ZEENAT P. SANGHVI, MUMBAI V. ACIT CEN CIR 38, MUMBAI

ITA 5140/MUM/2013

• Counselvise Citation: 514019914 RSA 2013
• Duration Of Justice: 1 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2005-2006
• Appeal Filed On: 15-07-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABHA KALA CHANDA
• Assessee Lawyers: J P BAIRAGRA
• Keywords: Unexplained expenditure; Gift; Search and seizure; Loose papers; Onus to prove
• Section: 68; 132; 12; 143(3); 153A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G , BENCH MUMBAI , BEFORE SHRI R.C.SHARMA , A M & VIVEK VARMA , J M ITA NO. 8026 / MUM/20 1 0 ( ASSESSMENT YEAR : 200 5 - 0 6 ) SMT. ZEENAT P. SANGHVI, 2203, WINDSOR TOWER, SHASTRI NAGAR,ANDHERI(W),MUMBAI - 53 VS. DCIT, CC - 38, MUMBAI PAN/GIR NO. : A VMPS 7416 H ( APPELLANT ) .. ( RESPONDENT ) AND ITA NO. 5140/ MUM/20 13 ( ASSESSMENT YEAR :2005 - 0 6 ) SMT. ZEENAT P. SANGHVI, 2203, WINDSOR TOWER, SHASTRI NAGAR,ANDHERI(W),MUMBAI - 53 VS. A CIT, CC - 38, MUMBAI PAN/GIR NO. : A VMPS 7416 H ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : SHRI J.P.BAIRAGRA /REVENUE BY : SMT.ABHA KALA CHANDA DATE OF HEARING : 1 1 TH NOVEMBER , 201 4 DATE OF PRONOUNCEMENT 19 TH DECEMBER , 201 4 O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) FOR A.Y 200 5 - 0 6, IN THE MATTER OF ORDER PASSED U/S. 143(3) R.W.S.153A AND ORDE R U/S. 271(1)(C) OF THE ACT. 2. THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO. 8026/MUM/2010 ARE AS UNDER : - ITA NO S . 8026/10 & 5140 /1 3 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. C.I.T. (A) ERRED IN CONFIRMING THE ADDITION OF RS. 98,15,000 8/ - IN THE ASSESSMENT U/S 153A OF THE I. T. ACT AS NO RELEVANT OR INCRIMINATING MATERIAL OR EVIDENCE WAS FOUND OR SEIZED DURING THE COURSE OF SEARCH REFLECTING UNDISCLOSED INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 98,15,000 / - WHICH WAS WITHOUT ANY BASIS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. C.I.T.(A) ERRED IN CONFIRMING THE ADDITION OF RS. 97,00,000 / - MADE BY THE LEARNED A.O. ON ACCOUNT OF LOAN. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. C.I.T.(A) ERRED IN CONFIRMING THE ADDITION OF RS. 65,0001 - MADE BY THE LEARNED A.O ON ACCOUNT OF FOREIGN TRAVELLING AND RS. 50,0001 - MADE BY THE LEARNED A.O ON ACCOUNT OF CREDIT CARD EXPENSES. 3. RIVAL CONTE NTIONS HAVE BEEN HEARD, RECORD PERUSED. FACTS IN BRIEF ARE THAT A SEARCH AND SEIZURE OPERATION WAS INITIATED U/S.132 ON 12 - 9 - 2007 IN CASE OF M/S K SERA SERA PRODUCTIONS LTD. THE HUSBAND OF THE ASSESSEE MR. PARAG SANGHAVI WAS DIRECTOR OF THIS COMPANY AND TH EREFORE HIS RESIDENCE WAS ALSO COVERED IN THE SEARCH OPERATION. DURING THE COURSE OF THE SEARCH AT THE RESIDENT OF THE ASSESSEE NO INCRIMINATING DOCUMENTS, JEWELLERY, CASH, UNACCOUNTED BANK ACCOUNTS, UNDISCLOSED PROPERTY, ETC. WERE FOUND AND HENCE THERE WA S NO SEIZURE EXCEPT SOME LOOSE PAPERS NUMBERED PG. 1 TO 32 . CONSEQUENT TO SEARCH, ASSESSMENT WAS FRAMED BY AO U/S.153A R.W.S.143(3), WHEREIN FOLLOWING CONDITIONS WERE MADE : - A) RS.97,00,000/ - ON ACCOUNT OF LOAN RECEIVED FROM NRI MR. VIJAY B. BHANSALI (NO DOCUMENTS OR ANY PAPERS WERE FOUND DURING THE COURSE OF SEARCH) B) RS. 65,000/ - ON ACCOUNT OF FOREIGN TRAVELLING ON ESTIMATED BASIS INCURRED OUT OF WITHDRAWALS, BUT AO MADE THE ADDITION U/S.69C OF THE INCOME TAX ACT, 1961, C) RS.50,000/ - ON ACCOUNT OF CRED IT CARD EXPENSES ON ESTIMATED BASIS. 