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TMI Blog2024 (4) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... so far as cash deposits made in Kotak Mahindra Bank on other dates, the Assessing Officer has absolutely no evidence to establish that any close associate or relative of Sh. Rajesh Chawla went to the bank for depositing the cash. In fact, the deposit slips indicating deposit of cash in the bank account of M/s RBPL clearly reveal that they bear signatures of either Sh. Sumit Kumar or Sh. Anmol Goel. None of the close relatives/associates of Sh. Rajesh Chawla were found to have signed the deposit slips recovered from the concerned bank. Surprisingly enough, the AO has chosen not to examine Sh. Sumit Kumar, who had signed most of the deposit slips, or employees of the concerned bank to ascertain the identity of the person who carried cash and deposited in the bank account. Thus, the CCTV footage obtained from the bank only leads to a presumption and does not contain any conclusive evidence to establish that the close relatives and associates of Sh. Rajesh Chawla were carrying demonetized cash for depositing in the bank account of M/s RBP L. It is fairly well settled, presumption howsoever strong cannot be substitute for evidence. No addition can be made purely on the basis of presump ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee cannot be hauled up for the cash deposited in the bank accounts of M/s RBPL by ignoring the statutory mandate of Section 132(4A) r.w.s 292C of the Act. AO should have directed his energy in conducting enquiry with M/s RBPL and with people closely associated with it to ascertain the source of cash deposits in the bank accounts of M/s RBPL. Instead of doing that the Assessing Officer has simply relied upon the statement recorded u/s 132(4) of the Act from Sh. Mohit Goel, who was no way connected with M/s RBPL and is a person of questionable integrity, considering the fact that he was involved in fraud and absconded for a considerable period before being arrested by law enforcement agency. Thus upon considering the totality of facts and circumstances of the case, third member agree with Ld. Accountant Member that the addition a part of which was sustained by Ld. Commissioner (Appeals), cannot be made. Consequently, the alleged commission payment is also unsustainable. Decided in favour of assessee. Additions representing labour expenses and unaccounted/unexplained purchases and unexplained liability - As Accountant Member has not recorded any specific finding on these issues. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account was of a stranger and not related to the assessee ? 3. The question proposed by the Ld. Judicial Member are as under:- 1.) Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in confirming the framing of Assessment Order by the AO dated 29-12-2019 for the Assessment year 2017.18 u/s 143(3) of the Act on the assessee and not under the provisions of Section 153C consequent to search action on 22-12-2016 at the residential premises of Sri. Kapil Kumar and Sri. Ashwini Singla and in the case of Mohit Goel on 23-12-2016 wherein the said Assessment year is not covered within immediately 6 preceding Assessment years (2011-12, 2012-13, 2013-14, 2014-15, 2015-16 and 2016-17) as the date of search is 22-12-2016/23- 12-2016 which falls in F.Y. 2016-17 relevant to A. . 2017-182. 2). Whether on facts and circumstances of the case and in law, if the answer to Question No. 1 is YES, is there any necessity for recording satisfaction u/s 153C of the Income Tax Act relating to framing of assessment for A.Y. 2017-18 in view of amended provision Section 153C of the Act as applicable w.e.f. 01/04/2017 which clearly mandates that the assessment is required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in sustaining the proportionate addition of Rs. 21,63,486/- out of total addition of Rs. 1,52,00,000/- made by Ld. AO in the hands of Assessee on account of commission paid to Mohit Goel u/s 69C read with Section 115 BBE of the Act?. 9). Whether on the facts and circumstances of the case, that the Ld.CIT(A) has erred in law and on facts in sustaining the addition of Rs. 6,65,670/- on account of disallowance of labour charges?. 10). Whether on facts and circumstances of the case, the Ld. CIT(A) justified in sustaining addition of Rs. 1,16,62,097/- on account of unexplained trade creditors and purchaser.? 11). In the facts and circumstances of the case and considering the principle of natural justice, whether the Assessee should have been given an opportunity of cross examining the witnesses by following the recent binding Judgement dated 12-02-2020 of the Hon'ble Supreme Court of India in the case of I.C.D.S. Ltd. Vs. CIT reported in (2020)273 Taxmann 12/194 DTR 18/316 CTR 679 (SC) ? ITA No.61/(DEL)/2021 (AY-2017-18) (Revenue) 1). Whether on facts and circumstances of the case, the Ld. CIT(A) is justified in deleting addition of Rs. 28,14,40,000/- out of total addition of Rs. 32 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mited ( RBPL ) made u/s 69A r.w.s 115BBE of the Act, ought to be deleted in law and on the basis of the facts on record? (ii) Whether on the facts and circumstances of the case, the order of the CIT(A) should be set aside to his file with the direction to give cross-examination of Mohit Goel and CCTV Footage of Kotak Mahindra bank dated 23.11.2016 along with the certificate u/s 65B (4) of the Indian Evidence Act, 1872? (iii) Whether on the facts and circumstances of the case, the grounds challenging the Ld. CIT(A)'s action in sustaining the proportionate addition of Rs. 21,63,486/- and deleting the balance addition of Rs. 1,30,36,514/- out of the total addition of Rs. 1,52,00,000/- made by Ld. AO in the hands of assessee on account of commission paid to Mohit Goel u/s 69C read with Section 1155 BBE of the Act, require to be remitted to the file of the Id. CIT(A)? (iv) Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in law and on facts in sustaining the addition of Rs. 6,65,670/- on account of disallowance of labour charges? (v) Whether on the facts and circumstances of the case, the Ld. CIT(A) justified in sustaining addition of Rs. 1,16,62,097/- on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Parliament has made an amendment under Section 153C of the Act vide Finance Act, 2017 applicable w.e.f 01.04.2017, that six years as per Section 153C would be six years prior to the date of search however the decision passed by the Hon'ble Delhi High Court in RRJ Securities Ltd. (Supra) could not have the occasion to deal with the issue as the satisfaction note in case of RRJ Securities was recorded prior to the amendment? G. Whether on the facts and circumstances of the case and in law, the assessment order can be said to be bad in law when the AO has given the opportunity of cross examination of Mr. Mohit Goel? H. Whether on the facts and circumstances of the case and in law, the matter was rightly remanded to the file of Ld. CIT(A) to decide upon the merits of the case afresh since opportunity to the assessee for the cross examination of Mr. Mohit Goel who could not be located at that time since he was absconding? I. Whether the statement made by Mr. Mohit Goel (erstwhile director of Ringing Bells Pvt. Ltd.) holds the evidentiary value u/s 132(4) of the Act who has the controlling stake in RBPL having shareholding of 40%? J. Whether the statement made by Mr. Anmol Goel ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umar and Sh. Ashwini Singhla, partners of M/s JMK Export. Consequently, a search and seizure operation was also carried out in the residential premises of Sh. Mohit Goel, erstwhile Director of M/s Ringing Bells Private Limited. ( RBPL ) on 23/12/2016. Simultaneously, survey action u/s 133A of the Act was conducted at the business premises of some other entities such as, M/s JMK Exports, M/s. Harrison Diamonds Pvt. Ltd., M/s JMK Jewels Pvt. Ltd. and M/s RBPL. 8. As stated by the Assessing Officer, in course of search and survey operations, large number of incriminating materials including E-mail and SMS conversations amongst parties were found. In course of search and seizure operation conducted in case of Sh. Mohit Goel, statement u/s 132(4) of the Act was recorded wherein he stated that cash deposits amounting to Rs. 32,81,90,000/- made in the bank accounts of RBPL post demonetization, was given to him by Sh. Rajesh Chawala, one of the Directors of M/s D. L. Heera Bhai Jewellery Arcade Pvt. Ltd., the assessee company, for depositing in the bank accounts and thereafter transferring funds to specified bank accounts on commission basis. Based on such statement of Sh. Mohit Goel and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r examining the remand report, submissions of the assessee and other materials on record Ld. First Appellate Authority rejected assessee s submissions on the issue of validity of assessment order passed u/s 143(3) r.w.s 153C of the Act. He held that since the date of recording of satisfaction has to be construed as the date of search and seizure operation as contemplated u/s 153C of the Act, the Assessing Officer was justified in initiating proceedings u/s 153C of the Act and passing the assessment order u/s 143(3) r.w.s. 153C of the Act. On merits, Ld. First Appellate Authority held that the only evidences relied upon by the Assessing Officer are the statement recorded from Sh. Mohit Goel and CCTV footage of Kotak Mahindra Bank. He observed, since Sh. Mohit Goel was not a Director of M/s RBPL either at the time of search or at the time of cash deposits, his statement does not have validity. He further held that since CCTV footage of 23/11/2016 obtained from Kotak Mahindra Bank is the only direct evidence to implicate the assessee, the cash deposits made on 23/11/2016 to the extent of Rs. 4,67,50,000/- can be added u/s 69A of the Act. Accordingly, out of the total additions made of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons carrying the bags nor the Branch Manager were examined. He observed, the SMS messages of Smt. Dharna Goel relied upon by the Assessing Officer is neither sufficient nor conclusive proof that the assessee is owner of the cash found deposited in bank accounts of M/s RBPL. Thus, ultimately he held that simply relying upon the statement recorded from Shri Mohit Goel addition could not be made as he had no locus standi to give such statement in respect of M/s RBPL as he was no longer a Director nor a person of interest of RBPL. He held that in terms of section 132(4A) and 292C of the Act, presumption was required to be drawn against RBPL in whose name the bank accounts exist and also against Shri Mohit Goel who was found in CCTV footage at Kotak Mahindra Bank. Thus, ultimately, he held that on the basis of such inconclusive evidences the addition made cannot be sustained. Accordingly, he deleted the addition made on account of demonetized cash deposits and commission paid thereon. 