ACIT, CC-2, Chandigarh V. M/s TJR Properties Pvt. Ltd., Chandigarh

ITA 727/CHANDI/2022

• Counselvise Citation: [2023] 101 COUNSELVISE.COM (IT) 9873 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-09-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 12-12-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained cash credit; Capital asset; Business income; Principle of natural justice; Tax effect; Application of stay; Cost of acquisition; Wrong claim; Accommodation entries; Reassessment proceedings; Borrowed satisfaction; TDS; Set aside
• Section: 147; 68; 148; 132; 144; 143(3); 2(14); 153A; 133(6); 250; 264; 64; 43; 48; 73; 72; 13; 145(3); 22

Judgement Text

आयकरअपील यअ धकरण,च डीगढ़ यायपीठ,च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, ‘B’, CHANDIGARH BEFORE SHRI A.D. JAIN, VICE PRESIDENT & SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER आयकरअपीलसं./ITA No 670/ C H D / 2 0 2 2 नधा रणवष / Assessment Year :2012-13 TJR Properties Private Limited, 80-81, 3 rd Floor, Sector 17-C, Chandigarh 160017 Vs. बनाम The DCIT, Central Circle-2, Chandigarh थायीलेखासं./PAN No:AACCT8364R अपीलाथ /Appellant यथ /Respondent नधा रतीक ओरसे/Assessee by : Sh. Rohit Goyal, CA, Sh. T.N. Singla, CA and Ms. Shruti Khandelwal, Advocate राज वक ओरसे/ Revenue by : Sh. Sarbjeet Singh, CIT (DR) S.A. N0.8/Chd/2023 (Arising inआयकरअपीलसं./ITA No 670/CHD/2022 नधा रणवष / Assessment Year :2012-13 TJR Properties Private Limited, 80-81, 3 rd Floor, Sector 17-C, Chandigarh 160017 Vs. बनाम The DCIT, Central Circle-2, Chandigarh थायीलेखासं./PAN No:AACCT8364R अपीलाथ /Appellant यथ /Respondent & आयकरअपीलसं./ITA No. 727/C H D / 2 0 2 2 नधा रणवष / Assessment Year :2012-13 The ACIT, Central Circle-2, Chandigarh Vs. बनाम TJR Properties Private Limited, 80-81, , Sector 17-C, Chandigarh 160017 थायीलेखासं./PAN No:AACCT8364R अपीलाथ /Appellant यथ /Respondent 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 2 नधा रती क ओर से/Assessee by : Sh. Rohit Goyal, CA, Sh. T.N. Singla, CA and Ms. Shruti Khandelwal, Advocate राज वक ओरसे/ Revenue by : Sh. Sarbjeet Singh, CIT (DR) स ु नवाईक तार+ख/Date of Hearing : 19.09.2023 उदघोषणाक तार+ख/Date of Pronouncement : 29.11.2023 आदेश/Order Per Bench: These are Assessees / Revenue’s appeals an Cross Objection by the Assessee against the respective orders of the ld.CIT (A)-3, Gurgaon as per the following details:- S.No. ITA No. A.Y. CIT(A)-3,Gurgaon order dated 1 670/Chd/2022 2012-13 30.09.2022 2. S.A.NO. 8/Chd/2023 (in ITANo.670/Chd/2022 2012-13 30.09.2022 2 727/Chd/2022 2012-13 30.09.2022 2. Since the issues involved in these appeals are identical, they have been heard together and are being disposed of by this common order. For the sake of description of facts, ITA No. 670/Chd/2022 is being taken asthe lead case. 3. The Assessee, in ITA No.670/Chd/2022, has taken the following grounds of appeal:- 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 3 1. That the order of Learned C.I.T. (Appeals) is bad and against the facts and Law. 2. That the assessment completed u/s 153A of the Income Tax Act, 1961 is against the provisions of the law as neither any search was conducted on the company nor any Panchnama was prepared in the name of the company. 3. That on the facts and in the circumstances of the case, the Order of assessment passed under Section 153A of the Act is wholly illegal and without jurisdiction as no search had been conducted under Section 132 of the Act in any of the business premises of the appellant - company. 4. That on the facts and in the circumstances of the case, the finding recorded in the assessment Orders that search and seizure operations were carried out under Section 132 of the Act in the case of the appellant-company, is perverse and wholly erroneous and therefore, the Order of assessment passed under Section 153A of the Act is without jurisdiction. 5. That the additions made in the assessment Order are not based on any corroborative and relevant incriminating material stated to have been unearthed during the course of any search by the Assessing Officer, though no search has taken place on the appellant and therefore, the Order of Assessment is wholly illegal and without jurisdiction in view of the judgment in the case of Commissioner of Income-tax (Central)-III v. Kabul Chawla [2016] 380 ITR 573 (Delhi)/[2015] 281 CTR 45 (Delhi). 6. That the learned CIT (A) has estimated the cost of plot at Rs. 1,94,01,797/-instead of cost of plot accepted by the Id. AO at Rs. 2,07,27,388/-. 7. That the Id. CIT(A) has wrongly disallowed expenses of Rs.43,61,605/-incurred for transfer of said plot sold which was accepted by the Id AO in the assessment order. 8 That the learned CIT (A) has wrongly disallowed loss on sale of shares amounting to Rs. 17,49,637/- 9. That the learned CIT (A) has wrongly disallowed bad debt written off mounting to Rs. 1,00,00,000/-. 10.That the learned CIT(A) has erred in making total addition of Rs. 3,85,19,844/-on surmises and conjectures. 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 4 11.That the appellant craves leave to add, alter, amend or withdraw any grounds of appeal before the final hearing. 4. The following additional Grounds have also been taken by the Assessee: 1. That the approval u/s 153D was granted by the JCIT without application of mind and without consideration of relevant records. 2. That no search was conducted on the appellant company and otherwise also the alleged search, if any, conducted was in violation of provisions of section 132(1) of the Income tax Act, 1961. 5. At the outset, the ld. Counsel for the Assessee has stated at the bar that he does not wish to press the additional grounds. Rejected as not pressed. 6. Ground Nos.1 and 11 are general in nature. 7. As per Ground No.2, since neither any search was conducted on the Assessee company, nor any ‘Panchnama’ was prepared in its name, the provisions of section 153A of the Income Tax Act, 1961 (in short 'the Act') are not applicable and so, the assessment completed u/s 153A of the Act is against the provisions of law. This Ground corresponds to Ground No. (b) raised by the Assessee before the ld. CIT(A). The Assessing Officer passed the assessment order dated 30.12.2019 u/s 153A(1)(b) read with section143(3) of the I.T.Act, 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 5 making various additions.Before the ld. CIT(A), the Assessee raised this issue by wayof Ground No. (b). 8. The ld. CIT(A), in para 10 of the impugned order, has observed, inter alia, that a letter dated 7.9.2022 had been sent to the A.O., requiring him to furnish details of the warrant executed / ‘Panchnama’ prepared,’ on the basis of which, proceedings u/s 153A of the Act were initiated; that in response, the A.O. had furnished the copy of the warrant which was duly executed in the name of the Assessee on6.2.2018, in respect of the premises situated at SCO 80- 81, 4 th Floor, Sector 17-C, Chandigarh; that the said warrant was found containing the name of the Assessee; that accordingly, it was found that the warrant of authentication u/s 132(1) of the Act had been executed in the name of the Assessee; and that, therefore, the A.O. was justified in initiating assessment proceedings u/s 153A of the Act. 9. Before us, on behalf of the Assessee, it has been contended that neither any search was conducted on the Assessee company, nor any ‘Panchnama’ was prepared in its name; that the Assessee company filed an application under the RTI Act, bearing Registration No. CCITC/R/E/20/0001 dated 7.1.2020, seeking information with regard to copy of last warrant, a copy whereof has been placed at Assessee’s 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 6 Paper Book (‘ABP’),pages 346-350. It has been contended that the said application of the Assessee was transferred (APB 351-352) to the DGIT, ITO office of PCIT (Investigation), Ludhiana and the DCIT, Central Circle-2, Chandigarh (APB 354-356) and finally to the DCIT, Central Circle-2, Mohali (APB 357); that none of the Income Tax Authorities provided the Assessee company with the copy of the said warrant; that the ACIT, Central Circle-2, Chandigarh vide order (APB 360-361), dated 5.2.2.020, passed u/s 7(5) of the RTI Act, denied the Assessee company with a copy of the search warrant. 10. It has been contended that the assessment u/s 153A of the Act was completed against the provisions of the law, as neither any search u/s 132 was conducted on the Assessee company, nor any ‘Panchnama’ was prepared in its name; that though the Assessee specifically requested the Assessing Officer to provide it with a copy of the search warrant in the name of the Assessee company, no such search warrant was provided to the Assessee company; that neither the name of the company was mentioned in the ‘Panchnama’; nor a copy of the search warrant was provided to the Assessee company, despite repeated requests. It has been contended that the search was conducted at the residential premises of the Assessee company, namely Shri Tarloki Nath Singla and Shri Jagdish Rail Gupta in their 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 7 individual capacity; that simultaneously, search was also conducted in the business premises at M/s Kansal Singla and Associates, Chandigarh, at SCO 80-81, 4 th Floor, Sector 17-C, Chandigarh, which is also the registered address of the Assessee company; that during the search of M/s Kansal Singla and Associates, regular books of account along withbank details of the company were found; that one of the directors of the company, Shri T.N.Singla, who is also a partner in M/s Kansal Singla and Associates, was present at the time of search, but his signatures were not taken on the ‘Panchnama’ prepared in the name of M/s Kansal Singla and Associates; that on the request of the Assessee company, the ld. CIT(A), vide letter dated 7.9.2022, directed the A.O. to furnish a copy of the search warrant / ‘Panchnama’ prepared,on the basis of which, the assessment u/s 153A had been completed in the case of the Assessee company; that the ld CIT(A), in the impugned order, has similarly mentioned that the “Assessing Officer furnished the copy of the warrant which was duly executed in the name of the appellant on 16.2.2018 in respect of the premises situated at SCO 80-81, 4 th Floor, Sector 17-C, Chandigarh. The said warrant was found containing the name of the appellant”; that the ld. CIT(A), by simply observing so, agreed with the action of the Assessing Officer and held that the Assessing Officer was justified in initiating assessment proceedings u/s 153A of the Act; that the ld. 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 8 CIT(A) did not provide the Assessee with the copy of the warrant, nor reproduced the same in the order; that since none of the Income Tax Authorities provided the Assessee with the copy of the search warrant, the Assessee company was suspicious that its name was not mentioned in the search warrant. 11. In the above situation, the Bench had called for the original search warrant from the Department, which was produced. The name of the Assessee company was foundmentioned in the search warrant. It is seen that a copy of the ‘Panchnama’ has been placed at APB 519- 522. At APB 519, at item A, it is mentioned: ‘Warrant in the case: M/s Kansal Singla and associates’; at item (B), it has beenstated that: ‘Warrant to search (Details and Ownership of place ofsearch): M/s Kansal Singla and Associates SCO 80-81, 4 th Floor, Sector 21C, Chandigarh. So, the name of the Assessee Company, isnotmentioned in this ‘Panchnama’. Also, this ‘Panchnama’ does not bear the signature of Shri T.N. Singla,Director of the Assessee Company, who is stated tohave been present at theplace of searchat the timeof the search. 12. On this issue, the submissions on behalf of the Department, as contained in the oral arguments addressed by the ld. CIT (DR) and the written submissions dated 5.6.2023 are that providing of the copy of 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 9 the warrant is not a right of the searched persons; that u/s 96 of the CrPC read with section 76 of the Evidence Act, a certified copy of a search warrant could be obtained on payment of legal fee. Reliance has been placed on the decision of the Hon'ble Delhi High Court in the case of‘MDLR’, 361 ITR 405 (Delhi), wherein, it has been held inpara 24, that it will be salutary and proper that a copy of the search warrant be furnished to the occupant or the personsearched; and that this would curtail anyallegationofinterpolation, addition of names, etc. On the issue as to whether it is necessary to have the names of the person searched in the ‘Panchnama’, the ld. DR has sought to place reliance on ‘MDLR’ (supra), wherein, the Hon'ble Delhi High Court has held that since the 22 parties whose names were not mentioned, did not object to theorder u/s 153A in the petitionu/s 264 pursuant to the assessment order,such objection was not justified in the writ petition filed; that the assessment order under section 153A cannot and should not be permitted to become a matter of writ petition as the First Appellate Forum; and that the First Appellate Statutory Authority could deal statutorily with the questions and issues raised in the writ petition the jurisdiction of the First Appellate Authority having not been invoked with the appeals preferred by the writ petitioners. 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 10 13. Concerning the issue of absence of signatures of the main person on the search warrant, the ld. CIT (DR) has contended that there is no reequipment of service of warrant on the main person, who is usually occupied at other premises, that the search warrant is required to be served on the witnesses. 14. As observed, the name of the Assessee company has been mentioned in the search warrant, which was produced in the original by the Department before us. Therefore, this puts this entire controversy at rest and the Assessee’s objection in this regard is found to be unjustified and it is, accordingly, rejected, while rejecting Ground No.2. 15. Now, coming to Ground Nos. 3, 4 and 5, these Grounds correspond to Additional Ground Nos. 1, 2 and 3 taken by the Assessee before the ld. CIT(A). The matter pertaining to Ground Nos. 3 and 4 has been effectively decided by us in the preceding paragraphs, where we have found that the search warrant did contain the name of the Assessee company. Therefore, the grievance of the Assessee by way of Ground Nos. 3 and 4 also does not contain any merit and, accordingly, Ground Nos. 3 and 4 are rejected. 