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TMI Blog2024 (12) TMI 895X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act, viz., record the statement of any person which may be useful for, or relevant to, any proceeding under this Act, made it clear that the materials collected and the statement recorded during the survey u/s 133A were not conclusive piece of evidence by itself. Following the circular F.No.286/2/2003 of the Central Board of Direct Taxes dated 10.3.2003, it was concluded that the materials collected and the statement obtained under Section 133A would not automatically bind the assessee. The application of the extrapolation technique shall depend on facts and circumstances of each case and there can be no universal law on this issue. In the present case, no documents have been found and seized during the search and Ld. AO is merely relying on the statement of employees only, and as such application of extrapolation technique is not warranted for the entire assessment period. Thus, no adverse inference may kindly be drawn against the assessee and addition made in the hands of assessee may kindly be deleted. Addition made u/s 69C on account of unexplained expenditure should be deleted as there is no supporting document to proof the contention that assessee has actually spend amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hal, Jalandhar, Ludhiana, Phagwara, Mohali, Patiala, Moga, and Ferozpur. 4. The assessee is a business man engaged in the business of real estate, as promoter developer and engaged in other trading activities, and is regularly assessed to tax. Regular return has been filed u/s 139(1) along with copies of audited accounts and assessed accordingly. However, it is pertinent to note that in-spite of a thorough search being conducted at the business and residential premises of the assessee (Sh Chander Sheikhar Marwah), on 29/10/2020, no incriminating documents has been found and there is no SEIZURE of any incriminating materials by the search party. 4. Simultaneously, on the same date, survey u/s 133A of the Act 61, was also carried out at the premises of various business concerns, operating under the trade name of M/s Inayat Global Private Limited, M/s Karsh Enterprises, M/s IJM International, M/s Nagahia Sons, all located at Nakodar. 5. The outcome of the survey conducted revealed that all the above business concerns under different trade names, are engaged in manufacturing and sale of cigarettes and cigarette filters, legally owned and operated in the names of different individuals, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... four concerns, are legally owned by the respective persons, under respective PAN, and cigarette manufacturing being under the control of Central excise authorities, all the above persons are separately registered before the said authorities and also under the VAT, and later under GST authorities, as per applicable provisions of respective Acts, and all provisions regarding submissions of returns and statements in usual course of business has also been complied with. 9. All the above persons has been regularly filing their respective returns along with financial statements and has been regularly assessed to tax in normal course, since inception of business. 10. During the course of search at the premises of the assessee and survey at the premises of the cigarette manufacturing concerns, statements of various individuals were recorded, the summary of which are as under: Name of Persons deposed who deposed before Search team : (page 18 of Remand) Locus satndi of the persons in relation to search : Main contents of their depositions: Vinod Kumar Director Inayat Global Pvt Ltd The Assessee Mr Chander Sheikhar Marwaha has been controlling the whole business of all cigarette manufacturin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis of statements and depositions of the employees and the other persons, recorded, during search u/s 132 and survey u/s 133A of the Act 61, referred to in above paragraphs, and estimated the unaccounted sales of cigarettes and cigarette filter and went on to make an addition of Rs. 20,16,56,000/- on account of alleged unaccounted production and sales of cigarette plus an amount of Rs. 2,03,84,000/- on account of profits from cigarette filters, alleged to have been produced and sold by the assessee, in the four cigarette manufacturing, units, namely M/s Inayat Global Private Limited, M/s Karsh Enterprises, M/s IJM International, M/s Nagahia Sons, thereby determining the total income at Rs. 22,41,95,210/-, against a returned income of Rs. 21,55,210/-. 12. The matter was carried in appeal and the first appellate authority, being the Ld CIT (A) - 5, Ludhiana, passed a detailed order considering all aspects of the matter, and has observed that in absence of any SEIZED material, or documents, unearthed during the search, and in the absence of any incriminating materials, the provisions and scope of search cases are governed by the decision of the Hon ble Supreme Court, in the case of P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case and in law, the Id. C1T(A) was justified in deleting the addition made by AO u/s 153 A of the Act for the A.Y. 2011- 12 where the addition has been made on the basis of incriminating material in the A. Y. 2021-22 and ignoring the decision of Hon ble Supreme Court in the case of M/s Kcsarwani Zarda Bhandar Sahson, Allahabad in Civil Appeal Nos. 7738-7739/2021. 