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TMI Blog2024 (12) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... 6) TMI 29 - DELHI HIGH COURT] in favour of the assessee. Further the issue in dispute is also squarely covered in favour of the assessee by the orders of Khoday Ehshwarsa and Sons [ 2024 (9) TMI 1660 - ITAT BANGALORE] . and in the case of Sanjay Duggal and Others [ 2021 (1) TMI 909 - ITAT DELHI] and in the case of Quality Structure Pvt. Ltd.[ 2024 (9) TMI 1661 - ITAT LUCKNOW] In view of the foregoing, we set aside the impugned appellate orders of learned CIT(A) deserve to be set aside; and the assessment orders passed by the Assessing Officer deserve to be annulled. Additions made in absence of incriminating material - Following the order of Hon'ble Supreme Court in the case of Pr. CIT vs. Abhisar Buildwell (P) Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] no additions could be made in the assessment orders passed by the AO in the aforesaid assessment orders. Accordingly, the additions made in the aforesaid assessment orders deserve to be deleted. - Shri Anadee Nath Misshra, Accountant Member And Shri Subhash Malguria, Judicial Member For the Appellant : Shri Ashish Jaiswal, Advocate For the Respondent : Smt. Namita S. Pandey CIT (D.R.) ORDER PER BENCH: (A) These appeals, filed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and bad in law as without valid and lawful approval u/s. 153D of the Income Tax Act, 1961. 5. That the Ld. CIT (A) has erred in confirming addition of Rs. 5,60,000/- on a account of unexplained share application money received us. 68 of the Income Tax Act, 1961. 6. That the assessment completed by learned assessing officer is arbitrary, prejudicial and unlawful. 7. That the learned assessing officer has erred in not providing proper and adequate opportunity to the appellant. I.T.A. No.42/Lkw/2022 1. That the notice issued and assessment completed under section 153A of the act is invalid and unlawful being without jurisdiction. 2. That the learned assessing officer has erred in invoking section 153A of the Income Tax Act, 1961. 3. That the learned assessing officer has erred in making addition arbitrarily without any relevance or nexus to the seized material. 4. That the assessment order passed by Ld. AO is without jurisdiction and bad in law as without valid and lawful approval u/s. 153D of the Income Tax Act, 1961. 5. That the Ld. CIT (A) has erred in confirming addition of Rs. 26,70,000/- on a account of unexplained share application money received us. 68 of the Income Tax Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proval u/s. 153D of the Income Tax Act, 1961. 2. That the Ld. CIT (A) as well as Assessing Officer has erred in confirming addition of Rs. 80,70,000/- on a account of alleged unexplained money. 6. That the assessment completed by learned assessing officer is arbitrary, prejudicial and unlawful as no addition can be made merely on doubt or presumption without bringing any positive evidences. 7. That the learned assessing officer has erred in not providing proper and adequate opportunity to the appellant. I.T.A. No.46/Lkw/2022 1. That the notice issued and assessment completed under section 153A of the act is invalid and unlawful being without jurisdiction. 2. That the learned assessing officer has erred in invoking section 153A of the Income Tax Act, 1961. 3. That the learned assessing officer has erred in making addition arbitrarily without any relevance or nexus to the seized material. 4. That the assessment order passed by Ld. AO is without jurisdiction and bad in law as without valid and lawful approval u/s. 153D of the Income Tax Act, 1961. 5. That the Ld. CIT (A) has erred in confirming addition of Rs. 21,64,000/- on a account of unexplained share application money received us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned assessing officer has erred in making addition arbitrarily without any relevance or nexus to the seized material. 4. That the assessment order passed by Ld. AO is without jurisdiction and bad in law as without valid and lawful approval u/s. 153D of the Income Tax Act, 1961. 5. That the Ld. CIT (A) has erred in confirming addition of Rs. 38,30,000/- on a account of unexplained share application money received us. 68 of the Income Tax Act, 1961. 6. That the assessment completed by learned assessing officer is arbitrary, prejudicial and unlawful. 7. That the learned assessing officer has erred in not providing proper and adequate opportunity to the appellant. I.T.A. No.50/Lkw/2022 1. That the notice issued and assessment completed under section 153A of the act is invalid and unlawful being without jurisdiction. 2. That the learned assessing officer has erred in invoking section 153A of the Income Tax Act, 1961. 3. That the learned assessing officer has erred in making addition arbitrarily without any relevance or nexus to the seized material. 4. That the assessment order passed by Ld. AO is without jurisdiction and bad in law as without valid and lawful approval u/s. 153D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment order passed by the Assessing Officer is without jurisdiction and bad in law and without valid and lawful approval u/s 153D of the IT Act. 2. That the learned CIT(A) as well as Assessing Officer has erred in making addition of Rs. 3,52,40,000/- on account of profit on sale of poultry feed (MBM). 3. That the assessment completed by learned Assessing Officer is arbitrary, prejudicial and unlawful as no addition can be made merely on doubt or presumption without any bringing any positive evidences. 4. That the learned assessing officer has erred in not providing proper and adequate opportunity to the appellant. I.T.A. No.54/Lkw/2022 1. That the notice issued and assessment completed under section 153A of the act is invalid and unlawful being without jurisdiction. 2. That the learned assessing officer has erred in invoking section 153A of the Income Tax Act, 1961. 3. That the learned assessing officer has erred in making addition arbitrarily without any relevance or nexus to the seized material. 4. That the assessment order passed by Ld. AO is without jurisdiction and bad in law as without valid and lawful approval u/s. 153D of the Income Tax Act, 1961. 5. That the Ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. That the notice issued and assessment completed under section 153A of the act is invalid and unlawful being without jurisdiction. 2. That the learned assessing officer has erred in invoking section 153A of the Income Tax Act, 1961. 3. That the learned assessing officer has erred in making addition arbitrarily without any relevance or nexus to the seized material. 4. That the assessment order passed by Ld. AO is without jurisdiction and bad in law as without valid and lawful approval u/s. 153D of the Income Tax Act, 1961. 5. That the Ld. CIT (A) has erred in confirming addition of Rs. 8,90,000/- on a account of unsecured loan us. 68 of the Income Tax Act, 1961. 6. That the Ld. CIT (A) has erred in confirming disallowance on account of interest on unsecured loan of Rs. 1,71,382/-. 7. That the assessment completed by learned assessing officer is arbitrary, prejudicial and unlawful. 8. That the learned assessing officer has erred in not providing proper and adequate opportunity to the appellant. I.T.A. No.58/Lkw/2022 1. That the notice issued and assessment completed under section 153A of the act is invalid and unlawful being without jurisdiction. 