Shri Mahavir Ferro Alloys Pvt. Ltd., Rourkela V. ACIT Central Circle , , Sambalpur

ITSSA 64/CTK/2023

• Counselvise Citation: [2023] 102 COUNSELVISE.COM (IT) 0883 (ITAT-CUTTACK)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-10-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 09-10-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 24-05-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Depreciation; Search and seizure; Accommodation entries; Revised return; TDS; Rule 8D; Bogus
• Section: 131; 56; 143(3); 142(1); 153A; 133(6); 143(2); 43; 22; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BEFORE Assessment Year Shri Mahavir Ferro Alloys Pvt Ltd.,Kalunga Industrial Estate, Kalunga, Rourkela. PAN/GIR No. (Appellant Per Bench These seven separate orde Appeal No.Bhubaneswar Bhubaneswar- Bhubaneswar- Bhubaneswar- 2020-2021, re IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK (through virtual hearing) BEFORE S/SHRI GEORGE MATHAN, JUDICIAL RAJESH KUMAR, ACCOUNTANT MEMBER IT(ss)A Nos.63 to 69/CTK/20 Assessment Years : 2014-15 to 2020 Mahavir Ferro Alloys Kalunga Industrial Estate, Kalunga, Rourkela. Vs. ACIT, Central Circle, Sambalpur PAN/GIR No.AAGCS 0605 L (Appellant) .. ( Respondent Assessee by : Shri Miraj D Sha . Revenue by : Shri Abani Kanta Nayak, ld Date of Hearing : 10/10 Date of Pronouncement : 10/10 O R D E R These seven appeals filed by the assessee are directed orders of the ld CIT(A)-2, Bhubaneswar all Bhubaneswar-2/10387/2013-14, Bhubaneswar -2/10401/2015-16,Bhubaneswar-2/10488/2016 -2/111254/2017-18,Bhubaneswar-2/10582/2018 -2/10410/2019-20 for the assessment years 2021, respectively. Page1 | 68 IN THE INCOME TAX APPELLATE TRIBUNAL, , CUTTACK JUDICIAL MEMBER AND , ACCOUNTANT MEMBER /CTK/2023 15 to 2020-2021 ACIT, Central Circle, Sambalpur Respondent) Miraj D Shah, CA : Shri Abani Kanta Nayak, ld CIT DR 10/2023 /10/2023 are directed against the dated 29.3.2023 in 14, Bhubaneswar-2/10583/2014-15, 2/10488/2016-17, 10582/2018-19 and for the assessment years 2014-15 to IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page2 | 68 2. Shri Miraj D Shah, CA appeared on behalf of the assessee and Shri Abani Kanta Nayak, ld CIT DR appeared for the revenue. 3. Ld AR has filed a chart in respect of the issues under appeal, which are as follows: Sl. No. Particulars 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 1. As per 139 return -162317864 -149138635 -1235684246 -595413280 -310100298 - - 2. As per 153A return -149691503 -146798944 -1235684247 -600155592 -73902856 - NA 3 Basis of assessment 153A return 153A return 153A return 139 return 139 return 153A return NA 4. Additions 66931754 245191187 180533983 12429837 5098383 94431787 203086116 5. Assessed income -82759749 98392243 -1055150264 -582983443 -305001915 94431787 203086116 6. Adjustments with B/F losses - 9839243 - - -- 94431787 203086116 7 Additions 66931754 245191187 180533983 12429837 5098383 94431787 203086116 8 Demand, if any - - - - - - - 9 Additions-as per order a. Share capital 66500000 218571250 6100000 - - - - b Unsecured loans - 25800000 110218318 - - 87500000 56500000 C Int. on unsecured loans 431756 819937 8215665 1429837 5098383 6931787 - D Stock- - - - - - - 143686116 E Cash- - - - - - - 2900000 Total 66931756 245191187 180533983 12429837 5098383 94431787 203086116 Difference if any -.00 - - - - - - 10 Relief by CIT(A) IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page3 | 68 a. Share capital 3295765 - -- - - - - B Unsecured loans - - 7518318 - - - - C Int. on unsecured loans - - - 577649 624438 675018 - D Stock - - - - - - 109618897 E Cash - -- - - - - 2900000 Total 3295765 - 7518318 577649 624438 675018 112518897 11 Remaining addition – contested before ITAT a Share capital 63204235 218571250 62100000 - - - - B Unsecured loans - 25800000 10700000 - - 87500000 56500000 C Int. on unsecured loans 431756 819937 8215665 11852188 4473945 6256769 - D Stock - - - - - - 34067219 E Cash -- - - - - - - Total 63635991 245191187 173015665 11852188 4473945 93756769 90567219 12 Claims u/s.153A return not allowed - - - -4742312 422802558 - - A Prior period exp. - - - 4756938 1723575 B Depreciation -14625 -12860 C 45913348 D Water cess 107140 E Entry tax input written off 21234754 F Project exp. Written off 337403975 IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page4 | 68 4. It was submitted by ld AR that the issues involved in these appeals were the additions made on account of share capital introduction in the assessment years 2014-15, 2015-16, 2016-17, addition on account of unsecured loans for the assessment years 2015-16, 2016-17, 2019-20 and 2020-21, disallowance of interest on unsecured loans for the assessment years 2014-15, 2015-16, 2016-17, 2017-18, 2018-19 & 2019-10 and addition on account of valuation of stock for the assessment year 2020- 2021. It was the further submission that certain claims were made in respect of prior period expenses for the assessment years 2017-18 and 2018-19, which had also not been allowed by the Assessing Officer and ld CIT(A). Each of the additions have been argued independently. IT(ss) No.63/CTK/2023 for A.Y. 2014-15 Share capital 5. The share capital treated as bogus income relating to assessment years 2014-15, 2015-16 & 2016-17. It was the submission that the facts are identical for all the three assessment years and share applicants/shareholders were different. Ld AR drew our attention to assessment year 2014-15 to submit that the share applicant in this year was Blossom Suppliers Pvt Ltd (BSPL). It was submitted that the assessee had received share application money of Rs.2.65 crores during the assessment year 2013-14 and Rs.4 crores during the assessment year 2014-15. The IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page5 | 68 shares were allotted during the assessment year 2014-15. There was a search on the premises of the assessee on 20.2.2020. Notice u/s.153A had been issued to the assessee and the returns had been filed. The original return u/s.143(3) had been filed declaring a loss and the assessment had also been completed on 7.1.2016 accepting the returned loss. It was the submission that in the course of 153A assessment, notice u/s.153A had been issued to the assessee on 1.1.2021 and the assessee had filed its return of income on 27.4.2021. Notice u/s.143(2) of the Act was issued on 30.7.2021 and notice u/s.142(1) came to be issued on 30.8.2021. The assessee has filed its response on 10.9.2021 in four sets and had also brought to the notice of the Assessing Officer that the size of the folders and bank statement is more than 1.5 GB and bulky and, therefore, a CD containing the copies of the bank statements were being furnished. It was the submission that after this on 30.9.2021, i.e. within 20 days the assessment order came to be passed u/s.153A of the Act. Ld AR has drawn our attention to the order sheet details which were shown at pages 6 to 8 of the short notes. The assessee has filed short notes in respect of the arguments which is extracted as follows: A.Y. 2014-15 (IT(SS) A 63/CTK/2023) General Note: 1. The assessee is a Company, which was incorporated on 10/09/1996, the assessee company is engaged in the manufacturing of Iron Ore Pellets, Sponge Iron and M.S. Billets and is also producing Captive Power for self consumption and Solar Power for Sale of Power. The Company has its plants located at Kalunga Industrial Estate, Kalunga and Solar Power Plant IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page6 | 68 located at Tankajoda. The Company is having a total manufacturing capacity of 176400 MT per annum and power plant capacity of 12 MW and Solar Power Plant with capacity of 1MW. 2. Issue in this appeal: (a) Addition of share capital of Rs.6,32,04,235 upheld by Ld CITA. (b) Interest on loan disallowed Rs. 4,31,756 upheld by Ld CITA. 3. Share Capital: The assessee had raised share capital of Rs.3,51,90,000 by issue of 351900 shares of face value of Rs.100 each at a premium of Rs. 325/-total value per share of Rs. 425/-. The total amount raised was Rs. 14,95,57,500. The issue of share capital raised was examined in the assessment proceedings u/s 143(3 ) of the Act vide an order dated 27/12/2016 wherein the AO examined this issue and accepted the share capital raised. The AO however made an addition on account of excess value of share issue price which was over and above the book value and thus made an addition of Rs. 73,89,900 u/s 56(2)(viib) of the IT Act, 1961. 4. In the search proceedings no incriminating material was found with respect to the said share capital raised. The assessee submitted the following documents in support of the cash credit during search assessment proceedings; a) share application Form b) Share allotment letter (c) ROC Forms related to share allotted. (d) Income Tax Return Acknowledgement of the Allottee (e) Audited Accounts of the Allottee (f) Bank Statement of the Allottee (g) Source confirmation letter of the Allottee (h) Professional Tax Challan of Allottee (i) Certificate of Incorporation issued by the ROC, Ministry of Corporate Affairs. (j) PAN Card of Allottee (k) Board Resolution of the Allottee Company for making the subscription (I) MCA Master Sheet having details of registered office and director details. (m)Articles and Memorandum of Association (n) Scrutiny assessment order of the Allottee for AY 2014-15 5. The AO in the Assessment Proceedings u/s. 153A, made an addition of Rs.6,65,00,000 on account of Share Capital received from Blossom Suppliers Pvt. Ltd. 6. On the issue of Share Capital, CIT (A) held as follows: IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page7 | 68 a. Relief Granted: Rs. 32,95,765 (Pro rata deletion of addition u/s. 56 of The IT Act, 1961) b. Additions confirmed : Rs.6,32,04,235 [Para 5.6 on Page 20 of the Appeal Order] 7. The shares were allotted to M/s. Blossom Suppliers Private Limited which has a net worth of Rs. 16,91,96,214 and the directors of this company and the beneficial owners of this company were relatives of the promoters of the assessee company. 8. There is no material on record to prove any deficiency in the documents submitted by the assessee. 9. The AO made certain observation regarding the share capital raised by the share applicant in F.Y. 008-09. The AO failed to appreciate that the assessee cannot be held responsible for the subscriber share capital raised 5/6 years ago. The findings and observations in the Assessment Order is irrelevant with regard to the position of the assessee company. 10. The basis of addition by the AO doesn't have any reference to the seized materials. 11. The Assessment for the year of the share applicant was completed u/s. 1,43(3) of the IT Act, 1961 dated 22/09/2016 wherein share capital issued were examined and accepted. 12. The AO has not conducted any inquiry in this regard and made the addition merely on conjecture and surmises. [Appears from the Order Sheet of the A.O. passing the order u/s. 153A/143(3) of the IT Act, 1961] 13. Interest on Loan: The assessee had brought forward loan of Rs. 1,07,93,904 taken from Meenakshi Holdings Limited. During the relevant assessment year, the interest of Rs. 4,31,756 was charged to the profit loss account on this loan. The interest paid on this loan was accepted in scrutiny assessment for AY 2014-2015 and AY 2013-2014 which was made u/s 143(3) of the Act. 14. In the search proceedings no incriminating material was found with respect to the said loan. The assessee submitted the following documents in support of the interest paid on loans during search assessment proceedings: (a) TDS Certificate (b) Loan Confirmation (c) Ledger (d) Income Tax Return Acknowledgement of the lender 15. The Loan taken by the Assessee was duly repaid before the date of assessment and also before the date of search. IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page8 | 68 16.The AO disallowed the interest without any basis or material and merely on conjecture and surmises. The assessee duly discharged its onus for the claim of interest, the loan which was brought forward loan, the interest was duly allowed in all previous years, including scrutiny assessments for AY 2013-2014 and 2014-2015 (Original Assessment). There was no justification to disallow the interest and hence the said disallowance be reversed. 17. On the Issue of Interest on Loan, CIT(A) confirmed the additions of Rs.4,31,756.00. [Para 6.6 on Page 25 of the Appeal Order] 18.AO didn't conduct any enquiry in this matter and added based on his presumption. While making the addition, AO just mentioned it is a shell/paper company without giving any basis to its findings. 19. It is also mentioned by AO that assessee has not furnished sufficient evidentiary proof to justify its claim that whether said interest income has offered for taxation or not by the receiver. There was no documents or evidences, as such, called upon by AO in this regard. Furthermore, there is no obligation casted upon the assessee to prove whether the interest income was offered for taxation or not by the receiver. Negative onus can't be casted upon the assessee even otherwise AO has failed to bring ant material on record to prove otherwise. 