ACIT, Central Circle-1(2), Ahmedabad V. Anusthan Buildcon Pvt Ltd, Ahmedabad

ITSSA 360/AHD/2018

• Counselvise Citation: [2023] 101 COUNSELVISE.COM (IT) 9553 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 10 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-12-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-09-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 02-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: THESECONDPARTOFTHEPROVISO; .WEHAVEHEARDTHELD.DRANDPERUSEDTHEMATERIALSAVAILABLEONRECORD.ADMITTEDLY
• Keywords: Search and seizure

Judgement Text

आयकरअपीलीयअधिकरण , अहमदाबादनयायपीी INTHEINCOMETAXAPPELLATETRIBUNAL, ‘’B’’BENCH,AHMEDABAD BEFORESHRIWASEEMAHMED,ACCOUNTANTMEMBER And SHRISIDDHARTHANAUTIYAL,JUDICIALMEMBER Revenueby:ShriSudhenduDas,CITDR Assesseeby:WrittenSubmission Sl. No(s) IT(SS)ANo(s)Asset. Year(s) Appeal(s)by Appellantvs.Respondent AppellantRespondent 1-2 IT(SS)ANos.359- 360/Ahd/2018 2012-13 & 2013-14 A.C.I.T., CentralCircle-1(2), Ahmedabad. AnushthanBuildcon Pvt.Ltd., 5-B,Vasupujya Society,Paldi, Ahmedabad-380001. PAN:AAJCA3647B 3-4IT(SS)ANo.302- 303/Ahd/2018 2013-14 & 2014-15 Anushthan BuildconPvt. Ltd., 5-B,Vasupujya Society,Paldi, Ahmedabad- 380001. PAN:AAJCA3647B A.C.I.T., CentralCircle-1(2), Ahmedabad. 5.IT(SS)A No.355/Ahd/2018 2015-16D.C.I.T., CentralCircle-1(2), Ahmedabad. AnushthanBuildcon Pvt.Ltd., 5-B,Vasupujya Society,Paldi, Ahmedabad-380001. PAN:AAJCA3647B (Applicant)(Respondent) IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 2 सुनवाईकीतारीख /DateofHearing:19/09/2023 घोषणाकीतारीख /DateofPronouncement:13/12/2023 आदेश/ORDER PERWASEEMAHMEDACCOUNTANTMEMBER: ThecaptionedappealshavebeenfiledattheinstanceofRevenueandthe assesseeagainsttherespectiveordersoftheLearnedCommissionerofIncome Tax(Appeals),Ahmedabadarisinginthematterofassessmentorderpassed unders.153Ar.w.s.143(3)oftheIncomeTaxAct,1961(here-in-afterreferredto as"theAct")relevanttotheAssessmentYearsasmentionedinthecausetitle. First,wetakeupIT(ss)ANo.359/Ahd/2018,anappealbytheRevenueforAY 2012-13 2.TheRevenuehasraisedfollowinggroundsofappeal: 1.Onthefactsandinthecircumstancesofthecaseandinlaw,theLd.CIT(A)haserred inlawandonfactsindeletingtheadditionofRs.5,27,00,000/-onaccountofu/s68as unexplainedcreditintheformofsharecapitalandsharepremiumonthegroundthatno incriminatingmaterialwasfoundduringsearchandalsoonmeritsoftheentriesreceived, inspiteoftheoverwhelmingevidencefoundinthesearchactionatB-406,Wallstreet-II, Ellisbridge,Ahmedabadandalsobecausetheingredientsofsection68werenotsatisfied inrespectofthesharecapitaladdedbytheAO. 2.Onthefactsandinthecircumstancesofthecaseandinlaw,theLd.CIT(A)haserred inlawandonfactsindeletingtheadditionofRs.10,54,000/-onaccountofu/s69Cas unaccountedexpenses. 3.Onthefactsandinthecircumstancesofthecaseandinlaw,theLd.CIT(A)haserred inlawandonfactsindeletingtheadditionofRs.55,11,000/-onaccountofu/s68as unexplainedcreditintheformofunsecuredloans. 4.Onthefactsandinthecircumstancesofthecaseandinlaw,theLd.CIT(A)haserred inlawandonfactsinadmittingadditionalevidenceproducedbytheassesseebeforethe CIT(A)inrespectofunsecuredloanwithoutfollowingtheprocedureprescribedinRule46A andwithgivingAssessingOfficeropportunitytoexaminetheevidenceasmandatedby Rule46AoftheITRules,1962 5.Onthefactsandinthecircumstancesofthecaseandinlaw,theLd.CIT(A)haserredin lawandonfactsisnotappreciatingtheprovisionsofsection153AoftheITAct,1961 whichrequiresthetotalincometobebroughtundertaxwithoutanyrestrictions. IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 3 6.Onthefactsandinthecircumstanceofthecaseandinlaw,theLd.CIT(A)haserredin lawandonfactsinholdingthatsuchassessmentorre-assessmentu/s153AoftheITAct, 1961istoberestrictedonlytotheincriminatingmaterialsfoundduringthesearch. 7.Onthefactsandinthecircumstancesofthecaseandinlaw,theLd.CIT(A)haserred inlawandonfactsindeletingtheadditionofRs.1,10,220/-onaccountofu/s69Cas unaccountedexpenses. 8.Onthefactsandinthecircumstancesofthecaseandinlaw,theLd.CIT(A)haserred inlawandonfactsindeletingtheadditionofunaccountedexpensesofRs.12,02,49,840/- inShivSomeshwarProject(ProtectiveBasis). 9.Onthefactsandinthecircumstancesofthecaseandinlaw,theLd.CIT(A),haserred inlawandonfactsindeletingtheadditionofunaccountedinvestmentinCesuProjectof Rs.19,69,60,000/- 10.Onthefactsandinthecircumstancesofthecaseandinlaw,theLd,CIT(A)oughtto haveupheldtheorderoftheAO. 11.Itistherefore,prayedthattheorderoftheLd.CIT(A),besetasideandthatoftheA.O berestoredtotheaboveextent. 3.TheinterconnectedissueraisedbytherevenuevidegroundNo.1ofits appealisthatthelearnedCIT(A)erredindeletingtheadditionofcreditof unexplainedsharecapitalundersection68oftheActonmeritaswellason technicalcountbyholdingthatinsearchassessmentadditioncanonlymade basedonincriminatingmaterialandfurthererredinholdingthatnoincriminating materialfound. 4.Thefactsinbriefarethattheassesseeinthepresentcase,aprivate company,claimedtobeengagedinthebusinessofinvestmentandtradingin shares&securities.TheassesseeisalsoapartnerinanLLPnamelyM/sShah HiralalBuildconfor68%shareinprofitandtheassesseealsoacquired91.12% sharesofM/sGreenfiledRealityPvtLtd.Boththeseconcernsareengagedinthe businessofrealestatedevelopment.Theassesseecompanyiscontrolledbythe familymemberofShriAnilandAtulHiralalShahwhojointlyholdsmorethan50% sharesoftheassesseecompany. IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 4 4.1Theassesseefortheyearunderconsiderationi.e.A.Y.2012-13filedreturn ofincomeatRs.NILwhichwasprocessedundersection143(1)oftheAct. Subsequently,asearchproceedingundersection132oftheActwascarriedout on4 th December2014atthepremisesofShriAnilandAtulHiralalShahGroup alsoknownasentryprovider/Raju(AliasAnilHiralal)bartergroup.Theassessee companybeingpartofthegroupwasalsosubjecttoimpugnedsearchproceeding dated4 th December2014.Inconsequenceofthesearch,theproceedingsunder section153AoftheActwereinitiatedinthecaseoftheassesseefortheyear underconsiderationaswellasotherassessmentyearsfallingwithintheprescribed period. 4.2DuringthesearchproceedingsatthepremisesoftheBarterGroup,several materialsintheformofloosepapers,sheetsandelectronicdataetc.wereseized fromthegrouppremises.Accordingly,itwasallegedthatthegroupmainly indulgedintheactivityofsharemarketoperation/manipulationaswellasin receiptofunaccountedmoneyintherealestatebusinessthroughthecompanies namelyM/sSarthavInfrastructurePrivateLimited,M/sShahHiralalBuildconLLP andM/sGreenfieldRealityPvt.Thegroupgeneratedahugeamountof unaccountedincomefromtheactivityofsharemarketmanipulationand unaccountedreceiptsfromrealestatebusiness.Inordertoroundtrippingand layeringoftheunaccountedincome/receipts,thegrouphasfloatedlarge numbersofconcernintheformsofcompanies,firms,proprietaryconcernwhere theunaccountedincome/receiptswerelayeredintheguiseofsharecapitalalong withpremiumandunsecuredloan.Itwasalsoallegedthattheunaccounted income/receiptofthegrouplayeredintheguiseofsharecapital&Premiumin thedifferentgroupcompaniesweredonewiththehelpofMumbaibasedentry providerShriChandrakantShah,ShriParveenKumarJain,ShriPartikRShah.The companiesmanagedandcontrolledbytheRajuBarterGroupsuchasRajesh EnterprisePvtLtd,NeminathTradersPvtLtd,AnusthanBuildconPvtLtd(present respondentassessee)andRealMarketingPvtLtdhasreceivedhugeamountof sharecapitalalongwithpremiumindifferentfinancialyears(2007-08to2011-12) IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 5 fromthecompaniesmanagedandcontrolbytheabove-mentionedentryproviders andfromotherparties. 4.3Itwasfurtherobservedthatduringtheindependentsearchatthepremises ofentryproviderShriShrishChandrakantShah,anexcelsheetnamely“RBarter” wasfoundinwhichrunningledgeraccountofBartergroupwasmaintained.As pertheimpugnedsheetcashaggregatingtoRs.85,56,86,850/-wasreceivedfrom thebartergroupagainstanamountofRs.82,87,00,000/-accommodatedtothe bartergroupthroughwebofthecompaniesmanagedbyhimandwiththehelpof companiesmanagedbyShriParveenKumarJain.Theremainingamountswere adjustedagainsttheangadiacharges,commissionandvarioustypesofexpenses andcashpaymentofRs.2,75,94,000/-only. 4.4ItwasfoundthattheentriesrecordedintheexcelsheetfoundfromShri ShrishChandrakantShahwerecorelatingwiththematerialsfoundandseized duringanindependentsearchproceedingatthepremisesofShriPraveenKumar Jain.Further,duringthesearchattheRajuBarterGroup(assesseegroup)aloose sheetmarkedasPage247/25ofannexureA-1wasfoundfromtheofficeofShri AnilHiralalsituatedatB-406WallStreet-II,EllisbridgeAhmedabad.Therewas datewisenotingofvarioustransactionontheimpugnedsheetundertheheading “Shrish”.Theentryrecordedonpage247/25ofAnnexureA-1matchedwiththe entriesrecordedintheexcelsheetfoundfromthepremisesofShriShrish ChandrakantShah. 4.5Duringtheassessmentproceedings,theAOobservedthattheassessee companyhasreceivedsharecapitalandsharepremiumofRs.5,27,00,000/-from followingparties: EntitiescontrolledandmanagedbyShriShrishChandrakantShah (a)AdharVenturesIndiaLtdRs.50,00,000/- (b)DhanushTechnologiesLtdRs.1,00,00,000/- IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 6 Otherparties (a)KutchTextilesPvtLtd.Rs.1,50,00,000/- (b)SuperDomesticMachineLtdRs.25,00,000/- (c)JupiterBusinessLtdRs.2,02,00,000/- 4.6TheAOfurtherobservedthat,duringthesearch/surveyoperationatM/s ShahHiralalBuildconLLPandM/sGreenfieldRealityPvtLtd.,thematerialswere gatheredregardingunaccountedcashreceiptagainstthesaleofunitsoftheir respectiveprojects.Further,itwasacceptedthatthatunaccountedreceiptafter utilizingforthepaymentofon-moneyinpurchasesoflandwereofbroughtback intheguiseofsharecapitalthroughthepresentrespondentassessee. 4.7TheAOalsoobservedthatduringthesearchinthecaseofassesseegroup unaccountedcashbookmarkedasannexureA/5,A/6andA/7werefoundfrom theresidenceofShriAsitVohra,depictinginthenarrationagainstcashpayment as“AnushthanEntry”.Theamountofcashpaymentalongwiththedatematched withtheamountcreditedfromM/sJupiterBusinessLtdintheformofshare capitalintheassesseecompany. 