2. That the learned assessing offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material: -Saroj Sudhir Kothari dated 7th August, 2023 -M/s King Buildcon (P) Ltd. dated 10th July 2023 -M/s Jay Ambey Aromatics dated 24th November, 2023 -M/s Abhisar Buildwell (P) Ltd. dated 24th April, 2023 3. Copy of decisions of Hon'ble High Court where the courts have held that statement under section 132(4) of the Act does not constitute incriminating material found during the course of search: -Shiv Kumar Agarwal (Del. HC) dated 28th July, 2022 -Anand Kumar Jain (Del. HC) dated 12th February, 2021 -Best Infrastructure (India) (P) Ltd. dated 1st August, 2017 -Divya Exim (P) Ltd. dated 15th January, 2023 4. Copy of statement of Sachin Verma recorded under section 132(4) of the Act, dated 12/01/2018 5. Copy of tabular chart containing details of approval of case by Additional CIT (Central), Kanpur along with approval letters 6. Copy of decisions on the issue of statutory approval by Addl. CIT under section 153D of the Act: -Subodh Agarwal (All. HC) dated 12th December 2022 -M/s Khoday Ehshwarsa and Sons (Bang. Trib.) dated 30th September, 2024 -M/s Quality Structures Pvt. Ltd. (Lko.Trib.) dt. 30th September 2024 -Navin Jain Others (Lko.Trib.) dt. 3rd August 2021 7. Copy o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sionin the case of : Standard Frozen Foods Export Pvt Lt - ITSSA 41-44/Lkw/2022 for AY 2012-13, AY 2013-14, AY 2016-17 AY 2017-18 and ITA 45/Lkw/2022 for AY 2018-19 Standard Agro Vet Pvt Ltd- ITSSA 46-49/Lkw/2022 for AY 2012-13, AY 2013-14, AY 2014-15 and AY 2015-16 Kamal Kant Verma- ITSSA 50-52/Lkw/2022 for AY 2015-16, AY 2016-17 AY 2017-18 and ITA 53/lKw/2022 for AY 2018-19 Sachin Verma- ITSSA 54-58/Lkw/2022 for AY 2012-13, AY 2014-15, AY 2015-16, AY 2016-17 AY 2017-18 and ITA 59/Lkw/2022 for AY 2018-19 In connection to the above, the appellant humbly submits before your honour as under: 1. That the search and seizure operation u/s 132 was carried out on 10.01.2018 in the Rustom Foods Group of cases alongwith the appellant group of cases u/s 132 of the IT Act, 1961. The case was centralized u/s 127 dated 28.06.2018 to DCIT, Central Circle-2, Kanpur. Consequent to search and centralization of cases, search assessment proceeding was initiated by DCIT, CC-2, Kanpur by issuing notice u/s 153A/143(2) of the Act dated 12.07.2019 and 28.08.2019 respectively whereas the questionnaire was issued u/s 142(1) dated 09.09.2019 for compliance on 24.09.2019 and subsequently the search assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consisting of 15 cases (appellant cases from sl. no. 6 to 15). (Pg 83 and 80 of PB Vol- 1) Draft Assessment Order sent by AO for approval to Addl.CIT at the fag end of assessment proceeding on 26.12.2019 and 28.12.20219 getting barred on 31.12.2019 Addl.CIT failed to discharge mandatory and statutory obligation to protect appellant/assessee from arbitrary or unjust exercise of discretion by AO and failure to provide fair search assessment being the very intention and purpose of section 153D statutory approval introduced by legislature in its wisdom to cast obligation upon JCIT in search assessment for the following reasons in the case of appellant: - Mistake committed and accepted by AO :- Subsequent to search assessment, petitions were filed for rectification of orders, which were also rectified u/s 154. Meaning thereby that the ld.AO accepted the mistake committed in making addition in the search assessment order (No. of Cases rectified u/s 154 7 Search Assessment Orders.)- Page 164-179 of PB Vol-1 - Undue and unjust discretion by AO: Notice was issued on 23/12/2019 for compliance on 24/12/2019 as show-cause notice for the first time on the issue of certain cash payment of Rs. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 28.12.2019 for completion of assessment proceeding getting time barred on 31.12.2019. Reliance is placed upon Jurisdictional Allahabad High Court in the case of PCIT vs. Subodh Agarwal, ITA 86 of 2022 dated 12.12.2022, recent decision in the case of KhodayEhshwarsa and Sons vs. DCIT, ITA 1079 1080/Bang/2024 dated 20.09.2024, I.T.A. No.1813/Del/2019 in the case of Sanjay Duggal and Others and Hon ble Lucknow Tribunal in the case of Quality Structure Pvt Ltd. vs. DCIT, CC-2, Kanpur, ITSSA 679 680/Lkw/2019 dated 30.09.2024. ISSUE OF ASSESSMENT FRAMED U/S 153A IN ABSENCE OF INCRIMINATING MATERIAL: That the search conducted u/s 132 of the Income Tax Act, 1961 on 10.01.2018 and the search assessment was completed u/s 153A for the AY 2012-13 to AY 2017-18. No notice or assessment proceeding was pending on the date of search i.e. 10.01.2018 which is also apparent from the assessment order itself. No incriminating material found and seized during search, also apparent from the assessment order. Reliance is placed upon Principal Commissioner of Income-tax, Central-3 v. AbhisarBuildwell (P.) Ltd. [2023] 454 ITR 212 (SC)and also in the following decisions subsequent to AbhisarBuildwell, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 384 dated 12.02.2021, Best Infrastructure India (P.) Ltd [2017] 397 ITR 82 (Delhi) and recent decision in the case of Dviya Exim (P) Ltd v. DCIT, ITA 7442, 5952 5957 (Delhi) of 2018 dated 15.01.2024in which the Hon ble Court held that no addition can be made in absence of incriminating material found during search on the basis of statement recorded u/s 132(4) of the IT Act, 1961. In view of above, the appellant prays and request before your honour to quash the assessment order framed unlawfully and in violation to provision of law and settled judicial precedents or appropriate relief as deem fit in the interest of justice to the appellant. I. ASSESSMENT ORDER IS ILLEGAL AND WITHOUT JURISDICTION AS THE APPROVAL REQUIRED U/S 153D OF THE ADDL.CIT, CENTRAL IS MECHANICAL AND WITHOUT APPLICATION OF MIND IN VIOLATION OF REQUIREMENT U/S 153D: 4. That the appellant humbly submits before your honour that there has been no application of mind by the approving authority and the approval givenis purely mechanical for the sake of administrative approval for completion of assessment at the fag end of assessment proceeding for the following reasons: Firstly, that the approval has been given to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the JCIT to protect the taxpayer against arbitrary or unjust exercise of discretion by the AO. 5. Now, the appellant humbly submits before your honour that before going to legal issue involved, it is important to understand the background of the assessment and its relevant timelines in which assessment proceeding has been conducted and completed by the ld.AO and approved by the ld.Addl.CIT. That the search and seizure operation u/s 132 was carried out on 10.01.2018 in Rustom Foods Group of cases alongwith the appellant group of cases. That the search assessment proceeding was initiated by DCIT, CC-2, Kanpur by issuing notice u/s 153A and 143(2) of the Act dated 12.07.2019 and 28.08.2019 respectively whereas the questionnaire was issued u/s 142(1) dated 09.09.2019 for compliance on 24.09.2019 and the assessment proceeding was completed u/s 153A vide order dated 29.12.2019 with mechanical approval of Addl.CIT, Central Circle, Kanpur vide approval no. 1488 and 1490. Therefore, from the above, it is clear that the time frame available to the appellant and ld.AO for compliance by the appellant and inquiry before assessment u/s 142(1) and completion of assessment u/s 153A with approval ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 110 cases were approved on the same day or the next day at the fag end of assessment proceeding without application of mind for the sake of administrative approval for completion of assessment. 7. The appellant from the above humbly submits before your honour that the provision of section 153D has been specifically incorporated in the Statute and made mandatory in the process of completion of search assessment for the approval to be given by the JCIT as statutory obligation casted upon any statutory authority which is JCIT in the present case required to discharge its obligation not mechanically, not even formally but after due application of mind. Thus, the obligation of granting Approval acts as an inbuilt protection to the taxpayer against arbitrary or unjust exercise of discretion by the AO, which in the present the ld.JCIT has failed to do so as apparent from the above that the ld.AO has completed the search assessment of whole group in short period of three months without conducting any inquiry and providing cross examination to the appellant before making any addition even though requested by the appellant and on this count as well as legal requirement the Addl.CITfailed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner or] Commissioner under sub-section (12) of section 144BA. 11. That the approval granted by the JCIT as required u/s 153D has been granted mechanically by the approving authority only for the sake of formality as being one of the mandatory requirement before completion of search assessment u/s 153A at the fag end of assessment proceeding getting barred on 31.12.2019 as the same has been given by common approval letter for multiple assessee and assessment years which is contrary and violative of mandatory requirement of law u/s 153D for giving approval for each assessment year with application of mind and not by way of formality in the form of common approval letter for multiple assessee s mechanically without application of mind. 12. Moreover, the approval has been granted by the Addl.CIT to 110 cases in two days i.e. 48 approvals on 27.12.2019 and 62 approvals on 28.12.2019 by way of common approvals among which the approval of appellant case has also given vide approval no. 1488 and 1490 appearing at page 80 83 of the PB Vol-1alongwith other approvals at page 76-84of the PB Vol-1. 13. This mandatory provision u/s 153D for each assessment year is parimateria to the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be treated as a mere empty formality. If the approval is granted by the superior authorities in a mechanical manner without application of mind then the very purpose of obtaining approval is defeated. The power to grant approval is not to be exercised casually and in a routine manner and further, the concerned authority, while granting approval, is expected to examine the entire material before approving the assessment order. It has also been laid down that whenever any statutory obligation is cast upon any authority, such authority is legally required to discharge the obligation by application of mind. At this juncture, it is pertinent to mention that the Hon ble Apex Court in the case of Sahara India (Firm) v. CIT Anr. (2008) 216 CTR (SC) 303 : (2008) 7 DTR (SC) 27 : (2008) 300 ITR 403 (SC) , while discussing the requirement of prior approval of Chief Commissioner or Commissioner in terms of provision of section 142(2A) of the Act, opined that the requirement of previous approval of the Chief Commissioner or Commissioner in terms of said provision being inbuilt protection against the arbitrary or unjust exercise of power by the assessing officer, casts a very heavy duty on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ole ground of defect in the approval to the draft assessment order granted by the competent Approving Authority. Learned counsel for the Assessee, however, defended the order of the tribunal for the reasoning given therein. 9. Considering the submissions of the learned counsel for the parties and having perused the order of the Tribunal, in view of the undisputed facts before us about the manner in which the approval to the draft assessment order was granted under section 153D for the assessment proceedings, by a letter dated 31-12-2017 in 38 cases placed before the approving authority in a single day, we are required to examine as to whether a substantial question of law arises for consideration before us so as to admit the present appeal. To answer the same, we are required to go through the relevant provisions of the Income-tax Act. Section 132 provides the procedure for search and seizure operations in consequence of the information in possession of the Income-tax Authorities. Section 153A prescribes assessment in case of search or requisition. Section 153A provides that in the case of a person where a search is initiated under section 132, the Assessing Officer shall issue not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exhaustive discussion on the requirement of prior approval under section 153D of the Act and it was noted that the requirement of approval cannot be treated as mere formality and the mandate of the Act that the Approving Authority has to act in a judicious manner by due application of mind in a manner of a quasi judicial authority, has been considered. 12. It was held therein that if an approval has been granted by the Approving Authority in a mechanical manner without application of mind then the very purpose of obtaining approval under section 153D of the Act and mandate of the enactment by the legislature will be defeated. For granting approval under section 153D of the Act, the Approving Authority shall have to apply independent mind to the material on record for each assessment year in respect of each assessee separately. The words 'each assessment year' used in sections 153D and 153A have been considered to hold that effective and proper meaning has to be given so that underlying legislative intent as per scheme of assessment of sections 153A to 153D is fulfilled. It was held that the approval as contemplated under 153D of the Act, requires the approving authority, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... previous approval of the Chief Commissioner or Commissioner in terms of the said provision being an in-built protection against arbitrary or unjust exercise of power by the Assessing Officer casts a very heavy duty on the said high ranking authority to see that the approval envisaged in the section is not turned into an empty ritual. The Apex Court has held therein that the approval must be granted only on the basis of material available on record and the approval must reflect the application of mind to the facts of the case. The above discussion made in the judgement of Tribunal dated 3-8-2021 in the case of Navin Jain (supra) has been relied by the Tribunal, in the instant case, to arrive at the conclusion that the mechanical approval under section 153D of the Act would vitiate the entire proceedings in the instant case. 17. For the reasoning given in the case of Navin Jain (supra), as extracted in the impugned order passed by the Tribunal, as noted above, there cannot be any two opinion to the requirement of prior approval of the Joint Commissioner to the draft assessment order prepared by the Assessing Officer, as per the mandate of section 153D of the Income tax Act. 18. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case, the draft assessment order in 38 cases, i.e. for 38 assessment years placed before the Approving Authority on 31-12-2017 was approved on same day i.e. 31-12-2017, which not only included the cases of respondent-assessee but the cases of other groups as well. It is humanly impossible to go through the records of 38 cases in one day to apply independent mind to appraise the material before the Approving Authority. The conclusion drawn by the Tribunal that it was a mechanical exercise of power, therefore, cannot be said to be perverse or contrary to the material on record. 21. As the facts are admitted before us, the questions of law framed on the factual issues related to the findings recorded by the Assessing Officer are not open to agitate within the scope of the present appeal being in the nature of second appeal. No substantial question of law arises for consideration before us. 22. The Appeal is dismissed being devoid of merit. 17. Reliance is placed upon the decision of KhodayEhshwarsa and Sons vs. DCIT, ITA 1079 1080/Bang/2024 dated 20.09.2024 where the Hon ble Tribunal observed and held that all the draft orders involving 6 assessment years i.e. assessment years 2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the I.T. Act, there should be a search initiated under section 132 of the I.T. Act and panchanama drawn, the A.O. shall have to issue notice to the assessee requiring him to furnish the return of income within the specified time in respect of each assessment year falling within six assessment years. The A.O. shall assess or re-assess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Provided that the A.O. shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. It is further provided that assessment or re-assessment, if any, relevant to any assessment year falling within the period of six assessment years referred to in this Section pending on the date of initiation of the search under section 132 or making of requisition under section 132A as the case may be, shall abated. Thus, when provisions of Section 153A are applicable in a case of assessee, A.O. shall have to give separate notice of each assessment year and assessee shall have to be directed to file return of income for each year and separate o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JCIT in respect of each assessment year referred to under section 153A or 153B shall have to be obtained. Thus, no order of assessment or re-assessment shall be passed by the A.O. in the present cases in respect of each assessment years under section 153A/153B of the I.T. Act, 1961, except with the prior approval of the Joint Commissioner. Learned Counsel for the Assessee has argued that the approval under section 153D have been granted by the JCIT without going through the seized material, appraisal report and other material on record. Thus, the approval is granted in a most mechanical manner and without application of mind. Therefore, same is invalid, bad in Law and void ab initio and as such all assessments under section 153A got vitiated and as such A.O. was not having jurisdiction to pass the assessment orders under section 153A of the I.T. Act, 1961. 