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TMI Blog2019 (7) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... SINGH (JUDICIAL MEMBER).- 1. This group of five appeals/cross-appeals are directed against the separate order of the Commissioner of Income-tax (Appeals)-2, Udaipur out of which three appeals by the Revenue for the assessment years 2011-12, 2014-15 and 2015-16 in M/s. Pacific Leasing and Research Ltd. and one cross-appeal by the assessee therein for the assessment year 2011-12. For the assessment year 2011-12, only the Revenue's appeal in M/s. Pacific Industrial Ltd. All appeals are related with the same group and the parties have raised certain common grounds of appeal, therefore, with the consent of parties all appeals were heard together and are decided by the common order for the sake of brevity and convenience. 2. First, we are taking the appeals for the assessment year 2011-12 in M/s. Pacific Leasing and Research Ltd. The Revenue in its appeal in I. T. A. No. 331/Jodh/2018, has raised the following grounds of appeal : 1. Whether on the facts and in the circumstances of the case and in taw the Commissioner of Income-tax (Appeals) was justified in deleting the addition of ₹ 7,00,00,000 out of the total addition of ₹ 8,24,50,000 made by the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 1,18,580. A search and seizure action under section 132 was carried out on August 26, 2015 at the residential and business premises of the assessee including other business group, viz., M/s. Pacific Industry, Pacific Export, Kapil Agarwal, Smt. Kariika Agarwal, J. P. Agarwal, Gitanjali Investech Holding India Pvt. Ltd. (all the assessee's group). During the search action, Shri J. P. Agarwal in his statement recorded under section 132(4) of the Act admitted of taking accommodation entries in the form of long-term capital gain (LTCG). Consequent of the search, a notice under section 153A was issued to the assessee on March 22, 2016. In response to the notice, the assessee filed its return of income declaring an income of ₹ 1,18,580 on March 26, 2016, declaring the same income as declared while filing the original return of income under section 139. The assessment was completed under section 153A read with section 143(3) on December 29, 2017. The Assessing Officer while passing the assessment order made the addition on account of unsecured loan received by the assessee from the following eight parties aggregating to ₹ 8,24,50,000 : Sl. No. Name of parties A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntative of the assessee submits that reassessment was made by the Assessing Officer pursuant to the search action carried out on August 26, 2015 under section 132 of the Act at the entire assessee's group. During the search action, no incriminating material was found by the search team, however, the Assessing Officer made addition on account of share capital or unsecured loan under section 68 of the Act. The learned authorised representative submits that one of the reasons for making assessment under section 153A was that the statement of the alleged accommodation entry provider were recorded under section 131/ 133 in the year 2014 and 2015 wherein, such person alleged to have admitted that they provided accommodation entry in the form of long-term capital gains or unsecured loan. The said statements were not related to the assessee. Such statement has no evidentiary value. No cross-examination of such person was provided to the assessee. The original assessment for the year under consideration was already completed and the addition in reassessment under section 153A is invalid in the absence of any incriminating material found during the search. The learned authorised represen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nelised through banking transaction. The lender company duly complied. The learned authorised representative submits that the entire addition made by the Assessing Officer is liable to be deleted. Further, in support of the above submission, the learned authorised representative relied upon the following decisions : (i) CIT v. Morani Automotives (P.) Ltd. [2014] 264 CTR 86 (Raj). (ii) CIT v. Haresh D. Mehta [2017] 251 Taxman 346 (Bom) ; [2018] 407 ITR 492 (Bom). (iii) CIT v. S. M. Aggarwal [2007] 293 ITR 43 (Delhi). (iv) Kishinchand Chellaram v. CIT [1980] 125 ITR 713 (SC). (v) Ayaaubkhan Noorkhan Pathan v. State of Maharashtra, AIR 2013 SC 58. (vi) Pr. CIT v. Meeta Gutgutia, prop. M/s. Ferns "N" Petals [2017] 395 ITR 526 (Delhi) ; [2017] 295 CTR 466 (Delhi) (vii) CIT v. Kabul Chawla [2016] 380 ITR 573 (Delhi) 9. On the other hand, the learned Departmental representative for the Revenue supported the order of the Assessing Officer. The learned Departmental representative further submits that the assessee has not challenged the validity of assessment, either during the assessment or during the first appellate stage. 10. In the rejoinder submission, the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no addition can be made in respect of assessments which have become final if no incriminating material is found during search. Similar view was taken by the hon'ble Bombay High Court in CIT v. Gurinder Singh Bawa [2016] 386 ITR 483 (Bom). 13. Therefore, considering the factual and legal discussion, we find that the assessment for the assessment year 2011-12 was already completed when search action under section 132 was carried out at the premises of the assessee. No incriminating material found during the search in respect of the addition made by the Assessing Officer, therefore, the addition made by the Assessing Officer in the impugned assessment year is without jurisdiction. Thus, the legal ground raised by the assessee is allowed and the assessment order is held as invalid, consequent upon the entire addition made therein are directed to be deleted. 14. As we have held that the addition in the assessment order is invalid, therefore, the discussions on alternative submission of the assessee on the merits as well as on other grounds of appeal have become academic. 15. In the result, the appeal of the assessee for the assessment year 2011-12 is allowed consequently the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer asked the assessee to produce the competent person of the creditor along with the relevant documents and information. The assessee filed its reply on November 27, 2017. In the reply besides the other contention, the assessee contended that the original assessment has already been completed under section 143(1) or under section 143(3) and time for issuance of notice under section 143(2) has elapsed. In the regular assessment for the assessment year under consideration has been examined with the relevant document and after examining the material the assessment from the assessment years 2010-11 to 2015-16 were completed. The assessee also contended that no incriminating material was found during the search, therefore, no addition in the completed assessment unless incriminating material came in possession of the Assessing Officer, can be made. The assessee also submitted that they have already furnished the confirmation and copy of the account of each of the respective creditors along with the Income-tax return, balance-sheet of the said creditor, in their reply in response to the notice under section 131 on November 10, 2015 and on June 8, 2016. The assessee also re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax (Appeals). In support of his submission, the learned authorised representative relied upon the decision which is already relied on in appeal for the assessment year 2011-12. 20. We have considered the rival submissions of the parties and have gone through the orders of the authorities below. The learned authorised representative for the assessee vehemently argued that the additions under section 68 are not based on any incriminating material found during the search. We have noted that the assessee has similar plea before the learned Commissioner of Income-tax (Appeals). The learned Commissioner of Income-tax (Appeals) rejected the said grounds of appeal, however, the learned Commissioner of Income-tax (Appeals) granted relief to the assessee on the merits of. Therefore, we are of the view that the assessee can raise such plea by taking the course of rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963. 21. The hon'ble Gujarat High Court in Pr. CIT v. Sun Pharmaceuticals Industries Ltd. [2018] 408 ITR 517 (Guj) ; [2017] 86 taxmann.com 148 (Guj) held that, though the assessee has not appealed, can defend the order appealed against on any ground decided against him by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r has not taken the compliance of the lender companies. On the submission of the assessee, the learned Commissioner of Income-tax (Appeals) sought the remand report of the Assessing Officer. The learned Commissioner of Income-tax (Appeals) after seeking supplementary report of the Assessing Officer and the reply of the assessee and after considering the contents of the remand reports and the reply of the assessee deleted the addition with the following observations : "4.3.3 I have gone through the material placed on record and I find that the Assessing Officer has not issued any summon/notice under section 131/133(6) of the Act to Glaze Construction Pvt. Ltd, Grove Suppliers Pvt. Ltd., Nihon Commodities Pvt. Ltd and VSG Leasing and Finance Pvt. Ltd. whereas the appellant in discharge of its onus under section 68 of the Act has filed confirmation of accounts as well as bank statements reflecting the transactions with other substantiating documents, which are available at page Nos. 56-230 of the paper book and also in common paper book and further common paper book filed separately. From these documentary evidences placed on record identity, creditworthiness and genuineness of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain [2014] 221 Taxman 180, CIT v. Victor Electrodes Ltd. [2010] 329 ITR 271 (Delhi), Addl. CIT v. Bahri Bros P. Ltd. [1985] 154 ITR 244 (Patna) and others as referred to by the appellant, I am of the considered view that the appellant duly discharged its burden casted upon it under section 68 of the Act. It is further seen that no summon/notice was issued to the lender companies namely, Glaze Construction Pvt. Ltd, Grove Suppliers Pvt. Ltd., Nihon Commodities Pvt. Ltd and VSG Leasing and Finance Pvt. Ltd. asking them to confirm the transactions of loans undertaken with the appellant pertaining to the year under consideration. 4.3.5 The Assessing Officer during assessment proceedings took negative inference from the statement of Shri J. P. Agarwal recorded during search under section 132(4) wherein he made disclosure in respect of long-term capital gain in his individual hands. I have gone through the statement of Shri J. P. Agarwal and his disclosure made in his statement, notably, the disclosure made was in his personal capacity only and with respect to long-term capital gains only and not in respect of any other transactions be it be receipt of unsecured loans. Therefore, I fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n found and brought on record. 4.3.8 Similarly, I find that various observations of the Assessing Officer on the balance-sheet/Income-tax return of the lender companies are misconstrued, misconceived and are factually incorrect. I further find that the various other allegations/observations of the Assessing Officer are misconceived and premature only and in view the submission made by the appellant in his written submissions in para Nos. 3.26 to 3.33 above, the same does not lead anywhere to draw any adverse inference against the appellant. Further, the various case law relied upon by the Assessing Officer are distinguishable from the facts of the present case as categorically countered by the appellant in his written submissions in para Nos. 3.36 to 3.43 above. 4.3.9 It is a settled judicial position that under the Income-tax law primary burden under section 68 of the Act is on the appellant and once this burden is discharged under section 68 of the Act, no addition under section 68 of the Act is justifiable in the hands of the asses see in view of the judgments in case of Shree Barkha Synthetics Ltd. v. Asst. CIT [2006] 283 ITR 377 (Raj) ; [2006] 155 Taxman 289 (Raj), CIT v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of in income and balance-sheet wherein the transactions are reported, accordingly the Assessing Officer has not followed the principles laid down under section 68 of the Act. The hon'ble Gujarat High Court in the case of CIT v. Ranchhod Jivabhai Nakhava [2012] 21 taxmann.com 159 (Guj.) has held that : 'Once the assessee has established that he has taken money by way of account payee cheques from the lenders who are all income-tax assessees whose PAN have been disclosed the initial burden under section 68 was discharged. It further appears that the assessee had also produced confirmation letters given by those lenders. (para 15) Once the Assessing Officer gets hold of the PAN of the lenders, it was his duty to ascertain from the Assessing Officer of those lenders, whether in their respective returns they had shown existence of such amount of money and had further shown that those amount of money had been lent to the assessee. If before verifying of such fact from the Assessing Officer of the lenders of the assessee, the Assessing Officer decides to examine the lenders and asks the assessee to further prove the genuineness and creditworthiness of the transaction, the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entary evidences furnished by the assessee, remand reports including the second remand report and supplementary remand report of the Assessing Officer and passed elaborate order, which in our view does not require any further interference. No contrary facts or law is brought to our notice to take a different. Therefore, we affirm the order of the learned Commissioner of Income-tax (Appeals). 25. In the result, the appeal of the Revenue is dismissed. I. T. A. No. 332/Jodh/2018 for the assessment year 2015-16 by the Revenue 26. The Revenue has raised the following grounds of appeal : "1. Whether on the facts and in the circumstance case and in law the Commissioner of Income-tax (Appeals) was justified in deleting the addition of ₹ 3,75,00,000 made by the Assessing Officer under section 63 of the Income-tax Act on account of unsecured loans obtained by the assessee. 2. Whether on the facts and circumstances of the case and in law, the Commissioner of Income-tax (Appeals) was justified in deleting the additions when the assessee failed to produce the alleged creditors for verification. 3. Whether on the facts and in the circumstances of the case and in law, the Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom it." 30. Brief facts of the case are that the assessee is a company filed its return of income for the assessment year 2011-12 on September 28, 2011 declaring nil income. A search action as referred to above was carried out in the assessee's group on August 26, 2015. Consequent upon a notice under section 153A was served upon the assessee. In response to the notice under section 153A, the assessee furnished its return of income on February 5, 2016 declaring nil income. The Assessing Officer completed the assessment under section 153A read with section 143(3) on December 31, 2017. The Assessing Officer while passing the assessment order made addition of ₹ 7 crores under section 68 on account of unsecured loan. During the assessment, the Assessing Officer noted that the assessee has received unsecured loan of ₹ 7 crores from M/s. MVS Leasing Pvt. Ltd. The Assessing Officer asked the assessee to prove the identity and genuineness of transaction and creditworthy of the lender. The assessee furnished the confirmation of the loan. The Assessing Officer on his observation that during search and as well as the post-search action Shri J. P. Agarwal, who is the key ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. We have noted that the ground of appeal raised by the Revenue is similar as raised by the Revenue in I. T. A. No. 331/Jodh/2018, the only variation in the ground of appeal is that in the said case, the addition was made on account of share application, however in the present case addition relates to unsecured loan. On the identical facts we have already dismissed the appeal of the Revenue, therefore, by following the principle of consistency, the ground of appeal raised by the Revenue are dismissed with similar observation. 34. We may also add that the addition was made by the Assessing Officer in the absence of incriminating material found during the course of search action and in the absence of any incriminating material no addition in the unabated assessment is permissible. Therefore, the submission of the assessee is also accepted in dismissing the appeal of the Revenue in view of rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963. 35. In the result, the appeal of the Revenue is dismissed. I. T. A. No. 322/Jodh/2018 by the Revenue for the assessment year 2014-15 (Pacific industrial Limited, Mumbai). The Revenue has raised the following grounds of appeal : " ..... X X X X Extracts X X X X X X X X Extracts X X X X
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