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TMI Blog2018 (5) TMI 1744X X X X Extracts X X X X X X X X Extracts X X X X ..... Rachna Singh, CIT, DR ORDER PER R.S. SYAL, VP: These three appeals by the assessee relate to assessment years 2008- 09, 2009-10 and 2014-15. Since some of the issues raised in these appeals are common, we are, therefore, proceeding to dispose them off by this consolidated order for the sake of convenience. 2. Following four grounds have been raised in this appeal :- 1. That under the facts and circumstances, the impugned Asstt. Year being abated one as per 2nd proviso to section 153A(1), hence, Ld. AO exceeded his jurisdiction in examining the issue for addition of ₹ 19,35,720/- as the same is not emanating from any material found/seized of incriminating nature or even otherwise. 2. That without prejudice, in the absence of finding of incriminating material etc. belonging to the assessee in the search of a 3rd party, the assumption of jurisdiction u/s 153C is unwarranted. 3. That without prejudice, in the absence of recording any satisfaction by the AO of the assessee, the whole proceedings are illegal and without jurisdiction. 4. That under the facts and circumstance, addition of ₹ 19,35,720/- u/s 68 for receipts from 7 persons as mentioned in Para-4 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when a search is conducted, there can be possibly two types of assessment years, namely, completed assessments and non-completed or pending assessments. Assessment years having completed assessments mean the years for which either the assessments stood completed by the AO u/s 143(3) or section 144 before the date of search or the years for which the regular assessments were not taken up after the filing of the returns by the assessee and further that the time limit for issuing notice u/s 143(2) got lapsed on the date of search. On the other hand, the assessment years having non-completed or pending assessments mean the years for which the assessments are pending on the date of search which are abated in terms of the express provisions of the second proviso to section 153A. This will also embrace the years in respect of which the time limit for issuing notice u/s 143(2) is still available with the AO as on the date of search. 7. Adverting to the extant factual matrix, it is seen that the assessment year under consideration falls in the category of `completed assessments' and not the `pending assessments' abating on the date of search. The ld. AR relied on the judgment in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on pages 6 and 7 of the impugned order. In response to question no. 2, he stated that he was working with M/s Jainco Pvt. Ltd. for the last 7-8 years. In response to question no. 8, he submitted that his monthly salary was ₹ 8,000/-. Answering question no. 9, he stated that his monthly family expenditure was ₹ 5,000/- to ₹ 6,000/-. Replying to question no. 11 specifically on the point as to whether he had invested his savings anywhere, he replied in negative by deposing that he had neither made any investment nor givenany amount to others. It is evident from the statement of Shri Matwar Prasad recorded during the course of search u/s 132 that he admitted not to have given any loan or advance to any person including the assessee. This statement of Shri Matwar Prasad, coupled with the fact that the assessee surrendered this amount during the course of assessment proceedings, in our considered opinion, constitutes incriminating material found during the course of search. The ld. AR was fair enough to concede that addition to the extent of ₹ 3,75,000/- is backed by incriminating material found during the course of search and should be confirmed. We, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, dismissed as not pressed. 15. In the result, the appeal is partly allowed. Assessment Year 2009-10 16. For this year, again, four grounds have been raised which are mutatis mutandis similar to those recorded above for the immediately preceding assessment year. Ground nos. 2 and 3 were not pressed by the ld. AR, which are, ergo, dismissed. 17. The sole issue raised through ground nos. 1 and 4 is against the confirmation of addition of ₹ 16,70,000/- made by the AO u/s 68 of the Act. 18. Assessment for this year also stood completed as on the date of search. The Assessing Officer, in the instant proceedings, made an addition of ₹ 16,70,000/- representing sundry creditors/unsecured loans in respect of seven persons, which include credit balance of ₹ 4,30,000/- appearing in the name of Sh. Matwar Prasad. Both the sides are in agreement that the facts and circumstances of the instant year are similar to those of the preceding year. In fact, no separate arguments were advanced andthe parties adopted their arguments made for the preceding year. In view of our decision rendered for the immediately preceding assessment year, we confirm the addition only to the ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e law that an assessee can escape clutches of section 68 if he successfully proves three things to the satisfaction of the AO, viz., identity of the payer, capacity of the payer and genuineness of transaction. Genuineness of a loan transaction primarily depends upon the genuineness of the payer. If the alleged payer itself is not genuine, then the entire edifice of the genuineness of the transaction, created through a web of paper trail, falls flat. In concluding as to the genuineness of a transaction, the Hon'ble Courts have held that apparent must be considered real until there are reasons to believe that the apparent is not real. The facts and circumstances of the instant case, as will be seen infra, are a glaring example of apparent being not real, but just a facade of genuineness of loan transaction, which actually is not. 23. The assessee filed certain details concerning PTU including its return of income. A copy of the balance sheet of this company has been provided in the paper book from which it is palpable that it has no tangible or intangible fixed assets. The only item on the asset side of its balance sheetis 'Current assets.' On the liability side totaling ₹ 19. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of its director. Similarly, return of income of PTU for the succeeding assessment year, namely, 2015- 16 has also been signed by Shri Dipak Singh in the capacity of its director. This indicates that the list of companies given by the Assessing Officer in his order is only inclusive and not exhaustive and it is further established that Sh. Dipak Singh is director in several companies operating in similar manner. The fact that Sh. Dipak Singh is not a real person managing the affairs of PTU but only a name-lender is also borne out from the statement of Shri Rajendra Bubna, discussed in a later para of this order. 25. It is further pertinent to note that the Assessing Officer has recorded that three companies from the list of 16 companies having Sh. Dipak Singh as a common director, have the same address, namely, 2A, Ganesh Chandra Avenue Commerce House, 7th Floor, Room No.1, Kolkata, W.B - 700013 IN. It has further been recorded that 12 more companies are registered atthis address, meaning thereby, that all such companies are allegedly operating from one room only. This factual position recorded in the assessment order has not been controverted on behalf of the assessee. 26. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... providing accommodation entries. All the accommodation entries done from these companies are wholly controlled by me from time to time as per the requirements of my clients'. The above disposition by Shri Rajendra Bubna, who was actually controlling PTU, leaves nothing to doubt that PTU is one of the paper/shell companies, having no other substantive business activity except providing accommodation entries to its clients. 27. The matter does not stop here. Having so much material to implicate the assessee for having obtained an accommodation entry of ₹ 1.00 crore from PTU, the AO carried out further investigation by issuing summons u/s 131 of the Act to the directors of PTU requiring their appearance in person. Unfortunately, no compliance was made. Thereafter, the Assessing Officer recorded statement of the assessee u/s 131 of the Act, whose relevant parts have been reproduced on pages 6 and 7 of the assessment order. In response to question no.7 about the assessee having outstanding loans from around 24 parties and requiring to give: "the exact purpose for which you have taken these loans",she simply replied that the finances were managed by her husband and she had no idea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e receipt/repayment of loan through account payee cheques etc., there is predominant evidence which proves without an iota of doubt that the assessee received an accommodation entry of loan of ₹ 1.00 crore from PTU. 30. At this juncture, it will not be out of place to refer to the judgment of the Hon'ble Supreme Court in CIT vs. Durga Prasad More (1971) 82 ITR 540 (SC), in which the assessee claimed before the ITO that income of certain property should not be taxed in his hands as it was a trust property. The ITO rejected the claim and included the income in the hands of the assessee. The Tribunal affirmed the decision of the ITO, which wasreversed by the Hon'ble High Court. Reversing the verdict of the Hon'ble High Court, their Lordships noticed that though the assessee made a claim that income of the property was not his and produced conveyance executed in his favour and the deed of settlement executed by his wife, nearly about a year after the conveyance, however, when the ITO asked the assessee about the source from which his wife got the amount, apart from saying that it was 'sthridhan' property, he failed to disclose any source from which his wife could have go ..... X X X X Extracts X X X X X X X X Extracts X X X X
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