4. BY THE IMPUGNED ORDER THE CIT(A) CONFIRMED THE ADDITION AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. ITA NO S . 8026/10 & 5140 /1 3 3 5. LEARNED AR CONTENDED THAT ASSESSMENT HAVE BEEN PROCESS ED U/S.143(1 ) OF THE ACT AND NO NOTICE U/ S.143(2) WAS ISSUED TILL THE INITIATION OF SEARCH ON 12 - 9 - 2007 . AS PER THE LEARNED AR EVEN THE TIME LIMIT FOR ISSUANCE OF NOTICE U/S.143(2) HAD BEEN EXPIRED ON 31 - 3 - 2007 I.E. AFTER 12 MONTHS FROM THE END OF THE RELEVANT MONTH IN WHICH RETURN WAS FILED. AS PER THE LEARNED AR ASSESSMENT HAD BECOME FINAL AND WAS NOT PENDING, THEREFORE, THERE WAS NO QUESTION OF AB A T E MENT AND IN SUCH A CASE, NO ADDITION COULD BE MADE UNLESS THERE WAS SOME INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. LEARNED AR VEHE MENTLY ARGUED THAT NO ADDITION CAN BE MADE U/S.153A INCASE WHERE ASSESSMENT WAS NOT PENDING. FOR THIS PURPOSE, RELIANCE WAS PLACED ON THE DECISION OF ITAT SPECIAL BENCH IN THE CASE OF ALCARGO GLOBAL LOGISTIC LTD., (2012) 137 ITD 287 , WHEREIN IT WAS HELD TH AT PROVISIONS OF SECTION 153A COME INTO OPERATION IF A SEARCH OR REQUISITION IS INITIATED AFTER 31/05/2003 AND ON SATISFACTION OF THIS CONDITION, THE AO IS UNDER OBLIGATION TO ISSUE NOTICE TO THE PERSON REQUIRING HIM TO FURNISH THE RETURN OF INCOME FOR SIX YEARS IMMEDIATELY PRECEDING THE YEAR OF SEARCH. THE SPECIAL BENCH FURTHER HELD THAT IN CASE ASSESSMENT IS ABATED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION U / S 153A FOR WHICH ASSESSMENT SHALL BE MADE FOR EACH ASSESSMENT YEAR SEPAR ATELY. THUS IN CASE WHERE ASSESSMENT HAS ABATED THE AO CAN MAKE ADDITIONS IN THE ASSESSMENT, EVEN IF NO INCRIMINATING MATERI AL HAS BEEN FOUND. BUT IN OTHER CASES THE SPECIAL BENCH HELD THAT THE ASSESSMENT U/S. 153A CAN BE MADE ON THE BASIS OF THE INCRIMINAT ING MATERIAL WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS BOOKS OF ACCOUNT AND OTHER DOCUMENTS FOUND IN T HE COURSE OF ITA NO S . 8026/10 & 5140 /1 3 4 SEARCH BUT NOT PROD UCED IN THE COURSE OF ORIGINAL ASSESSMENT AND UNDISCLOSED INCOME OR P RO P ERTY DISCLOSED DURING THE COURSE OF SEARCH . IN THE PRESENT CASE, THE ASSESSMENT HAD BEEN COMPLETED UNDER SUMMARY SCHEME U/S 143( 1 ) AN D TIME LIMIT FOR ISSUE OF NOTICE U/S 143( 2 ) EX P IRED ON THE DATE OF SEARCH. THEREFORE, THERE WAS NO ASSESSMENT PENDING IN THIS CASE AND IN SUCH A CASE THERE WAS NO QU ESTION OF ABATEMENT. THEREFORE, ADDITION COULD BE MADE ONLY ON THE BASIS OF I NCRIMINATING MATERIAL FOUND DURING SEARCH. FOR THIS PROPOSITION, FURTHER RELIANCE WAS PLACED ON THE DECISIONS OF : - A) ITAT MUMBAI BENCH IN THE CASE OF SHRI GURINDER SINGH BAWA VIS. DCIT - 28 TAXMANN.COM 328. B) ITAT MUMBAI BENCH IN THE CASE OF ANIL P. KHIMANI VS. DCIT (ITA NO.2855 TO 2860/MUM/2008, DATED 23 - 2 - 2010. C) ITAT VISHAKKAPATNAM IN THE CASE OF KGR EXPORTS VS. JCIT (ITA NO. 494/V/2007, DATED 11 - 9 - 2008). D) ITAT JODHP UR BENCH IN THE CASE OF VISHAL DEMBLA VS. DCIT - 157 TTJ 189. E) ITAT MUMBAI BENCH IN THE CASE OF DCIT V. PRATIBHA INDUSTRIES LIMITED - 141 ITD 151. F) HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. MURLI AGRO PRODUCTS LTD. (2011)15 TAXMANN.COM 183(BOM); G ) ITAT MUMBAI BENCH IN THE CASE OF ACIT VS. JAYENDRA P. JHAVERI , (2014) 45 TAXMANN.COM 204(ALL.); AND H) ITAT DELHI BENCH IN THE CASE OF ACIT VS. JACKSON ENGINEER LTD. 2014 - TIOL - 494 - ITAT - DEL. 5.1 ON MERITS, LEARNED AR CONTENDED THAT ASSESSEE HAD TAKEN L OAN OF RS. 97 LAKHS FROM HIS CLOSE FAMILY FRIENDS MR. VIJAY B. BHANSALI, WHO IS NRI, RESIDING AT SHARJAH, UAE. IN SUPPORT OF THE LOAN SO TAKEN, VIDE LETTER DATED 14 - 9 - 2013, THE ASSESSEE HAS FILED CONFIRMATION LETTER AND ALSO CLARIFIED BEFORE THE AO THAT THI S AMOUNT WAS WRONGLY SHOWN AS GIFT IN THE BALANCE SHEET FILED ALONG WITH THE RETURN OF INCOME. OUR ATTENTION WAS ALSO INVITED TO THE CERTIFICATE ISSUED BY THE ABU DHABI COMMERCIAL BANK CERTIFYING THAT CHEQUES WERE ISSUED TO THE ASSESSEE FROM NON - RESIDENT ITA NO S . 