ACIT (Central)-1, Indore V. Mount Everest Breweries Ltd., Indore

ITSSA 60/Ind/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 5333 (ITAT-INDORE)
• Duration Of Justice: 10 month(s) 12 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 19-01-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Appeal Filed On: 08-03-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Bogus Share capital; Unexplained expenditure; Gift; Business expenditure; Income from undisclosed sources; Search and seizure; Loose papers; Document seized; Source of fund; Validity of assessment; Accommodation entries; Onus to prove; Retraction; Documents seized; TDS; Set aside; Liquidation; Bogus
• Section: 68; 132; 69C; 143(3); 153A; 292BB; 251; 143(2); 139(1); 43; 48; 22

Judgement Text

आयकर अपील य अ धकरण, इंदौर यायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER VIRTUAL HEARING IT(SS)A No.59/Ind/2021 Assessment Year: 2013-14 & IT(SS)A No.60 & 61/Ind/2021 Assessment Year: 2016-17 & 2017-18 ACIT, Central-1, Indore : Appellant V/s M/s. Mount Everest Breweries ltd. Indore PAN:AADCM5244J : Respondent IT(SS)A No.68 to 70/Ind/2021 Assessment Year: 2015-16 to 2017-18 M/s. Mount Everest Breweries ltd. Indore PAN:AADCM5244J : Appellant V/s ACIT, Central-1, Indore : Respondent M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 2 CO No.06/Ind/2021 (Arising out of IT(SS)A No.59/Ind/2021) Assessment Year: 2013-14 & CO Nos. 07 & 08/Ind/2021 (Arising out of IT(SS)A No.60 & 61/Ind/2021) Assessment Year: 2016-17 & 2017-18 M/s. Mount Everest Breweries ltd. Indore PAN:AADCM5244J : Appellant V/s ACIT, Central-1, Indore : Respondent Appellant by Shri P.K. Mitra, CIT-DR Respondent by Shri V.N.Dube, AR Date of Hearing 14.12.2021 Date of Pronouncement 20.01.2022 O R D E R PER BENCH: The above captioned appeals filed at the instance of the Revenue & Asessee and Cross Objections by the assessee are directed against the order of Ld. Commissioner of Income Tax(Appeals)-3 (in short ‘Ld. CIT] Bhopal dated 17.12.2020 which are arising out of the order u/s 143(3) of the Income Tax Act 1961(In short the ‘Act’) dated 26.12.2019 framed by ACIT-Central-1, Indore. M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 3 Assessment Year 2013-14 The revenue has raised following grounds of appeal in ITANo.59/Ind/2021 for A.Y.2013-14:- 1. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in law in deleting the addition of Rs. 3,45,00,000/- made on account of unexplained cash credits u/s 68 of the Income Tax Act, 1961. The Assessee has raised following grounds of appeal in CONo.06/Ind/2021 Notice issued u/s 153A is bad in Law: 1. That Ld. CIT (A) has erred in not appreciating the ground no.1 and 2 of assessee challenging the notice issued by Ld. AO as well as Assessment proceedings of section 153A on the basis that no incriminating documents has been found during the search and seizure operations conducted at the premises of assessee company. 2. That Ld. CIT (A) has erred in dismissing the ground of assessee that the statement recorded of the Promotor u/s. 132(4) which has been subsequently retracted before the Investigation wing itself at the time of search, cannot be treated as incriminating material for the purpose of assessment u/s 153A of the Act. Therefore, notice is bad in law. 3. That, Ld. CIT (Appeals) failed to appreciate that assessee company after issuance of notice u/s 153A has no option left but to file return and therefore Assessee has filed Income Tax Return and participated in the proceedings under protest and without prejudice to the provisions of section 292BB and others applicable provisions of the Income Tax Act. 4. That Ld. CIT (Appeals) has erred in not appreciating the facts of the case and settled law that notice as well as assessment order passed u/s 153A by Ld. AO in absence of any incriminating documents found during the search and seizure operation is bad in law, 5. That Ld. CIT (Appeals)has erred in dismissing the contention/ground of assessee merely on the basis that assessee has participated in the assessment proceeding therefore the assessee cannot claim the that notice of 153A is bad in law despite of the concrete law that there is no estoppel against the law and statute. M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 4 6. That Ld. CIT (A) has further failed to appreciate the very fact that during the course of the search and seizure operation in the premises of the assessee, the department was not able to pin point a single incriminating material / document in respect of any unaccounted funds/assets/sales/stock, which can draw any adverse inference against the Assessee. And assessee was able to provide each and every detail as required by the department with respect to the financial transactions entered by the Assessee Company during the period under consideration with respect to turn over / sales revenue, expenses/purchases, inventories, Bank & Cash and no defects of whatsoever in the nature were found by the department. 7. That Ld. CIT (A) erred in holding that once the search has taken place and notice u/s 153A has been issued the jurisdiction is conferred on the Assessing officer to assess or reassess the total income of the six year, evading the settled position of law that A.O has jurisdiction to pass the assessment under Section 153A 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. 8. That the CIT (A) has rightly allowed and deleted the addition of Rs. 3,45,00,000/- as unexplained cash credit under section 68 r.w.s. 115BBE of the Act for the unsecured loans received from certain associate companies of the group, after considering all the documents produced during the course of appeal and appreciated that the assessee have proved the identity of the parties, their credit worthiness and genuineness of the transaction by submitting complete documentary proof. 9. That the Learned Assessing Officer erred in making the addition of the receipt loans from the certain group companies during the previous year 2012-13 for the purpose of brewery project, which were infused by the associate concerns of the group from the funds ultimately sourced from the promoters of the group. 10. That the Ld. CIT(A) appreciate that the funds received from the companies were for the purpose of expansion of brewery project of the company and the same was even repaid by the company during the financial year 2014-15. The said transactions were reflected in the regular books of the assessee company as well the group companies who have advanced the said loans. 11. The Ld. CIT (A) has appreciated that the transaction entered by the assessee with the group companies are genuine and in support assessee filed copy of the bank statement along with the Balance Sheet and the Profit & Loss Account, and the ITR acknowledgement of the group M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 5 companies are reflecting these loans in the assessee name and the same are reflected in the regular books of the assessee company also, therefore Ld. CIT (A) has rightly deleted the addition Rs. 3,45,00,000/-. 12. That the Ld. CIT (A) is correct by deleting the addition made by the learned Assessing Officer merely on the basis of surmises and conjectures and without any substance as no incriminating material have been found during course of search and seizure operations conducted on various office/factory/other premises of the assessee company in respect of any unaccounted business/turnover/stock/assets. Assessment Year 2015-16 The assessee has raised following ground of appeal in IT(SS)ANo.68/Ind/2021 1. That on the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) - 3 Bhopal, grossly erred in confirming the addition under observation that the A.O was justified to make addition of Rs. 14,34,50,864/- (Rs.11,34,63,932/- plus Rs.2,99,86,944/- minus Rs. 12/- as deleted by CIT(A) 3, Bhopal) u/s 68 of the Act, as unexplained cash credit wrongly treating the same as undisclosed income. 2. Notice issued u/s 153A is bad in Law. That the learned Commissioner of Income Tax (Appeals), erred in dismissing the ground under observation that “once appellant participated in assessment proceeding before A.O in pursuance to notice issued u/s 153A of the Act, the appellant cannot claim that issue of notice u/s 153A is not in order” without appreciating that the appellant has filed the return under protest without prejudice to the provisions of section 292BB and other provisions of the Income Tax Act. 3. That the learned Commissioner of Income Tax (Appeals), erred in dismissing the ground “Notice issued u/s 153A is bad in Law” under observation “that during the search and seizure operation books of account, document, loose papers etc were seized” and “ the seized documents and papers are the incriminating material on the basis of which the additions have been made” without appreciating that AO is not able to pin point any incriminating material and the documents under question are audited Balance sheet, Profit & loss account, vouchers, invoices, Bank statement and books of accounts forming part of regular books of accounts/records and no discrepancy is found/pointed out by the AO in respect of declaring such documents as incriminating. M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 6 4. Confirming the addition of Rs.14,34,50,864/- (Rs. 11,34,63,932/- plus Rs.2,99,86,944/- minus Rs.12/- deleted by the Hon’ble CIT(A) as Unexplained Cash Credit u/s. 68 of the Act. That the learned Commissioner of Income Tax (Appeals) - 3 Bhopal erred in confirming the addition of Rs. 14,34,50,864/- as unexplained cash credit under section 68 of the Act, under observation that unsecured loans received from certain companies of the group converted into share capital without appreciating that the appellant had proved the identity of the loan creditors, their credit worthiness and genuineness of the transaction by submitting complete documentary proof and evidence substantiated the same in relation to section 68 of the act, therefore confirming the addition made merely on the basis of presumption and surmises without any incriminating material was not justified, therefore addition may be deleted. 5. That the learned Commissioner of Income Tax (Appeals) erred in even confirming the addition of Rs.2,99,86,944/- as unexplained share capital u/s. 68 of the Act without appreciating that the conversion of opening balance of loan into share capital during the year against the carry forwarded of the loans taken from the group / associates companies namely Bhillai Properties Investment Pvt.Ltd.and Accord Vanijya Pvt. Ltd from financial year 2009-10 & 2010-11, and no such amount received during the financial year 2014-15. Therefore, even otherwise confirming the addition in respect of said money received in prior years cannot be added in the financial year 2014-15. 6.That the learned Commissioner of Income Tax (Appeals) erred in taking the dual view against the same loan creditors for proving identity, creditworthiness and genuineness of the transaction of the same loan creditors as regards to repayment of loan to the loan creditors and conversion of loan taken into share capital of the appellant company, hence confirming the addition on the basis the loan amount under question converted into equity share capital and not repaid. 7. That the learned Commissioner of Income Tax (Appeals) erred in evading the facts and evidences available on record that the transaction entered by the appellant with the companies of the group/associates are genuine and in support appellant filed copy of the Bank statement along with the Balance Sheet and the Profit & Loss Account, the ITR acknowledgement bank statement and source of source of the concerned group companies and fully substantiated the transaction as regards its identity, genuineness as well as creditworthiness. 8. That the learned Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs. 14,34,50,864/- as unexplained cash credit u/s. 68 of the Act, by evading the fact that the addition made by A.O (u/s 143(3) r.w.s 153A of the Act) is merely on the basis of presumptions without having any incriminating material found during the course of search and even there after (either during course of investigation post search or during course of assessment proceeding). M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 7 9. That the learned Commissioner of Income Tax (Appeals) erred in evading the fact that the appellant even explained the source of source of the amount received from its concerned group / associates companies by submitting copy of the Bank statement along with the Balance Sheet and the Profit & Loss Account, and ITR acknowledgement of the aforesaid companies, were reflecting these investments held by the company from over the years and later on liquidated for the purpose making the investment in the group concern and the same are reflected in the regular books of accounts of the company. Hence treating such material as incriminating and further treating the amounts received from these companies as unaccounted income is misplaced. 10. That the learned Commissioner of Income Tax (Appeals) confirming the addition made by A.O merely based on surmises and conjectures and without any substance as no incriminating material have been found during course of search and seizure operations conducted on various office/factory/other premises of the appellant in respect of any unaccounted business/turnover/stock/assets. 11. That the learned Commissioner of Income Tax (Appeals) erred in confirming the additions made by A.O merely to justify the unwarranted search and seizure operations conducted on the various entities of the group on 14.11.2017 merely on presumptions without any justification. 12. That the Appellant craves leave to add, amend, alter, delete, modify, withdraw, and substitute any or all the above grounds of appeal. Assessment Year 2016-17 The revenue has raised following grounds of appeal in ITSSA.No.60/Ind/2021 1. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in law in deleting the addition of Rs. 5,86,50,000/- made on account of unexplained cash credit u/s 68 of the Income Tax Act, 1961. 2. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in law in deleting the addition of Rs. 37,27,790/- made on account of interest expenses u/s 69C of the Income Tax Act, 1961. The assessee has raised following grounds of appeal in ITSSA.No.69/Ind/2021 1. That on the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) - 3 Bhopal, grossly erred in M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 8 confirming the addition under observation that the A.O was justified to make addition of Rs.13,73,11,321/- (Rs.19,96,89,111/ minus Rs. 37,27,790/- minus Rs. 5,86,50,000 as addition deleted by CIT(A) in respect of loans taken from the concerned group companies and interest payable thereon. 2. Notice issued u/s 153A is bad in Law. That the learned Commissioner of Income Tax (Appeals), erred in dismissing the ground under observation that “once appellant participated in assessment proceeding before A.O in pursuance to notice issued u/s 153A of the Act, the appellant cannot claim that issue of notice u/s 153A is not in order” without appreciating that the appellant has filed the return under protest without prejudice to the provisions of section 292BB and others provisions of the Income Tax Act. 3. That the learned Commissioner of Income Tax (Appeals), erred in dismissing the ground “Notice issued u/s 153A is bad in Law” under observation “that during the search and seizure operation books of account, document, loose paper etc were seized” and “ the seized documents and papers are the incriminating material on the basis of which the additions have been made” without appreciating that AO is not able to pin point any incriminating material and the documents under question are audited Balance sheet, Profit & loss account, vouchers, invoices, bank statements and books of accounts forming part of regular books of accounts/records and no discrepancy found/pointed out by the AO in respect in respect of declaring such documents as incriminating. 4. Confirming the addition of Rs. 13,73,11,321/- (Rs.19,96,89,111/ - minus Rs. 5,86,50,000 - minus Rs. 37,27,790/- addition deleted by CIT(A) as loan taken from group companies & unexplained expenditure) u/s. 68 & 69 C of the Act. That on facts and circumstances of the case the learned Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs. 13,47,00,000/ (Rs.19,33,50,000/- minus Rs.5,86,50,000/- as addition deleted by CIT(A) on the observation that the loan taken from group companies namely Novelty Realtors Pvt Ltd & Moriya Merchandise Pvt Ltd returned to the such loan creditors) as unexplained cash credit under section 68 of the Act, under observation that unsecured loans received from certain group companies converted into share capital without appreciating that the appellant had proved the identity of the loan creditors, their creditworthiness and genuineness of the transaction by submitting the complete documentary proof/evidence substantiated same in relation to section 68 of the act , therefore confirming the addition made merely on the basis of presumption and surmises without any incriminating material was not justified, therefore addition may be deleted. M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 9 5. That the learned Commissioner of Income Tax (Appeals) erred in even confirming the addition of Rs. 26,11,321/ as unexplained expenditure u/s. 69C of the Act in respect of interest payable on loans taken from group company namely Moriya Merchandise Pvt Ltd under the observation that the appellant has not made repayment of loan and converted the loan into share capital and therefore it is not allowable expenditure, without appreciating that the assesse has fully substantiated the transaction and no such addition/disallowance can be made merely for the reason that the outstanding amount of loan taken from the concerned group company along with interest payable (net after deducting TDS from such interest) converted into share capital. 6. That the learned Commissioner of Income Tax (Appeals) erred in taking the dual view against the loan creditors for proving identity, creditworthiness, and genuineness of the same loan creditors as regards repayment of loan to the loan creditors and conversion of loan taken into share capital of the appellant company, hence confirming the addition on the basis as the loan amount under question converted into equity share capital and not repaid. 7. That the learned Commissioner of Income Tax (Appeals) erred in evading the facts and evidences available on record that the transaction entered by the appellant with the group companies namely Novelty Realtors Pvt Ltd & Moriya Merchandise Pvt Ltd are genuine and in support appellant filed copy of the Bank statement along with the Balance Sheet and the Profit & Loss Account, the ITR acknowledgement and source of source of the concerned group companies and fully substantiated the transaction as regards its identity, genuineness as well as creditworthiness. 8. That the learned Commissioner of Income Tax (Appeals) erred in confirming the addition made by A.O (u/s 143(3) r.w.s 153A of the Act), evading the fact that addition under question is merely on the basis of presumptions without having any incriminating material found during the course of search and even thereafter (either during course of investigation post search or during course of assessment). 9. That the learned Commissioner of Income Tax (Appeals) erred in evading the fact that the appellant even explained the source of source of the amount received from its concerned group companies by submitting copy of the Bank statement along with the Balance Sheet and the Profit & Loss Account, and ITR acknowledgement and affidavit of the aforesaid group companies, were reflecting these investments held by the company from over the years and later on liquidated for the purpose making the investment in the group concern and the same are reflected in the regular books of accounts of the company. Hence treating such material as incriminating and further treating the amounts received from these companies as unaccounted income is misplaced. M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 10 10. That the learned Commissioner of Income Tax (Appeals) confirming the addition made by A.O merely on the basis of surmises and conjectures and without any substance as no incriminating material have been found during course of search and seizure operations conducted on various office/factory/other premises of the appellant in respect of any unaccounted business/turnover/stock/assets. 11. That the learned Commissioner of Income Tax (Appeals) erred in confirming the additions made by A.O merely to justify the unwarranted search and seizure operations conducted on the various entities of the group on 14.11.2017 merely on presumptions without any justification. 12. That the Appellant craves leave to add, amend, alter, delete, modify, withdraw and substitute any or all the above grounds of appeal. The assessee has raised following grounds of appeal in CO.No. 07/Ind/2021 1. That the CIT (A) has rightly allowed and deleted the addition of Rs. 5,86,50,000/- as unexplained cash credit under section 68 and Rs. 37,27,790/- as interest expenses under section 69C of the Act for the unsecured loans received from certain associate companies of the group, after considering all the documents produced during the course of appeal and appreciated that the assessee have proved the identity of the parties, their creditworthiness and genuineness of the transaction by submitting complete documentary proof. 2. That the Ld. CIT(A) appreciate that the funds received from the companies were for the purpose of expansion of brewery project of the company and the same was even repaid by the company and the said transactions were reflected in the regular books of the assessee company as well the group companies who have advanced the said loans. 3. The Ld. CIT (A) has appreciated that the transaction entered by the assessee with the group companies are genuine and in support assessee filed copy of the bank statement along with the Balance Sheet and the Profit & Loss Account, and the ITR acknowledgement of the group companies are reflecting these loans in the assessee name and the same are reflected in the regular books of the assessee company also, therefore Ld. CIT (A) has rightly deleted the addition of Rs. 5,86,50,000/- and Rs. 37,27,790/-. 4. That the Ld. CIT (A) is correct by deleting the addition made by the learned Assessing Officer merely on the basis of surmises and conjectures and without any substance as no incriminating material have been found during course of search and seizure operations conducted on various M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 11 office/factory/other premises of the assessee company in respect of any unaccounted business/turnover/stock/assets. 5. That on the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) - 3 Bhopal, rightly deleted the addition of Rs. 5,86,50,000/- u/s 68 of the Act and Rs. 37,27,790/- u/s 69C of the Act. 6. That on facts and circumstances of the case the learned Commissioner of Income Tax (Appeals) rightly deleted the addition of Rs.5,86,50,000/- as addition deleted by CIT(A) on the observation that the loan taken from group companies namely Novelty Realtors Pvt Ltd & Moriya Merchandise Pvt Ltd returned to the such loan creditors 7. That the learned Commissioner of Income Tax (Appeals) rightly deleted the addition of Rs. 37,27,790/- as expenditure u/s. 69C of the Act in respect of interest payable on loans taken from group companies 8. That the learned Commissioner of Income Tax (Appeals) is correct in its view that transaction entered by the Assessee with the group companies namely Novelty Realtors Pvt Ltd & Moriya Merchandise Pvt Ltd are genuine and in support Assessee filed copy of the Bank statement along with the Balance Sheet and the Profit & Loss Account, the ITR acknowledgement and source of source of the concerned group companies and fully substantiated the transaction as regards its identity, genuineness as well as creditworthiness. 9. That the learned Commissioner of Income Tax (Appeals) is correct in deleting the addition as the assessee has explained the source of source of the amount received from its concerned group companies by submitting copy of the Bank statement along with the Balance Sheet and the Profit & Loss Account, and ITR acknowledgement and affidavit of the aforesaid group companies, were reflecting these investments held by the company from over the years and later on liquidated for the purpose making the investment in the group concern and the same are reflected in the regular books of accounts of the company. 10. That the Appellant craves leave to add, amend, alter, delete, modify, withdraw and substitute any or all the above grounds of appeal. Assessment Year 2017-18 The Revenue has raised following grounds of appeal in ITSSA.No.61/Ind/2021 1. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in law in deleting the addition of Rs. 1,20,00,000/- made on account of unexplained cash credit u/s 68 of the Income Tax Act, 1961. M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 12 2. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in law in deleting the addition of Rs. 1,03,636/- made on account of interest expenses u/s 69C of the Income Tax Act, 1961. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that the amended provisions of section 115BBE are not applicable for A.Y. 2017-18 without appreciating that the provisions of the aforesaid section are effective from 01.04.2017 i.e. A.Y. 2017-18. The assessee has raised following grounds of appeal in ITSSA.No.70/Ind/2021 1. That on the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) - 3 Bhopal, grossly erred in confirming the addition under observation that the A.O was justified to make addition of Rs.1,63,27,790/- (Opening balance Rs. 1,31,77,790/- plus Rs. 1,50,00,000/- loan taken minus Rs.1,18,50,000/- loan repaid) as unexplained cash credit in respect of loans taken from the concerned group company. 2 Notice issued u/s 153A is bad in Law. That the learned Commissioner of Income Tax (Appeals), erred in dismissing the ground under observation that “once appellant participated in assessment proceeding before A.O in pursuance to notice issued u/s 153A of the Act, the appellant cannot claim that issue of notice u/s 153A is not in order” without appreciating that the appellant has filed the return under protest without prejudice to the provisions of section 292BB and other provisions of the Income Tax Act. 3. That the learned Commissioner of Income Tax (Appeals), erred in dismissing the ground “Notice issued u/s 153A is bad in Law” under observation “that during the search and seizure operation books of account, document, loose paper etc were seized” and “ the seized documents and papers are the incriminating material on the basis of which the additions have been made” without appreciating that AO is not able to pin point any incriminating material and the documents under question are audited Balance sheet, Profit & loss account, vouchers, invoices and books of accounts forming part of regular books of accounts/records and no discrepancy is found/pointed out by the AO inrespect of declaring such documents as incriminating. 4 Confirming the addition of Rs. 1,63,27,790/- as unexplained cash credit u/s. 68 of the Act. (Opening balance Rs. 1,31,77,790/- plus Rs. 1,50,00,000/- loan taken minus Rs.1,18,50,000/- loan repaid) That on facts and circumstances of the case the learned Commissioner of Income Tax erred in confirming the addition of Rs. 1,63,27,790/- as unexplained cash credit under section 68 of the Act, under observation M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 13 that unsecured loans received from certain companies of the group converted into share capital without appreciating that the appellant had proved the identity of the loan creditors, their credit worthiness and genuineness of the transaction by submitting complete documentary proof substantiated the same in relation to section 68 of the act, therefore confirming the addition made merely on the basis of presumption and surmises without any incriminating material was not justified, therefore addition may be deleted. 5. That the learned Commissioner of Income Tax (Appeals) erred in taking the dual view against proving identity, creditworthiness, and genuineness of the same loan creditor (Novelty Realtors Pvt Ltd a group/associate company) as regards repayment of loan and conversion of loan taken into share capital of the appellant company, hence confirming the addition on the basis that the loan amount under question converted into equity share capital and not repaid. 6. That the learned Commissioner of Income Tax (Appeals) erred in evading the facts and evidences available on record that the transaction entered by the appellant with the companies of the group are genuine and in support appellant filed copy of the Bank statement along with the Balance Sheet and the Profit & Loss Account, the ITR acknowledgement and source of source of the concerned group company and fully substantiated the transaction as regards its identity, genuineness as well as creditworthiness. 7 That the learned Commissioner of Income Tax (Appeals) erred in confirming the addition made by A.O (u/s 143(3) r.w.s 153A of the Act, evading the fact that addition under question is merely on the basis of presumptions without having any incriminating material found during the course of search and even thereafter (either during course of investigation post search or during the course of assessment). 8 That the learned Commissioner of Income Tax (Appeals) erred in evading the fact that the appellant even explained the source of source of the amount received from its concerned group company by submitting copy of the Bank statement along with the Balance Sheet and the Profit & Loss Account, and ITR acknowledgement of the aforesaid company, was reflecting these investments held by the company from over the years and later on liquidated for the purpose making the investment in the group concern and the same are reflected in the regular books of accounts of the company. Hence treating such material as incriminating and further treating the amounts received from these companies as unaccounted income is misplaced. 9. That the learned Commissioner of Income Tax (Appeals) confirming the addition made by A.O merely on the basis of surmises and conjectures and without any substance as no incriminating material have been found during course of search and seizure operations conducted on M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 14 various office/factory/other premises of the appellant in respect of any unaccounted business/turnover/stock/assets. 10. That the learned Commissioner of Income Tax (Appeals) erred in confirming the additions made by A.O merely to justify the unwarranted search and seizure operations conducted on the various entities of the group on 14.11.2017 merely on presumptions without any justification. 11. That the Appellant craves leave to add, amend, alter, delete, modify, withdraw, and substitute any or all the above grounds of appeal. The assessee has raised following grounds of appeal in C.O. No. 08/Ind/2021 1. That the CIT (A) has rightly allowed and deleted the addition of Rs. 1,20,00,000/- as unexplained cash credit under section 68 and Rs. 1,03,636/- as interest expenses under section 69C of the Act for the unsecured loans received from certain associate companies of the group, after considering all the documents produced during the course of appeal and appreciated that the assessee have proved the identity of the parties, their creditworthiness and genuineness of the transaction by submitting complete documentary proof. 2. That the Ld. CIT(A) appreciate that the funds received from the companies were for the purpose of expansion of brewery project of the company and the same was even repaid by the company and the said transactions were reflected in the regular books of the assessee company as well the group companies who have advanced the said loans. 3. The Ld. CIT (A) has appreciated that the transaction entered by the assessee with the group companies are genuine and in support assessee filed copy of the bank statement along with the Balance Sheet and the Profit & Loss Account, and the ITR acknowledgement of the group companies are reflecting these loans in the assessee name and the same are reflected in the regular books of the assessee company also, therefore Ld. CIT (A) has rightly deleted the addition of Rs. 1,20,00,000/- and Rs. 1,03,636/-. 4. That the Ld. CIT (A) is correct by deleting the addition made by the learned Assessing Officer merely on the basis of surmises and conjectures and without any substance as no incriminating material have been found during course of search and seizure operations conducted on various office/factory/other premises of the assessee company in respect of any unaccounted business/turnover/stock/assets. 5. That on facts and circumstances of the case the learned Commissioner of Income Tax (Appeals) rightly deleted the addition of Rs.1,20,00,000/- and Rs. 1,03,636/- u/s 68 and 69C of the Act as M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 15 addition deleted by CIT(A) on the observation that the loan taken from group companies namely Welplan traders Pvt Ltd returned to the such loan creditor. 6. That the learned Commissioner of Income Tax (Appeals) is correct in its view that transaction entered by the Assessee with the group companies namely Welplan Traders Pvt Ltd is genuine and in support Assessee filed copy of the Bank statement along with the Balance Sheet and the Profit & Loss Account, the ITR acknowledgement and source of source of the concerned group companies and fully substantiated the transaction as regards its identity, genuineness as well as creditworthiness. 7. That the Appellant craves leave to add, amend, alter, delete, modify, withdraw and substitute any or all the above grounds of appeal. 2. As the issues raised in all these appeals are mostly common and relates to same assessee, at the request of all the parties, these appeals were heard together and the same are being disposed of by this common order for sake of convenience and brevity. 3. From the perusal of the above grounds revenue’s appeal challenges the finding of Ld. CIT(A) deleting addition made by the Ld. AO u/s 68 of the Act. On the other hand, grounds raised in the assessee’s appeals on merits challenges the finding of Ld. CIT(A) confirming the addition for alleged unexplained share capital u/s 68 of the Act and as far as legal issues are concerned through cross objection assessee has challenged the proceedings carried out u/s 153A of the Act as bad in law as the assessments year are non- abated/completed assessments and during search no incriminating material was found and the additions are made only on the basis of statement recorded u/s 132(4) of the Act. Remaining legal issue if M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 16 any raised in the assesse’s appeals and Cross objections have not been pressed by Ld. counsel for the assessee as stated during the course of hearing. 4. Brief facts of the case as culled out from the records are that the assessee is a limited company engaged in the business of manufacturing of Beer. Search and seizure operation u/s 132 of the Act was carried out on 14.11.2017 at Associate Alcohol Group of which assessee is also a part. During Search certain documents were seized and statement of key person Mr. Anand Kedia was recorded wherein he accepted that undisclosed income have been routed through share capital, share premium and unsecured loan totaling to Rs. 45.11 cr (approx..) and invested in various group companies including the assessee. This statement was retracted within five days. Seized material mainly included the financial statements of various companies which are closely held by the assessee company and other group concerns. Notice u/s 153A of the Act issued to file the return of income. The instant appeals relates to assessment year 2013-14, 2015-16, 2016-17 & 2017-18 for which the original return of income were filed u/s 139(1) of the Act on 21.09.2013, 30.09.2015, 10.11.2016 & 31.10.2017 declaring income of Nil, Rs.3,40,37,950/-, 3,79,43,670/- & Rs.1,16,09,410/- respectively. In reply to notice issued u/s 153A of the Act return of income were again filed on 26.04.2019 declaring same income as declared in the original return of income. Notices u/s 143(2) & 142(1) of the Act were duly served upon the assessee. During the course of assessment proceedings Ld. AO made detailed examination of the records and also called for various information which were M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 17 duly supplied. While concluding the assessment, the focus of the assessment proceedings were centered to the transaction of unsecured loan, share capital/premium from following seven companies: a. Bhillai Properties Investments Pvt. Ltd. b. Accord Vanijya Pvt. Ltd. c. Mayfair Mercantiles Pvt. Ltd. d. Moriya Merchandise Pvt. Ltd. e. Eagle Agencies Pvt. Ltd. f.Novelty Realtors Pvt. Ltd. g. Welplan Traders Pvt. Ltd. 5. In the case of Bhilai Properties Investments Pvt. Ltd. & Accord Vanijya Pvt. Ltd. there was an opening balance as on 01.04.2013 at Rs.75 lacs & Rs.2.42 Cr. There was also transaction of loan taken from above stated companies spread through various assessment year. There were repayment of loans in some cases and in some cases the loans taken were transferred to share capital and share premium account. Ld. AO based on the examination of the financial statements observed that above stated alleged cash creditors are having meager or no regular source of income and they are merely paper entities used by the assessee to route the undisclosed income in the form of unsecured loans and share capital and share premium in the company and the identity and creditworthiness of these companies are not proved and the genuineness of the transaction are also in doubt. Coupled with this fact ld. AO also linked the statement given by Mr. Anand Kedia to affirm the view that the alleged unsecured loan/share capital or share premium are M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 18 unexplained income of the assessee. Though it was contended by the assessee that the statement given during the course of search was under stress and duress and the same was retracted within 5 days through an affidavit. No incriminating material was found during the course of search. Assessee company is governed by the State Excise Law and there is no defect in the books of accounts. The alleged seized documents are merely financial statements and bank statements of various companies which have been alleged to be bogus but the transaction with all these concerns are duly recorded in the books of accounts and most of them are closely held by the same group. However, Ld. AO was not satisfied and the additions were made u/s 68 r.w.s 115BBE of the Act on account of unexplained unsecured loan/ share capital and share premium and disallowance of interest expenditure u/s 69C of the Act totalling Rs. 3,45,00,000/-. Rs. 14,34,50,876/-, Rs.19,96,89,111/- & Rs.2,84,31,426/- for A.Y. 2013-14, 2015-16, 2016-17 & 2017-18 respectively and assessed the income accordingly. 6. Aggrieved assessee preferred an appeal before the ld. CIT(A) and partly succeeded, as Ld. CIT(A) deleted the additions made for the opening balance as on 01.04.2013, alleged unsecured loans repaid by the assessee and also observed that alleged interest expenditure should be allowed and thus deleted the addition of Rs.3.45 cr., Rs.12/- Rs.6,23,77,790/- and Rs.1,21,03,636/- respectively for A.Y.2013-14, 2015-16, 2016-17 & 2017-18 and confirmed the remaining addition. M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 19 7. Aggrieved assessee is now in appeal challenging the additions confirmed by the Ld. CIT(A) and has also raised cross objection challenging legality of assessment proceedings u/s 153A of the Act whereas revenue is in appeal against the addition deleted by ld. CIT(A). 8. We will first take up the legal grounds raised by the assessee challenging the validity of assessment proceedings in the cross objections filed against the Revenue’s appeal for A.Ys. 2013-14, 2015-16, 2016-17 & 2017-18. 9. Learned counsel for the Assessee while challenging the validity of the proceedings initiated under section 153A of the Act drew our attention to the fact that the return for A.Ys. 2013-14, 2015-16 & 2016-17 filed u/s 139(1) of the Act on 27.09.2013, 30.09.2015 & 11.10.2016. Assessment year 2013-14 already stands completed u/s 143(3) of the Act on 19.03.2016. For A.Y. 2015-16 & 2016-17 time limit of issuance of notice u/s 143(3) of the Act stood expired on 30.09.2016 and 30.09.2017 which was much before the date of conducting search on 14.11.2017 and further submitted that Ld. CIT (A) erred in not appreciating the fact that no incriminating material has been found during the search and seizure operations conducted at the premises of assessee company relating to the addition made and failed to appreciate that assessee company after issuance of notice u/s 153A has no option left but to file return to save the penalty for non-filing of return and therefore Assessee has participated in the proceedings however the same was under protest and without prejudice to the provisions of section 292BB and others applicable provisions of the Income Tax Act 1961. M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 20 10.Learned Counsel for the assessee also submitted that Ld. CIT (A) erred in dismissing the contention/ground of assessee merely on the basis that assessee has participated in the assessment proceeding therefore the assessee cannot claim that the notice of 153A is bad in law. That Ld. CIT (A) has further failed to appreciate the very fact that during the course of the search and seizure operation in the premises of the assessee, the department has not been able to pinpoint a single incriminating material / document in respect of any unaccounted funds/assets/sales/stock, which can draw any adverse inference against the Assessee as the assessee was able to provide each and every detail as required/desired by the department with respect to the financial transactions entered by the Assessee Company during the period under consideration with respect to turn over / sales revenue, expenses/purchases, inventories, Bank & Cash and no defects of whatsoever in the nature were found by the department. The addition of alleged unexplained cash credit has been made on the basis of entries in the regular books of accounts duly reflected in the assessee's financial accounts and there is no reference to any material found in search with reference to the addition made. Therefore, in absence of an incriminating material no addition can be made in assessment u/s 153A. Reliance placed on following decisions:- 1. Hon’ble Delhi High Court in Commissioner of Income Tax (CENTRAL) –III v Kabul Chawla (2015) 281 CTR (Del) 45 2. Hon’ble Madhya Pradesh High Court bench at Gwalior in Pr. Commissioner of Income Tax v. Gahoi & Oil Mills and Ors. [2020] 272 TAXMAN 522 (MP) M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 21 3.Hon’ble ITAT Delhi in the case of ACIT, Central Circle-15 and Ors. Vs. Moon Beverages Ltd. and Ors. MANU/ID/0958/2020 4. Hon’ble Delhi High court in the matter of Kurele Paper Mills private Limited reported in (2016) 380 ITR 571, 11. Per Contra Ld.CIT(DR) referred to the written submissions placed on record citing various decisions. Reliance was placed on the following finding of Ld.CIT(A) dismissed the legal grounds raised by the assessee observing as follows:- “4.1 Ground No 1 & 2 for AYs 2012-13 to 2018-19: -Through these grounds of appeal, the appellant has challenged legality of assessment order passed by the AO. I have perused the submissions of the learned AR, the various decision cited, and the assessment order. Once the search has taken place and notices u/s 153A has been issued the jurisdiction is conferred on the assessing officer to pass assessment order 'to 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'. .......” 4.1.1 Once the assessee has participated in assessment proceedings before the A.O the appellant assessee cannot claim that issue of notice u/s 153A r.w.s 143(3) for A.Y 2012-13 to 2017-18 is not in order. Once the assessee has been put to notice and has filed returns in response to the notices and has attended the assessment proceedings, it cannot be said that issue of notice u/s 153A is not in order. .......... 4.1.2 In view of the above, the ground taken by the appellant that no incriminating material is found and the issue of notices u/s 153A for A.Y 2012-13 to 2018-2019 is not justified, has no merit and is therefore, rejected. Therefore, appeal on these ground is Dismissed.” 12. We have heard rival contentions and perused the records placed before us. Through the Cross objection assesse has raised legal ground challenging validity of the assessment proceeding stating that the assessment order under appeal i.e. A.Ys. 2013-14, 2015-16 & 2016-17 are non-abated assessment year as assessment for 2013-14 already stood completed u/s 143(3) of the Act and time limit for issuance of notice u/s 143(2) of the Act stood expired for M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 22 A.Y.2015-16 & 2016-17 before initiation of search and no incriminating material was found during the course of search specifically relating to the additions made by the ld. AO and therefore, initiation of assessment proceedings were itself bad in law and the additions made by the ld. AO deserves to be deleted. 13. We, observe that before us Ld. counsel for the assessee has stated that after issuance of notice u/s 153A assessee has no option left but to file return to save the penalty for non-filing of return and therefore had no other option except to file the return/to participate in the proceedings, which was filed/participated simultaneously raising protest and the same is without prejudice to the provisions of section 292BB and others applicable provisions of the Income Tax Act. 14. As regards the contention of the Revenue in respect of the validity of the Notice issued u/s 153A that during the search and seizure operation books of account, document, loose paper etc were seized, the seized documents and papers are the incriminating material on the basis of which the additions have been made. Ld. counsel for the assessee sated that Ld. AO is not able to pin point a piece of document which can be treated as incriminating and documents under question, found during course of search (viz Audited financial Balance sheet, Profit & Loss Account, Books of accounts, bills/vouchers, bank statement etc) cannot be treated as incriminating material per se without pointing out any discrepancy/defect therein and the observation of the department that the seized documents are the incriminating material on the basis M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 23 of which the additions have been made is totally illegal and unjustified and no incriminating documents/material has been found during the search and seizure operations. 15. Further Ld. counsel for the assessee stated that the revenue is not able to pin point a single incriminating material / document in respect of any unaccounted funds/assets/sales/stock/cash, which can draw any adverse inference against the Assessee and to point out any defect/deficiency in respect of the contention of the assessee that assessee was able to provide each and every detail as required/desired by the department with respect to the financial transactions entered by the Assessee Company during the period under consideration with respect to turn over / sales revenue, expenses/purchases, inventories, Bank & Cash and no defects of whatsoever in the nature were found by the department and the addition of unsecured loans received from the group companies has been made on the basis of entries in the regular books of accounts duly reflected in the assessee's financial accounts and there is no reference to material found in search with reference to the addition made, therefore, in absence of an incriminating material no addition can be made in assessment u/s 153A. 16. We also observe that the basis of the addition was mainly the statement given by the key person of the group namely Anand Kedia recorded on 16.11.2017. In the assessment order Ld. AO has specifically observed that the retraction made by the assessee was after a very long period and therefore the same cannot be accepted. We, however, on perusal of record find that the Mr. Anand kedia M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 24 retracted the statement within 5 days of the date of search by filing an affidavit. 17. Apart from the statement the search team was only able to find the financial statements of the alleged cash creditors and the confirmation of account but no other material was unearthed which could indicate that assessee has converted its unaccounted income in the form of unsecured loan/share capital from the alleged companies which mostly owned/controlled by the assesse group only. Addition made by the ld. AO are merely based on the theory which seems to be on assumption surmises and conjectures that the alleged companies have meager income and have no basis of any fixed asset and are therefore paper companies. Apart from this theory there is no evidence against the assessee. It is also not in dispute that the assessee filed its return for A.Ys. 2013-14, 2015-16 & 2016-17 u/s 139(1) of the Act on 27.09.2013, 30.09.2015 & 11.10.2016. Assessment year 2013-14 already stood completed u/s 143(3) of the Act on 19.03.2016 and for A.Y. 2015-16 & 2016-17 time limit of issuance of notice u/s 143(3) of the Act stood expired on 30.09.2016 and 30.09.2017 which was much before the date of conduct search on 14.11.2017. As per our discussions above we find that the alleged seized material was not incriminating in nature as they were duly accounted for in the regular books of accounts there were no such documents unearthed during the course of search which could clearly indicated that assessee has routed its unexplained income in the form of unsecure loan/unexplained share/share capital and premium through alleged cash credit companies. Thus, the A.Ys. 2013-14, 2015-16 & 2016-17comes under the category of completed and non- M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 25 abated assessment and addition for this assessment year can only be made if any incriminating material is found during the course of search. Our view is supported by following judicial pronouncements. a. Reliance is placed on the decision of Hon’ble Delhi High Court in Commissioner of Income Tax (CENTRAL) –III v Kabul Chawla (2015) 281 CTR (Del) 45 wherein the Hon’ble Court has specifically held that completed assessments can be interfered with by Assessing officer while making the assessment under Section 153A can 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. b. That further Hon’ble Madhya Pradesh High Court bench at Gwalior in Pr. Commissioner of Income Tax v. Gahoi & Oil Mills and Ors. [2020] 272 TAXMAN 522 (MP) has also affirmed the aforesaid view of Hon’ble Delhi High Court and held that in absence of any incriminating material, Ld. AO has no jurisdiction to make addition under section 153A of the Act. c. That, Hon’ble ITAT Delhi in the case of ACIT, Central Circle- 15 and Ors. Vs. Moon Beverages Ltd. and Ors. MANU/ID/0958/2020 has also held that It was held once the entries are recorded in the books of account, the same cannot be construed as incriminating in nature and So far as M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 26 statements u/s. 132(4) is concerned, the same are also not incriminating in nature as held in various decisions. Relevant portion of the order is reproduced hereunder that: “46.1 .....A perusal of the assessment order shows that the addition is not based on any incriminating material, but, based on post-search enquiries or statements recorded u/s. 132(4) of the Act. The share certificates and counterfoils thereof found during the search, in our opinion, cannot be construed as incriminating in nature. Even the document appearing at page 59 of Annexure A-10 found and seized from the corporate office of M/s. Hindustan Aqua Limited at 1010, Vijaya Building, Barakhamba Road, New Delhi, showing the details of advance for purchase of shares or refund of share application money in our opinion cannot be construed as incriminating since the entries are duly recorded in the books of account. The AO nowhere has disputed or challenged the above submission of the assessee before him as appears at page 43 of the assessment order. Therefore, once the entries are recorded in the books of account, the same in our opinion cannot be construed as incriminating in nature. So far as statements u/s. 132(4) is concerned, the same are also not incriminating in nature as held in various decisions. Under these circumstances, we are of the considered opinion that when the addition is not based on any incriminating material found as a result of search, no addition can be made u/s. 153A/143(3) of the Act.” d. Reliance is also placed on the judgement of the Hon’ble Delhi High court in the matter of Kurele Paper Mills private Limited reported in (2016) 380 ITR 571, wherein the issue was whether there was any incriminating material whatsoever found during the search to justify initiation of proceedings u/s 153A of the Act and the Hon’ble High Court has held that the order of CIT (A) reveals that there is a factual finding that "no incriminating evidence related to share capital issued was found during the course of search as is manifest from the order of the Assessing Officer". Consequently, it was held that the Assessing Officer was not justified in invoking section 68 of the Act for the purposes of making additions on account of share capital. M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 27 18. On the basis of examination of the facts of the case as placed before us and judicial pronouncement cited as above we are of the view that notice as well as assessment order passed u/s 153A by Ld. AO for A.Ys. 2013-14, 2015-16 & 2016-17 in absence of any incriminating documents found during the search and seizure operation is bad in law, and the contention of the revenue that assessee has participated in the assessment proceeding therefore the assessee cannot claim that the notice of 153A of the Act is not justified. 