Member in his chamber The assessment in this case and in the connected appeal was above the figure of Rs. 55 lakhs and it was just and proper when dealing with a matter of this magnitude not to employ unnecessary haste and show impatience particularly when it was known to the department that the books of the assessee were in the Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors Dhakeswari Cotton Mills Ltd v CIT [1954] 26 ITR , theHon'ble Supreme Court of India has held as under As regards the second contention although ITO is no fettered by technical rules of evidence and pleadings, and that he is entitled to act on matenal which may not be accepted as evidence in a court of law but there the agreement ends, because it is equally clear that in making the assessment under section 23(3) he is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all and there must be something more than bare suspicion to support the assessment under section 23(3) The rule of law on this t has been fairly and rightly stated by the Lahore High Court in the case of Seth Gurmukh Singh v CIT [1944] 12 393. In the instant case the Tribunal violated certain fundamental rules of justice in reaching its conclusions Firstly, it did not disclose to the assessee what information had been supplied to it by the departmental representative. Next, it did not give any opportunity to the assessee to rebut the material furnished to it by him and lastly, it declined to take all the material that the assessee wanted to produce in support of its case. The result was that the assessee had not had a fair hearing The estimate of the gross rate of profit on sales both by the ITO and the Tribunal was based on surmises, suspicions and conjectures. The Tribunal took fr the representative of the department a statement of gross profit rates of other cotton mills but did not show that statement to the assessee did not givehim a opportunity to show that statement had no relevancy whatsoever to the case of the mill in question. It was not known whether the mills which had disclosed these rates were similarly situated and circumstanced. Not only did the Tribunal not show the information given by the representative of the department to the assessee, but it refused even to look at books and papers which assessee's representative produced before the Accountant Member in his chamber The assessment in this case and in the connected appeal was above the figure of Rs. 55 lakhs and it was just and proper when dealing with a this magnitude not to employ unnecessary haste and show impatience particularly when it was known to the department that the books of the assessee were in the Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 71 Dhakeswari Cotton Mills Ltd v CIT [1954] 26 ITR , theHon'ble Supreme Court of India has held as under: As regards the second contention although ITO is not fettered by technical rules of evidence and pleadings, and that he is entitled to act on matenal which may not be accepted as evidence in a court of law but there the agreement ends, because it is equally clear that in making 23(3) he is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all and there must be something more than bare suspicion to support the assessment under section 23(3) The rule of law on this t has been fairly and rightly stated by the Lahore High Court in the case of Seth Gurmukh Singh v CIT [1944] 12 393. In the instant case the Tribunal violated certain fundamental rules of justice in reaching its conclusions the assessee what information had been supplied to it by the departmental representative. Next, it did not give any opportunity to the assessee to rebut the material furnished to it by him and lastly, it declined to wanted to produce in support of its case. The result was that the assessee had not had a fair hearing The estimate of the gross rate of profit on sales both by the ITO and the Tribunal was based on surmises, suspicions and conjectures. The Tribunal took from the representative of the department a statement of gross profit rates of other cotton mills but did not show that statement to the assessee did not givehim a opportunity to show that statement had no relevancy whatsoever to the tion. It was not known whether the mills which had disclosed these rates were similarly situated and circumstanced. Not only did the Tribunal not show the information given by the representative of the department to k at books and papers which assessee's representative produced before the Accountant Member in his chamber The assessment in this case and in the connected appeal was above the figure of Rs. 55 lakhs and it was just and proper when dealing with a this magnitude not to employ unnecessary haste and show impatience particularly when it was known to the department that the books of the assessee were in the custody of the Sub the Tribunal in estimating the gross not act on any material but acted on pure guess and suspicion It was thus a fit case for the exercise of power under Article 136 In the result, the appeal was to be allowed and the order of the Tribunal was to be set aside and th remanded to it with direction that in arriving at its estimate of gross profits and sales it should give full opportunity to the assessee to place any relevant material on the point that it has before the Tribunal, whether it is found in t account or elsewhere and it should also disclose to the assessee the material on which the Tribunal is going to found its estimate and then afford him full opportunity to meet the substance of any private inquiries made by the ITO if it is intended to make the esti enquiries...” In the case of KishinchandChellaramv CIT [1980] 125 ITR 713 (SC), the Hon'ble Supreme Court of India has held as under “....The letters, dated 14 did not constitute could legitimately take into account for the purpose of arriving at the finding that the amount of Rs 1,07,350 was remitted by the assessee from its Madras Office, and if these two letters were eliminated from consi material evidence at all before the Tribunal which could support its finding What the manager of the bank wrote in his letters could not possibly be based on his personal knowledge but was based on here say The revenue authorities ought to have called upon the manager to produce the documents and papers on the basis of which he made the statement and confronted the assessee with those documents and papers. No explanation has been furnished by the revenue as to what happened when the m appeared in obedience to the summons and what statement he made. It was not possible to hold in the face of the application for remittance signed in the name of T, that amount was remitted by the assessee and the finding to that effect Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors custody of the Sub-Divisional Officer Thus both the ITO and the Tribunal in estimating the gross profit rate on sales did not act on any material but acted on pure guess and suspicion It was thus a fit case for the exercise of power under Article 136. In the result, the appeal was to be allowed and the order of the Tribunal was to be set aside and the case was to be remanded to it with direction that in arriving at its estimate of gross profits and sales it should give full opportunity to the assessee to place any relevant material on the point that it has before the Tribunal, whether it is found in the books of account or elsewhere and it should also disclose to the assessee the material on which the Tribunal is going to found its estimate and then afford him full opportunity to meet the substance of any private inquiries made by the ITO nded to make the estimate on the foot of those KishinchandChellaramv CIT [1980] 125 ITR 713 the Hon'ble Supreme Court of India has held as under: The letters, dated 14-2-1955 and 9-3-1959 ENT ITR 713 did not constitute any material evidence which the Tribunal could legitimately take into account for the purpose of arriving at the finding that the amount of Rs 1,07,350 was remitted by the assessee from its Madras Office, and if these two letters were eliminated from consideration, there was no material evidence at all before the Tribunal which could support its finding What the manager of the bank wrote in his letters could not possibly be based on his personal knowledge but was based on here say The revenue ght to have called upon the manager to produce the documents and papers on the basis of which he made the statement and confronted the assessee with those documents and papers. No explanation has been furnished by the revenue as to what happened when the manager appeared in obedience to the summons and what statement It was not possible to hold in the face of the application for remittance signed in the name of T, that amount was remitted by the assessee and the finding to that effect Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 72 Divisional Officer Thus both the ITO and profit rate on sales did not act on any material but acted on pure guess and suspicion It was thus a fit case for the exercise of power In the result, the appeal was to be allowed and the order of e case was to be remanded to it with direction that in arriving at its estimate of gross profits and sales it should give full opportunity to the assessee to place any relevant material on the point that it he books of account or elsewhere and it should also disclose to the assessee the material on which the Tribunal is going to found its estimate and then afford him full opportunity to meet the substance of any private inquiries made by the ITO mate on the foot of those KishinchandChellaramv CIT [1980] 125 ITR 713 1959 ENT ITR 713, any material evidence which the Tribunal could legitimately take into account for the purpose of arriving at the finding that the amount of Rs 1,07,350 was remitted by the assessee from its Madras Office, and if these deration, there was no material evidence at all before the Tribunal which could support its finding What the manager of the bank wrote in his letters could not possibly be based on his personal knowledge but was based on here say The revenue ght to have called upon the manager to produce the documents and papers on the basis of which he made the statement and confronted the assessee with those documents and papers. No explanation has been furnished anager appeared in obedience to the summons and what statement It was not possible to hold in the face of the application for remittance signed in the name of T, that amount was remitted by the assessee and the finding to that effect reached by the Tribunal must be held to be unreasonable and perverse. Even assuming that these letters were to be taken into account those letters would at the highest establish that T an employee remitted the amount from Madras and N, another employee, received it at that the remittance was made at Madras and received at Bombay on behalf of the assessee The burden was on the department to show that the money belonged to the assessee by bringing proper evidence on record and the assess could not be expected to call T and N who left the service at the time when the assessment was reopened in evidence to help the department to discharge the burden that lay upon it Therefore, there was no evidence on the basis of which the Tribunal could come to the finding that the impugned amount was remitted by the assessee and that it represented its undisclosed income In the case of H.R. Mehta v ACIT [2016] 72 taxmann.com 110 (Bombay), the Hon'ble Supreme Court of India has held as under “....In the light of the fact that the money was advanced apparently by the account payee cheque and was repaid vide account payee cheque the least that the Assessing Officer should have done was to grant an opportunity to the assessee to meet the case against him b matenal sought to be used against him in arriving before passing the order of assessment. This not having been done, the denial of such opportunity goes to root of the matter and strikes at the very foundation of the assessment and therefore, renders the orders passed by the Commissioner (Appeals) and the Tribunal vulnerable. The assessee was bound to be provided with the material used against him apart from being permitting him to cross examine the deponents whose statements were relied upo Despite the request seeking an opportunity to cross examine the deponents and furnish the assessee with copies of statements and disclose material these were denied to him. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors reached by the Tribunal must be held to be unreasonable Even assuming that these letters were to be taken into account those letters would at the highest establish that T an employee remitted the amount from Madras and N, another employee, received it at Bombay From this it did not follow that the remittance was made at Madras and received at Bombay on behalf of the assessee The burden was on the department to show that the money belonged to the assessee by bringing proper evidence on record and the assess could not be expected to call T and N who left the service at the time when the assessment was reopened in evidence to help the department to discharge the burden that lay upon it Therefore, there was no evidence on the basis of which the d come to the finding that the impugned amount was remitted by the assessee and that it represented its undisclosed income...” H.R. Mehta v ACIT [2016] 72 taxmann.com 110 the Hon'ble Supreme Court of India has held as under e light of the fact that the money was advanced apparently by the account payee cheque and was repaid vide account payee cheque the least that the Assessing Officer should have done was to grant an opportunity to the assessee to meet the case against him by providing the matenal sought to be used against him in arriving before passing the order of assessment. This not having been done, the denial of such opportunity goes to root of the matter and strikes at the very foundation of the assessment and e, renders the orders passed by the Commissioner (Appeals) and the Tribunal vulnerable. The assessee was bound to be provided with the material used against him apart from being permitting him to cross examine the deponents whose statements were relied upon by him. Despite the request seeking an opportunity to cross examine the deponents and furnish the assessee with copies of statements and disclose material these were denied to him. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 73 e Tribunal must be held to be unreasonable Even assuming that these letters were to be taken into account those letters would at the highest establish that T an employee remitted the amount from Madras and N, another Bombay From this it did not follow that the remittance was made at Madras and received at Bombay on behalf of the assessee The burden was on the department to show that the money belonged to the assessee by bringing proper evidence on record and the assessee could not be expected to call T and N who left the service at the time when the assessment was reopened in evidence to help the department to discharge the burden that lay upon it. Therefore, there was no evidence on the basis of which the d come to the finding that the impugned amount was remitted by the assessee and that it represented its H.R. Mehta v ACIT [2016] 72 taxmann.com 110 the Hon'ble Supreme Court of India has held as under e light of the fact that the money was advanced apparently by the account payee cheque and was repaid vide account payee cheque the least that the Assessing Officer should have done was to grant an opportunity to the y providing the matenal sought to be used against him in arriving before passing the order of assessment. This not having been done, the denial of such opportunity goes to root of the matter and strikes at the very foundation of the assessment and e, renders the orders passed by the Commissioner (Appeals) and the Tribunal vulnerable. The assessee was bound to be provided with the material used against him apart from being permitting him to cross examine the n by him. Despite the request seeking an opportunity to cross examine the deponents and furnish the assessee with copies of statements and disclose material these were denied to him. Therefore, the addition made to the income of the assessee was not justified and liable to be deleted [Para 17) In the case of CIT v Rajesh Kumar[2008] 306 ITR 27 (Delhi) Hon'ble High Court of Delhi has held that since material collected by revenue behind back of assessee was used against him without disclosing that material to him or giving any opportunity to him to cross-examine person whose statement had been used b against his interests, principles of natural justice had been violated and therefore, addition In this casethe Hon'ble High Court of has held as under There was no dispute that all the information asked for in the office letter dated 5 That letter did not advert to anystatement of Mor H or P Clearty there was no way that the assessee could have known about any statements recorded of those persons. The version given by the assess least a plausible one [Para 10] The Tribunal had on those facts rightly come to the conclusion that since the revenue had relied upon the statement of M it should have been made available to the assessee with an opportunity was not done by the Assessing Officer It clearly showed that the principles of natural Justice had been violated [Para 11] There was no infirmity in the view taken by the Tribunal on the facts of the case. It was quite clear by the revenue behind the back of theassessee was used against him without disclosing that material to him or giving any opportunity to him to cross statement had been used by the revenue against the interests of the assessee [Para 12] Hence, no substantial question of law arose for consideration of the High Court[Para 13]. In the case of CIT v Kamal Trading Company[2013] 346 ITR 60(Rajasthan) the Hon'ble High Court of Rajasthan has held that Assessing Officer had not brought any evidence on record to disprove transaction of purchase of crops by assessee from Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors Therefore, the addition made to the income of the assessee ied and liable to be deleted [Para 17)...” CIT v Rajesh Kumar[2008] 306 ITR 27 (Delhi) Hon'ble High Court of Delhi has held that since material collected by revenue behind back of assessee was used against him without disclosing that material to him or giving any opportunity to him to examine person whose statement had been used by revenue against his interests, principles of natural justice had been violated and therefore, addition was rightly deleted by Tribunal In this casethe Hon'ble High Court of has held as under: There was no dispute that all the information asked for in the office letter dated 5-3-2003 was supplied by the assessee. That letter did not advert to anystatement of Mor H or P Clearty there was no way that the assessee could have known about any statements recorded of those persons. The version given by the assessee, therefore, was correct or at least a plausible one [Para 10] The Tribunal had on those facts rightly come to the conclusion that since the revenue had relied upon the statement of M it should have been made available to the assessee with an opportunity of cross-examining him. That was not done by the Assessing Officer It clearly showed that the principles of natural Justice had been violated [Para 11] There was no infirmity in the view taken by the Tribunal on the facts of the case. It was quite clear that matenal collected by the revenue behind the back of theassessee was used against him without disclosing that material to him or giving any opportunity to him to cross-examine the person whose statement had been used by the revenue against the s of the assessee [Para 12] Hence, no substantial question of law arose for consideration of the High Court[Para 13]. CIT v Kamal Trading Company[2013] 346 ITR the Hon'ble High Court of Rajasthan has held that r had not brought any evidence on record to disprove transaction of purchase of crops by assessee from Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 74 Therefore, the addition made to the income of the assessee CIT v Rajesh Kumar[2008] 306 ITR 27 (Delhi) the Hon'ble High Court of Delhi has held that since material collected by revenue behind back of assessee was used against him without disclosing that material to him or giving any opportunity to him to y revenue against his interests, principles of natural justice had been violated There was no dispute that all the information asked for in the 2003 was supplied by the assessee. That letter did not advert to anystatement of Mor H or P Clearty there was no way that the assessee could have known about any statements recorded of those persons. The ee, therefore, was correct or at The Tribunal had on those facts rightly come to the conclusion that since the revenue had relied upon the statement of M it should have been made available to the examining him. That was not done by the Assessing Officer It clearly showed that the principles of natural Justice had been violated [Para 11] There was no infirmity in the view taken by the Tribunal on that matenal collected by the revenue behind the back of theassessee was used against him without disclosing that material to him or giving examine the person whose statement had been used by the revenue against the Hence, no substantial question of law arose for consideration CIT v Kamal Trading Company[2013] 346 ITR the Hon'ble High Court of Rajasthan has held that r had not brought any evidence on record to disprove transaction of purchase of crops by assessee from farmers, amount shown as payable to said farmers could not be treated as unexplained credits on basis of statement of farmers recorded behind back of ass In this casethe Hon’ble High Court of has held as under “....3. Deletion of addition of Rs 22 41 482 has been ordered by the Commissioner of Income was made by the Assessing Officer on account of unexplained sundry credi on account of claim of loss of Rs 200 200 in the paddy account The Commissioner of Income that certain statements of certain farmers were recorded by the Inspector of Income back of the assessee The assessee was not given opportunity to cross written in Hindi whereas the farmers were illiterate or semi literate Affidavits were filed by the assessee of each and every farmer, whic Commissioner of Income has been affirmed by the Income 4. The Commissioner of Income sundry creditors has given the findings that on con of statements of 20 farmers and the affidavits, mert has been found in the contention of the assessee that the Inspector of Income collect statements and the said statements were recorded behind the back of th expect iterate and semi memory details of accounts with the assessee was asking too much. They are not expected to be familiar with concepts such as financial year and 31st March They understand the timing difference. Merely by the fact that the stamp papers were purchased from one stamp vendor it does not lead to the inference that the contents of the affidavits were dictated by the assessee. The Assessing Officer did not bring on record any other evidence to support such inference Each of these farmers appeared before the Assessing Officer to confirm that he sold his crops. Thus, there is no reason with the Assessing Officer to ignore their statements. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors farmers, amount shown as payable to said farmers could not be treated as unexplained credits on basis of statement of farmers recorded behind back of assessee ble High Court of has held as under: 3. Deletion of addition of Rs 22 41 482 has been ordered by the Commissioner of Income-tax (Appeals), which addition was made by the Assessing Officer on account of unexplained sundry creditors Disallowance was also made on account of claim of loss of Rs 200 200 in the paddy account The Commissioner of Income-tax (Appeals) has found that certain statements of certain farmers were recorded by the Inspector of Income-tax, but it were recorded behind the back of the assessee The assessee was not given opportunity to cross-examine the witnesses Statements were written in Hindi whereas the farmers were illiterate or semi literate Affidavits were filed by the assessee of each and every farmer, which have been relied upon by the Commissioner of Income-tax (Appeals) and the said finding has been affirmed by the Income-tax Appellate Tribunal 4. The Commissioner of Income-tax (Appeals) with respect to sundry creditors has given the findings that on consideration of statements of 20 farmers and the affidavits, mert has been found in the contention of the assessee that the Inspector of Income-tax was not authorized to record or collect statements and the said statements were recorded behind the back of the assessee. It wasfurther held that to expect iterate and semi-literate farmers to recount from memory details of accounts with the assessee was asking too much. They are not expected to be familiar with concepts such as financial year and 31st March They do not understand the timing difference. Merely by the fact that the stamp papers were purchased from one stamp vendor it does not lead to the inference that the contents of the affidavits were dictated by the assessee. The Assessing Officer did not on record any other evidence to support such inference Each of these farmers appeared before the Assessing Officer to confirm that he sold his crops. Thus, there is no reason with the Assessing Officer to ignore their statements. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 75 farmers, amount shown as payable to said farmers could not be treated as unexplained credits on basis of statement of farmers 3. Deletion of addition of Rs 22 41 482 has been ordered tax (Appeals), which addition was made by the Assessing Officer on account of tors Disallowance was also made on account of claim of loss of Rs 200 200 in the paddy tax (Appeals) has found that certain statements of certain farmers were recorded by behind the back of the assessee The assessee was not given examine the witnesses Statements were written in Hindi whereas the farmers were illiterate or semi- literate Affidavits were filed by the assessee of each and h have been relied upon by the tax (Appeals) and the said finding tax Appellate Tribunal. tax (Appeals) with respect to sideration of statements of 20 farmers and the affidavits, mert has been found in the contention of the assessee that the tax was not authorized to record or collect statements and the said statements were recorded It wasfurther held that to literate farmers to recount from memory details of accounts with the assessee was asking too much. They are not expected to be familiar with concepts do not understand the timing difference. Merely by the fact that the stamp papers were purchased from one stamp vendor it does not lead to the inference that the contents of the affidavits were dictated by the assessee. The Assessing Officer did not on record any other evidence to support such inference Each of these farmers appeared before the Assessing Officer to confirm that he sold his crops. Thus, there is no reason with the Assessing Officer to ignore their statements. Affidavits were enough and to accept the case of the assessee Reasons in detail have been given by the Commissioner of Income 5 pages The order of the Commissioner of Income (Appeals) has been affirmed by the Income Tribunal in paragraph No. 13 the Income Tribunal has observed thus "After hearing the rival contentions and on a perusal of the materials available on record, we noted that the Assessing Officer has examined the books of account durin of the assessment proceedings but he did not find any mistake in the books of account Even the Assessing Officer failed to prove any transaction as non made enquires behind the back of the assessee firm and without affording any opportunity the Inspector furnished his report to the Assessing Officer When the Assessing Officer confronted the assessee the assessee-firm contacted all the farmers and requested the Assessing Officer to iss the Act All the farmers appeared before the Assessing Officer who examined them individually and all of them confirmed that they sold their crops to the assessee faith in the assessee firm as it is their perma the full amounts are paid after certain penod The amount as stated in the accounts as on March 31 2006 was outstanding which was paid subsequently within 2/3 months. From the above facts and also keeping in view the materials available on r brought any evidence on record to disprove any transactions. Therefore, in such circumstances, the disallowance has been made on surmises and conjectures Hence, the learned Commissioner of Income said addition. Thus ground No. 2 of the Revenue is dismissed.” 5. For the reasons stated by the Commissioner of Income (Appeals) and the Income satisfied that a finding of fact has been recorded by the Commissioner of Income affirmed by the Income Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors Affidavits were enough and sufficient piece of evidence so as to accept the case of the assessee Reasons in detail have been given by the Commissioner of Income-tax (Appeals) in 4 5 pages The order of the Commissioner of Income (Appeals) has been affirmed by the Income-tax Appe Tribunal in paragraph No. 13 the Income-tax Appellate Tribunal has observed thus: "After hearing the rival contentions and on a perusal of the materials available on record, we noted that the Assessing Officer has examined the books of account during the course of the assessment proceedings but he did not find any mistake in the books of account Even the Assessing Officer failed to prove any transaction as non-genuine The Inspector made enquires behind the back of the assessee firm and ing any opportunity the Inspector furnished his report to the Assessing Officer When the Assessing Officer confronted the assessee-firm with the report of the Inspector, firm contacted all the farmers and requested the Assessing Officer to issue summons under section 131 of the Act All the farmers appeared before the Assessing Officer who examined them individually and all of them confirmed that they sold their crops to the assessee-firm They have faith in the assessee firm as it is their permanent aratia and the full amounts are paid after certain penod The amount as stated in the accounts as on March 31 2006 was outstanding which was paid subsequently within 2/3 months. From the above facts and also keeping in view the materials available on record, the Assessing Officer has not brought any evidence on record to disprove any transactions. Therefore, in such circumstances, the disallowance has been made on surmises and conjectures Hence, the learned Commissioner of Income-tax (Appeals) has rightly deleted the said addition. Thus ground No. 2 of the Revenue is 5. For the reasons stated by the Commissioner of Income (Appeals) and the Income-tax Appellate Tribunal, we are satisfied that a finding of fact has been recorded by the issioner of Income-tax (Appeals) which has been affirmed by the Income-tax Appellate Tribunal, thus, no case Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 76 sufficient piece of evidence so as to accept the case of the assessee Reasons in detail have tax (Appeals) in 4- 5 pages The order of the Commissioner of Income-tax tax Appellate tax Appellate "After hearing the rival contentions and on a perusal of the materials available on record, we noted that the Assessing g the course of the assessment proceedings but he did not find any mistake in the books of account Even the Assessing Officer genuine The Inspector made enquires behind the back of the assessee firm and ing any opportunity the Inspector furnished his report to the Assessing Officer When the Assessing Officer firm with the report of the Inspector, firm contacted all the farmers and requested ue summons under section 131 of the Act All the farmers appeared before the Assessing Officer who examined them individually and all of them confirmed firm They have nent aratia and the full amounts are paid after certain penod The amount as stated in the accounts as on March 31 2006 was outstanding which was paid subsequently within 2/3 months. From the above facts and also keeping in view the ecord, the Assessing Officer has not brought any evidence on record to disprove any transactions. Therefore, in such circumstances, the disallowance has been made on surmises and conjectures Hence, the learned ly deleted the said addition. Thus ground No. 2 of the Revenue is 5. For the reasons stated by the Commissioner of Income-tax tax Appellate Tribunal, we are satisfied that a finding of fact has been recorded by the tax (Appeals) which has been tax Appellate Tribunal, thus, no case for interference in the appeal is made out No substantial question of law is involved with respect to the deletion of Rs. 22,41,482. In the case of CIT v.Raja Ginning Udyog[2005] 268 ITR 383(MP), the Hon'ble High Court of Madhya Pradesh has held that “...5. With regard to ground No (1) the Tribunal has recorded a finding that some enquiry was conducted by the Assessing Officer on his own and he had produce the farmers so as to ascertain from them the payments made to them with regard to cotton purchased by the assessee Assessee was asked to produce farmers for the first time on 4th January 1993, Le about 3 months before passing of the final order. Since the farmers were busy during this period they could not be produced and no further opportunity in this regard was given Thus, finding has been recorded in the enquiry that was conducted by the Assessing Officerbehind the back principles of natural justice in the light of this finding, CIT(A) and Tnbunal both found the procedure adopted by Assessing Officer as erroneous and against law