16. According to Ground No.5, the additions made are not based on any incriminating material found during the search. In this regard, 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 11 the ld. CIT(A) has held that the Assessing Officer was having jurisdiction to assess the income of the Assessee on the basis of the material available at the time of the assessment and he was not to restrict the additions subject to the incriminating material found during the search. For holding so, the ld. CIT(A) has placed reliance on the decision of the Hon'ble Kerala High Court in the case of “CIT vs. KPUmmer”, (citation not given) in the impugned order; the decision of the Hon'ble Allahabad High Court in the case of ‘Rajkumar Arora’, 367 ITR 517 (Allahabad) ; the decision of the Hon'ble Kerala High Court in the case of ‘EN Gopakumar vs. CIT’, (2016) 75 taxman.com 215 and the decision of the Hon'ble Allahabad High Court in the case of ‘CIT vs. KesarvaniZardaBhardar’, ITA No.270/2014. The ld. Counsel for the Assessee, on this issue, has contended that the A.O. issued notice u/s 153A of the Act on 09.03.2019, against which, the company filed return and challenged the initiation of proceedings u/s 153A vide letter dated 03.05.2019 (APB-1); and that the additions made by the Assessing Officer are not emanating out of the search proceedings, as no incriminating material or evidence was found during the course of the alleged search related to the Assessee company for the year under consideration. Reliance in this regard is placed on the order of the Hon'ble Apex Court wherein, the SLP filed by the Department in the cases of ‘MeetaGutgutia’ 96 taxmann.com 468/257 Taxman 441 (SC) 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 12 and ‘Kabul Chawla’ were dismissed by the Hon'ble Apex Court. The relevant portion is re-produced below - "Recently, Hon'ble ITAT Delhi in AlankarSaphire Developers v. Dy. CIT [2020] 116 taxmann.com 389/184 ITD 847 (Delhi - Trib.) decided the issue that if no incriminating material is found in the search, no addition can be made u/s 153A. During the course of hearing in this case the assessee relied on the decision of Hon'ble Delhi High Court in CIT v. Kabul Chawla [2015] 61 taxmann.com 412/234 Taxman 300/[2016] 380 ITR 573 (Delhi) and Pr. CIT v. MeetaGutgutia [2017] 82 taxmann.com 287/248 Taxman 384/395 ITR 526 (Delhi). On the basis of arguments of the parties the Tribunal noted that SLP filed by the Department in the case of Kabul Chawla (Supra) was dismissed by Hon'ble Apex Court for low tax effect and SLP filed before Supreme Court in the case of MeetaGutgutia (supra) was dismissed by Hon'ble Supreme Court in Pr. CIT v. MeetaGutgutia [2018] 96 taxmann.com 468/257 Taxman 441 (SC) by observing that "We do not find any merit in this petition". The Department submitted that SLP on the similar issue has been admitted by Hon'ble Apex Court in M/s Apar industries (Citation not provided). The Tribunal however held that once the SLP is not admitted, the decisions given by the High Court in the case of Kabul Chawla and MeetaGutgutia became final and binding." 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 13 17. The ld. Counsel for the Assessee has contended that therefore, the addition made by the learned assessing officer cannot be sustained in the present case in the order passed under section 153A of the Act, in the absence of any incriminating material found during the course of search action, where there was no pending assessment which could be said to have abated on the date of search. 18. Reliance has been placed on the judgment of Hon'ble Apex Court in the case of ‘PCIT vs M/s AbhisarBuildwell P. Ltd.’, CA No. 6580, dated 24.04.2023, wherein, the Hon’ble court held that “in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961." 19. Reliance has further been placed on the judgment of the Hon'ble High Court of Bombay, in ‘Pr. CIT Vs. Sandeep Agarwal (HUF)’, dated 09/10/2023 (Bombay), wherein it was held that - "We dismiss the appeal, holding that the only issue which arises for determination will have to be answered against the Revenue and favouring the Assessee 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 14 given the decisions of the Hon'ble Supreme Court in ‘AbhisarBuildwell (P.) Ltd.’, (supra) and ‘U.K. Paints (Overseas)’, (supra). The clarification issued in both these judgments is, however, issued in these matters as well in the context of reassessment proceedings under Sections 147 and 148 of the IT Act. However, as noted above, all contentions of all parties are kept open in this context." 20. It has been contended that the Assessing Officer has wrongly made addition u/s 153A(l)(b) r.w.s. 143(3) of the Act on the direction of the third party without having any incriminating material on record, as no incriminating material/document was unearthed by the Department during the search proceeding. Hence, assessment u/s 153A(l)(b) r.w.s. 143(3) of the Income Tax Act, 1961 has been wrongly made, against the provisions of the law. 21. It has been submitted that the Assessing Officer wrongly made additions in the hands of the company, of all credit entries in the bank, regarding which, sufficient and credible information including the source by way of evidence had been submitted during the assessment proceeding for discharging its burden and which additions, are not sustainable in law, as no inquiry has been undertaken by the Assessing Officer and/or any material brought on record establishing the amount of bank entries as unexplained, 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 15 thereby inviting the application of provisions of the Section 68 of the Act. 22. It has been submitted that theld. CIT(A,) in his order, on Page 126, has observed that a letter dated 07.09.2022 was sent to the A.O.,requiring himto produce a copy of the search warrant executed / ‘Panchnama’ prepared on the basis of which proceedings u/s 153A were initiated on the company. The CIT(A) observed thatthe AO was justified in initiating proceedings u/s 153A of the Act, as warrant of authorization u/s 132(1) was executed in the name of the company on 16.02.2018 at SCO 80-81, 4 th Floor, Chandigarh. 23. It has been submitted that the CIT(A), on pages 127 & 128 of his order, has observed that the Assessee has stated that the additions made in the order u/s 153A of the Act cannot be sustained in the absence of any incriminating material found during the search proceedings; that the CIT(A) observed that consideration of above ground of appeal, it had been noted that in terms of the provisions of section 153A(l)(b), the Assessing Officer was required to assess/reassess the total income for the year under consideration; that the CIT(A) observed that it has been held by the Hon'ble Kerala High Court in the case of ‘CIT vs KP Ummer’ that when a notice u/s 153A is issued, it enables the Department to carry out assessment/re- 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 16 assessment with respect to 6 immediate prior years and this does not require any incriminating materialrecovered during search relating to those prior ``years in which there is no time left on the date of search for an assessment u/s 143 (3); that the CIT(A) observed that the same view has been up-held by the Hon'ble Allahabad High Court in the case of ‘Rajkumar Arora’; that the CIT(A) observed that the Hon’ble Kerala High Court, in the case of ‘EN Gopakumar vs CIT’, (2016)75 taxman.com 215 andthe Hon'ble Allahabad High Court, in the case of ‘CIT vs KesarwaniZardaBhandar’, (2016), ITA No. 270/2014, had also held similarly; that the ld. CIT(A) observed that keeping in view of the provisions of the Act and the ratios of the decisions mentioned, it was observed that the Assessing Officer was having jurisdiction to assess the income of the Assessee on the basis of material available at the time of assessment and was not to restrict the additions subject to incriminating material found during the course of search and that it was in the manner that Additional Grounds of appeal No. 3 & 5were dismissed by the ld. CIT(A). It has been contended that in view of the decisions in ‘Kabul Chawla’ (supra), ‘MeetaGutgutia’ (supra), ‘Sandeep Agarwal (HUF)’ (supra) and ‘AhhisarBuildwell’ (supra), Ground No.5 be accepted and the A.O. be held not to have had jurisdiction to make the additions in the absence of incriminating material found in the search. 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 17 24. On the other hand, the ld. DR, supporting the impugned order in this regard, has contended that as correctly stated by the ld. CIT(A) and not rebutted on behalf of the Assessee, the search warrant was duly executed in the name of the Assessee on 6.2.2018 in respect of the premises situated at SCO 80-81, 4 th Floor, Sector 17-C, Chandigarh; that, therefore, the Assessing Officer was well justified in initiating assessment proceedings u/s 153A of the Act; that as correctly noted by the ld. CIT(A) in terms of the provisions of section 153A (1)(b) of the Act, the Assessing Officer was required to assess / re-assess the total income of the Assessee for the year under consideration; that as held by the Hon'ble Kerela High Court in the case of ‘CIT vs. KP Ummer’ (supra), when a notice u/s 153A of the Act is issued, it enables the Department tocarry out assessment / re- assessment with respect to the six immediate prior years and this does not require any incriminating material recovered during the search relating to those prior years, in which, there was no timeleft on the date of search for an assessment u/s 143(3) of the Act; that the same view has been taken by the Hon'ble Allahabad High Court in the case of ‘Rajkumar Arora’, (supra), the Hon'ble Kerela High Court in the case of ‘EN Gpuakumar vs. CIT’, (supra) and the Hon'ble Allahabad High Court in the case of ‘CIT vs. KeserwaniZardaBhandar’, (supra); that the ld. CIT(A) has correctly held that in view of the provisions of the 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 18 Act and the ratios of thesedecisions, the Assessing Officer was indeed having jurisdiction to assess the income of the Assessee on the basis of the material available at the time of the assessment and he was to restrict the additions subject to incriminating material found during the course of search. The ld. DR has contended that in this view of the matter, therebeing no merit therein, Ground Nos. 3 to 5 may be rejected. 25. We have heard the parties on Ground No. 5 raised before us. 26. The grievance of the Assessee is that the additions made by the Assessing Officer do not emanate from the search proceedings, as no incriminating material was found, pertaining to the year under consideration. In this regard, it is seen that noassessment was pending for the year under consideration and as such, had not abated on the date ofsearch. In such a case, as held by the Hon'ble High Court in the case of ‘Kabul Chawla’, 380 ITR 573 (Del) and as also similarly held in ‘Pr. CIT Vs. MeetaGutgutia’ 395 ITR 526 (Del), if no incriminating material so found in the search, no addition can be made u/s 153A. The SLP in the casesof ‘MeetaGutgutia’ (supra and ‘Kabul Chawla’ (supra),were dismissed by the Hon'ble Supreme Court, having found no merit therein. In ‘PCIT vs. M/s AbhisarBuildwellP. Ltd.’, vide order dated 24.4.2023, the Hon'ble Supreme Court has 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 19 held, agreeing with ‘Kabul Chawla’ (supra), that in case no incriminating material is unearthed during the search, the Assessing Officer cannot assess or re-assess taking into consideration the other material in respect of the completed assessment / unabated assessment; that meaning thereby, that in respectof completed / unabated assessment, no addition can be made by the Assessing Officer in the absenceof any incriminating material found during the course of search u/s 132 of the I.T. Act. Further, as correctly contended on behalf of the Assessee, ‘AshisarBuildwell’ has been followed by the Hon'ble Bombay High Court in the case of‘Pr. CIT v Sandeep Aggarwal (HUF)’, vide orderdated 9/10/2023, wherein, it has been held that the clarification issued by the Hon'ble supreme Court in the case of AbhisarBuildwell’ and ‘U.K. Paints’, has been issued in the context of re-assessment proceedings u/s 147 and 148 of the Act as well. 27. It is further seenthat while dealing with the cases of the Group Company for A.Y. 2017-18 (ITA No. 33/Chd/2023 and ITA No. 146/Chd/2023) and the case of the Group Company for A.Y. 2013-14 in ITA No. 739/Chd/2022, vide our order dated 31.10.2023, that under similar facts and circumstances, we have held that the Assessing Officer was initially of the view that no addition was 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 20 required to be made and had sent a deviation note, but had made the additions only on the diktat of a third party, i.e., the ADIT. Similar is the position here. The additions for the year under consideration have been made by the Assessing Officer only on the directions of the third party, without having in his possession any incriminating material unearthed during the search proceedings, for the year under consideration, which is indirect contravention of the afore discussed case laws. Moreover, the additions wrongly made represented all the credit entries in the bank account of the Assessee company. Regarding these credit entries, sufficient credible documentary information had been furnished by the Assessee,by way of evidence, during the assessment proceedings, including the source thereof, whichcogent voluminousdocumentary evidence the Department was been not able to rebut. The Assessing Officer, rather, having not been satisfied therewith, hadnot deemed it necessary to undertaken any inquiry in this regard. Also, no material was brought on record to establish that the bank entries wereunexplainedentries. This being so, the provisions of section 68 of the Act were wrongly applied. 28. In view of the above, Ground No.5 is found to carry merit and, accordingly, the same is accepted. 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 21 29. Coming tothe Ground Nos.6 and 7, the Assessee has contended that the ld. CIT(A) has erred in estimating the cost of plot at Rs. 1,94,01,797/-, instead of that accepted by the Assessing Officer at Rs. 2,07,27,388/-. It has further been submitted that the ld. CIT(A) has gone wrong in disallowing the expenses of Rs. 43,61,605/-, incurred by the Assessee for transfer of the said plot, which expenses had correctly been accepted by the Assessing Officer in his order. 30. So far regards the issue of remaining cost of plot, in the assessment order, the Assessing Officer observed that the expenses claimed by the Assessee company during the year, on transfer of the plot, had been verified; that however, considering that the Assessee company had claimed that it was engaged in the business of real estate and had shown this transfer in its Profit and Loss account,benefit of indexation was not allowable to the Assessee on this transaction. Accordingly, the Assessing Officer computed the profit on the transfer of plot by holding that the sale consideration of the property was for Rs. 5,00,50,000/-; that from this, the amount of Rs. 2,07,27,388/- representing cost of the property, as shown as on31.3.2011 and the expenses of Rs. 43,61,605/- had to be reduced from the said sale consideration of the property, giving a net gain of 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 22 Rs. 2,49,61,007/, which was added to the income of the Assessee company on the transfer of the property. 31. Thus, the Assessing Officer verified and accepted the cost of acquisition of the commercial plot, i.e, SCO 129, Sector 5, Panchkula, whichwas registered on12.3.2008 and sold on30.11.2011 [as noted by the ld. CIT(A) at page 106 of the impugned order], and which was, therefore, held by the Assessee for more than 36 months, at Rs. 2,07,27,388/-. The Assessing Officer also allowed the expenses of Rs. 43,61,605/- incurred on the property during the year. He, however, refused to allow indexation to the Assessee company, holding that plot had been held by the Assessee company for business purpose. 32. The matter was remitted to the Assessing Officer by the ld. CIT(A). During the remand proceedings, the A.O. issued a notice (APB 95-96) to the Assessee on6.1.2022, u/s 250(4) of the Act, requiring the Assessee to again submit proof oftransfer along with documentary evidence in support of the Assessee’s claim of deduction while computing Long Term Capital Gain. The Assessee, vide reply (APB 97- 100) dated 21.1.2022, explained all the facts regarding the Long Term Capital Gain on the sale of plot and submitted date-wisepayment schedule for the purchase of the plot. 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 23 33. The ld. CIT(A), however, while allowing the indexation of cost of theplot u/s 49 of the Act and accepting the plot as a long term capital asset, still reduced the openingbalance of the cost of the plot, as shown in the balance sheet (APB 21) as on31.3.2011 and he also did not allow the expenses of Rs. 43,61,605/- incurred during the year and this, against which, the Assessee is aggrieved, was undisputedly done by the ld. CIT(A) without issuance of any notice of enhancement u/s 251(1)(2)of the Act and without considering the details and chronology of payment, as furnished by the Assessee vide its reply dated 18.1.2022, particularly when the Assessing Officer, in the assessment order, had made specific mention of having duly verified the claim of the Assessee with regard to the transaction of the plot. 34. Thus, before reducing the cost of the land, no opportunity was granted to the Assessee by the ld. CIT(A), thereby contravening the explicit provisions of section 251(2) of the Act, as per which, the ld. CIT(A) should not enhance an assessment unless the Assessee has been granted a reasonable opportunitytoshow cause against such enhancement. While doing so, the ld. CIT(A), though he accepted the sale of the plot as a sale of a long term capital asset allowable for indexation and also accepted it to be assessed as long term capital 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 24 gain / loss, he acted inexcess of his power by reducing the cost of the asset sold, for calculating the capital gain, from the consideration of the sale ofthe plot, thereby enhancing the Assessee’s liability without any opportunity to show cause against such enhancement and went wrong in reducing the cost ofthe plot at Rs. 1,94,01,797, instead of that for Rs. 2,07,27,388/-, which cost of plot had been rightly accepted by the Assessing Officer on the basis of cogent unrebutted evidence produced. 35. In so far regards the expenses of Rs. 43,61,605/-, incurred for transfer of the plot, which expense was accepted by the Assessing Officer, the ld. CIT(A) observed that Long Term Capital Gain should be worked out by considering the cost of acquisition at Rs. 1,73,11,797/- as per the cost reflected in the balance sheet, plus Rs. 20,90,000/- on account of stamp duty paid on purchase of the plot, total amounting to Rs. 1,94,01,797/-, further indexed with reference to the year of purchase, i.e, F.Y. 2007-08, till the date of sale. Applying the provisions of section 49 of the Act, the ld. CIT(A) did not find the other amount forming part of the written down value as on 31.3.2011 to be eligible. The indexed cost of acquisition was, thus, worked out at Rs. 2,76,41,398/-. In this manner, the ld. CIT(A), worked out the Long Term Capital Gain at Rs. 2,24,08,602/-, i.e., the sale consideration of 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 25 the plot, of Rs. 5,00,05,000/-, as reduced by the cost of acquisition worked out by the ld. CIT(A), at Rs. 2,76,41,398/-. 36. The grievance of the Assessee is that here again, without issuing any show cause notice to the Assessee, as per the requirement of sections 250 (1) and (2) of the Act, the ld. CIT(A) erred in reducing the cost of the plot and in disallowing the expenses of Rs. 43,61,605/-, which expenses had been correctly allowed by the Assessing Officer. 37. As rightly pointed out on behalf of the Assessee, vide questionnaire (APB 326-327) dated 5.12.2019, the Assessing Officer had asked the Assessee company to furnish the working of the capital gain. The Assessee, vide reply (APB 334) dated 19.12.2019, furnished the calculation of capital gain along with all the necessary supporting documents,like computation, copy of ITR, copy of sale deed and copy of purchase deed. Though the Assessee furnished these very evidences before the ld. CIT(A), as available at APB 231, the ld. CIT(A) illegally ignored the same. Even during the remand proceedings, vide notice (APB 95) issued u/s 250(4), on 6.1.2022, the Assessing Officer asked the Assessee to again submit proof or justification along withdocumentary evidence in support of the Assessee’s claim of deduction computing the Long Term Capital Gain , as is evident from point (d) at APB 96. Vide reply (APB 97-100) dated 21.1.2022, the Assessee fully 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 26 explained all the facts regardingthe Long Term Capital Gain along withfurnishingof date wise payment schedule for the purchase of the plot. A copy of the agreement to sell dated 9.5.2007 between Shri Vinod Mahanjan GPA (APB 101-104) and Shri Tirloki Nath Singla, Notice (APB 105) dated 27.12.2007, for deposit of dues as per HUDA policy, copies of cheqeus(APB 106-110) dated 31.12.2007, 9.1.2008 and 8.1.2008, givenby the Assessee to the Estate officer, HUDA Panchkula, copy of conveyance deed (APB 111-120) dated 25.1.2008, copy of application (APB 121-122) for transfer of the plot, copy of transfer fees (APB 123) paid to Estate office on 30.1.2008, copy of transferpermission letter (APB 124-125) dated 7.3.2008, copy of re- allotment letter of plot (APB 126-128) dated 21.5.2008 and copy of receipt (APB 129) dated 30.11.2011 of SBI, for Stamp Duty, were filed before the ld. CIT(A) also. However, the Assessing Officer illegally did not take into consideration any of these documentary evidences and he did not enter any adverse comments or finding with regard thereto in the remand report. Even the ld. CIT(A) did not make mention of this cogent voluminous documentary evidence in the order under appeal, thereby evincing that the claim of deduction for Long Term Capital Gain, in fact, stood undoubted and fully accepted. 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 27 38. In view of the above, we do not find any justification in the disallowance of the expenses of Rs. 43,61,605/-, as claimed by the Assessee, being disallowed in the face of the afore-mentioned unrebutted voluminous cogent documentary evidence furnished by the Assessee before both the authorities below, i.e., twice before the Assessing Officer and again before the ld. CIT(A) in appellate proceedings. 39. Accordingly, finding merit therein, Ground Nos. 6 &7 are accepted. 40. Now, turning to Ground No.8, the Assessee has contended that the ld. CIT(A) has wrongly disallowed loss on sale of shares amounting to Rs. 17,49,737/-. In this regard, as per the assessment order, the Assessee had shown in its Income Tax Return, losses of Rs. 2,90,547/-. The Assessing Officer observed that since the Assessee company had not undertaken any business activity during the year andit had also failed to produce bills and vouchers of the expenses claimed by it, the genuineness of the expenses claimed did not stand proved; that further, the Assessee had alsofailed to produce its books of account for verification and examination; that still further, the Assessee company had been found to be a shell company managed and controlled by Shri Tirloki Nath Singla, having no genuine regular 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 28 business. It was thus, that the Assessing Officer disallowed the losses claimed by the Assessee in it itsprofit and loss account and Income Tax return, at Rs. 2,90,547/-. The ld. CIT(A) confirmed the disallowance. 41. On behalf of the Assessee, it has been contended that the Assessee’s Profit and Loss Account (APB 24), computation of income (APB 266-267), the ITR of the Assessee company (APB 233-265) and documents of Mansukh Stock Brokers (APB 302-324) had been submitted by the Assessee before the Assessing Officer as well as the CIT(A) in order to substantiate its claim of loss on shares; that however, despite having found no discrepancy inthese documents, both the authorities below did not investigate the claim of the Assessee and made the disallowance without even as much as mentioning these documents; and that the Assessing Officer disallowed the loss on sale of sharesamounting to Rs. 17.49,637/-, shown in the profit and loss account and the ld. CIT(A) illegally confirmed the same. 42. It is seen that as noted by the ld. CIT(A) in the impugned order, the Assessee had clearly stated in the written submissions filed before the ld. CIT(A), that the Assessee had shown sale of shares at Rs. 99,17,633/-, in its profit and loss account and had also shownpurchase cost of the said shares at Rs. 1,15,22,078/-, STT of 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 29 Rs. 26,517/-, service tax of Rs. 8,788/-, brokerage of Rs. 85,290/-, expenses on investment, of Rs. 24,344/-, and late payment charges of Rs. 253/-, which were also debited to the profit and loss account as expenses incurred on the purchase / sale of the shares. It was also contended that complete proof, evidence / details ofPurchaseNote and Sale Note of sharesalong with proof of other expenses were submitted during the assessment proceedings. It was also stated that during the assessment proceedings, it was submitted that the shares were purchased from Mansukh Stock Brokers Ltd., and amount of Rs. 40,00,000/- each were paid to them on19.3.2012 and 20.3.2012, throughbanking channels. It was further stated that a net loss of Rs. 17,49,637/- had been incurred and had been shown in the profit and loss account, which, however, the Assessing Officer had disallowed without applying his own mind. It was stated that the Assessing Officer was working in such a haste and with a biased and vitiated mind-set,just tofollow the diktat of a third party, that he could not identify that the loss was from the difference in the Sale and Purchase Cost. It was stated that it is not necessary for a loss tobe incurred only from business activities. It was stated that further, the Assessing Officer disallowed the loss without any mention about the genuineness of these expenses, the Purchase Cost of the shares and the other expenses incurred on the purchase / saleof the shares. The 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 30 ld. CIT(A), however, didnot appreciate the said contention of the Assessee. 43. It is seen that the Assessee made investment of Rs. 1,15,22,078/- (APB 24-30), on shares. The Assessee sold theseshares for Rs. 99,17,633/- (APB 30). The Assessee had also incurred expenses of Rs. 24,344/- on the investment. This standsreflectedin the audited balance sheet (APB 30) of the Assessee company. A copy of the expenses on investment account in the books of the Assessee company (APB 146) and a copy of account of loss of shares (APB 324) in the books of the Assessee company were filed by the Assessee before the Assessing Officer vide reply (APB 278-279) dated 25.11.2019. TheAssessing Officer, however, without taking into consideration these facts/ replies / evidences, disallowed the loss on shares amounting to Rs. 17,49,637/- (loss on shares amounting to Rs. 17,25,293/-, as available at APB 324 and the expense on investmentamounting to Rs. 24,344/- as shown at APB 30). As per APB 259-260, in its return of income, the Assessee had claimed carry forward of loss of Rs. 4,45,788/-, which is also as per the computation of income (APB 266), after taking the effect of the sale and purchase of these shares in its profit and loss account. 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 31 44. It is also seen that the Assessing Officer had issued communication u/s 133(6) of the I.T. Act, during the remand proceedings, calling for information from all the lenders of the Assessee company, including Munsukh Stock Brokers, on the direction of the ld. CIT(A). In response thereto, the lender has submitted documentary evidences, as sought for. However, the Assessing Officer did not make any mention of these evidences in the remand report. In fact, the remand report focused mainly on justifying declaration of the Assessee company as a shell company and, thereby, adding all the credits in the bank account of the Assessee company to its income. 45. The net loss of Rs. 2,90,547/- incurred by the Assessee company included the loss on sale of shares amounting to Rs. 17,49,637/-, as available from the Assessee’s profit and loss account (APB 24), as correctly pointed out on behalf of the Assessee. The authorities below have, on the other hand, disallowed the net loss of Rs. 2,90,547/-, on the basis that no documentary evidence was filed by the Assessee. While doing so, as has been correctly contended by the Assessee, that no mention whatsoever was made by either of the taxing authorities, about the genuineness of the expenses, the purchase cost of the shares and the other expenses incurred on the purchase / sale of the 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 32 shares. In fact, both the authorities below failed to appreciate that the loss was actually dueto the difference in the sale and purchase cost of the shares. 46. From the above discussion, finding merit therein, Ground No.8 is accepted and the amount of Rs. 17,49,637/-, representing the net loss on the sale of shares, is directed to be allowed and after giving effect thereto, the net loss of Rs. 2,90,547/- in the profit and loss account is directed to be allowed. 47. Concerning Ground No.9, as per the Assessee, the ld. CIT(A) has gone wrong in disallowing bad debt written off amounting to Rs. 1,00,00,000/-. In this regard, the Assessing Officer, in the assessment order, observed that the Assessee had claimed a bad debt of Rs. 1,00,00,000/- during the year, which had been claimed tobewrittenoff and, therefore,it had been set off against the gain on the sale of property by the Assessee in its profit and loss account; that a Show Cause Notice was issued requiring the Assessee company to substantiate its claim with corroborative evidence; that the Assessee was also required to substantiate the genuineness of its claim vis-à-vis the size and affairs of the Assessee company; that in response,no plausible explanation had been furnished by the Assessee company; and that hence, the bad debt claimed wasbeing disallowed. 