4.8TheAOinviewoftheaboveobservationheldthatthegenuinenessof sharecapitalandpremiumhasnotbeenestablished.Likewise,theidentityofthe sharesubscriberwasalsonotfullyestablishedasthepartieswerenotfound existingonthegivenaddress.Furthermore,theassesseealsofailedtoprovidethe correctaddress.Thesharesubscribers,intheirrespectivereturnofincome,filed forAYs2009-10to2013-14haveshowneithernilincomeorverymeagreincome. Thus,thecreditworthinessofthepartieswasalsonotestablished.Hence,theAO treatedthecreditofsharecapitalandpremiumforRs.5.27croresasunexplained cashcreditundersection68oftheAct. 5.TheaggrievedassesseepreferredanappealbeforethelearnedCIT(A).The learnedCIT(A)afterconsideringtheassessmentorderandthesubmissionofthe IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 7 assesseedeletedtheadditionmadebytheAOontechnicalgroundsaswellon merit.TherelevantfindingofthelearnedCIT(A)ontechnicalgroundisextracted asunder: 5.3Factsofthecasewithreferencetothedocumentseizedduringthecourseof search,submissionsoftheappellantandcaselawsrelieduponbytheappellanthavebeen carefullyconsidered.Itisanundisputedfactthattheexcelsheetseizedfromtheharddisk, underconsiderationwasfoundduringthecourseofsearchatthepremisesofShriShirish ChandrakantShahandnotatthepremisesoftheappellant.Theexcelsheetreliedupon bytheAOformakingtheadditionisnotinthehandwritingoftheappellantorany authorizedpersononbehalfoftheappellantandneitherinthehandwritingofShriShirish ChandrakantShahithasbeenfoundintheformofexcelsheets.Thisisalsoafactthat thisexcelsheethasnotbeensignedbyanyoneandappellant'snamehasnotbeen mentionedontheexcelsheets.FurthertheAOhasalsostatedthattherecordsseized fromShriShirishChandrakantShahhavecorrelationwiththerecordsseizedfromPraveen KumarJainwhichactuallyprovesthefactthatboththepartieswererelatedandthe transactionsintheexcelsheetbelongtoboththepartiesandnameoftheappellantwas nowherementionedintheseizedmaterialorinthestatementgivenbyShriShirishShah. Thus,astheexcelsheethavenotbeensupportedbyanyindependentmaterialand evidencestoprovethefactthatactuallycashhasbeentransferredtoobtaintheshare capital.Thecontentionoftheappellantcannotbeignoredthattheappellantcompanywas incorporatedon07.04.2011anditisactuallythefirstfinancialyeari.e.F.Y.2011-12 relevanttoA.Y.2012-13duringtheyearunderconsiderationandhencegeneratingthe cashprofitstothetuneofRs.5.27croreisnotlogicallypossibleforanybusinessentityin absenceofanyevidencefoundduringthesearch.Itisalsolegallysettledprinciplethatthe presumptionu/s.292CoftheActisforthepersonfromwhosepremisesthedocumentsare foundandnotapplicabletothethirdparty.Furthertheexcelsheetsisadumbdocument asfarastheappellantisconcernedandadditionsonsuchdocumentcannotbemadein thehandsofthirdparty.TheHon'bleSupremeCourtinthecaseofV.C.Shukla1998(3) SCC410heldasunder:- "37.InBeniv.BisanDayalitwasobservedthatentriesinbooksofaccountarenot bythemselvessufficienttochargeanypersonwithliability,thereasonbeingthata mancanriotbeallowedtomakeevidenceforhimselfbywhathechoosestowrite inhisownbooksbehindthebackoftheparties.Theremustbeindependent evidenceofthetransactiontowhichtheentriesrelateandinabsenceofsuch evidencenoreliefcanbegiventothepartywhoreliesuponsuchentriesto supporthisclaimagainstanother.InHiralalv.RamRakhatheHighCourt,while negativingacontentionthatithavingbeenprovedthatthebooksofaccountwere regularlykeptintheordinarycourseofbusinessandthat,therefore,allentries thereinshouldbeconsideredtoberelevantandtohavebeenproved,said,that theruleaslaiddowninSection34ofTieActthatentriesinthebooksofaccount regularlykeptinthecourseofbusinessarerelevantwhenevertheyrefertoa matterinwhichtheCourthastoenquirewassubjecttothesalientprovisothat suchentriesshallnotalonebesufficientevidencetochargeanypersonwith liability.Itisnot,therefore,enoughmerelytoprovethatthebookshavebeen regularlykeptinthecourseofbusinessandtheentriesthereinarecorrect.Itis furtherincumbentuponthepersonrelyinguponthoseentriestoprovethatthey wereinaccordancewithfacts." SupremeCourtofIndiainthecaseofCommonCause(ARegisteredSociety)[2017]77 taxmann.com245(SC)vs.UnionofIndiaheldasunder:- IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 8 "Section69AoftheIncome-taxAct,1961,readwithsection34oftheIndian EvidenceAct,1872-Unexplainedmoney(Loosepapers)Raidswereconductedon twobusinessgroupsandincriminatingmaterialsinformofrandomsheetsand loosepapers,computerprints,harddisk,pendrivesetc.werefound-Evidenceof certainhighlyincriminatingmoneytransactionswerealsofound-However, departmenthadnoevidencetoprovethatentriesintheseloosepapersand electronicdatawerekeptregularlyduringcourseofbusinessofconcerned businesshouseWhetherthus,thesedetaileddocumentsrecoveredbyauthorities hadnoevidentiaryvaluesandtheycouldnothavebeenreliedontodirect registrationofFIRandinvestigationincaseofhighpublicfunctionariesoccupying importantofficesHeld,yesWhetherfurther,materialsinquestionwerenotonly irrelevantbutwerealsolegallyinadmissibleundersection34ofEvidenceAct- Held,yes[Paras22,24&27][Infavourofassessee]" TheHon'bleBombayHighCourtinthecaseofAdditionalCommissionerofIncomeTaxvs. MissLataMangeshkarreportedin97ITR696heldasunder:- "HeadNote:Section69AoftheIncome-taxAct,1961Unexplainedmoneys-Assessment years1962-63to1964-65-Relyingonevidenceinformofstatementsbytwopersonsthat theyhadpaidmoneyin'black'toassessee,aswellasentriesinbooksbelongingtothem regardingallegedpayments,ITOmadeadditionstoassessee'stotalincomeasincome fromundisclosedsourcesTribunal,onscrutinyofsaidstatements,havingfoundthat evidencetenderedsufferedfromseriousinfirmities,heldthatmereentriesinaccounts regardingpaymentstoassesseewerenotsufficienttoprovethatasseseehadreceived moneyinblackforwhichshedidnotissueareceipt-Tribunaldeletedadditionsaccordingly -whetherentriesinday-bookorledgerwouldbeacorroborativepieceofevidenceand oncedirectevidenceofpersonshavingmadepaymentsinblackwasdisbelieved,novalue couldbeattachedtothoseentries-Held,yes-whethertherefore,Tribunalwasjustifiedin deletingadditions-Held,Yes” InthecaseofPrarthanaConstructionPLtdv/s.DCIT(2001)118Taxman112(Ahd, Hon'bleITAT,Ahmedabad'C'Benchheldasunder:- Section158BDreadwithsection158BC,oftheIncome-taxAct,1961-Block assessmentUndisclosedincomeoffrperson-Blockperiod1985-86to21-9-1996- Duringsearchofpremisesofafirmanditspartners,itsallegedlycontainingdetails ofcertainlandtransactionpertainingtoassessee-companywereseizedand statementsofthirdpartieswererecordedundersections132(4)and131(1A)- Whetherloosepapersanddocumentsseizedfrompremisesofthirdpartiesand statementsrecordedatbackofassesseewithoutitbeingledopportunityto interrogatesaiddeponentsandwithoutbringingonrecordanysupporting evidence,couldmadebasisforaddingundisclosedincomeinhandsofassessee- Held,no-Additionswerealsomadetoassessee'sincomeonbasisofstatementof aparty,madebehindbackofassessee,toeffectthatcashpaymentsweremade byassesseetosuchpartyforacquiringdevelopmentrights-Nosearchhadtaken placeincaseofsuchpartyandnodocumentsorrecordsevidencingpaymentof on-moneywereseized-Assesseewasgivennoopportunitytocross-examinesaid party-Whetheradditionmadeonbasisofstatementofsuchpartywouldbe unsustainable-Held,yes." Duringthecourseofsearchandevenafterthesearchduringthecourseoftheassessment proceedingswhentheappellanthadrequestedforopportunityofcrossexaminationofShri ShirishChandrakantShahwhichhasnotbeengrantedtotheappellantandhenceonthe basisofthedecisionoftheHon'bleApexCourtinthecaseofAndamanTimberIndustries vs.CommissionerofCentralExcise,Kolkata-II[2015]62taxmann.com3(SC)whereinit hasbeenheldinPara6&7notallowingtheassesseetocross-examinethewitnessesby IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 9 theAdjudicatingAuthoritythoughthestatementsofthosewitnessesweremadethebasis oftheimpugnedorderisaseriousflawwhichmakestheordernullityandalsotantamount toviolationofprinciplesofnaturaljustice.TherelevantPara6&7isaunder: "6.Accordingtous,notallowingtheassesseetocross-examinethewitnessesby theAdjudicatingAuthoritythoughthestatementsofthosewitnessesweremade thebasisoftheimpugnedorderisaseriousflawwhichmakestheordernullity Inasmucliasitamountedtoviolationofprinciplesofnaturaljusticebecauseof whichtheassesseewasadverselyaffected.Itistobeborneinmindthattheorder oftheCommissionerwasbaseduponthestatementsgivenbytheaforesaidtwo witnesses.Evenwhentheassesseedisputedthecorrectnessofthestatements andwantedtocross-examine,theAdjudicatingAuthoritydidnotgrantthis opportunitytotheassessee.Itwouldbepertinenttonotethatintheimpugned orderpassedbytheAdjudicatingAuthorityhehasspecificallymentionedthatsuch anopportunitywassoughtbytheassessee.However,nosuchopportunitywas grantedandtheaforesaidpleaisnotevendealtwithbytheAdjudicatingAuthority. AsfarastheTribunalisconcerned,wefindthatrejectionofthispleaistotally untenable.TheTribunalhassimplystatedthatcross-examinationofthesaid dealerscouldnothavebroughtoutanymaterialwhichwouldnotbeinpossession oftheappellantthemselvestoexplainastowhytheirex-factorypricesremain static.ItwasnotfortheTribunaltohaveguessworkastoforwhatpurposesthe appellantwantedtocross-examinethosedealersandwhatextractionthe appellantwantedfromthem. 