11.2. The meaning of the word Approval as defined in Black Law Dictionary is The Act of confirming, rectifying, sanctioning or consenting to some act or thing done by another. To approve means to be satisfied with, to confirm, rectify, sanction or 'consent to some act or thing done by another, to consent officially, to rectif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions/comments in the appraisal report, the seized documents and further enquiries made by the A.O. during the course of assessment proceedings. Therefore, necessarily at the time of grant of approval of the assessment made by the A.O, the Joint Commissioner is required to verify the above issues, apply his mind that whether they have been properly appreciated by the A.O. while framing the assessment orders or not. The JCIT is also required to verify whether the required procedure have been followed by the A.O. or not at the time of framing of the assessments. Thus, the approval cannot be a mere discretion or formality, but, is mandatory being Quasi Judicial function and it should be based on reasoning. In our view, when the legislature has enacted some provision to be exercised by the higher Revenue Authority enabling the A.O. to pass assessment order or reassessment order in search cases, then, it is the duty of the JCIT to exercise such powers by applying his judicious mind. We are of the view that the obligation of the approval of the Approving Authority is of two folds ; on one hand, he has to apply his mind to secure in build for the Department against any omission or negligen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of KhodayEhshwarsa and Sons vs. DCIT, ITA 1079 1080/Bang/2024 dated 20.09.2024, I.T.A. No.1813/Del/2019 in the case of Sanjay Duggal and Others and Hon ble Lucknow Tribunal in the case of Quality Structure Pvt Ltd. vs. DCIT, CC-2, Kanpur, ITSSA 679 680/Lkw/2019 dated 30.09.2024. NO ADDITION CAN BE MADE BY AO IN ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING SEARCH: 22. The appellant humbly submits before your honour that the ld.AO has made addition in absence of any incriminating material found during the search and whereas no addition can be made in absence of incriminating material is settled by the Hon ble Supreme Court in the case of Principal Commissioner of Income-tax, Central-3 v. AbhisarBuildwell (P.) Ltd. [2023] 454 ITR 212 (SC). In appellants case the search was conducted u/s 132 on 10.01.2018 and notice u/s 153A was issued on 12.07.2019 for the AY 2012-13 to AY 2017-18 (six assessment year) whereas the limitation for issuance of notice u/s 143(2) for the last assessment year i.e. AY 2017-18 was 30.09.2018 whereas no assessment proceeding was pending or abated for assessment as apparent from the assessment order framed u/s 153A of the Income Tax Act, 1961. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 82 (Delhi)and recent decision in the case of Dviya Exim (P) Ltd v. DCIT, ITA 7442, 5952 5957 (Delhi) of 2018 dated 15.01.2024 in which the Hon ble Court held that no addition can be made in absence of incriminating material found during search on the basis of statement recorded u/s 132(4) of the IT Act, 1961. Sl.No. 14 to 16: In these cases no incriminating material was found during search and the addition has been made on account of unsecured loan received during the year on the basis of statement recorded u/s 132(4) of the brother of the appellant during search and that no confirmation or statement to confront the same was done during search or assessment proceeding. Reliance is placed upon the decision of Delhi High Court in the case of PCIT vs. Shiv Kumar Agarwal, ITA No 231 of 2022 dated 28.07.2022, PCIT vs. Anand Kumar Jain (2021) 432 ITR 384 dated 12.02.2021,Best Infrastructure India (P.) Ltd [2017] 397 ITR 82 (Delhi)and recent decision in the case of Dviya Exim (P) Ltd v. DCIT, ITA 7442, 5952 5957 (Delhi) of 2018 dated 15.01.2024 in which the Hon ble Court held that no addition can be made in absence of incriminating material found during search on the basis of statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f six assessment years referred to in this sub-section pending on the date of initiation of the search under section 132 or making of requisition under section 132-A, as the case may be, shall abate. (2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or Section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside Explanation. For the removal of doubts, it is hereby declared that, (i) save as otherwise provided in this section, section 153-B and section 153-C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year. 11. As per th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act, subject to fulfilment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy. 12. If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under section 153A of the Act is linked with the search and requisition under sections 132 and 132A of the Act. The object of Section 153A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs. 25. Further, the Hon ble Supreme Court has upheld its decision of Principal Commissioner of Income-tax, Central-3 v. AbhisarBuildwell (P.) Ltd. [2023] 454 ITR 212 (SC) in the following decisions subsequent to AbhisarBuildwell as following: PCIT vs. Saroj Sudhir Kothari, SLP (C) No. 4077 of 2023 dated 07.08.2023 PCIT vs. King Buildcom (P) Ltd, Civil Appeal No. 4326 of 2023 dated 10.07.2023 PCIT vs. Jay Ambey Aromatics, SLP (Civil) 24524 of 20223 dated 24.11.2023 PCIT vs. S.S. Con Build (P) Ltd., SLP (C) No. 7799 of 2023 dated 04.05.2023 26. As regard to addition made on the basis of statement recorded during search the appellant places reliance on the following judicial precedence where the Hon ble Courts has held that no addition can be made on the basis of statement recorded in absence of incriminating material found during search as the same does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny stock companies was disclosed as LTCG by its beneficiaries, and the LTCG earned by the promoters and family members has been used for personal use. 2. In this regard reliance has been placed on the statement of Sh. Madho Gopal Agarwal recorded on oath under section 132(4) of the Act on 3rd August, 2015 and letter dated 31st July, 2015 issued by Sh. Madho Gopal Agarwal. The case was centralised as per the orders passed under section 127 of the Act and a notice under section 153A of the Act was issued on 6th September, 2016, which was duly served. Upon receipt of notice the assessee filed his return for the relevant assessment year 2011-12 declaring an income of Rs. 5,41,130/- on 2nd March, 2017. During the year under consideration, the assessee declared income under the head 'income from salary', 'income from capital gains' and 'income from other sources'. With respect to the income from capital gains, the assessee submitted in his reply to state that he had purchased 400 shares of one M/s KGN Industries Ltd. for a total consideration of Rs. 4,000/- at Rs. 10/- per share subsequently dematerialised the shares and sold the shares on 13th October, 2010 i.e., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The ITAT concluded that the additions made by the AO for the assessment under consideration is not based on any incriminating material found during the course of search from the premises of the assessee. The ITAT concluded that the AO had made the additions solely relying on the disclosures made by the Managing Director, Sh. Madho Gopal Agarwal. The ITAT after finding that there was no incriminating material found as a result of the search conducted against the assessee on record, allowed the appeal and set aside the addition made by the AO. The ITAT has relied upon the judgment of this Court in Pr. CIT v. Anand Kumar Jain [2021] 432 ITR 384 and CIT v. Best Infrastructure India (P.) Ltd. [2017] 84 taxmann.com 287/397 ITR 82 (Delhi) wherein this Court has held that statements recorded under section 132(4) of the Act do not themselves constitute as incriminating material in the absence of any corroborative evidence. The ITAT placed reliance on para 35 of Best Infrastructure India (P.) Ltd. (supra) as reproduced hereinbelow: 35. Turning to the facts of the present case, it requires to be noted that the statements of Mr. Anu Aggarwal, portions of which have been extracted hereinbefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search, the issue is covered in favour of the assessee by the judgment of this Court in the case of Kabul Chawla (supra) and Pr. CIT v. MeetaGutgutia [2017] 82 taxmann.com 287/248 Taxman 384/395 ITR 526 . The relevant paragraphs are reproduced hereinbelow: '10. The ITAT, therefore, concluded that since no assessment was pending for the relevant assessment year 2010-11 on the date of search and no incriminating material was found during the course of search, the issue is covered in favour of the assessee by the judgment of this Court in the case of Commissioner of Income tax v. Kabul Chawla (2016) 380 ITR 573 and Principal CIT v. MeetaGutgutia (2017) 395 ITR 526 as well as by the orders of the ITAT in the group cases of Madho Gopal Agarwal and M/s Kapis Impex LLP (supra). 