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 33 48. Before the ld. CIT(A), the Assessee submitted that it had sold one show room site (SCO 129,Sector 5, Panchkula) for Rs. 5,00,50,000/- during the year; that the Assessing Officer had wrongly calculated the business profit at Rs. 2,49,61,007/- by assessing the gain on the sale of the property as business income; that the profit on sale of theproperty, amounting to Rs. 1,14,59,090/-,had been shown by the Assessee company in its profit and loss account, as per the provisions of the Companies Act,2013; that, however, the resulting Long Term Capital Gain amounting to Rs. 1,13,03,850/- had been declared by the Assessee company in its return of income, availing the benefit of indexation on the cost of purchase and improvementthereupon; that the amount of Rs. 1Crore claimed as bad debt had been paid to M/s Golden Chemtech as earnest money for purchase of the property; that however, due to slump in the market, theremaining payment could not be arranged and the earnestmoney was forfeited; and that it was accordingly, that the said amount of Rs. 1 Crore had been claimed by the Assessee in its profit and loss account as a bad debt. 49. The ld. CIT(A),however, confirmed the disallowance of the claim of the bad debt of Rs. 1 Crore, as made by the Assessing Officer. While doing so, it was observed that the Assessee had not furnished any 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 34 documentary evidence in support of the claim; that copy of the registered sale agreement enteredbetween the Assessee and M/s Golden Chemtech had not been filed, either in the assessment proceedings, or in the appellate proceedings; that it had been merely explained that the Assessee had paid earnest money amounting to Rs. 1 Crore to M/s Golden Chemtech for the purchase of the property,but due to slump in the market, the remaining payment could not be arranged and the earnestmoney was forfeited, due to which, the amount had been claimed as a bad debt in the profit and loss account. The ld. CIT(A) observed that however, from a perusal of the record, it had been found that the Assessee had paid the amount of Rs. 1 Crore to M/s Golden Chemtech on10.12.2011 and the same had been claimed as a bad debt as on31.3.2012, on the ground that the remaining payment could not be arranged, and it was therefore, that the earnestmoney was forfeited; that it had not been explained, as to how muchamount was remaining to be paid, whereas the Assessee had received an amount of Rs. 3,00,00,000/- in December, 2011, from the sale of property; that further, as on 31.3.2012, the Assessee washaving bank balance of Rs. 100,30,855/- and advance of Rs. 2,13,00,000/- given to M/s Evershine RecreationPvt Ltd., as a group concern having common directors; that therefore, there was no merit in the submission that the remaining payment could no be arranged 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 35 and it was therefore, that the money was forfeited; that further, it had been gathered from the public domain that the directors of M/s Golden Chemtech were Smt. Usha Gupta, Smt. Pushpa Gupta and Shri Jagdish Rai Gupta; that Shri JagdishRai Gupta wasalso one of the directors of the Assessee company; that the registered address of M/s Golden Chemech was SCO 14,Sector 7, Chandigarh; that the said premise belonged to M/s Evershine Recreation Pvt. Ltd., Chandigarh; that Shri JagdishRai Gupta and Shri T.N. Singla were directors, who were also the directors of the Assessee company; that thus, the Assessee, M/s Golden Chemtech Ltd. and M/s Evershine Recreation Pvt. Ltd. were group concerns having common directors and common addresses; that therefore, it was beyond the preponderance of probability that the earnest money was forfeited by a company which was being managed and operated by common directors; that no person can make loss with itself; and that therefore, it was evident that the Assessee had designed a colourable device by making bogus claim of bad debt of Rs. 1 Crore in order to reduce its tax liability on account of Long Term Capital Gain earned from the sale of property. The ld. CIT(A) placedreliance on the decision of the Hon'ble Supreme Court in the case of ‘Mc Dowell and Co. Ltd. vs. CTO’, wherein it was held that any colourable device used with the 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 36 sole intention to evade taxes could result in the Revenue lifting the corporate veil, looking at the true intention of the transaction. 50. It is seen that before the Assessing Officer, in response tonotice (APB 325) dated 5.12.2019, the Assessee company, vide reply (APB 324) dated 19.12.2019, had submitted its bank account and ledger account as documentary proof of the claim of bad debt of Rs. 1 Crore. However, the Assessing Officer did not take into consideration these documentary evidences, though, no discrepancy therein was pointed out. The same very documents were also submitted by the Assessee before the ld. CIT(A), as available at APB 231, 234 and 235. However, the ld. CIT(A) also ignored this cogent documentary evidence and confirmed the disallowance by wrongly observing that the Assessee had not submitted documentary evidence. The Assessee has rightly contended that the addition of Rs. 1 Crore is not based on any incriminating material unearthed during the search. The amount of Rs. 1 Crore had been given by the Assessee to M/s Golden Chemtech Ltd., as advance for business purpose, for purchase of property,but due to slump in the market, the balance was not paid and the advance paid was written off thereafter. The Assessee had produced cogent documentary evidence to support these facts, which evidence remains unrebutted hitherto. Even before us, the Department has not 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 37 been able to challenge this documentary evidence furnished by the Assessee before both the authorities below. 51. In view of these facts and circumstances, Ground No. 9 is accepted and the addition of Rs. 1,00,00,000/- is ordered to be deleted. 52. So far regards Ground No.10, the contention of the Assessee is that the ld. CIT(A) has erred in making total addition of Rs. 3,85,19,844/- on merely conjectures and surmises. This Ground is general and has been dealt with while dealing with the above Grounds. 52. In view of the above, the Assessee’s appeal in ITA No. 670/Chd/2022 for A.Y. 2012-13 is partly allowed. ITA No. 727/Chd/2022 – Department’s appeal. 53. The Department has raised the following Grounds of appeal:- i) Whether on the facts and in the circumstances of the case, Ld. CIT(A) has erred in law in treating the income of the assessee as Long Term Capital Gain from sale of an immovable property instead of business income by overlooking the facts that the assessee company is engaged in the business of sale and purchase of immovable property? 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 38 ii) Whether on the facts and in the circumstances of the case and in law the Ld. CIT (A) erred in considering the property as capital assets instead of stock-in trade despite the fact that the assessee deals in real estate? iii) Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in not appreciating the fact that the amount of Rs. 3,71,55,000/- (1,26,05,000 + 2,45,50,000) credited in bank account of assessee during A.Y. 2012-13 was to be considered as unexplained cash credit u/s 68 of the Act as theassessee did not establish its genuineness during the course of assessment proceedings ? iv) Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in allowing the appeal of the assessee by holding that identity and creditworthiness of the persons from whom such credits were received, were proved, however, genuineness of the transactions was not established as the purpose of such credit was not explained? v) Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in allowing the appeal of the assessee on the issue of credit entries even when all three limbs of Sec 68 was not proved by the assessee? 54. In the assessment order, the Assessing Officer observed that the Assessee company submitted details of the persons from whom credit entries of Rs. 6,26,55,000/- had been received during the year; that 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 39 however, the purpose of these credit entries and utilization of funds had not been explained satisfactorily by the Assessee company to substantiate the genuineness of the transactions in respect thereof; that the Assessee company has been found tobe a shell company managed by Shri T.N. Singla, CA; that the Assessee company existed only on paper and did not have any profit earning apparatus as such, because it was not carrying on any kind of business activity whatsoever; that further, the books of account of the Assessee company had notbeenproduced for verification;and that since the Assessee company had shownsale of property of Rs. 5,00,50,000/- during the year, the excess amount of Rs. 1,26,05,000/- credited in the bank account of the Assessee company was beingheld to be unexplained cash credits of the Assessee company, within the meaning of section 68 of the Act and was being added to the income of the Assessee company. The Assessing Officer observed that further, the perusal of the bank account statement of the Assessee company regarding bank account No. 014537187 with City Bank revealed creditentries of Rs. 2,45,50,000/- during the year, which entries had been found tobe disproportionate to the income and turnover as well as affairs shown by the Assessee company; that further, the Assessee company had not furnished any copy of the accounts or confirmation, etc., of the lender from whom the amounthas been received during 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 40 the year, to substantiate the genuineness of the these creditentries; that thus, the Assessee company had failed to prove the identity of the party, the genuineness of the transaction and the creditworthiness of the lender; that therefore, vide show cause notice dated 5.12.2019, the Assessee company was required to show cause as to why these credit entries of Rs. 2,45,50,000/- may not be treated as its unexplained cash credits within the meaning of section 68 of the Act and be added to its income accordingly; that in response, vide reply dated 19.12.2019, the Assessee company had submitteddetails of the persons from whom the credit entries of Rs. 2,45,50,000/- had been received during the year; that however, the purpose of thesecredit entries and utilization, however, of these funds had not been explainedby the Assessee company satisfactorily to substantiate the genuineness of the transactions in respect of these creditentries of Rs. 2,45,50,000/-; that therefore, the amount of Rs. 2,45,50,000/- was being held to be unexplained cash credits of the Assessee company within the meaning of section68 of the Act and the same was being added to the income of the Assessee company. 55. The Assessing Officer alsoobserved that during the search, statementon oath of Shri Jagdish Rai Gupta, Director of the Assessee company was recorded u/s 132(4) of the I.T. Act. After reproducing a 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 41 part of the statement of Shri Jgdish Rai Gupta, the Assessing Officer served that Shri Jagdish Rai Gupta had admitted that no business activity hadbeen carried out by the Assessee company from the date of its establishment, and that further, Shri Jagdish Rai Gupta had denied any knowledge of any business transactions or bank transactions carried out by the Assessee company, M/s TJR Properties P.Ltd. 56. In the impugned order, the ld. CIT(A) observed that the Assessee submitted during the appellate proceeding that credits amounting to Rs. 2,45,50,000/- and Rs.6,26,55,000/-were received in its bank account maintained with CITI Bank and Bank of Maharashtra, respectively during the year under consideration. It was explained that all the credits were received from genuine persons and furnished necessary documentary evidences in respect of each credit entry, such as confirmation/affidavit, bank account statement, ledger account, ITR of such persons, certificate from bank in support of loan disbursal entry and detailed transaction ledger account in support of sale of equity shares whose sale proceeds were credited in the bank account. It was explained that all these documents were also furnished before the Assessing Officer during the assessment proceedings, and the same had also been acknowledged by the 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 42 Assessing Officer in the assessment order, as the additions had been made on the issue of purpose and utilisation of such credits. It was contended that assessments in the cases ofSh. T.N. Singla, Smt. Kiran Singla andSh. SahilSingla, from whom, credits were received in the bank account, were also completed by the same Assessing Officer, for the A.Y. 2012-13, and no addition on account of these transactions was made. Further, it was also submitted that the Assessing Officer was satisfied with the explanation in respect of the bank credits, on the basis of the documents furnished during theassessment proceedings by the Assessee and a deviation note was sent to the ADIT(lnv), Mohali, stating that such credits were from known sources and duly accounted for. In respect of the addition of Rs.1,26,05,000/-, it was submitted that the Assessing Officer had assumed that all the sale consideration of Rs 5,00,50,000/- was deposited in the bank accountmaintained with the Bank of Maharashtra, and had proceeded to add the remaining credits of Rs.1,26,05,000/-, whereas the sale consideration of Rs.5,00,50,000/- was received in both the bank account maintained with CITI Bank and Bank of Maharashtra and the earnest money was received during F.Y. 2010-11, which had been duly shown in the Balance sheet for AY. 2011-12. The Assessee furnished copy of sale deed, wherein, the 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 43 payment schedule was mentioned and details of credit entries received in both the bank accounts, to corroborate its submission. 57. After taking into consideration the above facts, it was observed by the ld. CIT(A), that the Assessing Officer had inferred, in the assessment order, the Assessee company to be a shell company, as it was found existing only on paper and it did not have any profit earning apparatus since it was not carrying out any kind of business activity. On perusing the findings of the Assessing Officer as recorded in the assessment order and the material available on record, it was found by the ld. CIT(A) that though the Assessee company did not possess any regular income generating apparatus, however, it had sold a commercial asset during the year, resulting in capital gain of Rs.1,13,03,850/-. The ld. CIT(A) observed that however, regardless of the same and without any prejudice to such findings, in order to decide the issue of the additions made by the AO on account of unexplained bank credits u/s 68 of the Act, it was required to examine the identity and creditworthiness of the persons from whomthe amount had been received and the genuineness of the transactions, on merit, by considering each credit separately. 