7.Asmentionedabove,theappellanthadcontestedthetruthfulnessofthe statementsofthesetwowitnessesandwantedtodiscredittheirtestimonyfor whichpurposeitwantedtoavailtheopportunityofcross-examination.Thatapart, theAdjudicatingAuthoritysimplyreliedupontheprice-listasmaintainedatthe depottodeterminethepriceforthepurposeoflevyofexciseduty.Whetherthe goodswere,infact,soldtothesaiddealers/witnessesatthepricewhichis mentionedintheprice-listitselfcouldbethesubjectmatterofcross-examination. Therefore,itwasnotfortheAdjudicatingAuthoritytopresupposeastowhat couldbethesubjectmatterofthecross-examinationandmaketheremarksas mentionedabove.Wemayalsopointoutthatonanearlieroccasionwhenthe mattercamebeforethisCourtinCivilAppealNo.2216of2000,orderdated 17.03.2005waspassedremittingthecasebacktotheTribunalwiththedirections todecidetheappealonmeritsgivingitsreasonsforacceptingorrejectingthe submissions". FurtherasimilarapproachhasbeentakeninthedecisionsoftheApexCourt,jurisdictional GujarathighCourtandotherHighCourtswhichareasunder: a)KishanchandChelaram&Co.Vs.CIT(1980)125ITR,723(SC): "Thestatementsofthemanagerinthosetwoletterswerebasedonhearsay,as,in theabsenceofevidence,itcouldnotbetakenthathemusthavebeenincharge oftheMadrasofficeonOctober16,1946,soastohavepersonalknowledge.The departmentoughttohavecalleduponthemanagertoproducethedocumentsand papersonthebasisofwhichhemadethestatementsandconfrontedtheassessee withthosedocumentsandpapers.Itwastruethatproceedingsundertheincome taxlawwerenotgovernedbythestrictrulesofevidence,and,therefore,itmight besaidthatevenwithoutcallingthemanagerofthebankinevidencetoprovethe letterdatedFebruary18,1955,itcouldbetakenintoaccountasevidence.But beforetheincometaxauthoritiescouldrelyuponit,theywereboundtoproduceit beforetheassesseesothattheassesseecouldcontrovertthestatements IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 10 containedinitbyaskingforanopportunitytocrossexaminethemanagerofthe bankwithreferencetothestatementsmadebyhim.Norwasthereany explanationregardingwhathappenedwhenthemanagerappearedinobedience tothesummonsreferredtointheletterdatedMarch9,1957,andwhatstatement hehadmade. b)UOIvs.T.R.Varma(1958)SCR499(507) Crossexaminationofwitnessshouldbeallowedsothattheadverseevidencecan bemetbytheoppositeparty.Onfacts,itwasheldthatsuchcrossobjectionwas allowedinthiscase. c)ThePunjab&HaryanaHighCourtinPaharChand&Sonsvs.StateofPunjab (1976)30STC211(P&H)andoftheMysoreHighCourtinNeminathAppayyaVs. JambooraaAIR1966Mys154alsolaydownclearlythattheAssessingOfficer cannotgetoverorcircumventthespecificrequestforcrossexaminationonthe groundoftheassesseenothavingproducedthewitnessesanditwasfurtherheld thatthestatementsofthosepersonswhohavenotbeencrossexaminedmustnot betakenintoaccountforanydecisionagainstthetaxpayer. d)Thereferenceisalsoinvitedtothefollowingdecisions(1)KalraGlueFactoryVs. SalesTaxTribunal&Others(S.C.)167ITR498(II)ADDLCITVs.Mukur Corporation(Gu).)111ITR312.(iii)CITVs.ChandraVilasHotel(Guj.)164ITR 102. e)RelianceisalsoplacedinthecaseofStateofKeralavs.K.T.ShahduliAIR1977 SC1627whereininteralia,ithasbeenheldasunder: "theusualmoderecognisedbylawforprovingthefactisbyproductionof evidenceandevidenceincludesoralevidenceofwitnesses.Theopportunityto provethecorrectnessofcompletenessofthereturnwould,therefore,necessarily carrywithittherighttoexaminewitnessandthatwould,therefore,necessarily carrywithitintherighttoexaminewitnessandthatwouldincludeequallythe righttocross-examinewithnessexaminedbytheSTO.Hereinthepresentcase thereturnfiledbytheasseseeappearedtotheSTOtobeincorrectand incompletebecausecertainsalesappearinginthebooksofHaziUsmankuttyand otherwholesaledealerswerenotshowninthebooksofaccountoftheassessee. TheSTOreliedontheevidencefurnishedbytheentriesinthebooksofaccountof HaziUsmankuttyandotherwholesaledealersforthepurposeofcomingtothe conclusionthatthereturnfiledbytheassesseewasincorrectorincomplete. Placedinthesecircumstances,theassesseecouldprovethecorrectnessand completenessofhisreturnonlybyshowingthattheentriesinthebooksof accountofHaziUsmankuttyandotherwholesaledealerswerefalse,bogusor manipulatedandthatthereturnsubmittedbytheassesseeshouldnotbe disbelievedonthebasisofsuchentries,andthisobviously,theassesseecouldnot do,unlesshewasgivenanopportunityofcrossexaminingHaziUsmankuttyand otherwholesaledealerswithreferencetotheiraccounts.Sincetheevidentiary materialprocuredfromorproducedbyHaziUsmankuttyandotherwholesale dealerswassoughttoberelieduponforshowingthatthereturnsubmittedbythe assesseewasincorrectandIncompletetheassesseewasentitledtoan opportunitytohaveHaziUsmankuttyandotherwholesaledealerssummonedas witnessesforcross-cxamination.Itcanhardlybedisputedthatcrossexamination isoneofthemostefficaciousmethodsofestablishingtruthandexposing falsehood.Here,itwasnotdisputedonbehalfoftherevenuethattheassesseein bothcasesappliedtotheSTOforsummoningHaziUsmankuttyandother IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 11 wholesaledealersforcross-examinationbuthisapplicationwasturneddownby theSTO.ThisactoftheSTOinrefusingtosummonHaziUsmankuttyandother wholesaledealersforcross-examinationbytheassesseeclearlyconstituted infractionoftherightconferredontheassesseebythesecondpartoftheproviso andthatvitiatedtheordersofassessmentmadeagainsttheassessee." f)TheHon'bleDelhiHighCourthasinthecaseofCITvs.SMCShareBrokerLtd. 288ITR345,heldthatnotpermittingthecrossexaminationoftheperson searchedwhileframingtheassessmentofathirdpersonswilltantamountthatthe principlesofnaturaljusticehadnotbeenfollowed.ThefindingsoftheTribunal wereconfirmedbytheHon'bleHighCourtbywhichtheTribunalhassetasidethe blockassessmentbyholdingthattheAOwasfunctioningasaquasijudicial authorityandwasunderanobligationtoadheretotheprinciplesofnaturaljustice. g)TheHon'bleSupremeCourtinthecaseofITOvs.M.PiraiChoodi,g334ITR 262(2011)hasobservedasunder: "WhereanorderhadbeenpassedbytheA.O.withoutgrantingtheassesseean opportunitytocrossexamineandtheassesseepreferredaWritPetition: HeldthattheHighCourtoughtnottohaveset-asidetheorderofassessmentbut tohaveonlygrantedtheassesseeanopportunitytocross-examinethewitness." Thus,theHon'bleSupremeCourthasset-asidethedecisionofMadrasHighCourt inthecaseofM.PiraiChoodivs.ITO(2008)302ITR40(Mad).Inthesaidcase, theassessee/WritPetitionerwasnotpresentwhenthestatementofthevillage administrativeofficerwasobtainedbytheassessingauthorityandthereforethe HighCourtobservedthatsuchastatementobtainedfromvillageadministrative officerbehindtheassessee/writpetitionerdeprivinghimanopportunitytocross- examinetothevillageadministrativeofficerwouldamounttoviolationofprinciple ofnaturaljusticeandthereforewouldvitiatetheassessmentorderandaccordingly theHighCourtset-asidetheorderoftheA.O. Accordingly,whilesettingasidetheorderoftheMadrasHighCourt,Hon'ble SupremeCourthasheldthattheassesseeshouldbegrantedanopportunityof cross-examinationofthewitness.” h)DCITvs.MahendraAmbalalPatel(2010)40DTR243(Guj.)whereinithasbeen heldasunder:- "Additioninthehandsoftheassesseehavingbeenmademerelyonthebasisofa baldstatementofathirdpartywithouttherebeinganycorroborativeevidence, theTribunalwasjustifiedindeletingtheadditionparticularlywhentheassessee wasnotallowedopportunitytocross-examinethepersonswhomadesucha statement" PrarthanaConstructionPvt.Ltd.,TaxAppealNo.79of2000(Guj.) Keepinginviewthefactsofthecaseasmentionedaboveandthesebindingjudgments, theappellant'scaseiscoveredbythisjudgment,hence,additionsmadebytheAOarenot foundjustifiedanddeservestobedeleted. 5.4SimilarlythedetailsintheforAnnexureA-6Itisanundisputedfactthatthe documentunderconsiderationwasfoundduringthecourseofsearchatthepremisesof ShriAsitVora(aliasShah)andnotatthepremisesoftheappellant.Thisdocumentisnot IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 12 inthehandwritingoftheappellantoranyauthorizedpersononbehalfoftheappellant. Thisisalsoafactthatthispaperhasnotbeensignedbyanyone.Duringthecourseof search,nostatementofShriAsitVorafromwhosepremisesthisdocumentwasfound,was recordedonthisissueandthereisnomentionthatShriAsitVorahasstatedatanystage oninvestigation/assessmentproceedingsthatthefiguresmentionedonthispaperbelong to/pertaintotheappellant.Itisalsolegallysettledprinciplethatthepresumptionu/s.292C oftheActisforthepersonfromwhosepremisesthedocumentsarefoundandnot applicabletothethirdpartyThus,thisdocumentisadumbdocumentasfarasthe appellantisconcernedandadditionsonsuchdocumentcannotbemadeinthehandsof thirdpartyonthebasisofthedecisionof(i)Hon'bleSupremeCourtinthecaseofV.C. Shukla1998(3)SCC410,(ii)SupremeCourtofIndiainthecaseofCommonCause(A RegisteredSociety)[2017]77taxmann.com245(SC)vs.UnionofIndia,(iii)Hon'ble BombayHighCourtinthecaseofAdditionalCommissionerofIncomeTaxvs.MissLata Mangeshkarreportedin97ITR696and(iv)PrarthanaConstructionPLtdv/s.DCIT(2001) 118Taxman112(Ahd,Hon'bleITAT,Ahmedabad'C'Bench.Evenintherelevantpagesof AnnexureA-6nowherethedetailsandnameofJupiterBusinessLimitedhasbeen mentioned.Nameoftheappellantiswrittentwiceandthetotalamountisonly Rs.55,00,000/-(42,00,000+13,00,000)on6thJan2012buttheAOmadetheadditions ofRs.1,67,83,500/-consideringinvestmentinJupiterBusinessLtdasnon-genuine, whereas,nameofJupiterBusinessLtdisnowherementionedintheseizedmaterial.The AOlinkedtheamountwrittenagainstthenameoftheappellantintheseizedmaterialto theregulartransactionwithJupiterBusinessLtdwithoutmakinganyenquiry.Thereisno statementofanyonerecordedonthisissue.Thus,matchingthetransactionswritteninthe diarywithtransactionofJupiterBusinessLtdisunjustified.TheAOhasextrapolatedthe figuresofadditions,whichalsonotpermissibleaspersettledlegalposition.FurthertheAO himselfstatedatpage18oftheassessmentroderthatshrAtulH.Shah&ShriAnilH. Shahhavebeenfoundindulgedinsharemarketmanipulationsandtheyhaveroutedtheir unaccountedmoneythroughvariouscompanies.AdditionsofmorethanRs.1000crore havebeenmadeinthehandsofShriAtulH.Shah&ShriAnilH.Shahforthesamereason bytheAO.Therefore,theseadditionsarenothingbutdoubletaxation,evenif,these transactionsarenotfoundgenuineforthesakeofargument.Moreover,thereisno incriminatingdocumentexceptRs.55lakh(42+13lakh)foundduringthesearch.Hence, additionsarenotfoundlegallysustainablekeepinginviewthebindingjudgementof Hon'bleHighCourtofGujarat,AhmedabadinthecaseofSaumyaConstruction. 6.BeingaggrievedbytheorderofthelearnedCIT(A),theRevenueisin appealbeforeus. 7.ThelearnedDRbeforeusfiledapaperbookrunningfrompages1to181 andreiteratedthesubmissionsbyreferringthefindingscontainedinthe assessmentorder.ThelearnedDRvehementlysupportedtheorderoftheAO. 8.Ontheotherhand,thelearnedARbeforeusfiledapaperbookrunning frompages1to441andfiledwrittensubmissionsrunninginto337pageswherein itwascontendedthattheyearindisputeisunabatedassessmentyear,andno documentofincriminatingnaturewasfoundduringthesearchproceedings.All IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 13 theitemsoftheloansappearedinthefinancialstatementsoftheassesseeand thegenuinenessofsuchloanswasalsoacceptedbytherevenue. 8.1Besidesprejudicetotheabove,itwasalsocontendedinthewritten submissionthattheAOinhisassessmentorderhasacceptedthatthebeneficiary oftheamountindisputeareM/sGreenFieldRealityandM/sHiralalBuildcon. Likewise,therewasanadditionmadeinthehandsofthemainpersonsofthe groupnamelyShriAnil/AtulHiralalShah.Assuch,theamountindisputehas alreadybeenincludedwhilecalculatingthetotalincome.Thus,itwassubmitted thattherecannotbeanyadditiontothetotalincomeoftheassessee.The assesseeinthewrittensubmissionvehementlysupportedtheorderofthelearned CIT-A. 9.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Thecontroversybeforeusarisesforour adjudicationwhetherthesharecapitalreceivedbytheassesseeisunexplained cashcreditinthemannerspecifiedundersection68oftheActinthehandsofthe assessee.Fromtheprecedingdiscussion,wenotethatthepredominantallegation oftherevenueisthattheassesseeispartofthegroupwhichisengagedin manipulatingthesharemarketandreceivingunaccountedmoneyfromitsreal estateproject.Thismoneybelongingtothegroupwasroutedthroughthewebof companiescontrolledandmanagedbytheentryprovidersinthebooksofthe differentcompaniesofthegroupi.e.bartergroup.Inthisregard,wefind pertinenttonotethattheAOintheassessmentorderhasobservedthatthe unaccountedmoneygeneratedbythebartergrouponaccountofrealestate activities,hasalreadybeensufferedtotaxinthehandsofM/sGreenFieldReality andM/sHiralalBuildcon.Likewise,therewasanadditionmadeinthehandsofthe mainpersonsofthegroupnamelyShriAnil/AtulHiralalShah.Therelevantfinding intheassessmentorderisreproducedasunder: Theassesseesubmittedvideletterdated26.12.2016thatsharecapital&premiumhad beenreceivedbyitisnotingbutthecashreceiptofrealestateprojectsShivSomeshwar IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 14 Enclave&ShivkartikEnclavedevelopedbyShahHiralalBuildconLLP.Hence,itisproved thatthesharecapital/premiumreceivedbyassesseeisnotgenuineconsideringthe acceptancesubmittedbyassessee. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX Itwasfoundduringthesearch&seizureactiononthegroundthatthemainpersonAtul HiralalShah&AnilHiralalShahbothhavebeenfoundtohaveindulgedinunaccounted sharetrading,IPO/GDRissuemanipulations&sharemarketmanipulationonalarge& systematicscale.InhandsofbothAnilShah&AtulShahinsameAY2008-09,u/s.143(3) r.w.s147dated12/08/2016,additionsofmorethanRs.800croreshavebeenmadeon theseissues. 9.1InviewoftheabovefindingoftheAO,thelearnedCIT-Awaspleasedto deletetheaddition.FromtheabovefindingoftheAO,itistranspiredthatthe assesseeisthenotthebeneficiaryofthesharecapitalshownbyitinthebooksof accounts.Furthermore,oncethesameamounthasalreadybeenaddedinthe handsoftherespectivepartiesbeinginthehandsofM/sGreenfieldrealityand M/sHiralalBuildconandinthehandsofthemainpersonsofthegroupnamely ShriAnil/AtulHiralalShah,furtheradditionwouldleadtothedoubleaddition whichisnotdesirableundertheprovisionsoflaw. 9.2Moreover,wefindthatthelearnedCIT-Ahaspasseddetailedandreasoned orderdeletingtheadditionmadebytheAO.Assuch,thefindingofthelearned CIT-Adoesnotrequireanyinterference.Accordingly,weupholdthesame.Hence, thegroundofappealoftherevenueisherebydismissed. 10.ThenextissueraisedbytheRevenuevidegroundNo.2ofitsappealis thatthelearnedCIT(A)erredindeletingtheadditionofRs.10,54,000/-under section69CoftheAct. 11.TheAOwhiletreatingthecreditofsharecapitalforRs.5.27croresas bogusaccommodationentryheldthattheassesseemusthaveincurredcertain expenditureforavailingimpugnedaccommodationentry.Thus,theAOestimated theunaccountedexpensesundersection69CoftheActat2%ofRs.5.27crore IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 15 whichworkedoutatRs.10.54Lakhsandaddedthesametothetotalincomeof theassessee. 12.Onappealbytheassessee,thelearnedCIT(A)deletedtheadditionmade bytheAOholdingthattheassesseehasexplainedthecreditofsharecapitaland premium.Therefore,ad-hocdisallowancemadebytheAOundersection69Cof theActforgettingthecreditofsharecapitalisnotsustainable. 13.BeingaggrievedbytheorderofthelearnedCIT(A),theRevenueisin appealbeforeus. 14.ThelearnedDRbeforeusreiteratedthesubmissionsbyreferringthe findingscontainedintheassessmentorder.ThelearnedDRvehementlysupported theorderoftheAO. 15.Ontheotherhand,theassesseeinthewrittensubmissionvehemently supportedtheorderofthelearnedCIT-A. 16.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialavailableonrecord.AdmittedlytheAOhastreatedsharecapitalmoney receivedbytheassesseeasaccommodationentryandaccordinglyheldthat assesseemusthaveincurredunaccountedexpenditureintheformofcommission forgettingsuchentryinitsbooks.TheentirethrustoftheRevenueformaking additionundersection69CoftheActbeingcommissionexpensespaidtoentry provideristhatthesharecapitalmoneyreceivedbytheassesseeisa bogus/accommodationentry.Attheoutset,wenotethattheadditionmadebythe AOundersection68oftheAct,treatingthesharecapitalandpremiumasbogus hasbeendeletedbyusvideparagraphNo.9ofthisorder.Oncethebasison whichtheunaccountedcommissionexpensewasaddedbytheAOitselfdoesnot stand,theimpugnedadditionofRs.10.54Lakhalsocannotbesustained.Hence, IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 16 wedonotfindanyreasontointerfereinthefindingofthelearnedCIT(A).Thus, thegroundofappealraisedbytheRevenueisherebydismissed. 17.ThenextinterconnectedissueraisedbytherevenuevidegroundNo.3to 7ofitsappealisthatthelearnedCIT(A)erredindeletingtheadditionu/s68of theActonaccountonunsecuredloanandcommissionexpenseu/s69after admittingtheadditionalevidencewithoutaffordingopportunitytotheAOand furthererredinholdingthatadditioncanonlybebasedonincriminatingmaterials. 18.TheAOduringtheassessmentproceedingsfoundthattheassesseehas receivedunsecuredloanforRs.55,11,000/-fromthefollowingparties: 1.AnkitSureshbhaiShahRs.5,00,000/- 2.DarshitJShahRs.10,00,000/- 3.PannabenPShahRs.40,00,000/- 4.SanketShahRs.11,000/- 18.1TheAOfoundthattheassesseehasnotprovidednecessarydetailswith respecttogenuinenessofthetransactionandcreditworthinessofthelenders. Theassesseealsoisnotpayinganyinterestonsuchahugeamountofloan.The AOfurtherheldthattheentiremoneylayeredintothebooksoftheassesseeand othergroupconcernintheformofunsecuredloanandsharecapitalisnothingbut theunaccountedincomeofthebartergroup.Butthefactthatthemoneycredited inthebooksoftheassesseeisunaccountedincomeofeitherAtulorAnilHiralal shahorotherconcernofgroupwillnotaffecttheapplicabilityofsection68ofthe Act.Inholdingso,theAOrelieduponthejudgmentofHon’bleCalcuttaHigh CourtinthecaseofM/sTrinetraCommerce&Trade(P.)Ltd.reportedin75 taxmann.com70.TheAOaccordinglytreatedthecreditofunsecuredloanofRs. 55.11Lakhfromtheabovepartiesasunexplainedcashcreditundersection68of theActandaddedtothetotalincomeoftheassessee.TheAOalsomadean additionofRs.1,10,220/-undersection69CoftheActbeingestimated commissionexpensesincurredfortakingthecreditofsuchunsecuredloan. IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 17 19.TheaggrievedassesseepreferredanappealbeforethelearnedCIT(A)and challengetheadditionmadebytheAOonmeritaswellasontechnicalcount. 19.1ThelearnedCIT(A)foundthattheAOinhisordernowherereferredtoany incriminatingmaterialfoundduringthesearchwithrespecttounsecuredloan receivedbytheassessee.Therefore,consideringthefactthattheyearunder considerationbeingunabatedassessmentyearforthepurposeofproceeding undersection153AoftheAct,noadditiontototalincomecanbemadein absenceofincriminatingmaterialonaccountofcreditofunsecuredloan. 20.ThelearnedCIT(A)onmeritofthecasefoundthattheassesseehas providedconfirmationfromtheloanparties,theirPAN,ITRandbankstatements. Thepartieshavedulyconfirmedthattheinterestfreeloanwasextended.The loanpartiesregularlyfilereturnofincome,andthetransactionsarecarriedout throughbankingchannelreflectinginthebankstatementoftheassesseeaswell astheparties.Therewasnodepositincashinthebankaccountoftheloan partiesbeforetransferringtheamounttotheassessee.Inthecaseoftheparty, namelySmt.PannabenPShahfromwhomloanofRs.40Lakhoutof55.11lakh credited,theassesseealsomaderepaymentofRs.28.5Lakhs.Thus,thelearned CIT(A)heldthattheassesseedulydischargedtheonuscastuponitunderthe provisionsofsection68oftheAct. 21.BeingaggrievedbytheorderofthelearnedCIT(A),theRevenueisin appealbeforeus. 22.ThelearnedDRbeforeusreiteratedthesubmissionsbyreferringthe findingscontainedintheassessmentorder.ThelearnedDRvehementlysupported theorderoftheAO. IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 18 23.Ontheotherhand,theassesseeinthewrittensubmissionvehemently supportedtheorderofthelearnedCIT-A. 24.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Admittedly,theassesseegroupwassubjectto searchproceedingsundersection132oftheActdated4 th December2014(i.e. duringthefinancialyear2014-15correspondingtoA.Y.2015-16).Accordingly,the proceedingsundersection153AoftheActandtheassessmentorderfortheyear underconsiderationi.e.A.Y.2012-13wasframedwhereinbesidesotheradditions, theadditiononaccountcreditofunsecuredloanhasbeenmadeundersection68 oftheAct.OnappealbytheassesseethelearnedCIT(A)deletedtheaddition madebytheAObothonthegroundoflawaswellasongroundofmerit.While deletingtheadditiononthegroundlaw,thelearnedCIT(A)foundthattherewas nomaterialincriminatinginnaturefoundinthecourseofthesearchinrelationto unsecuredloan.Therefore,theyearunderconsiderationbeing unabated/completedassessmentyear,anyadditionmadeintheabsenceof incriminatingmaterialisnotjustified.ThelearnedDRbeforeusvehemently arguedthatthereisnoprovisionundersection153C/153Awhichrestrictsthe assessmentorreassessmentincaseofsearchtotheextentofincriminating materialsonly. 