Dy. Commissioner of Income Tax, Central Cir.-3, Surat V. Shri Nagjibhai Mohanjibhai Sakariya, Surat

ITSSA 8/SRT/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2032 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 24-05-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 30-03-2022
• Assessment Year: 2010-2011
• Appeal Filed On: 04-04-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: BIREN V SHAH
• Keywords: Unexplained cash credit; Search and seizure; Document seized; Opportunity of cross examination; Peak credit; Rule of consistency; Earning of tax free income; Third party statement; Accommodation entries; TDS; Rule 8D; Set aside
• Section: 68; 37; 132; 143(3); 142(1); 153A; 14A; 133(6); 37(1); 143(2); 69A; 43; 22; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER IT(SS)A No.01/SRT/2021 (AY 2010-11) IT(SS)A No.09/SRT/2020 (AY 2014-15) (Hearing in Physical Court) Deputy Commissioner of Income-tax, Central Circle- 3Room No.507, 5 th Floor, Aayakar Bhawan, Majura Gate, Surat-395001 Assistant Commissioner of Income-tax, Central Circle-3, Room No.507, 5 th Floor, Aayakar Bhawan, Majura Gate, Surat-395001 Vs Shri Dineshchandra D Koradia, 9/10, Dayanand Society, B/h.Navyug College, Rander Road, Surat PAN No: ACUPK 3696 A Appellant / Revenue Respondent /Assessee IT (SS)A No.08/SRT/2021 (AY 2010-11) ITA No.47/SRT/2021 (AY 2017-18) Deputy Commissioner of Income-tax, Central Circle-3 Room No.507, 5 th Floor, Aayakar Bhawan, Majura Gate, Surat-395001 Vs Shri Nagjibhai Mohanbhai Sakariya, 9/10, Dayanand Society, B/h.Navyug College, Rander Road, Surat PAN No: ABEPP 7995 G Appellant / Revenue Respondent / Assessee IT(SS)A No.02/SRT/2021 (AY 2010-11) IT(SS)A No.03/SRT/2021 (AY 2014-15) ITA No.30/SRT/2021 (AY 2015-16) ITA No.48/SRT/2021 (AY 2017-18) Deputy Commissioner of Income-tax, Central Circle-3 Room No.507, 5 th Floor, Aayakar Bhawan, Majura Gate, Surat-395001 Vs Shri Hareshbhai Mohanbhai Sakariya, 9/10, Vinod Niwas, Dayanand Society, B/h.Navyug College, AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 2 Rander Road, Surat PAN No: ALLPS9142 H Appellant / Revenue Respondent / Assessee Assessee by Shri Vartik Chauksi, & Shri Biren V Shah, AR Revenue by Shri H.P.Meena, CIT-DR Date of hearing 31.03.2022 Date of pronouncement 25.05.2022 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This batch set of eight appeals by Revenue are directed against the separate orders of ld. Commissioner of Income tax (Appeals)-3, Surat [for short to as “CIT(A)”] dated 11.03.2020, 10.02.2021 & 04.01.2021 for assessment years (AY) 2010- 11,2014-15, 2015-16 & 2017-18 which in turn arise out of separate assessment orders passed by the Assessing Officer under section 143(3) r.w.s. 153A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 30.12.2016 & 12.12.2019 respectively. In all the appeals, the Revenue has raised certain common grounds of appeal, certain facts in all appeals are common except variation of additions on account unsecured loans, consequential interest of such additions and AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 3 disallowance under section 14A, therefore, with the consent of parties, all the appeals were clubbed, heard and decided by a consolidated order to avoid the conflicting decisions. For appreciation of facts, the facts in assessment year 2010-11 in IT(SS)A No.01/SRT/2021 was treated as “lead” case. The Revenue has raised the following grounds of appeal:- “(1) On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in holding that any addition during the assessment u/s 153A has to be confined to the incriminating material found during the course of search u/s 132(1) of the Act, even though, there is no such stipulation in sec.153A of the Act. (2) On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that sec. 153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re-assess the total income of those six assessment years. This scheme of assessment or re-assessment of the total income of a person searched will become frivolous if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material. (3) On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that while computation of undisclosed income of the block period u/s 158BB was to be made on the basis of AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 4 evidence found as a result of search or requisition of books of accounts, whereas, there is no such stipulation in sec. 153A and sec.153C of the Act. (4) On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that assessment in relation to certain issues not related to the search and seizure may arise in any of the said six assessment years after the search u/s 132 is conducted in the case of the assessee, and that if the interpretation of the ld. CIT(A) were to hold it will not be possible to assess such income in the 153A proceedings. Further, no other parallel proceedings can be initiated to assess such income to assess the correct and true income of the assessee. (5) On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.4,15,00,000/- on account of unexplained cash credit without appreciating the fact that such loans were arranged by the assessee from the entry provider, which was not only accepted by the main persons of the entry providing group before the Income Tax Department but also before the other agencies like Enforcement Directorate. (6) On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.20,02,042/- on account of payment of interest on loan without appreciating the fact that M/s HVK International Pvt. Ltd., in which the assessee is one of the directors, has accepted before the Hon'ble ITSC that the unsecured loans arranged from 19 parties including the parties to whom the assessee has claimed to have paid interest, are bogus. AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 5 (7) It is, therefore, prayed that the order the Ld. CIT(A)-4, Surat may be set aside and that of the AO may be restored to the above extent.” 2. Brief facts of the case are that a search action under section 132 of the Act was carried out in the case of HVK group of Surat on 09.10.2014. During the search action, certain incriminating documents, cash and jewellery were seized from the residence of the assessee who is one of the directors of M/s HVK International Pvt. Ltd. Consequent upon search; a notice under section 153A on 29.10.2015 was served upon assessee to file his return of income for this assessment year (AY 2010-11). In response to notice under section 153A, the assessee filed his return of income for assessment year 2010- 11 on 26.12.2015 declaring total income at Rs.5,27,042/-. The Assessing Officer after serving notice under section 143(2) and notice under section 142(1) of the Act proceeded for assessment. The Assessing Officer during the assessment recorded that on verification of return of income, it is seen that the assessee has received unsecured loan from various parties who have poor credentials. The assessee availed loan from AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 6 Diasqua Exports, Madhav Gems, Mayur Gems & Paras Gems. All these concerns were bogus proprietary concerns of known entry providers like Shri Madan Lal Jain, Shri Pankaj Jain, Shri Sushil T Jain and Shri Praveen Jain. The Assessing Officer further noted that Shri Madan Lal Jain was arrested under prevention of Money Laundering Act, 2002 on 17.07.2014. The Enforcement Directorate recorded his statement, wherein he has stated that he is an entry provider of bogus bills. For Praveen Jain, the Assessing Officer recorded that his statement was a recorded by DDIT (Inv.) Unit 1(4), Mumbai on 06.10.2013, wherein he has admitted as bogus entry provider. Sushil Jain, proprietor of Mayur Gems is an employee of Pravin Jain. The Assessing Officer further noted that assessee has also paid interest on such unsecured loan and other loans. The Assessing Officer on the basis of his observation took his view that the transactions of unsecured loan are not genuine and accordingly issued show cause notice to the assessee to furnish his evidence to substantiate the genuineness of unsecured loan. The assessee filed his AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 7 reply on 27.12.2016 and furnished various evidences to prove the genuineness of transaction, address of lender and their PAN and bank statement. The Assessing Officer recorded that ledger and bank account was not furnished by assessee. The Assessing Officer recorded that mere payment through account payee cheque is not sacrosanct and on the basis of information with the Assessing Officer, the Assessing Officer disallowed the peak credit of unsecured loan from four creditors i.e. Diasqua Exports, Paras Gems, Madhav Gems and Mayur Gems and made addition of Rs.4.15 crores. The assessing officer also recorded that HVK International Pvt Ltd, the parent company, wherein the assessee is director filed a petition before Settlement Commission, wherein they accepted that unsecured loan transaction from 19 parties are bogus. The Assessing Officer also made disallowance of interest paid on various unsecured loan of Rs. 20,02,042/-. 