58. The ld. CIT(A) observed that during the assessment proceedings, it was observed by the Assessing Officer that credits of 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 44 Rs.2,45,50,000/- and Rs.6,26,55,000/-were received in the Assessee’s bank accounts maintained with CITI Bank and Bank of Maharashtra, respectively, during the yearunder consideration and the Assessee could not explain the purpose and utilisation of such credits; that it was thus, that the additions of Rs.2,45,50,000/- and Rs. 1,26,05,000/- were made by the Assessing Officer on such grounds; that the Assessee submitted during the appellate proceedings that it had received credits of Rs.2,45,50,000/- and Rs.6,26,55,000/-in its bank accounts maintained with CITI Bank and Bank of Maharashtra, and furnished documentary evidences in support of the identity and creditworthiness of such persons and the genuineness of the transactions; that the same were also furnished before the Assessing Officer during the assessment proceedings, vide submission dated 19.12.2019; that the said fact was also mentioned by the Assessing Officer in the assessment order, vide paras 14 and 15; that however, no adverse findings had been made by the Assessing Officer in respect of such evidences in support of the credits, except questioning the purpose and utilisation of the credits; and that the documentary evidences furnished by the Assessee had been examined independently by him [the ld.CIT(A)]in the light of the findings of the AO recorded in assessment order, as well as the remand report of AO. 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 45 59. The ld. CIT(A) observed that although the Assessing Officer had admitted to have received the said documents during the assessment proceedings, yet the same were not taken into account by the Assessing Officer while making the additions; that the Assessing Officer had recorded in his order that the Assessee could not explain the purpose and utilisation of such credits; that however, the Assessing Officer had failed to take cognizance of the fact that addition u/s 68 of the Act is to be made only if the Assessee does not offer any explanation regarding the source and nature of the credits received in the bank account, or if the explanation offered is not found satisfactory by the Assessing Officer, whereas in this case, the Assessee had duly furnished its explanation in respect of the bank credits received during the year under consideration, along with necessary documentary evidences; that if the Assessing Officer was not satisfied with the explanation of the Assessee in respect of the source and nature of the credits received, he should have recorded such adverse findings in the assessment order; that however, no adverse finding had been recorded in the assessment order in respect of the documentary evidences furnished by the Assessee in support of the bank credits; that the submissions and documents furnished by the Assessee during the appellate proceedings were also forwarded to the Assessing Officer for remand report; that in the 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 46 remand report also, the Assessing Officer had not brought on record any adverse finding in respect of the documentary evidences furnished by the Assessee in support of the bank credits, let alone pointing out any defect in the same; and that in view of such discussion and after making independent perusal of documents furnished by the Assessee, it was noted that the assessment order was non-speaking and mechanical in nature, and had been passed without discussing the merits of the documents and it was evident that the Assessing Officer had nothing adverse to say about the documents filed by the Assessee. 60. The ld. CIT(A) observed that the whole approach of the Assessing Officer had been found contrary to the facts of the case and the provisions of the Act; that even if, for the sake of argument, it were to be accepted that the Assessee was a shell company, in such a case, addition u/s 68 of the Act could have been considered by the Assessing Officer in the cases which have benefitted by taking such accommodation entries of credits from the Assessee; that as far as Assessee was concerned, the Assessing Officer could have made additions on account of unexplained credits, if any, in the books of account after examining the relevant document and adverse findings, if any; that there was no direct or indirect evidence pointed out by the 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 47 Assessing Officer before making such addition; that the case of the Assessee had been covered u/s 132 of the Act; and that even there was no adverse finding on this account out of the search proceedings. 61. The ld. CIT(A) heldthat after considering the merits of the case, the analysis of credits as per the table and the strength of documentary evidence, there was no justification in such additions made in the hands of the Assessee u/s 68 of the Act; and thattherefore, the additions of Rs.2,45,50,000/- and Rs. 1,26,05,000/- are being deleted and Grounds of appeal Nos. 6,10, 11 and12 and additional ground of appeal No. 4 are being allowed. 62. Challenging the impugned order, the ld. DR has contended that the ld. CIT(A) has erred in law in treating the income of the assessee as Long Term Capital Gain from sale of an immovable property, instead of business income, by overlooking the fact that the assessee company is engaged in the business of sale and purchase of immovable property; that the ld. CIT (A) erred in considering the property as a capital asset instead of stock-in-trade, despite the fact that the assessee deals in real estate; that the ld. CIT(A) erred in not appreciating the fact that the amount of Rs. 3,71,55,000/- (1,26,05,000 + 2,45,50,000) credited in bank account of assessee 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 48 during A.Y. 2012-13 was to be considered as unexplained cash credit u/s 68 of the Act, as theassessee did not establish itsgenuineness during the course of the assessment proceedings; that the ld. CIT(A) has erred in allowing the appeal of the assessee by holding that the identity and creditworthiness of the persons from whom such credits were received, were proved, whereas however, the genuineness of the transactions was not established, as the purpose of such credit was not explained; and that the ld. CIT(A) has erred in allowing the appeal of the assessee on the issue of credit entries even when all three limbs of Sec 68 were not proved by the assessee. 63. The ld. DR has contended that the Assessing Officer has specifically found that in the statement of Shri Jagdish Rai Gupta, recorded on oath in the course of search, he was specifically confronted about the nature of the business activities and the revenue operations of the companies; that he had clearly admitted that he was one of the Directors in M/s TJR Properties Pvt. Ltd. and M/s Evershine Resorts Pvt. Ltd.; that he had stated that these companies were incorporated in 2008; that he had clearly stated that M/s TJR Properties Pvt. Ltd. was not involved in any kind of business activity; that he had denied any knowledge of any business transactions or bank transactions carried out by M/s TJR Properties 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 49 Pvt. Ltd.; that Shri Jagdish Rai Gupta had been specifically confronted with the Account Statement of M/s TJR Properties Pvt. Ltd., but in his reply, Shri Jagdish Rai Gupta had stated that he had no knowledge of any banking transaction, i.e., debit or credit, carried out by this company; and that he had further stated that this company had been incorporated with him by Shri Triloki Nath Singla, Chartered Accountant. 64. The ld. DR has contended that it was on the basis of the said statement of Shri Jagdish Rai Gupta, that the Assessing Officer inferred that the Assessee company was a shell company existing only on paper and not having any profit earning apparatus as such, because it was not carrying on any kind of business activity whatsoever; that this categoric observation and the findings of the fact have nowhere been controverted and, therefore, the Grounds raised by the Department are entitled to be accepted and the appeal of the Department is entitled to be allowed, which may be so ordered. 65. On the other hand, the ld. Counsel for the Assessee has contended that the company has never received money from any unknown or unrelated person, and even no funds were ever transferred to any unknown or unrelated person, except the money paid for the genuine transactions done by the company; that no 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 50 transaction was ever done to rotate any undisclosed money or black money, or to inflate the turnover, or to divert the bank loans, or to evade the tax during any year since its inception, except genuine transactions; that the company, after coming to know about the contents of the Appraisal Report, submitted a detailed note of comparison of the Assessee company with the general characteristics of a shell company before the Assessing Officer on 23.12.2019 during the assessment proceedings; and that the assessing officer was satisfied with the response of the company in reply to the various questionnaires issued by the Assessing Officer during the assessment proceedings and did not ask any query about status of the company as a shell or genuine company during the whole assessment proceedings. 66. The ld. Counsel for the Assessee has contended that the Assessing Officer was fully satisfied with the status of the company as a genuine company upto 27.12.2019 and, accordingly, the Assessing Officer sent a deviation note to the Deputy Director of Investigation (ADIT), Mohali on 26.12.2019, vide letter (deviation note, paper book page 385-387) note no. 1733. dated 24.12.2019, calling for no addition at all, with the observation "amounts have been credited in the bank accounts of the companies from known 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 51 sources, which has been duly accounted for by the assessee companies in their respective books of account and shown in their audit report as well as ITR filed in due course on regular basis." 67 The ld. Counsel for the Assessee has submitted that the ADIT Investigation, Mohali took less than 12hours to go through all the documents and detailed replies and evidences as submitted by the company and rejected the said deviation note vide letter no. 1763 dated 27.12.2019 with an unauthorized diktat to declare the genuine Assessee company declared as a shell company, as mentioned in Appraisal Report; that on receipt of reply from the ADIT on 27.12.2019, the Assessing Officer changed his mind and declared the company as a shell company, although he was fully satisfied while sending the deviation note on 26.12.2019, till 06:00pm; that it is proved from this, that the Assessing Officerhad to forego his satisfaction and adhere to the dictates of a third party, i.e., the ADIT(lnv), Mohali. 68. The ld. Counsel submitted that the Assessing Officer, after relying on the documents, information and explanation submitted by the Assessee, had proposed no addition at all, as he was completely satisfied with regard to the fact that the assessee company was not a shell company and that all amounts credited in the bank accounts of 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 52 the assessee company were only from known sources, which were genuine and duly accounted for in its books of account,upto 26.12.2019, and he had prepared a deviation note for making no addition at all; that this fact has been established beyond a shadow of doubt by the fact, that a deviation note was prepared by the Assessing Officer,on 24/12/2019 and was sent to the ADIT, Investigation, Mohali on 26/12/2019, at 06:00pm, vide letter No. 1733, (along with all the Assessee’ssubmissions and note on comparison of the Assessee company with a Shell company) after perusal of :- a) Statements of directors recorded during search and post search investigations; b) Replies filed by the company including its books of account; c) A detailed note on comparison of the Assessee company with a so-called shell company; d) Submission of cogent and reliable documentary evidences. 69. The ld. Counsel has stated that in this deviation note, the Assessing Officer has categorically admitted that there was no document or reasoning supplied to him by the Investigation Wing, on the basis of which, the credit entries in the bank accounts of the Assessee company could have been treated as unexplained; that 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 53 further, he has also admitted that after going through the replies of the Assessee company, he was satisfied that the company was a genuine company and not a shell company. 70. It has been submitted that further, no question/explanation regarding the status/genuinity of the company was ever asked during the assessment proceedings and simply by distorting the statements of the director, i.e., Sh. Jagdish Gupta and following the diktat of a third party, the company was declared as a Shell Company. 71. Reliance has beenplaced on the judgment of the Hon'ble Delhi High Court in the case of ‘PCIT vs Agson Global Pvt Ltd.’, dated 20.01.2022. 71.1 The ld. Counsel for the Assessee has further contendedthat the assertion of the Assessing Officer, that the Assessee company is a shell entity having no profit earning apparatus of its own is wrong, because the Assessee company had already purchased a Showroom site No. 129, Sector 5, Panchkula and the purchase deed with regard thereto was registered on 12.03.2008, for Rs. 1.73 Crores and stamp duty of Rs. 20.90 lacs was paid on the said sale deed; that the company wanted to construct a showroom on the said site, but due to slump in the market, it preferred to sell the said showroom site 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 54 and the said showroom site was sold for Rs. 5.05 Crores on 07.12.2011, through a registered sale deed. 71.2 It has been contended that the Directors and their relatives / friends also wanted to invest in property and they all gave the funds to the company for investment in property; that however, the main source of the funds in the company was only the Directors and their relatives/ friends; that no funds from any unknown person or entity were received in this company and these funds were returned, when demanded, to the said Directors / Relatives / Friends as and when required by them. 72.3. It has been stated that during F.Y. 2016-17, the company entered into an agreement to sell for a one kanal plot in Sector 27, Panchkula, to build flats / apartments on the said plot and paid Rs. 1.50 Crores to the owner of the plot and also deposited 1% TDS amounting to Rs. 1.50 lacs on the earnest money paid on this plot; that however, the owner of the plot met with an accident and got his hip/ thigh fractured; that he remained bed-ridden for 3-4 months and ultimately, he expired in May 2017; that his wife refused to sell the plot and did not agree to register sale deed in favour of the Assessee company, and ultimately, his wife returned the advance of Rs. 1.50 Crore to the company in F.Y. 2017-18; that copies of the 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 55 purchase agreement and the agreement for cancellation were submitted during the course of assessment proceedings before the Assessing Officer and, thereafter, no question or query was raised by the Assessing Officer. 71.4 The ld. Counsel has stated that further, there is no definition of 'Shell Company', either under the Income Tax Act, or under the Companies Act.; and that a detailed note on 'Shell Company' has been submitted with both, the AO and the Id. CIT(A) (Page 342-345 of Paperbook) 71.5 The ld. AR contends that since its incorporation, the Assessee company is regularly preparing its Profit and Loss Account as well as its Balance Sheet, and it has also been getting its accounts audited regularly; that this company s a legal entity and it is operating like any other genuine company. 71.6 It has further been stated that even the Registrar of Companies and the MCA have identified certain shell companies after 2013 and even the Directors of such shell companies have been disqualified; that, however, the assessee company has been treated as a legal and genuine company. It has been stated that as per the various definitions of 'shell company', a shell company is a company which is having dummy directors and does not conduct any activity 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 56 other than in a pass-through capacity; that the assessee company was regularly doing the business activity and it even made purchase of property and made sincere efforts to develop the proposed commercial colony, like other real estate developers; that for a company to be genuine, it is not necessary that only there should be trading or manufacturing activity in the company. 71.7 It has been submitted that the loans or advances were received or given to relatives or friends or sister concern as and when required, and that such transactions cannot, by any stretch of imagination, render the genuine and legal assessee company to be either a paper company, or a shell company; that no Director or shareholder of the assessee company is fictitious; that the Directors and shareholders of the assessee company are respectable persons of means and repute, and that therefore, there is no illegal purpose or motive of the Directors or shareholders to do any illegal business in the assessee company; and that further, no allegation is levied by the Assessing Officer that this company is an entry operator, or isdoing any illegal activities. 71.8 The ld. Counsel stated that the company filed a detailed reply on the issue of ‘shell company’ after receipt of the Appraisal Report from the ICAI, New Delhi, along with a note of comparison of a 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 57 shell company with a genuine company, which was reproduced by CIT(A) in his order at pages 70-75. 71.9 The assessee contended that until 27.12.2019, the Assessing Officer had remained completely satisfied with regard to the fact that M/s TJR Properties Private Limited was not a shell company and the Assessing Officer was satisfied that the company is genuine company; that also, the Assessing Officer had accepted that these transactions stood duly accounted for in the books of account of the company; that the Assessing Officer had himself proposed no addition of these credits in the case of the company, in the Deviation Note sent by him to the Deputy Director of Income Tax (Investigation), Mohali, on 26.12.2019; that this stands established beyond any shadow of doubt, by the fact that the said Deviation Note was prepared by the Assessing Officer on 24.12.2019 and was sent to the Deputy Director of Income Tax (Investigation), Mohali, on 26.12.2019, at 6.00 PM, vide letter No. 1733, in the case of M/s TJR Properties Private Limited; that in the Deviation Note, the Assessing Officer had categorically admitted that there was no document or reasoning supplied to him by the Investigation Wing of the Department, due to which, the credit entries in the bank accounts of the Assessee company could have been treated as unexplained; that the Assessing 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 58 Officer had also admitted that after going through the replies of the Assessee company, he had become satisfied that the amounts had been credited in the bank accounts of the Assessee company from known sources, which had been duly accounted for by the Assessee company in its books of account, and shown in its Audit Report and Income Tax Return, filed in due course, on a regular basis. 71.10 It has been stated that on 27.12.2019, the Assessing Officer had received an unwarranted, illegal and unauthorized diktat from the Deputy Director of Income Tax (Investigation), Mohali, that is, letter No. 1763 sent to him by the Deputy Director of Income Tax (Investigation), Mohali on 27.12.2019, wherein he, that is, the Assessing Officer, was illegally directed to make additions of all the credits in the bank accounts of M/s TJR Properties Private Limited, in its respective case, without any basis and without any adverse material on record against M/s TJR Properties Private Limited; and that the AO found himself in a predicament upon receiving the said illegal diktatof the Deputy Director of Income Tax (Investigation), Mohali, on 27.12.2019, within less than twenty-four hours of his having sent his Deviation Note to the Deputy Director of Income Tax (Investigation), Mohali, on 26.12.2019. 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 59 71.11 It has further been averred that the Assessing Officer had no choice but to forcibly proceed against M/s TJR Properties Private Limited on the said third party diktat and on borrowed satisfaction, in an utterly arbitrary and blatant violation of the provisions of the Income Tax Act; that it was thus, that the Assessing Officer had staged a somersault and had made the additions by assigning flimsy reasons therefor, as if it was the Deputy Director of Income Tax (Investigation), Mohali, and not he, that is, the Assessing Officer, who was the actual assessing authority; that the Assessing Officer, without application of his own mind, in the haste of adherence to these illegal instructions of a third party, by throwing all laws of the land to the wind, declared the genuine Assessee company as a shell company and made addition of all the credits received in the bank accounts of the company, irrespective of the merit of each such credit. 71.12 It has been argued that the Revenue has relied on the judgment of ‘Assam Company India Ltd. and Anrvs. Union of India and 2 Ors.’, rendered on 7 th March, 2019, by the Hon'ble Gauhati High Court in WP(C) 2572/2018, to support their allegation to declare a genuine company as shellcompany; that however, the facts in this case are altogether different and cannot be equated with the 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 60 facts of the Assessee company; that the Hon'ble High Court set aside the notice issued by SEBI for branding the said companyas a shell company. However, the Hon'ble High Court made the following general observation regarding shell companys, depending upon circumstances and facts; that in the said judgment, a complaint was received from the SFIO and the Income Tax department regarding investment of the company in money laundering and alsoinformed that it acted as an entry operator; that however, none of the facts of the above case are similar to the Assessee company, as neither the company is involved in money laundering, nor has it acted as an entry operator. 71.13 The ld. Counsel for the Assessee further submitted that the Assessing Officer,in para 11 of the order, contends that the company did not produce books of account for verification during the assessment proceedings; that Search u/s 132 (1) was conducted at the business premises of M/s Kansal Singla and Associates, Chandigarh; that during the course of search in the business premises of M/s Kansal Singla & Associates, regular books of account along with bank statements of the company, i.e., M/s TJR Properties Private Limited were found from the premises of the said 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 61 M/s Kansal Singla & Associates, as mentioned on page 357 of the Appraisal Report (page 391 of the paper book). 71.14 It has been further stated that the Assessing Officer alleged that books of account of the company were not produced before him; that it was so observed onlyto justify wrong addition made on the diktat of the DDIT (Inv.), whereas, on page 357 of the Appraisal Report sent by the DDIT (Inv.) to the assessing officer, it is clearly mentioned that - "during the course of search action, books of accounts of these company were found from the office premises of M/s Kansal Singla and Associates i.e. SCO 80-81, Sector 17C, Chandigarh." 71.15 It has been stated that the DDIT (Inv.) also took copies of these books of account pertaining to both the companies from the office of M/s Kansal Singla and Associates, SCO 80-81,4th Floor, Sector - 17C, Chandigarh, in the hard disk mentioned in points 26, 27 and 28 in the ‘Panchnama’ prepared bythe DDIT (Inv.) in the case of M/s Kansal Singla and Associates, which were handed over to the assessing officer by the DDIT(lnv.), as part of the seized material / record. 71.16 It has been submitted that the Assessee submitted complete narration of all debit and credit entries of the banks along 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 62 with complete copies of bank statements during the assessment proceedings, and the explanation of each debit and credit entry, as desired, was furnished to the assessing officer along with ledger and copies of accounts of all the persons from whom the amount was received were also submitted on record; that the books of account and all other incidental records were produced before the Assessing Officer, which were sufficient for the Assessing Officer to determine the legality of the company and the genuinity of the bank credits, and to assess the Income chargeable to tax under the provisions of the Income Tax Act,1961; that the Assessing Officer was fully satisfied with the details already submitted and did not insist to produce the books of account again, otherwise, in the absence of books, he would have passed the assessment order u/s 144 of the Act, instead of section 143(3) of the Act; and that the pretext of non-production of books of account by the assessee company is frivolous and wrong. 71.17 It has been submitted that during the course of search in the business premises of M/s Kansal Singla& Associates, regular books of account along with bank statements of the Assessee company were found and copies of all these books of account were taken on CD by the department, as per the ‘Panchnama' of M/s Kansal Singla & Associates (Page 519-522 of paperbook) 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 63 71.18 The ld. Counsel has stated that the books of account were also examined by the Assessing Officer before sending his deviation note dated 24.12.2019 to the Investigation Wing as per the contents of his letter dated 24.12.2019 (page 385-387 of the paperbook) and the unauthorized diktat ofthe ADIT Investigation is at Pages 388-390 of the paperbook). 71.19 It is stated that the books of account were also submitted before the ACIT on 18.01.2022 during the remand proceedings - Page 97 of the paperbook. 71.20 It is submitted that the Assessing Officer wrongly made additions in the hands of the company on the basis of its bank entries, regarding which, sufficient and credible information including the source by way of evidence had been placed during the assessment proceeding for discharging its burden, that the ld. CIT(A) has rightly held that such additions are not sustainable in law, as no inquiry had been undertaken by the Assessing Officer and no material was brought on record establishing the amount of the bank entries as unexplained, thereby inviting the application of provisions of the Section 68 of the Act. 71.21 It has been argued that the Assessing Officer had wrongly assessed the genuine Assessee company, namely, M/s TJR Properties 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 64 Private Limited as a shell company on a third party direction without application of his own mind and with a vitiated and biased mind-set; that the Assessing Officer had made additions of all credits in the bank accounts of the company during the relevant year without even considering the sources, nature and purpose of any transaction of the company during the relevant year against the provisions of law and the principles of natural justice. 71.22 The ld. Counsel for the Assessee The assessee contends that the Assessing Officer did not make any adverse findings in the remand report and the entire investigation / proceedings of the Assessing Officer revolves around stating the Assessee company as a shell company on the diktat of a third party; that theAssessing Officer wrongly made addition of all the credit entries in the bank accounts of the company, amounting to Rs. Rs. 1,26,05,000/- and Rs. 2,45,50,000/-, ignoring all the proofs and documentary evidences submitted by the Assessee during the assessment proceeding; that however, the same documents were submitted before the CIT(A) during the appellate proceedings and the CIT(A) has rightly granted relief of Rs. 1,26,05,000/- and Rs. 2,45,50,000/- to the Assessee after verification of all the documents. 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 65 71.23. It has been averred that the Assessing Officer himself has accepted thegenuinity of the company in the deviation note dated 24- 12-2019; that the AO sent the deviation note only after verifying the sources and merits of the documents submitted by the Assessee Company; that however, it was on receipt of letter from the DDIT, that the Assessing Officer made addition of the total credits in the bank accounts of the company and declared the genuine company as a shell company, without issuing any show cause notice; that complete verification was also done by the CIT(A) and he found that the ingredients of section 68 were satisfied and hence, the CIT(A) correctly granted relief of Rs. 2,45,50,000/- and Rs. 1,26,05,000/- to the Assessee company. 71.24 It was stated that further, during the remand proceedings u/s 250(4), the AO issued letters under section 133(6) to the lenders of the company for further investigation, on the direction of the CIT(A), but neither this fact is mentioned in the assessment order nor any findings were mentioned by the AO in the Remand Report; that rather, the Remand Report of the AO just revolves around declaring the Assessee company as a shell company and thereby adding all the credits in the bank accounts of the company; that further the entire 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 66 assessment proceedings and remand proceedings revolve around the facts that - 1. The Assessee company is a shell company 2. The Assessee company failed to submit books of account during the assessment proceedings 3. The Assessee company failed to prove the identity of the party, the genuineness of the transaction and the creditworthiness of the lender. 4. The Assessee company failed to prove the purpose and utilization of funds. 71.25 It has been averred that the Assessee company submitted all the documentary evidences to prove the identity, genuineness, creditworthiness of the lenders during the assessment proceedings; that the same documentary evidences were submitted before the CIT(A) also (paperbook pages 231-232, point 15-18, 22, 27-30) during the appellate proceedings and the CIT(A), after considering these documents rightly deleted the additions wrongly made by the AO u/s 68 of the Act and also accepted the Assessee company to be a genuine company and not a shell company. 71.26 It has been submitted that as far as the question of submission of books of account is concerned, firstly, the books of 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 67 account were seized during the search u/s 132 of the Act on M/s Kansal Singla and Associates, and secondly, the Assessing Officer has himself mentioned in his questionnaire dated 07.10.2019 (paper book page 271, point 21) that he was in possession of the books of account which were seized during the search operation and thirdly, the books of account were submitted by the Assessee company during the assessment proceedings as well as during the remand proceedings, but the mind of the Assessing Officer was vitiated to such an extent that he ignored all the relevant facts and made addition in the hands of the Assessee company on false accusations. 71.27 It has been argued that the Assessing Officer, in para 15.1, at page 13 of his order after considering the documents submitted by the Assessee during the assessment proceedings, wrongly alleged that the Assessee company could not explain the purpose and utilization of funds satisfactorily, or the genuineness of the transaction, without even mentioning any adverse findings on the documentary evidences placed on record and therefore wrongly made addition of all the credit entries in the bank accounts of the Assessee company. 71.28 It has been submitted that the CIT(A), after considering the same documents, has mentioned on Page 125 of its order that- 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 68 "There is no justification in making addition u/s 68 of the Act by questioning the purpose and utilization of credits without bringing on record any adverse findings by AO. The whole approach of the AO has been found contrary to the facts of the case and provisions of the Act." 72. Having considered the rival submissions in the light of the material available on record, we find that while deleing the additions of the amounts of Rs. 2,45,50,000/-, and Rs. 1,26,05,000/-, the ld. CIT(A) did not agree with the conclusionof the Assessing Officer that the Assessee company was nothing else but a shell company. For arriving at thisopinion, the ld. CIT (A) observed that though the Assessee company did notpossess any regular income generating apparatus,it had sold a commercial asset during the year, resulting in capital gain of Rs. 1,13,03,850/-; that the Assessee had submitted that it had received credit of Rs. 2,45,50,000/- in its bank accounts maintained withCITI Bank andBank of Maharashtra, and had furnished documentary evidence in support of the identity and creditworthiness of the lenders and the genuineness of the transactions; that the same documents werealso furnished before the Assessing Officer in the assessment proceedings vide submissions dated 19.12.2019, which fact stood also mentioned by the Assessing Officer in the assessment order, inparagraphs 14 and15; that however, no adversefindings had been recorded by theAssessing 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 69 Officer in respectof such evidences in support of the credits, except questioning the purposes and utilization thereof and that the documentary evidence furnished by the Assessee hadbeenexamined independently by him [the ld. CIT(A)] in the light of the findings of the Assessing Officer recorded in the assessment order as well as in the remand report of the Assessing Officer; that although the Assessing Officer had admitted to have received the said documents during the assessment proceedings, the Assessing Officer did not take them into consideration while making the additions; that the Assessing Officer had observed that the Assessee couldnotexplain the purpose and utilization of such credits; that, however, the Assessing Officer failed to take cognizance of thefact that the addition u/s 68 of the Act is tobe made either if the Assessee does not offer any explanation regarding thesource andnature of thecredits received in the bank account,or if the explanation offered by the Assessee isnot found satisfactory by the Assessing Officer; that on the other hand, in the present case, the Assessee had duly furnished its explanationin respect of thebank credits received during the year, alongwith necessary documentary evidence; that if the Assessing Officer wasnot satisfied with the explanation of the Assessee in respectof the source andnature of the credits received,he should have recorded such adverse findings in the Assessment Order; that, however, no 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 70 adverse finding had been recorded in the Assessment Order in respect of the documentary evidence furnished by the Assessee in support of the bank credits;that the documents furnished by the Assessee during the appellate proceeds had also been forwarded to the Assessing Officer for a remandreport; that in the Remand Report also,the A.O. had not brought on record any adverse finding in respect of the documentary evidence furnished by the Assessee in support of thebank credits, let alone pointing out any defect in the same; that in view of this discussion and after making perusal of the documents furnished by the Assessee, ithad been noted that the Assessment Order was non-speaking and mechanical in nature and had been passed without discussing the merits of the documents and it was evident that the Assessing Officer had nothing adverse to say about the evidence; that the whole approach of the Assessing Officer had been found to be contrary to the facts of the case and the provisions of the Act; that even if, for the sake of argument, it were to be accepted that the Assessee was a shell company, in such a case, additions u/s 68 of the Act could have been considered by the Assessing Officer only in the case of a party which had benefitted by taking suchaccommodation entries of credits from the Assessee; that so far as the Assessee was concerned, the Assessing Officer could have 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 71 made additions on account of unexplained credits, if any, in the books of account, after examiningthe relevantdocuments and adverse findings,if any;that there was nodirect or indirect evidence pointed out by the Assessing Officer before making such addition; that the case of the Assessee had been covered u/s 132 of the Act; that even there was no adverse finding on this account out of search proceedings; and that therefore, after considering the merits of the case, the analysis of the credits as per the table and on the strength of the documentary evidence, it was observed that there was no justification in such additions made in the hands of the Assessee u/s 68 of the Act. It was in this manner that the additions of Rs. 2,24,50,0000/- and Rs. 1,26,05,000/- were deleted by the ld. CIT(A). 73. We do not find any error whatsoever in the order of the ld. CIT(A). The stand of the Assessee company, that it had never received any money from any unknown or unrelated persons and that no funds had ever been transferred by it to any unknown or uncalled person, except the money paid in the genuine transactions undertaken by it and that no transaction was ever done to rotate any undisclosed or black money, or to inflate its turnover, or to divert the bank loans, or to evade tax, during the year, since its very inception, has not been successfully rebutted by the Department. It is on 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 72 record that on having come to know the Appraisal Report, the Assessee had submitted before the Assessing Officer, during the assessment proceedings, on 23.12.2019, a detailed note of comparison of the Assessee company with the general characteristics of a shall company, attempting to explain as to how the Assessee could not at all be said to be a shell company. The Assessing Officer, on his part, was satisfied with the response of the Assessee company to the various questionnairesand he did not put any query to the Assessee regardingits status, alleging it to be a shell company. This was the position up to 27.12.2019. The Assessing Officer sent a Deviation Note (APB 385-387) No. 1733 dated 24.12,2019, calling for no addition to be made and observing that the amounts had been credited in the accounts of the Assessee company from known sources, which had been duly accounted for by the Assessee companies in their respective books of account and shown by them in their audit reports as well as ITRs filed indue course,on a regular basis. For ready reference, a copy of the Deviation Note is being scanned and reproduced here under: 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 73 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 74 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 75 73.1 The ld. Counsel for the assessee has contended that the ADIT (Investigation), Mohali took less than 12 hours to go through all the documents and detailed replies and evidences as submitted by the company and rejected the said Deviation Note vide letter no. 1763 dated 27.12.2019 with an unauthorized diktat to declare the genuine Assessee company as a shell company, as mentioned in the Appraisal Report. On receipt of the reply from the ADIT on 27.12.2019, 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 76 the AO also changed his mind and declared the Assessee company as a shell company, although he had been fully satisfied while sending the Deviation Note on 26.12.2019 at 06:00pm; that it is proved from this that the Assessing Officer had to forego his satisfaction and adhere to the diktat of a third party, i.e., the ADIT(lnv). The AR of the company submitted that the Assessing Officer, after relying on the documents, information and explanation submitted by the assessee, had proposed no addition at all, as he was completely satisfied with regard to the fact that the assessee company was not a shell company and all amounts credited in the Bank accounts of the assessee company were only from known sources, which were genuine and duly accounted for in its books of account, upto 26.12.2019, and he prepared a Deviation Note for making no additionat all; that this fact has been established beyond a shadow of doubt by the fact that a Deviation Note was prepared by the Assessing Officer, dated 24/12/2019, and sent to the ADIT, Investigation, Mohali on 26/12/2019 at 06:00 pm, vide letter No. 1733 (along with all submissions of the assessee and note on comparison of the Appellant company with a Shell company), after perusal of :- 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 77 a) Statements of directors recorded during search and post search investigations; b) Replies filed by the company including its books of account; c) A detailed note on comparison of the assessee company with a so called shell company; d) Submission of cogent and reliable documentary evidences. 73.2 The ld. Counsel has submitted, and it is not disputed, that in this Deviation Note, the Assessing Officer has categorically admitted that there was no document or reasoning supplied to him by the Investigation Wing, due to which, the credit entries in the bank account of the assessee company could be treated as unexplained (Deviation Note- para 3/last); that further, he has also admitted (Deviation Note-para 4/last) that after going through the replies of the assessee company, he was satisfied that the amounts have been credited in the bank account of the assessee company from known sources, which have been duly accounted for by the assessee company in their books of account and shown in their audit report as well as ITR filed in due course on regular basis; that further, no question/explanation regarding the status/genuinity of the company was ever asked during the assessment proceedings and simply by 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 78 distorting the statements of the Directors, i.e., Sh. Jagdish Gupta and Sh. Sant Ram Sharma and following the diktat of the third party in opposition to the Deviation Note, the company was declared as a Shell Company. All these assertions of the Assessee are found correct, as patent on record. 73.3 Reliance has rightly been placed on the judgment of the Hon'ble Delhi High Court in the case of ‘PCIT vs Agson Global Pvt. Ltd.’, dated 20.01.2022. Therein it was held that- "4.2 What is of some significance is that a deviation report dated 20-12-2018 was prepared by the AO, which was, markedly different from the assessment orders passed by him. This aspect of the matter has been adverted to at great length by the Tribunal in the impugned order and shall also be alluded to by us in the latter part of the judgment. 4.3 Suffice it to state that the Deputy Director of Investigation Wing had submitted a written appraisal report on 4-1-2018. Despite the stand taken by the Deputy Director (Investigation) in the appraisal report and the communication dated 24-12-2018, at the meeting held on 28-12-2018, the AO and the Assistant Commissioner of Income-tax (ACIT) reiterated the position taken in the deviation report. 4.4 in the deviation report, the AO concluded that since the source of the cash movement concerning receipt of money by the assessee in the form of share capital/share premium amounting to Rs. 365.28 crores was traceable directly to the assessee's bank accounts, the addition of the said sum was not justified. 4.5 Likewise, insofar as the issue concerning addition of Rs. 941.86 crores qua bogus purchases was concerned, the AO in the deviation report made the following significant observations : 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 79 (i) Contrary to what the appraisal report had held, all purchases madeby the assessee were not bogus. (ii) 50% of the purchases were verified by issuing notices under section133(6) of the Act. Qua them, confirmatory letters, as well as copies of the ledger accounts, were presented by the assessee. In respect of these,no variation was found. (iii) If the value of such purported bogus purchases, as noticed in the appraisal report, was taken into account and juxtaposed against sales booked against the very same persons- it would show that the assessee has, in fact, declared a profit. In other words, if transactions with such parties are treated as bogus purchases, the profit reflected in the books will have to be reduced. The rationale given was that one cannot disallow bogus purchases and at the same time treat the sales with the same parties as genuine and bring the same to tax. Therefore, the suggestion made in the appraisal report that an ad hoc addition of 25% should be made to the income on account of such bogus purchases, may ultimately be detrimental to the interest of the revenue, if the sale is also to be treated as bogus. (iv) Reference was made to the transactions arrived at with three entities by the assessee in the financial year 2016- 2017. It was noticed that similar transactions made with the same or different parties that were bogus transactions, is something which obtained strength from the fact that stock worth Rs. 450 crores, was found short, although the same stood recorded in the books of accounts. In sum, the conclusion reached was that the books of accounts were not genuine and were liable to be rejected under section 145(3) of the Act and thereafter a gross profit rate had to be estimated on a reasonable basis keeping in mind the prevailing market trend. 4.6 As regards cash deposits made by the assessee during the demonetization period; against a proposal to add Rs. 180.53 crores, as suggested by the Investigation Wing, for the reasons given in the deviation report, the amount was pared down to Rs. 99.04 crores. Thus, the suggested addition on 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 80 this score to the total income of the assessee concerning AY 2017-2018 was restricted to Rs. 99.04 crores. 11.5 That being the position, the Tribunal concluded that the assessee had been able to prove the identity of the investors, their creditworthiness and genuineness, which are the ingredients of section 68 of the Act. The relevant observations made in paragraph 86 by the Tribunal read as follows : "86. Considering the facts of the case in the light of material on record in voluminous paper books and confirmations of the parties and the summary of transfer of funds reproduced above, it is clear that assessee produced sufficient documentary evidences before the A.O. to prove that money routed from the assessee itself which came back to the assessee in the form of share capital/premium, therefore, assessee proved identity of the Investors, their creditworthiness and genuineness of the transaction in the matter and as such have been able to prove ingredients of section 68 of the I.T. Act. The A.O. however did not make any further enquiry on the documentary evidences filed by the assessee. The A.O. did not verify the trail of the source of funds received by assessee through various entities as explained above. We may also note that during the course of hearing of these appeals, A.O. was present in the Court, but, did not make any adverse comment upon the documentary evidences filed in the paper book filed by the assessee. The A.O. thus, failed to conduct scrutiny of the documents at assessment stage and merely suspected the transaction between the Investor Companies and the assessee company despite the fact that in the deviation report the A.O. expressed doubts in making addition into the matter. It may also be noted here that no cash have been reported to have been deposited in the accounts of the assessee, the Investor Companies and other related parties. Considering the totality of the facts and circumstances of the case and material on record, we are of the view that assessee has been able to prove that it has received genuine amounts which is routed through various companies. Therefore, there was no justification to make any addition under section 68 of the I.T. Act." 15.1 In the context of this aspect, the Tribunal returned the following findings of fact: 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 81 (v) Because there was dissonance in the AO's views, as recorded in the deviation report and the remand report when compared to the additions/disallowance made in the assessment orders, the appraisal report generated pursuant to the search and seizure action was called for by the Tribunal and perused. A perusal of the report by the Tribunal revealed that addition/disallowance concerning bogus purchase was made only to protect the interest of the revenue. (viii) Insofar as the abated AYs were concerned i.e., AYs 2015- 2016, 2016-2017 and 2017-2018, it was, as per the Tribunal, apparent that the assessee had purchased goods, which were in value less than the sum for which they were sold. Therefore, as held by the A.O. in the deviation report, if the purported bogus purchases were to be disallowed then necessarily the sales shown in the assessee's regular books of accounts would also have to be excluded which would result in the assessee's income falling below the returned/declared income. In this regard, the Tribunal recorded that for the AYs 2012-2013 to 2017-2018, the total sales recorded by the assessee was Rs. 36,20,60,89,783/-, as against purchases made from the same very parties amounting to Rs. 36,02,14,17,848/-. Resultantly, for the said period, the assessee had shown a profit of Rs. 18,46,71,935/-. 15.8 According to us, the observations made by the Tribunal are pure findings of fact, which cannot be interdicted by us in appeal. The inconsistency in the approach adopted by the A.O., while preparing the deviation report and framing the assessment order with regard to purported bogus purchases is an aspect, which cannot be ignored and has been correctly highlighted by the Tribunal.” 74. It is seen that as correctlycontended on behalf of the Assessee, the observation of the Assessing Officer that the Assessee company is not a shell company having no profit earning apparatus of its own 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 82 is wrong, because the Assessee company had already purchased a Show Room Site No. 129, Sector 5, Panchkula, and purchased deed with regard to which was registered on 12.3.2008, for Rs. 1.73 crores and stamp duty of Rs. 20.90 lacs waspaidthereon. The Assessee company, it remains un-rebutted, wanted to construct a show room on the said site but due to slump in the market, it had to sell the show room site on 7.12.2011 through a registered sale deed for Rs. 5.05 Crores. 75. It also remains unrebutted that the directors and their relatives / friends also wanted to invest in property and they all gave the funds to the company for investment in property. However, the main source of the funds in the company was only from the Directors and their relatives/ friends. No funds from any unknown person or entity were received in this company and these funds were returned, when demanded, to the said Directors / Relatives / Friends as and when required by them. 76. It is also undisputed that during F.Y. 2016-17, the company entered into an agreement to sell for one Kanal plot in Sector 27, Panchkula to build flats / apartments on the said plot & paid Rs. 1.50 Crores to the owner of the plot & also deposited 1% TDS amounting to Rs. 1.50 lacs on the earnest money paid on this plot. 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 83 However, the owner of the plot met with an accident and got his hip / thigh fractured. He remained bed ridden for 3-4 months and ultimately, he expired in May 2017. His wife refused to sell the plot and did not agree to register sale deed in favour of our company and ultimately his wife returned the advance of Rs. 1.50 Crore to the company in F.Y. 2017-18. The copy of Purchase Agreement and the agreement for cancellation were submitted during the course of assessment proceedings before the Assessing Officer and thereafter no question or query was raised by the Learned Assessing Officer. 77. Further, as rightly contended, there is no definition of ‘shell company’, either in the ‘Income tax Act’ or in the ‘Companies Act’. A detailed note (APB 342) submitted before both the authorities below by the Assessee. Moreover, as observed, it is incorrect to state that the Assessee company did nto have profit earning apparatus of its own. 78. Further, it also remains unrebutted that the Assessee company has been regularly preparing its Profit and Loss account and Balance Sheet and it is also getting its account audited regularly. Moreover, after 2013, the Registrar of the Companies and the MCA have identified certain shell companies and the directors of these companies have been disqualified. The Assessee company has not 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 84 been shown to be one of such ‘Shell Company’. Rather, it is always treated as a perfectly legal and genuine company, even by the Department itself. It has been doing business and it purchase property and made efforts to develop as commercial colony like the other real estate developers. It advanced and received loans to and from relatives / friends as per requirements. The Directors and shareholders of the Assessee are persons of means and repute. The Assessee is not an entry operator and is not doing any illegal activity. Even the Assessing Officer did not level any allegation to this effect against the Assessee company. The note filed by the Assessee companyconcerning the issue of it not being a shell company has been taken note of and reproduced by the ld. CIT(A) himself inhis order at pages 70 to 75 thereof. 79. As noted, until 27.12.2019, the Assessing Officer hadremained fully satisfied that the Assessee was genuine company and not a shell company. He had accepted the transactions as having been duly accounted for in the Assessee’s books of account. In the Deviation Note, the Assessing Officer didnot propose any addition. Therein, the Assessing Officer had specifically stated that no document or reasoning had been supplied to him by the Investigation Wing of the Department, on the basis of which, the creditentries in the bank 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 85 accounts of the Assessee company could have been treated as unexplained credits of the Assessee company. The Assessing Officer had also admitted in the Deviation Note that he was satisfied with the amounts credited in thebank account of the Assessee company were from known sources and that they had been duly accounted for by the Assessee in its books of account and had been shown in its Audit Report and Income Tax Returns, were filed regularly in due course. These facts have also not been held by the ld. CIT(A) to be false or wrong. 80. The fact remains that it was only on a diktat ofa third party, i.e., letter No. 1763 sent by theDeputy Director of Income Tax (Investigation), Mohali, on27.12.2019 that the Assessing Officer proceeded to make the additions, against his owns satisfaction as elaborated by him the DeviationNote, without any basis and without any adverse material on record against the Assessee, else there was no reason why the Assessing Officer would have taken such a complete somersault from the said position maintained by him originally, to ordering the additions of all the credit entries in the bank accounts of the Assessee, within a matter of one day of his having sent his Deviation Note to the Deputy Director of Income Tax (Investigation), Mohali. 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 86 81. The ld. CIT(A), while rightly deleting the additions wrongly made, has duly taken into consideration the position, as discussed above. 82. The Department has sought to place reliance on the decision of the Hon'ble Gauhati High Court in the case of ‘Assam Company India Ltd. and Anr. vs. Union of India and 2 Ors’, rendered inWP (C) No.2572 / 2018 on 7.3.2019. The facts in that case, it is however, seen, are entirely different, asrightly contended on behalf of the Assessee. Therein, there had been a complaint from theSFIO and the Income Tax Department regarding involvement by the Company in money laundering and in entry operations. Thus,on the contrary are nowhere the facts of the present matter and it is not nobody’s case that the Assessee company is an entry operation, or into any money laundering. Rather, even in the facts of that case, the Hon'ble High Court observed that just being a paper company and not having an assets or business operations isno offence per se; that a corporate entity may be set up with the objective of carrying out corporateactivities in future, that this would not make it an illegal entity; that is not offence per se to be a shell company; and that a shell company is ordinarily identified with dubious activities cornering series economic offences such as, tax evasions,money 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 87 laundering, conversion of black money into while and round-tripping with a host of other associated offences; So, in the facts and circumstance of the present case, ‘Assam Company India Ltd’, (supra), if at all, works infavour of, rather than against the Assessee. There is no allegation of the Assessee company being an entry operator or being into money laundering or doing round-tripping or doing commercial or any serious economic offence or in any other associated offences. It has not been shown to be a shell company. 83. The Department contends that the ld. CIT(A) erred in treating the income of the Assessee as Long Term Capital Gain from sale of an immovable property, instead of business income,by overlooking the fact that the Assessee company is engaged in the sale and purchase of immovable properties. It is seenthat as correctly observed by the ld. CIT(A), during F.Y. 2007-08, a commercial property comprised in theland at SCO 129,Sector 5,Panchkula was purchased by the Assessee company, for Rs. 1,73,00,000/-. The same could not be commercially developed by the Assessee and it was sold during the year under consideration forRs. 5,00,50,000/-. It has remained undisputed that this plot was a business capital assetcovered by the provisions of section 2(14) of the Act. It is patent on record, in the shape of a recital in the Profit and Loss account and 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 88 the Balance Sheet of the Assessee company since F.Y. 2007-08 that this plot was not put to any use by the Assessee company; nor had any development been claimed thereon. In the face of these facts,no fault canbe found in the conclusion arrived at by the ld. CIT(A), that the saleof the property resulted in capital gain and it does not stand covered under the provisions of section50 of the Act. Moreover, it also remainedundisputed that right from its inception, the Assessee hasnot carried onany business activity in thenature of sale and purchase of immovable properties / assets and the propertyunderreference was the only properlydealt withever by the Assessee company, as rightlytaken note of by the ld. CIT(A). Too, the said property has been shown as a fixed asset in the balance sheet of the Assessee company, and not a stock-in-trade. Further, having been held by the Assessee for more than 36 months, from 12.3.2008 to 30.11.2011, the plot was rightly held by the ld. CIT(A) to be Long Term Capital asset of the Assessee and the income relating to sale thereof was rightly assessed as LongTerm Capital Gain. For thesereasons, finding nomerit therein, this assertion of the Department is hereby rejected. 84. Likewise, there is no force as consideredabove,in the contention that the ld. CIT(A) went wrong in considering the property as a 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 89 capital asset and not as stock-in-trade, despite the Assessee allegedly dealing in real estate. 85. In view of the above, the findingsrecorded by the ld. CIT(A) qua the issue brought under challenge by the Department, are found to be on all fours, and not requiring any interference at our hands. Ordered according. 86. In the result, the appeal in ITA No. 670/Chd/2022 is hereby allowed whereas, the appeal filed by the Department in ITA No. 727/Chd/2022 is dismissed. Stay Application No. 8/Chd/2023 87. Inview of the above disposal of appeals, the request for Stay as filed on behalf of the Assessee has become infructuous, accordingly, the application for stay in S.A. No. 8/Chd/2022 is dismissed, as infructuous. Order Pronounced on 29.11.2023. Sd/- Sd/- (VIKRAM SINGH YADAV) ( A.D. JAIN ) Accountant Member Vice President “आर.के.” आदेश क त1ल2प अ3े2षत / Copy of the order forwarded to : 1. अपीलाथ / The Appellant 670-Chd-2022 & 727-c-2022– TJR Properties Pvt Ltd Pvt Ltd., Chandigarh 90 2. यथ / The Respondent 3. आयकरआय ु 8त/ CIT 4. 2वभागीय त न<ध, आयकरअपील+यआ<धकरण, च>डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड फाईल/ Guard File आदेशान ु सार/ By order, सहायकपंजीकार/ Assistant Registrar