24.1InthisregardwenotethatithasbeensettledbyvariousHon’bleCourt includingHon’bleJurisdictionalHighCourtthatthecompleted/unabated assessmentcannotbedisturbedintheabsenceofanyincriminatingmaterial/ documentswhereastheassessment/reassessmentcanbedisturbedwithrespect toabatedassessmentyears.Theword'assess'inSection153AoftheActis relatabletoabatedproceedings(i.e.thosependingonthedateofsearch)andthe word'reassess'tothecompletedassessmentproceedings.TheHon’bleGujarat HighCourtinthecaseofSaumyaConstructionPvt.Ltd.reportedin81 taxmann.com292,hasheldthattherecannotbeanyadditionofregularitems showninthebooksofaccountsuntilandunlesstherewerecertainmaterialsof IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 19 incriminatingnaturefoundduringthesearch.Thewordincriminatinghasnotbeen definedundertheAct,butitreferstothatmaterials/documents/information whichwerecollectedduringthesearchproceedingsandnotproducedinthe originalassessmentproceeding.Simultaneously,thesedocumentshadbearingon thetotalincomeoftheassessee. 24.2Nowcomingtothefactsofthecaseonhand,wenotethatadditionwas madefortheloanamountcreditedinthebooksoftheassessee.However,no materialofincriminatingnaturewasfoundduringsearchproceedingsregarding creditofsuchloan.TheAOalsodidnotrefertoanyincriminatingmaterialfound inthisregardwhichwouldhavemadebasisfortheadditionintheassessment. TheCIT(A)alsogivencategoricalfindingthatnomaterialinconnectionwithloan transactionwasfound. 24.3Atthetimeofhearing,thelearnedDRhasnotbroughtanythingonrecord referringincriminatingmaterialinconnectionwithloantransaction.Accordingly, weholdthattherecannotbeanyadditionoftheregularitemswhichwere disclosedbytheassesseeintheregularbooksofaccounts.Inholdingso,wedraw supportandguidancefromthejudgmentofHon’bleGujaratHighCourtincaseof SaumyaConstruction(P.)Ltd(supra)whereinitwasheldasunder: Thus,whileinviewofthemandateofsub-section(1)ofsection153Aineverycasewhere thereisasearchorrequisition,theAssessingOfficerisobligedtoissuenoticetosuch persontofurnishreturnsofincomeforthesixyearsprecedingtheassessmentyear relevanttothepreviousyearinwhichthesearchisconductedorrequisitionismade,any additionordisallowancecanbemadeonlyonthebasisofmaterialcollectedduringthe searchorrequisition.Incasenoincriminatingmaterialisfound,theearlierassessment wouldhavetobereiterated. 24.4Inviewoftheabove,weholdthattherecannotbeanyadditiontothetotal incomeoftheassesseeoftheregularitemsasmadebytheAOinthepresent case. 24.5Oncetheadditionontechnicalcounthasbeenheldasnotsustainablethen theothergroundsraisedbytherevenuebecomesredundant.Therefore,weare IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 20 notinclinedtoadjudicatethesame.Hencethegroundsofappealsraisedbythe Revenueareherebydismissed. 25.ThenextissueraisedbytheRevenuevidegroundNos.8&9ofitsappeal isthatthelearnedCIT(A)erredindeletingtheprotectiveadditionforRs. 12,02,49,840/-onaccountofunexplainedexpenditureintheprojectrunbyM/s ShahHiralalBuildconLLPandfurthererredindeletingtheadditionof unaccountedinvestmentintheprojectofGreenfieldRealityPvtLtd. 26.TheAOobservedthatduringthesearchattheassesseegroupcertain documentsrelatingtotherealestateproject(ShivSomeshawarProjectAlthan- Surat)ofM/sShahHiralalBuildconLLP,markedasPage-1ofannexure-A3were foundfromtheresidenceofShriAshitHaribhaiVora.Fromtheimpugnedseized document,itwasrevealedthatonmoneyofRs.16.44crorewaspaidagainstthe purchasesoflandoftheproject.Thefactofhavingmadethepaymentofland costinunaccountedcashtothetuneof₹16.44croreswasalsoadmittedbythe M/sShahHiralalBuildconLLP.TheAOwasoftheviewthattheassesseebeing partneroftheM/sShahHiralalBuildconLLPfor68%musthavecontributedtothe initialinvestmentintheprojecttothetuneofitssharei.e.68%whichworkedout atRs.11,17,92,000/-(68%of16.44crores).Further,theAOfromtheimpugned sheetalsoobservedthatanamountofexpenseforRs.1,24,38,000/-wasalso incurredontheprojectoverlandcost.Thus,basedontheidenticallogic,theAO workedtheamountofRs.84,57,840/-andopinedthatthesamemusthavebeen contributedbytheassessee.However,theAOheldthatasubstantialadditionis requiredtobemadeinthehandsoftheLLPbuttoprotecttheinterestofthe revenueaddedthesameinthehandoftheassesseeonprotectivebasis. 26.1Likewise,theAOfoundcertaindocumentmarkedaspage-5ofAnnexure- A3inrelationrealestateproject(ShivKartikEnclaveatVesu-Surat)ofM/s GreenfieldRealityPrivateLtd.(hereafterGRPL)inwhichassesseehold91.12% shares.Fromtheimpugnedsheet,itwasrevealedunaccountedinvestmentofRs. IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 21 22,74,60,000/-wasmadeinthesaidproject.Thefactofhavingcashpayment amountingtoRs.22,74,60,000/-foracquisitionoftheprojectwasalsoaccepted bytheGRPL.Accordingly,theAOheldthatthesourceofinvestmenttotheextent ofRs.22,74,60,000/-notexplained,asumofRs.19,69,60,000/-outofsuch investmentpertainstotheyearunderconsiderationandremainingtothenext year,representsunexplainedcashcredit.Hence,theAOaddedthesametothe totalincomeoftheassesseeonsubstantivebasis. 27.Onappeal,thelearnedCIT(A)afteranalyzingthefindingofassessment order,materialsfoundduringthesearchandsurveyaswellassubmissionofthe assesseemadecertainobservationillustratedasunder: (i)UndisputedlycashwaspaidagainstthepurchaseoflandbyM/sShah HiralalBuildconLLPandGRPLfortheirrespectiveprojects. (ii)Duringthesearch,therewereseveralloosepapersordocumentsfound andseizedfromthepremisesofShriAshitVohrainrelationtoprojectof M/sShahHiralalBuildconLLPandGRPLwhichwerecontainingthe informationaboutconstructionexpenses,landcostandbookingamount etc.Itisthetritelawthattheseizeddocumentsshouldbereadin totalityandharmoniouslyinordertoreachacorrectconclusion.In contrasttheAOonlychosepartofthedocumentstodrawinference againsttheassesseewhichisnotcorrect. (iii)Someofthedocumentsfoundandseizedinrelationtoboththeprojects aredatedandsomearenot,howeverthesedocumentscanbe summarizedinchronologicalorderbasedondateandtypeof transactionandtheirvaluenotedtherein.Onanalyzingseized documentsinchronologicalorderinthecaseoftheprojectofM/sShah HiralalBuildconLLP,itcanbeseenthatprojectwasstartedbefore1 st October2011andreceiptofthebookingamountswerestartedbefore thatdate.ThelandfortheprojectofM/sShahHiralalBuildconLLP wereregisteredvidedeeddated14-03-2012.Thus,theobservationof IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 22 theAOthatnopossibilityofbookingamountatthetimeofpurchaseof landiswrong. (iv)Likewise,analysisofseizeddocumentsinrelationtotheprojectofGRPL inchronologicalorder,itcanbeseenthatreceiptsofbookingamount werestartedbefore09-04-2012i.e.beforetheregistrationofland purchased. (v)Theseizedmaterialnowherecontainsthenameoftheassessee.Thus, theAOwronglyanalyzedtheseizedmaterial. 27.1Thus,thelearnedCIT(A)basedonaboveobservationacceptedthe contentionoftheassesseethatcashpaymentsagainstthepurchaseoflandfor projectweremadeoutofbookingamounts.ThefirmM/sShahHiralalBuildcon LLPandGRPLhavealreadyofferedincomeonaccountofon-moneyreceiptinthe bookingofunitsoftheirrespectiveprojects.Therefore,noadditioninthehandof theassessee,evenonprotectivebasiscanbemadeinthegivenfactsand circumstances. 28.BeingaggrievedbytheorderofthelearnedCIT(A),theRevenueisin appealbeforeus. 29.ThelearnedDRbeforeusreiteratedthesubmissionsbyreferringthe findingscontainedintheassessmentorder.ThelearnedDRvehementlysupported theorderoftheAO. 30.Ontheotherhand,theassesseeinthewrittensubmissionvehemently supportedtheorderofthelearnedCIT-A. 31.Wehaveheardtherivalcontentionsofbothpartiesandperusedthe materialsavailableonrecord.Attheoutset,wenotethatbasedonsameseized materials,identicaladditiononaccountonmoneypaidbyM/sShahHiralal BuildconLLPandGRPLagainstthepurchaseoftheirrespectiveprojectlandwas IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 23 alsomadeinthehandofShriAnkitSureshbhaiShahwhichwasdeletedbythe learnedCIT(A)onsamereasoningasheldinthecaseofthepresentassessee.In thecaseofShriAnkitSureshbhaiShahtheRevenuewasinappealbeforethis TribunalinIT(SS)ANo.343/Ahd/2018whichhasbeendecidedvideorderdated 27 th September2023infavouroftheassesseebyobservingasunder: 10.Wehaveheardtheld.DRandperusedthematerialsavailableonrecord.Admittedly, inthecaseonhand,theAOmadeprotectiveadditioninthehandsoftheassesseein differentassessmentyearsonaccountofallegedinitialunaccountedinvestmentsand unaccountedreceiptintheprojectsofconcernsnamelyM/sShahHiralalBuildconLLPand GRPL.TheconceptofprotectiveassessmentisnotdefinedintheprovisionsoftheAct. However,thesamehasbeenusedbytherevenueauthorityasaprecautionarytoolwhere thereissomeincomeaccruedorarise,buttheAOisnotsurewhoisliabletopaytaxon suchincome,theAOmayproceedtoassesssuchincomeonprotectiveandsubstantive basis.TheHon’bleSupremecourtinthecaseofLaljiHaridasvs.ITOreportedin[1961]43 ITR387hasdefinedtheconceptofprotectiveassessmentasunder: Incaseswhereitappearstotheincome-taxauthoritiesthatcertainincomehas beenreceivedduringtherelevantassessmentyearbutitisnotclearwhohas receivedthatincomeandprimafacieitappearsthattheincomemayhavebeen receivedeitherbyAorBorbybothtogether,itwouldbeopentotherelevant income-taxauthoritiestodeterminethesaidquestionbytakingappropriate proceedingsbothagainstAandB. 