The ACIT Central-1 Indore, Indore V. Shri Krishna Devcon P Ltd, Indore

ITSSA 11/Ind/2022

AI Insights

The case involves multiple appeals by the revenue and cross-objections by the assessee, M/s Shri Krishna Devcon Ltd., against the orders of the Commissioner of Income Tax (Appeals) for various assessment years. The primary issues revolved around the additions made by the Assessing Officer under sections 68 and 69C of the Income Tax Act, 1961, concerning unsecured loans and unexplained investments. The Tribunal examined the evidences, including the statements of directors and the financial documents of the companies involved, and found that the additions were not justified as they were not supported by any incriminating material discovered during the search operations. The Tribunal also considered the legal precedents and the principles of natural justice in arriving at its decision.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130939 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 20-08-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-07-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 03-02-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S RAKESH GUPTA
• Keywords: Unexplained cash credit; Unexplained investment; Gift; Business income; Income from undisclosed sources; Search and seizure; Document seized; Principle of natural justice; Additional evidence; Question of law; Corroborative evidences; Accommodation entries; Block assessment; Onus to prove; Retraction; Documents seized; Reassessment proceedings; TDS
• Section: 68; 69; 132; 69C; 139; 143(3); 133A; 153A; 260A; 133(6); 143(1); 143(2); 64; 158BC; 158B(b); 113; 43; 48; 73; 72; 13; 153; 22; 153C

Judgement Text

Page 1 of 77 आयकर अपील य अ धकरण, इंदौर यायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER IT(SS)A Nos.8 to 10/Ind/2022 (Assessment Years: 2012-13,2014-15 & 2016-17) ACIT Central -1 Indore Vs. M/s Shri Krishna Devcon Ltd. MZ-3, Starlite Tower, 29 YN Road, Indore (Appellant / Revenue) (Respondent/ Assessee) PAN: AAACE 1255G IT(SS)A Nos.11/Ind/2022 (Assessment Years: 2017-18) ACIT Central -1 Indore Vs. M/s Shri Krishna Devcon Ltd. MZ-3, Starlite Tower, 29 YN Road, Indore (Appellant / Revenue ) (Respondent/ Assessee) PAN: AAACE 1255G IT(SS)A Nos.03/Ind/2022 (Assessment Year: 2016-17) & CO No.01/Ind/2023 (Arising out of IT(SS)A No.11/Ind/2022 (Assessment Years: 2017-18) M/s Shri Krishna Devcon Ltd. MZ-3, Starlite Tower, 29 YN Road, Indore Vs. ACIT Central -1 Indore (Appellant / Assessee) (Respondent/ Revenue) PAN: AAACE 1255G Assessee by S/Shri Rakesh Gupta, Somil Agarwal, IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 2 of 77 Page 2 of 77 Saksham Agrawal, Shri Durgesh Khandelwal & Harsh Vijayvargiya ARs Revenue by Shri P.K. Mishra, CIT-DR Date of Hearing 13.07.2023 Date of Pronouncement 21.08.2023 O R D E R Per Bench: These four appeals by the revenue for A.Y.2012-13,2014-15,2016- 17 & 2017-18 and one cross appeal and one cross objection by the assessee for A.Ys. 2016-17 & 2017-18 are directed against the composite order dated 15.11.2021 of Commissioner of Income Tax (Appeals). For the Assessment Years- 2012-13 the revenue has raised following grounds: “1.Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in accepting additional evidence u/s 46A in complete disregard to the remand report submitted by AO which was received in the 0/0 CIT(A) on 18.09.2020. The CIT(A) has not discussed the issues raised in remand report in his order. 2.Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in accepting additional evidence u/s 46A even through conditions mentioned in clauses (a)-(d) of 46ACD were not satisfied.s 3.Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in accepting retraction made by the assessee made after more than a year as genuine even though there was strong evidence on record about accommodation entries provided by companies controlled by Sharad Darak, a known entry provider; and whether CIT(A) has erred in accepting the retraction of assessee as genuine ignoring the decision of Hon'ble SC in the case of Bannalal Jat constructions Pvt Ltd Vs ACIT [2019] 106 Taxmann.com 128(SC). 4.Whether on the facts and in the circumstances of the case and In law, the Ld. CIT(A) was justified in deleting the addition after finding it non-abated assessment year, while the addition was made on the basis of incriminating documents found during the search and seizure proceedings. IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 3 of 77 Page 3 of 77 5. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 5,00,00,000/- made by the Assessing Officer under section 68 of Income Tax Act, 1961on account of bogus unsecured loans. 6.Whether on the facts and in the circumstances of the case and in law, the CIT was justified in deleting the addition of Rs. 34,74,068/- made by the Assessing Officer under section 69C of Income Tax Act, 1961 on account of interest expenses on bogus unsecured loans.” 2. Ld. CIT-DR has submitted that during the course of search and post search proceedings it was found that the assesse has received huge unsecured loan from ten suspicious companies which are controlled and managed by Shri Sharad Darak who is well known accommodation entries provider of Indore. The AO has given the details of survey u/s 133A carried out by Raipur Investigation Wing on 22.01.2014 at the premises of various companies having common address at Kamla Hari Villa, Besides Apollo Pharmacy, Main Road, Vidya Nagar, Bilaspur and found that those companies are controlled by Shri Sharad Darak who has been the director of these companies either in present or in the past. These all companies having a common address had no business activity or any staff working from the premises, no documents or books of account at the so called registered office. Similarly in the assessment proceedings in case of Krishna Oils and Proteins Pvt. Ltd. the DCIT-5(1), Indore has conducted certain inquiries and also recorded the statement of Shri Sharad Darak u/s 131 on 21.02.2014 whereby it is proved that companies runs by Shri Sharad Darak such as M/s Jayant Securities & Finance Ltd. are bogus companies and being used for providing accommodation entries. During the course of search proceedings statement of Shri Naveen Jain (director of the assesse company) was recorded on oath u/s 132(4) on 14.07.2016 wherein Shri Naveen Jain has confessed that the unsecured loans amounting to Rs.10,31,84,647/- are merely accommodation entries provided by Shri Sharad Darak, through his dummy companies. He has also stated that this loan amount is actually unaccounted/undisclosed income of Shri Krishna Devcon Ltd. (Assessee). Based on this material IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 4 of 77 Page 4 of 77 showing undisclosed/unaccounted income of the assesse company the AO issued show cause notice to the assesse and in response the assesse filed submissions vide letter dated 16.11.2018. The AO was not satisfied with the reply and explanation filed by the assesse as well as retraction of Shri Naveen Jain vide letter dated 29.08.2017 as it was not a valid retraction not explaining the mistake in the statement recorded u/s 132(4). Therefore, a mere retraction after gap of more than one year cannot be accepted. Thus, Ld. DR has submitted that the AO has made the addition on the basis of the incriminating material and the ld. CIT(A) has deleted the same by accepting additional evidence filed by the assesse and without considering objections raised by the AO in the remand report. Therefore, there is clear violation of principles of natural justice as well as Rule 46A of the Income Tax Rules. The AO has made his own inquiry and not simply relied upon the inquiry conducted by the investigation wing of the department in other cases. Merely because these transactions are through banking channel would not epso facto proves that the transactions are genuine when it was found during the investigation that the alleged loan creditor companies are dummy and paper companies controlled by Shri Sharad Darak for providing accommodation entries. It was also found during the investigation that no business activities were carried out by these companies and therefore, all the trait of paper/shell companies are existed in this case. He has relied upon the order of the assessing officer. 2.1 On the other hand, ld. Counsel for the assesse has submitted that the ground no.1 & 2 raised by the department are misconceived. The ld. CIT(A) has forwarded the additional evidence to the AO for his comments and the AO submitted the remand report dated 14.09.2020 which was duly considered by the Ld. CIT(A). He has referred to para no.2.1 of the impugned order of the Ld. CIT(A) and submitted that the Ld. CIT(A) has duly considered remand report wherein AO raised the objection to the admission of the additional evidence but did not submit anything on the veracity of the additional evidence filed by the assesse. Therefore, he has IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 5 of 77 Page 5 of 77 considered the reasons explained by the assesse that the additional evidence has been obtained after the completion of assessment proceedings and there was no occasion to file the same in the course of assessment proceedings. Considering the explanation of the assesse as sufficient cause for not producing the evidences during the assessment proceedings, the ld. CIT(A) has admitted the additional evidence in the interest of justice. Thus, the Ld. Counsel for the assesse has submitted that ground no1 & 2 are not only misconceived but misleading and contrary to the facts and record. He has further submitted that the AO has not referred to any incriminating material in the assessment order on the basis of which addition could have been made. The AO has referred to the investigation carried out by the department in some other cases on 22.01.2014 whereas the search in the case of the assessee was conducted on 12.07.2016. Therefore, the said investigation carried out on 22.01.2014 cannot be considered as incriminating material found or seized in the search carried out in the case of the assessee on 12 th July 2016. Thus, Ld. Counsel for the assesse has submitted that there is no incriminating material found or seized during the course of search and seizure action and the assessment year 2012-13 was not abated due to the search and seizure action and therefore, in absence of any incriminating material the additions made by the AO are not valid and liable to be deleted. 2.2 He has pointed out that all the transactions are duly recorded in the books of account of the assesse and therefore, nothing was found during the search which is not disclosed by the assessee in the return of income filed under section 139 or not recorded in the books of account of the assesse. Even the statement of Shri Naveen Jain recorded u/s 132(4) cannot be held as incriminating material in absence any iota of material or evidence found during the search. The assessment order is silent about any incriminating material except referring to the statement of Shri Naveen Jain and some earlier investigation carried out by the department in the year 2014 in the third party case. Earlier investigation was only a IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 6 of 77 Page 6 of 77 survey u/s 133A and what was impounded the books of account of the lender companies cannot be considered as incriminating material as all these transactions are already part of the books of account of the assesse as well as the lender company. Rather the said impounded material supports the case of the assesse. The ld. Learned counsel for the assesse has submitted that the assesse relied upon various judgments before the Ld. CIT(A) which includes; (i) Pr. CIT vs. Meeta Gutgutia 395 ITR 526 (Delhi) (ii) CIT vs. Kabul Chawla 380 ITR 573 (iii) CIT vs. Harjeev Aggarwal 290 CTR 263 (Delhi) (iv) Pr. CIT vs. Best Infrastructure (India) P. Ltd. 397 ITR 82 (Delhi) and also relied upon the judgment of Hon’ble Delhi High Court in case of Pr. CIT vs. Anand Kumar Jain 432 ITR 384 and submitted that Hon’ble High Court has held that the statement recorded u/s 132(4) of the Act do not by themselves constitute incriminating material in absence of any documents or other evidence to disclose undisclosed income of the assesse. He has further submitted that Mr. Naveen Jain subsequently filed an affidavit and retracted his statement by explaining the circumstances and reasons for giving an incorrect statement at the time of search and seizure action. He has then relied upon the judgment of Hon’ble Supreme Court in case of Pr. CIT vs. Pr. CIT vs. Abhisar Buildwell Pvt. Ltd. 149 taxman 499(SC) and submitted that the Hon’ble Supreme Court has now upheld the judgment in the case of CIT vs. Kabul Chawla (supra). He has referred to the assessment order and submitted that the assesse filed reply to the show cause notice issued by the AO and explained all the facts along with supporting evidence. The AO has though referred to some SEBI orders but whether such order does exist is not clear as the AO neither supplied to assessee nor reproduced the alleged order in the assessment order. The assesse has taken loan from M/s. Jay Jyoti India Pvt. Ltd. of Rs.3.5 Cr a listed company at Bombay Stock Exchange and balance amount of Rs.1.5 cr. was taken from M/s. Zyka Merchandise Pvt. Ltd. He has referred to page no.471 to 475 of paper book and submitted that th e ledger account of M/s. Jay Jyoti India Pvt. Ltd. in the books of assesse for the period 01.04.2011 to 31.03.2012 show that the impugned amount of Rs.3.5 cr. was received by the assesse company on various dates and IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 7 of 77 Page 7 of 77 the assesse has paid the interest on the said amount of loan after deducting TDS @ 10%. He has then referred to entries in the ledger account from 01.04.2012 to 31.03.2016 and submitted that the said loan was repaid by the assesse along with interest through proper banking channel in the subsequent year much before the date of search. Therefore, when there was no outstanding amount found at the time of search and entire loan was already repaid by the assesse along with interest then the books found at the time of search established the fact of genuineness of transaction taking loan and repayment of the same. Copy of the ledger account showing the transactions of loan are repaid of the same along with interest after deducting TDS has been duly signed and certified by the authorized signatory of M/s. M/s. Jay Jyoti India Pvt. Ltd. Therefore, the confirmation of loan transaction and repayment of the same was also produced by the assesse before the authorities below. Even in the books of M/s. Jay Jyoti Indi Pvt. Ltd. these transactions are reflected which confirmed the claim of the assessee of taking this loan and repayment of the same. Both taking loans as well as repayment of the same are through banking channel. He has referred to the bank account statement of M/s. Jay Jyoti India Pvt. Ltd. showing grant of loan to the assesse on various dates through cheques and also showing the repayments by the assessee with interest. He has referred to the acknowledgement of the return of income of M/s. Jay Jyoti India Pvt. Ltd. along with computation of income for A.Y.2012-13 shown the complete address, PAN details of the ledger company has engaged in the genuine business. He has referred to the financial statement of M/s. Jay Jyoti India Pvt. Ltd. and submitted that the said company has shown turnover of Rs.4 cr. and strong financial position proves that the lender company has net worth approximately of Rs.116 cr. which is multiple times of sum advanced to the assesse. All these documents are placed in the paper book from page no. 564 to 603. He has also referred to the copy of the affidavit of Shri Sharad Darak at page no.814 to 817 wherein he had admitted that he is a director of the said company duly giving details of the registered address, PAN, Details of the ward/circle where this company is assessed. He has also confirmed IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 8 of 77 Page 8 of 77 the grant of loan to the assesse company and repayment of the same by the assesse along with interest after deduction of TDS. Therefore, the assesse has produced relevant evidence to prove the identity of the creditor, creditworthiness of the creditor and genuineness of the transactions. The AO has not questioned the correctness and veracity of evidence produced by the assesse but simply rejected the reply of the assesse and made the addition on assumption and suspicion based on the report of the investigation wing that Shri Sharad Darak involved in providing accommodation entries. 2.3 As regards M/s. Zyka Merchandise Pvt. Ltd. the Ld. Counsel for the assesse has submitted that all the details of loan taken by the assesse and payment of interest after deduction of TDS are given in the ledger account in the books of M/s. Zyka Merchandise Pvt. Ltd. for the period 01.04.2011 to 31.03.2017. A copy of the said ledger account is placed at page no.718 & 719 of the paper book. The assesse paid the interest after deducting TDS which is also reflected in the said ledger account. Out of the said loan of Rs.1,50,00,000/- the assesse repaid the principal amount of Rs.11,46,649/- during the year under consideration. The transactions are through banking channel and confirmation from the lender company was also filed placed at page no. 720A of the paper book along with bank account statement at page no.721 to 723 of the paper book. He has then referred to the financial statements and return of income of M/s. Zyka Merchandise Pvt. Ltd. at page no. 724 of the paper book and the directors report along with auditor financial statement of M/s. Zyka Merchandise Pvt. Ltd. as on 31.03.2012 placed at page no. 725 to 730 of the paper book showing that the company has net worth about Rs. 7 cr. which is also multiple times of the sum advance to the assesse. 2.4 Ld. AR has submitted that the Ld. AO has made reference to the statement of Shri Naveen Jain who was only a non-executive director of the assesse and did not look after day to day activities of the assessee company. Further while recording his statement on 14.07.2016 Shri Naveen Jain was under severe pressure and stress as the search was IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 9 of 77 Page 9 of 77 going on since last three days and therefore, the alleged confession extracted from him cannot be used for making additions without any corroborative evidence. Once the assesse furnished all the relevant documentary evidences comprising of confirmation, income tax returns, other supporting documents then the assesse discharged its onus to prove the identity, creditworthiness of the creditor and genuineness of the transactions and the assessing officer has not brought any material on record to prove the contrary or to show that evidence produced by the assesse is bogus. The assesse has produced the retraction letter dated 29.08.2017 of Shri Naveen Jain as well as letter of Shri Sunil Jain who is managing director of the assesse company clarifying that the surrender has been wrongly obtained from a person not lawfully authorized/competent to make such surrender. He has also pointed out that while recording the statement of Shri Surendra Jain the department never confronted him with the statement of Shri Naveen Jain from whom surrender was obtained. Ld. AR has referred to the assessment order passed u/s 143(3) on 04.03.2015 in case of M/s. Zyka Merchandise Pvt. Ltd. after the alleged survey dated 22.01.2014 and submitted that the department has not disputed the books of account of the said company having transactions of loan given to the assesse. 2.5 He has relied upon the judgment of Hon’ble Rajasthan High Court in case of Aravali Trading Co. Vs. ITO 187 taxman 338 (Rajasthan) and submitted that Hon’ble High Court has held that once the existences of the creditors is proved and such persons own the credits which are found in the books of the assesse. The assesse’s onus stands discharged and he is not further required to prove the source from which the creditors could have acquired the money deposited with him either in terms of section 68 or on general principle. 2.6 He has then relied upon the judgment of Hon’ble Delhi High Court in case of CIT vs. Real Time Marketing Pvt. Ltd. 306 ITR 35 and submitted that the Hon’ble High Court has upheld the order of the Tribunal by noting the fact that confirmation of the lender has been filed by the IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 10 of 77 Page 10 of 77 assessee and the said company was assessed to tax. The source of lender company has been explained as out of transfer of funds from the accounts of another company. Thus, it was held that assesse discharged its burden of proving identity, capacity and genuineness of the transaction. The AO has not brought any material to show that the funds to the lender company were provided by the assesse. 