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TMI Blog2020 (7) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... ot pending at the time of search. Hence assessment for these assessment years did not abate. Hence no addition in these assessment years under section 153A is permissible without incriminating material found during search. In the present case we have already given a finding that the addition is not based upon any incrimination material found upon search in the case of the assessee. This aspect is only of academic interest as addition has not been made by the assessing officer as deemed dividend. In the case of CIT versus Surat Cotton Spinning Weaving Mills [ 1993 (4) TMI 64 - BOMBAY HIGH COURT] once the assessing officer has assessed a particular receipt under a particular head of income the amount is no more available to him for assessment under another head Moreover the issue that in case of search and seizure assessment under section 153 A no addition can be made without incriminating material found during search is settled by honourable Supreme Court in the case of Sinhgad Technical Education Society [ 2017 (8) TMI 1298 - SUPREME COURT] . Since we have already held that these additions are not sustainable in assessment u/s 153A. Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... r noted during search and seizure action u/s.132(1)of the IT Act,1961 carried out in Loha Ispaat Group of cases, it was found that this company was also carrying out various transactions of purchase/sales/loan etc. with the above referred concerns. That the company on being confronted with huge evidence in the shape of seized papers, computer backup data and the statements of various persons Including the statement of assessee Shri Rajesh Poddar himself (CMD of Lpha Ispaat Ltd.) has admitted that the concerns mentioned at Sr.no. 3 to 13 have provided only accommodation entries by receiving cash from the company itself. The Assessing Officer further noted that this has been admitted even during the course of assessment proceedings in the case of the company. Hence, the Assessing Officer held that thus it has already been proved that these concerns are bogus entities having no creditworthiness of their own and were giving accommodation entries to Loha Ispaat Group in lieu of some commission brokerage paid to them. He further noted that moreover the concerns other than mentioned at Sr. No. 1 and 2 are entities belonging to the Loha Ispaat Group and their creditworthiness and source o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the onus cast upon him. He held that the assessee has not explained as to why such flow has taken place and such credits in his books are indirectly the money generated mostly by way of purchase and sale leaving corresponding debtors/stock unsettled. Hence, he held that source of the same is not explained and substantiated by the evidence. Thereafter the Assessing Officer referred to the provisions of section 68 of the Act and certain case laws. Finally the Assessing Officer concluded that the assessee was not able to discharge the onus cast on him with respect to genuineness of these parties giving unsecured loans appearing as credits in books of the company. He opined that money introduced is nothing but assessee's own money. Accordingly, he made addition as under section 68 of the Act :- Assessment Year 2006-07 10,38,92,792 (Closing balance from Rajesh Poddar HUF which includes amount received during the year at ₹ 5,31,89,070/-) 2007-08 7,32,34,516 (received during the year) 2008-09 15,05,04,633 (received during the year) 2009-10 2,70,20,000 (received during the year) 2010-11 5,25,03,957 (received during the year) 2011-12 - 2012-13 7,51,79,250 (received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame on the ground that the Assessing Officer has categorically brought out in the assessment order that the assessee had given a mere explanation that the credits/loans were generated mostly by way of purchase and sale in Loha Ispaat Ltd. leaving corresponding accommodation debtors/stock unsettled but no proof thereof is either available on record or given by the assessee before the Assessing Officer to prove such co-relation. He noted that despite the fact that the creditors are the part of Loha Ispaat group or related thereto and the assessee being the Managing director in Loha Ispaat Ltd., the assessee has failed to submit any documentary evidence in support of his claim regarding unsecured loans. Further learned CIT(A) dealt with the issue raised by the assessee that the additions were not based upon any incriminating material found in search. He refuted the same by observing that incriminating material were found and seized during the search showing that the assessee has taken accommodation entries from various entities and a statement u/s. 132(4) was obtained from assessee confirming the same. 9. Against this order the assessee is in appeals before us. 10. We have heard bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - * Dhani Devi Processor ₹ 60,000/- 12. Learned Departmental Representative thereafter referred to paragraph 7 of the said order for following proposition :- "7. We have considered the submissions of the parties and perused the material available on record. As could be seen, the only grievance of the assessee is, before treating the unsecured loans as unexplained cash credits under section 68 of the Act, the Departmental Authorities have not given adequate opportunity of being heard to the assessee. In this context, it is the submission of the learned Authorised Representative that certain developments have taken place after completion of the assessment, in assessee's case viz. assessment orders passed in case of Loha Ispat Ltd. and some of the creditors which may have bearing on the genuineness of unsecured loans. To prove such fact, the assessee has also submitted before us the assessment orders passed in case of Loha Ispat Ltd., Shri Rajesh Poddar (HUF) and Dhani Devi Processors for the very same assessment year. On a perusal of the aforesaid orders, we have noticed that these orders have been passed after completion of the assessment in case of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... departmental representative did not back this submission to any reference of the seized material in the orders of the authorities below. Thereafter learned Departmental Representative referred to the claim of the assessee that loans generated in the hands of assessee are part of the accommodation transaction of sales and purchases of M/s Loha Ispaat Limited. However, he submitted that this claim is not supported by any evidence. However thereafter he sought to address this issue and submitted that additional income disclosed by M/s Loha Ispaat Ltd. on account of unaccounted cash sales for the corresponding A.Ys. are as under :- S.No. A.Y. Unaccounted Cash Sales additional income disclosed by M/s Loha Ispaat Ltd. @ 3% on unaccounted cash sales 1 2006-07 3,56,13,708 4,68,411 2 2007-08 1,38,97,843 4,16,935 3 2008-09 79,89,493 2,39,685 4 2009-10 5,70,35,156 17,11,055 5 2010-11 10,60,39,550 31,81,187 6 2011-12 3,44,70,180 10,34,105 TOTAL 23,50,45,930 70,51,378 In addition to above M/s Loha Ispat Ltd. has admitted unaccounted sale of ₹ 3,28,810/- for F.Y. 2004-05 and ₹ 14,22,18,089/- for F.Y. 2011-12. Thus M/s Loha Ispaat Ltd. has declared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y documentary evidence in support of his claim regarding unsecured loans." Therefore, these details now. submitted by the assessee in the form of Fund Trail Chart along with extract of Bank Statement shall not be admitted for adjudication." 15. Learned Departmental Representative further submitted that the decision of the Assessing Officer in the case of M/s. Dhanidevi Processors Pvt. Ltd., another group company has made an addition of ₹ 4 crores to the total income of the concern for A.Y. 2007-08 on account of unexplained investment as share application money introduced in M/s. Loha Ispaat Ltd. and the appeal is pending before learned CIT(A). learned Departmental Representative finally concluded as under :- "In view of the aforesaid, it is humbly submitted that the claim of the appellant that the loans generated in the hands of assessee are part of the accommodation transaction of sales and purchases of M/s Loha Ispaat Ltd., deserves to be rejected and the addition made by the Assessing Officer to the total income of assessee as unexplained cash credits, deserves to be sustained." 16. We have heard both the Counsel and perused the records. We note that assessment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings. Furthermore regarding assessment year10-11 he observed that the assessee has not given information regarding filing of return under section 139(1) for this assessment year. He further observed that last date for filing of return of income under section 139(4) of the act for this year was 31/3/12. 18. At this juncture learned CIT(A) declined to adjudicate this aspect. After having so adjudicated he observed that the issue raised regarding absence of incriminating seized material has not been raised by way of a ground but it has been stated only in written submission that assessment under section 153A must be limited only to incriminating material found during search. He held that explanation given in the written statement cannot be treated as a ground. Thereafter learned CIT(A) again contradicted himself by stating that materials were found and seized during search. However he failed to make any reference to any such material. Here we note that learned CIT(A) was very much conscious of assessee's grievance and he has adjudicated the same against the assessee for assessment year 11-12 and 12-13. However as he found that for the other assessment years no assessment is pending h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following parties; 1. Rajesh Poddar HUF 2. Dhanidevi Processor Pvt. Ltd 3. Indian Tube Traders 4. Shree Ram International 5. Ganayaka Steel Pvt. Ltd. 6. S.B. Metal 7. Varun Sales Pvt. Ltd. 8. Ajaydev Steels 9. Bhavna Ispaat Pvt. Ltd. 10. Shivam Ispaat 11. V.K. Shah Steels Pvt. Ltd. 12. Pawanjyoti Steels Pvt .Ltd. 13. Bride Steels It is sub mitted that unsecured loan received from the above mentioned parties during the period from 2005-06 to 2011-12 is as a result of accommodation stock/accommodation debtors in the books of Loha Ispaat limited leading no evasion of tax. All the money received through chain of person related to the transaction within Loha Ispaat limited. And the transaction remains unsettled both in the hand of Mr. Rajesh Poddar, in the hand of above mentioned parties & Loha Ispaat Limited, Hence it is dear that such a loan provider did not have their own source of fund. The loan so generated in the hand of assessee is forming part of accommodation transactions of sales & purchases of Loha Ispaat Limited." 21. The learned Departmental Representative in his submission has also stated that addition has been made exclusively and solely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had agreed for the same. In the present case we note that the addition in the case of search and seizure and others has to be based upon provisions of law and the case laws in this regard. If it is not so assessee cannot be subject to tax. Rather this decision helps the case of the assessee 26. On this account also a mere admission on the part of assessee dehorse any corroborative material found during search and without any further enquiry by the assessing officer cannot be the sole and conclusive basis of addition under section 68 of the unsecured loan. This is more so when in the statement of the assessee which is the basis of addition it has been stated that these sums have their origin from Loha Ispat ltd. These aspects have been brushed aside by the assessing officer. He has not issued any notice to the parties who have given the loan. He has not obtained their financials and commented upon their creditworthiness on the basis of the financials. 27. We also note that the assessing officer was also himself aware of the real import of the assessee's statement wherein it was submitted that the unsecured loans have their origin in Loha Ispat Ltd. Hence assessee officer has mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court regard upon by the learned departmental representative regarding the evidentiary value of statement obtained under section 132(4) is concerned, we note that the said case law by no stretch of imagination propounded that one aspect of the statement obtained can be relied upon and the other aspect is be rejected. Moreover the issue that in case of search and seizure assessment under section 153 A no addition can be made without incriminating material found during search is settled by honourable Supreme Court in the case of Sinhgad Technical Education Society (supra). Since we have already held that these additions are not sustainable in assessment u/s 153A. 32. In the result we set aside the order of learned CIT(A) and decide the issue in favour of assessee. Before partying we note that this appeal was heard in 20.1.20.The pronouncement is delayed due to lockdown in view of Covid 19 pandemic.The pronouncement is as per rule 34(5) of appellate tribunal rules and Honourable Bombay High Court decision vide order dated 15.4.2020 extending the time bound periods specified by hon'ble High Court by removing the period under lockdown. This aspect is also dealt with in detail in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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