10.1Theobjectiveoftheprotectiveassessmentisthatincasesubstantiveassessment madeinthehandofotherpersonnotsustainedthentaxshallbecollectedfromthe personinwhosehandprotectiveassessmenthasbeenmade.However,theconceptof protectiveorsubstantiveassessmentonlybeappliedwhereitisestablishedbeyonddoubt thatsomeincomehasbeenaccruedorariseninaparticularassessmentyearbutthereis someuncertaintyaboutthepersonwhoisliabletotax.Inotherwordthisconceptcannot beappliedincaseswhereitcannotbeestablishedbeyonddoubtthattheincomehas accruedorarises.Inholdingso,wedrawsupportandguidancefromtheorderof coordinatebenchofthistribunalincaseofITOward10(1)Ahmedabadvs.KetanB ThakkarHUFreportedin[2015]61taxmann.com18whereinitwasheldasunder: Theprotectiveassessmentofanincomecanbemadewhere,intheopinionofthe AssessingOfficer,anincomehasdefinitelyariseninaparticularassessmentyear butthereisanydoubtabouttheentityinwhoseincomeistobebroughttotax.In thelightofthislegalposition,whencourtreverttothefactsofthepresentcase, thecourtfindthatevenincomehavingarisenisnotfreefromdoubtsincethe AssessingOfficerhimselfisnotsureabouttheembezzlementhavingactually takenplace.Inthecourseofassessmentof'V',itisanadmittedpositionthatthe AssessingOfficerhasdisallowedtheembezzlementlossandisinappealagainst suchadisallowance.Whenthefactofembezzlementisnotacceptedbythe AssessingOfficer,therecannotbeanyoccasiontomakesubstantiveassessment andprotectiveassessmentinrespectofsuchanembezzlementincome.The questionofprotectiveassessmentofsuchanincomeinthehandsoftheassessee, onprotectivebasis,couldhaveariseninasituationinwhich,forexample,the AssessingOfficerwastocometoaconclusionthatembezzlementinhastaken placebuthewasnotsureastowhohasdonetheembezzlement.Ofcourse,even thisproceedsontheassumptionthatanamountembezzledbytheassesseeform hisemployer,evenifthatbeso,wouldconstitutehisincomenotwithstandingthe factthat,insuchasituation,thefactofunlawfulgainsarecoupledwith correspondingobligationtoreturnthesametoitsrightfulowner.[Para12] IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 24 10.2Comingtothefactsofthecasetohand,basedoncertainpapersfoundfromthe premisesofthirdpartynamelyShriAshitVohra,containingtheinformationaboutcash paidagainstthelandpurchasedfortheproposedrealestatedevelopmentprojectofM/s ShahHiralalBuildconandGRPL,concludedthattheassesseemadeunaccounted investmentandreceivedshareinunaccountedbookingreceiptintheratioofinitial contributioninsubsequentyears.However,thenameoftheassesseewasnotappearing inimpugnedseizedmaterialbasedonwhichtheAOproceededtomakeprotectiveaddition inthehandsoftheassesseeandsubstantiveadditioninthehandofonShriGautambhai. Fromtheassessmentorder,wenotethattheAOonlyreferredonepaperforeachproject, containingtheinformationaboutlandcostonrightsideandonleftsideofsamepage, nameof4personinabbreviatedformwaswrittenalongwithcertainamount.TheAO decodedoneoftheabbreviation“G”asGautambhai”andconcludedthathehasmade initialcontributiononbehalfoftheassesseeintheproposedprojects.Therewasno reasoningorbasisassignedbyAOforhisconclusion.Ontheotherhand,thelearned CIT(A)foundthattherewereseveralpapersinrelationtotheprojectsfoundduringthe searchatthepremisesofShriAshitVohra.ThelearnedCIT(A)onanalysisofeachand everyseizedpaperinchronologicalorderfoundthattheprojectswerestartedandbooking amountwasreceivedbytheboththeconcernevenbeforetheregistrationofpurchase deedofland.Theld.CIT(A)alsofoundthatthecashpaymentagainstthelandpurchase weremadefromthebookingamountreceivedovertheperiod.Thenamesnotedonthe seizedpaperrepresentthepersonthroughwhomthebookingamountswerecollected. ThefindingofthelearnedCIT(A)hasnotbeencontrovertedbythelearnedDRbasedon anysubstantivematerials.Thus,fromthefindingofthelearnedCIT(A)itisemergedthat theconcernnamelyM/sShahHiralalBuildconandGRLPstartedtheirrespectiverealestate projectinwhichtheycollectedunaccountedbookingamountswhichwasutilizedfor unaccountedpaymentagainstpurchaseoflandandotherunaccountedexpenditure.Thus, weareoftheopinionthatwhatevertheunaccountedreceiptsarisefromtheseized materialsweretaxableinthehandsofthoseconcernsandthoseconcernsindeedhave offeredincomebyincludingtheunaccountedbookingreceiptintheirturnover.TheAOhas wronglyanalyzedtheseizedmaterialsandaccordinglyreachedtothewrongconclusion thattheassesseehasmadeinvestmentincashintheprojectsandsubsequentlyreceived sharesinbookingamountinproportionofinitialcontribution.Accordingly,weareofthe viewthatnoadditioninthehandoftheassesseeisrequiredtobemadeunderthegiven factsandcircumstances.Therefore,wedonotfindanyreasontointerfereinthefindingof thelearnedCIT(A).Hencethegroundofappealraisedbytherevenueforall4appealsare herebydismissed. 31.1Respectfully,followingtheorderofthistribunalinthegroupcaseofthe assesseeonsamedispute,weherebyconfirmtheorderofthelearnedCIT(A). Hence,thegroundofappealraisedbytheRevenueisherebydismissed. 32.ThegroundNos.10and11oftheRevenue’sappealaregeneralinnature, hencethesameareherebydismissedaccordinglyasinfructuous. 33.Intheresult,theappealoftheRevenueisherebydismissed. IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 25 ComingtoIT(SS)No.360/Ahd/2018,anappealbytheRevenueforA.Y. 2013-14 34.TheRevenuehasraisedfollowinggroundsofappeal: 1.Onthefactsandinthecircumstancesofthecaseandinlaw,theLd.CIT(A)haserred inlawandonfactsindeletingtheadditionofadditionofRs.22,03,47,000/-madebythe AOu/s*0.68oftheITAct,1961onthegroundthatnoincriminatingmaterialrelatingto theseloanswasfoundduringthesearchaction. 2.Onthefactsandinthecircumstancesofthecaseandinlaw,theLd.ClT(A)haserredin lawandonfactsisnotappreciatingtheprovisionsofsection153AoftheITAct,1961 whichrequiresthetotalincometobebroughtundertaxwithoutanyrestrictions. 3.Onthefactsandinthecircumstanceofthecaseandinlaw,theCIT(A)haserredinlaw andonfactsinholdingthatsuchassessmentorre-assessmentu/s153AoftheITAct, 1961istoberestrictedonlytotheincriminatingmaterialsfoundduringthesearch. 4.Onthefactsandinthecircumstanceofthecaseandinlaw,theLd.CIT(A)haserredin lawandonfactsindeletingonmerittheadditionofRs.79,00,000/-outoftheadditionof Rs.22,03,47,000/-onaccountofunsecuredloan,holdingthesametobegenuine,after consideringdocumentsfurnishedbeforehim. 5.Onthefactsandinthecircumstancesofthecaseandinlaw,theLd.CIT(A)haserred inlawandonfactsinadmittingadditionalevidenceproducedbytheassesseebeforethe CIT(A)inrespectofunsecuredloanwithoutfollowingtheprocedureprescribedinRule46A andwithgivingAssessingOfficeropportunitytoexaminetheevidenceasmandatedby Rule46AoftheITRules,1962 6.Onthefactsandinthecircumstancesofthecaseandinlaw,theLd.CIT(A)haserred inlawandonfactsindeletingtheadditionofadditionofRs.44,06,940/-(2%of Rs.22,03,47,000/-)madebytheAObyconsideringtheunaccountedexpensesincurredfor obtainingtheunsecuredloansofaccommodationentry. 7.Onthefactsandinthecircumstancesofthecaseandinlaw,theLd.CIT(A)haserred inlawandonfactsindeletingtheadditionofRs.3,05,00,000/-madebytheAssessing Officeronaccountofunaccountedinvestment. 8.Onthefactsandinthecircumstancesofthecaseandinlaw,theLd.CIT(A)oughtto haveupheldtheorderoftheA.0. 9.Itis,therefore,prayedthattheorderoftheLd.CIT(A)besetasideandthatoftheA.O. berestoredtotheaboveextent. 35.TheinterconnectedissueraisedbytherevenuevidegroundNos.1to6of itsappealisthatthelearnedCIT(A)erredindeletingtheadditionmadebytheAO u/s68oftheActforRs.22,03,47,000/-onaccountonunsecuredloanbyholding thattheadditioncanonlybebasedonincriminatingmaterialandfurthererredin deletingthepartadditionofRs.79lakhonmeritafteracceptingadditional IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 26 evidenceandfurthererredindeletingthecommissionexpensesu/s69CoftheAct forRs.44,06,940/-only. 36.TheAOduringtheassessmentfoundthattheassesseehasreceived unsecuredloanforRs.22,03,47,000/-fromthefollowingparties: 1.AsopalavFltRs.1,60,00,000/- 2.BirajManipexRs.29,00,000/- 3.GratifyManagementRs.5,00,00,000/- 4.MahimaClothingRs.2,10,00,000/- 5.NatikChemicalsPvtLtdRs.5,00,00,000/- 6.NeminathTrades(P)LtdRs.16,00,000/- 7.RajratnaBuildlink(P)LtdRs.3,70,00,000/- 8.RatnakarEnterprisesRs.1,74,47,000/- 9.SarkiwadSaranRs.28,00,000/- 10.ShareyamHotelP.LtdRs.34,00,000/- 11.SumitBunglowOPRs.1,82,00,000/- 36.1TheAOfoundthattheassesseehasnotprovidednecessarydetailswith respecttogenuinenessofthetransactionandcreditworthinessofthelender.The assesseeisalsonotpayinganyinterestonsuchahugeamountofloan.TheAO furtherheldthatentiremoneylayeredintothebooksoftheassesseeandother groupconcernsintheformofunsecuredloanandsharecapitalisnothingbutthe unaccountedincomeofthebartergroup.Butthefactthatthemoneycreditedin thebooksoftheassesseeisunaccountedincomeofeitherAtulorAnilHiralalshah orotherconcernofgroupwillnotaffecttheapplicabilityofsection68oftheAct. Inholdingso,theAOrelieduponthejudgmentofHon’bleCalcuttaHighCourtin thecaseofTrinetraCommerce&Trade(P.)Ltd.reportedin75taxmann.com70. TheAOaccordinglytreatedthecreditofunsecuredloanofRs.22,03,47,000/- fromtheabovepartiesasunexplainedcashcreditundersection68oftheActand addedtothetotalincomeoftheassessee.TheAOalsomadeanadditionofRs. IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 27 41,06,940/-undersection69CoftheActbeingestimatedcommissionexpenses incurredfortakingthecreditofsuchunsecuredloan. 37.TheaggrievedassesseepreferredanappealbeforethelearnedCIT(A)and challengedtheadditionmadebytheAOonmeritaswellasontechnicalcount. 38.ThelearnedCIT(A)foundthattheAOinhisordernowherereferredtoany incriminatingmaterialfoundduringthesearchwithrespecttounsecuredloan receivedbytheassessee.Therefore,consideringthefactthattheyearunder considerationbeingunabatedassessmentyearforthepurposeofproceeding undersection153AoftheAct,noadditiontototalincomecanbemadein absenceofincriminatingmaterialonaccountofcreditofunsecuredloan. 