11. A predecessor Division Bench of this Court in Kabul Chawla (supra) has held that if no incriminating material is found during the course of the search in respect of an issue, then no addition in respect of such an issue can be made in the assessment under sections 153A and 153C of the Act. The legal position summarized in the subsequent decision of MeetaGutgutia (supra) is reproduced hereinbelow: 37. On a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. ' 10. In this view of the matter there is no infirmity in the order passed by the ITAT. In the aforesaid facts, no substantial questions of law arise for consideration. Accordingly, the present appeal is dismissed. 27. In view of above facts and case authorities relied upon the appellant humbly request your honour to quash the assessment order framed u/s 153A for the AY 2012-13 to AY 2017-18 in appeal in absence of incriminating material found during search. ON MERIT: I. Standard Frozen Foods Export Pvt Lt - ITSSA 41-44/Lkw/2022 for AY 2012-13, AY 2013-14, AY 2016-17 AY 2017-18 and ITA 45/Lkw/2022 for AY 2018-19- [Page No. 28-32] II. Standard Agro Vet Pvt Ltd- ITSSA 46-49/Lkw/2022 for AY 2012-13, AY 2013-14, AY 2014-15 and AY 2015-16 [Page No. 32-33] III. Kamal Kant Verma- ITSSA 50-52/Lkw/2022 for AY 2015-16, AY 2016-17 AY 2017-18 and ITA 53/lKw/2022 for AY 2018-19 [Page No. 33-39] IV. Sachin Verma- ITSSA 54-58/Lkw/2022 for AY 2012-13, AY 2014-15, AY 2015-16, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the share allotment alongwith share applicants details available were provided. Moreover, the share applicants were allotted shares and made shareholder of the company and as regard to the creditworthiness of the shareholders looking at the amount of share application money ranging from 35,000/- to 2,00,000/- the same may is reasonable amount which a person could hold in his saving to invest in share application of the company to become shareholder of that company. As regard to Unsecured Loan of Rs. 43,00,000/- in AY 2016-17 , the appellant humbly submits that the this is not an unsecured loan from U.S. Traders but an advance from customer to whom sale has been made. The ledger account, confirmation, letter from U.S Trader and Bill of Supply is enclosed in the paperbook at page 259-263 of PB Vol2- Part1. Furthermore, the audited books of account has not been rejected by the AO and also the sales are accepted. Moreover, the arbitrary addition without application of mind has resulted in double taxation. As regard to addition on the basis of LP-5 page 44 found with the third party of Rs. 80,76,000/- in the AY 2018-19: 01. it is undisputed fact that alleged document/ paper was not f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed herewith, it transpires that several types of payments are written which includes bank payment, Cash Payment and MLA Donation. In this paper, name of assessee is not appearing. It is fact that several business transactions made with Rushtam Foods Pvt Ltd are appearing but it does not mean that entire transactions relates to appellant only, may be relates to others. Only few business transaction appearing in this sheet alone does not establish that cash transactions relates to assessee as this sheet was not found from the possession of assessee. 10. That appellant during assessment proceeding strongly denied having cash receipts from Mr. Saleem Qureshi. The assessee also does not know who is MLA and why payment has been made to MLA and how payment made to MLA relates to assessee. What Mr. Saleem Qureshi has stated about transaction appearing in this alleged sized loose document is not known to assessee. The appellant was requested AO for cross examination with the Saleem Qureshi for confrontation of facts but the said requests was not entertained 11. The legal effect of the statement recorded behind the back of the assessee and without furnishing the copy thereof to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondents handwriting and which did not contain the name of the respondent or any date of payment or the name of the person who made the payment. It rightly held that the Revenue failed to establish the nexus of the seized material to the respondent and had drawn inferences based on suspicion, conjectures and surmises which cannot take the place of proof. We also agree with the Tribunal that the assessing officer did not conduct any independent enquiry relating to the value of the property purchased and the burden of proving the actual consideration in the purchase of the property is on the Revenue and it had failed to discharge the said burden. 16. Reliance is also placed on the decision in the case of CBI vs. VC Shukla (1998) 3 SCC 410) it has been held that the loose sheets of paper cannot be considered to be books. 17. In the case of CIT vs. Girish Chaudhary (2008) 296 ITR 619 (Delhi) - Delhi High Court has held as under:- That the revenue has to prove the undisclosed income beyond doubt. Further it was held that the document should be a speaking one and it should contain narration in respect of various figures noted therein. Otherwise the same should be considered as du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in the share allotment but the ld.AO has made arbitrary addition without any corroborative evidence to support the suspicion or inquiry. The ld.AO as well ld.CIT(A) has made addition only on the basis that section 68 requirement is not fulfilled whereas the shareholder details were available with the ld.AO who failed to confirm or conduct any inquiry. The identity in the form of name, address in the share allotment alongwith share applicants details available were provided. Moreover, the share applicants were allotted shares and made shareholder of the company and as regard to the creditworthiness of the shareholders looking at the amount of share application money ranging from 35,000/- to 2,00,000/- the same may is reasonable amount which a person could hold in his saving to invest in share application of the company to become shareholder of that company whereas as regard to the share application money above 2,00,000/- the PAN and Bank Statement has also been provided which are enclosed in the paperbook vol2 part 2 page 312-566. As regard to Unsecured Loan of Rs. 6,00,000/- in AY 2012-13 , the appellant humbly submits that the this is not share application from S.K.Nigam but u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n has been made on the basis of statement recorded of the brother of the appellant without confrontation with the appellant during search or post search during assessment and neither any incriminating material other than alleged loose paper found during search nor any corroborative evidence to support the allegation brought on record during the assessment proceeding by the ld.AO. The ld.AO also failed to conduct any inquiry during the assessment proceeding and the ld.CIT(A) confirmed the addition on the basis of statement. 01. That Ld. AO has made addition on the basis of seized loose paper Page No- 32 of LP-5 and relying on the statement of Shri Sachin Verma recorded u/s 132(4) of the Income Tax Act, 1961. In this regards appellant respectfully submitted that paper seems printout taken from of tally accounting software and is account ledger named Net Profit MBM Sales (GST Exempted) for the period 30.04.2017 to 31.12.2017 containing 10 entries on monthly basis. It is also important to address being doubtful as to whether the printout being taken as LP 5 Page 31 32 are from the tally computer of Standard Frozen Foods Export Pvt Ltd, Unnao which the department is claiming or mischiev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. iv) No single Kg. of stock was found. v) No single evidence regarding transportation was found. vi) No evidence regarding weight of alleged goods supplied was found. vii) No investments regarding unexplained investment in any movable or immovable assets have been found. viii) No such cash as was found at the time of search. 06. Your honour may appreciate that in GST regime which requires E way bill for supplying of goods over to value of 50000/- such supply is not possible in a single day. The address mentioned in the loose paper is E-20, UPSIDC Industrial Area, Unnao which does not belongs to appellant. This address is factory premises of Standard Frozen Foods Exports Pvt Ltd and thus this paper was not found from the possession of appellant. 07. That during the course of assessment proceeding, assessee has filed detailed submissions on the query raised along with supporting evidences and explanations but the ld. AO disregarded the same and has come to conclusion with predetermined and preconceived mind of making addition on the basis of investigation report, solely considering amount of surrender made in the statements recorded u/s 132(4) of Sachin Verma without bringing any e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence and not by mere handwriting. In the case of CBI v. V.C. Shukla 1998 taxmann.com 2155 (SC), Hon ble Apex court has loose sheets have been ruled out as of any evidentiary value. loose sheets cannot be accounts books of a party. Even if it is taken as an informal accounting it is not the record of the assessee. Even assuming such entries as correct and authentic they cannot without independent evidence fix a liability upon a person. In that connection the court also referred to Section 9 of the Evidence Act and observed that even if such entries are admissible under the said provisions to support an inference about correctness of the entries still such entries would not suffice without supportive independent evidence. They have no probative value in the absence of some corroborative primary evidence of the reality of such transaction shown in the noting in such loose sheets of paper. Even entries in the books of account need corroboration before acting against the third party on the basis of any entry in the books of account of a person. Any presumption of transaction on some vague, tenuous and dubious entries in a sheet of paper is not rational and hence legal unless there is c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of search and seizure operation, no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely . This instruction is in line with the recommendation of the Task Force on Direct Taxes Chaired by Dr. Vijay Kelker. Recommendation in final Report Para 3.27 of Task Force on Direct Taxes Chaired byDr. Vijay Kelkar in this context: The CBDT must issue immediate instruction to the effect that no raiding party should obtain any surrender whatsoever. Where, a taxpayer desire to voluntarily make a disclosure, he should be advised to make so after the search. All cases where surrender is obtained during the course of the search in violation of the instruction of the CBDT, the leader of the raiding party be subjected to vigilance enquiry. All statements recorded during the search should be Video recorded. Subsequently, CBDT also issued another letter [ F.NO.286/98/2013-IT (INV.II)], DATED 18-12-2014, emphasizing upon the need to focus on gathering evidences during Search/Survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence. The letter is being reproduced herein under:- SE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s impression or misconception of law. In such circumstances, it is always open to an assessee to demonstrate and satisfy the authority concerned with documentary evidence. Supreme Court decisions on admission being not conclusive:- The settled principle of law suggests that a confession of an accused would need corroboration with evidences to convict the accused. It is a matter of acceptance that though an admission is an important piece of evidence but it is not conclusive and it is open to the assessee to show that it is incorrect. At this stage, it shall not be out of place to quote the verdict of Hon ble Supreme Court of India in case of Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 wherein their Lordships while observing that admission is an extremely important piece of evidence, held that, it cannot be said to be conclusive and the maker can show that it was incorrect. The landmark verdict was followed by the Hon ble Delhi High Court of Delhi in case of S. Arjun Singh v. CWT [1989] 175 ITR 91 . Further reliance can also be placed on the judgement of the apex court in case of NagubaiArmul V. B Sharma Rao AIR 1956 SC 100 wherein it was held that an admi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conduct any inquiry on the lender during the assessment proceeding. The ld.CIT(A) confirmed the addition on the basis of statement of the appellant under undue coercion contrary to the fact. The appellant has filed details of the unsecured loan comprising of ledger account, PAN, ITR Bank Statement have been filed and appearing in the paperbook vol 2 part 1 from page 2 to 43 fulfilling the requirement of section 68 three ingredients i.e. identity, genuineness and creditworthiness. In view of above, the appellant humbly request your honour to kindly delete the addition made on the basis of statement recorded without any incriminating material was found during search nor any corroborative evidence to support the allegation brought on record during the assessment proceeding by the ld.AO. ADDITION OF Rs. 4,00,000/- IN AY 2014-15 ON OF DIFFERENCE IN VALUE OF PROPERTY U/S 56(2)(vii) OF THE IT ACT, 1961: 1. That appellant re-producing the provisions of section 56(2)(vii)(b) for ready reference as under : (b) any immovable property, i) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property; ii) for a consideration which is l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort of the terms cost , price and value . As a matter of fact, a price indicates a fact that has already occurred in practice, a completed affair after a property has been, or agreed to be sold. On the other hand, value indicates the estimation of a probable price of the property concerned. The value of a property cannot be stated in an abstract form and it varies from time to time and can only be stated with reference to so many factors, i.e. the locality, situation, general appearance in the area, availability of shopping and marketing facilities, condition of public ways and transportation, availability of utilities, and many other things. As far as cost is concerned, it indicates cost to the purchaser for the purchase of the property after the purchase has been completed or agreed to. The provisions of sec. 56 of the Act state the fair market value and value is estimation of a probable price of the property, i.e. the deeming fiction. 5. The value of a property cannot be stated in an abstract form and it varies from time to time and can only be stated with reference to so many factors, i.e., the locality, situation, general appearance in the area, availability of shopping and ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act, made investments over and above that recorded in the books in the year under consideration. 10. Your honour may please very kindly be appreciate that no addition could be made solely on presumption without affording reasonable opportunity to the appellant and without fallowing the provisions of section section56(2)(x)(B)as amended. There is no presumption under Law that the difference between the actual purchase price and the stamp duty value would be unaccounted investment by the purchaser. In view of the above, it is prayed that addition made by AO may please very kindly be deleted as:- i) No evidence either at the time of search or at the time of assessment was found that appellant has paid any extra amount other than actual price. ii) No opportunity has been allowed to appellant before making addition. iii) The AO has failed to fallow the provisions of section 56(2)(x)(B), as amended, as the provisions is curative in nature and must be adhered. ADDITION OF Rs. 2,60,00,000/- IN AY 2018-19 ON THE BASIS OF LP 5 PAGE 31: In respect of addition of Rs. 2,60,00,000/- in AY 2018-19 on the basis of LP 5 Page 31, the appellant humbly submits that the addition has been made on the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of Rs. 37 lacs to 60 lacs in a single day, there must be sale at least 2,46,00,000/- to 4,00,00,000/-in that day if the profit rate is assumed being 15%. The rate of MBM is approx.35000/- PMT meaning thereby at least goods to the extents of 700 Ton to 1140 Ton must have been supplied. The truck capacity is approx. 15 MT thus at least 50 to 76 trucks must be required. Further no stock was found undisclosed in the hand of assessee and all these things clearly supports that this paper was prepared by someone only with intent to mischief the appellant. Your honour may please very kindly be appreciate that department has carried out action u/s 132 covering business as well as residential premises and except to this alleged seized document, no other evidence with regards to fallowing transactions which is integral part of business ,were found: ix) No single evidence regarding sales of MBM to earn such huge profit in a day was found. x) No Single evidence regarding purchases of MBM was found. xi) No evidence regarding the buyers or suppliers was found. xii) No single Kg. of stock was found. xiii) No single evidence regarding transportation was found. xiv) No evidence regarding wei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o justify the addition. 10. Your honour may appreciate that no addition can be made or sustained simply on the basis of statement recorded at the time of search, for which no corroborative material is found. In order to make a genuine and legally sustainable addition on the basis of surrender during search, there must be some incriminating material must have been found to correlate the undisclosed income with such statement which is absent in the case of appellant. 11. That if the contents are alleged documents is treated as genuine then cash to the extent of Rs. 3,45,00,000/- must have been found available at the time of search or undisclosed investment to that extents must have been found which is absent in the appellant case. The cash in the case of appellant was found tallied with the books of accounts and therefore no addition has been made on account of cash. The Hon'ble Supreme Court in Ramji Dayawala Sons (P.) Ltd. v. Invest import AIR 1981 SC 2085 observed that the truth of the facts stated in the documents had to be proved by admissible evidence and not by mere handwriting. In the case of CBI v. V.C. Shukla 1998 taxmann.com 2155 (SC), Hon ble Apex court has loose shee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson/ company to whom it belongs. In other words name of the receiver is no where mentioned in this loose paper. c) This paper contains details of cash taken /given to/from A.T International during the periods 09.06.2017 to 02.01.2018. d) That Ld. AO allegation on the hand is that this printout was taken from tally systems and another hand it has been alleged that no one has to records such types of transactions in regular books. e) That in no where it has been found that appellant was maintaining two sets of books. f) Only a account ledger could be construed as books. g) That as per alleged printout, assessee has taken loan of Rs. 1,77,17,070/- and repaid Rs. 1,01,50,000/- leaving balance payable amounts to Rs. 7567070/-. If the transactions are recognized as loan, then interest element must be there because no one has to give such huge money without any benefits. h) Further during the course of search, no other supporting evidence in token to acceptance was found showing name of receiver/ payers. i) Your honour may appreciate that during the course of assessment proceeding, appellant has filed affidavit of Mohd. Anwar partner of M/s A T International and his affidavit he affirme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal and hence legal unless there is corroboration by corresponding entry in regular accounts of both the parties to the transaction. l) Similar view was taken in ITO v. Smt. Pratibha Goyal [2011] 14 taxmann.com 50/132 ITD 517 (Jp.) : wherein reference was made to Mumbai Bench of the Tribunal in the case of Universal Impex v. ITO [IT Appeal No. 444 (Mum.) of 2007, dated 7-5-2009] held that addition made on the basis of statement of one of the partners and entries recorded in the diary cannot be upheld solely on the strength of the statement without any supporting material. The onus was on the AO to collect supporting material and since the AO has not discharged his onus, therefore, the addition was deleted. m) In the case of CIT v. Ravi Kumar [2008] 168 Taxman 150/[2007] 294 ITR 78 (Punj. Har.) , The Hon ble High Court has observed as under: The assessee was found to be in possession of loose slips and not of any valuable articles or things. Neither the possession nor the ownership of any jewellery mentioned in the slips was proved. Held that, the assessee had discharged the onus by explaining that slips contained the rough calculations and it was for the revenue to prove that the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtunity to the appellant and thus suffers from legal infirmity. Reliance is placed to the decision of Hon ble Gauhati High Court in the case Greenview Restaurant vs. Assistant Commissioner of Income-tax reported in (2003] 133 Taxman 432 (Gauhati) in which Hon ble High Court has held as under: A plain reading of section 143(2) and (3) makes it manifestly clear that if the Assessing Officer while making the assessment of the tax liability considers it necessary to ensure that the assessee had not understated the income or had not computed excessive loss and had not underpaid the tax in any manner, he shall serve on the assessee a notice requiring him either to attend his (Assessing Officer) office or to produce or cause to be produced any evidence on which the assessee may rely in support of the return. It is thereafter on the date specified in the notice or subsequent thereto as may be, that the Assessing Officer, after hearing such evidence as the assessee may produce as well as any other evidence as he may require on specified points and after taking into account all relevant materials, make the assessment of the total income or loss of the assessee and determine the sum payable b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the return and explain the disclosures made in the statement of its partner had not been complied with. The Tribunal in passing the impugned orders also did not address itself to that vital aspect of the matter. Thus, one could not sustain the impugned orders of the Tribunal restoring the amount of Rs. 4 lakhs as undisclosed income of the appellant- firm for the assessment years in question. Matter was to be remitted back to the Assessing Officer. [Para 17] 13. Evidentiary value of statement recorded u/s 132(4) of the Income Tax Act, 1961: The CBDT has issued Instruction to curb such erroneous practices of seeking involuntary forced confession of undisclosed income, the CBDT issued Circular F. No. 286/2/2003-IT(Inv.), dated 10-3-2003 after taking due recommendation of Kelker Committee, which clearly states that no attempt should be made to obtain confession/surrender as to the undisclosed income during search. Any action on the contrary shall be viewed adversely . CBDT Instruction F. No. 286/2/2003-IT (Inv.), dated 10-3-2003 regarding confession of additional income during the course of search seizure and survey operation is as reproduced herein under In pursuance of the Finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eys conducted by the Department. It is also seen that many such admissions are retracted in the subsequent proceedings since the same are not backed by credible evidence. Such actions defeat the very purpose of Search/Survey operations as they fail to bring the undisclosed income to tax in a sustainable manner leave alone levy of penalty or launching of prosecution. Further, such actions show the Department as a whole and officers concerned in poor light. 2. I am further directed to invite your attention to the Instructions/Guidelines issued by CBDT from time to time, as referred above, through which the Board has emphasized upon the need to focus on gathering evidences during Search/Survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence. 3. In view of the above, while reiterating the aforesaid guidelines of the Board, I am directed to convey that any instance of undue influence/coercion in the recording of the statement during Search/Survey/Other proceeding under the I.T.Act,1961 and/or recording a disclosure of undisclosed income under undue pressure/ coercion shall be viewed by the Board adversely. 4. These guidelines may be brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therein. It is only a piece of evidence, the weight to be attached to which must depend on the circumstances in which it is made. It can be shown to be erroneous or untrue. 14. In view of above facts submitted, it is humbly prayed that the addition made on the basis of statement made by the appellant and LP 5 Pg 32 alleged to be found being doubtful as to whether the printout being taken as LP 5 Page 31 32 are from the tally computer of Standard Frozen Foods Export Pvt Ltd, Unnao which the department is claiming or mischievously kept or provided by someone to the department and moreover, the ld.AO failed to corroborate or substantiate factually or through evidences as to how the profit from such business is practically perceivable or possible as explained and submitted by the appellant no addition can be made on the basis of dumb document and suspicion without corroboration with material evidence. PRAYER The appellant humbly submits in brief and pray before your honour that the assessment has been framed in violation to mandatory and statutory requirement of approval to be given by the Addl.CIT, Central being Approving Authority u/s 153D of the IT Act, 1961 without application of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 and AY 2015-16 Kamal Kant Verma- ITSSA 50-52/Lkw/2022 for AY 2015-16, AY 2016-17 AY 2017-18 and ITA 53/lKw/2022 for AY 2018-19 Sachin Verma- ITSSA 54-58/Lkw/2022 for AY 2012-13, AY 2014-15, AY 2015-16, AY 2016-17 AY 2017-18 and ITA 59/Lkw/2022 for AY 2018-19 In connection to the above, the appellant humbly submits before your honour as under: Legal Issues: Issue of Statutory Approval by JCIT u/s 153D of the IT Act, 1961 Issue of Assessment framed u/s 153A in absence of incriminating material. ISSUE OF STATUTORY APPROVAL BY JCIT U/S 153D OF THE IT ACT, 1961: The appellant humbly submits that in all 19 appeals from ITSSA 41-59/LKW/2022 common legal issue of statutory approval u/s 153D of the Income Tax Act, 1961 is involved. The appellant humbly submits before your honour in brief legally as well as factually as to how there has been violation of mandatory and legal requirement u/s 153D as well as factually how the Addl.CIT failed to do discharge the statutory obligation casted upon by the legislature which lead to mechanical approval at the fag end of assessment proceeding on 27.12.2019 ad 28.12.2018 only for the sake of completion of assessment proceeding getting time barred on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PB Vol-1, the appellant had requested the ld.AO regarding transaction with AT International of Rs. 1.77 Crore and requested for confrontation but the ld.AO simply brushed aside the request. - Inquiry before Assessment u/s 142(1): The appellant has requested the ld.AO to make summon and make inquiry at appellant cost on the issue of share application and unsecured loan which the ld.AO simply brushed aside. (Relevant Para O Page 183- Letters on Page 180-203) Mechanical Approval for the sake of completion of search assessment proceeding time barring on 31.12.2019: Absence of application on mind on the cases in which Approval have been granted also prima-facie apparent from the Approval Letter itself. The approval has been granted by way of common approval being an empty formality at the fag end of assessment proceeding on 27.12.2019 and 28.12.2018 to multiple assessee and assessment years upto 110 cases for the sake of completion of group search assessment proceeding getting time barred on 31.12.2019. The appellant humbly submits in brief and pray before your honour that the assessment has been framed in violation to mandatory and statutory requirement of approval to be given by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant with legal issue and its judicial precedence has been made as following: Sl. No 1 to 10 : In these cases no incriminating material was found during search and the addition has been made on account of share application received during the year. Reliance is placed upon the decision of Hon ble Supreme Court in the case of Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd. [2023] 454 ITR 212 (SC) where the Hon ble Court has held that no addition can be made in absence of incriminating material found and seized during search. Sl.No. 11 to 13:In these cases no incriminating material was found during search and the addition has been made on account of unsecured loan received during the year on the basis of statement recorded u/s 132(4) of the appellant during search. Reliance is placed upon the decision of Delhi High Court in the case of PCIT vs. Shiv Kumar Agarwal, ITA No 231 of 2022 dated 28.07.2022, PCIT vs. Anand Kumar Jain (2021) 432 ITR 384 dated 12.02.2021, Best Infrastructure India (P.) Ltd [2017] 397 ITR 82 (Delhi) and recent decision in the case of Dviya Exim (P) Ltd v. DCIT, ITA 7442, 5952 5957 (Delhi) of 2018 dated 15.01.2024 in which the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad High Court in the case of PCIT vs. Subodh Agarwal, ITA 86 of 2022 dated 12.12.2022, recent decision in the case of Khoday Ehshwarsa and Sons vs. DCIT, ITA 1079 1080/Bang/2024 dated 20.09.2024, I.T.A. No.1813/Del/2019 in the case of Sanjay Duggal and Others and Hon ble Lucknow Tribunal in the case of Quality Structure Pvt Ltd. vs. DCIT, CC-2, Kanpur, ITSSA 679 680/Lkw/2019 dated 30.09.2024 Also, that the assessment has been framed u/s 153A for AY 2012-13 to AY 2017-18 in appeal before your honour as illegal and without jurisdiction in absence of incriminating material. Reliance is placed upon Principal Commissioner of Income tax, Central-3 v. Abhisar Buildwell (P.) Ltd. [2023] 454 ITR 212 (SC) and others by Supreme Court in the case of PCIT vs. Saroj Sudhir Kothari, SLP (C) No. 4077 of 2023 dated 07.08.2023 , PCIT vs. King Buildcom (P) Ltd, Civil Appeal No. 4326 of 2023 dated 10.07.2023 , PCIT vs. Jay Ambey Aromatics, SLP (Civil) 24524 of 20223 dated 24.11.2023and PCIT vs. S.S. Con Build (P) Ltd., SLP (C) No. 7799 of 2023 dated 04.05.2023. In view of above, the appellant prays and request before your honour to quash the assessment order framed unlawfully and in violation to provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned Counsel for the assessee further drew our attention to the fact that approval No. 1490 was requested by the Assessing Officer for 16 cases on 28/12/2019 and approval was given by the Addl. CIT on the same day i.e. on 28/12/2019. He further drew our attention to the fact that approval No. 1488 was requested by the Assessing Officer for 15 cases on 26/12/2019 and approval was given by the Addl. CIT on the very next day i.e. on 27/12/2019. He also drew our attention to the fact that draft assessment orders were sent by the Assessing Officer for approval to the Addl. CIT at the fag end of the assessment proceedings on 26/12/2019 and 28/12/2019 though the assessments were going to be barred by limitation barely a few days later, on 31/12/2019. Placing reliance on the order of Hon'ble Allahabad High Court in the case of Pr. CIT vs. Subodh Agarwal, I.T.A. No.86 of 2022, dated 12/12/2022 and order of Hon'ble Orissa High Court in the case of ACIT vs. Serajuddin Co. (supra) and further on the order of Hon'ble Delhi High Court in the case of Pr. Commissioner of Income Tax vs. Shiv Kumar Nayyar (supra), learned Counsel for the assessee submitted that the assessment orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ACIT vs. Serajuddin Co. (supra) and order of Hon'ble Delhi High Court in the case of Pr. Commissioner of Income Tax vs. Shiv Kumar Nayyar (supra), in favour of the assessee. Further the issue in dispute is also squarely covered in favour of the assessee by the orders of the Income Tax Appellate Tribunal in the case of Khoday Ehshwarsa and Sons vs. DCIT, I.T.A. No.1079 1080/Bang/2024 dated 20/09/2024 and in the case of Sanjay Duggal and Others, I.T.A. No.1813/Del/2019 and in the case of Quality Structure Pvt. Ltd. vs. DCIT, IT(SS)A No. 679 680/Lkw/2019 (supra). In view of the foregoing, we set aside the impugned appellate orders of learned CIT(A) deserve to be set aside; and the assessment orders passed by the Assessing Officer deserve to be annulled. (D.2) The second limb of the contentions made by the learned Counsel for the assessee on behalf of the appellant assessees was that in the following cases, no incriminating material was found in the course of search conducted u/s 132 of the IT Act: Appeal Number Assessment year Appellant IT(SS)A No.41/Lkw/2022 2012-13 Standard Frozen Foods Exports Pvt. Ltd. IT(SS)A No.42/Lkw/2022 2013-14 Standard Frozen Foods Exports Pvt. Ltd. IT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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