This has also now become a finding of fact which cannot be c appeal, as the appeal is required to be heard only on substantial question of law In the case of the appellant, the AO has made addition on the basis of statements of Shri Rajendra Jain & Shri Dipak Jain, both entry providers. However, t statement being used against it. The appellant was also not provided with the information gathered by investigation wing, which has been also relied upon by the AO. Thus, there has been clear violence of principle o addition of unsecured loans 10.14 In our opinion , the addition of unsecured loan creditor , where the Assessing Officer relied on statement of Sh Rajendra Jain and Deepak Jain have already been deleted by the Ld C Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors for interference in the appeal is made out No substantial question of law is involved with respect to the deletion of Rs. CIT v.Raja Ginning Udyog[2005] 268 ITR the Hon'ble High Court of Madhya Pradesh has held that 5. With regard to ground No (1) the Tribunal has recorded a finding that some enquiry was conducted by the Assessing Officer on his own and he had not asked the assessee to produce the farmers so as to ascertain from them the payments made to them with regard to cotton purchased by the assessee Assessee was asked to produce farmers for the first time on 4th January 1993, Le about 3 months before ing of the final order. Since the farmers were busy during this period they could not be produced and no further opportunity in this regard was given Thus, finding has been recorded in the enquiry that was conducted by the Assessing Officerbehind the back of the assessee This violated the principles of natural justice in the light of this finding, CIT(A) and Tnbunal both found the procedure adopted by Assessing Officer as erroneous and against law This has also now become a finding of fact which cannot be challenged in this appeal, as the appeal is required to be heard only on substantial question of law. In the case of the appellant, the AO has made addition on the basis of statements of Shri Rajendra Jain & Shri Dipak Jain, both entry providers. However, the appellant was not made aware of these statement being used against it. The appellant was also not provided with the information gathered by investigation wing, which has been also relied upon by the AO. Thus, there has been clear violence of principle of natural justice by the AO while making addition of unsecured loans. In our opinion , the addition of unsecured loan creditor , where the Assessing Officer relied on statement of Sh Rajendra Jain and Deepak Jain have already been deleted by the Ld CIT(A) holding Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 77 for interference in the appeal is made out No substantial question of law is involved with respect to the deletion of Rs. CIT v.Raja Ginning Udyog[2005] 268 ITR the Hon'ble High Court of Madhya Pradesh has held that: 5. With regard to ground No (1) the Tribunal has recorded a finding that some enquiry was conducted by the Assessing not asked the assessee to produce the farmers so as to ascertain from them the payments made to them with regard to cotton purchased by the assessee Assessee was asked to produce farmers for the first time on 4th January 1993, Le about 3 months before ing of the final order. Since the farmers were busy during this period they could not be produced and no further opportunity in this regard was given Thus, finding has been recorded in the enquiry that was conducted by the Assessing of the assessee This violated the principles of natural justice in the light of this finding, CIT(A) and Tnbunal both found the procedure adopted by Assessing Officer as erroneous and against law This has also now hallenged in this appeal, as the appeal is required to be heard only on In the case of the appellant, the AO has made addition on the basis of statements of Shri Rajendra Jain & Shri Dipak Jain, both entry he appellant was not made aware of these statement being used against it. The appellant was also not provided with the information gathered by investigation wing, which has been also relied upon by the AO. Thus, there has been f natural justice by the AO while making In our opinion , the addition of unsecured loan creditor , where the Assessing Officer relied on statement of Sh Rajendra Jain IT(A) holding that no credit entries are appearing in respect of those unsecured loan creditor during the period from AY 2013 to reference of no cross examination for the purpose of deleting the unsecure loans , particularly, relied on statements of Rajendra jain and Deepak Jain, is unjustified. Further, during the search proceeding, the director of the assessee company sh Ni the statement of sh Rajendra Jain and Dee accommodation entries provided through entities controlled by them, but no cross examination was sought by the Director of the assessee company. Moreover, the Assessing made the addition due to failure on part of the assessee in producing those substantiate their identity and creditworthiness placed by the Ld CIT(A) on the decision of Dhakeshwari Cotton Mills Ltd (supra), Kishinchand Chellaram (supra), H R Mehta (supra), Cit Vs Rajesh Kumar (supra) , CIT vs Kamal Trading and CIT vs Raja Ginning U facts and ratio of those decisions are not applicable over the facts of the assessee. 10.15 The second reasoning has been given by the ld CIT(A) is of no incriminating material already dealt above while assessee. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors that no credit entries are appearing in respect of those unsecured loan creditor during the period from AY 2013-14 to 2020 no cross examination for the purpose of deleting the particularly, where the Assessing officer has not relied on statements of Rajendra jain and Deepak Jain, is unjustified. Further, during the search proceeding, the director of the assessee company sh Nirmal Madani was duly informed about the statement of sh Rajendra Jain and Deepak jain of accommodation entries provided through entities controlled by , but no cross examination was sought by the Director of the assessee company. Moreover, the Assessing made the addition due to failure on part of the assessee in producing those substantiate their identity and creditworthiness. The reliance placed by the Ld CIT(A) on the decision of Dhakeshwari Cotton Mills Ltd (supra), Kishinchand Chellaram (supra), H R Mehta (supra), Cit Vs Rajesh Kumar (supra) , CIT vs Kamal Trading Company (supra) and CIT vs Raja Ginning Udhyog (supra) are distinguishable on facts and ratio of those decisions are not applicable over the facts of The second reasoning has been given by the ld CIT(A) is material qua the addition, which we have already dealt above while adjudicating the cross objection of the Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 78 that no credit entries are appearing in respect of those unsecured 14 to 2020-21 and so no cross examination for the purpose of deleting the Assessing officer has not relied on statements of Rajendra jain and Deepak Jain, is unjustified. Further, during the search proceeding, the director of Madani was duly informed about pak jain of accommodation entries provided through entities controlled by , but no cross examination was sought by the Director of the assessee company. Moreover, the Assessing made the addition due to failure on part of the assessee in producing those parties to . The reliance placed by the Ld CIT(A) on the decision of Dhakeshwari Cotton Mills Ltd (supra), Kishinchand Chellaram (supra), H R Mehta (supra), Cit Company (supra) dhyog (supra) are distinguishable on facts and ratio of those decisions are not applicable over the facts of The second reasoning has been given by the ld CIT(A) is qua the addition, which we have the cross objection of the 10.16 The next reasoning of the impugned order is that the evidences filed by the assessee regarding identity and credit worthiness of the lender parties and and he relied merely details available in Income without carrying out further enquiries. the decision Hon’ble Patna High Court in the case of CIT Vs Hanuman Agrwal (supra) loan as unexplained cash letter, but the ITO rejected the claim of the assessee and made addition u/s 68 of the Act. The Hon’ble High Court held the ITO should have issued summon u/s 131 of the for taking statement of the creditor when his correct addres and the onus of the assessee is discharged when correct address is provided. Further, the Ld CIT(A) held that the Assessing Officer in remand proceeding also insisted upon production of the unsecured loan creditor and did not 133(6) of the Act. The Ld CIT(A) relied on the decision of Hon’ble Supreme Court in the case of (supra). In the said case, the assessee supplied correct name address of the alleged cre 131 of the Act but the alleged creditors did not made the addition. The Hon’ble Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors reasoning given by the Ld CIT(A) in para 8.3.10 of the impugned order is that the Assessing Officer has ignored the evidences filed by the assessee regarding identity and credit worthiness of the lender parties and genuineness of the transaction on profiling of the lender made based on details available in Income-tax Department database (ITBA without carrying out further enquiries. The Ld CIT(A) has relied on the decision Hon’ble Patna High Court in the case of CIT Vs Hanuman Agrwal (supra) where the creditors confessed the loan as unexplained cash credit, but later on filed confirmatory letter, but the ITO rejected the claim of the assessee and made addition u/s 68 of the Act. The Hon’ble High Court held the ITO should have issued summon u/s 131 of the for taking statement of the creditor when his correct address was provided by the assessee and the onus of the assessee is discharged when correct address is provided. Further, the Ld CIT(A) held that the Assessing Officer in remand proceeding also insisted upon production of the unsecured loan creditor and did not issue summon u/s 131 or notice u/s . The Ld CIT(A) relied on the decision of Hon’ble Supreme Court in the case of CIT vs Orissa Corporation P Ltd In the said case, the assessee supplied correct name address of the alleged creditors and Revenue issued summon u/s but the alleged creditors did not attend, made the addition. The Hon’ble Supreme Court held that Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 79 in para 8.3.10 Officer has ignored the evidences filed by the assessee regarding identity and credit of the transaction profiling of the lender made based on ent database (ITBA), The Ld CIT(A) has relied on the decision Hon’ble Patna High Court in the case of Additional where the creditors confessed the ter on filed confirmatory letter, but the ITO rejected the claim of the assessee and made addition u/s 68 of the Act. The Hon’ble High Court held the ITO should have issued summon u/s 131 of the for taking statement of s was provided by the assessee and the onus of the assessee is discharged when correct address is provided. Further, the Ld CIT(A) held that the Assessing Officer in remand proceeding also insisted upon production of the unsecured issue summon u/s 131 or notice u/s . The Ld CIT(A) relied on the decision of Hon’ble CIT vs Orissa Corporation P Ltd In the said case, the assessee supplied correct name and ditors and Revenue issued summon u/s attend, thus ITO held that revenue apart form issue notice u/s 131 did not pursue the matter and did not examine the creditwo Supreme Court approved the action of the Tribunal that the assessee discharged its onus. In the case of Builders (supra ) cited by the Ld CIT(A) the Hon’ble Court held that merely because the summon served and the interest paid to them was not disallowed , the creditors can’t be held as unexplained. on the decision of the Tribunal in the case of Trade P ltd (supra ) parties in response to section 133(6) of the Act cannot be attributed to the assessee. The Ld CIT(A) has cited number of decisio facts of those cases are distinguishable. In the case of the during the course of search itself the Department attempted to verify but those parties were not found at the address provided by the assessee. The Assessing Officer has reproduced report of the Inspector, wherein he had made inquiry in neighborhood. The Assessing Officer has also reproduced the photo of the closed premises of those unsecured loan creditors. one such enquiry report is reproduced as under: Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors apart form issue notice u/s 131 did not pursue the matter and did not examine the creditworthiness of the crditors and thus Hon’ble approved the action of the Tribunal that the assessee discharged its onus. In the case of DCIT Vs Rohini cited by the Ld CIT(A) the Hon’ble Court held that merely because the summon issued to the creditors could not be served and the interest paid to them was not disallowed , the ld as unexplained. Further, the Ld CIT(A( relied on the decision of the Tribunal in the case of DCIT vs Acro Exports where in it is held that non-attendance to section 133(6) of the Act cannot be attributed to The Ld CIT(A) has cited number of decisio facts of those cases are distinguishable. In the case of the the course of search itself the Department attempted to those parties were not found at the address provided by the assessee. The Assessing Officer has reproduced report of the Inspector, wherein he had made inquiry in neighborhood. The ssessing Officer has also reproduced the photo of the closed premises of those unsecured loan creditors. For ready one such enquiry report is reproduced as under: “Prateek Gehlot, Inspector O/o DDIT( Inv.) Unit Date : 08.11.2019 Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 80 apart form issue notice u/s 131 did not pursue the matter and did and thus Hon’ble approved the action of the Tribunal that the DCIT Vs Rohini cited by the Ld CIT(A) the Hon’ble Court held that issued to the creditors could not be served and the interest paid to them was not disallowed , the Ld CIT(A( relied DCIT vs Acro Exports attendance of to section 133(6) of the Act cannot be attributed to The Ld CIT(A) has cited number of decisions but the facts of those cases are distinguishable. In the case of the assessee, the course of search itself the Department attempted to those parties were not found at the address provided by the assessee. The Assessing Officer has reproduced report of the Inspector, wherein he had made inquiry in neighborhood. The ssessing Officer has also reproduced the photo of the closed For ready reference , Prateek Gehlot, Inspector Inv.) Unit-I(1), Mumbai Date : 08.11.2019 To, The Assistant Director of Income Tax (Investigation), Unit-4(2), Mumbai Sub : Inspector Report in the case of M/s Divyanshi Gems Private Limited Respected Sir, As directed, we, the undersigned Inspectors, went for discreet inquiry M/s Divyanshi Gems Private Limited at Cabin No.A, Office No. 404, Pramukh Darshan Apartment, Near CFhaarKhanaChakla, Rampura, Surat on 08.11.2019. After reaching the premise, it was revealed that the security guard of the building staying at the said premise for the last 6 months and he did not knew anything about the said entity. Further, enquiries were made in the nearby area about the entity but nobody knew anything about it. The image of the said premise w Submitted. Encl : as above Sd/- (Suraj Singh) Inspector, o/o ADIT(Inv) Unit-3, Surat 10.17 This fact of non was duly confronted to the director of the assessee company during search proceedings itself, however, he could not provide their new address or contact number of unsecured loan assessment proceeding or remand proceeding the provide their new address. The assessee also did not make any request for issuing of summon to its witness or deposit their travel expenses to the office of the Assessing Officer for ensuring their Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors The Assistant Director of Income Tax (Investigation), Sub : Inspector Report in the case of M/s Divyanshi Gems Private Limited As directed, we, the undersigned Inspectors, went for discreet inquiry to the address of M/s Divyanshi Gems Private Limited at Cabin No.A, Office No. 404, Pramukh Darshan Apartment, Near CFhaarKhanaChakla, Rampura, Surat on 08.11.2019. After reaching the premise, it was revealed that the security guard of the building Shri Gopalbhai AgarwaL was staying at the said premise for the last 6 months and he did not knew anything about the said entity. Further, enquiries were made in the nearby area about the entity but nobody knew anything about it. The image of the said premise which was closed is also enclosed herewith. Yours faithfully, sd/- (Prateek Gehlot) Inspector, o/o ADIT(Inv) Unit-1(1), Mumbai” This fact of non-availability of creditors at their address was duly confronted to the director of the assessee company during search proceedings itself, however, he could not provide their new address or contact number of unsecured loan creditors. eeding or remand proceeding the assesse provide their new address. The assessee also did not make any request for issuing of summon to its witness or deposit their travel expenses to the office of the Assessing Officer for ensuring their Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 81 Sub : Inspector Report in the case of M/s Divyanshi Gems Private Limited – reg. to the address of M/s Divyanshi Gems Private Limited at Cabin No.A, Office No. 404, Pramukh Darshan Apartment, Near CFhaarKhanaChakla, Rampura, Surat on 08.11.2019. After reaching the Gopalbhai AgarwaL was staying at the said premise for the last 6 months and he did not knew anything about the said entity. Further, enquiries were made in the nearby area about the entity but nobody knew hich was closed is also enclosed herewith. availability of creditors at their address was duly confronted to the director of the assessee company during search proceedings itself, however, he could not provide their new creditors. During assessee did not provide their new address. The assessee also did not make any request for issuing of summon to its witness or deposit their travel expenses to the office of the Assessing Officer for ensuring their attendance as per the procedure laid down under Procedure ,1908 . The assessing gathered by the Inspectors of the department during search proceeding, insisted for verification of their identity. Regarding the credit Assessing Officer referred available in income-tax database and observed that they lacked the financial resources. The creditors shown to have having outstanding credits in their ba concern of genuineness of transaction also. Assessing officer has also made addition for the interest payment to those unsecured loan parties. 10.18 The Hon’ble supreme court in the case of steel ltd in Civil Appeal No of 2019 ( arising out of SLP (Civil ) No. 29855 of 2018 ) held as under: “11. The principles which emerge where sums of money are credited as Share Capital/Premium i. The assessee is under a legal obligation to prove the of the transaction, the identity of the creditors, and credit worthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the AO, so as to discharge the primary onus. ii. The Assessing Officer is duty bound to investigate the credit worthiness of the creditor/ subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of name Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors attendance as per the procedure laid down under code of . The assessing officer, in view of the information gathered by the Inspectors of the department during search , insisted for personal attendance of the parties for verification of their identity. Regarding the creditworthiness, the referred to their financial status from the data tax database and observed that they lacked the The creditors shown to have given loan despite having outstanding credits in their balance sheets, which raises concern of genuineness of transaction also. In the Assessing officer has also made addition for the interest payment to those unsecured loan parties. The Hon’ble supreme court in the case of NRA ltd in Civil Appeal No of 2019 ( arising out of SLP (Civil ) held as under: 11. The principles which emerge where sums of money are credited as Share Capital/Premium are: i. The assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and credit worthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the AO, so as to discharge the primary onus. essing Officer is duty bound to investigate the credit worthiness of the creditor/ subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of name-lenders. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 82 ode of Civil in view of the information gathered by the Inspectors of the department during search personal attendance of the parties for worthiness, the financial status from the data tax database and observed that they lacked the loan despite lance sheets, which raises In the case, the Assessing officer has also made addition for the interest payment to NRA Iron and ltd in Civil Appeal No of 2019 ( arising out of SLP (Civil ) 11. The principles which emerge where sums of money are genuineness of the transaction, the identity of the creditors, and credit- worthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the AO, so essing Officer is duty bound to investigate the credit- worthiness of the creditor/ subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or iii. If the enquiries and i creditors to be dubious or doubtful, or lack credit the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by 12. In the present case, the A.O. had conducted detailed enquiry which revealed that : i. There was no material on record to prove, or even remotely suggest, that the share a independent legal entities. The survey revealed that some of the investor companies were non address mentioned by the assessee. For example: a. The companies Hema Trading Co. Pvt. Ltd. a Trade Pvt. Ltd. at Mumbai, were found to be non address given, and the premises was owned by some other person. b. The companies at Kolkatta did not appear before the A.O., nor did they produce their bank statements to sub of the funds from which the alleged investments were made. c. The two companies at Guwahati viz. Ispat Sheet Ltd. and Novelty Traders Ltd., were found to be non provided. The genuineness of the transaction was completely doubtful. ii. The enquiries revealed that the investor companies had filed returns for a negligible taxable income, which would show that the investors did not have the financial capacity to invest funds ranging between Rs. 90,00,000 Assessment Year 2009 premium. For example: Neha Cassetes Pvt. Ltd. of Rs. 9,744/- for A.Y. 2009 Rs, 90,00,000 in the Assessee Company. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors iii. If the enquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit-worthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary ated by Section 68 of the Act. 12. In the present case, the A.O. had conducted detailed enquiry which revealed that : i. There was no material on record to prove, or even remotely suggest, that the share application money was received from independent legal entities. The survey revealed that some of the investor companies were non-existent, and had no office at the address mentioned by the assessee. a. The companies Hema Trading Co. Pvt. Ltd. and Eternity Multi Trade Pvt. Ltd. at Mumbai, were found to be non-existent at the address given, and the premises was owned by some other person. b. The companies at Kolkatta did not appear before the A.O., nor did they produce their bank statements to substantiate the source of the funds from which the alleged investments were made. c. The two companies at Guwahati viz. Ispat Sheet Ltd. and Novelty Traders Ltd., were found to be non- existent at the address provided. The genuineness of the transaction was found to be ii. The enquiries revealed that the investor companies had filed returns for a negligible taxable income, which would show that the investors did not have the financial capacity to invest funds ranging between Rs. 90,00,000 to Rs. 95,00,000 in the Assessment Year 2009-10, for purchase of shares at such a high Neha Cassetes Pvt. Ltd. - Kolkatta had disclosed a taxable income for A.Y. 2009-10, but had purchased Shares worth the Assessee Company. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 83 nvestigations reveal that the identity of the worthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary 12. In the present case, the A.O. had conducted detailed enquiry i. There was no material on record to prove, or even remotely pplication money was received from independent legal entities. The survey revealed that some of the existent, and had no office at the nd Eternity Multi existent at the address given, and the premises was owned by some other person. b. The companies at Kolkatta did not appear before the A.O., nor stantiate the source c. The two companies at Guwahati viz. Ispat Sheet Ltd. and Novelty existent at the address found to be ii. The enquiries revealed that the investor companies had filed returns for a negligible taxable income, which would show that the investors did not have the financial capacity to invest funds to Rs. 95,00,000 in the 10, for purchase of shares at such a high Kolkatta had disclosed a taxable income 10, but had purchased Shares worth Similarly Warner Multimedia Ltd. had purchased Shares worth Rs. 95,00,000 in the Assessee Company – Respondent. Another example is of Ganga Builders Ltd. – Kolkatta which had filed a return for Rs. shares to the tune of Rs. 90,00,000 in the Assessee Company Respondent, etc. iii. There was no explanation whatsoever offered as to why the investor companies had applied for shares of the Assessee Company at a high premium of Rs. 1 though the face value of the share was Rs. 10/ iv. Furthermore, none of the so established the source of funds from which the high share premium was invested. v. The mere mention of the income tax fi was not sufficient to discharge the onus under Act. 13. The lower appellate authorities appear to have ignored the detailed findings of the AO from the field enqu investigations carried out by his office. The authorities below have erroneously held that merely because the Respondent Company Assessee had filed all the primary evidence, the onus on the Assessee stood discharged. The lower appellate authoriti to appreciate that the investor companies which had filed income tax returns with a meagre or nil income had to explain how they had invested such huge sums of money in the Assesse Company Respondent. Clearly the onus to establish the credit wo the investor companies was not discharged. The entire transaction seemed bogus, and lacked credibility. The Court/Authorities below did not even advert to the field enquiry conducted by the AO which revealed that in several cases the investor c to be non-existent, and the onus to establish the identity of the investor companies, was not discharged by the assessee. 14. The practice of conversion of un cloak of Share Capital/Premium must be subjected scrutiny. This would be particularly so in the case of private placement of shares, where a higher onus is required to be on the Assessee since the information is within the personal knowledge of the Assessee. The Assessee is under a lega obligation to prove the receipt of share capital/premium to the Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors Similarly Warner Multimedia Ltd. – Kolkatta filed a NIL return, but had purchased Shares worth Rs. 95,00,000 in the Assessee Respondent. Another example is of Ganga Builders Ltd. Kolkatta which had filed a return for Rs. 5,850 but invested in shares to the tune of Rs. 90,00,000 in the Assessee Company Respondent, etc. iii. There was no explanation whatsoever offered as to why the investor companies had applied for shares of the Assessee Company at a high premium of Rs. 190 per share, even though the face value of the share was Rs. 10/- per share. iv. Furthermore, none of the so-called investor companies established the source of funds from which the high share premium v. The mere mention of the income tax file number of an investor was not sufficient to discharge the onus under Section 68 13. The lower appellate authorities appear to have ignored the detailed findings of the AO from the field enquiry and investigations carried out by his office. The authorities below have erroneously held that merely because the Respondent Company Assessee had filed all the primary evidence, the onus on the Assessee stood discharged. The lower appellate authorities failed to appreciate that the investor companies which had filed income tax returns with a meagre or nil income had to explain how they had invested such huge sums of money in the Assesse Company Respondent. Clearly the onus to establish the credit worthiness of the investor companies was not discharged. The entire transaction seemed bogus, and lacked credibility. The Court/Authorities below did not even advert to the field enquiry conducted by the AO which revealed that in several cases the investor companies were found existent, and the onus to establish the identity of the investor companies, was not discharged by the assessee. 14. The practice of conversion of un-accounted money through the cloak of Share Capital/Premium must be subjected to careful scrutiny. This would be particularly so in the case of private placement of shares, where a higher onus is required to be on the Assessee since the information is within the personal knowledge of the Assessee. The Assessee is under a lega obligation to prove the receipt of share capital/premium to the Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 84 Kolkatta filed a NIL return, but had purchased Shares worth Rs. 95,00,000 in the Assessee Respondent. Another example is of Ganga Builders Ltd. 5,850 but invested in shares to the tune of Rs. 90,00,000 in the Assessee Company – Respondent, etc. iii. There was no explanation whatsoever offered as to why the investor companies had applied for shares of the 90 per share, even called investor companies established the source of funds from which the high share premium le number of an investor of the 13. The lower appellate authorities appear to have ignored the iry and investigations carried out by his office. The authorities below have erroneously held that merely because the Respondent Company – Assessee had filed all the primary evidence, the onus on the es failed to appreciate that the investor companies which had filed income tax returns with a meagre or nil income had to explain how they had invested such huge sums of money in the Assesse Company - rthiness of the investor companies was not discharged. The entire transaction seemed bogus, and lacked credibility. The Court/Authorities below did not even advert to the field enquiry conducted by the AO which ompanies were found existent, and the onus to establish the identity of the accounted money through the to careful scrutiny. This would be particularly so in the case of private placed on the Assessee since the information is within the personal knowledge of the Assessee. The Assessee is under a legal obligation to prove the receipt of share capital/premium to the satisfaction of the AO, failure of which, would justify addition of the said amount to the income of the Assessee.” 10.19 Thus, the Hon’ble filing of primary evidence by an assessee is not sufficient to discharge its onus u/s 68 of the Act when seen the finding of the Assessing officer during field particularly the financial strength also no documents other than primary evidence like PAN, account etc. have been filed by the assessee. were found at their address during field enquiry during search proceedings and nor have been prod assessment and remand proceedings. relied upon by the ld CIT(A) are of no assistance to the assessee. The assessee has failed to discharge its onus of establishing Identity, credit worthiness and genuin aside the order of ld CIT(A) on the issue of addition to the extent of 18 unsecured loan creditors. Since we have upheld the those unsecured loan parties as addition for interest is al 10.19 The ground No. 2 and 3 accordingly partly allowed. 11. In ground no. 4 of the cross objection the issue that despite giving no adverse comment in remand report, the Assessing Officer is not justified in preferring the appeal before Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors satisfaction of the AO, failure of which, would justify addition of the said amount to the income of the Assessee.” the Hon’ble Supreme Court has held that merely filing of primary evidence by an assessee is not sufficient to discharge its onus u/s 68 of the Act when seen the finding of the Assessing officer during field enquiry and investigation and particularly the financial strength of creditor. In the instant case also no documents other than primary evidence like PAN, have been filed by the assessee. Neither, were found at their address during field enquiry during search proceedings and nor have been produced by the assessee in assessment and remand proceedings. In our opinion, the decisions relied upon by the ld CIT(A) are of no assistance to the assessee. The assessee has failed to discharge its onus of establishing Identity, credit worthiness and genuineness of transaction. We set aside the order of ld CIT(A) on the issue of addition to the extent of 18 unsecured loan creditors. Since we have upheld the those unsecured loan parties as unexplained, the corresponding addition for interest is also upheld. No. 2 and 3 of the appeal of the Revenue are accordingly partly allowed. no. 4 of the cross objection,the assessee has raised the issue that despite giving no adverse comment in remand report, er is not justified in preferring the appeal before Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 85 satisfaction of the AO, failure of which, would justify addition of the has held that merely filing of primary evidence by an assessee is not sufficient to discharge its onus u/s 68 of the Act when seen the finding of the enquiry and investigation and . In the instant case also no documents other than primary evidence like PAN, ITR,ledger the parties were found at their address during field enquiry during search uced by the assessee in In our opinion, the decisions relied upon by the ld CIT(A) are of no assistance to the assessee. The assessee has failed to discharge its onus of establishing eness of transaction. We set aside the order of ld CIT(A) on the issue of addition to the extent of 18 unsecured loan creditors. Since we have upheld the credit from the corresponding Revenue are ,the assessee has raised the issue that despite giving no adverse comment in remand report, er is not justified in preferring the appeal before the ITAT. We find that ld DR did not accept this contention of the Ld Counsel that assessing officer had not given adverse remark for unsecure loan creditors. We have also verified from the summary of remand report reproduced by the Ld CIT(A) in the impugned order and find that the contention of the assessee is not correct. Hence the ground No. 4 of the cross objection is dismissed. 12. In ground No. 5 to 7 of the cross objections, the merely supported the action of the Ld CIT(A) in making the deleting the part addition of purchases and addition of unsecured creditors, which we already reversed. Thus, the ground cross objection raised are infructuous and accordingly dismiss 13. In ground No. 8, also the assessee has supported the direction of ld CIT(A) to the Assessing officer for allowing credit of TDS after verification. This ground being only in support of finding of ld CIT(A), which has not been disputed by the Revenue, hence dismissed as infructuous. 14. In AY 2014-15,the assessee has raised grounds in cross objections, which are identical to grounds raised in cross objection for AY 2013-14, therefore following our finding grounds of cross objections are adjudicated mut revenue has raised ground challenging deletion of addition of bogus purchases, deletion of addition addition unsecured loan creditors. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors the ITAT. We find that ld DR did not accept this contention of the Ld Counsel that assessing officer had not given adverse remark for unsecure loan creditors. We have also verified from the summary of and report reproduced by the Ld CIT(A) in the impugned order and find that the contention of the assessee is not correct. Hence the ground No. 4 of the cross objection is dismissed. In ground No. 5 to 7 of the cross objections, the assessee y supported the action of the Ld CIT(A) in making the deleting the part addition of purchases and addition of unsecured , which we already reversed. Thus, the ground No. 5 to raised are infructuous and accordingly dismiss also the assessee has supported the direction of ld CIT(A) to the Assessing officer for allowing credit of TDS after verification. This ground being only in support of finding of ld A), which has not been disputed by the Revenue, hence dismissed as infructuous. the assessee has raised grounds in cross objections, which are identical to grounds raised in cross objection therefore following our finding in AY 2013 grounds of cross objections are adjudicated mutasis mut revenue has raised ground challenging deletion of addition of bogus of additionof subcontract expenses, deletion of addition unsecured loan creditors. The grounds related to bogus Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 86 the ITAT. We find that ld DR did not accept this contention of the Ld Counsel that assessing officer had not given adverse remark for unsecure loan creditors. We have also verified from the summary of and report reproduced by the Ld CIT(A) in the impugned order and find that the contention of the assessee is not correct. Hence assessee has y supported the action of the Ld CIT(A) in making the deleting the part addition of purchases and addition of unsecured loan No. 5 to 7 of raised are infructuous and accordingly dismissed. also the assessee has supported the direction of ld CIT(A) to the Assessing officer for allowing credit of TDS after verification. This ground being only in support of finding of ld A), which has not been disputed by the Revenue, hence the assessee has raised grounds in cross objections, which are identical to grounds raised in cross objection in AY 2013-14, the sis mutandis. The revenue has raised ground challenging deletion of addition of bogus , deletion of The grounds related to bogus purchases and unsecured loan creditors raised are identical to grounds related to bogus purchase and unsecured loan creditors AY 2013-14, therefore following our finding in AY 2013 grounds are adjudicated mutasis m 15. The Ground related to deletion of disallowance of subcontract expenses has been raised in this assessment year assessment years. The facts qua the issue in dispute are that during search proceedings, the authorised officer asked the key persons of assessee to provide details of subcontractors along with their current addresses and documentary evidences in support of services rendered. The copy of bills of those contractors pr by the assessee were in same format and font, style which raised prima facie suspicion about their existence. The other provided by the assessee were investigation team. The search team verified their credential from the income-tax department database and found one of the contractors was even not maintaining books of accounts. The list of contractors where deficiency of documents was observed is as under: Number of parties F.Y. 2012- 13 F.Y. 2013- 14 F.Y. 2014- Ashok Construction 21,41,548 3,09,18,793 Rajni Developers 42,69,374 Total 21,41,548 3,51,88,167 Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors purchases and unsecured loan creditors raised are identical to grounds related to bogus purchase and unsecured loan creditors 14, therefore following our finding in AY 2013 are adjudicated mutasis mutandis. The Ground related to deletion of disallowance of subcontract has been raised in this assessment year and onward . The facts qua the issue in dispute are that during search proceedings, the authorised officer asked the key persons of assessee to provide details of subcontractors along with their current addresses and documentary evidences in support of The copy of bills of those contractors pr by the assessee were in same format and font, style which raised prima facie suspicion about their existence. The other assessee were also not found in order by the The search team verified their credential from tax department database and found one of the contractors was even not maintaining books of accounts. The list of contractors where deficiency of documents was observed is as -15 F.Y.2015-16 F.Y.2016-17 F.Y.2017-18 F.Y.2018- 19 F.Y.2019 3,09,18,793 6,03,41,671 1,49,85,213 1,80,10,577 42,69,374 89,36,529 46,02,528 3,51,88,167 6,92,78,200 1,95,87,741 1,80,10,577 Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 87 purchases and unsecured loan creditors raised are identical to grounds related to bogus purchase and unsecured loan creditors in 14, therefore following our finding in AY 2013-14, thse The Ground related to deletion of disallowance of subcontract and onward . The facts qua the issue in dispute are that during search proceedings, the authorised officer asked the key persons of assessee to provide details of subcontractors along with their current addresses and documentary evidences in support of The copy of bills of those contractors produced by the assessee were in same format and font, style which raised prima facie suspicion about their existence. The other documents found in order by the The search team verified their credential from tax department database and found one of the contractors was even not maintaining books of accounts. The list of contractors where deficiency of documents was observed is as F.Y.2019-20 Total 12,63,97,802 14,42,06,233 15.1 The department conducted on the spot enquiry but the contractors were not foun report of Inspectors of the department have 39 of the Impugned assessment order. proceedings, the assessee submitted various details in support of sub-contract expense, Assessing Officer, therefore, filed by the assessee regarding sub disallowed the claim of the assessee of sub 15.2 Before the ld CIT(A) confirmation letter from sub statement, ITR copy of sub submitted by the assessee were claimed to be additional evidences,hence, same were sent to comments. Before, the Assessing Officer in remand sub-contractor parties were produced by the assessee. The summary of the remand report of the Assessing Officer is reproduced as under: Sr. No. Name of the party 1. Ashok Construction Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors The department conducted on the spot enquiry but the ound in existence at their given address. report of Inspectors of the department have reproduced on page 38 39 of the Impugned assessment order. During assessment the assessee submitted various details in support of but could not produce the parties before the therefore, not being satisfied with the evidences filed by the assessee regarding sub-contract expenses, he disallowed the claim of the assessee of sub-contract expenses. Before the ld CIT(A), the assessee submitted copy of confirmation letter from sub-contractors, bill payment, bank , ITR copy of sub-contractors etc. The documents submitted by the assessee were claimed to be additional same were sent to the Assessing Officer for his the Assessing Officer in remand proceedings, contractor parties were produced by the assessee. The summary of the remand report of the Assessing Officer is Name of the party Remarks Ashok Construction 1. Party appeared before this office statemen was recorded on Oath 2. The assessee has not submitted stock book and stated that material has been utilized OM directly from the supplier on place of Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 88 The department conducted on the spot enquiry but the in existence at their given address. The reproduced on page 38- During assessment the assessee submitted various details in support of but could not produce the parties before the fied with the evidences contract expenses, he contract expenses. , the assessee submitted copy of , bill payment, bank The documents submitted by the assessee were claimed to be additional Officer for his proceedings, the contractor parties were produced by the assessee. The summary of the remand report of the Assessing Officer is 1. Party appeared before this office statement 2. The assessee has not submitted stock book and stated that material has been utilized OM directly from the supplier on place of 2. Rajni Developers 15.3 The ld CIT(A) after considering the remand report and submission of the assessee deleted the disallowance of sub expenses observing as under: Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors construction. As the stock is not stored at any place by the assessee and hence, not maintained any stock book. 3. Party has provided its contact number and address in statement. 4. Copy of the statement enclosed. The Ld.CIT(A) may decide the case on merits based on the above facts. 1. Party appeared before this office and statement was recorded on Oath 2. The assessee has not submitted stock bookand stated that material has been utilized directly from the supplier on place of construction. As the stock is not stored at any place by the assessee and hence, not maintained any stock book. 3. Party has provided its contact number and address in statement. 4. Copy of the statement enclosed. The Ld.CIT(A) may decide the case on merits based on the above facts. The ld CIT(A) after considering the remand report and assessee deleted the disallowance of sub expenses observing as under: Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 89 construction. As the stock is not stored at any place by the assessee and hence, not 3. Party has provided its contact number and 4. Copy of the statement enclosed. The Ld.CIT(A) may decide the case on merits 1. Party appeared before this office and 2. The assessee has not submitted stock bookand stated that material has been utilized directly from the supplier on place of construction. As the stock is not stored at any place by the assessee and hence, not 3. Party has provided its contact number and 4. Copy of the statement enclosed. The Ld.CIT(A) may decide the case on merits The ld CIT(A) after considering the remand report and assessee deleted the disallowance of sub-contract “22.3.3 The appellant company has submitted that during the assessment proceedings, the appellant company as well as parties have provided the details of ITR, ledger account, Bi Statement etc. However, the AO has ignored the evidences provided by the appellant company during the assessment proceedings. The AO has merely relied upon the finding of the Investigation Wing and the report of the Inspector that the premises was found closed at the time of his visit. During the remand proceedings, both the parties have attended before the AO during the remand proceedings and their statements were recorded. Both the parties have provided necessary documentary evidences to AO. The AO has not made any adverse remark against both the parties. In view of the above facts, the appellant company has been able to prove with documentary evidences that the payment made to M/s. Ashok Construction & M/s. Rajni Developers was genuine and justified.” 15.4 Before us the Ld DR submitted that producing the parties before the AO establish the identity of the party, but the proof that what services were actually rendered by those parties, the assessee has not furnished any documentary evidence in support, including measurement book authority i.e MCGM that part of the works contract had been executed by the assessee using the services of relevant sub contractor. 15.5 The Ld. Counsel of the assessee on the other hand re on the finding of the Ld CIT(A) on the issue in dispute and submitted that parties were duly produced before the Assessing Officer and therefore, disallowance. Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 22.3.3 The appellant company has submitted that during the assessment proceedings, the appellant company as well as parties have provided the details of ITR, ledger account, Bills, Bank Statement etc. However, the AO has ignored the evidences provided by the appellant company during the assessment proceedings. The AO has merely relied upon the finding of the Investigation Wing and the report of the Inspector that the premises s found closed at the time of his visit. During the remand proceedings, both the parties have attended before the AO during the remand proceedings and their statements were recorded. Both the parties have provided necessary documentary evidences to AO. AO has not made any adverse remark against both the parties. In view of the above facts, the appellant company has been able to prove with documentary evidences that the payment made to M/s. Ashok Construction & M/s. Rajni Developers was genuine and Before us the Ld DR submitted that producing the parties before the AO establish the identity of the party, but the proof that what services were actually rendered by those parties, the assessee has not furnished any documentary evidence in including measurement book etc. duly verified by the Govt authority i.e MCGM that part of the works contract had been executed by the assessee using the services of relevant sub Counsel of the assessee on the other hand re on the finding of the Ld CIT(A) on the issue in dispute and submitted that parties were duly produced before the Assessing the Ld CIT(A) is justified in deleting the Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 90 22.3.3 The appellant company has submitted that during the assessment proceedings, the appellant company as well as parties lls, Bank Statement etc. However, the AO has ignored the evidences provided by the appellant company during the assessment proceedings. The AO has merely relied upon the finding of the Investigation Wing and the report of the Inspector that the premises s found closed at the time of his visit. During the remand proceedings, both the parties have attended before the AO during the remand proceedings and their statements were recorded. Both the parties have provided necessary documentary evidences to AO. AO has not made any adverse remark against both the parties. In view of the above facts, the appellant company has been able to prove with documentary evidences that the payment made to M/s. Ashok Construction & M/s. Rajni Developers was genuine and Before us the Ld DR submitted that producing the parties before the AO establish the identity of the party, but the proof that what services were actually rendered by those parties, the assessee has not furnished any documentary evidence in verified by the Govt authority i.e MCGM that part of the works contract had been executed by the assessee using the services of relevant sub- Counsel of the assessee on the other hand relied on the finding of the Ld CIT(A) on the issue in dispute and submitted that parties were duly produced before the Assessing the Ld CIT(A) is justified in deleting the 15.6 We have heard rival submission of the part dispute and perused the relevant material on record. During the course of search proceedings, the sub found in existence at their address and even during assessment proceedings those parties could not be produced by the assessee. The assessee also could not produce any documentary evidence in support of the services rendered by those parties to the assessee. Assessing Officer disallowed the relevant sub During proceedings before the Ld CIT(A), the assessee produced parties before the Assessing ld CIT(A) deleted the disallowance. But we find t producing those parties before the Assessing parties got established but of the services rendered by the those sub been discharged by the assessee. In th appropriate to restore this issue to Assessing Officer for deciding afresh after considering the submission and evidence by assessee in support of services rendered by those sub Revenue is accordingly allowed for statistical purpose. 16. The ground raised by the assessee in its cross AY 2015-16 to 2020-21 and ground raised by the revenue in its appeal for AY 2013-14 to AY 2020 Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. During the course of search proceedings, the sub-contractor parties were not found in existence at their address and even during assessment proceedings those parties could not be produced by the assessee. The assessee also could not produce any documentary evidence in support of the services rendered by those parties to the assessee. Assessing Officer disallowed the relevant sub-contractor expenses. During proceedings before the Ld CIT(A), the assessee produced parties before the Assessing Officer in remand proceeding ld CIT(A) deleted the disallowance. But we find that by way of producing those parties before the Assessing Officer identity of the parties got established but the requirement of evidence in support of the services rendered by the those sub-contract parties has not been discharged by the assessee. In the circumstances, we feel appropriate to restore this issue to back to the file of the Assessing Officer for deciding afresh after considering the submission and evidence by assessee in support of services rendered by those sub-contractor parties. The ground of the Revenue is accordingly allowed for statistical purpose. The ground raised by the assessee in its cross-objections for 21 and ground raised by the revenue in its 14 to AY 2020-21 are covered by our fin Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 91 ies on the issue in dispute and perused the relevant material on record. During the contractor parties were not found in existence at their address and even during assessment proceedings those parties could not be produced by the assessee. The assessee also could not produce any documentary evidence in support of the services rendered by those parties to the assessee. Thus, the contractor expenses. During proceedings before the Ld CIT(A), the assessee produced proceeding and thus hat by way of identity of the the requirement of evidence in support contract parties has not e circumstances, we feel the file of the ld. Assessing Officer for deciding afresh after considering the submission and evidence by assessee in support of services round of the objections for 21 and ground raised by the revenue in its 21 are covered by our findings in cross objection and appeals for AY 2013 therefore same are adjudicated muta 17. In the result, cross objections of the assessee are dismissed, whereas appeals of the revenue are partly allowed. Order pronounced und 28/02/2023. Sd/- (ABY T VARKEY JUDICIAL MEMBER Mumbai; Dated: 28/02/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors in cross objection and appeals for AY 2013-14 and 2014 therefore same are adjudicated mutatis mutandis. cross objections of the assessee are dismissed, whereas appeals of the revenue are partly allowed. Order pronounced under Rule 34(4) of the ITAT Rules, 1963 on sd/- ABY T VARKEY) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 92 14 and 2014-15, cross objections of the assessee are dismissed, er Rule 34(4) of the ITAT Rules, 1963 on OM PRAKASH KANT) ACCOUNTANT MEMBER (Assistant Registrar) ITAT, Mumbai Original dictation pad is enclosed at the end of file 1. Draft dictated on: 2. Draft placed before author: 3. Draft proposed & placed before the second member: 4. Draft discussed/approved by Second Member: 5. Approved Draft comes to the PS/PS: 6. Order pronounced on: 7. File sent to the Bench Clerk: 8. Date on which file goes to the Head Clerk: 9. Date on which file goes to AR Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors Date Initials Original dictation pad is enclosed 21.02.2023 Sr. PS/PS Draft placed before author: 22.02.2023 Sr. PS/PS Draft proposed & placed before the second member: JM/AM Draft discussed/approved by JM/AM Approved Draft comes to the Sr. Sr. PS/PS Order pronounced on: Sr. PS/PS File sent to the Bench Clerk: Date on which file goes to the Sr. PS/PS Date on which file goes to AR Skyway Infra Projects Pvt. Ltd. ITA Nos. 2665, 2669, 2676, 2670, 2677, 2681, 2671, 2682/M/2022 & CO No. 146/M/2022 & Ors 93 Sr. PS/PS Sr. PS/PS JM/AM JM/AM Sr. PS/PS Sr. PS/PS Sr. PS/PS