SONU PANKAJ SHAKTI SAGAR SOOD,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 5(1), MUMBAI

PER OM PRAKASH KANT, AM PER OM PRAKASH KANT, AM

These three appeals by the assessee are directed against three These three appeals by the assessee are directed against three These three appeals by the assessee are directed against three separate orders, all dated 24.01.2025 orders, all dated 24.01.2025, passed by the Ld. passed by the Ld. Commissioner of Income Commissioner of Income-tax (Appeals)- 53, Mumbai [in short ‘the 53, Mumbai [in short ‘the Ld.CIT(A)] for assessment year Ld.CIT(A)] for assessment years (AY) 2013-14,2014-15 and 2020 15 and 2020-21 respectively. As common issue and dispute respectively. As common issue and dispute is involved involved in these appeals, therefore, all these three appeals all these three appeals were heard together and heard together and disposed off by way of this consolidated order for sake of by way of this consolidated order for sake of by way of this consolidated order for sake of convenience and avoid writ petitioner facts. convenience and avoid writ petitioner facts.

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assessment year amounting to assessment year amounting to Rs. 4,55,00,000/- which which was repaid during the relevant assessment year and was repaid during the relevant assessment year and was repaid during the relevant assessment year and subsequent year, thus in peculiar facts of the case, the subsequent year, thus in peculiar facts of the case, the subsequent year, thus in peculiar facts of the case, the genuineness of the transaction ought not to have been genuineness of the transaction ought not to have been genuineness of the transaction ought not to have been doubted. It is well settled principle in law that when doubted. It is well settled principle in law that when doubted. It is well settled principle in law that when unsecured loan unsecured loans are repaid in the current or subsequent s are repaid in the current or subsequent year, provision of Section 68 shall not be applicable. year, provision of Section 68 shall not be applicable. 4. Without Prejudice to the above, on the facts and in law 4. Without Prejudice to the above, on the facts and in law 4. Without Prejudice to the above, on the facts and in law the Ld. CIT(A) ought to have appreciated that that that the Ld. CIT(A) ought to have appreciated that that that the Ld. CIT(A) ought to have appreciated that that that majority of loans were repaid during current majority of loans were repaid during current year and year and subsequent year through banking channel which is duly subsequent year through banking channel which is duly subsequent year through banking channel which is duly reflected in the bank account and books of account of the reflected in the bank account and books of account of the reflected in the bank account and books of account of the appellant, the addition made on account of cash credit to appellant, the addition made on account of cash credit to appellant, the addition made on account of cash credit to extent of repayment of loans was to be deleted. extent of repayment of loans was to be deleted. 5. On the facts and in law, 5. On the facts and in law, the impugned addition has the impugned addition has been made on the basis of statements of third party which been made on the basis of statements of third party which been made on the basis of statements of third party which are collected behind back of the Appellant. The impugned are collected behind back of the Appellant. The impugned are collected behind back of the Appellant. The impugned statements are made without providing any cogent statements are made without providing any cogent statements are made without providing any cogent material to support such statements. The statement made material to support such statements. The statement made material to support such statements. The statement made by third party are in absence of any collaborative evidence arty are in absence of any collaborative evidence arty are in absence of any collaborative evidence and cogent material to substantiate such statements. and cogent material to substantiate such statements. 6. On the facts and in law, the impugned addition is made 6. On the facts and in law, the impugned addition is made 6. On the facts and in law, the impugned addition is made on the basis of coerced and bald statement without any on the basis of coerced and bald statement without any on the basis of coerced and bald statement without any substantive material, therefore, the sta substantive material, therefore, the statements of the third tements of the third party cannot be held to have any evidentiary value. party cannot be held to have any evidentiary value. 7. On the facts and in law, when all payments have been 7. On the facts and in law, when all payments have been 7. On the facts and in law, when all payments have been made through banking channels and repayments have made through banking channels and repayments have made through banking channels and repayments have also been effected through banking channels, mere non also been effected through banking channels, mere non also been effected through banking channels, mere non- compliance with the not compliance with the notice issued under Section 133(6) of ice issued under Section 133(6) of the Act by the lenders cannot, by itself, give rise to doubts the Act by the lenders cannot, by itself, give rise to doubts the Act by the lenders cannot, by itself, give rise to doubts regarding the genuineness of the transactions. regarding the genuineness of the transactions. 2.1 The relevant facts as emerging from the orders of the lower The relevant facts as emerging from the orders of the lower The relevant facts as emerging from the orders of the lower authorities and the submissions of the parties are that the assessee authorities and the submissions of the parties are that the assessee authorities and the submissions of the parties are that the assessee is an individual and a professional actor by vocation. In addition to is an individual and a professional actor by vocation. In addition to is an individual and a professional actor by vocation. In addition to his cinematic pursuits, the assessee is also engaged in endorsing his cinematic pursuits, the assessee is also engaged in e his cinematic pursuits, the assessee is also engaged in e various brands and corporations in his capacity as a celebrity. For various brands and corporations in his capacity as a celebrity. For various brands and corporations in his capacity as a celebrity. For the assessment year (A.Y.) under consideration, the assessee filed the assessment year (A.Y.) under consideration, the assessee filed the assessment year (A.Y.) under consideration, the assessee filed

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his return of income on 31.03.2015, declaring a total income of Rs. his return of income on 31.03.2015, declaring a total income of his return of income on 31.03.2015, declaring a total income of 3,01,05,630/-. This return was initially pro . This return was initially processed under cessed under Section 143(1) of the Income Tax Act, 1961 (hereinafter referred to as "the of the Income Tax Act, 1961 (hereinafter referred to as "the of the Income Tax Act, 1961 (hereinafter referred to as "the Act").

2.2 A survey action under A survey action under Section 133A of the Act was conducted of the Act was conducted on the assessee’s premises on 07.12.2012. Consequent thereto, the on the assessee’s premises on 07.12.2012. Consequent thereto, the on the assessee’s premises on 07.12.2012. Consequent thereto, the case was selected for scrutin case was selected for scrutiny and assessment was completed y and assessment was completed under Section 143(3) Section 143(3) of the Act at a total income of of the Act at a total income of Rs. 3,65,85,870/-. While the assessee initially contested certain While the assessee initially contested certain While the assessee initially contested certain additions additions additions regarding regarding regarding unsecured unsecured unsecured loans, loans, loans, the the the addition addition addition of of of Rs. 13,50,000/- pertaining to pertaining to M/s Benchmark Trading P M/s Benchmark Trading Pvt. Ltd. upheld by first appellate authority was ultimately resolved under the Direct by first appellate authority was ultimately resolved under the by first appellate authority was ultimately resolved under the Tax Vivad Se Vishwas (VSV) Scheme Tax Vivad Se Vishwas (VSV) Scheme.

2.3 Subsequently, a search and seizure operation under Subsequently, a search and seizure operation under Subsequently, a search and seizure operation under Section 132 of the Act was carried out on 15.09.2021 at the premises of the of the Act was carried out on 15.09.2021 at the premises of the of the Act was carried out on 15.09.2021 at the premises of the assessee and its related entities. Following the search action, and assessee and its related entities. Following the search action, and assessee and its related entities. Following the search action, and by virtue of Explanation 2(ii) to Section 148 Explanation 2(ii) to Section 148, the proceedings were , the proceedings were reopened under Section 147 Section 147. Upon obtaining the requisit . Upon obtaining the requisite approval from the Principal Chief Commissioner of Income Principal Chief Commissioner of Income Principal Chief Commissioner of Income-tax (Central-2), Mumbai, a notice under , a notice under Section 148 was issued on 13.02.2023. In was issued on 13.02.2023. In response, the assessee filed a return of income on 13.03.2023, response, the assessee filed a return of income on 13.03.2023, response, the assessee filed a return of income on 13.03.2023, declaring a total income of Rs. 3,01,05,613/- declaring a total income of

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2.4 In the course of the reassessment proceedings, the learned the course of the reassessment proceedings, the learned the course of the reassessment proceedings, the learned Assessing Officer (Ld. AO) confronted the assessee with the findings Assessing Officer (Ld. AO) confronted the assessee with the findings Assessing Officer (Ld. AO) confronted the assessee with the findings unearthed during the search. The Ld. AO specifically relied upon unearthed during the search. The Ld. AO specifically relied upon unearthed during the search. The Ld. AO specifically relied upon the sworn statement of the sworn statement of Shri Kishanlal Udaylal Jain Shri Kishanlal Udaylal Jain, Director of s Om Shilpi Jewels and Gems Pvt. Ltd., recorded under , recorded under Section M/s Om Shilpi Jewels and Gems Pvt. Ltd. 131 of the Act. In the said statement, Shri Jain admitted to . In the said statement, Shri Jain admitted to . In the said statement, Shri Jain admitted to facilitating bogus unsecured loans facilitating bogus unsecured loans from agents in lieu of the cash from agents in lieu of the cash 14 and subsequent years for the assessee and his for the assessee and his during FY 2013-14 and subsequent years spouse, Mrs. Sonali Sood, through multiple conduit entities such as ouse, Mrs. Sonali Sood, through multiple conduit entities such as ouse, Mrs. Sonali Sood, through multiple conduit entities such as M/s Renuka Exim P Ltd; M/s Chattar Impex p Ltd ; M/s Yuvika M/s Renuka Exim P Ltd; M/s Chattar Impex p Ltd ; M/s Yuvika M/s Renuka Exim P Ltd; M/s Chattar Impex p Ltd ; M/s Yuvika Impex P Ltd ; M/s Krishna Raj Dimonds P Ltd and M/s Kamal Gem Impex P Ltd ; M/s Krishna Raj Dimonds P Ltd and M/s Kamal Gem Impex P Ltd ; M/s Krishna Raj Dimonds P Ltd and M/s Kamal Gem Jewellers etc. The statement of Shri Kishanlal Udaylal Jain, The statement of Shri Kishanlal Udaylal Jain, The statement of Shri Kishanlal Udaylal Jain, director of M/s. Om Shilpi Jewels and Gems Pvt. Ltd was or of M/s. Om Shilpi Jewels and Gems Pvt. Ltd was or of M/s. Om Shilpi Jewels and Gems Pvt. Ltd was confronted to the ass confronted to the assessee during search proceedings. essee during search proceedings. Although the assessee denied personal knowledge of these lenders and the assessee denied personal knowledge of these lenders and the assessee denied personal knowledge of these lenders and directed the Income- -tax department to his accounts team, the Ld. tax department to his accounts team, the Ld. AO noted that the accounts personnel namely accounts personnel namely Shri Radhesh Shri Radhesh Nair and Shri Pankaj Jalisatgi, and Shri Pankaj Jalisatgi, expressed their inability to provide expressed their inability to provide details as they were not associated with the assessee during the details as they were not associated with the assessee during the details as they were not associated with the assessee during the period the transactions occurred. period the transactions occurred.

2.4.1 Further the ld AO ld AO referred to the field inquires carried out by inquires carried out by the investigation wing for verification of the address of the various the investigation wing for verification of the address of the various the investigation wing for verification of the address of the various unsecured loan providers unsecured loan providers including ‘M/s Krishnaraj Di including ‘M/s Krishnaraj Diamond P Ltd, Surat’, where in it was revealed the parties were it was revealed the parties were not found at their not found at their

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registered address. This fa This fact of non traceability of ‘M of ‘M/s Krishnaraj Diamond P Ltd, Surat’, was brought to the notice of asse P Ltd, Surat’, was brought to the notice of assessee during P Ltd, Surat’, was brought to the notice of asse search proceedings, but he search proceedings, but he denied of having any knowledge of the denied of having any knowledge of the lender parties and directed the investigation team to his account directed the investigation team to his account directed the investigation team to his account team namely Shri Radhesh Nair and Shri Pankaj Jalisatgi, but they i Radhesh Nair and Shri Pankaj Jalisatgi, but they i Radhesh Nair and Shri Pankaj Jalisatgi, but they expressed their inability to provide details as they were not expressed their inability to provide details as they were not expressed their inability to provide details as they were not associated with the assessee during the period the transactions associated with the assessee during the period the transactions associated with the assessee during the period the transactions occurred.

2.4.2 Further during the course of assessment proceedings, Further during the course of assessment proceedings, Further during the course of assessment proceedings, for verification of unsecured loan, the ld AO ication of unsecured loan, the ld AO carried out enquiry u/s carried out enquiry u/s 133(6) of the Act and noted that only few parties complied and that and noted that only few parties complied and that and noted that only few parties complied and that too partly, on the basis of which their creditworthiness was not too partly, on the basis of which their creditworthiness was not too partly, on the basis of which their creditworthiness was not established.

2.5 The assessee in response submitted ledger account of those in response submitted ledger account of those in response submitted ledger account of those parties in his books of account alongwith copy of his Bank parties in his books of account alongwith copy of his Bank parties in his books of account alongwith copy of his Bank statement. The assessee submitted that all documents justifying The assessee submitted that all documents justifying The assessee submitted that all documents justifying creditworthiness were already filed during earlier assessment creditworthiness were already filed during earlier assessment creditworthiness were already filed during earlier assessment proceeding. The assessee submitted that part of loan amounting to The assessee submitted that part of loan amounting to The assessee submitted that part of loan amounting to Rs. 13,50,000/- from from ‘Benchmark Trading P ltd’ was already held was already held as unexplained cash credit and added while completing assessment unexplained cash credit and added while completing assessment unexplained cash credit and added while completing assessment u/s 143(3) of the Act dated 28/03/2016.

2.5.1 Further, the assessee expl Further, the assessee explained that total unsecured loan ained that total unsecured loan outstanding at end of FY 2012 outstanding at end of FY 2012-13 were of Rs. 2,93,98,417/ 13 were of Rs. 2,93,98,417/- and

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out of which loans of Rs. 1,25,00,000/0 out of which loans of Rs. 1,25,00,000/0 were obtained during FY were obtained during FY 2012-13.

2.5.2 The assessee further submitted The assessee further submitted that all the unsecured loan unsecured loans in dispute were obtained by way of banking transaction and already ned by way of banking transaction and already ned by way of banking transaction and already reflected in his books of account books of account. The assessee filed copy of the The assessee filed copy of the ledger account of those unsecured parties appearing in books of ledger account of those unsecured parties appearing in books of ledger account of those unsecured parties appearing in books of account and also filed copy of the bank statements and submitted account and also filed copy of the bank statements and submitted account and also filed copy of the bank statements and submitted that all those loans loans had already been returned back either in the back either in the year under consideration or in the subsequent assessment years. year under consideration or in the subsequent assessment years. year under consideration or in the subsequent assessment years. The assessee refuted all the observation of the AO made on the The assessee refuted all the observation of the AO made The assessee refuted all the observation of the AO made basis of statement of ‘sh Kishan U jain’ and and inquiry by the inspectors of investigation wing. inspectors of investigation wing.

2.6 In view of the above observation In view of the above observations, the ld AO made addition of made addition of unexplained cash credit unexplained cash credit of Rs. 4,55,00,000/- in respec in respect of the 11 unsecured loan parties unsecured loan parties.

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31(2) (2) Mumbai, ITA No. 3260 3259 and 3258/Mum/2023 for 31(2) (2) Mumbai, ITA No. 3260 3259 and 3258/ 31(2) (2) Mumbai, ITA No. 3260 3259 and 3258/ A.Y. 2010-11, 2011 11, 2011-12 and 2012-13 and upheld the addition and upheld the addition made by the ld AO. Aggrieved, the assessee is in appeal before us. made by the ld AO. Aggrieved, the assessee is in appeal before us. made by the ld AO. Aggrieved, the assessee is in appeal before us.

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Assessment Year, which culminated into an Assessment Order dated Assessment Year, which culminated into an Assessment Order dated Assessment Year, which culminated into an Assessment Order dated 20/03/2016. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) On the facts and circumstances of the case and in law, the Ld. CIT(A) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the additions made by Ld. AO despite the fact that erred in confirming the additions made by Ld. AO despite the fact that erred in confirming the additions made by Ld. AO despite the fact that there was no incriminating material no incriminating material found against the Appellant found against the Appellant in the search action carried out under Section 132 of the Act. in the search action carried out under Section 132 of the Act. in the search action carried out under Section 132 of the Act. 4. On the facts and circumstances of the case and in law, the Ld. CIT(A) On the facts and circumstances of the case and in law, the Ld. CIT(A) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the additions made by the Ld. AO despite the fa erred in confirming the additions made by the Ld. AO despite the fact erred in confirming the additions made by the Ld. AO despite the fa that there was neither any incriminating material found nor any that there was neither any incriminating material found that there was neither any incriminating material found books of account, other documents or any assets books of account, other documents or any assets were books of account, other documents or any assets requisitioned under Section 132A of the Act during the course of requisitioned under Section 132A of the Act during the course of requisitioned under Section 132A of the Act during the course of search proceedings. search proceedings. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) On the facts and circumstances of the case and in law, the Ld. CIT(A) On the facts and circumstances of the case and in law, the Ld. CIT(A) failed to appreciate the correct position of law that the Ld. AO can failed to appreciate the correct position of law that the Ld. AO can failed to appreciate the correct position of law that the Ld. AO can assume jurisdiction to proceed with the re-assessment only if assume jurisdiction to proceed with the assessment only if undisclosed income is found based on incriminating mate undisclosed income is found based on incriminating material undisclosed income is found based on incriminating mate against the Appellant. against the Appellant. 6. On the facts and circumstances of the case and in law, the Ld. CIT(A) On the facts and circumstances of the case and in law, the Ld. CIT(A) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in upholding the action of the Ld. AO in issuing the Impugned erred in upholding the action of the Ld. AO in issuing the Impugned erred in upholding the action of the Ld. AO in issuing the Impugned Notice under Section 148 in a non faceless manner thereby Notice under Section 148 in a non faceless manner thereby Notice under Section 148 in a non faceless manner thereby contravening Section 151A of the Act as well as the E contravening Section 151A of th e Act as well as the E-Assessment of Income Escaping Assessment Scheme, 2022 formulated by the Board. Income Escaping Assessment Scheme, 2022 formulated by the Board. Income Escaping Assessment Scheme, 2022 formulated by the Board. 7. On the facts and circumstances of the case and in law, the Id. CIT(A) On the facts and circumstances of the case and in law, the Id. CIT(A) On the facts and circumstances of the case and in law, the Id. CIT(A) erred in upholding the additions which were merely based on third erred in upholding the additions which were merely based on third- party statements, that too without any opportunity of cross party statements, that too without any opportunity of cross- examination afforded to the Appellant. 8. On the facts and circumstances of the case and in law, the Ld. CIT(A) On the facts and circumstances of the case and in law, the Ld. CIT(A) On the facts and circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the Ld. AO has carried out the re failed to appreciate that the Ld. AO has carried out the re-assessment failed to appreciate that the Ld. AO has carried out the re without adhering to the principles of natural justice. without adhering to the principl 5.1 We have heard rival submissions of the parties on this We have heard rival submissions of the parties on this We have heard rival submissions of the parties on this preliminary issue of admissibility of additional grounds. Since these preliminary issue of admissibility of additional grounds. Since these preliminary issue of admissibility of additional grounds. Since these grounds challenge the very substratum of the reassessment grounds challenge the very substratum of the reassessment grounds challenge the very substratum of the reassessment proceedings and go to the root of the matter, we are of the proceedings and go to the root of the matter, we are of the proceedings and go to the root of the matter, we are of the

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considered view that they satisfy the criteria for admission. In light ew that they satisfy the criteria for admission. In light ew that they satisfy the criteria for admission. In light of the settled legal position enunciated by the of the settled legal position enunciated by the Hon’ble Supreme Hon’ble Supreme Court in the case of in the case of CIT vs. NTPC Ltd. [1998] 229 ITR 383 (SC) CIT vs. NTPC Ltd. [1998] 229 ITR 383 (SC), we admit the additional grounds for adjudication. we admit the additional grounds for adjudication. 6. Additional Ground No. 1 being general in nature, we proceed to d No. 1 being general in nature, we proceed to d No. 1 being general in nature, we proceed to Ground No. 2, wherein the assessee assails the reassessment on Ground No. 2, wherein the assessee assails the reassessment on Ground No. 2, wherein the assessee assails the reassessment on the premise of a "change of opinion." the premise of a "change of opinion." The learned counsel argued The learned counsel argued that the issue of unsecured loans was extensively scrutinized that the issue of unsecured loans was extensively scrutinized that the issue of unsecured loans was extensively scrutinized during the original assessment proceedings under Section 143(3), assessment proceedings under Section 143(3), assessment proceedings under Section 143(3), culminating in the order dated 28.03.2016, much culminating in the order dated 28.03.2016, much prior to search in prior to search in the case of assessee. the case of assessee. It was contended that since the Assessing It was contended that since the Assessing Officer (AO) had already deliberated upon the genuineness of these Officer (AO) had already deliberated upon the genuineness of these Officer (AO) had already deliberated upon the genuineness of these loans, making a solitary addition for g a solitary addition for M/s Benchmark Trading Pvt. M/s Benchmark Trading Pvt. Ltd. while accepting the rest, the current proceedings represent a while accepting the rest, the current proceedings represent a while accepting the rest, the current proceedings represent a mere re-appreciation of existing material, which is impermissible in appreciation of existing material, which is impermissible in appreciation of existing material, which is impermissible in law.

6.1 The ld. counsel for the he ld. counsel for the assessee submitted that the survey u/s submitted that the survey u/s 133A of the Act was conducted in the case of the assessee on ct was conducted in the case of the assessee on ct was conducted in the case of the assessee on 07.12.2012. Pursuant to the survey case was selected for ursuant to the survey case was selected for ursuant to the survey case was selected for scrutiny, wherein certain addition wherein certain additions on account of the unsecured loans were n account of the unsecured loans were made and the ld AO ld AO completed the assessment at total income of e assessment at total income of Rs. 3,65,85,870/- as against returned income of Rs. as against returned income of Rs. as against returned income of Rs.. 3,01,05,630/- . Aggrieved, the assessee filed appeal before the l the assessee filed appeal before the l the assessee filed appeal before the learned first appellate authority, but the addition was ultimately settled under but the addition was ultimately settled under

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the Direct-Tax Vivad Vivad-Se-Vishwas scheme. It is contention of the scheme. It is contention of the assessee that during the assessment proceeding u/s 143 of the Act, assessee that during the assessment proceeding u/s 143 of the Act assessee that during the assessment proceeding u/s 143 of the Act all those unsecured loan all those unsecured loans were duly examined by the were duly examined by the ld AO and except one addition one addition for unexplained cash credit amounting to Rs. for unexplained cash credit amounting to Rs. 13,50,000/- for unsecured for unsecured loan from the ‘Benchmark Trading P ltd Benchmark Trading P ltd’, all other unsecured loan unsecured loans were found to be genuine and no addition was made in respect of those loans in respect of those loans.

6.2 He submitted that in the present re He submitted that in the present re-assessment proce assessment proceseding u/s 147, no incrimin nating material was found during the course of during the course of the search and, hence d, hence addition has been made on same set of the addition has been made on same set of the facts and circumstances except on statement of Shri Kishanlal facts and circumstances except on statement of facts and circumstances except on statement of Udaylal Jain which was recorded u/s 131 of the Act. which was recorded u/s 131 of the Act. which was recorded u/s 131 of the Act. Conversely, the learned Departmental Representative (DR) the learned Departmental Representative (DR) argued that the argued that the present reassessment was triggered by a search under Section 132, present reassessment was triggered by a search under Section 132, present reassessment was triggered by a search under Section 132, invoking the deeming provisions of Explanation 2(ii) to Section Explanation 2(ii) to Section invoking the deeming provisions of 148.

6.3 We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the relevant material on record. It is the relevant material on record. It is the contention of the assessee that contention of the assessee that re-opening is merely the is merely the ‘change of the opinion’ based on same set ’ based on same set of facts which were available during earlier assessment proceedings. of facts which were available during earlier assessment proceedings. of facts which were available during earlier assessment proceedings.

6.4 But we find that in the instant case re But we find that in the instant case re-opening has been done opening has been done under the deeming provision of Explanation 2(ii) of sec. 148 which under the deeming provision of Explanation 2(ii) of sec. 148 which under the deeming provision of Explanation 2(ii) of sec. 148 which provides for re-opening in the cases where search has been opening in the cases where search has been opening in the cases where search has been

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conducted. Further, while it is true that a previous assessment conducted. Further, while it is true that a previous assessment conducted. Further, while it is true that a previous assessment concluded the issue, the subsequent search action brought to light luded the issue, the subsequent search action brought to light luded the issue, the subsequent search action brought to light the statement of Shri Kishanlal Udaylal Jain Shri Kishanlal Udaylal Jain, recorded under , recorded under Section 131. In the said statement, a specific modus operandi was Section 131. In the said statement, a specific modus operandi was Section 131. In the said statement, a specific modus operandi was confessed, implicating the assessee in the procurement of bogus confessed, implicating the assessee in the procurement of bogus confessed, implicating the assessee in the procurement of bogus loans in exchange for cash. This constitutes "new tangible material" ans in exchange for cash. This constitutes "new tangible material" ans in exchange for cash. This constitutes "new tangible material" that was not available to the AO during the original assessment. that was not available to the AO during the original assessment. that was not available to the AO during the original assessment. The discovery of fresh evidence that fundamentally alters the The discovery of fresh evidence that fundamentally alters the The discovery of fresh evidence that fundamentally alters the complexion of the facts precludes the application of the "change of complexion of the facts precludes the application of the "chan complexion of the facts precludes the application of the "chan opinion" doctrine. Reopening based on new information discovered opinion" doctrine. Reopening based on new information discovered opinion" doctrine. Reopening based on new information discovered post-assessment does not constitute a ‘change of opinion’ but assessment does not constitute a ‘change of opinion’ but assessment does not constitute a ‘change of opinion’ but rather a discovery of escapement. Consequently, the additional rather a discovery of escapement. Consequently, the rather a discovery of escapement. Consequently, the ground No. 2 of the appeal is dismissed. ground No. 2 of the appeal is dismissed.

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search which could be said could be said to be incriminating material for the ting material for the purpose of making addition. The learned counsel further submitted ddition. The learned counsel further submitted ddition. The learned counsel further submitted that in the impugned impugned assessment order, the Ld.AO has not recorded the Ld.AO has not recorded any discovery of incrimi of incriminating material during the search ting material during the search proceeding. The ld. counsel for the assessee submitted that ld. counsel for the assessee submitted that ld. counsel for the assessee submitted that statement recorded of recorded of Shri Kishanlal Udaylal Jain i Kishanlal Udaylal Jain u/s 131 of the Act in the case of ‘M/s. Om Shilpi Jewels and Gems Pvt. Ltd M/s. Om Shilpi Jewels and Gems Pvt. Ltd M/s. Om Shilpi Jewels and Gems Pvt. Ltd’ cannot be treated as incriminating incriminating material in absence of any material in absence of any material seized/discovered during the course of the search and seizure seized/discovered during the course of the search and seizure seized/discovered during the course of the search and seizure operation. The ld. cou The ld. counsel emphasised that the statement relied that the statement relied upon by the ld AO was recorded u/s 131 of the Act and not u/s was recorded u/s 131 of the Act and not u/s was recorded u/s 131 of the Act and not u/s 132(4) of the Act and therefore same cannot be regarded as 132(4) of the Act and therefore same cannot be regarded as 132(4) of the Act and therefore same cannot be regarded as incriminating material for the purpose of sustaining addition. The incriminating material for the purpose of sustaining incriminating material for the purpose of sustaining ld. counsel relied upon th ld. counsel relied upon the decision of PCIT vs Anand Kumar Jain Anand Kumar Jain (HUF) reported in (2021) 432 ITR 384 (Delhi), d in (2021) 432 ITR 384 (Delhi), d in (2021) 432 ITR 384 (Delhi), wherein the Hon’ble High Court of the Delhi Hon’ble High Court of the Delhi has categorically held that categorically held that statement recorded u/s 132(4) of the Act cannot u/s 132(4) of the Act cannot, on , on a standalone basis and without reference to any material discovered during the basis and without reference to any material discovered during the basis and without reference to any material discovered during the search and seizure action search and seizure action, empower the Assessing O Assessing Officer to frame the assessment.

7.1 The ld. counsel for the assessee The ld. counsel for the assessee further referred referred to the decision of Hon’ble Hon’ble Bombay High Court in the case of CIT Vs. case of CIT Vs. continental warehousing corporation ( continental warehousing corporation (Nhava Sheva) ) Ltd [2015] 374 ITR 645, decision of Hon’ble Delhi High Court in the case of decision of Hon’ble Delhi High Court in the case of decision of Hon’ble Delhi High Court in the case of CIT Vs.

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Kabul Chawla 61 taxmann.com 412 (Delhi) Kabul Chawla 61 taxmann.com 412 (Delhi), and PCIT Vs. PCIT Vs. Abhisar Buildwell (P.) Ltd. [2023] 149 taxmann.com 399(SC) (P.) Ltd. [2023] 149 taxmann.com 399(SC) (P.) Ltd. [2023] 149 taxmann.com 399(SC). The Hon’ble Supreme Court in the case of Supreme Court in the case of Abhisar Buildwell (P.) Ltd. Abhisar Buildwell (P.) Ltd. (Supra) concluded that no addition can be made by concluded that no addition can be made by the AO in search the AO in search assessment u/s 153A assessment u/s 153A, in absence of incriminating ting material found during the course of search u/s 132 of the Act. course of search u/s 132 of the Act.

7.2 The ld. counsel for the assessee submitted that all the above ld. counsel for the assessee submitted that all the above ld. counsel for the assessee submitted that all the above referred decisions were rendered in the context of section 153A, but referred decisions were rendered in the context of section 153A, but referred decisions were rendered in the context of section 153A, but pursuant to the chan to the change in law w.e.f. 1.04.2021, section ge in law w.e.f. 1.04.2021, section 153A has been done way with been done way with and the provision governing governing assessment pursuant to search and search and seizure operation now contained contained in sec 148 r.w. Explanation 2(ii) of the Act. ) of the Act. The ld. counsel was of the opinion ld. counsel was of the opinion that the language of of Explanation-2(ii) read with section 2(ii) read with section 148 of the Act, is pari-materia with that of the with that of the section 153A and the scheme of 153A and the scheme of assessment is substantially substantially the same. Therefore Therefore the principle settled by judicial decision settled by judicial decisions referred above should above should apply mutatis mutandis to the provision to the provisions of sec.148 read with Explanation xplanation 2(ii) of the Act. Relying on the above proposi on the above proposition, the ld. counsel for the the ld. counsel for the assessee submitted that the impugned assessment order has been assessee submitted that the impugned assessment order has been assessee submitted that the impugned assessment order has been passed without there being any incrimi ed without there being any incriminating material found during ting material found during the course of the search and therefore the assessment order is the course of the search and therefore the assessment the course of the search and therefore the assessment unsustainable in law and liable to be quashed. Further in support in law and liable to be quashed. Further in support in law and liable to be quashed. Further in support of the contention that that provision of sec 148 read with read with explanation 2(1) is pari-materia materia with erstwhile section 153A, the ld. counsel

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relied on the decision of the relied on the decision of the Lucknow Bench of the Tr ench of the Tribunal in the case of Rakesh Kumar Pandey Rakesh Kumar Pandey Vs ACIT (2025) 181 taxmann.com ACIT (2025) 181 taxmann.com 896 (Lucknow- Trip Trip.) The ld. counsel submitted that in said The ld. counsel submitted that in said decision the Coordinate oordinate Bench has held that if no as held that if no incrementing material has been found during the course of search than the material has been found during the course of search material has been found during the course of search Assessing officer cannot acquire officer cannot acquire jurisdiction u/s 148 of the Act and jurisdiction u/s 148 of the Act and the deeming provision u/s 132 of th the deeming provision u/s 132 of the Act was not adequate for the e Act was not adequate for the Assessing officer to assume jurisdiction u/s 147 of the Act. ssessing officer to assume jurisdiction u/s 147 of the Act. ssessing officer to assume jurisdiction u/s 147 of the Act.

7.3 We have meticulously analyzed the statutory framewo We have meticulously analyzed the statutory framewo We have meticulously analyzed the statutory framework of the "New Reassessment Regime." "New Reassessment Regime." The main contention of the learned The main contention of the learned counsel for the assessee is that the provision of section 148 read counsel for the assessee is that the provision of sec counsel for the assessee is that the provision of sec with Explanation 2(ii ii) of the Act are pari-materia materia with erstwhile section 153A of the Act 153A of the Act.

7.4 The The The Finance Finance Finance Act, Act, Act, 2021, 2021, 2021, abolished abolished abolished the the the search search-specific search assessment regime (Sections 153A to 153C) for searches conducted assessment regime (Sections 153A to 153C) for searches conducted assessment regime (Sections 153A to 153C) for searches conducted on or after April 1, 2021. In its place, search assessments were on or after April 1, 2021. In its place, search assessments were on or after April 1, 2021. In its place, search assessments were integrated into the general reassessment framework of Sections 147 integrated into the general reassessment framework of Sections 147 integrated into the general reassessment framework of Sections 147 through 151. This shift moved the trigger from "initiation of search" h 151. This shift moved the trigger from "initiation of search" h 151. This shift moved the trigger from "initiation of search" to "possession of information suggesting escapement". The new to "possession of information suggesting escapement". The new to "possession of information suggesting escapement". The new Section 148 empowers the AO to issue a notice if there is Section 148 empowers the AO to issue a notice if there is Section 148 empowers the AO to issue a notice if there is "information which suggests that income chargeable to tax has "information which suggests that income chargeable to tax has "information which suggests that income chargeable to tax has escaped assessment". To facilitate search cases, Explanation 2 was sessment". To facilitate search cases, Explanation 2 was sessment". To facilitate search cases, Explanation 2 was inserted below Section 148, creating a deeming fiction. The inserted below Section 148, creating a deeming fiction. The inserted below Section 148, creating a deeming fiction. The Explanation 2(i) below Section 148 Explanation 2(i) below Section 148 deems that the AO has deems that the AO has

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"information" in the case of the assessee if a search is initiated "information" in the case of the assessee if a search is initiated "information" in the case of the assessee if a search is initiated under Section 132. 32. Proviso to Section 148A Proviso to Section 148A waives the requirement for a preliminary inquiry and the issuance of a show- requirement for a preliminary inquiry and the issuance of a show requirement for a preliminary inquiry and the issuance of a show cause notice (SCN) before issuing a Section 148 notice in search cause notice (SCN) before issuing a Section 148 notice in search cause notice (SCN) before issuing a Section 148 notice in search cases. For ready reference, For ready reference, we feel it appropriate appropriate to reproduce section 148 and relevan section 148 and relevant Explanation-2(ii) during relevant period during relevant period as under:

“148. Issue of notice where income has escaped assessment. 148. Issue of notice where income has escaped assessment. 148. Issue of notice where income has escaped assessment. - Before making the assessment, reassessment or recomputation under section making the assessment, reassessment or recomputation making the assessment, reassessment or recomputation 147, and subject to the provisions of section 148A, the Assessing Officer 147, and subject to the provisions of section 148A, the Assessing Officer 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy of the order shall serve on the assessee a notice, along with a copy of the order shall serve on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A, requiring to furnish passed, if required, under clause (d) of section 148A, requiring to furnish passed, if required, under clause (d) of section 148A, requiring to furnish within a period of thr within a period of three months from the end of the month in which such end of the month in which such notice is issued, or such further period as may be allowed by the notice is issued, or such further period as may be allowed by the notice is issued, or such further period as may be allowed by the Assessing Officer on the bas Assessing Officer on the basis of an application made in this regard by the of an application made in this regard by the assessee, a return of his income or the income of any other person in assessee, a return of his income or the income of any other per assessee, a return of his income or the income of any other per respect of which he is assessable under this Act during the previous year respect of which he is assessable under this Act during the pre respect of which he is assessable under this Act during the pre corresponding to the relevant assessment year, in the prescribed form and corresponding to the relevant assessment year, in the prescribed form and corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars verified in the prescribed manner and setting forth such other particulars verified in the prescribed manner and setting forth such other particulars as may be prescribes and t as may be prescribes and the provisions of this Act shall, so far as may he provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be be, apply accordingly as if such return were a return required to be be, apply accordingly as if such return were a return required to be furnished under section 139. furnished under section 139. Provided that no notice under this section shall be issued unless there is that no notice under this section shall be issued unless there is that no notice under this section shall be issued unless there is information with the Assessing Offi information with the Assessing Officer which suggests that the income cer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for chargeable to tax has escaped assessment in the case of the assessee for chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior the relevant assessment year and the Assessing Officer has obtained prior the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice approval of the specified authority to issue such notice: Provided further r that no such approval shall be required where the that no such approval shall be required where the Assessing Officer, with the prior approval of the specified authority, has Assessing Officer, with the prior approval of the specified authority, has Assessing Officer, with the prior approval of the specified authority, has passed an order under clause (d) of section 148A to the effect that it is a fit passed an order under clause (d) of section 148A to the effect that it is a fit passed an order under clause (d) of section 148A to the effect that it is a fit case to issue a notice under this section case to issue a notice under this section: Provided also that any return of income, required to be furnished by an that any return of income, required to be furnished by an that any return of income, required to be furnished by an assessee under this section and furnished beyond the period allowed shall assessee under this section and furnished beyond the period allowed shall assessee under this section and furnished beyond the period allowed shall not be deemed to be a re not be deemed to be a return under section 139.

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Explanation 1.-………………. ………………. Explanation 2.—For the purposes of this For the purposes of this section, where,— — (i)a search is initiated under section 132 or books of account, other (i)a search is initiated under section 132 or books of account, other (i)a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after documents or any assets are requisitioned under section 132A, on or after documents or any assets are requisitioned under section 132A, on or after the 1st day of April, 2021, in the case of the assessee; or the 1st day of April, 2021, in the case of the assessee; or the 1st day of April, 2021, in the case of the assessee; or (ii)a survey is conducted under section 133A, other than under sub a survey is conducted under section 133A, other than under sub a survey is conducted under section 133A, other than under sub-section (2A) [***] of that section, on or after the 1st day of April, 2021, in the case (2A) [***] of that section, on or after the 1st day of April, 2021, in the case (2A) [***] of that section, on or after the 1st day of April, 2021, in the case of the assessee; or of the assessee; or (iii)the Assessing Officer is satisfied, with the prior approval of the (iii)the Assessing Officer is satisfied, with the prior approva (iii)the Assessing Officer is satisfied, with the prior approva Principal Commissioner or Commissioner, that any money, bullion, Principal Commissioner or Commissioner, that any money, bullion, Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned under jewellery or other valuable article or thing, seized or requisitioned under jewellery or other valuable article or thing, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st section 132 or section 132A in case of any other person on or after the 1st section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, belongs to day of April, 2021, belongs to the assessee; or (iv)the Assessing Officer is satisfied, with the prior approval of Principal (iv)the Assessing Officer is satisfied, with the prior approval of Principal (iv)the Assessing Officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, Commissioner or Commissioner, that any books of account or documents, Commissioner or Commissioner, that any books of account or documents, seized or requisitioned under section 132 or section 132A in case of any seized or requisitioned under section 132 or section 132A in case of any seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee, any information contained therein, relate to, the assessee, any information contained therein, relate to, the assessee, the Assessing Officer shall be deemed to have information which suggests the Assessing Officer shall be deemed to have information which suggests the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of that the income chargeable to tax has escaped assessment in t that the income chargeable to tax has escaped assessment in t the assessee [where] the search is initiated or books of account, other the assessee [where] the search is initiated or books of account, other the assessee [where] the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the documents or any assets are requisitioned or survey is conducted in the documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article case of the assessee or money, bullion, jewellery or other valuable article case of the assessee or money, bullion, jewellery or other valuable article or thing or books of acco or thing or books of account or documents are seized or requisitioned in unt or documents are seized or requisitioned in case of any other person. case of any other person.” 7.5 On plain reading of plain reading of above provisions, the search action u/s search action u/s 132 has been deemed to have information suggesting to tax escaped deemed to have information suggesting to tax escaped deemed to have information suggesting to tax escaped assessment. The scheme of section 147/ 148 assessment. The scheme of section 147/ 148 read with Explanation read with Explanation 2 (ii) is distinct from the scheme of section 153A. distinct from the scheme of section 153A. Under the distinct from the scheme of section 153A. erstwhile Section 153A, the AO was mandated to assess or reassess erstwhile Section 153A, the AO was mandated to assess or reassess erstwhile Section 153A, the AO was mandated to assess or reassess the total income for six years solely by virtue of a search. However, the total income for six years solely by virtue of a search. However, the total income for six years solely by virtue of a search. However, the current Section 147/148 framewor the current Section 147/148 framework operates on the existence k operates on the existence

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of "information which suggests" escapement. of "information which suggests" escapement. Explanation 2(ii) Explanation 2(ii) creates a legal fiction where a search is creates a legal fiction where a search is deemed deemed to be such information. Under the provision Under the provisions of section 148/147 148/147 there is no concept of abatement of assessment. concept of abatement of assessment. Further, if er, if the assessing officer make an addition on the ground for whi officer make an addition on the ground for which the assessment ch the assessment was re-opened, then then the assessing officer is at liberty to make the assessing officer is at liberty to make addition in respect of the other addition in respect of the other item or enquiry during the course of during the course of re-assessment proceeding proceeding, but in the case of 153A proceeding if no of 153A proceeding if no incriminating material is found in the case of unabated assessment ting material is found in the case of unabated assessment ting material is found in the case of unabated assessment year, as per the decision of the Hon’ble Supreme Court in the case as per the decision of the Hon’ble Supreme Court in the case as per the decision of the Hon’ble Supreme Court in the case of Abhisar Buildwell (P.) Ltd. of Abhisar Buildwell (P.) Ltd.(supra), the Assessing O , the Assessing Officer is restricted to make addition on the basis of restricted to make addition on the basis of incriminating incriminating material found.

7.6 The Hon’ble Supreme Court in The Hon’ble Supreme Court in Abhisar Buildwell (P.) Abhisar Buildwell (P.) Ltd.(supra), affirming the view taken by the Delhi High Court in affirming the view taken by the Delhi High Court in CIT affirming the view taken by the Delhi High Court in v. Kabul Chawla (supra) held that the jurisdi (supra) held that the jurisdiction of the AO under ction of the AO under Section 153A to disturb completed assessments is strictly confined Section 153A to disturb completed assessments is strictly confined Section 153A to disturb completed assessments is strictly confined to making additions based on incriminating material unearthed to making additions based on incriminating material unearthed to making additions based on incriminating material unearthed during the search. The Hon’ble Court reasoned that permitting during the search. The Hon’ble Court reasoned that permitting during the search. The Hon’ble Court reasoned that permitting additions in the absence of such material w additions in the absence of such material would render the concept ould render the concept of a search-based assessment arbitrary and would bypass the based assessment arbitrary and would bypass the based assessment arbitrary and would bypass the statutory limitation periods prescribed for regular assessments. The statutory limitation periods prescribed for regular assessments. The statutory limitation periods prescribed for regular assessments. The Hon’ble Court held that the foundation of search assessments Hon’ble Court held that the foundation of search assessments Hon’ble Court held that the foundation of search assessments

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under Sections 153A and 153C is the detect under Sections 153A and 153C is the detection of incriminating ion of incriminating material.

7.7 The Revenue contends that this deeming fiction introduced The Revenue contends that this deeming fiction introduced The Revenue contends that this deeming fiction introduced under section 148 of the Act effectively replaces the "Incriminating under section 148 of the Act effectively replaces the "Incriminating under section 148 of the Act effectively replaces the "Incriminating Material" doctrine. If the law Material" doctrine. If the law deems that the AO has information for that the AO has information for the relevant years simply the relevant years simply because a search took place, the Revenue because a search took place, the Revenue argues that the requirement to "pinpoint" specific material before argues that the requirement to "pinpoint" specific material before argues that the requirement to "pinpoint" specific material before issuing a notice or making an addition is effectively neutralized. issuing a notice or making an addition is effectively neutralized. issuing a notice or making an addition is effectively neutralized.

7.8 The question has been raised by the ld Counsel for the The question has been raised by the ld Counsel for the The question has been raised by the ld Counsel for the assessee that the principles of assessee that the principles of Abhisar Buildwell (supra) still be invoked while completing an assessment under Section 147 in the invoked while completing an assessment under Section 147 in the invoked while completing an assessment under Section 147 in the new regime.

7.9 In this regard, regard, we may like to refer the decision the decision dated 2/01/2026 of Coordinate Bench of of Coordinate Bench of Kolkata in the case of in the case of In M/s BMS Sales Pvt. Ltd. vs. DCIT BMS Sales Pvt. Ltd. vs. DCIT in ITA No.1199/KOL/2025 for ITA No.1199/KOL/2025 for Assessment Year: 2019 Assessment Year: 2019-20. The Bench dealt with the validity of a Bench dealt with the validity of a Section 148 notice issued after a 2021 search where no Section 148 notice issued after a 2021 search where no Section 148 notice issued after a 2021 search where no incriminating material was initially found. The assessee argued that incriminating material was initially found. The assessee argued that incriminating material was initially found. The assessee argued that for "unabated" years, the notice was invalid in the absence of for "unabated" years, the notice was invalid in the absence of for "unabated" years, the notice was invalid in the absence of incriminating material. However, the Tribunal rejected this incriminating material. However, the Tribunal rejected this incriminating material. However, the Tribunal rejected this challenge, making a critical distinction between the old and new challenge, making a critical distinction between the old and new challenge, making a critical distinction between the old and new regimes. The Tribunal held that under the new framework, the AO The Tribunal held that under the new framework, the AO The Tribunal held that under the new framework, the AO is under a mandatory obligation to reopen a certain number of is under a mandatory obligation to reopen a certain number of is under a mandatory obligation to reopen a certain number of

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assessment years following a search, similar to the mandate under assessment years following a search, similar to the mandate under assessment years following a search, similar to the mandate under the old Section 153A. Because Explanation 2 to Section 148 deems the old Section 153A. Because Explanation 2 to Section 148 deem the old Section 153A. Because Explanation 2 to Section 148 deem the existence of information, the AO does not need to possess the existence of information, the AO does not need to possess the existence of information, the AO does not need to possess specific incriminating material at the specific incriminating material at the stage of issuing the notice stage of issuing the notice. The Tribunal explicitly disagreed with the Chandigarh Bench’s decision Tribunal explicitly disagreed with the Chandigarh Bench’s decision Tribunal explicitly disagreed with the Chandigarh Bench’s decision in Rosha Alloys (P) Ltd. v. DCIT, Central Rosha Alloys (P) Ltd. v. DCIT, Central-2025(7) TMI 2025(7) TMI 238 (Chd) dt. 28.5.2025 which had suggested that the AO must still demonstrate which had suggested that the AO must still demonstrate which had suggested that the AO must still demonstrate a link between the search information and the escapement for each a link between the search information and the escapement for each a link between the search information and the escapement for each specific year. The relevant finding of the Tribunal (supra) is The relevant finding of the Tribunal (supra) is The relevant finding of the Tribunal (supra) is reproduced as under: reproduced as under:

2.6. After hearing the ri 2.6. After hearing the rival contentions and perusing the material on val contentions and perusing the material on record, we find that the assessee has challenged the issue of notice record, we find that the assessee has challenged the issue of notice record, we find that the assessee has challenged the issue of notice u/s.148 of the Act and also the proceedings u/s.147/143(3) of the Act u/s.148 of the Act and also the proceedings u/s.147/143(3) of the Act u/s.148 of the Act and also the proceedings u/s.147/143(3) of the Act on the ground that the AO has failed to provide copy of the reasons on the ground that the AO has failed to provide copy of the reasons on the ground that the AO has failed to provide copy of the reasons recorded in the proceedings u/s.148 of the Act and also the addition rded in the proceedings u/s.148 of the Act and also the addition rded in the proceedings u/s.148 of the Act and also the addition made by the AO are not arising out of the search conducted u/s.132 of made by the AO are not arising out of the search conducted u/s.132 of made by the AO are not arising out of the search conducted u/s.132 of the Act on the assessee, Rather the additions made were on the basis the Act on the assessee, Rather the additions made were on the basis the Act on the assessee, Rather the additions made were on the basis of material gathered during the course of searches on Kesara Group on of material gathered during the course of searches o of material gathered during the course of searches o 30.11.2018 and Anup Majee Group on 05.11.2020 and consequently 30.11.2018 and Anup Majee Group on 05.11.2020 and consequently 30.11.2018 and Anup Majee Group on 05.11.2020 and consequently the notice u/s.148 of the Act was itself invalid and may be quashed. the notice u/s.148 of the Act was itself invalid and may be quashed. the notice u/s.148 of the Act was itself invalid and may be quashed. We have perused the provisions under old scheme vis a vis under new We have perused the provisions under old scheme vis a vis under new We have perused the provisions under old scheme vis a vis under new scheme and find that under the new sch scheme and find that under the new scheme of search, the AO has to eme of search, the AO has to issue notice u/s 148 of the Act for the number of assessment years as issue notice u/s 148 of the Act for the number of assessment years as issue notice u/s 148 of the Act for the number of assessment years as provided in the Act. In other words there need not be any incriminating provided in the Act. In other words there need not be any incriminating provided in the Act. In other words there need not be any incriminating materials and whether there is any materials warranting additions materials and whether there is any materials warranting additions materials and whether there is any materials warranting additions that has to be exam that has to be examined by the AO during proceedings u/s 147 of the ined by the AO during proceedings u/s 147 of the Act. Therefore we do not find any merit in the contentions of the Act. Therefore we do not find any merit in the contentions of the Act. Therefore we do not find any merit in the contentions of the assessee that the provisions of Section 148 of the Act for search assessee that the provisions of Section 148 of the Act for search assessee that the provisions of Section 148 of the Act for search conducted on or after 1.4.2021 cannot be considered in total oblivion of conducted on or after 1.4.2021 cannot be considered in total oblivion of conducted on or after 1.4.2021 cannot be considered in total oblivion of the fact that no incriminating material was found with the assessee e fact that no incriminating material was found with the assessee e fact that no incriminating material was found with the assessee during the course of search u/s.132 of the Act and the impugned during the course of search u/s.132 of the Act and the impugned during the course of search u/s.132 of the Act and the impugned assessment was unabated and hence no addition can be made. We assessment was unabated and hence no addition can be made. We assessment was unabated and hence no addition can be made. We note that the plea of the assessee does not have force or merit as in note that the plea of the assessee does not have force or merit note that the plea of the assessee does not have force or merit this case the requirement of any incriminating material is not there for this case the requirement of any incriminating material is not there for this case the requirement of any incriminating material is not there for issuing notice u/s 148 Page | 7 ITA No.1199/KOL/2025 M/s BMS issuing notice u/s 148 Page | 7 ITA No.1199/KOL/2025 M/s BMS issuing notice u/s 148 Page | 7 ITA No.1199/KOL/2025 M/s BMS

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Sales Pvt. Ltd.; A.Y. 2019 Sales Pvt. Ltd.; A.Y. 2019-20 and the assessment can be reopened 20 and the assessment can be reopened because the provisions of Section 148 of the Act are analogous to because the provisions of Section 148 of the Act ar because the provisions of Section 148 of the Act ar Section 153A of the Act as applicable in the case of search pertaining to Section 153A of the Act as applicable in the case of search pertaining to Section 153A of the Act as applicable in the case of search pertaining to search prior to 1.4.2021. In our opinion, the AO is under obligation to search prior to 1.4.2021. In our opinion, the AO is under obligation to search prior to 1.4.2021. In our opinion, the AO is under obligation to reopen such assessment years prior to the date of search even if there reopen such assessment years prior to the date of search even if there reopen such assessment years prior to the date of search even if there is no incriminating mate is no incriminating material and then frame the assessment rial and then frame the assessment accordingly. In other words the existence of incriminating materials has accordingly. In other words the existence of incriminating materials has accordingly. In other words the existence of incriminating materials has to be examined during the assessment proceedings and not at the to be examined during the assessment proceedings and not at the to be examined during the assessment proceedings and not at the stage of issuance of notice. Ld. AR also relied on the decision of the stage of issuance of notice. Ld. AR also relied on the decision of the stage of issuance of notice. Ld. AR also relied on the decision of the Chandigarh Be Chandigarh Bench of the Tribunal in the case of Rosha Alloys (P) Ltd., nch of the Tribunal in the case of Rosha Alloys (P) Ltd., reported in 2025 (7) TMI 238 (Chd) dtd. 28.05.2025, however, with, reported in 2025 (7) TMI 238 (Chd) dtd. 28.05.2025, however, with, reported in 2025 (7) TMI 238 (Chd) dtd. 28.05.2025, however, with, utmost humility and respectful disagree with the conclusion drawn by utmost humility and respectful disagree with the conclusion drawn by utmost humility and respectful disagree with the conclusion drawn by the coordinate bench of the Tribunal and, therefore, the ground Nos.1 the coordinate bench of the Tribunal and, therefore, the groun the coordinate bench of the Tribunal and, therefore, the groun to 5 raised by the assessee have no merit and accordingly the same to 5 raised by the assessee have no merit and accordingly the same to 5 raised by the assessee have no merit and accordingly the same are dismissed by upholding the appellate order on this issue.” are dismissed by upholding the appellate order on this issue. are dismissed by upholding the appellate order on this issue. 7.10 The decision in the case of in the case of BMS Sales Pvt. Ltd.(supra) BMS Sales Pvt. Ltd.(supra) thus holds that at the jurisdictional stage of that at the jurisdictional stage of initiating proceedings, the proceedings, the "Incriminating Material" doctrine has been weakened by the "Incriminating Material" doctrine has been weakened by the "Incriminating Material" doctrine has been weakened by the legislative fiction of Explanation 2. The "information" is now a legislative fiction of Explanation 2. The "information" is now a legislative fiction of Explanation 2. The "information" is now a statutory presumption rather than a factual discovery. statutory presumption rather than a factual discovery. statutory presumption rather than a factual discovery.

7.11 The Abhisar Buildwell Abhisar Buildwell (supra) ruling emphasized that f ruling emphasized that for completed assessments, additions cannot be made arbitrarily or on completed assessments, additions cannot be made arbitrarily or on completed assessments, additions cannot be made arbitrarily or on "other material" without a nexus to the search. Under Section 147, "other material" without a nexus to the search. Under Section 147, "other material" without a nexus to the search. Under Section 147, the AO is still required to base the assessment on "tangible the AO is still required to base the assessment on "tangible the AO is still required to base the assessment on "tangible material". If the only material in the AO's possession is search- material". If the only material in the AO's possession is s material". If the only material in the AO's possession is s derived information, and that information is found to be non- derived information, and that information is found to be non derived information, and that information is found to be non incriminating for a particular year, the rationale of Abhisar incriminating for a particular year, the rationale of incriminating for a particular year, the rationale of Buildwell (supra) suggests that no addition can be sustained. suggests that no addition can be sustained. suggests that no addition can be sustained. Further, even no addition is made by the ld AO on the information Further, even no addition is made by the ld AO on the information Further, even no addition is made by the ld AO on the information gathered during the search leading reopening u/s 148 of the Act , gathered during the search leading reopening u/s 148 of the A gathered during the search leading reopening u/s 148 of the A

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the ratio of Hon’ble jurisdictional the ratio of Hon’ble jurisdictional High Court in the case of High Court in the case of Commissioner of Income Commissioner of Income-Tax-5 v. Jet Airways (I) Ltd. 5 v. Jet Airways (I) Ltd. [2010] 331 ITR 236 (Bom) 331 ITR 236 (Bom) that if an Assessing Officer (AO) reopens an that if an Assessing Officer (AO) reopens an assessment under Section 147/148 but fails to add the specific assessment under Section 147/148 but fails to add the specific assessment under Section 147/148 but fails to add the specific income for which the notice was issued, they cannot independently income for which the notice was issued, they cannot independently income for which the notice was issued, they cannot independently add other, new income, making the reassessment invalid , will also add other, new income, making the reassessment invalid add other, new income, making the reassessment invalid come into play and no other addition could be made in and no other addition could be made in search and no other addition could be made in assessments u/s 147 u/s 147 otherwise then based on information if information if no addition is made based on addition is made based on such information.

Regarding the assessee’s reliance on Abhisar Buildwell Abhisar Buildwell 7.12 Regarding the assessee’s reliance on (supra), we observe a fundamental distinction. In the present case, , we observe a fundamental distinction. In the present case, , we observe a fundamental distinction. In the present case, the "information" is not merely the factum of the search, but the the "information" is not merely the factum of the search, but the the "information" is not merely the factum of the search, but the specific, sworn testimony of Shri Kishanlal Udaylal Jain and the specific, sworn testimony of Shri Kishanlal Udaylal Jain and the specific, sworn testimony of Shri Kishanlal Udaylal Jain and the subsequent field inquiries by the Investigation Wing which revealed subsequent field inquiries by the Investigation Wing which revea subsequent field inquiries by the Investigation Wing which revea the non-existence of the lenders. existence of the lenders.

7.13 In the case of n the case of decision in Rakesh Kumar Pandey (Supra) Rakesh Kumar Pandey (Supra), which has been relied upon by the ld Counsel which has been relied upon by the ld Counsel, the Coordinate , the Coordinate Bench observed as under: as under: “(F2.1) A conjoint reading of the prevailing law as contained in sect A conjoint reading of the prevailing law as contained in section 147 A conjoint reading of the prevailing law as contained in sect & 148 of the 1. T. Act, shows that the Assessing Officer is deemed to have & 148 of the 1. T. Act, shows that the Assessing Officer is deemed to have & 148 of the 1. T. Act, shows that the Assessing Officer is deemed to have information which suggests that income chargeable to tax has escaped information which suggests that income chargeable to tax has escaped information which suggests that income chargeable to tax has escaped assessment where a search is initiated under section 132 of the Act. assessment where a search is initiated under section 132 of the Act. assessment where a search is initiated under section 132 of the Act. However, to satisfy the requirement However, to satisfy the requirement of section 147 of the Act, a mere of section 147 of the Act, a mere suggestion is not adequate to assume jurisdiction under section 147 of the suggestion is not adequate to assume jurisdiction under section 147 of the suggestion is not adequate to assume jurisdiction under section 147 of the Act. The perusal of section 147 of the I. T. Act shows that the Assessing Act. The perusal of section 147 of the I. T. Act shows that the Assessing Act. The perusal of section 147 of the I. T. Act shows that the Assessing Officer can assume jurisdiction under section 147 of the Act if any income Officer can assume jurisdiction under section 147 of the Act if any inco Officer can assume jurisdiction under section 147 of the Act if any inco chargeable to tax has escaped assessment. Therefore, to assume chargeable to tax has escaped assessment. Therefore, to assume chargeable to tax has escaped assessment. Therefore, to assume

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jurisdiction under section 147 of the Act, the Assessing Officer must have, jurisdiction under section 147 of the Act, the Assessing Officer must have, jurisdiction under section 147 of the Act, the Assessing Officer must have, sound reasons to belief (and not just a suggestion) that income chargeable sound reasons to belief (and not just a suggestion) that income chargeable sound reasons to belief (and not just a suggestion) that income chargeable to tax has escaped assessment in the ca to tax has escaped assessment in the case of the assessee. The deeming se of the assessee. The deeming provision under Explanation provision under Explanation-2 to Section 148 of the Act is to be read 2 to Section 148 of the Act is to be read strictly and not liberally; as it is well settled that deeming provisions of strictly and not liberally; as it is well settled that deeming provisions of strictly and not liberally; as it is well settled that deeming provisions of law are to be interpreted strictly: Explanation law are to be interpreted strictly: Explanation-2 to Section 148 of the Act 2 to Section 148 of the Act provides that the Assessing Officer is deemed to have information which rovides that the Assessing Officer is deemed to have information which rovides that the Assessing Officer is deemed to have information which suggests that income chargeable to tax has escaped assessment. suggests that income chargeable to tax has escaped assessment. suggests that income chargeable to tax has escaped assessment. However, there is no deeming provision of law to the effect that the However, there is no deeming provision of law to the effect that the However, there is no deeming provision of law to the effect that the Assessing Officer is deemed to have sound belief that Assessing Officer is deemed to have sound belief that income has escaped income has escaped assessment. The requirement u/s 147 of 1. T. Act of forming a sound belief assessment. The requirement u/s 147 of 1. T. Act of forming a sound belief assessment. The requirement u/s 147 of 1. T. Act of forming a sound belief that income has escaped assessment, has placed a much higher burden that income has escaped assessment, has placed a much higher burden that income has escaped assessment, has placed a much higher burden on the Assessing Officer than merely having suggestion, that income has on the Assessing Officer than merely having suggestion, that income has on the Assessing Officer than merely having suggestion, that income has escaped assessment. M escaped assessment. Moreover, the search action under section 132 of the oreover, the search action under section 132 of the Act is merely a provision of law, authorizing investigation of the assessee's Act is merely a provision of law, authorizing investigation of the assessee's Act is merely a provision of law, authorizing investigation of the assessee's affairs. Section 132 of the Act is not a charging provision. A provision of affairs. Section 132 of the Act is not a charging provision. A provision of affairs. Section 132 of the Act is not a charging provision. A provision of law, authorizing investigation in the case of the law, authorizing investigation in the case of the assessee, cannot bestow assessee, cannot bestow substantive or jurisdictional rights on Revenue to the detriment of the substantive or jurisdictional rights on Revenue to the detriment of the substantive or jurisdictional rights on Revenue to the detriment of the assessee, which were not available before the investigation started. It is assessee, which were not available before the investigation started. It is assessee, which were not available before the investigation started. It is well settled that provisions of law are to be interpreted in a manner which well settled that provisions of law are to be interpreted in a manner which well settled that provisions of law are to be interpreted in a manner which does not lead to absurd results. The interpretation give by the learned lead to absurd results. The interpretation give by the learned lead to absurd results. The interpretation give by the learned CIT(A) would imply that merely because search has been conducted under CIT(A) would imply that merely because search has been conducted under CIT(A) would imply that merely because search has been conducted under section 132 of the Act, which is a no more than a process of investigation; section 132 of the Act, which is a no more than a process of investigation; section 132 of the Act, which is a no more than a process of investigation; the Assessing Officer becomes vested with addi the Assessing Officer becomes vested with additional substantive and tional substantive and jurisdictional powers to assume jurisdiction u/s 147 of the 1. T. Act even jurisdictional powers to assume jurisdiction u/s 147 of the 1. T. Act even jurisdictional powers to assume jurisdiction u/s 147 of the 1. T. Act even when no incriminating materials have be when no incriminating materials have been found at the time of search u en found at the time of search us 132 of the I. T. Act from the assessee's premises 132 of the I. T. Act from the assessee's premises based on which the based on which the Assessing Officer can reasonably arrive at sound belief that income has Assessing Officer can reasonably arrive at sound belief that income has Assessing Officer can reasonably arrive at sound belief that income has escaped assessment. This interpretation, being absurd is unacceptable. A escaped assessment. This interpretation, being absurd is unacceptable. escaped assessment. This interpretation, being absurd is unacceptable. reasonable interpretation of law, as provided in Section 147 and reasonable interpretation of law, as provided in Section 147 and reasonable interpretation of law, as provided in Section 147 and 148 of the 1. T. Act, is th 148 of the 1. T. Act, is that the Assessing Officer can assume at the Assessing Officer can assume jurisdiction u/s 147 of the 1. T. Act if he can reasonably come to a jurisdiction u/s 147 of the 1. T. Act if he can reasonably come to a jurisdiction u/s 147 of the 1. T. Act if he can reasonably come to a sound belief that income has escaped assessment, with the help of sound belief that income has escaped assessment, with the help of sound belief that income has escaped assessment, with the help of incriminating materials found in the course of search under incriminating materials found in the course of search under incriminating materials found in the course of search under section 132 of the Act. H section 132 of the Act. However, if there are no incriminating owever, if there are no incriminating materials found during search under section 132 of the Act, the materials found during search under section 132 of the Act, the materials found during search under section 132 of the Act, the deeming 'suggestion' under Explanation deeming 'suggestion' under Explanation-2 to Section 148 of the Act, 2 to Section 148 of the Act, in itself does not lead to fulfillment of mandatory requirement w/s in itself does not lead to fulfillment of mandatory requirement w/s in itself does not lead to fulfillment of mandatory requirement w/s 147 of the I. T. A 147 of the I. T. Act that Assessing Officer must have sound reasons ct that Assessing Officer must have sound reasons to believe that income has escaped assessment. From perusal of to believe that income has escaped assessment. From perusal of to believe that income has escaped assessment. From perusal of records, it is obvious that no incriminating material was found in records, it is obvious that no incriminating material was found in records, it is obvious that no incriminating material was found in the course of search under section 132 of the Act. In the absence of the course of search under section 132 of the Act. In the absence of the course of search under section 132 of the Act. In the absence of any incriminating material, the deeming provision under section riminating material, the deeming provision under section riminating material, the deeming provision under section

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132 of the Act is not adequate for the Assessing Officer to assume 132 of the Act is not adequate for the Assessing Officer to assume 132 of the Act is not adequate for the Assessing Officer to assume jurisdiction under section 147 of the Act. jurisdiction under section 147 of the Act. For the aforesaid reason, we For the aforesaid reason, we are of the view that the proceedings under section 147 read with section are of the view that the proceedings under section 147 read are of the view that the proceedings under section 147 read 148 were started, and jurisdiction under section 147 was assumed by the 148 were started, and jurisdiction under section 147 was assumed by the 148 were started, and jurisdiction under section 147 was assumed by the Assessing Officer without meeting the requirement of law. Accordingly, we Assessing Officer without meeting the requirement of law. Accordingly, we Assessing Officer without meeting the requirement of law. Accordingly, we conclude that the assessment order passed under section 147 of the Act is conclude that the assessment order passed under section 147 of the Act is conclude that the assessment order passed under section 147 of the Act is nonest and is unsustain nonest and is unsustainable in the eye of law. Therefore, for this reason law. Therefore, for this reason also, the assessment order deserved to be annulled. also, the assessment order deserved to be annulled. (EMPHASIS SUPPLIED)” (EMPHASIS SUPPLIED)” 7.14 In above decision, the C above decision, the Coordinate Bench ench has held that irrespective of the dee irrespective of the deeming provision of Explanation 2(ii) of section of Explanation 2(ii) of section 148, a mere "suggestion" of escapement is insufficient and a mere "suggestion" of escapement is insufficient and the a mere "suggestion" of escapement is insufficient and Assessing officer has to satisfy sound reasons to believe that income ssessing officer has to satisfy sound reasons to believe that income ssessing officer has to satisfy sound reasons to believe that income escaped assessment. .

7.15 In the instant case In the instant case before us the AO’s belief was far from the AO’s belief was far from arbitrary. The statement recorded under Section 131, of Shri arbitrary. The statement recorded under Section 131, of Shri arbitrary. The statement recorded under Section 131, of Shri Kishanlal Udaylal Jain though not under Section 132(4), qualifies Kishanlal Udaylal Jain though not under Section 132(4), qualifies Kishanlal Udaylal Jain though not under Section 132(4), qualifies as "material" that can trigger a reassessment under the broad as "material" that can trigger a reassessment under the broad as "material" that can trigger a reassessment under the broad definition of "information" provided definition of "information" provided in the new scheme. The non in the new scheme. The non- traceability of the lenders at their registered addresses provides the traceability of the lenders at their registered addresses provides the traceability of the lenders at their registered addresses provides the requisite factual foundation to transform a "suggestion" into a requisite factual foundation to transform a "suggestion" into a requisite factual foundation to transform a "suggestion" into a "reasoned belief." In our opinion, all those In our opinion, all those information information constituted sound reasons to believe sound reasons to believe that income had escaped assessment and assessment and therefore the ratio in the decision of the Rakesh Kumar Pandey therefore the ratio in the decision of the Rakesh therefore the ratio in the decision of the Rakesh (Supra) is no longer longer applicable over the facts of the instant case. applicable over the facts of the instant case. While the Lucknow Bench Lucknow Bench in Rakesh Kumar Pandey Rakesh Kumar Pandey observed that a mere "suggestion" of es a mere "suggestion" of escapement is insufficient without a "sound capement is insufficient without a "sound belief," we find that in the instant case, the AO’s belief was far from belief," we find that in the instant case, the AO’s belief was far from belief," we find that in the instant case, the AO’s belief was far from

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arbitrary. The statement recorded under Section 131, though not arbitrary. The statement recorded under Section 131, though not arbitrary. The statement recorded under Section 131, though not under Section 132(4), qualifies as "material" that can trigger a under Section 132(4), qualifies as "material" that can trigger a under Section 132(4), qualifies as "material" that can trigger a reassessment under the broad definition of "information" provided under the broad definition of "information" provided under the broad definition of "information" provided in the new scheme. The non in the new scheme. The non-traceability of the lenders at their traceability of the lenders at their registered addresses provides the requisite factual foundation to registered addresses provides the requisite factual foundation to registered addresses provides the requisite factual foundation to transform a "suggestion" into a "reasoned belief." transform a "suggestion" into a "reasoned belief."

7.16 We note that the "incriminating material" rule established in note that the "incriminating material" rule established in note that the "incriminating material" rule established in Abhisar Buildwell (supra) was specific to the unique architecture of (supra) was specific to the unique architecture of (supra) was specific to the unique architecture of Section 153A. Under the amended Section 147, the AO's Section 153A. Under the amended Section 147, the AO's Section 153A. Under the amended Section 147, the AO's jurisdiction is wider; if "information" (including deemed information jurisdiction is wider; if "information" (including deemed information jurisdiction is wider; if "information" (including deemed information from a search) suggests escapement m a search) suggests escapement of income of income, the AO is empowered to reassess empowered to reassess any income that has escaped assessment income that has escaped assessment which comes to his notice during the proceedings. In this case, the which comes to his notice during the proceedings. In this case, the which comes to his notice during the proceedings. In this case, the third-party confessions and the failed field verifications constitute party confessions and the failed field verifications constitute party confessions and the failed field verifications constitute sufficient "tangible material" to justify the addition, irrespective of icient "tangible material" to justify the addition, irrespective of icient "tangible material" to justify the addition, irrespective of whether a specific document was "seized" from the assessee. whether a specific document was "seized" from the assessee. whether a specific document was "seized" from the assessee.

7.17 In view of the above, we hold that the jurisdictional In view of the above, we hold that the jurisdictional In view of the above, we hold that the jurisdictional requirements of Section 147/148 have been met. The ratio of requirements of Section 147/148 have been met. The ratio of requirements of Section 147/148 have been met. The ratio of Rakesh Kumar Pandey umar Pandey (supra) is distinguishable as the present case is distinguishable as the present case involves specific adverse evidence beyond the mere occurrence of a involves specific adverse evidence beyond the mere occurrence of a involves specific adverse evidence beyond the mere occurrence of a search.

7.18 In view of aforesaid discussion, In view of aforesaid discussion, the additional grounds No grounds Nos. 3- 5 of the appeal raised by assessee are dismissed. 5 of the appeal raised by assessee are dismissed.

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8.1 However, before u However, before us learned counsel for the assessee s learned counsel for the assessee did not press this ground, , accordingly, the same is d the same is dismissed as infructuous.

10.1 The facts in brief qua the issue brief qua the issue-in-dispute are that during the dispute are that during the course of the re-assessment proceeding, assessment proceeding, the Ld. the Ld. AO observed following amount of unsecured following amount of unsecured loans given by the assessee. loans given by the assessee. Sr. No. Name of The Entity Name of The Entity PAN Amount

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1 Amit R. Bajaj Amit R. Bajaj AFRPB3442B 7900000 2 Benchmark Trading Pvt. Ltd. Benchmark Trading Pvt. Ltd. AADCB3962G 2700000 3 Harinder Singh Kanda Harinder Singh Kanda AFHPK0323G 500000 4 Krishna Raj Diamond Pvt. Ltd. Krishna Raj Diamond Pvt. Ltd. AAECK0445Q 9500000 5 Manibhadra Diamond Traders Manibhadra Diamond Traders AAGCM3399H 1800000 6 Neha Beri AIWPM1742M 6400000 7 Nisith Biswas Nisith Biswas AAPPB8312F 500000 8 Sachin Baslas Sachin Baslas AKKPB3762G 2200000 9 Shree Balaji Enterprises Shree Balaji Enterprises ACYPK3888Q 10000000 10 Yuvika Impex Pvt. Ltd Yuvika Impex Pvt. Ltd AAACY4332L 3000000 11 Yuvraj Entertainment Entertainment AAACY3782G 1000000 Total 45500000 10.2 The ld AO made addition of unsecured loan on the basis of made addition of unsecured loan on the basis of made addition of unsecured loan on the basis of evidences gathered evidences gathered from three sources: (i) statements recorded tements recorded during search; (ii) inquiry carried during search and inquiry carried during search and inquiry carried during search and (iii) inquiry carried during re-assessment. assessment.

10.3 The ld AO firstly firstly, referred to the statement of Shri Kishanlal referred to the statement of Shri Kishanlal Udaylal Jain recorded u/s 131 of the Act by the I recorded u/s 131 of the Act by the Investigation wing, nvestigation wing, which was carried out which was carried out parallel to the search proceeding, parallel to the search proceeding, wherein in answers to questions s Nos. 16 to 23, he stated regarding stated regarding unsecured loan transactions of the assessee of the assessee. This statement forms bedrock of This statement forms bedrock of the Revenue’s allegation that the credits appearing in the assessee's the Revenue’s allegation that the credits appearing in the assessee's the Revenue’s allegation that the credits appearing in the assessee's books lack genuine character and creditworthiness. Therefore, it is books lack genuine character and creditworthiness. books lack genuine character and creditworthiness. imperative to extract imperative to extract said questions and answers of his statement said questions and answers of his statement for ready reference as under: or ready reference as under:

“Q.16 Please furnish Q.16 Please furnish details of sales made to Shri Sonu Sood and Smt of sales made to Shri Sonu Sood and Smt Sonali Sood by you. Please also furnish the mode of payment. Sonali Sood by you. Please also furnish the mode of payment. Sonali Sood by you. Please also furnish the mode of payment. Ans. Sir we have not sold much of new jewellery to them. We may have Ans. Sir we have not sold much of new jewellery to them. We may have Ans. Sir we have not sold much of new jewellery to them. We may have done small amount of repairing work for them. The amount would not be done small amount of repairing work for them. The amount would not be done small amount of repairing work for them. The amount would not be more than 1.1 to 1.5L total. This amount would have been received by us 1 to 1.5L total. This amount would have been received by us 1 to 1.5L total. This amount would have been received by us in cash. In the last 1 in cash. In the last 1-2 years we have not received any repairing orders ceived any repairing orders from them.

Sonu Pankaj Shakti Sagar Sood Sonu Pankaj Shakti Sagar Sood 28 ITA No. 1840 , 1843 & 1842 1840 , 1843 & 1842/MUM/2025

Q.17 Please give details of any other transaction done with Shri Sonu 7 Please give details of any other transaction done with Shri Sonu 7 Please give details of any other transaction done with Shri Sonu Sood. Ans. Sir we have in the past given loan to Shri Sonu Sood in FY 13-14 from Ans. Sir we have in the past given loan to Shri Sonu Sood in FY 13 Ans. Sir we have in the past given loan to Shri Sonu Sood in FY 13 Omshilpi Jewels and Gems Pvt Omshilpi Jewels and Gems Pvt Ltd. Other than this we have no other Ltd. Other than this we have no other transaction in the books of Omshilpi Jewels and Gems Pvt Ltd. I am transaction in the books of Omshilpi Jewels and Gems Pvt Ltd. I am transaction in the books of Omshilpi Jewels and Gems Pvt Ltd. I am submitting ledger of Sonu Sood in our books from FY 2013-14 till date as submitting ledger of Sonu Sood in our books from FY 2013 submitting ledger of Sonu Sood in our books from FY 2013 Page 1 to 8 of Annexure 1 to this statement. I am also submitting copy of Page 1 to 8 of Annexure 1 to this statement. I am also submitting copy of Page 1 to 8 of Annexure 1 to this statement. I am also submitting copy of our bank book which reflects the payments to/from Sonu Sood, at page 1 bank book which reflects the payments to/from Sonu Sood, at page 1 bank book which reflects the payments to/from Sonu Sood, at page 1 to 29 of Annexure 2 to this statement. to 29 of Annexure 2 to this statement. Other than this, I also arranged for unsecured loan entries for Sonu Sood Other than this, I also arranged for unsecured loan entries for Sonu Sood Other than this, I also arranged for unsecured loan entries for Sonu Sood from Renuka Exim Pvt Ltd, Chattar Impex Pvt Ltd, Yuvika Impex Pvt Ltd, from Renuka Exim Pvt Ltd, Chattar Impex Pvt Ltd, Yuvika Impex Pvt Ltd, from Renuka Exim Pvt Ltd, Chattar Impex Pvt Ltd, Yuvika Impex Pvt Ltd, Krishna Raj Diamond Pvt Ltd, Kamal Gem Jewellers. This was done shna Raj Diamond Pvt Ltd, Kamal Gem Jewellers. This was done shna Raj Diamond Pvt Ltd, Kamal Gem Jewellers. This was done starting in FY 2013 starting in FY 2013-14 and in subsequent years also. I have also arranged 14 and in subsequent years also. I have also arranged for unsecured loans for Smt Sonali Sood from Renuka Exim Pvt Ltd. for unsecured loans for Smt Sonali Sood from Renuka Exim Pvt Ltd. for unsecured loans for Smt Sonali Sood from Renuka Exim Pvt Ltd. Q.18 Please explain the sources from which loan has be 18 Please explain the sources from which loan has be 18 Please explain the sources from which loan has been paid to Sonu Sood by Omshilpi Jewels and Gems Pvt Ltd. Sood by Omshilpi Jewels and Gems Pvt Ltd. Ans. Sir Sonu Sood had paid us cash of Rs 45 lakhs against which we Ans. Sir Sonu Sood had paid us cash of Rs 45 lakhs against which we Ans. Sir Sonu Sood had paid us cash of Rs 45 lakhs against which we have provided RTGS entries to him in FY 2013 have provided RTGS entries to him in FY 2013-14. These entries are same 14. These entries are same as ledger submitted at Annexure 1 to this statement. as ledger submitted at Annexure 1 to this statement. Q.19 Please explain in detail how the loans from the entities Renuka Exim 9 Please explain in detail how the loans from the entities Renuka Exim 9 Please explain in detail how the loans from the entities Renuka Exim Pvt Ltd, Chattar Impex Pvt Ltd, Yuvika Impex Pvt Ltd, Krishna Raj Pvt Ltd, Chattar Impex Pvt Ltd, Yuvika Impex Pvt Ltd, Krishna Raj Pvt Ltd, Chattar Impex Pvt Ltd, Yuvika Impex Pvt Ltd, Krishna Raj Diamond Pvt Ltd, Kamal Gem Jewellers were arranged by you, as Diamond Pvt Ltd, Kamal Gem Jewellers were arranged by you, as Diamond Pvt Ltd, Kamal Gem Jewellers were arranged by you, as mentioned by you at Q No 17. Please give the complete details of mentioned by you at Q No 17. Please give the complete det mentioned by you at Q No 17. Please give the complete det middlemen involved, if any, and commission earned by you, if any. middlemen involved, if any, and commission earned by you, if any. middlemen involved, if any, and commission earned by you, if any. Ans. Sir there are agents in the market who arrange unsecured loans in Ans. Sir there are agents in the market who arrange unsecured loans in Ans. Sir there are agents in the market who arrange unsecured loans in lieu of cash. The loans availed from these parties Renuka Exim Pvt Ltd, lieu of cash. The loans availed from these parties Renuka Exim Pvt Ltd, lieu of cash. The loans availed from these parties Renuka Exim Pvt Ltd, Chattar Impex Pvt Ltd, Yuvika Impex Pv Chattar Impex Pvt Ltd, Yuvika Impex Pvt Ltd, Krishna Raj Diamond Pvt t Ltd, Krishna Raj Diamond Pvt Ltd, Kamal Gem Jewellers have been given in return for cash paid by Sonu Ltd, Kamal Gem Jewellers have been given in return for cash paid by Sonu Ltd, Kamal Gem Jewellers have been given in return for cash paid by Sonu Sood/Sonall Sood, as applicable. I had arranged these loans for Sonu Sood/Sonall Sood, as applicable. I had arranged these loans for Sonu Sood/Sonall Sood, as applicable. I had arranged these loans for Sonu Sood/Sonali Sood through some agents but I do not remember their names Sood/Sonali Sood through some agents but I do not remember their names Sood/Sonali Sood through some agents but I do not remember their names right now. For this, I earned a commission of around Rs 50,000 in cash. I or this, I earned a commission of around Rs 50,000 in cash. I or this, I earned a commission of around Rs 50,000 in cash. I arranged these entries in PY 2013 arranged these entries in PY 2013-14 and in subsequent years. 14 and in subsequent years. Q.20 Please refer to your response to the question above where you have Q.20 Please refer to your response to the question above where you have Q.20 Please refer to your response to the question above where you have stated that you have arranged unsecured loans in lieu of cash for Sonu stated that you have arranged unsecured loans in lieu of ca stated that you have arranged unsecured loans in lieu of ca

Sonu Pankaj Shakti Sagar Sood Sonu Pankaj Shakti Sagar Sood 29 ITA No. 1840 , 1843 & 1842 1840 , 1843 & 1842/MUM/2025

Sood and Sonali Sood. Please substantiate your response with Sood and Sonali Sood. Please substantiate your response with Sood and Sonali Sood. Please substantiate your response with documentary evidences, If any. documentary evidences, If any. Ans. Sir I am submitting copy of email exchanged on 26.12.2019 between Ans. Sir I am submitting copy of email exchanged on 26.12.2019 between Ans. Sir I am submitting copy of email exchanged on 26.12.2019 between Shri Janak Talsaria and Shri Radhesh Nair, who is the CA of Sonu Sood Shri Janak Talsaria and Shri Radhesh Nair, who is the CA of Sonu Sood Shri Janak Talsaria and Shri Radhesh Nair, who is the CA of Sonu Sood and Sonali Sood. This email (annexed as page 1 to 4 of Annexure 3 to this Sood. This email (annexed as page 1 to 4 of Annexure 3 to this Sood. This email (annexed as page 1 to 4 of Annexure 3 to this statement) contains ledgers of Chattar Impex Pvt Ltd, Krishna Raj statement) contains ledgers of Chattar Impex Pvt Ltd, Krishna Raj statement) contains ledgers of Chattar Impex Pvt Ltd, Krishna Raj Diamond Pvt Ltd, Kamal Gem Jewellers in the books of Sonu Sood. These Diamond Pvt Ltd, Kamal Gem Jewellers in the books of Sonu Sood. These Diamond Pvt Ltd, Kamal Gem Jewellers in the books of Sonu Sood. These emails were being exchanged in order to follow up for my commission emails were being exchanged in order to follow up for my emails were being exchanged in order to follow up for my accrued on account of facilitating these loans. accrued on account of facilitating these loans. Q.21 Please state whether you know anyone named Smt Monika Jain and Q.21 Please state whether you know anyone named Smt Monika Jain and Q.21 Please state whether you know anyone named Smt Monika Jain and Shri Nayan Shree Jain. If so, please state the nature of your relationship Shri Nayan Shree Jain. If so, please state the nature of your relationship Shri Nayan Shree Jain. If so, please state the nature of your relationship with these people. Ans. Sir I do not know these peo Ans. Sir I do not know these people. I have never heard their names. ple. I have never heard their names. Q. 22 I am showing you list of unsecured loans availed by Shri Sonu Sood, Q. 22 I am showing you list of unsecured loans availed by Shri Sonu Sood, Q. 22 I am showing you list of unsecured loans availed by Shri Sonu Sood, as declared by him in his Tax Audit Report for AY 2014-15. The Tax Audit as declared by him in his Tax Audit Report for AY 2014 as declared by him in his Tax Audit Report for AY 2014 Report is annexed as Annexure 4 to this statement. In this list, Shri Sonu Report is annexed as Annexure 4 to this statement. In this list, Shri S Report is annexed as Annexure 4 to this statement. In this list, Shri S Sood has stated to have received unsecured loans of Rs 9 lakhs each from Sood has stated to have received unsecured loans of Rs 9 lakhs each from Sood has stated to have received unsecured loans of Rs 9 lakhs each from Smt Monika Jain and Shri Nayan Shree Jain. The address of both these Smt Monika Jain and Shri Nayan Shree Jain. The address of both these Smt Monika Jain and Shri Nayan Shree Jain. The address of both these persons has been given as Shop No. 6/7, Dhavalgiri Apartment, Swami persons has been given as Shop No. 6/7, Dhavalgiri Apartment, Swami persons has been given as Shop No. 6/7, Dhavalgiri Apartment, Swami Samarth Nagar, Andheri (W), Mumbal Samarth Nagar, Andheri (W), Mumbal-400053, which is same as the which is same as the registered office of Om Shilpi Jewels and Gems Private Limited. Further, no registered office of Om Shilpi Jewels and Gems Private Limited. Further, no registered office of Om Shilpi Jewels and Gems Private Limited. Further, no PAN has been mentioned against these persons. Please comment. PAN has been mentioned against these persons. Please comment. PAN has been mentioned against these persons. Please comment. Ans. Sir I had arranged for loans for Sonu Sood from Renuka Exim Pvt Ltd, Ans. Sir I had arranged for loans for Sonu Sood from Renuka Exim Pvt Ltd, Ans. Sir I had arranged for loans for Sonu Sood from Renuka Exim Pvt Ltd, Chattar Impex Pvt Ltd Chattar Impex Pvt Ltd, Yuvika Impex Pvt Ltd, Krishna Raj Diamond Pvt , Yuvika Impex Pvt Ltd, Krishna Raj Diamond Pvt Ltd, Kamal Gem Jewellers and maybe that is why he has put this address Ltd, Kamal Gem Jewellers and maybe that is why he has put this address Ltd, Kamal Gem Jewellers and maybe that is why he has put this address against Monika Jain and Nayan Shree Jain. I do not know any persons of against Monika Jain and Nayan Shree Jain. I do not know any persons of against Monika Jain and Nayan Shree Jain. I do not know any persons of these names. They have no connection with me or this address. I do not these names. They have no connection with me or this address. I do these names. They have no connection with me or this address. I do even know whether they really exist or not. even know whether they really exist or not. Q.23 Please confirm whether you are willing to depose the facts submitted Q.23 Please confirm whether you are willing to depose the facts submitted Q.23 Please confirm whether you are willing to depose the facts submitted by you above as and when called at a later date. Also confirm that you by you above as and when called at a later date. Also confirm that you by you above as and when called at a later date. Also confirm that you would be willing to depose these facts in the face of cross examination would be willing to depose these facts in the face of cross e would be willing to depose these facts in the face of cross e with Shri Sonu Sood and Smt Sonali Sood, if needed. with Shri Sonu Sood and Smt Sonali Sood, if needed. Ans. Yes sir I confirm the same.” Ans. Yes sir I confirm the same.” thus (i) stated of 10.4 The deponent sh Kishanlal Udaylal Jain sh Kishanlal Udaylal Jain thus 14 i.e. AY 2014-15 through giving loan by way of RTGS by way of RTGS in FY 2013-14 i.e. AY 2014

Sonu Pankaj Shakti Sagar Sood Sonu Pankaj Shakti Sagar Sood 30 ITA No. 1840 , 1843 & 1842 1840 , 1843 & 1842/MUM/2025

his company Omshilpi Omshilpi Jewels and Gems Pvt Ltd in lieu of cash from in lieu of cash from the assessee ( Q-17 17 & 18); (ii) admitted of arranging loan arranging loans for assessee through brokers /agents assessee through brokers /agents via RTGS transfers RTGS transfers in lieu of cash (Q -17 & 19); (iii) also pointed towards electronic trails (emails with also pointed towards electronic trails (emails with also pointed towards electronic trails (emails with the assessee’s representative) to substantiate his claim of acting sessee’s representative) to substantiate his claim of acting sessee’s representative) to substantiate his claim of acting as a middleman for a commission (Q a middleman for a commission (Q-20).

10.5 The second pillar of the Revenue’s case rests upon the field pillar of the Revenue’s case rests upon the field pillar of the Revenue’s case rests upon the field inquiries conducted by the Investigation Wing to verify the existence inquiries conducted by the Investigation Wing to verify the existence inquiries conducted by the Investigation Wing to verify the existence of the purported lending entities of the purported lending entities. For ready reference, r For ready reference, result of field inquiries carried out in case of lender carried out in case of lender parties is summarised as under:

A. M/s. Krishnaraj Diamond Pvt. Ltd. (Surat) A. M/s. Krishnaraj Diamond Pvt. Ltd. (Surat)

Field enquiries conducted at the stated registered office, viz. 307, New DTC, 3rd Field enquiries conducted at the stated registered office, viz. 307, New DTC, 3rd Field enquiries conducted at the stated registered office, viz. 307, New DTC, 3rd Floor, Hathfalia, Haripura, Surat Floor, Hathfalia, Haripura, Surat–395003, Gujarat, revealed that the location 395003, Gujarat, revealed that the location comprised two separate buildings, namely comprised two separate buildings, namely “New DTC” and “New DTC “New DTC” and “New DTC-A”. Verification was carried out at both premises; however, no office of M/s. Verification was carried out at both premises; however, no office of M/s. Verification was carried out at both premises; however, no office of M/s. Krishnaraj Diamond Pvt. Ltd. was found to be in existence. Instead, at the “New Krishnaraj Diamond Pvt. Ltd. was found to be in existence. Instead, at the “New Krishnaraj Diamond Pvt. Ltd. was found to be in existence. Instead, at the “New DTC” building, an office of an entity styled “Vishwa Insurance” was noticed DTC” building, an office of an entity styled “Vishwa Insurance” was noticed DTC” building, an office of an entity styled “Vishwa Insurance” was noticed, while the premises in “New DTC while the premises in “New DTC-A” were found locked. Upon further enquiry, it A” were found locked. Upon further enquiry, it transpired that the said premises earlier housed an entity known as “Gelson transpired that the said premises earlier housed an entity known as “Gelson transpired that the said premises earlier housed an entity known as “Gelson Enterprises”, which had since shifted to another address. When confronted with Enterprises”, which had since shifted to another address. When confronted with Enterprises”, which had since shifted to another address. When confronted with the aforesaid adverse material (vide Question No. 112), the assessee merely material (vide Question No. 112), the assessee merely material (vide Question No. 112), the assessee merely expressed ignorance and sought to shift the onus of explanation upon its expressed ignorance and sought to shift the onus of explanation upon its expressed ignorance and sought to shift the onus of explanation upon its accounts personnel, namely Shri Radhesh Nair and Shri Pankaj Jalisatgi. accounts personnel, namely Shri Radhesh Nair and Shri Pankaj Jalisatgi. accounts personnel, namely Shri Radhesh Nair and Shri Pankaj Jalisatgi. However, as duly recorded by the Ld. Assessing Officer, However, as duly recorded by the Ld. Assessing Officer, However, as duly recorded by the Ld. Assessing Officer, both the said

Sonu Pankaj Shakti Sagar Sood Sonu Pankaj Shakti Sagar Sood 31 ITA No. 1840 , 1843 & 1842 1840 , 1843 & 1842/MUM/2025

individuals individuals individuals subsequently subsequently subsequently disclaimed disclaimed disclaimed any any any knowledge knowledge knowledge of of of the the the impugned impugned impugned transactions, stating that their association with the assessee commenced transactions, stating that their association with the assessee commenced transactions, stating that their association with the assessee commenced subsequent thereto.

B. M/s. Benchmark Trading Pvt. Ltd. (Mumbai) B. M/s. Benchmark Trading Pvt. Ltd. (Mumbai)

For the purpose of verification, an I For the purpose of verification, an Inspector was deputed on 16.09.2021 to the nspector was deputed on 16.09.2021 to the stated address of M/s. Benchmark Trading Pvt. Ltd., being 13/A, Mezzanine stated address of M/s. Benchmark Trading Pvt. Ltd., being 13/A, Mezzanine stated address of M/s. Benchmark Trading Pvt. Ltd., being 13/A, Mezzanine Floor, Gordhandas Building, Opera House, Mumbai Floor, Gordhandas Building, Opera House, Mumbai–400007, for service of 400007, for service of summons under section 131 of the Act. The Inspector reported that upo summons under section 131 of the Act. The Inspector reported that upo summons under section 131 of the Act. The Inspector reported that upon reaching the premises, an unidentified individual opened the door and categorically the premises, an unidentified individual opened the door and categorically the premises, an unidentified individual opened the door and categorically denied the existence of any such entity or company at the said address. The said denied the existence of any such entity or company at the said address. The said denied the existence of any such entity or company at the said address. The said person further refused to disclose his identity and immediately closed the door. person further refused to disclose his identity and immediately closed the door. person further refused to disclose his identity and immediately closed the door. Consequently, the summons issued under section 131 could not be served upon ntly, the summons issued under section 131 could not be served upon ntly, the summons issued under section 131 could not be served upon the said entity.

C. M/s. Manibhadra Diamond Traders Pvt. Ltd. C. M/s. Manibhadra Diamond Traders Pvt. Ltd.

In the course of enquiries conducted under section 131 of the Act, the entity M/s. In the course of enquiries conducted under section 131 of the Act, the entity M/s. In the course of enquiries conducted under section 131 of the Act, the entity M/s. Manibhadra Diamond Traders Pvt. Ltd. was fo Manibhadra Diamond Traders Pvt. Ltd. was found to be non und to be non-existent at its recorded address, viz. 302 recorded address, viz. 302-A, Shubh Building, 60 Feet Road, Bhayander (West), A, Shubh Building, 60 Feet Road, Bhayander (West), Mumbai–401101. The Inspector reported that the said premises were, in fact, 401101. The Inspector reported that the said premises were, in fact, 401101. The Inspector reported that the said premises were, in fact, occupied by a residential tenant, Smt. Ratanmala Kishore Jain, who has b occupied by a residential tenant, Smt. Ratanmala Kishore Jain, who has b occupied by a residential tenant, Smt. Ratanmala Kishore Jain, who has been residing therein since the year 1992 residing therein since the year 1992–93. This factual position was further 93. This factual position was further corroborated by the Society Secretary, Shri Lalit Jain, who categorically affirmed corroborated by the Society Secretary, Shri Lalit Jain, who categorically affirmed corroborated by the Society Secretary, Shri Lalit Jain, who categorically affirmed that no such business entity had ever operated from the said premises for nearly that no such business entity had ever operated from the said premises for nearly that no such business entity had ever operated from the said premises for nearly three decades.

D. M/s. Yuvika Impex Pvt. Ltd. (Surat) D. M/s. Yuvika Impex Pvt. Ltd. (Surat)

Sonu Pankaj Shakti Sagar Sood Sonu Pankaj Shakti Sagar Sood 32 ITA No. 1840 , 1843 & 1842 1840 , 1843 & 1842/MUM/2025

Enquiries conducted at the stated Surat address revealed the premises to be a Enquiries conducted at the stated Surat address revealed the premises to be a Enquiries conducted at the stated Surat address revealed the premises to be a modest ancestral residence. The occupant, Smt. Bhavika Tejas Jariwala, stated modest ancestral residence. The occupant, Smt. Bhavika Tejas Jariwala, stated modest ancestral residence. The occupant, Smt. Bhavika Tejas Jariwala, stated on oath that her family had been residing therein for over on oath that her family had been residing therein for over a century and that the a century and that the premises had never been let out or used for any commercial activity. She further premises had never been let out or used for any commercial activity. She further premises had never been let out or used for any commercial activity. She further deposed that the family possessed limited financial means, thereby rendering deposed that the family possessed limited financial means, thereby rendering deposed that the family possessed limited financial means, thereby rendering the existence of any such commercial entity at the said address wholly the existence of any such commercial entity at the said address wholly the existence of any such commercial entity at the said address wholly implausible.

10.6 Thirdly, in the course of the assessment proceedings, the , in the course of the assessment proceedings, the , in the course of the assessment proceedings, the learned Assessing Officer issued notices under section 133(6) of the learned Assessing Officer issued notices under section 133(6) of the learned Assessing Officer issued notices under section 133(6) of the Act to all eleven parties from whom the assessee had purportedly Act to all eleven parties from whom the assessee had purportedly Act to all eleven parties from whom the assessee had purportedly obtained unsecured loans. obtained unsecured loans.

10.6.1 Upon examination Upon examination, the Assessing Officer recorded that , the Assessing Officer recorded that the following parties— —(i) M/s Benchmark Trading Pvt. Ltd., (ii) Shri (i) M/s Benchmark Trading Pvt. Ltd., (ii) Shri Harinder Kanda, (iii) Krishna Raj Diamond Pvt. Ltd., (iv) M/s Harinder Kanda, (iii) Krishna Raj Diamond Pvt. Ltd., (iv) M/s Harinder Kanda, (iii) Krishna Raj Diamond Pvt. Ltd., (iv) M/s Manibhadra Diamond Traders, (v) Shri Nishit Biswas, (vi) Shri Manibhadra Diamond Traders, (v) Shri Nishit Biswas, (vi) Shri Manibhadra Diamond Traders, (v) Shri Nishit Biswas, (vi) Shri Sachin Baslas, (vii) M/s Sachin Baslas, (vii) M/s Shree Balaji Enterprises, (viii) M/s Yuvika Shree Balaji Enterprises, (viii) M/s Yuvika Impex Pvt. Ltd., and (ix) M/s Yuvraj Entertainment—failed to Impex Pvt. Ltd., and (ix) M/s Yuvraj Entertainment Impex Pvt. Ltd., and (ix) M/s Yuvraj Entertainment furnish any response to the notices issued under section 133(6). On furnish any response to the notices issued under section 133(6). On furnish any response to the notices issued under section 133(6). On this basis, the Assessing Officer drew an adverse inference and this basis, the Assessing Officer drew an adverse inference and this basis, the Assessing Officer drew an adverse inference and concluded concluded that that the the said said parties parties lacked lacked the the requisite requisite creditworthiness.

10.6.2 In respect of the remaining parties who responded to the In respect of the remaining parties who responded to the In respect of the remaining parties who responded to the notices, namely Shri Amit Bajaj and Ms. Nehaberi, the Assessing notices, namely Shri Amit Bajaj and Ms. Nehaberi, the Assessing notices, namely Shri Amit Bajaj and Ms. Nehaberi, the Assessing Officer observed that they had not furnished essential financial Officer observed that they had not furnished essential financial Officer observed that they had not furnished essential financial

Sonu Pankaj Shakti Sagar Sood Sonu Pankaj Shakti Sagar Sood 33 ITA No. 1840 , 1843 & 1842 1840 , 1843 & 1842/MUM/2025

documents such as capital accounts, profit and loss statements, uch as capital accounts, profit and loss statements, uch as capital accounts, profit and loss statements, and bank statements for verification. Consequently, he held that and bank statements for verification. Consequently, he held that and bank statements for verification. Consequently, he held that both the creditworthiness of the creditors and the genuineness of both the creditworthiness of the creditors and the genuineness of both the creditworthiness of the creditors and the genuineness of the transactions remained unsubstantiated. the transactions remained unsubstantiated.

10.6.3 Further, insofar as M/ Further, insofar as M/s Shree Balaji Enterprises is s Shree Balaji Enterprises is concerned, although a reply to the notice under section 133(6) was concerned, although a reply to the notice under section 133(6) was concerned, although a reply to the notice under section 133(6) was filed, the Assessing Officer noted from its balance sheet that it filed, the Assessing Officer noted from its balance sheet that it filed, the Assessing Officer noted from its balance sheet that it reflected a capital of reflected a capital of ₹13,88,666/- and sundry debtors amounting and sundry debtors amounting to ₹3,03,25,509/-, which was , which was not found satisfactory to explain the not found satisfactory to explain the source of such loan source of such loan of Rs. 1.00 crores given to the assessee. to the assessee. Additionally, the entity failed to furnish complete bank statements Additionally, the entity failed to furnish complete bank sta Additionally, the entity failed to furnish complete bank sta for verification. In tho for verification. In those circumstances, the Assessing Officer se circumstances, the Assessing Officer rejected the claim of creditworthiness and the genuineness of the rejected the claim of creditworthiness and the genuineness of the rejected the claim of creditworthiness and the genuineness of the transaction in relation to M/s Shree Balaji Enterprises. transaction in relation to M/s Shree Balaji Enterprises. transaction in relation to M/s Shree Balaji Enterprises.

10.7 In response, the assessee furnished copies of the ledger In response, the assessee furnished copies of the ledger In response, the assessee furnished copies of the ledger accounts of all the concerned p accounts of all the concerned parties along with corresponding arties along with corresponding bank statements, contending that the loans so received had been bank statements, contending that the loans so received had been bank statements, contending that the loans so received had been duly repaid either during the relevant previous year or in the duly repaid either during the relevant previous year or in the duly repaid either during the relevant previous year or in the immediately succeeding assessment year. The assessee further immediately succeeding assessment year. The assessee further immediately succeeding assessment year. The assessee further candidly acknowledged that the impug candidly acknowledged that the impugned loans were facilitated ned loans were facilitated through Shri Kishanlal Udaylal Jain, a person known to him, who through Shri Kishanlal Udaylal Jain, a person known to him, who through Shri Kishanlal Udaylal Jain, a person known to him, who had arranged such funds from his acquaintances on the had arranged such funds from his acquaintances on the had arranged such funds from his acquaintances on the understanding that the assessee would, subject to availability, understanding that the assessee would, subject to availability, understanding that the assessee would, subject to availability, attend certain private functions of those perso attend certain private functions of those persons. However, the ns. However, the

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assessee categorically denied having paid any cash consideration or assessee categorically denied having paid any cash consideration or assessee categorically denied having paid any cash consideration or premium in lieu of procuring the said loans. premium in lieu of procuring the said loans.

10.7.1 It was further submitted that the assessee had no direct It was further submitted that the assessee had no direct It was further submitted that the assessee had no direct knowledge of the individual entities from whom Shri Kishanlal knowledge of the individual entities from whom Shri Kishanlal knowledge of the individual entities from whom Shri Kishanlal Udaylal Jain had arranged the loans, but maintained a bona fide Udaylal Jain had arranged the loans, but maintained a Udaylal Jain had arranged the loans, but maintained a belief that such persons possessed adequate financial capacity and belief that such persons possessed adequate financial cap belief that such persons possessed adequate financial cap were regular assessee were regular assessee under the Act. The assessee also pointed out under the Act. The assessee also pointed out that the loans were obtained during the financial year 2012–13, that the loans were obtained during the financial year 201 that the loans were obtained during the financial year 201 and, therefore, upon verification after a lapse of seven to eight and, therefore, upon verification after a lapse of seven to eight and, therefore, upon verification after a lapse of seven to eight years, there existed a reasonable possibility that the said parties years, there existed a reasonable possibility that the said parties years, there existed a reasonable possibility that the said parties might have shifted from the addresses recorded in the ledger have shifted from the addresses recorded in the ledger have shifted from the addresses recorded in the ledger accounts.

10.8 However, the submission However, the submissions of the assessee were were not accepted and the ld AO sustain sustained the addition treating the unsecured loan the addition treating the unsecured loans of Rs. 4,55,00,000/- as unexplained cash credit .

10.9 The Ld. CIT(A) rejected the The Ld. CIT(A) rejected the contention of the assessee that of the assessee that repayment of the loan was sufficient to discharge the of the loan was sufficient to discharge the of the loan was sufficient to discharge the onus u/s 68 of the Act. The Ld. CIT(A) in support of the Act. The Ld. CIT(A) in support thereof, relied on the decision relied on the decision of the Coordinate Bench of the Tribunal in the case of ench of the Tribunal in the case of JK Global, ench of the Tribunal in the case of Mumbai Vs ITO (supra). ITO (supra).

10.10 Before us, the learned counsel for the assessee assailed Before us, the learned counsel for the assessee assailed Before us, the learned counsel for the assessee assailed the findings of the a the findings of the authorities below and advanced a threefold uthorities below and advanced a threefold submission. Firstly, it was contended that all the impugned loans , it was contended that all the impugned loans , it was contended that all the impugned loans

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were received through banking channels and stood duly repaid were received through banking channels and stood duly repaid were received through banking channels and stood duly repaid either during the relevant previous year or in the immediately either during the relevant previous year or in the immediately either during the relevant previous year or in the immediately succeeding assessment ye succeeding assessment year, in any event much prior to the search ar, in any event much prior to the search action conducted in the case of the assessee. action conducted in the case of the assessee. Placing reliance on Placing reliance on the judgment of the Hon’ble Gujarat High Court in PCIT v. the judgment of the Hon’ble Gujarat High Court in the judgment of the Hon’ble Gujarat High Court in Merrygold Gems (P.) Ltd. [2024] 164 taxmann.com 764, it was [2024] 164 taxmann.com 764, it was Merrygold Gems (P.) Ltd. submitted that once the loans are accepted as repaid and duly submitted that once the loans are accepted as repaid and duly submitted that once the loans are accepted as repaid and duly reflected in the banking records, no adverse inference is warranted reflected in the banking records, no adverse inference is warranted reflected in the banking records, no adverse inference is warranted in the year of receipt. in the year of receipt. The Ld. counsel for the assessee further relied The Ld. counsel for the assessee further relied on the decision of Hon’ble Gujarat High Court in the case of PCIT v. Hon’ble Gujarat High Court in the case of PCIT v. Hon’ble Gujarat High Court in the case of PCIT v. Ambe Tradecrop (P.) Ltd. (2022) 145 taxmann.com 27 (Gujarat); Ambe Tradecrop (P.) Ltd. (2022) 145 taxmann.com 27 (Gujarat); Ambe Tradecrop (P.) Ltd. (2022) 145 taxmann.com 27 (Gujarat); decision of the Hon’ble Bombay High Court in the case of CCIT decision of the Hon’ble Bombay High Court in the case of CCIT decision of the Hon’ble Bombay High Court in the case of CCIT (OSD)/PCIT (OSD)/PCIT (OSD)/PCIT v. v. v. Bhupendra Bhupendra Bhupendra Champaklal Champaklal Champaklal Delal Delal Delal (2024) (2024) (2024) 1260 1260 1260 taxmann.com 560 (Bombay) and taxmann.com 560 (Bombay) and decision of Co-ordinate Bench of ordinate Bench of Mumbai Tribunal in the case of Dy. CIT v. Hetal Nitin Shah (2024) Mumbai Tribunal in the case of Dy. CIT v. Hetal Nitin Shah (2024) Mumbai Tribunal in the case of Dy. CIT v. Hetal Nitin Shah (2024) 159 taxmann.com 1618 (Mumbai 159 taxmann.com 1618 (Mumbai-Trib.). The Hon’ble Bombay High Trib.). The Hon’ble Bombay High Court in the case of Bhupendra Champaklal Delal (supra) held that Court in the case of Bhupendra Champaklal Delal (supra) held that Court in the case of Bhupendra Champaklal Delal (supra) held that assessee received loan from a assessee received loan from a creditor and repaid same, since all creditor and repaid same, since all transactions were routed through bank accounts, mere fact that transactions were routed through bank accounts, mere fact that transactions were routed through bank accounts, mere fact that creditor had not charged interest on outstanding loan would not creditor had not charged interest on outstanding loan would not creditor had not charged interest on outstanding loan would not justify holding loan transactions to be bogus. The relevant finding of justify holding loan transactions to be bogus. The relevant finding of justify holding loan transactions to be bogus. The relevant finding of the Hon’ble High Cour the Hon’ble High Court is reproduced as under:

“8. The third issue relates to an exception taken by AO to the manner The third issue relates to an exception taken by AO to the manner The third issue relates to an exception taken by AO to the manner in which a loan amount shown to be repaid is received back allegedly in which a loan amount shown to be repaid is received back allegedly in which a loan amount shown to be repaid is received back allegedly by Assessee himself through a series of structured transactions. by Assessee himself through a series of structured transactions. by Assessee himself through a series of structured transactions. Assessee filed a list of s Assessee filed a list of sundry creditors along with his return of undry creditors along with his return of

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income which showed an amount of Rs. 1,26,12,036/ income which showed an amount of Rs. 1,26,12,036/ income which showed an amount of Rs. 1,26,12,036/- as payable to one M/s. Champaklal Devidas as on 31st December 1987. One Shri. one M/s. Champaklal Devidas as on 31st December 1987. One Shri. one M/s. Champaklal Devidas as on 31st December 1987. One Shri. J. P. Gandhi, a close associate of Assessee was the proprietor of J. P. Gandhi, a close associate of Assessee was the proprietor of J. P. Gandhi, a close associate of Assessee was the proprietor of M/s. Champaklal Devi M/s. Champaklal Devidas. In AY 1990-91 and 1991 91 and 1991-92 Assessee has shown share and security transactions with said Champaklal has shown share and security transactions with said Champaklal has shown share and security transactions with said Champaklal Devidas, which were shown to result in a loss to Assessee and Devidas, which were shown to result in a loss to Assessee and Devidas, which were shown to result in a loss to Assessee and corresponding profit to Champaklal Devidas. All transactions were corresponding profit to Champaklal Devidas. All transactions were corresponding profit to Champaklal Devidas. All transactions were recorded by book entries recorded by book entries only. Assessee contended that he had no only. Assessee contended that he had no separate document except the general entries in his book and separate document except the general entries in his book and separate document except the general entries in his book and J.P.Gandhi claimed to have lost his books in a fire. Assessee's books J.P.Gandhi claimed to have lost his books in a fire. Assessee's books J.P.Gandhi claimed to have lost his books in a fire. Assessee's books indicated a huge amount as closing balance in the account of indicated a huge amount as closing balance in the account of indicated a huge amount as closing balance in the account of Champaklal Devidas. Asse Champaklal Devidas. Assessee repaid an amount of Rs. 15.4 Crores ssee repaid an amount of Rs. 15.4 Crores to Champaklal Devidas. The AO has held that Champaklal Devidas to Champaklal Devidas. The AO has held that Champaklal Devidas to Champaklal Devidas. The AO has held that Champaklal Devidas in turn lent the entire sum to some Dhanraj Mills Pvt Ltd. which also in turn lent the entire sum to some Dhanraj Mills Pvt Ltd. which also in turn lent the entire sum to some Dhanraj Mills Pvt Ltd. which also transferred the amount to another company called Kennilworth transferred the amount to another company called Kennilworth transferred the amount to another company called Kennilworth Investment Ltd and ot Investment Ltd and other group companies of Assessee himself. The her group companies of Assessee himself. The AO concluded this to be an arrangement on paper only and a device AO concluded this to be an arrangement on paper only and a device AO concluded this to be an arrangement on paper only and a device used by Assessee to show loss in transactions with Champaklal used by Assessee to show loss in transactions with Champaklal used by Assessee to show loss in transactions with Champaklal Devidas only on the ground that Assessee has not paid interest on Devidas only on the ground that Assessee has not paid interest on Devidas only on the ground that Assessee has not paid interest on the loan stated t the loan stated to be availed from Champaklal Devidas. The AO o be availed from Champaklal Devidas. The AO refused to exclude the opening balance of Rs. 54,13,442/ refused to exclude the opening balance of Rs. 54,13,442/ refused to exclude the opening balance of Rs. 54,13,442/- for lack of production of evidence by Assessee. The ITAT has examined this production of evidence by Assessee. The ITAT has examined this production of evidence by Assessee. The ITAT has examined this issue and noticed the observation of CIT (A) that the accounts relating issue and noticed the observation of CIT (A) that the accounts relating issue and noticed the observation of CIT (A) that the accounts relating to AY 1987-88 were very much available with the AO and hence his 88 were very much available with the AO and hence his 88 were very much available with the AO and hence his observation that there was no evidence was incorrect. Furthermore, observation that there was no evidence was incorrect. Furthermore, observation that there was no evidence was incorrect. Furthermore, the repayment made by Assessee in subsequent years were the repayment made by Assessee in subsequent years were the repayment made by Assessee in subsequent years were considered while holding the transaction to be bogus. Most considered while holding the transaction to be bogus. Most considered while holding the transaction to be bogus. Most importantly, th importantly, the ITAT noticed that the assessment of J. P. Gandhi e ITAT noticed that the assessment of J. P. Gandhi was also done by the same AO and the profits declared by him were was also done by the same AO and the profits declared by him were was also done by the same AO and the profits declared by him were all accepted. All the transactions were routed through bank accounts. all accepted. All the transactions were routed through bank accounts. all accepted. All the transactions were routed through bank accounts. The mere fact that Champaklal Devidas has not charged interest on The mere fact that Champaklal Devidas has not charged interest on The mere fact that Champaklal Devidas has not charged interest on the outstanding loan does not justify holding the transactions to be outstanding loan does not justify holding the transactions to be outstanding loan does not justify holding the transactions to be bogus. The ITAT has relied on the well settled proposition of law that bogus. The ITAT has relied on the well settled proposition of law that bogus. The ITAT has relied on the well settled proposition of law that tax authorities are not entitled to sit in an arm chair of a tax authorities are not entitled to sit in an arm chair of a tax authorities are not entitled to sit in an arm chair of a businessman to regulate business affairs. Hence, the third businessman to regulate business affairs. Hence, the third businessman to regulate business affairs. Hence, the third issue also based on facts and the view of the AO on the basis of general based on facts and the view of the AO on the basis of general based on facts and the view of the AO on the basis of general observations, surmises and conjectures de hors any substantial observations, surmises and conjectures de hors any substantial observations, surmises and conjectures de hors any substantial material as rejected by the ITAT is correct.” material as rejected by the ITAT is correct. 10.11 Further, ld counsel submitted that Hon’ble Gujarat High Further, ld counsel submitted that Hon’ble Gujarat High Further, ld counsel submitted that Hon’ble Gujarat High Court in the case of Ambe Tradecorp (P.) Ltd. (supra) noted that e case of Ambe Tradecorp (P.) Ltd. (supra) noted that e case of Ambe Tradecorp (P.) Ltd. (supra) noted that when loan is repaid by the assessee in subsequent years, the onus when loan is repaid by the assessee in subsequent years, the onus when loan is repaid by the assessee in subsequent years, the onus

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u/s 68 of the Act is considered as discharged. The relevant finding u/s 68 of the Act is considered as discharged. The relevant finding u/s 68 of the Act is considered as discharged. The relevant finding of the Hon’ble High Court(supra) is reproduced as under: of the Hon’ble High Court(supra) is reproduced as under: of the Hon’ble High Court(supra) is reproduced as under:

“3.4 When t 3.4 When the revenue preferred appeal before the Appellate he revenue preferred appeal before the Appellate Tribunal, the Tribunal confirmed the findings recorded by the Tribunal, the Tribunal confirmed the findings recorded by the Tribunal, the Tribunal confirmed the findings recorded by the Appellate Authority. The Tribunal referred to the decision of CIT v. Appellate Authority. The Tribunal referred to the decision of CIT v. Appellate Authority. The Tribunal referred to the decision of CIT v. Durga Prasad More Durga Prasad More [1971] 82 ITR 540 (SC) and also in Sumati Dayal nd also in Sumati Dayal v. CIT [1995] 80 Taxman 89/214 ITR 801 (SC) [1995] 80 Taxman 89/214 ITR 801 (SC), to further record on , to further record on the basis of the facts that the assessee had furnished the details the basis of the facts that the assessee had furnished the details the basis of the facts that the assessee had furnished the details such as copy of ledger account, bank statements, income tax retur such as copy of ledger account, bank statements, income tax retur such as copy of ledger account, bank statements, income tax returns, balance sheet etc. It was also recorded that notice under section balance sheet etc. It was also recorded that notice under section balance sheet etc. It was also recorded that notice under section 133(6) of the Act was issued to the said parties which were duly 133(6) of the Act was issued to the said parties which were duly 133(6) of the Act was issued to the said parties which were duly responded by them. The identity of the parties could not be, therefore responded by them. The identity of the parties could not be, therefore responded by them. The identity of the parties could not be, therefore disputed, recorded the tribunal. The aspect was al disputed, recorded the tribunal. The aspect was also noticed that the so noticed that the assessee was not beneficiary of the loan received by it and the loan assessee was not beneficiary of the loan received by it and the loan assessee was not beneficiary of the loan received by it and the loan was repaid by the assessee in the subsequent year. It led to was repaid by the assessee in the subsequent year. It led to was repaid by the assessee in the subsequent year. It led to unacceptable conclusion that the impugned transaction was a unacceptable conclusion that the impugned transaction was a unacceptable conclusion that the impugned transaction was a business transaction between the assessee and business transaction between the assessee and the loan parties and the loan parties and that they could not be doubted for their genuineness. that they could not be doubted for their genuineness. 3.5 While the revenue has tried to put up a case that the transactions 3.5 While the revenue has tried to put up a case that the transactions 3.5 While the revenue has tried to put up a case that the transactions were in the nature of accommodation entries, this case has only were in the nature of accommodation entries, this case has only were in the nature of accommodation entries, this case has only presumptive and assumptive value not supported presumptive and assumptive value not supported by any factual by any factual data. On the contrary, on the basis of the material before the data. On the contrary, on the basis of the material before the data. On the contrary, on the basis of the material before the authorities, the transactions were found to be genuine. authorities, the transactions were found to be genuine. authorities, the transactions were found to be genuine. 4. Learned advocate for the appellant attempted to emphasize that 4. Learned advocate for the appellant attempted to emphasize that 4. Learned advocate for the appellant attempted to emphasize that for the purpose of application of section 68 of the Act for the purpose of application of section 68 of the Act for the purpose of application of section 68 of the Act, three ingredients were necessary. Firstly identity of the parties to the ingredients were necessary. Firstly identity of the parties to the ingredients were necessary. Firstly identity of the parties to the transaction of loan, second is the creditworthiness of such parties transaction of loan, second is the creditworthiness of such parties transaction of loan, second is the creditworthiness of such parties and thirdly the genuineness of the transaction. It was submitted in and thirdly the genuineness of the transaction. It was submitted in and thirdly the genuineness of the transaction. It was submitted in vain that neither of the ingredients were sat vain that neither of the ingredients were satisfied. 5. As discussed above, since the requisite material was furnished by 5. As discussed above, since the requisite material was furnished by 5. As discussed above, since the requisite material was furnished by assessee showing the identity and since the assessee was not assessee showing the identity and since the assessee was not assessee showing the identity and since the assessee was not beneficiary when the loan was repaid in the subsequent year, even beneficiary when the loan was repaid in the subsequent year, even beneficiary when the loan was repaid in the subsequent year, even the ingredients of creditworthiness and genuineness the ingredients of creditworthiness and genuineness the ingredients of creditworthiness and genuineness of transaction were well satisfied. were well satisfied.”

10.12 Secondly, the learned counsel submitted , the learned counsel submitted that during the , the learned counsel submitted course of search proceedings no evidence or any document course of search proceedings no evidence or any document course of search proceedings no evidence or any document suggesting unsecured loan received by the assessee as bogus or suggesting unsecured loan received by the assessee as bogus or suggesting unsecured loan received by the assessee as bogus or

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non genuine was recovered and the en non genuine was recovered and the entire addition rests solely on tire addition rests solely on the statement of Shri Kishanlal Udaylal Jain. He submitted that the statement of Shri Kishanlal Udaylal Jain. He submitted that the statement of Shri Kishanlal Udaylal Jain. He submitted that without any prompt, the investigation wing recorded statement of without any prompt, the investigation wing recorded statement of without any prompt, the investigation wing recorded statement of Shri Kishanlal Udaylal Jain though he was not appearing in the list Shri Kishanlal Udaylal Jain though he was not appearing in the list Shri Kishanlal Udaylal Jain though he was not appearing in the list of the unsecured loan parties of the unsecured loan parties. The ld. counsel submitted that his . The ld. counsel submitted that his statement were recorded invoking section 131 of the Act and not recorded invoking section 131 of the Act and not recorded invoking section 131 of the Act and not part of section 132(4) of the Act. part of section 132(4) of the Act. It was argued that although the It was argued that although the said person alleged receipt of cash in lieu of arranging loans, he said person alleged receipt of cash in lieu of arranging loans, he said person alleged receipt of cash in lieu of arranging loans, he neither furnished the neither furnished the names and addresses of any alleged names and addresses of any alleged intermediaries nor was any such enquiry conducted by the intermediaries nor was any such enquiry conducted by the intermediaries nor was any such enquiry conducted by the Investigation Wing. Further, despite a reference to certain email Investigation Wing. Further, despite a reference to certain email Investigation Wing. Further, despite a reference to certain email correspondence between him and the assessee’s Chartered correspondence between him and the assessee’s Chartered correspondence between him and the assessee’s Chartered Accountant, no such material was ever bro Accountant, no such material was ever brought on record by the ught on record by the Assessing Officer to substantiate the alleged involvement of the Assessing Officer to substantiate the alleged involvement of the Assessing Officer to substantiate the alleged involvement of the assessee in any cash transaction. It was also pointed out that assessee in any cash transaction. It was also pointed out that assessee in any cash transaction. It was also pointed out that although Shri Jain claimed to have earned commission income of although Shri Jain claimed to have earned commission income of although Shri Jain claimed to have earned commission income of ₹50,000/- for arranging the loans, no evide for arranging the loans, no evidence was produced to nce was produced to demonstrate that such income had been offered to tax by him in demonstrate that such income had been offered to tax by him demonstrate that such income had been offered to tax by him regular course. In the regular course. In the circumstances, it was contended that the circumstances, it was contended that the said statement, being uncorroborated by any independent material, said statement, being uncorroborated by any independent material, said statement, being uncorroborated by any independent material, could not form the sole basis for making th could not form the sole basis for making the addition. The ld. e addition. The ld. counsel for the assessee was of the view that statement of Shri counsel for the assessee was of the view that statement of Shri counsel for the assessee was of the view that statement of Shri Kishanlal Udaylal Jain was recorded under coercion or pressure or Kishanlal Udaylal Jain was recorded under coercion or pressure or Kishanlal Udaylal Jain was recorded under coercion or pressure or some wrong doing might have been detected in his business and some wrong doing might have been detected in his business and some wrong doing might have been detected in his business and

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therefore he might had been forced to give s therefore he might had been forced to give statement against the tatement against the assessee.

10.13 The ld. counsel e ld. counsel before us also referred to the additional referred to the additional ground challenging addition made without any cross examination ground challenging addition made without any cross examination ground challenging addition made without any cross examination and submitted the ld and submitted the ld AO highly relied on the said statement of Shri relied on the said statement of Shri Kishanlal Udaylal Jain but the assessee was only shown the copy of Jain but the assessee was only shown the copy of Jain but the assessee was only shown the copy of his statement of during search proceeding but a copy of said his statement of during search proceeding but a copy of said his statement of during search proceeding but a copy of said statement statement statement was was was neither neither neither provided provided provided nor nor nor opportunity opportunity opportunity of of of cross cross cross examination was provided to the assessee. The ld. counsel urged examination was provided to the assessee. The ld. counsel urged examination was provided to the assessee. The ld. counsel urged that making addition reli that making addition relied solely on the statement of Shri ed solely on the statement of Shri Kishanlal Udaylal Jain but Kishanlal Udaylal Jain but failure of the Assessing Officer to afford failure of the Assessing Officer to afford an opportunity of cross an opportunity of cross-examination of the said witness constitutes examination of the said witness constitutes a clear violation of the principles of natural justice, thereby vitiating a clear violation of the principles of natural justice, thereby vitiating a clear violation of the principles of natural justice, thereby vitiating the impugned addition. ned addition. The ld. counsel relied on the decision of the The ld. counsel relied on the decision of the Hon’ble Supreme Court in the case of M/s. Andaman Timber M/s. Andaman Timber Hon’ble Supreme Court in the case of Industries v. Commissioner of Central Excise, Kolkata-II [2015] Industries v. Commissioner of Central Excise, Kolkata Industries v. Commissioner of Central Excise, Kolkata 62 taxmann.com 3 (SC), taxmann.com 3 (SC), wherein the Hon’ble Supreme Court ruled the Hon’ble Supreme Court ruled that denying an assessee the right to cross that denying an assessee the right to cross-examine witnesses examine witnesses whose statements are used to demand tax is a serious violation of whose statements are used to demand tax is a serious violation of whose statements are used to demand tax is a serious violation of natural justice, making the resulting order null and void. The ld natural justice, making the resulting order null and void. natural justice, making the resulting order null and void. Counsel accordingly accordingly submitted that impugned reassessment cannot assessment cannot be sustained in view of the violation of the principle of natural be sustained in view of the violation of the principle of natural be sustained in view of the violation of the principle of natural justice.

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10.14 Thirdly, adverting to the observation of the Assessing , adverting to the observation of the Assessing , adverting to the observation of the Assessing Officer that certain loan creditors were not traceable at their Officer that certain loan creditors were not traceable at Officer that certain loan creditors were not traceable at recorded addresses during the course of search, the learned counsel recorded addresses during the course of search, the learned counsel recorded addresses during the course of search, the learned counsel for the assessee submitted that the impugned loans pertain to for the assessee submitted that the impugned loans pertain to for the assessee submitted that the impugned loans pertain to Financial Year 2012 Financial Year 2012–13, whereas the enquiries were conducted 13, whereas the enquiries were conducted after a considerable lapse of seven to eight years. In such after a considerable lapse of seven to eight years. In such after a considerable lapse of seven to eight years. In such circumstances, it was contended that the possibility of the circumstances, it was contended that the possibility of the circumstances, it was contended that the possibility of the concerned parties having shifted from their erstwhile addresses concerned parties having shifted from their erstwhile addresses concerned parties having shifted from their erstwhile addresses cannot be ruled out. It was further urged that the loans had been cannot be ruled out. It was further urged that the loans had been cannot be ruled out. It was further urged that the loans had been arranged through Shri Kishanlal Udaylal Jain and, therefore, the arranged through Shri Kishanlal Udaylal Jain and, therefore, the arranged through Shri Kishanlal Udaylal Jain and, therefore, the assessee did not have direct knowledge of the current whereabouts assessee did not have direct knowledge of the current whereabouts assessee did not have direct knowledge of the current whereabouts of such parties. The learned counsel further emphasized that the The learned counsel further emphasized that the The learned counsel further emphasized that the Assessing Officer has not recorded any finding to the effect that Assessing Officer has not recorded any finding to the effect that Assessing Officer has not recorded any finding to the effect that notices issued under section 133(6) of the Act were returned notices issued under section 133(6) of the Act were notices issued under section 133(6) of the Act were unserved. According to the assessee, this circumstance prima facie unserved. According to the assessee, this circumstance prima facie unserved. According to the assessee, this circumstance prima facie indicates that the said parties were in existence at the relevant indicates that the said parties were in existence at the relevant indicates that the said parties were in existence at the relevant point of time. Despite this, no further steps were undertaken by the point of time. Despite this, no further steps were undertaken by the point of time. Despite this, no further steps were undertaken by the Assessing Officer, such as issuance of summon Assessing Officer, such as issuance of summons under section 131 s under section 131 or deputation of an Inspector for field verification, and the addition or deputation of an Inspector for field verification, and the addition or deputation of an Inspector for field verification, and the addition has been made primarily on the basis of information received from has been made primarily on the basis of information received from has been made primarily on the basis of information received from the Investigation Wing, without conducting any independent the Investigation Wing, without conducting any independent the Investigation Wing, without conducting any independent enquiry.

hat a sum of ₹13,50,000/- 10.14.1 It was also submitted t It was also submitted that a sum of received from Benchmark Trading Pvt. Ltd. had already been received from Benchmark Trading Pvt. Ltd. had already been received from Benchmark Trading Pvt. Ltd. had already been

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treated as unexplained cash credit and added in the assessment treated as unexplained cash credit and added in the assessment treated as unexplained cash credit and added in the assessment completed under section 143(3) of the Act dated 28.03.2016. The completed under section 143(3) of the Act dated 28.03.2016. The completed under section 143(3) of the Act dated 28.03.2016. The assessee further placed on record copies of assessee further placed on record copies of replies furnished by Shri replies furnished by Shri Nitish Biswas, Shri Sachin Biswas and Yuvraj Entertainment in Nitish Biswas, Shri Sachin Biswas and Yuvraj Entertainment in Nitish Biswas, Shri Sachin Biswas and Yuvraj Entertainment in response to notices issued under section 133(6) of the Act. response to notices issued under section 133(6) of the Act. response to notices issued under section 133(6) of the Act.

10.14.2 Elaborating further, the learned counsel submitted that Elaborating further, the learned counsel submitted that Elaborating further, the learned counsel submitted that the total unsecured loans outstanding as on the total unsecured loans outstanding as on the close of Financial the close of Financial 13 aggregated to ₹2,93,98,417/-, out of which loans Year 2012–13 aggregated to , out of which loans amounting to ₹1,25,00,000/ 1,25,00,000/- were raised during the said year. It were raised during the said year. It was contended that the loans were received and subsequently was contended that the loans were received and subsequently was contended that the loans were received and subsequently repaid through banking channels and, therefore repaid through banking channels and, therefore, the concerned , the concerned parties are no longer in contact with the assessee. parties are no longer in contact with the assessee.

Lastly, it was submitted that all primary evidences 10.14.3 , it was submitted that all primary evidences , it was submitted that all primary evidences available with the assessee, including ledger accounts and bank available with the assessee, including ledger accounts and bank available with the assessee, including ledger accounts and bank statements evidencing receipt as well as repayment of the loans statements evidencing receipt as well as repayment of the loans statements evidencing receipt as well as repayment of the loans through regular banking channels, were duly furnished both during through regular banking channels, were duly furnished both during through regular banking channels, were duly furnished both during the original assessment proceedings under section 143(3) as well as the original assessment proceedings under section 143(3) as well as the original assessment proceedings under section 143(3) as well as in the present reassessment proceedings. In the absence of any in the present reassessment proceedings. In the absence of any in the present reassessment proceedings. In the absence of any cogent material brought on record by the Assessing Officer to cogent material brought on record by the Assessing Officer cogent material brought on record by the Assessing Officer dislodge these evidences, the impugned addition, it was contended, dislodge these evidences, the impugned addition, it was contended, dislodge these evidences, the impugned addition, it was contended, is unsustainable in law. is unsustainable in law.

10.15 On On the the other other hand hand, the learned learned Departmental Departmental Representative (DR) relied on the relied on the order of the lower authorities and order of the lower authorities and

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submitted that in view of the evidence tted that in view of the evidence of the statement of Shri the statement of Shri Kishanlal Udaylal Jain Kishanlal Udaylal Jain, the loans are in the nature o , the loans are in the nature of the unexplained cash credit. unexplained cash credit.

11.1 At the outset, it is noteworthy that, pursuant to the search At the outset, it is noteworthy that, pursuant to the search At the outset, it is noteworthy that, pursuant to the search conducted by the Investigation Wing at the premises of the assessee conducted by the Investigation Wing at the premises of the assessee conducted by the Investigation Wing at the premises of the assessee and its related concerns, no incriminating material whatsoever was and its related concerns, no incriminating material whatsoever was and its related concerns, no incriminating material whatsoever was found to indicate that the assessee had introduced unaccounted found to indicate that the assessee had introduced unaccount found to indicate that the assessee had introduced unaccount cash for the purpose of obtaining the impugned loans. No reference cash for the purpose of obtaining the impugned loans. No cash for the purpose of obtaining the impugned loans. No of any material adverse to claim of unsecured loan of assessee adverse to claim of unsecured loan of assessee adverse to claim of unsecured loan of assessee during survey carried u/s 133A in during survey carried u/s 133A in 07/12/2012 has been made by as been made by the AO in impugned order. the AO in impugned order.

11.2 The Assessing Officer has dra The Assessing Officer has drawn adverse inference on the wn adverse inference on the ground that certain loan creditors were not found at their recorded ground that certain loan creditors were not found at their recorded ground that certain loan creditors were not found at their recorded addresses during the course of post addresses during the course of post-search verification. In our search verification. In our considered view, the explanation offered by the assessee merits considered view, the explanation offered by the assessee merits considered view, the explanation offered by the assessee merits acceptance. The loans in questio acceptance. The loans in question pertain to financial year 2012 n pertain to financial year 2012– 13, whereas the search was conducted in financial year 2020–21. 13, whereas the search was conducted in financial year 2020 13, whereas the search was conducted in financial year 2020 Given the substantial lapse of time, the possibility of such parties Given the substantial lapse of time, the possibility of such parties Given the substantial lapse of time, the possibility of such parties having shifted their place of business or residence cannot be ruled having shifted their place of business or residence cannot be ruled having shifted their place of business or residence cannot be ruled

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out, particularly when out, particularly when it is an admitted position that the loans it is an admitted position that the loans stood repaid through banking channels either during the relevant stood repaid through banking channels either during the relevant stood repaid through banking channels either during the relevant year or in the subsequent year, and the assessee may not have year or in the subsequent year, and the assessee may not have year or in the subsequent year, and the assessee may not have continued contact with such parties thereafter. continued contact with such parties thereafter.

11.3 Further, the assessee has relied Further, the assessee has relied upon the argument that upon the argument that repayment of loan in the year under consideration or in subsequent loan in the year under consideration or in subsequent loan in the year under consideration or in subsequent year, is sufficient enough to discharge burden u/s 68 of the Act and is sufficient enough to discharge burden u/s 68 of the Act and is sufficient enough to discharge burden u/s 68 of the Act and relied upon various precedents in support thereof. But we are of relied upon various precedents in support thereof. But we are of relied upon various precedents in support thereof. But we are of opinion that repayment of loan m opinion that repayment of loan may be one of aspect for considering ay be one of aspect for considering genuineness of transaction but in the instant case the statement of genuineness of transaction but in the instant case the statement of genuineness of transaction but in the instant case the statement of Shri Kishanlal Udaylal Jain of obtaining loan in lieu of cash is Shri Kishanlal Udaylal Jain of obtaining loan in lieu of cash is Shri Kishanlal Udaylal Jain of obtaining loan in lieu of cash is raising doubt on the genuineness of loan and therefore those raising doubt on the genuineness of loan and raising doubt on the genuineness of loan and decisions relied upon by t decisions relied upon by the assessee are distinguishable in the he assessee are distinguishable in the facts of the assessee. facts of the assessee.

11.4 The entire edifice of the addition rests substantially on the The entire edifice of the addition rests substantially on the The entire edifice of the addition rests substantially on the statement of Shri Kishanlal Udaylal Jain recorded under section statement of Shri Kishanlal Udaylal Jain recorded under section statement of Shri Kishanlal Udaylal Jain recorded under section 131 of the Act on the second day of the search proceedings, despite 131 of the Act on the second day of the search proceedings, de 131 of the Act on the second day of the search proceedings, de the fact that he does not figure as a creditor in respect of the loans the fact that he does not figure as a creditor in respect of the loans the fact that he does not figure as a creditor in respect of the loans for the year under consideration. The record is conspicuously silent for the year under consideration. The record is conspicuously silent for the year under consideration. The record is conspicuously silent as to the circumstances in which his statement came to be as to the circumstances in which his statement came to be as to the circumstances in which his statement came to be recorded. Relevant part of his statement has already Relevant part of his statement has already Relevant part of his statement has already been reproduced in preceding paragraphs. reproduced in preceding paragraphs.

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11.5 Further, the said statement remains wholly uncorroborated by Further, the said statement remains wholly uncorroborated by Further, the said statement remains wholly uncorroborated by any independent material. any independent material. It is evident that in the statement It is evident that in the statement recorded u/s 131 Shri Kishanlal Udaylal Jain stated that he had recorded u/s 131 Shri Kishanlal Udaylal Jain stated that he had recorded u/s 131 Shri Kishanlal Udaylal Jain stated that he had provided accommodatio provided accommodation entries of the unsecured loan against cash n entries of the unsecured loan against cash provided by the assessee but he has not brought on record any provided by the assessee but he has not brought on record any provided by the assessee but he has not brought on record any documentary evidence in support thereof. There are obvious documentary evidence in support thereof. There documentary evidence in support thereof. There contradictions in his statement. In answer to question no. 18 he in his statement. In answer to question no. 18 he in his statement. In answer to question no. 18 he stated that loan was also stated that loan was also given by his company in FY 2013 given by his company in FY 2013-14 in lieu of cash, but same has not been listed by the ld AO as , but same has not been listed by the ld AO as , but same has not been listed by the ld AO as unsecured loan or unexplained cash credit. Further, though unsecured loan or unexplained cash credit. Further, t unsecured loan or unexplained cash credit. Further, t reference was made therein to alleged email correspondence reference was made therein to alleged email correspondence reference was made therein to alleged email correspondence between Shri Jain and the assessee’s Chartered Accountant, no Jain and the assessee’s Chartered Accountant, no Jain and the assessee’s Chartered Accountant, no such material has been brought on record by the Assessing Officer such material has been brought on record by the Assessing Officer such material has been brought on record by the Assessing Officer to substantiate the allegation or to establish any involvement of the to substantiate the allegation or to establish any involvement of the to substantiate the allegation or to establish any involvement of the assessee in the alleged accommodation entry mechanism. In answer assessee in the alleged accommodation entry mechanism. assessee in the alleged accommodation entry mechanism. to question no 20 of statement of sh Jain, there is reference of some estion no 20 of statement of sh Jain, there is reference of some estion no 20 of statement of sh Jain, there is reference of some ledger account as part of said email correspondence, but merely ledger account as part of said email correspondence, but merely ledger account as part of said email correspondence, but merely copy of ledger accounts copy of ledger accounts cannot be a material establishing establishing transfer of cash against loan by way of RTGS. of cash against loan by way of RTGS. Further, in answer to q in answer to question 18 and 19, sh Jain stated of arranging loans through some brokers 18 and 19, sh Jain stated of arranging loans through some brokers 18 and 19, sh Jain stated of arranging loans through some brokers or agents but the investigation did not obtain e investigation did not obtain a list of such agents list of such agents or brokers from him from him. Further the Shri Kishanlal Udaylal Jain has . Further the Shri Kishanlal Udaylal Jain has stated that he received commission income of Rs. stated that he received commission income of Rs. 50,000/ 50,000/- in cash but there is nothing on record to show that such commission but there is nothing on record to show that such commission but there is nothing on record to show that such commission

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income was appearing in income was appearing in his return of income filed in the regular return of income filed in the regular course.

11.6 The ld. counsel for the assessee before the Ld. CIT(A) The ld. counsel for the assessee before the Ld. CIT(A) The ld. counsel for the assessee before the Ld. CIT(A) submitted that probably the statement of Sh submitted that probably the statement of Shri Kishanlal Udaylal ri Kishanlal Udaylal Jain was recorded under threat or coercion and the statement does Jain was recorded under threat or coercion and the statement does Jain was recorded under threat or coercion and the statement does not appears at his will. Before us ld. counsel submitted that not appears at his will. Before us ld. counsel submitted that not appears at his will. Before us ld. counsel submitted that probably the investigation wing might have found something wrong probably the investigation wing might have found something wrong probably the investigation wing might have found something wrong in the business activity and therefore pre in the business activity and therefore pressurized him to give ssurized him to give statement against the assessee. statement against the assessee.

11.7 Once an adverse statement was sought to be relied upon Once an adverse statement was sought to be relied upon Once an adverse statement was sought to be relied upon against the assessee, it was incumbent upon the Assessing Officer against the assessee, it was incumbent upon the Assessing Officer against the assessee, it was incumbent upon the Assessing Officer to afford an effective opportunity of cross to afford an effective opportunity of cross-examination to the examination to the assessee. The denial of such opportunity constitutes a clear denial of such opportunity constitutes a clear denial of such opportunity constitutes a clear infraction of the principles of natural justice, rendering the reliance infraction of the principles of natural justice, rendering the reliance infraction of the principles of natural justice, rendering the reliance placed on such statement legally untenable. We are of the opinion placed on such statement legally untenable. We are of the opinion placed on such statement legally untenable. We are of the opinion that in view of such allegation, the Ld. CIT(A) that in view of such allegation, the Ld. CIT(A) at least at least should have directed the Assessing Officer for providing cross examination of irected the Assessing Officer for providing cross examination of irected the Assessing Officer for providing cross examination of Shri Kishanlal Udaylal Jain but no such cross objection has been Shri Kishanlal Udaylal Jain but no such cross objection has been Shri Kishanlal Udaylal Jain but no such cross objection has been provided which is a serious violation of the principle of the natural provided which is a serious violation of the principle of the natural provided which is a serious violation of the principle of the natural justice.

11.8 The Hon’ble Supreme Court in The Hon’ble Supreme Court in Andaman Timber Industries v. Timber Industries v. CCE (supra) has authoritatively held that denial of the opportunity (supra) has authoritatively held that denial of the opportunity (supra) has authoritatively held that denial of the opportunity to cross-examine a witness, whose statement constitutes the very examine a witness, whose statement constitutes the very examine a witness, whose statement constitutes the very

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foundation of the demand, is a serious infraction of the principles of foundation of the demand, is a serious infraction of the principles of foundation of the demand, is a serious infraction of the principles of natural justice, rendering the natural justice, rendering the resultant order a nullity in the eyes of resultant order a nullity in the eyes of law. Their Lordships have further clarified that where such law. Their Lordships have further clarified that where such law. Their Lordships have further clarified that where such statement forms the sole or primary basis of the addition, failure to statement forms the sole or primary basis of the addition, failure to statement forms the sole or primary basis of the addition, failure to afford cross-examination is not a mere procedural irregularity examination is not a mere procedural irregularity examination is not a mere procedural irregularity capable of being cured capable of being cured, but a fundamental defect in the evidentiary , but a fundamental defect in the evidentiary process process process itself, itself, itself, vitiating vitiating vitiating the the the entire entire entire proceedings. proceedings. proceedings. In In In such such such circumstances, the proper course is not to remand the matter, but circumstances, the proper course is not to remand the matter, but circumstances, the proper course is not to remand the matter, but to set aside the addition in toto. It necessarily follows that where to set aside the addition in toto. It necessarily follows that where to set aside the addition in toto. It necessarily follows that where the veracity of a witness is liable to be tested through cross witness is liable to be tested through cross witness is liable to be tested through cross- examination, and upon such testing the testimony stands examination, and upon such testing the testimony stands examination, and upon such testing the testimony stands discredited, in the absence of any independent corroborative discredited, in the absence of any independent corroborative discredited, in the absence of any independent corroborative material, the Revenue’s case cannot be sustained. A remand, in material, the Revenue’s case cannot be sustained. A remand, in material, the Revenue’s case cannot be sustained. A remand, in such a situation, would serve such a situation, would serve no useful purpose where the sole no useful purpose where the sole piece of evidence itself is procedurally infirm. However, in the piece of evidence itself is procedurally infirm. However, in the piece of evidence itself is procedurally infirm. However, in the present present present case, case, case, it it it has has has been been been contended contended contended that that that certain certain e certain e e-mail correspondence exchanged between Shri Jain and the Chartered correspondence exchanged between Shri Jain and the Chartered correspondence exchanged between Shri Jain and the Chartered Accountant Accountant of of the the assessee assessee exists, exists, which which may may constitute constitute corroborative material to the statement relied upon by the corroborative material to the statement relied upon by the corroborative material to the statement relied upon by the Assessing Officer. Significantly, such material has not been brought Assessing Officer. Significantly, such material has not been brought Assessing Officer. Significantly, such material has not been brought on record by the Assessing Officer, thereby leaving an evidentiary on record by the Assessing Officer, thereby leaving an evidentiary on record by the Assessing Officer, thereby leaving an evidentiary vacuum as to whether the impugned addition res vacuum as to whether the impugned addition rests solely upon the ts solely upon the statement statement statement of of of Shri Shri Shri Jain Jain Jain or or or is is is supported supported supported by by by independent independent independent corroboration. corroboration. corroboration. In In In our our our considered considered considered view, view, view, if if if such such such e e-mail e correspondence indeed exists and is sought to be relied upon as correspondence indeed exists and is sought to be relied upon as correspondence indeed exists and is sought to be relied upon as

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corroborative evidence, the same must be duly brought on record corroborative evidence, the same must be duly brought on record corroborative evidence, the same must be duly brought on record and confronted to the assessee. Further, in that eventuality, Shri nd confronted to the assessee. Further, in that eventuality, Shri nd confronted to the assessee. Further, in that eventuality, Shri Jain, whose statement is proposed to be relied upon, must be made Jain, whose statement is proposed to be relied upon, must be made Jain, whose statement is proposed to be relied upon, must be made available for cross-examination by the assessee. Absence of such examination by the assessee. Absence of such examination by the assessee. Absence of such opportunity would render reliance on his statement legally opportunity would render reliance on his statement legally opportunity would render reliance on his statement legally untenable in light of the settled position of law. untenable in light of the settled position of law.

11.10 It is also an admitted position that the loans were It is also an admitted position that the loans were It is also an admitted position that the loans were arranged arranged arranged through through through Shri Shri Shri Kishanlal Kishanlal Kishanlal Udaylal Udaylal Udaylal Jain. Jain. Jain. In In In such such such circumstances, it was incumbent upon the Investigation Wing as circumstances, it was incumbent upon the Investigation Wing as circumstances, it was incumbent upon the Investigation Wing as well as the Assessing Officer well as the Assessing Officer to carry the enquiry to its logical to carry the enquiry to its logical conclusion conclusion conclusion by by by ascertaining ascertaining ascertaining the the the identities identities identities of of of the the the alleged alleged alleged intermediaries or brokers through whom the loans were purportedly intermediaries or brokers through whom the loans were purportedly intermediaries or brokers through whom the loans were purportedly arranged. No such enquiry has been conducted. The approach of arranged. No such enquiry has been conducted. The approach of arranged. No such enquiry has been conducted. The approach of making selective enquiries, aimed o making selective enquiries, aimed only at supporting the case of the nly at supporting the case of the Revenue while eschewing further investigation which may have a Revenue while eschewing further investigation which may have a Revenue while eschewing further investigation which may have a bearing adverse to the Revenue, cannot be countenanced. bearing adverse to the Revenue, cannot be countenanced. bearing adverse to the Revenue, cannot be countenanced.

11.11 Further, we note that before the ld AO we note that before the ld AO the assessee we note that before the ld AO explained that total unsecured loan outstandi explained that total unsecured loan outstanding at end of FY 2012 ng at end of FY 2012- 13 were of Rs. 2,93,98,417/ 13 were of Rs. 2,93,98,417/- and out of which loans of Rs. and out of which loans of Rs. 1,25,00,000/0 were obtained during FY 2012 were obtained during FY 2012-13. Undisputedly, 13. Undisputedly, addition u/s 68 in year under consideration can be made for addition u/s 68 in year under consideration can be made for addition u/s 68 in year under consideration can be made for unsecured loan received during the year under consideration and unsecured loan received during the year under considera unsecured loan received during the year under considera not for opening balances. The assessee also filed details of not for opening balances. The assessee also filed details of not for opening balances. The assessee also filed details of unsecured loan received during the year before the AO, which he unsecured loan received during the year before the AO, which he unsecured loan received during the year before the AO, which he

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has reproduced on page 13 has reproduced on page 13 of impugned order but did not consider did not consider this aspect while making addition for unsecured loan. while making addition for unsecured loan. Further, we while making addition for unsecured loan. note that loan form Benchmark Trading p Ltd was already added in note that loan form Benchmark Trading p Ltd was already added in note that loan form Benchmark Trading p Ltd was already added in earlier assessment proceeding proceeding and settled by the assessee under and settled by the assessee under vivid-se-vishwas scheme has also not considered for excluding form vishwas scheme has also not considered for excluding form vishwas scheme has also not considered for excluding form the addition of unsecured loan. the addition of unsecured loan.

11.13 In view of the aforesaid facts and circumstances, mainly, In view of the aforesaid facts and circumstances, In view of the aforesaid facts and circumstances, (i) the email correspondence not brought on record and no cross (i) the email correspondence not brought on record and no cross (i) the email correspondence not brought on record and no cross examination of sh Jain (ii) no enquiry regarding agents by the examination of sh Jain (ii) no enquiry regarding agents by the examination of sh Jain (ii) no enquiry regarding agents by the Revenue (iii) no setoff setoff of addition already made and settled under of addition already made and settled under Vivad-se-Viswash scheme and (iv) not limiting the addition to the Viswash scheme and (iv) not limiting the addition to the Viswash scheme and (iv) not limiting the addition to the unsecured loans received during the year, unsecured loans received during the year, we deem it appropriate, we deem it appropriate, in the interest of justice, to restore the entire issue relating to the in the interest of justice, to restore the entire issue relating to the in the interest of justice, to restore the entire issue relating to the impugned addition to the file of the Assessing Officer. The Assessing impugned addition to the file of the Assessing Officer. impugned addition to the file of the Assessing Officer. Officer is directed to afford the assessee a meaningful opportunity of Officer is directed to afford the assessee a meaningful opportunity of Officer is directed to afford the assessee a meaningful opportunity of cross-examination of Shri Kishanlal Udaylal Jain and thereafter examination of Shri Kishanlal Udaylal Jain and thereafter examination of Shri Kishanlal Udaylal Jain and thereafter adjudicate the issue afresh in accordance with law, after carrying adjudicate the issue afresh in accordance with law, after carrying adjudicate the issue afresh in accordance with law, after carrying out such further enquiries as may be wa out such further enquiries as may be warranted.

11.14 Accordingly, Accordingly, the grounds of the appeal on the merit are of the appeal on the merit are allowed for statistical purposes, whereas the additional ground no. owed for statistical purposes, whereas the additional ground no. owed for statistical purposes, whereas the additional ground no. 7 and 8 are dismissed. 7 and 8 are dismissed.

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is also restored to the file of the assessing officer is also restored to the file of the assessing officer with the direction with the direction as contained in AY 2013 as contained in AY 2013-14.

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14.1 During the course of assessment proceedings, notice under During the course of assessment proceedings, notice under During the course of assessment proceedings, notice under section 133(6) of the Act was issued section 133(6) of the Act was issued to M/s Vincent Commercial to M/s Vincent Commercial Company Ltd.; however, no response was received. The Assessing Company Ltd.; however, no response was received. The Assessing Company Ltd.; however, no response was received. The Assessing Officer further noted that the assessee had received an additional Officer further noted that the assessee had received an additional Officer further noted that the assessee had received an additional sum of ₹4,00,000/- - from Shri Ehsaan Sood, the son of the from Shri Ehsaan Sood, the son of the assessee, who had not filed any return of assessee, who had not filed any return of income up to Assessment income up to Assessment Year 2021–22, having only recently attained the age of majority. On 22, having only recently attained the age of majority. On 22, having only recently attained the age of majority. On this basis, the Assessing Officer doubted his creditworthiness. this basis, the Assessing Officer doubted his creditworthiness. this basis, the Assessing Officer doubted his creditworthiness. Consequently, a show cause notice was issued to the assessee. Consequently, a show cause notice was issued to the assessee. Consequently, a show cause notice was issued to the assessee.

14.2 In response, the assessee submitt In response, the assessee submitted that the impugned loans ed that the impugned loans had already been examined during the course of the original had already been examined during the course of the original had already been examined during the course of the original assessment proceedings. It was further contended that notice under assessment proceedings. It was further contended that notice under assessment proceedings. It was further contended that notice under section 133(6) had been duly served upon the creditor, and any section 133(6) had been duly served upon the creditor, and any section 133(6) had been duly served upon the creditor, and any non-compliance on the part of the said compliance on the part of the said party could not be party could not be attributed to the assessee, who had no control over third parties. attributed to the assessee, who had no control over third parties. attributed to the assessee, who had no control over third parties. The assessee also relied upon the fact that the transactions were The assessee also relied upon the fact that the transactions were The assessee also relied upon the fact that the transactions were routed through banking channels. However, the Assessing Officer routed through banking channels. However, the Assessing Officer routed through banking channels. However, the Assessing Officer was not persuaded by the explanation so was not persuaded by the explanation so offered and proceeded to offered and proceeded to make an addition of ₹56,00,000/- under section 68 of the Act as make an addition of under section 68 of the Act as unexplained cash credits. The learned CIT(A), placing reliance on unexplained cash credits. The learned CIT(A), placing reliance on unexplained cash credits. The learned CIT(A), placing reliance on the decision of the Tribunal in the decision of the Tribunal in J.K. Global, Mumbai (supra), upheld the addition and rejected the ass the addition and rejected the assessee’s contention regarding essee’s contention regarding repayment of loans through banking channels. repayment of loans through banking channels.

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14.3 Upon consideration of the material on record, we find that the Upon consideration of the material on record, we find that the Upon consideration of the material on record, we find that the facts and circumstances in the present year are facts and circumstances in the present year are pari materia pari materia with those arising in the assessee’s own case for As those arising in the assessee’s own case for Assessment Year 2013 sessment Year 2013– 14, wherein identical issues relating to unsecured loans and the 14, wherein identical issues relating to unsecured loans and the 14, wherein identical issues relating to unsecured loans and the evidentiary value of statements recorded during search proceedings evidentiary value of statements recorded during search proceedings evidentiary value of statements recorded during search proceedings has been adjudicated. adjudicated. Therefore, respectfully following our findings espectfully following our findings and conclusions rendered therein, th and conclusions rendered therein, the issue under consideration is e issue under consideration is decided mutatis mutandis mutatis mutandis in terms of the directions and reasoning in terms of the directions and reasoning recorded for Assessment Year 2013 recorded for Assessment Year 2013–14.

Order pronounced in the Order pronounced in the open Court on 05/05/2026. /2026. Sd/- Sd/ Sd/- (KAVITHA RAJAGOPAL (KAVITHA RAJAGOPAL) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 05/05/2026 Disha Raut, Stenographer Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. {{{ BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai