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TMI Blog2023 (7) TMI 1261X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Corporation [ 2015 (5) TMI 656 - BOMBAY HIGH COURT] - additions cannot be sustained on the legal ground of no incriminating material. Unexplained cash credit - As submitted that additions which are in respect of same party for same deposit, but made once under credit in bank account and secondly under unexplained cash credit in books of account, same might be eliminated - HELD THAT:- We are of the opinion that addition could not be made twice for the same entry of the deposit, once, appearing in the bank statement and secondly appearing in the books of accounts of the assessee and similar is the situation in respect of cash deposit in bank account. The Assessing Officer shall verify the contention of the assessee and accordingly take appropriate action in accordance with law. - ITA Nos. 4381 to 4387/MUM/2018 - - - Dated:- 31-5-2023 - SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAHUL CHAUDHARY (JUDICIAL MEMBER) For the Assessee by : Mr. Nilesh Joshi For the Revenue by : Mr. Neehar Ranjan Pandey, CIT-DR ORDER PER BENCH These appeals by the assessee are directed against separate orders, each dated 02.02.2018, passed by the Ld. Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been increased by the Assessing Officer to 0.75 percentile of fund moved. 3.1 The assessee filed appeals before the ld CIT(A) and challenged various additions on merit. The assessee also challenged validity of proceedings u/s 153A on the ground, firstly, that no warrant was issued in the case of the assessee. This contention of the assessee has been rejected by the Ld CIT(A) and in the impugned order, he has duly referred the warrant and panchnamas prepared in the name of the assessee. Secondly, the assessee challenged that no incriminating material was found or seized in the case of assessee qua the additions made, hence no addition could have been made in case of unabated assessment years, relying on the decision of the Hon ble Bombay High Court in the case of CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd [58 taxmann.com 78] (Bombay HC). The ld. CIT(A), however rejected this challenge of the assessee and held that various material has been found in the search of the group cases, which are incriminating in the nature, hence, no relief was granted relying the ratio of hon ble Jurisdictional High Court in the case of Continental warehousing Corporation (supra). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of assessee, search has been conducted on 24.09.2013. There is no dispute between the parties on the fact that no assessments were pending either u/s 143(2) or u/s 147 of or any other section as on the date of search in relation to assessment years under reference, so the question of abatement has to be examined as to whether the limitation for issue of notice u/s 143(2) was available on the date of search qua each assessment year. Under the provisions of the Act, the limitation for issue of notice u/s 143(2) for each of the assessment year has been provided, which is summarised in below table: AY Due date of filing return of income in salary case of assessee Expiry of Limitation for issue of notice u/s 143(2) of the Act in the case of assessee 08-09 31/07/2008 30/09/2009 09-10 31/07/2009 30/09/2010 10-11 31/07/2010 30/09/2011 11-12 31/07/2011 30/09/2012 12-13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eet netting off the loans. The learned Commissioner of Income Tax (Appeals) has given a partial relief and sustained addition of Rs. 1,14,22,000/-. 4. This is the year of unabated assessment, hence, as held in the case of Continental ware housing corporation (supra), addition could have been made only on the basis of any incriminating material found during the course of search in the case of the assessee. As far as the issue of no incriminating material qua the addition is concerned, the Ld. CIT(A) has observed as under: 4.4 I am unable to accept the appellant's aforesaid plea, because this is not a case where no incriminating material was found during the course of search. As regards the issue of abatement of assessment, it is noticed that there was no prior assessment us. 143(3) in this case. The return was only processed u/s. 143(1). As such, the Assessing Officer can look at all the issues while framing the assessment order and is not constrained by only the issues arising from the findings of the search action. As regards the claim that there was no incriminating documents found in the course of search, the facts are entirely different. Shri Kannan K. Vishwanath ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Hon'ble Delhi High Court in the case of CIT v. Anil Kumar Bhatia 352 IT 493 (Del) wherein on similar facts, action of the Assessing Officer in invoking the provisions of section 153A of the Act and making additions on various grounds was upheld. In that case, the A.Ys. involved were 2000-01 and 2002-03 to 2006-07. During the course of search, a written undertaking of loan of Rs. 1,50,000/- dated 10.02.2003 given by the assessee in that case to a lady had been recovered pertaining to A.Y. 2003-04. In A.Ys. 2001-02 and 2002-03 and even subsequent years, the Assessing Officer had made additions on account of unexplained deposit, agricultural income and unexplained gift. After considering the legal provisions as well as the new scheme of post search block assessments introduced w.e.f. 01.06.2003, the Hon'ble High Court held that the Tribunal was not justified in holding that no addition could be made for agricultural income, gift received and unexplained deposits as stated above on the ground that in respect of these additions, no material was found during the search carried out us. 132 and also on the ground that for all the A.Ys. under consideration, the returns filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the assessee, which cannot be treated as incriminating material as same are part of the regular books of accounts of the assessee. Sixthly, the Ld. CIT(A) has referred to documents of unaccounted transactions of the assessee with M/s All Ammar Developers, however, neither any reference of particular seized material has been made nor any addition has been made by the AO on the basis of the said seized material in the case of the assessee. Thus, the finding of ld CIT(A) reproduced above is factually incorrect to hold existence of incriminating material. 4.2 Now, examine reference of any seized material in additions made by the Assessing. We find that in assessment year 2008-09, the Assessing Officer has made three additions. Firstly, the addition of Rs. 12,16,39,728/- u/s 68 of the Act on the basis of credit entries of the bank accounts maintained with Canara bank i.e. a saving bank account No. 0232101101571 and another current account No. 0232201002250. The Assessing Officer held that the entire credit entries of those bank accounts as unexplained u/s 68 of the Act. The relevant finding of the Assessing Officer is reproduced as under: 6.5 During the course of assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed. 4.4 During the course of hearing before us, the Ld. Departmental Representative (DR) was specifically asked to refer and the produce the incriminating material qua this addition of unexplained credit into bank accounts. The Ld. DR despite providing sufficient time of more than one month, he failed to produce or link the addition with the any incriminating material. We may note that neither the Assessing Officer nor the ld. CIT(A) has specifically linked this addition with any incriminating material found and seized during the course of search, therefore, in absence of any incriminating material qua this addition, same cannot be sustained. The ground No. 2 of the appeal is accordingly allowed. 5. The ground No. 3 of the appeal relates to the addition of Rs. 13,38,000/-, which was wrongly mentioned by the Assessing Officer at Rs. 48,72,000/-. Before us the Ld. Counsel of the assessee submitted that Ld. CIT(A) has already directed the Ld. AO for deleting the double addition of cash deposit and the ld AO has accordingly allowed relief, so the assessee was not aggrieved qua the ground, hence ground was not pressed before us. The ground No. 3 is accordingly dismissed. 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,07,186 /- was supported by the confirmations filed by the appellant. The AO did not carry out any independent verification of these unsecured loans. Thus, there is no basis to reject the subsequent submissions and make the addition based on the initial submission when the same is not in the form of an audited balance sheet. Further, as regards the amount of Rs. 1,89,07,186/-, as per the appellant, this comprises of an amount of Rs. 1,14,22,000/- from Tirumala Corporation and Rs. 74,85,186/- from Shree Ganesh Enterprises. In the case of Shree Ganesh Enterprises total credits received is Rs. 9,37,49,875/- and after accounting for the journal entries, including that for sales of Rs. 8,62,64,689/-, the closing balance is shown as Rs. 74,85,186/-. The AO has taken only the closing balance as the unexplained cash credit. It is further noted that the credit of Rs. 9,37,49,875/- is reflected as credits in the current a/c of the appellant with Canara Bank. The total amount of credits appearing in the bank statements with Canara Bank has already been added us. 68 by the Assessing Officer. Thus, to that extent, any addition in respect of unsecured loans from Shree Ganesh Enterprises amounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in upholding the addition on merits subject to quantum being re-verified. 3. The learned Assessing Officer erred in making addition of the cash deposits in bank account of Rs. 1,50,000/- u/s 68 of the Act. The learned Assessing Officer failed to appreciate that the source of cash deposits and withdrawals was submitted. The learned Commissioner of Income Tax (Appeals) has erred in upholding the addition on merits which forms part of the addition made in Ground No. 2 mentioned herein above. 4. The learned Assessing Officer has erred in making addition of the unsecured loans us 68 of the Act of Rs. 6,75,26,716/-. The learned Assessing Officer failed to appreciate that the appellant had submitted a revised Balance Sheet netting off the loans. The learned Commissioner of Income Tax (Appeals) has erred in sustaining the addition while restricting the addition to Rs. 1,37,10,619/-. 5. The learned Commissioner of Income Tax (Appeals) has erred in enhancing the income of the appellant by Rs. 39,800/- on account of credit in the HDFC Bank account of the appellant. 7.1 In AY 2009-10, the ground Nos. 1 to 4 are identical to ground nos. 1 to 4 for AY 2008-09, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Assessing Officer has erred in taxing the deposits in Axis Bank accounts amounting to Rs. 9,44,99,000/- u/s 68 of the Act. The learned Assessing Officer failed to appreciate that the source of the deposits was explained. 4. The learned Assessing Officer has erred in taxing the unexplained income out of circular fund movements amounting to Rs. 7,26,000/. The learned Assessing Officer ought to have accepted the disclosure made by the appellant of 0.5%. 5. The learned Assessing Officer has erred in making addition of the unsecured loans us 68 of the Act of Rs. 29,54,95,384/-. The learned Assessing Officer failed to appreciate that the appellant had submitted a revised Balance Sheet netting off the loans. The learned Commissioner of Income Tax (Appeals) has erred in sustaining the addition while restricting the amount to Rs. 3,35,98,005/- subject to re-verification of quantum. 9.1 Before us the Ld. Counsel submitted that the Ground No. 4 of the appeal was not pressed by the assessee, therefore, same is dismissed as infructuous. The other ground Nos. 1to 3 and 5 are identical to ground Nos. 1 to 4 of the appeal for Ay 2008-09, therefore, same are decided mutatis mutand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. In respect of other grounds, before us, the Ld. Counsel of the assessee has filed additional evidences in the form of confirmation, detailed address ledger accounts etc. in respect of credits appearing in the bank statements. The ld. Counsel submitted that no reasonable opportunity was granted by the lower authorities for producing those evidences, therefore same might be admitted and matter might be restored back to the ld. AO for deciding afresh. 11.1 We have heard rival submissions of the parties on the issue in dispute. Since, the additional evidences go to the root of the matter, therefore we feel it appropriate to restore the respective grounds raised in assessment year 2012-13 to 2014-15 to the file of the Ld. Assessing Officer for deciding afresh. Before us, the Ld. Counsel of the assessee has submitted that the Assessing officer held the entire credits in the bank statement as unexplained, and also made separate additions for the cash deposits in the bank statement and unexplained cash credit for the parties, which are already reflecting in the bank statement. Accordingly, he submitted that additions which are in respect of same party for same deposit, but made once ..... 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