38.1However,thelearnedCIT(A)onthemeritoftheadditionconfirmed majorityofadditionmadebytheAOexceptdeletingtheadditionmadeincaseof followingpartiesforRs.79lakhonly. (1)BirajManipexRs.29Lakh (2)NeminathTradersPvtLtdRs.16Lakh (3)ShreyamHotelPvtLtdRs.34Lakh 38.2Similarly,thelearnedCIT(A)deletedtheadditionmadeundersection69C oftheActrepresentingestimatedcommissionexpensespaidfortaking accommodationentryontechnicalcount.However,onmerit,theld.CIT-A confirmedtheadditioninproportionoftheadditionupheldundersection68ofthe Act. 39.BeingaggrievedbytheorderofthelearnedCIT(A),boththerevenueand theassesseeareinappealbeforeus.Therevenueisinappealagainstthedeletion ofadditionontechnicalaswellasagainstthepartadditiondeletedonmerit whereastheassesseeisinappealagainsttheadditionconfirmedonmerit.The relevantgroundsofassessee’sappealinIT(SS)No.302/Ahd/2018readasunder: IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 28 1.Ld.CIT(A)erredinlawandonfactsinconfirmingdisallowanceofRs.21,24,47,000/- ofunsecuredloanreceivedbyinvokingprovisionofsection68ignoringfactthatappellant hasdischargeditsonusbyprovidingidentity,genuinenessandcreditworthinessandall amountsreceivedthroughbankingchannel.Ld.CIT(A)oughttohaveconsidered submissionofappellantanddeletethedisallowance.Itbesoheldnow. 2.Ld.CIT(A)oughttohaveconsideredthefactthatmerenon-chargingofinterestdoesn't leadstotransactionasnon-genuineasappellantcastisonus.Itbeheldsonow. 3.Ld.CIT(A)oughttohavemadeenquirybyissuingsummonstotheunsecuredloan partiesasappellanthasdischargedburdencastonhimandoughttohaveintimated concernedAOofunsecuredloanpartiesincaseofanyirregularitiesandnotconfirmed additionincaseofappellant.Itbesoheldnow. 4.Ld.CIT(A)oughttonottohaveconfirmedRs.42,48,940/-ofunaccountedexpenseson accommodationentryofunsecuredloanu/s69Conpresumptionbasiswithoutany corroboratingmaterialfound.Itbesoheldnow. 5.Ld.CIT(A)oughtnottohavegivenhisfindingsonmeritsregardingunsecuredloanu/s 68andunaccountedexpensesu/s69CoftheActasvalidityofassessmentorderframed u/s153AoftheActhasalreadyquashedasnoincriminatingmaterialwasfoundduring searchproceedingsandoughtnottohaveenteredintofutileexercise.Itbesoheldnow. 40.ThelearnedDRbeforeusreiteratedthesubmissionsbyreferringthe findingscontainedintheassessmentorder.ThelearnedDRvehementlysupported theorderoftheAO. 41.Ontheotherhand,theassesseeinthewrittensubmissionreiteratedthe contentionsraisedbeforetheauthoritiesbelow. 41.1BoththelearnedDRandtheLearnedARsupportedtheorderofthe authoritiesbelowtotheextentfavorabletothem. 42.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Attheoutset,wenotetheidenticalgroundof appealwasraisedbytherevenueforAY2012-13inIT(SS)359/Ahd/2018,while decidingthegroundofappealofrevenueforA.Y.2012-13,wehavegivendetailed findingvideparagraphNo.24ofthisorderthatinthecaseofunabated assessmentyearnoadditionofregularitemcanbemadeintheabsenceof incriminatingmaterialfoundinthecourseofsearchproceedingatthepremisesof theassessee.InyearunderconsideratetheAOwhilemakingadditionof IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 29 unsecuredloanhasnowherereferredtoanyincriminatingmaterialfoundwhich hasbeenmadebasisforsuchaddition.Therefore,inourconsideredopinion,the learnedCIT(A)hasrightlydeletedtheadditionmadebytheAOontechnicalcount. Hence,thegroundofappealoftherevenueonthegroundoflaw/technical groundisherebydismissed. 43.Comingtothegroundsofappealraisedbytherevenueandbythe assesseeonmerits,weareoftheopinionthatonceadditionitselfisnot sustainableonthegroundoflaw,theothergroundsbecomeredundantor infructuous.Therefore,wearenotinclinedtoadjudicatethesame.Hencethe groundsofappealraisedbytheRevenueandbytheassesseeonmeritarehereby dismissedasinfructuous. 44.ThenextissueraisedbytheRevenuevidegroundNo.7ofitsappealis thatthelearnedCIT(A)erredindeletingtheadditionofunaccountedinvestment ofRs.3.05croresintheprojectofGRPL. 45.Attheoutset,wenotethattheissuesraisedbytherevenueinitsground appealfortheAY2013-14areidenticaltotheissuesraisedbytherevenuein IT(SS)ANo.359/AHD/2018fortheassessmentyear2012-13inthegroundNo.9. Therefore,thefindingsgiveninIT(SS)ANo.359/AHD/2018shallalsobe applicablefortheyearunderconsiderationi.e.AY2013-14.Thegroundofappeal oftherevenuefortheassessment2012-13hasbeendecidedbyusvide paragraphNo.31ofthisorderagainsttheRevenue.ThelearnedARandtheDR alsoagreedthatwhateverwillbethefindingsfortheassessmentyear2012-13 shallalsobeappliedfortheyearunderconsiderationi.e.AY2013-14.Hence,the groundofappealfiledbytherevenueisherebydismissed. 46.ThegroundsofappealbearingNos.8&9oftheRevenue’sappealare generalinnature.Hence,thesamearenotadjudicatedanddismissedas infructuous. IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 30 47.IntheresultappealoftheRevenueisherebydismissed. ComingtoIT(SS)ANo.302/AHD/2018,anappealbytheassesseeforAY 2013-14 48.TheinterconnectedissueraisedbytheassesseevidegroundNos.1to5of itsappealisthatthelearnedCIT(A)erredindecidingtheissueofadditionof unsecuredloanonmeritandtherebyconfirmingtheadditiononmeritforRs. 21,24,47,000/-undersection68oftheActandRs.42,48,940/-undersection69C oftheAct. 49.Attheoutset,wenotethattheissueraisedbytheassesseehasbeen adjudicatedalongwiththegroundofappealoftherevenueinIT(SS)No. 360/Ahd/2018.ThegroundofappealoftheRevenueinIT(SS)No.360/Ahd/2018 hasbeenadjudicatedvideparagraphNo.42to43ofthisorderwhereintheissue raisedbytheassesseehasbeendismissedasinfructuous.Fordetaileddiscussion, pleaserefertothesaidparagraphofthisorder.Hence,thegroundofappealof theassesseeisherebydismissedasinfructuous. 50.ThenextissueraisedbytheassesseevidegroundNos.6&7ofitsappeal areinrelationtointerestu/s234A,234Band234CoftheActandinitiationof penaltyproceedingu/s271(1)(c)oftheAct.Boththeissuesraisedbythe assesseeareeitherconsequentialorprematuretodecide.Hence,thesameare herebydismissedaccordingly. 51.Intheresult,theappealoftheassesseeisherebydismissedasinfructuous. ComingtoIT(SS)ANo.303/Ahd/2018,anappealbytheassesseeforAY 2014-15 IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 31 52.TheonlyeffectiveissueraisedbytheassesseeisthatthelearnedCIT(A) erredinconfirmingtheadditionundersection68oftheActforRs.2.945crores andproportionateestimatedcommissionexpensesforRs.5,89,000/-u/ssection 69CoftheAct. 53.Theassesseeduringtheyearunderconsiderationhasshowntohave receivedunsecuredloamofRs.2.945croresfromthepartynamelyM/sRatnakar Enterprises.TheAOfoundthattheassesseehasnotfurnisheddetailsregarding thegenuinenessofthetransaction.Furthermore,theimpugnedpartyfortheAY 2011-12to2015-16haseitherfiledreturnofincomeorshownverynegligible income.Further,consideringthefactthattheassesseegroupisengagedin layeringofunaccountedincome,thegenuinenessoftransactioncannotbeheldas fulfilled.Hence,theAOtreatedthesameasunexplainedcashcreditunder section68oftheAct.TheAOalsoestimatedcommissionexpense@2%ofsuch loanwhichworkedoutatRs.5.89Lakhsandaddedthesametothetotalincome oftheassesseeaspertheprovisionsofsection69CoftheAct. 54.Onappealbytheassessee,thelearnedCIT(A)alsoconfirmedtheaddition madebytheAObyobservingasunder: 6.1InrespectoftheunsecuredloanpartiestheAOhasmadetheadditiononaccount ofUnsecuredloanreceivedfromRatnakarEnterprise(P)Ltd.tothetuneof Rs.2,94,50,000/-duringtheyearunderconsideration.TheAOhasmainlycontendedthat theappellanthasnotprovidedthedetailsregardingthegenuinenessandcreditworthiness andonthefactthatnointeresthasbeenpaidonsuchhugeamountofloans.To substantiatethegenuinenessofthesecredits,theappellantsubmittedconfirmationsfrom thecreditor,detailsofthePAN,IncomeTaxReturnandbankaccountbyhighlightingthe transactions.Toprovethegenuinenessofthetransactions,theappellantcontendedthat theloanwastakenthroughregularbankingchannel.Ithasbeenreflectedinthebank accountofboththeparties.Theappellantcompanyhasfiledconfirmationfromthe creditorinthisregard.Therefore,thetransactionisgenuineone.Toprove creditworthinessofthecreditor,theappellantcontendedthattheloanwasreceived throughregularbankingchannelandtherewasnoimmediatecashdepositsintheaccount ofthecreditorandalsoafterprovidingtheloanthecreditorhashugefundofhisown.The A.O.hasstatedinthechartatPageno.3oftheAssessmentorderthatRatnakar Enterprise(P)Ltd.hasnotfiledreturnforA.Y.2013-14whichisfactuallyincorrectasthe appellanthassubmittedthecopyoftheITReturnforA.Y.2013-14havingincomeofRs. 53,326/-andA.Y2014-15havingincomeofRs.86,160/-.TheA.O.hasstatedthatthe creditorhasdulyfiledtheIncomeTaxReturnforA.Y2014-15havingincomeofRs. 86,160/-andhasalsofiledtheIncomeTaxReturnofA.Y.2015-16andhencetheidentity ofthecreditorcannotbedoubted.TheappellanthadproducedfrorecordsofROCthe IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 32 statusofthecreditorwhichisActivestatusason29.08.2018whichclearlyprovesthe identityoftheparty.InregardswiththequeryrelatedtotheInteresthasnotbeen chargedbythecreditorstheappellantcontendedthattheconfirmationofA.Y2012-13to 2015-16fromthepartieshavebeendulysubmittedwhereinthepartieshavethemselves confirmedthefactthattheInterestfreeloanshavebeenprovidedbythemandhencethe observationoftheA.O.regardingthechargingofInterestisunjustified.Onthebasisof thefactsaboutRatnakarEnterprise(P)Ltd.,theappellantfiledconfirmation,IncomeTax Return,ROCrecordsandtransactionisthroughregularbankingchannels&reflectedinthe booksofaccountsofboththeparties,provethegenuinenessofthetransactions.Thefacts ofthecasehavebeenanalysedintotality.Bysubmittingconfirmation&PANdetails,the appellanthadprovedonlyidentityofthecreditor.Buttheothertwolimbsi.e.genuineness oftransactionandcreditworthinesshasnotprovedbytheappellantparticularlykeepingin viewthefactsthatnorepaymentinpartorfullofloanhasbeenmadeandnointerestwas paid/credited.Theappellantfailedtoprovethenetworthofthecreditortoadvancesuch hugeloantotheappellant.Merelythecontentionthatthetransactionwasthroughnormal bankingchanneldoesnotfulfilltheseconditionsie.genuinenessoftransaction& creditworthinessofthecreditor.Allfactshavetobestudiedtogether.Lookingtothese facts,theAOisjustifiedinconsideringthecreditofRs.2,94,50,000/-fromRatnakar Enterprise(P)Ltdasnon-genuine.Hence,additionsofRs2,94,50,000/-madebytheAO areconfirmed. ************************************************************* AsIhaveconfirmedtheadditionsofRs.2,94,50,000/-inparaabove,2%ofthesameI.e 5,89,000/-isconfirmedandremainingadditionsofRs.75,000/-isdeleted.This,groundof appealispartlyallowed. 