20. Background of the assessment: The assessee filed its return in response to the notice u/s 153Aof the Act on 27-04-2021. The AO issued notice u/s 142(1) of the Act on 30-08-2021. The assessee made compliance with the notice and submitted all documents as called for which included the documents relating to share applications, loan and interest on loans. The AO did not make any inquiry with the creditors and even the AO did not issue any show cause notice. The assessee had submitted all evidence to substantiate the transactions of cash credit and thus established the identity, creditworthiness, and genuineness of the transactions before the AO in the assessment proceedings. (a) The AO relied on some third-party statements recorded in some other cases where some third party have made some adverse comments on the share subscriber companies. The assessee sought copies of said statements and the cross examination of these parties. The AO did not provide any copies of the statements, nor did he provide the cross examination. Thus, merely based on some third-party statements which were recorded in some other cases and before the assesses search, the AO came to conclusion that the credits were not genuine and made the additions. (b) The assessee having discharged all its onus with respect to the sum credited, the addition made on account of share applications, loan and IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page9 | 68 interest on loans were bad in law and is unjustified and uncalled for as the AO failed to make any inquiry or provide any adverse material and cross examination on this issue.” 6. It was the submission that after submission of all the details as called for in the notice issued u/s.142(1) of the Act, there was no further discussion and within 20 days, the assessment orders for all the seven years came to be passed. Ld AR drew our attention to para 5.3 of the assessment order, wherein, the AO has mentioned that the assessee company has been found to have received monies from share holders/unsecured loans who are identified as bogus companies by the Kolkata Investigation Wing. Ld AR submitted that in the case of Blossom Suppliers Pvt Ltd, the Assessing Officer has identified the entry operator as Anand Sharma. In para 5.4, the AO mentions about one Ananda Singhania and one Mr Manoharlal Nanglia, whose statements have been alleged to have recorded accepting that they have provided accommodation entry to various companies. It was the further submission that the said investigation report was at no point of time, brought to the attention of the assessee, nor was the statement of said two persons given to the assessee and Shri Anand Sharma has now been considered as Shri Anand Singhania and how that has been done is also not known to the assessee. Ld AR further submitted that in para 5.4 onwards the AO talks of various methods adopted by the entry operators of Kolkata. He does not correlate the evidences in the assessment nor in the course of assessment linking the IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page10 | 68 assessee’s transactions with any of the bogus companies. It was the further submission that in para 5.9 of the assessment order, the AO held that mere filing of share application is not enough as the said application is not an unimpeachable document and does not on its own prove the genuineness or authenticity of the transaction. After this, the AO treated the share application money received by the assessee from Blossom Suppliers Pvt Ltd of Rs.6.65 crores as unexplained cash credit u/s.68 of the Act. It was the submission that the assessee had not only provided the share application form but also submitted the share allotment form, ROC forms related to share allotted, income tax return acknowledgment of the aloottee and various other details as mentioned in the short notes, extracted above in para 4. It was the further submission that in the case of Blossom Suppliers Pvt Ltd, the assessee had also submitted the assessment order passed u/s.143(3) for the assessment year 2014-15 passed on 22.9.2016, wherein, the AO of Blossom Suppliers Pvt Ltd has categorically mentioned that the said assessee has made total investment in shares at the beginning of the year of Rs.7,76,02,125/- and the total income of the assessee had been assessed at Rs.2,33,770/-. For better appreciation, copy of the assessment order of Blossom Suppliers Pvt Ltd., is extracted as follows: IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page11 | 68 “INCOME TAX DEPARTMENT Name of the Assessee M/S. BLOSSOM SUPPLIERS PRIVATE LIMITED Nature of business Trading Business Address 157, RABINDRA SARANI, R, NO. 106, GROUND FLOOR Kolkata-700 007 Assessment Year 2014-2015 PAN AADCD6126G Previous Year 2013-2014 Status Domestic Company Date of Order 2^09.2016 \ Method of Accounting Mercantile Previous Year ending on 31.03.2014 Ward ITO Ward - 9(2), Koikata Date of Hearing As per order Sheet Whether Resident/ resident but not ordinarily Resident/non- resident Resident Section and subsection under which the order is made U/S 143(3) of the Income Tax Act, 1961 ASSESSMENT ORDER Return of income for the assessment year 2014-15 was filed on 01.04.2015 declaring a Income of Rs.1,58,752/-. The return was duly processed u/s 143(1) of the Income Tax Act, 1961. The case was selected for scrutiny through Computer Assisted Scrutiny Selection (CASS). Notice u/s 143(2) of the Income Tax Act, 1961 dated 08.04.2016 was issued and duly served upon the assessee, subsequently notice u/s 142(1) of the Income Tax Act, 1961 was issued calling for details regarding accounts of the business of the assessee In compliance to such notice, Shri Ashish Modi, ACA, the A/R of the assessee company appeared from time to time and filed details as requisitions. The same was examined and placed on record. The case is heard and discussed. Examination of accounts reveal that the assessee has made total investment in shares at the begging of the year for Rs 7,76,02,125/-, income from which in the form of dividend or capital gain irrespective of the fact whether such income has been earned during the financial year or not, is not includable in the total income of the assessee or not allowable expenditure for capital gain. Hence, expenses relatable to such income, computed under Rule 8D of the 1. T. Rules, 1962, is to be disallowed u/s 14A of the Income Tax Act, 1961,The issue has been duly intimated to the assessee. The position of law has been clarified by Circular No 5 of 2014 dated 11.02.2014 issued by the CBDT. Since the assessee has no IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page12 | 68 expenditure in the nature of interest, calculation of disallowance under Rule 8D(2)(iii) comes to Rs 2,81,392/- re !4% of Rs 5,62,78,313/- [Average value of investment as on the first day and the last day of the previous year].But the expenses claimed by the assessee is Rs. 1,84,459/-. However, the disallowance is restricted to Rs 1,23,022/-i.e expenses debited by the assessee other than Bank Charges , Secretarial Audit Fee, ROC filling Fees, Audit Fees, and Professional Tax which are statutory in nature. Farther, debited by the assessee other than Rent & Accountant Salary which are expenses in nature of business activities and salary respectively. Total Income as per return ; Rs. 1,58,752/- Add: Addition as discussed above a) Disallowance u/s 14 A : Rs, 75,022/- : Rs. 75,022/- Total Income Assessed Rs.2,33,774/- Total Income Assessed R/O :Rs. 2,33,770/- Income of the assessee is assessed u/s 143(3) of the Income Tax Act, 1961. Income tax is calculated on ITD Application. Calculation sheet annexed herewith forms part of this order. Issue copy of Assessment order and demand notice to the assessee. Sd/- (Sukumar Biswas) Income tax Officer, Ward 9(2),Kolkata” 7. It was the submission that the Assessing Officer in his assessment order refers to certain transactions of Blossom Suppliers Pvt Ltd., done during the assessment years 2008-09, 2009-10 and 2010-2011 to make the allegation that Blossom Suppliers Pvt Ltd was a bogus company. It was the submission that in the search proceedings on the assessee, no evidence, whatsoever, has been found nor refers to in the assessment order in respect of any of the additions, which have been proposed in any of the assessment. It was the submission that the copy of the said Investigation report from Kolkata was also not put to the assessee much less shown to IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page13 | 68 the assessee and such investigation report is also not available in the public domain. 8. At this point of time, a specific question was raised to ld CIT DR as to what is the investigation report being referred to by the Assessing Officer and what is the date of the said investigation report. To this, ld CIT DR submitted that he does not have the said investigation report. The details of the said investigation report are not mentioned in any of the orders. He cannot give any information in regard to said investigation report. It was then informed to ld CIT DR that the Bench desired the information to examine whether the investigation report was available with the Revenue/Assessing officer when the original assessment order u/s.143(3) had been passed in the case of the assessee on 27.12.2016 because in the original assessment order passed u/s.143(3) in regard to the shares allotted, there was an addition made by the Assessing Officer of Rs.73,89,900/- by revaluing the shares of the assessee, which have been allotted. 9. It was the further submission of ld AR that Blossom Suppliers Pvt Ltd had a net worth of Rs.16,91,96,14/- and the directors of the said company and the beneficiary owners of the said company were the relatives to the promoters of the assessee company. It was the submission that any additional details that were required by the Assessing Officer in relation to IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page14 | 68 the transactions entered into by the assessee with Blossom Suppliers Pvt Ltd relevant in the relevant assessment year would have been produced had the same been ever examined. It was the submission that no examination of any of the evidences produced much less verification had been done or referred to. Ld AR placed before us the copy of the balance sheet of Blossom Suppliers Pvt Ltd for the assessment year 2014-15 alongwith notes forming integral part of the balance sheet as on 31 st March, 2014 to submit that the shares of the assessee company were specifically shown under the head “non current investment”. It was the further submission that in any case, Rs.2.25 crores had been received by the assessee in the earlier assessment year and under no stretch of imagination, can the same be considered as unexplained cash credit in the hands of the assessee for the assessment year 2014-15. 10. In reply, ld CIT DR drew our attention to para 5.3 of the assessment order to submit that the assessee has not provided any details in respect of transaction of Blossom Suppliers Pvt Ltd for the assessment year 2008-09. 2009-10 and 2010-2011 and obviously, the said company was a bogus company. It was the submission that just because the assessment order has been passed will not give sanctity to a bogus transaction. It was the submission that in view of the decision of Hon’ble Supreme Court in the case of Durga Prasad More, 82 ITR 540(SC) as also the decision of Hon’ble IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page15 | 68 Supreme Court in the case of Sumit Dayal, 214 ITR 801 (SC), the transactions are colourable device and that the addition as made by the AO and confirmed by the ld CIT(A) is liable to be upheld. Ld CIT DR also drew our attention to page 45 of the paper book filed by the assesses to submit that the assessee itself is a loss making concern and there was no reason for Blossom Suppliers Pvt Ltd., to purchase the shares of the assessee company at a premium of Rs.325/-. It was the submission that the subscription of the shares by Blossom Suppliers Pvt Ltd., is nothing but accommodation entry routed through jamakharchi company and bereft of any genuine share transaction. The very fact that Blossom Suppliers Pvt Ltd., whose shares value skyrocket in 2008-09 from Rs.2 to Rs.990/- in a year and subsequently goes back to Rs.2/- by circulating its shares amongst the group companies is enough proof that it is a paper company which has its headquarter located in Kolkata and bank account located in Bhubaneswar. The multiple bank account transaction in the family concern, which is nothing but accommodation entry as provided in the assessment order in para 5.5. Therefore, it is urged that the addition made under section 68 on account of purchase of fictitious share transaction and corresponding interest disallowance is to be confirmed. 11. In reply, ld AR drew our attention to page 68 of paper book, which was the notice u/s.143(2). It was the submission that except in the query IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page16 | 68 in item No.5, 5.1 and 5.2, there is no question in regard to Blossom Suppliers Pvt Ltd. It was the further submission that all details called for by the Assessing Officer had been submitted to the Assessing Officer and without making any investigation nor finding any incriminating material, nor providing the copy of the alleged investigation report, nor providing the statement recorded from the alleged persons nor providing opportunity for cross examination, but only on presumption, the addition has been made. It was the submission that the addition as made by the AO and confirmed by the ld CIT(A) is liable to be deleted. 12. We have considered the rival submissions. A perusal of the facts in the present case shows that in the course of assessment proceedings, as is evident from the order sheet notings, the assessee has provided all the details called for as early as 10.9.2021 i.e. within 10 days of the notice being issued u/s.142(1) of the Act. A perusal of the order sheet notings clearly shows that there is no action taken by the Assessing Officer after receiving these details but the assessment order has been passed on 30.9.2021. Copy of the order sheet for the assessment year 2014-15 is extracted as follows: IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page17 | 68 “ IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page18 | 68 IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page19 | 68 13. A perusal of the details as submitted by the AO before the Assessing Officer shows that substantial information in relation to share application has been provided as has been called for by the Assessing Officer. There is no shortfall in respect of the details that were submitted by the assessee in respect of notice u/s.142(1) of the Act. The Assessing Officer also does not mention anywhere that the assessee has not provided the details as called for. In fact, a perusal of para 4 of the assessment order shows that the Assessing Officer recognizes that the assessee has filed written submission alongwith details and documents on 10.9.2021 and the same were also examined and verified. In para 5.1 of his order, the Assessing Officer mentions that in the course of search and seizure operation, it is noted that the assessee has introduced fund through unsecured loans and share capital and share premium from Kolkata based companies. How that becomes an incriminating material is not mentioned especially in view of the fact that for the same assessment year, regular assessment has been IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page20 | 68 done in the case of the assessee and addition on account of share premium has been made by invoking the provisions of section 56(2)(viib. A perusal of the assessment order in para 5.3 refers to the name of the alleged entry operator as Anand Sharma in respect of Blossom Suppliers Pvt Ltd. However, a copy of the written submission filed by the assessee on 5.9.2021 provides the company’s master data, wherein, the director and signatory of the company are namely Krishna Shukla and Ankur Jain, as follows: IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page21 | 68 14. The assessee company has received the first transaction of Rs.2.65 crores during the assessment year 2013-14. Obviously, this amount cannot be considered for an addition u/s.68 of the Act for the assessment year 2014-15. Therefore, out of addition of Rs.6.65 crores made by the AO and as reduced by the ld CIT(A) to Rs.6,32,04,235/- on account of benefit given by the ld CIT (A) on account of the addition made in respect of the share application valuation in the regular assessment passed u/s.143(3) of the Act in the case of the assessee would straightaway be reduced by Rs.2.65 crores. 15. Though the Assessing Officer has mentioned and substantially discussed in regard to Blossom Suppliers Pvt Ltd., no evidence has been placed by the revenue nor referred to by the AO to substantiate the claim. The investigation report referred to by the Assessing Officer is not even seen by the ld CIT DR. Copy of the same has not been given to the assessee. Even though the assessment order in the case of Blossom Suppliers Pvt Ltd., has been placed before the Assessing Officer and the Assessing Officer of Blossom Suppliers Pvt Ltd., also recognize the share application in the assessment order. There is no discussion to disturb that fact also. 16. It is trite law that the assessment cannot be done on the basis of conjectures and surmises. An assessment must have been based on foundation and evidence on the basis of which addition can be IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page22 | 68 made/sustained. It is also trite law that if any evidence is going to be used against the assessee in the assessment proceedings, then such evidence must be put to the assessee for his rebuttal and failure to place such evidence to the assessee would render such evidence inapplicable. It is also trite law that initial burden to substantiate the claim is on the assessee and once all evidences and details are submitted then the burden shifts on the Revenue. The burden of proof is not stagnant; it shifts from the assessee to the revenue and vice versa on the basis of the production of the evidences. 17. With the above principle in mind, if we look to the facts of the present case, it shows that the assessee has provided all the evidences called for by the Assessing Officer to substantiate its claim of share capital. The evidences provided by the assessee has not been dislodged nor disproved nor found to be lacking because in the assessment order, the Assessing officer does not make any statement or allegation dislodging or proving any of the evidences submitted to be false. The Assessing Officer has relied upon the investigation report and such reference is not substantiated insofar as the investigation report admittedly is not in the public domain nor this assessment order refers to the identification No. or date or the details of such investigation report. The alleged investigation report has not been provided to the assessee nor put to the assessee for rebuttal. The statements recorded and referred to have not been put to the IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page23 | 68 assessee nor the opportunity of cross examination provided. The statements of the assessee have not been considered and examined in its entirety, which is evident from the fact that the assessee has provided even the master data of Blossom Suppliers Pvt Ltd., which showed that the Directors of Blossom Suppliers Pvt Ltd., in January, 2013 were different from the names as mentioned by the Assessing Officer. A perusal of the assessment order shows that the Assessing Officer is relying upon certain transaction of Blossom Suppliers Pvt Ltd., for the assessment years 2008-09 , 2009-10 & 2010-2011, which were in no way connected to the assessee as the transaction between the assessee and Blossom Suppliers Pvt Ltd., took place only from the assessment year 2013-14. A perusal of the order of the ld CIT(A) shows that in para 5.5 of his order, the ld CIT(A) recognizes that in the course of original assessment u/s.143(3), the shares allotted to Blossom Suppliers Pvt Ltd., had been revalued by the revenue and addition had been on this count and consequently gave a relief to the extent of Rs.32,95,765/- on the ground of double addition. Thus, it becomes evident that in the course of original assessment, the share application had been examined by the then Assessing Officer. The present assessment order u/s.153A does not bring out anything to show as to what was the new evidence that was found in the course of search to give the Assessing Officer the inclination that the share application money received by Blossom Suppliers Pvt Ltd., was bogus. In the absence of any evidence IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page24 | 68 found/referred to by the Assessing Officer to substantiate the claim that the share application transaction of the assessee with BPCL is bogus, the addition as made by the AO and confirmed by the ld CIT(A) stands deleted. INTEREST PAID ON UNSECURED LOAN 18. In respect of issue of interest paid on unsecured loan, it was submitted by ld AR that the assessee had taken loan from Meenakshi Holding Ltd., in 2008-09. It was the submission that the assessee has been paying interest on the said loan @ 4%. TDS has also been deducted from the said loan. It was the submission that said Meenakshi Holding Ltd., has also filed its return of income in the relevant assessment year disclosing the interest income after paying the requisite tax. It was the submission that the Assessing Officer by simply mentioning that Meenakshi Holding Ltd., is a Shell/paper company, disallowed the interest. It was the submission that during the earlier years, the interest has been allowed and even in the course of original assessment proceedings in the case of the assessee u/s.143(3), the interest had been allowed. The details of Meenakshi Holding Ltd., had also been provided to the Assessing Officer in the course of assessment proceedings in reply to notice issued u/s.143(2) of the Act. Ld AR placed before us the copy of the assessment order in the case of the assessee for the assessment year 2013-14, wherein also, there is no disallowance of the interest paid to Meenakshi Holding Ltd., It was the submission that the loans from Meenakshi Holding Ltd., was not a fresh IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page25 | 68 loan. It was the submission that the loan confirmation certificate had been submitted before the Assessing officer and without doing any verification or enquiry with creditor, the interest has been disallowed. Ld AR submitted that even before the ld CIT(A), the evidence had been placed and the ld CIT(A) on the ground that the assessee has been able to prove the identity and has failed to prove creditworthiness of the investing company and the genuineness of the transactions as required u/s.68 of the Act, confirmed the disallowance. It was the submission that all evidence as called for by the Assessing Officer had been provided by the assessee. It was the further submission that in the remand proceedings before the ld CIT(A), there is a specific remand report of the Assessing Officer dated 6.2.2023 as has been extracted by the ld CIT(A) in para 6.3 of his order. In para 6.4 of the ld CIT(A) order, it is stated that the AO mentions that in the appraisal report in respect of the search, no specific query/details/documents have been found in respect of Meenakshi Holding Ltd. The Assessing officer further goes on to mention that blank signed cheques, stamps and other details containing the transactions details were found from the residential premises of the key person Suresh Chand Jain and Vicky Jain, which proves that those paper companies were actually operated from the residence of Sri Suresh Chand Jain and Sri Vicky Jain to provide accommodation entries. In para 7 of the remand report, the AO further submits that the assessee had not furnished sufficient evidentiary proof to justify the claim of interest paid IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page26 | 68 to Meenakshi Holding Ltd. It was the submission that in the course of appeal, Panchannama of the residential premises of Shri Suresh Chand Jain and Sri Vicky Jain were produced, wherein, it is clearly evident that no stamps or blank signed cheques, as alleged with respect to Meenakshi Holding Ltd., has either been found or seized. All the cheque books were of the group companies/concerns/family members. Nothing connected to Meenakshi Holdings Ltd., to the assessee was ever found. It was the further submission that this has been brought out in reply to the remand report in para 6.4 of the order of the ld CIT(A). It was the further submission that in para 6.5 of the order of the ld CIT(A), on verification of the public documents of Meenakshi Holdings Ltd., produced, which showed that from the assessment years 2008-09 to 2013-14, the said Meenakshi Holdings Ltd., was having a net profit of Rs.21.36 lakhs to Rs.33.39 lakhs for each of the relevant financial year. It was thus the submission that this itself showed that Meenakshi Holdings Ltd., was having substantial income and was not a bogus company. It was the submission that in fact the allegations as made by the Assessing Officer in the assessment order and even in remand report were contrary to the facts in its reality and it clearly showed that the Assessing Officer has not even looked into such papers but has made the addition on mere surmises and conjectures. It was the submission that the addition as made by the AO and confirmed by the ld CIT(A) is liable to be deleted. IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page27 | 68 19. In reply, ld CIT DR submitted that the assessee has not provided sufficient evidentiary proof to justify the claim as has been mentioned in the remand report of the Assessing Officer and has also failed to prove the creditworthiness of the investing company and genuineness of the transaction. It was the prayer that the addition as made by the AO and confirmed by the ld CIT(A) is liable to be upheld. 20. We have considered the rival submissions. A perusal of the facts of the present case clearly shows that the loan from Meenakshi Holdings Ltd., is not a fresh loan but it is a carry forward loan. The assessee has provided the proof to show that Meenakshi Holdings Ltd., has provided the loan insofar as even the confirmation letter has been provided by the assessee. A perusal of para 6.5 of the order of the ld CIT(A) shows that Meenakshi Holding Ltd., is having substantial income before tax. The assessee has also provided the copy of the acknowledgement of the returns filed by the Meenakshi Holding Ltd. The said Meenakshi Holding Ltd., is not referred to in the alleged investigation report used against the assessee for the purpose of disallowing the share capital accommodation. The allegation made by the AO in his remand report in regard to the cheque books etc of Meenakshi Holding Ltd at the residence of Sri Suresh Chand Jain and Sri Vicky Jain have been categorically proved to be wrong with the proof of panchannama as recorded by the search party in the course of search of Shri Suresh Chand Jain and Sri Vicky Jain. This being so, it cannot be said that IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page28 | 68 Meenakshi Holdings ltd., is a bogus company and the allegation by the AO is only figment of imagination and is not supported by any documents or evidence. This being so, the disallowance of interest as made by the AO and confirmed by the ld CIT(A) stands deleted. 21. No other grounds have been argued and consequently same are not being adjudicated. 22. In the result, appeal of the assessee stands partly allowed. IT(ss) A No.64/CTK/2023 for A.Y. 2015-16 SHARE CAPITAL 23. Both the parties have agreed that in the relevant assessment year, the facts and arguments are identical. 24. It was the submission that the assessee has received share capital introduction from 12 companies on which one of the company namely Blossom Suppliers Pvt Ltd., is the same as in the assessment year 2014-15. In respect of other companies, it was submitted that except the fact that in none of the other companies the management is by the relatives of the Directors of the assessee company, all the facts remain the same. It was the submission that the assessment orders in the case of 7 out of 12 share applicants have also been filed and in the case other 5, there were no assessment order but the copy of the returns and all other details were submitted. It was the further submission that in respect of Flora Trexmi Pvt IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page29 | 68 Ltd., and Overtop Infra Projects Pvt Ltd.,, the AO mentions that summons u/s.131 were issued and were not complied with is not true insofar as no notice u/s 133(6) and 131 had been issued by the AO as it is apparent from the order sheet. It was the submission that the assessment order was a mere reproduction of the assessment order for the assessment year 2014- 15. It was the submission that the evidences were produced before the ld CIT(A) which has also been extracted by him in his order from pages 12 to 27. It was the prayer that the addition as made by the AO and confirmed by the ld CIT(A) is liable to be deleted. 25. In reply, ld CIT DR reiterated his arguments as made in the assessment year 2014-15. 26. The assessee has filed short notes, which are extracted as follows: “Shri Mahavir Ferro Alloys Private Limited Short notes for ITAT Appeals A.Y. 2015-16 (ITSSA 64/CTK/2023) 1. Issue in this appeal: (a) Addition of share capital of Rs.21,85,71,250 upheld by Ld CITA. (b) Addition of unsecured loan of Rs.2,58,00,000 upheld by Ld CITA. (c) Interest on loan disallowed Rs. 8,19,937 upheld by Ld CITA. AY 2015-2016 (ITA No. ITSSA 64/CTK/2023) 2. Share Capital: The assessee had raised share capital of Rs. 8,81,70,000 by issue of 881700 shares of face value of Rs.100 each out of which 146700 shares issued at a premium of Rs. 240/- total value per share of Rs. 340/- and 735000 shares issued at a premium of Rs.200/- total value per share of Rs.300/-. The total amount raised was Rs. 27,03,78,000. 3. In the search proceedings no incriminating material was found with respect to the said share capital raised. IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page30 | 68 4. The AO in the Assessment Proceedings u/s. 153A, made an addition of Rs.21,85,71,250 on account of Share Capital received from the following entities: SL No. Name of Share Applicants Amount Invested in assessee company 1 Arrowspace Hirise Private Limited 51,00,000 2 Blossom Suppliers Private Limited 4,29,39,000 3 Deepjyoti Developers Private Limited 51,00,000 4 Manikala Dealmark Private Limited 30,00,000 5 Moontree Vincom Private Limited 51,00,000 6 Niharika Distributors Private Limited 3,84,39,000 7 Pearl Tracom Private Limited 4,11,00,000 8 Ranbhumi Niketan Private Limited 51,00,000 9 Tuberrose Projects Private Limited 51,00,000 10 Neelgagan Suppliers Private Limited 2,49,00,000 11 Flora Trexim Private Limited 51,00,000 12 Overtop Infra Projects Private Limited 3,75,00,000 TOTAl Para 5.10 on Page 6 of the Assessment Order] 21,84,78,000 5. On the issue of Share Capital, CIT (A) held as follows: a Relief Granted: Rs. Nil b. Additions confirmed : Rs.21,85,71,250.00 (Para No. 5.7 on Page 36 of the Appeal Order] 6. The assessee submitted the following documents in support of the cash credit during search assessment proceedings: a. Share Application Form b. Share Allotment Letter c. ROC Forms related to share allotted. d. Income tax Return Acknowledgement of the Allottee f. Audited Accounts of the Allottee g. bank Statement of the Allottee h source confirmation letter of the Allottee i. PAN card of allottee j. Board Resolution of the allottee company for making the subscription. k. MCA master sheet having details of registered office and director details. l. Articles and memorandum of Association. 7. Assessment Orders of the respective Share Applicants were also filed before A.O. for the following Share Applicants: IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page31 | 68 SL No. Name of Share Applicants Assessment Order Relevant Year/Any Other year (s) 1 Arrowspace Hirise (P) Ltd. Filed 2 Blossom Suppliers (P) Ltd. Filed 3 Manikala Dealmark (P) Ltd. Filed 4 Moontree Vincom (P) Ltd. Filed 5 Neelgagan Suppliers (P) Ltd. Filed 6 Flora Trexim (P) Ltd. Filed 7 Overtop Infra Projects (P) Ltd. Filed 8. The shares were allotted to 12 entities whose financial particulars are tabulated below: Sr.No. Name of the share applicants Net worth Amount invested in assessee company Investment to networth ratio 1. Arrowspace Hirise Private Limited 32,68,99,260 51,00,000 1.56% 2. Blossom Suppliers Private Limited 18,23,75,422 4,29,39,000 23.54% 3. Deepyoti Developers Private Limited 22,02,00,716 51,00,000 2.32% 4. Manikala Dealmark Private Limited 17,62,44,558 30,00,000 1.70% 5. Moontree Vincom Private Limited 18,25,62,870 51,00,000 2.79% 6. Niharika Distributors Pvt Ltd. 13,04,01,681 3,84,39,000 29.48% 7. Oearl Tracom Private Limited 80,36,78,708 4,11,00,000 5.11% 8. Ranbhumi Niketan Private Limited 9,97,96,782 51,00,000 5.11% 9. Tuberrose Projects Private Limited 9,92,97,825 51,00,000 5.14% 10. Neelgagan Suppliers Private Limited 24,81,86,520 10.03% 11. Flora Trexim Pvt Ltd. 25,62,50,004 1.99% 12. Overtop Infra Projects Pvt Ltd. 10,31,80,365 3,75,00,000 36.34% 9. The following is the list of the parties where AO has not given any finding in the assessment order. IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page32 | 68 SL No. Name of Share Applicants Amount Invested in assessee company Remarks of the Assessee 1 Arrowspace Hirise (P) Ltd. 51,00,000 The A.O. is totally silent in the Assessment Order as to why he is making the addition on account of cash credit for the amounts received from these companies. 2 Deepjyoti Developers (P) Ltd. 51,00,000 3 Moontree Vincom (P) Ltd. 51,00,000 4 Niharika Distributors (P) Ltd. 3,84,39,000 5 Pearl Tracom (P) Ltd. 4,11,00,000 6 Ranbhumi Niketan (P) Ltd. 51,00,000 7 Tuberrose Projects (P) Ltd. 51,00,000 8 Neelgagan Suppliers (P) Ltd. 2,49,00,000 9 Manikala Dealmark (P) Ltd. 30,00,000 TOTAL 13,29,39,000 10. The following is the summary of Allegations by A.O. in its Assessment Order based on which the A.O. claims these entities to be Shell Entities: Name of share applicant. Amount invested in assessee co. Amount added by the AO Alleged operator Reasons Counter remarks Blossom Supplies Pvt Ltd 4,29,39, 000 4,79,41, 00 Anand Sharma Discussi on on Share Holding of the Share Subscrib er raised in F.Y, 2008-09 The adverse observation with regard to capital raised by the share applicant company is not related to the year in which shares are issued to the share applicant and is of no relevance in the case of the assessee to make any additions in the hand of the assessee company. The findings and observations in the Assessment Order is IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page33 | 68 irrelevant with regard to the transaction of the assessee company. Furthermore, the presumption of the law goes in favor of the assessee. It can't be said that the assessee company gave cash to the share applicant in F.Y. 2008-09 to raise the capital and the same was introduced in the A.Y. 2015-16 as share capital in the books of the assessee company. Flora Traxim Pvt Ltd. 51,000.0 0 51,000. 00 Manohar lal Nangalia 131 summon not complie d. -Very less income - No 133(6) or 131 notice issued by A.O. [This is apparent from Order Sheet] - The Share Applicant has sufficient Net Worth. - No evidence brought on record the to substantiate the claim of the A.O Overtop Infra Projects Pvt Ltd 3,75,00, 000 3,75,00, 000 Manohar lal Nangalia -131 summon not complie d. -Very less income - No 133(6) or 131 notice issued by A.O. [This is apparent from Order Sheet] - The Share Applicant has sufficient Net Worth. - No evidence brought on record the to substantiate the claim of the AO Total 8,55,39, 000 9,05,41, 000 11 Unsecured Loans : The assessee has received a total unsecured loan of Rs.4,20,40,000. Out of this, an amount of : 3 00.000 was added in the assessment u/s. 153Aon account of additions u/s. 68 of the IT Act, 1961 being unexplained cash credit from the following parties: SI. Name of the Lender Amount of Loan 1 Blossom Suppliers Private Limited 1,10,00,000 2 Rosco Vanijya Private Limited 11,00,000 3 Rover Promoters Private Limited 78,00,000 4 Swastik Infocity Private Limited 25,00,000 5 Unity Tradecom Private Limited 34,00,000 IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page34 | 68 TOTAL 2,58,00,000 5.10 on Page 6 of the Asst. Order] 1. In the search proceedings no incriminating material was found with respect to the said loan creditors or the said transactions. 2. The assessee submitted the following documents in support of the cash credit i.e., loan during search assessment proceedings: a. Ledger of the Lender in the books of the assessee b. Loan Confirmation c. Loan Confirmation for year of refund d. Audited Accounts of the Lender e. Bank Statement of the Lender f. TDS Certificate w.r.t. Interest g. ITR Acknowledgement of the Lender h. Source of Source i. Assessment Order of the Lender for all lender except Swastik Infocity Pvt. Ltd. 3. On the issue of Unsecured Loan, CIT (A) held as follows: a. Relief Granted: Rs. Nil b. Additions confirmed : Rs.2,58,00,000 Para No. 6.3 on Page 43 of the Appeal Order] 5. Loans were repaid before the assessment order u/s. 153A of the IT Act, 1961 was passed. 6 The following is the summary of Allegations by A.O. in its Assessment Order based on which the A.O. claims these entities to be Shell Entities: Sl. No. Name of the lender Amount of loan Allege d operat or Reasons Counter remarks 1. Blossom Suppliers Dr ivate Limited 1,10,00,0 00 Anand Sharm a Discussion on Share Holding of the Share Subscriber raised in F.Y. 2008- 09 The adverse observation with regard to capital raised by the share applicant company is not related to the year in which loans were received from the lender and is of no relevance in the case of the assessee to make any additions in the hand of the assessee company. The findings and observations in the Assessment Order is irrelevant with regard to the transactions of the assessee company. Furthermore, the IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page35 | 68 presumption of the law goes in favor of the assessee. It can't be said that the assessee company gave cash to the share applicant in F.Y. 2008-09 to raise the capital and the same was introduced in the A.Y. 2015-16 as loan in the books of the assessee company. 2. Rosco Vanijya Pvt Ltd. 11,00,000 Monoh arlal Nangal ia Ankit Todi is director in number of shell companies - No 133(6) or 131 notice issued by A.O. [This is apparent from Order Sheet] - No evidence brought on record to substantiate the claim. - No discussion in the Assessment order for the basis of addition 3. Rover Promoters 5 Limited 78,00,000 Mukes h Banka - - No 133(6) or 131 notice issued by A.O. [This is apparent from Order Sheet] - No evidence brought on record to substantiate the claim. - No discussion in the Assessment order for the basis of addition 4. Swastik Infocity Pvt Ltd. 25,00,000 - - No findings were given by the A.O. However, the amount received was added u/s. 68 of the IT Act, 1961 5. Unity Tradecom Pvt Ltd. 34,00,000 Manoh arlal Nangli a AnkitTodi is director in number of shell companies - No 133(6) or 131 notice issued by A.O. [This is apparent from Order Sheet] - No evidence brought on record to substantiate the claim. -No discussion in the assessment order for the basis of addition. 7. Interest on loan: During the relevant assessment year, the interest of Rs.56,40,919 was charged to the profit loss account. Out of the above, an amount of Rs.8,19,937 was disallowed in the assessment proceedings u/s153A of the IT IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page36 | 68 Act 1961 on account of interest paid to entities whose loan amount were added u/s. 68 of the IT Act, 1961. 8. In the search proceedings no incriminating material was found with respect to the said loan. The assessee submitted the following documents in support of the interest paid on loans during search assessment proceedings: a. TDS certificate b. Loan confirmation c. Ledger d. Income tax return acknowledgement of the lender 9. The AO disallowed the interest based on unsubstantiated allegations and incorrect facts. The assessee duly discharged its onus for the claim of interest. There was no justification to disallow the interest and hence the said disallowance be reversed. (Para No.6.1 on page of the Asst. Order] 10. On the issue of interest on loan, the CIT(A) confirmed the addition of Rs. Rs.8,19,937. (para No.7 on page No.45 of the Appeal Order] 11. Back ground of the assessment: The assessee filed its return in response to the notice u/s 153Aof the Act on 27-04-2021. The assessee made compliance with the notice and submitted all :s as called for which included the documents relating to share applications, loan and interest on loans. The AO did not make any inquiry with the creditors and even the AO did not issue any show cause notice. The assessee had all evidence to substantiate the transactions of cash credit and thus established the identity, creditworthiness, and 5ss of the transactions before the AO in the assessment proceedings. (a0 The AO relied on some third-party statements recorded in some other cases where some third party have made some adverse comments on the share subscriber companies. The assessee sought copies of said statements and the cross examination of these parties. The AO did not provide any copies of the statements, nor did he provide the cross examination. Thus, merely based on some third-party statements which were recorded in some other cases and before the assesses search, the AO came to conclusion that the credits were not genuine and made the additions. (b) The assessee having discharged all its onus with respect to the sum credited, the addition made on account of share is applications, loan and interest on loans were bad in law and is unjustified and uncalled for as the AO failed to make any inquiry or provide any adverse material and cross examination on this issue.” 27. We have considered the rival submissions. As the facts in the present case are also identical to the facts for the assessment year 2014-15 referred (supra), the addition made by the AO, in respect of BSPL to the extent of Rs.4,29,39,000/- stands deleted and IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page37 | 68 in respect of other 11 companies, as it is noticed that the facts are the same and except for the fact of the control of the said company by the relatives of the Directors of the assessee company, the addition stands deleted. It is also noticed that Rosco Vanijya Pvt ltd., Deepjyoti Developers Pvt Ltd., Moontree Vincom pvt Ltd., and Niharika Distributors Pvt Ltd., are not in the list of companies as mentioned by the AO in the alleged investigation report from Kolkata and in any case all the details in respect of 12 companies had been provided to the AO and no negative evidence has been found in respect of the assessee. The Assessing officer is only relying upon certain transactions of the said companies for the assessment year 2008-09 and 2009-10, whereas transaction relates to assessment year 2015-16 in respect of the assessee. Even for a moment, we are to assume that in the investigation report, the investigation Wing of Kolkata has been able to get confession from the alleged directors/controllers of those companies in respect of the transaction done by those companies, the fact that the present investment in shares have been done by these companies would only stands against the alleged confession recorded by the Investigation Wing. The assessee’s name has not cropped up in any of the statements in respect of any of the investigation report. The statements recorded from the alleged entry operators specifically being identified, the company with whom the entry operators have dealt with, what is conspicuous in the present case is the absence of reference of the assessee company’s name in IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page38 | 68 the investigation report as has been referred to by the AO. It is also conspicuous that no specific investigation report is being referred to and neither such investigation report is being placed before the Tribunal much less before the ld CIT(A). In these circumstances, on identical findings as has been given in the assessment year 2014-15, the addition as made by the AO and confirmed by the ld CIT(A) in respect of share application money received by the assessee treated as unexplained cash credit stands deleted. Unsecured loans of Rs.2,58,00,000/- 28. In the course of assessment on similar allegation, the Assessing Officer has disallowed the unsecured loans received by the assessee. It was submitted by ld AR that the assessee has received unsecured loans from 5 companies to an extent of Rs.2,58,00,000/-. It was the submission that out of the same, Rs.1,10,00,000/- is from Blossom Suppliers Pvt Ltd.,, which is a listed concern. The Assessing officer on the ground that the balance sheet of the listed 11 companies showed share capital from similar Kolkata based companies, has made the disallowance. It was the submission that in para 5.5 (B), the AO mentions that summons u/s.131 of the Act were issued to the Directors of Flora Trexim Pvt Ltd., and M/s. Overtop Infra Projects Pvt Ltd.,. Mr Abhijit Tiwari and Mr Bijay Krishna Tiwari and same was not complied with. It was the submission that such 131 notices have never been issued as it is evident from the order sheet IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page39 | 68 entry. It was the submission that the addition has been made only on the basis conjectures and surmises and the addition is liable to be deleted. 29. In reply, ld CIT DR vehemently supported the order of the AO and ld CIT(A). 30. We have considered the rival submissions. The issue in regard to unsecured loans from BSPL has already been found to be genuine in our findings for the assessment year 2014-15. Therefore, on the basis of that order itself, the addition in respect of BSPL stands deleted. 31. In para 5.5 (B), the AO refers to Flora Trexim Pvt Ltd., and Overtop Infra Projects Pvt Ltd., and refers to Mr Abhijit Tiwari and Bijay Krishna Tiwari as directors of both the companies. However, at page 4 para 5.3 of the assessment order in the case of Flora Trexim Pvt Ltd., the entry operator was shown as Pankaj Agarwal and in the case of Overtop Infra Projects Pvt Ltd., the entry operator was shown as Manoharlal Nangalia. Now for the purpose of entry operator and issuance of 131 notices, it is two different persons and what is the relationship to these companies is not mentioned but the statements have been recorded allegedly from the said two persons, who have agreed as entry operators but the Directors of the said companies are totally different. What is the relationship between the said entry operators and the directors have not been brought out. Consequently, the veracity of the statements recorded from Pankaj Agarwal and Manoharlal Nangalia and Anand Singhania raises a question. IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page40 | 68 Admittedly, a perusal of the order sheet entries for the assessment year 2015-16 also clearly shows that no notice u/s.131 has been issued. The order sheet entry is nothing but the record of the action taken in respect of the file to which the order sheet relates. Thus, a perusal of the assessment order itself showed that there is contradiction in the alleged evidence relied upon by the AO. Thus, we are faced with evidence as produced by the assessee, which remained uncontroverted by the revenue as against the allegation made by the AO without the support of any documents and even such allegation run contrary to each other. In these circumstances, the addition in respect of unsecured loan as made by the AO and confirmed by the ld CIT(A) stands deleted. INTEREST ON UNSECURED LOANS OF Rs.8,19,937/- 32. Both the parties have reiterated the arguments as made in the assessment year 2014-15. 33. We have considered the rival submissions. As we have held that the unsecured loans are genuine, consequently, the consequential effect is that the interest on unsecured loans is also allowable. 34. Other grounds taken in the grounds of appeal are not agitated, therefore same are not adjudicated. 35. In the result, appeal of the assessee stands partly allowed. IT(ss) A No.65/CTK/203 for A.Y. 2016-17 SHARE CAPITAL OF Rs.6,2100,000/- IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page41 | 68 36. The assessee has filed short notes to his arguments as under: ““Shri Mahavir Ferro Alloys Private Limited Short notes for ITAT Appeals A.Y. 2016-17 (ITSSA 65/CTK/2023) 1. Issue in this appeal: (a) Addition of share capital of Rs.6,1,00,000 upheld by Ld CITA. (b) Addition of unsecured loan of Rs.10,7,00,000 upheld by Ld CITA. (c) Interest on loan disallowed Rs. 8,15,665 upheld by Ld CITA. 2. Share Capital: The assessee had raised share capital of Rs.6,30,12,500 by issue of 630125 shares of face value of Rs.100 each out of which 298000 shares issued at a premium of Rs. 140/- total value per share of Rs. 240/- and 332125 shares issued at a premium of Rs.200/- total value per share of Rs.300/-. The total amount raised was Rs. 17,11,57,500/-.. 3. In the search proceedings no incriminating material was found with respect to the said share capital raised. 4. The AO in the Assessment Proceedings u/s. 153A, made an addition of Rs.6,21,00,000 on account of Share Capital received from the following entities: SL No. Name of Share Applicants Amount Invested in assessee company 1 Atlantic Investment Pvt Ltd. 81,00,000 2 Dhansakti Suppliers Pvt Ltd. 1,26,00,000 3 Himalayan Investment Consultant 1,02,00,000 4 Rangoli Plaza Private Limited 2,19,00,000 5 Welkin Investment Consultant Pvt Ltd. 93,00,000 Total 6,21,00,000 Para 5.11 on page 7 of the assessment order. 5. On the issue of Share Capital, CIT (A) held as follows: a Relief Granted: Rs. Nil b. Additions confirmed : Rs.6,1,00,000 (Para No. 5.4 on Page 31 of the Appeal Order] 6. The assessee submitted the following documents in support of the cash credit during search assessment proceedings: a. Share Application Form b. Share Allotment Letter c. ROC Forms related to share allotted. d. Income tax Return Acknowledgement of the Allottee IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page42 | 68 f. Audited Accounts of the Allottee g. bank Statement of the Allottee h source confirmation letter of the Allottee i.PAN card of allottee j. Board Resolution of the allottee company for making the subscription. k. MCA master sheet having details of registered office and director details. l. Articles and memorandum of Association. 7. Assessment Orders of the respective Share Applicants were also filed before A.O. for the following Share Applicants: SL No. Name of Share Applicants Assessment Order Relevant Year/Any Other year (s) 1 Dhansakti Suppliers Pvt ltd. Filed 2 Rangoli Plaza Pvt Ltd. filed 8. The shares were allotted to 12 entities whose financial particulars are tabulated below: Sr.No. Name of the share applicants Net worth Amount invested in assessee company Investment to networth ratio 1. Atlantic Investment Pvt Ltd. 55,21,03,181 81,00,000 1.47% 2. Dhansakti Suppliers Pvt ltd. 19,46,69,732 1,26,00,000 6.4% 3. Himalayan Investment Consultant pvt Ltd. 49,09,90,966 1,02,00,000 2.08% 4. Rangoli Plaza Limited 25,58,23,87 2,19,00,000 8.56% 5. Welkin Investment Consultant Pvt Ltd. 57,4,48,755 93,00,000 1.6% 9. The following is the list of the parties where AO has not given any finding in the assessment order. SL No. Name of Share Applicants Amount Invested in assessee company Remarks of the Assessee 1 Antlantic Investment Pvt Ltd. 81,00,000 The A.O. is totally silent in the Assessment Order as to why he is making the addition on account of cash credit for the amounts received from these IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page43 | 68 companies. 2 Dhansakti Suppliers Pvt Ltd. 1,26,00,000 3 Himalayan Investment Consultant Pvt Ltd. 1,02,00,000 Total 3,09,00,000 10. The following is the summary of Allegations by A.O. in its Assessment Order based on which the A.O. claims these entities to be Shell Entities: Name of share applicant. Amount invested in assessee co. Amount added by the AO Alleged operator Reasons Counter remarks Rangoli Plaza Pvt Ltd. 2,19,00, 000 2,19,00, 000 Manohar lal Nangalia /Mukesh Banka No dicussio n in order for basis of addition -No 133(6) or 131 notice issued by AO. (This is apparent from order sheet). The share applicant has sufficient net worth. -No evidence brought on record to substantiate the claim of the AO. -AO is himself not sure about the identity of entry operator to which this company is linked with Welkin Investme nt Consulta nt Pvt Ltd. 93,00,00 0 93,00,0 00 Pankaj Agarwal No discussi on in roder for basis of addition -No 133(6) or 131 notice issued by AO. (This is apparent from order sheet). The share applicant has sufficient net worth. -No evidence brought on record to substantiate the claim of the AO. Total 3,12,00 ,000 3,12,00, 000 11 Unsecured Loans : The assessee has received a total unsecured loan of Rs.21,71,29,121 Out of this, an amount of Rs.11,02,18,318 was added in the assessment u/s. 153A on account of additions u/s. 68 of the IT Act, 1961 being unexplained cash credit from the following parties: Sl.No. Name of the lender Amount of loan Int. disallowed 1. Allworth Construction Pvt Ltd. 60,00,000 4,37,671 2. Anjana Jain 75,18,318 - 3. Atlantic Investment Pvt Ltd. 55,00,000 2,17,973 4. Blossom Suppliers Private Limited 15,00,000 10,72,800 IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page44 | 68 5 Complete Softech Private Limited 1,,01,00,000 7,95,797 6. Crazy Trexim Private Limited 50,00,000 4,39,644 7. Flora Trexmi Private Limited 80,00,000 7,08,164 8. Grewal Steel & Holding Private Limited 2,50,00,000 - 9. Himalayan Investment Consultants Private Limited 25,00,000 2,17,603 10. Kamalraj Overseas Private Limited 59,00,000 4,40,803 11. Outlay Overseas Private Limited 49,00,000 3,91,463 12. Ritu Dhan Dealmark Private Limited 1,95,00,000 14,56,742 13. Rover Promoters Private Limited - 7,06,506 14. Satyalaxmi Promoters Private Limited 51,00,000 3,76,003 15. Swastik Infocity Private Limited- 0 2,25,817 16. Topflow Abasan Pvt Ltgd. 47,00,000 4,21,841 17. Unity Tradecom pvt Ltd. - 3,06,838 Total 11,02,18,318 82,15,665 1 2. In the search proceedings no incriminating material was found with respect to the said loan creditors or the said transactions. 13. The assessee submitted the following documents in support of the cash credit i.e., loan during search assessment proceedings. a. Ledger of the Lender in the books of the assessee B. Loan Confirmation C. Loan Confirmation for year of refund d. ited Accounts of the Lender e. Bank Statement of the Lender f. TDS Certificate w.r.t. Interest g. ITR Acknowledgement of the Lender h. Source of Source 14. The assessee also submitted the assessment order of the following lenders a. Allworth Construction pvt Ltd. b. Blossom Suppliers Pvt Ltd. c. Compelte softech Pvt Ltd. d. Crazy Trxim Pvt Ltd. e. Flora Traxim Pvt Ltd. f. Grewal Steel & Holdings Pvt Ltd. g. Satyalaxmi Promoters pvt Ltd. h. Topflow Abasan Pvt Ltd. 15. On the issue of Unsecured Loan, CIT (A) held as follows: a. Relief Granted: Rs. Nil b. Additions confirmed : Rs.10,27,00,000 Para No. 6.4 on Page 43 of the Appeal Order] 16. Loans were repaid before the assessment order u/s. 153A of the IT Act, 1961 was passed. 17. The following is the list of parties where AO has not given any findings in the assessment order. IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page45 | 68 Sl.No. Name of the share applicant Amount invested in assessee company Remarks of the assessee 1. Atlantic Investment Pvt Ltd. 55,00,000 The A.O. is totally silent in the Assessment Order as to why he is making the addition on account of cash credit for the amounts received from these companies 2. Crazy Trexim Pvt Ltd. 50,00,000 3. Himalayan Investment Consultant Pvt Ltd. 25,00,000 4. Topflow Abasan pvt ltd. 47,00,000 Total 1,77,00,000 18. The following is the summary of allegations by AO in its assessment order based on which the AO claims these entities to be shell entities. Sl. No. Name of the lender Amount of loan Allege d operat or Reasons Counter remarks 1 Allworth Construction Private Limited 50,00,000 Mukesh Banka - 131 Summon not complied. - Tendency of Shell Companies - No 133(6) or 131 notice issued byA.O. [This is apparent from Order Sheet] - No evidence brought on record to substantiate the claim. - No discussion in the Assessment order for the basis of addition. 2 Blossom Suppliers Private Limited 15,00,000 Anand Sharma Discussion on Share Holding of the Share Subscriber raised in F.Y. 2008-09 The adverse observation with regard to capital raised by the share applicant company is not related to the year in which loans were received from the lender and is of no relevance in the case of the assessee to make any additions in the hand of the assessee company. The findings and observations in the Assessment Order is irrelevant with regard to the transactions of the assessee company. Furthermore, the presumption of the law goes in favor of the assessee. it cannot be said that the assessee company gave cash to the share applicant in F.Y., 2008-09 to raise the capital and the same was introduced in the A.Y. 2016- 17 as loan in the books of the IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page46 | 68 assessee company. 3. Complete softech Pvt Ltd. 1,01,00,000 Mukesh Banka Shell company -No 133(6) or 131 notice issued by the Ao. (This is apparent from order sheet) -No evidence brought on record to substantiate the claim -No discussion in the assessment order for the basis of addition 4. Flkora Traxim Pvt Ltd. 80,00,000 Pankaj Agarwal/ Manohar lal Nangalia -131 summon not complied with 0very less income No 133(6) or 131 notice issued by the Ao. (This is apparent from order sheet) -No evidence brought on record to substantiate the claim -No discussion in the assessment order for the basis of addition 5. Grewal Steel Holding Pvt Ltd. 2,50,00,000 Manohar lal Nangtlia - No findings were given by the AO. However, the amount received was added u/s.68 of the I.T.Act. 6. Kamalraj Overseas Pvt Ltd. 59,00,000 Mukesh Banka -131 summon not complied Directors associated with 100 companeis No 133(6) or 131 notice issued by the Ao. (This is apparent from order sheet) -No evidence brought on record to substantiate the claim -No discussion in the assessment order for the basis of addition 7 Outlay Overseas Pvt Ltd. 49,00,000 Mukesh Banka - No findings were given by the AO. However, the amount received was added u/s.68 of the Act. 8. Ritu Dhan Dealmark pvt Ltd. 1,95,00,000 Mukesh Ban No findings were given by the AO. However, the amount received was added u/s.68 of the Act. 9. Satyalaxmi Promoters Pvt Ltd. 51,00,000 - -131 summon not complied with No 133(6) or 131 notice issued by AO. Total 8,50,00,000 IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page47 | 68 19. Interest on Loan: During the relevant assessment year, the interest of Rs. 1,45,84,835 was charged to the profit loss account unsecured loans. Out of the above, an amount of Rs.82,15,565 was disallowed in the assessment proceedings u/s.153A of the IT Act, 1961 on account of interest paid to entities whose loan amount were added u/s. 68 of the IT Act, 1961. 20. In the search proceedings no incriminating material was found with respect to the said loan. The assessee submitted the following in support of the interest paid on loans during search assessment proceedings: a. TDS certificate b. Loan confirmation c. Ledger d. Income tax return Acknowledgement of the lender 21. The AO disallowed the interest based on unsubstantiated allegations and incorrect facts. The assessee duly discharged its •' interest. There was no justification to disallow the interest and hence the said disallowance be reversed. (Para No.6.1 page 7 of the Asst. Order] 22. On the Issue of Interest on Loan, CIT(A) confirmed the additions of Rs.82,15,565. [Para No. 7.3 on Page No. 46 of the Appeal Order] 23. Background of the assessment: The assessee filed its return in response to the notice u/s 153A of the Act on 27-04-2021.The AO issued notice u/s 142(1) of the Act on 30-08-2021. The assessee made compliance with the notice and submitted all documents as called for which included the documents relating to share applications, loan and interest on loans. The AO did not make any inquiry with the creditors and even the AO did not issue any show cause notice. The assessee had submitted all evidence to substantiate the transactions of cash credit and thus established the identity, creditworthiness, and genuineness of the transactions before the AO in the assessment proceedings. (a) The AO relied on some third-party statements recorded in some other cases where some third party have made some adverse comments on the share subscriber companies. The assessee sought copies of said statements and the cross examination of these parties. The AO did not provide any copies of the statements, nor did he provide the cross examination. Thus, merely based on some third-party statements which were recorded in some other cases and before the assesses search, the AO came to conclusion that the credits were not genuine and made the additions. (b) The assessee having discharged all its onus with respect to the sum credited, the addition made on account of share applications, loan and interest on loans were bad in law and is unjustified and uncalled for as the AO failed to make any inquiry or provide any adverse material and cross examination on this issue.” 37. The assessee has received share capital introduction of Rs.6.21 crores from 5 companies. The facts remain identical to the assessment year IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page48 | 68 2015-16 referred (supra). Both the parties have reiterated their same arguments as in the assessment years 2014-15 and 2015-16 on the issue. 38. We have considered the rival submissions. On identical findings for the assessment years 2014-15 and 2015-16 (supra) the addition made by the Assessing Officer and confirmed by ld CIT(A) in respect of share capital treated as unexplained cash credit stands deleted. UNSECURED LOANS OF Rs.11,02,18,318/- 39. The assessee has received Rs.11,02,18,318/- as unsecured loans from 17 companies. Interestingly, in para 5.6 (B) of the assessment order, the AO refers to the Directors of Flora Traxim Pvt Ltd., & M/s Overtop Infra Projects Pvt Ltd.,: Mr Abhijit Tiwari and Mr Bijay Krishna Tiwari. He also mentions that summons u/s.131 were issued. However, as per his own records in para 5.3, on the basis of alleged information received by him from Kolkata Investigation Wing, in the case of Flora Traxim Pvt Ltd., Pankaj Agarwal is the entry operator and in the case of Overtop Infra Projects Pvt Ltd., Manoharlal Nanglia is the entry operator. In para 5.6 (C) in respect of M/s. Kamalraj Overseas Pvt Ltd., the AO also mentions that notice u/s.131 has been issued to Shri Ajit Sharma and Mr Santosh Pandey. M/s. Kamalraj Overseas Pvt Ltd., as well as M/s. Manikala Dealmark Pvt Ltd., did not appear in the list mentioned in para 5.3 of his order. In para 5.6 D, AO mentions that in the case of M/s. Allworth Construction Pvt Ltd., IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page49 | 68 summons were issued to Arun Sharma and Om Prakash Sharma. Allowrth Construction pvt Ltd is not referred to in the alleged information. In para 5.6 E, the AO refers to M/s. Satyalaxmi Promoters Pvt Ltd., and M/s. Topflow Abason pvt Ltd., directors being Mrs Asha Devi Goyaland Mr Babu Lal Sharma. In respect of all the companies, these also do not show up any information from Kolkata Investigation Wing. A perusal of the order sheet entry in respect of assessment year 2016-17 does not show any 131 notice having been issued. The response from the assessee for the said assessment year is of 12.9.2021 & 13.9.2021 and summons seems to have been issued to appear on 14.9.2021 itself. There is no evidence of any summon having been issued at all. A perusal of the statement made shows that the assessee has submitted assessment orders of M/s. Allworth Construction Pvt Ltd., BPSL, Complete Softech pvt Ltd., Crazy Trexim Pvt Ltd., Flora Trexmi pvt Ltd., Grewal Steel & Holdings Pvt Ltd., Satyalaxmi Promoters Pvt Ltd. and Topflow Abasan Pvt Ltd., The assessment orders of 8 of 17 companies, unsecured loan creditors, though produced there is no discussion of the evidence produced. This being so, on identical findings for the assessment year 2015-16(supra) the addition as made by the and confirmed by ld CIT(A) in respect of loan creditors treating the same as unexplained cash credit stands deleted. IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page50 | 68 DISALLOWANCE OF INTEREST ON UNSECURED LOANs 40. As we have held that unsecured loans to be genuine, the consequential interest paid stands allowed on the same loans as per our findings for the assessment year 2014-15. 41. No other arguments are made in respect of other grounds, therefore, same are not being adjudicated. 42. In the result, appeal stands partly allowed. IT(ss) A No.66 & 67/ctk/023 FOR A.Y. 2017-18 & 2018-19 43. As the facts in both the appeals are identical, same are being disposed of together. 44. The first issue is in respect of interest on unsecured loans. As we have already held that the unsecured loans taken during the earlier assessment years are genuine, the interest paid on said unsecured loans, stands allowed in the line of our findings for the assessment years 2014-15, 2015-16 & 2016-17. 45. The next issue relates to disallowance in respect of prior period expenses. 46. It was submitted by ld AR that certain expenses had been claimed representing the prior period expenses while filing the return u/s.153A of the Act. It was the submission that the Assessing Officer when completing the assessment instead of taking the returned income as per the return filed u/s.153A of the Act adopted the total income as per the return filed IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page51 | 68 originally on 6.10.2018 and proceeded to complete the assessment. It was the submission that consequently, the AO had not granted the assessee the benefit of prior period expenses as claimed. It was the submission that the ld CIT(A) had not considered the claim of the assessee on the ground that the search conducted by the department cannot be for the benefit of the assessee. Ld AR has filed short notes to support the arguments for the assessment year 2017-18 & 2018-19, as follows: 2017-18 1. Issue in this appeal (a) disallowance of interest on loan of Rs.1,24,29,837 upheld by ld CIT(A). (b) Rejected of revised claim of Rs.47,42,312 upheld by ld CIT(A) 2. Interest on loan: During the relevant assessment year, the interest of Rs.2,65,63,716 was charged to the profit and loss account on interest from unsecured loans. Out of the above, an amount of Rs.1,24,9,837/- was disallowed in the assessment procedigns u/s.153A of the I.T.Act 1961 on account of interest paid to entities whose loan amount were added u/s.68 of the I.T.Act, 1961. 3. In the search proceedings no incriminating material was found with respect to the said loan. The assessee submitted the following documents in support of the interest paid on loans during search assessment proceedings: (a) TDS Certificate (b) Loan Confirmation (c) Ledger (d) Income Tax Return Acknowledgement of the lender 4. The AO disallowed the interest based on unsubstantiated allegations and incorrect facts. The assessee duly discharged its onus for the claim of interest. There was no justification to disallow the interest and hence the said disallowance be reversed. [Para No. 5.4 on Page 3 of the Asst. Order] IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page52 | 68 4. On the Issue of Interest on Loan, CIT(A) confirmed the additions of Rs. 1,18,52,188. CIT(A) allowed an interest amount of Rs.5,77,649 paid to Mrs. Anjana Jain. [Para No. 5.4 on Page No. 18 of the Appeal Order] Background of the assessment: The assessee filed its return in response to the notice u/s 153A of the Act on 27-04-2021. The AO issued notice u/s 142(1) of the Act on 30-08-2021. The assessee made compliance with the notice and submitted all documents as called for which included the documents relating to share applications, loan and interest on loans. The AO did not make any inquiry with the creditors and even the AO did not issue any show cause notice. The assessee had submitted all evidence to substantiate the transactions of cash credit and thus established the identity, creditworthiness, and genuineness of the transactions before the AO in the assessment proceedings. (a) The AO relied on some third-party statements recorded in some other cases where some third party have made some adverse comments on the share subscriber companies. The assessee sought copies of said statements and the cross examination of these parties. The AO did not provide any copies of the statements, nor did he provide the cross examination. Thus, merely based on some third-party statements which were recorded in some other cases and before the assesses search, the AO came to conclusion that the credits were not genuine and made the additions. The assessee having discharged all its onus with respect to the sum credited, the addition made on account of share applications, loan and interest on loans were bad in law and is unjustified and uncalled for as the AO failed to make any inquiry or provide any adverse material and cross examination on this issue. Revision of claim disallowed as classified as prior period: See detailed note Annexure A. 2018-19 Issue in this appeal (a) disallowance of interest on loan of Rs.44,73,945 upheld by ld CIT(A). (b) Rejected of revised claim of Rs.42,28,02,558 upheld by ld CIT(A) 2. Interest on loan: During the relevant assessment year, the interest of Rs.2,85,52,460 was charged to the profit and loss account on interest from unsecured loans. Out of the above, an amount of Rs.50,98,383/- was disallowed in the assessment proceedings u/s.153A of the I.T.Act 1961 on account of interest paid to entities whose loan amount were added u/s.68 of the I.T.Act, 1961. 3. In the search proceedings no incriminating material was found with respect to the said loan. The assessee submitted the following IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page53 | 68 documents in support of the interest paid on loans during search assessment proceedings: (a) TDS Certificate (b) Loan Confirmation (c) Ledger (d) Income Tax Return Acknowledgement of the lender 4. The AO disallowed the interest based on unsubstantiated allegations and incorrect facts. The assessee duly discharged its onus for the claim of interest. There was no justification to disallow the interest and hence the said disallowance be reversed. [Para No. 5.4 on Page 3 of the Asst. Order] 4. On the Issue of Interest on Loan, CIT(A) confirmed the additions of Rs. 44,73,945. CIT(A) allowed an interest amount of Rs.5,77,649 paid to Mrs. Anjana Jain. [Para No. 5.4 on Page No. 18 of the Appeal Order] Background of the assessment: The assessee filed its return in response to the notice u/s 153A of the Act on 27-04-2021. The AO issued notice u/s 142(1) of the Act on 30-08-2021. The assessee made compliance with the notice and submitted all documents as called for which included the documents relating to share applications, loan and interest on loans. The AO did not make any inquiry with the creditors and even the AO did not issue any show cause notice. The assessee had submitted all evidence to substantiate the transactions of cash credit and thus established the identity, creditworthiness, and genuineness of the transactions before the AO in the assessment proceedings. (a) The AO relied on some third-party statements recorded in some other cases where some third party have made some adverse comments on the share subscriber companies. The assessee sought copies of said statements and the cross examination of these parties. The AO did not provide any copies of the statements, nor did he provide the cross examination. Thus, merely based on some third-party statements which were recorded in some other cases and before the assesses search, the AO came to conclusion that the credits were not genuine and made the additions. The assessee having discharged all its onus with respect to the sum credited, the addition made on account of share applications, loan and interest on loans were bad in law and is unjustified and uncalled for as the AO failed to make any inquiry or provide any adverse material and cross examination on this issue. 7. Revision of claim disallowed as classified as prior period: See detailed note Annexure A. IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page54 | 68 47. It was the submission that there were expenses which related to the relevant assessment years which had by oversight not been claimed in the original return. It was the submission that the Assessing Officer may be directed to allow the prior period expenses as claimed. 48. In reply, ld CIT DR submitted that the issue does not arise out of the order of the ld CIT(A) and consequently, same cannot be considered. It was the submission that the issue has also not been discussed by the Assessing Officer. 49. We have considered the rival submissions. A perusal of the assessment order for the assessment year 2017-18 shows that in the return filed by the assessee in response to notice u/s.153A, the assessee has shown loss of Rs.60,01,55,592/-. However, when computing the total income of the assessee, the Assessing Officer has adopted the total income as per the return filed u/s.139(5) being the revised return filed at a loss of Rs.59,54,13,280/-. This computation itself shows that the expenses claimed by the assessee in its returns in response to notice u/s.153A have not been considered. Similarly, for the assessment year 2018-19, a perusal of the assessment order shows that in 153A return filed, the assessee has disclosed a loss of Rs.73,29,02,856/- whereas when computing the total income of the assessee, the Assessing Officer has adopted the total income as per the return u/s.139(5) at a loss of Rs.31,01,00,298/- resulting in non- IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page55 | 68 consideration of the prior period expenses. Here, as it is noticed that the Assessing Officer has not adjudicated on the issue of prior period expenses. This issue of prior period expensxes is restored to the file of the Assessing Officer for re-adjudication after granting the assessee adequate opportunity of being heard. The expense is liable to be allowed if it is relatable to the assessment year under consideration or which has been paid during the assessment year under consideration. The findings of ld CIT(A) that the search is not for the benefit of the assessee does not stand to reason insofar as what is assessable is the true income of the assessee whether it is through search or whether it is through regular assessment. It is not the case that when a search assessment is made, the income of the assessee is to be assessed on hypothetical basis. 50. No other arguments are made in respect of other grounds, therefore, same are not being adjudicated 51. In the result, both the appeals are partly allowed for statistical purposes. IT(SS) A No.68/CTK/2013: A.Y. 2019-2020 52. The issue in the assessee’s appeal is against the disallowance of Rs.8,75,00,000 towards unsecured loan and Rs.62,56,769/- towards interest paid on unsecured loans. IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page56 | 68 53. The assessee has filed short notes as follows: “1. Issues in Appeal: (a) Addition of unsecured loan of Rs.8,75,00,000 upheld by Ld CITA. (b) Interest on loan disallowed Rs. 69,31,787 upheld by Ld CITA. 2. Unsecured Loans : The assessee has received a total unsecured loan of Rs.52,75,00,000. Out of this, an amount of Rs.8,75,00,000 was added in the assessment u/s. 153A on account of additions u/s. 68 of the IT Act, 1961 being unexplained cash credit received from: i) Compact Finstock Private Limited : 8,45,00,000 (Assessee received loan of Rs.14.10 Crore, AO accepted the transaction of loan to the extent of Rs.5.65 crore) ii) Blossom Suppliers Private Limited : 30,00,000 [Para 5.11 on Page 6 of the Assessment Order] 3. In the search proceedings no incriminating material was found with respect to the said loan creditors or the said transactions. 4. The assessee submitted the following documents in support of the cash credit i.e., loan during search assessment proceedings: a. Ledger of the Lender in the books of the assessee b. Loan Confirmation c. Audited Accounts of the Lender d. Bank Statement of the Lender e. TDS Certificate w.r.t. Interest f. ITR Acknowledgement of the Lender g. Source of Source h. Assessment Order of the Lenders 5. On the issue of Unsecured Loan, CIT (A) held as follows: a. Relief Granted: Rs. Nil b. Additions confirmed : Rs.8,75,00,000 [Para No. 5.4 on Page 26 of the Appeal Order] 6. The total amount of loan received from Compact Finstock Pvt. Ltd during the year was 14,10,00,000. However, the A.O. has added only 8,45,00,000. The AO accepted the transaction of Rs.5.65 crore of loan taken from this party and balance amount of Rs.8.45 crore was held u/s 68 of the Act. IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page57 | 68 7. The following is the summary of Allegations by A.O. in its Assessment Order based on which the A.O. claims this entity to be Shell Entity: 1. Compant Finstock Pvt Ltd. Allegation by AO Our remarks 1. Entity is linked to Anand Sharma, Entry Operator 1. Same company is linked to 2 entry operators. A.O. himself is not clear about the identity of the entry operators to whom the company is linked with 2. Statement of Anand Singhania, Entry Operator 2. There is no evidence on record to prove the statement of Anand Singhania and under what capacity 3. Authorized Office during the time of search could not trace the address. 3. The Loan Lender is a high tax paying company and has paid taxes to the tune of 59,33,044 in A.Y. 2020-21. 4. As per MCA database, the Company is an Active Compliant company. The status of Active Compliant is given after uploading photographs of office premises along with geolocation mapping ii) Blossom Suppliers Pvt Ltd. Allegation by AO Our remarks 1. Entity is linked to Anand Sharma, Entry Operator. 2. Discussion on share holding of the company raised by them in F.Y,2008-09 The adverse observation with regard to capital raised by the share applicant company is not related to the year in which loans were received from the lender and is of no relevance in the case of the assessee to make any additions in the hand of the assessee company. The findings and observations in the Assessment Order is irrelevant with regard to the transactions of the assessee company. Furthermore, the presumption of the law goes in favor of the assessee. It can't be said that the assessee company gave cash to the share applicant in FY. 2008-09 to raise the capital and the same was introduced in the A.Y. 2016-17 as loan in the books of the assessee company. A.O. has not brought any documents on record to substantiate his claims that the entity is linked to Anand Sharma. IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page58 | 68 7. Interest on Loan: During the relevant assessment year, the interest of Rs. 5,24,49,870 was charged to the profit loss account on interest from unsecured loans. Out of the above, an amount of Rs.69,31,787 was disallowed in the assessment proceedings u/s. 153A of the IT Act, 1961 on account of interest paid to entities whose loan amount were added u/s. 68 of the IT Act, 1961, 8. In the search proceedings no incriminating material was found with respect to the said loan. The assessee submitted the following documents in support of the interest paid on loans during search assessment proceedings: (a) TDS Certificate (b) Loan Confirmation (c) Ledger (d) Income Tax Return Acknowledgement of the lender 9. The AO disallowed the interest based on unsubstantiated allegations and incorrect facts. The assessee duly discharged its onus for the claim of interest. There was no justification to disallow the interest and hence the said disallowance be reversed. [Para No. 6.1 on Page 6 of the Asst. Order] 10. On the Issue of Interest on Loan, CIT(A) confirmed the additions of Rs.62,56,769. CIT(A) allowed an interest amount of Rs.6,75,018 paid to Mrs. Anjana Jain. [Para No. 6.4 on Page No. 29 of the Appeal Order] 11. Background of the assessment: The AO issued notice u/s. 143(2) of the IT Act, 1961 on 16/03/2021. The AO issued notice u/s 142(1) of the Act on 30-08-2021. The assessee made compliance with the notice and submitted all documents as called for which included the documents relating to loans and stock. The AO did not make any inquiry with the creditors and even the AO did not issue any show cause notice. The assessee had submitted all evidence to substantiate the transactions of cash credit and thus established the identity, creditworthiness, and genuineness of the transactions before the AO in the assessment proceedings. (a) The AO relied on some third-party statements recorded in some other cases where some third party have made some adverse comments on the share subscriber companies. The assessee sought copies of said statements and the cross examination of these parties. The AO did not provide any copies of the statements, nor did he provide the cross examination. Thus, IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page59 | 68 merely based on some third-party statements which were recorded in some other cases and before the assesses search, the AO came to conclusion that the credits were not genuine and made the additions. (c) The assessee having discharged all its onus with respect to the sum credited, the addition made on account of share applications, loan and interest on loans were bad in law and is unjustified and uncalled for as the AO failed to make any enquiry or provide any adverse material and cross examination on this issue.” 54. Both the parties reiterated their arguments as raised in the assessment year 2014-15, 2015-16 & 2016-17. 55. In line with our findings given in assessment years 2014-15, 2015-16 & 2016-17, the addition made in respect of unsecured loans treated as cash credit stands deleted and consequently, the disallowance of interest on unsecured loans stands allowed. 56. No other arguments are made in respect of other grounds, therefore, same are not being adjudicated. 57. In the result, appeal stands partly allowed. IT(SS) A No.69/CTK/2023: A.Y. 2020-21 58. The assessee has raised two issues in this appeal. First one is upholding the disallowance of the addition of Rs.5,65,00,000/- u/s.68 of the Act and second one upholding the addition of Rs.3,40,67,219/- on account of stock difference as unexplained income of the assessee. 59. The assessee has filed short notes as follows: IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page60 | 68 “A.Y. 2020-21 (ITSSA 69/CTK/2023) 1. Issues in Appeal: (a) Addition of unsecured loan of Rs.5,65,00,000 upheld by Ld CITA. (b) Addition on account of stock difference of Rs.3,40,67,219 upheld by Ld CIT (A). 2. Unsecured Loans : The assessee has received a total unsecured loan of Rs.50,83,00,000. Out of this, an amount of Rs.5,65,00,000 was added in the assessment u/s. 153Aon account of additions u/s. 68 of the IT Act, 1961 being unexplained cash credit received from Compact Finstock Private Limited. [Para 5.11 on Page 3 of the Assessment Order] 3. In the search proceedings no incriminating material was found with respect to the said loan creditors or the said transactions. 4. The assessee submitted the following documents in support of the cash credit i.e., loan during search assessment proceedings: a. Ledger of the Lender in the books of the assessee b. Loan Confirmation c. Audited Accounts of the Lender d. Bank Statement of the Lender e. TDS Certificate w.r.t. Interest f. ITR Acknowledgement of the Lender g. Source of Source h. Assessment Order of the Lender 5. On the issue of Unsecured Loan, CIT (A) held as follows: a. Relief Granted: Rs. Nil b. Additions confirmed : Rs.5,65,00,000 [Para No. 3.4 on Page 22 of the Appeal Order] 6. Interest on the same loan has been accepted by the A.O. as there is no disallowance made on interest on such loans. 7. The total amount of loan received from Compact Finstock Pvt. Ltd during the year was 10,39,00,000. Assessee received loan of Rs.10.39 Crore, AO accepted the transaction of loan to the extent of Rs.4.74 crore. However, the A.O. has added only 5,65,00,000. There is no basis provided by A.O. for adding only 5.65 crore out of 10.39 crores received during the year. 8. The following is the summary of Allegations by A.O. in its Assessment Order based on which the A.O. claims this entity to be Shell Entity: IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page61 | 68 Allegations by A.O. Our Remarks 1. Entity is linked to Anand Sharma, Entry Operator 2. Statement of Anand Singhania, Entry Operator 3. Authorized Office during the time of search could not trace the address. 1. Same company is linked to 2 entry operators. A.O. himself is not clear about the identity of the entry operators to whom the company is linked with. 2. There is no evidence on record to prove the statement of Anand Singhania and under what capacity. 3. The Loan Lender is a high tax paying company and has paid taxes to the tune of 59,33,044 in A.Y. 2020- 21. 4. As per MCA database, the Company is an Active Compliant company. The status of Active Compliant is given after uploading photographs of office premises along with geolocation mapping. 9. Addition on account of Stock Difference": During the relevant assessment year, the A.O. made an addition of Rs. 14,36,86,116 on account of undisclosed income on account of stock difference. [Para 6.3 on Page 4 of Asst. Order] 10.The assessee is challenging the stock verification report since the day of the search and also in the statement of Mr. Vicky Jain recorded during the time of search. The stock verification on the basis of eye estimation cannot be relied on. There is no evidence of any actual weighment, numbers, size and shapes of heaps. There is no record of the weight taken or even there is no document to show that the weight of the stock was actually taken. There is no item wise remark on the stock verification report as to how the physical stock verification was conducted. Since there are no weighment records etc., it can be concluded that the physical stock verification was not at all done and some figures have been put on imagination. 11. On this Issue of addition on account of Stock difference, CIT(A) held as follows: a. Relief granted Rs.10,96,18,897 b. Additions confirmed Rs.3,40,67,219 [Para No. 5.9 on Page No. 46 of the Appeal Order] 12.The following additions have been confirmed by the Ld. CIT(A): • Addition made in Raw Materials : Rs. 20,97,296.00 • Addition made in Finished Goods : Rs. 3,19,69,923.00 • Total Addition : Rs.3,40,67,219.00 IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page62 | 68 Details of addition confirmed Item (Raw Material ) Qty. as per Department Valuer (A) Qty. as per books of the assessee (B) Difference (A-B) %of Varianc e Amount of Addition Petcoke 5850.00 5966.506 -116.506 1.99% 20,97,296.00 The above difference represents stock shortage i.e. stock as per books is higher than the stock estimated by the valuer. Hence no addition can be made in such circumstances. Item (Finished Goods) Qty. as per Department Valuer Qty. as per books of the assessee Difference Amount of Addition Iron Ore Pellet 19,439.000 18,422.424 1,016.576 33,07,338.00 Iron Ore Pellet (Oversize) 6,404.000 5,595.600 808.400 20,22,500.00 M.S. Billet 6,062.000 5,354.650 707.350 1,84,03,125.00 Runner Riser 232.000 225.540 6.460 64,600.00 Sponge Iron 2,731.000 2,474.940 256.060 35,84,840.00 Sponge Iron (RM) 2,540.000 2,212.320 327.680 45,87,520.00 Total 3,19,69,923.00 The total stock value of the assessee on the date of survey was around Rs.130 crore and the variance upheld by the Ld CIT Appeals is Rs.3.19 crore which comes to 2.45%. We submit that the 2.45% variance is absolutely irrelevant and negligible when one considers the fact that the stock quantity was more than 4 lakh Metric tons and value of Rs. 130 crore. Since the stock was taken on eye estimation, such variance is negligible considering the nature of stock items. The assessee puts its reliance on following case law: (a) Hon'ble Orissa High Court- Utkal Alloy Ltd- enclosed in submission (b) Hon'ble Delhi High Court- Balaji Wires Pvt Ltd- enclosed in submission (c) Shri Sanjay Sharma, Bargarh Vs. DCIT, Central Circle, Sambalpur pronounced on 25th Sep, 2020 [IT(SS)ANo. 138/CTK/2018) wherein it was held that: "....the assessee has also alleged that the stock/inventory has been counted by the search team only on the basis of eye estimation but not actual weighment of stock of paddy/rice/bran/husk etc. Therefore. considering the totality of the facts and circumstances of the case, we allow 20% (twenty percent) relief to the assessee on the total addition made due IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page63 | 68 to there may be difference between eye-estimation for stock taking and actual weighment of the stocks found......." 13. Please refer to addition note on this issue. Annexure A. 14. Background of the assessment: The AO issued notice u/s. 143(2) of the IT Act, 1961 on 16/03/2021. The AO issued notice u/s 142(1) of the Acton 30-08-2021. The assessee made compliance with the notice and submitted all documents as called for which included the documents relating to loans and stock. The AO did not make any inquiry with the creditors and even the AO did not issue any show cause notice. The assessee had submitted all evidence to substantiate the transactions of cash credit and thus established the identity, creditworthiness, and genuineness of the transactions before the AO in the assessment proceedings. (a) The AO relied on some third-party statements recorded in some other cases where some third party have made some adverse comments on the share subscriber companies. The assessee sought copies of said statements and the cross examination of these parties. The AO did not provide any copies of the statements, nor did he provide the cross examination. Thus, merely based on some third-party statements which were recorded in some other cases and before the assesses search, the AO came to conclusion that the credits were not genuine and made the additions. (b) The assessee having discharged all its onus with respect to the sum credited, the addition made on account of share applications, loan and interest on loans were bad in law and is unjustified and uncalled for as the AO failed to make any inquiry or provide any adverse material and cross examination on this issue.” 60. In regard to first issue, both the parties have reiterated their arguments as made in the assessment years 2015-16 & 2016-17. 61. On identical findings for the assessment years 2015-16 to 2016-17, the addition made in respect of unsecured loans stands deleted. 62. The next issue is in regard to the addition made on account of difference in stock. 63. It was submitted by ld AR that in the course of survey, an addition in respect of stock had been made to an extent of Rs.14,36,86,116/-. It was the submission that in the course of search, alleged huge difference of stock IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page64 | 68 on finished products was taken at average metric basis. Ld AR drew our attention to the stock measurement which is extracted as below: IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page65 | 68 64. It was the submission that consequently as the difference in the stock was found of Rs.14,36,86,116/- the Assessing Officer made the IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page66 | 68 addition. Consequent to the search by the department, the Directorate of Mines had also searched the assessee and physical stock was taken and there was no difference found between the stock as recorded in the books of the assessee and as found at the time of search. The stock report of the Dy. Director of mines was considered by the ld CIT(A) and after making necessary adjustment to the date of search by the department with relation to the search report by the Dy. Director of Mines, ld CIT(A) gave relief of Rs.10,96,18,897/- but confirmed the addition of Rs.3,40,67,219/-. It was the submission that the actual stock of the assessee was of Rs.130 crores and the difference was only Rs.3,40,67,219/-, which is barely less than 2.5% of the actual stock. It was the submission that a perusal of the stock measurement clearly shows that the measurement are on the basis of average length, width and height and calculation of cubic meter and multiplication by weight. The stock is lying in the open area and no physical measurement was done. In fact, the physical measurement was done by the Dy. Director of Mines and no difference between the stock as recorded in the books of account and as found by the Dy. Director of Mines was detected. It was the submission that the measurement of the quantity of the stock is done by the Valuation Officer being only on estimate basis and estimation addition is less than 2.5% of the total stock, therefore, no addition was called for. IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page67 | 68 65. In reply, ld CIT DR submitted that substantial relief has been granted by the ld CIT(A) and no further relief is liable to be granted. 66. We have considered the rival submissions. A perusal of the facts in the present case clearly shows that the assessee had stock of Rs.130 crores as on the date of search. As a consequence of the search and the alleged detection of the undisclosed stock, it can be said the Dy. Director of Mines had also conducted physical search. The specific search by the Dy. Director of Mines had not shown any difference between the physical stock as recorded in the books and as found at the time of search on 29.2.2020, which is just few days after the search by the Income tax Department. A perusal of the stock valuation as done by the valuation agency shows that the measurement of quantity has been done by adopting the average calculation of the quantity of the stock. It is not a physical verification. After considering the set off, of the relief granted by the ld CIT(A) by considering the physical stock taken by the Dy. Director of Mines in the course of their search, the difference comes to only less than 2.5%. This variation is very much possible when an estimation is done. It is further considered that the fact that the revenue has not filed appeal against the deletion in respect of alleged difference in the stock, it can be presumed that the stock as recorded by the Dy. Director of Mines after physical verification, which tallied with the stock as recorded in the books of the assessee is correct. Consequently, the addition of Rs.3,40,67,219/- IT(ss)A Nos.63 to 69/CTK/2023 Assessment Years : 2014-15 to 2020-2021 Page68 | 68 representing the alleged difference in the stock found in the course of search and as recorded in the books of the assessee stands deleted. 67. No other arguments are made in respect of other grounds, therefore, same are not being adjudicated. 68. In the result, appeal of the assessee stands partly allowed. Order dictated and pronounced in the open court on 10/10/2023. Sd/- sd/- (Rajesh Kumar) (George Mathan) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 10/10/2023 B.K.Parida, SPS (OS) Copy of the Order forwarded to : By order Sr.Pvt.secretary ITAT, Cuttack 1. The Appellant : Shri Mahavir Ferro Alloys Pvt Ltd.,Kalunga Industrial Estate, Kalunga, Rourkela 2. The Respondent: ACIT, Central Circle, Sambalpur 3. The CIT(A)-, 2, Bhubaneswar 4. Pr.CIT-2, Bhubaneswar 5. DR, ITAT, Cuttack 6. Guard file. //True Copy//