2.7 He has then referred to the decision of Coordinate Bench of this tribunal in case of ACIT vs. Pramod Kumar Sethi dated 06.11.2018 in ITANO.382 & 383/Ind/2014 wherein the same lender companies as in the present case were involved and the Tribunal has held that identity of four companies are well established, genuineness is duly proved by the transactions which are made through account payee cheques and supported by all necessary details including bank account statement, financial statement, confirmation of account, Pan details etc. which are placed on record and sufficient to prove the creditworthiness. He has then referred to the decision of this tribunal in case of M/s Radhishwari Developers Pvt. Ltd. vs. PCIT dated 27the July 2021 in ITANo.493/Ind/2018 as well as in case of Globe Realcom Pvt. Ltd. vs. ACIT dated 26.04.2022 in IT(SS)ANo.170 to 174/Ind/2020 and submitted that in all these cases this tribunal has dealt with the issue of loan given by M/s. Jayant Securities & finance Ltd. as well as M/s Jay Jyoti India Pvt. Ltd. which are the companies allegedly controlled by Sharad Darak and finally the addition made by the AO was deleted. 2.8 Thus, Ld. Counsel has submitted that on identical grounds the AO made addition in those cases based on the same report of the investigation wing regarding the involvement of Shri Sharad Darak in providing accommodation entries through these companies controlled by him. He has also relied upon the decisions of Indore Bench of this Tribunal in case of Shri Sanjay Shukla vs. ACIT dated 15.03.2022 in ITANo.333/Ind/2020 & M/s Tirupati Construction vs. Dy. CIT dated 14.07.2016 in ITANo.522/Ind/2014 and decision of Mumbai Bench of this IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 11 of 77 Page 11 of 77 Tribunal in case of JCIT vs. M/s. Shalimar Housing & Finance Ltd. dated 01.06.2021 in ITANo.4079/Mum/2019. 3. We have considered the rival submission as well as relevant material on record. First objection raised by the revenue is regarding the acceptance of additional evidence by the Ld. CIT(A) in-complete disregard to the remand report submitted by the AO. The AO made addition in respect of unsecured loan taken by the assesse from the companies, the details which are given in para 8 of the assessment order as under: S. No. Name of Company F.Y. Amount 1. Jayant Security And Finance Ltd. 2010-11 2013-14 23,00,000/- 85,00,000/- 2. Jay Jyoti India Pvt. Ltd. 2011-12 2013-14 3,50,00,000/- 1,00,00,000/- 3. Rajwadi (Rajyeshwar) Retail Traders Systems Pvt Ltd 2013-14 15,00,000/- 4. East West Finvest India Ltd 2012-13 1,00,00,000/- 5. Zyka (Ziya) merchandise Pvt Ltd 2011-12 1,50,00,000/- 3. Puvi Finvest Ltd. 2013-14 2015-16 60,00,000/- 4,90,00,000/- -do-( Aand A Shelters) 2015-16 1,99,95,000/- 3.1 For assessment year 2012-13 the assesse has shown unsecured loan of Rs.3.50 cr. from M/s Jay Jyoti India Pvt. Ltd. and Rs.1.50 cr. from M/s. Zyka Merchandise Pvt. Ltd. The AO has treated these companies as paper company controlled and managed by one Shri Sharad Darak who was in view of the AO a well-known accommodation entry provider. Before the Ld. CIT(A) assesse furnished additional evidence with the application under Rule 46A of the Income Tax Rules. The assesse proposed to produce IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 12 of 77 Page 12 of 77 the affidavit of Shri Sharad Darak, MOU signed between the assesse and M/s Jayant Security And Finance ltd., East West Finvest India Ltd. and Purvi Finvest Ltd. Copy of termination letter for MOU dated 01.04.2019 and 08.04.2019, copy of letter dated 23.04.2019 and 09.05.2019 for appointment of arbitrator. The ld. CIT(A) has considered and decided this issue of admission of additional evidences in para 2.1 as under: “2.1 The appellant during the course of appellate proceedings has furnished the additional evidence u/r 46A of the IT Rules by way of Affidavit of Shri Sharad Kumar Darak, MOU signed between appellant and M/s Jayant Security and Finance Ltd, M/s East West Finvest India Ltd & M/s Purvi Finvest Ltd, Copy of termination letter for MOU dated 01.04.2019 & 08.04.2019, Copy of letter dated 23.04.2019 & 09.05.2019 for appointing Hon'ble Justice RS Garg and copy of arbitration order. It was submitted by the appellant that the additional evidences further proves genuineness of the transactions and were collected after the assessment proceedings. The additional evidences have been forwarded to the AO for his comments. The AO submitted the remand report dated 14.09.2020 which is placed on record and have been perused. The Ld. AO raised objection to admission of additional evidences, but did not submitted anything on veracity of additional evidences filed by the appellant. Since, the additional evidences had been obtained after the completion of assessment proceedings, there was no occasion to file such evidences in the course of assessment proceedings. Therefore, there was sufficient cause for not producing the evidences during assessment proceedings. Therefore, the appellant's case is falling under rule 46A(1)(b) of Income Tax Rules. Therefore, additional evidences produced during the course of appellate proceedings have been admitted for the sake of natural justice.” 3.2 Thus, it is clear that the additional evidence submitted by the assesse in support of its claim was forwarded to the AO for his comments. The AO submitted the remand report dated 14.09.2020 and raised objections to the admission of the additional evidences. It is pertinent to note that the AO has not taken any step to verify correctness of the additional evidence filed by the assessee and even no comments were submitted in the remand report except raising the objections against the admission of the additional evidence. The ld. CIT(A) after considering remand report as well as reasons explained by the assessee for not IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 13 of 77 Page 13 of 77 producing the evidence during the course of assessment proceedings admitted the additional evidence. 3.3 We find that there is nothing in the proposes additional evidence filed by the assesse before the Ld. CIT(A) which could suggest that the same was prepared or manufactured by the assesse as an afterthought. Some of the evidences are part of some business MOUs between the parties and subsequent dispute which was referred for resolution thorough arbitration and therefore, the said additional evidence was independent evidence and assesse was having no control or say to manipulate with the same. The affidavit of Shri Sharad Darak was filed by the assessee to counter the AO’s finding that these companies are controlled and managed by Shri Sharad Darak who is providing bogus accommodation entries. Therefore, in our considered view the Ld. CIT(A) was justified in admitting the additional evidence after calling for a remand report from the AO. 3.4 The next grievance of the revenue is regarding the finding of the Ld. CIT(A) in respect of the assessment years 2012-13 & 2014-15 holding that the addition made by the AO in absence of any incriminating material is not valid. Ld. DR has referred to the assessment order and submitted that the AO has referred to various reports of the departments and the statements of Shri Naveen Jain and asserted that it constitutes incriminating material. We find that the AO in the assessment order has referred to only the ledger account and entries in the books of accounts of the assesse company as well as in the books of the lender companies. Except the entries in the books of account and particularly in the ledger accounts of the parties the AO has not referred to any material either found or seized during the course of search and seizure action carried out on 12 th July 2016 which could disclose any fact to indicate that the unsecured loan shown by the assesse in the books of account are bogus. Therefore, once the transactions of the loan are duly recorded in the books of account of the assesse as well as in the books of account of the lender companies then the addition made by the AO treating these transactions IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 14 of 77 Page 14 of 77 as bogus entry provided by the lender companies cannot be said to be based on any incriminating material found or seized during the course of search and seizure proceedings carried out on 12 th July 2016 in case of the assesse. The assessing officer has referred to the investigation report of the department u/s 133A on 22.01.2014 along with statement of Shri Dinesh Agrawal dated 22.01.2014 and statement of Shri Sharad Darak dated 21.02.2014. All these statements were recorded in the survey proceedings carried out in the month of January 2014 or February 2014 and therefore, have no connection with search and seizure proceedings in the case of the assesse carried out on 12 th July 2016. Further the AO has made only reference to these survey and statements but nothing was brought on record as what exactly revealed in those statements recorded on 22.01.2014 and 21.02.2014. Therefore, it can at the best be considered as the personal knowledge of the AO of some events or investigation not related to the assesse but no record or evidence was referred by the AO in the assessment order to substantiate to the said person knowledge therefore, the same cannot be a basis of addition. Secondly the statement of Shri Naveen Jain recorded u/s 132(4) does not disclosed any new fact or leading to discovery of any material or transaction which is not already recorded in the books of account of the assesse as well as lender companies. All the facts and records were available with the AO in respect of the loan transactions at the time of search and seizure action as return of income for assessment year 2012-13 & 2014-15 filed long before the search and seizure action. Therefore, the said statement of Shri Naveen Jain in absence of any incriminating material would not constitute an incriminating material disclosed any undisclosed income. 3.5 The Hon’ble Delhi High Court in case of CIT vs. Harjeev Aggarwal 290 CTR 263 while considering the issue of statement recorded u/s 132(4) of the Act would itself be sufficient to assess the income held in para 19 to 25 as under: “19. In view of the settled legal position, the first and foremost issue to be addressed is whether a statement recorded under Section IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 15 of 77 Page 15 of 77 132 (4) of the Act would by itself be sufficient to assess the income, as disclosed by the Assessee in its statement, under the Provisions of Chapter XIV-B of the Act. 20. In our view, a plain reading of Section 158BB(1) of the Act does not contemplate computing of undisclosed income solely on the basis of a statement recorded during the search. The words "evidence found as a result of search" would not take within its sweep statements recorded during search and seizure operations. However, the statements recorded would certainly constitute information and if such information is relatable to the evidence or material found during search, the same could certainly be used in evidence in any proceedings under the Act as expressly mandated by virtue of the explanation to Section 132(4) of the Act. However, such statements on a standalone basis without reference to any other material discovered during search and seizure operations would not empower the AO to make a block assessment merely because any admission was made by the Assessee during search operation. 21. A plain reading of Section 132 (4) of the Act indicates that the authorized officer is empowered to examine on oath any person who is found in possession or control of any books of accounts, documents, money, bullion, jewellery or any other valuable article or thing. The explanation to Section 132 (4), which was inserted by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1st April, 1989, further clarifies that a person may be examined not only in respect of the books of accounts or other documents found as a result of search but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Act. However, as stated earlier, a statement on oath can only be recorded of a person who is found in possession of books of accounts, documents, assets, etc. Plainly, the intention of the Parliament is to permit such examination only where the books of accounts, documents and assets possessed by a person are relevant for the purposes of the investigation being undertaken. Now, if the provisions of Section 132(4) of the Act are read in the context of Section 158BB(1) read with Section 158B(b) of the Act, it is at once clear that a statement recorded under Section 132(4) of the Act can be used in evidence for making a block assessment only if the said statement is made in the context of other evidence or material discovered during the search. A statement of a person, which is not relatable to any incriminating document or material found during search and seizure operation cannot, by itself, trigger a block assessment. The undisclosed income of an Assessee has to be computed on the basis of evidence and material found during search. The statement recorded under Section 132(4) of the Act may also be used for making the assessment, but only to the extent it is relatable to the incriminating evidence/material unearthed or found during search. In other words, there must be a nexus between the statement recorded and the evidence/material IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 16 of 77 Page 16 of 77 found during search in order to for an assessment to be based on the statement recorded. 22. In CIT v. Sri Ramdas Motor Transport Ltd.: (1999) 238 ITR 177 (AP), a Division Bench of Andhra Pradesh High Court, reading the provision of Section 132(4) of the Act in the context of discovering undisclosed income, explained that in cases where no unaccounted documents or incriminating material is found, the powers under Section 132(4) of the Act cannot be invoked. The relevant passage from the aforesaid judgment is quoted below: "A plain reading of sub-section (4) shows that the authorised officer during the course of raid is empowered to examine any person if he is found to be in possession or control of any undisclosed books of account, documents, money or other valuable articles or things, elicit information from such person with regard to such account books or money which are in his possession and can record a statement to that effect. Under this provision, such statements can be used in evidence in any subsequent proceeding initiated against such per son under the Act. Thus, the question of examining any person by the authorised officer arises only when he found such person to be in possession of any undisclosed money or books of account. But, in this case, it is admitted by the Revenue that on the dates of search, the Department was not able to find any unaccounted money, unaccounted bullion nor any other valuable articles or things, nor any unaccounted documents nor any such incriminating material either from the premises of the company or from the residential houses of the managing director and other directors. In such a case, when the managing director or any other persons were found to be not in possession of any incriminating material, the question of examining them by the authorised officer during the course of search and recording any statement from them by invoking the powers under section 132(4) of the Act, does not arise. Therefore, the statement of the managing director of the assessee, recorded patently under section 132(4) of the Act, does not have any evidentiary value. This provision embedded in sub- section (4) is obviously based on the well established rule of evidence that mere confessional statement without there being any documentary proof shall not be used in evidence against the person who made such statement. The finding of the Tribunal was based on the above well settled principle." 23. It is also necessary to mention that the aforesaid interpretation of Section 132(4) of the Act must be read with the explanation to Section 132(4) of the Act which expressly provides that the scope of examination under Section 132(4) of the Act is not limited only to the books of accounts or other assets or material found during the search. However, in the context of Section 158BB(1) of the Act which expressly restricts the computation of undisclosed income to the evidence found during search, the statement recorded under Section IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 17 of 77 Page 17 of 77 132(4) of the Act can form a basis for a block assessment only if such statement relates to any incriminating evidence of undisclosed income unearthed during search and cannot be the sole basis for making a block assessment. 24. If the Revenue's contention that the block assessment can be framed only on the basis of a statement recorded under Section 132(4) is accepted, it would result in ignoring an important check on the power of the AO and would expose assessees to arbitrary assessments based only on the statements, which we are conscious are sometimes extracted by exerting undue influence or by coercion. Sometimes statements are recorded by officers in circumstances which can most charitably be described as oppressive and in most such cases, are subsequently retracted. Therefore, it is necessary to ensure that such statements, which are retracted subsequently, do not form the sole basis for computing undisclosed income of an assessee. 25. In Commissioner of Income Tax v. Naresh Kumar Aggarwal: (2014) 3699 ITR 171 (T & AP), a Division Bench of Telangana and Andhra Pradesh High Court held that a statement recorded under Section 132(4) of the Act which is retracted cannot constitute a basis for an order under Section 158BC of the Act. The relevant extract from the said judgement is quoted below: "17. The circumstances under which a statement is recorded from an assessee, in the course of search and seizure, are not difficult to imagine. He is virtually put under pressure and is denied of access to external advice or opportunity to think independently. A battalion of officers, who hardly feel any limits on their power, pounce upon the assessee, as though he is a hardcore criminal. The nature of steps, taken during the course of search are sometimes frightening. Locks are broken, seats of sofas are mercilessly cut and opened. Every possible item is forcibly dissected. Even the pillows are not spared and their acts are backed by the powers of an investigating officer under section 94 of the Code of Criminal Procedure by operation of sub-section (13) of section 132 of the Act. The objective may be genuine, and the exercise may be legal. However, the freedom of a citizen that transcends, even the Constitution cannot be treated as non- existent." "18. It is not without reason that Parliament insisted that the recording of statement must be in relation to the seized and recovered material, which is in the form of documents, cash, gold, etc. It is, obviously to know the source thereof, on the spot. Beyond that, it is not a limited licence, to an authority, to script the financial obituary of an assessee." "19. At the cost of repetition, we observe that if the statement made during the course of search remains the same, it can constitute the basis for proceeding further under the Act even if there IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 18 of 77 Page 18 of 77 is no other material. If, on the other hand, the statement is retracted, the Assessing Officer has to establish his own case. The statement that too, which is retracted from the assessee cannot constitute the basis for an order under section 158BC of the Act." 3.6 Thus, the Hon’ble High Court was of the view that the statement recorded u/s 132(4) would certainly constitutes information and if such information is relatable to the evidence or material found during search, the same could be used as evidence in any proceedings under the Act. However, such statements on a standalone basis without reference to any other material discovered during search and seizure operations would not empower the AO to make a block assessment merely because any admission was made by the Assessee during search operation. In the Instruction No. E.No.286/2/2003 dated 10.03.2003, the C.B.D.T. have issued the guidelines to the tax authorities that during the investigation they should focus to discover the material and evidence revealing the undisclosed income instead of merely recording the statements. The Hon’ble Delhi High Court in case of Pr. CIT vs. Anand Kumar Jain (HUF) & Ors. 432 ITR 384 has reiterated this view in para 8 to 10 as under: “8. Next, we find that, the assessment has been framed under section 153A, consequent to the search action. The scope and ambit of section 153A is well defined. This court, in CIT v. Kabul Chawla,[1] concerning the scope of assessment under Section 153A, has laid out and summarized the legal position after taking into account the earlier decisions of this court as well as the decisions of other High Courts and Tribunals. In the said case, it was held that the existence of incriminating material found during the course of the search is a sine qua non for making additions pursuant to a search and seizure operation. In the event no incriminating material is found during search, no addition could be made in respect of the assessments that had become final. Revenue's case is hinged on the statement of Mr. Jindal, which according to them is the incriminating material discovered during the search action. This statement certainly has the evidentiary value and relevance as contemplated under the explanation to section 132(4) of the Act. However, this statement cannot, on a standalone basis, without reference to any other material discovered during search and seizure operations, empower the AO to frame the block assessment. This court in Principal IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 19 of 77 Page 19 of 77 Commissioner of Income Tax, Delhi v. Best Infrastructure (India) P. Ltd.,[2] has inter-alia held that: "38. Fifthly, statements recorded under Section 132(4) of the Act do not by themselves constitute incriminating material as has been explained by this Court in Harjeev Aggarwal,,[3]" 9. In Commissioner of Income Tax v. Harjeev Aggarwal,4 this Court had held as follows: "23. In view of the settled legal position, the first and foremost issue to be addressed is whether a statement recorded under Section 132(4) of the Act would by itself be sufficient to assess the income, as disclosed by the Assessee in its statement, under the Provisions of Chapter XIV-B of the Act. 24. In our view, a plain reading of Section 15888(1) of the Act does not contemplate computing of undisclosed income solely on the basis of a statement recorded during the search. The words "evidence found as a result of search" would not take within its sweep statements recorded during search and seizure operations. However, the statements recorded would certainly constitute Information and if such information is relatable to the evidence or material found during search, the same could certainly be used in evidence in any proceedings under the Act as expressly mandated by virtue of the explanation to Section 132(4) of the Act. However, such statements on a standalone basis without reference to any other material discovered during search and seizure operations would not empower the AO to make a block assessment merely because any admission was made by the Assessee during search operation. 25. (...) However, as stated earlier, a statement on oath can only be recorded of a person who is found in possession of books of accounts, documents, assets, etc. Plainly, the intention of the Parliament is to permit such examination only where the books of accounts, documents and assets possessed by a person are relevant for the purposes of the investigation being undertaken. Now, if the provisions of Section 132(4) of the Act are read in the context of Section 158BB(1) read with Section 1588(b) of the Act, it is at once clear that a statement recorded under Section 132(4) of the Act can be used in evidence for making a block assessment only if the said statement is made in the context of other evidence or material discovered during the search. A statement of a person, which is not relatable to any incriminating document or material found during search and seizure operation cannot, by itself, trigger a block assessment. The undisclosed income of an Assessee has to be computed on the basis of evidence and material found during search. The statement recorded under Section 132(4) of the Act may also be used for making the assessment, but only to the extent it is relatable to the incriminating evidence/material unearthed or found during search. In IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 20 of 77 Page 20 of 77 other words, there must be a nexus between the statement recorded and the evidence/material found during search in order to for an assessment to be based on the statement recorded. 26. In CIT v. Sri Ramdas Motor Transport Ltd., (1999) 238 ITR 177 (AP), a Division Bench of Andhra Pradesh High Court, reading the provision of Section 132(4) of the Act in the context of discovering undisclosed income, explained that in cases where no unaccounted documents or incriminating material is found, the powers under Section 132(4) of the Act cannot be invoked. (...) 27. It is also necessary to mention that the aforesaid interpretation of Section 132(4) of the Act must be read with the explanation to Section 132(4) of the Act which expressly provides that the scope of examination under Section 132(4) of the Act is not limited only to the books of accounts or other assets or material found during the search. However, in the context of Section 158BB(1) of the Act which expressly restricts the computation of undisclosed income to the evidence found during search, the statement recorded under Section 132(4) of the Act can form a basis for a block assessment only if such statement relates to any incriminating evidence of undisclosed income unearthed during search and cannot be the sole basis for making a block assessment. 28. If the Revenue's contention that the block assessment can be framed only on the basis of a statement recorded under Section 132(4) is accepted, it would result in ignoring an important check on the power of the AO and would expose assessees to arbitrary assessments based only on the statements, which we are conscious are sometimes extracted by exerting undue influence or by coercion. Sometimes statements are recorded by officers in circumstances which can most charitably be described as oppressive and in most such cases, are subsequently retracted. Therefore, it is necessary to ensure that such statements, which are retracted subsequently, do not form the sole basis for computing undisclosed income of an assessee. 29. In Commissioner of Income Tax v. Naresh Kumar Aggarwal: (2014) 3699 ITR 171 (T&AP), a Division Bench of Telangana and Andhra Pradesh High Court held that a statement recorded under Section 132(4) of the Act which is retracted cannot constitute a basis for an order under Section 158BC of the Act. (...)" 10. Now, coming to the aspect viz the invocation of section 153A on the basis of the statement recorded in search action against a third person. We may note that the AO has used this statement on oath recorded in the course of search conducted in the case of a third party (l.e., search of Pradeep Kumar Jindal) for making the additions in the hands of the assessee. As per the mandate of Section 153C, if this statement was to be construed as an incriminating material belonging IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 21 of 77 Page 21 of 77 to or pertaining to a person other than person searched (as referred to in Section 153A), then the only legal recourse available to the department was to proceed in terms of Section 153C of the Act by handing over the same to the AO who has jurisdiction over such person. Here, the assessment has been framed under section 153A on the basis of alleged incriminating material (being the statement recorded under 132(4) of the Act). As noted above, the Assessee had no opportunity to cross-examine the said witness, but that apart, the mandatory procedure under section 153C has not been followed. On this count alone, we find no perversity in the view taken by the ITAT. Therefore, we do not find any substantial question of law that requires our consideration. 3.7 The Hon’ble High Court has observed that the statement recorded during the course of search conducted in case of third person cannot be used without handing over the said statement and giving opportunity of cross examination to the assesse. Even in this case the statement of Shri Naveen Jain recorded u/s 132(4) was subsequently retracted. The reasons were also explained for retraction of the statement that he was only a non- executive director of the assesse company and did not look after the day to day activities of the assesse company and therefore, were not well versed with all the transactions recorded in the books of account. It is pertinent to note that when there was no incriminating material found or seized during the course of the search and seizure action and statement of Shri Naveen Jain also does not relate to discovery of any new evidence or material revealing any undisclosed income not already recorded in the books of account then the possibility on extracting the statement at the time of search proceedings by exerting undue influence cannot be ruled out and therefore, the retraction made subsequently cannot be said to be without basis. Once it is found that the additions were made by the AO based on the transactions recorded in the books of account and not on the basis of any incriminating material found or seized during the course of search proceedings then the addition so made in the proceedings u/s 153A for assessment years which are not abated due to search and seizure action is not sustainable as held in a series of the decisions of IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 22 of 77 Page 22 of 77 Hon’ble High Courts including the decision of Hon’ble Delhi High Court in case of CIT vs. Kabul Chawla (supra) in para 37 & 38 as under: “37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 23 of 77 Page 23 of 77 in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Conclusion 38. The present appeals concern AYs, 2002-03, 2005-06 and 2006- 07.On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. 3.8 This view has been reiterated by the subsequent judgment of Hon’ble Delhi High Court as well as other High Courts including the Hon’ble jurisdictional High Court dated 02.02.2023 in case of Pr. CIT vs. M/s Great Galleon Ventures ltd. Income Tax Appeal No.222 of 2022 wherein it has been held as under: This appeal u/S 260A of the Income Tax Act 1961(for short, the Act of 1961 hereinafter) is directed against the order dated 23.12.2021 passed by the Income Tax Appellate Tribunal, Bench Indore in ITA No. 67/Ind/2021(Revenue’s Appeal) for the Assessment Year 2015- 16. The substantial question of law which has been raised by the appellant in this appeal is “whether in absence of any incriminating documents seized during the course of search, the Assessing Officer is justified in making the addition in non-abated assessment orders u/S 153-A r/W Sec 143(3) of the Act of 1961.” The assessment is u/S 153A r/W Sec 143(3) of the Act of 1961 for the assessment year 2015-16. Learned Tribunal was in seisin with the appellant and cross appeals arising from respective orders passed by the Commissioner Income Tax(Appeals). The appeal before the CIT(Appeals) was directed against the addition of income by the Assessing Officer taking production on presumptive basis and working out estimated income. ADVERTISEMENT The factum of addition not being based on any incriminating material found during the search is not disputed. Exactly identical substantial question of law came up for consideration before the Division Bench of this Court at Gwalior Bench in ITA No. 21/2019, ITA No. 31/2019 and ITA No. 32/2019(Principal Commissioner of Income Tax Vs. Gahoi Foods Private Ltd). Vide order dated 12.07.2019, these appeals were disposed of holding that in the given facts of the present case, as no IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 24 of 77 Page 24 of 77 incriminating documents during the course of search were found, the order in appeal cannot be said to have suffered any illegality as would give rise to proposed substantial question of law. Consequently, the appeals were dismissed. In view of the fact that the aforesaid question of law was dealt by the Division Bench of this Court in the aforesaid cases, no different view can be taken in this appeal. Accordingly, finding no substantial question of law, this appeal fails and is hereby dismissed. 3.9 The Hon’ble jurisdictional High Court in case of Pr. CIT vs. Gahoi & Oil Mills and Ors. 272 Taxman 522 (MP) has reiterated its view in para 7 to 10 as under: 7. In view of the facts discussed above in clause No. (i) to (ix) of para No.6, I am of the considered opinion that the addition in respect of unaccounted production/sale and profit on such production/sale has been made by the A.O in a mechanical manner without any basis. The income has been estimated merely on the basis of imagination, presumption and suspicion. The addition based on imagination, presumption and suspicion. Cannot be sustained. I am of the considered opinion that THE HIGH COURT OF MADHYA PRADESH I.T.A.No.21/2019 (Pr. Commissioner of Income Tax Vs. Gahoi Dal & Oil Mills) I.T.A.No.31/2019 (Pr. Commissioner of Income Tax Vs. Gahoi Foods Pvt. Ltd.) I.T.A.No.32/2019 (Pr. Commissioner of Income Tax Vs. Gahoi Foods Pvt. Ltd.) the addition made by A.O is uncalled for any unwarranted, hence the addition made by the A.O is hereby deleted." 7. Section 153 A (1) of the Act stipulates : "(1) Assessment in case of search or requisition.-- Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall - (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 25 of 77 Page 25 of 77 (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment THE HIGH COURT OF MADHYA PRADESH I.T.A.No.21/2019 (Pr. Commissioner of Income Tax Vs. Gahoi Dal & Oil Mills) I.T.A.No.31/2019 (Pr. Commissioner of Income Tax Vs. Gahoi Foods Pvt. Ltd.) I.T.A.No.32/2019 (Pr. Commissioner of Income Tax Vs. Gahoi Foods Pvt. Ltd.) year falling within such six assessment years. Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate. Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso), specify the class or classes of cases in which the assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made. Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless - (a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years ; (b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years ; and (c) the search under section 132 is initiated or requisition under section 132A is made on or after the 1 st day of April, 2017." THE HIGH COURT OF MADHYA PRADESH I.T.A.No.21/2019 (Pr. Commissioner of Income Tax Vs. Gahoi Dal & Oil Mills) I.T.A.No.31/2019 (Pr. Commissioner of Income Tax Vs. Gahoi Foods Pvt. Ltd.) I.T.A.No.32/2019 (Pr. Commissioner of Income Tax Vs. Gahoi Foods Pvt. Ltd.) IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 26 of 77 Page 26 of 77 8. Dwelling on the scope of Sub-section (1) of Section 153 A of the Act, a Division Bench of Delhi High Court in CIT Vs. Kabul Chawla; (2016) 380 ITR 573 observed: "37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: (i) Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. (ii) Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. (iii) The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs 'in which both the disclosed and the undisclosed income would be brought to tax'. (iv) Although Section 153 A does not say THE HIGH COURT OF MADHYA PRADESH I.T.A.No.21/2019 (Pr. Commissioner of Income Tax Vs. Gahoi Dal & Oil Mills) I.T.A.No.31/2019 (Pr. Commissioner of Income Tax Vs. Gahoi Foods Pvt. Ltd.) I.T.A.No.32/2019 (Pr. Commissioner of Income Tax Vs. Gahoi Foods Pvt. Ltd.) that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment 'can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material.' (v) In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. (vi) Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 27 of 77 Page 27 of 77 separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. (vii) Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the THE HIGH COURT OF MADHYA PRADESH I.T.A.No.21/2019 (Pr. Commissioner of Income Tax Vs. Gahoi Dal & Oil Mills) I.T.A.No.31/2019 (Pr. Commissioner of Income Tax Vs. Gahoi Foods Pvt. Ltd.) I.T.A.No.32/2019 (Pr. Commissioner of Income Tax Vs. Gahoi Foods Pvt. Ltd.) course of original assessment." 9. We are in respectful agreement with the view expressed. 10. In the given facts of present case as no incriminating documents during course of search are found, the order in appeal cannot be said to have suffered the illegality as would give rise to the proposed substantial question of law. 3.10. The issue is now finally settled by the Hon’ble Supreme Court in case of Pr. CIT vs. Abhisar Buildwell Pvt. Ltd. (supra) as under: 9. While considering the issue involved, one has to consider the object and purpose of insertion of Section 153A in the Act, 1961 and when there shall be a block assessment under Section 153A of the Act, 1961. 9.1 That prior to insertion of Section 153A in the statute, the relevant provision for block assessment was under Section 158BA of the Act, 1961. The erstwhile scheme of block assessment under Section 158BA envisaged assessment of ‘undisclosed income’ for two reasons, firstly that there were two parallel assessments envisaged under the erstwhile regime, i.e., (i) block assessment under section 158BA to assess the ‘undisclosed income’ and (ii) regular assessment in accordance with the provisions of the Act to make assessment qua income other than undisclosed income. Secondly, that the ‘undisclosed income’ was chargeable to tax at a special rate of 60% under section 113 whereas income other than ‘undisclosed income’ was required to be assessed under regular assessment procedure and was taxable at normal rate. Therefore, section 153A came to be inserted and brought on the statute. Under Section 153A regime, the intention of the legislation was to do away with the scheme of two parallel assessments and tax the ‘undisclosed’ income too at the normal rate of tax as against any special rate. Thus, after introduction of Section 153A and in case of search, there shall be IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 28 of 77 Page 28 of 77 block assessment for six years. Search assessments/block assessments under Section 153A are triggered by conducting of a valid search under Section 132 of the Act, 1961. The very purpose of search, which is a prerequisite/trigger for invoking the provisions of sections 153A/153C is detection of undisclosed income by undertaking extraordinary power of search and seizure, i.e., the income which cannot be detected in ordinary course of regular assessment. Thus, the foundation for making search assessments under Sections 153A/153C can be said to be the existence of incriminating material showing undisclosed income detected as a result of search. 10. On a plain reading of Section 153A of the Act, 1961, it is evident that once search or requisition is made, a mandate is cast upon the AO to issue notice under Section 153 of the Act to the person, requiring him to furnish the return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and assess or reassess the same. Section 153A of the Act reads as under: “153A. Assessment in case of search or requisition - (1) Notwithstanding anything contained in Section 139, Section 147, Section 148, Section 149, Section 151 and Section 153, in the case of a person where a search is initiated under Section 132 or books of account, other documents or any assets are requisitioned under Section 132-A after the 31st day of May, 2003, the Assessing Officer shall— (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under Section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search under Section 132 or making of requisition under Section 132-A, as the case may be, shall abate. (2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 29 of 77 Page 29 of 77 (1) or Section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub- section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside Explanation.—For the removal of doubts, it is hereby declared that,— (i) save as otherwise provided in this section, Section 153- B and Section 153-C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year.” 11. As per the provisions of Section 153A, in case of a search under Section 132 or requisition under Section 132A, the AO gets the jurisdiction to assess or reassess the ‘total income’ in respect of each assessment year falling within six assessment years. However, it is required to be noted that as per the second proviso to Section 153A, the assessment or re-assessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under Section 132 or making of requisition under Section 132A, as the case may be, shall abate. As per sub-section (2) of Section 153A, if any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to subsection (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner. Therefore, the intention of the legislation seems to be that in case of search only the pending assessment/reassessment proceedings shall abate and the AO would assume the jurisdiction to assess or reassess the ‘total income’ for the entire six years period/block assessment period. The intention does not seem to be to re-open the completed/unabated assessments, unless any incriminating material is found with respect to concerned assessment year falling within last six years preceding the search. Therefore, on true interpretation of Section 153A of the Act, 1961, in case of a search under Section 132 or requisition under Section 132A and during the search any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reassess the ‘total income’ taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 30 of 77 Page 30 of 77 to fulfilment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy. 12. If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under Section 153A of the Act is linked with the search and requisition under Sections 132 and 132A of the Act. The object of Section 153A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material, the AO would assume the jurisdiction to assess or reassess the total income for the entire six years block assessment period even in case of completed/unabated assessment. As per the second proviso to Section 153A, only pending assessment/reassessment shall stand abated and the AO would assume the jurisdiction with respect to such abated assessments. It does not provide that all completed/unabated assessments shall abate. If the submission on behalf of the Revenue is accepted, in that case, second proviso to section 153A and subsection (2) of Section 153A would be redundant and/or rewriting the said provisions, which is not permissible under the law. 13. For the reasons stated hereinabove, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material. 