19. Under these circumstances, the additions made in absence of any incriminating material for the completed and non-abated assessment i.e. A.Ys. 2013-14, 2015-16 & 2016-17 deserves to be deleted. Our view is supported by the ratio laid down by the Hon’ble Delhi High Court in case of CIT v. Kabul Chawla, (2016) 2 ITJ Online 869 (Delhi) : (2016) 380 ITR 573 : (2015) 281 CTR 45 : (2015) 234 Taxman 300 and also decision of Pr. CIT v. Meeta Gutgutia, (2020) 8 ITJ Online 273 (Delhi) : (2017) 395 ITR 526. Therefore, in totality of facts in view of the relevant judicial pronouncements clearly suggests that that the proceedings initiated u/s 153A of the Act for the A.Ys. 2013-14, 2015-16 & 2016-17being non-abated and completed assessments are bad in law and deserve to be quashed. We, thus set aside the findings of Ld. CIT(A) on this legal ground and hold that proceedings initiated in the case of the assessee for A.Ys. 2013-14, 2015-16 & 2016-17 are bad in law without jurisdiction and therefore, assessments framed for these years are quashed and addition made are deleted. Accordingly, first legal ground raised by assessee challenging the legality of assessment proceedings for A.Ys. M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 28 2013-14, 2015-16 & 2016-17 is allowed and the legal ground raised for A.Y. 2017-18 is dismissed. 20. As far as merits are concerned so far as assessment years 2013- 14, 2014-15 & 2015-16 are concerned though we have already quashed assessment order and deleted the addition still for academic purpose we still deal with the merits of the case along with merit of the case pending for adjudication for A.Y. 2017-18. The additions made by Ld. AO can be categorized into two parts i.e. details of addition deleted by the Ld. CIT(A) and details of additions confirmed by the ld. CIT(A). Chart 2 DETAILS OF ADDITIONS DELETED BY LD. CIT (A) S.NO. Name of Loan Creditor Group Company Amount deleted by Ld. CIT (A) (Rs.) A.Y. 2013-14 1 Bhillai Properties & Investment Pvt. Ltd. 1,65,00,000/- 2 Accord Vanijya Pvt. Ltd. 1,80,00,000/- Total 3,45,00,000/- A.Y. 2015-16 1 Eagle Agencies Pvt. Ltd 12/- Total 12/- A.Y. 2016-17 1 Novelty Realities Pvt. Ltd. 6,23,77,790/- Total 6,23,77,790/- A.Y. 2017-18 Moriya Merchandise Pvt. Ltd. 1,03,636/- Welplan Traders Pvt. Ltd. 1,20,00,000/- Total 1,21,03,636/- Chart 3 DETAILS OF ADDITIONS CONFIRMED BY LD. CIT (A) S.NO. Name of Loan Creditor Group Company Amount confirmed by Ld. CIT M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 29 (A) (Rs.) A.Y. 2015-16 1 Bhillai Properties & Investment Pvt. Ltd 63,25,400/- 2 Accord Vanijya Pvt. Ltd. 2,36,61,744/- 3 Mayfair Mercantiles Pvt. Ltd. 73,00,200/- 4 Moriya Merchandise Pvt. Ltd. 5,00,00,280/- 5 Eagle Agencies Pvt. Ltd 5,61,63,240/- Total 14,34,50,864/- A.Y. 2016-17 1 Novelty Realities Pvt. Ltd. 10,53,00,000/- Moriya Merchandise Pvt. Ltd. 3,20,11,321/- Total 13,73,11,321/- A.Y. 2017-18 Novelty Realities Pvt. Ltd 1,63,27,790/- Total 1,63,27,790/- 21. From perusal of the details above, we find that the issue only related to the examination of identity and creditworthiness of the alleged seven cash creditor companies and the transactions namely carried out by assessee with these companies namely Bhilai Properties Investments Pvt. Ltd., Accord Vanijya Pvt. Ltd., Mayfair Mercantiles Pvt. Ltd., Moriya Merchandise Pvt. Ltd., Eagle Agencies Pvt. Ltd.,Novelty Realtors Pvt. Ltd. &. Welplan Traders Pvt. Ltd. If after examination of facts if we are satisfied with the identity and creditworthiness of these companies and genuineness of the transactions with the assessee company provision of section 68 r.w.s. 115BBE of the Act will not apply and the additions made by the ld. AO will automatically deserve to be deleted else vice versa. M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 30 22. Ld. counsel for the assessee apart from referring to the written submissions placed on record, detailed paper book showing various documents including the financial submissions, Income Tax Return, Bank Statements, confirmation of account, retraction statement also supported the finding of Ld. CIT(A) deleting the additions for unexplained/unsecured loan and unexplained interest expenditure and the decisions relied by the ld. CIT(A), also submitted that addition for opening balance as on 01.04.2012 was wrongly made by the Ld. AO as the same was not received during the year. That the alleged sum includes the funds obtained from the promoters of the group companies namely Anand Kedia, Prasann Kumar kedia and Shweta Kedia which were received by them on maturity of Life Insurance policies and routed through Millennium Urga in other group companies. All the alleged seven companies are closely held by the Kedia Group and the address is jointly shared by them at Kolkata since the promoter company is registered at Kolkata since last many year. In case of all the alleged companies no fresh share capital and share premium was received during the year under appeal and there was no immediate cash deposit before issuance of cheques to the assessee. Shareholding of the loan creditors company are totally controlled and owned by the promoters and therefore one cannot question the genuineness of the transaction. Most of the alleged unsecured loan has been repaid during the year under appeal or subsequently before the date of search Ld. AO has not disputed the book results of the assessee company. Assessee is showing large turnover and showing handsome profits and paying taxes regularly. Most of the alleged companies have passed through M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 31 scrutiny assessment proceedings in the years prior to assessment year 2013-14. Prayer was made that since the assessee has furnished sufficient documentary evidences no addition was called for unexplained share capital and share premium and unexplained unsecured loan u/s 68 of the Act and u/s 69C of the Act. 23. Ld. counsel for the assessee also submitted that Bhilai properties Investments Pvt Ltd. (in short BPIL) is a major investor of the group having investment in various group companies like Aadhya Power Pvt Ltd., Devraj Techno Farming Pvt Ltd. etc., which are regularly assessed to tax. BPIL has infused funds in the assessee company through liquidation of investments and the same cannot be classified as Shell Company. These funds were used for business purpose by the assessee. Accord Vanijya Pvt Ltd. ( in short AVPL) is also a major investor of the group having Investment in various companies of the group like Aadhya Power Pvt Ltd... Devraj Techno Farming Pvt Ltd. etc. which is regularly assessed to tax. AVPL has infused funds in the assessee company through liquidation of investments and the same cannot be classified as Shell Company. These funds were used for business purpose by the assessee. Eagle Agencies Pvt Ltd. (EAPL) is also a major investor of the group which in turn has invested in various group companies like Mayfair Mercantiles Pvt Ltd., MEBL, Oceanic Developers Pvt Ltd. etc. It cannot be categorised as a shell company. Funds have been generated through sale of investment and infused in the assessee company for brewery project. Moriya Merchandise Pvt Ltd. (MMPL) is a major investment of the group having investment in various M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 32 companies like MEBL. AVPL and Springbok Properties Pvt Ltd. The company is regularly assessed to tax and cannot be categorised as a shell company. The said company has disposed of investments and infused funds in the assessee company which have been utillised for brewery project. Novelty Realtors Pvt Ltd. (NRPL) is a major investment of the group. having investment in various companies like AVPL Mayfair Mercantile Pvt Ltd., Vanity Estate etc. The company is regularly assessed to tax and cannot be categorised as a shell company. The said company has disposed of investments and infused funds in the assessee company which have been utilised for brewery project. No addition can be made merely on the basis of statement at Mr.AnandKedia recorded during search in odd hours and unavoidable circumstances which have been rebutted by him thereafter. The bank statements, ITRS, Balance sheet, P&L duly reflect the investments held by these companies (BPIL AVPL, EAPL. MMPL.NRPL) which were later liquidated for making investment in group concerns. No incriminating documents were found during the course of search which can lead to any inference of unaccounted generation/infusion of funds. The assessee has maintained accounts on SAP ERP system and each and every movement of material from/to the factory is recorded. 24. The aforesaid amounts have been given by the concerned entities for the purpose of business requirement and expansion of breweries project. The loan creditors are regularly assessed to tax and confirmation/Balance sheets/ÏITRs of concerned parties are enclosed. The loan transactions are duly reported in the Audit M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 33 reports of the concerned companies and duly reflected in the books of accounts and the same are not out of unaccounted income and therefore section 68 is not applicable. The amounts infused by the associate companies out of disposal of Investments held by them over the years and are for the working capital requirements, business expansion and investments in other group companies. The assessee is a reputed company and largest distillery of central India having SAP-ERP system doing online accounting of movement of each and every material in the factory premises. No assessment can be made merely on the basis of statement of Shri Anand Kedia without other evidences detected during search. No addition can be made on suspicion however strong. Further no assessment can be made beyond 6 years preceding the previous year of search. No incriminating documents have been found during search which can lead to inference of generation of unaccounted income and infusion thereof. 25. Reliance placed on the following decisions:- 1.Principal Commissioner of Income Tax v. Kurele Paper Mills P. Ltd. [2016] 380 ITR 571 (Delhi) 2.Hon’ble Delhi High Court in Commissioner of Income Tax (CENTRAL) –III v Kabul Chawla (2015) 281 CTR (Del) 45 3.Hon’ble Madhya Pradesh High Court bench at Gwalior in Pr. Commissioner of Income Tax v. Gahoi & Oil Mills and Ors. [2020] 272 TAXMAN 522 (MP) 4.ACIT, Central Circle-15 and Ors. Vs. Moon Beverages Ltd. and Ors. MANU/ID/0958/2020 5.Suraj Bhan Bajaj v. Income Tax Officer Decided On: 21.04.2006 [2008]21SOT22(Delhi) MANU/ID/5012/2006 M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 34 6.Hon’ble ITAT Bench, Mumbai MANU/IU/0613/2018 in Syntensia Network Security India Pvt. Ltd. v. ITO 11(2)(4) 26. Per contra ld. DR vehemently argued supporting the order of Ld. CIT(A) confirming the finding of Ld. AO and also submitted that the unsecured loan/share capital received by the assessee from the group companies concerned controlled by the group and found to be paper entities having meager business activities and the assessee has failed to established the identity, credibility and genuineness of the transactions with respect to unsecured loans/share capital in the question received from the group companies with doubtful credentials , therefore treated as unexplained cash credit u/s 68 of the Act and accordingly the interest paid by the assessee to such companies is also treated as unexplained expenses u/s 69C of the Act. The Ld. Departmental representative strongly contended that the promoters of the assessee company in their statement recorded on 16.11.2017 under section 132 (4) of the Act admitted the receipt of the sum from the companies concerned as unexplained income and as per AO the retraction was made by the concerned after a period of 2 years, whereas as per findings of Ld. CIT (A) the same was retracted by letter dated 22.11.2017 and affidavit dated 30.11.2017. The relevant portion of the Assessment order dated 26.12.2019 on the basis of which the Ld. AO made the addition as relied by the Ld. Departmental representative is as follows: - “...8. During the course of search/post-search proceedings it was found that the registered office of the assessee company was shown as 106A, Shyam Bazar Street, Kolkata. This address was found to be common for around 30 companies which were in fact associate concerns of the M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 35 assessee. Most of these companies have meager business activities and are involved in making investments in shares of similar paper companies which were subsequently liquidated. The proceeds were applied for making further such investments and giving loans/advances to group companies and their key persons. In fact, the key persons of the flag ship concern viz Mount Everest Breweries (MEBL) i.e. the assessee are also directors in these companies. In other words, all these companies are fully controlled by the assessee. 9. In the above backdrop it was observed that the assessee has received huge amount of funds from these very companies in the form of unsecured loans/advances/capital etc. Likewise during the course of search proceedings u/s 132 at the business premises situated at 4th floor, BPK Star Tower, A.B. Road, Indore, the promoter of the group Shri Anand Kumar Kedia had given a statement on oath u/s 132(4) on 16/11/2017. In this statement the promoter had admitted that unaccounted income of the assessee company Mount Everest Breweries Ltd. (MEBL) was being routed through various Kolkata based companies acquired by the group namely Eagle Agencies Pvt. Ltd., Novelty Realtors Pvt. Ltd. and Moriya Merchandise Pvt. Ltd. He had also given details of various such companies acquired/formed by the group and investments made in them. The relevant portion of the said statement of Shri Anand Kumar Kedia recorded u/s 132(4) on 16/11/2017 is reproduced below for ready reference: .... .... It can be Inferred from the above statement of the promoter Shri Anand Kumar Kedia that the entire modus operandi of routing unaccounted funds have been lucidly described and admitted. 10. Apart from this confession if one takes a holistic view at the entirety of the facts Le. formation of companies operating from a single address with common promoters/key persons, Investment in them by the assessee, their investment in shell companies through shell companies and inter connected transactions leading to receipt of funds from these companies by the assessee in various forms (Unsecured loans etc.), it becomes more than evident that the funds received by the assessee from these companies are likely to be its own unaccounted funds. The modus operandi of the assessee is to route unaccounted funds through Kolkata based group companies which has also been admitted by the promoter Shri Anand kumar Kedla in his statement u/s 132(4) dated 16.11.2017. 13. The contentions of the assessee are perused. As far as the disparities pointed out with regard to the year in which funds (unsecured loans etc) were received by the assessee it is to be understood that the funds received by the companies in question from the so called sale of investments is the real bone of contention. The receipt of funds by these companies in the M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 36 guise of sale proceeds are nothing but the routed funds of the assessee and hence the year of receipt of funds by these companies has to be taken in to consideration though ultimately the actual receipt by the assessee in the form of unsecured loans/share capital from these companies as per the Audited accounts shall be considered. ... ... 15. The contentions of the assessee regarding the proposed addition owing to funds received through sale of Investment by its shell companies and ultimate receipt of the same in the form of Unsecured loans/Share capital more or less vindicates the findings/observations discussed in the preceding paragraphs on the basis of which the show cause notice was issued. The arrangement has been made by the assessee for rotating its funds by forming a maze of companies which in turn makes Investments within such kind of group companies/other companies and ultimately liquidates the same to other dubious/shell companies and then provide these funds to the assessee. 15.1 There is no denying the fact that the investments transactions made the said companies are duly reflected in the Bank statements, Balance and P&L account. When the chief object behind the genesis of a company is to provide accommodation entries, the filing of statutory documents before various authorities does not establish the genuineness of its business transactions since everything on paper will be well maintained by such entities notwithstanding its actual activities. It is also not denied that income is generated by these so called investment companies in the guise of share sale/Investment to Infuse funds in the assessee company. The moot point is the arrangement adopted for routing of unaccounted funds. The reflection of Investments in the bank statements does not in any way legitimize the said arrangement. The transaction through banking channels is also not a benchmark of genuineness. The department is not bound to provide separate justification to the assessee for treating an entity as shell since the same will be incorporated in the assessment order which in any case will be provided to the assessee. 15.2 Considering the surrounding circumstances and the scheme of things it is evident that the apparent is not real since the motive behind the apparent is ulterior,... ... 17.1 Other findings about the functioning of these companies are as follows:- M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 37 a) Apart from Associated Alcohols & Breweries Limited and Mount Everest Breweries Limited, there is very meagre business activity in most of the remaining companies. b) Huge amount of share premium is received in these companies. The share investments made by these companies is liquidated. c) These funds obtained from above is further applied by these companies as investment in shares of mainly other companies registered on the same address or is given as loans and advances to these companies and their key persons. d) It is seen that Shri Prasann Kedia, Shri Sanjay Tibrewal, Shri Ranjan Tibrewal, Shri Sandeep Tibrewal, Shri Nitin Tibrewal, Shri Kamal Tibrewal, etc., are/were directors in all these companies, some of whom are key persons of the flagship concerns of the Associated Alcohols group. e) It is also noted that the funds routed through these companies ultimately reaches the flagship companies namely Associated Alcohols & Breweries Ltd, and Mount Everest Breweries Ltd. 17.2 The share investment made by the group companies within the group is seen from the seized documents seized as page no. 50 of LPS 26, as under:- .... .... 19. Moreover, Shri Anand Kumar Kedia (Promoter) in the statement recorded u/s 132(4) dated 16.11.2017 (reproduced in the preceding paragraphs) has elaborately explained the modus operandi which includes the formation of companies, Investment in shares and ultimate routing of funds back to the books of the assessee. He accordingly, declared the amount of Rs.45,11,49,372/- received as share capital/share premium and unsecured loan from Moriya Merchandise Pvt. Ltd., Eagle Agencies Pvt. Ltd. and Novelty Realtors Pvt. Ltd. as undisclosed Income of Mount Everest Breweries Ltd. (assessee)/flagship concerns. After this disclosure the assessee remained silent for prolonged period of time. Then all of a sudden after a gap of almost 2 years the assessee states through a casual letter that the statement was recorded at odd hours during continuation of search and sleeplessness of multiple days in unavoidable circumstances. ... ... 21. The assessee's contention about Incriminating material found during the course of search has no basis since the entire analysis done in the preceding paragraphs is a result of Incriminating material itself which was unearthed during search operation u/s 132. 21.1 After receipt of funds from these companies the assessee also goes one step forward and converts such funds received in the guise of M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 38 unsecured loans in to shares. For example on examination of the seized material (LPS-4 pages 35 to 39) from the premises 106A, Shyam bazaar street, Kolkatta it is observed that the company (borrower) has entered into an agreement with lender companies namely Eagle Agencies P Ltd., Accord Vanijya P Ltd., Moriya Merchandise P Ltd., Bhilal Properties P Ltd. for conversion of unsecured loans into shares. This shows that the money of MEBL has come back from these shell companies as loans and conversion of these so called loans Into shares extinguishes the loan repayment formalities too and restarts the cycle of money laundering. ... .... 25. Moreover Incriminating material has very well been found during search proceedings which was related to various Issues discussed in the order. Even otherwise the issue of Incriminating material is sub judice in the Supreme Court and there have been varied views taken by other courts. The copies of the entire seized material have been provided to the assessee and hence the assessee cannot feign ignorance regarding its existence. 26. The available financials of some of these companles from which Unsecured loans/Share capital has been received are reproduced... 27. In view of the entire discussion made in all the preceding paragraphs (including the modus operandi adopted by the assessee) It is inferred that the assessee has failed to establish the identity, credibility and genuineness of the transaction with respect to Unsecured loans/Share capital in question received from group companies with doubtful credentials. The unsecured loans/Share Capital accepted by the assessee (as per Audited accounts) from those group companles directly/indirectly controlled by the group and found to be paper entities having meager business. activities are therefore treated as unexplained cash credits u/s 68 r.w.s. 115BBE. The interest paid by the assessee to such companies is also treated as unexplained expenses u/s 69C r.w.s. 115BBE and disallowed. These additions made are tabulated below:....... 27. We have heard rival contentions and perused the records placed before us and carefully gone through the oral and written submissions made from both the sides and the judicial pronouncements referred by them. On merits of the case both the assessee and revenue are in appeal before us against the additions made by the ld. AO u/s 68 r.w.s. 115 BBE of the Act for unsecured M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 39 loan/share capital and for unexplained interest expenditure u/s 69C r.w.s. 115BBE of the Act. We observe that the assessee is a well-established company engaged in the business of manufacturing Beer and consistently assessed to tax. Search action u/s 132 of the Act was carried out on 14.11.2017 on the group namely Associated Alhocal Group of which assessee is also a related concern. During the search proceedings financial and bank statement of various alleged paper companies were found. Statement of key person Mr. Anand Kedia was recorded wherein he stated to have converted undisclosed income of Rs. 45,11,49,372/- through various companies of the group in the form of share capital, share premium and unsecured loan. This statement was retracted within five days stating on affidavit to have been given under pressure of department, under stress and duress and at odd hours. As far as the assessee’s case is concerned examination of the ld. AO was finally settled with regard to seven companies namely Bhilai Properties Investments Pvt. Ltd., Accord Vanijya Pvt. Ltd., Mayfair Mercantiles Pvt. Ltd., Moriya Merchandise Pvt. Ltd., Eagle Agencies Pvt. Ltd.,Novelty Realtors Pvt. Ltd. &. Welplan Traders Pvt. Ltd. alleging therein to be shell/paper companies. Ld. AO found that through these companies assessee has received unsecured loans and in some years unsecured loan has been converted into share capital and share premium also. While making addition Ld. AO also considered the opening credit balance in the account of alleged cash creditor companies namely Bhilai Properties Investments Pvt. Ltd., at Rs. 75 lacs and in the case of Accord Vanijya Pvt. Ltd. Rs.2.42 cr M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 40 as part of the undisclosed income. The addition made by the ld. AO are categorize in three parts. a. Addition for share capital u/s 68 r.w.s. 115BBE of the Act for A.Y.2015-16 at Rs.2,99,86,944/- received from following two companies: Share capital received from AY 2015-16 (Addition u/s 68 r.w.s. 115BBE) Bhilai Property Investment Pvt. Ltd. 63,25,200/- Accord Vanijya Pvt. Ltd. 2,36,61,744/- Total 2,99,86,944/- b. Addition for unsecure loan u/s 68 r.w.s. 115BBE of the Act for A.Ys. 2013-14, 2015-16, 2017-18 totaling to Rs.33.86 cr. (approx..) in the case of following companies: Particulars Assessment years Unsecured loan received from 2013-14 2015-16 2016-17 2017-18 Moriya Merchandise Pvt. Ltd. 00 50000280 29400000 00 Welplan Traders Pvt. Ltd. 00 00 00 12000000 Bhilai Properties & Investment Pvt. Ltd. 16500000 200 00 00 Mayfair Mercantile Pvt. Ltd. 00 7300200 00 00 Accord Vanijya Pvt. Ltd. 18000000 00 00 00 M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 41 Eagle Agencies Pvt. Ltd. 00 56163252 00 00 Novelty Realtors Pvt. Ltd. 00 00 163950000 16327790 total 34500000 113463932 193350000 28327790 c. Addition for unexplained expenditure u/s 69C r.w.s. 115BBE of the Act for the interest expenses at Rs.64,42,747/- in case of following companies: Particulars Assessment years Unsecured loan received from 2013-14 2015-16 2016-17 2017-18 Moriya Merchandise Pvt. Ltd. 00 00 2611321 103636 Eagle Agencies Pvt. Ltd. 00 00 3727790 00 total 00 00 6339111 103636 28. We further find that when the assessee carried the matter before the first appellate authority Ld. CIT(A) after making detailed examination of the documentary evidences filed by the assessee, retraction made by the key person Mr. Anand Kedia within five days of the search stating that the surrender was taken under stress and duress by the revenue authorities and also Ld. CIT(A) appreciated the fact that all alleged seven cash creditors companies are closely held by the promoter group and there and the unsecured loans taken have been repaid mostly before the date of search and also taking into consideration the settled judicial precedents deleted the M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 42 addition for interest expenditure u/s 69C of the Act in total and partly deleted the addition for unsecured loan u/s 68 of the Act observing as follows: i. With regard to confirmation of addition of remaining amount of said loan being Rs. 14,34,50,864, Rs. 13,73,11,321/- and Rs. 1,63,27,790/- for A.Y. 2015-16, 2016-17 and 2017-18 respectively as unexplained in respect of very same loan transaction Ld. Counsel for Assessee has vehemently submitted that Ld. CIT (A) has taken a dual view in respect of unexplained cash credit under section 68 of the Act, in respect of unsecured loans received from certain companies converted into share capital in spite of fact that Assessee had even proved the source of source of loan amount given by the group loan creditors, the identity of the loan creditors, their creditworthiness and genuineness of the transaction by submitting complete information, explanation, documentary proof/evidence thereof, Ld. CIT(A) gone ahead in confirming the addition made by AO merely on the basis of presumption and surmises without having any incriminating material. ii. It was submitted by Ld. Counsel for Assessee that the learned CIT (Appeals) erred in taking the dual view in respect of amount received by the Assessee from very same loan transaction by taking the separate stand in respect proving identity, creditworthiness, and genuineness of the transaction for the amount which was repaid after that vis-a-vis the amount converted into share capital of the Assessee. iii. Further attention was drawn by the Ld. Counsel for the Assessee that while partly allowing the appeal of the assessee on the basis of facts and evidences, the Ld. CIT (A) made the following observations in the aforesaid order: - “4.2.5 The assessee was required to establish identity of creditors, capacity of the creditors and genuineness of the transaction. The AO considering the reply of the assessee stated that genuineness of the transaction between the assessee and creditors are not established and held that the loan taken from various companies are paper/shell/briefcase companies which does not have any operative business and are involved in providing accommodation entries. M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 43 4.2.6 The appellant during appellate proceedings has contended that the loan was taken from various associated group concerns. Further, the appellant has filed various documentary evidences in support of genuineness of the transaction, creditworthiness of the lender and identity of the lender which were also filed before the AO. The appellant has also strongly contended that no incriminating material was found during search on the basis of which additions have been made by the AO. The appellant has also taken a plea that entire addition has been made on conjectures, surmises and suspicion basis. 4.2.7 I have considered the facts of the case, material evidences on record & written submissions filed by the ld AR of the appellant. I have also given my thoughtful consideration to the facts and findings of the AO inter alia material brought on record. As culled out from assessment order the appellant has taken unsecured loan from above cited company. The AR has vehemently challenged the arbitrary approach of the AO mainly on two major Counts: (a) The AO erred in considering the documentary evidences filed in support of creditworthiness of the lender and genuineness of the transaction. (b) The AO erred in making addition based on statement without any incriminating material on record. (a) The AO erred in considering the documentary evidences filed in support of creditworthiness of the lender and genuineness of the transaction: Appellant before the AO as well as before me has filed copies of PAN, bank account statement of lenders, audited balance sheet, profit and loss statement, certificate of incorporation, copy of MOA, details collected from website of Ministry of Corporate Affairs, and confirmations of lenders. The brief details of these lender companies are as under: b) The AO erred in making addition based on statement without any incriminating material on record. Shri Anand Kumar Kedia in his statement recorded on oath on 16.11.2017 has admitted that a sum of Rs. 45,11,49,372/- was through three companies namely, M/s Moriya Merchandise Pvt Ltd, M/s Eagle Agencies Pvt ltd and M/s Novelty Realtors Pvt Ltd. However, the said statement was retracted vide dated M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 44 22.11.2017 and affidavit dated 30.11.2017. However, the AO vide para 19 has alleged that the said retraction was made after two years. In support appellant has filed copy of letter dated 22.11.2017 duly received in the office of The DDIT(Inv)-III, Indore. The search in the case of appellant initiated on 14.11.2017 and concluded on 18.11.2017 and the said retraction letter was filed on 22.11.2017 i.e. within 4 days, therefore, it cannot be said that the retraction is an afterthought. Shri Anand Kumar Kedia vide retraction letter dated 22.11.2017 has contended that the statement was given under pressure and at odd hours. This fact has also been confirmed by the AO vide para 19 of the assessment order. However, the AO has not placed reliance on any incriminating material having its bearing on the surrendered income. The A.O has also failed to bring on record any positive evidence having nexus with the impunged investment in share capital. Further, the declaration was made for Mount Everest Breweries Ltd. Thus, it can be safely concluded that the addition made by the A.O was not on the basis of the incriminating material found during the course of search but only on the basis of retracted statement of Shri Anand Kumar Kedia. 4.2.8 As discussed above, the appellant has furnished all details such as documents relating to identity, creditworthiness of the lender and genuineness of the transactions. Thus, prima facie liability of the assessee to prove the genuineness of the transaction and to establish the identity and credit worthiness of the lender stands discharged. Thus considering the fact that the lender is group companies and is regular tax assessee's, and have given the loan through account payee cheque and have confirmed the transaction the liability of the assessee of explaining the genuineness of the transaction stands discharged and the addition cannot be made on mere suspicion how so strong the reasons of suspicion may be. Also, the appellant has repaid the loan. The repayment of loan has been done from 29.09.2014 to 20.01.2015. Hon'ble Gujarat High Court in the case of Ayachi Chandrashekhar A.Y. 2013-14, 2015-16 to 2017-18 Narsangji (2014) 42 Taxmann.com 251 (Guj HC) has held that "It has also come on record that the said loan amount has been repaid by the assessee to Shri Ishwar Adwaniin the immediate next FY M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 45 and the Deptt has accepted the repayment of loan without probing into it. In the aforesaid facts and circumstances of the case, when the Tribunal has held that the matter is not required to be remanded as no other view would be possible we see no reason to interfere with the impugned order passed by ITAT". 4.2.9 The loan party furnished the loan confirmation, copy of bank account and proof of filing of the return. By filing the above documents the appellant is able to establish the i. Identity of the creditors-the creditors are income tax payer and filed the loan confirmations. ii. Genuineness of the transaction- the appellant has taken the loan through banking channel. The appellant is in the receipt of loan by cheque. Copies of bank statements of lender companies are placed on record and perused. Appellant has made repayments of the loan taken per his convenience of fund availability as is evident from loan confirmation letters and ledger statements of the lender companies duly accompanied by bank statements. Appellant has also paid interest to the lender companies on the loans borrowed and the same have been offered to tax by the respective lender companies in their regular income tax return. The appellant has also deducted TDS on interest and the TDS credit has also been availed by respective lender company. iii. Creditworthiness of the creditors the creditors are income tax payer and filing the income tax return. The companies have not only given the loan to the appellant but to other parties also. 4.2.10 From the above it is clear that the appellant has satisfied all the three conditions required for genuineness of the transaction. The same view has been upheld by Honb'le ITAT in the following cases: i. Umesh Electricals v/s Asst. CIT(2011) 18 ITJ 635 (Trib.-Agra):- (2011) 131 ITD 127: (2011) 141 TTJ Establishment of identity and credit-worthiness proved- Assessee produced the bank account of creditor in his bank account on the same day on which loan was given- Assessee furnished the cash flow statement of creditor-Based on inquiry, AO noted that creditor was engaged in providing accommodation entries HELD- In group cases, it has been held that there was no evidence against the creditor to prove that he was providing M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 46 accommodation entries-Further, mere deposit of money by the creditor on the same day, does not establish that the loan is not genuine-Assessee has proved the source of credit and also the source of source-Addition cannot be made. ii. Aseem Singh v/s Asst. CIT (2012) 19 ITJ 52 (Trib.-Indore) Identity and credit-worthiness proved-Assessee took loan of Rs.1,00,000/- confirmation of creditor was filed-Lower authorities made addition u/s 68 holding that amount was deposited in cash in the bank account of lender immediately prior to date of loan- HELD- Assessee has established the identity- The party has confirmed the transaction-If AO doubted the transaction, AO should have called creditor u/s 131- Addition cannot be made. Thus, appellant has furnished all the required details in order to prove identity of lenders, genuineness of the transaction and creditworthiness of the creditors. 4.2.11 As far as case laws relied upon by the A.O. are concerned, on perusal it is seen that none of the case laws relied upon by the A.O. are applicable to the facts of this case//The case laws referred by AO are as under: (a) Sumatidayal vs CIT 214 ITR 801 (SC) Section 68 of the Income-tax Act, 1961-Cash credits - Assessment years 1971-72 and 1972-73-Assessee had shown certain amounts in capital accounts in books claiming same to be winnings from horse races- She filed sworn statement to effect that she started going for races only towards end of year 1969 and had no experience in races but she purchased jackpot tickets on combination worked out by her on basis of advice given by her husband - She had allegedly won 16 jackpots besides trebles Assessing Officer disbelieved her version and taxed amount as income from undisclosed sources Settlement Commission by its majority order upheld assessment order holding that it was reasonable to infer, on facts, that assessee did not participate races but purchased winning tickets after events with unaccounted money Whether matter in question had to be considered in light of human probabilities - Held, yes - Whether having record to conduct of assessee as disclosed by her in nworn affidavit as well as other material on record, an inference could reasonably be drawn that winning tickets were M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 47 purchased by her after race event - Held, yes - Whether, therefore, finding of majority of Settlement Commission that amount in question was not winnings from horse races but income from undisclosed sources was justified-Held, yes In the above mentioned case, the assessee has claimed certain amounts in capital account from winnings from horse races. But in reality assessee has purchased lottery tickets out of unaccounted money. However, facts of the case of appellant are entirely different from the above cited case. Moreover, when the primary and direct evidences provide all the explanation, the surrounding circumstances bear no significance. (a) Pavankumar M Sanghvi (2018) 97 taxmann.com 398 (b) Seema Jain (2018) 96 taxmann.com 307 (Delhi) (c) Aaradhna estate Pvt Ltd (2018) 91 taxmann.com 19 (Guj HC) (d) Pratik SyntexPvt Ltd (2018) 94 taxmann.com 12 (ITAT Mumbai) (e) Mid East Folio Management Ltd vs CIT(2003) 81 TTJ 37(Mum) (f) PCIT vs NRA Iron & Steel (P) Ltd (2019) 103 taxmann.com 48 (SC) (g) Navodaya Castle Pvt Ltd (2015) 56 taxmann.com 18 (SC) All the case laws cited by the AO are relating to failure on the part of assessee to prove genuineness of the credit which is not in the case of appellant. Appellant has proved genuineness of the transaction, and creditworthiness of the creditors with supportive evidences. Therefore, facts of the case relied by the AO are clearly distinguishable from the facts of the case of appellant. 4.2.12 In my considered view, the AO except relying upon the findings of the Investigation Wing could not bring on record any cogent material to establish that the lender company from whome appellant had claimed to have received loan was non- existent or bogus or paper company. In my view, the appellant could be able to fully discharge its onus of proving the genuineness of the loan transaction beyond all doubts. It is important to mention here that during the course of search a stock audit was also done in the case of appellant, where no discrepancy was found. The identity of the lender company is M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 48 self-proven from the fact that the assessments in the case of the lender company have been framed either by the AO himself or by some other assessing officer. The genuineness of the transactions also gets fully established as the transactions have been taken place through banking channels and these have been confirmed by the lender companies. Also find that all the lender company was having sufficient net owned funds for making advances to the appellant or any one also. The appellant has been able to establish even the sources of the source in the hands of the lender company. The lender company is assessed to Income Tax. During the course of the search/survey no incriminating material or any other evidence was found from which it could have been inferred that the appellant had provided any fund to the lender company before obtaining loans. 4.2.13 Once it has been established and proven beyond doubt that the loan taken by appellant from various companies is genuine. Therefore, the interest payment on loan is also considered as genuine business expenditure. The appellant has also deducted applicable TDS on the interest paid and no delay in payment of TDS to government by the appellant has been brought on record by the AO. 4.2.14 Therefore, in view of the above discussion, the AO was not justified in making addition on account of unsecured loan amount and interest on loan amount to various companies. The appellant has repaid the loan of Rs.3,45,00,000/- taken in the AY 2013-14 from M/s Bhilai Properties & Investments Pvt Ltd and M/s Accord Vanijya Pvt Ltd. The appellant has repaid the loan of Rs. 12/-in AY 2015-13 taken from M/s Eagle Agencies Pvt Ltd. The appellant has repaid the loan of Rs.4,92,00,000/- in AY 2016-17 taken from M/s Novelty Realtors Pvt Ltd through cheque. The appellant has also repaid loan of Rs. 1,18,50,000/- in AY 2017-18 taker from M/s Novelty Realtors Pvt Ltd and Rs. 1,20,00,000/- from M/s Welplan Traders Pvt Ltd. Thus, keeping in view facts of the case, the documentary evidences filed by the appellant and the case laws cited above, the additions made by the AO amounting to Rs.3,45,00,000/-in the AY 2013- 14, Rs.12/- in AY 2015-16, Rs. 5,86,50,000/- in AY 2016-17 and Rs.1,20,00,000/- in AY 2017-18 are Deleted.” M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 49 29. After going through the finding of ld. CIT(A) we find that he has accepted the identity and creditworthiness of the companies and also accepted the genuineness of the transactions relating to the unsecured loans taken and repaid and also allowed the interest expenditure. We have further examined the facts of the case with reference to each of the assessment years and all the alleged seven cash creditors namely Bhilai Properties Investments Pvt. Ltd., Accord Vanijya Pvt. Ltd., Mayfair Mercantiles Pvt. Ltd., Moriya Merchandise Pvt. Ltd., Eagle Agencies Pvt. Ltd.,Novelty Realtors Pvt. Ltd. &. Welplan Traders Pvt. Ltd. with which transaction have taken place so as to examine the source of fund brought in the books of accounts in the form of unsecured loan as well as share capital and share premium. The same has been dealt in the following manner: A. Assessment Year 2013-14 Even the source of source of funds under question infused by the Bhillai Properties Investments Pvt Ltd and Accord Vanijya Pvt. Ltd. amounting to Rs. 1,65,00,000/ and Rs. 1,80,00,000/- during the F.Y 2012-13 were substantiated and explained that the same is obtained by them from Millennium Urja Limited another group / associate company of the group, which in turn obtained the funds from promoters of the group (namely Anand Kumar Kedia, Prasann Kumar Kedia and Shweta Kedia, they have received the fund from maturity of life insurance policies at that time apart from their own balances). Hence the conclusion drawn by the AO that these funds received by the assessee company is the unaccounted funds of the assessee routed in form of unsecured loans stands erroneous and even M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 50 factually incorrect. (Copy of submissions along with Bank Statements of concerned parties are appearing on page no. 384 to 407 of the paper book) a) The promoters of group received the proceeds from the maturity of Insurance policies, obtained by them in earlier years, between 23rd January 2013 to 28th January 2013 out of which Rs. 3,17,95,000/- were subsequently transferred to the group company namely Millennium Urja Ltd. between the same period. b) Apart from this policy maturity proceeds, Millennium Urja has sourced the balance amount of Rs. 27,05,000/- from the members of Kedia Family and other prime real estate company of the group namely Smilington Holdings Pvt. Ltd. which have. transferred these funds out of loans obtained from the independent third parties. and its internal accruals respectively c) That Millennium Urja Limited in turn advanced these funds to Accord Vanijya Pvt. Ltd. and Bhillai Properties Investment Pvt. Ltd. amounting to Rs. 1,80,60,000/- and Rs. 1,65,00,000/- respectively between 23rd January 2013 to 25th March 2013. d) The Accord Vanijya Pvt. Ltd. and Bhillai Properties Investment Pvt. Ltd. transferred, out of the funds received from Millennium Urja Limited, to the assessee company amounting to Rs. 1,80,00,000/- and Rs. 1,65,00,000/- respectively between 23rd January 2013 to 25th March 2013. e) The loan under question taken from the concern group companies having its promoters and their relatives as M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 51 directors (namely Mr. Anshuman Kedia and Mr. Kamal Kumar Tibrewal) and shares of the loan creditor companies totally controlled and owned by the promoters and having common place of business as of the assessee company. f) The loan under question is fully explained and substantiated, and was repaid in the next year itself (F.Y. 2014-15). Ld. AO’s observation is totally incorrect baseless and totally based on hypothetical presumption. B. Assessment Year 2015-16 The Assessee was having the opening balance of the loan from the concerned group companies amounting to Rs. 6,63,00,000/- as on 01.04.2014 and received a sum of Rs. 11, 34,63,932/- from the concerned companies during the year and repaid Rs. 3,63,13,268/- through banking channels during the year and liquidated the balance loan of Rs. 14, 34,50,664/- by way of issuance of equity shares upon conversion of the loan into equity during the year. The Ld. AO made the addition of Rs. 14,34,50,876/- (even making the additions in respect of opening balances of the loan carried forward from earlier years and converted into share capital during the year) a) Bhillai Properties Investments Pvt Ltd the assessee has not received any amount from the aforesaid group company during the year (except Rs. 200/-) however, liquidated the loan taken by the Assessee from the aforesaid group company M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 52 interalia by issuance of share capital of the aforesaid amount during the year, which was added by ld. AO as unexplained cash credit for the year. Balance Sheet, I.T Ack, ledger A/c (appearing on page no. 453-465 of the paper book) , PAS -3 allotment of share by the Assessee Company (appearing on page no. 358-370 of the paper book), Loan confirmation of the lender company (appearing on page no. 347-348 of the paper book), The share capital was issued to the associate / group company namely Bhillai Properties Investments Pvt. Ltd Rs. 63,25,200/- during the F.Y 2014-15 against opening balance of the loan amount carry forwarded from earlier years even prior to 1.04.2012 {apart from the further loans taken from Bhillai Properties Investments Pvt Ltd amounting to Rs. 1,65,00,000/- during the F.Y 2012-13, which were funded from the loans obtained from Millennium Urja Limited another group / associate company of the group, which in turn obtained the funds from promoters of the group (namely Anand Kumar Kedia, Prasann Kumar Kedia and Shweta Kedia, they have received the fund from maturity of life insurance policies at that time apart from their own balances) as explained and substantiated in respect of such loan amount for A.Y. 2013- 14}. Hence the conclusion drawn by the A.O that these funds received by the assessee company is the unaccounted funds of the assessee routed in form of unsecured loans stands erroneous and even factually incorrect. b) Accord Vanijya Pvt Ltd the assessee has not received any amount from the aforesaid group company however, liquidated M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 53 the loan taken by the Assessee from the aforesaid group company interalia by issuance of share capital of the aforesaid amount during the year, which was added by ld. AO as unexplained cash credit for the year. Balance Sheet, I.T Ack, ledger A/c (appearing on page no. 466-477 of the paper book), , PAS -3 allotment of shares by the Assessee Company (appearing on page no. 358-370 of the paper book), Loan confirmation of the lender company (appearing on page no. 351-352 of the paper book) The share capital was issued to the associate / group company namely Accord Vanijya Pvt Ltd of Rs. 2,36,61,744/- during the F.Y 2014-15 against opening balance of the loan amount carry forwarded from earlier years even prior to 1.04.2012 {apart from the further loans taken from Accord Vanijya Pvt Ltd amounting to Rs. 1,80,00,000/- during the F.Y 2012-13, which was funded from the loans obtained from Millennium Urja Limited another group / associate company of the group, which in turn obtained the funds from promoters of the group (namely Anand Kumar Kedia, Prasann Kumar Kedia and Shweta Kedia, they have received the fund from maturity of life insurance policies at that time apart from their own balances) as explained and substantiated in respect of such loan amount for A.Y. 2013- 14}. Hence the conclusion drawn by the A.O that these funds received by the assessee company is the unaccounted funds of the assessee routed in form of unsecured loans stands erroneous and even factually incorrect. M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 54 c) Mayfair Mercantiles Pvt Ltd, . The assesse company received the loan amounting to Rs. 73,00,200/ during the year from the aforesaid group company , against which the shares were issued by the Assessee company by conversion of such loan into equity .Balance Sheet, I.T Ack, ledger A/c, Bank statement, Loan confirmation of the loan creditor (appearing on page no. 401-414, 529-541 of the paper book), PAS -3 in respect of allotment of shares by the Assessee company (appearing on page no. 358-370 of the paper book). Even source of source said loan of the loan creditor group company was explained and substantiated. Source of amount of Rs. 73,00,200/- advanced by M/s Mayfair Mercantiles Pvt Ltd to the Assessee Company is the receipt of fund Rs. 4,34,249/ - on 12.09.2014 from Venkateshwar Investment & Finance Pvt Ltd, Rs. 10,90,000/- and Rs. 58,00,000/- on 12.09.2014 & 18.09.2014 from Prasann Kumar Kedia. The source of Venkateshwar Investment & Finance Pvt Ltd is the receipt of proceed Rs. 21,91,041/- on 10.09.2014 from sale of shares of AABL. The source of Prasann Kumar Kedia is the receipt of fund from family members and associate / group Company on 12.09.2014 from Anand Kumar Kedia HUF Rs. 3,60,000/-, on 12.09.2014, from Ramdulari Kedia Rs. 7,30,000/- and on 17.09.2014 Rs. 58,00,000/- from Springbok Properties Pvt Ltd. The source of Anand Kumar Kedia HUF is the receipt of fund Rs. 3,59,123/- from Venkateshwar Investment & Finance Pvt Ltd on 12.09.2014, the source of Ram Dulari Kedia is the receipt of fund from Venkateshwar Investment & Finance Pvt M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 55 Ltd Rs. 7,30,444/ - on 12.09.2014., the source of Springbok Properties Pvt Ltd is the receipt of fund from Millennium Urja Limited on 17.09.2014 for advancing Rs. 58, 00,000/- to Springbok Properties Pvt Ltd is the receipt of FDR on 16.09.2014 Rs. 5,47,84,000/- ( copy of submission, bank statements appearing on page no. 512-514, 529-541 of the paper book). Hence the conclusion drawn by the A.O that these funds received by the assessee company is the unaccounted funds of the assessee routed in form of unsecured loans stands erroneous and even factually incorrect. d) Moriya Merchandise Pvt Ltd, The assessee company received the loan amounting to Rs. 5,00,00,280/ during the year from the aforesaid group company, against which the shares were issued by the Assessee company by conversion of such loan into equity. Balance Sheet, I.T Ack, ledger A/c, Bank statement, Loan confirmation of the loan creditor (appearing on page no. 415-432, 353-355 of the paper book), PAS -3 in respect of allotment of shares by the Assessee company (appearing on page no. 358-370 of the paper book). Even source of source said loan of the loan creditor group company was explained and substantiated. The amount under question infused by the group company out of sale proceed of the investment held by the concerned loan creditor company from over the years (for the period even prior to 1 st April 2012), which was disposed by the loan creditor company during the year for the purpose of making onward investment into the brewery company of the group. Statement showing the details M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 56 of investment sold, affidavit of buyers confirming sale of investment for the F.Y 2014-15 of the lender Company, (appearing on page no. 542-562 of the paper book). The Balance sheet, Profit & Loss account and Income tax acknowledgement of the lending Company for the year ended on 31st March 2012, reflecting investments in investee companies (appearing on page no. 600-610 of the paper book). Copy of form no.2 return for the allotment of shares to the lenders company by investee companies reflecting allotment of shares to the Moriya Merchandise Pvt Ltd and carrying such investment from from financial year 2011-12 (appearing on page no. 612-465 of the paper book), Copy of sale invoice for the sale of investment issued in F.Y 2014-15 Rs. 5,00,00,000 (appearing on page no. 655-667 of the paper book), Copy of Balance Sheet and Profit & Loss account, Income Tax Acknowledgement, Bank Statement of the concerned buyers companies from whom share sale proceeds received by lender Company (appearing on page no. 668-869 of the paper book). The loan under question taken from the concern group companies having its promoters/their relatives as directors (namely Mr. Vimal Kumar Tibrewal and Mr. Kamal Kumar Tibrewal) and shares of the loan creditor companies totally controlled and owned by the promoters and having common place of business as of the assessee company. The loan under question is fully explained and substantiated, and even source of source of such loan (being sale proceeds of investment held by concerned loan creditor group company from the period F.Y. M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 57 2011-12 onwards) was explained and substantiated. The aforesaid loan creditor company already subjected to scrutiny assessment u/s 143(3) of the Act vide assessment order dated 21.03.2014 for A.Y. 2012-13 (for the year in which the concerned share capital was raised by the loan creditor company), Copy of the Assessment order appearing on page no. 23-26 of additional paper book filed on 30 th November, 2021. Thus, Ld. AO’s observation is totally incorrect baseless and totally based on hypothetical presumption. e) Eagle Agencies Pvt Ltd, The assessee company received the loan amounting to Rs. 5,61,63,252/- during the year from the aforesaid group company, out of which Rs. 5,61,63,240 converted into equity. Balance Sheet, I.T Ack, ledger A/c, Bank statement, Loan confirmation of the loan creditor (appearing on page no. 433-452, 356-357 of the paper book), PAS -3 in respect of allotment of shares by the Assessee company (appearing on page no. 358-370 of the paper book). Even source of source said loan of the loan creditor group company was explained and substantiated. The amount under question infused by the group company out of sale proceed of the investment held by the concerned loan creditor company from over the years (for the period from F.Y. 2010-11 onwards), which was disposed by the loan creditor company during the year for the purpose of making onward investment into the brewery company of the group. Statement showing the details of investment sold, affidavit of buyers confirming sale of M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 58 investment for the F.Y 2014-15 of the lender Company (appearing on page no. 563-593 of the paper book). The Balance sheet, Profit & Loss account and Income tax acknowledgement of the lending Company for the year ended on 31st March 2012, reflecting investments in investee companies and carrying such investment from financial year 2011-12 (appearing on page no. 870-875 of the paper book), Copy of Form no. 2 return for the allotment of shares to the lender company by the investee companies and carrying of such investment by the concerned lender companies from F.Y. 2011-12 onwards (appearing on page no. 876-888 of the paper book) Copy of statement showing the details of investment sold along with investment sale invoices raised during the financial year 2014-15 of Rs. 5,61,84,000/- (appearing on page no. 889- 907 of the paper book), Copy of Balance Sheet and Profit & Loss account, Income Tax Acknowledgement, Bank Statement of the concerned buyers companies from whom share sale proceeds received by lender Company (appearing on page no. 908-1162 of the paper book). The loan under question taken from the concern group companies having its promoters/their relatives as directors (namely Mr. Anshuman Kedia and Mr. Kamal Kumar Tibrewal) and shares of the loan creditor companies totally controlled and owned by the promoters and having common place of business as of the assessee company. The loan under question is fully explained and substantiated, and even source of source of such loan (being sale proceeds of investment held by M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 59 concerned loan creditor group company from the period F.Y. 2010-11 onwards) was explained and substantiated. The aforesaid loan creditor company already subjected to scrutiny assessment u/s 143(3) of the Act vide assessment order dated 08.02.2014 for A.Y. 2011-12 (for the year in which the concerned share capital was raised by the loan creditor company), Copy of the Assessment order appearing on page no. 27-30 of additional paper book filed on 30 th November, 2021. Thus, Ld. AO’s observation is totally incorrect baseless and totally based on hypothetical presumption. C. Assessment Year 2016-17 The Assessee has received a sum of Rs. 19,96,89,111/- from the concerned companies during the year and repaid Rs. 4,92,00,000/- through banking channels during the year and liquidated the loan of Rs. 13,63,51,728/- by way of issuance of equity shares upon conversion of the loan into equity during the year. The Ld. AO made the addition of Rs. 19,96,89,111/- a) Novelty Realtors Pvt Ltd, the assessee company received the loan amounting to Rs. 16,76,77,790/ during the year from the aforesaid group company, out of which Rs. 4,92,00,000/- has been retuned/repaid during very same year and loan amount i.e., 10,53,00,000/- against which the shares were issued by the Assessee company by conversion of such loan into equity, leaving the closing balance (as on date 31.03.2016) of Loan- Rs 1,31,77,790/-. Even source of source said loan of the loan creditor group company was explained and M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 60 substantiated. The amount under question infused by the group company out of sale proceed of the investment held by the concerned loan creditor company from over the years (for the period from F.Y. 2009-10 onwards), which was disposed by the loan creditor company during the year for the purpose of making onward investment into the brewery company of the group. Balance Sheet, I.T Ack, ledger A/c, Bank statement, Loan confirmation of the loan creditor for the financial year 2015-16 (appearing on page no. 398-414, 346-350 of the paper book), PAS -3 allotment of share by the Assessee Company (appearing on page no. 354-368 of the paper book), Statement showing the details of investment sold, sale invoice, affidavit of buyers company confirming sale of investment for the F.Y 2015-16 of the lender Company (appearing on page no. 473- 505 of the paper book), The Balance sheet, Profit & Loss account and Income tax acknowledgement of the lending Company for the year ended on 31st March 2012 and 31 st March, 2016, reflecting investments in investee companies (appearing on page no. 720-733, 398-404 of the paper book). Copy of Audited Balance Sheet and Profit and Loss A/c, Annual Return, form no.2 return for the allotment of shares to the lenders company by the concerned investee companies, reflecting allotment/issuance of shares to the Novelty Realtors Pvt Ltd carrying such investment from financial year 2011-12 (appearing on page no. 751-897 of the paper book)., Copy of sale invoice for the sale of investment issued in F.Y 2015-16 Rs. 17,10,00,000/- (appearing on page no. 898-954 of the M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 61 paper book) , Copy of Balance Sheet and Profit & Loss account, Income Tax Acknowledgement, Bank Statement of the concerned buyers companies from whom share sale proceeds received by lender Company (appearing on page no. 955-1386 of the paper book) The loan under question taken from the concern group company having its promoters/their relatives as directors (namely Mr. Anshuman Kedia and Mr. Kamal Kumar Tibrewal) and shares of the loan creditor companies totally controlled and owned by the promoters and having common place of business as of the assessee company. The loan under question is fully explained and substantiated, and even source of source of such loan (being sale proceeds of investment held by concerned loan creditor group company from the period F.Y. 2009-10 onwards) was explained and substantiated. The aforesaid loan creditor company already subjected to scrutiny assessment u/s 143(3)/147 of the Act vide assessment order dated 25.02.2014 and 30.10.2017 for A.Y. 2010-11 (for the year in which the concerned share capital was raised by the loan creditor company) Copy of the Assessment orders appearing on page no. 31-37 of additional paper book filed on 30 th November, 2021. Thus, Ld. AO’s observation is totally incorrect baseless and totally based on hypothetical presumption. b) Moriya Merchandise Pvt Ltd, the assessee company received the loan amounting to Rs. 3,20,11,321/- during the year from the aforesaid group company, out of aforesaid loan M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 62 Rs. 3,10,51,728/-against which the shares were issued by the Assessee company by conversion of such loan into equity, leaving the closing balance (as on date 31.03.2016) of Loan Rs 9,59,593/-. Even source of source said loan of the loan creditor group company was explained and substantiated. The amount under question infused by the group company out of sale proceed of the investment held by the concerned loan creditor company from over the years (for the period even prior to 1 st April 2012) , which was disposed by the loan creditor company during the year for the purpose of making onward investment into the brewery company of the group. Balance Sheet, I.T Ack, ledger A/c, Bank statement, Loan confirmation of the loan creditor for the financial year 2015-16 (appearing on page no. 415-426, 351-352 of the paper book), PAS -3 allotment of share by the Assessee Company (appearing on page no. 354-368 of the paper book)., Statement showing the details of investment sold, affidavit of buyers confirming sale of investment for the F.Y 2014-15 of the lender Company (appearing on page no. 506-518 of the paper book)., The Balance sheet, Profit & Loss account and Income tax acknowledgement of the lending Company for the year ended on 31st March 2012, reflecting investments in investee companies (appearing on page no. 525- 535 of the paper book). Copy of form no.2 return for the allotment of shares to the lenders company by the concerned investee companies, reflecting allotment of shares to the Moriya Merchandise Pvt Ltd carrying such investment from financial year 2011-12 onwards (appearing on page no. 537-566 of the M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 63 paper book)., Copy of sale invoice for the sale of investment issued in F.Y 2015-16 Rs. 2,94,00,000 (appearing on page no. 567-579 of the paper book)., Copy of Balance Sheet and Profit & Loss account, Income Tax Acknowledgement, Bank Statement of the concerned buyers companies from whom share sale proceeds received by lender Company (appearing on page no. 580-719 of the paper book).. The loan under question taken from the concern group company having its promoters/their relatives as directors (namely Mr. Vimal Kumar Tibrewal and Mr. Kamal Kumar Tibrewal) and shares of the loan creditor companies totally controlled and owned by the promoters and having common place of business as of the assessee company. The loan under question is fully explained and substantiated, and even source of source of such loan (being sale proceeds of investment held by concerned loan creditor group company from the period F.Y. 2011-12 onwards) was explained and substantiated. The aforesaid loan creditor company already subjected to scrutiny assessment u/s 143(3) of the Act vide assessment order dated 21.03.2014 for A.Y. 2012-13 (for the year in which the concerned share capital was raised by the loan creditor company) Copy of the Assessment orders appearing on page no. 23-26 of additional paper book filed on 30 th November, 2021. Thus, Ld. AO’s observation is totally incorrect baseless and totally based on hypothetical presumption. M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 64 D. Assessment Year 2017-18 The Assessee was having the opening balance of the loan from the concerned group companies amounting to Rs. 1,41,37,383/- as on 01.04.2014 and received a sum of Rs. 2,71,03,636/- from the concerned companies during the year and repaid Rs. 2,38,50,000/- through banking channels during the year and was having closing balance of Rs. 1,73,91,019/- at the year end. The Ld. AO made the addition of Rs. 2,84,31,426/- (even making the additions in respect of opening balances of the loan carried forward from earlier years) a) Novelty Realtors Pvt Ltd, The assessee company received the loan amounting to Rs. 1,50,00,000/- during the year from the aforesaid group company and was having a opening balance of Rs. 1,31,77,790/- carried forward from earlier years, out of which Rs. 1,18,50,000/- has been retuned/repaid during the year and was having outstanding closing balance of Rs. 1,63,27,790/- of the loan amount at the year end, which was added by the Ld. AO (as against the loan of Rs. 1,50,00,000/- received by the Assessee during the year). Even source of source said loan of the loan creditor group company was explained and substantiated. The amount under question infused by the group company out of sale proceed of the investment held by the concerned loan creditor company