55.BeingaggrievedbytheorderofthelearnedCIT(A),theassesseeisin appealbeforeus. 56.Theassesseeinthewrittensubmissionreiteratedthesubmissionsmade beforethelowerauthorities. 57.Ontheotherhand,thelearnedDRbeforevehementlysupportedtheorder oftheauthoritiesbelow. 58.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Theprovisionofsection68oftheActfastensthe liabilityontheassesseetomakeproperandreasonableexplanationregardingthe natureandsourcesofsumcreditedinthebookstothesatisfactionoftheAO.The assesseeisliabletoprovideproofoftheidentityofthelenders/creditors,establish thegenuinenessofthetransactionsandcreditworthinessoftheparties.Inthe IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 33 caseonhand,thebooksofaccountsoftheassesseewerecreditedbyunsecured amountofloanfromthepartiesasmentionedinpreviousparagraphs. 58.1TheassesseehasprovidedthePAN,ITR,Confirmationofpartyandbank statementsshowingtransactioncarriedthroughbankingchannelandsameisalso reflectinginbankstatementsoftheparty.Thus,theidentityofthecreditorparty hasbeenprovedwhichwasalsonotdoubtedbythelearnedCIT(A). 58.2Thenextaspectisgenuinenessofthetransaction,inthisregard,wenote thattransactioniscarriedoutthroughbankingchannel,thepartyhasalsogiven confirmationofextendingtheinterestfreeloantotheassesseeandtherewasno unusualcash/chequedepositpointedoutinthebankofthepartybefore transferringthefundtotheassessee.ThelearnedCIT(A)andtheAOwithout pointingoutanyinfirmityinthedocumentaryevidenceheldthetransactionnot genuinemerelyonthereasoningthatnointerestwaschargedbythepartyand repaymenthasnotbeendone.Assuch,thelowerauthoritieshavenotmadeany independentinquiryregardingthegenuinenessoftheloantransaction.Itisthe tritelawthatassesseeundersection68oftheActisrequiredtofurnishedprimary evidenceandoncetheassesseeprovidedsuchprimarydocumenttheonusshift ontherevenuetodisprovetheprimarydocumentprovidedbytheassesseebased onindependentinquiryandcontrarymaterials.Inthecaseonhand,boththe lowerauthorities,withoutconductinginquiriesandbringinganycontrarymaterial onrecordotherthansuspicionandsurmises,havedoubtedthegenuinenessof thetransactions. 58.3Likewise,thelowerauthoritieshavedoubtedthecreditworthinessofthe partymerelyonthebasisthatthepartyhasdeclarednegligibleincomeinthe incometaxreturn.Inourconsideredopinion,thecreditworthinessoftheparty doesnotonlydependupontheamountofincomedeclaredintheincometax return.Assuch,apersoncanhaveaccumulatedwealthorfundsintheformof capital,reservesetc.Furtherthefactisthatamountwastransferredthrough IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 34 bankingchannelandasperthefindingoflearnedCIT(A)itselftherewasnocash depositmadeinthebankaccountofthepartybeforetransferringthefundtothe assesseewhichmeansthepartywashavingsufficientfundtoextendloantothe assessee.Still,therevenuehadanydoubtregardingthecapacityofthepartyto extendsuchloan,thenrevenueshouldconductnecessaryinquiries.However,no suchenquiryhasbeenconductedbytherevenueauthority. 58.4Inviewoftheabovediscussion,weholdthattheassesseehasdischarged theprimaryonuscastuponitundertheprovisionofsection68oftheActand onusshiftedupontherevenue,butrevenuedoesnotbringcontrarymaterial. Therefore,insuchcircumstancestheadditionmadebytherevenueauthorityby treatingtheunsecuredasunexplainedcashcreditundersection68oftheAct cannotbesustained.Similarly,thead-hocadditionmadebytherevenueauthority onaccountestimatedcommissionexpensefortakingcreditofunsecuredloanalso cannotbesustained.Thus,weherebysetasidethefindingofthelearnedCIT(A) anddirecttheAOtodeletetheadditionmadebyhim.Hence,thegroundsof appealoftheassesseeisherebyallowed. 59.Intheresultappealoftheassesseeisherebyallowed. ComingtoIT(SS)ANo.355/Ahd/2018anappealbytheRevenueforAY 2015-16 60.TheRevenuehasraisedthefollowinggroundsofappeal: 1.Onthefactsandinthecircumstancesofthecaseandinlaw,theLd.CIT(A)haserredin lawandonfactsindeletingtheadditionofRs.40,25,000/-u/s.68oftheITAct. 2.Onthefactsandinthecircumstancesofthecaseandinlaw,theLd.CIT(A)haserredin lawandonfactsinadmittingadditionalevidenceproducedbytheassesseebeforetheCIT(A) inrespectofunsecuredloanwithoutfollowingtheprocedureprescribedinRule46Aandwith givingAssessingOfficeropportunitytoexaminetheevidenceasmandatedbyRule46Aofthe ITRules,1962. IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 35 3.Onthefactsandinthecircumstancesofthecaseandinlaw,theLd.CIT(A)haserredin lawandonfactsindeletingtheadditionofRs.80,500/-(2%ofRs.40,25,000/-)considering theunaccountedexpensesincurredforobtainingtheunsecuredloansofaccommodationentry receivedasunexplainedcashcredits. 4.Onthefactsandinthecircumstancesofthecaseandinlaw,theLd.CIT(A)haserredin lawandonfactsindeletingtheadditiononaccountofunexplainedmoneyforpurchasing sharestothetuneofRs.9,16,83,400/-. 5.Onthefactsandinthecircumstancesofthecaseandinlaw,theLd.CIT(A)oughttohave upheldtheorderoftheA.O. 6.Itis,therefore,prayedthattheorderoftheLd.CIT(A)besetasideandthatoftheA.O. berestoredtotheaboveextent. 61.ThefirstinterconnectedissueraisedbytheRevenuevidegroundNos.1to 3isthatthelearnedCIT(A)erredindeletingtheadditionmadeu/s68oftheAct forRs.40.25Lakhandadditionmadeu/s69CoftheActforRs.80,500/- 62.TheAOduringtheassessmentfoundthattheassesseehasreceived unsecuredloanforRs.40.25lakhsfromthefollowingparties: 1.PannabenPShahRs.28.25Lakhs 2.NeminathTreadersPvtLtdRs.12lakhs 62.1TheAOfoundthattheassesseehasnotprovidednecessarydetailswith respecttogenuinenessofthetransactionandcreditworthinessofthelender.The assesseeisalsonotpayinganyinterestonsuchhugeamountofloan.TheAO accordinglytreatedthecreditofunsecuredloanofRs.40.25lakhsfromtheabove partiesasunexplainedcashcreditundersection68andaddedtothetotalincome oftheassessee.TheAOalsomadeanadditionofRs.80,500/-undersection69C oftheActbeingestimatedcommissionexpensesincurredfortakingthecreditof suchunsecuredloan. 63.TheaggrievedassesseepreferredanappealbeforethelearnedCIT(A)and submittedthatnofreshloanwasacceptedduringtheyear.Assuch,theamount ofunsecuredloanconsideredbytheAOrepresentsrepaymentofloanfrom PannabenPShahandNeminathTradersPvtLtdtakenduringA.Y.2012-13and 2013-14respectively. IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 36 64.ThelearnedCIT(A)foundtheclaimoftheassesseeistrueandaccordingly deletedtheadditionmadeundersection68oftheActaswellasundersection 69CoftheActforRs.40.25lakhand80,500/-only. 65.BeingaggrievedbytheorderofthelearnedCIT(A)theRevenueisin appealbeforeus. 66.ThelearnedDRbeforeusreiteratedthesubmissionsbyreferringthe findingscontainedintheassessmentorder.ThelearnedDRvehementlysupported theorderoftheAO. 67.Ontheotherhand,theassesseeinthewrittensubmissionvehemently supportedtheorderofthelearnedCIT-A. 68.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Admittedly,theAOmadeadditionofRs.40.25lakhs undersection68oftheActbyholdingthatassesseehasreceivedfreshloan duringtheyearbutfailedtoexplainthesourcesofsuchloancredit.TheAOalso heldthattheassesseeintakingsuchunexplainedloanshouldhaveincurred certaincommissionexpenses,hencetheAOmadeadditionundersection69Cof theActonestimationbasis.Ontheotherhand,learnedCIT(A)foundthatthere wasnofreshloanacceptedbytheassessee.Assuch,theamounttreatedbythe AOascreditofloanrepresentsrepaymentofloanacceptedintheearlieryears. ThefindingofthelearnedCIT(A)hasnotbeencontrovertedbythelearnedDR.It istritelawthattheprovisionofsection68oftheActcanonlybemadeapplicable onthesumcreditedduringtheyear.Therefore,noadditionintheyearunder considerationundertheprovisionofsection68oftheActcanbemade.Likewise, theentirebasisofmakingestimatedadditionundersection69CoftheActwas thattheassesseehasacceptedfreshloan.Once,thebasisitselfwasnotfound true,theadditionmadeundersection69CoftheActonestimationbasiscannot IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 37 besustained.Hence,weherebydismissthegroundofappealraisedbythe revenue. 69.ThelastissueraisedbytheRevenueisthatthelearnedCIT(A)erredin deletingtheadditionmadebytheAOonprotectivebasisforRs.9,16,83,400/-on accountofinvestmentmadebytheassesseeinGRPL. 70.TheAOfoundthattheassesseeintheyearunderconsiderationmadean investmentinthesharesofGreenfieldRealityPvtLtd(GRPL)forRs.9,16,83,400/- only.TheAOconsideringthefactthattheadditionofRs.22,74,60,000/-was madeinthehandofassesseeinpreviousyearsonaccountofinitialunaccounted investmentintheprojectofGRPL,alsomadeadditionofRs.9,16,83,400/-inthe yearunderconsiderationonprotectivebasis. 71.Onappealbytheassessee,thelearnedCIT(A)deletedtheadditionmade bytheAO. 72.BeingaggrievedbytheorderofthelearnedCIT(A),theRevenueisin appealbeforeus. 73.ThelearnedDRbeforeusreiteratedthesubmissionsbyreferringthe findingscontainedintheassessmentorder.ThelearnedDRvehementlysupported theorderoftheAO. 74.Ontheotherhand,theassesseeinthewrittensubmissionvehemently supportedtheorderofthelearnedCIT-A. 75.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Attheoutset,wenotethatasfarastheissueofon moneypaidagainstthepurchaseofland/acquisitionoftheprojectofGRPLis concerned,thesamehasbeenheldaspaidoutofunaccountedbookingamount IT(SS)ANo.359/Ahd/2018 Asstt.Year2012-13with4others 38 oftheunitsoftheprojectwhiledecidingtheissueinIT(SS)ANo.359/Ahd/2018in thecaseofrevenue’sappealforAY2012-13.Therefore,wedonotfindany infirmityintheorderofthelearnedCIT(A).Hencethegroundofappealofthe revenueisherebydismissed. 76.Intheresult,theappealoftheRevenueisherebydismissed. 77.Inthecombinedresults,allthreeappealsoftheRevenuearedismissedand theassessee’sappealinIT(SS)No.302/Ahd/2018isalsodismissedasinfructuous whereastheassessee’sappealinIT(SS)No.303/Ahd/2018isallowed. OrderpronouncedintheCourton13/12/2023atAhmedabad. Sd/-Sd/- (SIDDHARTHANAUTIYAL)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad;Dated13/12/2023 Manish