8026/10 & 5140 /1 3 5 O RDINARY ACCOUNT OF MR. VIJAY BHANSALI. THE CONFIRMATION OF LOAN TRANSACTION WAS ALSO FILED VIDE LETTER DATED 9 - 3 - 2005. HE FURTHER CONTENDED THAT TO SUBSTANTIATE CREDITWORTHINESS OF THE LOAN CREDITOR, THE ASSESSEE HAS ALSO FILED CERTIFICATE FROM CHARTERED A CCOUNTANT FIRM, DUBAI, CERTIFYING CREDITWORTHINESS OF THE LOAN CREDITOR. AS PER LEARNED AR SINCE ALL PAYMENTS WERE RECEIVED VIDE ACCOUNT PAYEE CHEQUES FROM NRI ACCOUNT OF MR. VIJAY BHANSALI, ALL THE THREE CRITERIA OF IDENTITY, GENUINESS AND CREDITWORTHINES S WAS DULY PROVED IN VIEW OF THE ABOVE DOCUMENTS FILED BEFORE THE AO. IN SUPPORT OF HIS CONTENTIONS, RELIANCE WAS PLACED ON THE DECISION OF HON BLE RAJASTHAN HIGH COURT IN THE CASE OF LABH CHAND BOHRA, 219 CTR 571 , HONBLE GUJARAT HIGH COURT IN THE CASE OF PRATAPBHAI VIRJIBHAI PATEL, 2014 - TIOL - 267 - HC - AHM - IT, IN CASE OF ARAVALI TRADING CO., 220 CTR 622 , HONBLE BOMBAY HIGH COURT IN THE CASE OF CREATIVE WORLD TELEFILMS LTD., (2011) 333 ITR 100 , HONBLE ALLAHABAD HIGH COURT IN THE CASE OF VACMET PACKAGING (IND IA) PVT. LTD. , 224 TAXMANN 217 . 5.2 WITH REGARD TO THE ADDITION OF RS. 65,000/ - ON ACCOUNT OF FOREIGN TRAVELLING EXPENSES, LEARNED AR INVITED OUR ATTENTION TO THE WITHDRAWAL MADE BY THE ASSESSEE, HER HUSBAND AND HER MOTHER IN LAW AMOUNTING TO RS.16,08,971/ - , WHICH WAS SUFFICIENT TO MEET THE TRAVELLING UNDERTAKEN BY THE ASSESSEE. 5.3 WITH REGARD TO THE ADDITION OF RS. 50,000/ - MADE ON ACCOUNT OF CREDIT CARD EXPENSES U/S.69C , THE CONTENTION OF LEARNED AR WAS THAT ASSESSEE HAS NOT USED ANY CREDIT CARD IN HER N AME AND THE PERSONAL DRAWING MADE ITA NO S . 8026/10 & 5140 /1 3 6 BY HER BANK ACCOUNT WAS SUFFICIENT FOR HER REGULAR EXPENSES AND, THEREFORE, ESTIMATED ADDITION OF RS. 50,000/ - WAS NOT CALLED FOR. 6 . ON THE OTHER HAND , CONTENTION OF LEARNED DR WAS THAT PROCESSING OF RETURN U/S.143(1) IS N OT AN ASSESSMENT IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RAJESH ZAVERI STOCK, 291 ITR 501 . SINCE NO SCRUTINY ASSESSMENT WAS FRAMED U/S.143(3), ACCORDINGLY, THE AO WAS JUSTIFIED IN MAKING ADDITION U/S.153A. AS PER LEARNED DR IT WAS ONLY CASE OF SEARCH OPERATION. THE CASE WAS SUBSEQUENTLY TAKEN UP FOR SCRUTINY AND THE AO HAS FOUND THAT IT WAS BOGUS GIFT. HE FURTHER CONTENDED THAT U/S.153A, THE AO CAN ASSESSEE OR REASSESS THE TOTAL INCOME FOR THE SIX ASSESSMENT YEARS IMMEDIATELY PRECED ING ASSESSMENT YEARS IN WHICH SEARCH WAS CONDUCTED. 6.1 WITH RESPECT TO THE LOAN OF RS. 97 LAKHS, THE CONTENTION OF LEARNED DR WAS THAT THIS AMOUNT WAS SHOWN AS GIFT IN THE RETURN OF INCOME FILED AND ONLY DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDING THAT THE ASSESSEE HAS CHANGED HIS VERSION AND STATED THAT IT WAS A LOAN TRANSACTION. AS PER THE LEARNED DR, THE ASSESSEE HAS NOT PROVED IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. ACCORDINGLY, THE AO WAS JUSTIFIED IN MAKING ADDITION U/S . 68 OF THE ACT. 7. WE HAVE CONSIDERED RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND ALSO DELIBERATED ON THE JUDICIAL PRONOUNCEMENTS REFERRED BY LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS AS WELL AS CITED BY LEARNED AR AND DR DURING THE COURSE OF HEARING BEFORE US. FROM THE RECORD WE FOUND THAT THE SEARCH ACTION WAS CARRIED ON IN CASE OF M/S K SERA SERA PROD UCTIONS LTD, WHEREIN T HE HUSBAND OF THE ITA NO S . 8026/10 & 5140 /1 3 7 ASSESSEE MR. PARAG SANGHAV I WAS DIRECTOR, THEREFORE SEARCH OPERATION WAS AL SO CARRIED OUT AT HIS RESIDENCE , HOWEVER, DURING THE COURSE OF THE SEARCH AT THE RESIDENT OF THE ASSESSEE NO INCRIMINATING DOCUMENTS, JEWELLERY, CASH, UNACCOUNTED BANK ACCOUNTS, UNDISCLOSED PROPERTY, ETC. WERE FOUND AND HENCE THERE WAS NO SEIZURE EXCEPT SO ME LOOSE PAPERS NUMBERED PG. 1 TO 32 WHICH WERE DULY EXPLAINED DURING THE ASSESSMENT PROCEEDINGS AND NO ADDITION WAS MADE WITH REGARD TO THESE DOCUMENTS. WHILE FRAMING ASSESSMENT U/S.153A, THE AO FOUND THAT IN THE RETURN OF INCOME THE ASSESSEE HAD SHOWN IN HER CAPITAL ACCOUNT AN AMOUNT OF RS. 97 LAKHS RECEIVED AS GIFT. THE AO FURTHER OBSERVED THAT THIS GIFT WAS RECEIVED FROM MR. VIJAY BHANSALI, RESIDENT OF SHARJAH, UAE BY CHEQUES ISSUED FROM HIS NON - RESIDENT ORDINARY ACCOUNT MAINTAINED IN ABU DHABI COMMERCIA L BANK. VIDE LETTER DATED 30 - 11 - 2009, THE ASSESSEE EXPLAINED THAT AMOUNT SHOWN AS GIFT IN THE STATEMENT OF AFFAIR WAS IN FACT LOAN RECEIVED FROM THE CLOSE FRIENDS, WHICH COULD BE VERIFIED FROM THE LOAN CONFIRMATION ATTACHED VIDE LETTER DATED 14 - 9 - 2009. B Y O BSERVING THAT CREDITWORTHINESS OF SHRI VIJAY BHANSALI WAS NOT PROVED, THE AO MADE ADDITION U/S.68 OF THE ACT. BY THE IMPUGNED ORDER CIT(A) CONFIRMED THE ACTION OF THE AO. 8. FIRST, WE SHALL EXAMINE THE LEGAL ISSUE RAISED BY ASSESSEE WITH REGARD TO THE V ALID ITY OF ADDITION U/S.153A WHEN NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND TIME LIMIT FOR ISSUE OF NOTICE U/S.143(2) HAD EXPIRED . IT IS CLEAR FROM THE FINDING RECORDED BY THE AO AT PARA 6 OF HIS ASSESSMENT ORDER FRAMED U/S.153A A T PARA THAT THE FACT REGARDING ASSESSEE HAVING RECEIVED GIFT OF RS. 97 LAKHS FROM VIJAY ITA NO S . 8026/10 & 5140 /1 3 8 BHANSALI WAS FOUND ONLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS. NOWHERE THE AO HAS REFERRED ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, BASE D ON W HICH ADDITION HAD BEEN MA DE. IN TERMS OF JUDICIAL PRONOUNCEMENTS IN CASE OF ALCARGO GLOBAL LOGISTIC LTD., (SUPRA) , ADDITION U/S.153A CAN BE MADE ON THE BASIS OF INCRIMINATING MATERIAL WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS BOOKS OF ACCOUNTS AND OTHER DOCUMENTS FOUND IN COURSE OF SEARCH . IN THE INSTANT CASE, SUMMARY ASSESSMENT WAS DONE U/S.143(1) IN RESPECT OF RETURN OF INCOME FILED ON 29 - 3 - 2006. THE TIME LIMIT FOR ISSUE OF NOTICE U/S.143(2) WAS EXPIRED ON 31 ST MARCH, 2007 I..E 12 MONTHS FROM THE END OF THE MONTH IN WHICH RETURN WAS FURNISHED. IN THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION I.E. A.Y. 2005 - 06, THE RETURN OF INCOME WAS FURNISHED ON 29 - 3 - 2006. AS PER PROVISO TO SECTION 143(2) NOTICE UNDER CLAUSE (II) SHALL NOT BE SERVED ON THE ASS ESSEE AFTER THE EXPIRY OF 12 MONTHS FROM THE END OF THE MONTH, IN WHICH RETURN IS FURNISHED. THUS, THE TIME LIMIT FOR ISSUE OF NOTICE U/S.143(2) HAS ALREADY EXPIRED ON 31 - 3 - 2007 , WHICH IS MUCH PRIOR TO THE DATE OF SEARCH I.E. 12 - 9 - 2007. IT IS ALSO NOT IN D ISPUTE THAT NO INCRIMINATING MATERIAL WITH REGARD TO ALLEGED GIFT/LOAN WAS FOUND DURING THE COURSE OF SEARCH SO AS TO EMPOWER THE AO TO MAKE ADDITION U/S.153A WITH REGARD TO SUCH GIFT/LOAN. THE ITAT MUMBAI BENCH IN THE CASE OF SHRI GURINDER SINGH BAWA, 28 TAXMANN.COM 328 , HAS HELD AS UNDER : - 6. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE RAISED IS REGARDING LEGAL VALIDITY OF ADDITION MADE BY AO UNDER SECTION 153A OF THE ACT. UNDER THE PROVISIONS OF SECTION 153A, IN ALL CASES, WHERE SEARCH IS CONDUCTED UNDER SECTION 132 OF THE ACT, AO IS EMPOWERED TO ASSESS OR REASSESS TOTAL INCOME OF SIX ASSESSMENT YEARS PRECEDING THE ASSESSMENT YEAR IN WHICH SEARCH WAS CONDUCTED. THE SECTION ALSO PROVIDES THAT ASSESSMENT OR REAS SESSMENT RELATING TO ANY ITA NO S . 8026/10 & 5140 /1 3 9 ASSESSMENT YEAR FALLING WITHIN PERIOD OF SIX ASSESSMENT YEAR IF PENDING ON THE DATE OF INITIATION OF SEARCH SHALL ABATE. THERE HAVE BEEN DIVERGENT VIEWS REGARDING SCOPE OF APPLICATION OF SECTION 153A IN CASES WHERE NO INCRIMINATING MATERIAL WAS FOUND INDICATING ANY UNDISCLOSED INCOME. SOME OF THE TRIBUNAL BENCHES HAD TAKEN THE VIEW THAT IN CASE NO INCRIMINATING MATERIAL WAS FOUND AO HAD NO JURISDICTION TO MAKE ASSESSMENT OR REASSESSMENT UNDER SECTION 153A WHILE SOME OTHER BENCHES HE LD THAT JURISDICTION UNDER SECTION 153A WAS AUTOMATIC TO REASSESS SIX IMMEDIATE PRECEDING ASSESSMENT YEARS IRRESPECTIVE OF THE FACT WHETHER ANY INCRIMINATING MATERIAL WAS FOUND OR NOT. ANOTHER ASPECT ON WHICH THERE HAD BEEN DIVERGENT VIEWS WAS WHETHER EVEN IF AO HAD JURISDICTION UNDER SECTION 153A, ADDITION CAN BE MADE IN ASSESSMENT / REASSESSMENT ONLY WHEN SOME INCRIMINATING MATERIAL HAS BEEN FOUND. ALL THESE ASPECTS HAD BEEN REFERRED TO THE SPECIAL BENCH OF THE TRIBUNAL IN CASE OF ALCARGO GLOBAL LOGISTICS LTD. AND ORDER OF SPECIAL BENCH DATED 6.7.2012 HAS BEEN REFERRED. 6.1 THE SPECIAL BENCH IN THE CASE OF ALCARGO GLOBAL LOGISTICS LTD. (SUPRA), HAS HELD THAT PROVISIONS OF SECTION 153A COME INTO OPERATION IF A SEARCH OR REQUISITION IS INITIATED AFTER 31.5. 2003 AND ON SATISFACTION OF THIS CONDITION, THE AO IS UNDER OBLIGATION TO ISSUE NOTICE TO THE PERSON REQUIRING HIM TO FURNISH THE RETURN OF INCOME FOR SIX YEARS IMMEDIATELY PRECEDING THE YEAR OF SEARCH. THE SPECIAL BENCH FURTHER HELD THAT IN CASE ASSESSMEN T HAS ABATED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION UNDER SECTION 153A FOR WHICH ASSESSMENT SHALL BE MADE FOR EACH ASSESSMENT YEAR SEPARATELY. THUS IN CASE WHERE ASSESSMENT HAS ABATED THE AO CAN MAKE ADDITIONS IN THE ASSESSMENT, EVEN IF NO INCRIMINATING MATERIAL HAS BEEN FOUND. BUT IN OTHER CASES THE SPECIAL BENCH HELD THAT THE ASSESSMENT UNDER SECTION 153A CAN BE MADE ON THE BASIS OF INCRIMINATING MATERIAL WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS BOOKS OF ACCOUNT AND O THER DOCUMENTS FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT AND UNDISCLOSED INCOME OR PROPERTY DISCLOSED DURING THE COURSE OF SEARCH. IN THE PRESENT CASE, THE ASSESSMENT HAD BEEN COMPLETED UNDER SUMMARY SCHEME UNDER S ECTION 143(1) AND TIME LIMIT FOR ISSUE OF NOTICE UNDER SECTION 143(2) HAD EXPIRED ON THE DATE OF SEARCH. THEREFORE, THERE WAS NO ASSESSMENT PENDING IN THIS CASE AND IN SUCH A CASE THERE WAS NO QUESTION OF ABATEMENT. THEREFORE, ADDITION COULD BE MADE ONLY O N THE BASIS OF INCRIMINATING MATERIAL FOUND DURING SEARCH. . 