9911796707
TMI Blog2023 (3) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... egistered Multi-State Cooperative Urban Credit Society established under the Maharashtra Co-operative Societies Act, 2002 which is engaged in the activity of providing credit and credit facilities to its members. The assessee society has inter-state operations having around 100 branches across India having more than 35000 members. Since the assessee is a co-operative credit society, which provides credit facilities to its members, it is governed by the Banking Regulation Act, 1949 to the extent specified in Part V thereof. It is therefore mandatory for the assessee to obtain & maintain KYC documents in relation to its members. It is noted that, a survey action u/s 133A of the Income-tax Act, 1961 [in short 'the Act'] was conducted by Range-4, Raipur on 08-02-2016 at the Raipur Branch of the assessee society, where cash to the tune of Rs.1,49,79,000/- was found and seized by the survey authorities. The said survey action was converted into a search action u/s 132 of the Act on 09-02-2016. Prior to the date of search, the income-tax assessment u/s 143(3) of the Act for AY 2010-11 stood completed on 07-12-2012. Accordingly, the assessment for AY 2010-11 did not abate consequent to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them had not filed any income-tax returns for the relevant year nor did they disclose these bank accounts held with the assessee society. In the course of the search action, the Investigating authorities had gathered that sixty-four (64) accounts had been opened in the name of several individuals at the assessee's Raipur Branch, out of which the following twelve (12) members were examined under oath. Sr. No. Name of the Account Holder A/c No. Total Cash Deposit (in Rs.) 1. Ajay Kumar Panjwani 405/05 71,87,53,375 2. Suraj Naidu 501/03 96,49,39,750 3. Rajesh Enterprises Prop. Ashok Shahu 501/11 9,42,69,856 4. Sanjay Nandlal Bhagtani 403/09 55,54,917 5. Krishna Liladhar Tiberwala 403/2 3,22,25,600 6. Pradeepkumar Sudhakar Jain 403/3 36,30,560 7. Ashwaria Sheshnarayan Dubey 403/10 2,19,12,800 8. Abdul Aziz 501/4 3,30,33,500 9. Hemant Hargovind Saboo 501/6 63,22,858 10. Basant Raj Purohit 501/7 33,72,55,575 11. Surya Trading Co. Prop. Bhupendra Singh Thakur 501/9 30,87,500 12. Kundanlal Sahu 501/10 61,16,200 4. According to the AO, these account holders had stated that, they had received commission to facilitate cash deposits and tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious accounts of your society by all your members during the F.Y. 2009-10 & F.Y. 2010-11 respectively viz. Savings Deposits, Cash Credit deposit, agent security deposits, current deposits, MIS deposits, recurring deposits, short term fixed deposits, Long term fixed deposits, DAM Duppat deposits & Pigmy deposits and squared up loans during the year. The PAN wise list is the list that contains particulars of members who have mentioned their PANS in the KYC details and the Non-PAN wise list is the list where the PANS are not mentioned. ii) Please provide a bifurcated list of the branches operated by your society in rural areas/segments and urban areas/segments separately. iii) Copy of requisite permission obtained by RBI for carrying out the operations as a Co- operative Credit Society in Maharashtra, as per Banking regulation act and if so a copy of the Registration Certificate. iii) You as a credit society do not accept cheque as a norm. The moneys are received only in cash from all your members. Please explain the process of registering the members and what are your charges for registering such members. iv) Please provide a copy of the Annual Financial statements, Balance S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ured with some lucrative offers by the society officials like higher commission payment in case he roped in more members to their society. He didn't take much interest in the scheme although he became its member by signing some forms given to him. However, he never received any cheque book or pass book from the society. When he was shown the amount of Rs. 95, 21,073/- which has been debited from his account during the F.Y. 2009-10 as per the records of the credit society, he categorically denied having deposited or withdrawn any such amount from the account maintained with the credit society. He reiterated that he had never been issued pass book or cheque book from the said society and he was not aware of his member status as of now since he never operated the account in the first place. He was asked whether he files his return of income regularly to which he questioned me whether I had the authorization to pose such questions to him to which I replied that it was a general inquiry as per the orders of my superiors. The enquiry was thus concluded. 2. Thereafter, I visited the residence of Mr. Shaikh Irfan Ismail, another credit society member at the address given at 40, Tande ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve (12) account holders, which formed the basis of the impugned addition were not in existence during the FY 2009-10. The assessee thus submitted that it was incorrect on the AO's part to draw adverse inference based on statements of such persons who did not hold any account with the assessee during the relevant year. It was further pleaded that the expenses had been disallowed without verification. Also, vide letter dated 29-08-2018, the assessee objected to the additions/ disallowances made in the unabated assessment of AY 2010-11 since they were not backed or supported by any incriminating material unearthed in the course of search. Having regard to these pleadings of the assessee, the Ld. CIT(A) vide letter dated 31-08-2018 required the AO to submit a remand report after making necessary enquiries. Thereafter, vide letter dated 17-12-2018, the AO was further directed to quantify the deposits in relation to whom corresponding PAN/KYC details were available and where such details were not available. The AO was also required to quantify the deposits where there was violation of Rule 114B of the Rules. The AO furnished his 1st remand report on 22-01-2019 whose relevant extracts are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this regard, it is submitted that on verification it is ground that there are huge number of accounts where huge cash have been deposited during the year. Therefore, it is very difficult to make enquiries in those cases due to large number. More time will be required to complete this process. However, as mentioned above in para 3.2, enquiries in some cases had been made which proved that in some cases the details provided by the assessee are incorrect and in some cases account holders are completely unaware of their account held with the society. 6. Your good self vide letter dated 17.12.2018 has asked to quantify the deposits wherein PAN and KYC details are available and wherein such details are not available. Your good self has also asked to quantify the deposits wherein there has been violation of Rule 114B. 6.1 In this regard, it is submitted that during the remand proceedings, the assessee has submitted details of total credits of Rs. 577.23 crores which includes the transfer credits of Rs. 318.60 crores. Out of total 577.23 crores, total cash deposits are to the extent of Rs. 258.62 crores. Out of total cash deposits of Rs. 258.62 crores, deposits exceeding Rs. 50000/- p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r) is also incorrect as the accountholder has opened his account on 15.07.2010 in the society, hence there were no transactions during the F.Y-2009-2010 but the finding reveals that he has withdrawn a sum of Rs.95.21 Lakhs during the F.Y.- 2009-2010 . (copy of account opening form, form-60/61 and KYCs are attached herewith as Annexure 'C'). b) Shaikh Irfan Ismail: He may have shifted to other address but at the time of accounting opening he has signed the account opening form, affixed his photograph on account opening form, Nomination Details has been filled and signed by him along with witness (Ansari Sajjad), his thumb impression has been affixed on the form and he has also submitted the self attested copy of PAN Card, Ration Card & Form-61. After the account has been opened, the accountholder has not intimated any changes in his address, if any. During the FY-2009-2010, he has deposited cash of Rs. 100/- only in his account maintained with the society. (Copy of account opening form, form-60/61 and KYCS are attached herewith as Annexure 'D'). c) Essa Shaikh: The address mentioned in the report of the Inspector O/6 ACIT- CC-4(4) (as per the assessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which inter alia contained the KYC documentation of the account holders. 12. Having regard to the contradicting versions of the assessee society and the AO, the Ld. CIT(A) vide letter dated 17-02-2019 forwarded the list of account holders with PAN, addresses, Form 60 etc. to the AO to cross-verify the correctness of the data from the ITD/ITBA system. The Ld. CIT(A) also directed the AO to re-verify the assessee's contention that out of the total addition of Rs.577.23 crores, sum of Rs.318.60 crores related to transfers within the various accounts of the assessee and therefore not in the nature of cash deposits assessable u/s 68 of the Act. The Ld. CIT(A) is noted to have further re-analyzed the balance sum of Rs.258.62 crores [577.23 -- 318.60] and found that sum to the extent of Rs.19.46 crores related to accounts where individually cash deposited was less than Rs.2 lacs. Since deposit of Rs.2 lacs by the members in the entire year is quite nominal, according to Ld. CIT(A), the aforesaid sum was not relevant for the purposes of Section 68 of the Act. Out of the balance sum of Rs.239.16 crores (258.62 -- 19.46), the Ld. CIT(A) noted that, the assessee had furnished PAN, address an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g material as held by the jurisdictional High Court in the case of All Cargo Global Logistics Ltd (I.T. appeal No. 1969 of 2013). On the issue as to whether the assessments which have attained finality can be disturbed in absence of seized material, there are a number of decisions where this issue has been examined by the Hon'ble Courts which includes the decisions of the jurisdictional High Court in the cases of Continental Warehousing Corpn. (Nhava Sheva Ltd.) (58 taxmann. com 78) and Murli Agro Products (49 taxmann.com 172), decisions of the Hon'ble Delhi High Court in the cases of Anil Kumar Bhatia (352 ITR 493) and Chetandas Lachmandas (211 taxmann. 61) and Hon'ble Kerala High Court in the case of Canara Housing Development Co. (49 taxmann.com 98). After analyzing all such decisions on this issue, the Hon'ble Delhi High Court in the case of Kabul Chawla (61 taxmann. 412), has summarized the legal position that emerges as under: i.Once a search takes place under section 132 of the Act, notice under section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six A.Ys. immediately preceding the previous year releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action, is acceptable. This contention is acceptable considering that the Hon'ble Supreme Court in the case of Meeta Gutgutia (96 taxman.com 468) has dismissed the SLP against the decision of the Hon'ble Delhi High Court wherein it was similarly held that no additions can be made since no incriminating material was unearthed at the time of the search action." 14. According to Ld. CIT(A) however the search action at Bhopal, Indore & Sendhwa had revealed that the assessee society was being used as a conduit for transferring unaccounted cash across various parts of the country by depositing cash in dummy accounts. For this, (i) he referred to the statements of twelve (12) account holders at Raipur as recorded in the course of the search. The Ld. CIT(A) also (ii) referred to the report of the DDIT(I&CI), Mumbai; and (iii) the instances of improper KYC documentation found in the course of the second search action conducted on 26.05.2017 as 'incriminating material' found in the course of search. The Ld. CIT(A) also relied (iv) upon the findings of the test check enquiries which were conducted by the AO in the course of assessment through his ITI in respect of three (3) depositor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Bombay High Court in the case of CIT Vs Continental Warehousing Corporation (Nhava Sheva) Ltd (374 ITR 645)&CIT Vs Murli Agro Products Ltd (49 taxmann.com 172). 17. Before the Ld. CIT(A), the assessee had alternatively claimed the benefit of deduction u/s 80P(2)(a) of the Act on the additions made u/s 68 & 69C of the Act. Referring to the decisions of the Hon'ble Supreme Court in the case of Citizens Cooperative Society Ltd Vs ACIT (397 ITR 1), the Ld. CIT(A) observed that, the assessee had acted in violation of the Cooperative Societies Act and the principles of mutuality, as it was rendering services to nominal members as well apart from the ordinary members. Further, by relying upon the decision of the coordinate Bench of this Tribunal at Hyderabad in the case of Citizens Cooperative Society Ltd Vs Addl. CIT (24 taxmann.com 347), the Ld. CIT(A) held that deduction u/s 80-P of the Act could not be given to cooperative societies found to be involved in giving accommodation cheques. He, accordingly, rejected this alternate claim of the assessee. 18. Aggrieved by the order of Ld. CIT(A), the assessee as well as Revenue are in appeal before us by taking the following grounds. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . No Nature of Deposit Extent of confirmation Amount (Rupees) in Crores) A Transfer credits related to transactions involved with outside entities 100% To be quantified by the AO B Cash deposits less than Rs.2 lacs 10% 1,946 C Cash deposits between Rs. 2 lacs to Rs.40 lacs (i) Where PAN submitted but ROI not submitted 100% 81.26 (ii) Where PAN submitted but ROI not submitted 100% 17.94 (iii) Where PAN submitted and Roi filed but no business income declared 100% 2.39 (iv) Where PAN submitted, ROI filed and business income declared 10% 2.03 D Cash deposits exceeding Rs. 40 Lacs (i) Where form 60/61 submitted but no PAN submitted 100% 49.01 (ii) Where PAN submitted but ROI not submitted 100% 6.87 (iii) Where PAN submitted and ROI filed but no business income declared 100% 38.72 (iv) Where PAN submitted, ROI filed and business income declared 10% 2.26 4.2 While doing so, the Ld. CIT(A) erred in: (i) Basing his action on surmises, suspicion and conjecture; (ii) Taking into account irrelevant and extraneous considerations; and (iii) Ignori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by both sides as to whether there was any incriminating material found in the course of search at the premises of the assessee to justify the additions/disallowances made in the unabated assessments of the assessee society. 20. As noted earlier, on the date of search i.e. 22-06-2016, income tax assessment for AY 2010-11 was unabated. The provisions of Section 153A of the Act, forming part of Chapter XIV of the Act, contains special provisions for completing assessments in case of Search conducted u/s 132 or requisition made u/s 132A of the Act. These provisions can be invoked only in cases where the Income-tax Department has exercised its extra ordinary powers of conducting search and seizure operations after complying with stringent pre-conditions prescribed in Section 132 of the Act. There is no denial that once a search u/s 132 of the Act is conducted against a person then irrespective of whether any incriminating material is found, the AO is required to proceed against such person for completing the assessments u/s 153A of the Act for the specified six (6) assessment years. However, we find that Section 153A of the Act, itself creates the differentiation amongst specified s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re disadvantageous position than an assessee who is not subjected to search unless in the course of search, some incriminating documents or evidence or information is gathered by the Investigating authorities, so as to vest the AO with the necessary powers to make additions to the total income in relation to assessments which did not abate on account of search. Considering these aspects, the Hon'ble Delhi High Court in the case of CIT vs Kabul Chawla reportedin (2016) 380 ITR 573 (Del) held as under:- "37. On a conspectus of section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under section 132 of the Act, notice under section 153A(1) will have to be mandatorily issued to the person searched requiring him to file 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of earlier decisions rendered in the cases of CIT vs Anil Kumar Bhatia reported in (2013) 352 ITR 493 (Del) ; CIT vs Chetan Das Lachman Das reported in (2012) 211 Taxman 61 (Del HC) ; Madugula Venu vs DIT reported in (2013) 215 Taxman 298 (Del HC) ; Canara Housing Development Co. vs DCIT reported in (2014) 49 taxmann.com 98 (Kar HC) ; Filatex India Ltd vs CIT reported in (2014) 229 Taxman 555 (Del HC) ; Jai Steel (India) vs ACIT reported in (2013) 219 Taxman 223 (Del HC) ; CIT vs Murli Agro Products Ltd reported in (2014) 49 taxmann.com 172 (Bom HC) ; CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd reported in (2015) 374 ITR 645 (Bom HC) and All Cargo Global Logistics Ltd vs DCIT reported in (2012) 137 ITD 287 (Mum ITAT) (SB). We also find that the Revenue's SLP against the decision of the Hon'ble Delhi High Court in the case of Kabul Chawla (Supra) was dismissed by the Hon'ble Apex Court. 22. This view also finds support from the judgment of the Hon'ble Jurisdictional High Court in the case of CIT Vs Gurinder Singh Bawa (386 ITR 483) wherein it was held as follows: "3. For the Assessment Year 2005-06, the respondent-assessee had filed his return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. Mr. Kotangale, the learned Counsel for the revenue very fairly states that the decision of the Special Bench of the Tribunal in Al-Cargo Global Logistics Ltd. was a subject matter of challenge before this Court as a part of the group of appeals disposed of as CIT v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015] 374 ITR 645/58 taxmann.com 78/232 Taxman 270 (Bom.) upholding the view of the Special Bench of the Tribunal in Al- Cargo Global Logistics Ltd. Consequently, once an assessment has attained finality for a particular year i.e. it is not pending then the same cannot be subject to tax in proceedings under Section 153A of the Act. This of course would not apply if incriminating materials are gathered in the course of search or during proceedings under Section 153A of the Act which are contrary to and/or not disclosed during regular assessment proceedings. 7. In view of the above, on issue of jurisdiction itself the issue stands concluded against the revenue by the decision of this Court in Continental Warehousing Corpn. (Nhava Sheva) Ltd. (supra). In the appeal before us, the revenue has made no grievance with regard to the impugned order of the Tribunal hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial is found in the course of search action conducted u/s 132 of the Act. Even the Ld. CIT, DR appearing on behalf of the Revenue has not disputed this legal principle. The Ld. CIT(A) has however held that there were 'incriminating material' in the form of statements and enquiries against the assessee and therefore the AO had rightly disturbed the unabated assessment for AY 2010-11. 25. Before we look into the relevant 'incriminating material' referred to by the Ld. CIT(A), it is first necessary to understand the meaning of the expression "incriminating material" or evidence. It is noted that there is no definition set out in the Act and therefore meaning of this term has to be discerned from its judicial interpretation made by different judicial forums. We understand that there can be several forms of incriminating material or evidence. In order to constitute an incriminating material or evidence, it is necessary for the AO to establish that the information, document or material, whether tangible or intangible, is of such nature which incriminates or militates against the person in relation to whom it is found. Some common forms of incriminating material are for instance, where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular books or documents maintained in the ordinary course of business, but in such case the AO is not permitted to straightaway treat such material to be 'incriminating' in nature unless the AO thereafter brings on record further corroborative material or evidence to substantiate his suspicion and conclude that the transaction reflected in regular books or documents did not represent the true state of affairs. Until these conditions are satisfied, it cannot be held that every seized material or document or information is incriminating in nature, capable of justifying the additions in unabated assessments. 26. In view of the above legal position, let us now proceed to examine whether the additions/disallowances which the AO made in the orders of the unabated AYs impugned in this appeal was based on or made with reference to any incriminating material/information gathered in the course of search. The Ld. AR appearing on behalf of the assessee society first took us through the queries raised in several notices/requisitions issued by the AO u/s 142(1) of the Act and the final show cause notice dated 27-12-2017 to show that, at no point of time did the AO refer to any incriminating mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y proved that the credits in the accounts held with above mentioned society were unexplained cash credits. In view of this, the expenses claimed by the assessee of Rs. 9.24 crores were treated as unexplained and addition was made on this issue."[ Emphasis given by us] 27. Referring to the above report, the Ld. AR submitted that the only basis of the impugned additions were the enquiries made by the AO through his ITI in light of the details/documents furnished in the course of assessment. He contended that the report of the ITI which was obtained much after the search and in the course of assessment cannot be said to constitute incriminating material unearthed in the course of search. He further submitted that even the report of the ITI suffered from defects and infirmities, which we shall discuss in detail in the subsequent paragraphs. 28. The Ld. AR thereafter submitted that, the Ld. CIT(A) had however made out a completely new case to justify the additions made in the assessment order with purported material found/statements obtained in the course of search, which was not even the case of the AO in the relevant AY. Apart from the above material referred to by the AO, the Ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciety to accommodate the transfer of their monies from one place to another. This report, according to Ld. AR, supported their case in as much as this report did not suggest that additions u/s 68 of the Act was to be made in the hands of the assessee society. Instead, it was the respective members/depositors who were the real beneficiaries of these sums and therefore adverse inference, if any, could have been drawn against these depositors or beneficiaries alone, in their respective income-tax assessments. He showed us that, even the Ld. DDIT(I&CI) had identified some of the entities who were the beneficiaries of these deposits and who had not disclosed these receipts and/or not filed income-tax returns. In order to further fortify the case of the assessee society, the Ld. AR made an application for admission of additional evidence in terms of Rule 29 of the Income-tax Appellate Tribunal Rules, 1963, in which he placed the enquiries made by the assessee society under the RTI Act along with the enquiries made/assessment orders passed in the case of some depositors/members. Referring to these additional evidences, the Ld. AR showed us that, even the Revenue is assessing these cash de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unearthed in the course of search which had led him to make the impugned additions in the unabated AYs 2010-11 & 2011-12. 33. It is noted by us that, the AO had cited the report dated 26-12-2017 furnished by the ITI attached with his office as the basis of the impugned addition. It is apparent from the records that this field enquiry/report was not conducted in the course of search but it was obtained by the AO in the course of assessment proceedings conducted u/s 153A of the Act in the relevant AY. It is observed that, in the course of assessment, the AO had initially requisitioned the details of the account-holders, their KYC documentation and details of deposits. In light of the details & explanations submitted by the assessee and referring to the report of the Ld. DDIT (I&CI) and the statements given by some of the account-holders at Raipur Branch in the course of search, the AO himself initiated suo moto enquiries into three (3) depositors, who according to him, held accounts with the assessee society during the relevant year. As per the report of the ITI, the identity &creditworthiness of these three (3) account-holders were in doubt. The AO, therefore, inferred that the agg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said account and refrained from sharing the details of his personal tax returns. In this regard, the Ld. AR invited our attention to the KYC documentation of Mr. M. I. Siddique which shows that he was a PAN-holder who had furnished his complete personal details to open the account with the assessee society. The Ld. AR, thus submitted that, the averment of Mr. M. I. Siddique that he had only signed some papers was incorrect for the reason that no third party would have been privy to his personal details including his PAN, mobile number, address, photo proof and details of his family members. It is noted that Mr. M. I. Siddique had tacitly admitted that, he held account with assessee society but conspicuously avoided to give the exact details of the account opened and also the details of his personal tax returns. According to Ld. AR therefore these glaring aspects raise suspicion on the personal conduct of Mr. M. I. Siddique rather than that of the assessee society. It is also noted that the ITI had enquired about withdrawal of Rs.95.21 lacs from his bank account held with the assessee society in FY 2009-10/AY 2010-11, but the facts placed before us shows that he had opened his acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had that been done, the correct facts could have been brought on record. The Ld. AR thus submitted that the ITI's action of visiting and making enquiries at the incorrect address cannot be held against the assessee society. 38. The Ld. AR further demonstrated that these members from whom enquiries were made by the ITI had only deposited cash aggregating to Rs.100/- in FY 2009-10 (Rs.1,67,95,633/- in FY 2010-11) and therefore the reliance placed by the AO/Ld. CIT(A) on this report of ITI dated 26.12.2017 of this assessee's case to hold that the entire cash deposits made with the assessee society represented its unaccounted monies to make addition of Rs.577.23 crores u/s 68 of the Act in the relevant AY 2010-11 was completely unjustified. 39. Having regard to the above, we find merit in the submissions of the Ld. AR that not only did the ITI report (supra) not constitute incriminating material found in the course of search but even the findings recorded by the ITI in his report was factually incorrect, irrelevant and flawed and so, AO as well as Ld. CIT(A) erred in relying on it. It is further noted that the AO's action of making enquiries from only 3-4 depositors who had deposite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir hands. 41. It is noted that, the Ld. CIT(A) has first relied upon the statements of the twelve (12) account-holders of the Raipur Branch as the relevant incriminating material which justified the additions made u/s 68 of the Act in these unabated AYs i.e. AY. 2010-11 & 2011-12. In this regard, it is noted by us that, the Raipur Branch was opened by the assessee-society only on 20-06-2014 and that these twelve (12) members had opened their accounts subsequent thereto in FYs 2014-15 & 2015-16. None of these twelve (12) persons held accounts with the assessee-society in the relevant AYs 2010-11 & 2011-12 and therefore these statements per-se had no relevance in these relevant AYs before us. And it is also not in dispute that the Investigating authorities did not make any enquiries from the account-holders who had transacted in FYs 2009-10 & 2010-11. On this score alone, we find merit in the Ld. AR's submission that the Ld. CIT(A)'s reliance upon these statements to justify the impugned additions in the unabated AYs 2010-11 & 2011-12 was factually misplaced and unjustified. And these statements which pertains to AY. 2015-16 & AY. 2016-17 cannot in any manner be termed as incrimin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 of the Act. 44. It is noted that the Ld. CIT(A) had also relied on the findings of the second search action conducted u/s 132 of the Act dated 26.05.2017 to justify the additions made by the AO in these two unabated AYs which were being framed consequent to the first search conducted on 09.02.2016. According to us, the findings, if any, made by the Investigating authorities in the course of second search cannot be said to constitute incriminating material unearthed in the course of first search to justify the additions in the unabated AYs 2010-11 & 2011-12 unless the Ld. CIT(A) was able to find anything from the seized material (during second (2nd ) search) pertaining to AY. 2010-11 & AY. 2011-12 which is not the case of Ld. CIT(A) as per the impugned order. Moreover, we find that the relevant material/ evidence/asset etc. which was subsequently found & seized in the second search dated 26-05-2017 neither forms part of the seized material of the first search nor the assessment records pursuant to which the assessments framed u/s 153A of the Act dated 29-12-2017 for the relevant unabated AYs 2010-11 & 2011-12. Apart from making a sweeping statement that instances of improper KYC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned additions in the unabated AYs 2010-11 & 2011-12 was factually misplaced. 47. Be that as it may, the contents of the report shows that the Ld. DDIT(I&CI) had observed that these account holders were depositing large sums of cash on different dates in the accounts held by them with the assessee society, which was in turn being routed to different firms by way of RTGS who were the ultimate beneficiaries of these deposits and had failed to disclose the same in their respective tax returns. The Ld. DDIT(I&CI) observed that by taking advantage of the absence of reporting liabilities, these societies were being used as a conduit for money laundering. It is therefore noted that, it was not the case of the DDIT(I&CI) that these cash deposits belonged to the assessee or represented its unaccounted monies. Rather, according to the DDIT(I&CI), certain individuals were using the accounts held by members in the assessee society to route their unaccounted monies and the beneficiaries in relation thereto is also noted to have been identified by the DDIT(I&CI). In fact, one of the ten persons viz., Mr. R.A. Shah from whom enquiries were made had admitted that he had not disclosed his acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 09.02.2016 viz., between July 2014 to June 2016 wherein they had time and again requested them to register them with FIU-IND so that they could share the details & information of their members with the concerned Department. He showed us that, it was only vide Circular dated 08-01-2018 that the multi-state cooperative societies were brought within the purview of PMLA Act, 2002 and all multi-state cooperative societies were required to register themselves with the Department. Before us, the Revenue was unable to bring any material on record to controvert the aforesaid submissions of the assessee society. 49. On the overall conspectus of the facts, as discussed in the foregoing, we thus hold that the reasoning given by the Ld. CIT(A) viz., existence of incriminating material & statements against the assessee society, to justify the validity of the additions made in the unabated assessments framed u/s 153A/143(3) of the Act for AY 2010-11 was untenable both on facts and in law. 50. As far as the disallowance of interest & administrative expenses u/s 69C of the Act, it is noted that according to Ld. CIT(A), there was no incriminating material found in the course of search which sugg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unds taken by the assessee on the merits of the additions/disallowances have been rendered academic in nature and is therefore not being separately adjudicated upon. Accordingly, the appeal of the assessee in ITA No.4001/Mum/2019 for AY 2010-11 stands allowed on the legal ground as stated at para 19 (supra). 54. Since the facts and circumstances in the lead case under consideration, being ITA No. 4001/Mum/2019, [for A.Y. 2010-11] is identical to the other unabated AY 2011-12 in ITA No. 4002/Mum/2019, our decision in the case of ITA No. 4001/Mum/2019, for A.Y. 2010-11 of the assessee's appeal shall apply mutatis mutandis to the assessee`s appeal in ITA No. 4002/Mum/2019 for the unabated AY 2011-12. Hence, the appeal of the assessee for the AY 2011-12 also stands allowed in terms of para 19 (supra). 55. In view of our above findings, the appeals of the Revenue in ITA Nos. 3943/Mum/2019 & 3944/Mum/2019 for AYs 2010-11 & 2011-12, respectively, are rendered academic in nature. We therefore dismiss the both of them as infructuous. 56. In the result, the appeals of the assessee for AYs 2010-11 & 2011-12 in ITA Nos. 4001 & 4002/Mum/2019 stands allowed and the corresponding appeals o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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