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2023 (4) TMI 855 - AT - Income TaxAssessment u/s 153A - assessment in the case of unabated years - incriminating materials found during search or not? - unexplained investment u/s 69 - HELD THAT - The word 'assess' in Section 153A/153C of the Act is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to the completed assessment proceedings. In the case of Saumya Construction Pvt. Ltd. 2016 (7) TMI 911 - GUJARAT HIGH COURT has held that there cannot be any addition of regular items shown in the books of accounts until and unless there were certain materials of incriminating nature found during search. The word incriminating has not been defined under the Act, but it refers to materials/ documents/ information which were collected during the search proceedings and not produced in the original assessment proceeding. Simultaneously, these documents had bearing on the total income of the assessee. Now coming to the case, we note that addition was made based on the amount credited in the bank account of the assessee without referring to incriminating document found in this regard which would have made basis for the addition in the assessment. CIT(A) has also given clear finding that the entries in the bank statement which were the basis for making addition, have already been reported in the return of income filed under section 139 of the Act. There was no other material referred to by the AO while making the addition of credit entries in the bank account. We hold that there cannot be any addition to the total income of the assessee of the regular items as made by the AO in the present case. Accordingly, we do not find any infirmity in the order of the learned CIT (A). Hence, we uphold the same. Thus, the grounds of appeal of the Revenue are hereby dismissed. Addition being unaccounted receipt on account of noting/ jotting on loose paper/pocket diary etc. - CIT(A) held that pages of seized document are either dumb document or non-speaking one and worked out the amount of the receipts or payment from such pages - HELD THAT - We find that the learned CIT(A) worked out the amount of unaccounted receipt or payment based on admission by the assessee either in the statement recorded during the search or in the submission made during assessment or appellate proceeding and based on analysis of seized document which has not been controverted. No infirmity in the order of the learned CIT(A). Nevertheless, we find that the sum has been added twice i.e. in the AY 2014-15 and 2016-17 which is not desirable under the provisions of the Act. Thus, we delete the above addition from the AY 2014-15. Hence, the grounds of appeal of the assessee and Revenue for the AY 2013-14 and 2015-16 are dismissed whereas the ground of appeal of the assessee for the AY 2014-15 is partly allowed. Addition on account of unexplained credit entries in bank - It is the primary onus upon the assessee to justify the test provided under section 68 of the Act i.e. identity, credit worthiness of the parties but the assessee instead of providing the same requested to the Revenue to conduct the enquiries. Thus, it appears that the assessee has failed to discharge the onus imposed upon it under section 68 of the Act. However, considering the submission of the assessee that the loan party is not providing the information, we interest of the justice and fair play deemed it fit to restore the issue to the file of the AO for fresh adjudication after conducting necessary enquiries from the loan party. Hence, the ground of appeal of the assessee is allowed for statistical purposes. Unexplained cash based on the seized material found on the premises of the assessee without considering provisions of section 132(4A) - As in the absence of any corroborative material, the information contained in the seized document cannot be treated as incriminating material suggesting any income in the hands of the assessee. As such these documents are dumped documents and based on the same no addition can be sustained. Nevertheless, the director namely Shri Ashit Haribhai Vora has categorically denied by furnishing the affidavit to have made any payment of commission to the assessee. The contents of the affidavit were not controverted by the AO during the remand proceedings. On this count as well, the addition made by the AO is not sustainable. Moving further, CIT-A in his order has also observed that the due process of the provisions of section 153C was not adopted by the AO in the given set of facts and therefore for that reason as well the Ld. CIT-A was pleased to delete the addition made by the AO. The finding of the Ld. CIT-A was based on the order of this tribunal in the case of Rajesh Sundardas Vaswani and others 2020 (11) TMI 482 - ITAT AHMEDABAD At the time of hearing, the Ld. DR has not brought anything on record contrary to the finding of the Ld. CIT-A which has been reproduced somewhere in the preceding paragraph. Therefore, we do not find any reason to interfere in the finding of the Ld. CIT-A. Hence the ground of appeal of the revenue is hereby dismissed. Addition of unexplained credit entries in bank - In the case on hand, the AO has not carried out any independent inquiry and not found any infirmity in the primary documents filed by the assessee but merely doubted the genuineness of transaction since interest was not paid on impugned loan. In our considered view, the prerogative to pay/charge interest on loan is between the parties who accepted/provided the loan and the same also depends upon various factors. Merely the parties agreed to not to charge/pay interest on loan will not vitiate the genuineness of such loan transaction unless and until the revenue brought some cogent material on record to prove that such transaction of loan is not genuine.
Issues Involved:
1. Addition during assessment under section 153A based on incriminating material. 2. Addition of unaccounted receipts and payments based on loose papers and diaries. 3. Unexplained credit entries in bank accounts. 4. Unexplained cash based on seized material. Summary: Issue 1: Addition during assessment under section 153A based on incriminating material The Revenue contended that additions during assessment under section 153A should not be confined to incriminating material found during the search. The Tribunal upheld the CIT(A)'s decision, emphasizing that in the absence of incriminating material found during the search, no addition can be made for completed/unabated assessments. The Tribunal referred to the settled legal position, including the Gujarat High Court's decision in CIT vs. Saumya Construction Pvt Ltd, which states that completed assessments can only be disturbed based on incriminating material unearthed during the search. Issue 2: Addition of unaccounted receipts and payments based on loose papers and diaries The Tribunal addressed the addition of unaccounted receipts and payments based on loose papers and diaries found during the search. The Tribunal held that such documents are considered "dumb documents" unless corroborated by independent evidence. The Tribunal emphasized that noting or jotting on loose sheets or diaries cannot be used for making assessments unless they are corroborated with independent cogent material giving rise to undisclosed income. The Tribunal upheld the CIT(A)'s detailed analysis and findings, which were not controverted by the Revenue, and confirmed the deletion of additions based on such documents. Issue 3: Unexplained credit entries in bank accounts The Tribunal addressed the addition of unexplained credit entries in the assessee's bank accounts. The assessee provided PAN details, confirmation letters, and bank statements of the creditors to establish the identity, genuineness, and creditworthiness of the transactions. The Tribunal held that once the assessee discharges the primary onus by providing necessary documents, the onus shifts to the Revenue to conduct further inquiries. The Tribunal upheld the CIT(A)'s decision to delete the additions, except for the amount credited from Jalaram Finvest Ltd, which was remanded for fresh adjudication. Issue 4: Unexplained cash based on seized material The Tribunal addressed the addition of Rs. 70,00,000/- representing unexplained cash based on seized material found on the premises of the assessee. The Tribunal noted that the AO had taken contradictory stands in the assessment order and the remand report. The Tribunal held that the seized documents were "dumb documents" and could not be used for making assessments without corroborative material. The Tribunal also noted that the affidavit of Shri Ashitbhai Vora, denying any financial involvement of the assessee, was not controverted by the AO. The Tribunal upheld the CIT(A)'s decision to delete the addition. Conclusion: The Tribunal dismissed the appeals of the Revenue and the assessee for various assessment years, except for the appeal of the assessee for A.Y. 2014-15, which was partly allowed for statistical purposes. The Tribunal upheld the CIT(A)'s decisions on the issues of additions based on incriminating material, unaccounted receipts and payments, unexplained credit entries, and unexplained cash.
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