6.2 IN THIS CASE, THE AO HAD MADE ASSESSMENT ON THE INFORMATION/MATERIAL AVAILABLE IN THE RETURN OF INCOME. THE INFORMATION REGARDING THE GIFT WAS AVAILABLE IN THE RETURN OF INCOME AS CAPITAL AC COUNT HAD BEEN CREDITED BY THE ASSESSEE BY THE AMOUNT OF GIFT. SIMILAR WAS THE POSITION IN RELATION TO ADDITION UNDER SECTION 2(22)(E). THE AO HAD NOT REFERRED TO ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH BASED ON WHICH ADDITION HAD BEEN MADE. THE REFORE FOLLOWING THE DECISION OF THE SPECIAL BENCH (SUPRA), WE HOLD THAT THE AO HAD NO JURISDICTION TO MAKE ADDITION UNDER SECTION 153A. THE ADDITION MADE IS THEREFORE DELETED ON THIS LEGAL GROUND. ON MERIT ALSO WE DO NOT FIND ANY CASE TO SUSTAIN THE ITA NO S . 8026/10 & 5140 /1 3 10 ADDIT ION. THE ADDITION MADE IS ON ACCOUNT OF GIFT WHICH IS NOTHING BUT LOAN TAKEN BY THE ASSESSEE WHICH WAS CONVERTED INTO GIFT DURING THE YEAR. THUS SOURCE OF GIFT WAS LOAN WHICH THE AO HIMSELF HAS ADMITTED HAD BEEN TAKEN BY THE ASSESSEE IN THE YEAR PRIOR TO 2 000. THEREFORE, ADDITION IF ANY COULD HAVE BEEN MADE IN THE YEAR OF LOAN. SIMILARLY, CLAIM OF THE ASSESSEE AND FINDING OF CIT(A) THAT THERE WAS NO ACCUMULATED PROFIT HAS NOT BEEN CONTROVERTED BEFORE US. WE AGREE WITH CIT(A) THAT CURRENT YEAR PROFIT HAS TO BE EXCLUDED. THEREFORE, THERE IS NO CASE FOR ANY ADDITION UNDER SECTION 2(22)(E). WE, THEREFORE, DISMISS THE APPEAL OF THE REVENUE AND ALLOW THE APPEAL FILED BY THE ASSESSEE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED AND THAT BY THE REVENUE IS DISMISSED. 9. IN VIEW OF THE ABOVE PROPOSITION OF LAW, WE DO NOT FIND ANY MERIT IN THE ADDITION SO MADE BY AO U/S.153A WITHOUT REFERRING ANY INCRIMINATING MATERIAL HAVING FOUND DURING THE COURSE OF SEARCH, WHEN THE TIME LIMIT FOR ISSUE OF NOTICE U/S.143 (2) HAD EXPIRED MUCH PRIOR TO DATE OF SEARCH. 10 . WITH REGARD TO MERIT OF ADDITION, WE FOUND THAT ADDITION OF RS. 96 LAKHS WAS MADE BY AO U/S.68 OF THE ACT ON ACCOUNT OF LOAN TAKEN FROM MR. VIJAY BHANSALI. THE AO HAS DISCUSSED THE ISSUE IN PARA 5.9 AND AT P ARA 6..THE AO HAS ALSO OBSERVED THAT IN THE CAPITAL ACCOUNT FILED WITH THE ORIGINAL RETURN OF INCOME, THE ASSESSEE HAS CREDITED AN AMOUNT OF RS. 97 LAKHS AS GIFT FROM SHRI VIJAY BHANSALI, WHO IS A RESIDENT OF SARJAH, UAE. IT WAS CLARIFIED BY THE ASSESSEE BE FORE THE AO DURING THE ASSESSMENT PROCEEDINGS ITSELF THAT IT WAS WRONGLY MENTIONED AS GIFT IN THE CAPITAL ACCOUNT . T HE ASSESSEE HAS ALSO FILED LETTER FROM THE ABU DHABHI COMMERCIAL A BANK LTD. CERTIFYING THAT PAYMENT OF RS. 97,00,000/ - ON 4 DATES MADE TO M RS. ZEENAT SANGHAVI FROM THE SAVINGS NON RESIDENT ORDINARY (NRO) ACCOUNT NO. 357768 OF MR. VIJAY BABULAL BHANSALI. THE AO HAS INCORPORATED THE SAME IN PARA 6 IN HIS ASSESSMENT ORDER. THE AO ASKED FURTHER DETAILS AND ALSO LOAN CONFIRMATION FROM SHRI VIJAY B HANSALI ITA NO S . 8026/10 & 5140 /1 3 11 ALONG WITH HIS CREDITWORTHINESS. IN PARA 9, THE AO CONCLUDED THAT SINCE CREDIT WORTHINESS OF MR. VIJAY BHANSALI IS NOT PROVED, THE SAID LOAN IS INTEREST FEE LOAN AND IS STILL TO BE REPAID BY ASSE SSEE AND THEREBY HE TREATED RS. 97,00,000/ - AS UNEXPL AINED CASH CREDIT U/S 68 . IN PARA 4.2 THE LD. CIT (A) HAS INCORPORATED SUBMISSION OF THE ASSESSEE TO THE EFFECT THAT THE ADDITION CANNOT BE MADE U / S 68 AS THE ASSESSEE HAS SUBMITTED CONFIRMATION OF LOAN, COPY OF BANK ACCOUNT FROM WHOM THE LOAN IS RECEIVED, COPY OF PASSPORT, LETTER FROM THE ABU DHABI COMMERCIAL BANK THROUGH WHICH THE CHEQUE IS RECEIVED AND THEREFORE THE ASSESSEE HAS PRODUCED ALL THE EVIDENCE TO PROVE THE CREDIT WORTHINESS OF THE LOAN CREDITOR . HOWEVER, CIT(A) REJECTED ASSESSEES CONTENTIONS AND HAS GIVEN HIS FINDING AT PARA 4.4. THE LD. CIT (A) HAS RELIED O N THE DECISION OF THE HON. SUPREME COURT IN THE CASE OF DURGAPRASAD MORE 82 ITR 540 AND SUMATI DAYAL V. CIT 214 ITR 801 AND ALSO THE DECISION OF DELHI ITAT IN THE CASE OF DCIT V. SMT. PHOOL WATIDEVI 314 ITR (AT) 1 AND HELD THAT BY APPLYING THE TEST OF HUMAN PROBABILITY AND SURROUNDING CIRCUMSTANCES, DOCUMENTARY EVIDENCE CANNOT BE ACCEPTED AND THE ADDITION IS JUSTIFIED. BY OBSERVING THAT ASSESSEE WAS UNABLE TO DISCHARGE ITS BURDEN OF PROOF U/S .68 OF THE ACT, THE CIT(A) CONFIRMED THE ADDITION. FROM THE RECORD, WE FOUND THAT THE ASSESSEE HAD TAKEN LOAN OF RS. 97 LAKHS FROM MR. VIJAY BABULAL BHANSALI WHO IS AN NRI RESIDING AT SHARJAH, UAE FORM HIS NON - RESIDENT ACCOUNT WITH THE ABU DHABI COMMERCIAL BANK AS UNDER: CHEQUE DATE CHEQUE NO . AMOUNT (RS.) 17.01.2005 227626 25,00,000 17.01.2005 227627 22,00,000 23.02.2005 227628 25,00,000 14.03.2005 227629 25,00,000 TOTAL 97,00,000 ITA NO S . 8026/10 & 5140 /1 3 12 11 . VIDE LETTE R DATED 14 - 09 - 2009, THE ASSESSEE HAS FILED CONFIRMATION LETTER FROM LOAN CREDITOR AND ALSO CLARIFIED THAT THIS AMOUNT IS WRONGLY SHOWN AS GIFT IN THE BALANCE SHEET FILED WITH RETURN OF INCOME. HOWEVER, THE SAME WAS LOAN RECEIVED FOR PURCHASE OF RESIDENTIAL HOUSE PROPERTY IN M UMBAI AND WAS UTILISED FOR SAME. THE ASSESSEE HAD ALSO FILED A CERTIFICATE FROM ABU DHABI COMMERCIAL BANK CERTIFYING THAT THESE CHEQUES WERE ISSUED FROM THE NON - RESIDENT ORDINARY ACCOUNT OF MR. VIJAY BABULAL BHANSALI ON VARIOUS DATES AS MENTIONED IN THE CERTIFICATE AT PG. NO. 17 OF THE COMPILATION SUBMITTED TO THE AO. WE ALSO FOUND THAT VIDE LETTER DATED 09 - 03 - 2005 WRITTEN BY VIJAY BHANSALI TO THE HUSBAND OF THE ASSESSEE , MR. PARAG SANGHAVI REGARD ING LOAN GIVEN BY HIM TO HIS WIFE FROM H IS NRO ACCOUNT WITH THE ABU DHABI COMMERCIAL BA NK. THE PASSPORT OF THE LOAN CREDITOR WAS ALSO FILED WITH THE AO . TO SUBSTANTIATE THE CREDITWORTHINESS OF SHRI V I JAY BHANSALI, THE ASSESSEE HAS ALSO FILED A CERTIFICATE FROM FALCON INTERNATIONAL CONSULTING & AUDITING, CHARTERED ACCOUNTANT FIRM FROM DUBAI CERTIFYING CREDIT WORTHINESS OF THE LOAN CREDITOR. THE ASSESSEE HAD ALSO FIELD COPY OF ACCOUNT OF HDFC BANK OF - THE ASSESSEE IN WHICH THE SAID LOAN IS RECEIVE D. 1 2 . IN VIEW OF THE ABOVE DOCUMENTARY EVIDENCE FI LED BEFORE LOWER AUTHORITIES, WE FOUND THAT ASSESSEE HAS DISCHARGED ITS BURDEN OF PROOF U/S.68 OF THE ACT BY PROVING A. IDENTITY OF THE LOAN CREDITOR B. GENUINENESS OF THE LOAN TRANSACTION C. CREDIT WORTHINESS OF THE LOAN CREDITOR ACCORDINGLY , THE ADD ITION MADE BY THE AO WITHOUT GIVING ANY FINDING OTHERWISE IS NOT JUSTIFIED. THERE IS NO DISPUTE TO THE WELL SETTLED LEGAL ITA NO S . 8026/10 & 5140 /1 3 13 PROPOSITION THAT IN CASE OF LOAN TRANSACTION ASSESSEE IS NOT ONLY REQUIRED TO PROVE THE IDENTITY OF THE LOAN CREDITOR BUT ALSO THE GEN UINENESS OF THE LOAN TRANSACTION AS WELL AS CREDITWORTHINESS OF THE LOAN CREDITOR. IN THE INSTANT CASE, SINCE THE ASSESSEE HAS PROVED BY THE ABOVE DOCUMENTS THAT THE LOAN CREDITOR IS A LONG AND GOOD FRIEND OF THE A SSESSEES HUSBAND AND THE INTEREST FREE LO AN WAS GIVEN TO HELP THE ASSESSEE TO PURCHASE OF A RESIDENTIAL FLAT IN BOMBAY FOR WHICH LOAN WAS ACTUALLY UTILISED. FURTHER THE CREDIT WORTHINESS OF THE LOAN CREDITOR IS ALSO PROVED BY FILING