14. In view of the above and for the reasons stated above, it is concluded as under: i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ii) all pending assessments/reassessments shall stand abated; iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the ‘total income’ taking into IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 31 of 77 Page 31 of 77 consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and iv) 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. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs. 3.11 Thus the Hon’ble Supreme Court has upheld the view taken by the Hon’ble Delhi High Court in case of CIT vs. Kabul Chawla (Supra) as well as Hon’ble Jurisdictional High Court in case of Pr. CIT vs. Gahoi & Oil Mills and Ors. and in the case of Pr. CIT vs. M/s Great Galleon Ventures ltd (supra). The Ld. CIT(A) has decided this issue in para 3.2.2 as under: “3.2.2 I have considered the facts of the case, plea raised by the appellant and findings of the ld AO. On perusal of the assessment order, it has been found that the AO has not made reference of any incriminating document except the ledger account furnished by Shri Naveen Jain during statement recorded on oath. The impunged ledger account furnished by Shri Naveen Jain has also been reproduced by the ld AO on page no 10 of the assessment order. The transactions mentioned in the said ledger accounts of M/s East West Finvest India Limited, M/s Purvi Finvest Ltd, M/s Jay Jyoti India Pvt. Ltd., M/s Jayant Security and Finance Ltd. (Mumbai & Indore) are fully recorded in books of the appellant. These are the part of books of account of the appellant. Such document cannot be termed as incriminating document. Thus, the statement of Shri Navin Jain recorded u/s.132(4) of the Act cannot be treated as recorded on the basis of incriminating document seized as a result of search and seizure proceedings. Such statement forming basis of addition that too in absence of supporting incriminating document, cannot be constitute information found as a result of search and seizure proceedings. There are various judicial pronouncements wherein it has been held that no addition can be made in non-abated assessments in absence of incriminating material. The two moot IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 32 of 77 Page 32 of 77 question which arises here are that (i) whether the year are abated or non-abated assessment years and (ii) whether the ld AO can made addition in search assessment proceedings without having any incriminating material on record and that too in non-abated assessment years. In the instant case, search and seizure operations u/s 132 of the Act was carried out on 12.07.2016 and return of income for AY 2011-12 was filed on 23.09.2011 and time limit for issuing notice u/s 143(2) expired on 30.09.2012, return of income for AY 2012-13 was filed on 25.09.2012 and time limit for issuing notice u/s 143(2) expired on 30.09.2013, return of income for AY 2013-14 was filed on 29.09.2013 and time limit for issuing notice u/s 143(2) expired on 30.09.2014, return of income for AY 2014-15 was filed on 30.11.2014 and time limit for issuing notice u/s 143(2) expired on 30.09.2015, return of income for AY 2015-16 was filed on 30.09.2015 and time limit for issuing notice u/s 143(2) expired on 30.09.2016. Therefore, no assessment or reassessment proceedings were pending as on date of search and therefore, AYs 2011-12 to 2015-16 are non- abated assessment years or completed assessment years. However, the (ii) issue has already been dealt with in depth by Hon'ble Apex court, various High courts and tribunal and it is now settled legal pronouncement that no addition can be made in absence of any incriminating material in non-abated assessment year. This proposition find support from the decision of Hon'ble Apex court in the case of Meeta Gutgutia (2018) 96 taxmann.com 468 (SC) dt.2-7-18 affirming the decision of Hon’ble Delhi High Court in the same case reported in 82 taxmann.com 287. Hon’ble Delhi High Court alongwith various judgments followed the legal view taken by the Hon’ble Court in the case of Kabul Chawla (2016) 380 ITR 573 (Del HC). Hon'ble ITAT Indore in the case of Omprakash Gupta (2019) IT(SS)A Nos.277 to 281/Ind/2017 (Indore-Trib) dt.28-2-19, after following judgments in the case of Meeta Gututia (supra), Kabul Chawala (supra) and many others judgments held that: 13. In the case of Commissioner of Income Tax (Central)-3 Kabul Chawla (2015) 61 Taxman.com 412 (Del.), the Hon'ble Delhi High Court has considered the scope of section 132 of the Act and 153A(1) observed as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYS immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AY's will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 33 of 77 Page 33 of 77 the search takes place. The AO has the power to assess and reassess the total income of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. 14. From the above decision, it is very clear that in respect of concluded assessments additions cannot made without incriminating material. 15. The Hon'ble Delhi High Court in the case of PCIT Vs. Meeta Gutgutia 395 ITR 296 (Delhi) has held that it was only if during the course of the search u/s 132 of the Act incriminating material justifying the reopening of the assessment years for 6 previous years was found that invocation of section 153A of the Act qua each of the assessment year would justify. IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 34 of 77 Page 34 of 77 16. In the case of Principal CIT Vs. Soumya Constructions 387 ITR 529 (Guj.) the Hon'ble Gujarat High Court has observed that the addition was based on statement of the third person and not based on any incriminating material found during the course of search, therefore the addition deleted by the Tribunal was upheld. 17. In the case of PCIT Vs. Lata Jain 384 ITR 543 (Del) (supra), the Hon'ble Delhi High Court has held that the Tribunal was right in holding that there had to be incriminating material recovered during the course of search qua the assessee in each year for the purpose of framing an assessment u/s 153A of the Act. 18. From the above all the decisions, it is very clear that the A.O. to make an addition u/s 153A of the Act and there must be incriminating material available to the A.O. during the course of the search. incriminating material, the Unless there is an concluded/non abated assessments cannot be disturbed again u/s 153A of the Act. ............ 22. In the interest of justice, the decision of the Hon'ble Supreme Court in the case of Vegetable Products (supra) has to be followed. Therefore, we respectively following the decision of Hon'ble Delhi High Court in the case of Kabul Chawla (supra), Hon'ble Bombay High Court in the case Corporation (supra) of Continental Warehousing and also Hon'ble Gujarat High Court in the case of PCIT Vs. Meeta Gutgutia (supra), we hold that no addition can be made in respect of concluded assessments u/s 153A of the Act unless there is any incriminating material found during the course of search. We would like to make it clear that where the assessment is completed u/s 143(1) or 143(3) of the Act unless A.O. has a time to issue notice u/s 143(2) of the Act, A.O. cannot make an addition u/s 153A of the Act, unless there is an incriminating material found during the course of the search. 23. The coordinate bench of the Tribunal in the case of Sainath Colonisers Vs. ACIT (Central)-II Bhopal in IT (SS)A Nos.289 to 291/Ind/2017 dated 28.2.2019 has considered the similar issue and has held that if there is no incriminating material found during the course of search and the time limit for issue of notice u/s 143(2) of the Act expires, no addition can be made u/s 153A of the Act. For the sake of convenience relevant portion of the order is extracted hereunder: “8. We observe that the assessee has filed regular return of income u/s 139 of the Act for Assessment Year 2008-09 to 2010-11 on 30.9.08, 31.3.2010 and 12.10.2010 after IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 35 of 77 Page 35 of 77 claiming deduction u/s 80IB(10) at Rs.8,92,452/- Rs.2,66,948/- and Rs.2,44,417/ respectively. The time limit for issuance of notices u/s 143(2) of the Act stood expired in relation to the assessment year 2008-09 to 2010-11 much before the date of conducting the search i.e. 29.1.2014 and therefore these three assessment years falls under the category of unabated/non abated assessments. Now in the given facts Ld. Counsel for the assessee has relied few judgments and Ld. Departmental Representative has relied to few judgments in its favour. However, the Hon'ble Apex Court in the case of CIT V/s Vegetable Products Ltd 88 ITR 192 has "held that if two reasonable construction of a taxing provisions are possible, then that construction which favours the assessee must be adopted". In the light of above judgment of Hon'ble Apex Court we have gone through the judgments referred and relied by both the parties and are inclined to follow the view taken by Hon ble courts on the issue in question before us favouring the assessee. 9. The Hon'ble High Court of Gujarat in the case of PCIT Vs. Desai Construction (supra) confirmed the view taken by the Tribunal upholding the contention of the assessee that as no incriminating material was found during the course of search which could have enabled the Assessing Officer to re-examine its claim for deduction u/s 801B which was part of the assessment prior to the search and such assessment unabated. Bombay in the case of Continental Hon'ble High Court of Warehousing Corporation and All Cargo Global Logistics Ltd (Supra) confirmed the view taken by the Special Bench of IT.A.T. Mumbai Bench decided in favour of assessee dismissing the revenue's appeal holding that there was no incriminating material found during the course of search, the Tribunal was right in holding the power conferred u/s 153A being not expected to be exercised routinely, should be exercised if the search revealed any incriminating material. If that was not found then in relation to the second phase of three years, there was no warrant for making an order within the meaning of this provision". 10. Similar view was also taken by the Hon'ble High Court of Delhi in the case of Kabul Chawla (2015) 61 taxmann 412. 11. We therefore in the given facts and circumstances of the case and respectfully following the judgments referred and relied by the Ld. Counsel for the assessee are of the considered view that no addition/disallowance was called for Assessment Year 2008-09 to 2010-11 as no incriminating material was found during the course of search at the premises of the assessee as the time limit of IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 36 of 77 Page 36 of 77 issuance of notice u/s 143(2) of the Act stood expired much before the date of conducting search u/s 132 of the Act. Accordingly all the three appeals of the assessee are allowed." 24. In so far as the arguments of the Ld. D.R. in respect of following the ratio of the Hon'ble Supreme Court in the case of Vegetable Products (supra), the Ld. D.R. by relying on the decision in the case of CCV Dilip Kumar (supra) has submitted that the ratio laid down in the case of Vegetable Products (supra) cannot be applied. We find that in the case of CCV Dilip Kumar (supra) has considered the exemption provisions and held that exemption provisions has to be considered strictly and in a case of ambiguity view which favours the revenue must be adopted. Therefore, the above decision relied by the Ld. D.R. has no application to the ratio laid down by the Hon'ble Supreme Court in the case of Vegetable Products (supra). Therefore, argument of the Ld. D.R. is rejected. 25. In view of the above, the order passed by Ld. CIT(A) is reversed and the appeals filed by the assessee are allowed. In the light of above judicial pronouncement of Hon’ble ITAT, the ld AO was not justified in making additions in non-abated assessment year i.e. AYs 2011-12 to 2015-16 and that too in absence of any incriminating material. Further, in the assessment order the ld AO has not correlated the additions made with the incriminating seized material. Therefore, the additions made in the AYs 2011-12 to 2015- 16 on various accounts are not sustainable. Therefore, appeal on these grounds is allowed. 3.12 The Ld. CIT(A) has recorded the fact that the AO has not made reference to any incriminating material and documents except ledger account furnished by Shri Naveen Jain during the statement recorded u/s 132(4). Further the assessment for A.Ys.2012-13 & 2014-15 were not pending as on the date of search and therefore, the assessment for these two assessment years were not got abated due to the search and seizure action carried out on 12 th July 2016. The Ld. CIT(A) has referred and relied upon various judgments including the judgment of Hon’ble Delhi High Court in case of CIT vs. Kabul Chawla (Supra) and decision of this tribunal in case of Omprakash Gupta IT(SS)A Nos.277 to 281/Ind/2017 dated 28.02.2019. The view taken by the Hon’ble Delhi High Court in case IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 37 of 77 Page 37 of 77 of Kabul Chawla (supra) as well as this Tribunal in case of Omprakash Gupta(supra) has not been confirmed by the Hon’ble Supreme Court in case of Pr. CIT vs. Abhisar Buildwell Pvt. Ltd. (supra), therefore, we do not find any error or illegality in the impugned order of the Ld. CIT(A) qua this issue. 4. Ground no. 5 regarding the merits of the addition made by the AO on account of unexplained unsecure loan u/s 68 of the Act. The assessing officer has given the finding in para 8.9 to 8.10 as under: “8.9 The contentions of the assessee are perused. From the detailed discussion in the preceding paragraphs it has been vehemently brought out that these companies from which unsecured loan entries are seen in the books of the assessee are controlled by the entry provider Sharad Darak. These companies have been proven beyond doubt to be bogus/shell companies with no business activity/staff or even books of accounts. The assessee has only managed such entries in the guise of unsecured loans. These companies also find place in the bogus LTCG scam report sent by the department to SEBI. Hence the question of providing further evidences to the assessee in this matter does not arise. The contention that no accommodation entries as alleged have been taken in the books of Shri Krishna Devcon Ltd. as these are bank transactions and subjected to TDS deduction is also not acceptable. The transactions being done through banking channels and reflected in books of accounts of transacting parties does not legitimize the source of unsecured loans Le. shell companies. Two of the Sharad Darak Controlled companies namely Jayant Securities & Finance Ltd. and East West Finvest India Ltd. also feature in the Investigation Report of the Directorate of Income Tax (Inv.). Kolkata as bogus loss booking paper companies (Exit providers) in the racket of providing bogus exempt LTCG u/s 10(38). 8.10 The disparities in figures of Interest expenses etc pointed out by the assessee will be ironed out since the actual amounts of loans and interest from/to such entities as reflected in the books of accounts will be considered for each of the assessment years. 8.11. The unsecured loan of Rs.1,99,95,000/- taken in the books of A & A Shelters (partnership firm of the assessee) in the name of Purvi Finvest Ltd, during FY 2015-16 (AY 2016-17), has also been disclosed as unaccounted income of Shri Krishna Devcon Lld. (assessee) by Shri Naveen Jain (Director) in the above statement [as can be seen Ir the Annexure to the statement u/s 132(4)]. The ultimate source of this loan is thus the unaccounted Income of the assessee itself irrespective IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 38 of 77 Page 38 of 77 of the entity In whose books such an entry is reflected. However this sum will be treated as unexplained investment u/s 69 In the hands of the assessee instead of unexplained cash credit u/s 68.” 4.1 Thus, it is clear from the finding of the AO that apart from show cause notice issued to the assesse dated 31.10.2018 no other material or evidence is referred in the above finding of the AO. The AO has assumed that the entries of unsecured loans in the books of the assesse as well as in the books of lender companies are bogus accommodation entries based on some personal knowledge of the AO of investigation report of DIT (Investigation, Kolkata) as well as survey proceedings in respect of third party which are not brought on record by the AO. The AO then referred various case laws on the issue of addition made u/s 68 of the Act and also relied upon the statement of Shri Naveen Jain director of the assesse company recorded u/s 132(4) of the Act in support of his decision to make the addition on account of unsecured loans. The Assessing officer has not even considered and examined the documentary evidence filed by the assesse consisting of financial statements of lender company, confirmation of the lender companies, return of income filed by the lender companies and then the assessment orders framed u/s 143(3) in some of the lender companies. The assessing officer has even not pointed out any flaw or defect or abnormality in the financial statements of the lender companies produced by the assesse. The statement of Shri Naveen Jain recorded u/s 132(4) does not disclose any new fact or leading to any material not already recorded in the books of account and therefore, the addition cannot be made solely on the basis of the statement which was subsequently retracted by giving reasons therein. Though the AO has made wague reference to the investigation report DIT, Kolkata as well as survey conducted in the other cases however, except the personal knowledge of the AO, there is nothing on record as what actually the outcome of this investigation referred by the AO. Therefore, in absence of any record and evidence substantiating the said knowledge or assumption of the AO cannot be basis of the addition. Further the assesse produced IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 39 of 77 Page 39 of 77 the record to show that part of the unsecured loan was already repaid before the search and seizure action carried in the case of the assesse and therefore, the said transactions of repayment through banking channel cannot be doubted as bogus transaction when it was duly recorded in the books of account prior to the date of search. The assesse has produced the ledger account which is otherwise part of the regular books of account of the assessee duly audited wherein all the transactions of loan received from lender companies are duly recorded. The assessee has paid interest @ 9% and also deducted TDS @ 10%. The AO has not disputed the TDS on payment of interest on these loans. The repayment of loan of Rs.1,00,00,000/- on 26.03.2014 is also reflected in the ledger account and thereafter apart from the payment of interest after deducting TDS the assesse has also repaid a sum of Rs.4,07,37,377/- on 6 th May 2015. Therefore, this amount was repaid prior to the date of search and the AO has completely ignored and overlooked the documentary evidences filed by the assesse. The assesse has also filed the ledger account in the books of M/s Jayant Securities and Finance Ltd. as confirmation of loan transactions from the said company. The ledger account duly reflected the transactions of loan as well as interest paid by the assesse after deduction of TDS on these transactions through banking channel. Even the bank account of the M/s Jayant Securities and Finance ltd. was also produced by the assesse to show that the said company was having sufficient funds to lend the amounts to the assessee and there was no cash deposit in the bank account of the lender company. The assesse officer has not doubted the identity of the lender company as all are filing regular return of income and also subjected to assessments. Even otherwise the assessee filed the acknowledgment of return of income of the lender company. We further note that the assessee has filed the return of income not for one year but for all the assessment years of lender company. The acknowledgments of return of income of the lender company have been filed and available in the paper book at page no.486 to 499 (Jayant Securities & finance ltd. ) and page no.564 to 581 (Jay Jyoti India Pvt. Ltd.) The Annual report as well as tax audit report of the lender companies were also produced before IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 40 of 77 Page 40 of 77 the AO. The assessee also produced the certificate of registration as non- banking financial institutions of the lender companies. i. Similarly in case of M/s Rajwadi (Rajyeshwar) Retail Traders Systems Pvt. Ltd. the assesse has produced copy of ledger account in the books of the lender company, copy of the ledger account in the books of the assessee, copy of bank statement of the lender company, copy of acknowledgement of return along with computation of income, copy of annual report. All these documents are available at page no.648 to 679 of the paper book. The assessee officer has not taken any step to verify the correctness of the documentary evidences filed by the assessee but proceeded on the assumption that these transactions are accommodation entries. ii. In case of M/s East West Finvest India Ltd. the assessee has produced a copy of ledger account in the books of the lender company, copy of bank statement of the assessee for relevant year, copy of certificate of registration of the lender company as NBFC, copy of annual report and acknowledgment of return of income with computation of income of the lender company placed at page no.680 to 717 of paper book. iii. In case of M/s Zyka Merchandise Pvt. Ltd. the assesse has produced a copy of ledger account in the books of the lender company, copy of confirmation of account, copy of bank statement, copy of ledger account in the books of the assesse company, copy of affidavit of Shri Sharad Darak, copy of acknowledgment of return and copy of annual report for A.Y.2012- 13 placed at page no.718 to 735 of the paper book. iv. In case of M/s Purvi Finvest Ltd. the assessee has produced copy of ledger account in the books of the M/s Purvi Finvest Ltd., copy of bank statement, copy of acknowledgment of return along with computation of income for A.Y.2014-15 and 2016-17, copy of annual report and copy of certificate of registration as NBFC issued by RBI placed at page no.736 to 806 of the paper book. IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 41 of 77 Page 41 of 77 v. In case of M/s. A and A Shelters the assesse has produced copy of ledger account of M/s Purvi Finvest Ltd. in the books of M/s A and A Shelters, copy of bank account statement placed at page no.807 to 810 P.B., copy of affidavit of Sharad Darak, copy of ITR, Computation of income audit report, audited financial statements with tax audit report for A.Y.2013-14 of M/s. East West Finvest India ltd. placed at page no.807 to 829 of the paper book. 4.2 Thus the assesse has produced voluminous record and documentary evidence to prove that transactions are genuine and lender companies are active existing entities subjected to audit and tax audit and regularly filing the return of income, all these records are otherwise available with the department as these lender companies are regularly filing the return of income and also subjected to scrutiny assessment in some of the years. It is pertinent to note that the issue of accommodation entries from M/s Purvi Finvest India ltd. and M/s East West Finvest Ltd. has been considered by this Tribunal in case ITO vs. K.K. Patel Finance Ltd. vide order date 28 th April 2023 in ITANo. 988/Ind/2019 as under: “9. We have considered the submissions of Ld. DR and perused the orders of lower-authorities. Firstly, we observe from Para No. 9.4.c / Page No. 39 of the order of Ld. CIT(A) that the assessee has claimed to have filed following documents to Ld. AO during assessment- proceeding: i. Share Application Forms ii. Copy of Bank accounts iii. Affidavit of Shareholder company iv. Form No. 32 filed by share Applicant Co. v. Certificate of Incorporation of Business vi. ITR acknowledgments for A.Y. 2009-10 vil. Relevant portion of audited Balance Sheet viii. Ledger account of shareholder in the books of Appellant Co. ix. IT assessment order of the shareholder companies u/s 143(3) for AY 2009-10 We find that the revenue has not raised any ground to negate or contradict this fact claimed by assessee and also accepted by Ld. IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 42 of 77 Page 42 of 77 CIT(A). On a careful reading of assessment-order, we find that the AO has also talked at least about these documents having been filed by assessee, namely (i) affidavits of the directors of investor-companies; (ii) bank statements of the investor-companies; (iii) share application forms, etc. In fact, at one place the AO has made a heighted remark also “The type of documents furnished by assessee are self-serving and can be made by anyone”. This shows that the assessee has filed document to AO. Being so, we do not find any merit in the contention of Ld. DR that the assessee has not filed any evidence to AO. 10. Having said so, we now go to the vital findings made by Ld. CIT(A) wherein he has dealt with the findings of AO as under: (i) Ld. CIT(A) has observed that in the course of assessment- proceeding, the assessee produced books of account, filed copies of audited accounts, filed full details of the investors who had subscribed to the share capital. The AO has not raised any dispute or question on the receipt of money from those investors. (Para 9.7 of CIT(A)’s order). (ii) Ld. CIT(A) observed that the AO has not disputed the fact that the money is received from investor-companies but has raised question as to whether it is a loan or not. (Para 9.8 of CIT(A)’s order). (iii) Ld. CIT(A) observed that the share applicants are registered under the Companies Act, 1956 and are in the records of the Registrar of the Companies functioning under Ministry of Corporate Affairs, Government of India and they are having Permanent Account Numbers along with the acknowledgment of submissions of their return of income and furnished audited balance sheet and financial statements which proves identity. The share applicants have maintained bank accounts and copies of their bank accounts from which they made payments to the assessee for subscribing to the shares issued to them have been filed. The share applicants have not denied to have subscribed to the shares of the assessee and that such transactions were duly recorded in their books of accounts as well as their audited balance sheet. These facts clearly prove the genuineness of the transactions. It is further observed that the sources of the funds of the share applicants are explained as well as their sources were also explained. The facts furnished on record by the assessee-company clearly proved their sources of funds, and their capacity for making such payments and accordingly, the criteria of their creditworthiness is proved. The AO has not found any defect and/or deficiency in the sources of fund explained by the share applicants. It is also observed that the return of allotment as well as the annual return of the three share applicant companies for the A.Y. 2009- IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 43 of 77 Page 43 of 77 10 filed by the Appellant with the Registrar of the Companies, Ministry of Corporate Affairs, further categorically proves the fact of allotment of shares. The assessee has filed the Assessment order of all the three share applicant companies for the A.Y. 2009-10 completed u/s 143(3) of the Act and there is no addition in regard to share application. (Para 9.9 of CIT(A)’s order). (iv) Ld. CIT(A) has finally observed that the burden which lay on the assessee u/s 68 has been duly discharged by it and nothing further remains to be proved by it on the issue. There is no evidence on record to show that the identities of the share applicants are not proved and / or that the introduction of share capitals are not proved and /or that the introduction of share capital by them was not genuine and/or the source of investment was not fully explained to the satisfaction of the AO. (Para 9.10 of CIT(A)’s order). 11. Clearly, therefore, it is discernible that the Ld. CIT(A) has dealt with each and every aspect of the issue and concluded that the assessee has discharged the burden cast upon it u/s 68. The Ld. DR could not show us any reason to interfere with these findings. Therefore, we are inclined to hold that in such a situation, the Ld. CIT(A) has rightly reversed the action of AO and deleted the addition. We subscribe to his view and uphold the deletion. The revenue fails in this appeal.” 4.3 That was a case of share application money received by the assessee from these companies where the Ld. CIT(A) deleted the addition made by the AO u/s 68 of the Act. On further appeal this Tribunal after considering the documentary evidences and the finding of the Ld. CIT(A) has reached to the conclusion that the Ld. CIT(A) has rightly deleted the addition based on the documentary evidences. Similarly in case of ACIT vs. Pramod Kumar Sethi in ITANo.382-383/Ind/2014 dated 06.11.2018 has considered the transactions between the assesse and inter alia M/s. Purvi Finvest Pvt. Ltd. and M/s East West Finvest India Ltd. in para 16 & 17 as under: “16. Examining the fact of instant appeal for Assessment Year 2006- 07 and 2007-08 in the light of the above judgment of the Co-ordinate Bench in the case of ACIT V/S Shri Girish Kumar Sharda (Supra), we find that the same set of companies i.e. M/s. K.K. Patel Finance Limited, Indore, M/s. East West Finvest India Limited, Indore, M/s. IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 44 of 77 Page 44 of 77 Purvi Finvest Ltd, Indore and M/s. Trimurti Finvest Ltd, Indore are in question before the Tribunal in the instant two appeals before us. It has been clearly held by the Hon'ble Tribunal that all the alleged four companies are genuine and unsecured loans from these companies cannot be held to be unexplained cash credit u/s 68 of the Act. Even the linking of the assessee's case to the Lunkard Group was there in the case of ACIT V/S Girish Kumar Sharda (supra) and detailed finding has been given by the Tribunal in its order dated 30.1.2014. It is also evident from the perusal of the record that all the four companies are regularly assessed to tax and their assessment u/s 143(3) of the Act have been framed for Assessment Year 2006-07 and copies of the same are placed at page 66-73 of the paper book. They carry regular business activities and have sufficient funds for giving on credit towards interest. Identity of four companies are well established. Genuineness is duly proved by the transactions which are made through account payee cheque. All necessary details including bank statement/ financial statements, confirmation of account, PAN detail have been filed with these four companies and are placed on record at all proceedings are sufficient to prove the creditworthiness. The alleged unsecured loan of Rs.1,02,00,000/- and Rs.1,25,00,000/- were accepted during the year and were repaid also during the year which supports the contention of the assessee that the alleged loans were taken for business needs and were repaid back when the funds were available. 17. We therefore in the given facts and circumstances of the case and respectfully following the decision of Hon'ble Tribunal in the case of ACIT V/S Girish Kumar Sharda (supra) as well as detailed finding of fact by Ld.CIT(A) which is unconverted by the Ld. Departmental Representative as no material evidence has been placed to prove anything contrary. Therefore we find no infirmity in the finding of Ld.CIT(A) deleting the addition of Rs. 1,02,00,000/- and Rs. 1,25,00,000/- for alleged unsecured loans and also deletion of disallowance of interest on such loans at Rs.6,14,855/- andRs.5,55,815/- and also deleting the addition for undisclosed expenditure of Rs.5,25,000/- and Rs.6,25,000/-. We accordingly dismiss Revenue's Ground No.1, 2 &3 for Assessment Year 2006-07 and 2007-08 respectively. 4.4 Thus, the tribunal has taken as consistent view based on the documentary evidences showing that these companies are having financial capacity to advance amounts or invest the money which are genuine transactions as the transactions are carried out through banking channel and there is no material brought on record to show that the assesse’s on money has routed back through these companies in the garb of these IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 45 of 77 Page 45 of 77 transactions. In case of ACIT vs. Radheshwari Developers Pvt. Ltd. in ITANo.493/Ind/2018 the Tribunal has again considered this issue vide order dated 28 th July 2021 in para 43 as under: “43. Even one of the alleged cash creditor namely M/s. Jayant Securities & Finance Ltd. which Ld. Pr. CIT has referred as an accommodation entry provider, it is revealed that this company is regularly assessed to tax for last many years and scrutiny proceeding u/s 143(3) of the Act were completed in case of this company. Observation of the Ld. Pr. CIT about letter issued to M/s. Jayant Security & Finance Limited received back unsecured and then stating that somebody filed information on behalf of the M/s. Jayant Security & Finance Ltd. does not find any merit as this company is regularly filing appeal before the judicial forums including Tribunal at Ahmedabad Benches and before Hon'ble High Court of Gujarat, copy of which is placed at paper book No.4 of page 10 to 23 which shows that this company is not a dummy company. 4.5 We further note that in case of M/s Global Realcon Pvt. Ltd. vs. ACIT in IT(SS)A No. 170 to 174/Ind/2020 vide order dated 26.04.2022 this tribunal again considered the genuineness of the transactions between the assesse and M/s Jayant Securities & Finvest Ltd. as well as Jay Jyoti India Ltd. in para 11.4.1 as under: “11.4.1 We find that out of the various additions made by the AO in respect of the loan transactions claimed to have been carried out by the assessee with the above named eight creditors, in respect of loan taken by the assessee from two companies namely M/s. Jayant Security and Finance Ltd. and M/s. Jay Jyoti India Pvt. Ltd. respectively of a sum of Rs.75,00,000/- and Rs.75,00,000/- during the A.Y. 2012-13 and interest payments of Rs.40,685/- and Rs. 14,178/- respectively to such companies during A.Y. 2012-13 and further, in respect of loan from four companies namely, M/s. Octagon Media Matrix Pvt. Ltd., M/s. Rajwadi Retails Trade Systems Pvt. Ltd., M/s. Ranjit Securities Ltd. and M/s. Suzlon Securities Pvt. Ltd. respectively of a sum of Rs.50,00,000/-, Rs.50,00,000/-, Rs.35,00,000/- and Rs.50,00,000/- during the A.Y. 2014-15 and interest payments of Rs.1,12,500/- Rs. 1,12,500/-, Rs.1,44,375/- and Rs.1,12,500/- respectively to such companies during A.Y. 2014- 15, the AO has made additions of Rs. 1,50,00,000/- for A.Y. 2012-13 and Rs.1,85,00,000/- for A.Y. 2014-15 u/s. 68 of the Act and has also made additions amounting to Rs.54,863/- and Rs.4,81,875/- respectively for A.Y. 2012-13 and A.Y. 2014-15 on account of unexplained interest payment u/s. 69C of the Act to such loan IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 46 of 77 Page 46 of 77 creditors. Although, in respect of such additions, on the legal ground as discussed in para (11.3) supra, that the assessment years 2012- 13& A.Y. 2014-15 were complete assessment years and therefore, for such assessment years, no addition could have been made without having recourse to any incriminating material found during the course of the search. But, even on merits, we find no substance in the additions so made by the AO in respect of all the above named six loan creditors. 4.6 This issue has been repeatedly considered by this Tribunal in a series of decisions and in case of Shri Sanjay Shukla vs. ACIT in ITANo.33/Ind/2020 order dated 15.03.2022 has considered this issue in para 12.3 to 12.6 as under: “12.3 We have heard rival contentions, perused the records placed before us. Through ground No.1 revenue has challenged the finding of Ld. CIT(A) deleting the addition of Rs. 3,86,23,218/- made for unexplained unsecured loan and interest paid thereon taken from following parties: S. No. Name of Party Loan Received during the year Interest paid on the loan amount 1 Jayant Securities and Finance Ltd. Vadodara Rs.1,25,00,000 Rs.8,79,041/- 2 Jay Jyoti India Pvt. Ltd. Mumbai Rs.1,25,00,000 Rs.8,69,794/- 3 Manas Realtors Pvt. Ltd. New Delhi Rs.50,00,000 Rs.3,41,507/- 4 Shri Sushil Kumar Ratan Lal Khowal, Akola Rs.50,00,000 Rs.3,32,876/- 5 Chandumal Govindram, Indore Rs.12,00,000 ---- Total Rs.3,62,00,000 Rs.24,23,218/- 12.4 We find that Ld. CIT(A) has dealt with this issue elaborately taking note of all the relevant documents filed by the assessee and the settled judicial precedence on the issue of unexplained unsecured loan of Rs.445 laksh and interest paid thereon Rs.29,82,575/- and Ld. CIT(A) has partly allowed assessee’s ground by sustaining the addition only with regard to loan taken from M/s KCL Infra Projects IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 47 of 77 Page 47 of 77 Private Limited at Rs.83 laks and interest paid thereon at Rs.5,59,357/- and deleting the remaining addition as observed in the finding given in para 4 to 11 at page no.13 to 56 of the impugned order. 12.5. As regards the loan taken from Jayant Security and Finance Ltd. Badodara at Rs. 1.25 crores and interest paid thereon at Rs.8,79,041/-, we find that the alleged cash creditor is a limited company, Permanent Account No. and address has been provided. Loan taken through proper banking channel Confirmation of account is on record. Jayant Security and Finance Ltd. is a non-banking financial company having experience of 26 years. This company is regularly assessed to tax and has also been subjected to scrutiny assessment and the additions made thereon have traveled before Coordinate Bench Ahmedabad in the case of M/s. Jayant Security and Finance Ltd. in ITANo.753/Ahd/2012. We also find that the loan taken from alleged company has been treated as genuine and the additions made in the hands of other loan receivers have been deleted by this Tribunal in the case of M/s Tirupati Construction ITANo.533/Ind/2014 and M/s K.K. Patel Finance Ltd. ITANo.440/Ind/2010. We, therefore, find no reason to doubt the genuineness and creditworthiness of Jayant Security and Finance Ltd. and identity is well proved which has been rightly appreciated by Ld. CIT(A) in order to delete the addition made u/s 68 of the Act at Rs.1.25 cr and interest disallowance at Rs.8,79,041/-. 12.6. As regards the cash creditor namely M/s Jay Jyoti India Pvt. Ltd. Mumbai we find that this company was incorporated in 1999. As on 31.03.2013 it had share capital of Rs. 6,33,50,500/- and net reserves and surplus of Rs.1,08,62,25,646/-. Bank statement, confirmation of account, ledger statement, audited financial statement, Memorandum of Association and tax deducted at source certificate are placed on record which in totality are sufficient to prove identity of this company, genuineness of the transaction and creditworthiness of this company It is further proved with the fact that it had merely advanced 0.75% of the funds which it was capable of i.e. it had financial capacity of advancing 133 times more than the loan given to the assessee company. Thus, Ld. CIT(A) has rightly appreciated these facts for deleting addition for made u/s 68 of the Act as well as the interest disallowance.” 12.7xxxxxxx 12.8 xxxxxxx 12.9. We also find merit in the finding of Ld. CIT(A) referring to various decisions including decision of this Tribunal in the case of Sumati Kumar KasliwaL & OTHERS ITANo.181, 472/Ind/2017 and others. Judgment of Hon'ble jurisdictional High Court in the case of Pr. CIT vs. M/s Chain House International (P) Ltd. ITANo.111/2018 IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 48 of 77 Page 48 of 77 dated 07.08.2018 and also decision of this Tribunal in the case of M/s Tirupati Consturction (supra) and M/s K.K. Patel Finance Ltd. (supra) wherein similar issue and almost identical facts has been examined and decided in favour of the assessee and additions made u/s 68 of the Act were deleted. We, therefore, find no infirmity in the finding of Ld. CIT(A) deleting the addition for unexplained loan and interest paid thereon at Rs.3,86,23,218/-. Thus ground no.1 raised by the revenue is dismissed. 4.7 The Mumbai Bench of this tribunal in case of JCIT vs. M/s Shalimar Housing & Finance Ltd. (supra) has also considered the issue of addition made by the AO u/s 68 in respect of the unsecured loan transactions inter alia from M/s East West Finvest India Ltd, Jayant Securities & Finvest Ltd. and Jay Jyoti India Ltd. in para 14 to 20 as under: “14. We have carefully considered the submissions. We note that assessing in this case has submitted the following documents. 1. Confirmation from the lenders 2. Bank statement of lenders 3. Financial statement of lenders 4 Copy of acknowledgement of Return of Income. 5. Download of company master data from the MCA website. 6. Statement of loan repayment. 15. The Assessing Officer has duly issued notice u/s 133(6) to the above said parties. All the necessary confirmation and compliances have been made. The assessing officer thereafter has not brought on record result of any further enquiry made. The AO's observation from the financials of lenders submitted are in the nature of AOs surmise, devoid of any cogent enquiry. 9 Sh a l i m a r H o us i n g & F i n a n c e L t d. 16. The documents mentioned above with regard to all the lenders are also submitted before us, by way of paper book. We note that the identity of the lenders is duly proved. They have duly responded to assessing officers notice issued u/s 133(6) and have made due compliances. It is not even the case of the assessing officer that these parties are non-existent. The lending companies are also active companies as evident from the documents furnished from the website IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 49 of 77 Page 49 of 77 of Ministry of Corporate Affairs. The bank statement of the lending companies have also been furnished. Loan is granted through bank. No adverse inference has been noted by the assessing officer from the bank statement. 17. The grievance of the assessing officer is that these companies do not have substantial income and hence are not capable of giving loans. He has also expressed doubt about the position of reserves and fund position without brining on record any cogent material from any further enquiry made by bench. We find that the funds position of the companies as noted by the ld.CIT(A) is quite capable of granting loans. The adverse inference drawn from the financial statement of lending companies is only a surmise by the assessing officer without making any enquiry. In this regard, we note that honorable jurisdictional High Court in the case of Pr.CIT vs Veedhata Tower Pvt.Ltd, order dated 21.04.2018 has held that when all the necessary details of the fund provider was available with the assessing officer, he was free to make the necessary enquiry and addition under section 68 in the hands of the recipient were unjustified. Furthermore, assessee has also paid interest to the lenders. It has also deducted tax at source. Loan have been duly repaid, some part has been repaid even in the present assessment year. In these circumstances, in our considered opinion assessee has discharged the onus. The assessing officer has not brought on record any cogent material to make the addition as unproved cash credit. Hence, the addition made by the assessing officer is not sustainable. 10 Sh a l i m a r H o us i n g & F i n a n c e L t d. 18. The case laws relied upon by the Ld. Departmental Representative are not at all applicable on the facts of the present case. In the case of Precision Finance(P.) Ltd (supra), the parties were found to be non-existent. In the case, we are dealing with it is nobody's case that the parties are non-existent. In Navodaya Castles(P.) Ltd (supra), share subscribers were found to be paper company. This is not at all the case here. In E.Ummer Bava (supra), the issue was gift from NRI where the creditworthiness of the donor was not proved. In Shantananda Steels(P.) Ltd (supra), the issue was share capital and huge share premium from entry providers from Kolkatta. In NRA Iron & Steel(P.) Ltd (supra), the issue was non- existent share applicants. In Synergy Finlease(P.) Ltd(supra), the issue was share capital and improbable share premium from accommodation entry providers. In Blessings Commercial(p.) Ltd(supra), the issue was share capital and huge share premium, where the providers had minimum balance in their bank account. Accordingly, we note these case laws do not help the case of the revenue. IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 50 of 77 Page 50 of 77 19. Accordingly, in the background of aforesaid discussion and precedents, we do not find any infirmity in the order of Ld.CIT(A) regarding deletion of addition on account of loan. Accordingly, we are uphold the same. 20. As regard, the issue of interest on unsecured loan, the addition was made by the AO by holding that since the loan have been held by him to be unexplained the interest, thereon cannot be said to be for business purpose. Since, we have already held that addition of loan as unexplained credit is not sustainable, the disallowances of interest thereon, on the same reasoning is liable to be deleted. Hence, we uphold the order of the Ld.CIT(A) on the issue also.” 4.8 As it is manifest from the series of decisions referred above that this tribunal has examined the issue of genuineness of transactions between the assessee and these lender companies and found that when the assesse has produced relevant evidence to prove the identity of the lender companies, the capacity of the lender companies and genuineness of the transactions that in absence of any contrary material to disprove the claim of the assesse or to show that the evidence produced by the assesse is not reflecting true fact, the addition made by the AO is not sustainable. The ld. CIT(A) has also considered this issue in para 3.3.2 to 3.3.4 as under: “3.3.2 I have duly considered the above and found that the Ld. AO has concluded that the above unsecured loans had been received from the Companies controlled by Shri Sharad Darak who is a well known accommodation entry provider of Indore. The Ld. AO on the basis of findings of past actions of the various officers held that Shri Sharad Darak runs dummy companies through which he provides entries to needy persons. The Ld. AO has also relied upon various judgments. On perusal of assessment order, it has been found that the Ld. AO has not made any independent enquiry to disprove the identity, creditworthiness, genuineness of transaction. The Ld. AO has also not enquired into the nature and source of unsecured loans. The Ld. AO has only given emphasis on some enquiries conducted in the past and given a general findings and made additions. No specific finding about the companies proving them bogus has been given in the assessment order. The Ld. AO has also relied upon the statement of Shri Navin Jain which is not based upon any incriminating material. This statement cannot be sole reason for the addition in the total income of the appellant. The appellant has filed ample information and documents to discharge its onus as envisaged in section 68 of the Act. It has been found that all loans had been received by the appellant from the companies under consideration through proper banking channel and the appellant has paid interest thereon after deducting TDS. In the IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 51 of 77 Page 51 of 77 case of M/s. Jay Jyoti India Pvt. Ltd., the entire outstanding amount as on 01.04.2014 i.e. of Rs.3,79,02,377/- which includes sum of Rs.1,00,00,000/- received in AY 2014-15 and interest paid of Rs.32,24,863/- has been fully repaid on 06.05.2015 and 07.05.2015. Interest of Rs.32,24,863/- has been paid after deducting TDS of Rs.3,22,486/-. In the case of M/s Rajwadi (Rajyeshwar) Retail Traders Systems Pvt Ltd the appellant has received loan of Rs. 15,00,000/- on 07.03.2014 and the same was repaid on 26.03.2014 after paying interest of Rs. 9,247/-. In the case of M/s Purvi Finvest Ltd, the appellant had made partial repayment of Rs. 90,00,000/- on 18.05.2015. All transactions are done through banking channel. No investigation has been conducted to discredit such information or documents. The position of Share Capital, reserve and surplus and cash and balances of these companies as per audited balance sheet is as under:- Name of the Company F.Y. Share capital as on 31 ST March Reserve and surplus/Share application money pending for allotment as on 31 ST March Cash and cash equivalent/Bank as on 31 ST March Jayant Security And Finance Ltd. 2010-11 2,84,18,000/- 86,83,63,460/- 73,73,454/- Jayant Security And Finance Ltd. 2013-14 2,84,18,000/- 218,46,08,700/- 44,90,256/- M/s. Jay Jyoti India Pvt. Ltd. 2011-12 6,25,95,500/- 109,80,86,962/- 92,49,886/- M/s. Jay Jyoti India Pvt. Ltd. 2013-14 6,33,50,500/- 83,62,86,980/- 23,84,013/- M/s Rajwadi Retail Trade Systems Pvt Ltd 2013-14 29,27,000/- 1,95,28,995/- 7,07,085/- M/s East West Finvest India Ltd 2012-13 8,08,39,500/- 33,35,07,347/- 66,81,404/- M/s Zyka Merchandise Pvt Ltd 2011-12 29,10,000/- 6,68,07,972/- 14,91,320/- Puvi Finvest Ltd. 2013-14 15,84,66,500/- 186,24,03,524/- 7,25,386/- Puvi Finvest Ltd. 2015-16 15,84,66,500/- 179,31,56,944/- 11,01,361/- IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 52 of 77 Page 52 of 77 On perusal of the above, it is evident that the lender company had substantial funds available with it to advance money to the appellant. The appellant has also filed necessary documents to prove its identity, creditworthiness of these companies and also filed bank statement reflecting the transactions. In my opinion, nothing in form of cogent evidences has been brought on record by the ld. AO in support of his findings. The ld. A.O should have acted on the details furnished by the appellant, but he did not do so. Hon’ble Delhi High Court in the case of Oasis Hospitalities P. Ltd. reported in 333 ITR 119(2011) has held as under: “11. It is clear from the above that the initial burden is upon the assessee to explain the nature and source of the share application money received by the assessee. In order to discharge this burden, the assessee is required to prove : (a) Identity of shareholder; (b) Genuineness of transaction; and (c) Creditworthiness of shareholders. 12. In case the investor/shareholder is an individual, some documents will have to be filed or the said shareholder will have to be produced before the AO to prove his identity. If the creditor/subscriber is a company, then the details in the form of registered address or PAN identity, etc. can be furnished. 13. Genuineness of the transaction is to be demonstrated by showing that the assessee had, in fact, received money from the said shareholder and it came from the coffers from that very shareholder. The Division Bench held that when the money is received by cheque and is transmitted through banking or other indisputable channels, genuineness of transaction would be proved. Other documents showing the genuineness of transaction could be the copies of the shareholders register, share application forms, share transfer register, etc. 14. As far as creditworthiness or financial strength of the creditor/ subscriber is concerned, that can be proved by producing the bank statements of the creditors/subscribers showing that it had sufficient balance in its accounts to enable it to subscribe to the share capital. This judgment further holds that once these documents are produced, the assessee would have satisfactorily discharged the onus cast upon him. Thereafter, it is for the AO to scrutinize the same and in case he nurtures any doubt about the veracity of these documents to probe the matter further. However, to discredit the documents produced by the assessee on the aforesaid aspects, there has to be some cogent IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 53 of 77 Page 53 of 77 reasons and materials for the AO and he cannot go into the realm of suspicion.” Considering the above decision, the appellant had discharged its onus by producing ample evidences. Without any investigation and cogent material, ld. AO treated the same as unexplained which is not sustainable in view of following judgments: (i). Divine Leasing & Finane Ltd. (2008) 299 ITR 268(Delhi). wherein it was held that : “16. In this analysis, a distillation of the precedents yields the following propositions of law in the context of s. 68 of the IT Act. The assessee has to prima facie prove (1) the identity of the creditor/subscriber; (2) the genuineness of the transaction, namely, whether it has been transmitted through banking or other indisputable channels; (3) the creditworthiness or financial strength of the creditor/subscriber; (4) if relevant details of the address or PAN identity of the creditor/subscriber are furnished to the Department along with copies of the shareholders register, share application forms, share transfer register, etc. it would constitute acceptable proof or acceptable explanation by the assessee; (5) the Department would not be justified in drawing an adverse inference only because the creditor/subscriber fails or neglects to respond to its notices; (6) the onus would not stand discharged if the creditor/subscriber denies or repudiates the transaction set up by the assessee nor should the AO take such repudiation at face value and construe it, without more, against the assessee; (7) the AO is duty bound to investigate the creditworthiness of the creditor/ subscriber, the genuineness of the transaction and the veracity of the repudiation. (ii). CIT v. Kamdhenu Steel & Alloys Limited and Other (2014) 361 ITR 220(Delhi) wherein it is held that : “38. Even in that instant case, it is projected by the Revenue that the Directorate of Income Tax (Investigation) had purportedly found such a racket of floating bogus companies with sole purpose of lending entries. But, it is unfortunate that all this exercise if going in vain as few more steps which should have been taken by the Revenue in order to find out causal connection between the case deposited in the bank accounts of the applicant banks and the assessee were not taken. It is necessary to link the assessee with the source when that link is missing, it is difficult to fasten the assessee with such a liability.” IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 54 of 77 Page 54 of 77 (iii). Following the decision in the case of Oasis Hospitalities P. Ltd. (supra) and the decision of Hon’ble Apex Court in the case of NRA Iron & Steel Pvt. Ltd. (Arising out of SLP (Civil) No. 29855 of 2018) order dated 05.03.2019, I reject the contentions of the appellant in respect of above creditors. Relevant paras of the decision of Hon’ble Apex Court are reproduced hereunder: “9. The Judgments cited hold that the Assessing Officer ought to conduct an independent enquiry to verify the genuineness of the credit entries. In the present case, the Assessing Officer made an independent and detailed enquiry, including survey of the so-called investor companies from Mumbai, Kolkata and Guwahati to verify the credit-worthiness of the parties, the source of funds invested, and the genuineness of the transactions. The field reports revealed that the share-holders were either non- existent, or lacked credit-worthiness.” .......... 11. The principles which emerge where sums of money are credited as Share Capital/Premium are : i. The assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and credit-worthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the AO, so as to discharge the primary onus. ii. The Assessing Officer is duty bound to investigate the credit-worthiness of the creditor/ subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of name-lenders. iii. If the enquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit-worthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by Section 68 of the Act. 12. In the present case, the A.O. had conducted detailed enquiry which revealed that : IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 55 of 77 Page 55 of 77 i. There was no material on record to prove, or even remotely suggest, that the share application money was received from independent legal entities. The survey revealed that some of the investor companies were non-existent, and had no office at the address mentioned by the assessee.......” In view of the above judicial pronouncements, the AO is duty bound to investigate the issue once the assessee discharges its onus as per section 68 of the Act. Here, such efforts are absent. Further, the appellant has brought on record the decision of Hon’ble ITAT Indore in the case of Shri Pramod Kumar Sethi (ITA NO. 382 and 383/Ind/2014, dated 06.11.2018) wherein various companies of Sharad Darak Group held as genuine companies which also includes Purvi Finvest Ltd. from whom the appellant has taken unsecured loan of Rs.5,50,00,000/-. In another decision in the case of M/s. Radhishwari Developers Pvt. Ltd. (ITA No. 493/Ind/2018 dated 20.07.2021) Hon’ble ITAT Indore has held that M/s. Jayant Securities and Finance Ltd. is regularly assessed to tax for last many years and scrutiny proceedings u/s.143(3) of the Act were completed in this company. This company is regularly filing appeal before the judicial forums which show that this company is not a dummy company. Considering the above findings of the Hon’ble ITAT, above companies cannot be declared as dummy company. 3.3.3 In view of the above discussion, it is not justified to held the lender companies as dummy entities and the loans given to the appellant by these companies are non-genuine. Therefore, the additions made by the ld. AO are not sustainable. 3.3.4 In view of discussion made in para 3.2 to 3.3.3 above, addition of Rs. 23,00,000/- in AY 2011-12, Rs. 5,00,00,000/- in AY 2012-13, Rs.1,00,00,000/- in A.Y. 2013-14, Rs.2,60,00,000/- in A.Y. 2014-15 and Rs.4,90,00,000/- in A.Y. 2016-17 on account of unexplained cash credit u/s. 68 of the Act are hereby deleted. Therefore, appeal on these grounds is allowed.” 4.9 The Ld. CIT(A) has considered the evidence produced by the assesse as well as the facts that the AO has not conducted any inquiry in respect of the transactions and the evidence produced by the assesse but made the addition only on the presumption that the companies controlled and run by Shri Sharad Darak are providing accommodation bogus entries. The Ld. CIT(A) has followed various decisions including the decision of this Tribunal in case of Shri Pramod Kumar Setthi (supra) and M/s IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 56 of 77 Page 56 of 77 Radheshwari Developers Pvt. Ltd. (supra) while deleting the addition on merits. 4.10 In view of the fact and circumstances of the case as well as having considered the documentary evidence produced by the assesse and analyzing the transactions recorded in the documentary evidences we find that the assesse has duly discharged its onus to prove the identity of the loan creditors, the capacity of the loan creditors and the genuineness of the transactions. So far as the identity of the loan creditors is concerned the department has not disputed the same and the capacity of the loan creditor has been duly established by producing audited financial statements, tax audit report, bank account statements, return of income of the lender companies and no defect was pointed out by the AO in the documentary evidence produced by the assesse. The transactions are through banking channel and the assessee produced the bank account statement of the assesse as well as the loan creditor companies to show that there is nothing in the bank account statement as well as ledger account to reflect that assesse’s own money has routed back through these lender companies. Rather the assesse has repaid part of the loans prior to the search and seizure action in this case. Therefore, all these facts and record go to prove that the transactions are genuine and nothing has been brought on record except reference to certain investigation reports to doubt the transactions duly recorded in the books of account as well as in the bank account statement. Accordingly in these circumstances we do not find any error or illegality in the impugned order of the Ld. CIT(A) qua this issue of addition made by the AO u/s 68 of the Act on account of unsecured loan. 5. Ground No.6 is regarding the disallowance of interest paid by the assessee on these loans which was deleted by the Ld. CIT(A). 5.1 We further note that all the transactions of interest payment are duly reflected in the books of account of assesse as well as lender IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 57 of 77 Page 57 of 77 companies and are subjected to TDS. These transactions are also reflected in the bank account of the assessee as well as lender companies, therefore, there is no reason to doubt the payment of the interest by the assesse after deducting TDS through banking channel and duly recorded in the books of account. Ld. CIT(A) has deleted this addition in para 3.4 as under: “3.4 Ground No. 6 of AY. 2011-12 to 2014-15, Ground No 4 for AY 2015-16, Ground No 8 for AY 2016-17 and Ground No 4 & 5 for AY 2017-18:- Through these grounds appeal, the appellant has challenged the addition made on account of interest paid on unsecured loans of Rs. 23,00,000/- in AY 2011-12, Rs. 5,00,00,000/- in AY 2012- 13, Rs. 1,00,00,000/- in AY 2013-14, Rs. 2,60,00,000/- in AY 2014-15 and Rs. 4,90,00,000/- in AY 2016-17. In view of discussion made in para 3.2 to 3.3.4 above, additions of interest expenses being paid for the above amount of unsecured loans amounting to Rs. 1,23,066/- in AY 2011-12, Rs. 34,74,068/- in AY 2012-13, Rs. 50,33,096/- in AY 2013-14, Rs. 60,96,018/- in AY 2014-15, Rs. 70,58,250/- in AY 2015- 16, Rs. 71,68,750/- in AY 2016-17 and Rs. 94,16,014/- in AY 2017-18 are also not sustainable and hence, the same are deleted.” 5.2 Once the addition made on account of unsecured loan is deleted then the interest on the said loan added by the AO as consequence to the disallowance of the loan amount would not survive. Accordingly we do not find any reason to interfere with the impugned order of the Ld. CIT(A) qua this issue. For Assessment Year 2014-15 6. The revenue has raised following grounds of appeal: “1. Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in accepting additional evidence u/s 46A in complete disregard to the remand report submitted by AO which was received in the 0/0 CIT(A) on 18.09.2020. The CIT(A) has not discussed the issues raised in remand report in his order. IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 58 of 77 Page 58 of 77 2. Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in accepting additional evidence u/s 46A even through conditions mentioned in clauses (a)-(d) of 46ACD were not satisfied. 3.Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in accepting retraction made by the assessee made after more than a year as genuine even though there was strong evidence on record about accommodation entries provided by companies controlled by Sharad Darak, a known entry provider, and whether CIT(A) has erred in accepting the retraction of assessee as genuine ignoring the decision of Hon'ble SC in the case of Bannalal Jat constructions Pvt Ltd Vs ACIT [2019] 106 Taxmann.com 128(SC). 4.Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition after finding it non-abated assessment year, while the addition was made on the basis of incriminating documents found during the course of search and seizure proceedings. 5.Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 2,60,00,000/- made by the AO under section 68 r.w.s 115BBE of the Income Tax Act on account of bogus and secured loans. 6.Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs 60,96,018/-made by the AO under section 69C r.w.s. 115BBE of Income Tax Act 1961 on account of interest expenses on bogus unsecured loans.” 7. Ground no.1 to 3 are regarding non-consideration of remand report and accepting retraction made by Shri Naveen Jain. These are common and identical grounds as raised for A.Y.2012-13. We have already considered and decided the issue involved in ground nos.1 to 3 for A.Y.2012-13. Accordingly in view of our finding on ground no. 1 to 3 for A.Y.2012-13 these grounds stand dismissed. 8. Ground no.4 is regarding the addition deleted by Ld. CIT(A) for want of incriminating material. This issue has also been considered and decided by us in ground no.4 of the assessment year 2012-13. Hence in view of our finding on this issue for the assessment year 2012-12 this ground of appeal of revenue stands dismissed. IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 59 of 77 Page 59 of 77 9. Ground no.5 is regarding the addition made by the AO u/s 68 of the Act on account of unsecured loan which was deleted by the Ld. CIT(A). For A.Y.2014-15 the assesse has shown unsecured loan from Jayant Securities and Finance Ltd. of Rs.85,00,000/-, M/s Jay Jyoti India Pvt. Ltd. of Rs.1 cr., M/s Rajwadi (Rajyeshwar) Retail Traders Systems Pvt. Ltd. Rs. 15 lac and M/s Purvi Finvest Ltd. of Rs.60 lac. Thus, the assesse has shown total unsecured loan of Rs.2.60 cr from these four lending companies. The AO has passed composite order giving common ground for treating the unsecured loan transactions as bogus book entries. The Ld. CIT(A) has deleted the addition based on the documentary evidences filed by the assessee which was neither examined by the AO nor the correctness of the same was questioned. 9.1. We have already discussed the documentary evidences produced by the assesse in respect of these four lender companies namely Jayant Securities and Finance Ltd, M/s Jay Jyoti India Pvt. Ltd., M/s Rajwadi (Rajyeshwar) Retail Traders Systems Pvt. and M/s Purvi Finvest Ltd. while deciding the issue for the assessment year 2012-13. Even Jayant Securities and Finance Ltd & M/s Jay Jyoti India Pvt. Ltd. are common lender companies as for A.Y.2012-13. While considering the addition on merits for A.Y.2012-13 we have discussed the documentary evidences filed by the assesse in respect of all these companies. The ld. CIT(A) has also passed a composite order in respect of all the unsecured loans transactions for A.Y.2010-11 to 2016-17. 9.2. At the cost of repetition it is pertinent to note that Coordinate Bench of this Tribunal has considered the transactions with these lending companies in a series of decisions and found that these companies are active and do exist and also doing business as evident from their financial statement, return of income and assessment orders. In the case in hand the assesse has produced all the relevant evidence to show that the interest on the loan amount was paid to the lender companies regularly on quarterly basis after deduction of tax at source and the said interest amount has been duly shown as income of these lending companies in IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 60 of 77 Page 60 of 77 their return of income. Even the assesse has repaid most of the loan amount before the date of search and seizure i.e. 12 th July 2016. Thus, all these material and relevant facts have already been discussed by us and need not to be repeated. In view of our finding on this issue in the preceding paras of this order this ground of the revenue’s appeal stands dismissed. 10. Ground no.6 is addition made by the AO on account of interest payment which is consequential. This ground is common and identical for all assessment year before us. and therefore, in view of our finding on this issue while deciding the appeal of the Revenue for A.Y.2012-13 this ground of revenue’s appeal stand dismissed. For Assessment Year 2016-17 11. The revenue has raised following grounds of appeal: “1. Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in accepting additional evidence u/s 46A in complete disregard to the remand report submitted by AO which was received in the 0/0 CIT(A) on 18.09.2020. The CIT(A) has not discussed the issues raised in remand report In his order. 2. Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in accepting additional evidence u/s 46A even through conditions mentioned in clauses (a) - (d) of 46ACD were not satisfied. 3.Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in accepting retraction made by the assessee made after more than a year as genuine eventhough there was strong evidence on record about accommodation entries provided by companies controlled by Sharad Darak, a known entry provider; and whether CIT(A) has erred in accepting the retraction of assessee as genuine ignoring the decision of Hon'ble SC in the case of Bannalal Jat constructions Pvt Ltd Vs ACIT [2019] 106 Taxmann.com 128(SC). 4.Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 4,90,00,000/- made by the AO under section 68 r.w.s 115BBE of the Income Tax Act on account of bogus unsecured loans. 5.Whether on the facts and in the circumstances of the case and In law, the Ld. CIT(A) has erred in deleting the addition of Rs. IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 61 of 77 Page 61 of 77 1,99,95,000/-made by the AO under section 69 r.w.s 115BBE of Income Tax Act on account of unexplained investment. 6.Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 71,68,750/- made under section 69C r.w.s. 115BBE of Income Tax Act, on account of interest expenses on bogus unsecured loans.” 12. Ground no.1 to 3 are regarding non-consideration of remand report and accepting retraction of statement made by Shri Naveen Jain. These are common and identical grounds as raised for A.Y.2012-13. We have already considered and decided the issue involved in ground nos.1 to 3 for A.Y.2012-13. Accordingly in view of our finding on ground no. 1 to 3 for A.Y.2012-13 these grounds stand dismissed. 13. Ground No.4 is regarding the addition made by the AO on account of unsecured loan by treating the same bogus accommodation entries which was deleted by the Ld. CIT(A). For the year under consideration the assessee has shown unsecured loan from M/s Purvi Finvest Ltd. of Rs. 4,90,00,000/-. The assessing officer in the composite order has made the addition for the year under consideration along with for assessment years 2010-11 to 2015-16. The reasons given by the AO for all the years are common and consequently the addition was made by treating all the unsecured loan transactions for A.Y.2011-12 to 2016-17 as bogus accommodation entries. The Ld. CIT(A) has deleted the addition by considering the documentary evidence filed by the assesse which was neither examined by the AO nor found to be incorrect or defective. 13.1 We have already considered this issue while deciding the appeal for A.Y.2012-13 in forgoing part of this order. Even all the loan creditors companies including M/s Purvi Finvest Ltd. was subject matter of the consideration and examination of this Tribunal in a series of decisions as referred in forgoing part of this order wherein the Tribunal found that the transactions with these lending companies supported by the documentary evidences in the shape of financial statement/auditor report, return of income, confirmation are genuine transactions in the absence of any IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 62 of 77 Page 62 of 77 contrary material to disprove the documentary evidences. Accordingly in view of our finding while deciding this issue in the appeal for A.Y.2012-13 this ground of revenue’s appeal stands dismissed. 14. Ground No.5 is regarding the addition made by the AO u/s 69 of the Act on account of unexplained investment. The AO noted that unsecured loan of Rs.1,99,95,750/- has been shown in the books of M/s. A & A Shelters (partnership firm of the assessee) in the name of M/s Purvi Finvest Ltd, during F.Y. 2015-16 relevant to assessment year under consideration. The AO has made addition of the said amount in the hand of the assessee by treating the same as unexplained investment of the assessee based on the statement of Shri Naveen Jain. On appeal the Ld. CIT(A) has deleted this addition. 14.1. Ld. DR has relied upon the order of the AO and submitted that Shri Naveen Jain has admitted that this loan transaction in the books of the partnership firm of the assesse namely M/s A & A Shelters is unaccounted income of the assesse company. 14.2. On the other hand ld. AR of the assesse has submitted that this transition of unsecured loan is between the M/s A & A Shelters and M/s. Purvi Finvest Ltd through proper banking channel. He has further submitted that the assesse has produced copy of ledger account of M/s Purvi Finvest Ltd in the books of M/s A & A Shelters for the period of 01.04.2015 to 31.03.2016. He has referred to page nos.362 & 363 of the paper book and submitted that the assessee produced all relevant documents and supporting evidence including copy of ledger account of M/s Purvi Finvest Ltd., copy of bank account of M/s A & A Shelters showing receipt of loan from M/s Purvi Finvest Ltd. He has also referred to the bank statement of M/s Purvi Finvest Ltd. at page no.741 of paper book showing loan transaction to M/s A & A Shelters on 26.11.2015 through proper banking channel. He has also referred a copy of the affidavit from Shri Sharad Darak confirming the existence of the said company, registered address UIL, PAN details at page no.824 to 826 of the IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 63 of 77 Page 63 of 77 paper book. He has then referred to certificate of registration issued by RBI as NBFC w.e.f. 21.03.2005 and therefore, M/s Purvi Finvest Ltd was regularly engaged in the business of money lending. A copy of acknowledgment of return of income of M/s Purvi Finvest Ltd along with computation of income for A.Y.2016-17 is placed at page no.747 to 751 of the paper book. Ld. Counsel for the assesse submitted that these details show the lender company is engaged in the genuine business of lending for which TDS has been deducted by several parties as per the details at page no.749 & 750 of the paper book. He has also referred to the audit report of M/s Purvi Finvest Ltd which shows that the lender company has turnover of Rs.5.4 cr. for A.Y.2016-17 and net worth about Rs.195 cr. which is multiple times of the sum advanced to the partnership firm. All these documents are placed at page no.919 to 925 of the paper book. 14.3. Ld. Counsel for the assesse has further submitted that once Shri Naveen Jain has retracted his statement giving due explanation of incorrect statement made during the course of search and seizure proceedings then the addition made by the AO solely on the basis of statement is not sustainable and Ld. CIT(A) has rightly deleted the same. Reference is made by the AO to the statement of third person without supplying copy to the assesse and without giving an opportunity of cross examination therefore, the order of the AO is not sustainable. He has relied upon judgment of Hon’ble Supreme Court in case of Andaman Timber Industries vs. CCE 62 taxmann.com 3 (SC). He has also relied upon the judgment of Hon’ble Delhi High Court in case of CIT vs. Rakam Money Matters (P) Ltd. in ITA No.778/2015 dated 13.10.2015. 14.4. We have considered the rival submissions as well as relevant material on record. The assessing officer has made this addition in para 8.11 as under: “8.11. The unsecured loan of Rs.1,99,95,000/- taken in the books of A & A Shellers (partnership firm of the assessee) in the name of Purvi Finvest Ltd, during FY 2015-16 (AY 2016-17), has also been disclosed IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 64 of 77 Page 64 of 77 as unaccounted income of Shri Krishna Devcon Ltd. (assessee) by Shri Naveen Jain (Director) in the above statement [as can be seen from Annexure to the statement u/s 132(4)]. The ultimate source of this loan is thus the unaccounted Income of the assessee itself Irrespective of the entity In whose books such an entry is reflected. However this sum will be treated as unexplained Investment u/s 69 in the hands of the assessee Instead of unexplained cash credit u/s 68.” 14.5. Thus it is clear that the AO has made addition contrary to the record which was rejected by holding that in the books of M/s A & A Shelters partnership firm unsecured loan of Rs. 1,99,95,000/- is shown as taken from M/s Purvi Finvest Ltd but ultimate source of this loan is the unaccounted income of the assesse solely on the basis of the statement of Shri Naveen Jain. The ld. CIT(A) has deleted the said addition in para 3.8.1 as under: “3.8.1 I have considered the facts mentioned in the assessment order and submissions of the appellant. It is undoubted fact that the above loan has been taken by M/s A & A Shelters from M/s Purvi Finvest Limited in the assessment year 2016-17 and therefore, if any addition is proposed to be made that should be made in the hands of M/s A & A Shelters not in the hands of appellant. The ld AO is not justified in this regard. Further, as held in para 3.2 & 3.3 of this order, M/s Purvi Finvest Limited is a genuine company and had sufficient financial capacity to advance the loan, this addition is not sustainable. Hence, the addition of Rs. 1,99,95,000/- is hereby deleted. Therefore, appeal on this ground is allowed. “ 14.6. Thus, the Ld. CIT(A) has given the finding that when the AO found that this loan has been taken by M/s A & A Shelters from M/s Purvi Finvest Limited then addition if any should have been made in the hand of M/s A & A Shelters not in the hands of the assesse. We further note that the assesse has otherwise produced all the relevant documentary evidences to show that it is a genuine transaction of loan between M/s A & A Shelters and M/s Purvi Finvest Limited and therefore, in absence of any material or other fact to show that this loan amount is assessee’s unaccounted income transferred to the partnership firm in the garb of unsecured loan from M/s Purvi Finvest Limited the addition made by the IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 65 of 77 Page 65 of 77 AO is not sustainable. The AO has even not conducted any inquiry on this issue and simply made addition based on the statement which does not disclosed any fact leading to the conclusion that the transaction as found recorded in the books of M/s A & A Shelters is in fact unaccounted income of the assesse. Accordingly in the facts and circumstances of the case and in view of the supporting documents filed by the assesse as placed in the paper book at page no.362,746 to 805, 919 to 925 we do not find any error or illegality in the impugned order of the Ld. CIT(A). This ground of revenue’s appeal is dismissed. 15. Ground no.6 regarding addition made by the AO on account of interest payment on unsecured loan. This ground is common and identical to the ground no.6 for A.Y.2012-13. Even this ground is consequential to the addition made by the AO on account of unsecured loan in the preceding years. In view of our finding on this issue for A.Y.2012-13 this ground of revenue’s appeal stands dismissed. For Assessment Year 2016-17 16. The Assessee has raised following grounds of appeal: “1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned assessment order u/s 153A/143(3) without assuming jurisdiction as per law and without recording requisite satisfaction as per law and without complying with the other mandatory conditions as envisaged under the Act. 2. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in framing the impugned assessment order u/s 153A/143(3), is bad in law and against the facts and circumstances of the case, more so when no incriminating material was found as a result of search. 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs.63,45,500/- u/s 68 r.w.s. 115BBE on account of alleged undisclosed income, more so when no incriminating material was found as a result of search and impugned addition has been made by recording incorrect facts and findings and without observing the principles of natural justice. IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 66 of 77 Page 66 of 77 4. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making addition of Rs.63,45,500/- u/s 68 r.w.s. 115BBE on account of alleged undisclosed income, is bad in law and against the facts and circumstances of the case 5. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs.2,77,350/- u/s 68 r.w.s. 115BBE on account of alleged unaccounted income, more so when no incriminating material was found as a result of search and impugned addition has been made by recording incorrect facts and findings and without observing the principles of natural justice. 6. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making the above additions and that too without found any incriminating material as a result of search warranting such addition. 7. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in passing the impugned assessment order and that too without obtaining the valid approval u/s 153D as per law. 8. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.” 17. Ground No.1 to 4 are regarding the addition made by the AO and confirmed by the ld. CIT(A) on account of on money received for booking of plots. The AO noted that as per the seized material (diary) containing various entries of receipt of amounts against sale of plots in Shri Krishna Enclave project the assesse received record consideration in cash but not shown in the books of account. One Shri Hemendra Nabeda who is a relative of the directors of the assessee company in his statement explained the coded noting in the diary seized from his residential premises. Thus the AO concluded that the amounts recorded in the diary is the payment received against sale of plots which is not recorded in the books of account of the assesse and consequently an addition of Rs.63,45,500/- was made as advance towards booking of plots not recorded in the books of account. The AO however, made the addition u/s IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 67 of 77 Page 67 of 77 68 of the Act r.w. section 115BBE. On appeal the Ld. CIT(A) has confirmed this addition made by the AO as the same is based on the seized material. 