3. Aggrieved by the addition made in assessment order and validity of order passed under section 153A, the assessee filed appeal before Ld. CIT(A). Before ld CIT(A) besides challenging AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 8 the validity of addition, the assessee also challenged the addition on legal ground that the addition was made on the basis of third-party statement and such statements are not incriminating evidence found during the course of search action and therefore no addition can be made on the basis of such statements. The assessee filed detailed written submission on the validity as well as legality of addition made in the assessment order passed under 153A in absence of incriminating materials found during the course of search action. The assessee relied upon the decisions of Hon'ble jurisdictional High Court in the case of CIT vs. Saumya Construction Pvt. Ltd. (Tax Appeal No.24 of 2016) dated 14.03.2016; Principal Commissioner of Income Tax Vs. Anil Bholabhai Patel dated 30.08.2017 and Hon'ble Delhi High Court in the case of Commissioner of Income-tax Vs Kabul Chawla (2015) 61 taxmann.com 412 (Del). 4. Against the merits of the additions the assessee submitted that the assessee availed unsecured loan from four parties namely Diasqua Exports, Paras Gems, Madhav Gems and AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 9 Mayur Gems and furnished the opening and closing balance, details of interest paid and TDS made on such interest and the amount received and repaid during the year. Such details are recorded by ld CITA) at page No. 18 & 19 of his order. The assessee also stated that the assessing officer considered only peak of all transaction and made addition of Rs. 4.15 Crore in AY 2010-11 and Rs. 2.14 Crore in AY 2014-15. The assessee further stated the assessing officer has no other evidence in his possession which proves that the unsecured loan availed by assessee is bogus or non-genuine. The entire additions are based on mere assumption and presumption. The transaction of unsecured loan is supported by all the necessary documentary evidences furnished to the assessing officer. The onus casted on the assessee has been discharged and no additions under section 68 can be made against the assessee. In response to the notice under section 133(6) all the parties have furnished the required details and accepted/ confirmed that the transactions are genuine. Even other wise the additions cannot be made on the basis of third party AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 10 information, more particularly when it is not supported with the documentary evidences. The assessee stated that he has furnished the documents which consist of copy of ledger accounts of the parties from its books, confirmation of accounts duly signed by the parties showing their complete address, bank statement of the assessee reflecting the transaction, copy of computation of income of the lender, balance sheet, return of income and profit and loss accounts. The assessee also relied on the case law of Gujarat High Court in CIT Vs Rohini Builders (256 ITR 36 Guj), CIT Vs Ranchod Jivabhai Nakhava (208 Taxman 116 Guj) and other various case laws. 5. The Ld. CIT(A) after considering the submission of assessee recorded that search action in case of assessee was carried out on 09.10.2014. The assessee argued before him that addition in case of assessee is not made on the basis of any incriminating materials found during the course of search action. The Ld. CIT(A) recorded that the time-limit for issuance of notice under section 143(2) for assessment year 2010-11 AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 11 has already expired on the date of search action. Thus, no addition in absence of any incriminating material could be made. The Ld. CIT(A) recorded that Assessing Officer made addition on the basis of statement of Praveen Jain recorded by DDIT(Inv.) Mumbai in October, 2013. In the entire assessment order, there is no reference that during the search action, some incriminating materials were found which proved that assessee has given cash on such loan. The Assessing Officer also disallowed interest expense against the loan taken from nineteen parties. The Ld. CIT(A) by referring the relevant portion of decision of Hon'ble jurisdictional High Court in the case of Saumya Construction Pvt. Ltd. (supra) and decision of Delhi High Court in the case of Kabul Chawla (supra) and other decisions held that impugned addition are not based on incriminating material, therefore, the addition made by assessing officer under section 68 of the Act on account of unsecured loan is not sustainable. Thus, ld. CIT(A) deleted the substantial addition and the consequential addition made on account of interest expense payment was also deleted. AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 12 6. The Ld. CIT(A) also considered the merit of addition and held that during the appellate stage the assessee furnished the ledger accounts of the parties, confirmation with PAN and full address and bank statement reflecting the transactions with the return of income of all the creditors. The assessing officer has taxed peak credit of loan taken from three parties being Paras Gems, Mayur Gems and Madhav Gems on the ground that loan taken from such firms are bogus. The Ld. CIT(A) held that as per various decisions of courts, the assessee required to prove the identity, creditworthiness of the lenders and the genuineness of the transactions. The assessee has furnished confirmation of the parties, PAN, bank statement reflecting the transactions, return of income and annual accounts of such parties. Such documents established the identity of the parties. There is no dispute about the fact that loan was received from account payee cheques and copy of bank statement of assessee as well as lender to prove the creditworthiness and genuineness of transactions. During the assessment, the Assessing Officer issued notice under section AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 13 133(6) to all the parties, wherein they have furnished their ledger account from books of accounts, their confirmation, bank statement and annual accounts and admitted that they have given loan to the assessee. These facts are not disputed in the assessment order. No evidence was found or brought on record that during the search any evidence regarding search unsecured loan was fund during the search. The Ld. CIT(A) by referring that decision of Hon’ble jurisdictional High Court in the case of Rohini Builders (supra) and in the case of CIT vs. Apex Tharm Packaging (P) Ltd., (2014) 42 taxmann.com 472 (Guj) held that when the assessee has established identities of the parties, creditworthiness of the payee and genuineness of the transactions, addition under section 68 is not justified. Thus, even on merit the additions were deleted. Aggrieved by the order of Ld. CIT(A), the Revenue has filed this appeal before the Tribunal. 7. We have heard the submission of Ld. Commissioner of Income-tax -Departmental Representative (CIT-DR) for the Revenue and Ld. Authorized Representative (AR) for the AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 14 assessee and perused the materials available on record and case law cited by lower authorities. The Ld. CIT-DR for the Revenue submits that a search action was carried out on the assessee and his HVK Group on 09.10.2014. The notice under section 154A was issued upon assessee to file his return of income. Notice under section 153A issued on the basis of incriminating materials found during the search action for the assessment year under consideration i.e., 2010-11. The Assessing Officer made addition of unsecured loan and interest payment made thereon. The Ld. CIT(A) deleted the addition by taking view that no incriminating materials were found during the course of search action with regard to alleged unsecured loan. The Ld. CIT-DR for the Revenue submits that no grounds of appeal was raised either in response to the notice under section 153A or in the original grounds of appeal before Ld. CIT(A). Once it was not objected before the lower authorities, the assessee cannot raise such plea at later stage that no incriminating materials found during the course of search action with regard to such unsecured loan. On the AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 15 merit of the addition, Ld. CIT-DR for the Revenue supported the order of Assessing Officer. 8. On the other hand, Ld. AR for the assessee submits that during the assessment, assessee raised objection before Assessing Officer that no incriminating material of unsecured loan was found during the course of search action. The assessment for the year 2010-11 was not pending at the time of search conducted on 09.10.2014, the time period for issuing notice under section 143(2) has already been expired long back. Thus, the assessment was unabated of the assessment year under consideration. Therefore, the Assessing Officer is not entitled to make addition of unsecured loan in absence of any incriminating material found during the course of search action. The Ld. AR for the assessee submits that during the first appellate stage, the assessee has specifically raised additional issue / modified ground of appeal as recorded by Ld. CIT(A) in para-3.5 of his order, wherein the assessee is specifically raised ground that no addition can be made in absence of any incriminating material found during the course AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 16 of search action. The assessee also objected that Assessing Officer grossly erred in making addition under section 37(1)/ 68 / 69A of the Act merely on the basis of statement of third party which cannot be considered in case of assessee. 9. On merit, the Ld. AR of the assessee submits that during assessment as well as before Ld. CIT(A), the assessee furnished complete evidence to prove the genuineness of transaction, identity of party and creditworthiness of the lender. The Assessing Officer made addition on peak credit instead of making addition of alleged bogus unsecured loan. The Ld. AR for the assessee submits that the loan transaction was genuine and the assessee has fully discharged his onus lies upon him. Ld. CIT(A) after considering the merits of the case and also deleted the addition of unsecured loan. The ld AR for the assessee submits that once the addition of unsecured loan was deleted, consequential interest payment of such amount was also deleted. To support his various submission, the ld. AR for the assessee relied upon the following decisions:- AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 17  CIT vs. Saumya Construction Pvt. Ltd. reported in 387 ITR 529 (Guj)  CIT vs. Harjeev Aggarwal 70 taxmann.com 95 (Del)  CIT vs. SMC Broker Ltd. 288 ITR 345 (Del)  CIT vs. Rajeshkumar [2008] 172 Taxman 74 (Del)  Heirs and Legal Representatives of Lt. Laxmanbhai S. Patel vs. CIT [2008] 327 ITR 290 (Guj)  PCIT, Ahmedabad vs. Kanubhai Maganlal Patel [2017] 79 taxmann.com 257 (Guj)  Jai Karan Sharma vs. DCIT, Circle 25(1), New Delhi [2012] 23 taxmann.com 300 (Del),  DCIT Vs M/s Creative Trendz Pvt. Ltd. IT(SS)A No.272 & 273/SRT/2016 dated 13.11.2020  PCIT vs. Anand Kumar Jain ITA No.23/2021 dated 12.02.2021  CIT vs. Rohini Builders 256 ITR 360 (Guj),  CIT vs. Apex Therm Packaging (P) Ltd. 42 taxmann.com 472 (Gul). 10. We have considered the rival submissions of both the parties and have gone through the orders of authorities below carefully. We have also deliberated on the various case laws relied by ld. AR for the assessee. During the assessment year, the Assessing Officer noted that on verification of return of income submitted by assessee, it is seen that assessee has AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 18 received unsecured loan from various parties having poor credentials. The assessee has received unsecured loan from Diasqua Exports, Madhav Gems, Mayur Gems and Paras Gems respectively. The Assessing Officer further recorded that these firms are bogus proprietary concerned and entry provider like Madhav Gems and Mayur Gems and Paras Gems that they are of loan providing accommodation entries. The assessee in response to show cause notice submitted that he has taken loan from Paras Gems who is not the same as mentioned in the statement of Praveen Jain. The assessee has availed loan from Prakash Nahar who is proprietorship firm is coincidentally not connected with Praveen Gems. In response to notice under section 133(6), Prakash Nahar submitted that bank statements, ledger account and confirmation and annual accounts regarding Madhav Gems, the assessee submitted that he has taken loan from Madhav Gems, from Madjav Gems is not same as mentioned in the statement of Praveen Jain. He stated that Sushil Jain is the proprietor of Mayur Gems. Further notice under section 133(6) was served on Sushil AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 19 Jain, where he has furnished complete bank account, ledger account, books of account and confirmation. Regarding Madhav Gems, the assessee also stated that as per statement of Shri Praveen Jain that he appointed Pankaj Jain as director of Madhav Gems. The assessee explained that Madhav Gems is not the same as mentioned in the statement of Shri Praveen Jain. The assessee explained that in response to notice under section 133(6) issued to Sushil Jain furnished his bank account, ledger account and confirmation and stated that he does not know Pravin Jain and he has no relation with him. The Assessing Officer disregarded the submission of assessee. The Assessing Officer instead of giving any finding on the documents furnished by various parties in response to notice under section 133(6) concluded that mere payment by cheque is not sacrosanct nor it can make a genuine transaction. The Assessing Officer worked the peak credit in the case of Paras Gems, Madhav Gems & Mayur Gems and made addition of Rs.4.15 crores. The Assessing Officer further made addition on account of disallowance of interest expense by taking view that AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 20 various parties from whom the assessee has availed unsecured loan having over credentials. The assessee has availed interest payment of 19 such parties. The Assessing Officer by disallowed the interest payment by treating as it was bogus. On appeal before Ld. CIT(A) the additions of unsecured loan as well as interest disallowances were deleted. 11. We find that Ld. CIT(A) on considering the submission of assessee that addition of unsecured loan is not based of any incriminating material found during the course of search action. We find that Ld. CIT(A) in para 5-2 of his order has recorded that during the search action, cash / jewellery was seized from the residence of assessee, who is director of HVK International Pvt. Ltd. The Assessing Officer made addition on the basis of general statement of third party recorded by DDIT (Inv.) Mumbai. There is no whisper in the assessment order that any incriminating material was found during the search action for giving cash against such loan. The Ld. CIT(A) by referring the decision of Hon'ble jurisdictional High Court in the case of Saumya Construction Pvt. Ltd. (supra) and Anil AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 21 Bholabhai Patel (supra) and in the case of PCIT vs. Sunrise Finlease (P) Ltd. 89 taxmann.com 1 and PCIT vs. Sanghi Fincap Ltd. The Ld. CIT(A) held that no addition in absence of incriminating material can be made in the unabated assessment. 12. We find that Ld. CIT(A) also examined the case of unsecured loan on merit and recorded that Assessing Officer made addition by adopting peak credit theory and made addition of Rs.4.15 crores of three parties being Mayur Gems, Paras Gems & Madhav Gems. The assessee has furnished ledger account of those parties, confirmation along with PAN, full addresses, bank statement and other relevant documentary evidence. The ld CIT(A) held that the Assessing Officer issued notice under section 133(6) and in response thereto parties have admitted such loan to the genuine and also provided necessary evidence. Such evidence was not found to be incorrect. The assessee has clearly discharged his onus of under section 68 that there is no addition can be made merely on the basis of presumption. The Ld. CIT(A) also relied on the decision of AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 22 Hon'ble jurisdictional High Court in the case of CIT-1 vs. Dharmadev Finance (P.) Ltd. [2014] 43 taxmann.com 395(Guj); PCIT vs. RSA DIGI Prints (Tax Appeal No.503 of 2017 dated 06.09.2017 and Rohini Builders vs. Dy. CIT (2002) 76 TTJ 521 (Ahd.Trib) 265 ITR 360 (Guj) and deleted the addition on merit. 13. We find that the Assessing Officer has not made any specific comment on various documentary evidence furnished by assessee nor any independent investigation was carried out. Thus in absence of any adverse material collected by the Assessing Officer during the assessment against the assessee and no addition was warranted. 14. The Hon’ble jurisdictional High Court in the case of Rohini Builders (supra) and in Apex Therm Packaging (P) Ltd. (supra) held that when full particulars including confirmation with names, addresses, PAN No. and copy of income-tax return, balance-sheet, profit and loss account and computation of total income of all creditors or lenders were furnished and the loans were given through cheques and reflected in the AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 23 balance-sheet the Assessing Officer was not justified in making addition. Thus, in view of the aforesaid discussion, we affirm the order of Ld. CIT(A) on the legal issue as no incriminating material was found during the course of search action with regard to unsecured loan and interest payment. We also affirm the order of Ld. CIT(A) on merit that in absence of any adverse material against the documentary evidence and discharging the onus to prove the identity, creditworthiness and genuineness of the lender. Thus, we affirm the order of Ld. CIT(A) on deleting the addition of unsecured loan. In the result, ground No.1 to 5 of Revenue’s appeal is dismissed. 15. Ground No. 6 of appeal raised by Revenue relates to deleting addition on account of interest expense of Rs.20,02,042/-. We find that Ld. CIT(A) deleting the addition of unsecured loan by treating as genuine and deleted the addition. The disallowance of interest expense was also deleted by taking view that consequential interest paid on such loan cannot be disallowed under section 37. So far as balance interest disallowance under section 37 is concerned, the Ld. CIT(A) AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 24 held that HVK International Pvt. Ltd., in his Settlement Application has admitted cash payment against cheque received. Merely cash against the loan transaction has been admitted by HVK International Pvt. Ltd., in its settlement application will not make claim of assessee as bogus thereby deleted the entire disallowance of interest expenses. Considering the fact that we have affirmed the order of Ld. CIT(A) in deleting the addition under section 68 therefore, the disallowance of consequence interests is also affirm. This ground No.6 of Revenue is dismissed. 16. In the result, Revenue’s appeal in IT(SS)A No.01/SRT/2021 is dismissed. IT(SS)A No.09/SRT/2020 (for A.Y.2014-15) 17. The Revenue has raised the following grounds of appeal:- “1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.2,14,35,595/- on account of unexplained cash credit without appreciating the fact that such loans were arranged by the assessee from the entry provider, which was not only accepted by the main persons of the entry providing group before the Income Tax Department but also before the other agencies like Enforcement Directorate. AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 25 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.52,47,847/- on account of payment of interest on loan without appreciating the fact that such loans were arranged by the assessee from the entry provider, which was not only accepted by the main persons of the entry providing group before the Income Tax Department but also before the other agencies like Enforcement Directorate. 3. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.16,02,269/- on account of payment of interest on loan without appreciating the fact that M/s HVK International Pvt. Ltd. In which the ae is one of the directors, has accepted before the Hon'ble ITSC that the unsecured loans arranged from 19 parties including the parties to whom the assessee has claimed to have paid interest, are bogus. 4. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.64,69,000/- on account of unexplained money received back in cash from M/s Nish Developers Pvt. Ltd. without appreciating the fact that the digital evidence seized from the premise of the construction company searched clearly mentioned the receipt of cash of Rs.129.38 lacs by Shri Dinesh Koradiya. 5. It is, therefore, prayed that the order the Ld. CIT(A)-4, Surat may be set aside and that of the AO may be restored to the above extent.” 18. Ground No.1 relates to deleting the addition of Rs.2.15 crores on account of unexplained cash credit. We find that this ground of Revenue’s appeal is similar to Ground No.5 in AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 26 Revenue’s appeal for assessment year 2010-11, wherein similar addition was deleted by Ld. CIT(A) not only on legal issue as well as on merit. Considering the fact that we have affirmed the order of Ld. CIT(A) on ground No.5 in Revenue’s appeal in IT(SS)A No.01/SRT/2021, therefore, the ground No.1 of this Revenue’s appeal is dismissed with similar observation. This ground No.1 of Revenue’s appeal is dismissed. 19. Ground No.2 relates to deleting the addition of Rs.52,47,847/- on account of interest on loan. We find that this similar ground No.6 of Revenue’s appeal in IT(SS)A No.01/SRT/2021 for assessment year 2010-11, which we have dismissed, therefore following the principle of consistency, this ground No.2 of Revenue’s appeal is also dismissed. 20. Ground No.3 relates deleting the other addition of Rs.16.02 lakhs on account of interest payment. We find that this similar ground of Revenue’s appeal in IT(SS)A No.01/SRT/2021 for assessment year 2010-11, which we have already dismissed, therefore following the principle of consistency, this ground of Revenue’s appeal is also dismissed. AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 27 21. Ground No.4 relates to deleting the addition of Rs.64.69 lakhs on account of unexplained on-money received back from M/s Nish Developers Pvt. Ltd. 22. Fact relates to this aforesaid ground are that a search action under section 132 was carried out in the case of Nish Developers Pvt. Ltd. on 04.04.2014 and a Pen drives was seized, wherein it was found that assessee has received cash of Rs.129.38 lakhs from Nish Developers Pvt. Ltd., The statement of Kailash Aggarwal of Nish Developers was recorded. In the statement, Kailash Aggarwal, director of Nish Developers Pvt. Ltd., admitted on-money received during the course of sale of flats in “Avighna Park” at Curry Road, Mumbai. In the post search investigation, it was revealed that a flat was registered /booked in the name of Shri Dineshbhai Koradia, the assessee and his wife Smt. Neeruben D Koradiya. On the basis of such details available in the pen drive, the Assessing Officer issued show cause notice on the said cash payment. In the show cause notice, the Assessing Officer recorded that the assessee and his wife had received cash AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 28 (back) of Rs.129.38 lakhs and as to why this amount should not be added back as unaccounted cash in the income of assessee. The assessee in reply to the show cause notice submitted that they made a booking of flat at Avighna Park of M/s Nish Developers Pvt. Ltd. for a consideration of Rs.4.15 crores, out of which Rs.2.07 crores was paid by assessee and remaining Rs.2.07 crores (rounded off) by his wife. The assessee submitted that the flat is still in the joint name of assessee and his wife and there is no occasion for receiving cash from M/s Nish Developers Pvt. Ltd. The reply of assessee was not accepted by Assessing Officer and Assessing Officer held that material evidence was available during the course of search action in case of M/s Nish Developers Pvt. Ltd., and its group, wherein the director of M/s Nish Developers Pvt. Ltd. admitted on oath that they have received on-money from all the purchasers and this goes to say that assessee is also received on-money for purchasing of flat. On the basis of statement of director of M/s Nish Developers Pvt. Ltd., the Assessing Officer made addition of ½ Rs.129.38 lakhs i.e., AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 29 Rs.64.69 lakh in case of assessee and added back to the income of assessee. 23. On appeal before Ld. CIT(A), the assessee submitted that the addition is not based on incriminating material found during the course of search action and the material found in the course of search action in case of M/s Nish Developers Pvt. Ltd., cannot be relied for making addition in case of assessee as the same is not found from the premises of assessee. The Assessing Officer has not recorded proper satisfaction and reasoning on the basis of which addition is made in without submission made assessee. Further stated that during the course of search action at assessee’s premises neither any noting, record of any cash of alleged received was found. Further assessee explained that on-going through the statement of M/s Nish Developers Pvt. Ltd., CEO nowhere stated or agreed that they have given cash to the assessee and his wife. M/s Nish Developers Pvt. Ltd., had disowned by its employee. The assessee further explained that no addition can be made on the basis of third party statement. There is no AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 30 evidence that assessee has paid on-money for purchasing flat and entire addition is based on presumption and without any evidence. The assessee also relied on certain case law.  CIT vs. Harjeev Aggarwal [2016] 70 taxmann.com 95 (Del)  CIT vs. SMC Broker Ltd. 288 ITR 345 (Del)  CIT vs. Rajeshkumar 306 ITR 27 (Del)  Heir And Legal Representatives of Lt. Laxmanbhai S Patel vs. CIT 327 ITR 290 (Guj)  PCIT, Ahmedabad vs. Kanubhai M Patel [2017] 79 taxmann.com 257 (Guj)  Jai Karan Sharma vs. DCIT [2012] 23 taxmann.com 300 (Del) 24. The Ld. CIT(A) after considering the submission of assessee held that a search operation was carried out on 04.04.2014 in the premises of M/s Nish Developer Pvt. Ltd. During the course of search action, statement of Shri Kailash Agarwal was recorded, wherein he accepted the on-money from sale of unit. The Assessing Officer relied on the presumption of pen-drive on the basis of which, the addition was made in case of assessee and his wife. The Assessing Officer relied on the statement of Shri Kailash Agarwal, wherein he has admitted to AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 31 have received sale of some flats. Thus, the contention of Assessing Officer, the director of M/s Nish Developer Pvt. Ltd. admitted on-money from all bookings is incorrect. Kailash Agarwal nowhere in his statement admitted regarding on- money payment to assessee or his wife. The Assessing Officer has not referred the seized material found from the premises of third party. The addition is based on knowing in the pen- drive, which is not corroborated by any document seized from the premises of assessee. Thus, Ld. CIT(A) held that addition cannot be sustained. The Ld. CIT(A) besides other case law relied on the decision of Hon'ble jurisdictional High Court in the case of CIT vs. Maulikkumar K Shah 307 ITR 139 (Guj), wherein it was held that addition could not be made on the basis of noting on the diary, which is not supported by any other independent evidence. The Ld. CIT(A) also held that addition is based on the noting made in the seized material found at the third party premises. There is no evidence that when cash was paid by writing “like must know in the assessment order”. In the assessment order clearly shown that AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 32 Assessing Officer himself is not sure from his finding and deleted the addition. Aggrieved by the order of Ld. CIT(A) Revenue has raised the above grounds of appeal in its appeal before the Tribunal. 25. We have heard the submission of Ld. CIT-DR for the Revenue and the Ld. AR for the assessee. The ld. CIT-DR for the Revenue supported the order of Assessing Officer. The ld CIT- DR for the revenue submits that the assessing officer made additions on the basis of evidence and the statement record in case of builder from whom the assessee purchased a flat in Mumbai. During the search action builder, wherein assessee made booking, and pen drive was seized which disclosed the received of cash back from M/s Nish Developer Pvt. Ltd. The ld CIT-DR for the revenue submits that it is a general practice to receive on-money on booking of flat from builder. The ld CIT(A) deleted the addition by accepting the submissions of the assessee. 26. On the other hand the Ld. AR for the assessee submits that assessee along with his wife purchased a flat in “Avighna AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 33 Park” for Rs.4.16 crores out of which Rs.2.07 crores was paid by assessee’s wife. The Assessing Officer relied on the material and the statement record during the search of builder and alleged that assessee must have paid on-money at the time of booking the flat and same has been received back to the assessee as found in seized material. There is no independent evidence of receiving cash from builder. The Assessing Officer made addition merely on the basis of presumption. The Ld. CIT(A) held on the appreciating of the fact that there is no evidence found that cash was paid by assessee earlier and there is no evidence of on-money. Further, the material was found at the third-party is not belong to the assessee. Shri Kailash Agarwal nowhere in his statement stated that they have paid cash against sale of flat and nowhere name as stated the assessee was given. The Ld. AR of the assessee submits that if the addition made on the basis of material found during the course of search action on third party, the Assessing Officer must pass order under section 153C after AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 34 recording proper satisfaction. To support his contention, Ld. AR of the assessee relied upon the following decision:-  PCIT vs. Anandkumar Jain (Delhi HC) [ITA No.23/2021 and CM 5385/2021,  CIT vs. Haarjeev Aggarwal (2016) 70 taxmann.com 95 (Del),  Jai Pal Aggarwal reported in 28 taxmann.com 269 (Del) 27. We have considered the rival submission of both the parties and have gone through the orders of lower authorities carefully. We find that the Assessing Officer made the addition on the basis of material gathered / found during the course of search action on M/s Nish Developer Pvt. Ltd. Admittedly no satisfaction under section 153C was recorded. The assessee before Assessing Officer clearly stated that he along with his wife jointly purchased a flat and paid the entire consideration of Rs.4.15 crores (½ by each) through cheque and they are still occupying the said flat. We find that no independent investigation was carried out by the Assessing Officer. The Assessing Officer merely relied on the third party statement and made the addition of Rs.64.69 lakh i.e., ½ of Rs.129.38 AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 35 lakhs allegedly received back in cash from M/s Nish Developer Pvt. Ltd. 28. The Hon'ble Delhi High Court in the case of Jai Pal Aggarwal reported in 28 taxmann.com 269 held that no addition merely on the case of recorded by third party unless any corroborative evidence found from the assessee. We find that Ld. CIT(A) deleted the addition by appreciating the fact that addition is based on the knowing made in the seized material found at third party. The conclusion of Assessing Officer is that “assessee must have paid cash”, which was returned on getting money through cheque but there is no evidence when the cash was paid. Thus, we find that Ld. CIT(A) deleted the addition by holding that the assessing officer made addition without making any enquiry and only on the basis of third party statement. Thus, we affirm order of Ld. CIT(A). This ground No.4 of Revenue’s appeal is dismissed. 29. In the result, Revenue’s appeal is dismissed. IT(SS)A No.08/SRT/2021 (AY 2010-11) 30. The Revenue has raised the following grounds of appeal: AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 36 “1, On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.2,82,00,000/- on account of unexplained cash credit without appreciating the fact that such loans were arranged by the assessee from the entry provider, which was not only accepted by the main persons of the entry providing group before the Income Tax Department but also before the other agencies like Enforcement Directorate. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.27,06,276/- on account of payment of interest on loan without appreciating the fact that such loans were arranged by the assessee from the entry provider, which was not only accepted by the main persons of the entry providing group before the Income Tax Department but also before the other agencies like Enforcement Directorate. 3. It is, therefore, prayed that the order the Ld. CIT(A)-may be restored to the above extent.” 31. The ground No.1 relates to deleting the addition of Rs.2.82 crores on account of unexplained cash credit. We find that similar ground of Revenue’s appeal raised in Ground No.5 in IT(SS)A No.01/SRT/2021 for assessment year 2010-11, which we have already dismissed by affirming the order of Ld. CIT(A) on legal issue as well as on merit. Therefore, following the principle of consistency this ground of Revenue’s appeal is also dismissed with similar observation (supra). AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 37 32. Ground No.2 relates to deleting the addition on account of payment of interest on loan. We find that this similar ground No.6 of Revenue’s appeal in IT(SS)A No.01/SRT/2021 for assessment year 2010-11, which we have affirmed the order of Ld. CIT(A). Thus, following the principle of consistency with similar observation, this ground of Revenue’s appeal is also dismissed. 33. In the result, Revenue’s appeal is dismissed. ITA No.47/SRT/2021 (AY 2017-18) 34. The Revenue has raised the following grounds of appeal:- “(i) On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the disallowance of Rs.73,87,398/- made under Sec.37(1) of the Act, without appreciating the fact that the assessee has obtained unsecured loans from dummy concerns managed and controlled by entry provider, Shri Pravin Jain, who admitted before the Investigation Wing, Mumbai that he is engaged in the business of providing accommodation entries to the beneficiaries in lieu of commission. (ii). On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the disallowance of Rs.73,87,398/- made under Sec.37(1) of the Act without appreciating the fact that entry provider Shri Pravin Jain has identified the concerns from where the ae has accepted the unsecured loan as his dummy concerns. AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 38 (iii) On the facts and circumstances of the case, the Ld. CIT(A) has erred in restricting the disallowance made under Sec. 14A of the Act from Rs.56,10,697/- to Rs.28,497/-in view of Board’s Circular No.5/2014 dated 11.02.2014. (iv) On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the disallowance of Rs.22,06,072/- made on account of difference in interest rate (on an average basis) between the interest and paid on unsecured loans and interest charged on advances. (iv) It is, therefore, prayed that the order the Ld. CIT(A)-may be restored to the above extent.” 35. Ground No. (i) & (ii) relate to deleting the addition on account of unsecured loans for providing accommodation entries to the beneficiaries of Rs.73,87,398/-. We find that these similar issue raised by Revenue in ground No.6 of Revenue’s appeal in IT(SS)A No.01/SRT/2021 for assessment year 2010-11, which we have already dismissed the Revenue’s appeal by following principle consistency, thus, the ground No.(i) & (ii) of Revenue’s appeal is also dismissed with similar observation (supra). 36. Ground No. (iii) relates to restricting the addition for disallowance under section 14A of Rs.56,10,697/- to Rs.28,497/-. AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 39 37. Brief facts of the related to this addition are that during the assessment, the Assessing Officer noted that assessee has shown exempt income. The Assessing Officer invoked the provision of Rule 8D of the Income Tax Rules, 1962 and made addition of Rs.56,10,697/- being 1% of average investment made for earning exempt income. On appeal before Ld. CIT(A) the addition was restricted to the extent of Rs.28,497/-by taking view that during the year the assessee had only earned exempt income i.e., profit for partnership firm of Rs.52,02,401/-. So far as disallowance under Rule 8D2 (ii) is concerned, the only investment in respect which exempt income is earned or received is to be considered. The Ld. CIT(A) held that disallowance made by Assessing Officer is not justified as no exempt income was earned in respect of investment considered by Assessing Officer for computation of disallowance under section 14A r.w.s. 8D of IT Rules, 1962. The Ld. CIT(A) also followed the decision of Special Bench in the case of Vireet Investment (P.) Ltd. reported in 82 taxmann.com 415 (Delhi.Trib.), wherein it was held that only AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 40 those investment are to be considered for computing average value of investment which yielded exempt income during the year. The Ld. CIT(A) also followed various decisions of Tribunal and superior courts and held that 0.5% investment must remain confine to only such investment which is yielded tax exempt income during the relevant previous year. The Ld. CIT(A) worked out the average balance of investment made for exempt income which were worked out to be Rs.28,49,707/- and 1% thereof i.e., Rs.28,497/- was sustained thereby deleting the remaining disallowance. Aggrieved by the order of Ld. CIT(A) the Revenue has filed present appeal before the Tribunal. 38. We have heard the submissions of Ld. CIT-DR for Revenue and Ld. AR for the assessee and the order of authorities below carefully. Ld. CIT-DR for the Revenue supported the order of Assessing Officer. 39. On the other hand, Ld. AR for the assessee submits that assessee has earned profit from partnership firm (Yashvi Reality) of Rs.52,02,401/-. The assessee received profit from AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 41 partnership firm after payment of tax on partnership firm, therefore for the purpose of computation of disallowance as per under section 14A r.w.s. Rule 8D(ii), investment which yielded exempt income is only to be considered the balance of investment which yielded exempt income was Rs.14,98,507/- and closing balance of investment is yielded exempt income of Rs.28,49,707/- and 1% of average investment is only Rs.28,497/-, which was considered by Ld. CIT(A) for making disallowance under section 14A on the basis of aforesaid submissions. Ld. AR for the assessee relied on the order of Ld. CIT(A). 40. We have considered the rival submissions of both the parties. We find that during the assessment, the Assessing Officer invoked the provision of Rule 8D of IT Rules, 1962 without having regard to working and submission of assessee. The Assessing Officer after invoking the provision of Rule 8D worked out the disallowance on the basis of average value of investment and computed the disallowance of Rs.56,10,697/-. Before Ld. CIT(A), the assessee submitted that only investment AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 42 which yielded exempt income is to be considered for making disallowance under section 14A r.w.s. Rule 8D. We find that Ld. CIT(A) by following the decisions of superior courts including the decision of Special Bench of Delhi Tribunal in the case of Vireet Investment (P.) Ltd. (supra) considered only those investment which yielded exempt income and worked out the disallowance under section 14A r.w.s. 8D at Rs.28,497/-. We find that order of Ld. CIT(A) in consonance with the decision of Special Bench of Delhi Tribunal in the case of Vireet Investment (P.) Ltd. (supra), thus, on the basis of aforesaid observation, we affirm the order of Ld. CIT(A). This ground No.(iii) of Revenue’s appeal is dismissed. 41. Ground No.(iv) relates to deleting the disallowance of Rs.22,06,072/- on account of difference in interest paid on unsecured loans and advance charged. 42. Brief facts of the case qua this ground of appeal of Revenue are that during the assessment, the Assessing Officer noted that in the computation of income, it is seen that assessee has invested in interest bearing funds and also paid interest on AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 43 higher rate charged on lower rate. On show cause notice, the Assessing Officer recorded that no satisfactory reply was given, the assessee simply stated that he had paid interest @ 7% on average of unsecured loan, while advance loans @ 4%. The Assessing Officer on the basis of his observation made disallowance of difference i.e., @ 3% and worked out the same at Rs.22,06,072/-. Before Ld. CIT(A), the assessee submitted that there is no direct nexus between the interest bearing loans with that of loan advanced by assessee. Most of the loans were advanced prior to assessment year 2010-11 while the loans were availed after that period. The assessee further stated that majority of the loans advanced by assessee was from its own capital and the income earned and retained in the respect entity year after year which is about to Rs.57.06 crores. The assessee also stated that in earlier year, the rate of interest paid and the interest earned was accepted by Department and no such disallowance was ever made. The Ld. CIT(A) after considering the submission of assessee found that there is no direct nexus between the interest bearing loans AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 44 with that of loans advanced by assessee. Moreover, most of the loans were advanced before assessment year 2010-11 and loan is taken after that period. On the contention of assessee that loan was advanced from its own capital which is about to Rs.57.06 crores. In the earlier year interest paid and received was accepted by Department. Thus, on the aforesaid observation, Ld. CIT(A) deleted the entire addition. Aggrieved by this deletion of Ld. CIT(A) Revenue has filed present appeal before the Tribunal. 43. We have heard both the submission of Ld. CIT-DR for the Revenue and Ld. AR for the assessee and perused the materials available on record carefully. The Ld. CIT-DR for the Revenue supported the order of Assessing Officer. The Ld.CIT- DR for the revenue submits that there was mixed fund with the assessee and the assessee has paid more interest than the interest earned on advance by assessee. Accordingly, the Assessing Officer made a reasonable disallowance at differential of 3% of interest earned and paid. AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 45 44. On the other hand, the Ld. AR for the assessee submits that there is no direct nexus between interest bearing loans with that of loan advances by the assessee. The Ld. AR for the assessee submits that assessee took advance prior to assessment year 2010-11 and assessee has paid interest on unsecured loan availed subsequently. The majority of the loan and advance by assessee from his own capital and retained in respective various entities. The Ld. AR for the assessee submits that the reserve and surplus funds available with the assessee is Rs.40.70 crores. Thus it is settled law when the reserve and surplus funds are far than the advance availed by the assessee. Therefore as per the decision of Hon'ble Bombay High Court in the case of CIT vs. Reliance Utility & Power Ltd. (2009) 313 ITR 340 (Bom). The AR for the assessee submits that assessee has shown similar interest payment and interest income however, no such disallowance was made in the earlier year. Thus, no different treatment can be adopted by Assessing Officer for the year under consideration. AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 46 45. We have considered the rival submission of the parties and find that Assessing Officer made the addition of differential amount @ 3% and worked out the disallowance of interest of Rs.22,06,072/-. The Ld. CIT(A) deleted the addition by taking view that most of the loans were advanced prior to assessment year 2010-11 and the loans were availed after that period and there is no direct nexus of interest bearing loans with that of loans advanced by assessee. We find that Ld. CIT(A) while considering the disallowance taken into account the reserve and surplus fund of assessee, which are far excess than the interest loan advanced by assessee. We find that before us the aforesaid fact is not controverted by showing any contrary fact or any contrary of law. Thus, we affirm the order of Ld. CIT(A) and this Ground No.(iv) raised by Revenue is dismissed. 46. In the result, appeal of Revenue is dismissed. IT(SS)A No.02/SRT/2021 (A.Y. 2010-11) 47. The Revenue has the following grounds of appeal:- “1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.5,30,00,000/- on account of unexplained cash credit without appreciating the fact that such AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 47 loans were arranged by the assessee from the entry provider, which was not only accepted by the main persons of the entry providing group before the Income Tax Department but also before the other agencies like Enforcement Directorate. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.20,17,521/- on account of payment of interest on loan without appreciating the fact that such loans were arranged by the assessee from the entry provider, which was not only accepted by the main persons of the entry providing group before the Income Tax Department but also before the other agencies like Enforcement Directorate. 3. It is, therefore, prayed that the order the Ld. CIT(A)-4, Surat may be set aside and that of the AO may be restored to the above extent.” 48. Ground No.1 relates to deleting the addition on account of unsecured loan /unexplained cash credit of Rs.5.30 crores. We find that this ground No.1 of Revenue’s appeal is similar to the ground No.5 in Revenue’s appeal IT(SS)A No.01/SRT/2021 for assessment year 2010-11, which we have already dismissed by affirming the order of Ld. CIT(A). Thus, by by following the principle consistency (supra), this ground of appeal is dismissed with similar observation. Thus, this ground No.1 raised by Revenue is dismissed. 49. Ground No.2 relates to disallowance of Rs.20,17,521/- on account of payment of interest on loan. We find that this AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 48 ground of appeal is similar to ground No.6 in IT(SS)A No.01/SRT/2021 for assessment year 2010-11, which we have already dismissed the Revenue’s appeal (supra). Thus, by following the principle of consistency (supra) we dismiss the ground No.2 raised by Revenue. 50. In the result, Revenue’s appeal is dismissed. IT(SS)A No.03/SRT/2021 (A.Y 2014-15) 51. The Revenue has raised the following grounds of appeal:- “1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.2,05,25,000/- on account of unexplained cash credit without appreciating the fact that such loans were arranged by the assessee from the entry provider, which was not only accepted by the main persons of the entry providing group before the Income Tax Department but also before the other agencies like Enforcement Directorate. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.85,83,786/- on account of payment of interest on loan without appreciating the fact that such loans were arranged by the assessee from the entry provider, which was not only accepted by the main persons of the entry providing group before the Income Tax Department but also before the other agencies like Enforcement Directorate. 3. It is, therefore, prayed that the order the Ld. CIT(A)-4, Surat may be set aside and that of the AO may be restored to the above extent.” AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 49 52. Ground No.1 relates to deleting the addition on account of unsecured loan /unexplained cash credit of Rs.2,05,25,000/-. We find that this ground of appeal is similar to the ground No.5 in Revenue’s appeal IT(SS)A No.01/SRT/2021 for assessment year 2010-11, which we have already dismissed by affirming the order of Ld. CIT(A). Hence, following the principle consistency this ground of appeal is dismissed. In the result, ground No.1 raised by Revenue is dismissed. 53. Ground No.2 relates to disallowance of payment of interest of Rs.85,83,786/-. We find that this ground of appeal is similar with ground No.6 in IT(SS)A No.01/SRT/2021 for assessment year 2010-11, which we have already dismissed the Revenue’s appeal (supra). Thus, by following the principle of consistency we dismiss the ground No.2 raised by Revenue. 54. In the result, Revenue’s appeal is dismissed. ITA.No.30/SRT/2021 (A.Y. 2015-16) 55. The Revenue has raised the following grounds of appeal:- “1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.92,61,001/- on account of payment of interest on loan without appreciating the fact AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 50 that such loans were arranged by the assessee from the entry provider, which was not only accepted by the main persons of the entry providing group before the Income Tax Department but also before the other agencies like Enforcement Directorate. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in restricting the addition of Rs.88,29,362/- to Rs.9,78,797/- on account of disallowance u/s 14A of the I.T. Act without appreciating the fact involved in this case. 56. Ground No.1 relates to deleting the addition on account of interest on unsecured loan. We find that similar ground No.6 raised by Revenue in IT(SS)A No.01/SRT/2021 for assessment year 2010-11, which we have already dismissed. Thus, by the following the principle of consistency, we dismiss the ground No.1 raised by Revenue with similar observation. 57. Ground No.2 relates to restricting the addition of Rs.88,29,362/- to Rs.9,78,797/- on account of disallowance under section 14A. 58. Brief facts of the case are that during the assessment, the Assessing Officer noted that assessee has made investment for earning exempt income. On show cause notice, the assessee explained that amount received from exempt income received from the firm and company is already taxed in the hand of AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 51 firm and company respectively. Hence, further taxation will be double taxation; therefore the provision of under section 14A is not applicable in the facts of the present case. And the assessee has not earned dividend income on stock held as investment. The contention of assessee was not accepted by Assessing Officer. The Assessing Officer invoked the provisions of Rule 8D of IT Rules, 1962 and made disallowance of Rs.88.29 lakhs being ½% of average value of investment, income from which does not form part of total income. The assessing officer worked out the disallowance of Rs.88.29 lakh. 59. Aggrieved by the addition / disallowance under section 14A the assessee filed appeal before Ld. CIT(A). Before Ld. CIT(A) assessee filed detailed written submission as recorded in para- 8.2 of the order of Ld. CIT(A). Besides assessee’s other submission, submitted that disallowance made by Assessing Officer is erroneous that investment out of which exempt income earned were made out of own funds available with assessee and hence no disallowance can be made. The AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 52 assessee further explained that assessee has received following exempt income:- A.Y 09-10 10-11 11-12 12-13 13-14 14-15 15-16 Share of profit from H.V.Jewels (Delhi) 143,425 102.668 (5,515) (61,627) 5,819 (1,562) (128,875) Share of profit from H.V. Jewels (Ahmedabad) -- -- (1,368) (13,225) (31,699) (25,057) -- Share of profit from H. Vinodkumar & Co. 7,672,934 37,792.814 20,405,130 1,250 -- (2,500) -- Share of profit from Dhaval Jewels -- 15,342,816 52,377,254 127,816,777 6,026,185 3,442,111 (446,749) Share of profit from KHP Jewels --- --- --- --- (43,942) (14,391) (14,489) Dividend from public Ltd. 41,966 --- 70,194 78,089 130,932 137,208 15,554 LTCG 43,686 --- 97,575 3,91,259 6,89,520 99,015 9,63,243 60. The assessee also relied on various case laws as recorded by ld CIT(A) in his order. The Ld. CIT(A) after considering the submission of assessee held that the assessee has shown his exempt income in tubulise form which he has recorded in earlier para-6.2 of assessment order. The Ld. CIT(A) by referring the decision of Ahmedabad Tribunal in the case of Vishnu Anant Mahajan vs. ACIT 22 taxmann.com 88 AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 53 (Ahmedabad-Trib.), wherein it was held that disallowance under section 14A cannot exceed exempt income. The Ld. CIT(A) also relied on the decision of Hon'ble Delhi High Court in the case of PCIT Vs. Caraf Builders & Construction Pvt. Ltd., 101 Taxmann.com 167 (Del) and restricted the addition to the extent of exempt income. 61. The Ld. CIT(A) also referred the decision of Hon'ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT (2015) 61 taxmann.com 118/234 Taxman 761 (Del) and Hon'ble Madras High Court in the case of CIT vs. Chettinad Logistics (PO.) Ltd. (2017) 80 taxmann.com 221 (Mad) and Hon'ble Supreme Court in the case of PCIT vs. Oil Industry Development Board (2019) 103 taxmann.com 326 (SC). Aggrieved by the order of Ld. CIT(A) the Revenue has filed present appeal before the Tribunal by challenging the order passed by Ld. CIT(A). 62. We have heard the submission of both the parties and perused the materials available on record. The Ld. CIT-DR for the Revenue supported the order of Assessing Officer. AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 54 63. On the other hand, Ld. AR for the assessee supported the order of Ld. CIT(A) and submits that during the relevant financial year the assessee earned total exempt income of Rs.9,78,797/- so far the disallowance under section 14A should be restricted to the exempt income earned. The Ld. CIT(A) in his order has referred various decisions, wherein it was held that disallowance under section 14A cannot exceed the exempt income, if no exempt income is earned no disallowance under section 14A is permissible. 64. We have considered the rival submissions of the parties and have gone through the orders of the lower authorities carefully. The assessing officer made disallowance under section 14A by taking view that it is not possible to earn exempt income without incurring certain expenses, the assessee has not furnished segregations of expenses related to the earning of such exempt income. The Rule 8D is scientific method for determining the expenditure in relation to exempt income. The assessing officer invoked the provisions of Rule 8D and made disallowance under Rule 8D2(iii) of Rs. AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 55 88,29,362/- being ½ % of average value of investment, income from which does not form part of total income, as appearing in the balance sheet of the assessee on first day and the last days of the previous year. Before ld CIT(A) the assessee submits that there is no exempt income earned by the assessee during the relevant financial year, therefore no disallowance under section 14A is permissible. The ld CIT(A) after considering the submissions recorded that during the period under consideration the assessee has earned /shown any exempt income of Rs. 15,554/- from dividend form Public Limited Company and Rs. 9,63,243/- thus total of Rs. 9,78,797/- only. The ld CIT(A) after referring various decisions of different High Courts restricted the disallowance to the extent of exempt income. We find that the order of Ld. CIT(A) is based on sound legal reasoning, wherein various High Courts held that the disallowance under section 14A cannot exceeds the exempt income. Thus, we do not find any reason to interfere with the order passed by Ld. CIT(A). Hence, this ground No.2 of Revenue’s appeal is dismissed. AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 56 65. In the result, appeal of Revenue is dismissed. ITA No.48/SRT/2021 (A.Y. 2017-18) 66. The Revenue has raised the following grounds of appeal:- “[i] On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of Rs.81,03,890/- made u/s 37(1) of the Act without appreciating the fact that assessee obtained unsecured loan from dummy concerns managed and controlled by entry provider Shri Pravin Jain, who, admitted before he Investigation Wing, Mumbai that he is engaged in the business of providing accommodation entries to the beneficiaries in lieu of commission. [ii] On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of Rs.81,03,890/- made u/s 37(1) of the Act without appreciating the fact that entry provider Shri Pravin Jain has identified the concerns from where the assessee has accepted unsecured loan as his dummy concerns. [iii] On the facts and in the circumstances of the case and in law,theLd. CIT(A) has erred in deleting the disallowance made u/s 14A of the Act Rs.71,29,433/- without considering the Circular No.5/2014 dated11.02,2014 issued by the Board and the amended Rule 8D(2)(ii) of the I.T. Rules. [iv] On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has justified in deleting disallowance of Rs.7,17,520/- made on account of difference in interest rate (on an average basis) between the interest paid on unsecured loan and interest charged on advances. [iv] In it, therefore, prayed that the order the Ld. CIT(A)-4, Surat may be set aside and that of the AO may be restored to the above extent.” AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 57 67. Ground No.(i) & (ii) relate to deleting the disallowance of interest payment on unsecured loan. We find that this ground of appeal is similar to ground No.6 raised by Revenue in IT(SS)A No.01/SRT/2021 for assessment year 2010-11, which we have already dismissed. Thus, by following the principle of consistency these grounds of appeal are dismissed with similar observation. 68. Ground No. [iii] relates to deleting the addition of Rs.71,29,433/- on account of disallowance under section 14A of the Act. 69. Brief facts for adjudication of this ground of appeal are that during the assessment, the Assessing Officer issued show cause notice to assessee for disallowance for expenditure incurred for earning exempt income, which does not form part of total income. The assessee in reply to show caused notice submitted that amount received from the firm and company is already taxed in the hand of firm and company and no further taxation is warranted. The assessee further submitted that he has not received any exempt income and thus provision of AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 58 under section 14A is not applicable in the case of assessee. The submission of assessee was not accepted by Assessing Officer. The Assessing Officer invoked the provision of 8D disallowance of IT Rules, 1962 and disallowed 1% of average balance of exempt income. The Assessing Officer worked out the disallowance of Rs.71,29,433/-. Aggrieved by the addition in the assessment, the assessee filed appeal before Ld. CIT(A). 70. Before Ld. CIT(A) the assessee reiterated similar submission as made before Assessing Officer. In addition to this, assessee submitted that he has not earned any exempt income, therefore no disallowance under section 14A of the Act is warranted. The Ld. CIT(A) after referring the several decisions, which we have quoted in para-61 by our order and Ld. CIT(A) held that it is an undisputed fact that no exempt income earned by assessee. Therefore, disallowance made by Assessing Officer was deleted by Ld. CIT(A). Aggrieved by the addition deleting by Ld. CIT(A), Revenue has filed present appeal before this Tribunal. AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 59 71. We have heard the submission of both the parties and perused the materials available on record. The Ld. CIT-DR for the Revenue supported the order of Assessing Officer. 72. On the other hand the ld. AR for the assessee submits that no exempt income earned during the year, therefore no disallowance of under section 14A r.w.s Rule 8D is warranted and he supported the order of Ld. CIT(A). 73. We have considered the rival submission of both the parties and perused the order of lower authorities carefully. We find that Assessing Officer made disallowance under section 14A r.w.r. 8D disallowance by taking view that average balance of exempt income is Rs. 71,29,43,260/-. The assessing officer worked out disallowance of Rs.71.29 lakh being 1% of average investment for earning exempt. The Ld. CIT(A) deleted the addition by taking view that no exempt income is earned by assessee during the year. Therefore no disallowance is warranted. We find that the Assessing Officer made disallowance in accordance with amended Rule 8D and worked out disallowance. We find merit in the submission of AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 60 Ld AR for the assessee that assessee that when no exempt income is earned by assessee, the provision of under section 14A of the Act are not applicable in the present case. Hence, we affirm the order of Ld. CIT(A). This ground No.[iii] of Revenue’s appeal is dismissed. 74. Ground No.[iv] relates to deleting the disallowance of Rs.7,17,520/- on account of difference in interest rate between the interest paid and interest charged on advances. 75. We find that this ground of appeal is similar to the Revenue’s appeal in ITA No.47/SRT/2021 for assessment year 2017-18, wherein we have already affirmed the deletion of the addition Ld. CIT(A), wherein it was held that there is no direct nexus interest bearing loan with that of loan advance by assessee. Moreover, the interest free capital was far in excess to the loan advance by assessee. Therefore, this ground No.[iv] of Revenue’s appeal is dismissed. In the result, Revenue’s appeal is dismissed. 76. In combine result, eight appeal of the Revenue in IT (SS)A No.01/SRT/2021, IT(SS)A No.09/SRT/2020, IT(SS)A 08/SRT/ AYs 10-11, 14-15, 15-16 & 17-18 Dineshchandra D Koradia, Nagjibhai M Sakariya & Sh. Hareshbhai M Sakariya 61 2021, ITA No.47/SRT/2021, IT(SS)A No.02-03/SRT/2021 & ITANo.48/SRT/2021 are dismissed. A copy of the instant common order be placed in the respective case file(s). Order pronounced in the open court on 25/05/2022 and result was placed on the Notice Board. Sd/- Sd/- (Dr ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 25/05/2022 Dkp. Out Sourcing P.S Copy to: 1. Appellant- 2. Respondent- 3. CIT(A)- 4. CIT 5. DR 6. Guard File True copy/ By order Sr. Private Secretary /Assistant Registrar, ITAT, Surat True copy/