BHADRESH MANSUKHLAL DODHIA HUF,BHIWANDI vs. DCIT-CC-3, THANE, THANE

per section 153C was duly recorded and thus, notice issued to per section 153C was duly recorded and thus, notice issued to per section 153C was duly recorded and thus, notice issued to file return to assessee was justified. ii. Hon'ble Gujarat High Cour ii. Hon'ble Gujarat High Court in the case of Raju Bhupendra t in the case of Raju Bhupendra Desai vs The Income Tax Officer [Special Civil application No. Desai vs The Income Tax Officer [Special Civil application No. Desai vs The Income Tax Officer [Special Civil application No. 20294 of 2019] (on 5 July, 2021) has held as under: 20294 of 2019] (on 5 July, 2021) has held as under: 13. It may be noted that at the time of issuing the notice under 13. It may be noted that at the time of issuing the notice under 13. It may be noted that at the time of issuing the notice under section 153C of the Act, the Assessing Offic section 153C of the Act, the Assessing Officer has to satisfy er has to satisfy himself whether the books of accounts or documents or assets himself whether the books of accounts or documents or assets himself whether the books of accounts or documents or assets seized or requisitioned by the other Assessing Officer in the seized or requisitioned by the other Assessing Officer in the seized or requisitioned by the other Assessing Officer in the proceedings under section 153A and handed over to him, had a proceedings under section 153A and handed over to him, had a proceedings under section 153A and handed over to him, had a bearing on the determination of the total income of th bearing on the determination of the total income of the person to e person to whom the notice under section 153C is issued. Such whom the notice under section 153C is issued. Such whom the notice under section 153C is issued. Such satisfaction would be in the realm of subjective satisfaction of satisfaction would be in the realm of subjective satisfaction of satisfaction would be in the realm of subjective satisfaction of the concerned Assessing Officer. The sufficiency or correctness the concerned Assessing Officer. The sufficiency or correctness the concerned Assessing Officer. The sufficiency or correctness of the documents or material handed over by the other of the documents or material handed over by the other of the documents or material handed over by the other Assessing Officer to him also could not be gone into by the Officer to him also could not be gone into by the Officer to him also could not be gone into by the Courts at this stage. In the case of Raymond Woolen Mills Ltd. Courts at this stage. In the case of Raymond Woolen Mills Ltd. Courts at this stage. In the case of Raymond Woolen Mills Ltd. Versus ITO reported in (1999) 236 ITR 34 (SC), it has been held Versus ITO reported in (1999) 236 ITR 34 (SC), it has been held Versus ITO reported in (1999) 236 ITR 34 (SC), it has been held that that that in in in determining determining determining whether whether whether the the the commencement commencement commencement of of of reassessment proceeding is vali reassessment proceeding is valid, the Court has only to see d, the Court has only to see whether there is prima facie some material on the basis of whether there is prima facie some material on the basis of whether there is prima facie some material on the basis of which the department has opened the case, and that the which the department has opened the case, and that the which the department has opened the case, and that the sufficiency or correctness of the material could not be sufficiency or correctness of the material could not be sufficiency or correctness of the material could not be considered at this stage. It is true that the supreme Cou considered at this stage. It is true that the supreme Cou considered at this stage. It is true that the supreme Court has made the said observations while considering the validity of the made the said observations while considering the validity of the made the said observations while considering the validity of the reasons recorded by the Assessing Officer for reopening of the reasons recorded by the Assessing Officer for reopening of the reasons recorded by the Assessing Officer for reopening of the assessment of the assessee under Section 147, whereas the assessment of the assessee under Section 147, whereas the assessment of the assessee under Section 147, whereas the present case arises out of the proceedings initiated and the present case arises out of the proceedings initiated and the present case arises out of the proceedings initiated and the satisfaction recorded by the Assessing Officer for initiating the tisfaction recorded by the Assessing Officer for initiating the tisfaction recorded by the Assessing Officer for initiating the proceedings under section 153C of the said Act. nonetheless proceedings under section 153C of the said Act. nonetheless proceedings under section 153C of the said Act. nonetheless such reliance of the decision of Supreme Court by the such reliance of the decision of Supreme Court by the such reliance of the decision of Supreme Court by the respondent could not be said to be out of place when the matter respondent could not be said to be out of place when the matter respondent could not be said to be out of place when the matter was concerning was concerning about the reopening of the assessment of the about the reopening of the assessment of the petitioner - assessee. assessee. Thus at the time of recording satisfaction for the purposes of Thus at the time of recording satisfaction for the purposes of Thus at the time of recording satisfaction for the purposes of section 153C of the Act, the assessing officer should be 'prima section 153C of the Act, the assessing officer should be 'prima section 153C of the Act, the assessing officer should be 'prima facie' satisfied that the documents seized have a bearing on facie' satisfied that the documents seized have a bearing on facie' satisfied that the documents seized have a bearing on the determination of the total income of the person to whom the determination of the total income of the person to whom the determination of the total income of the person to whom the notice under section 153C is being issued. notice under section 153C is being issued. 13. In the present case, documents containing information that 13. In the present case, documents containing information that 13. In the present case, documents containing information that the appellant has received accommodation entries as mentioned the appellant has received accommodation entries as mentioned the appellant has received accommodation entries as mentioned in the satisfaction not in the satisfaction note were found and seized. Besides these e were found and seized. Besides these documents, the statement of Shri Bhadresh Dodhia also documents, the statement of Shri Bhadresh Dodhia also documents, the statement of Shri Bhadresh Dodhia also

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suggests that the appellant had received accommodation suggests that the appellant had received accommodation suggests that the appellant had received accommodation entries. The AO has recorded a satisfaction u/s. 153C of the Act entries. The AO has recorded a satisfaction u/s. 153C of the Act entries. The AO has recorded a satisfaction u/s. 153C of the Act as discussed above. It is important to ment as discussed above. It is important to mention here that DCIT, ion here that DCIT, Central Circle Central Circle-3, Thane is the AO for the searched person as 3, Thane is the AO for the searched person as well as the appellant. Considering the totality of facts and well as the appellant. Considering the totality of facts and well as the appellant. Considering the totality of facts and material on record, I am of the material on record, I am of the opinion that the AO has rightly the AO has rightly invoked the provisions of section 153C of the Act. invoked the provisions of section 153C of the Act. Accordingly, Accordingly, the ground no. 1 raised by the appellant stand the ground no. 1 raised by the appellant stand DISMISSED. DISMISSED.” 3.6 It is thus evident from the above that while dealing with the It is thus evident from the above that while dealing with the It is thus evident from the above that while dealing with the validity of the satisfaction recorded under section 153C, the learned validity of the satisfaction recorded under section 153C, the learned validity of the satisfaction recorded under section 153C, the learned CIT(A) has taken note of the seized material an CIT(A) has taken note of the seized material and the documents d the documents referred to in the satisfaction note, which, according to him, referred to in the satisfaction note, which, according to him, referred to in the satisfaction note, which, according to him, indicated the receipt of unsecured loans from M/s Jatadhari indicated the receipt of unsecured loans from indicated the receipt of unsecured loans from Commercial Pvt. Ltd. The ld CIT(A) has therefore proceeded on the The ld CIT(A) has therefore proceeded on the premise that incriminating material existed qua the addition made. premise that incriminating material existed qua the premise that incriminating material existed qua the However, a specific finding on the precise nature or evidentiary However, a specific finding on the precise nature or evidentiary However, a specific finding on the precise nature or evidentiary nexus of such incriminating material vis nexus of such incriminating material vis-à-vis the impugned vis the impugned addition is not discernible from the order. addition is not discernible from the order.

3.7 Having regard to the law laid down in Having regard to the law laid down in Abhisar Buildwell Abhisar Buildwell (supra) and other judicial precedents, it becomes necessary for us to d other judicial precedents, it becomes necessary for us to d other judicial precedents, it becomes necessary for us to test, in the facts of the present case, whether any addition could test, in the facts of the present case, whether any addition could test, in the facts of the present case, whether any addition could have been validly sustained in the absence of incriminating material have been validly sustained in the absence of incriminating material have been validly sustained in the absence of incriminating material relatable to the assessee. To that end, we have examined the relatable to the assessee. To that end, we have examined the relatable to the assessee. To that end, we have examined the findings of the learned CIT(A) on merits to ascertain the factual findings of the learned CIT(A) on merits to ascertain the factual findings of the learned CIT(A) on merits to ascertain the factual substratum on which the impugned addition has been affirmed. substratum on which the impugned addition has been affirmed. substratum on which the impugned addition has been affirmed. The relevant observations of the learned CIT(A) on merits are The relevant observations of the learned CIT(A) on merits are The relevant observations of the learned CIT(A) on merits are reproduced hereunder for ready reference: reproduced hereunder for ready reference:

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“17. The ground no. 3 17. The ground no. 3 and 5 raised by the appellant are regarding and 5 raised by the appellant are regarding the addition of Rs.50,00,000/ the addition of Rs.50,00,000/- made by the AO u/s. 68 of the Act. made by the AO u/s. 68 of the Act. The facts leading to this addition are that during the search The facts leading to this addition are that during the search The facts leading to this addition are that during the search operation, it was found that various entities of Dodhia Group had operation, it was found that various entities of Dodhia Group had operation, it was found that various entities of Dodhia Group had taken accommodatio taken accommodation entries in the form of unsecured loans/share n entries in the form of unsecured loans/share capital from various shell entities. The Assessee during the year capital from various shell entities. The Assessee during the year capital from various shell entities. The Assessee during the year had taken following unsecured loans: had taken following unsecured loans: Sr. No. Name of the Company Amount of Loan Amount of Loan 1 Jatadhari Commercial Pvt. 50,00,000/- 50,00,000/ Ltd. 18.1 During the 18.1 During the assessment proceedings, the AO requested the assessment proceedings, the AO requested the assessee to substantiate the genuineness of loan taken during the assessee to substantiate the genuineness of loan taken during the assessee to substantiate the genuineness of loan taken during the year, however, the said notice remained uncompiled with. The AO year, however, the said notice remained uncompiled with. The AO year, however, the said notice remained uncompiled with. The AO issued a specific show cause notice on 06.09.2022 wherein the issued a specific show cause notice on 06.09.2022 wherein the issued a specific show cause notice on 06.09.2022 wherein the documents found du documents found during the search along with the seized pages no. ring the search along with the seized pages no. 35 to 38 of bundle no. 3 seized from the residence of Shri Divyesh 35 to 38 of bundle no. 3 seized from the residence of Shri Divyesh 35 to 38 of bundle no. 3 seized from the residence of Shri Divyesh R. Dhanani (where the details of amount received back by various R. Dhanani (where the details of amount received back by various R. Dhanani (where the details of amount received back by various entities of Dodhia Group which was claimed to have been paid as entities of Dodhia Group which was claimed to have been paid as entities of Dodhia Group which was claimed to have been paid as interest on unsecured loans raised from shell entities were found unsecured loans raised from shell entities were found unsecured loans raised from shell entities were found mentioned) were also confronted. However, this notice remained mentioned) were also confronted. However, this notice remained mentioned) were also confronted. However, this notice remained uncompiled with. Another show cause notice was issued on uncompiled with. Another show cause notice was issued on uncompiled with. Another show cause notice was issued on 02.11.2022 which was also not responded by the appellant. This 02.11.2022 which was also not responded by the appellant. This 02.11.2022 which was also not responded by the appellant. This show cause notice w show cause notice was followed by another show cause notice as followed by another show cause notice dated 18.11.2022 and the same was also not responded by the dated 18.11.2022 and the same was also not responded by the dated 18.11.2022 and the same was also not responded by the appellant. Final show cause notice in this case was issued on appellant. Final show cause notice in this case was issued on appellant. Final show cause notice in this case was issued on 25.11.2022 wherein wherein the appellant was again informed that as per appellant was again informed that as per enquiries conducted by the De enquiries conducted by the Department, the loan creditor companyis partment, the loan creditor companyis bogus and therefore, the assessee was requested to produce the bogus and therefore, the assessee was requested to produce the bogus and therefore, the assessee was requested to produce the directors of the company. In response, the assessee on 11.12.2022, directors of the company. In response, the assessee on 11.12.2022, directors of the company. In response, the assessee on 11.12.2022, filed documents such as confirmation, ITR, financial statement, copy filed documents such as confirmation, ITR, financial statement, copy filed documents such as confirmation, ITR, financial statement, copy of ledger account, of ledger account, copy of bank statement, copy of certificate of copy of bank statement, copy of certificate of incorporation of lender company. However, no comments regarding incorporation of lender company. However, no comments regarding incorporation of lender company. However, no comments regarding the production of the directors of the company were given. Neither the production of the directors of the company were given. Neither the production of the directors of the company were given. Neither any comments were made regarding the findings of the enquiries any comments were made regarding the findings of the enquiries any comments were made regarding the findings of the enquiries conducted by th conducted by the department suggesting that the loan creditor is a e department suggesting that the loan creditor is a bogus entity. 18.2 It is further seen from the impugned assessment order that 18.2 It is further seen from the impugned assessment order that 18.2 It is further seen from the impugned assessment order that M/s. Jatadhari Commercial Pvt. Ltd. was a shell company operated M/s. Jatadhari Commercial Pvt. Ltd. was a shell company operated M/s. Jatadhari Commercial Pvt. Ltd. was a shell company operated by an entry operator namely Shri Manoj Kumar and as per the by an entry operator namely Shri Manoj Kumar and as per the by an entry operator namely Shri Manoj Kumar and as per the statement recorded by Investigation Wing, Kolkata, Shri Manoj tatement recorded by Investigation Wing, Kolkata, Shri Manoj tatement recorded by Investigation Wing, Kolkata, Shri Manoj Kumar admitted that he is engaged in the activities of providing Kumar admitted that he is engaged in the activities of providing Kumar admitted that he is engaged in the activities of providing accommodation entries. It is important to mention that the said accommodation entries. It is important to mention that the said accommodation entries. It is important to mention that the said statement of Shri Manoj Kumar was confronted with Shri Bhadresh statement of Shri Manoj Kumar was confronted with Shri Bhadresh statement of Shri Manoj Kumar was confronted with Shri Bhadresh Dodhia in the statement recorded u/s. 132(4) of the Act on dhia in the statement recorded u/s. 132(4) of the Act on dhia in the statement recorded u/s. 132(4) of the Act on 29.11.2019 at his office 1001, Filix Towers, Sonapur, Bhandup 29.11.2019 at his office 1001, Filix Towers, Sonapur, Bhandup 29.11.2019 at his office 1001, Filix Towers, Sonapur, Bhandup

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West. The corresponding question is question no. 56 and Shri West. The corresponding question is question no. 56 and Shri West. The corresponding question is question no. 56 and Shri Bhadresh Dodhia simply stated that he has no comments to offer. Bhadresh Dodhia simply stated that he has no comments to offer. Bhadresh Dodhia simply stated that he has no comments to offer. 18.3 After considering the facts of the case, the AO observed that onsidering the facts of the case, the AO observed that onsidering the facts of the case, the AO observed that theunsecured loan of Rs.50,00,000/ theunsecured loan of Rs.50,00,000/- is not genuine and the said is not genuine and the said loan creditor companywas created only for the purpose of carrying loan creditor companywas created only for the purpose of carrying loan creditor companywas created only for the purpose of carrying out sham transactions wherein unaccounted money was routed out sham transactions wherein unaccounted money was routed out sham transactions wherein unaccounted money was routed through thes through these companies. The AO after considering the legal e companies. The AO after considering the legal position and the facts of the case held that the assessee has failed position and the facts of the case held that the assessee has failed position and the facts of the case held that the assessee has failed to substantiate the genuineness of these loans as well as to substantiate the genuineness of these loans as well as to substantiate the genuineness of these loans as well as creditworthiness creditworthiness creditworthiness of of of loan loan loan creditor. creditor. creditor. Accordingly, Accordingly, Accordingly, addition addition addition of of of Rs.50,00,000/ Rs.50,00,000/- was made by the AO. 19. During the appellate proceedings, the appellant has filed a 19. During the appellate proceedings, the appellant has filed a 19. During the appellate proceedings, the appellant has filed a detailed submission. The said submission is not being reproduced detailed submission. The said submission is not being reproduced detailed submission. The said submission is not being reproduced for the sake of brevity. However, the contentions raised by the for the sake of brevity. However, the contentions raised by the for the sake of brevity. However, the contentions raised by the appellant are summarized as under: appellant are summarized as under: i. It had filed all the documents such as confirmation, copy of ITR, d all the documents such as confirmation, copy of ITR, d all the documents such as confirmation, copy of ITR, copy of bank statement, copy of financial statements, copy of copy of bank statement, copy of financial statements, copy of copy of bank statement, copy of financial statements, copy of incorporation certificate, etc. for substantiating the genuineness of incorporation certificate, etc. for substantiating the genuineness of incorporation certificate, etc. for substantiating the genuineness of the loans taken. taken. ii. The appellant has discharged his onus as require ii. The appellant has discharged his onus as required u/s. 68 of the d u/s. 68 of the Act by filing the necessary documentary evidences Act by filing the necessary documentary evidences iii. The AO has violated the principle of natural justice because the iii. The AO has violated the principle of natural justice because the iii. The AO has violated the principle of natural justice because the copies of enquiry reports conducted at the back of the appellant copies of enquiry reports conducted at the back of the appellant copies of enquiry reports conducted at the back of the appellant were not provided. were not provided. iv. The opportunity of cross examin iv. The opportunity of cross examination of so-called accommodation called accommodation entry operators was not provided by the AO. entry operators was not provided by the AO. V. The unsecured loan raised during the year has been repaid in V. The unsecured loan raised during the year has been repaid in V. The unsecured loan raised during the year has been repaid in subsequent assessment years. subsequent assessment years. vi. No incriminating material suggesting that the loans are No incriminating material suggesting that the loans are No incriminating material suggesting that the loans are taken after giving cash to taken after giving cash to these companies, was found these companies, was found during the search operation during the search operation. Findings 20. Before dealing with the facts of the present case, it isimportant 20. Before dealing with the facts of the present case, it isimportant 20. Before dealing with the facts of the present case, it isimportant to first deal with the legal position regarding section 68 of the Act to first deal with the legal position regarding section 68 of the Act to first deal with the legal position regarding section 68 of the Act which has emerged. over the years.It is a well set which has emerged. over the years.It is a well settled legal position tled legal position that onus of proving the source of money found to have been that onus of proving the source of money found to have been that onus of proving the source of money found to have been received by an assessee, is on him. If the assessee fails to received by an assessee, is on him. If the assessee fails to received by an assessee, is on him. If the assessee fails to satisfactorily explain these credits, it is open for the revenue to hold satisfactorily explain these credits, it is open for the revenue to hold satisfactorily explain these credits, it is open for the revenue to hold

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that the sum credited, is income of the as that the sum credited, is income of the assessee and no further sessee and no further burden lies on the revenue. For this proposition reliance is placed on burden lies on the revenue. For this proposition reliance is placed on burden lies on the revenue. For this proposition reliance is placed on the decision of Hon. Supreme Court in the case of Roshan Di Hatti the decision of Hon. Supreme Court in the case of Roshan Di Hatti the decision of Hon. Supreme Court in the case of Roshan Di Hatti vs CIT 107 ITR 938 (SC) and Kale Khan Mohammad Hanif vs CIT vs CIT 107 ITR 938 (SC) and Kale Khan Mohammad Hanif vs CIT vs CIT 107 ITR 938 (SC) and Kale Khan Mohammad Hanif vs CIT 50 ITR 1 (SC). 50 ITR 1 (SC). 21. It is also a well 21. It is also a well settled legal position that in order to discharge settled legal position that in order to discharge his onus u/s 68, the assessee must prove the identity of creditors, his onus u/s 68, the assessee must prove the identity of creditors, his onus u/s 68, the assessee must prove the identity of creditors, capacity of creditors to advance money and genuineness of capacity of creditors to advance money and genuineness of capacity of creditors to advance money and genuineness of transaction by filing documents such as confirmation, copies of transaction by filing documents such as confirmation, copies of transaction by filing documents such as confirmation, copies of bank statement, bank statement, copy of financial statements, copy of ITRs, etc. copy of financial statements, copy of ITRs, etc. Once the assessee has discharged his primary onus by submitting Once the assessee has discharged his primary onus by submitting Once the assessee has discharged his primary onus by submitting supporting documents such as confirmation, copies of bank supporting documents such as confirmation, copies of bank supporting documents such as confirmation, copies of bank statements of creditors, copies of ITR of creditors and copies oftheir statements of creditors, copies of ITR of creditors and copies oftheir statements of creditors, copies of ITR of creditors and copies oftheir financial statement, then only burden shifts to the department. For ement, then only burden shifts to the department. For ement, then only burden shifts to the department. For this proposition the reliance is placed on following decisions: this proposition the reliance is placed on following decisions: this proposition the reliance is placed on following decisions:  Shankar Industries vs CIT 114 ITR Shankar Industries vs CIT 114 ITR 689 (Calcutta). (Calcutta).  Harichand Virender Paul vs CIT 140 ITR 148 (P&H HC). Harichand Virender Paul vs CIT 140 ITR 148 (P&H HC). Harichand Virender Paul vs CIT 140 ITR 148 (P&H HC).  CIT vs Biju Patnaik 160 ITR 674 (SC CIT vs Biju Patnaik 160 ITR 674 (SC).  CIT vs Precision Finance Pvt. Ltd. 208 ITR 465 (Calcutta). CIT vs Precision Finance Pvt. Ltd. 208 ITR 465 (Calcutta). CIT vs Precision Finance Pvt. Ltd. 208 ITR 465 (Calcutta).  Dhanlaxmi Steel Re Dhanlaxmi Steel Re-rolling Mills vs CIT 228 ITR 780 (AP). rolling Mills vs CIT 228 ITR 780 (AP).  Sanil K. M. P. vs CIT 177 Taxman 481 (Kerela). Sanil K. M. P. vs CIT 177 Taxman 481 (Kerela). 22.1 The appellant is heavily relying on the documents such as 22.1 The appellant is heavily relying on the documents such as 22.1 The appellant is heavily relying on the documents such as copy of ITR, financial copy of ITR, financial statement, bank statement, etc. filed by him statement, bank statement, etc. filed by him during the assessment proceedings. In this connection, it may be during the assessment proceedings. In this connection, it may be during the assessment proceedings. In this connection, it may be mentioned that the issue of make mentioned that the issue of make- believe documentation in the case believe documentation in the case of accommodation entries has been discussed by the Hon'ble Delhi of accommodation entries has been discussed by the Hon'ble Delhi of accommodation entries has been discussed by the Hon'ble Delhi High Court in High Court in the case of CIT v. Nova Promoters and Finlease (P.) the case of CIT v. Nova Promoters and Finlease (P.) Ltd. [2012] 342 ITR 169 (Delhi), wherein the Hon'ble High Court Ltd. [2012] 342 ITR 169 (Delhi), wherein the Hon'ble High Court Ltd. [2012] 342 ITR 169 (Delhi), wherein the Hon'ble High Court observed as under: observed as under: "The ratio of a decision is to be understood and appreciated in the "The ratio of a decision is to be understood and appreciated in the "The ratio of a decision is to be understood and appreciated in the background of the facts of that case. So understood, background of the facts of that case. So understood, it will be seen it will be seen that where the complete particulars of the share applicants such as that where the complete particulars of the share applicants such as that where the complete particulars of the share applicants such as their names and addresses, Income their names and addresses, Income-tax file numbers, their tax file numbers, their creditworthiness, share application forms creditworthiness, creditworthiness, share application forms share application forms and shareholders' and and shareholders' shareholders' register, share transfer register, etc., are furnishe register, share transfer register, etc., are furnished to the Assessing d to the Assessing Officer and the Assessing Officer has not conducted any enquiry Officer and the Assessing Officer has not conducted any enquiry Officer and the Assessing Officer has not conducted any enquiry into the same or has no material in his possession to show that into the same or has no material in his possession to show that into the same or has no material in his possession to show that those particulars are false and cannot be acted upon, then no those particulars are false and cannot be acted upon, then no those particulars are false and cannot be acted upon, then no

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addition can be made in the hands of the compan addition can be made in the hands of the company under section 68 y under section 68 and the remedy open to the Revenue is to go after the share and the remedy open to the Revenue is to go after the share and the remedy open to the Revenue is to go after the share applicants in accordance with law. We are afraid that we cannot applicants in accordance with law. We are afraid that we cannot applicants in accordance with law. We are afraid that we cannot apply the ratio to a case, such as the present one, where the apply the ratio to a case, such as the present one, where the apply the ratio to a case, such as the present one, where the Assessing Officer is in possession of material that Assessing Officer is in possession of material that discredits and discredits and impeaches the particulars furnished by the assessee and also impeaches the particulars furnished by the assessee and also impeaches the particulars furnished by the assessee and also establishes the link between self establishes the link between self-confessed 'accommodation entry confessed 'accommodation entry providers', whose business it is to help assessees bring into their providers', whose business it is to help assessees bring into their providers', whose business it is to help assessees bring into their books of account their unaccounted monies thro books of account their unaccounted monies through the medium of ugh the medium of share subscription, and the assessee The existence with the share subscription, and the assessee The existence with the share subscription, and the assessee The existence with the Assessing Officer of material showing that the share subscriptions Assessing Officer of material showing that the share subscriptions Assessing Officer of material showing that the share subscriptions were collected as part of a premeditated plan were collected as part of a premeditated plan-a smoke screen a smoke screen- conceived and executed with the connivance or invo conceived and executed with the connivance or involvement of the lvement of the assessee excludes the applicability of the ratic." assessee excludes the applicability of the ratic." 22.2 Therefore, as held by the Hon'ble High Court, if the AO 22.2 Therefore, as held by the Hon'ble High Court, if the AO 22.2 Therefore, as held by the Hon'ble High Court, if the AO examines the truth behind such sum credited shown by the examines the truth behind such sum credited shown by the examines the truth behind such sum credited shown by the assessee and material that discredits and impeaches the assessee and material that discredits and impeaches the assessee and material that discredits and impeaches the particulars furn particulars furnished by the assessee and also shows that the ished by the assessee and also shows that the amount was received as part of a premeditated plan conceived and amount was received as part of a premeditated plan conceived and amount was received as part of a premeditated plan conceived and executed with the connivance or involvement of the assessee, this executed with the connivance or involvement of the assessee, this executed with the connivance or involvement of the assessee, this fastens the liability of such credits in the hands of the assessee. fastens the liability of such credits in the hands of the assessee. fastens the liability of such credits in the hands of the assessee. 23. Further, it was held in the case of CIT v. Nipun Builders and , it was held in the case of CIT v. Nipun Builders and , it was held in the case of CIT v. Nipun Builders and Developers Developers Developers P. P. P. Ltd. Ltd. Ltd. [2013] [2013] [2013] 350 350 350 ITR 407 ITR 407 ITR 407 (Delhi) (Delhi) (Delhi) that that that the the the point at which which the initial onus on the assessee to prove the initial onus on the assessee to prove the unexplained credit would stand discharged depends upon the facts unexplained credit would stand discharged depends upon the facts unexplained credit would stand discharged depends upon the facts and circumstances of and circumstances of each case. It was pointed out that where there each case. It was pointed out that where there is private placement of shares: is private placement of shares: "the assessee cannot simply furnish details and remain quiet even "the assessee cannot simply furnish details and remain quiet even "the assessee cannot simply furnish details and remain quiet even when summons issued to shareholders under section 131 return when summons issued to shareholders under section 131 return when summons issued to shareholders under section 131 return unserved and uncomplied. This approach would be u unserved and uncomplied. This approach would be u unserved and uncomplied. This approach would be unreasonable as a general proposition as the assessee cannot plead that they as a general proposition as the assessee cannot plead that they as a general proposition as the assessee cannot plead that they had received money, but could do nothing more and it was for the had received money, but could do nothing more and it was for the had received money, but could do nothing more and it was for the Assessing Officer to enforce shareholders attendance. Some cases Assessing Officer to enforce shareholders attendance. Some cases Assessing Officer to enforce shareholders attendance. Some cases might require or justify visit by the Inspector to might require or justify visit by the Inspector to ascertain whether ascertain whether the shareholders/subscribers were functioning or available at the the shareholders/subscribers were functioning or available at the the shareholders/subscribers were functioning or available at the addresses, but it would be incorrect to state that the Assessing addresses, but it would be incorrect to state that the Assessing addresses, but it would be incorrect to state that the Assessing Officer should get the addresses from the Registrar of Companies' Officer should get the addresses from the Registrar of Companies' Officer should get the addresses from the Registrar of Companies' website or search for the addresses of s website or search for the addresses of shareholders and hareholders and communicate with them. Similarly, creditworthiness was not proved communicate with them. Similarly, creditworthiness was not proved communicate with them. Similarly, creditworthiness was not proved by mere issue of a cheque or by furnishing a copy of statement of by mere issue of a cheque or by furnishing a copy of statement of by mere issue of a cheque or by furnishing a copy of statement of bank account. Circumstances might require that there should be bank account. Circumstances might require that there should be bank account. Circumstances might require that there should be some evidence of positive nature to show that some evidence of positive nature to show that the said subscribers the said subscribers had made a genuine investment, acted as angel investors, after due had made a genuine investment, acted as angel investors, after due had made a genuine investment, acted as angel investors, after due diligence or for personal reasons. Thus, finding or a conclusion must diligence or for personal reasons. Thus, finding or a conclusion must diligence or for personal reasons. Thus, finding or a conclusion must

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be practicable, pragmatic and might in a given case take into be practicable, pragmatic and might in a given case take into be practicable, pragmatic and might in a given case take into account that the assessee might fin account that the assessee might find it difficult to unimpeachably d it difficult to unimpeachably establish the creditworthiness of the shareholders." establish the creditworthiness of the shareholders." 24.1 Similarly, in CIT v. N. R. Portfolio Pvt. Ltd. [2014] 264 CTR 258 24.1 Similarly, in CIT v. N. R. Portfolio Pvt. Ltd. [2014] 264 CTR 258 24.1 Similarly, in CIT v. N. R. Portfolio Pvt. Ltd. [2014] 264 CTR 258 (Delhi), the Hon'ble High Court reiterated the need of the assessee to (Delhi), the Hon'ble High Court reiterated the need of the assessee to (Delhi), the Hon'ble High Court reiterated the need of the assessee to satisfy the Assessing Officer satisfy the Assessing Officer about the "identity, creditworthiness about the "identity, creditworthiness and genuineness" of the creditors. It was pointed out that mere and genuineness" of the creditors. It was pointed out that mere and genuineness" of the creditors. It was pointed out that mere production of incorporation details, PANS or the fact that third production of incorporation details, PANS or the fact that third production of incorporation details, PANS or the fact that third persons or company had filed Income persons or company had filed Income-tax details in case of a private tax details in case of a private limited company may limited company may not be sufficient when surrounding and not be sufficient when surrounding and attending facts predicate a cover up. These facts indicate and reflect attending facts predicate a cover up. These facts indicate and reflect attending facts predicate a cover up. These facts indicate and reflect proper proper proper paper paper paper work work work or or or documentation documentation documentation but but but genuineness, genuineness, genuineness, creditworthiness, identity, are deeper and obtrusive. Companies no creditworthiness, identity, are deeper and obtrusive. Companies no creditworthiness, identity, are deeper and obtrusive. Companies no doubt are artificial or ju doubt are artificial or juristic persons but they are soulless and are ristic persons but they are soulless and are dependent upon the individuals behind them who run and manage dependent upon the individuals behind them who run and manage dependent upon the individuals behind them who run and manage the said companies. It is the persons behind the company who take the said companies. It is the persons behind the company who take the said companies. It is the persons behind the company who take the decisions, controls and the decisions, controls and manage them.” 4.1 A plain reading of the above reveals A plain reading of the above reveals that the learned CIT(A) that the learned CIT(A) has relied on three broad categories of material forming the has relied on three broad categories of material forming the has relied on three broad categories of material forming the foundation of the addition foundation of the addition —

(i) firstly, the seized pages No. 35 to 38 of Bundle No. 3 found at firstly, the seized pages No. 35 to 38 of Bundle No. 3 found at firstly, the seized pages No. 35 to 38 of Bundle No. 3 found at the residence of Shri Divyesh R. Dhanani, wherein details of the residence of Shri Divyesh R. Dhanani, wherein details of the residence of Shri Divyesh R. Dhanani, wherein details of repayments or amounts received back by various entities of the r amounts received back by various entities of the r amounts received back by various entities of the Dodhia Group, ostensibly towards interest on unsecured loans Dodhia Group, ostensibly towards interest on unsecured loans Dodhia Group, ostensibly towards interest on unsecured loans obtained from shell entities, were recorded; obtained from shell entities, were recorded;

(ii) secondly, the statement of Shri Manoj Kumar , the statement of Shri Manoj Kumar , the statement of Shri Manoj Kumar which was recorded by the Investigation wing of recorded by the Investigation wing of Income-tax Department, tax Department, Kolkatta, which was confronted to Shri Bhadresh Dodhia was confronted to Shri Bhadresh Dodhia during was confronted to Shri Bhadresh Dodhia his search proceedings on 29/11/2019. his search proceedings on 29/11/2019.

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(iii) Thirdly, the addition has been addition has been upheld mainly for the reason of upheld mainly for the reason of failure of the assessee in discharging the onus u/s 68 of the Act. failure of the assessee in discharging the onus u/s 68 of the failure of the assessee in discharging the onus u/s 68 of the The inquiries conducted in post search or assessment proceedings The inquiries conducted in post search or assessment proceedings The inquiries conducted in post search or assessment proceedings revealed M/s Jatadhari as bogus shell entity, so in final show cause revealed M/s Jatadhari as bogus shell entity, so in final show cause revealed M/s Jatadhari as bogus shell entity, so in final show cause notice dated 25/11/2022, the assessee was asked to produce notice dated 25/11/2022, the assessee was asked to produce notice dated 25/11/2022, the assessee was asked to produce director of said company but assessee did not comply. The director of said company but assessee did not comply. director of said company but assessee did not comply. documents in support of identity, creditworthiness and genuiness of documents in support of identity, creditworthiness and genuiness of documents in support of identity, creditworthiness and genuiness of transaction have also been rejected. transaction have also been rejected.

4.2 Out of the three sources referred to by the lower authorities, it Out of the three sources referred to by the lower authorities, it Out of the three sources referred to by the lower authorities, it is manifest that the second and third sources are unquestionably is manifest that the second and third sources are unquestionably is manifest that the second and third sources are unquestionably found during the course of the search action. The not materials found during the course of the search action found during the course of the search action statement of Shri Bhadresh M. Dodhia, recorded under section statement of Shri Bhadresh M. Dodhia, recorded under section statement of Shri Bhadresh M. Dodhia, recorded under section 132(4) of the Act, cannot, in the light of the judgment of the Hon’ble 132(4) of the Act, cannot, in the light of the judgment of the Hon’ble 132(4) of the Act, cannot, in the light of the judgment of the Hon’ble Delhi High Court in Harjeev Lal Agarwal v. CIT Harjeev Lal Agarwal v. CIT (supra), be regarded (supra), be regarded as incriminating material. The law is well settled that a statement riminating material. The law is well settled that a statement riminating material. The law is well settled that a statement under section 132(4), in the absence of supporting documentary under section 132(4), in the absence of supporting documentary under section 132(4), in the absence of supporting documentary evidence, does not constitute incriminating material for the purpose evidence, does not constitute incriminating material for the purpose evidence, does not constitute incriminating material for the purpose of assessment under sections 153A or 153C. of assessment under sections 153A or 153C.

Thus, the only document that survives for consideration is the 4.3 Thus, the only document that survives for consideration is the Thus, the only document that survives for consideration is the set of seized pages numbered 35 to 38 of bundle no. 3, recovered set of seized pages numbered 35 to 38 of bundle no. 3, recovered set of seized pages numbered 35 to 38 of bundle no. 3, recovered from the residence of Shri Divyesh R. Dhanani. from the residence of Shri Divyesh R. Dhanani. On verification of On verification of factual observation of records factual observation of records, we find that the entry pertain , we find that the entry pertaining to the loan from M/s Jatadhari Commercial Pvt. Ltd. M/s Jatadhari Commercial Pvt. Ltd. is duly recorded is duly recorded in the regular books of account of the assessee and is part of the in the regular books of account of the assessee and is part of the in the regular books of account of the assessee and is part of the

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balance sheet forming part of the return of income originally filed. balance sheet forming part of the return of income originally filed. balance sheet forming part of the return of income originally filed. Hence, the mere presence of such an entry in th Hence, the mere presence of such an entry in the seized papers e seized papers cannot, in law, be regarded as cannot, in law, be regarded as incriminating material incriminating material discovered during the course of search. during the course of search.

4.4 As regards the remark “return” appearing in the document, it As regards the remark “return” appearing in the document, it As regards the remark “return” appearing in the document, it is noted that during search proceedings, Shri Bhadresh M. Dodhia is noted that during search proceedings, Shri Bhadresh M. Dodhia is noted that during search proceedings, Shri Bhadresh M. Dodhia did not explain but he was also not specifically questioned about did not explain but he was also not specifically questioned about did not explain but he was also not specifically questioned about this notation with reference to transaction of loan of Jatadhari this notation with reference to transaction of loan of Jatadhari this notation with reference to transaction of loan of Jatadhari Commercial P. Ltd. It is submitted by the ld counsel for the It is submitted by the ld counsel for the assessee that During assessment, the assessee explained that this During assessment, the assessee explained that this During assessment, the assessee explained that this remark might have been made by the accountant or concerned staff remark might have been made by the accountant or concerned staff remark might have been made by the accountant or concerned staff to indicate the intention to repay the loan. The Assessing Officer, to indicate the intention to repay the loan. The Assessing Offi to indicate the intention to repay the loan. The Assessing Offi however, construed it to mean that interest was returned in cash to however, construed it to mean that interest was returned in cash to however, construed it to mean that interest was returned in cash to the lender. Significantly, the word “cash” does the lender. Significantly, the word “cash” does not not appear in the seized material; it was merely assumed by the AO. seized material; it was merely assumed by the AO.

4.5 The burden of proving that any interest was repaid in cash lay The burden of proving that any interest was repaid in cash lay The burden of proving that any interest was repaid in cash lay squarely upon the Assessing Officer. No enquiry was, however, squarely upon the Assessing Officer. No enquiry was, however, squarely upon the Assessing Officer. No enquiry was, however, undertaken with M/s Jatadhari Commercial Pvt. Ltd. M/s Jatadhari Commercial Pvt. Ltd. M/s Jatadhari Commercial Pvt. Ltd. to verify such inference. In the absence of any corroborative evidence, the said inference. In the absence of any corroborative evidence, the said inference. In the absence of any corroborative evidence, the said assumption remains speculative. Accordingly, a loan entry already assumption remains speculative. Accordingly, a loan entry alre assumption remains speculative. Accordingly, a loan entry alre disclosed in the regular accounts cannot be termed incriminating disclosed in the regular accounts cannot be termed disclosed in the regular accounts cannot be termed merely because it is found noted in the seized papers. merely because it is found noted in the seized papers. merely because it is found noted in the seized papers.

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4.6 Though it may be possible that in some post Though it may be possible that in some post Though it may be possible that in some post-search investigation or assessment proceedings, the genuineness of the investigation or assessment proceedings, the genuineness of the investigation or assessment proceedings, the genuineness of the loan may be independently examined, that by itself does not make ndependently examined, that by itself does not make ndependently examined, that by itself does not make the entry “incriminating” for the purpose of section 153C the entry “incriminating” for the purpose of section 153C the entry “incriminating” for the purpose of section 153C proceedings. For determining whether any proceedings. For determining whether any incriminating material incriminating material was found during search was found during search qua the addition made, our answer is in our answer is in the negative.

4.7 In the facts and in the circumstances of case and in law, it is In the facts and in the circumstances of case and in law, it is In the facts and in the circumstances of case and in law, it is evident that neither the assessment order nor the order of the t that neither the assessment order nor the order of the t that neither the assessment order nor the order of the learned CIT(A) contains any reference to specific incriminating learned CIT(A) contains any reference to specific incriminating learned CIT(A) contains any reference to specific incriminating material in relation to the impugned addition. The Hon’ble Supreme material in relation to the impugned addition. The Hon’ble Supre material in relation to the impugned addition. The Hon’ble Supre Court in Abhisar Buildwell Pvt. Ltd. v. CIT Abhisar Buildwell Pvt. Ltd. v. CIT (supra) has categorically (supra) has categorically held that where the assessment is unabated and no incriminating held that where the assessment is unabated and no incriminating held that where the assessment is unabated and no incriminating material is found during search, no addition material is found during search, no addition can be made on any can be made on any other basis .

4.8 Respectfully following the law laid down by the Hon’ble Respectfully following the law laid down by the Hon’ble Respectfully following the law laid down by the Hon’ble Supreme Court, we hold that no addition could have been made in Supreme Court, we hold that no addition could have been made in Supreme Court, we hold that no addition could have been made in the case of the assessee in the absence of incriminating material. the case of the assessee in the absence of incriminating material. the case of the assessee in the absence of incriminating material. Accordingly, Ground No. 5 of the appeal for A.Y. 2014 Ground No. 5 of the appeal for A.Y. 2014 Ground No. 5 of the appeal for A.Y. 2014–15 is allowed.

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“39. For the year under consideration, the appellant had raised 39. For the year under consideration, the appellant had raised 39. For the year under consideration, the appellant had raised technical grounds no. 1, 2 and 4 which are identical to ground no. 1, technical grounds no. 1, 2 and 4 which are identical to ground no. 1, technical grounds no. 1, 2 and 4 which are identical to ground no. 1, 2 and 4 for AY 2014 2 and 4 for AY 2014-15. The facts for the year under consideration 15. The facts for the year under consideration are also similar to AY 20 are also similar to AY 2014-15. Therefore, following my findings for 15. Therefore, following my findings for AY 2014-15, the 15, the ground no. 1, 2 and 4 raised by the appellant stand Dismissed.” stand Dismissed.” 7. In assessment year 2017 In assessment year 2017-18 also the Ld. CIT(A) has decided 18 also the Ld. CIT(A) has decided the ground challenging the validity of the addition on the basis of the ground challenging the validity of the addition on the basis of the ground challenging the validity of the addition on the basis of no incriminating material. The relevant finding is reproduced as incriminating material. The relevant finding is reproduced as incriminating material. The relevant finding is reproduced as under:

“46. For the year under consideration, the appellant had raised 46. For the year under consideration, the appellant had raised 46. For the year under consideration, the appellant had raised technical grounds no. 1, 2 and 4 which are identical to ground no. 1, technical grounds no. 1, 2 and 4 which are identical to ground no. 1, technical grounds no. 1, 2 and 4 which are identical to ground no. 1, 2 and 4 for AY 2014 2 and 4 for AY 2014-15. The facts for the year under 15. The facts for the year under consideration are also similar to AY are also similar to AY 2014-15. Therefore, following my findings for 15. Therefore, following my findings for AY 2014-15, the ground no. 1, 2 and 4 raised by the appellant 15, the ground no. 1, 2 and 4 raised by the appellant 15, the ground no. 1, 2 and 4 raised by the appellant stand DISMISSED. DISMISSED.” 8. In view of the above In view of the above, following our finding in assessment years ing in assessment years 2014-15, the relevant gro the relevant grounds raised in AY 2016-17 and 2017 17 and 2017-18 are allowed in favour of the assessee. are allowed in favour of the assessee.

Order pronounced in the ced in the open Court on 30/10 /10/2025.

Sd/ Sd/- Sd/ Sd/- (NARENDER KUMAR CHOUDHRY) (NARENDER KUMAR CHOUDHRY (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 30/10/2025 Rahul Sharma, Sr. P.S.

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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, BY ORDER, //True Copy// (Assistant Registrar) Registrar) ITAT, Mumbai ITAT, Mumbai