from over the years (from the F.Y. 2009-10 onwards), which was disposed by the loan creditor company during the year for the purpose of making onward investment into the brewery M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 65 company of the group. Balance Sheet, I.T Ack, ledger A/c, Bank statement, Loan confirmation of the loan creditor for the financial year 2016-17 (appearing on page no. 372-394, 342 of the paper book), Statement showing the details of investment sold, sale invoice, affidavit of buyers company confirming sale of investment for the F.Y 2016-17 of the lender Company (appearing on page no. 443-450 of the paper book), The Balance sheet, Profit & Loss account and Income tax acknowledgement of the lending Company for the year ended on 31st March 2012, and 31 st March, 2016, reflecting investments in investee companies (appearing on page no. 454- 483 of the paper book), Copy of balance Sheet, Annual Return, form no.2 return for the allotment of shares to the lenders company by investee companies, reflecting allotment/Issuance of shares to the Novelty Realtors Pvt Ltd carrying such investment from financial year 2011-12 (appearing on page no. 485-518 of the paper book), Copy of sale invoice for the sale of investment issued in F.Y 2016-17 Rs. 1,50,00,000/- (appearing on page no. 519-522 of the paper book), Copy of Balance Sheet and Profit & Loss account, Annual Return,Income Tax Acknowledgement, Bank Statement of the concerned buyers companies from whom share sale proceeds received by lender Company (appearing on page no. 523-616 of the paper book). The loan under question taken from the concern group company having its promoters/their relatives as directors (namely Mr. Anshuman Kedia and Mr. Kamal Kumar Tibrewal) and shares of the loan creditor companies totally controlled M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 66 and owned by the promoters and having common place of business as of the assessee company. The loan under question is fully explained and substantiated, and even source of source of such loan (being sale proceeds of investment held by concerned loan creditor group company from the period F.Y. 2009-10 onwards) was explained and substantiated. The aforesaid loan creditor company already subjected to scrutiny assessment u/s 143(3)/147 of the Act vide assessment order dated 25.02.2014 and 30.10.2017 for A.Y. 2010-11 (for the year in which the concerned share capital was raised by the loan creditor company) Copy of the Assessment orders appearing on page no. 31-37 of additional paper book filed on 30 th November, 2021. Thus, Ld. AO’s observation is totally incorrect baseless and totally based on hypothetical presumption. b) Welplan Traders Pvt Ltd. That the loan under question from the prime property holding company of the group amounting to Rs. 1,20,00,000/- was undertaken by the assessee company for the purpose of expansion of its brewery project. The source of Rs.1,20,00,000/- given by Welplan Traders Pvt Ltd to the Mount Everest Breweries Ltd is receipt of sale proceed of immovable property situated in Indore Rs. 51,000/- on 14.10.2016, Rs. 25,00,000/- on 14.10.2016, Rs. 20,00,000/- on 21.10.2016, Rs. 25,00,000/- on 04.11.2016, Rs. 25,00,000/- on 07.11.2016 and Rs. 25,00,000/- on 08.11.2016. Thus, Ld. AO’s observation is totally incorrect baseless and totally based on hypothetical presumption. M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 67 c) Moriya Merchandise Pvt Ltd. That the loan under question from Moriya Merchandise Pvt. Ltd. is the interest amount of Rs. 1,03,636/- on the carry forward balance of loan taken from group Company. No loan taken during the financial year 2016-17 from Moriya Merchandise Pvt Ltd. Thus, Ld. AO’s observation is totally incorrect baseless and totally based on hypothetical presumption. 30. On examining the complete details of transactions carried out between the assesse and the alleged seven cash creditor companies, complete details of documents furnished to prove the identity and creditworthiness of the cash creditors, and also the genuineness of transactions carried out in the form of unsecured loan and the share capital, before us Ld. CIT-DR failed to controvert the fact that all the alleged companies are closely held by the directors and promoters of the assessee and other group companies. Ld. CIT-DR also failed to controvert the fact that ld. CIT(A) took double view in respect of amount received by the assessee from very same loan transactions by taking a separate stand in respect of proving the identity and creditworthiness of cash creditors and genuineness of the transaction for the amount which was repaid vis-à-vis amount converted into share capital of the assessee. 31. We also notice that Ld. CIT(A) failed to appreciate that during the course of search/in the course of assessment proceedings, the documents found/provided by Appellant ( copy of the Bank statement along with the Balance Sheet and the Profit & Loss M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 68 Account, and ITR acknowledgement of the aforesaid companies), reflecting these investments held by the company from over the years (from the period prior to 01.04.2012) and which were later on liquidated for the purpose making the investment in the appellant group concern and the same are reflected in the regular books of accounts of the company and therefore treating such material as incriminating is totally misplaced. 32. We also observe that the learned CIT (Appeals) erred in confirming the addition made by A.O merely on the basis of surmises and conjectures and without any substance as no incriminating material have been found during course of search and seizure operations conducted on various office/factory/other premises of the appellant in respect of any unaccounted business/turnover/stock/assets, which Ld. CIT(A) himself accepted while allowing the appeal in respect of part of receipt of very same loan in the order. 33. We also notice that except relying upon the findings of the Investigation wing Ld. AO could not bring on record any cogent material to establish that the lender Company from whom appellant had claimed to have received loan was non-existent or bogus or paper company which shows that the appellant is able to fully discharge its onus of proving the genuineness of the loan transaction beyond all doubts. That during the course of search a stock audit was also done in the case of appellant where no discrepancy was found. That the identity of the lender companies is M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 69 itself proven from the fact that the assessments in the case of such lender companies have been framed either by the A.O himself or by some other assessing officer. That the genuineness of the transactions also gets fully established as the transactions have been taken place through banking channel and these have been confirmed by the lender companies. They were having sufficient net owned funds for making advances to the appellant or any one also. That the appellant has also been able to establish even the sources of the source in the hands of the lender companies. The lender companies are regularly assessed to Income Tax. During the course of search no incriminating material or any other evidence was found from which it could have been inferred that the appellant company had provided any fund to the lender Company, as appearing in the very same order. 34. We also note that the learned CIT(Appeals) has given a finding that it has been established and proven beyond doubt that the loan taken by appellant from lender companies is genuine and therefore the interest payment on loan is also considered as genuine business expenditure and the appellant has also deducted applicable TDS on the interest paid and no delay in payment of TDS to the government by the appellant has been brought on record by the learned assessing officer. 35. We also notice that in the case of two cash creditors namely Bhilai Properties Investment Pvt. Ltd. and Accord Vanijya Pvt. Ltd. There was an opening balance of Rs. 75,00,000/- and Rs.2.42 cr. M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 70 as on 01.04.2012. ld. Assessing Officer while making addition for unexplained share capital and unexplained unsecured loan also considered the opening balance totalling to Rs. 3,17,00,000/- appearing in the books as on 01.04.2012. Out of this sum Ld. CIT(A) confirmed the addition of Rs.2,99,86,944/- for the year under 2015- 16 towards unexplained share capital addition made by the ld. Assessing Officer It is judicially settled that each assessment year is separate and there is no reason for making addition of opening balance of previous year for which assessment is being framed. In other words Ld. Revenue authorities cannot includ certain receipts as income of the year which actually pertains to some other years. As in the case of assessee the amount which was received prior to A.Y. 2013-14 has been added to the income of assessee during A.Y. 2015-16. For arriving on this view we find support from following judicial pronouncements. a) In the case of ITAT, New Delhi in Suraj Bhan Bajaj v. Income Tax officer [2008] 21 SOT 22 (Delhi) herein Hon’ble Tribunal has held that “each assessment year is separate and there is no reason for making addition in respect of gifts received in years earlier to the year for which assessment is being framed. Even while invoking deeming provisions for making addition, Income Tax Act does not empower the revenue authorities to include certain receipt as income of the year which actually pertains to some other years. The Commissioner (Appeals), therefore, correctly deleted the addition in respect of part of the gifts and loans which was not pertaining to the year under consideration, and was received by the assessee in earlier years and was explained before the lower authorities vide his cash flow statement”. b) In the case of CIT v. Usha Stud Agricultural Farms Ltd. [2008) 301 ITR 384 (Delhi) Section 68 of the Income-tax Act, 1961 - Cash credits - Assessment year 1999-2000 - During assessment proceedings, Assessing Officer noticed that M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 71 assessee had shown certain amount as advance from one 'B1 - As assessee failed to file confirmation from B, Assessing Officer made addition of that amount under section 68 - On appeal. Commissioner (Appeals) deleted addition on ground that said cash credit was appearing in books of assessee over past four to five years and, thus, it was not fresh credit entry pertaining to relevant assessment year - Tribunal dismissed appeal filed by revenue -Whether finding recorded by Commissioner (Appeals) was a finding of fact and, as such, no fault could be found with order of Tribunal in endorsing decision of Commissioner (Appeals) - Held, yes 36. It is also not in dispute that all the alleged seven cash creditors are closely held owned and controlled by assessee and its associated group companies. Directors/promoters of the assessee group companies and their relatives are directors and shareholders in the alleged cash creditor companies. Also perusal of the balance sheet of these seven companies shows that prior to A.Y.2013-14 there were sufficient reserves and surplus and share capital which has actually carried forwarded to A.Y.2013-14 and in subsequent years. These accumulated funds stood invested as loans in other entities. The transaction with the assessee company are merely shift over from one loan account to another. Assessee has satisfactorily proved the source of source of the alleged funds received/ transferred to share capital account for the years under appeal. The documents seized during the course of search are not incriminating in nature as they not indicating that the accumulated reserves and other unsecured loan taken by the alleged cash creditor companies are bogus nor any cogent material is found to prove that the alleged sum is unaccounted income of the assessee routed through these cash creditors in question before us. The main basis of the Ld. Assessing Officer for making addition was the theory of meagre income which M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 72 was in the nature of surmises and conjecture and the statement given u/s 132 of the Act but the same was retracted immediately within five days of the conclusion of search which in itself sufficient to prove that the alleged statement did not carry any evidentiary value as it was claimed to have been taken at odd hours under presser of the search team and was under stress and duress. It is also proved by the documentary evidences that some portion of the alleged addition are the funds infused by the promoters/director/shareholder of assessee company and their relatives received on maturity of Life Insurance Policy during the year 2013 and the same fund was routed through group company namely Millennium Urga Ltd. to the other companies and thereafter reaching in the bank account of the assesse company. 37. We also find that most of the alleged cash creditors were subjected to scrutiny assessment prior to A.Y. 2013-14 during which there was capital form and also security premium was received and nothing adverse was held against these companies. Therefore, so far as identity and creditworthiness of the alleged cash creditor companies are concerned, we are fully satisfied and the assessee has discharged its onus to prove the same. As regards the genuineness of the transaction is concerned as we have stated in earlier paras that promoters, directors and shareholders of the alleged cash creditor companies are also the promoters, directors M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 73 and shareholders of the assessee and group companies. In other words all alleged cash creditors are closely held companies with that of assessee group and the transactions carried out by the assesse are not with any unknown or unrelated person for which genuineness needs to be proved but they are within their own closely held companies which were carried out for managing the funds required for the purpose of business of Breweries as well as for taking finance from banks, for giving growth to the sales, for acquiring fixed assets and expansion of the business. We, therefore, are satisfied with the genuineness of the alleged transaction in the nature of unsecured loan/share capital/security premium taken by the assessee from the alleged seven companies. 38. We, therefore under the given facts and circumstances of the case find that with respect to the alleged cash creditor namely Bhilai Properties Investments Pvt. Ltd., Accord Vanijya Pvt. Ltd., Mayfair Mercantiles Pvt. Ltd., Moriya Merchandise Pvt. Ltd., Eagle Agencies Pvt. Ltd.,Novelty Realtors Pvt. Ltd. &. Welplan Traders Pvt. Ltd. the assesse has successfully proved to our satisfaction their identity and creditworthiness by providing documentary evidences, providing proof of source of source and also proved the genuineness of the M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 74 transactions, thus, fulfilling all three parameters i.e. identity and creditworthiness of cash creditors and genuineness of transaction. We therefore, hold that no addition for unexplained cash credit u/s 68 r.w.s. 115BBE of the Act was called for in the assessment completed for A.Ys. 2013-14, 2015-16, 2016-17 & 2017-18 in respect of the alleged sum received from the above stated alleged cash creditors. Thus, the addition for unexplained cash credit, unexplained share capital/premium and unexplained expenditure made by the ld. AO at Rs. 3,45,00,000/-, Rs.14, 34,50,876/-, Rs.19,96,89,111/-, Rs.2,84,31,426/- for A.Y.2013-14, 2015-16, 2016-17 & 2017-18 respectively was uncalled for and the same is deleted. We, thus, confirm the finding of Ld. CIT(A) to the extent of deletion of the addition of Rs. 10,89,81,438/- (Rs.3,45,00,000/-, Rs.12, Rs.6,23,77,790/- & Rs.1,21,03,636/-) and reverse the finding of the ld. CIT(A) confirming the remaining addition totaling to Rs. 29,70,89,975/-(Rs. Nil, Rs.14,34,50,864/-, Rs.13,73,11,321/- & Rs.1,63,27,790/-) for A.Ys.2013-14, 2015-16, 2016-17 & 2017-18. Thus, grounds on merit raised by the revenue are dismissed for 2013-14, 2016-17 & 2017-18 and those raised by the assessee for A.Y. 2015-16 to A.Y. 2017-18 are allowed as per terms indicated above. M/s. Mount Everest Breweries ltd. IT(SS)A No.59/Ind/2021 & others 75 39. As regard the grounds raised in the cross objection by the assessee for A.Y. 2016-17 & 2017-18 supporting the finding of Ld. CIT(A), same deserves to be dismissed as infructuous, as we have already confirmed the finding of Ld. CIT(A) supported by the assessee in its cross objection. 39. In the result, Revenues appeals IT(SS)A No.59 to 61/Ind/2021 for A.Ys. 2013-14, 2016-17 & 2017-18 are dismissed and Assessee’s appeals IT(SS)A No.68 & 69/Ind/2021 for 2015-16 & 2016-17 are allowed and IT(SS)A No.70/Ind/2021 for A.Y. 2017-18 is partly allowed. Cross Objection CONo.06/Ind/2021 for A.Y. 2013-14 is allowed and Those CONo.07 & 08/Ind/2021 raised for A.Ys.2016-17 & 2017-18 are dismissed as infructuous. The order pronounced as per Rule 34 of ITAT Rules, 1963 on 20.01.2022. Sd/- Sd/- (MAHAVIR PRASAD) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER दनांक /Dated : 20.01.2022 Patel/PS Copy to: The Appellant/Respondent/CIT concerned/CIT(A) concerned/ DR, ITAT, Indore/Guard file. By Order, Asstt.Registrar, I.T.A.T., Indore