17.1. Before the tribunal the Ld. Counsel for the assessee has submitted that the alleged seized documents were found during the search from the premises of Shri Hemendra Nabeda who has explained in the statement that entries in the diary were investment made by him in the plots in the scheme of Shri Krishna Enclave. He has referred to the statement of Shri Hemendra Nabeda at page no.421 to 434 of the paper book and submitted that once Hemendra Nabeda has stated that the entries in the diaries are investment made by him in the plots then the same cannot be treated as unexplained income in the hands of the assesse. Further all the transactions of sale of plots are recorded in the books of account of the assesse and the seized documents were not recovered from the possession of the assesse therefore, the same cannot be attributed to the assesse. He has further contended that in the proceedings u/s 153A a document seized from the third party cannot be considered rather the said documents can be considered only in the proceedings u/s 153C. The assessing officer has erred in assuming jurisdictional u/s 153A of the Act and no addition could be made in the hand of the assesse. 17.2 He has further submitted that during the assessment proceedings ledger of Shri Hanuman Prasad Mishra and Smt. Babita Malpani in the books of the assesse submitted along with sale deed of plot no.650 & 750 to show that these plots were sold to these persons and therefore, same were already recorded in the books of account and part of the assesse turnover. The addition in respect of undisclosed income on account of sale of these plots cannot be made. Further, plot no. 868 was booked by Shri Ankush Chourasia s/o Shru R.C. Chourasia after paying an advance of Rs. 50,000/- vide cheque no. 896962 drawn on SBI. Relevant copy of bank statement of the assessee highlight the above sum is placed as page no. 981 of paper book. All the remaining plots alleged to have been sold by the assessee are part of its inventory and are still owned by the assessee company details of which were submitted during assessment proceedings IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 68 of 77 Page 68 of 77 vide reply dated 26.11.2018 placed at page no. 356-359 of P.B. The Ld. AO has arbitrarily assumed plot rates and sale for making the impugned addition w.r.t. alleged undisclosed sale to Shri Sudeep Jain, Shri Naveen Bhandari, Shri Sandeep Chaudhary and Shri Ranjeet Chakravarthy. This is evident from perusal of page 34 of the assessment order wherein Ld. AO has assumed that since the plots are in the same project where Shri Nabeda made investment therefore, the same rate is considered. Further, Ld. AO has himself assumed that these parties must have paid 3 installments for the alleged purchase of plots whereas nothing can be derived from the seized material as is evident from perusal of page no. 860-882 of paper book. Such arbitrary and vague additions without support of any corroborative evidence is bad in law and has no legal legs to stand and may please be directed to be deleted. Next contention of Ld. Counsel of the assessee is that the addition has been made solely on the basis of alleged statement recorded of Shri Hemendra Singh Nabeda (PB 421-434). It is a matter of common knowledge as has been explained above and which has been taken into judicial notice also and several decision including in the case of IT v. Naresh Kumar Agarwal, (2014) 369 ITR 171, High Court of Andhra Pradesh (supra) and Dy. Commissioner Of Income Tax vs Pramukh Builders, (2008) 112 ITD 179, that high handedness and arbitrary attitude is resorted in the search proceedings and in the present case is evident by the sheer fact that though there was no evidence against Shri Hemendra Singh Nabeda to this fact yet he was made to speak in this fashion. Obviously, a person facing the search continuously for three days in an interrupted manner is bound to breakdown as happened in the present case. 17.3 Ld. Counsel for the assessee has also referred to the CBDT Instruction E.No.286/2/2003 dated 10.03.2003 and submitted that the CBDT has issued a clear instruction to the tax authorities to focus on collection of evidence during the search/survey instead of reliance solely based on statements. IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 69 of 77 Page 69 of 77 17.4 On the other hand Ld. DR has submitted that the contents of the diary has been explained by Shri Hemandra Singh Nabeda and decoded noting in the diary written as ‘SKEN’ as Shri Krishna Enclave. The addition is made on the basis of incriminating material disclosed unaccounted transactions and therefore, the ld. CIT(A) has rightly confirmed the addition made by the AO by following decision of this Tribunal in case of shri Om Prakash Patidar (HUF). 17.5 We have considered the rival submissions as well as relevant material on record. The Assessing officer has made the addition on account of unaccounted income as found recorded in the seized material which is a diary containing various entries from the possession of Shri Hemandra Singh Nabeda. These entries contain plot no. and rates as well as name of certain persons in whom name booking is shown. During the course of assessment proceeding the assesse has filed the reply to the show cause notice issued by the AO wherein the assesse has explained that the plots which are referred in the alleged diary have been sold by the assesse company to shri Hanuman P. Mishra & Smt. Babita Malpani and full payment for sale of those plots have been received from the customers. The assesse also filed the copy of ledger account showing the sale of plot no.650 & 700 to these two customers and also filed copies of registered sale deeds demonstrating the sale of plots. The assessing officer has not taken pain to consider documents produced by the assesse and therefore, no verification has been done by the AO to find out the correct facts and position of the sale of these plots. Further the assesse has also explained that plot no.868 has been booked by shri Ankush s/o R.C. Chourasia against payment of Rs.50,000/- vide Cheque drawn on SBIs the particulars of the cheques were also produced before the AO along with copy of ledger account shown the transaction. It was further explained that all the remaining plots as mentioned in the alleged seized material are still owned by the assessee and part of the inventory of the assesse company which could have been verified from the books of account of the assesse. However, the AO has not verified from record the IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 70 of 77 Page 70 of 77 correct status about the transactions allegedly recorded in the seized material from the possession of one Shri Hemandra Singh Nabeda who has explained as his investment. However, we find from the record and particularly from the sale deed for sale of plot no.650 and 700 as well as booking amounts in respect of the plot no.868 that all these transaction are duly recorded in the ledger account placed before the AO. Therefore, when the plots are finally sold to the buyers through sale deeds then entries recorded in the alleged seized documents cannot be considered as reflecting the true state of affairs. The assesse has unambiguously explained and stated that all other remaining plots considered by the AO as recorded in the seized material are still owned by the assessee and part of the inventory. The Ld. CIT(A) has confirmed the addition by ignoring all these explanation and relevant evidences available on record. Therefore, the impugned order of the Ld.CIT(A) confirming the addition without even verifying the correct facts on the record produced by the assesse is not sustainable. Once the assesse has produced the relevant documents to manifest that some of the alleged plots have been sold by the assesse through registered sale deeds and duly recorded in the books of account and also declared in the turnover of the assesse then the addition on account of undisclosed income in respect of sale of these plots is highly arbitrary and unjustified. 17.6 Similarly when the assesse has explained that another plot was booked in the name of Ankush S/o R.C. Chourasia against booking amount of Rs.50,000/- received through Cheque and the details of the booking and Cheque produced before the AO in the ledger account then the addition to the extent of the said plot no.868 is also not justified. The remaining plots are claimed to be part of the inventory of the assesse company which could be verified from the books of account however, neither the AO nor Ld. CIT(A) took pain to verify this fact from the books of the assesse. Accordingly in the facts and circumstances of the case, we are of the considered view that the addition made by the AO and confirmed by the Ld. CIT(A) without considering correct facts as recorded IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 71 of 77 Page 71 of 77 in the books of account as well as other relevant evidence produced by the assesse in the shape of sale deeds and transactions through banking channel is highly arbitrary and hence same is deleted. 17.7 Before parting with the issue it is pertinent to note that the AO has made addition u/s 68 of the Act on the ground that entries found in the seized documents from Shri Shri Hemandra Singh Nabeda are not recorded in the books of account. Once the addition is made on the basis of these entries not recorded in the books of account being on money received by the assesse against the sale of plot then the provision of section 68 cannot be invoked. This finding of the AO is self-contradictory as in one had it is held that these transactions are not recorded in the books of account and on the other hand Ld. AO has made the addition u/s.68 of the Act which can be done only when the entries are found in the books of account and the assessee failed to explain the source of the credit recorded in the books of account. The Ld. CIT(A) has confirmed this addition made u/s 68 of the Act as under: “In view of the above, mentioning of section 68 of the Act by the Id AO in the assessment order is not bad in law. Basically, the additions should have been made as undisclosed income from sale of plots by the Id AO. Considering the above discussion, addition amounting to Rs. 1,89,000/- in AY 2013-14 and Rs. 63,45,500/- in AY 2016-17, being undisclosed income from sale of plots are confirmed. Therefore, appeal on these grounds is dismissed.” 17.8 Thus, the Ld. CIT(A) has confirmed the addition without looking into bare facts and application of mind. Therefore, the impugned order of the Ld. CIT(A) is not sustainable in law. 18. Ground No.5 & 6 are regarding addition of Rs.2,77,350/- made u/s 68 of the Act on account of cash received against sale of plots not recorded in the books of account. The assessing officer has noted that register marked as BS-2 seized during the course of search from the office premises of the assesse contains details of plot sold by the assessee in Shri Krishna Enclave Project. Based on the entries in the said register the AO found that the assesse received part of the sale consideration in IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 72 of 77 Page 72 of 77 Cheque and part in cash. Thus, the AO come to the conclusion that for the year under consideration the assesse has received cash of Rs.2,77,350/- which has not been accounted and consequently he has made addition of the said amount as unexplained cash credit u/s 68 of the Act. On appeal the Ld. CIT(A) has confirmed the addition made by the Ld. CIT(A). 18.1 Before the Tribunal Ld. Counsel for the assesse has submitted that the assesse had duly recorded sale transactions in the books of account and also produced the sale deed executed in favour of the buyer which shows that there was no element of cash found in these transaction of sale. The sale consideration was received through proper banking channel and duly recorded in the books of account of the assesse. Therefore, the addition made by the AO without any corroborative evidence is not justified. 18.2 On the other hand, Ld. DR has submitted that addition made by the AO is based on the seized material. The assesse has not disputed the transactions recorded in the seized material to the extent of the amount received in Cheque and therefore, the said seized material cannot be considered as partly correct. He has relied upon the order of the authorities below. 18.3 We have considered the rival submissions as well as relevant material on record. The assessing officer has made addition based on the seized documents which is register found during the course of search from the office premises of the assessee. The details of the transactions as recorded in the said register are given by the AO in para 10.1 as under: “10.1 Accordingly, a show cause notice was issued on this count, the relevant extract of which is reproduced below: AY 2016-17 1) Thirdly, from the Incriminating documents (Register BS-2) seized from the official premises (MZ-3, Storlit Tower, Y N Road, Indore) during the course of search it is found that lot of plots have been sold IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 73 of 77 Page 73 of 77 in the name of Sri Krishna Enclave to various customers for which following amounts have been received in cash: Sr. No. Name of customer Amount received by Cheque/draft Amount received in cash Date of payment 1. Mohanand Thakur 17,85,600/- 2,77,350/- 05.03.2016 18.4 Thus, the seized material clearly shows the transactions of sale to Shri Mohanand Thakur and sale consideration was received to the extent of Rs.17,85,600/- in Cheque and a sum of Rs.2,77,350/- in cash. The assesse has not disputed the sale transaction to Shri Mohanand Thakur as well as sale consideration of Rs.17,85,600/- received in Cheque. Therefore, the seized material showing other details of cash received by the assesse cannot be denied. The seized documents cannot be accepted as admissible evidence in part. Hence to the extent of addition made by the AO towards the cash receipt of Rs.2,77,350/- is duly based on the seized material. Since the said transaction of cash is not found recorded in the books of account therefore, applying the provisions of section 68 of the Act is not justified. Hence we restrict the addition of the said amount of Rs.2,77,350/- as unaccounted business income of the assesse and not u/s 68 of the Act. The orders of the authorities below are modified accordingly. 18.5 Ground No.7 is regarding validity of assessment order for want of valid approval u/s 153D of the Act. Before us the ld. Counsel for the assesse had not advanced any argument on this issue. We note that the assessing officer has given the details of the approval taken from Additional CIT in para 13 of the assessment order as under: “13. This order is passed with the prior approval of the Addl. Commissioner of Income Tax (Central). Indore u/s 153D of the Income Tax Act, 1961 vide letter F.No. Addl. CIT (Central)/Ind./153D/2018- 19/1549 dated 29/12/2018.” 18.6 Accordingly in the facts and circumstances of the case when the AO has obtained the approval u/s 153D and assessee has not brought before IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 74 of 77 Page 74 of 77 us anything to show contrary ground no.7 of the assesse’s appeal is dismissed. For Assessment Year 2017-18 19. The Revenue has raised following grounds of appeal: “1.Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in accepting additional evidence u/s 46A in complete disregard to the remand report submitted by AO which was received in the 0/0 CIT(A) on 18.09.2020. The CIT(A) has not discussed the issues raised in remand report in his order. 2. Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in accepting additional evidence u/s 46A even through conditions mentioned in clauses (a) - (d) of 46ACD were not satisfied. 3.Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in accepting retraction made by the assessee made after more than a year as genuine eventhough there was strong evidence on record about accommodation entries provided by companies controlled by Sharad Darak, a known entry provider, and whether CIT(A) has erred in accepting the retraction of assessee as genuine ignoring the decision of Hon'ble SC in the case of Bannalal Jat constructions Pvt Ltd Vs ACIT [2019] 106 Taxmann.com 128(SC). 4.Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 94,16,014/-made by the AO under section 69C r.w.s 115BBE of Income Tax Act on account of interest expenses on bogus unsecured loans.” 20. Ground no.1 to 3 are regarding non-consideration of remand report and accepting retraction made by Shri Naveen Jain. These are common and identical grounds as raised for A.Y.2012-13. We have already considered and decided the issue involved in ground nos.1 to 3 for A.Y.2012-13. Accordingly in view of our finding on ground no. 1 to 3 for A.Y.2012-13 these grounds of revenue’s appeal stand dismissed. 21 Ground no.4 is regarding the addition made by the AO on account of interest expenses which was deleted by the Ld. CIT(A). This issue is consequential to the disallowance of unsecured loan taken by the assesse in the preceding assessment years. In view of our finding on the issue of IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 75 of 77 Page 75 of 77 addition on account of unsecured loan in the preceding year the disallowance made by the AO on account of interest expenditure which is consequential to the addition of unsecured loan would not survive. Accordingly ground no.4 of the revenue’s appeal is dismissed. CO NO. 1/Ind/2023 For A.Y.2017-18 22. The assesse has raised following grounds of appeal: “1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs.11,02,955/- u/s 68 r.w.s. 115BBE on account of alleged unaccounted income and that too by recording incorrect facts and findings and in violation of principles of natural justice. 2. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making addition of Rs.11,02,955/- w/s 68 r.w.s. 115BBE, is bad in law and against the facts and circumstances of the case. 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) ought to have quashed the impugned assessment order passed by Ld. AO without there being requisite approval in terms of section 153D and in any case approval, if any, is mechanical without application of mind and is no approval in the eyes of law. 4. That the cross objector craves the leave to add, amend, modify, delete any of the ground(s) of cross objection before or at the time of hearing.” 23. Ground no.1 & 2: The AO has given the details of the plots sold by the assesse to five persons against consideration received in Cheque as well as in cash which are found recorded in the seized documents BS-2. The details of the consideration received from these five buyers are given by the AO as under: Sr. No. Name of Customer Amount receive by Cheque/draft(Rs.) Amount received in cash (Rs.) Date of payment 1. Sajid Khan 17,85,600/- 2,76,650/- 08.06.2016 IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 76 of 77 Page 76 of 77 2. Hemand Shukla 17,85,600/- 2,76,650/- 18.05.2016 3. Rajnish Sharma 11,16,060/- 1,74,770/- 18.05.2016 4. Siddharth Basu 17,85,600/- 2,90,635/- 18.05.2016 5. Ram Narayan Singh 5,04,432/- 84,250/- 03.06.2016 Total receipts in cash Rs. 11,02,955/- 23.1 This issue is common to the issue of cash received against sale of one plot based on the seized documents found during the course of search and seizure action at the business premises of the assesse as raised by the assesse in ground no.5 for A.Y.2016-17. 23.2 In view of our finding on this issue as raised in ground no.5 of the appeal of the assessee for A.Y.2016-17 the addition made by the AO and confirmed by the Ld. CIT(A) is upheld except the provisions of section 68 of the Act applied by the AO would not attract when the alleged cash receipts are not found recorded in the books of account and therefore, the addition would be unaccounted business income. 24. Ground no.3 is regarding validity of the assessment order passed by the AO in absence of valid sanction/approval u/s 153D of the Act. 24.1 Before us the ld. Counsel for the assesse had not advanced any argument on this issue. We note that the assessing officer has given the details of the approval taken from Additional CIT in para 13 of the assessment order as under: “13. This order is passed with the prior approval of the Addl. Commissioner of Income Tax (Central). Indore u/s 153D of the Income Tax Act, 1961 vide letter F.No. Addl. CIT (Central)/Ind./153D/2018- 19/1549 dated 29/12/2018.” 24.2 Accordingly in the facts and circumstances of the case when the AO has obtained the approval u/s 153D and assessee has not brought before IT(SS)A No.8 & others/Ind/2022 Shri Krishna Devcon Ltd. Page 77 of 77 Page 77 of 77 us anything to show contrary ground no.3 of the assesse’s Cross Objection is dismissed. 25. In the result, appeals of assesse for A.Y. 2016-17 & CO for 2017-18 are partly allowed and appeals of revenue for Assessment Years- 2012-13, 2014-15, 2016-17 & 2017-18 are dismissed. Order pronounced in the open court on 21.08.2023. Sd/- Sd/- (B.M. BIYANI) (VIJAY PAL RAO) Accountant Member Judicial Member Indore, 21.08.2023 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore