ACIT CENTRAL CIRCLE-2(1), Mumbai V. M/S. G NINE MODULAR PVT. LTD., Mumbai

ITA 3214/MUM/2022

AI Insights

The case involves multiple appeals by the Revenue against the orders of the Ld. Commissioner of Income-tax (Appeals) which had deleted the additions made by the Assessing Officer on the grounds of lack of incriminating material. The appeals pertained to the assessment years 2015-16, 2016-17, and 2017-18 for M/s G Nine Modular Pvt. Ltd. and M/s G Trade and Capital Venture Pvt. Ltd. The main legal contention revolved around whether the additions made by the Assessing Officer were justified in the absence of any incriminating material found during the search operations conducted under section 132 of the Income-tax Act, 1961. The Tribunal examined the submissions, evidence, and relevant legal precedents before arriving at its decision.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123632 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 21-02-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 20-12-2022
• Other Referred Cases: CIT v. Continental Warehousing Corporation [2015 374 ITR 645], B Kishore Kumar Vs DCIT, JCIT (OSD) Nitin in ITA No. 2092/M/2019, Best Infrastructure (India) Pvt. Ltd.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained expenditure; Business income; Document seized; Tangible material; Bad and doubtful debts; Accommodation entries; Documents seized
• Section: 68; 132; 69C; 143(3); 133A; 153A; 143(1); 250; 72

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI PAVAN KUMAR GADALE (JUDICIAL MEMBER) ITA No. 3212, 3213 & 3214/MUM/2022 Assessment Years: 2015-16, 2016-17 & 2017-18 ACIT Central Circle-2(1), Old CGO Building, 804, 8 th floor, M.K. Road, Mumbai-400020. Vs. M/s G Nine Modular Pvt. Ltd., 13 BKT Ind. Park Sector II, Gurai Pada, Nr Varun Industry Waliv, Vasai (E), Mumbai-401208. PAN No. AAECG 2664 B Appellant Respondent ITA No. 3247/MUM/2022 Assessment Year: 2012-13 ACIT Central Circle-2(1), Old CGO Building, 804, 8 th floor, M.K. Road, Mumbai-400020. Vs. M/s G Trade and Capital Venture Pvt. Ltd., 6 G Laxmi Industrial Estate, New Linking Road, Andheri (West), Mumbai-400053. PAN No. AADCG 7583 Q Appellant Respondent Revenue by : Dr. Kishor Dhule, CIT-DR Assessee by : Mr. Naresh Jain, AR Date of Hearing : 22/02/2023 Date of pronouncement : 28/04/2023 PER OM PRAKASH KANT, AM These appeals by the Revenue are directed against separate order passed by the Ld. Commissioner of Income dated 20.10.2022 in the case of G 27.10.2022 in the case of G The facts and circumstances of the cases and grounds raised identical, same were heard together and disposed off by way of this consolidated order for convenience. 2. First, we take up the appeal of the Revenue 3213/Mum/2022 in the case of M/s G Nine Modular P ltd assessment year 2015 reproduced as under: 1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) no incriminating material was found to sustain addition. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) entire additions of Rs.1,90,20,630/ assessment order onl incriminating material was found to sustain the addition without order was passed after carefully analyzing the seized material and evidences found during the course of search and survey pr 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) entire additions of Rs.1,90,20,630/ M/s G Nine Modular and M/s G Trade ITA Nos. 3212 to 3214 and 3247/M/2022 ORDER PER OM PRAKASH KANT, AM These appeals by the Revenue are directed against separate order passed by the Ld. Commissioner of Income-tax (Appeals) vide dated 20.10.2022 in the case of G-Nine Modular Pvt. Ltd. 27.10.2022 in the case of G-Trade Capital Venture and Pvt. Ltd. cts and circumstances of the cases and grounds raised , same were heard together and disposed off by way of this consolidated order for convenience. we take up the appeal of the Revenue bearing ITA No. 3213/Mum/2022 in the case of M/s G Nine Modular P ltd assessment year 2015-16. The grounds raised by the Revenue are reproduced as under: Whether on the facts and circumstances of the case and in law, the Ld. CIT(A)-48, Mumbai is right in holding that no incriminating material was found to sustain addition. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A)-48, Mumbai is right in deleting the entire additions of Rs.1,90,20,630/- made in the assessment order only on the ground that no incriminating material was found to sustain the addition without appreciating the facts that the assessment order was passed after carefully analyzing the seized material and evidences found during the course of search and survey proceedings and seized. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A)-48, Mumbai is right in deleting the entire additions of Rs.1,90,20,630/- made in the M/s G Nine Modular and M/s G Trade Capital ITA Nos. 3212 to 3214 and 3247/M/2022 2 These appeals by the Revenue are directed against separate tax (Appeals) vide Nine Modular Pvt. Ltd. and Trade Capital Venture and Pvt. Ltd. cts and circumstances of the cases and grounds raised being , same were heard together and disposed off by way of this bearing ITA No. 3213/Mum/2022 in the case of M/s G Nine Modular P ltd for 16. The grounds raised by the Revenue are Whether on the facts and circumstances of the case and in holding that no incriminating material was found to sustain addition. Whether on the facts and circumstances of the case and 48, Mumbai is right in deleting the made in the y on the ground that no incriminating material was found to sustain the addition appreciating the facts that the assessment order was passed after carefully analyzing the seized material and evidences found during the course of Whether on the facts and circumstances of the case and 48, Mumbai is right in deleting the made in the assessment order without appreciating the facts that the identity, genu lenders were not established after giving ample opportunity to the assessee. 4. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) the appeal filed by the assessee of the Hon’ble Bombay High Court in the case of CIT v. Continental Warehousing Corporation [2015 374 ITR 645] ignoring the fact that appeal is pending before the Hon’ble Supreme Court of India on this issue of power conferred by se adjudicated upon. 3. Briefly stated, facts of fact are that the assessee filed its regular return of income for assessment year under consideration on 30.09.2015 declaring loss of Rs.194,06,767/ assessment was completed u/s 143(3) of the Income (in short ‘the Act’) determining total income at Rs.82,83,510/ wherein addition for ‘ Act. 3.1 Subsequently, a search action u/s 132 of the Act was carried out at the premises of the assessee on 30.11.2019 along with search action at the other entities of the group. The case of the assessee was then centralized with the Dy. CIT Central Circle Mumbai by way of order u/s 127 of the Act passed by the Ld. CIT(A). The DCIT-2(1) (hereinafter shall be referred as ‘the Assessing Officer’) issued notice u/s 153A of the Act asking the assessee to file return of income. In response, the assessee filed return of income on 08.01.2021 declaring loss of Rs.59,68,271/ M/s G Nine Modular and M/s G Trade ITA Nos. 3212 to 3214 and 3247/M/2022 assessment order without appreciating the facts that the identity, genuineness and creditworthiness of the lenders were not established after giving ample opportunity to the assessee. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A)-48, Mumbai is right in allowing the appeal filed by the assessee relying on the decision of the Hon’ble Bombay High Court in the case of CIT v. Continental Warehousing Corporation [2015 374 ITR 645] ignoring the fact that appeal is pending before the Hon’ble Supreme Court of India on this issue of power conferred by section 153A of the Act which was not adjudicated upon. Briefly stated, facts of fact are that the assessee filed its regular return of income for assessment year under consideration on 30.09.2015 declaring loss of Rs.194,06,767/- completed u/s 143(3) of the Income (in short ‘the Act’) determining total income at Rs.82,83,510/ ‘bogus unsecured loan’ was made u/s 68 of the Subsequently, a search action u/s 132 of the Act was carried out at the premises of the assessee on 30.11.2019 along with search action at the other entities of the group. The case of the assessee was then centralized with the Dy. CIT Central Circle Mumbai by way of order u/s 127 of the Act passed by the Ld. 2(1) (hereinafter shall be referred as ‘the Assessing Officer’) issued notice u/s 153A of the Act asking the assessee to file return of income. In response, the assessee filed return of income on 08.01.2021 declaring loss of Rs.59,68,271/-. The Assessing M/s G Nine Modular and M/s G Trade Capital ITA Nos. 3212 to 3214 and 3247/M/2022 3 assessment order without appreciating the facts that ineness and creditworthiness of the lenders were not established after giving ample Whether on the facts and circumstances of the case and 48, Mumbai is right in allowing relying on the decision of the Hon’ble Bombay High Court in the case of CIT v. Continental Warehousing Corporation [2015 374 ITR 645] ignoring the fact that appeal is pending before the Hon’ble Supreme Court of India on this issue of power ction 153A of the Act which was not Briefly stated, facts of fact are that the assessee filed its regular return of income for assessment year under consideration -. The scrutiny completed u/s 143(3) of the Income-tax Act, 1961 (in short ‘the Act’) determining total income at Rs.82,83,510/- was made u/s 68 of the Subsequently, a search action u/s 132 of the Act was carried out at the premises of the assessee on 30.11.2019 along with search action at the other entities of the group. The case of the assessee was then centralized with the Dy. CIT Central Circle-2(1), Mumbai by way of order u/s 127 of the Act passed by the Ld. 2(1) (hereinafter shall be referred as ‘the Assessing Officer’) issued notice u/s 153A of the Act asking the assessee to file return of income. In response, the assessee filed return of income . The Assessing Officer brought to the notice of the assessee the unsecured loans received by the assessee during the year under consideration and in the light of the observations during the search/survey proceedings the Assessing Officer held the unsecur parties namely (i) Ella Finetex Co. Pvt. Ltd., (ii) Kathakali Vincom Pvt. Ltd. (iii) NCL Research and Financial Services Ltd. (iv) Ojas Assets Reconstruction Ltd. & (v)TanayaVincom Pvt. Ltd. unexplained cash credit. unsecured loan of Rs.1,25,00,000/ Pvt. Ltd’. and ‘Kathakali Vincom Pvt. Ltd the income of the assessee in the 143(3) of the Act dated 26.12.2017 assessment order passed u/s 153A of the Act on 08.08.2021 Assessing Officer considered only the balance amounts of unsecured loan of Rs.1,75,00,000/ added the same as unexplained cash credit Assessing Officer also made addition for the disallowance of interest on those accommodation entries of unsecured loan for the amount of Rs.14,45,620/- and for arranging those accommodation e Rs.75,000/-. 4. Aggrieved with the finding of the assessee filed appeal of the assessment proceedings as well as merit of the addition. The M/s G Nine Modular and M/s G Trade ITA Nos. 3212 to 3214 and 3247/M/2022 Officer brought to the notice of the assessee the unsecured loans received by the assessee during the year under consideration and in the light of the observations during the search/survey proceedings he Assessing Officer held the unsecured loans received from Ella Finetex Co. Pvt. Ltd., (ii) Kathakali Vincom Pvt. Ltd. (iii) NCL Research and Financial Services Ltd. (iv) Ojas Assets Reconstruction Ltd. & (v)TanayaVincom Pvt. Ltd. unexplained cash credit. Further, the Assessing Officer noted that unsecured loan of Rs.1,25,00,000/- received from Kathakali Vincom Pvt. Ltd’. was already the income of the assessee in the assessment order passed u/s 143(3) of the Act dated 26.12.2017 and therefore, in the impugned assessment order passed u/s 153A of the Act on 08.08.2021 Assessing Officer considered only the balance amounts of unsecured loan of Rs.1,75,00,000/- as accommodation entry added the same as unexplained cash credit u/s 68 of the Act. The Assessing Officer also made addition for the disallowance of interest on those accommodation entries of unsecured loan for the amount and also, he made addition for the commission for arranging those accommodation entries amounting to Aggrieved with the finding of the Assessing assessee filed appeal before the ld CIT(A) and challenged the legality of the assessment proceedings as well as merit of the addition. The M/s G Nine Modular and M/s G Trade Capital ITA Nos. 3212 to 3214 and 3247/M/2022 4 Officer brought to the notice of the assessee the unsecured loans received by the assessee during the year under consideration and in the light of the observations during the search/survey proceedings, ed loans received from Ella Finetex Co. Pvt. Ltd., (ii) Kathakali Vincom Pvt. Ltd. (iii) NCL Research and Financial Services Ltd. (iv) Ojas Assets Reconstruction Ltd. & (v)TanayaVincom Pvt. Ltd., as Assessing Officer noted that received from ‘TanayaVincom already added into order passed u/s and therefore, in the impugned assessment order passed u/s 153A of the Act on 08.08.2021, the Assessing Officer considered only the balance amounts of as accommodation entry and u/s 68 of the Act. The Assessing Officer also made addition for the disallowance of interest on those accommodation entries of unsecured loan for the amount he made addition for the commission ntries amounting to Assessing officer, the and challenged the legality of the assessment proceedings as well as merit of the addition. The Ld. CIT(A) in combined to 2018-19 held that there was no incriminating material found during the course of the search action at the premises of the assessee and those assessment being unabated have been made without aid of incriminating material the course of search, f High Court in the case of 374 ITR 645 (Bom). 5. Aggrieved with the fi before the Tribunal by way of challenging the finding of the Ld. CIT(A). In ground No. 1 to 3, the Revenue has challenged deletion of all the three additions of unexplained cash credit u/s 68 of the and interest and commission corresponding to amount. In the ground No. 4 Revenue has referred that order of the Hon’ble Bombay High Court in the case of Continental Warehousing Corporation Ltd. (supra), an preferred by the Revenu is pending, therefore also. 6. Before us, the Ld. Departmental Representative (DR) contested the finding of the Ld. CIT(A) on the incriminating material qua the addition of unexplained cash credit u/s 68 of the Act. The Ld. DR submitted that in the case of the assessee along with search action, simultaneous survey M/s G Nine Modular and M/s G Trade ITA Nos. 3212 to 3214 and 3247/M/2022 Ld. CIT(A) in combined appellate order for assessment year 2014 19 held that there was no incriminating material found during the course of the search action at the premises of the assessee and those assessment being unabated, no addition could have been made without aid of incriminating material the course of search, following the finding of the Hon’ble Bombay High Court in the case of Continental Warehousing Corporation Aggrieved with the finding of the Ld. CIT(A), the Revenue is before the Tribunal by way of challenging the finding of the Ld. CIT(A). In ground No. 1 to 3, the Revenue has challenged deletion of all the three additions of unexplained cash credit u/s 68 of the and commission corresponding to unsecured loan amount. In the ground No. 4 Revenue has referred that order of the Hon’ble Bombay High Court in the case of Continental Warehousing Corporation Ltd. (supra), an appeal has been preferred by the Revenue before the Hon’ble Supreme therefore present appeal has been preferred Before us, the Ld. Departmental Representative (DR) contested the finding of the Ld. CIT(A) on the issue of non-existence of any inating material qua the addition of unexplained cash credit u/s 68 of the Act. The Ld. DR submitted that in the case of the assessee along with search action, simultaneous survey M/s G Nine Modular and M/s G Trade Capital ITA Nos. 3212 to 3214 and 3247/M/2022 5 appellate order for assessment year 2014-15 19 held that there was no incriminating material found during the course of the search action at the premises of the no addition could have been made without aid of incriminating material found during ollowing the finding of the Hon’ble Bombay Continental Warehousing Corporation nding of the Ld. CIT(A), the Revenue is before the Tribunal by way of challenging the finding of the Ld. CIT(A). In ground No. 1 to 3, the Revenue has challenged deletion of all the three additions of unexplained cash credit u/s 68 of the Act, unsecured loan amount. In the ground No. 4 Revenue has referred that against order of the Hon’ble Bombay High Court in the case of Continental appeal has been before the Hon’ble Supreme Court, which appeal has been preferred in this case Before us, the Ld. Departmental Representative (DR) contested existence of any inating material qua the addition of unexplained cash credit u/s 68 of the Act. The Ld. DR submitted that in the case of the assessee along with search action, simultaneous survey proceedings u/s 133A of the Act were also carried out at the premises of the unsecured loan provider entities during which it was observed that those entities were not found premises. This fact of non provider companies was also brought to the notice of the Director of the assessee company Mr. Kumar Pal Banda on 20.01.2020 and he could not satisfactorily explain genuineness of the loan and he admitted that part of the loan The Ld. DR submitted that while arriving on the conclusionthat no incriminating material existed in the case of the assessee, the Ld. CIT(A) ignored the statement of Shri Kumar Pal Banda recorded u/s 132(4) of the Act on 14.11.2019 received from certain parties were not genuine and settled in c The learned DR also referred to the statement of Shri JayantilalOtmal Jain and submitted that he could not substantiate genuineness of the unsecured loans in the light of evidence course of search and appearing in the books of accounts of the assessee and third inquiries carried out by the that in view of the decision of the Hon’ble of B Kishore Kumar Vs DCIT recorded under section 132(4) is an admissible evidence and Ld. CIT(A) has completely ignored such a statement. M/s G Nine Modular and M/s G Trade ITA Nos. 3212 to 3214 and 3247/M/2022 proceedings u/s 133A of the Act were also carried out at the unsecured loan provider entities during which it was observed that those entities were not found in existence at their premises. This fact of non-existence of those unsecured loan provider companies was also brought to the notice of the Director of sessee company Mr. Kumar Pal Banda on 14/11/ 2019 and 20.01.2020 and he could not satisfactorily explain genuineness of the loan and he admitted that part of the loan was The Ld. DR submitted that while arriving on the conclusionthat no criminating material existed in the case of the assessee, the Ld. CIT(A) ignored the statement of Shri Kumar Pal Banda recorded u/s 132(4) of the Act on 14.11.2019 wherein he admitted the loan certain parties were not genuine and settled in c The learned DR also referred to the statement of Shri Jain, promoter of the GM group dated 30/11/2019 and submitted that he could not substantiate genuineness of the unsecured loans in the light of evidences gathered dur and survey actions at the premises of the creditors appearing in the books of accounts of the assessee and third inquiries carried out by the Income-tax department. He submitted that in view of the decision of the Hon’ble Madras Court in the case Kumar Vs DCIT (62 taxmann.com 215) statement recorded under section 132(4) is an admissible evidence and Ld. CIT(A) has completely ignored such a statement. M/s G Nine Modular and M/s G Trade Capital ITA Nos. 3212 to 3214 and 3247/M/2022 6 proceedings u/s 133A of the Act were also carried out at the unsecured loan provider entities during which it existence at their existence of those unsecured loan provider companies was also brought to the notice of the Director of 14/11/ 2019 and 20.01.2020 and he could not satisfactorily explain genuineness of settled in cash. The Ld. DR submitted that while arriving on the conclusionthat no criminating material existed in the case of the assessee, the Ld. CIT(A) ignored the statement of Shri Kumar Pal Banda recorded u/s admitted the loan certain parties were not genuine and settled in cash. The learned DR also referred to the statement of Shri , promoter of the GM group dated 30/11/2019 and submitted that he could not substantiate genuineness of the gathered during the survey actions at the premises of the creditors appearing in the books of accounts of the assessee and third-party tax department. He submitted Court in the case taxmann.com 215) statement recorded under section 132(4) is an admissible evidence and Ld. 6.1 The Ld. DR further submitted that disclosure of any transaction in the books of accounts is not material and even if some transaction is disclosed in the books of accounts and as a result of such action, the contents of such disclosure are found to be incorrect or false, the discovery of such a document indicating disclosed transactions would form the incriminating material. According to the Ld. DR in the light of the facts observed during the course of survey proceedings, unsecured loan parties, the claim of the loan of accounts was fals accounts indicating the falsity of transaction books of accounts as contention, he relied the case of N.K. Industries Ltd. 72 taxmann.com 289 6.2 According to him, the incriminating material did not always have to be tangible material or document indicating name of the assessee but gathering of information or finding of the investigat disclosing that assessee has not shown its income correctly in the return of income filed Ld. DR also relied on the decision Kumar Didwania in The Ld. DR summarize correct due to reasons that persons of the assessee admitted the non M/s G Nine Modular and M/s G Trade ITA Nos. 3212 to 3214 and 3247/M/2022 DR further submitted that disclosure of any n in the books of accounts is not material and even if some transaction is disclosed in the books of accounts and as a result of such action, the contents of such disclosure are found to be incorrect or false, the discovery of such a document indicating sclosed transactions would form the incriminating material. According to the Ld. DR in the light of the facts observed during the proceedings, including non-existence of the unsecured loan parties, the claim of the loans recorded in the bo of accounts was false and therefore seizure of regular books of accounts indicating the falsity of transaction ma as incriminating material. In support of his of the decision of the Hon’ble Gujarat N.K. Industries Ltd. 72 taxmann.com 289 According to him, the incriminating material did not always to be tangible material or document indicating name of the assessee but gathering of information or finding of the investigat disclosing that assessee has not shown its income correctly in the return of income filed, also constitute incriminating material. The Ld. DR also relied on the decision in the case of JCIT (OSD) Nitin in ITA No. 2092/M/2019 dated 23.01.2023. The Ld. DR summarized that the finding of the Ld. CIT(A) is not correct due to reasons that firstly, in search proceedings persons of the assessee admitted the non-genuineness of the M/s G Nine Modular and M/s G Trade Capital ITA Nos. 3212 to 3214 and 3247/M/2022 7 DR further submitted that disclosure of any n in the books of accounts is not material and even if some transaction is disclosed in the books of accounts and as a result of such action, the contents of such disclosure are found to be incorrect or false, the discovery of such a document indicating sclosed transactions would form the incriminating material. According to the Ld. DR in the light of the facts observed during the existence of the recorded in the books and therefore seizure of regular books of made the regular n support of his the Hon’ble Gujarat High in N.K. Industries Ltd. 72 taxmann.com 289. According to him, the incriminating material did not always to be tangible material or document indicating name of the assessee but gathering of information or finding of the investigation disclosing that assessee has not shown its income correctly in the also constitute incriminating material. The JCIT (OSD) Nitin ITA No. 2092/M/2019 dated 23.01.2023. that the finding of the Ld. CIT(A) is not search proceedings key genuineness of the unsecured loan parties in view brought to their notice action carried out in the documents were impounded incriminating material action of key persons of the assessee group and falsity in the books of accounts, in 132(4) of the Act. 7. On the contrary, the Ld. Counsel of the assessee vehemently opposed arguments of the Ld. DR and submitted that neither the Ld. Assessing Officer nor the Ld. DR has referred to any material whether ‘tangible’ or which could indicate the unsecured loan received by the assessee company as not genuine. He submitted that the statement of Kumar Pal Banda’ recorded u/s 132(4) of the Act on 14.11.2019 was subsequently, retracted by him. the decision of the Mumbai Tribunal in the case of Ajmera Vs DCIT ( ITA No. 983/Mum/2020), additions made merely on the basis of retracted statement without there being any corroborative in law as same run contrary to the CBDT circular 286/2/2003-IT(Inv) dated 10/03/2003 which has clearly stated that no attempt should be made to obtain confession/surrender as to the undisclosed income during search. M/s G Nine Modular and M/s G Trade ITA Nos. 3212 to 3214 and 3247/M/2022 unsecured loan parties in view of the facts of their nonexistence brought to their notice, Secondly, in the simultaneous survey action carried out in the cases of related parties documents were impounded which are incriminating incriminating material has been gathered in the search and survey key persons of the assessee group and they have admitted falsity in the books of accounts, in their statement recorded u/s On the contrary, the Ld. Counsel of the assessee vehemently arguments of the Ld. DR and submitted that neither the Ld. Assessing Officer nor the Ld. DR has referred to any material or ‘intangible’ found during the course of which could indicate the unsecured loan received by the assessee company as not genuine. He submitted that the statement of recorded u/s 132(4) of the Act on 14.11.2019 was subsequently, retracted by him. The learned consul referred to the decision of the Mumbai Tribunal in the case of jmera Vs DCIT ( ITA No. 983/Mum/2020), and submitted that additions made merely on the basis of retracted statement without corroborative evidence/material, is not sustainable in law as same run contrary to the CBDT circular IT(Inv) dated 10/03/2003 which has clearly stated that no attempt should be made to obtain confession/surrender as to the undisclosed income during search. M/s G Nine Modular and M/s G Trade Capital ITA Nos. 3212 to 3214 and 3247/M/2022 8 of the facts of their nonexistence , in the simultaneous survey related parties, certain which are incriminating, thirdly, the athered in the search and survey they have admitted their statement recorded u/s On the contrary, the Ld. Counsel of the assessee vehemently arguments of the Ld. DR and submitted that neither the Ld. Assessing Officer nor the Ld. DR has referred to any material found during the course of search, which could indicate the unsecured loan received by the assessee company as not genuine. He submitted that the statement of ‘Shri recorded u/s 132(4) of the Act on 14.11.2019 consul referred to the decision of the Mumbai Tribunal in the case of Jasmin K and submitted that additions made merely on the basis of retracted statement without is not sustainable in law as same run contrary to the CBDT circular F No. IT(Inv) dated 10/03/2003 which has clearly stated that no attempt should be made to obtain confession/surrender as 7.1 The Ld. Counsel submitted that not a single document or electronic evidence was found during which could indicate the assessee. He further submitted that in the case of survey action carried out independently at the premises of the unsecured loan parties, no incriminating mater parties were not found at submitted that without prejudice even the observation made during the course of survey proceedings cannot be treated as material found during the course of search at According to him, the survey proceedings carried out at the premises of the unsecured loan parties are independent and not part of the search proceedings carried out at the premises of the assessee and therefore for utilizing during the course of survey proceedings provisions other than section 153A of the Act for assessing income on the basis of those observations provisions of section 153A of the Act. u/s 132(4) of the Act High Court in the case of 8 TMI 250 (Delhi High Court), u/s 132(4) of the Act is not an incriminating material found during the course of search view of the arguments, the Ld. Counsel supported the order of the M/s G Nine Modular and M/s G Trade ITA Nos. 3212 to 3214 and 3247/M/2022 The Ld. Counsel submitted that not a single document or electronic evidence was found during the course of the search which could indicate in-criminality in obtaining unsecured loan by the assessee. He further submitted that in the case of survey action carried out independently at the premises of the unsecured loan no incriminating material was found except that those parties were not found at their addresses. The Ld. Counsel submitted that without prejudice even the observation made during the course of survey proceedings cannot be treated as material found during the course of search at the premises of the assessee. According to him, the survey proceedings carried out at the premises of the unsecured loan parties are independent and not part of the search proceedings carried out at the premises of the assessee and therefore for utilizing the such information found during the course of survey proceedings, the AO provisions other than section 153A of the Act for assessing income on the basis of those observations, but certainly cannot invoke provisions of section 153A of the Act. Further, regarding admission u/s 132(4) of the Act, the Ld. Counsel submitted that Hon’ble Delhi High Court in the case of Best Infrastructure(india) pvt High Court), has held that statement u/s 132(4) of the Act is not an incriminating material found during unless corroborated with seized documents. view of the arguments, the Ld. Counsel supported the order of the M/s G Nine Modular and M/s G Trade Capital ITA Nos. 3212 to 3214 and 3247/M/2022 9 The Ld. Counsel submitted that not a single document or the course of the search obtaining unsecured loan by the assessee. He further submitted that in the case of survey action carried out independently at the premises of the unsecured loan ial was found except that those addresses. The Ld. Counsel submitted that without prejudice even the observation made during the course of survey proceedings cannot be treated as material the premises of the assessee. According to him, the survey proceedings carried out at the premises of the unsecured loan parties are independent and not part of the search proceedings carried out at the premises of the information found he AO may invoke provisions other than section 153A of the Act for assessing income , but certainly cannot invoke regarding admission the Ld. Counsel submitted that Hon’ble Delhi india) pvt ltd (2017) that statement/confession u/s 132(4) of the Act is not an incriminating material found during unless corroborated with seized documents. In view of the arguments, the Ld. Counsel supported the order of the Ld. CIT(A) and submitted that order of the Ld. CIT(A) in-dispute should be upheld. 8. We have heard rival submission of the parties on the issue dispute and perused the relevant material on record. We find that the Hon’ble Bombay High Court in the case of Warehousing Corporation assessment i.e. where no assessment proceedings are pending, no addition could have been made without the aid of the incriminating material. The Ld. CIT(A) has deleted the addition of Rs.1,75,00,000/- based on the r Bombay High Court the assessment year under pending as on the date of the search and therefore it is a case of non-abated assessment and ther issue whether there was any incriminating material found during the course of the search qua the additions made. In the year under consideration the Assessing O of ₹1,75,00,000/-on account of accommodation entry of unsecured loan under section 68 of the act, secondly for the interest of ₹14,45,626/-in respect of said accommodation entry of unsecured loan, thirdly, on account of commission paid of arranging accommodation entry of unsecured loan. All the three additions are related to the single issue of unsecured loans held as unexplained cash credit under se M/s G Nine Modular and M/s G Trade ITA Nos. 3212 to 3214 and 3247/M/2022 Ld. CIT(A) and submitted that order of the Ld. CIT(A) dispute should be upheld. We have heard rival submission of the parties on the issue dispute and perused the relevant material on record. We find that the Hon’ble Bombay High Court in the case of Warehousing Corporation (supra), held that in case of non assessment i.e. where no assessment proceedings are pending, no addition could have been made without the aid of the incriminating material. The Ld. CIT(A) has deleted the addition of based on the ratio of the decision of the Hon’ble (supra) and other decisions cited by him. the assessment year under consideration, no assessment was pending as on the date of the search and therefore it is a case of d assessment and therefore, we have to only examine the issue whether there was any incriminating material found during the course of the search qua the additions made. In the year under consideration the Assessing Officer has made three additions on account of accommodation entry of unsecured loan under section 68 of the act, secondly for the interest of in respect of said accommodation entry of unsecured loan, thirdly, on account of commission paid of odation entry of unsecured loan. All the three additions are related to the single issue of unsecured loans held as unexplained cash credit under section 68 of the Act. M/s G Nine Modular and M/s G Trade Capital ITA Nos. 3212 to 3214 and 3247/M/2022 10 Ld. CIT(A) and submitted that order of the Ld. CIT(A) on the issue- We have heard rival submission of the parties on the issue-in- dispute and perused the relevant material on record. We find that the Hon’ble Bombay High Court in the case of Continental , held that in case of non-abated assessment i.e. where no assessment proceedings are pending, no addition could have been made without the aid of the incriminating material. The Ld. CIT(A) has deleted the addition of atio of the decision of the Hon’ble other decisions cited by him. For no assessment was pending as on the date of the search and therefore it is a case of we have to only examine the issue whether there was any incriminating material found during the course of the search qua the additions made. In the year under fficer has made three additions, firstly on account of accommodation entry of unsecured loan under section 68 of the act, secondly for the interest of in respect of said accommodation entry of unsecured loan, thirdly, on account of commission paid of ₹75,000/-for odation entry of unsecured loan. All the three additions are related to the single issue of unsecured loans held as ction 68 of the Act. Therefore, the issue-in-dispute before us is whether any incriminating material the addition of unsecured loan made by the Assessing found during the course of search action. are not acceptable due to following reasons: 8.1 Firstly, the Ld. DR has Kumar Pal Banda record part of the unsecured loan Ld. Counsel has submitted that the said statement has already been withdrawn. No other corroborative evidence or seized material has been found dur indicate that those unsecured loans are not genuine. Counsel has referred in the case of PCIT v. (8) TMI 250. The relevant finding of the Hon’ble Delhi High Court (supra) is reproduced as under: “38. Fifthly, statements recorded under Section 132 (4) of the Act of the Act do not by themselves constitute incriminating material as has been explained by this Court in Commissioner of Income Tax v. Harjeev Aggarwal (supra). Lastly, as already pointed out hereinbefore, the facts in the present case are different from the facts in Smt. Dayawanti Gupta v. CIT (supra) where the admission by the Assessees themselves on crit maintain accounts and admission that the seized documents reflected transactions of unaccounted sales and purchases, is non case, there was a factual finding to the effect that the Assessees were habitual offenders, indulging in clandestine operations whereas there is nothing in the present case, whatsoever, to suggest that any statement made by Mr. M/s G Nine Modular and M/s G Trade ITA Nos. 3212 to 3214 and 3247/M/2022 dispute before us is whether any incriminating material addition of unsecured loan made by the Assessing found during the course of search action. The arguments of ld DR are not acceptable due to following reasons: he Ld. DR has referred to the statement of Shri recorded on 14.11.2019, in which part of the unsecured loan wasnot genuine and settled in cash. The Ld. Counsel has submitted that the said statement has already No other corroborative evidence or seized material has been found during the course of the search indicate that those unsecured loans are not genuine. to the decision of the Hon’ble Delhi PCIT v. Best Infrastructure (India) Pvt. Ltd. 2017 The relevant finding of the Hon’ble Delhi High Court (supra) is reproduced as under: 38. Fifthly, statements recorded under Section 132 (4) of the Act of the Act do not by themselves constitute incriminating material as has been explained by this Court n Commissioner of Income Tax v. Harjeev Aggarwal (supra). Lastly, as already pointed out hereinbefore, the facts in the present case are different from the facts in Smt. Dayawanti Gupta v. CIT (supra) where the admission by the Assessees themselves on critical aspects, of failure to maintain accounts and admission that the seized documents reflected transactions of unaccounted sales and purchases, is non-existent in the present case. In the said case, there was a factual finding to the effect that the sees were habitual offenders, indulging in clandestine operations whereas there is nothing in the present case, whatsoever, to suggest that any statement made by Mr. M/s G Nine Modular and M/s G Trade Capital ITA Nos. 3212 to 3214 and 3247/M/2022 11 dispute before us is whether any incriminating materialqua addition of unsecured loan made by the Assessing Officer, was The arguments of ld DR statement of Shri which he stated that genuine and settled in cash. The Ld. Counsel has submitted that the said statement has already No other corroborative evidence or seized material ing the course of the search which could indicate that those unsecured loans are not genuine. The Ld. Delhi High Court est Infrastructure (India) Pvt. Ltd. 2017 The relevant finding of the Hon’ble Delhi High Court 38. Fifthly, statements recorded under Section 132 (4) of the Act of the Act do not by themselves constitute incriminating material as has been explained by this Court n Commissioner of Income Tax v. Harjeev Aggarwal (supra). Lastly, as already pointed out hereinbefore, the facts in the present case are different from the facts in Smt. Dayawanti Gupta v. CIT (supra) where the admission by ical aspects, of failure to maintain accounts and admission that the seized documents reflected transactions of unaccounted sales and existent in the present case. In the said case, there was a factual finding to the effect that the sees were habitual offenders, indulging in clandestine operations whereas there is nothing in the present case, whatsoever, to suggest that any statement made by Mr. Anu Aggarwal or Mr. Harjeet Singh contained any such admission.” 8.1.1 In the case of statement/confession of assessee was duly corroborated with incriminating material/documents found during the course of search and therefore, such statement was accepted by the Hon’ble High Court as basis for confirming the additi finding of the Hon’ble High Court is reproduced as under: “5. We have perused the orders passed by the Tribunal and the authorities below. Though the assessee was at pains to make out an issue that he has made certain submissions and those were not considered by the Assessing Officer and therefore, the Assessing Officer has misdirected himself in determining the tax liability, on going through the order of the Tribunal, we find that the case of the assessee was decided on the ba statements dated 29.8.2006 and 10.10.2006 and admitted documents. We extract that portion of the order as has been recorded by the Assessing Officer in paragraph (11), which clinches the whole issue: 11. Therefore, reliance is placed on the admission of the assessee at the time of search, which is reproduced as under: Sworn statement of Shri Kishore Kumar dt. 29.8.2006: 'Qn.11: I am showing you the three print Rs.52,73,920 (Rs.3,31,336 + Rs.15,05,158 + Rs.34,37,427). Please explain this? Ans: These are the details of loans given by me to various parties as mentioned in the printouts. This is a separate business carried out by me which was not included in the income Qn.12: Please explain the source for the total outstanding amounts which are given by you? M/s G Nine Modular and M/s G Trade ITA Nos. 3212 to 3214 and 3247/M/2022 Anu Aggarwal or Mr. Harjeet Singh contained any such In the case of B Kishore Kumar (supra), statement/confession of assessee was duly corroborated with incriminating material/documents found during the course of search and therefore, such statement was accepted by the Hon’ble High Court as basis for confirming the addition. The relevant finding of the Hon’ble High Court is reproduced as under: 5. We have perused the orders passed by the Tribunal and the authorities below. Though the assessee was at pains to make out an issue that he has made certain submissions and those were not considered by the Assessing Officer and therefore, the Assessing Officer has misdirected himself in determining the tax liability, on going through the order of the Tribunal, we find that the case of the assessee was decided on the basis of his own sworn statements dated 29.8.2006 and 10.10.2006 and admitted documents. We extract that portion of the order as has been recorded by the Assessing Officer in paragraph (11), which clinches 11. Therefore, reliance is placed on the admission of the assessee at the time of search, which is reproduced as under: Sworn statement of Shri Kishore Kumar dt. 29.8.2006: 'Qn.11: I am showing you the three print-out of amounts totaling to (Rs.3,31,336 + Rs.15,05,158 + Rs.34,37,427). Please Ans: These are the details of loans given by me to various parties as mentioned in the printouts. This is a separate business carried out by me which was not included in the income-tax returns filed by me. Qn.12: Please explain the source for the total outstanding amounts which are given by you? M/s G Nine Modular and M/s G Trade Capital ITA Nos. 3212 to 3214 and 3247/M/2022 12 Anu Aggarwal or Mr. Harjeet Singh contained any such ishore Kumar (supra), the statement/confession of assessee was duly corroborated with incriminating material/documents found during the course of search and therefore, such statement was accepted by the Hon’ble on. The relevant finding of the Hon’ble High Court is reproduced as under: 5. We have perused the orders passed by the Tribunal and the authorities below. Though the assessee was at pains to make out an submissions were not considered by the Assessing Officer and therefore, the Assessing Officer has misdirected himself in determining the tax liability, on going through the order of the Tribunal, we find that the sis of his own sworn statements dated 29.8.2006 and 10.10.2006 and admitted documents. We extract that portion of the order as has been recorded by the Assessing Officer in paragraph (11), which clinches 11. Therefore, reliance is placed on the admission of the assessee at out of amounts totaling to (Rs.3,31,336 + Rs.15,05,158 + Rs.34,37,427). Please Ans: These are the details of loans given by me to various parties as mentioned in the printouts. This is a separate business carried out ns filed by me. Qn.12: Please explain the source for the total outstanding amounts Ans: The loans totaling to Rs.52,73,920 given to various parties as per the list were from my undisclosed income. I agree to pay the relevant income-tax dues for the above declared undisclosed income.' Sworn statement of Shri Kishore Kumar dt. 10.10.2006 (in Tamil): 'Qn.1: I am showing you Ann/BL/B&D/S telephone index books wherein amounts given in cash to various persons were found recorded. Whom do they belong to? In whose handwriting it is write? What do these amounts represent? Ans: They belong to me. Signature is mine and the notings relate to loans given by me on various dates. This constitutes my separate finance business. There are no regular books for this. According to the documents shown, as on date outstanding loans to be recovered is in the range of Rs.25 Lakhs to 30 Lakhs. The rate of interest is 18% (i.e. Rs.1.50 per 100 per month). The interest income is also not shown in the accounts. The borrowers have committed defaults in repaying the loans and more than 50% of the outstandings are to be treated as bad debts. All the advances were not disclosed in the returns filed.'This has been relied upon by the Tribunal in 6. With regard to the undisclosed income of Rs.52,73,920/ supported by printouts, in the sworn statement dated 29.8.2006, the assessee says that he had separate business income which was not included in his income tax returns. Therefore, admis undisclosed income of Rs.52,73,920/ The assessee in the sworn statement made on 10.10.2006, stated that outstanding loans to the tune of Rs.25 Lakhs to 30 Lakhs are to be recovered with interest at the rate of 18%. Thi admission. This amount has also been calculated and added as undisclosed income. When there is a clear and categoric admission of the undisclosed income by the assessee himself, in our considered opinion, there is no necessity to scrutinize th document can be of some relevance, if the undisclosed income is determined higher than what is now determined by the department. Moreover, it is not the case of the assessee that the admission made by him was incorrect or there is mistake. clear admission, voluntarily made, by the assessee, that would constitute a good piece of evidence for the Revenue. 7. The learned counsel for the assessee relied upon a decision of the Delhi High Court in M/s G Nine Modular and M/s G Trade ITA Nos. 3212 to 3214 and 3247/M/2022 Ans: The loans totaling to Rs.52,73,920 given to various parties as per the list were from my undisclosed income. I agree to pay the tax dues for the above declared undisclosed income.' Sworn statement of Shri Kishore Kumar dt. 10.10.2006 (in 'Qn.1: I am showing you Ann/BL/B&D/S-3 and sl.No.5, which are telephone index books wherein amounts given in cash to various found recorded. Whom do they belong to? In whose handwriting it is write? What do these amounts represent? Ans: They belong to me. Signature is mine and the notings relate to loans given by me on various dates. This constitutes my separate . There are no regular books for this. According to the documents shown, as on date outstanding loans to be recovered is in the range of Rs.25 Lakhs to 30 Lakhs. The rate of interest is 18% (i.e. Rs.1.50 per 100 per month). The interest income is also not shown in the accounts. The borrowers have committed defaults in repaying the loans and more than 50% of the outstandings are to be treated as bad debts. All the advances were not disclosed in the returns filed.'This has been relied upon by the Tribunal in 6. With regard to the undisclosed income of Rs.52,73,920/ supported by printouts, in the sworn statement dated 29.8.2006, the assessee says that he had separate business income which was not included in his income tax returns. Therefore, admis undisclosed income of Rs.52,73,920/- is categoric and undisputed. The assessee in the sworn statement made on 10.10.2006, stated that outstanding loans to the tune of Rs.25 Lakhs to 30 Lakhs are to be recovered with interest at the rate of 18%. This is a clear admission. This amount has also been calculated and added as undisclosed income. When there is a clear and categoric admission of the undisclosed income by the assessee himself, in our considered opinion, there is no necessity to scrutinize the documents. The document can be of some relevance, if the undisclosed income is determined higher than what is now determined by the department. Moreover, it is not the case of the assessee that the admission made by him was incorrect or there is mistake. In fact, when there is a clear admission, voluntarily made, by the assessee, that would constitute a good piece of evidence for the Revenue. 7. The learned counsel for the assessee relied upon a decision of the Delhi High Court in Commissioner of Income Tax v. Girish M/s G Nine Modular and M/s G Trade Capital ITA Nos. 3212 to 3214 and 3247/M/2022 13 Ans: The loans totaling to Rs.52,73,920 given to various parties as per the list were from my undisclosed income. I agree to pay the tax dues for the above declared undisclosed income.' Sworn statement of Shri Kishore Kumar dt. 10.10.2006 (in 3 and sl.No.5, which are telephone index books wherein amounts given in cash to various found recorded. Whom do they belong to? In whose handwriting it is write? What do these amounts represent? Ans: They belong to me. Signature is mine and the notings relate to loans given by me on various dates. This constitutes my separate . There are no regular books for this. According to the documents shown, as on date outstanding loans to be recovered is in the range of Rs.25 Lakhs to 30 Lakhs. The rate of interest is 18% (i.e. Rs.1.50 per 100 per month). The interest income is also not shown in the accounts. The borrowers have committed defaults in repaying the loans and more than 50% of the outstandings are to be treated as bad debts. All the advances were not disclosed in the returns filed.'This has been relied upon by the Tribunal in full force. 6. With regard to the undisclosed income of Rs.52,73,920/- supported by printouts, in the sworn statement dated 29.8.2006, the assessee says that he had separate business income which was not included in his income tax returns. Therefore, admission of is categoric and undisputed. The assessee in the sworn statement made on 10.10.2006, stated that outstanding loans to the tune of Rs.25 Lakhs to 30 Lakhs are to s is a clear admission. This amount has also been calculated and added as undisclosed income. When there is a clear and categoric admission of the undisclosed income by the assessee himself, in our considered e documents. The document can be of some relevance, if the undisclosed income is determined higher than what is now determined by the department. Moreover, it is not the case of the assessee that the admission made In fact, when there is a clear admission, voluntarily made, by the assessee, that would 7. The learned counsel for the assessee relied upon a decision of the Commissioner of Income Tax v. Girish Chaudhary, [2008] 296 ITR 619 to plead that loose sheets of papers should not be taken as a basis for determining undisclosed income. However, in the case on hand, loose sheets found during th are not the sole basis for determining the tax liability. It is a piece of evidence to prove undisclosed income. The printout statements of undisclosed income is not disputed by the assessee and in his sworn statements it is accepted. In fact, he outstanding loans to be recovered are in the range of Rs.25 Lakhs to 30 Lakhs. We find no error in the procedure followed by the Assessing Officer on admitted facts. The entire exercise by the department to bring to tax undisclosed income, we generous and simple. There appears to be no confusion in the quantification of the tax liability and we uphold the order of the Tribunal.” 8.1.2 The decision in the case of B Kishore Kumar (supra) is therefore distinguishable on facts. Delhi High Court in the case of Best Infrastructure p Ltd (supra), is undisputed that merely on the basis of the confession u/s 132(4) of the Act, without any other corroborative material found addition could be made tr as incriminating material. 8.2 Secondly, the learne JayantilalOtmaljain constitute incriminating material. On perusal of the copy of said statement, which is produced before us by the learne representative, we find that he was questioned to comment on the confession of Sri Kumarpal Banda of unsecured loan parties being not genuine, but he simply replied that at the time he was not able to reply as he had to check it. The relevant question and answer is reproduced for ready reference: M/s G Nine Modular and M/s G Trade ITA Nos. 3212 to 3214 and 3247/M/2022 , [2008] 296 ITR 619 to plead that loose sheets of papers should not be taken as a basis for determining undisclosed income. However, in the case on hand, loose sheets found during th are not the sole basis for determining the tax liability. It is a piece of evidence to prove undisclosed income. The printout statements of undisclosed income is not disputed by the assessee and in his sworn statements it is accepted. In fact, he admitted that outstanding loans to be recovered are in the range of Rs.25 Lakhs to 30 Lakhs. We find no error in the procedure followed by the Assessing Officer on admitted facts. The entire exercise by the department to bring to tax undisclosed income, we find has been generous and simple. There appears to be no confusion in the quantification of the tax liability and we uphold the order of the 8.1.2 The decision in the case of B Kishore Kumar (supra) is therefore distinguishable on facts. In view of decision of the Hon’ble in the case of Best Infrastructure p Ltd (supra), is undisputed that merely on the basis of the confession u/s 132(4) without any other corroborative material found be made treating the statement u/s 132(4) of the as incriminating material. the learned DR has referred to the statement of Sri dated 30/11/2019 to support that same constitute incriminating material. On perusal of the copy of said statement, which is produced before us by the learne representative, we find that he was questioned to comment on the marpal Banda of unsecured loan parties being he simply replied that at the time he was not able to reply as he had to check it. The relevant question and answer is reproduced for ready reference: M/s G Nine Modular and M/s G Trade Capital ITA Nos. 3212 to 3214 and 3247/M/2022 14 , [2008] 296 ITR 619 to plead that loose sheets of papers should not be taken as a basis for determining undisclosed income. However, in the case on hand, loose sheets found during the search are not the sole basis for determining the tax liability. It is a piece of evidence to prove undisclosed income. The printout statements of undisclosed income is not disputed by the assessee and in his admitted that outstanding loans to be recovered are in the range of Rs.25 Lakhs to 30 Lakhs. We find no error in the procedure followed by the Assessing Officer on admitted facts. The entire exercise by the find has been generous and simple. There appears to be no confusion in the quantification of the tax liability and we uphold the order of the 8.1.2 The decision in the case of B Kishore Kumar (supra) is ew of decision of the Hon’ble in the case of Best Infrastructure p Ltd (supra), it is undisputed that merely on the basis of the confession u/s 132(4) without any other corroborative material found, no the statement u/s 132(4) of the Act DR has referred to the statement of Sri dated 30/11/2019 to support that same constitute incriminating material. On perusal of the copy of said statement, which is produced before us by the learneddepartmental representative, we find that he was questioned to comment on the marpal Banda of unsecured loan parties being he simply replied that at the time he was not able to reply as he had to check it. The relevant question and answer is “Q.17 Mr. Kumarpal Banda in his statement i Q.30 & 31 has stated that unsecured loans from various parties in different financial years have been settled later in cash and they are not genuine. The same is reproduced as under for your convenience. Q.30 Kindly explains the name of the part unsecured loan has been taken by the company M/s. G.M Modular Pvt. Ltd. Also explain the creditworthiness and genuineness of unsecured loan taken by M/s. G.M Modular Pvt. Ltd. Ans. Sir, M/s. G.M Modular Put. Ltd. has taken loans from various parties in different financial years and the same have been settled later. However I can recollect the following names of parties from which the unsecured loan is taken and they are not genuine:- 1. M/s. Essar india Ltd. 2. M/s. Matarani Commodities Pvt. 3. M/s. Morya Industries Ltd. 4. M/s. NCL Research Financial Service Ltd. 5. M/s. Shivam Investment & Consultancy Ltd. 6. M/s. Ojas Assets Reconstruction Company Ltd. Q.31 On what basis you are saying that the loans from the abovementioned parties is Ans. Sir, I confirm that the above mentioned parties from which the unsecured loan has been taken by M/s. G.M Modular Pvt. Ltd are not genuine as they are settled in cash during repayment to these parties. Please offer your comments. Ans: Sir, at present I am not able to comment as I have check it.” M/s G Nine Modular and M/s G Trade ITA Nos. 3212 to 3214 and 3247/M/2022 Q.17 Mr. Kumarpal Banda in his statement in reply to Q.30 & 31 has stated that unsecured loans from various parties in different financial years have been settled later in cash and they are not genuine. The same is reproduced as under for your convenience. Q.30 Kindly explains the name of the parties form which unsecured loan has been taken by the company M/s. G.M Modular Pvt. Ltd. Also explain the creditworthiness and genuineness of unsecured loan taken by M/s. G.M Modular Ans. Sir, M/s. G.M Modular Put. Ltd. has taken loans from parties in different financial years and the same have been settled later. However I can recollect the following names of parties from which the unsecured loan is taken and they are not 1. M/s. Essar india Ltd. 2. M/s. Matarani Commodities Pvt. Ltd. 3. M/s. Morya Industries Ltd. 4. M/s. NCL Research Financial Service Ltd. 5. M/s. Shivam Investment & Consultancy Ltd. 6. M/s. Ojas Assets Reconstruction Company Ltd. Q.31 On what basis you are saying that the loans from the abovementioned parties is not genuine. Ans. Sir, I confirm that the above mentioned parties from which the unsecured loan has been taken by M/s. G.M Modular Pvt. Ltd are not genuine as they are settled in cash during repayment to these parties. Please offer your comments. at present I am not able to comment as I have M/s G Nine Modular and M/s G Trade Capital ITA Nos. 3212 to 3214 and 3247/M/2022 15 n reply to Q.30 & 31 has stated that unsecured loans from various parties in different financial years have been settled later in cash and they are not genuine. The same is reproduced as ies form which unsecured loan has been taken by the company M/s. G.M Modular Pvt. Ltd. Also explain the creditworthiness and genuineness of unsecured loan taken by M/s. G.M Modular Ans. Sir, M/s. G.M Modular Put. Ltd. has taken loans from parties in different financial years and the same However I can recollect the following names of parties from which the unsecured loan is taken and they are not 6. M/s. Ojas Assets Reconstruction Company Ltd. Q.31 On what basis you are saying that the loans from the Ans. Sir, I confirm that the above mentioned parties from which the unsecured loan has been taken by M/s. G.M Modular Pvt. Ltd are not genuine as they are settled in cash at present I am not able to comment as I have 8.3 He was further asked to provide contact details of the parties from whom unsecured loans were taken by the assessee company and other entities of the group, in response to which also he replied that at the time he was not able to provide the details as he had to check it. 8.4 Regarding arguments of the learne information regarding unsecured loan parties the survey u/s 133A of the Act carried out at the premises of the unsecured loan parties the Assessing Officer, made in the assessment order. The relevant observations of the Assessing Officer are extracte “1.1. The assessee vide its letter dated26.01.2021 has submitted its explanation which has been considered however the same is not found to be acceptable due to the following reasons: (i) The following facts establish that there is no creditworthiness of the lenders: Name and Address of the party Ella Finetex Co. Pvt. Ltd. PAN : AABCE3795J Room No. 12, 1 R N Mukherjee Road, Mezanine Floor, Kolkata, West Bengal M/s G Nine Modular and M/s G Trade ITA Nos. 3212 to 3214 and 3247/M/2022 e was further asked to provide contact details of the parties from whom unsecured loans were taken by the assessee company and other entities of the group, in response to which also he replied that at the time he was not able to provide the details as he had to arguments of the learned DR that incriminating regarding unsecured loan parties was gathered the survey u/s 133A of the Act carried out at the premises of the unsecured loan parties, we may like to refer to the the Assessing Officer, made in the assessment order. The relevant of the Assessing Officer are extracted as under: 1.1. The assessee vide its letter dated26.01.2021 has submitted its explanation which has been considered however the same is not found to be acceptable due to the following reasons:- (i) The following facts establish that there is no rthiness of the lenders:- Remarks Directors are Non filer of ITR. Negligible profits shown. AY 2015-16 shows a low PBT of Rs 1.31 lacs which does not justify the huge loan of Rs 1.10 crores. Even the interest on Rs 1.10 crore is not offered to tax. This is a normal practice in accommodation entry because the interest earned is not real but notional, only for book accounting purpose whereas the tax outflow would be on real basis. 11 R N Mukherjee Road, Kolkata location is well known to be a hub for shell company as is seen for many company data base in searches conducted by Kolkata directorate in recent and earlier past. This adds M/s G Nine Modular and M/s G Trade Capital ITA Nos. 3212 to 3214 and 3247/M/2022 16 e was further asked to provide contact details of the parties from whom unsecured loans were taken by the assessee company and other entities of the group, in response to which also he replied that at the time he was not able to provide the details as he had to DR that incriminating was gathered during the survey u/s 133A of the Act carried out at the premises of the we may like to refer to the observation of the Assessing Officer, made in the assessment order. The relevant d as under: 1.1. The assessee vide its letter dated26.01.2021 has submitted its explanation which has been considered however the same is not found to be acceptable due to the (i) The following facts establish that there is no Directors Directors are Non filer of ITR. Negligible 16 shows a low PBT of Rs 1.31 lacs which does not justify the huge loan of Rs 1.10 crores. Even the interest on Rs 1.10 crore is not offered to tax. This is a normal practice in n entry because the interest earned is not real but notional, only for book accounting purpose whereas the tax 11 R N Mukherjee Road, Kolkata location is well known to be a hub for shell company ata base in searches conducted by Kolkata directorate in recent and earlier past. This adds 1. Kakali Ghosh 2. Sanjay Sarkar Kathakali Vincom Pvt. Ltd. PAN : AAECK3364N Mezanine Floor, Room No. 12, 1 R N Mukherjee Road, Dalhousie, Kolkata, West Bengal – 700001. NCL Research and Financial Services Pvt. Ltd. PAN : AAACN5752D 3 rd floor, Bhagyodaya Building, 79, Nagindas Master Road, Fort, Mumbai-400023 Tanaya Vincom Pvt. Ltd. PAN : AADCT8361K Room No. 310, 3 rd floor, 7A Bentinck Street, Dalhousie, Kolkata, West Bengal-700001. M/s G Nine Modular and M/s G Trade ITA Nos. 3212 to 3214 and 3247/M/2022 credence to the belief that the company has merely provided book entries in books of assessee. Directors are Non filer of IT. For AY 2016- 17 shows a low PBT of Rs 0.21 lacs which does not justify the huge loan of Rs 50 lacs. Even the interest on Rs 50 lacs is not offered to tax. Thisis a normal practice in accommodation entry because the interest earned is not real but notional, only for book accounting purpose whereas the tax outflow would be on real basis. 1 R N Mukherjee Road,Kolkata location is well known to be a hub for shell companies as is seen for many company data base in searches conducted by Kolkata directorate in recent and earlier past. This adds credence to the belief that the company has merely provided book entries in books of assessee. The said company is involved in arranging LTCG from Penny stock as per the Kolkata Investigation directorate report (Ref: F.No 75A/2015-16/257-273 dated 27.04.2015 of Pr.DIT (Inv.), \Kolkata). The statement of Goutam Bose, one of the directors of the company wherein he admitted on oath that he is a dummy director in the said company. Thus it clearly shows that the conduct of directors are dubious and doubtful in nature with regard to financial transactions undertaken. Directors are Non • filer of ITR. Negligible profits shown. AY 2015-16 shows a low PBT of Rs 5.90 lacs which does not justify the huge loan of Rs 1.40 crores. Even the interest on Rs 1.40 crore is not offered to tax. This is eet, a normal practice in accommodation Vest entry because the interest earned is not real but notional, only for book accounting purpose whereas the tax outflow would be on real basis. 7A Bentick Street, Kolkata location is well known to be a hub for shell company as is seen for many company data base in searches conducted by Kolkata directorate in recent and earlier past. This adds credence to the belief that the company has merely providedbook entries in books of assessee. M/s G Nine Modular and M/s G Trade Capital ITA Nos. 3212 to 3214 and 3247/M/2022 17 credence to the belief that the company has merely provided book entries in books of 17 shows a low PBT of Rs 0.21 lacs which does not justify the huge loan of Rs 50 s 50 lacs is not offered to tax. Thisis a normal practice in accommodation entry because the interest earned is not real but notional, only for book accounting purpose whereas the tax well known to be a hub for shell companies as is seen for many company data base in searches conducted by Kolkata directorate in recent and earlier past. This adds credence to the belief that the company has merely provided book entries in books of 1. Nirmal Kumar Manna 2. Sandip Kumar Jain The said company is involved in arranging Investigation directorate report (Ref: F.No 273 dated 27.04.2015 Kolkata). The statement of Goutam Bose, one of the directors of the company wherein he admitted on oath that company. Thus it clearly shows that the conduct of directors are dubious and doubtful in nature with regard to financial 1. Vijay Poddar 2. Gautam Bose Directors are Non • filer of ITR. Negligible 16 shows a low PBT of Rs 5.90 lacs which does not justify the huge loan of Rs 1.40 crores. Even the interest on Rs 1.40 crore is not offered to ax. This is eet, a normal practice in accommodation Vest entry because the interest earned is not real but notional, only for book accounting purpose whereas 7A Bentick Street, Kolkata location is well a hub for shell company as is seen for many company data base in searches conducted by Kolkata directorate in recent and earlier past. This adds credence to the belief that the company has merely providedbook entries in books of 1. Sandip Kumar Jain 2. Om Prakash Saraswat (i) The assessee has been failed in establishing the identity, genuineness and creditworthiness of lenders in respect of following lender entities: (i)&(ii)-Ella Finetex Co Pvt Ltd and KathakaliVincomPvt Ltd: • The companies M/s Ella Finetex Co Pvt Ltd and M/s KathakaliVincom Pt Ltd are registered at the address Room No. 12, Mazanine Floor, 1 R N Mukherjee Road, Lal Bazar, Kolkata- 700001.A survey u/s 133A was carried out at the registered address of these comp authorization could not be executed as the companies were not found at the registered address. Statement of Mr. Kailash KumarKedia was recorded us 131 of the Income tax Act, 1961 on 13.11.2019. He in his statement has stated that h Floor, 1 R N Mukherjee Road, Kolkata since 1997 and he has never heard of the companies MIs Ella Finetex Co Pt Ltd and MIs KathakaliVincom Pvt Ltd. An opportunity was given to the assesseei.e. Mr. Jayantilal GM Group on 12.01.2020, to produce the party to verify its claim that the unsecured loan is genuine. But the assessee failed to produce the party and thus failed to discharge its onus to explain the credit. (iii)NCL Research and Financial The company is a proven penny scrip as per the report of Kolkata Investigation Directorate (Ref: F.No 75A/2015 16/257-273 dated 27.04.2015 of Pr.DIT (Inv.), Kolkata). Statement of Mr.Mahavir Prasad Saraswat one of the director of the company Services Ltd was recorded u/s 131 of the Income 1961 on 27.05.2015 by DDIT(In) Kolkata. He was asked about the business activities of the company, questions about the books of accounts of the company and the number of AM attended. He was not able to answer these questions. He has agreed that he is just a dummy director in the company and has no knowledge about the business of the company. A statement of Mr. Vijay Poddar, the director of M/s NCL Research and Financial was also recorded us 131 of the Income 27.05.2015 during the process of Survey u/s 133A of the Income-tax Act, 1961 at the registered premises of the M/s G Nine Modular and M/s G Trade ITA Nos. 3212 to 3214 and 3247/M/2022 (i) The assessee has been failed in establishing the identity, genuineness and creditworthiness of lenders in respect of following lender entities:- Ella Finetex Co Pvt Ltd and KathakaliVincomPvt Ltd: • The companies M/s Ella Finetex Co Pvt Ltd and M/s KathakaliVincom Pt Ltd are registered at the address Room No. 12, Mazanine Floor, 1 R N Mukherjee Road, Lal Bazar, 700001.A survey u/s 133A was carried out at the registered address of these companies on 13.11.2019. The authorization could not be executed as the companies were not found at the registered address. Statement of Mr. Kailash KumarKedia was recorded us 131 of the Income tax Act, 1961 on 13.11.2019. He in his statement has stated that he is working in the office at R.No. 12 Mezanine Floor, 1 R N Mukherjee Road, Kolkata since 1997 and he has never heard of the companies MIs Ella Finetex Co Pt Ltd and MIs KathakaliVincom Pvt Ltd. An opportunity was given to the assesseei.e. Mr. Jayantilal Jain, Promoter of GM Group on 12.01.2020, to produce the party to verify its claim that the unsecured loan is genuine. But the assessee failed to produce the party and thus failed to discharge its onus to explain the credit. (iii)NCL Research and Financial Services Ltd: The company is a proven penny scrip as per the report of Kolkata Investigation Directorate (Ref: F.No 75A/2015 273 dated 27.04.2015 of Pr.DIT (Inv.), Kolkata). Statement of Mr.Mahavir Prasad Saraswat one of the director of the company Ms NCL Research and Financial Services Ltd was recorded u/s 131 of the Income 1961 on 27.05.2015 by DDIT(In) Kolkata. He was asked about the business activities of the company, questions about the books of accounts of the company and the f AM attended. He was not able to answer these questions. He has agreed that he is just a dummy director in the company and has no knowledge about the business of the company. A statement of Mr. Vijay Poddar, the director of M/s NCL Research and Financial Services Ltd was also recorded us 131 of the Income-tax Act, 1961 on 27.05.2015 during the process of Survey u/s 133A of the tax Act, 1961 at the registered premises of the M/s G Nine Modular and M/s G Trade Capital ITA Nos. 3212 to 3214 and 3247/M/2022 18 (i) The assessee has been failed in establishing the identity, genuineness and creditworthiness of lenders in respect of Ella Finetex Co Pvt Ltd and KathakaliVincomPvt Ltd: • The companies M/s Ella Finetex Co Pvt Ltd and M/s KathakaliVincom Pt Ltd are registered at the address Room No. 12, Mazanine Floor, 1 R N Mukherjee Road, Lal Bazar, 700001.A survey u/s 133A was carried out at the anies on 13.11.2019. The authorization could not be executed as the companies were not found at the registered address. Statement of Mr. Kailash KumarKedia was recorded us 131 of the Income- tax Act, 1961 on 13.11.2019. He in his statement has e is working in the office at R.No. 12 Mezanine Floor, 1 R N Mukherjee Road, Kolkata since 1997 and he has never heard of the companies MIs Ella Finetex Co Pt Ltd and MIs KathakaliVincom Pvt Ltd. An opportunity was Jain, Promoter of GM Group on 12.01.2020, to produce the party to verify its claim that the unsecured loan is genuine. But the assessee failed to produce the party and thus failed to discharge its The company is a proven penny scrip as per the report of Kolkata Investigation Directorate (Ref: F.No 75A/2015- 273 dated 27.04.2015 of Pr.DIT (Inv.), Kolkata). Statement of Mr.Mahavir Prasad Saraswat one of the Ms NCL Research and Financial Services Ltd was recorded u/s 131 of the Income-tax Act, 1961 on 27.05.2015 by DDIT(In) Kolkata. He was asked about the business activities of the company, questions about the books of accounts of the company and the f AM attended. He was not able to answer these questions. He has agreed that he is just a dummy director in the company and has no knowledge about the business of the company. A statement of Mr. Vijay Poddar, the Services Ltd tax Act, 1961 on 27.05.2015 during the process of Survey u/s 133A of the tax Act, 1961 at the registered premises of the company.In reply to Q.56 Mr. Vijay Poddar had accepted that the company is a business of providing accommodation entries. A survey action u/s 133A of the Income out at the registered address of the company on13.11.2019. Statement of Mr. Mayank Singh, the CFO of the compan was recorded us 131 of the Income 15.11.2019. Mr. Mayank Singh in his statement has accepted that Mr. Goutam Bose is now the Managing Director of the company.Statement of Mr. Goutam Bose was recorded by DDIT(In) Kolkata on 27.05.2015.Mr. Bose in his statement has accepted that he is a dummy director in the company and has no idea about the affairs of the company. An opportunity was given to the assessee i.e. Mr. Jayantilal Jain, Promoter of GM Group on 12.01.2020, to produce the par loan is genuine. But the assessee failed to produce the party and thus failed to discharge its onus to explain the source of credit. (iv)Ojas Assets Reconstruction Ltd: The company M/s Ojas Assets Reconstruction Lt known as Tyam Industries Ltd) has registered address at 503, Shri Krishna Complex, New Link Road, Opp.Laxmi Industrial Estate, Andheri West, Mumbai company was Non filer for the assessment year in which loan has been given. The company i in huge transaction to the tune of Rs.37 lacs and still a non filer adds credence to the fact that this could be merely a book entry. The identity of the lender is not established. Mr. Kumarpal Banda, the director of M/s GM Modular his statement recorded u/s 132(4) of the Income 1961 on 14.11.2019 has submitted that they have accepted loan entries from the company M/s Ojas Assets Reconstruction Ltd in reply to Q.30 and Q.31 of the statement, which are not genuine. the group have also declared the amount taken as LTCG in the company scrip in income Declaration Scheme 2016). This fact only reinforces that the company is in the business of providing accommodation entries.An opportunity w Jain, Promoter of GM Group on 12.01.2020 to produce the M/s G Nine Modular and M/s G Trade ITA Nos. 3212 to 3214 and 3247/M/2022 company.In reply to Q.56 Mr. Vijay Poddar had accepted that the company is a penny stock company and is in the business of providing accommodation entries. A survey action u/s 133A of the Income-tax Act, 1961 was carried out at the registered address of the company on13.11.2019. Statement of Mr. Mayank Singh, the CFO of the compan was recorded us 131 of the Income-tax Act, 1961 on 15.11.2019. Mr. Mayank Singh in his statement has accepted that Mr. Goutam Bose is now the Managing Director of the company.Statement of Mr. Goutam Bose was recorded by DDIT(In) Kolkata on 27.05.2015.Mr. Bose in his statement has accepted that he is a dummy director in the company and has no idea about the affairs of the company. An opportunity was given to the assessee i.e. Mr. Jayantilal Jain, Promoter of GM Group on 12.01.2020, to produce the party to verify its claim that the unsecured loan is genuine. But the assessee failed to produce the party and thus failed to discharge its onus to explain the source of credit. (iv)Ojas Assets Reconstruction Ltd: The company M/s Ojas Assets Reconstruction Lt known as Tyam Industries Ltd) has registered address at 503, Shri Krishna Complex, New Link Road, Opp.Laxmi Industrial Estate, Andheri West, Mumbai- 400064.The company was Non filer for the assessment year in which loan has been given. The company is said to be transacting in huge transaction to the tune of Rs.37 lacs and still a non filer adds credence to the fact that this could be merely a book entry. The identity of the lender is not established. Mr. Kumarpal Banda, the director of M/s GM Modular his statement recorded u/s 132(4) of the Income 1961 on 14.11.2019 has submitted that they have accepted loan entries from the company M/s Ojas Assets Reconstruction Ltd in reply to Q.30 and Q.31 of the statement, which are not genuine.The family members of the group have also declared the amount taken as LTCG in the company scrip in income Declaration Scheme-2016 (IDS 2016). This fact only reinforces that the company is in the business of providing accommodation entries.An opportunity was given to the assesseeie. Mr. Jayantilal Jain, Promoter of GM Group on 12.01.2020 to produce the M/s G Nine Modular and M/s G Trade Capital ITA Nos. 3212 to 3214 and 3247/M/2022 19 company.In reply to Q.56 Mr. Vijay Poddar had accepted penny stock company and is in the business of providing accommodation entries. A survey tax Act, 1961 was carried out at the registered address of the company on13.11.2019. Statement of Mr. Mayank Singh, the CFO of the company tax Act, 1961 on 15.11.2019. Mr. Mayank Singh in his statement has accepted that Mr. Goutam Bose is now the Managing Director of the company.Statement of Mr. Goutam Bose was recorded by DDIT(In) Kolkata on 27.05.2015.Mr.Goutam Bose in his statement has accepted that he is a dummy director in the company and has no idea about the affairs of the company. An opportunity was given to the assessee i.e. Mr. Jayantilal Jain, Promoter of GM Group on 12.01.2020, ty to verify its claim that the unsecured loan is genuine. But the assessee failed to produce the party and thus failed to discharge its onus to explain the The company M/s Ojas Assets Reconstruction Ltd (Now known as Tyam Industries Ltd) has registered address at 503, Shri Krishna Complex, New Link Road, Opp.Laxmi 400064.The company was Non filer for the assessment year in which s said to be transacting in huge transaction to the tune of Rs.37 lacs and still a non filer adds credence to the fact that this could be merely a book entry. The identity of the lender is not established. Mr. Kumarpal Banda, the director of M/s GM Modular Pt Ltd in his statement recorded u/s 132(4) of the Income-tax Act, 1961 on 14.11.2019 has submitted that they have accepted loan entries from the company M/s Ojas Assets Reconstruction Ltd in reply to Q.30 and Q.31 of the The family members of the group have also declared the amount taken as LTCG in 2016 (IDS- 2016). This fact only reinforces that the company is in the business of providing accommodation entries.An as given to the assesseeie. Mr. Jayantilal Jain, Promoter of GM Group on 12.01.2020 to produce the party to verify its claim that the unsecured loan is genuine. But the assessee failed to produce the party and thus failed to discharge its onus to explain t (v) TanayaVincomPvt Ltd: A survey action u/s 133A of the Income carried out in the premises of the company M/s TanayaVincom Pt Ltd on 13.11.2019. The survey authorization could not be served as the company was not found at the premises. Efforts were also made to record the statement of Mr.Sandip Kumar Jain and Mr. Om PrakashSaraswat, Directors of the company but the same were not traceable at the address provided in the IT. An opportunity was given to the assessee i.e. Jain, Promoter of GM Group on 12.01.2020, to produce the party to verify its claim that the unsecured loan is genuine. But the assessee failed to produce the party and thus failed to discharge its onus to explain the source of credit. 8.5 We note that in the case of was intimated regarding negligible profit of said company and directors of the said company being non intimated that the area in which said unsecured loan party l was a well-known hub of information regarding the unsecured loan party gathered by the investigation wing pre search period same to the key person of the assessee company of search, cannot be said that incriminating material was found during the course of the search qua the addition. Similar observations have been made in respect of the other unsecured loan parties. Further, independent survey was carried out in ‘Ella Fintex Co Pvt Ltd M/s G Nine Modular and M/s G Trade ITA Nos. 3212 to 3214 and 3247/M/2022 party to verify its claim that the unsecured loan is genuine. But the assessee failed to produce the party and thus failed to discharge its onus to explain the source of credit. (v) TanayaVincomPvt Ltd: A survey action u/s 133A of the Income-tax Act, 1961 was carried out in the premises of the company M/s TanayaVincom Pt Ltd on 13.11.2019. The survey authorization could not be served as the company was not nd at the premises. Efforts were also made to record the statement of Mr.Sandip Kumar Jain and Mr. Om PrakashSaraswat, Directors of the company but the same were not traceable at the address provided in the IT. An opportunity was given to the assessee i.e.Mr.Jayantilal Jain, Promoter of GM Group on 12.01.2020, to produce the party to verify its claim that the unsecured loan is genuine. But the assessee failed to produce the party and thus failed to discharge its onus to explain the source of credit. note that in the case of ‘Ella Fintex Co. P ltd was intimated regarding negligible profit of said company and directors of the said company being non-filer of ITR. Further intimated that the area in which said unsecured loan party l hub of shell companies. In our opinion, certain information regarding the unsecured loan party gathered by the pre search period and thereafter to the key person of the assessee company during , cannot be said that incriminating material was found during the course of the search qua the addition. Similar observations have been made in respect of the other unsecured loan parties. Further, independent survey was carried out in Ella Fintex Co Pvt Ltd’and‘KathakaliVincom P Ltd M/s G Nine Modular and M/s G Trade Capital ITA Nos. 3212 to 3214 and 3247/M/2022 20 party to verify its claim that the unsecured loan is genuine. But the assessee failed to produce the party and thus failed he source of credit. tax Act, 1961 was carried out in the premises of the company M/s TanayaVincom Pt Ltd on 13.11.2019. The survey authorization could not be served as the company was not nd at the premises. Efforts were also made to record the statement of Mr.Sandip Kumar Jain and Mr. Om PrakashSaraswat, Directors of the company but the same were not traceable at the address provided in the IT. An Mr.Jayantilal Jain, Promoter of GM Group on 12.01.2020, to produce the party to verify its claim that the unsecured loan is genuine. But the assessee failed to produce the party and thus failed to discharge its onus to explain the source of credit.” Ella Fintex Co. P ltd’, the assessee was intimated regarding negligible profit of said company and filer of ITR. Further it was intimated that the area in which said unsecured loan party located shell companies. In our opinion, certain information regarding the unsecured loan party gathered by the thereafter confronted the during the course , cannot be said that incriminating material was found during the course of the search qua the addition. Similar observations have been made in respect of the other unsecured loan parties. Further, independent survey was carried out in the case of KathakaliVincom P Ltd’ on 13/11/2019 and those parties were not found at the registered address, however this fact of nonavailability of those parties at the registered address was only communicated to shJayantilal post-search proceeding on 12/01/2020 and therefore also it cannot be said that said information was confronted to the assessee during the course of search proceeding. party namely ‘NCL Research and Financial Services Assessing Officer observed that in Kolkata investigation report dated 27/04/ referred. Further during companyunder section 131 of the Act dated 15/11/2019 that Mr Gautam was the managing director of the but that fact in itself is not any incriminating material. In case of the other unsecured loan parties i.e Ltd and TanayaVincom P Ltd incriminating material except statement of Sri Kumarpalbanda and shJayantilaljain, which we have already dealt above. 8.6 Further, we agree with the contention of the Ld. Counsel of the assessee that those survey proceedings are independent though carried out simultaneously. Those inquiries are not part of the search proceedings u/s 132 of the Act decision in the case of in order dated 28.02.2023 simultaneous survey could be treated as incriminating material. M/s G Nine Modular and M/s G Trade ITA Nos. 3212 to 3214 and 3247/M/2022 13/11/2019 and those parties were not found at the registered address, however this fact of nonavailability of those parties at the registered address was only communicated to shJayantilal search proceeding on 12/01/2020 and therefore also it cannot d information was confronted to the assessee during the course of search proceeding. Regarding, the unsecured loan NCL Research and Financial Services Assessing Officer observed that in the information gathered by the Kolkata investigation report dated 27/04/2015, said party during the survey action, the CFO of the under section 131 of the Act dated 15/11/2019 that Mr Gautam was the managing director of the in itself is not any incriminating material. In case of the other unsecured loan parties i.e Ojas Assets Reconstruction TanayaVincom P Ltd also there is no reference incriminating material except statement of Sri Kumarpalbanda and shJayantilaljain, which we have already dealt above. e agree with the contention of the Ld. Counsel of the assessee that those survey proceedings are independent though carried out simultaneously. Those inquiries are not part of the search proceedings u/s 132 of the Act.The ld DR referred to the case of CIT v. Sky Infra Pvt. Ltd. by the Tribunal 28.02.2023, to support that informat simultaneous survey could be treated as incriminating material. M/s G Nine Modular and M/s G Trade Capital ITA Nos. 3212 to 3214 and 3247/M/2022 21 13/11/2019 and those parties were not found at the registered address, however this fact of nonavailability of those parties at the registered address was only communicated to shJayantilal Jain in search proceeding on 12/01/2020 and therefore also it cannot d information was confronted to the assessee during Regarding, the unsecured loan NCL Research and Financial Services ltd’,the the information gathered by the 2015, said party has been the CFO of the under section 131 of the Act dated 15/11/2019 stated that Mr Gautam was the managing director of the said company, in itself is not any incriminating material. In case of Ojas Assets Reconstruction also there is no reference of any incriminating material except statement of Sri Kumarpalbanda and shJayantilaljain, which we have already dealt above. e agree with the contention of the Ld. Counsel of the assessee that those survey proceedings are independent action though carried out simultaneously. Those inquiries are not part of The ld DR referred to CIT v. Sky Infra Pvt. Ltd. by the Tribunal , to support that information found in simultaneous survey could be treated as incriminating material. But we find that in said case of CIT v. Sky Infra Pvt. Ltd. (supra) , inquiries were carried out by the Inspectors of the income department as part of the search proceedings of said case are distinguishable. 8.7 Further, the information gathered actions was not confronted search proceedings and it was only confronted in proceedings on 20/01/2020 8.8 For invoking sustaining addition in the Act in case of non incriminating material at the premises of the assessee found during the course of search during the course of other actions i.e. like survey or by the action of other agencies, then, the provisions to deal with those materials or observations, are different from the provisions u/s 153A of the Act. The Ld. CIT(A) in the case of the assessee for assessment year 2014-15 after considering various decisions on the issue has concluded as under: “6.15 Conclusion respect to various judicial decisions clearly laid down the following principles (i) the assessments which have been concluded us 143(3) of the Act and not pending at the time of search proceedings, do not abate. M/s G Nine Modular and M/s G Trade ITA Nos. 3212 to 3214 and 3247/M/2022 But we find that in said case of CIT v. Sky Infra Pvt. Ltd. (supra) , inquiries were carried out by the Inspectors of the income department as part of the search proceedings itself, therefore facts of said case are distinguishable. , the information gathered during independent survey not confronted to the assessee during the course of search proceedings and it was only confronted in 20/01/2020. sustaining addition in proceedings u/s 153A of in case of non-abated assessments , the prerequisite material should be found during the course of search at the premises of the assessee qua the adition. If any material is during the course of search of third party or material is found during the course of other actions i.e. like survey or by the action of hen, the provisions to deal with those materials or different from the provisions u/s 153A of the Act. The Ld. CIT(A) in the case of the assessee for assessment year 15 after considering various decisions on the issue has concluded as under: 6.15 Conclusion-The aforesaid detailed discussion with respect to various judicial decisions clearly laid down the following principles - (i) the assessments which have been concluded us 143(3) of the Act and not pending at the time of search proceedings, do M/s G Nine Modular and M/s G Trade Capital ITA Nos. 3212 to 3214 and 3247/M/2022 22 But we find that in said case of CIT v. Sky Infra Pvt. Ltd. (supra) , inquiries were carried out by the Inspectors of the income-tax itself, therefore facts during independent survey during the course of search proceedings and it was only confronted in post search proceedings u/s 153A of he prerequisite is that found during the course of search . If any material is third party or material is found during the course of other actions i.e. like survey or by the action of hen, the provisions to deal with those materials or different from the provisions u/s 153A of the Act. The Ld. CIT(A) in the case of the assessee for assessment year 15 after considering various decisions on the issue-in-dispute discussion with respect to various judicial decisions clearly laid down the (i) the assessments which have been concluded us 143(3) of the Act and not pending at the time of search proceedings, do (ii) for this purpose, in assessment, relying on the decision of Hon'ble Bombay High Court in CIT V/s Gurinder Singh Bawa (79 taxmann.com 398) (iii) the proceedings us 153A of the Act do not empower the Assessing officer to re unless fresh incriminating material for the relevant year is found during the course of search proceedings. (iv) the Assessing officer does not have jurisdiction to make additions/disallowances which are not based on relevant incriminating material found during the course of search proceedings. (v) in the case of completed/un no incriminatingmaterial is found during the course of search, the assessment u/s 153A of the Act is to be made on originally assessed/r disallowance can be made de hors the incriminating evidences for the relevant year are recovered during the course of search. (vi)Any admission or confession needs corroboration with evidences. In order to make a genuine a sustainable addition on the basis of admission or confession during search action, it is necessary that some incriminating material must have been found to correlate the undisclosed income with such statement. (vii) Any statement recorded under considered as incriminating material found in the course of search as these are recorded to elicit more information/explanation of the search person on the incriminating documents/gold/jewellery found during search. 6.16 Conclusion made on account of accommodation entry of unsecured loan of Rs.70,00,000/ to interest on accommodation entry of unsecured loan of Rs. 3,87,764/-, and as unexplained expend commission for arranging accommodation entry of unsecured loan of Rs. 17,500/ M/s G Nine Modular and M/s G Trade ITA Nos. 3212 to 3214 and 3247/M/2022 (ii) for this purpose, intimation u/ 143(1) would constitute an assessment, relying on the decision of Hon'ble Bombay High Court in CIT V/s Gurinder Singh Bawa (79 taxmann.com (iii) the proceedings us 153A of the Act do not empower the Assessing officer to re-adjudicate the settled issues again, unless fresh incriminating material for the relevant year is found during the course of search proceedings. (iv) the Assessing officer does not have jurisdiction to make additions/disallowances which are not based on relevant ting material found during the course of search proceedings. (v) in the case of completed/un-abetted assessments, where no incriminatingmaterial is found during the course of search, the assessment u/s 153A of the Act is to be made on originally assessed/returned income and no addition or disallowance can be made de hors the incriminating evidences for the relevant year are recovered during the course of search. (vi)Any admission or confession needs corroboration with evidences. In order to make a genuine a sustainable addition on the basis of admission or confession during search action, it is necessary that some incriminating material must have been found to correlate the undisclosed income with such statement. (vii) Any statement recorded under section 132(4) cannot be considered as incriminating material found in the course of search as these are recorded to elicit more information/explanation of the search person on the incriminating documents/gold/jewellery found during 6.16 Conclusion- In the present case, additions have been made on account of accommodation entry of unsecured loan of Rs.70,00,000/-, as unexplained expenditure u/s. 69C due to interest on accommodation entry of unsecured loan of Rs. , and as unexplained expenditure us. 69C due to commission for arranging accommodation entry of unsecured loan of Rs. 17,500/- . As stated above, the AO has not M/s G Nine Modular and M/s G Trade Capital ITA Nos. 3212 to 3214 and 3247/M/2022 23 timation u/ 143(1) would constitute an assessment, relying on the decision of Hon'ble Bombay High Court in CIT V/s Gurinder Singh Bawa (79 taxmann.com (iii) the proceedings us 153A of the Act do not empower the ettled issues again, unless fresh incriminating material for the relevant year is (iv) the Assessing officer does not have jurisdiction to make additions/disallowances which are not based on relevant ting material found during the course of search abetted assessments, where no incriminatingmaterial is found during the course of search, the assessment u/s 153A of the Act is to be made on eturned income and no addition or disallowance can be made de hors the incriminating evidences for the relevant year are recovered during the (vi)Any admission or confession needs corroboration with evidences. In order to make a genuine and legally sustainable addition on the basis of admission or confession during search action, it is necessary that some incriminating material must have been found to correlate the undisclosed section 132(4) cannot be considered as incriminating material found in the course of search as these are recorded to elicit more information/explanation of the search person on the incriminating documents/gold/jewellery found during In the present case, additions have been made on account of accommodation entry of unsecured loan , as unexplained expenditure u/s. 69C due to interest on accommodation entry of unsecured loan of Rs. iture us. 69C due to commission for arranging accommodation entry of unsecured . As stated above, the AO has not brought on record through the assessment order or through any communication regarding any incriminating document or material found or seized during the Search and Seizure action us 132 of the Act, which can be linked /correlated with the impugned additions made. Considering the totality of the facts and circumstances of the issues involve, I am of the considered opinion that de hors the incriminating evidences as held in the above binding judicial decisions. The AO is accordingly directed to delete the impugned additions made in the assessment order. Thus, the grounds of appeal no. 1 & 2 are allo 8.9 For the year under consideration, the Ld. CIT(A) has followed his finding in assessment year 2014 “13. The appellant has made identical submissions as that made in Appeal No. CIT(A) Mumbai/10716/2013 reproduced above. case remain the same. Since all the grounds involved in Appeal No. CIT(A) 2015-16 are identical to the one that is discussed above in Appeal No. CIT(A) AY. 2014-15, the undersigned findings for AY.2014 with respect to these grounds would mutatis mutandis apply to this appeal for AY 2015 14. Hence, it is held that in the absence of any incriminating material, the additions Addition on account of accommodation entry of unsecured loan u/s 68 of Rs. 1,75,00,000/ on account of unexplained expenditure us 69C on account of interest on accommodation entry of unsecured loan of Rs. 14,45,626/ account of unexplained expenditure us 69C on account of commission for arranging accommodation entry of unsecured loan of Rs. 75,000 / deserved to be deleted. 8.10 In view of the above discussion, the Ld. DR has failed to substantiate any incriminating material found during the course of M/s G Nine Modular and M/s G Trade ITA Nos. 3212 to 3214 and 3247/M/2022 brought on record through the assessment order or through any communication regarding any incriminating document or al found or seized during the Search and Seizure action us 132 of the Act, which can be linked /correlated with the impugned additions made. Considering the totality of the facts and circumstances of the issues involve, I am of the considered opinion that these additions cannot survive de hors the incriminating evidences as held in the above binding judicial decisions. The AO is accordingly directed to delete the impugned additions made in the assessment order. Thus, the grounds of appeal no. 1 & 2 are allo For the year under consideration, the Ld. CIT(A) has followed his finding in assessment year 2014-15 and observed as under: The appellant has made identical submissions as that made in Appeal No. CIT(A) Mumbai/10716/2013-14 for AY 2014-15, as eproduced above. Other facts and backgrounds of the case remain the same. Since all the grounds involved in Appeal No. CIT(A)-48, Mumbai/10634/2014-15 for A.Y. 16 are identical to the one that is discussed above in Appeal No. CIT(A)-48, Mumbai/10716/2013- 15, the undersigned findings for AY.2014 with respect to these grounds would mutatis mutandis apply to this appeal for AY 2015-16 as well. 14. Hence, it is held that in the absence of any incriminating material, the additions made i.e., (i) ) Addition on account of accommodation entry of unsecured loan u/s 68 of Rs. 1,75,00,000/-, (i) Addition on account of unexplained expenditure us 69C on account of interest on accommodation entry of unsecured loan of Rs. 14,45,626/- and (ji)Addition on account of unexplained expenditure us 69C on account of commission for arranging accommodation entry of unsecured loan of Rs. 75,000 /-. for A.Y. 2015 deserved to be deleted.” In view of the above discussion, the Ld. DR has failed to substantiate any incriminating material found during the course of M/s G Nine Modular and M/s G Trade Capital ITA Nos. 3212 to 3214 and 3247/M/2022 24 brought on record through the assessment order or through any communication regarding any incriminating document or al found or seized during the Search and Seizure action us 132 of the Act, which can be linked /correlated with the impugned additions made. Considering the totality of the facts and circumstances of the issues involve, I am of these additions cannot survive de hors the incriminating evidences as held in the above binding judicial decisions. The AO is accordingly directed to delete the impugned additions made in the assessment order. Thus, the grounds of appeal no. 1 & 2 are allowed.” For the year under consideration, the Ld. CIT(A) has followed 15 and observed as under: The appellant has made identical submissions as that made in Appeal No. CIT(A)-48, 5, as Other facts and backgrounds of the case remain the same. Since all the grounds involved in 15 for A.Y. 16 are identical to the one that is discussed above -14 for 15, the undersigned findings for AY.2014-15 with respect to these grounds would mutatis mutandis 14. Hence, it is held that in the absence of any made i.e., (i) ) Addition on account of accommodation entry of , (i) Addition on account of unexplained expenditure us 69C on account of interest on accommodation entry of Addition on account of unexplained expenditure us 69C on account of commission for arranging accommodation entry of . for A.Y. 2015-16 In view of the above discussion, the Ld. DR has failed to substantiate any incriminating material found during the course of search which could establish non loan. As far as his arguments of concerned, we are of the opinion that any entry in the books of accounts could be false as a discovered during the search. So, falsity of books of account recording the entries of unsecured loan incriminating material found and incriminating material in itself unless established to be of other incriminating material. In view of above discussion, finding of the Ld. CIT(A) on the issue not find any infirmity in same. The grounds of appeal of the Revenue are accordingly dismissed. 9. Before us the Ld. under rule 27 of the ITA jurisdiction of the Assessing Officer in passing the assessment order. In his application he is submitted that as per CBDT instruction No. 1/2011 dated 31/01/2011, corporate having declared/returned income the jurisdiction of the Assessing Officer in the rank of officer and where the declared/returned income is those cases would be under the jurisdiction of the Deputy commissioner or Asst Commissioner. The le submitted that in the present case declared/returned income being M/s G Nine Modular and M/s G Trade ITA Nos. 3212 to 3214 and 3247/M/2022 search which could establish non-genuineness of the unsecured As far as his arguments of falsity of the books of accounts we are of the opinion that any entry in the books of accounts could be false as a result of any incriminating material during the search. So, falsity of books of account recording the entries of unsecured loan may be as a result of incriminating material found and but those entries ar incriminating material in itself unless established to be of other incriminating material. In view of above discussion, finding of the Ld. CIT(A) on the issue-in-dispute is well reasoned not find any infirmity in the same. Accordingly, . The grounds of appeal of the Revenue are accordingly Ld. Counsel of the assessee filed under rule 27 of the ITAT to rules,1963, raising the issue of the jurisdiction of the Assessing Officer in passing the assessment order. In his application he is submitted that as per CBDT . 1/2011 dated 31/01/2011, corporate having declared/returned income up to ₹ 30 lakh would be under the jurisdiction of the Assessing Officer in the rank of officer and where the declared/returned income is above those cases would be under the jurisdiction of the Deputy commissioner or Asst Commissioner. The learne submitted that in the present case declared/returned income being M/s G Nine Modular and M/s G Trade Capital ITA Nos. 3212 to 3214 and 3247/M/2022 25 genuineness of the unsecured falsity of the books of accounts is we are of the opinion that any entry in the books of any incriminating material during the search. So, falsity of books of account in may be as a result of any but those entries are not incriminating material in itself unless established to be false by way of other incriminating material. In view of above discussion, finding easoned,and we do we uphold the . The grounds of appeal of the Revenue are accordingly l of the assessee filed an application raising the issue of the jurisdiction of the Assessing Officer in passing the assessment order. In his application he is submitted that as per CBDT . 1/2011 dated 31/01/2011, corporate assessee’s 30 lakh would be under the jurisdiction of the Assessing Officer in the rank of Income-tax above₹ 30 lakh, those cases would be under the jurisdiction of the Deputy arned Counsel submitted that in the present case declared/returned income being below the threshold limit of have been assessed by the officer of the rank of (ITO) only, hence the assessment made by Asst Commissioner of Income tax is invalid and deserve to be quashed as 9.1 We find that the appeal of the revenue has already been dismissed and therefore the issue raised in th under rule 27 of the ITAT rules is merely academic and therefore we are not adjudicating upon the same and has dismissed as infructuous. 9.2 We find that the grounds raised in other appeals and application under rule 27 of the ITAT Rul grounds raised in assessment year 2015 No.3212/Mum/2022, therefore same are decided to our decision in ITA No. 10. In the result, all the four appeals of the Revenue are dismissed. Order pronounced in the open Court on Sd/- (PAVAN KUMAR GADALE JUDICIAL MEMBER Mumbai; Dated: 28/04/2023 Rahul Sharma, Sr. P.S. M/s G Nine Modular and M/s G Trade ITA Nos. 3212 to 3214 and 3247/M/2022 below the threshold limit of Rs. 30 lakh and therefore case should have been assessed by the officer of the rank of Income (ITO) only, hence the assessment made by the officer in the rank of Asst Commissioner of Income-tax/Deputy Commissioner of Income tax is invalid and deserve to be quashed as void ab initio We find that the appeal of the revenue has already been dismissed and therefore the issue raised in the application filed under rule 27 of the ITAT rules is merely academic and therefore we are not adjudicating upon the same and has dismissed as We find that the grounds raised in other appeals and application under rule 27 of the ITAT Rules, 1963 being identical grounds raised in assessment year 2015- 3212/Mum/2022, therefore same are decided mutatis mutandis ITA No.3212/Mum/2022. In the result, all the four appeals of the Revenue are pronounced in the open Court on 28/0 Sd/- PAVAN KUMAR GADALE) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER M/s G Nine Modular and M/s G Trade Capital ITA Nos. 3212 to 3214 and 3247/M/2022 26 30 lakh and therefore case should ncome-tax officer the officer in the rank of tax/Deputy Commissioner of Income- void ab initio. We find that the appeal of the revenue has already been e application filed under rule 27 of the ITAT rules is merely academic and therefore we are not adjudicating upon the same and has dismissed as We find that the grounds raised in other appeals and es, 1963 being identical -16 and ITA mutatis mutandis In the result, all the four appeals of the Revenue are 04/2023. - OM PRAKASH KANT) ACCOUNTANT MEMBER Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// M/s G Nine Modular and M/s G Trade ITA Nos. 3212 to 3214 and 3247/M/2022 Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai M/s G Nine Modular and M/s G Trade Capital ITA Nos. 3212 to 3214 and 3247/M/2022 27 BY ORDER, (Assistant Registrar) ITAT, Mumbai