Appeal Details
Counselvise Citation
[2024] 100 COUNSELVISE.COM (IT) 4019 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
10 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
01-02-2024
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
B
Next Hearing Date
15-01-2024
Assessment Year
2014-2015
Appeal Filed On
14-03-2023
Judgement Text
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH ‘B’ CHANDIGARH BEFORE: SHRI A.D.JAIN, VICE PRESIDENT AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 3/CHD/2023 नधा रण वष / Assessment Year : 2014-15 M/s TJR Properties Pvt. Ltd., SCO 80-81, 3 rd Floor, Sector 17-C, Chandigarh. Vs. बनाम The DCIT, Central Circle-2, Chandigarh. थायीलेखासं./PAN No:AACCT8364R अपीलाथ /Appellant यथ /Respondent & आयकर अपील सं./ITA No. 144/CHD/2023 नधा रण वष / Assessment Year :2014-15 The DCIT, Central Circle-2, Chandigarh . Vs. बनाम M/s TJR Properties Pvt. Ltd., SCO 80-81, 3 rd Floor, Sector 17-C, Chandigarh. थायीलेखासं./PAN No:AACCT8364R अपीलाथ /Appellant यथ /Respondent नधा रती क ओर से/Assessee by : Shri Rohit Goyal, CA & Shri T.N.Singla, C.A. राज व क ओर से/ Revenue by : Smt. Kusum, CIT DR तार#ख/Date of Hearing : 16.01.2024 उदघोषणा क तार#ख/Date of Pronouncement : 02.02.2024 HYBRID HEARING आदेश/ORDER PER A.D.JAIN, VICE PRESIDENT ITA No.3/CHD/2023 and ITA No.144/CHD/2023 are cross appeals filed by the assessee and the Revenue, ITA 3 &144/CHD/2023 A.Y. 2014-15 2 respectively, against the order dated 15.12.2022 passed by the ld. CIT(A)-3, Gurgaon pertaining to Assessment Year 2014-15. ITA 3/CHD/2023 2. In ITA No. 3/CHD/2023, the assessee has raised the following Grounds of appeal : 1. That the order of Learned C.I.T. (Appeals) is bad and against the facts and Law. 2. That the assessment completed u/s 153A of the Income Tax Act, 1961 is against the provisions of the law as neither any search was conducted on the company nor any Panchnama was prepared in the name of the company. 3. That on the facts and in the circumstances of the case, the Order of assessment passed under Section 153A of the Act is wholly illegal and without jurisdiction as no search had been conducted under Section 132 of the Act in any of the business premises of the appellant - company. 4. That on the facts and in the circumstances of the case, the finding recorded in the assessment Orders that search and seizure operations were carried out under Section 132 of the Act in the case of the appellant -company, is perverse and wholly erroneous and therefore, the Order of assessment passed under Section 153A of the Act is without jurisdiction. 5. That the additions made in the assessment Order are not based on any corroborative and relevant incriminating material stated to have been unearthed during the course of any search by the Assessing Officer, though no search has taken place on the appellant and therefore, the Order of Assessment is wholly illegal and without jurisdiction in view of the judgment in the case of Commissioner of Income-tax (Central)-III v. Kabul Chawla [2016] 380 ITR 573 (Delhi)/[2015] 281 CTR 45 (Delhi). 6. That the learned CIT(A) has wrongly upheld addition of Rs. 10,00,000/- received from Sh. S.K. Arora without any justification. ITA 3 &144/CHD/2023 A.Y. 2014-15 3 7. That the learned CIT(A) has wrongly upheld addition of Rs. 4,00,000/- received from Sh. Rakesh Kumar without any justification. 8. That the learned CIT(A) has wrongly upheld addition of Rs. 20,00,000/- received from M/s Ajit India without any justification. 9. That the learned CIT(A) has wrongly upheld addition of Rs. 1,00,000/- received from Sh. Sahil Singla without any justification. 10. That the learned CIT(A) has wrongly upheld addition of Rs. 3,00,000/- received from Tirloki Nath Singla HUF without any justification. 11. That the learned CIT(A) has wrongly upheld addition of Rs. 7,00,000/- on account of Income deposited in cash without any justification. 12. That the learned CIT(A) has wrongly upheld addition of Rs. 45,00,000/- u/s 68 of the Act on surmises and conjectures. 13. That the learned CIT(A) has wrongly upheld disallowance of loss of Rs. 2,97,834/- without any justification. 14. That the learned CIT(A) has wrongly upheld disallowance of depreciation on vehicle to the extent of Rs. 9,11,4884/- without any justification. 15. That the appellant craves leave to add, alter, amend or withdraw any grounds of appeal before the final hearing. 2.1 The following additional Grounds have also been taken by the Assessee: 1. That the approval u/s 153D was granted by the JCIT without application of mind and without consideration of relevant records. 2. That no search was conducted on the appellant company and otherwise also the alleged search, if any, conducted was in violation of provisions of section 132(1) of the Income tax Act, 1961. ITA 3 &144/CHD/2023 A.Y. 2014-15 4 3. At the outset, the ld. Counsel for the Assessee has stated at the bar that he does not wish to press the additional grounds. Rejected as not pressed. 4. Ground Nos.1 and 15 are general in nature. 5. As per Ground No.2, since neither any search was conducted on the Assessee company, nor any ‘Panchnama’ was prepared in its name, the provisions of section 153A of the Income Tax Act, 1961 (in short 'the Act') are not applicable and so, the assessment completed u/s 153A of the Act is against the provisions of law. This Ground corresponds to Ground No. (b) raised by the Assessee before the ld. CIT(A). The Assessing Officer passed the assessment order dated 30.12.2019 u/s 153A(1)(b) read with section143(3) of the I.T.Act, making various additions. Before the ld. CIT(A), the Assessee raised this issue by way of Ground No. (b). 6. The ld. CIT(A), in para 10 of the impugned order, has observed, inter alia, that a letter dated 7.9.2022 had been sent to the A.O., requiring him to furnish details of the warrant executed / ‘Panchnama’ prepared,’ on the basis of which, proceedings u/s 153A of the Act were initiated; that ITA 3 &144/CHD/2023 A.Y. 2014-15 5 in response, the A.O. had furnished the copy of the warrant which was duly executed in the name of the Assessee on6.2.2018, in respect of the premises situated at SCO 80- 81, 4 th Floor, Sector 17-C, Chandigarh; that the said warrant was found containing the name of the Assessee; that accordingly, it was found that the warrant of authentication u/s 132(1) of the Act had been executed in the name of the Assessee; and that, therefore, the A.O. was justified in initiating assessment proceedings u/s 153A of the Act. 7. Before us, on behalf of the Assessee, it has been contended that neither any search was conducted on the Assessee company, nor any ‘Panchnama’ was prepared in its name; that the Assessee company filed an application under the RTI Act, bearing Registration No. CCITC/R/E/20/0001 dated 7.1.2020, seeking information with regard to copy of last warrant, a copy whereof has been placed at Assessee’s Paper Book (‘ABP’),pages 346-350. It has been contended that the said application of the Assessee was transferred (APB 351-352) to the DGIT, ITO office of PCIT (Investigation), Ludhiana and the DCIT, Central Circle-2, Chandigarh (APB 354-356) and finally to the DCIT, Central Circle-2, Mohali (APB 357); that none of the Income Tax Authorities provided ITA 3 &144/CHD/2023 A.Y. 2014-15 6 the Assessee company with the copy of the said warrant; that the ACIT, Central Circle-2, Chandigarh vide order (APB 360- 361), dated 5.2.2.020, passed u/s 7(5) of the RTI Act, denied the Assessee company with a copy of the search warrant. 8. It has been contended that the assessment u/s 153A of the Act was completed against the provisions of the law, as neither any search u/s 132 was conducted on the Assessee company, nor any ‘Panchnama’ was prepared in its name; that though the Assessee specifically requested the Assessing Officer to provide it with a copy of the search warrant in the name of the Assessee company, no such search warrant was provided to the Assessee company; that neither the name of the company was mentioned in the ‘Panchnama’; nor a copy of the search warrant was provided to the Assessee company, despite repeated requests. It has been contended that the search was conducted at the residential premises of the Assessee company, namely Shri Tarloki Nath Singla and Shri Jagdish Rail Gupta in their individual capacity; that simultaneously, search was also conducted in the business premises at M/s Kansal Singla and Associates, Chandigarh, at SCO 80-81, 4 th Floor, Sector 17-C, Chandigarh, which is also the registered address of the ITA 3 &144/CHD/2023 A.Y. 2014-15 7 Assessee company; that during the search of M/s Kansal Singla and Associates, regular books of account along withbank details of the company were found; that one of the directors of the company, Shri T.N.Singla, who is also a partner in M/s Kansal Singla and Associates, was present at the time of search, but his signatures were not taken on the ‘Panchnama’ prepared in the name of M/s Kansal Singla and Associates; that on the request of the Assessee company, the ld. CIT(A), vide letter dated 7.9.2022, directed the A.O. to furnish a copy of the search warrant / ‘Panchnama’ prepared,on the basis of which, the assessment u/s 153A had been completed in the case of the Assessee company; that the ld CIT(A), in the impugned order, has similarly mentioned that the “Assessing Officer furnished the copy of the warrant which was duly executed in the name of the appellant on 16.2.2018 in respect of the premises situated at SCO 80-81, 4 th Floor, Sector 17-C, Chandigarh. The said warrant was found containing the name of the appellant”; that the ld. CIT(A), by simply observing so, agreed with the action of the Assessing Officer and held that the Assessing Officer was justified in initiating assessment proceedings u/s 153A of the Act; that the ld. CIT(A) did not provide the ITA 3 &144/CHD/2023 A.Y. 2014-15 8 Assessee with the copy of the warrant, nor reproduced the same in the order; that since none of the Income Tax Authorities provided the Assessee with the copy of the search warrant, the Assessee company was suspicious that its name was not mentioned in the search warrant. 9. In the above situation, the Bench had called for the original search warrant from the Department, which was produced. The name of the Assessee company was found mentioned in the search warrant. It is seen that a copy of the ‘Panchnama’ has been placed at APB 519-522. At APB 519, at item A, it is mentioned: ‘Warrant in the case: M/s Kansal Singla and associates’; at item (B), it has been stated that: ‘Warrant to search (Details and Ownership of place of search): M/s Kansal Singla and Associates SCO 80-81, 4 th Floor, Sector 21C, Chandigarh. So, the name of the Assessee Company, is not mentioned in this ‘Panchnama’. Also, this ‘Panchnama’ does not bear the signature of Shri T.N. Singla,Director of the Assessee Company, who is stated to have been present at the place of search at the time of the search. 10. On this issue, the submissions on behalf of the Department, as contained in the oral arguments addressed ITA 3 &144/CHD/2023 A.Y. 2014-15 9 by the ld. CIT (DR) and the written submissions dated 5.6.2023 are that providing of the copy of the warrant is not a right of the searched persons; that u/s 96 of the CrPC read with section 76 of the Evidence Act, a certified copy of a search warrant could be obtained on payment of legal fee. Reliance has been placed on the decision of the Hon'ble Delhi High Court in the case of ‘MDLR’, 361 ITR 405 (Delhi), wherein, it has been held in para 24, that it will be salutary and proper that a copy of the search warrant be furnished to the occupant or the person searched; and that this would curtail any allegation of interpolation, addition of names, etc. On the issue as to whether it is necessary to have the names of the person searched in the ‘Panchnama’, the ld. DR has sought to place reliance on ‘MDLR’ (supra), wherein, the Hon'ble Delhi High Court has held that since the 22 parties whose names were not mentioned, did not object to the order u/s 153A in the petition u/s 264 pursuant to the assessment order, such objection was not justified in the writ petition filed; that the assessment order under section 153A cannot and should not be permitted to become a matter of writ petition as the First Appellate Forum; and that the First Appellate Statutory Authority ITA 3 &144/CHD/2023 A.Y. 2014-15 10 could deal statutorily with the questions and issues raised in the writ petition the jurisdiction of the First Appellate Authority having not been invoked with the appeals preferred by the writ petitioners. 11. Concerning the issue of absence of signatures of the main person on the search warrant, the ld. CIT (DR) has contended that there is no reequipment of service of warrant on the main person, who is usually occupied at other premises, that the search warrant is required to be served on the witnesses. 12. As observed, the name of the Assessee company has been mentioned in the search warrant, which was produced in the original by the Department before us. Therefore, this puts this entire controversy at rest and the Assessee’s objection in this regard is found to be unjustified and it is, accordingly, rejected, while rejecting Ground No.2. 13. Now, coming to Ground Nos. 3, 4 and 5, these Grounds correspond to Additional Ground Nos. 1, 2 and 3 taken by the Assessee before the ld. CIT(A). The matter pertaining to Ground Nos. 3 and 4 has been effectively decided by us in the preceding paragraphs, where we have found that the ITA 3 &144/CHD/2023 A.Y. 2014-15 11 search warrant did contain the name of the Assessee company. Therefore, the grievance of the Assessee by way of Ground Nos. 3 and 4 also does not contain any merit and, accordingly, Ground Nos. 3 and 4 are rejected. 14. According to Ground No.5, the additions made are not based on any incriminating material found during the search. In this regard, the ld. CIT(A) has held that the Assessing Officer was having jurisdiction to assess the income of the Assessee on the basis of the material available at the time of the assessment and he was not to restrict the additions subject to the incriminating material found during the search. For holding so, the ld. CIT(A) has placed reliance on the decision of the Hon'ble Kerala High Court in the case of “CIT vs. KPUmmer”, (citation not given) in the impugned order; the decision of the Hon'ble Allahabad High Court in the case of ‘Rajkumar Arora’, 367 ITR 517 (Allahabad) ; the decision of the Hon'ble Kerala High Court in the case of ‘EN Gopakumar vs. CIT’, (2016) 75 taxman.com 215 and the decision of the Hon'ble Allahabad High Court in the case of ‘CIT vs. KesarvaniZardaBhandar’, ITA No.270/2014. The ld. Counsel for the Assessee, on this issue, has contended that the A.O. issued notice u/s 153A of the Act on 09.03.2019, ITA 3 &144/CHD/2023 A.Y. 2014-15 12 against which, the company filed return and challenged the initiation of proceedings u/s 153A vide letter dated 03.05.2019 (APB-1); and that the additions made by the Assessing Officer are not emanating out of the search proceedings, as no incriminating material or evidence was found during the course of the alleged search related to the Assessee company for the year under consideration. Reliance in this regard is placed on the order of the Hon'ble Apex Court wherein, the SLP filed by the Department in the cases of ‘MeetaGutgutia’ 96 taxmann.com 468/257 Taxman 441 (SC) and ‘Kabul Chawla’ were dismissed by the Hon'ble Apex Court. The relevant portion is re-produced below - "Recently, Hon'ble ITAT Delhi in Alankar Saphire Developers v. Dy. CIT [2020] 116 taxmann.com 389/184 ITD 847 (Delhi - Trib.) decided the issue that if no incriminating material is found in the search, no addition can be made u/s 153A. During the course of hearing in this case the assessee relied on the decision of Hon'ble Delhi High Court in CIT v. Kabul Chawla [2015] 61 taxmann.com 412/234 Taxman 300/[2016] 380 ITR 573 (Delhi) and Pr. CIT v. Meeta Gutgutia [2017] 82 taxmann.com 287/248 Taxman 384/395 ITR 526 (Delhi). On the basis of arguments of the parties the Tribunal noted that SLP filed by the Department in the case of Kabul ITA 3 &144/CHD/2023 A.Y. 2014-15 13 Chawla (Supra) was dismissed by Hon'ble Apex Court for low tax effect and SLP filed before Supreme Court in the case of Meeta Gutgutia (supra) was dismissed by Hon'ble Supreme Court in Pr. CIT v. Meeta Gutgutia [2018] 96 taxmann.com 468/257 Taxman 441 (SC) by observing that "We do not find any merit in this petition". The Department submitted that SLP on the similar issue has been admitted by Hon'ble Apex Court in M/s Apar industries (Citation not provided). The Tribunal however held that once the SLP is not admitted, the decisions given by the High Court in the case of Kabul Chawla and Meeta Gutgutia became final and binding." 15. The ld. Counsel for the Assessee has contended that therefore, the addition made by the learned assessing officer cannot be sustained in the present case in the order passed under section 153A of the Act, in the absence of any incriminating material found during the course of search action, where there was no pending assessment which could be said to have abated on the date of search. 16. Reliance has been placed on the judgment of Hon'ble Apex Court in the case of ‘PCIT vs M/s AbhisarBuildwell P. Ltd.’, CA No. 6580, dated 24.04.2023, wherein, the Hon’ble court held that “in case no incriminating material is unearthed during the search, the AO cannot assess or ITA 3 &144/CHD/2023 A.Y. 2014-15 14 reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961." 17. Reliance has further been placed on the judgment of the Hon'ble High Court of Bombay, in ‘Pr. CIT Vs. Sandeep Agarwal (HUF)’, dated 09/10/2023 (Bombay), wherein it was held that - "We dismiss the appeal, holding that the only issue which arises for determination will have to be answered against the Revenue and favouring the Assessee given the decisions of the Hon'ble Supreme Court in ‘Abhisar Buildwell (P.) Ltd.’, (supra) and ‘U.K. Paints (Overseas)’, (supra). The clarification issued in both these judgments is, however, issued in these matters as well in the context of reassessment proceedings under Sections 147 and 148 of the IT Act. However, as noted above, all contentions of all parties are kept open in this context." 18. It has been contended that the Assessing Officer has wrongly made addition u/s 153A(l)(b) r.w.s. 143(3) of the Act ITA 3 &144/CHD/2023 A.Y. 2014-15 15 on the direction of the third party without having any incriminating material on record, as no incriminating material/document was unearthed by the Department during the search proceeding. Hence, assessment u/s 153A(l)(b) r.w.s. 143(3) of the Income Tax Act, 1961 has been wrongly made, against the provisions of the law. 19. It has been submitted that the Assessing Officer wrongly made additions in the hands of the company, of all credit entries in the bank, regarding which, sufficient and credible information including the source by way of evidence had been submitted during the assessment proceeding for discharging its burden and which additions, are not sustainable in law, as no inquiry has been undertaken by the Assessing Officer and/or any material brought on record establishing the amount of bank entries as unexplained, thereby inviting the application of provisions of the Section 68 of the Act. 20. It has been submitted that the ld. CIT(A,) in his order, on Page 126, has observed that a letter dated 07.09.2022 was sent to the A.O., requiring him to produce a copy of the search warrant executed / ‘Panchnama’ prepared on the basis of which proceedings u/s 153A were initiated on the ITA 3 &144/CHD/2023 A.Y. 2014-15 16 company. The CIT(A) observed that the AO was justified in initiating proceedings u/s 153A of the Act, as warrant of authorization u/s 132(1) was executed in the name of the company on 16.02.2018 at SCO 80-81, 4 th Floor, Chandigarh. 21. It has been submitted that the CIT(A), on pages 127 & 128 of his order, has observed that the Assessee has stated that the additions made in the order u/s 153A of the Act cannot be sustained in the absence of any incriminating material found during the search proceedings; that the CIT(A) observed that consideration of above ground of appeal, it had been noted that in terms of the provisions of section 153A(l)(b), the Assessing Officer was required to assess/reassess the total income for the year under consideration; that the CIT(A) observed that it has been held by the Hon'ble Kerala High Court in the case of ‘CIT vs KP Ummer’ that when a notice u/s 153A is issued, it enables the Department to carry out assessment/re-assessment with respect to 6 immediate prior years and this does not require any incriminating material recovered during search relating to those prior years in which there is no time left on the date of search for an assessment u/s 143 (3); that the CIT(A) ITA 3 &144/CHD/2023 A.Y. 2014-15 17 observed that the same view has been up-held by the Hon'ble Allahabad High Court in the case of ‘Rajkumar Arora’; that the CIT(A) observed that the Hon’ble Kerala High Court, in the case of ‘EN Gopakumar vs CIT’, (2016)75 taxman.com 215 and the Hon'ble Allahabad High Court, in the case of ‘CIT vs Kesarwani ZardaBhandar’, (2016), ITA No. 270/2014, had also held similarly; that the ld. CIT(A) observed that keeping in view of the provisions of the Act and the ratios of the decisions mentioned, it was observed that the Assessing Officer was having jurisdiction to assess the income of the Assessee on the basis of material available at the time of assessment and was not to restrict the additions subject to incriminating material found during the course of search and that it was in the manner that Additional Grounds of appeal No. 3 & 5were dismissed by the ld. CIT(A). It has been contended that in view of the decisions in ‘Kabul Chawla’ (supra), ‘Meeta Gutgutia’ (supra), ‘Sandeep Agarwal (HUF)’ (supra) and ‘Ahhisar Buildwell’ (supra), Ground No.5 be accepted and the A.O. be held not to have had jurisdiction to make the additions in the absence of incriminating material found in the search. ITA 3 &144/CHD/2023 A.Y. 2014-15 18 22. On the other hand, the ld. DR, supporting the impugned order in this regard, has contended that as correctly stated by the ld. CIT(A) and not rebutted on behalf of the Assessee, the search warrant was duly executed in the name of the Assessee on 6.2.2018 in respect of the premises situated at SCO 80-81, 4 th Floor, Sector 17-C, Chandigarh; that, therefore, the Assessing Officer was well justified in initiating assessment proceedings u/s 153A of the Act; that as correctly noted by the ld. CIT(A) in terms of the provisions of section 153A (1)(b) of the Act, the Assessing Officer was required to assess / re-assess the total income of the Assessee for the year under consideration; that as held by the Hon'ble Kerela High Court in the case of ‘CIT vs. KP Ummer’ (supra), when a notice u/s 153A of the Act is issued, it enables the Department to carry out assessment / re- assessment with respect to the six immediate prior years and this does not require any incriminating material recovered during the search relating to those prior years, in which, there was no time left on the date of search for an assessment u/s 143(3) of the Act; that the same view has been taken by the Hon'ble Allahabad High Court in the case of ‘Rajkumar Arora’, (supra), the Hon'ble Kerela High Court ITA 3 &144/CHD/2023 A.Y. 2014-15 19 in the case of ‘EN Gopakumar vs. CIT’, (supra) and the Hon'ble Allahabad High Court in the case of ‘CIT vs. Keserwani ZardaBhandar’, (supra); that the ld. CIT(A) has correctly held that in view of the provisions of the Act and the ratios of these decisions, the Assessing Officer was indeed having jurisdiction to assess the income of the Assessee on the basis of the material available at the time of the assessment and he was to restrict the additions subject to incriminating material found during the course of search. The ld. DR has contended that in this view of the matter, there being no merit therein, Ground Nos. 3 to 5 may be rejected. 23. We have heard the parties on Ground No. 5 raised before us. 24. The grievance of the Assessee is that the additions made by the Assessing Officer do not emanate from the search proceedings, as no incriminating material was found, pertaining to the year under consideration. In this regard, it is seen that no assessment was pending for the year under consideration and as such, had not abated on the date of search. In such a case, as held by the Hon'ble High Court in the case of ‘Kabul Chawla’, 380 ITR 573 (Del) and as also ITA 3 &144/CHD/2023 A.Y. 2014-15 20 similarly held in ‘Pr. CIT Vs. Meeta Gutgutia’ 395 ITR 526 (Del), if no incriminating material so found in the search, no addition can be made u/s 153A. The SLP in the cases of ‘Meeta Gutgutia’ (supra and ‘Kabul Chawla’ (supra),were dismissed by the Hon'ble Supreme Court, having found no merit therein. In ‘PCIT vs. M/s Abhisar BuildwellP. Ltd.’, vide order dated 24.4.2023, the Hon'ble Supreme Court has held, agreeing with ‘Kabul Chawla’ (supra), that in case no incriminating material is unearthed during the search, the Assessing Officer cannot assess or re-assess taking into consideration the other material in respect of the completed assessment / unabated assessment; that meaning thereby, that in respect of completed / unabated assessment, no addition can be made by the Assessing Officer in the absence of any incriminating material found during the course of search u/s 132 of the I.T. Act. Further, as correctly contended on behalf of the Assessee, ‘Ashisar Buildwell’ has been followed by the Hon'ble Bombay High Court in the case of‘Pr. CIT v Sandeep Aggarwal (HUF)’, vide order dated 9/10/2023, wherein, it has been held that the clarification issued by the Hon'ble supreme Court in the case of Abhisar Buildwell’ and ‘U.K. Paints’, has been issued in ITA 3 &144/CHD/2023 A.Y. 2014-15 21 the context of re-assessment proceedings u/s 147 and 148 of the Act as well. 25. It is further seen that while dealing with the cases of the Group Company for A.Y. 2017-18 (ITA No. 33/Chd/2023 and ITA No. 146/Chd/2023) and the case of the Group Company for A.Y. 2013-14 in ITA No. 739/Chd/2022, vide our order dated 31.10.2023, that under similar facts and circumstances, we have held that the Assessing Officer was initially of the view that no addition was required to be made and had sent a deviation note, but had made the additions only on the diktat of a third party, i.e., the ADIT. Similar is the position here. The additions for the year under consideration have been made by the Assessing Officer only on the directions of the third party, without having in his possession any incriminating material unearthed during the search proceedings, for the year under consideration, which is indirect contravention of the afore discussed case laws. Moreover, the additions wrongly made represented all the credit entries in the bank account of the Assessee company. Regarding these credit entries, sufficient credible documentary information had been furnished by the Assessee, by way of evidence, during the assessment ITA 3 &144/CHD/2023 A.Y. 2014-15 22 proceedings, including the source thereof, which cogent voluminous documentary evidence the Department was been not able to rebut. The Assessing Officer, rather, having not been satisfied therewith, had not deemed it necessary to undertaken any inquiry in this regard. Also, no material was brought on record to establish that the bank entries were unexplained entries. This being so, the provisions of section 68 of the Act were wrongly applied. 26. In view of the above, Ground No.5 is found to carry merit and, accordingly, the same is accepted. 27. Coming to ground No.6, the AO made addition of all credit entries in the assessee's bank account, amounting to Rs.3,22,01,650/- without considering each credit separately on merit and holding that the purpose and utilization of the funds was not explained by the assessee. Before the ld. CIT(A), the assessee submitted, vide reply (APB 47-51), dated 21.03.2020, the following documents : 1. ITR-V of Sh. Surinder Kumar Arora for A.Y. 2014-15.(Paper book page 47) 2. Copy of Affidavit of Sh. S.K. Arora. (Paper book page 48-49) 3. Bank Account statements of Sh. S.K. Arora for A.Y. 2014-15 (Paperbook page 50) 4. Copy of account of Sh. S.K. Arora in the books of M/s TJR Properties Private Limited for A.Y.2014-15 (Paperbook Page 51) ITA 3 &144/CHD/2023 A.Y. 2014-15 23 28. It was argued before the ld. CIT(A) that the AO had wrongly made addition of Rs.3,22,01,650/-, including the amount of Rs.10 lacs received from Shri S.K.Arora; that while doing so, the AO did not mention any deficiency on the assessee's part to prove the utilization of funds; and that the AO also did not mention the said documents furnished by the assessee before the AO. 29. The ld. CIT(A) observed that in respect of the amount of Rs.10 lacs, on perusal of the documents furnished by the assessee, it was observed that the said amount had been explained as received on account of loans; that though the transaction had been found to be routed through the bank account of Shri S.K.Arora, the main sources of credits ( Rs.98,56,935/-) had not been explained in the hands of Shri S.K.Arora; that the amount of Rs.98,56,935/- received in the bank account had been transferred immediately to various persons, in different amounts; and that merely submission of bank account would not amount to explaining the credit worthiness of Shri S.K.Arora, particularly keeping in view the quantum of the amount given and the level of income he had shown in the ITR ( Rs.3,62,000). ITA 3 &144/CHD/2023 A.Y. 2014-15 24 30. The ld. Counsel for the assessee has contended that the relevant portions of the assessee's reply/written submissions dated 21.03.2020, are at pages 73 and 80 of the CIT(A)’s order, containing the details of the assessee's bank account and the details of the loans received from Shri S.K.Arora. It has been contended that in addition to the documents submitted by the assessee before the AO, the AR also furnished a copy of the assessment order dated 24.12.2019, in the case of Shri S.K.Arora for assessment year 2014-15, passed u/s 153A(1)(b) read with Section 143(3) of the Act, passed by the same AO who assessed the case of the company, by making addition of all the credits in the bank account of the assessee for the same assessment year. It was contended that the AO accepted the creditworthiness of Sh. S.K. Arora in his assessment proceedings while made addition of the same in the case of the assessee company. How can same transaction be unexplained u/s 68 of the Act in one Assessment proceedings and be genuine and credible in the other Assessment proceedings for the same year. This clearly shows that the Learned Assessing officer was not using his wits, common sense and there was no application of mind by ITA 3 &144/CHD/2023 A.Y. 2014-15 25 him whatsoever. Further, the following documents, as also submitted before the ld. CIT(A), have been filed before us : 1. ITR-V of Sh. Surinder Kumar Arora for A.Y. 2014-15. (Paperbook page 47) 2. Copy of Affidavit of Sh. S.K. Arora. (Paperbook page 48-49) 3. Bank Account statements of Sh. S.K. Arora for A.Y 2014-15 (Paperbook page 50) 4. Copy of account of Sh. S.K. Arora in the books of M/s TJR Properties Private Limited for A.Y.2014-15 (Paperbook Page 51) 5. Copy of Assessment order dated 24.12.2019 of S.K.Arora for A.Y. 2014-15 passed u/s 153A(1)(b) r.w.s. 143(3) of the Act (Paper Book page 52-53) 31.1 The assessee company contends that the company received advance Rs. 10,00,000/- from Sh. S.K. Arora on 01.06.2013 and the same were returned back on 30.06.2014. The company submitted all the documentary evidences before the AO as well as before the CIT(A) but neither authority raised any objection in the documents submitted by the company during assessment proceeding and appellate proceedings. The AO ignoring all the documentary proofs followed the dictate of third party and made addition Rs. 10,00,000/-received from Sh. S.K. Arora during the year under consideration while the CIT(A) confirmed the said addition taking a plea that mere submission of bank account statement cannot explain the creditworthiness of lender. It not the bank account statement that the company submitted to substantiate its ITA 3 &144/CHD/2023 A.Y. 2014-15 26 claim, the company submitted ITR, copy of affidavit, copy of account of Sh. SK Arora along with the bank account statement to prove the creditworthiness of the amount received. In the affidavit it is clearly mentioned that company received advance of Rs. 10,00,000/- on 01.06.2013. 31.2 The company has filed written submission before CIT(A) in 2020, the CIT(A) had more than 2 years to examine the documents submitted by the assessee company and ask the assessee to submit any other document, if required. The assessee company had clearly mentioned in its written submission the list of documents attached as annexure to substantiate its claim, if somehow, only the bank statement was available with the CIT(A) then the CIT(A) could have asked the assessee to furnish all other documents as mentioned in the written submission. No such inquiry was made by the CIT(A). Neither the CIT(A) nor AO asked the appellant to submit any other documentary evidence with regard to the amount received or given back to Sh. SK Arora. 31.3 The CIT(A) wrongly confirmed the addition made by the AO on the plea that the company did not submit any ITA 3 &144/CHD/2023 A.Y. 2014-15 27 documentary evidence other than the bank statement but on the other hand the CIT(A) himself is mentioning the list of documents submitted by the assessee in point 1, page 104 of his order, thereby contradicting his own statement. The CIT(A) ought to have raised any query or issued any notice asking the assessee to submit the same. But no such query was raised nor any notice was issued to the assessee in this regard. Additionally, the CIT(A) confirmed the addition of Rs. 10,00,000/- made by the AO for an absurd reason without giving any findings on the documents which was already submitted by the assessee company during the assessment proceeding and remand proceeding. 31.4 The AO found the documentary evidence furnished by the assessee company to be unsatisfactory while the CIT(A) observed that the assessee company failed to submit any documentary evidence other than bank statement, they could have initiated proceedings under Sections 133(6) or 131 of the Act for further investigation. However, it is noteworthy that neither the AO nor the CIT(A) extended any such notice to the lender for additional inquiries. Instead, an addition of Rs. 10,00,000/- was made based on the directive of a third party. ITA 3 &144/CHD/2023 A.Y. 2014-15 28 32. On the contrary the same AO has assessed the case of Sh SK Arora for the same assessment year wherein the returned income of Shri SK Arora has been accepted by the AO. 33.1 The ld. DR on the other hand, has placed strong reliance on the impugned order, contending that it has not been successfully rebutted, as observed by the ld. CIT(A) that mere submission of Bank Account Statement does not amount to explaining the credit worthiness of Shri S.K.Arora, particularly when the amount given to Shri S.K.Arora is of Rs.10 lacs, as contrasted with his income shown in the ITR of Rs. 3,62,000/-. 33.2 It is seen that as available from the assessment order (supra) dated 24.12.2019, passed in the case of Shri S.K.Arora in assessment year 2014-15, the credit worthiness of Shri S.K.Arora has been accepted. On the contrary, in the case of the assessee, for the same assessment year, the addition has been made on the basis that the credit worthiness of Shri S.K.Arora did not stand proved. The AO in both the cases is the same. The case of the assessee is that the amount of Rs.10 lacs had been received by the assessee, as advance on 01.06.2013. The same was returned ITA 3 &144/CHD/2023 A.Y. 2014-15 29 on 30.06.2014. Apropos the evidence filed by the assessee before the taxing authorities, no question was raised by either the AO or the ld. CIT(A) against such documents. Before the AO, the assessee had filed ITR-V of Shri Surinder Kumar Arora for the year under consideration, copy of affidavit of Shri S.K.Arora, Bank Account Statement of Shri S.K.Arora for the year under consideration and copy of account of Shri S.K.Arora in the books of the assessee for assessment year 2014-15 i.e., the year under consideration. Shri S.K.Arora’s assessment order for assessment year 2014- 15, passed by the same AO and that of the assessee, on 24.12.2019, was also filed before the CIT(A), as has also been done before us, alongwith the other evidences. Thus, the addition of Rs.10 lacs was made by the AO by ignoring the aforesaid documentary evidences filed by the assessee, which have not been refuted. The ld. CIT(A) has confirmed the addition by merely stating that submission of bank account statement by itself cannot explain the credit worthiness of the lender. This finding of the ld. CIT(A) is also found to be unsustainable in the face of the documentary evidences furnished by the assessee before the ld. CIT(A). It is not only the bank account statement of the ITA 3 &144/CHD/2023 A.Y. 2014-15 30 lender which has been filed in singularity. Rather, the bank account statement is accompanied by the ITR of the lender, his affidavit, and the assessment order in the case of the lender for the year under consideration by the same AO as that of the assessee. 33.3 It is seen that as rightly contended on behalf of the assessee, the AO made the addition just on the dictat of a third party, whereas initially, he had not proposed any addition at all. The company has filed written submission before CIT(A) in 2020, the CIT(A) had more than 2 years to examine the documents submitted by the assessee company and ask the assessee to submit any other document, if required. The assessee company had clearly mentioned in its written submission the list of documents attached as annexure to substantiate its claim, if somehow, only the bank statement was available with the CIT(A) then the CIT(A) could have asked the assessee to furnish all other documents as mentioned in the written submission. No such inquiry was made by the CIT(A). Neither the CIT(A) nor AO asked the appellant submit any other documentary evidence with regard to the amount received or given back to Sh. SK Arora. ITA 3 &144/CHD/2023 A.Y. 2014-15 31 33.4 The CIT(A) wrongly confirmed the addition made by the AO on the plea that the company did not submit any documentary evidence other than the bank statement but on the other hand the CIT(A) himself is mentioning the list of documents submitted by the assessee in point 1, page 104 of his order, thereby contradicting his own statement. The CIT(A) ought to have raised any query or issued any notice asking the assessee to submit the same. But no such query was raised nor any notice was issued to the assessee in this regard. Additionally, the CIT(A) confirmed the addition of Rs. 10,00,000/- made by the AO for an absurd reason without giving any findings on the documents which was already submitted by the assessee company during the assessment proceeding and remand proceeding. 33.5 The AO found the documentary evidence furnished by the assessee company to be unsatisfactory while the CIT(A) observed that the assessee company failed to submit any documentary evidence other than bank statement, they could have initiated proceedings under Sections 133(6) or 131 of the Act for further investigation. However, it is noteworthy that neither the AO nor the CIT(A) extended any such notice to the lender for additional inquiries. Instead, an addition of ITA 3 &144/CHD/2023 A.Y. 2014-15 32 Rs. 10,00,000/- was made based on the directive of a third party. 34. On the contrary the same AO has assessed the case of Shri SK Arora for the same assessment year wherein the returned income of Shri SK Arora has been accepted by the AO. 35. In view of the above, Ground No. 6 is accepted and the addition of Rs. 10 lacs is deleted. 36. Concerning Ground No.7, here again the addition was made by the AO without considering each credit separately on merit, while making addition of Rs.3,22,01,650/-, holding that the purpose and utilization of funds which had not been explained by the assessee. 37. The assessee submitted before the ld. CIT(A) that the AO had erred in making addition of Rs.4 lacs from Shri Rakesh Kumar; that here also, the AO had not mentioned any deficiency on the part of the assessee to prove the sources of the funds; that the AO had also not made any mention of the documents submitted by the assessee during the assessment proceedings; that the assessee had filed before the AO, a copy of account of Shri Rakesh Kumar, in ITA 3 &144/CHD/2023 A.Y. 2014-15 33 the books of the assessee company, for assessment year 2014-15 (copies at APB 58). 38. The ld. CIT(A) confirmed the addition, observing that in the absence of any documentary evidence, the same remained unexplained. 39.1 Before us, ld. Counsel for the assessee has contended that the following documents copies whereof have also been filed before us, were furnished before authorities below : 1. Confirmation of Sh. Rakesh Kumar Garg (Paperbook page 58) 2. ITR-V of Sh. Rakesh Kumar Garg for A.Y. 2014-15 (Paperbook page 59) 3. Computation of Sh. Rakesh Kumar Garg for A.Y. 2014-15 (Paperbook page 60-63) 4. Bank Account statements of Sh. Rakesh Kumar Garg for A.Y 2014-15 (Paperbook page 64-70) 39.2 It has been contended that the assessee company contends that the company gave advance of Rs. 4,00,000/- to Sh. Rakesh Kumar on 28.10.2013 and the same were received back by the company in the next month only on 09.11.2013. Since, the advance given was received back by the company within the same year, hence, these were squared up loans and advances and in support of such squared up loans and advances the company submitted the copy of account of the party in the books of the company. No ITA 3 &144/CHD/2023 A.Y. 2014-15 34 other document was either asked by the AO or by CIT(A) in their respective proceedings. 39.3 The company has filed written submission before CIT(A) in 2020, the CIT(A) had more than 2 years to examine the documents submitted by the assessee company and ask the assessee to submit any other document, if required. But neither the CIT(A) nor AO asked the appellant submit any other documentary evidence in this regard. 39.4 The CIT(A) has reproduced the entire written submission of the assessee company in its order, and on page 76 and 80 of the CIT(A) order, the following facts were mentioned by the assessee in its submission which were reproduced by CIT(A):- (page 76 of CIT order) DATE RECEIPT INWARD (CR) REMARKS PROOF OF IDENTITY, GENUINES AND CREDIT WORTHINESS OF THE PARTY AMOUNT (IN RS) PARTY NAME/ ACCOUNT NO. 09/11/2013 4,01,650/- RAKESH KUMAR (FRIEND OF DIRECTOR) AND INCOME DURING THE YEAR ADVANCE GIVEN TO RAKESH KUMAR OF RS 4,00,000 ON 28/10/2013 RECEIVED BACK ON 09/11/2013. RS 1,650 IS THE INCOME DURING THE YEAR LEDGER ACCOUNT (Page 80 of CIT order) ITA 3 &144/CHD/2023 A.Y. 2014-15 35 39.5 The CIT(A) has also reproduced the index of the written submission of the assessee company and on Page 96 of the' CIT(A) order, in point 22, the assessee has mentioned that the copy of account of Sh. Rakesh Kumar in the books of the company is attached as annexure at Page 234 of the paperbook of the assessee company before CIT(A). At three different pages of the CIT(A) order the CIT(A) is himself acknowledging the submission of copy of account by the company while deciding the case the CIT(A) has wrongly taken the plea that no documentary evidence was submitted by the company during the appellate proceedings. The above documents were submitted before the CIT(A) which were neither considered by the CIT(A) nor discussed by the CIT(A) in its order. The CIT(A) wrongly confirmed the addition made by AO without carrying out any verification with regard to DATE RECEIPT INWARD (CR) REMARKS PROOF OF IDENTITY, GENUINES AND CREDIT WORTHINE SS OF THE PARTY AMOUNT (IN RS) PARTY NAME/ ACCOUNT NO. 09/11/2013 4,00,000/- RAKESH KUMAR (FRIEND OF DIRECTOR) AND INCOME DURING THE YEAR ADVANCE GIVEN TO RAKESH KUMAR OF RS 4,00,000 ON 28/10/2013 RECEIVED BACK ON 09/11/2013. LEDGER ACCOUNT ITA 3 &144/CHD/2023 A.Y. 2014-15 36 the copy of account submitted by the company and wrongly confirmed the addition of Rs. 4,00,000/- by taking a plea that no documentary evidence was submitted by the company to establish the creditworthiness of Sh. Rakesh Kumar. 39.6 The AO found the documentary evidence furnished by the assessee company to be unsatisfactory while the CIT(A) observed that the creditworthiness cannot be established due to non-submission of documents, they could have initiated proceedings under Sections 133(6) or 131 of the Act for further investigation. However, it is noteworthy that neither the AO nor the CIT(A) extended any such notice to the lender for additional inquiries. Instead, an addition of Rs. 4,00,000/- was made based on the directive of a third party. Neither enquiry was made by CIT(A) / AO before confirming the addition of Rs. 4,00,000/- nor any documentary evidence were sought from the assessee company, therefore the assessee company has now submitted copy of computation, ITR-V and bank account statement of Sh. Rakesh Kumar (Paperbook page 59-70) as additional evidence along with confirmation which was submitted before CIT(A) and AO. The ITA 3 &144/CHD/2023 A.Y. 2014-15 37 submission of said documents are neither challenged nor disputed in the appeal by the department. 39.7 The ld. DR has, again, placed strong reliance on the impugned order. 40.1 We find that here also, the addition has been so confirmed without taking into consideration the documentary evidence filed by the assessee. It remains undisputed that these were squared up loans and advances, the company having given advance of Rs.4 lacs to Shri Rakesh Kumar on 28.10.2013 and the same having been received back through banking channel, on 09.11.2013, in respect of which, the assessee has placed on record before the authorities below, the copy of account of Shri Rakesh Kumar in the books of the assessee company. 40.2 Further, the CIT(A) has reproduced the entire written submission of the assessee company in its order, and on page 76 and 80 of the CIT(A) order, the following facts were mentioned by the assessee in its submission which were reproduced by CIT(A):- (page 76 of CIT order) DATE RECEIPT INWARD (CR) REMARKS PROOF OF IDENTITY, GENUINES AND CREDIT WORTHINESS OF THE PARTY ITA 3 &144/CHD/2023 A.Y. 2014-15 38 AMOUNT (IN RS) PARTY NAME/ ACCOUNT NO. 09/11/2013 4,01,650/- RAKESH KUMAR (FRIEND OF DIRECTOR) AND INCOME DURING THE YEAR ADVANCE GIVEN TO RAKESH KUMAR OF RS 4,00,000 ON 28/10/2013 RECEIVED BACK ON 09/11/2013. RS 1,650 IS THE INCOME DURING THE YEAR LEDGER ACCOUNT (Page 80 of CIT order) DATE RECEIPT INWARD (CR) REMARKS PROOF OF IDENTITY , GENUINE S AND CREDIT WORTHIN ESS OF THE PARTY AMOUNT (IN RS) | PARTY NAME/ ACCOUNT NO. 09/11/2013 4,00,000/- RAKESH KUMAR (FRIEND OF DIRECTOR) AND INCOME DURING THE YEAR ADVANCE GIVEN TO RAKESH KUMAR OF RS 4,00,000 ON 28/10/2013 RECEIVED BACK ON 09/11/2013. LEDGER ACCOUNT 40.3 The CIT(A) has also reproduced the index of the written submission of the assessee company and on Page 96 of the' CIT(A) order, in point 22, the assessee has mentioned that the copy of account of Sh. Rakesh Kumar in the books of the company is attached as annexure at Page 234 of the paperbook of the assessee company before CIT(A). At three different pages of the CIT(A) order the CIT(A) is himself acknowledging the submission of copy of account by the company while deciding the case the CIT(A) has wrongly taken the plea that no documentary evidence was submitted by the company during the appellate proceedings. The above ITA 3 &144/CHD/2023 A.Y. 2014-15 39 documents were submitted before the CIT(A) which were neither considered by the CIT(A) nor discussed by the CIT(A) in its order. The CIT(A) wrongly confirmed the addition made by AO without carrying out any verification with regard to the copy of account submitted by the company and wrongly confirmed the addition of Rs. 4,00,000/- by taking a plea that no documentary evidence was submitted by the company to establish the creditworthiness of Sh. Rakesh Kumar. 40.4 The AO found the documentary evidence furnished by the assessee company to be unsatisfactory while the CIT(A) observed that the creditworthiness cannot be established due to non-submission of documents, they could have initiated proceedings under Sections 133(6) or 131 of the Act for further investigation. However, it is noteworthy that neither the AO nor the CIT(A) extended any such notice to the lender for additional inquiries. Instead, an addition of Rs. 4,00,000/- was made based on the directive of a third party. Neither enquiry was made by CIT(A) / AO before confirming the addition of Rs. 4,00,000/- nor any documentary evidence were sought from the assessee company, therefore the assessee company has now submitted copy of computation, ITA 3 &144/CHD/2023 A.Y. 2014-15 40 ITR-V and bank account statement of Sh. Rakesh Kumar (Paperbook page 59-70) as additional evidence along with confirmation which was submitted before CIT(A) and AO. The submission of said documents are neither challenged nor disputed in the appeal by the department. 41. In view of the above, the addition of Rs.4 lacs is deleted and Ground No.7 is accepted. 42. Turning to Ground No.8, this relates to addition of Rs.20 lacs received by the assessee from M/s Ajit India. Here too, the addition was made by the AO, holding that the purpose and utilization of funds had not been explained by the assessee. 43. Before the ld. CIT(A), the assessee submitted that the AO, while wrongly holding that the assessee could not explain the purpose and sources of the funds, had failed to mention any deficiency whatsoever on the part of the assessee, in the face of the documentary evidence filed before him, in the shape of copy of account of M/s Ajit India in the books of the assessee company in the year under consideration and the pay-in-slip of M/s Ajit India, dated 21.03.2014, of Rs.20 lacs; and that in the assessment order, ITA 3 &144/CHD/2023 A.Y. 2014-15 41 the AO had also not even mentioned the documents so submitted by the assessee in the assessment proceedings. 44. While confirming the addition of Rs.20 lacs, the ld. CIT(A) held that in the absence of any documentary evidence, the same remained unexplained. 45.1 Before us, the ld. Counsel for the assessee has contended that mention of the documents submitted before the ld. CIT(A) vide reply dated 21.03.2020, stands reproduced at pages 77-80 of the ld. CIT(A)’s order. Reliance has been placed on the following documents, as furnished by the assessee before the authorities below: 1. C o nf i r m a t i on o f M/ s A j i t I n d i a ( P a pe r B o o k pa ge 7 1 ) 2. Copy of account of M/s Ajit India in the books of M/s TJR Properties Private Limited for AY 2014-15. (Paperbook Page 72) 3. Copy of pay in slip of M/s Ajit India of Rs. 20 lakh dated 21.03.2014. (Paperbook Page 73-74) 45.2 The ld. Counsel for the assessee contended that the assessee company gave advance of Rs. 20,00,000/- to M/s Ajit India through RTGS on 25.07.2013 and the same were received back by the company on 22.03.2014 vide cheque no. 792304. Since, the advance given was received back by the company within the same year, hence, these were squared up loans and advances and in support of such squared up loans ITA 3 &144/CHD/2023 A.Y. 2014-15 42 and advances the company submitted the copy of account of the party in the books of the company. The appellant submitted copy of pay-in slip of M/s Ajit India before the CIT(A) during the appellate proceedings. No other document was either asked by the AO or by CIT(A) in their respective proceedings. 45.3 The company has filed written submission before CIT(A) in 2020, the CIT(A) had more than 2 years to examine the documents submitted by the assessee company and ask the assessee to submit any other document, if required. But neither the CIT(A) nor AO asked the appellant submit any other documentary evidence in this regard. The CIT(A) has reproduced the entire written submission of the assessee company in its order, and on page 77 and 80 of the CIT(A) order, the following facts were mentioned by the assessee in its submission which were reproduced by CIT(A):- Page 77 of CIT order DATE RECEIPT INWARD (CR) REMARKS PROOF OF IDENTITY, GENUINES AND CREDIT WORTHINES S OF THE PARTY AMOUNT (IN PARTY ITA 3 &144/CHD/2023 A.Y. 2014-15 43 RS) NAME/ ACCOUNT NO. 22/03/2014 20,00,000/- AJIT INDIA ADVANCE OF RS 20,00,000 GIVEN ON 25/07/2013 AND RECEIVED BACK ON 22/03/2014 LEDGER ACCOUNT Page 80 of CIT order DATE RECEIPT INWARD (CR) REMARKS PROOF OF IDENTITY, GENUINES AND CREDIT WORTHINESS OF THE PARTY AMOUNT (IN RS) PARTY NAME/ ACCOUNT NO. 22/03/2014 20,00,000/- AJIT INDIA ADVANCE OF RS 20,00,000 GIVEN ON 25/07/2013 AND RECEIVED BACK ON 22/03/2014 LEDGER ACCOUNT 45.4 The CIT(A) in his order has himself acknowledged the submission of copy of account by the company while upholding the addition the CIT(A) has wrongly taken the plea that no documentary evidence was submitted by the company during the appellate proceedings. The above documents were submitted before the CIT(A) which were neither considered by the CIT(A) nor discussed by the CIT(A) in its order. The CIT(A) wrongly confirmed the addition made by AO without carrying out any verification with regard to the copy of account submitted by the company and wrongly confirmed the addition of Rs. 20,00,000/- by taking a plea ITA 3 &144/CHD/2023 A.Y. 2014-15 44 that no documentary evidence was submitted by the company to establish the creditworthiness of M/s Ajit India. 45.5 The AO found the documentary evidence furnished by the assessee company to be unsatisfactory while the CIT(A) observed that the creditworthiness cannot be established due to non-submission of documents, they could have initiated proceedings under Sections 133(6) or 131 of the Act for further investigation. However, it is noteworthy that neither the AO nor the CIT(A) extended any such notice to the lender for additional inquiries. Instead, an addition of Rs. 20,00,000/- was made based on the directive of a third party. 45.6 Neither enquiry was made by CIT(A) / AO before confirming the addition of Rs. 20,00,000/- nor any documentary evidence were sought from the assessee company, therefore the assessee company has now submitted copy of confirmation from M/s Ajit India (Paperbook page 71) as additional evidence along with copy of account of M/s Ajit India in the books of the company and copy of pay in slip of Rs. 20,00,000/- which was submitted before CIT(A) and AO. The submission of said documents are neither challenged nor disputed in the appeal by the department. Hence, the ITA 3 &144/CHD/2023 A.Y. 2014-15 45 addition confirmed by CIT(A) amounting to Rs. 20,00,000/- on account of amount received back from M/s Ajit India needs to be deleted. 46. The ld. DR has placed strong reliance on the impugned order in this regard also. 47. We find that the assessee had furnished before the authorities below, copy of account, for assessment year 2014-15 i.e. the year under consideration, of M/s Ajit India in the books of the assessee. A copy thereof is at APB 72. The assessee had also filed a copy of pay-in-slip (APB 73-74), of M/s Ajit India, of Rs.20 lacs, dated 21.03.2014. The assessee has also filed confirmation of M/s Ajit India (APB 71) before us too. The stand of the assessee in this regard is that it had given advance of Rs.20 lacs to M/s Ajit India through RTGS on 25.07.2013 and that this amount was received back by the assessee on 22.03.2014, vide cheque, in the same year; that therefore, these were squared up loans and advances, which were duly supported by the copy of account of the lender in the books of the assessee company; that the pay-in-slip also proved the stand of the assessee; that no other document was asked for by either of the taxing authorities. This has not been disputed. The loan was a ITA 3 &144/CHD/2023 A.Y. 2014-15 46 squared up loan. No evidence to the contrary has been brought on record by either the taxing authorities or the ld. DR before us. There is not even an iota of evidence on record to show that either of the taxing authorities had even as much as put any question to the assessee in this regard. 48. The factum of the ledger account having been filed by the assessee before the ld. CIT(A) is also evident from pages 77 and 78 of the order under appeal, where the ld. CIT(A) has taken note of the submission made by the assessee in this regard. Moreover, there is no rebuttal by the ld. CIT(A) to the copy of account filed by the assessee. Therefore, the ld. CIT(A) confirmed the addition of Rs.20 lacs in utter oblivion of the documentary evidence produced on record by the assessee as above and thereby arriving at a wrong finding that no documentary evidence had been filed by the assessee. 49. Accordingly, finding force therein, Ground No.8 is accepted and the addition of Rs.20 lacs is deleted. 50.1 Ground No.9 questions the confirmation of addition of Rs.1 lac received by the assessee company from Shri Sahil Singla. Again, the AO while making the addition, has alleged ITA 3 &144/CHD/2023 A.Y. 2014-15 47 that the purpose and utilization of the funds could not be explained by the assessee. 50.2 Vide reply dated 21.03.2020, before the ld. CIT(A), the assessee, inter-alia, produced on record ITR-V of Shri Sahil Singla for the year under consideration (copy of APB 77), copy of account of Shri Sahil Singla and Smt. Kiran Singla in the books of the assessee company for the year under consideration (APB 80) and bank account statements of Shri Sahil Singla and Smt. Kiran Singla, for the year under consideration (APB 81). The ld. CIT(A), while confirming the addition, observed that there was cash deposit of Rs.1 lakh in the bank account of Smt. Kiran Singla and that the source of the same had not been explained. 50.3 The ld. Counsel for the assessee has contended that other than the documentary evidence filed, the assessee had also filed a copy of assessment order dated 24.12.2019, for assessment year 2014-15, passed u/s 153A(1)(b) read with Section 143(3) of the Act, in the case of Shri Sahil Singla and a copy of the assessment order dated 26.12.2019, passed for assessment year 2014-15, u/s 153A(1)(b) read with Section 143(3) of the Act, in the case of Smt. Kiran Singla, wherein, ITA 3 &144/CHD/2023 A.Y. 2014-15 48 the Assessing Officer of all the three was the same and he had made the addition of all the credits in the bank account of the assessee company whereas he had accepted the credit worthiness of Shri Sahil Singla and Smt. Kiran Singla, in their respective assessment proceedings. It has been submitted that the following documents, filed before us, were also submitted alongwith reply dated 21.12.2019, before the ld. CIT(A) : 1. ITR-V of Sh. Sahil Singla for A.Y. 2014-15. (Paperbook page 77) 2. Copy of Assessment order dated 24.12.2019 passed u/s 153A(l)(b) r.w.s 143(3) of Sh. Sahil Singla for A.Y. 2014-15. (PAperbook page 78-79) 3. Copy of account of Sh. Sahil Singla and Smt. Kiran Singla in the books of M/s TJR Properties Private Limited for A.Y.2014-15 (Paperbook page 80) 4. Bank Account statements of Sh. Sahil Singla and Smt. Kiran Singla for A.Y. 2014- 15 (Paperbook Page 81) 5. Copy of Assessment order dated 26.12.2019 passed u/s 153A(l)(b) r.w.s 143(3) of Smt. Kiran Singla for A.Y. 2014-15. (Paperbook Page 329-320) 50.4 It has been contended that the assessee company received unsecured loan of Rs.1 lakh from Shri Sahil Singla and Smt. Kiran Singla on 31.08.2013 and they were returned on 11.04.2017; that although documentary evidences were filed before both the taxing authorities, neither of them raised any objection regarding any of these documents; that ignoring all the documentary evidences, the AO, though he was initially of the opinion that no addition be made, later ITA 3 &144/CHD/2023 A.Y. 2014-15 49 on went on to make the additions following dictat of a third party; that the ld. CIT(A) also illegally confirmed the addition, overlooking the fact that in the cases of both, Shri Sahil Singla and Smt. Kiran Singla, these cash deposits stood accepted by that very AO himself; that the ld. CIT(A) has erred in observing that the assessee company had failed to submit any documentary evidences other than the bank statement. 50.5 The ld. DR has placed strong reliance on the impugned order. 51.1 Here also we find that it is a case of confirmation of addition wrongly made. The ld. CIT(A)’s order is a result of complete misreading and non reading of material documentary evidence brought on record by the assessee. 51.2 The assessee had submitted evidence in the shape of ITR-V of Shri Sahil Singla for assessment year 2014-15, a copy of account of Shri Sahil Singla and Smt. Kiran Singla in the books of the assessee company, for assessment year 2014-15 and bank account statements Shri Sahil Singla and Smt. Kiran Singla, for assessment year 2014-15. Copies of these documents have been filed before us at pages 77,80 ITA 3 &144/CHD/2023 A.Y. 2014-15 50 and 81 of the APS before us also, the assessee company had filed a copy of the assessment order dated 24.12.2019, by Shri Sahil single and assessment order dated 26.12.2019, of Smt. Kiran Singla, for assessment year 2014-15, passed u/s 153A(1)(b) read with Section 143(3) of the Act, passed by the same AO as who had assessed the case of the assessee company for the same assessment year. The AO accepted the credit worthiness of Shri Sahil Singla and Smt. Kiran Singla in their respective assessment proceedings, while he made addition of the same in the case of the assessee company. This course of action, evidently, is impermissible in law. The same transaction cannot be held to be as unexplained u/s 68 of the Act in one assessment proceedings and it cannot be held to be genuine and credible in the other related APS for the same year. From this, it is amply clear that the addition had been made the AO without any application of mind whatsoever. The ld. CIT(A), however, erred in failing to take into consideration this basic aspect of the matter and confirming the addition, which, from its inception could not have been made. The contention of the assessee that it had received an unsecured loan of Rs.1 lac from Shri Sahil Singla and Smt. Kiran Singla on 31.08.2013 and that it was ITA 3 &144/CHD/2023 A.Y. 2014-15 51 returned on 11.04.2017, has not been disputed and it stands proved on record. The assessee company had submitted all the relevant documentary evidence in this regard before both the taxing authorities, which did not stand questioned by either of them. However, even in the face of this unrebutted documentary evidence, the AO made the addition. The addition, as observed, was made despite the fact that the AO, in his Note, had not evinced any inclination to make any addition whatsoever. However, as correctly contended and as also stands available from the record, it was on the dictat of a third party, that the addition was made by the AO, when such addition is not sustainable in the eye of law. The ld. CIT(A) wrongly confirmed the addition made on a specious observation that there was an immediate cash deposit of Rs.1 lac in the bank account, the source whereof had not been explained, this, despite the fact that the alleged immediate cash deposits were accepted by the same AO in the assessment proceedings of Shri Sahil Singla and Smt. Kiran Singla. While doing so, the ld. CIT(A) neither rebutted the documentary evidence brought on record by the assessee, nor did he ask the assessee the submit any other documentary evidence concerning the amount received and ITA 3 &144/CHD/2023 A.Y. 2014-15 52 given back by the assessee to Shri Sahil Singla and Smt. Kiran Singla. In fact, documents furnished by the assessee in the evidence were not even commented upon adversely by the ld. CIT(A). Rather, they were not at all commented upon, leading to the conclusion that these documents were not at all looked into by the ld. CIT(A). In the absence of any rebuttal to such documentary evidence, the ld. CIT(A) erred in confirming the addition. Whereas the ld. CIT(A) observed that the assessee company had failed to submit any documentary evidence other than the bank statements, no proceedings, either under Section 133(6), or Section 131 of the Act, were taken out, for making any further investigation into the matter. 52. In view of the above, finding force therein, Ground No.9 is accepted and the addition of Rs.1 lac is deleted. 53.1 Apropos Ground No.10, amount of Rs.3 lacs received by the assessee from Shri Triloki Nath Singla, HUF was added by the AO. The AO made addition of all the credit entries in the bank, of Rs.3,22,01,650/-, holding that the purpose and utilization of the funds was not explained by the assessee. The assessee had submitted the following ITA 3 &144/CHD/2023 A.Y. 2014-15 53 documents before the AO, which were also filed before the ld. CIT(A) vide the assessee's reply dated 21.03.2020: 1. ITR-V of Tirloki Nath (HUF) for A.Y. 2014-15. 2. Copy of account of Tirloki Nath HUF and T.N. Singla in the books of M/s TJR Properties Private Limited for A.Y.2014-15. 3. Copy of account of cash book in the books of T.N.Singla (HUF) 4. Bank Account statements of Tirloki Nath (HUF) for A.Y. 2014-15 53.2 The ld. CIT(A) has noted at pages 76, 81 and 95 of his order, the documents submitted by the assessee vide its reply dated 21.03.2020. The assessee had received an amount of Rs.3 lacs on 31.08.2013 and that of Rs.75 lacs on 18.09.2013, from Shri Triloki Nath Singla, HUF. The documents in support, filed by the assessee were the bank account statement, the ledger account, the confirmation and the ITR of Shri Triloki Nath Singla, HUF. The ld. CIT(A) observed that there was immediate cash deposit of Rs.3 lacs in the bank account of Shri Triloki Nath Singla, HUF and the source thereof had not been explained; that in respect of the remaining amount of Rs.75 lacs, on perusal of the documents furnished by the assessee, it had been observed that the said amounts had been explained as received as unsecured loan; that the transaction had been found to have been routed through the bank account from the sale proceeds of mutual funds of Rs. 85 lacs, reflected in the ITA 3 &144/CHD/2023 A.Y. 2014-15 54 computation of income; and that the identity and credit worthiness also stood established from the ITR details of Rs.75 lacs. As such, addition of Rs.3 lacs was confirmed by the ld. CIT(A), holding that the immediate cash deposit of Rs.3 lacs in the bank account of Smt. Kiran Singla and the source thereof had not been explained. 53.3 Before us, in the Paper Book, at pages 54 to 57 thereof, the assessee has furnished copies of the documents furnished before the ld. CIT(A), copy of the assessment order dated 26.12.2019 passed u/s 153A(1)(b) read with Section 143(3) of the Income Tax Act, in the case of Smt. Kiran Singla for assessment year 2014-15. It has been contended that it is evident from the copy of cash book of Shri Triloki Nath Singla, HUF, that the HUF deposited cash of Rs.3 lacs on 20.08.2013 and the same was withdrawn on 06.08.2013, as is available from the bank statement. It has been submitted that all the documentary evidences were filed before the AO as well as the ld. CIT(A); that however, neither authority raised any objection against the documents so filed; that the AO ignored all the documentary proofs and followed the dictat of the third party and made addition of Rs.3 lacs and the ld. CIT(A) wrongly confirmed such ITA 3 &144/CHD/2023 A.Y. 2014-15 55 addition, holding that there was immediate cash deposit of Rs.3 lacs in the bank account and that the source thereof had not been explained; that the assessee had filed an elaborate written submission before the ld. CIT(A) in 2020; that the ld. CIT(A) had more than two years to examine the documents submitted by the assessee, or to ask the assessee to submit any other document, if so required; that however, it was not so done and the assessee was never asked to submit any other documentary evidence. 53.4 The ld. DR, on the other hand, has placed strong reliance on the impugned order in this regard also. 54. Having considered the rival contentions in the light of the material placed on record, we find the grievance of the assessee to be justified. The documentary evidence furnished by the assessee in the shape of ITR-5 of Shri Triloki Nath Singla, HUF for assessment year 2014-15, account of Shri Triloki Nath Singla, HUF and Shri T.N.Singla in the books of M/s TJR Properties Pvt. Ltd., for assessment year 2014-15, account of cash book in the books of Shri Triloki Nath Singla, HUF, bank account statements of Shri Triloki Nath Singla, HUF, for assessment year 2014-15 and the assessment order dated 26.12.2019, passed u/s 153A(1)(b) ITA 3 &144/CHD/2023 A.Y. 2014-15 56 read with Section 143(3) of the Income Tax Act, in the case of Smt. Kiran Singla, for assessment year 2014-15, which were duly explained by the assessee as supporting the stand taken by the assessee on the amount of Rs.3 lacs, have nowhere been rebutted by the taxing authorities. The taxing authorities, however, against all cannons of the principles of natural justice, have simply brushed aside these voluminous documentary evidence, without even referring to the same in their respective orders. It stands established on record that the amount was returned to the lender by the assessee. The cash book of the lender shows that the amount was deposited on 20.08.2013. The bank statement makes it clear that it was withdrawn on 06.08.2013. This has nowhere been put to challenge by the ld. CIT(A) and the observation that there was immediate deposit in cash of Rs.3 lacs and that the source thereof had not been explained, is not borne out from anything on record in contrast to the evidence furnished by the assessee. Further, in case of doubt, the authorities ought to have raised queries from the assessee, which was not done. No enquiry was also carried out from the lender HUF. No proceedings were initiated either u/s 133(6) or 131 of the Act, for further investigation into the ITA 3 &144/CHD/2023 A.Y. 2014-15 57 matter, if any such investigation was required. As such, both the authorities were, in fact, satisfied with the explanation of the assessee and as such, there was no reason for making the addition or for confirming the same at the hands of the ld. CIT(A). 55. In view of the above, Ground No. 10 is accepted and the addition of Rs.3 lacs is deleted. 56. Concerning Ground No. 11, this issue pertains to addition of Rs.7 lacs on account of income deposited in cash. The addition of Rs.3,22,01,650/- of all the credit entries in the bank, as made by the AO included cash deposit of Rs.7 lacs by the assessee company in its bank account, holding that the purpose and utilization of such funds had also not been explained by the assessee. 57.1 The ld. CIT(A) confirmed the addition, holding that no evidence/details giving the particulars of the person from whom such cash was received, or the nature of the transaction with them, had been furnished by the assessee, due to which, the cash deposit of Rs.7 lacs had remained unexplained. ITA 3 &144/CHD/2023 A.Y. 2014-15 58 57.2 The ld. Counsel for the assessee has submitted that the assessee had filed copy of income account alongwith copy of cash account, bank account statement, profit & loss account and copy of hire charges account in the books of the assessee company for assessment year 2014-15, before the AO as well as the ld. CIT(A), neither of whom had considered such documentary evidence filed; and that no explanation or further documentary evidence was ever asked for either by the AO or by the ld. CIT(A). 57.3 We find that since undisputedly the assessee had furnished the aforesaid documentary evidence before both the taxing authorities. The ld. CIT(A) was factually incorrect in observing that no evidence/details giving the particulars of the person from whom such cash was received, or the nature of the transaction with them, had been filed. As in the case of the other cash deposits discussed herein above, the assessee company had filed a complete reply before the ld. CIT(A). The ld. CIT(A) had ample time to examine the documentation furnished, which was not done. Despite the assessee having discharged its burden of furnishing documentary evidence in support of the amount deposited, neither the AO, nor the CIT(A) on receipt of the documentary ITA 3 &144/CHD/2023 A.Y. 2014-15 59 evidence put any question to the assessee, or initiated any enquiry, either u/s 133(6) of the Act, or u/s 131 thereof. It stands made out that the assessee had earned the income of Rs.7 lacs from leasing out of vehicle of the company. The copy of account of hire charges, which had been furnished before both the taxing authorities, stands filed before us also. It formed part of the books of account submitted by the assessee company during the assessment proceedings, shown as income in the Profit & Loss Account. Neither of the authorities below have rebutted this documentary evidence, rendering their respective orders to be orders passed as a result of misreading and non reading of material documents brought on record. 57.4 In view of the above, finding force in Ground No.11, the same is accepted and the addition of Rs.7 lacs is deleted. 58. By way of Ground No.12, confirmation of addition of Rs.45 lacs by invoking the provisions of Section 68 of the Income Tax Act, has been brought to challenge. Here, undisputedly, the assessee company submitted the Cash Flow Statements, explanation of each debit and credit entry in the bank account of the assessee company and also filed the balance sheet, affidavit, confirmations, bank statement, ITA 3 &144/CHD/2023 A.Y. 2014-15 60 ITRs, balance sheets and copies of accounts, etc. However, the AO did not consider each credit entry separately, as was required to be done under the law. He made additions of all the credit entries in the bank account of the assessee company without considering the nature, source, credibility and genuineness of each credit transaction received in the assessee's bank account during the year under consideration. Rather, the AO, to start with, was completely satisfied with the genuineness of the company and the sources of the credit entries in the bank account. In pursuance thereof, the AO had sent a detailed note on the comparison of the assessee company with shell companies and the explanation of the credit entries. This was done by way of Deviation Note, addressed to the Deputy Director of Investigation, Mohali, on 26.12.2019, in the letter No. 1733, dated 24.12.2019, passed on his satisfaction, which had been arrived at with regard to the source of the transactions as per the evidence filed on behalf of the assessee and its regular books of account, which stood duly explained. However, the ADIT (Investigation) Mohali, though she was not authorized to do so and though she did not have any jurisdiction over the matter, rejected the Deviation Note of ITA 3 &144/CHD/2023 A.Y. 2014-15 61 the AO in a short time of twelve hours of receipt of the Deviation Note. While doing so, the ADIT (Investigation) Mohali observed that the assessee company was a shell company. Vide letter No.1763 dated 27.12.2019, addressed to the AO, the ADIT (Investigation) Mohali rejected the proposal/Deviation Note suggesting that no addition be made and directed the AO to make additions by assigning flimsy reasons. It was on the basis of such dictat and that too, of a third party, that the AO made the additions including the one in question by way of Ground No.11. Accordingly, all the credit entries in the bank account of the assessee company were added as its undisclosed income u/s 68 of the Income Tax Act. We find that such additions, as rightly contended on behalf of the assessee, are not at all sustainable in the eye of the law. Such addition was made without putting the assessee to show cause thereagainst. Also, the assessee was wrongly treated as a shell company, without any query in this regard having been put to the assessee in the questionnaires issued. The documentary evidence, as discussed, filed on behalf of the assessee, was no way taken into consideration by the AO before making the addition. It has not been disputed that the assessee ITA 3 &144/CHD/2023 A.Y. 2014-15 62 company furnished full explanation concerning the identity, sources, bank account, etc., of each of its creditors and on the basis thereof, no entity could have been treated as a sham entity. 59.1 The ld. CIT(A), while upholding the addition, has observed as follows : "It was further explained that the AO has used statement of Sh. Jagdish Rai Gupta selectively in, parts by drawing wrong inference that M/S TJR was a shell company. It was submitted that M/s TJR Properties was having land which was purchased during F.Y. 2007-18 for Rs.1,73,00,000/- and sold during A.Y. 2012-13 for Rs.5,00,05,000/-by executing registered sale deed on 30.11.2011 and after paying stamp duty. Further, M/s TJR paid earnest money of Rs.1,50,00,000/- during F.Y. 2016-17 for purchase of a plot to build flat /apartment and paid TDS of Rs. 1,50,000/- @1%. Thus, M/s TJR was having income generating apparatus and was undertaking business activities and was not a shell company. 9.3 Facts and material available on record have been considered in detail. Sh. TN Singla and Sh. Jagdish Rai Gupta are the directors/shareholders of the appellant company. Sh. Sahil Singla is the son, Smt. Kiran Singla is the wife and Smt. Sakshi Singla is Daughter in Law of Sh. TN Singla .After taking into consideration the above facts, it is observed that the AO has held in his order the appellant company to be a shell company as merely existing on papers and not carrying out any business activities. After perusing the findings of the AO recorded in the assessment order and the material available on record, it is noted that M/s TJR Properties was having land which was purchased during F.Y. 2007-18 for Rs.l,73,00,000/- and sold during A.Y. 2012-13 for Rs.5,00,05,000/-by executing registered sale deed on 30.11.2011 and paying stamp duty. The same AO has assessed Long Term Capital Gain in the hands of M/s TJR from the said transaction. It is not the case of the AO that the said land was a Benami asset held in the name of M/s TJR. Further, M/s TJR paid earnest money of Rs. 1,50,00,000/- during F.Y. 2016-17 for purchase of a plot to build flat/apartment and paid TDS of Rs. 1,50,000/- @1%. Thus, on facts, it is observed that M/s TJR was having income generating apparatus in past and future years and was undertaking business activities. There is no definition of shell company given under the provisions of Income Tax Act, 1961 or Companies Act, 1956/2013. Every case needs to be examined on merits as per the ITA 3 &144/CHD/2023 A.Y. 2014-15 63 peculiar facts and circumstances to draw such inference and consequences out of the same as per the provisions of Income Tax Act. In order to decide the merit of addition made by the AO on account of unexplained bank credits u/s 68 of the Act, it is required to examine the source and nature of credits received by the appellant terms of conditions laid down in the provisions of section 68 of the Act. Thus, it required to examine the identity and creditworthiness of the persons from who's amounts have been received and genuineness of the transactions on merit considering each credit separately. The AO has not discussed each and cred separately on merits in the assessment order before drawing the inference that the credits were unexplained. During the assessment proceedings, it was observed by AO after going through the reply of the appellant dated 19.12.2019 in respect of particular of such persons from whom such credits were received that the appellant had cred amounting to Rs 3,22,01,650/- in its bank account and the appellant could not explain purpose of such credits. Thus, the addition of Rs.3,22,01,650/- was made by the AO on the ground that the appellant has failed to explain the purpose and utilisation of such credits The appellant submitted during the appellate proceedings that it had received credits of Rs. 3,22,01,650/- in its bank account maintained with Bank of Maharashtra and furnished documentary evidence in support of identity and creditworthiness of such persons a genuineness of transaction which have been also furnished during the assessment proceedings. The AO was again directed during appellate proceedings vide letter no.295 dated 12.08.2021 to examine such credits on merit in respect of identity and creditworthiness of such persons and genuineness of transaction. In the remand report dated 15.07.2022(supra), the AO did not bring on record any adverse findings in respect of identity and creditworthiness of such persons and genuineness of transactions except by stating that appellant is a shell company and doesn't have any profit generating apparatus. It was further stated that one of the group companies, i. e., M/s Evershine Recreation Pvt Ltd was a shell company from whom the appellant has received credits. However, the AO did not make any further enquiry in respect of credits in the bank account during the remand proceedings and relied upon the facts as discussed in the assessment order. The appellant has discharged its onus as required u/s 68 of the Act. All the above mentioned documents were also furnished before the AO during the assessment proceedings. Although the AO has admitted to have received 'the said documents during the assessment proceedings yet the same were not taken into account by the AO while making addition. The AO has recorded in his order that the appellant could not explain the purpose and utilisation of such credits. However, the AO failed to take cognisance of the fact that addition u/s 68 of the Act is to be made if the appellant doesn't offer any explanation regarding the source and nature of credits received in the bank account or if the explanation offered is not found satisfactory by the AO. Whereas in this case the appellant has duly furnished its explanation in respect of bank credits received during the year under consideration alongwith necessary documentary evidence. If ITA 3 &144/CHD/2023 A.Y. 2014-15 64 the AO was not satisfied with the explanation of the AO in respect of source and nature of credits received, he should have recorded such dissatisfaction in the assessment order. However, no adverse finding has been recorded in the assessment order in respect of the documentary evidence furnished by the appellant in support of bank credits. The submissions and documents furnished by the appellant during the appellate proceedings were also forwarded to the AO for remand report. In the remand report also, the AO has not even discussed the documentary evidence furnished by the appellant in support bank credits let alone pointing out any defect in the same. In view of the above discussion and after making independent perusal of documents furnished by the appellant, it is noted that the assessment order is non speaking, mechanical in nature and has been passed without discussing merits of the documents. There is no direct or indirect evidence pointed out by the AO before making such additions. Therefore, after considering the merits of the case, analysis of credits as per the above table and strength of documentary evidence, it is observed that there is no justification in such addition made in the hands of the appellant u/s 68 of the Act. Therefore, the addition of Rs. 2,77,01,650/- is hereby deleted." 59.2 Thus, the ld. CIT(A) deleted the addition of Rs.2,77,01,650/- on verification of all the documentary evidences filed. The addition of Rs.45 lacs was, however, confirmed, again, without asking the assessee for any doubt to be cleared, if the ld. CIT(A) had entertained any such doubt, and without asking the assessee to furnish any other documents by way of evidence, by way of issuance of any Show Cause Notice or any query raised. 59.3 The AO had observed, in para 11.1 of the assessment order, that the assessee had not produced its books of account for verification during the assessment proceedings. ITA 3 &144/CHD/2023 A.Y. 2014-15 65 In this regard, the undisputed stand taken by the assessee remains that the search was conducted at the business premises of M/s Kansal Singla & Associates, Chandigarh; that during the search, regular books of account alongwith bank statements of the assessee company, were found, which fact also stands mentioned at page 357 of the Appraisal Report. Copies of all the books of account were taken on CD by the Department, as per Panchnama of M/s Kansal Singla & Associates, Chandigarh. The books of account were also examined by the AO before forwarding his Deviation Note to the Investigation Wing, even as per the contents of the AO’s letter dated 24.12.2019, addressed to the ADIT (Investigation) Mohali. The books of account were also submitted by the assessee before the AO during the remand proceedings, on 16.02.2022, as is evident from APB 84. The AO made the additions merely on the dictat of a third party i.e., the ADIT (Investigation) Mohali, without going into the merits, all the documentary evidence submitted. The ld. CIT(A) relied on the very same documentary evidence and gave relief of an amount of Rs.2,77,01,650/-. Curiously, though the addition of Rs.45 lacs was illegally confirmed by the ld. CIT(A), without considering that since the assessee ITA 3 &144/CHD/2023 A.Y. 2014-15 66 had discharged its onus of proving the identity and credit worthiness of its lenders and the genuineness of the transaction, it was the AO who had failed to discharge the onus which had thereafter shifted on to him, and who had also failed to rebut the evidence filed by the assessee. 59.4 Reliance has rightly been placed by the ld. Counsel for the assessee on the decision of the Hon'ble Delhi High Court in the case of “Pr. CIT (Central)-I Vs, M/s Adamine Construction Pvt. Ltd.”, 2018 (2) TMI, 1815 (Delhi), holding, under similar facts and circumstances, that the AO had gone into by the report received and had not made the necessary further enquiries, like any enquiry into the bank accounts, or the other particulars available with him and rather basing his entire findings on the report; that this could not be considered as primary material, and that the assessee company had discharged the onus cast upon it, by providing the basic details, which were not suitably enquired into by the AO. The ld. Counsel for the assessee has contended that vide order dated 28.09.2018, the Department’s SLP against the said decision of the Hon'ble Delhi High Court in the case of “Adamine Construction” (supra), has been dismissed. ITA 3 &144/CHD/2023 A.Y. 2014-15 67 Before us, the Department has not been able to cite any decision contrary to “Adamine Construction” (supra). 60. In view of the above, the assessee's grievance by way of Ground No.12 is found to be justified and it is accepted as such. The addition of Rs.45 lacs is, accordingly, deleted. 61. Ground No.13 challenges the confirmation of the disallowance of loss of Rs.2,97,834/-. The AO observed that the assessee company had shown losses of Rs.2,97,834/- in its return of income; that since the assessee company had not undergone any business activity during the year under consideration and the assessee company had failed to produce the bills/vouchers of the expenses claimed by it, the genuineness of the expenses claimed could not be proved; that further, the assessee company had also failed to produce its books of account for verification and examination; that still further, the assessee company had been found to be a shell company managed and controlled by Shri Triloki Nath Singla, having no genuine regular business; and that therefore, the losses claimed of Rs.2,97,834/- were being disallowed. ITA 3 &144/CHD/2023 A.Y. 2014-15 68 62.1 Here again, the ld. CIT(A) has observed that the assessee did not furnish any documentary evidence in respect of the losses claimed to have been incurred. It was on this basis that the ld. CIT(A) confirmed the disallowance of loss of Rs.2,97,834/-. 62.2 The stand of the assessee is that the AO had wrongly observed that bills and vouchers and books of account had not been produced by the assessee. It has again been submitted, and not disputed by the Department, that the search had been conducted on the business premises of M/s Kansal Singla & Associates, Chandigarh, wherein, regular books of account alongwith bank statements of the assessee company, were found and copies thereof were taken on CD by the Department, which fact is also evident from the Panchnama of M/s Kansal Singla & Associates. This being so, obviously, the AO was incorrect in holding that the assessee had not produced its books of account, bills and vouchers for the assessment proceedings. Since the Department had taken the same on CD, the books of account, also comprised of the bills and vouchers were already in the possession of the Department. ITA 3 &144/CHD/2023 A.Y. 2014-15 69 62.3 Further, the assessee is also correct when it contends that the books of account were examined by the AO at the time of sending his Deviation Note to the Investigation Wing. Further still, even during the remand proceedings, the assessee had submitted the books of account before the AO, on 16.02.2022. 63. On the basis of the above, we find the addition of Rs.2,97,834/- to be unsustainable and the same is, accordingly, deleted, while accepting Ground No.13. 64.1 According to Ground No.14, the ld. CIT(A) has erred in upholding the disallowance of depreciation on vehicle to the extent of Rs.9,11,484/- 64.2 It is seen that the disallowance of Rs.9,11,484/-, representing depreciation on vehicle, has been made by the AO without entering any discussion with regard thereto in the assessment order. The ld. CIT(A) confirmed the disallowance, again, without any discussion. The assessee had filed before the authorities below, the computation sheet of M/s TJR Properties Pvt. Ltd., for assessment year 2014- 15, the Fixed Assets Schedule and the Registration Certificate of the car. The stand taken is that the vehicle ITA 3 &144/CHD/2023 A.Y. 2014-15 70 was registered in the name of the assessee company and it was used for business purposes only. 64.3 It is seen that the documents furnished by the assessee in support of its claim have nowhere been rebutted by either of the authorities below. Particularly, the Registration Certificate alongwith the other documents filed has nowhere been rebutted. This being so, the very basis of the disallowance made is unsustainable in law and we hold so. Accordingly, the addition of Rs.9,11,484/- is deleted, found to be based on no material, whatsoever and in direct opposition to the documentary evidence furnished by the assessee. Accordingly, Ground No.14 is also accepted. 65. In the result, the appeal is partly allowed, as indicated. ITA 144/CHD/2023 66. This is cross appeal filed by the Department to the assessee's appeal in ITA 3/CHD/2023, for assessment year 2014-15. The following grounds have been raised : i) Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in not appreciating the fact that the amount of Rs. 2,77,01,650/-credited in bank account of assessee during F.Y. 2013-14 was to be considered as unexplained cash credit u/s 68 of the Act as the ITA 3 &144/CHD/2023 A.Y. 2014-15 71 assessee did not establish its genuineness during the course of assessment proceedings ? ii) Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in allowing the appeal of the assessee by holding that identity and creditworthiness 6f the persons from whom such credits were received, were proved, however, genuineness of the transactions was not established as the purpose of such credit was not explained? iii) Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in allowing the appeal of the assessee on the issue of credit entries even when all three limbs of Sec 68 was not proved/ established by the assessee? 67. The single issue raised by the Department in its appeal is the action of the ld. CIT(A) in deleting the addition of Rs.2,77,01,650/- credited in the bank account of the assessee company during the year under consideration. According to the Department, the ld. CIT(A) erred in not appreciating the fact that the amount of Rs.2,77,01,650/- was to be considered as unexplained cash credit u/s 68 of the Act, since the assessee did not establish its genuineness during the assessment proceedings. The Department has contended that the ld. CIT(A) erred in holding that the identity and credit worthiness of the persons from whom the credits comprising the amount of Rs.2,77,01,650/- were received, stood proved, whereas the genuineness of the transactions had not been established by the assessee, since the purpose of the credits had not been explained and ITA 3 &144/CHD/2023 A.Y. 2014-15 72 thereby all the three limbs of the provisions of Section 68 of the Act did not stand proved by the assessee. 68. The ld. CIT(A), it is seen, in the impugned order, has observed inter-alia that the assessee had explained that the AO had used the statement of Shri Jagdish Rai Gupta, selectively, in parts, by drawing a wrong inference that M/s TJR Properties Pvt. Ltd. was a shell company; that the assessee had submitted that that M/s TJR Properties was having land which was purchased during F.Y. 2007-18 for Rs.1,73,00,000/- and sold during A.Y. 2012-13 for Rs.5,00,05,000/-by executing registered sale deed on 30.11.2011 and after paying stamp duty. Further, M/s TJR paid earnest money of Rs.1,50,00,000/- during F.Y. 2016-17 for purchase of a plot to build flat /apartment and paid TDS of Rs. 1,50,000/- @1%; that the assessee had submitted that M/s TJR was having income generating apparatus and was undertaking business activities and was not a shell company; that the CIT(A) considered the facts and material available on record and held that Sh. TN Singla and Sh. Jagdish Rai Gupta are the directors/shareholders of the appellant company and Sh. Sahil Singla is the son, Smt. Kiran Singla is the wife and Smt. Sakshi Singla is Daughter ITA 3 &144/CHD/2023 A.Y. 2014-15 73 in Law of Sh. TN Singla; that after taking into consideration these facts, the ld. CIT(A) observed that the AO has held in his order the appellant company to be a shell company as merely existing on papers and not carrying out any business activities; that after perusing the findings of the AO recorded in the assessment order and the material available on record, the ld. CIT(A) noted that M/s TJR Properties was having land which was purchased during F.Y. 2007-18 for Rs.l,73,00,000/- and sold during A.Y. 2012-13 for Rs.5,00,05,000/-by executing registered sale deed on 30.11.2011 and paying stamp duty. The CIT(A) further observed that the same AO had assessed Long Term Capital Gain in the hands of M/s TJR from the said transaction; that it was not the case of the AO that the said land was a Benami asset held in the name of M/s TJR. Further, M/s TJR paid earnest money of Rs. 1,50,00,000/- during F.Y. 2016-17 for purchase of a plot to build flat/apartment and paid TDS of Rs. 1,50,000/- @1%. Thus, on facts, the CIT(A) observed that M/s TJR was having income generating apparatus in past and future years and was undertaking business activities; that there was no definition of shell company given under the provisions of Income Tax Act, 1961 ITA 3 &144/CHD/2023 A.Y. 2014-15 74 or Companies Act, 1956/2013. The ld. CIT(A) observed that every case needs to be examined on merits as per the peculiar facts and circumstances to draw such inference and consequences out of the same as per the provisions of Income Tax Act; that in order to decide the merit of addition made by the AO on account of unexplained bank credits u/s 68 of the Act, it was required to examine the source and nature of credits received by the appellant terms of conditions laid down in the provisions of section 68 of the Act. Thus, it was required to examine the identity and creditworthiness of the persons from who's amounts have been received and genuineness of the transactions on merit considering each credit separately. The ld. CIT(A) held that the AO had not discussed each and cred separately on merits in the assessment order before drawing the inference that the credits were unexplained; that during the assessment proceedings, it was observed by AO after going through the reply of the appellant dated 19.12.2019 in respect of particular of such persons from whom such credits were received that the appellant had cred amounting to Rs 3,22,01,650/- in its bank account and the appellant could not explain purpose of such credits. Thus, the addition of ITA 3 &144/CHD/2023 A.Y. 2014-15 75 Rs.3,22,01,650/- was made by the AO on the ground that the appellant has failed to explain the purpose and utilisation of such credits; that the assessee submitted during the appellate proceedings that it had received credits of Rs. 3,22,01,650/- in its bank account maintained with Bank of Maharashtra and furnished documentary evidence in support of identity and creditworthiness of such persons a genuineness of transaction which have been also furnished during the assessment proceedings; that the AO was again directed during appellate proceedings vide letter no.295 dated 12.08.2021 to examine such credits on merit in respect of identity and creditworthiness of such persons and genuineness of transaction. In the remand report dated 15.07.2022(supra), the AO did not bring on record any adverse findings in respect of identity and creditworthiness of such persons and genuineness of transactions except by stating that appellant is a shell company and doesn't have any profit generating apparatus. It was further stated that one of the group companies, i. e., M/s Evershine Recreation Pvt Ltd was a shell company from whom the appellant has received credits. However, the AO did not make any further enquiry in respect of credits in the bank account during the ITA 3 &144/CHD/2023 A.Y. 2014-15 76 remand proceedings and relied upon the facts as discussed in the assessment order. It was submitted that the assessee has discharged its onus as required u/s 68 of the Act and all the above mentioned documents were also furnished before the AO during the assessment proceedings; that although the AO had admitted to have received 'the said documents during the assessment proceedings yet the same were not taken into account by the AO while making addition. It was submitted that the AO had recorded in his order that the appellant could not explain the purpose and utilisation of such credits, however, the AO failed to take cognisance of the fact that addition u/s 68 of the Act was to be made if the appellant doesn't offer any explanation regarding the source and nature of credits received in the bank account or if the explanation offered is not found satisfactory by the AO, whereas in this case the appellant has duly furnished its explanation in respect of bank credits received during the year under consideration alongwith necessary documentary evidence. It was submitted that if the AO was not satisfied with the explanation of the AO in respect of source and nature of credits received, he should have recorded such dissatisfaction in the assessment order. However, no adverse ITA 3 &144/CHD/2023 A.Y. 2014-15 77 finding has been recorded in the assessment order in respect of the documentary evidence furnished by the appellant in support of bank credits. The submissions and documents furnished by the assessee during the appellate proceedings were also forwarded to the AO for remand report. In the remand report also, the AO did not even discussed the documentary evidence furnished by the appellant in support of bank credits let alone pointing out any defect in the same. In view of the above discussion and after making independent perusal of documents furnished by the appellant, it was noted that the assessment order is non speaking, mechanical in nature and has been passed without discussing merits of the documents. The ld. CIT(A) held that there was no direct or indirect evidence pointed out by the AO before making such additions. Therefore, after considering the merits of the case, analysis of credits as per the above table and strength of documentary evidence, it was observed that there was no justification in such addition made in the hands of the appellant u/s 68 of the Act. Therefore, the addition of Rs. 2,77,01,650/- was deleted by the ld. CIT(A). ITA 3 &144/CHD/2023 A.Y. 2014-15 78 69.1 In sum, the ld. CIT(A) held that M/s TJR Properties Pvt. Ltd. was having income generating apparatus in the earlier and later years and was undertaking business activities and that as such, it was not a shell company; that the source and nature of the credits received were required to be examined separately in case of each credit by examining the identity and credit worthiness of the lenders and the genuineness of the transactions; that this had not been done by the AO; that the AO had observed that the assessee had credits amounting to Rs.3,22,01,650/- in its bank account, the purpose whereof could not be explained by the assessee and that the assessee had also failed to explain the utilization of such credits; that the assessee had, during the assessment proceedings, furnished documentary evidence in support of the identity and credit worthiness of its lenders and the genuineness of the transactions; that such evidence had also been furnished in the first appellate proceedings; that the AO had again been directed, during the assessment proceedings, vide letter, to examine such credits on merits in respect of the identity and credit worthiness of the persons and the genuineness of the transactions; that in his Remand Report dated 15.07.2022, the AO had not ITA 3 &144/CHD/2023 A.Y. 2014-15 79 brought on record, any adverse findings with regard to the identity and credit worthiness of the lenders or the genuineness of the transactions, other than saying that the assessee was a shell company, not having any profit generating apparatus; that it had been further stated by the CIT(A) that one of the group companies, i.e., M/s Evershine Recreation Pvt. Ltd., again, a shell company, had been a company from whom the assessee had received credits; that however, the AO had not made any further enquiry in respect of the credits in the bank account of the assessee even during the remand proceedings and had merely relied on the facts as discussed in the assessment order; that the assessee had discharged its onus u/s 68 of the Act; that the assessee had furnished all the documents before the AO during the assessment proceedings; that though the AO had admitted having received the said documents during the assessment proceedings, the same had not been taken into consideration by the AO while making the addition; that the AO failed to consider that addition u/s 68 of the Act is to be made only if the assessee does not offer any explanation regarding the source and nature of the credits received or if the explanation offered is not found to be satisfactory by the AO; ITA 3 &144/CHD/2023 A.Y. 2014-15 80 that on the other hand, the assessee, in its case, had furnished its explanation in respect of the bank credits received during the year, along with necessary documentary evidence; that if the AO was not satisfied with the explanation of the AO in respect of the source and nature of the credits received, he should have recorded such dissatisfaction in the assessment order; that however, the AO had not recorded any adverse finding in the assessment order in respect of the documentary evidence furnished by the assessee in respect of the bank credits; that the submissions and documents furnished by the assessee during the appellate proceedings had also been forwarded to the AO for a remand report; that in the remand report also, the AO had not even discussed the documentary evidence furnished by the assessee, let alone pointing out any defect therein; that as such, the assessment order was non- speaking and mechanical in nature and had been passed without discussing the merits of the documents; that there was no direct or indirect defect pointed out by the AO before making the additions; and that therefore, there was no justification in such addition made in the hands of the assessee u/s 68 of the Act. It was on the basis of the above ITA 3 &144/CHD/2023 A.Y. 2014-15 81 observations that the addition of Rs.2,77,01,650/- was deleted by the ld. CIT(A). 69.2 Immediately, we do not find any error whatsoever in the detailed reasoned order passed by the ld. CIT(A) while deleting the addition of Rs.2,77,01,650/-. Remarkably, there is no rebuttal before us to the finding of the ld. CIT(A) that in the remand report, the AO has not even discussed the documentary evidence furnished by the assessee in support of the bank credits, much less pointing out any defect in the same. Again, remarkably, it was the very same documentary evidence which had been furnished by the assessee before the AO during the original assessment proceedings also. That being so, as pointed out somewhere in the preceding portion of this order, while discussing the assessee's appeal for the year under consideration, since the documentary evidence furnished by the assessee before the ld. CIT(A) was the very same documentary evidence, to the last page thereof, which was furnished by the assessee in the original assessment proceedings before the AO, it could not be termed as an additional evidence, though the assessee, as a abundant precaution, stated it to be so. Therefore, it was the very same documentary evidence which the AO again got ITA 3 &144/CHD/2023 A.Y. 2014-15 82 the opportunity of examining, by way of the remand proceedings ordered by the ld. CIT(A), however, as in the assessment order, in the remand report also, the AO did not make even a mention of the evidence filed by the assessee, what to talk of discussing the same and rebutting it for arriving at a conclusion, addition was required to be made. On the contrary, as discussed, initially the AO was not in favour of any addition and a Deviation Note had been sent by him to the ADIT(Investigation). However, though no jurisdiction was vested in him to do so, the AO illegally overruled and directed the additions to be made which dictat of a third party was illegally followed by the AO while passing the assessment order, even in the face of the voluminous documentary evidence filed by the assessee, it was on the basis of which, that the AO had recorded the dissatisfaction note. 69.3 Other than the above, the Assessing Officer had wrongly held the assessee company as shell company without any substance or cogent reason, and the ld. CIT(A) has rightly declared this company as a genuine company and not a shell company. The status of the company has already been decided by us in our order of the company for ITA 3 &144/CHD/2023 A.Y. 2014-15 83 assessment year 2012-13 and 2013-14 on the same facts, wherein we have confirmed it as a genuine company and not as shell company. 69.4 It is despite the above inability of the Department to repel the evidence based stand taken by the assessee, that the Department has raised the issue that the genuineness of the transactions had not been established. We, on the basis of the preceding discussion, find ourselves unable to subscribe to this view of the Department. Accordingly, finding no merit therein, all the grounds raised by the Department are rejected and the appeal filed by the Department is dismissed. 70. In the result, whereas ITA-3/CHD/2023 is partly allowed, as indicated above, the Department’s appeal in ITA- 144/CHD/2023 is dismissed. Order pronounced on 02.02.2024. Sd/- Sd/- (VIKRAM SINGH YADAV) (A.D.JAIN ) ACCOUNTANTMEMBER VICE PRESIDENT “Poonam ITA 3 &144/CHD/2023 A.Y. 2014-15 84 “आदेश क琉 灹ितिलिप अ灡ेिषत/ Copy of the order forwarded to : 1. अपीलाथ牸/ The Appellant 2. 灹瀄यथ牸/ The Respondent 3. आयकर आयु猴/ CIT 4. िवभागीय 灹ितिनिध, आयकर अपीलीय आिधकरण, च瀃डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड榁फाईल/ Guard File आदेशानुसार/ By order, Assistant Registrar
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