DY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1(4), KOLKATA, KOLKATA V. MCK PGE PROJECTS LLP, KOLKATA

ITSSA 37/KOL/2024

AI Insights

The case involves appeals by the Revenue against the orders of the Commissioner of Income-tax (Appeals), Kolkata, which had deleted the additions made by the Assessing Officer under section 68 of the Income Tax Act, 1961. The additions pertained to unsecured loans which were deemed as unexplained cash credits. The Tribunal noted that a search operation under section 132 of the Act was conducted on the Primare Group of companies, including the assessee, on 05.01.2001. Subsequent proceedings under section 153A were initiated, and it was found that no incriminating material related to the unsecured loans was discovered during the search. The Tribunal referenced the decision of the Hon'ble Apex Court in PCIT v. Abhisar Buildwell P. Ltd. to support its conclusion that additions could not be made in the absence of incriminating material.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 25058 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 17 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 02-12-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 25-11-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 15-04-2024
• Other Referred Cases: PCIT v. Abhisar Buildwell P. Ltd. (2023) 454 ITR 212 (SC)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBHENDU DATTA
• Assessee Lawyers: MANISH TIWARI
• Keywords: Unexplained cash credit; Bogus
• Section: 132; 153A; 68; 131; 133(6)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA Nos.37 & 38/KOL/2024 (Assessment Years: 2015-16 & 2016-17) DCIT Circle-1(4) 110 Shantipally, Aaykar Bhawan Poorva, 3rd Floor, Kolkata-700107, West Bengal Vs. MCK PGE Projects LLP 2nd Floor, 6E Elgin Road, Kolkata-700020, West Bengal (Appellant) (Respondent) PAN No. AATFM6309B Assessee by : Shri Manish Tiwari, AR Revenue by : Shri Subhendu Datta, CIT DR Date of hearing: 25.11.2024 Date of pronouncement : 02.12.2024 O R D E R Per Rajesh Kumar, AM: These are an appeal preferred by the Revenue against the orders of the Commissioner of Income-tax (Appeals), Kolkata-20 (hereinafter referred to as the “Ld. CIT(A)”]even dated 29.12.2023 for the AY 2015-16 & 2016-17. 02. At the outset, we note that there is a delay of 47 days in filing these appeals by the revenue. That after hearing both sides and after taking into accounts the contents of the condonation petition, the bench considered the delay to be for bonafide , genuine and sufficient reasons. Accordingly, the delay for 47 days is condoned and appeal is taken for adjudication. Page | 2 IT(SS)A No. 37/KOL/2024 MCK PGE Projects ; A.Y. 2015-16 ITA No. 37/KOL/2024 03. The only issue raised by the Revenue against the deletion of ₹2,94,000/- by ld. CIT (A) as made by the ld. AO u/s 68 of the Act in respect of bogus unsecured loans. 04. The facts in brief are that a search u/s 132 of the Act was conducted in the case of Primare Group of companies and other associated entries on 05.01.2001. Consequently, proceedings u/s 153A of the Act were initiated on 26.10.2021 by serving upon the assessee the notice u/s 153A. The assessee complied with the notice by filing return of income on 23.11.2021, declaring total income of ₹25,78,450/-. Thereafter statutory notices were issued and served upon the assessee. During the search and post search action and enquiries, certain materials belonging to the assessee were found and seized, which revealed that assessee group has brought back its own money in the form of unsecured loans through shell companies. The notices u/s 133(6) were issued to many companies from whom the assessee raised such huge unsecured loans during the year. The said notices were replied in some cases only, whereas some lenders did not respond to the notices at all. Finally, the ld. AO treated these unsecured loans as unexplained cash credit and added a sum of ₹2,94,00,000/- u/s 68 of the Act to the total income of the assessee in the assessment framed u/s 143(3)/153A of the Act. 05. In the appellate proceedings, the ld. CIT (A) allowed the appeal of the assessee by holding that no incriminating materials were found relating to the assessee during the course of search for this particular assessment year. Therefore, information available in the form of audit report, return of income and other records in the assessment folder and statements u/s 131 of the Act, during post search enquiry are not Page | 3 IT(SS)A No. 37/KOL/2024 MCK PGE Projects ; A.Y. 2015-16 the incriminating materials seized during search and therefore the additions made are not sustainable in the eyes of law as the same do not come from incriminating material seized during the course of search. The ld CIT(A) after following the decision of Hon'ble Apex Court in the case of PCIT v. Abhisar Buildwell P. Ltd. (2023)454 ITR 212(SC), deleted the addition made by the Assessing Officer. 06. After hearing the rival contentions and perusing the materials available on record, we find that a search action u/s 132 of the Act was carried out on Primare Group of companies on 05.11.2021, of which the assessee is related entity. The notice issued u/s 153A of the Act was complied with and return of income was filed in compliance. Accordingly, we note that on the date of search , the instant assessment year has attain finality as there was no pending proceedings under the Act and also the time limit for issuing notice u/s 143(2) of the Act had also expired. Therefore, in consonance with the provisions of Section 153A of the Act, the addition in case of unabated assessment can only be made on the basis of incriminating material found and seized during the course of and not otherwise. In our opinion, no addition can be made in absence of any incriminating material found during the course of search in the unabated assessment year. We also note that in case of the assessee no incriminating material was found during the course of search qua these unsecured loan and the ld. AO has made the addition on the basis of audit report, return of income and on the basis of statements u/s 131 of the Act, which in our opinion are not the incriminating material found during the course of search. Therefore, we do not find any infirmity in the order of ld. CIT (A) who has been passed the order after relying on the decision of Hon'ble Apex court in case of Abhisar Page | 4 IT(SS)A No. 37/KOL/2024 MCK PGE Projects ; A.Y. 2015-16 Buildwell P. Ltd. (supra). Accordingly, we uphold the order of ld. CIT(A) by dismissing the appeal of the Revenue. ITA No. 38/KOL/2024 07. The issue raised in this appeal is against the deletion of ₹2.29 crore by CIT (A) as made by the ld. AO u/s 68 of the Act in respect of unsecured loans as raised by the assessee during the year. Since, the issue raised in this appeal for A.Y. 2016-17 is similar to IT(SS)A No.37/KOL/2024 for A.Y. 2015-16 as decided above. Therefore, our decision would apply mutatis mutandis to IT(SS)A no.38/KOL/2024. Hence, the appeal of Revenue in IT(SS)A No.38/KOL/2024 for A.Y. 2016-17 is dismissed. 08. In the result, the appeals of the Revenue are dismissed. Order pronounced in the open court on 02.12.2024. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 02.12.2024 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata "