BORA AGRO FOODS,PUNE vs. DCIT, CIR-5, PUNE, PUNE

5. The learned CIT(A) erred in not appreciating that the Assessee had not given any loan to Manasvi Enterprises and therefore, question of receipt of any interest income by the Assessee simply did not arise and accordingly, the addition made is not justified and the same may kindly be deleted. (₹ 15,06,375/-)

6. The learned CIT(A) ought to have appreciated that no corroborative evidence was found in the course of search on Kele Group that the Assessee firm had received any interest income of Rs.19,50,000/- and therefore, in the absence of any corroborative evidence, the addition made was not justified and the same ought to have been deleted. (₹ 15,06,375/-)

7. The Id. CIT(A) failed to appreciate that Shri Abhay Kele had filed an affidavit confirming the fact that no loan was borrowed by him or any of his entities from the Assessee firm and hence, question of receipt of any interest in cash simply did not arise and therefore, the addition made ought to have been delete. (₹ 15,06,375/-)

8. The learned CIT(A) failed to appreciate that there was no evidence to indicate that the notings on the papers seized from Kele Group 2 pertained to the assessee firm and hence, he ought to have deleted the said addition. (₹ 15,06,375/-)

9. Without prejudice to the above grounds, the learned CIT(A) erred in confirming the addition made by the learned A.O. u/s 69A r.w.s.

, 2361 & 2362/PUN/2025[A] 115BВЕ without appreciating that the provisions of section 69A were not applicable and hence, the addition made u/s. 69A r.w.s. 115BBE ought to have been deleted. (8,31,519/-) 10. The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal

.” Submission of ld.AR :

2. Ld.Authorised Representative (Ld.AR) for the Assessee filed paper book. The Ld.AR also filed written submissions. Relevant Paragraphs of the written submissions are reproduced as under :

“3] Ground Nos. 1-3: Validity of notice issued u/s 148:- 3.1] As stated above, the original assessment u/s 143(3) was completed and thereafter, the learned A.O. reopened the case of the assessee on the ground that during the course of search on Kele Group, evidence was found that Mr. Kele had paid interest in cash to Bora Agro. The copy of the reasons recorded for reopening the case are enclosed herewith as Annexure A. In the said reasons, the learned A.O. has stated that in the course of search on Prithvi Edifice Pvt. Ltd., Prithvi Builders and Developers and Abhay Kele Group on 03.02.2021 certain incriminating documents were seized He further holds that as per the documents seized in the course of search, it was revealed that Shri Abhay Kele and his entity Manasvi Enterprises had taken term loan from Bora Agro Foods and had paid interest in cash on the term loans. He has held that this year, an amount of Rs. 19,50,000/- was paid in cash as interest. Accordingly, on the basis of the above information, the learned A.O. has reopened the case of the assessee. 3.2] The assessee submits that the learned A.O. has no jurisdiction to issue notice u/s 148 for making an addition in case of the assessee on the basis of evidence found in the course of search on a third party. As clarified above, the learned A.O. has clearly mentioned in the reasons given that the evidence was found and seized in the course of search on Kele Group from which it was revealed that they had paid interest in cash to the assessee. It is submitted that the foundation of reopening in the present case is 'the incriminatingevidence' seized in the course of search on Kele Group. Accordingly. it is submitted that the learned A.O. ought to have taken recourse to the provisions of section 153C for making any addition in the case of the assessee. Thus, Assessee submits that the ld AO has assumed the jurisdiction u/s 148 incorrectly and 3 unjustifiably. In this context, reliance is placed on the decision of Hon'ble Bombay High Court in the case of Sejal Jewelery [171 taxmann.com 846] 2361 & 2362/PUN/2025[A] wherein Hon'ble Bombay High Court has held that the reopening u/s 148 cannot be assumed by the A.O. for making any addition on the basis of the evidence seized in the course of search on a third party. The relevant head notes are as under – "Section 153C, read with sections 147, 148 and 153A, of the Income tax Act, 1961 Search and seizure Assessment of any other person (Unsecured loan) Assessment year 2012-13 A search and seizure operation was conducted at premises of 'SJP' and its associate concerns as well as key individuals of group - During search, incriminating evidences in form of various loose papers and data back-ups of various electronic devices were found and seized It was revealed that assessee had accepted accommodation entries towards huge unsecured loans from a shell/paper company/entity On basis of same, Assessing Officer reopened assessee's case under section 147 - Assessee contended that since entire basis of reopening was search action, assessment could be made only under section 153A and not under sections 147 and 148 Whether since foundation of present case was certainly a search action which was undertaken by revenue against 'SJP' and in such search and seizure action, materials were seized and such materials were further explored and enquired, provisions of section 153C read with section 153A would be applicable Held, yes Whether, therefore, impugned notice under section 147 and all actions consequent thereto were required to be held to be without jurisdiction and bad in law - Held, yes (Paras 22 and 23) [In favour of assessee)" 3.3] Similar view has been taken by ITAT Pune in the case of Vijaykumar Chordiya [ITA No.1075/PN/24] wherein notice u/s 148 was issued for making an addition on the basis of evidence seized in the course of search on a third party. Hon'ble ITAT has held that the learned A.O. has no jurisdiction to issue notice u/s 148 for making any addition in the case of the assessee on the basis of the search conducted on a third party. A copy of the said decision is enclosed herewith as Annexure B. Accordingly, in view of the above decision of Hon'ble Bombay High Court and Hon'ble ITAT, Pune, it is submitted that the notice issued u/s 148 by the learned A.O. is invalid in law and hence, reasst. order passed u/s 147 be declared null and void. 4] Ground Nos. 4-8: Addition of Rs. 19,50,000/- 4.1] Without prejudice to the above, the assessee submits that even on merits, the addition made of Rs. 19,50,000/- is not justified at all According to A.O., as per the documents seized from Kele Group, the assessee had given a loan to Manasvi Enterprises or to Shri Abhay Kele. In the course of asst. proceedings, the assessee had denied the above allegation of the learned A.O. and had stated that it had not given any such loan to Manasvi Enterprises or to Shri Abhay Kele. In fact, Assessee has never ever entered into any transactions with Mr. 4 Kele or with his group entities 4.2] The learned A.O. has not accepted the contention of the assessee. According to him, as per the documents seized from Shri Abhay Kele, it 2361 & 2362/PUN/2025[A] is evident that the assessee had received an interest of Rs. 19,50,000/- in cash. He has also stated that the statement of Shri Abhay Kele was recorded at the time of search, and he had accepted the transactions recorded in the ledger impounded from his premises. Accordingly, the learned A.O has held that the assessee has received Rs. 19,50,000/- as an interest in cash and therefore, has made the addition u/s 69A of the Act. 4.3] The assessee submits that on following grounds, the addition is not justified at all. First of all, from the seized record, your Honour would observe that there is no mention of Assessee Firm "Bora Agro Foods" in any documents. The name appearing in the seized records is 'Bora Agro' only (copy of the ledger account seized from Kele Group are enclosed as Annexure C) which is erroneously Interpreted by ld A.O. as Bora Agro Foods'. This action appears to be mere assumption or just a guess on his part as there was no mention of either complete name or names of Partners, contact details, address, PAN no. or any other relevant information indicating its link with the assessee Bora Agro Foods Here, it should be understood that there can be synonymous entities by the name Bora Agro with whom these transactions might have been done. The Assessee as well as Mr. Kele has clearly denied any sort of loan transactions with each other. 4.4] Factually, Assessee has not entered into any transaction and has never given any loan to Mr. Abhay Kele or his Group Entities. Hence, payment of any interest by the said party to the Assessee does not of Principal Loan transaction were never found. The Ld. AO has ill- logically relied upon only the alleged transactions of payment of interest to 'Bora Agro' while making the addition despite the fact that, there was no evidence of any principal loan transaction, on which interest was allegedly paid. Thus, it substantiates our contention that the name mentioned in the seized documents as 'Bora' or 'Bora Agro' is not that of Assessee firm Bora Agro Foods. In fact, in the course of asst. proceedings, we had submitted the affidavit of Shri Abhay Kele wherein he had confirmed on oath that neither he nor any of his group entity / related entities had taken any loan from the assessee firm. He has also affirmed that no interest in cash has been paid by him or any of his entities to the assessee. The copy of the affidavit of Shri Kele is enclosed herewith as Annexure D. From the above facts, it is evident that the alleged transactions are not made with the assessee firm. 4.5] The learned A.O. has rejected the said affidavit on the ground that Shri Abhay Kele had himself owned these papers and therefore, denying the said transactions is only an afterthought act. Whereas the assessee 5 submits that Shri Abhay Kele in his affidavit has clearly mentioned that no loan was taken either by him or his entities from the assessee firm. He has also affirmed that no interest in cash has been paid to the assessee. Since the alleged transactions are denied by both the Parties, 2361 & 2362/PUN/2025[A] question of making any addition in the hands of the assessee simply does not arise based on certain assumptions. Accordingly, Assessee would like to reiterate the following important points: a. Identification of the Assessee is not established from the seized documents. b. The Id. AO has only assumed that the transaction pertained to the Assessee. c. The Principal Loan transaction was never entered into by & between the Parties and no such traces were at all found during the search. Without any principal loan transaction, there cannot be any payment of interest. So, it is illogical on the part of the Id. AO to make the said addition d. The affidavit of Shri Abhay Kele cannot be ignored, which states on oath that, no interest was paid by him or any of his related entities to Bora Agro Foods and thereby denying the alleged transactions. In view of the above, the addition made by the A.O. is not justified. 4.6] Despite a very clear fact that Mr. Abhay Kele in his statement has not accepted any transactions of either loan or payment of interest to the assessee, the ld. A.O. has strangely/surprisingly has relied upon the said statement of Shri Kele while making an addition. a. It is also appreciated that no addition can be made in the hands of the assessee on the basis of certain documents found with the third party. It is further noted that in the absence of any corroborative evidence brought on record by the learned A.O. no addition can be made in the hands of the assessee on the basis of the information seized from third party. In this context, reliance is placed on the following decisions, wherein the courts have held that no addition can be made in the hands of the assessee on the basis of information seized from a third party-Pradeep Runwal [149 ITD 548 (Pune)] b. Regency Mahavır Properties [89 Taxmann.com 444(Mum)] c. Vineet Ranawat [88 Taxmann.com 428 (Pune) 4.7] In view of the above decisions, the assessee submits that the addition made is not justified at all. Further, as clarified above, the learned A.O. has not brought on record any corroborative evidence in support of his case He is simply making the addition without referring to any evidence whatsoever. It is also to be appreciated that Shri Kele has filed an affidavit wherein he has denied any payment of interest in 6 cash to the assessee firm. Thus, considering the said affidavit and in absence of any corroborative evidence brought on record, it is submitted that the addition of Rs. 19,50,000/- is not justified and the same may kindly be deleted.

, 2361 & 2362/PUN/2025[A] In case, any further clarification is required, the same would be submitted on hearing from Your Honour.” Submission of ld.DR : 3. Ld.Departmental Representative(ld.DR) for the Revenue filed written submissions, the relevant paragraphs of the written submissions are reproduced as under : “8.7 In conclusion, it is to submit that the non obstante clause in Section 153C cannot be read to completely exclude the provisions of Sections 143 or 147, in cases where the assessee's income is sought to be assessed on the basis of information found during search proceedings However, it is to clarify that it will not be open for the AO to take recourse to Section 147, where the AO has taken steps under Section 153C of the Act or vice versa. Thus, if the conditions for exercise of jurisdiction under Section 153C of the Act are satisfied and the AO issues a notice as required under Section 153C of the Act, any reassessment under Section 147 of the Act would become impermissible The assumption that provisions of Section 153C of the Act precludes any proceeding under Section 147 of the Act by virtue of the non obstante clause. is unpersuasive. The scheme of Sections 153C of the Act indicates that the said provision was enacted to simplify the procedure, while maintaining the necessary safeguards, for assessment/reassessment in cases where assets belonging to the assessee or books of account or documents, which contain information pertaining to the assessee are found pursuant to a search conducted under Section 132 of the Act or requisition made under Section 132A of the Act, in respect of a person other than the assessee" Accordingly, it is to submit that, in the instant case, the AO had not assumed jurisdiction under Section 153C of the Act and therefore the re-assessment proceedings initiated under Section 147 cannot be faulted.

, 2361 & 2362/PUN/2025[A] 2024)] Para 20 for the issue to be decided by the Hon. HC.

2. Amar Jewellers Ltd. vs ACIT Paras 46,47,48,49,52,53,55,76 & 84. (2022) 444 ITR 97 9 (Guj) dtd 31- Even assessments completed u/s 153A 01-2022 were reopened u/s 147/148 holding therefore that the non obstante clause in section 153A did not exclude the applicability of section 147/148.

3. CIT vs Anil Kumar Bhatia 24 Para 18,19,21 & 22. taxmann.com 98 (Delhi) (2012) 4. Sejal Jewellery&Anr vs UoI : WP Para 4 on page 4 indicates that the No.3057 of 2019 along with 12 petitioner was searched along with its WPs associate concerns as well as the key individuals of the group.

, 2361 & 2362/PUN/2025[A] This itself indicates that the stand taken by both the parties are very thought after process. The transactions appearing in the books of Kele groups done with the assessee are conclusive evidence that the assessee has indeed undertaken transaction with Kele group. Considering the fact of the above, I hereby reject the submissions made by the assessee and add Rs. 19,50,000/- in the total income of the hands of the assessee under the provisions of section 69A of the IT Act. Penalty proceedings 271AAC is also initiated for under reporting as well as mis-reporting of income. Provisions of section 115BBE of the IT Act is also applicable for levying the tax at the rate of 60%+ surcharge 25% of such tax” unquote. 4.5) Aggrieved by the Assessment Order, Assessee filed Appeal before the Commissioner of Income Tax (Appeals). The CIT(A) confirmed the addition, the relevant paragraph is as under :

Quote, “These grounds challenge the merits of the addition. The impounded ledgers explicitly record cash interest payments to "Bora Agro" totaling Rs. 19,50,000/- on specific dates. The name closely matches the assessee's ("Bora Agro Foods"), and Shri Abhay Kele admitted in his survey statement that the transactions in the ledger were true and undertaken with the named parties. This admission provides corroboration to the documentary evidence. The assessee's denial of loans or transactions lacks substantiation. The affidavit from Shri Abhay Kele, submitted later, contradicts his contemporaneous admission and appears as an afterthought, rightly rejected by the AO, as belated retractions or affidavits are often viewed as lacking efficacy without strong evidence. Absence of principal loan evidence does not negate the interest receipt, as the ledger entries and admission stand independently. The assessee's submissions are contradictory-initial denial of knowledge, followed by an affidavit from Kele, indicating possible collusion. The addition is justified u/s 69A of the Act as unexplained. Grounds 4-7 are dismissed” Unquote. 4.6) Aggrieved by the Order of the Ld.CIT(A), Assessee has filed appeal before this Tribunal. 11 5) In this case, on 03/02/2021 there was Search u/s 132 of the Income Tax Act in various Abhay Kele group entities.

, 2361 & 2362/PUN/2025[A] Simultaneously there were Survey u/s 133A in some entities of Abhay Kele Group. Ld.DR had filed copy of the Letter dated 10/03/2021 of Dy.Director Income Tax (investigation) Unit-1 (2) Pune wherein it is mentioned that in the course of search & seizure action in Kele Group, a survey was conducted in Prithvi Edifice Pvt. Ltd, Prithvi Builders & developers. The DDIT (Inv.) has tabulated the information pertaining to various persons in a table, the part of the table is reproduced as under which have name “Bora Agro”

Bora Agro 2015-16 28/02/2015 12,00,000/- 2016-17 28/05/2015 12,00,000/- 01/09/2015 12,00,000/- 12/12/2015 12,00,000/- 27/02/2016 12,00,000/- 2017-18 28/05/2016 12,00,000/- 29/12/2016 5,00,000/- 06/03/2017 2,50,000/- 5.1) In this case entire addition is based on some pages of Bundle No.10. In the Assessment Order for AY 2017-18 the Assessing Officer has not specifically mentioned whether the impugned Bundle No.10 was impounded during a Survey or Seized during Search u/s 132 of the Act. 5.2) We have perused the copies of the impounded documents filed by the Departmental Representative. The relevant part is scanned 12 and reproduced here under:

, 2361 & 2362/PUN/2025[A] Thus, it is observed from the impounded documents that at some places the name mentioned is “Bora”, at some places the name mentioned is “Bora Agro”. Thus, nowhere the complete name of the Assessee Bora Agro Foods is mentioned in the impounded 13 documents.

, 2361 & 2362/PUN/2025[A] 5.3) Statement of Mr.Abhay Kele was recorded during Survey. The DDIT (Inv.) vide his letter dated 10/03/2021 has merely forwarded few questions and answers. The DDIT has not forwarded complete statement of Mr.Abhay Kele to the AO. The relevant question Number 51 and its answer is reproduced here as under :

Q.51 Please go through entry dated 26.04.2017 in ledgers mentioned above ipages 11 to 21), it is seen that cheque received of Rs. 4,00,000 in Prithvi Edifice Pvt Ltd is being paid back in cash which is also corroborated with the ledger of 'B204,205,206 MrKanhyala& Co. (Bora)" in the regular Books of Prithvi Edifice Pvt Ltd (ledger attached as Annexure 1 of this statement). It establishes that cash payment made by yourself to Bora is being entered in the tally of 'Manasvi Enterprises'. Hence, 'Manasvi Enterprises' is nothing but parallel books of accounts of Prithvi Group. Please oller your comment. Ans I confirm that cheque of Rs. 4,00,000 has been received from MrKanhyala& Co. (Bora) in the Prithvi Edifice Pvt Ltd. Regarding payment made in cash, I will have to verify and I will submit the details in few days time.

Thus, it can be observed that the question pertains to some “Kanhyala & Co (Bora)”. In the answer Mr.Abhay Kele has confirmed about cheque payment of Rs.4,00,000/- to Kanhyala & Co(bora). Thus, Mr.Abhay Kele in his statement recorded during the survey has never stated that there was any transaction with Bora Agro Foods which is the assessee in appeal before us. Mr.Abhay Kele has admitted cheque payment to Kanhyala & Co., which is not same as Bora Agro Foods. Mr.Abhay Kele has explained that there 14 was cheque payment of Rs.4,00,000/- to Kanhyala& Co, but the Assessing Officer has not bothered to trace the cheques from the 2361 & 2362/PUN/2025[A] bank statement to arrive at the exact person. Apparently Kanhyala& Co seems to be a different person. Be it as it may be the fact remains that even during the Statement recorded during Survey Mr.Abahy Kele has never uttered the name of the Assessee „BoraAgro Foods”.

5.4) Mr.Abhay Kele in the Affidavit filed during Assessment Proceedings has categorically denied having any transaction. The Affidavit is reproduced here under : Quote, “1. A search action u/s. 132 of the Income Tax Act was conducted at my home on me and my wife Mrs Archana Kele by the Income Tax Authorities. So also, survey was conducted at my office under section 133 of Income tax act on Prithvi Edifice Pvt. Ltd. and other entities of my group, wherein I am either a Director or a Partner.

5.7) In the facts and circumstances of the case, based on our analysis in all preceding paragraphs, we are of the considered opinion that there is no cash receipt by the assessee during the year, hence, we direct the AO to delete the addition of Rs. 19,50,000/-.

5.8) Accordingly ground numbers 3-8 for AY 2017-18 are allowed.

Ground Number 1: 16 6. Assessee has challenged notice u/s 148. The Assessee has filed copy of Reasons recorded for Reopening. The relevant part of the 2361 & 2362/PUN/2025[A] Reasons Recorded for Reopening is scanned and reproduced as under :

, 2361 & 2362/PUN/2025[A] 6.1 Thus, it can be observed that Assessment in the case of the Assessee has been reopened based on the information received from DDIT(inv) 1(2) Pune vide letter dated 10/03/2021. Copy of the said Letter was filed by Ld.DR. We have studied the letter dated 10/03/2021. We have already reproduced the chart given in the said letter and we have also reproduced the so called entries referring to “Bora Agro”. The letter of the DDIT dated 10/03/2021 also had some part of statement of Abhay Kele recorded during the action. The figures mentioned in the “Reasons Recorded” do not match with Impounded Documents. This shows that there is no application of mind. We have reproduced correct figures in Paragraph 5 of this order. 6.2 On reading the Answers of Mr.Abhay Kele it is observed that No where Mr.Abahy Kele has stated that he or any of his entity had paid any interest in cash to Bora Agro Foods. In answer to one question he has referred to Kanhyala & Co (Bora), however, he has not stated that Kanhyalal& Co is same as Bora Agro Foods. Therefore, on reading statement of Mr. Abhay Kele , prima facia there is no material to presume that any cash has been paid to assessee during the year. 6.3 We have also studied the impounded documents enclosed with 18 the letter dated 10/03/2021, no where in the documents name of the 2361 & 2362/PUN/2025[A] Assessee, Bora Agro Foods appears. Thus, prima facia there was no evidence in the possession of the AO to allege cash receipts by Assessee Bora Agro Foods, leading to escapement of income. 6.4 Hon‟ble Bombay High Court in the case of PCIT vs Shodiman Investments (P.) Ltd. [2020] 422 ITR 337 (Bombay) [16-04-2018] has observed as under :

Quote, “11. Further, a reading of the entire decision, it is clear that the reasonable belief on the basis of tangible material could be, prima facie, formed to conclude that income chargeable to tax has escaped assessment. Mr.Mohanty, learned Counsel is ignoring the fact that the words 'whatever reasons' is qualified by the words' having reasons to believe that income has escaped assessment'. The words whatever reasons only means any tangible material which would on application to the facts on record lead to reasonable belief that income chargeable to tax has escaped assessment. This material which forms the basis, is not restricted, but the material must lead to the formation of reason to believe that income chargeable to tax has escapedAssessment. Mere obtaining of material by itself does not result in reason to believe that income has escapedassessment. In fact, this would be evident from the fact that in para 16 of the decision in Rajesh Jhaveri Stock Brokers (P.) Ltd.'s, case (supra), it is observed that the word 'reason' in the …. 'reason to believe' would mean cause or justification. Therefore, it can only be the basis of forming the belief However, the belief must beindependently formed in the context of the material obtained that there is an escapement of income.Otherwise, no meaning is being given to the words 'to believe' as found in Section 147 of the Act. Therefore, the words 'whatever reasons' in Rajesh Jhaveri Stock Brokers (P.) Ltd.'s, case (supra), only means whatever the material, the reasons recorded must indicate the reasons to believe that income has escaped assessment. This is so as reasons as recorded alone give the Assessing Officer power to re-open an assessment, if it reveals /indicate, reasons to believe that income chargeable to tax has escaped assessment.

6.5 In the case of the Assessee Bora Agro Foods on reading the Reasons recorded by the AO it is clear that AO has not applied his mind to the information received from DDIT. The AO has 20 independently not tried to establish that the word „Bora‟ or „Bora Agro‟ mentioned in the impounded documents refers to Bora Agro 2361 & 2362/PUN/2025[A] Foods. We have already discussed that during the survey in the statement Mr.AbahyKele has also not stated that any cash was paid to Bora Agro Foods, neither Mr.Abahy Kele has identified the words „Bora‟ or „Bora Agro‟ as Bora Agro Foods. It is important to understand here that in answer to question number 46,47 Mr.Abhay Kele has specifically identified person as P K Satalkar, similarly in answer to question number 50 Mr.Abhay Kele has identified the person as Vijay Raundal. However, in the context of the words „Bora‟ or „Bora Agro‟ Mr.Abhay Kele has not identified it as Bora Agro Foods. It means Mr.Abhay Kele has identified the persons mentioned in the impounded documents but he has not mentioned Bora Agro Foods. 6.6 In these facts primafacia there was no material with the AO to arrive at reason to believe escapement of Income in the case of Bora Agro Foods .Accordingly the Notice u/s 148 is bad in law. Therefore, in the facts and circumstances of the case the Ground No. 1 raised by the Assessee is allowed.

10. In the result, all the appeals filed by the Assessee are partly allowed.

Order pronounced in the open Court on 11th March, 2026.