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2025 (4) TMI 200 - AT - Income TaxUnsecured loans u/s 68 - AO observed that the assessee did not file relevant bank statements of the lenders nor established identity creditworthiness and genuineness of persons / parties from whom the assessee has taken unsecured loans - CIT(A) deleted addition - revenue agued that as AO had indeed given sufficient opportunities to the assessee in the assessment proceedings and hence the CIT(A) ought not to have taken cognizance of all the additional evidences filed before him - HELD THAT - It is pertinent to note that the ld. AO also had one more occasion in the remand proceedings to examine these documents but he chose not to do so. Hence the ld CIT(A) proceeded to examine all the factual details with supporting evidences. Hence we reject the plea of the DR before us to restore this matter to the file of ld AO as in our considered opinion these facts are not going to change. CIT(A) is having co-terminus powers with that of ld AO and in the instant case entire evidences had been verified and examined by the ld CIT(A) himself and relief was granted to the assessee. Hence we do not find any infirmity in the order of the ld CIT(A) in this regard. Accordingly the grounds raised by the revenue are dismissed. Addition towards cash found in the course of search - HELD THAT - We find that the assessee right from the date of search had always maintained that the seized cash does not belong to him and it belongs to M/s Vibhav Vaibhav Infra Home P Ltd wherein he is working as the Head of Finance. We find that the said company had also come forward to own up the said cash to have belonged to them by passing entry in the cash book immediately after the date of search. The statement of the assessee u/s 132(4) of the Act gets corroborated with the action of the said company incorporating the cash of Rs 21, 00, 000/- in the books of the company. Hence the statement u/s 132(4) of the Act in the instant case attains evidentiary value. On perusal of the cash book of the said company we find that the said company indeed had sufficient cash balance to explain the source. Hence no addition towards the cash found could either be made in the hands of the said company or in the hands of the assessee herein. Accordingly the Ground No. 1 raised by the assessee is allowed. Chargeability of interest u/s 234A 234B and 234C - In the instant case the return was filed by the assessee belatedly. Hence interest u/s 234A of the Act is leviable as per the Act. The chargeability of interest u/s 234B of the Act is consequential in nature and does not require any specific adjudication. It is well settled that interest u/s 234C of the Act is to be made only on the returned income and not on the assessed income. Ground No. 2 raised by the assessee is partly allowed. Addition made on account of alleged on-money paid by the assessee for purchase of flat - Addition u/s 153A - HELD THAT - In the instant case no satisfaction note was ever recorded and no proceedings u/s 153C of the Act were initiated on the assessee herein. AR also placed on record a copy of panchanama drawn on 05.11.2016 in the case of Shri Praveen Tyagi in the premises R-9/242 Rajnagar Ghaziabad. On perusal of the said Panchnama we find that the name of Shri Naveen Tyagi i.e. assessee herein does not figure at all. Hence whatever is being found and seized in the aforesaid residential premises of Shri Praveen Tyagi if they are sought to be used against the assessee then the department should have proceeded on the assessee u/s 153C of the Act. It is not in dispute that the assessee was independently covered in the search u/s 132 of the act and proceedings were initiated u/s 153A of the Act in his hands for the year under consideration. But that does not mean that evidence found in the search of a third-party premises could be used in the search assessment proceedings of the assessee u/s 153A. The legislature in its wisdom permits two search assessments to be framed for the same assessment year - one u/s 153A of the Act and other u/s 153C of the Act. In the search assessment u/s 153A of the Act the assessment is to be framed based on the materials found during the course of search of that assessee plus the declared income. In the search assessment u/s 153C of the Act materials found in the premises of third-party could be used on the assessee provided search material has a bearing on determination of total income of the assessee after recording due satisfaction note as mandated in Section 153C of the Act. This is the clear mandate of law in Section 153A and 153C of the Act. This mandate cannot be changed merely because Shri Naveen Tyagi (assessee herein) is also part of VVIP Limited. Hence the alleged on-money payment cannot be considered in the search assessment framed in the hands of the assessee u/s 153A of the Act. Addition made on account of gross profit - CIT(A) proceeded to adopt the net profit of the comparable business of earlier years instead of subsequent years - HELD THAT - We find that the ld CIT(A) had taken cognizance of actual business predominantly carried during the year i.e. trading in electrical goods and it compared the gross profit derived in earlier years from the very same trading activity. He has also taken cognizance of the fact that the assessee had started subcontract work related to civil work only during the year earning a meagre turnover of Rs.33.75 lakhs and the same was not prevalent in earlier years. We do not find any infirmity in the said adoption of profit by the ld CIT(A). Accordingly ground No. 1 raised by the revenue is dismissed. Addition u/s 68 of the Act on account of unsecured loan - CIT(A) observed that all the receipts and payments were made through regular banking channels and the bank statements of the lender as well as assessee were examined to find out availability of sufficient funds in the bank account before making the said payment by the either party and also examined the return of income of the lender and from the audited financial statements found that it has own fund of Rs.2.27 crore. Hence ld CIT(A) concluded that the lender is having sufficient creditworthiness to advance loan to the assessee. Since all the 3 ingredients of Section 68 were duly fulfilled the ld CIT(A) deleted the addition. None of the aforesaid factual findings of the ld CIT(A) were controverted by the revenue before us. Hence we do not find any infirmity in the order of the ld CIT(A) in granting relief to the assessee. Addition made on account of investment in shares - From the order of the ld CIT(A) it was duly clarified that the investment is only Rs. 1 lakh (10, 000 X 10) and not Rs. 10 lakhs. Accordingly the ld CIT(A) confirmed the addition only to the extent of Rs. 1 lakh and deleted the remaining arithmetic error of Rs. 9 lakhs. We do not find any infirmity in the order of the CIT(A) as what is sought to be corrected is only an arithmetic error committed by the ld AO. Accordingly ground raised by the revenue is dismissed.
1. ISSUES PRESENTED and CONSIDERED
The primary issues considered by the Tribunal were:
2. ISSUE-WISE DETAILED ANALYSIS Unsecured Loans under Section 68:
Cash Found During Search under Section 69A:
On-Money Payment for Flat Purchase:
Estimation of Profit and Additions under Section 68 and Unexplained Investments:
3. SIGNIFICANT HOLDINGS Unsecured Loans under Section 68:
Cash Found During Search under Section 69A:
On-Money Payment for Flat Purchase:
Estimation of Profit and Additions:
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