7736-7737/2021, 7732-7735/2021 and 7740-7743/2021 has upheld the order of Allahabad High Court and held that once during search undisclosed income is found on unearthing the incriminating material during the search, the AO would assume Jurisdiction to assess or reassess the total income even in case of completed/unbaled assessments? 5. Whether on the facts and circumstances of the case and in law, the Ld. CI f(A) justified in deleting the addition of Rs, 20,16,56,000/- made on basis of incriminating material on account of manufacturing of cigarette in the absence of plausible explanation by the assessee, without going into the merit of the case? 6. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 2,03,84,000/- made on basis of incriminating materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nb le Gujrat High court in the case of PCIT vs Saumya Constructions (P) Ltd. 387 ITR 529 (Gujrat) dated 14th march, 2016, (which incidently is much earlier to the Hon ble Apex court judgment in Abhisar Buildwell Pvt Ltd passed on 24th April, 2023). 18. As such Ld. DR prayed for restoration of the assessment order. 19. On the other hand the Ld. AR of the assessee, at the onset referred to the fourth proviso of section 153A of the Act 61, to submit that in the instant case, that the AO does not have any material whatsoever in his possession, on the basis of which he could issue a notice u/s 153A of the Act 61. 20. The relevant portion reads as under: Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless (a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years; (b) the income referred to in clause (a) or part thereof ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29.10.2020, wherein no documents or evidence were found in respect to any products / manufacturing for sale for cigarettes / filter. Moreover statements of the employees were taken under pressure as they were continuously provoked and threatened by the sections of income tax Act that would be imposed to them and also those statements were contradicting. Therefore, present case is a case where no proceedings for AY 2011-12 to AY 2019-20 were pending on the date of search and hence the said assessment did not abate. Therefore, in such a situation when the assessment has attained finality and has not abated and no incriminating material qua impugned addition was found as a result of search, which is evident from a plain reading of the assessment order, which also mentions that addition has been made only on the basis of statement recorded during search. Sir, this issue is also settled by The Hon ble Supreme Court of India in the case of PCIT-3 vs. Abhisar Buildwell Pvt. Ltd. in Civil Appeal No. 6580 of 2021 vide order dated 24.04.2023 in which it is made clear that no addition can be made in case no incriminating material was found during search u/s 132 of the Income Tax Act. This fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tified in holding that invocation of Section 153A by Revenue for Ays 2000-01 to 2003-04 was without any legal basis as there was no incriminating material qua each of those Ays. 26. CIT-II, Thane vs. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015] 58 taxmann.com 78 (Bom HC) IT: No addition can be made in respect of assessments which have become final if no incriminating material is found during search. It is submitted, at the cost of repetition, that there was no incriminating material found during Search qua. It is an admitted fact that original return was filed and later it was processed and search in the present case was carried upon on 2020 that is much after the date of completion of processing. Therefore, in view of above submissions and judgments, jurisdiction assumed by Ld. AO u/s 153A/143(3) is bad in law and impugned assessment order may please be quashed. 2) Submission on the legal ground that addition is based on statement of employees only, which was recorded during the search. It is submitted that in the present case addition is made on the basis of statement of employees recorded during the search which is not supported by any credible evidence. Sir, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operations. Instruction no. F.No. 286/2/2003-IT(Inv.II), dated 10.03.2003 give some reflection about such confession of additional income without any credible evidence during the course of search seizure which is quoted as under: Instances have come to the notice of the board where assessee have claimed that they have been forced to confess the undisclosed income during the course of the search seizure and survey operations. Such confession, if not based upon credible evidence, are later retracted by the concerned assessee while filing return of income. In these circumstances, such confession during the course of search seizure and survey operations do not serve any useful purpose. It is therefore, advised that there should be focus and concentration on collection of evidence of income which leads to the information on what has not been disclosed or is not likely to be disclosed before the income tax department. Similarly, while recording statement during the course of search seizure and survey operation no attempt should be made to confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further in respect of pending assessment proceedings al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning amount was not based on any evidence or material and, therefore, the same was rightly deleted by the CIT(A). (1973) 91 ITR 18 (SC) relied on . ACIT Vs. Anoop Kumar (2005) 94 TTJ (Asr) 288, wherein it is held that Income disclosed under s. 132(4) was subsequently retracted by the assessees. It was also not disclosed in the returns of income filed. Based on the seized documents and material, the AO has computed total income, which is below the income disclosed under s. 132(4). In fact all the additions made by the AO based on the documents and evidence found during the search stand confirmed. It is also a fact that total income so computed by the AO falls below the income disclosed under s. 132(4). It is not the case of the Department that difference in the income assessed and income disclosed under s. 132(4) represents some other concealed income. Therefore, it is clear that there is no material available with the Department to justify the addition so far as the difference between the income computed by the AO and income disclosed under s. 132(4). In other words, the so-called disclosure under s. 132(4) is bald and has no legs to stand and in such a case retraction is justified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooting than a normal assessment or an assessment based on the best judgment of the Assessing Officer. In the instant case, the assessee was searched and during this search no incriminating material was found. In the present case, no such assets were ever found by the department which could be attributed to any of such hypothetical receipts. Under these circumstances though estimation could be made, such estimation should not be vague and illogical which leads to absurdity. 30.1 Though there are number of judicial decisions where it has been held that no exploration can be made in search cases, in the present case addition is made in FY 2010-11, on the basis of statement of employees recorded in October 2020. 30.2 It is further submitted that even if there is any discrepancy found during the search, it could not lead to any evidence that it has been continued by assessee from the relevant previous years, this amounts to exploration of income, which is not permissible in law. 30.3 In support of his contention the assessee placed reliance upon the following decisions: CIT Vs. Anand Kumar Deepak Kumar 294 ITR 497 (Del), wherein it is held that ..........merely because some discrepancie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that documents regarding receipt of on-money by assesses having been found in respect of sale of flats to one party, addition could not be made in respect of all the parties to whom assessee sold flats merely on the basis of presumption. On the similar note, the Hon ble ITAT Jaipur Bench in case of ACIT V. M.M. Sales Agencies (2006) 153 Taxman 13 held that the income cannot be estimated for the period for which no information is available on the basis of the seized record. A similar issue was also dealt with by the Pune Bench of the Tribunal in Hotel Vrindavan v. Asstt. CIT [2000] 67 TTJ (Pune) 139 wherein it was held that the undisclosed income under Chapter XIV-B cannot be based on the presumption that if the assessee suppressed sales and expenses in later years, he must have done so in the earlier years also. Similarly, the Hon ble ITAT Ahmedabad Bench in case of DCIT V. Royal Marwar Tobacco Product Pvt. Ltd (2009) 29 SOT 53 held that the Assessing Officer was not justified in making estimated additions for earlier assessment years based on the documents seized for A.Y. 2004-05. The High Court of Delhi in case of Commissioner of Income-tax, Delhi v. H.C. Chandna (P.) Ltd. [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer had merely relied upon documents seized during course of search for other financial years 2010-11 and 2011-12, impugned assessment under section 153A was unjustified Also, in the judgment of High Court of Bombay in the case of Commissioner of Income-tax vs. C.J. Shah Co. reported at [2001] 117 TAXMAN 577 (BOM.), it has been held as under: Search and seizure action under section 132 led to detection of certain loose sheets of paper indicating undisclosed sales for some months on which basis Assessing Officer estimated undisclosed profit and also worked out peak investment - Tribunal having found no material to show turnover during block period, held that on basis of said loose sheets which indicated figures of only incoming and outgoing cash transactions, addition made was arbitrary - Whether since loose sheets nowhere recorded assessee s turnover, Assessing Officer had arrived at turnover on wrong basis of incoming and outgoing cash transactions - Held, yes - Whether while estimating undisclosed income on basis of material seized, it is impermissible for Assessing Officer to adopt an arbitrary method of calculation - Held, yes - Whether entire finding of Tribunal was based on f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyees only, and as such application of extrapolation technique is not warranted for the entire assessment period as per provisions of law. 4) SUBMISSIONS ON LEGAL ISSUE THAT NO DIN IS MENTIONED IN BODY OF ASSESSMENT ORDER/DEMAND NOTICE AND APPROVAL U/S 153D IS ALSO WITHOUT DIN 34. It is submitted that CBDT circular No. 19/2019 dated 14.08.2019 mandated very officer issuing any communication, order, etc to anyone to mention DIN in the body of the order. In the present case, DIN has not been mentioned on the assessment order passed u/s 153A of the Act and also not mentioned on the demand notice. 