13. Apparently, Ld. Judicial Member did not agree with the views expressed by Ld. Accountant Member. 14. Firstly, he held that the Assessing Officer has passed the assessment order u/s 143(3) of the Act a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other than the searched person, the date of search has to be reckoned to be the date on which the Assessing Officer receives the books of accounts or documents or assets seized and records his satisfaction note for assumption jurisdiction u/s 153C of the Act. He submitted in the facts of the present case, the Assessing Officer has recorded satisfaction on 24/09/2018, which falls in financial year 2018-19 relevant to assessment year 2019-20. Therefore, he has to initiate proceedings u/s 153C of the Act for six immediately preceding assessment years, commencing from assessment year 2012-13 to assessment year 2017-18. 17. Whereas, he submitted, the Assessing Officer has recorded satisfaction note for Asst. Years 2011-12 to 2016-17. He submitted, for the impugned assessment year, the Assessing Officer has not recorded any satisfaction note in terms of section 153C of the Act. Thus, he submitted, the assessment order passed u/s 143(3) r.w.s 153C of the Act is invalid. He submitted Ld. First Appellate Authority has clearly recorded a finding of fact that the assessment order has been passed u/s 143(3) r.w.s 153C of the Act. He submitted, in absence of grounds raised by the Revenue chall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice u/s 143(2) of the Act and completed the assessment u/s 143(3) of the Act. Thus, he submitted the assessment having been made u/s 143(3) of the Act is valid. In support of his contention learned counsel relied upon a number of judicial precedents furnished before me by way of a separate compilation. 19. I have carefully considered rival submissions and perused the materials on record. I have applied my mind to the decisions relied upon by both the parties. So far as factual aspect of the issue is concerned, there is no dispute that a search and seizure operation u/s 132 of the Act was carried out in case of Sh. Mohit Goel on 23/12/2016. It is the allegation of the Department that in course of such search and seizure operation certain incriminating materials belonging to the assessee were found. It is a fact on record that based on such incriminating material found and seized in course of search and seizure operation in case of Sh. Mohit Goel., the Assessing Officer recorded satisfaction in terms of section 153C(1) of the Act on 24/09/2018 in course of assessment proceeding of Sh. Mohit Goel. 20. Undisputedly, based on such satisfaction note, the Assessing Officer initiated ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n date, the issue is no more res-integra in view of the decision of Hon ble Supreme Court in case of CIT vs. Jasjit Singh, S.L.P No.6644 of 2016 judgment dated 26/09/2023, wherein, the Hon ble Supreme Court agreeing with the view expressed by Hon ble Delhi High Court in the case of SSP Aviation Ltd. vs. Deputy Commissioner of Income Tax, reported in [(2012) 346 ITR 177] held as under:- 9. It is evident on a plain interpretation of Section 153C(1) that the Parliamentary intent to enact the proviso was to cater not merely to the question of abatement but also with regard to the date from which the six year period was to be reckoned, in respect of which the returns were to be filed by the third party (whose premises are not searched and in respect of whom the specific provision under Section 153-C was enacted. The revenue argued that the proviso [to Section 153 (c) (1)] is confined in its application to the question of abatement. 10. This Court is of the opinion that the revenue's argument is insubstantial and without merit. It is quite plausible that without the kind of interpretation which SSP Aviation adopted, the A.O. seized of the materials of the search party, under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Ld. Standing Counsel appearing for the Revenue that assessment order has been passed u/s 143(3) of the Act and the Assessing Officer retains his jurisdiction to make assessment u/s 143(3) of the Act despite the provisions of section 153C, I am not convinced. If the argument advanced by the Revenue is accepted, the provisions of section 153C would become redundant. In the facts of the present appeal, it is the case of the Revenue that assessment for impugned assessment year is based on incriminating material found as a result of search and seizure operation carried out in case of Sh, Mohit Goel. It is also a fact that assessment for the impugned assessment year has abated. Considered from that perspective, the Assessing Officer has to assume jurisdiction u/s 153C of the Act for block of six preceding assessment year prior to assessment year 2019-20, wherein, the satisfaction u/s 153C was recorded. Any other interpretation would lead to a chaotic situation. In view of the aforesaid, I agree with the decision of Ld. Accountant Member on the validity of the assessment order. 26. Having held so it is not necessary to deal with the issues on merits as they have been reduced to mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e edifice of the entire assessment order concerning the addition of Rs. 32,81,90,000/- was founded on the statement recorded from Sh. Mohit Goel on the date of search and CCTV Footage of 23/11/2016 obtained from the Kotak Mahindra Bank, Noida Branch. It is a fact on record that out of the cash deposits of Rs. 32,81,90,000/- in various bank accounts of RBPL, an amount of Rs. 26,15,20,000/- was deposited in Kotak Mahindra Bank and the balance amounts were deposited in three other banks, viz; State Bank of India, Sector-63, Noida, Union Bank of India, Sector-66, Noida and Punjab National Bank, Sector-63, Noida. However, absolutely no enquiry was made by the Assessing Officer with the concerned banks to ascertain the source of cash deposits. The only enquiry conducted by the Assessing Officer was with Kotak Mahindra Bank, Noida Branch and as a result of such enquiry, the Assessing Officer received CCTV footages and number of deposit slips. In the CCTV footage of 23/11/2016, as discussed earlier, some close relatives/associates of Shri Rajesh Chawla were found in the bank along with one of the Directors of M/s RBPL, Sh. Anmol Goel. However, it is not understood how the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el has very clearly stated that he resigned from the directorship of the company on 28/07/2016 and is in no way concerned with the company. He has further stated that he had sold all his shares in the company by May, 2016 and has no control over the company. In fact, as on the date of search the shareholding pattern of M/s RBPL as per the details submitted to Kotak Mohindra Bank is as under:- Mohit Kumar- 40% Anmol Goel- 40% Dipak Gupta (HUF) 20% 31. Thus, when Sh. Mohit Goel had nothing to do with the company as he had resigned from the directorship and sold all his shares in RBPL much prior to the search and seizure operation conducted on 23/12/2016 and even prior to the declaration of demonetization, it is not understood how and why Assessing Officer so heavily relied upon the statement recorded u/s 132(4) of the Act from Sh. Mohit Goel. Though, it may be a fact that Sh. Anmol Goel, one of the directors has also stated in his statement recorded u/s 132(4) of the Act that cash to the tune of Rs. 30 Crores was received from Sh. Rajesh Chawla was deposited in the bank accounts of M/s RBPL post demonetize, however, the statement recorded cannot be taken on its face value as there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cash was received from Sh. Rajesh Chawal. He has also not furnished the details as to how cash received by him was deposited by Sh. Sumit Kumar and Sh. Anmol Goel and Sh. Mohit Kumar. (iv) Each cash deposit in Kotak Mahindra Bank Account of RBPL aggregating to Rs. 26.15 Crores was accompanied by declaration of M/s RBPL stating that the cash deposited has been received from sale of membership of loyalty card. (v) The CCTV footages of Kotak Mahindra Bank was obtained for entire month of November, 2016. However, except 23/11/2016, the CCTV footages of other days do not show cash being brought and deposited by the assessee or persons closely associated with it. (vi) SMS conversations of Mrs. Dharma Goel wife of Sh. Mohit Goel are very brief and no reasonable conclusion can be arrived at. Therefore, do not constitute conclusive proof that cash deposited in the bank account of M/s RBPL were given by the assessee. (vii) The Assessing Officer has not brought on record any evidence to show how the assessee has benefited from cash deposit in bank accounts of M/s RBPL. There is no evidence to show that the cash deposited flowed back to the assessee. 34. The aforesaid finding of facts rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gorically stated that they had gone to the bank to deliver 2-3 kg gold bullion to Sh. Anmol Goel, one of the Directors of M/s RBPL and delivered the gold in parking of Kotak Mahindra Bank branch. However, since Sh. Anmol Goel was alone carrying cash, he requested them to accompany him with cash inside the branch. The aforesaid statement recorded from Sh. Manpreet Singh, driver of Sh. Rajesh Chawla, clearly corroborates the initial statement recorded from Sh. Rajesh Chawla regarding the cash deposits. 37. Surprisingly enough, the Assessing Officer has consciously avoided any reference to the statement recorded from Sh. Manpreet Singh, driver of Sh. Rajesh Chawla, who is a direct witness to the cash deposits on 23/11/2016. This could be possibly for the reason that any reference to the statement recorded from Sh. Manpreet Singh would have diluted the case of the Assessing Officer. Thus, on appreciation of materials on record, I am of the considered opinion that the addition made of Rs. 32,81,00,000/- at the hands of the assessee is purely on conjectures and surmises rather than based on cogent evidence. In fact, Ld. First Appellate Authority, on appreciation of facts and materials av ..... X X X X Extracts X X X X X X X X Extracts X X X X
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