THE NET WORTH CERTIFICATE FROM CHARTERED ACCOUNTANT FIRM OF DUBA I . FOR THIS PURPOSE, RELIANCE CAN BE PLACED ON THE DECISION OF HONBLE PATNA HIGH COURT IN THE CASE OF SAROGI CREDIT CORPORATION VS. CIT, 103 ITR 344 AND HONBLE GUJARAT HIGH COURT IN THE CASE OF DCIT VS. ROHINI BUILDERS, 256 ITR 360 . DECISIONS RELIED BY C IT(A) ARE NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE. IN VIEW OF THE ABOVE DOCUMENTARY EVIDENCES AND FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY MERIT IN THE ACTION OF LOWER AUTHORITIES IN MAKING SAID ADDITION. 1 3 . THE AO ALSO MADE ADDITIO N OF RS. 65,000/ - ON ACCOUNT OF FOREIGN TRAVELLING EXPENSES. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT THE AO HAS DEALT WITH THE ADDITION IN PARA 9 OF HIS ASSESSMENT ORDER, WHEREIN HE HAS INCORPORATED THE ASSESSEES CONTENTION THAT THE TOTAL WITHD RAWAL MADE BY THE ASSESSEE, HER HUSBAND AND HER MOTHER - IN - LAW, AMOUNTING TO RS. 16,08,971/ - INCLUDED THE EXPENSES INCURRED FOR FOREIGN TRAVELLING. IT WAS ALSO SUBMITTED BEFORE THE AO THAT ASSESSEE HAS MADE A TRIP TO MALAYSIA, WHEREIN SHE STAYED WITH HER FRI ENDS AND RELATIVES, THEREFORE, NO EXPENSES WERE INCURRED FOR BOARDING AND LODGING. THE ONLY ITA NO S . 8026/10 & 5140 /1 3 14 EXPENSES SO INCURRED ON ACCOUNT OF AIR TICKETS. HOWEVER, THE AO HAS NOT AGREED TO THE CONTENTION OF THE ASSESSEE AND ESTIMATED THE EXPENSES OF TRIP TO MALAYSIA AND TREATED THE SAME AS UNEXPLAINED EXPENDITURE U/S.69C OF OTHE ACT. 14 . WE FOUND THAT DURING THE YEAR ASSESSEE ALONG WITHER HER HUSBAND AND MOTHER - IN - LAW HAS SHOWN WITHDRAWAL OF RS. 16,08,971/ - , WHICH HAS NOT BEEN DISPUTED BY THE AO. AS THE ASSESSEE COULD NO T FURNISH THE DETAILS OF EXPENSES, THE AO ESTIMATED THE SAME AND MADE ADDITION OF RS. 65,000/ - . THE TICKETS EXPENDITURE WAS ESTIMATED AT RS.30,000/ - . KEEPING IN VIEW TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE RESTRICT THE ADDITION TO RS. 30,000/ - U/ S.69C OF THE IT ACT. 1 5 . AO HAS ALSO MADE ADDITION OF RS. 50,000/ - U/S.69C WITH RESPECT TO CREDIT CARD EXPENSES. IN PARA 9(V) THE AO OBSERVED THAT ASSESSEE HAS FIVE CREDIT CARDS OF VARIOUS BANKS. ACCORDINGLY, HE ESTIMATED USE OF CREDIT CARDS TO THE EXTENT OF RS. 50,000/ - AND THEREBY MADE ADDITION U/S.69C OF THE ACT. HOWEVER, NOTHING POSITIVE MATERIAL WAS BROUGHT ON RECORD IN SUPPORT OF THE ALLEGATION THAT ASSESSEE HAS ACTUALLY USED THE CREDIT CARD. HOWEVER, WE FOUND THAT ASSESSEE HAD MADE PERSONAL DRAWINGS F ROM HER BANK ACCOUNT AMOUNTING TO RS. 3,95,396/ - WHICH WAS SUFFICIENT FOR HER REGULAR EXPENSES AND, THEREFORE, ANY FURTHER ESTIMATION OF RS. 50,000/ - ON ACCOUNT OF CREDIT CARD EXPENSES IS NOT JUSTIFIED WITHOUT BRINGING ANY COGENT MATERIAL ON RECORD. ACCORDIN GLY, WE DIRECT THE AO TO DELETE THE ADDITION. 16. AS WE HAVE ALREADY DELETED THE ADDITION MADE BY AO, THE PENALTY IMPOSED WITH REFERENCE TO SUCH ADDITION HAS NO LEGS TO STAND. ITA NO S . 8026/10 & 5140 /1 3 15 ACCORDINGLY, WE DIRECT THE AO TO DELETE THE PENALTY IMPOSED U/S.271(1)(C) OF TH E ACT. 1 7 . IN THE RESULT, APPEAL S OF THE ASSESSEE ARE ALLOWED IN PART . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 /1 2 / 201 4 . 19 /1 2 / 2014 SD/ - SD/ - ( ) ( VIVEK VARMA ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 19 / 1 2 /2014 /PKM , PS COPY OF THE ORDER FORWARDED T O : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A), MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//