35. It is further submitted that approval granted under s. 153D by the Additional CIT to the draft assessment order is without issuance of DIN. The final assessment order so passed under s. 153A in question on the basis of such invalid and non-est approval under section 153D is thus without sanction of law. Thus the assessment order passed is vitiated owning to non-conformity with the CBDT Circular No.19 of 2019. 36. Intimation of DIN vide separate letter without mentioning the DIN on the body of the assessment order is not valid as per law because section has not been mentioned in the intima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; or (iv) when PAN of assessee is not available and where a proceeding under the Act (other than verification under section 131 or section 133 of the Act) is sought to be initiated; or When the functionality to issue communication is not available in the system,The communication may be issued manually but only after recording reasons in writing in the file and with prior written approval of the Chief Commissioner / Director General of income tax. In cases where manual communication is required to be issued due to delay in PAN migration. The proposal seeking approval for issuance of manual communication shall include the reason for delay in PAN migration. The communication issued under aforesaid circumstances shall state the fact that the communication is issued manually without a DIN and the date of obtaining of the written approval of the Chief Commissioner / Director General of Income-Tax for issue of manual communication in the following format: This communication issues manually without a DIN on account of reason/ reasons given in para 3 (i)/3(ii)/3 (iii)/3 (iv)/3 (v) of the CBDT Circular No. .. dated. .... (Strike off those which are not applicable) and with the approval of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eated as invalid and deemed never to have been issued. 41. It is submitted that the assessment order and notice of demand are two separate communications qua the assessee and carry separate physical existence and identity, even though issued on the same date by the same Assessing officer pertaining to same assessment year and therefore, necessarily have to carry separate DIN on the body of the said communications. 42. In this regard reliance is placed on the decision of High Court of Calcutta, PCIT v/s Tata Medical Centre Trust Ors dated 26.09.2023 (2023) 334 CTR (Cal) 942 in which it was held as under: Revision Validity Order passed by CIT without mentioning DIN Tribunal upon examining the facts rightly held that the order does not incorporate the DIN and it is in violation of the Circular No. 19 of 2019, dt. 14th Aug., 2019 Further, the Revenue submitted that the intimation letter should be treated as part and parcel of the substantive order However, in the intimation letter there is nothing mentioned as to why in the substantive order the DIN was not mentioned as mandated in the circular Tribunal was therefore justified in quashing the order passed under s. 263 No substantial qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdictional Punjab and Haryana High Court decision where necessary guidance can be drawn from. In such a scenario, we are guided by the decision of the Hon ble Supreme Court in case of Commissioner of Income tax vs M/s Vegetables Products Ltd reported in 88 ITR 192 where it was held that where the provision is capable of more than one reasonable interpretation and different High Courts have taken different view or matter, the view which is favourable to the assessee should be adopted. In view of the same, we are inclined to follow the views expressed by Hon ble Delhi High Court, Hon ble Bombay High Court and Hon'ble Calcutta High Court delivered on the issue of the validity of order in absence of DIN on department communications. 15. Considering the factual matrix of the case and judicial precedents, as the matter have reached the respective Hon ble High Courts and that the findings of the Tribunal have been upheld in case of Brandix Mauritius Holding Ltd. and Tata Medical Centre Trust. Thus, the issue of non maintaining of DIN on the body of the statutory order is a defect which is not even curable u/s 292B of the Act because in the absence of DIN on the body of the order, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unaccounted sale/receipt was found during the search. 2. That no unaccounted purchase was found during the search. 3. That no unaccounted/unexplained diary was found during the search. 4. That no unaccounted/excess/short stock was found during the search. 5. That no unaccounted production was found during the search. 6. That no unaccounted machinery was found during search. 7. That no unaccounted labour was found during the search. 8. That no unauthorized movement of stock was found during the search. 9. That no unaccounted debtor/creditor/expense was found during the search. 10. That no proof of under billing / over billing was found during the search. 11. That no mismatch have been found with VAT/GST Authorities during the search. 12. That RG-1 registers, books, documents of the respective concerns were found and seized which duly reconciled with returns and books/balance sheets filed to the departments. Sir, relevant facts of the case of assessee are submitted as follows: All the time, when manufacturing process were undertaken from 2012 to 2017, it was mandatory as per para 10 of instructions dated 24.12.2008 issued vide F. No. 224/37/2005 by CBEC that round the clock presence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... starts the seal was removed by the superintendent only and there was no interference by the assessee. The addition made in the hands of assessee raises the question on the excise authorities because the production in the respective concerns was always under their supervision and monitored by them, more so when office has already obtained information from the Central Excise Department in this respect. That these facts were stated to the ld. AO also during the assessment proceedings also but he has not rebutted the same in the entire body of assessment order and merely relied on statement recorded. Sir, if the entire working is viewed by the Central Excise officer round the clock there is no chance of unaccounted production or under reported manufacturing. Sir, no attention was given to the above stated points nor to our submissions and the AO never rebutted our facts and mentioned only the statement of the employees recorded during search. Whereas, no attention was given to the facts that the employees whose statement has been considered were contradicting and changing there own statements and they were recorded under pressure and they threatened time to time during the course of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h could question the genuinity that assessee has actually incurred expenses of Rs 10,00,000/- at marriage expenses of his son. That the reply filed by the assessee at the time of assessment proceedings regarding such contention was as follows: assessee solemnized marriage of his son in a very simple manner. The functions related to marriage were organized by his in-laws. Assessee only organized small family function at home that was a small dinner party with closed ones and the expenditure incurred during that time was related to groceries, drinks and other snacks served during the party and the payment for the same was made in cash and the source of the payment was out of savings of the family and an estimated expenditure of Rs 1,50,000/- was incurred. Since the families had already decided that the marriage functions would be with closed family members and friends only. Therefore very limited guests were invited and all the expenditure related to family functions were incurred by his in- laws. Sir, keeping in view the above facts the addition amounting to Rs 10,00,000/- made u/s 69C on account of unexplained expenditure should be deleted as there is no supporting document to proo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these are regular business receipts which is being declared year on year basis. The receipts and or sales shown in the profit and loss account during the relevant year under consideration amounting to Rs. 1,06,35,600/- it is stated that assessee is engaged in the business of trading of sale /purchase of property. Assessee also earns commission on account of sale /purchase of property wherein there is no legal documentary evidences registered in the name of assessee. In some cases assessee made agreements for purchase and sold the same to third party in the course of transaction without registration being done in his name. In such scenarios the profit of assessee in the said transaction has duly been shown in the books of accounts maintained during the year. During the course of examination in personal hearing, regular books of accounts were produced and no discrepancy has been pointed out by AO and the assessee has duly declared the income earned on said account in the profit loss account and paid the due taxes and the return has been duly accepted processed u/s 143(1) of the Act by the department. Sir, the Ld. AO without considering the above submission has made the alleged additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te and Memorandum of Association(MOA) of the said company, along with the balance sheet showing the balance of assessee in the books of M/s LTE Info Technology Pvt. Ltd. as on 31.03.2019, which proves the genuineness of the transaction and creditworthiness of the company, but the Ld. AO did not consider the same and made addition in this regard. Sir, as regards the amount received from M/s LTE Info Technology Pvt. Ltd. in the bank account, it is submitted that the confirmed copy of ledger account as appearing in the books of assessee was also filed during the course of assessment. The identity, genuineness of transaction and creditworthiness has been established. 1. Identity of the Creditor : LTE INFO TECHNOLOGIES PRIVATE LIMITED CIN NO. : U72900DL2009PTC192207, EMAIL ID: [email protected] Registered Office: Shop No.-49, Ground Floor, Vardhman Market, Ram Vihar, East Delhi, Delhi 110092 2. Genuineness- The company is still in operation and the payments have been received through bank payments, which proves that the transaction is genuine, moreover the balance sheet of the company has been already placed on record. The copy of confirmed ledger account of the company as appearing i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r details to prove that the transactions have been done Jurisdictional AO of Bengaluru was also required to examine and report the matter within 20 days but he did not examine and send the report This fault of the AO cannot be attributed to assessee alleging his failure in discharging the onus to establish genuineness of transaction and identity and creditworthiness of the creditor When the assessee submits plausible explanation corroborated with all possible documentary evidence under his control and command in the form of PAN, bank statement and confirmation, then it has to be held that the assessee has discharged the onus that lay on his shoulders as per the requirement of s. 68 When the assessee has furnished his bank accounts, PAN and proof of address, it cannot be presumed that the identity and creditworthiness has not been proved Onus shifted on the AO to contradict explanation of the assessee but there is no exercise by the AO in this regard for dismissing the explanation and corroborative evidence adduced by the assessee Once there is proof of taking and repaying the loan, the addition in this regard is not called for. 48. The Hon ble Gauhati High Court in the case of Nemi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way of loan from the creditor actually belonged to the assessee, but this conclusion cannot be reached by mere failure on the part of the sub-creditor to show his creditworthiness and/or the genuineness of the transaction between the creditor and sub-creditor, for, the creditor May receive any amount from sources known to the creditor only and if he fails to show how he has received the amount, in question, or if he fails to show the creditworthiness of his sub-creditor, such an amount May be treated as the income from undisclosed source of the creditor or of the sub-creditor, as the case May be, but such failure, on the part of the creditor cannot, in the absence of any clinching evidence, be treated as the income of the assessee derived from undisclosed source. Keeping in view the above position of law, when we turn to the factual matrix of the present case, we find that so far as the appellant is concerned, he has established the identity of the creditors, namely, Nemichand Nahata and Sons (HUF) and Pawan Kumar Agarwalla. The appellant had also shown, in accordance with the burden, which rested on him under s. 106 of the Evidence Act, that the said amounts had been received by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same goes to the very root of the assessment made and we have no hesitation in answering the same in the negative. 49. The Hon ble Madhya Pradesh High Court in the case of CIT vs. Metachem Industries (2000) 245 ITR 160 (MP) has held as under: Once it is established that the amount has been invested by a particular person, be he a partner or an individual, then the responsibility of the assessee is over. Whether that person is an income-tax payer or not and where he had brought this money from, is not the responsibility of the firm. The moment the firm gives a satisfactory explanation and produces the person who has deposited the amount, then the burden of the firm is discharged and in that case that credit entry cannot be treated to be the income of the firm for the purposes of income-tax. 50. The Hon be Rajasthan High Court in the case of CIT vs. Jai Kumar Bakliwal (2014) 366 ITR 217 (Raj) has held as under :- Income Cash credit Genuineness While the assessee has to prove as special knowledge i.e. from where he has received the credit and once he disclosed the source from which he has received money, he must also establish that so far as his transaction with his creditor is con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch, and the entire investment in immovable property has been duly disclosed in regular books of accounts and yearly balance sheet, and regular returns. In course of search, no documents has been found to establish the allegation of extra investment in the said property. 55. It is stated that, this issue is also settled by The Hon ble Supreme Court of India in the case of PCIT-3 vs. Abhisar Buildwell Pvt. Ltd. in Civil Appeal No. 6580 of 2021 vide order dated 24.04.2023 in which it is made clear that no addition can be made in case no incriminating material was found during search u/s 132 of the Act 61. 56. Therefore, in view of above submissions and judgments, jurisdiction assumed by Ld. AO u/s 153A/143(3) is bad in law and impugned assessment order may please be quashed. 57. It is further submitted that addition is made merely on the basis of DVO valuation report only, without bringing on record any material, to show or establish that unaccounted investment has been made by the assessee. The law has been settled by various courts that addition cannot be made only on the basis of valuation report, which is just a tool for guidance of the AO and is just an opinion of a technical ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is an estimation and without there being anything more, cannot form basis for additions under s. 69B of the Act. In absence of any other material on record, addition was correctly deleted. The appeal is, therefore, dismissed. 58. Further reliance is placed on the decision of the Hon ble High Court of Delhi in the case of CIT v/s Sadhna Gupta Source (2013) 352 ITR 595 (Del) : (2013) 214 Taxman 540 (Del) in which it was held as under: 5. The law seems to be well settled that unless and until there is some other evidence to indicate that extra consideration had flowed in the transaction of purchase of property, the report of the DVO cannot form the basis of any addition on the part of the Revenue. In the present case there is no evidence other than the report of the DVO and, therefore, the same cannot be relied upon for making an addition. In these circumstances, the question which has been framed is decided in favour of the assessee and against the Revenue. The appeal is dismissed. 59. Decision of Hon ble High Court of Delhi in the case of CIT v/s Puneet Sabharwal Source (2011) 338 ITR 485 (Del) in which it was held as under: Income from Undisclosed Sources Unexplained or undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction on the actual expenditure incurred and booked in the books of accounts on the other hand the AO made addition by relying on value estimated by the DVO. Sir, in the present case the DVO had taken value of fully constructed property but in fact the construction of property was yet to be completed and also he applied CPWD rates whereas it is settled that State PWD rate is to be applied for estimating the value of property.Sir, it is also brought to your notice that original assessment has already been completed u/s 143(3) of the Act for AY 2017-18 and the value declared by assessee has already been accepted whereas after search proceedings Ld. AO is making addition in the hands of assessee without any incriminating material on record. Thus the addition made is to be quashed on this ground alone. 64. The valuation reported by the valuation officer of the said property has been done for ₹ 263.99 lacs for total area of 21257 sq feet. The cost of area per sq feet comes to ₹ 1241/- which is totally hypothetical and not based upon the actual PWD rates for the year 2016 to 2020. Till date, only civil work has been completed on the said property and as per PWD standar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was held as under: 184. We have heard the rival submissions of the parties and perused the material available on records. It is not in dispute that the impugned addition has been made on the basis report by DVO regarding construction cost of the property in question. The assessee claimed cost of construction on the actual expenditure incurred and booked in the books of accounts on the other hand the AO made addition by relying on value estimated by the DVO. The assessee pointed to two serious lacuna in the report; (i) the DVO applied CPWD rates for estimating the cost of construction and; (ii) the DVO had taken value of fully constructed property but in fact the construction of property was yet to be completed. We find merit into the contentions of the learned counsel for the assessee as it is well settled that State PWD rate is better guiding factor for arriving at cost of construction of the property. Moreover, the Revenue has not rebutted the claim of the assessee that the property in question was yet to be completed and the DVO took the value of completed property coupled with fact that no evidence is brought on record by the AO suggesting that any expenditure more than what wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever documents has been found and impounded in survey proceedings related to the aforesaid four concerns, are duly accounted for in regular books of accounts and relevant registers and are already before the AO and no adverse inference has been drawn. 67.2 Moreover, we are also in agreement with the submission and explanations of the assessee, as recorded in the above paragraphs, regarding control and supervision of the entire quantity manufactured and sales thereof, being done under Central Excise authorities, and duly recorded in appropriate register, stamped and authenticated by Central Government officers, and as such the suppression of production and sales in this cases are ruled out, without any documentary evidences, being brought to the contrary. 67.3 We are also in agreement with the objection of the assessee on the issue of DIN not being mentioned in the body of the assessment order and notice of demand, separately, as per provisions of the Board Circular no - 19 of 2019. In the instant case DIN has been generated by issue of separate intimation by way of a common DIN, for order, Notice (Demand Notice) and letter of approval u/s 153D of the Act 61. This generation is tech ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the above and for the reasons stated above, it is concluded as under: i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ii) all pending assessments/reassessments shall stand abated; iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the total income taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returns, on year by year basis, the same cannot be a subject matter of additions in proceedings u/s 153A, in absence of any incriminating materials brounght on record. The additions are deleted. 77. Asst year: 2019-20 (Addition of Rs. 2 crores on account of Sundry Creditors): This issue regarding genuineness of sundry creditors are discussed in details vis a vis the assessee submission, in earlier paragraphs. Moreover, these are all matter of regular assessment proceedings, and part of disclosure and reflections in regular returns for which documentary evidences has been filed by the assessee providing details establishing the identity, genuineness and credit worthiness of the parties. In absence of any incriminating materials gathered in course of search, this addition is deleted. 78. Asst Years: 2017-18, 2018-19 and 2019-20: (Addition of Rs. 27,61,732/- in each of the years, on the basis of Department Valuer report): This issue is discussed in details in earlier paragraphs vis a vis assessee submission. The entire addition on investments made in immovable property, has been made on the basis of valuers report (obtained post search). The investment made by the assessee in usual co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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