ACIT, CENTRAL CIRCLE-1(2), AHMEDABAD vs. ANUSTHAN BUILDCON PVT LTD, AHMEDABAD

आदेश/O R D E R PER WASEEM AHMED ACCOUNTANT MEMBER:

The captioned appeals have been filed at the instance of Revenue and the assessee against the respective orders of the Learned Commissioner of Income Tax (Appeals), Ahmedabad arising in the matter of assessment order passed under s. 153A r.w.s. 143(3) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Years as mentioned in the cause title.

First, we take up IT(ss)A No. 359/Ahd/2018, an appeal by the Revenue for AY 2012-13

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4.1 The assessee for the year under consideration i.e. A.Y. 2012-13 filed return of income at Rs. NIL which was processed under section 143(1) of the Act. Subsequently, a search proceeding under section 132 of the Act was carried out on 4th December 2014 at the premises of Shri Anil and Atul Hiralal Shah Group also known as entry provider/ Raju (Alias Anil Hiralal) barter group. The assessee company being part of the group was also subject to impugned search proceeding dated 4th December 2014. In consequence of the search, the proceedings under section 153A of the Act were initiated in the case of the assessee for the year under consideration as well as other assessment years falling within the prescribed period.

4.2 During the search proceedings at the premises of the Barter Group, several materials in the form of loose papers, sheets and electronic data etc. were seized from the group premises. Accordingly, it was alleged that the group mainly indulged in the activity of share market operation/ manipulation as well as in receipt of unaccounted money in the real estate business through the companies namely M/s Sarthav Infrastructure Private Limited, M/s Shah Hiralal Buildcon LLP and M/s Greenfield Reality Pvt. The group generated a huge amount of unaccounted income from the activity of share market manipulation and unaccounted receipts from real estate business. In order to round tripping and layering of the unaccounted income/ receipts, the group has floated large numbers of concern in the forms of companies, firms, proprietary concern where the unaccounted income/ receipts were layered in the guise of share capital along with premium and unsecured loan. It was also alleged that the unaccounted income/ receipt of the group layered in the guise of share capital & Premium in the different group companies were done with the help of Mumbai based entry provider Shri Chandrakant Shah, Shri Parveen Kumar Jain, Shri Partik R Shah. The companies managed and controlled by the Raju Barter Group such as Rajesh Enterprise Pvt Ltd, Neminath Traders Pvt Ltd, Anusthan Buildcon Pvt Ltd (present respondent assessee) and Real Marketing Pvt Ltd has received huge amount of share capital along with premium in different financial years (2007-08 to 2011-12)

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from the companies managed and control by the above-mentioned entry providers and from other parties.

4.3 It was further observed that during the independent search at the premises of entry provider Shri Shrish Chandrakant Shah, an excel sheet namely “R Barter” was found in which running ledger account of Barter group was maintained. As per the impugned sheet cash aggregating to Rs. 85,56,86,850/- was received from the barter group against an amount of Rs. 82,87,00,000/- accommodated to the barter group through web of the companies managed by him and with the help of companies managed by Shri Parveen Kumar Jain. The remaining amounts were adjusted against the angadia charges, commission and various types of expenses and cash payment of Rs. 2,75,94,000/- only.

4.4 It was found that the entries recorded in the excel sheet found from Shri Shrish Chandrakant Shah were corelating with the materials found and seized during an independent search proceeding at the premises of Shri Praveen Kumar Jain. Further, during the search at the Raju Barter Group (assessee group) a loose sheet marked as Page 247/25 of annexure A-1 was found from the office of Shri Anil Hiralal situated at B-406 Wall Street-II, Ellisbridge Ahmedabad. There was date wise noting of various transaction on the impugned sheet under the heading “Shrish”. The entry recorded on page 247/25 of Annexure A-1 matched with the entries recorded in the excel sheet found from the premises of Shri Shrish Chandrakant Shah.

4.5 During the assessment proceedings, the AO observed that the assessee company has received share capital and share premium of Rs. 5,27,00,000/- from following parties:  Entities controlled and managed by Shri Shrish Chandrakant Shah (a) Adhar Ventures India Ltd Rs. 50,00,000/- (b) Dhanush Technologies Ltd Rs. 1,00,00,000/-

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Other parties  (a) Kutch Textiles Pvt Ltd. Rs. 1,50,00,000/- (b) Super Domestic Machine Ltd Rs. 25,00,000/- (c) Jupiter Business Ltd Rs. 2,02,00,000/-

4.6 The AO further observed that, during the search/survey operation at M/s Shah Hiralal Buildcon LLP and M/s Greenfield Reality Pvt Ltd., the materials were gathered regarding unaccounted cash receipt against the sale of units of their respective projects. Further, it was accepted that that unaccounted receipt after utilizing for the payment of on-money in purchases of land were of brought back in the guise of share capital through the present respondent assessee.

4.7 The AO also observed that during the search in the case of assessee group unaccounted cash book marked as annexure A/5, A/6 and A/7 were found from the residence of Shri Asit Vohra, depicting in the narration against cash payment as “Anushthan Entry”. The amount of cash payment along with the date matched with the amount credited from M/s Jupiter Business Ltd in the form of share capital in the assessee company.

4.8 The AO in view of the above observation held that the genuineness of share capital and premium has not been established. Likewise, the identity of the share subscriber was also not fully established as the parties were not found existing on the given address. Furthermore, the assessee also failed to provide the correct address. The share subscribers, in their respective return of income, filed for AYs 2009-10 to 2013-14 have shown either nil income or very meagre income. Thus, the creditworthiness of the parties was also not established. Hence, the AO treated the credit of share capital and premium for Rs. 5.27 crores as unexplained cash credit under section 68 of the Act.

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assessee deleted the addition made by the AO on technical grounds as well on merit. The relevant finding of the learned CIT(A) on technical ground is extracted as under: 5.3 Facts of the case with reference to the document seized during the course of search, submissions of the appellant and case laws relied upon by the appellant have been carefully considered. It is an undisputed fact that the excel sheet seized from the hard disk, under consideration was found during the course of search at the premises of Shri Shirish Chandrakant Shah and not at the premises of the appellant. The excel sheet relied upon by the AO for making the addition is not in the handwriting of the appellant or any authorized person on behalf of the appellant and neither in the handwriting of Shri Shirish Chandrakant Shah it has been found in the form of excel sheets. This is also a fact that this excel sheet has not been signed by any one and appellant's name has not been mentioned on the excel sheets. Further the AO has also stated that the records seized from Shri Shirish Chandrakant Shah have correlation with the records seized from Praveen Kumar Jain which actually proves the fact that both the parties were related and the transactions in the excel sheet belong to both the parties and name of the appellant was no where mentioned in the seized material or in the statement given by Shri Shirish Shah. Thus, as the excel sheet have not been supported by any independent material and evidences to prove the fact that actually cash has been transferred to obtain the share capital. The contention of the appellant cannot be ignored that the appellant company was incorporated on 07.04.2011 and it is actually the first financial year i.e. F.Y. 2011-12 relevant to A.Y. 2012-13 during the year under consideration and hence generating the cash profits to the tune of Rs.5.27 crore is not logically possible for any business entity in absence of any evidence found during the search. It is also legally settled principle that the presumption u/s.292C of the Act is for the person from whose premises the documents are found and not applicable to the third party. Further the excel sheets is a dumb document as far as the appellant is concerned and additions on such document cannot be made in the hands of third party. The Hon'ble Supreme Court in the case of V.C. Shukla 1998 (3) SCC 410 held as under:- "37. In Beni v. BisanDayal it was observed that entries in books of account are not by themselves sufficient to charge any person with liability, the reason being that a man canriot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. In Hiralal v. Ram Rakha the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been proved, said, that the rule as laid down in Section 34 of Tie Act that entries in the books of account regularly kept in the course of business are relevant whenever they refer to a matter in which the Court has to enquire was subject to the salient proviso that such entries shall not alone be sufficient evidence to charge any person with liability. It is not, therefore, enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that they were in accordance with facts." Supreme Court of India in the case of Common Cause (A Registered Society) [2017] 77 taxmann.com 245 (SC) vs. Union of India held as under :-

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"Section 69A of the Income-tax Act, 1961, read with section 34 of the Indian Evidence Act, 1872- Unexplained money (Loose papers) Raids were conducted on two business groups and incriminating materials in form of random sheets and loose papers, computer prints, hard disk, pen drives etc. were found - Evidence of certain highly incriminating money transactions were also found - However, department had no evidence to prove that entries in these loose papers and electronic data were kept regularly during course of business of concerned business house Whether thus, these detailed documents recovered by authorities had no evidentiary values and they could not have been relied on to direct registration of FIR and investigation in case of high public functionaries occupying important offices Held, yes Whether further, materials in question were not only irrelevant but were also legally inadmissible under section 34 of Evidence Act - Held, yes [Paras 22, 24 & 27] [In favour of assessee]" The Hon'ble Bombay High Court in the case of Additional Commissioner of Income Tax vs. Miss Lata Mangeshkar reported in 97 ITR 696 held as under :- "Head Note: Section 69A of the Income-tax Act, 1961 Unexplained moneys - Assessment years 1962-63 to 1964-65-Relying on evidence in form of statements by two persons that they had paid money in 'black' to assessee, as well as entries in books belonging to them regarding alleged payments, ITO made additions to assessee's total income as income from undisclosed sources Tribunal, on scrutiny of said statements, having found that evidence tendered suffered from serious infirmities, held that mere entries in accounts regarding payments to assessee were not sufficient to prove that assesee had received money in black for which she did not issue a receipt-Tribunal deleted additions accordingly - whether entries in day-book or ledger would be a corroborative piece of evidence and once direct evidence of persons having made payments in black was disbelieved, no value could be attached to those entries - Held, yes - whether therefore, Tribunal was justified in deleting additions - Held, Yes” In the case of Prarthana Construction P Ltd v/s. DCIT(2001) 118 Taxman 112 (Ahd, Hon'ble ITAT, Ahmedabad 'C' Bench held as under :- Section 158BD read with section 158BC, of the Income-tax Act, 1961-Block assessment Undisclosed income of fr person - Block period 1985-86 to 21-9-1996- During search of premises of a firm and its partners, its allegedly containing details of certain land transaction pertaining to assessee-company were seized and statements of third parties were recorded under sections 132(4) and 131(1A)- Whether loose papers and documents seized from premises of third parties and statements recorded at back of assessee without it being led opportunity to interrogate said deponents and without bringing on record any supporting evidence, could made basis for adding undisclosed income in hands of assessee - Held, no-Additions were also made to assessee's income on basis of statement of a party, made behind back of assessee, to effect that cash payments were made by assessee to such party for acquiring development rights - No search had taken place in case of such party and no documents or records evidencing payment of on-money were seized - Assessee was given no opportunity to cross-examine said party - Whether addition made on basis of statement of such party would be unsustainable - Held, yes." During the course of search and even after the search during the course of the assessment proceedings when the appellant had requested for opportunity of cross examination of Shri Shirish Chandrakant Shah which has not been granted to the appellant and hence on the basis of the decision of the Hon'ble Apex Court in the case of Andaman Timber Industries vs. Commissioner of Central Excise, Kolkata - II [2015] 62 taxmann.com 3 (SC) wherein it has been held in Para 6 & 7 not allowing the assessee to cross-examine the witnesses by

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the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity and also tantamount to violation of principles of natural justice. The relevant Para 6 & 7 is a under: "6. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity Inasmucli as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guesswork as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. 7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price-list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price-list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions". Further a similar approach has been taken in the decisions of the Apex Court, jurisdictional Gujarat high Court and other High Courts which are as under: a) Kishanchand Chelaram & Co. Vs. CIT (1980) 125 ITR, 723 (SC): "The statements of the manager in those two letters were based on hearsay, as, in the absence of evidence, it could not be taken that he must have been in charge of the Madras office on October 16, 1946, so as to have personal knowledge. The department ought to have called upon the manager to produce the documents and papers on the basis of which he made the statements and confronted the assessee with those documents and papers. It was true that proceedings under the income tax law were not governed by the strict rules of evidence, and, therefore, it might be said that even without calling the manager of the bank in evidence to prove the letter dated February 18, 1955, it could be taken into account as evidence. But before the income tax authorities could rely upon it, they were bound to produce it before the assessee so that the assessee could controvert the statements

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contained in it by asking for an opportunity to cross examine the manager of the bank with reference to the statements made by him. Nor was there any explanation regarding what happened when the manager appeared in obedience to the summons referred to in the letter dated March 9, 1957, and what statement he had made. b) UOI vs. T.R. Varma (1958) SCR 499 (507) Cross examination of witness should be allowed so that the adverse evidence can be met by the opposite party. On facts, it was held that such cross objection was allowed in this case. c) The Punjab & Haryana High Court in Pahar Chand & Sons vs. State of Punjab (1976) 30 STC 211 (P&H) and of the Mysore High Court in Neminath Appayya Vs. Jambooraa AIR 1966 Mys 154 also lay down clearly that the Assessing Officer cannot get over or circumvent the specific request for cross examination on the ground of the assessee not having produced the witnesses and it was further held that the statements of those persons who have not been cross examined must not be taken into account for any decision against the tax payer. d) The reference is also invited to the following decisions (1) Kalra Glue Factory Vs. Sales Tax Tribunal & Others (S.C.) 167 ITR 498 (II) ADDL CIT Vs. Mukur Corporation (Gu).) 111 ITR 312. (iii) CIT Vs. Chandra Vilas Hotel (Guj.) 164 ITR 102. e) Reliance is also placed in the case of State of Kerala vs. K.T.Shahduli AIR 1977 SC 1627 wherein interalia, it has been held as under: "the usual mode recognised by law for proving the fact is by production of evidence and evidence includes oral evidence of witnesses. The opportunity to prove the correctness of completeness of the return would, therefore, necessarily carry with it the right to examine witness and that would, therefore, necessarily carry with it in the right to examine witness and that would include equally the right to cross-examine withness examined by the STO. Here in the present case the return filed by the assesee appeared to the STO to be incorrect and incomplete because certain sales appearing in the books of Hazi Usmankutty and other wholesale dealers were not shown in the books of account of the assessee. The STO relied on the evidence furnished by the entries in the books of account of Hazi Usmankutty and other wholesale dealers for the purpose of coming to the conclusion that the return filed by the assessee was incorrect or incomplete. Placed in these circumstances, the assessee could prove the correctness and completeness of his return only by showing that the entries in the books of account of Hazi Usmankutty and other wholesale dealers were false, bogus or manipulated and that the return submitted by the assessee should not be disbelieved on the basis of such entries, and this obviously, the assessee could not do, unless he was given an opportunity of cross examining Hazi Usmankutty and other wholesale dealers with reference to their accounts. Since the evidentiary material procured from or produced by Hazi Usmankutty and other wholesale dealers was sought to be relied upon for showing that the return submitted by the assessee was incorrect and Incomplete the assessee was entitled to an opportunity to have Hazi Usmankutty and other wholesale dealers summoned as witnesses for cross-cxamination. It can hardly be disputed that cross examination is one of the most efficacious methods of establishing truth and exposing falsehood. Here, it was not disputed on behalf of the revenue that the assessee in both cases applied to the STO for summoning Hazi Usmankutty and other

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wholesale dealers for cross-examination but his application was turned down by the STO. This act of the STO in refusing to summon Hazi Usmankutty and other wholesale dealers for cross-examination by the assessee clearly constituted infraction of the right conferred on the assessee by the second part of the proviso and that vitiated the orders of assessment made against the assessee." f) The Hon'ble Delhi High Court has in the case of CIT vs. SMC Share Broker Ltd. 288 ITR 345, held that not permitting the cross examination of the person searched while framing the assessment of a third persons will tantamount that the principles of natural justice had not been followed. The findings of the Tribunal were confirmed by the Hon'ble High Court by which the Tribunal has set aside the block assessment by holding that the AO was functioning as a quasi judicial authority and was under an obligation to adhere to the principles of natural justice. g) The Hon'ble Supreme Court in the case of ITO vs. M. Pirai Choodi, g 334 ITR 262 (2011) has observed as under: "Where an order had been passed by the A.O. without granting the assessee an opportunity to cross examine and the assessee preferred a Writ Petition: Held that the High Court ought not to have set-aside the order of assessment but to have only granted the assessee an opportunity to cross-examine the witness." Thus, the Hon'ble Supreme Court has set-aside the decision of Madras High Court in the case of M. Pirai Choodi vs. ITO (2008) 302 ITR 40 (Mad). In the said case, the assessee/Writ Petitioner was not present when the statement of the village administrative officer was obtained by the assessing authority and therefore the High Court observed that such a statement obtained from village administrative officer behind the assessee/writ petitioner depriving him an opportunity to cross- examine to the village administrative officer would amount to violation of principle of natural justice and therefore would vitiate the assessment order and accordingly the High Court set-aside the order of the A.O. Accordingly, while setting aside the order of the Madras High Court, Hon'ble Supreme Court has held that the assessee should be granted an opportunity of cross-examination of the witness.” h) DCIT vs. Mahendra Ambalal Patel (2010) 40 DTR 243 (Guj.) wherein it has been held as under :- "Addition in the hands of the assessee having been made merely on the basis of a bald statement of a third party without there being any corroborative evidence, the Tribunal was justified in deleting the addition particularly when the assessee was not allowed opportunity to cross-examine the persons who made such a statement" Prarthana Construction Pvt.Ltd., Tax Appeal No. 79 of 2000 (Guj.) Keeping in view the facts of the case as mentioned above and these binding judgments, the appellant's case is covered by this judgment, hence, additions made by the AO are not found justified and deserves to be deleted. 5.4 Similarly the details in the for Annexure A-6 It is an undisputed fact that the document under consideration was found during the course of search at the premises of Shri Asit Vora (alias Shah) and not at the premises of the appellant. This document is not

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in the handwriting of the appellant or any authorized person on behalf of the appellant. This is also a fact that this paper has not been signed by any one. During the course of search, no statement of Shri Asit Vora from whose premises this document was found, was recorded on this issue and there is no mention that Shri Asit Vora has stated at any stage on investigation/assessment proceedings that the figures mentioned on this paper belong to/pertain to the appellant. It is also legally settled principle that the presumption u/s.292C of the Act is for the person from whose premises the documents are found and not applicable to the third party Thus, this document is a dumb document as far as the appellant is concerned and additions on such document cannot be made in the hands of third party on the basis of the decision of (i) Hon'ble Supreme Court in the case of V.C. Shukla 1998 (3) SCC 410, (ii) Supreme Court of India in the case of Common Cause (A Registered Society) [2017] 77 taxmann.com 245 (SC) vs. Union of India, (iii) Hon'ble Bombay High Court in the case of Additional Commissioner of Income Tax vs. Miss Lata Mangeshkar reported in 97 ITR 696 and (iv) Prarthana Construction P Ltd v/s. DCIT (2001) 118 Taxman 112 (Ahd, Hon'ble ITAT, Ahmedabad 'C' Bench. Even in the relevant pages of Annexure A-6 nowhere the details and name of Jupiter Business Limited has been mentioned. Name of the appellant is written twice and the total amount is only Rs.55,00,000/- (42,00,000 + 13,00,000) on 6th Jan 2012 but the AO made the additions of Rs. 1,67,83,500/- considering investment in Jupiter Business Ltd as non-genuine, whereas, name of Jupiter Business Ltd is nowhere mentioned in the seized material. The AO linked the amount written against the name of the appellant in the seized material to the regular transaction with Jupiter Business Ltd without making any enquiry. There is no statement of anyone recorded on this issue. Thus, matching the transactions written in the diary with transaction of Jupiter Business Ltd is unjustified. The AO has extrapolated the figures of additions, which also not permissible as per settled legal position. Further the AO himself stated at page 18 of the assessment roder that shr Atul H. Shah & Shri Anil H. Shah have been found indulged in share market manipulations and they have routed their unaccounted money through various companies. Additions of more than Rs. 1000 crore have been made in the hands of Shri Atul H. Shah & Shri Anil H. Shah for the same reason by the AO. Therefore, these additions are nothing but double taxation, even if, these transactions are not found genuine for the sake of argument. Moreover, there is no incriminating document except Rs.55 lakh (42 + 13lakh) found during the search. Hence, additions are not found legally sustainable keeping in view the binding judgement of Hon'ble High Court of Gujarat, Ahmedabad in the case of Saumya Construction. 6. Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us.

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the items of the loans appeared in the financial statements of the assessee and the genuineness of such loans was also accepted by the revenue. 8.1 Besides prejudice to the above, it was also contended in the written submission that the AO in his assessment order has accepted that the beneficiary of the amount in dispute are M/s Green Field Reality and M/s Hiralal Buildcon. Likewise, there was an addition made in the hands of the main persons of the group namely Shri Anil/ Atul Hiralal Shah. As such, the amount in dispute has already been included while calculating the total income. Thus, it was submitted that there cannot be any addition to the total income of the assessee. The assessee in the written submission vehemently supported the order of the learned CIT-A.

The assessee submitted vide letter dated 26.12.2016 that share capital & premium had been received by it is noting but the cash receipt of real estate projects Shiv Someshwar

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Enclave & Shiv kartik Enclave developed by Shah Hiralal Buildcon LLP. Hence, it is proved that the share capital/premium received by assessee is not genuine considering the acceptance submitted by assessee. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX It was found during the search & seizure action on the ground that the main person Atul Hiralal Shah & Anil Hiralal Shah both have been found to have indulged in unaccounted share trading, IPO/GDR issue manipulations & share market manipulation on a large & systematic scale. In hands of both Anil Shah & Atul Shah in same AY 2008-09, u/s.143(3) r.w.s 147dated 12/08/2016, additions of more than Rs.800 crores have been made on these issues. 9.1 In view of the above finding of the AO, the learned CIT-A was pleased to delete the addition. From the above finding of the AO, it is transpired that the assessee is the not the beneficiary of the share capital shown by it in the books of accounts. Furthermore, once the same amount has already been added in the hands of the respective parties being in the hands of M/s Green field reality and M/s Hiralal Buildcon and in the hands of the main persons of the group namely Shri Anil/ Atul Hiralal Shah, further addition would lead to the double addition which is not desirable under the provisions of law.

9.2 Moreover, we find that the learned CIT-A has passed detailed and reasoned order deleting the addition made by the AO. As such, the finding of the learned CIT-A does not require any interference. Accordingly, we uphold the same. Hence, the ground of appeal of the revenue is hereby dismissed.

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which worked out at Rs. 10.54 Lakhs and added the same to the total income of the assessee.

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we do not find any reason to interfere in the finding of the learned CIT(A). Thus, the ground of appeal raised by the Revenue is hereby dismissed.

18.1 The AO found that the assessee has not provided necessary details with respect to genuineness of the transaction and credit worthiness of the lenders. The assessee also is not paying any interest on such a huge amount of loan. The AO further held that the entire money layered into the books of the assessee and other group concern in the form of unsecured loan and share capital is nothing but the unaccounted income of the barter group. But the fact that the money credited in the books of the assessee is unaccounted income of either Atul or Anil Hiralal shah or other concern of group will not affect the applicability of section 68 of the Act. In holding so, the AO relied upon the judgment of Hon’ble Calcutta High Court in the case of M/s Trinetra Commerce & Trade (P.) Ltd. reported in 75 taxmann.com 70. The AO accordingly treated the credit of unsecured loan of Rs. 55.11 Lakh from the above parties as unexplained cash credit under section 68 of the Act and added to the total income of the assessee. The AO also made an addition of Rs. 1,10,220/- under section 69C of the Act being estimated commission expenses incurred for taking the credit of such unsecured loan.

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19.1 The learned CIT(A) found that the AO in his order nowhere referred to any incriminating material found during the search with respect to unsecured loan received by the assessee. Therefore, considering the fact that the year under consideration being unabated assessment year for the purpose of proceeding under section 153A of the Act, no addition to total income can be made in absence of incriminating material on account of credit of unsecured loan.

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24.1 In this regard we note that it has been settled by various Hon’ble Court including Hon’ble Jurisdictional High Court that the completed/unabated assessment cannot be disturbed in the absence of any incriminating material/ documents whereas the assessment/ reassessment can be disturbed with respect to abated assessment years. The word 'assess' in Section 153A of the Act is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to the completed assessment proceedings. The Hon’ble Gujarat High Court in the case of Saumya Construction Pvt. Ltd. reported in 81 taxmann.com 292, has held that there cannot be any addition of regular items shown in the books of accounts until and unless there were certain materials of

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incriminating nature found during the search. The word incriminating has not been defined under the Act, but it refers to that materials/ documents/information which were collected during the search proceedings and not produced in the original assessment proceeding. Simultaneously, these documents had bearing on the total income of the assessee.

24.2 Now coming to the facts of the case on hand, we note that addition was made for the loan amount credited in the books of the assessee. However, no material of incriminating nature was found during search proceedings regarding credit of such loan. The AO also did not refer to any incriminating material found in this regard which would have made basis for the addition in the assessment. The CIT(A) also given categorical finding that no material in connection with loan transaction was found.

24.3 At the time of hearing, the learned DR has not brought anything on record referring incriminating material in connection with loan transaction. Accordingly, we hold that there cannot be any addition of the regular items which were disclosed by the assessee in the regular books of accounts. In holding so, we draw support and guidance from the judgment of Hon’ble Gujarat High Court in case of Saumya Construction (P.) Ltd (supra) wherein it was held as under: Thus, while in view of the mandate of sub-section (1) of section 153A in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition or disallowance can be made only on the basis of material collected during the search or requisition. In case no incriminating material is found, the earlier assessment would have to be reiterated. 24.4 In view of the above, we hold that there cannot be any addition to the total income of the assessee of the regular items as made by the AO in the present case.

24.5 Once the addition on technical count has been held as not sustainable then the other grounds raised by the revenue becomes redundant. Therefore, we are

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not inclined to adjudicate the same. Hence the grounds of appeals raised by the Revenue are hereby dismissed.

26.1 Likewise, the AO found certain document marked as page-5 of Annexure- A3 in relation real estate project (Shiv Kartik Enclave at Vesu-Surat) of M/s Greenfield Reality Private Ltd. (here after GRPL) in which assessee hold 91.12% shares. From the impugned sheet, it was revealed unaccounted investment of Rs.

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22,74,60,000/- was made in the said project. The fact of having cash payment amounting to Rs. 22,74,60,000/- for acquisition of the project was also accepted by the GRPL. Accordingly, the AO held that the source of investment to the extent of Rs. 22,74,60,000/- not explained, a sum of Rs. 19,69,60,000/- out of such investment pertains to the year under consideration and remaining to the next year, represents unexplained cash credit. Hence, the AO added the same to the total income of the assessee on substantive basis.

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the AO that no possibility of booking amount at the time of purchase of land is wrong. (iv) Likewise, analysis of seized documents in relation to the project of GRPL in chronological order, it can be seen that receipts of booking amount were started before 09-04-2012 i.e. before the registration of land purchased. (v) The seized material nowhere contains the name of the assessee. Thus, the AO wrongly analyzed the seized material.

27.1 Thus, the learned CIT(A) based on above observation accepted the contention of the assessee that cash payments against the purchase of land for project were made out of booking amounts. The firm M/s Shah Hiralal Buildcon LLP and GRPL have already offered income on account of on-money receipt in the booking of units of their respective projects. Therefore, no addition in the hand of the assessee, even on protective basis can be made in the given facts and circumstances.

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also made in the hand of Shri Ankit Sureshbhai Shah which was deleted by the learned CIT(A) on same reasoning as held in the case of the present assessee. In the case of Shri Ankit Sureshbhai Shah the Revenue was in appeal before this Tribunal in IT(SS)A No. 343/Ahd/2018 which has been decided vide order dated 27th September 2023 in favour of the assessee by observing as under: 10. We have heard the ld. DR and perused the materials available on record. Admittedly, in the case on hand, the AO made protective addition in the hands of the assessee in different assessment years on account of alleged initial unaccounted investments and unaccounted receipt in the projects of concerns namely M/s Shah Hiralal Buildcon LLP and GRPL. The concept of protective assessment is not defined in the provisions of the Act. However, the same has been used by the revenue authority as a precautionary tool where there is some income accrued or arise, but the AO is not sure who is liable to pay tax on such income, the AO may proceed to assess such income on protective and substantive basis. The Hon’ble Supreme court in the case of Lalji Haridas vs. ITO reported in [1961] 43 ITR 387 has defined the concept of protective assessment as under: In cases where it appears to the income-tax authorities that certain income has been received during the relevant assessment year but it is not clear who has received that income and prima facie it appears that the income may have been received either by A or B or by both together, it would be open to the relevant income-tax authorities to determine the said question by taking appropriate proceedings both against A and B. 10.1 The objective of the protective assessment is that in case substantive assessment made in the hand of other person not sustained then tax shall be collected from the person in whose hand protective assessment has been made. However, the concept of protective or substantive assessment only be applied where it is established beyond doubt that some income has been accrued or arisen in a particular assessment year but there is some uncertainty about the person who is liable to tax. In other word this concept cannot be applied in cases where it cannot be established beyond doubt that the income has accrued or arises. In holding so, we draw support and guidance from the order of coordinate bench of this tribunal in case of ITO ward 10(1) Ahmedabad vs. Ketan B Thakkar HUF reported in [2015] 61 taxmann.com 18 wherein it was held as under: The protective assessment of an income can be made where, in the opinion of the Assessing Officer, an income has definitely arisen in a particular assessment year but there is any doubt about the entity in whose income is to be brought to tax. In the light of this legal position, when court revert to the facts of the present case, the court find that even income having arisen is not free from doubt since the Assessing Officer himself is not sure about the embezzlement having actually taken place. In the course of assessment of 'V', it is an admitted position that the Assessing Officer has disallowed the embezzlement loss and is in appeal against such a disallowance. When the fact of embezzlement is not accepted by the Assessing Officer, there cannot be any occasion to make substantive assessment and protective assessment in respect of such an embezzlement income. The question of protective assessment of such an income in the hands of the assessee, on protective basis, could have arisen in a situation in which, for example, the Assessing Officer was to come to a conclusion that embezzlement in has taken place but he was not sure as to who has done the embezzlement. Of course, even this proceeds on the assumption that an amount embezzled by the assessee form his employer, even if that be so, would constitute his income notwithstanding the fact that, in such a situation, the fact of unlawful gains are coupled with corresponding obligation to return the same to its rightful owner. [Para 12]

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10.2 Coming to the facts of the case to hand, based on certain papers found from the premises of third party namely Shri Ashit Vohra, containing the information about cash paid against the land purchased for the proposed real estate development project of M/s Shah Hiralal Buildcon and GRPL, concluded that the assessee made unaccounted investment and received share in unaccounted booking receipt in the ratio of initial contribution in subsequent years. However, the name of the assessee was not appearing in impugned seized material based on which the AO proceeded to make protective addition in the hands of the assessee and substantive addition in the hand of on Shri Gautambhai. From the assessment order, we note that the AO only referred one paper for each project, containing the information about land cost on right side and on left side of same page, name of 4 person in abbreviated form was written along with certain amount. The AO decoded one of the abbreviation “G” as Gautambhai” and concluded that he has made initial contribution on behalf of the assessee in the proposed projects. There was no reasoning or basis assigned by AO for his conclusion. On the other hand, the learned CIT(A) found that there were several papers in relation to the projects found during the search at the premises of Shri Ashit Vohra. The learned CIT(A) on analysis of each and every seized paper in chronological order found that the projects were started and booking amount was received by the both the concern even before the registration of purchase deed of land. The ld. CIT(A) also found that the cash payment against the land purchase were made from the booking amount received over the period. The names noted on the seized paper represent the person through whom the booking amounts were collected. The finding of the learned CIT(A) has not been controverted by the learned DR based on any substantive materials. Thus, from the finding of the learned CIT(A) it is emerged that the concern namely M/s Shah Hiralal Buildcon and GRLP started their respective real estate project in which they collected unaccounted booking amounts which was utilized for unaccounted payment against purchase of land and other unaccounted expenditure. Thus, we are of the opinion that whatever the unaccounted receipts arise from the seized materials were taxable in the hands of those concerns and those concerns indeed have offered income by including the unaccounted booking receipt in their turnover. The AO has wrongly analyzed the seized materials and accordingly reached to the wrong conclusion that the assessee has made investment in cash in the projects and subsequently received shares in booking amount in proportion of initial contribution. Accordingly, we are of the view that no addition in the hand of the assessee is required to be made under the given facts and circumstances. Therefore, we do not find any reason to interfere in the finding of the learned CIT(A). Hence the ground of appeal raised by the revenue for all 4 appeals are hereby dismissed. 31.1 Respectfully, following the order of this tribunal in the group case of the assessee on same dispute, we hereby confirm the order of the learned CIT(A). Hence, the ground of appeal raised by the Revenue is hereby dismissed.

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Coming to IT(SS) No. 360/Ahd/2018, an appeal by the Revenue for A.Y. 2013-14

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evidence and further erred in deleting the commission expenses u/s 69C of the Act for Rs. 44,06,940/- only.

36.1 The AO found that the assessee has not provided necessary details with respect to genuineness of the transaction and credit worthiness of the lender. The assessee is also not paying any interest on such a huge amount of loan. The AO further held that entire money layered into the books of the assessee and other group concerns in the form of unsecured loan and share capital is nothing but the unaccounted income of the barter group. But the fact that the money credited in the books of the assessee is unaccounted income of either Atul or Anil Hiralal shah or other concern of group will not affect the applicability of section 68 of the Act. In holding so, the AO relied upon the judgment of Hon’ble Calcutta High Court in the case of Trinetra Commerce & Trade (P.) Ltd. reported in 75 taxmann.com 70. The AO accordingly treated the credit of unsecured loan of Rs. 22,03,47,000/- from the above parties as unexplained cash credit under section 68 of the Act and added to the total income of the assessee. The AO also made an addition of Rs.

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41,06,940/- under section 69C of the Act being estimated commission expenses incurred for taking the credit of such unsecured loan.

38.1 However, the learned CIT(A) on the merit of the addition confirmed majority of addition made by the AO except deleting the addition made in case of following parties for Rs. 79 lakh only. (1) Biraj Manipex Rs. 29 Lakh (2) Neminath Traders Pvt Ltd Rs. 16 Lakh (3) Shreyam Hotel Pvt Ltd Rs. 34 Lakh

38.2 Similarly, the learned CIT(A) deleted the addition made under section 69C of the Act representing estimated commission expenses paid for taking accommodation entry on technical count. However, on merit, the ld. CIT-A confirmed the addition in proportion of the addition upheld under section 68 of the Act.

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41.1 Both the learned DR and the Learned AR supported the order of the authorities below to the extent favorable to them.

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unsecured loan has nowhere referred to any incriminating material found which has been made basis for such addition. Therefore, in our considered opinion, the learned CIT(A) has rightly deleted the addition made by the AO on technical count. Hence, the ground of appeal of the revenue on the ground of law/technical ground is hereby dismissed.

The next issue raised by the Revenue vide ground No. 7 of its appeal is 44. that the learned CIT(A) erred in deleting the addition of unaccounted investment of Rs. 3.05 crores in the project of GRPL. 45. At the outset, we note that the issues raised by the revenue in its ground appeal for the AY 2013-14 are identical to the issues raised by the revenue in IT(SS)A No. 359/AHD/2018 for the assessment year 2012-13 in the ground No. 9. Therefore, the findings given in IT(SS)A No. 359/AHD/2018 shall also be applicable for the year under consideration i.e. AY 2013-14. The ground of appeal of the revenue for the assessment 2012-13 has been decided by us vide paragraph No. 31 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2012-13 shall also be applied for the year under consideration i.e. AY 2013-14. Hence, the ground of appeal filed by the revenue is hereby dismissed.

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Coming to IT(SS)A No. 302/AHD/2018, an appeal by the assessee for AY 2013-14

The interconnected issue raised by the assessee vide ground Nos. 1 to 5 of 48. its appeal is that the learned CIT(A) erred in deciding the issue of addition of unsecured loan on merit and thereby confirming the addition on merit for Rs. 21,24,47,000/- under section 68 of the Act and Rs. 42,48,940/- under section 69C of the Act.

Coming to IT(SS)A No. 303/Ahd/2018, an appeal by the assessee for AY 2014-15

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status of the creditor which is Active status as on 29.08.2018 which clearly proves the identity of the party. In regards with the query related to the Interest has not been charged by the creditors the appellant contended that the confirmation of A.Y 2012-13 to 2015-16 from the parties have been duly submitted wherein the parties have themselves confirmed the fact that the Interest free loans have been provided by them and hence the observation of the A.O. regarding the charging of Interest is unjustified. On the basis of the facts about Ratnakar Enterprise (P) Ltd., the appellant filed confirmation, Income Tax Return, ROC records and transaction is through regular banking channels & reflected in the books of accounts of both the parties, prove the genuineness of the transactions. The facts of the case have been analysed in totality. By submitting confirmation & PAN details, the appellant had proved only identity of the creditor. But the other two limbs i.e. genuineness of transaction and creditworthiness has not proved by the appellant particularly keeping in view the facts that no repayment in part or full of loan has been made and no interest was paid/credited. The appellant failed to prove the net worth of the creditor to advance such huge loan to the appellant. Merely the contention that the transaction was through normal banking channel does not fulfill these conditions ie. genuineness of transaction & creditworthiness of the creditor. All facts have to be studied together. Looking to these facts, the AO is justified in considering the credit of Rs.2,94,50,000/- from Ratnakar Enterprise (P) Ltd as non- genuine. Hence, additions of Rs 2,94,50,000/- made by the AO are confirmed. ************************************************************* As I have confirmed the additions of Rs.2,94,50,000/- in para above, 2% of the same I.e 5,89,000/- is confirmed and remaining additions of Rs.75,000/- is deleted. This, ground of appeal is partly allowed. 55. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us.

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case on hand, the books of accounts of the assessee were credited by unsecured amount of loan from the parties as mentioned in previous paragraphs.

58.1 The assessee has provided the PAN, ITR, Confirmation of party and bank statements showing transaction carried through banking channel and same is also reflecting in bank statements of the party. Thus, the identity of the creditor party has been proved which was also not doubted by the learned CIT(A).

58.2 The next aspect is genuineness of the transaction, in this regard, we note that transaction is carried out through banking channel, the party has also given confirmation of extending the interest free loan to the assessee and there was no unusual cash/cheque deposit pointed out in the bank of the party before transferring the fund to the assessee. The learned CIT(A) and the AO without pointing out any infirmity in the documentary evidence held the transaction not genuine merely on the reasoning that no interest was charged by the party and repayment has not been done. As such, the lower authorities have not made any independent inquiry regarding the genuineness of the loan transaction. It is the trite law that assessee under section 68 of the Act is required to furnished primary evidence and once the assessee provided such primary document the onus shift on the revenue to disprove the primary document provided by the assessee based on independent inquiry and contrary materials. In the case on hand, both the lower authorities, without conducting inquiries and bringing any contrary material on record other than suspicion and surmises, have doubted the genuineness of the transactions.

58.3 Likewise, the lower authorities have doubted the creditworthiness of the party merely on the basis that the party has declared negligible income in the income tax return. In our considered opinion, the creditworthiness of the party does not only depend upon the amount of income declared in the income tax return. As such, a person can have accumulated wealth or funds in the form of capital, reserves etc. Further the fact is that amount was transferred through

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banking channel and as per the finding of learned CIT(A) itself there was no cash deposit made in the bank account of the party before transferring the fund to the assessee which means the party was having sufficient fund to extend loan to the assessee. Still, the revenue had any doubt regarding the capacity of the party to extend such loan, then revenue should conduct necessary inquiries. However, no such enquiry has been conducted by the revenue authority.

58.4 In view of the above discussion, we hold that the assessee has discharged the primary onus cast upon it under the provision of section 68 of the Act and onus shifted upon the revenue, but revenue does not bring contrary material. Therefore, in such circumstances the addition made by the revenue authority by treating the unsecured as unexplained cash credit under section 68 of the Act cannot be sustained. Similarly, the ad-hoc addition made by the revenue authority on account estimated commission expense for taking credit of unsecured loan also cannot be sustained. Thus, we hereby set aside the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Hence, the grounds of appeal of the assessee is hereby allowed.

Coming to IT(SS)A No. 355/Ahd/2018 an appeal by the Revenue for AY 2015-16

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62.1 The AO found that the assessee has not provided necessary details with respect to genuineness of the transaction and credit worthiness of the lender. The assessee is also not paying any interest on such huge amount of loan. The AO accordingly treated the credit of unsecured loan of Rs. 40.25 lakhs from the above parties as unexplained cash credit under section 68 and added to the total income of the assessee. The AO also made an addition of Rs. 80,500/- under section 69C of the Act being estimated commission expenses incurred for taking the credit of such unsecured loan.

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be sustained. Hence, we hereby dismiss the ground of appeal raised by the revenue.

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of the units of the project while deciding the issue in IT(SS)A No. 359/Ahd/2018 in the case of revenue’s appeal for AY 2012-13. Therefore, we do not find any infirmity in the order of the learned CIT(A). Hence the ground of appeal of the revenue is hereby dismissed.

Order pronounced in the Court on 13/12/2023 at Ahmedabad. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 13/12/2023 Manish